EXHIBIT 10.2
119
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (the "Agreement") is made and entered into as
of March 12, 2009, among UNLTD Ventures Incorporated (the "Company"), Sheldon
Kales, Dr. Tally Bodenstein, Rakesh Malhotra and Boaz Dor,; and the following
shareholders of ActiVein Ltd.: Xenia Venture Capital Ltd. ("Xenia"), Mr. Ilan
Shalev, Dr. Yoav Paz, Mr. Adi Plaschkes (collectively the ActiVein
Shareholders); (collectively the ActiVein Shareholders); (each individually a
"Party" and together the "Parties").
WITNESSETH:
WHEREAS, the Parties are party to the Share Exchange Agreement to which this
Agreement is attached; and
WHEREAS, the shareholders of the Company desire to set forth certain matters
regarding the Shares herein.
NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein, the parties hereby agree as follows:
SECTION 1. DEFINITIONS AND RELATED MATTERS
1.1 Definitions.
When used in this Agreement, the following terms shall have the respective
meanings set forth below:
"Acquisition Notice" is defined in Section 3.8.
"Articles of Incorporation" shall mean the Company's Articles of
Incorporation or By-Laws, as amended from time to time.
"Board" or "Board of Directors" means the board of directors of the
Company.
"Buyer" is defined in Section 3.3.
"Co-Sale Offer" is defined in Section 4.2.1.
"IPO" means the date the Company's shares may be publicly traded on the
OTC Bulletin Board, the NASD, or any national stock exchange based in the United
States.
"New Securities" is defined in Section 2.1."Notice of Sale" is defined in
Section 3.1.
"Notice Period" is defined in Section 3.3
"Offer" is defined in Section 4.1.
120
"Offerees" shall have the meaning set forth in Section 3.1.
"Offered Shares" shall have the meaning set forth in Section 3.1.
"Other Shareholders" is defined in Section 4.2.1.
"Other Shareholders Co-Sale Pro Rata Percentage" is defined in Section
4.2.1.
"Permitted Transfer" is defined in Section 3.13.
"Permitted Transferee" is defined in Section 3.13.
"Remaining Buyers" is defined in Section 3.7.
"Response Notice" is defined in Section 3.3.
"Seller" is defined in Section 4.2.1.
"Selling Shareholder" is defined in Section 3.1.
"Shares" means the shares of the Company.
"Shareholder(s)" means Sheldon Kales, Dr. Tally Bodenstein, Boaz Dor and
the ActiVein Shareholders.
"Share Exchange Agreement" means the Share Exchange Agreement to which
this Agreement is attached as a Schedule.
"Third Party" is defined in Section 3.1.
"Transfer" is defined in Section 3.1.
1.2 Related Definitional Matters.
1.2.1 All capitalized terms used and not otherwise defined herein shall have the
meanings given them in the Share Exchange Agreement.
1.2.2. In case of the identical terms defined otherwise in this Agreement
and the Share Exchange Agreement, the definition as appearing in this Agreement
shall prevail for purposes of this Agreement.
1.2.3 All references herein to Dollars or $ are references to United
States dollars.
121
SECTION 2. PREEMPTIVE RIGHTS
2.1 Until an IPO, and except to the extent the right to receive such offer
has been waived in writing (before or after the effective date hereof) by a
Shareholder who would otherwise be entitled thereto, any New Securities to be
allotted by the Company shall first be offered by the Board of Directors by
written notice of offer to the registered Shareholders holding at least 3% of
the issued and outstanding share capital of the Company on an issued and
outstanding basis. "New Securities" shall mean any share capital of the Company,
whether or not now authorized, and rights, options or warrants to purchase share
capital, and securities of any type whatsoever that are, or may become,
convertible into share capital.
New Securities shall not include: (i) securities issued to employees,
directors, or consultants of the Company pursuant to any stock option plan or
stock plan or stock purchase or stock bonus arrangement approved by the Board of
Directors or as otherwise approved by the Board of Directors; (ii) securities
issued for consideration which does not consist of cash or which does not
consist entirely of cash, including without limitation real estate (including
ownership, leasing or any other rights thereto), patents or technology or other
know-how (including ownership, licensing or any other rights thereto), research
and/or development services or activities, distribution or manufacture of the
Company's products or services, any other services or activities, or joint
ventures; (iii) shares of the Company issuable upon exercise of options or
warrants issued in full compliance with the provisions of this Section 2; (iv)
securities offered to the public; (v) securities issued pursuant to the
acquisition (including if applicable acquisition of shares) by the Company of
another corporation or business entity (or their business unit or division) or
purchase or acquisition by the Company of all or substantially all the assets of
another corporation or business entity (or their business unit or division) or
merger of any corporation or business entity with or into the Company; (vi)
securities issued pursuant to stock split, recapitalization, reclassification or
payment of any dividend, bonus shares, or distribution with respect to the
Company's issued and outstanding share capital, or any similar event of the
Company; or (vii) any commission paid pursuant to Section 2.5 below.
2.2 As aforesaid, in the event the Company shall undertake an issuance of
New Securities, it shall give each Shareholder written notice thereof. Such
notice shall state the terms of the proposed allotment, and offer each such
Shareholder to purchase such number of such New Securities as is necessary for
such Shareholder to retain the proportion of his respective holdings. Each such
Shareholder may accept such offer, as to all or any part of the shares so
offered to him, by giving the Company written notice of acceptance within thirty
(30) days after being served with such notice of offer together with the amount
of consideration for the number of New Securities offered to him and accepted
thereby. Any Shareholder who fails to respond within such period or to pay the
above specified consideration shall be deemed to have refused that offered part
of the New Securities and to have waived any and all rights in connection with
this Section 2.
2.3 Any such offered New Securities that are not accepted by Shareholders
as aforesaid shall be under the control of the Board of Directors and may be
subsequently allotted without regard to this Section 2, except to the extent
that said offered New Securities may not be allotted at a price and upon terms
more favorable to the purchaser than that offered pursuant to Section 2.2. In
122
the event the New Securities are not acquired under this Section 2.3 prior to
the expiration of one-hundred and twenty (120) days from the first written
notice to the Shareholders under Section 2.2, they may not be issued except by
compliance again with the provisions of this Section 2.
2.4 For the purposes of any offer under this Section 2, the respective
holdings of any Shareholder shall mean the respective proportions of the
aggregate number of shares held by such Shareholder out of the total issued and
outstanding share capital of the Company as determined prior to the offer made
pursuant to Section 2.1.
2.5 The Company may pay a commission or brokerage fee to any person in
consideration of his subscribing or agreeing to subscribe, whether absolutely or
conditionally, for any shares in the Company, or procuring or agreeing to
procure subscriptions, whether absolute or conditional, for any shares in the
Company, provided such commission or brokerage fee does not exceed 10% of the
price at which the shares, in respect of which the commission is paid, are
issued. Such commission or brokerage fee may be paid in cash or in fully or
partly paid shares of the Company or in options for the purchase of such shares,
or in a combination of such methods.
SECTION 3. RIGHT OF FIRST REFUSAL
3.1 Except for Transfers to Permitted Transferees (as such terms are
defined below), in the event that, at any time prior to the consummation of an
IPO, any Shareholder desires to assign, transfer, pledge, hypothecate or
otherwise dispose of (each a "Transfer") any or all of such Shareholder's shares
in the Company (or any securities convertible into or exercisable for any shares
of the Company, or any agreement or commitment to issue any of the
foregoing)(the "Offered Shares") pursuant to the terms of a bona fide firm offer
received from any person or entity ("Third Party"), then such Shareholder must
first offer the Offered Shares to the other Shareholders (the "Offerees"), on
terms and conditions no less favorable than those proposed by the Third Party,
by a written notice (the "Notice of Sale") to the Company, and the Company shall
promptly give a copy of the Notice of Sale to the Offerees. For the purposes of
this Section 3, the holder of shares wishing to Transfer shares of the Company
shall be referred to as the "Selling Shareholder".
3.2 The Notice of Sale shall include the number of Offered Shares, whether
the Offered Shares will, upon the sale, be free of all liens charges and
encumbrances, affirmation that a bona fide firm offer has been received from the
Third Party, the identity of the Third Party, any representations, warranties,
covenants and indemnities offered by the Selling Shareholder(s) and the price
and terms of payment for the Offered Shares.
3.3 Each Offeree shall be entitled to purchase the Offered Shares, in
whole or in part, at the price and under the conditions stated in the Notice of
Sale, within fourteen (14) days of its receipt (the "Notice Period"), by giving
written notice of intention to do so to the Selling Shareholder, with copies to
the Company (the "Response Notice") (each Shareholder who has submitted a
Response Notice, a "Buyer").
123
The Response Notice shall, when taken in conjunction with the offer as
contained within the Notice of Sale, be deemed to constitute a valid, legally
binding and enforceable agreement for the sale and purchase of such Offered
Shares.
3.4 If the Response Notice has not been given by an Offeree within
fourteen (14) days as set forth in Section 3.3 above, then such Offeree shall be
deemed to have waived his right of first refusal pursuant to this Section 3.
3.5 Notwithstanding anything to the contrary herein, in the event that by
the end of the Notice Period, no Response Notices have been received by the
Selling Shareholder or the Selling Shareholder has received Response Notices
with respect to a total number of shares less than the number of the Offered
Shares, the Selling Shareholder shall have the option to either (i) sell all of
the Offered Shares to the Third Party at a price not less than and upon terms
not more favorable to the Third Party than those provided for in the Notice of
Sale, provided that the sale be consummated within forty five (45) days from the
expiration of the Notice Period, or (ii) unless otherwise agreed with the Third
Party who demands the right to purchase all of the Offered Shares, sell to the
Buyers such quantity of the Offered Shares as specified in their Response
Notices, and sell the remaining Offered Shares to the Third Party, at a price
not less than and upon terms not more favorable to the Buyers and to the Third
Party than those provided for in the Notice of Sale, provided that the sale be
consummated within forty five (45) days from the expiration of the Notice
Period. Any Offered Shares not Transferred within such forty five (45) day
period shall be subject to the requirements of first refusal pursuant to this
Section 3.
3.6 If Response Notices shall have been received for a total number of
shares equal to the number of Offered Shares, every Buyer shall buy the number
of shares as mentioned in the Response Notice as submitted.
3.7 If Response Notices shall have been received for a total number of
shares greater than the number of Offered Shares, the Buyers may acquire shares
in a quantity proportionate to the share capital of the Company held by them at
that time (based on the ratio of the share capital of the Company held by each
of them at that time relative to the total share capital of the Company, on an
as converted basis). However, no Buyer shall be required to buy a greater number
of shares than the number provided for in the Response Notice submitted by him.
Any Offered Shares remaining shall be allocated among those Buyers who have not
received all the shares indicated by them in their Response Notice (the
"Remaining Buyers") based on the ratio of the share capital of the Company held
by each of them at that time relative to the total share capital of the Company
held by the Remaining Buyers, on an as converted basis. However, no Remaining
Buyer shall be required to buy a greater total number of shares than the number
provided for in the Response Notice submitted by him. This procedure shall be
repeated until all of the Offered Shares have been allocated.
3.8 In every one of the events referred to in Sections 3.5, 3.6 and 3.7,
the Selling Shareholder shall send within seven (7) days after the last date for
submission of Response Notices to each of the Buyers, a notice (accompanied by
copies of all Response Notices received by the Selling Shareholders, and if
124
actually received, any notices of non-acceptance of the offer pursuant to the
Notice of Sale) that shall mention the number of shares that shall be acquired
by each Buyer (hereinafter the "Acquisition Notice").
3.9 After receipt of the Acquisition Notice each Buyer shall purchase from
the Selling Shareholder, and the Selling Shareholder shall sell and Transfer to
such Buyer the number of shares referred to in such notice according to the
terms of the Notice of Sale. Upon Transfer to the Buyer such shares must be free
and clear of any liens or encumbrances unless otherwise specified in the Notice
of Sale. The Selling Shareholder and such Buyer shall each have all the remedies
for breach of contract available under any applicable laws in connection with
the transaction set forth in this Section 3.
3.10 In the event that as a result of the provisions of this Section 3,
the Selling Shareholder would be required to Transfer a fraction of a share,
such number of shares shall be rounded to the nearest whole number (with 1/2
being rounded down). In the event that there shall be Offered Shares that cannot
be allocated pursuant to this Section 3.10, such Offered Shares shall be
allocated as the Board of Directors shall see fit.
3.11 Nothing in this Section 3 shall have any effect upon the requirement
of the consent of the Board of Directors to the Transfer of any shares or upon
its authority to refuse to consent to the Transfer.
3.12 Notwithstanding the above, a Shareholder may Transfer any of his
shares to a Permitted Transferee. For the purposes of this Section 3, "Permitted
Transferee" or a "Permitted Transfer" shall mean: (i) any Shareholder's spouse,
ancestors or descendants, or to trusts for the benefit of such persons; (ii) any
person or entity which controls, is controlled by or is under common control
with such Shareholder (for the purposes hereof, the term "control" shall mean
the power to appoint a majority of the Board of Directors of such entity, or
ownership of more than 90% of both the equity securities (or similar interests)
and the voting rights in the entity; (iii) from a Permitted Transferee back to
the given transferring Shareholder; (iv) in the case of a corporate Shareholder,
(a) any successor of such Shareholder by merger or (b) any person, firm or
corporation to which at the same time, substantially all the business and assets
of such Shareholder are being sold; or (v) in the case of joint holders of a
share, each such joint holder as regards any other joint holder's rights in such
share.
provided, however, in all cases such Permitted Transferee is required to
agree in writing to be bound by the obligations of the transferor under all
agreements involving the Company; and
provided further, however, that no such Transfer shall be allowed if as a
result of such Transfer, the number of Shareholders shall exceed fifty (50)
pursuant to mechanism of calculation as is specified in the Articles of
Incorporation.
Following a Permitted Transfer to a Permitted Transferee, such Permitted
Transferee shall have the right be considered a Shareholder for any and all
purposes, including for the purpose of the Transfer of its shares to its
Permitted Transferee.
125
SECTION 4. DISPOSITIONS OF SECURITIES
4.1 Drag-Along Rights. In the event that prior to an IPO any person or
entity unrelated or unaffiliated to any Shareholder (a "Third Party") makes an
offer to purchase in a bona fide arm's length transaction more than 90% of (i)
the issued and outstanding share capital of the Company; or (ii) the assets of
the Company (the "Offer"), and the holders at least 90% of the issued and
outstanding share capital of the Company on an issued and outstanding basis,
indicate, in writing, their acceptance of such Offer and such Offer is
conditioned upon the sale of all remaining shares of the Company to such Third
Party, then, the remaining Shareholders shall be obligated to sell or exchange
their shares under identical terms as concluded in any such acquisition. Such
remaining Shareholders shall be deemed to have given an irrevocable proxy to a
person to be appointed by the Board of Directors to vote for the acceptance of
the Offer and at the closing of such Offer all of the Shareholders shall sell
all of their shares to the Third Party making such Offer on the same terms and
conditions as contained in the Offer. In the event that a Shareholder fails to
surrender its share certificate in connection with the consummation of an Offer,
such certificate shall be deemed cancelled and the Company shall be authorized
to issue a new certificate in the name of the Third Party and the Board shall be
authorized to establish an escrow account into which the consideration for such
cancelled shares shall be deposited and to appoint a trustee to administer such
account. Proceeds received from a Third Party pursuant to this Section 4.1 shall
be distributed in accordance with the rights of the shares pursuant to the
Articles of Incorporation.
4.2 Tag-Along Rights. Prior to an IPO of the Company, if a Shareholder or
group of Shareholders that holds more than 25% of the issued and outstanding
share capital of the Company on an issued and outstanding basis reaches an
agreement to sell all or a portion of its Shares in a single transaction or
series of related transactions, each other holder of Shares shall have the right
to sell a pro rata share of their Shares in such transaction at the same price
and on the same terms as the selling Shareholder. If a Shareholder or a group of
Shareholders for which the provisions of this Section are applicable (in this
Section, the "Seller") desires to Transfer any Shares held by it in the Company
pursuant to the terms of a bona fide offer received from any party (in this
Section, the "Buyer") or otherwise, such Seller shall promptly give the other
Shareholders (the "Other Shareholders") written notice thereof, which fully
describes the proposed Transfer (the "Co-Sale Offer") and the Other Shareholders
or any one of them shall have the right to require, within 14 days of receipt of
the Co-Sale Offer, as a condition to such Transfer described therein, that the
Buyer shall purchase from such Other Shareholders at the same price per share
and on the same terms and conditions as involved in such Transfer by the Seller,
that percentage of the Shares proposed to be acquired by the Buyer (in this
Section, the "Transaction Shares") expressed by a fraction, the numerator of
which is the number of Shares then held by the Other Shareholders who exercise
their right hereunder and the denominator of which is the sum of (i) the
aggregate number of Shares and (ii) the aggregate number of Shares then held by
the Seller, all multiplied by 100 (such percentage shall be referred to as the
"Other Shareholders Co-Sale Pro Rata Percentage").
4.2.1 In the event that one or more of the Other Shareholders shall elect
to participate in such Transfer, each such Other Shareholders shall communicate
in writing such election to the Seller within the aforesaid period of time, and,
126
if the Transfer to the Buyer is consummated, such Other Shareholder shall be
entitled to Transfer to the Buyer as part thereof, and no Transfer of any Shares
by the Seller shall be completed unless simultaneously with such Transfer the
Buyer purchases, the Other Shareholders Co-Sale Pro Rata Percentage of the
Transaction Shares (and if more than one Other Shareholders so notified the
Seller, such Co-Sale Pro Rata Percentage shall be allocated among them pro rata
to their relative holdings in the Company), at the same price per share and on
the same terms and conditions as set forth in the Co-Sale Offer. If any Other
Shareholder did not respond to a Co-Sale Offer within the aforesaid time period,
it shall be deemed to be refusing to participate in such Transfer.
4.2.2 If none of the Other Shareholders elected to participate in such
Transfer, or if some of them did elect to so participate, then the Seller shall
be entitled to sell or transfer all, or the appropriate pro rata portion
(together with the participating Other Shareholders' shares), as applicable, of
the Transaction Shares to the Buyer at any time within 90 days thereafter. Any
such Transfer shall be at not less favorable terms and conditions to the Seller
than those specified in the Co-Sale Offer. Any Shares not sold within such
90-day period shall continue to be subject to the requirements of this Section
4.
4.2.3 The rights of co-sale under this Section 4 shall not apply to a
Transfer exempt from a right of first refusal under Section 3.
SECTION 5. AFFAIRS OF THE COMPANY
5.1 Administration of the Company.
5.1.1 Following the acquisition of Activein Ltd. the Board shall consist of
Mr. Boaz Dor, Ms. Anat Segal, Mr. Eitan Kyiet, Mr. Ilan Shalev and Mr. Avi Lior.
In the event Boaz Dor resigns as a director, Mr. Dor can designate his
replacement on the Board of Directors. Xenia has the right to remove Anat Segal,
Eitan Kyiet, Ilan Shalev and/or Avi Lior as directors and to designate the
replacement on the Board of Directors of any director so removed.
In all cases the right to appoint a director shall include the right to
remove and replace such director. Appointments, removals and replacements shall
be effected by furnishing written notification to the Company, signed by the
Shareholder with the right to appoint the director. Any notice regarding the
appointment, removal or replacement of a director shall be delivered to the
Company in writing, and shall become effective on the date fixed in such notice,
or upon the delivery thereof to the Company, whichever is later.
5.1.2 The presence of a majority of the directors shall constitute a quorum
for meetings of the board.
5.1.3 Any one director or Shareholders holding more than 10% of the voting
power in the Company may call a meeting of the Board of directors of the
Company, and the chairman of the Board shall call such a meeting upon such
request. The Company shall ensure that there shall be at least 4 Board meetings
per year.
127
5.2 Matters Requiring Security Holder Approval.
5.2.1 Veto Rights. Until an IPO, any action or resolution of the
Company's general meeting, or of the Board, regarding any of the following
actions whether concerning the Company itself, or its Subsidiary ActiVein Ltd.,
shall require the consent of two thirds of the Company's directors in a Board
meeting or the approval of Xenia:
5.2.1.1 an amendment to the Articles of Incorporation;
5.2.1.2 the entry into any new line of business or new business
activity;
5.2.1.3 a merger, consolidation or acquisition, or the sale, lease or
other disposal of all or substantially all of the Company's assets or those of
ActiVein Ltd.;
5.2.1.4 a transactions with any officer, director, or any other party
related, directly or indirectly;
5.2.1.5 the declaration and payment of any dividends or other
distributions;
5.2.1.6 the liquidation, dissolution or winding-up of the Company or
of ActiVein Ltd.;
5.2.1.7 the constitution of any committee of the Board of Directors;
5.2.1.8 the sale, license, contribution or disposition of the
Company's core intellectual property or that of ActiVein Ltd.; or
5.2.1.9 a change of domicile of ActiVein Ltd., whose domicile and base
of operations shall remain in Israel.
5.2.1.10 any change to the composition of the Board of Directors of
ActiVein Ltd.
SECTION 6. DISTRIBUTION & USE OF FUNDS
The distribution of funds following the Closing will be as follows:
6.1 Upon Closing the Company will transfer to its subsidiary, ActiVein
Ltd., US$250,000. These funds will be used by ActiVein Ltd. for research and
development;
6.2 The remaining funds of the Company - amounting to at least US$167,000
shall be used as follows:
6.2.1 For a one year period following the Closing - US$6,500 per
month paid to Mr. Sheldon Kales for investor relations and investment banking
services;
128
6.2.2 For a one year period following the Closing - US$1,500 per
month paid to Mr. Boaz Dor for investor relations and investment banking
services.
6.2.3 To pay all costs related to the generation of financial reports
for both the Company and Activein Ltd. in US GAAP format.
6.3 The remainder shall be used for legal, accounting and other expenses
associated with an initial public offering of the Company.
SECTION 7. AFFIRMATIVE COVENANTS & DECLARATIONS
7.1 Following the Closing, the current shareholders of the Company will take
all necessary steps to promptly file a registration statement with the
Securities and Exchange Commission to offer to the public 5,000,000 shares of
its common stock at an offering price of $0.20 per share. From the proceeds of
the public offering the Company will use $125,000 for investor relations
services. The $125,000 will be used according to instructions which will be
received from time to time from Mr. Sheldon Kales and shall be pursuant to a
plan agreed upon by the Board of Directors of the Company.
7.2 The Company will not issue any options, warrants or similar securities
to any of its officers, directors or persons performing similar functions until
60 days after the common stock of the Company begins trading. After this 60-day
period, and during the two-year period ending on the date which is two years
after the Company's stock begins to trade, the Company may issue options,
warrants or similar securities to its officers, directors and persons performing
similar functions provided that the number of shares issuable upon the exercise
of such securities does not exceed 2,500,000 shares.
7.3 If the execution of this Agreement and the Share Exchange Agreement
which shall be signed between the Company and Activein Ltd. and various other
parties does not take place by March 31, 2009, this Shareholders Agreement will
terminate, and any of the $250,000 not spent by Activein Ltd. will be promptly
returned to the Company, together with an accounting of all funds which Activein
Ltd. has spent.
7.4 Each current shareholder of Activein Ltd. hereby declares that it has
waived its rights of first refusal it may have under the Articles of Association
of Activein Ltd.
7.5 Xenia Venture Capital Ltd. hereby waives any rights of deemed
liquidation it may have under the Articles of Association of Activein Ltd.
7.6 Each current shareholder of Activein Ltd. holding preferred shares of
Activein Ltd. has waived their rights in respect of the transaction specified in
that certain Exchange Agreement between the Company and Activein Ltd. regarding
any "Special Issues" or any other rights granted to the preferred shareholders
of Activein Ltd. under its Articles of Association.
7.7 In the event that any representations or warranties are required from
the directors of the Company in connection with a listing of its shares on any
129
public exchange, the directors appointed by the former shareholders of Activein
Ltd. shall provide representations or warranties solely and exclusively in
connection with the technology of Activein Ltd. No other representations or
warranties of any nature whatsoever shall be provided by such directors, or by
their appointing shareholders. All other representations and warranties shall be
provided solely and exclusively by Mr. Boaz Dor.
SECTION 8. REGISTRATION RIGHTS
Registration rights in the Company shall be as set out in Appendix A
hereto.
SECTION 9. MISCELLANEOUS
9.1 Notices. Any notice under this Agreement shall be in writing and
shall be deemed to have been duly given for all purposes the earlier of (a) when
received or seven (7) calendar days after it is mailed by prepaid registered
mail; (b) the next calendar day after the day of transmittal thereof by
facsimile; or (c) upon the manual delivery thereof, to the respective addressee
or fax numbers set forth in above or to such other address of which notice as
aforesaid is actually received.
9.2 Benefit of Agreement; Assignments and Participations. Subject to the
next sentence, and except as otherwise expressly provided herein, all covenants,
agreements and other provisions contained in this Agreement by or on behalf of
any of the parties hereto shall bind, inure to the benefit of and be enforceable
by their respective successors. No party may assign or transfer any of its
rights or obligations (other than transfers required under law) without the
prior written consent of the other parties.
9.3 No Waiver; Remedies Cumulative. No failure or delay on the part of any
party hereto in exercising any right, power or privilege hereunder and no course
of dealing between the Company and any other party shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder. The
rights and remedies provided herein are exclusive of any rights or remedies that
the parties would otherwise have.
9.4 Amendments, Waivers and Consents. This Agreement may be only be
amended, with the written consent of the Parties hereto.
9.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
enforceable against the party actually executing such counterpart, but all of
which shall constitute one and the same instrument. For the purposes of the
Closing, signatures transmitted via telecopy (or other facsimile device) will be
accepted as original signatures if the sender on the same day, but not later
than within seven calendar days, sends a manually executed signature page by a
recognized overnight delivery service (charges prepaid).
130
9.6 Expenses. Each Party shall pay its own costs and expenses (including
attorneys' and accountants' fees and disbursements) incurred by such Party in
connection with the Transactions, otherwise related thereto.
9.7 Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
9.8 Governing Law; Submission to Jurisdiction; Venue. This Agreement shall
be governed by the laws of the State of Israel. The parties hereto hereby submit
to the exclusive jurisdiction of the courts of Tel-Aviv-Jaffa.
9.9 Severability. If any provision of this Agreement is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable to
the extent of such illegality, invalidity or unenforceability and the remaining
provisions shall remain in full force and effect and shall be construed without
giving effect to the illegal, invalid or unenforceable provisions.
9.10 Construction. Each covenant contained herein shall be construed
(absent express provision to the contrary) as being independent of each other
covenant contained herein, so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse compliance with
any other covenant.
9.11 Should there be any material breach of the terms of Section 5, 6.1,
6.2, 6.3, 7.1, or 7.2 of this Agreement, through no fault of Sheldon Kales or
Boaz Dor respecting Sections 6.1, 6.2, 6.3, 7.1, or 7.2 and upon the demand of
Sheldon Kales or Boaz Do; or through no fault of Xenia respecting Section 7.1,
and upon the demand of Xenia; all shares issued to the ActiVein Shareholders at
the Closing will be returned to the Company and cancelled and , all officers and
directors of the Company, with the exception of Boaz Dor will resign as officers
and directors of the Company, and all shares of ActiVein held by the Company
will be returned to their previous holders.
9.12 Termination. Except as provided herein, this Agreement shall
immediately and automatically terminate, without any further action by any
party, upon any of the following: (a) the dissolution, bankruptcy, receivership
or insolvency of the Company; (b) as to any Shareholder when such holder shall
no longer hold any Shares; or (c) upon the closing of an IPO.
9.13 Conflict with Articles. In the event of any contradiction between the
provisions of this Agreement and the provisions of the Articles of
Incorporation, the provisions of Articles of Incorporation shall prevail.
9.14 Entire Agreement. This Agreement contains the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements,
understandings and the letters of intent between the parties. For the avoidance
of doubt, all parties hereto acknowledge and declare that this Shareholders
Agreement and the Registration Rights attached hereto as Appendix A, replace in
there entirety any other Shareholders Agreements and/or Registration Rights
Agreements previously agreed upon amongst any of the Parties hereto.
131
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day, month and year first above written.
/s/ Sheldon Kales
----------------------------------
Sheldon Kales
/s/ Dr. Tally Bodenstein
----------------------------------
Dr. Tally Bodenstein
/s/ Rakesh Malhotra
----------------------------------
Rakesh Malhotra
/s/ Boaz Dor
----------------------------------
Boaz Dor
Xenia Venture Capital Ltd.
By: /s/ Eitan Kyiet
----------------------------------
Name: Eitan Kyiet
/s/ Ilan Shalev
----------------------------------
Ilan Shalev
/s/ Yoav Paz
----------------------------------
Dr. Yoav Paz
/s/ Adi Plaschkes
----------------------------------
Adi Plaschkes
132
APPENDIX A - REGISTRATION RIGHTS AGREEMENT
The following provisions govern the registration of the Company's securities:
1. Definitions. As used herein, the following terms have the following meanings:
"Holder" means any Shareholder and shareholders who are party to the
Shareholders Agreement to which this Appendix A is attached.
"Form S-1" means Form S-1 under the Exchange Act, available to the
Company, as in effect on the date hereof or any registration form under
the Securities Act subsequently adopted by the Securities and Exchange
Commission ("SEC") which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the
SEC.
"Initiating Holders" means Holders of an aggregate of at least 15% of the
Registrable Shares.
"Register," "registered" and "registration" refer to a registration
effected by filing a registration statement in compliance with the
Securities Act and the declaration or ordering by the SEC of effectiveness
of such registration statement, or the equivalent actions under the laws
of another jurisdiction.
"Registrable Shares" means all shares now or hereafter issued by the
Company prior to its initial public offering; provided, however, that any
shares (i) sold by a person to the public either pursuant to a
registration statement or Rule 144; or (ii) sold in a private transaction
in which the transferor's rights under this Section 3 are not assigned; or
(iii) that could be distributed by the holder thereof (in accordance with
applicable law) within three (3) months under Rule 144, shall not be
deemed to be Registrable Shares.
"Securities Exchange" shall mean the NYSE, the Nasdaq Global Market, the
AMEX, the LSE, the AIM, or the OTC Bulletin Board.
All capitalized terms used and not otherwise defined herein shall have the
meanings given them in the Shareholders Agreement to which this Agreement
is attached.
2. Incidental Registration. If the Company at any time proposes to register
any of its securities, other than (i) registrations on such form or similar
form(s) solely for registration of securities in connection with an
employee benefit plan or dividend reinvestment plan or an acquisition,
merger or consolidation or (ii) in a registration under Section 3 or
Section 4 of this Agreement, it shall give notice to the Holders of such
intention. Upon the written request of any Holder given within twenty (20)
days after receipt of any such notice, the Company shall include in such
registration all of the Registrable Shares indicated in such a request by a
Holder, so as to permit the disposition of the shares so registered.
Notwithstanding any other provision of this Section 2, if the managing
underwriter advises the Company in writing that marketing factors require a
133
limitation of the number of shares to be underwritten, then the number of
shares that may be included in the registration shall be allocated, first
to the Company, and second: (a) up to 60% of the balance, to the Initiating
Holders on a pro rata basis based on the total number of Registrable Shares
held by such Initiating Holders; and (b) up to 40% of the balance, to the
remaining Holders, on a pro rata basis based on the total number of
Registrable Shares held by such Holders. The Company shall have the right
to terminate or withdraw any registration initiated by it under this
Section 2 prior to the effectiveness of such registration whether or not
any Holder has elected to include securities in such registration.
3. Demand Registration. At any time after six months following the closing of
the initial public offering (the "IPO") and until the fifth anniversary
thereafter, the Initiating Holders may request in writing that all or part
of the Registrable Shares shall be registered for trading on the Securities
Exchange on which such Registrable Shares are listed. Within thirty (30)
days after receipt of any such request, the Company shall give written
notice of such request to the other Holders and shall include in such
registration all Registrable Shares held by all such Holders who wish to
participate in such demand registration and provide the Company with
written requests for inclusion therein within fifteen (15) days after the
receipt of the Company's notice. Thereupon, the Company shall use its best
efforts to effect the registration of all Registrable Shares as to which it
has received requests for registration for trading on the Securities
Exchange specified in the request for registration; provided, however, that
the Company shall not be required to effect any registration under this
Section 3: (i) within a period of one hundred and eighty (180) days
following the effective date of a previous registration; or (ii) if the
Holders, together with the holders of any other securities of the Company
entitled to inclusion in such registration, propose to sell Registrable
Shares and such other securities (if any) at an aggregate price to the
public (net of any underwriters' discounts or commissions) of less than
US$20 million; or (iii) if the Initiating Holders propose to dispose of
Registrable Shares that may be immediately registered on Form S-1 pursuant
to a request made pursuant to Section 4 below; or (iv) during the period
sixty (60) days prior to the Company's estimated date of filing of any
registration statement pertaining to the securities of the Company,
provided that the Company is actively employing in good faith reasonable
efforts to cause such registration statement to become effective and that
the Company's estimate of the date of filing of such registration statement
is made in good faith. Notwithstanding any other provision of this Section
3, if the managing underwriter advises the Company in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the number of shares that may be included in the
registration shall be allocated, first, to the Initiating Holders on a pro
rata basis based on the total number of Registrable Shares held by such
Initiating Holders; and second, to the remaining Holders, on a pro rata
basis based on the total number of Registrable Shares held by such Holders.
If the Company shall furnish to the Holders a certificate signed by the
chairman of the Board (the "Chairman") stating that in the good faith
judgment of the Board it would be materially detrimental to the Company or
its shareholders for such registration statement to be effected at such
134
time, the Company shall have the right to defer the filing of such
registration statement for a period of not more than one hundred twenty
(120) days after receipt of the request of the Holders under this Section
3; provided, however, that the Company shall not utilize this right more
than once in any twelve (12) month period. The Company may not cause any
other registration of securities for sale for its own account (other than a
registration effected solely to implement an employee benefit plan) to be
initiated after a registration requested pursuant to Section 3 and to
become effective less than ninety (90) days after the effective date of any
registration requested pursuant to Section 3. The Company shall not be
required to effect more than two (2) registrations under this Section 3.
4. Form S-1 Registration. In case the Company shall receive from any one
Holder or Holders a written request or requests that the Company effect a
registration on Form S-1, and any related qualification or compliance, with
respect to Registrable Shares the Company shall within thirty (30) days
after receipt of any such request give written notice of the proposed
registration, and any related qualification or compliance, to all other
Holders, and include in such registration all Registrable Shares held by
all such Holders who wish to participate in such registration and provide
the Company with written requests for inclusion therein within fifteen (15)
days after the receipt of the Company's notice. Thereupon, the Company
shall use its best efforts to effect such registration and all such
qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such
Holders' Registrable Shares as are specified in such requests, together
with all or such portion of the Registrable Shares of any other Holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any
such registration, qualification or compliance, pursuant to this Section 4:
(i) if Form S-1 is not available for such offering by the Holders; or (ii)
if the Company shall furnish to the Holders a certificate signed by the
Chairman stating that in the good faith judgment of the Board it would be
materially detrimental to the Company or its shareholders for such Form S-1
registration statement to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-1
registration statement for a period of not more than one hundred twenty
(120) days after receipt of the request of the Holders under this Section
4; provided, however, that the Company shall not utilize this right more
than once in any twelve (12) month period; or (iii) if the Company has,
within the twelve (12) month period preceding the date of such request,
already effected two registrations on Form F-3 for the Holders pursuant to
this Section 4; or (iv) during the period sixty (60) days prior to the
Company's estimated date of filing of any registration statement pertaining
to the securities of the Company, provided that the Company is actively
employing in good faith reasonable efforts to cause such registration
statement to become effective and that the Company's estimate of the date
of filing of such registration statement is made in good faith.
Notwithstanding any other provision of this Section 4, if the managing
underwriter advises the Company in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the number of
shares that may be included in the registration shall be allocated as
follows: (a) up to 75% of the shares, to the Initiating Holders, on a pro
rata basis based on the total number of Registrable Shares held by such
Initiating Holders, and (b) up to 25% of the shares, to the remaining
Holders, on a pro rata basis based on the total number of Registrable
Shares held by such Holders.
135
5. Designation of Underwriter. In the case of any registration, the Company
shall have the right to designate the managing and other underwriters in
any underwritten offering; provided that such designation shall be
approved by the Initiating Holders, such approval not to be unreasonably
withheld.
6. Expenses. All expenses incurred in connection with any registration under
Sections 2, 3 and/or 4 shall be borne by the Company; provided, however,
that each of the Holders participating in such registration shall pay its
pro rata portion of discounts or commissions payable to any underwriter and
that the Company shall not be required to bear the expenses and other
out-of-pocket costs of more than one counsel representing, and acting on
behalf of, the Initiating Holders in connection with each registration
under Section 2, 3 or 4. The Company shall not be required to pay for
expenses of any registration proceeding begun pursuant to Sections 3 or 4,
the request of which has been subsequently withdrawn by the Initiating
Holders or the Holders, as applicable. If the Holders are required to pay
the registration expenses, such expenses shall be borne by the holders of
securities (including Registrable Shares) requesting such registration in
proportion to the number of shares for which registration was requested.
7. Indemnities. In the event of any registered offering of shares of the
Company pursuant to this Appendix A:
7.1 The Company will indemnify and hold harmless, to the fullest
extent permitted by law, any Holder and any underwriter for such
Holder, and each person, if any, who controls the Holder or such
underwriter, from and against any and all losses, damages, claims,
liabilities, joint or several, costs and expenses (including any
amounts paid in any settlement effected with the Company's
consent) to which the Holder or any such underwriter or
controlling person may become subject under Applicable Law or
otherwise, insofar as such losses, damages, claims, liabilities
(or actions or proceedings in respect thereof), costs or expenses
arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact made by the Company itself
contained in the registration statement or included in the
prospectus, as amended or supplemented by the Company itself, or
(ii) the omission of by the Company itself or alleged omission of
the Company itself to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances in which they are made, not misleading,
and the Company will reimburse the Holder, such underwriter and
each such controlling person of the Holder or the underwriter,
promptly upon demand, for any reasonable legal or any other
expenses incurred by them in connection with investigating,
preparing to defend or defending against or appearing as a
third-party witness in connection with such loss, claim, damage,
136
liability, action or proceeding; provided, however, that the
Company will not be liable in any such case to the extent that (i)
such violation was made in a preliminary prospectus and was
corrected in a subsequent prospectus that was required by law to
be delivered to the person making the claim with respect to which
indemnification is sought hereunder, and such subsequent
prospectus was made available by the Company to permit delivery of
such prospectus in a timely manner, and such subsequent prospectus
was so delivered to such person (ii) any such loss, damage,
liability, cost or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished
in writing by a Holder, such underwriter or such controlling
persons in writing specifically for use in connection with such
registration; provided further, that this indemnity shall not be
deemed to relieve any underwriter of any of its due diligence
obligations; provided further, that the indemnity agreement
contained in this subsection 7.1 shall not apply to amounts paid
in settlement of any such claim, loss, damage, liability or action
if such settlement is effected without the consent of the Company,
which consent shall not be unreasonably withheld. Such indemnity
shall remain in full force and effect regardless of any
investigation made by or on behalf of the selling Shareholder, the
underwriter or any controlling person of the selling Shareholder
or the underwriter, and regardless of any sale in connection with
such offering by the selling Shareholder. Such indemnity shall
survive the transfer of securities by a selling Shareholder for a
period of five years, provided further, that the indemnity
agreement contained in this subsection 7.1 shall not apply to
amounts paid in settlement of any such claim, loss, damage,
liability or action if such settlement is effected without the
consent of the Company, which consent shall not be unreasonably
withheld. In no event shall the liability of the Holder exceed the
amount received by such Holder in such sale.
7.2 Each Holder participating in a registration hereunder will
indemnify and hold harmless, to the fullest extent permitted by
law, the Company, its officers and directors, each other Holder
participating in such registration and their partners,
shareholders, directors or officers, any underwriter for the
Company, or for any such other Holder, and each person, if any,
who controls the Company or such underwriter or such other Holder,
from and against any and all losses, damages, claims, liabilities,
joint or several, costs or expenses (including any amounts paid in
any settlement effected with the selling Shareholder's consent) to
which the Company or any such controlling person and/or any such
underwriter and/or such other Holder may become subject under
Applicable Law or otherwise, insofar as such losses, damages,
claims, liabilities (or actions or proceedings in respect
thereof), costs or expenses arise out of or are based on (i) any
untrue or alleged untrue statement of any material fact contained
in the registration statement or included in the prospectus, as
amended or supplemented, or (ii) the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light
of the circumstances in which they were made, not misleading, and
137
each such Holder will reimburse the Company, its officers and
directors and each other Holder participating in such registration
and their partners, shareholders, directors or officers, any
underwriter and each such controlling person of the Company or any
underwriter, promptly upon demand, for any reasonable legal or
other expenses incurred by them in connection with investigating,
preparing to defend or defending against or appearing as a
third-party witness in connection with such loss, claim, damage,
liability, action or proceeding; in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in
conformity with written information furnished by such Holder
specifically for use in connection with such registration. The
foregoing indemnity agreement is subject to the condition that,
insofar as it relates to any such untrue statement (or alleged
untrue statement) or omission (or alleged omission) made in the
preliminary prospectus but eliminated or remedied in the amended
prospectus at the time the registration statement becomes
effective or in the final prospectus, such indemnity agreement
shall not inure to the benefit of (i) the Company and (ii) any
underwriter, if a copy of the final prospectus was not furnished
to the person or entity asserting the loss, liability, claim or
damage at or prior to the time such furnishing is required by the
Securities Act; provided further, that this indemnity shall not be
deemed to relieve any underwriter of any of its due diligence
obligations; provided further, that the indemnity agreement
contained in this subsection 7.2 shall not apply to amounts paid
in settlement of any such claim, loss, damage, liability or action
if such settlement is effected without the consent of the
indemnifying Holders, which consent shall not be unreasonably
withheld. In no event shall the liability of a Holder exceed the
net proceeds from the offering received by such Holder. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company, the underwriter
or any controlling person of the Company or the underwriter.
7.3 Promptly after receipt by an indemnified party pursuant to the
provisions of subsections 7.1 or 7.2 of notice of the commencement
of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim
thereof is to be made against the indemnifying party pursuant to
the provisions of said subsection 7.1 or 7.2, promptly notify the
indemnifying party of the commencement thereof; but the omission
to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise
than hereunder. In case such action is brought against any
indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall have the right
to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume
the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, that if the defendants in
any action include both the indemnified party and the indemnifying
party and there is a conflict of interests which would prevent
counsel for the indemnifying party from also representing the
indemnified party, the indemnified party or parties shall have the
138
right to select one separate counsel to participate in the defense
of such action on behalf of such indemnified party or parties.
After notice from the indemnifying party to such indemnified party
of its election to assume the defense thereof, the indemnifying
party will not be liable to such indemnified party pursuant to the
provisions of said subsections 7.1 or 7.2 for any legal or other
expense subsequently incurred by such indemnified party in
connection with the defense thereof, unless (i) the indemnified
party shall have employed counsel in accordance with the provision
of the preceding sentence, (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time
after the notice of the commencement of the action and within 15
days after written notice of the indemnified party's intention to
employ separate counsel pursuant to the previous sentence, or
(iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the
indemnifying party. No indemnifying party will consent to entry of
any judgment or enter into any settlement which does not include
as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.
7.4 If recovery is not available under the foregoing indemnification
provisions, for any reason other than as specified therein, the
parties entitled to indemnification by the terms thereof shall be
entitled, to the extent permitted under Applicable Law, to
contribution to liabilities and expenses as more fully set forth
in an underwriting agreement to be executed in connection with
such registration. In determining the amount of contribution to
which the respective parties are entitled, there shall be
considered the parties' relative faults, knowledge and access to
information concerning the matter with respect to which the claim
was asserted, the opportunity to correct and prevent any statement
or omission, and any other equitable considerations appropriate
under the circumstances. In no event shall the liability of a
Holder exceed the net proceeds from the offering received by such
Holder.
8. Obligations of the Company. Whenever required under this Appendix A to
effect the registration of any Registrable Shares, the Company shall, as
expeditiously as possible:
8.1 prepare and file with the SEC a registration statement with
respect to such Registrable Shares and use its best efforts to
cause such registration statement to become effective, and, upon
the request of the holders of a majority of the Registrable Shares
registered thereunder, keep such registration statement effective
for a period of up to four (4) months or, if sooner, until the
distribution contemplated in the registration statement has been
completed; provided, however, that at any time, upon written
notice to the participating Holders and for a period not to exceed
one hundred twenty (120) days thereafter (the "Suspension
Period"), the Company may delay the filing or effectiveness of any
registration statement or suspend the use or effectiveness of any
registration statement (and the participating Holders hereby agree
not to offer or sell any Registrable Shares pursuant to such
registration statement during the Suspension Period) if the
Company reasonably believes that the Company may, in the absence
of such delay or suspension hereunder, be required under state or
federal securities laws to disclose any corporate development the
139
disclosure of which could reasonably be expected to have a
material adverse effect upon the Company. No more than one (1)
such Suspension Period shall occur in any twelve (12) month
period. In the event that the Company shall exercise its right to
delay or suspend the filing or effectiveness of a registration
hereunder, the applicable time period during which the
registration statement is to remain effective shall be extended by
a period of time equal to the duration of the Suspension Period.
8.2 prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply
with the provisions of the Securities Act with respect to the
disposition of all Registrable Shares covered by such registration
statement.
8.3 furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as
they may reasonably request in order to facilitate the disposition
of Registrable Shares owned by them.
8.4 in the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such
offering. Each Holder participating in such underwriting shall
also enter into and perform its obligations under such an
agreement.
8.5 notify each holder of Registrable Shares covered by such
registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of
the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the
circumstances then existing.
8.6 use its best efforts to cause all Registrable Shares registered
pursuant hereunder to be listed on each Securities Exchange on
which similar securities issued by the Company are then listed.
8.7 provide a transfer agent and registrar for all Registrable Shares
registered pursuant hereunder and a CUSIP number for all such
Registrable Shares, in each case not later than the effective date
of such registration.
8.8 use its best efforts to furnish, at the request of any Holder
requesting registration of Registrable Shares pursuant to this
Appendix A, on the date that such Registrable Shares are delivered
to the underwriters for sale in connection with a registration
pursuant to this Appendix A, if such securities are being sold
through underwriters, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the
140
underwriters, and to the respective Holder requesting registration
of Registrable Shares and (ii) a letter dated such date, from the
independent certified public accountants of the Company, in form
and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public
offering, addressed to the underwriters and to the respective
Holder requesting registration of Registrable Shares.
9. Assignment of Registration Rights. Any assignment of registration rights
hereunder shall be in accordance with the provisions of Section 9.2 of the
Shareholders' Agreement to which these Registration Rights are appended.
10. Lock-Up. In any registration of the Company's shares all Holders agree that
any sales of Registrable Shares may be subject to a "lock-up" period
restricting such sales, and all Holders will agree to abide by such
customary "lock-up" period of up to one hundred and eighty (180) days in
connection with the IPO, and ninety (90) days in connection with other
registrations, if and to the extent required by the underwriter in such
registration, which period may be extended upon the request of the
underwriter for an additional period of up to fifteen (15) days if the
Company issues or proposes to issue an earnings or other public release
within fifteen (15) days of the expiration of the ninety (90)-day lockup
period, not to (x) lend; offer; pledge; sell; contract to sell; 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, directly or indirectly, including any sale pursuant to Rule 144
under the Exchange Act (as defined below), any Shares or any securities
convertible into or exercisable or exchangeable for Shares (whether such
securities are then owned by the Holder or are thereafter acquired) or to
(y) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of such
securities, whether any such transaction described in clause (x) or (y)
above is to be settled by delivery of Shares or other securities, in cash,
or otherwise.
11. Public Information. At any time and from time to time after the earlier of
the close of business on such date as (a) a registration statement filed by
the Company under the Securities Act becomes effective, (b) the Company
registers a class of securities under Section 12 of the United States
Securities Exchange Act of 1934, as amended, or any federal statute or code
which is a successor thereto (the "Exchange Act"), or (c) the Company
issues an offering circular meeting the requirements of Regulation A under
the Securities Act, the Company shall undertake to make publicly available
and available to the Holders pursuant to Rule 144, such information as is
necessary to enable the Holders to make sales of Registrable Shares
pursuant to that Rule. The Company shall comply with the current public
information requirements of Rule 144 and shall furnish thereafter to any
Holder, upon request, a written statement executed by the Company as to its
compliance with the reporting requirements of the said Rule 144.
141
12. Certificate Legends. Each certificate representing Shares prior to
registration or Registrable Shares shall be stamped or otherwise imprinted
with legends substantially similar to the following (in addition to any
legend required under applicable state securities laws):
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER ANY
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH
LAWS OR UNLESS SUCH REGISTRATION IS NOT REQUIRED. THE SALE, PLEDGE,
HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN
SHAREHOLDERS AGREEMENT BY AND AMONG THE COMPANY AND CERTAIN SHAREHOLDERS
THEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO
THE SECRETARY OF THE COMPANY."
13. Delay of Registration; Furnishing Information. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to
Section 2, 3 or 4 that the selling Holders shall furnish to the Company
such information regarding themselves, the Registrable Shares held by them
and the intended method of disposition of such securities as shall be
required by law and regulations to effect the registration of their
Registrable Shares.
14. Termination of Registration Rights. All registration rights granted under
this Agreement shall terminate and be of no further force and effectone
year after the date of the IPO.
15. Certain Limitations on Registration Rights. In the case of any registration
under Section 2, 3, and 4 pursuant to an underwritten offering, if the
Company has determined to enter into an underwriting agreement in
connection therewith, all securities to be included in such registration
shall be subject to an underwriting agreement and no Holder may participate
in such registration unless such Holder agrees to sell such Holder's
securities on the basis provided therein and, completes and executes all
reasonable questionnaires, and other documents (including custody
agreements and powers of attorney) which must be executed in connection
therewith, and provides such other information to the Company or the
underwriter as may be necessary to register such Holder's securities.
16. Nominees for Beneficial Owners. If Registrable Shares are held by a nominee
for the beneficial owner thereof, the beneficial owner thereof shall be
treated as the Holder of such Registrable Shares for purposes of any
request or other action by any Holder or Holders of Registrable Shares
pursuant to this Agreement (or any determination of any number or
percentage of shares constituting Registrable Securities held by any Holder
or Holders of Registrable Shares contemplated by this Agreement) and all
notices to be sent hereunder to any Holder or Holders of Registrable Shares
shall also be sent to such beneficial owner; provided that the Company
shall have received reasonable assurances of such beneficial ownership.
142
17. Holdback. Each Holder not participating in a given registration in which
Registrable Shares are included agrees not to sell or distribute shares of
the Company, during the period beginning 24 days prior to, and ending 180
days following, the effective date of such registration, in such number
which may have a material adverse effect on the price of the Company's
shares, and will execute such customary form of agreement evidencing such
obligation.
143