Exhibit 4(a)(16)
NOTE PURCHASE
AGREEMENT
THIS NOTE PURCHASE AGREEMENT
(“Agreement”) is made as of the 27 day of July, 2004 by
and among ViryaNet Ltd., an Israeli corporation (the
“Company”), and the Investors set forth on the
signature pages affixed hereto (each an “Investor” and
collectively the “Investors”).
Recitals
A. The Company and the Investors are
executing and delivering this Agreement in reliance upon the
exemption from securities registration afforded by the provisions
of Regulation D (“Regulation D”), as promulgated by the
U.S. Securities and Exchange Commission (the “SEC”)
under the Securities Act of 1933, as amended; and
B. The Investors wish to purchase
from the Company, and the Company wishes to sell and issue to the
Investors, upon the terms and conditions stated in this Agreement,
an aggregate of US$2,500,000 of the Company’s 7.5%
Convertible Notes in the form attached hereto as Exhibit A
(the “Notes”), which are convertible into Ordinary
Shares, par value 1.0 NIS, of the Company’s capital stock
(the “Ordinary Shares”); and
C. Contemporaneous with the sale of
the Notes, the parties hereto are executing and delivering a
Registration Rights Agreement, in the form attached hereto as
Exhibit B (the “Registration Rights Agreement”),
pursuant to which the Company will agree to provide certain
registration rights under the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder, and
applicable state securities laws.
In consideration of the mutual
promises made herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions . In addition
to those terms defined above and elsewhere in this Agreement, for
the purposes of this Agreement, the following terms shall have the
meanings set forth below:
“ Affiliate ”
means, with respect to any Person, any other Person which directly
or indirectly through one or more intermediaries Controls, is
controlled by, or is under common control with, such
Person.
“ Business Day ”
means a day, other than a Saturday or Sunday, on which banks in New
York City are open for the general transaction of
business.
“ Company’s
Knowledge ” means the actual knowledge of the executive
officers (as defined in Rule 405 under the 1933 Act) of the
Company, after due inquiry.
“ Confidential
Information ” means trade secrets, confidential
information and know-how (including but not limited to ideas,
formulae, compositions, processes, procedures and techniques,
research and development information, computer program code,
performance specifications, support documentation, drawings,
specifications, designs, business and marketing plans, and customer
and supplier lists and related information).
“ Control ”
(including the terms “controlling”, “controlled
by” or “under common control with”) means the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or
otherwise.
“ Conversion Shares
” means the Ordinary Shares issuable upon the conversion of
the Notes.
“ Intellectual Property
” means all of the following: (i) patents, patent
applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice); (ii)
trademarks, service marks, trade dress, trade names, corporate
names, logos, slogans and Internet domain names, together with all
goodwill associated with each of the foregoing; (iii) copyrights
and copyrightable works; (iv) registrations, applications and
renewals for any of the foregoing; and (v) proprietary computer
software (including but not limited to data, data bases and
documentation).
“ Liens ” means
any pledge, hypothecation, assignment, deposit arrangement, lien,
charge, claim, security interest, security title, mortgage,
security deed or deed of trust, easement or encumbrance, or
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement
perfecting a security interest under the Uniform Commercial Code or
comparable law of any jurisdiction). For the avoidance of doubts,
Liens do not include the placement of Company’s source codes
in escrow under escrow agreements with third parties in the
ordinary course of business.
“ Material Adverse
Effect ” means a material adverse effect on (i) the
assets, liabilities, results of operations, condition (financial or
otherwise), business, or prospects of the Company and its
Subsidiaries taken as a whole, or (ii) the ability of the Company
to perform its obligations under the Transaction
Documents.
“ Nasdaq ” means
The Nasdaq Stock Market, Inc.
“ Payment Shares
” means Ordinary Shares issued (i) as pay-in-kind interest on
the Notes and/or (ii) as payment pursuant to Section 7 of the
Note.
“ Permitted Liens
” means (a) Liens imposed by law for taxes that are not yet
due or are being contested in good faith and for which adequate
reserves have been established in accordance with generally
accepted accounting principles; (b) carriers’,
warehousemen’s, mechanics’, materialmen’s,
repairmen’s and other like Liens imposed by law, arising in
the
ordinary course of business and securing
obligations that are not overdue by more than 30 days or that are
being contested in good faith and by appropriate proceedings; (c)
pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance
and other social security laws or regulations; (d) deposits to
secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course
of business; (e) easements, zoning restrictions, rights-of-way and
similar encumbrances on real property imposed by law or arising in
the ordinary course of business that do not secure any monetary
obligations and do not materially detract from the value of the
affected property.
“ Person ” means
an individual, corporation, partnership, limited liability company,
trust, business trust, association, joint stock company, joint
venture, sole proprietorship, unincorporated organization,
governmental authority or any other form of entity not specifically
listed herein.
“ Purchase Price
” means Two Million Five Hundred Thousand United States
Dollars (US$2,500,000).
“ Repayment Shares
” means Ordinary Shares issued as payment pursuant to Section
4 of the Note.
“ Senior Debt ”
means all amounts due to Bank Hapoalim under the loan provided by
the bank to the Company.
“ Registration
Statement ” has the meaning set forth in the Registration
Rights Agreement.
“ SEC Filings ”
has the meaning set forth in Section 4.6.
“ Securities ”
means the Notes, the Conversion Shares, the Payment Shares and the
Repayment Shares.
“ Subsidiary ” of
any Person means another Person, an amount of the voting
securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first Person.
“ Transaction Documents
” means this Agreement, the Notes and the Registration Rights
Agreement.
“ 1933 Act ”
means the Securities Act of 1933, as amended, or any successor
statute, and the rules and regulations promulgated
thereunder.
“ 1934 Act ”
means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated
thereunder.
2. Purchase and Sale of the
Notes . Subject to the terms and conditions of this Agreement,
on the Closing Date, each of the Investors shall severally, and not
jointly, purchase, and the Company shall sell and issue to the
Investors, the Notes in the respective amounts set forth opposite
the Investors’ names on the signature pages attached hereto
in exchange for the Purchase Price as specified in Section 3
below.
3. Closing . Upon
confirmation that the other conditions to closing specified herein
have been satisfied or duly waived by the Investors, the Company
shall deliver to Lowenstein Sandler PC, in trust, one or more
Notes, registered in such name or names as the Investors may
designate, with instructions that such Notes are to be held for
release to the Investors only upon payment in full of the Purchase
Price to the Company by all the Investors. Upon such receipt by
Lowenstein Sandler PC of the Notes, each Investor shall promptly,
but no more than one Business Day thereafter, cause a wire transfer
in same day funds to be sent to the account of the Company as
instructed in writing by the Company, in an amount representing
such Investor’s pro rata portion of the Purchase Price as set
forth on the signature pages to this Agreement. On the date (the
“Closing Date”) the Company receives the Purchase
Price, the Notes shall be released to the Investors (the
“Closing”). The Closing of the purchase and sale of the
Notes shall take place at the offices of Lowenstein Sandler PC,
1330 Avenue of the Americas, 21st Floor, New York, New York, or at
such other location and on such other date as the Company and the
Investors shall mutually agree.
4. Representations and Warranties
of the Company . The Company hereby represents and warrants to
the Investors that, except as set forth in the schedules delivered
herewith (collectively, the “Disclosure
Schedules”):
4.1 Organization, Good Standing
and Qualification . Each of the Company and its Subsidiaries is
a corporation duly organized, validly existing and in good standing
(to the extent relevant) under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority
to carry on its business as now conducted and to own its
properties. Each of the Company and its Subsidiaries is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property makes such qualification or
leasing necessary unless the failure to so qualify has not and
could not reasonably be expected to have a Material Adverse Effect.
The Company’s Subsidiaries are listed on Schedule 4.1
hereto.
4.2 Authorization . The
Company has full power and authority and has taken all requisite
action on the part of the Company, its officers, directors and
stockholders necessary for (i) the authorization, execution and
delivery of the Transaction Documents, (ii) authorization of the
performance of all obligations of the Company hereunder or
thereunder, and (iii) the authorization, issuance (or reservation
for issuance) and delivery of the Securities, other than the
Repayment Shares and shares that may be issued pursuant to Section
7 of the Note. The Transaction Documents constitute the legal,
valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability, relating to or affecting
creditors’ rights generally.
4.3 Capitalization .
Schedule 4.3 sets forth (a) the authorized capital stock of
the Company on the date hereof; (b) the number of shares of capital
stock issued and outstanding; (c) the number of shares of capital
stock issuable pursuant to the Company’s stock plans; and (d)
the number of shares of capital stock issuable and reserved for
issuance pursuant to securities (other than the Notes) exercisable
for, or convertible into or exchangeable for any shares of capital
stock of the Company. All of the issued and outstanding shares of
the Company’s capital stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of
pre-emptive rights and were issued in full compliance with
applicable securities laws and any rights of third parties. Except
as described on Schedule 4.3 , all of the issued and
outstanding shares of capital stock of each Subsidiary have been
duly authorized and validly issued and are fully paid,
nonassessable and free of pre-emptive rights, were issued in full
compliance with applicable securities laws and any rights of third
parties and are owned by the Company, beneficially and of record,
subject to no Liens. Except as described on Schedule 4.3 ,
no Person is entitled to pre-emptive or similar statutory or
contractual rights with respect to any securities of the Company.
Except as described on Schedule 4.3 , there are no
outstanding warrants, options, convertible securities or other
rights, agreements or arrangements of any character under which the
Company or any of its Subsidiaries is or may be obligated to issue
any equity securities of any kind and except as contemplated by
this Agreement, neither the Company nor any of its Subsidiaries is
currently in negotiations for the issuance of any equity securities
of any kind. Except as described on Schedule 4.3 and except
for the Registration Rights Agreement, there are no voting
agreements, buy-sell agreements, option or right of first purchase
agreements or other agreements of any kind among the Company and
any of the securityholders of the Company relating to the
securities of the Company held by them. Except as described on
Schedule 4.3 and except as provided in the Registration
Rights Agreement, no Person has the right to require the Company to
register any securities of the Company under the 1933 Act, whether
on a demand basis or in connection with the registration of
securities of the Company for its own account or for the account of
any other Person.
Except as described on Schedule
4.3 , the issuance and sale of the Securities hereunder will
not obligate the Company to issue Ordinary Shares or other
securities to any other Person (other than the Investors) and will
not result in the adjustment of the exercise, conversion, exchange
or reset price of any outstanding security.
Except as described on Schedule
4.3 , the Company does not have outstanding stockholder
purchase rights or “poison pill” or any similar
arrangement in effect giving any Person the right to purchase any
equity interest in the Company upon the occurrence of certain
events.
4.4 Valid Issuance . The
Notes have been duly and validly authorized. The Conversion Shares
have been duly and validly authorized and, upon the due conversion
of the Notes, and will be validly issued, fully paid and
non-assessable free and clear of all Liens, except for restrictions
on transfer set forth in the Transaction Documents or imposed by
applicable securities laws and except for those created by the
Investors. The Payment Shares have been duly and validly authorized
and, upon issuance pursuant to the terms of the Notes, will be
validly issued, fully paid and non-assessable free and clear of all
Liens, except for restrictions on
transfer set forth in the Transaction Documents
or imposed by applicable securities laws and except for those
created by the Investors. Upon approval of the issuance of the
Repayment Shares by the stockholders of the Company, to the extent
required, the Repayment Shares will be duly and validly authorized
and, upon issuance pursuant to the terms of the Notes, will be
validly issued, fully paid and non-assessable free and clear of all
Liens, except for restrictions on transfer set forth in the
Transaction Documents or imposed by applicable securities laws and
except for those created by the Investors. Subject to the above,
the Company has reserved a sufficient number of Ordinary Shares for
issuance of the Conversion Shares, the Payment Shares and the
Repayment Shares, free and clear of all Liens, except for
restrictions on transfer set forth in the Transaction Documents or
imposed by applicable securities laws and except for those created
by the Investors.
4.5 Consents . The execution,
delivery and performance by the Company of the Transaction
Documents and the offer, issuance and sale of the Securities
require no consent of, action by or in respect of, or filing with,
any Person, governmental body, agency, or official other than
filings that have been made pursuant to applicable securities laws
and the approvals by the Israeli Investment Center, the Israeli
Chief Scientist and Bank Hapolaim, which will be obtained prior to
the Closing Date, and post-sale filings pursuant to applicable
securities laws which the Company undertakes to file within the
applicable time periods and other than the approval of the
Company’s stockholders which may necessary for the issuance
of the Repayment Shares and shares that may be issued pursuant to
Section 7 of the Note. Subject to the accuracy of the
representations and warranties of each Investor set forth in
Section 5 hereof and the above, the Company has taken all action
necessary to exempt (i) the issuance and sale of the Securities,
(ii) the issuance of the Conversion Shares upon due conversion of
the Notes, (iii) the issuance of the Payment Shares in accordance
with the terms of the Notes, (iv) the issuance of the Repayment
Shares in accordance with the terms of the Notes and (v) the other
transactions contemplated by the Transaction Documents from the
provisions of any shareholder rights plan or other “poison
pill” arrangement, any anti-takeover, business combination or
control share law or statute binding on the Company or to which the
Company or any of its assets and properties may be subject and any
provision of the Company’s memorandum of association or
articles of association that is or could reasonably be expected to
become applicable to the Investors as a result of the transactions
contemplated hereby, including without limitation, the issuance of
the Securities and the ownership, disposition or voting of the
Securities by the Investors or the exercise of any right granted to
the Investors pursuant to this Agreement or the other Transaction
Documents.
4.6 Delivery of SEC Filings;
Business . The Company has made available to the Investors
through the EDGAR system, true and complete copies of the
Company’s most recent Annual Report on Form 20-F for the
fiscal year ended December 31, 2003 (as amended prior to the date
hereof, the “20-F”), and all other reports filed by the
Company pursuant to the 1934 Act since the filing of the 20-F and
prior to the date hereof (collectively, the “SEC
Filings”). The SEC Filings are the only filings required of
the Company pursuant to the 1934 Act for such period. The Company
and its Subsidiaries are engaged in all material respects only in
the business described in the SEC Filings and the SEC Filings
contain a complete and accurate description in all material
respects of the business of the Company and its Subsidiaries, taken
as a whole.
4.7 Use of Proceeds . The net
proceeds of the sale of the Notes hereunder shall be used by the
Company for working capital and general corporate
purposes.
4.8 No Material Adverse
Change . Since December 31, 2003, except as identified and
described in the SEC Filings or as described on Schedule 4.8
, there has not been:
(i) any change in the consolidated
assets, liabilities, financial condition or operating results of
the Company from that reflected in the financial statements
included in the 20-F, except for changes in the ordinary course of
business which have not and could not reasonably be expected to
have a Material Adverse Effect, individually or in the
aggregate;
(ii) any declaration or payment of
any dividend, or any authorization or payment of any distribution,
on any of the capital stock of the Company, or any redemption or
repurchase of any securities of the Company;
(iii) any material damage,
destruction or loss, whether or not covered by insurance to any
assets or properties of the Company or its Subsidiaries;
(iv) any waiver, not in the ordinary
course of business, by the Company or any Subsidiary of a material
right or of a material debt owed to it;
(v) any satisfaction or discharge of
any Liens or payment of any obligation by the Company or a
Subsidiary, except in the ordinary course of business and which is
not material to the assets, properties, financial condition,
operating results or business of the Company and its Subsidiaries
taken as a whole (as such business is presently conducted and as it
is proposed to be conducted);
(vi) any change or amendment to the
Company’s memorandum of association or articles of
association, or material change to any material contract or
arrangement by which the Company or any Subsidiary is bound or to
which any of their respective assets or properties is
subject;
(vii) any material labor
difficulties or labor union organizing activities with respect to
employees of the Company or any Subsidiary;
(viii) any material transaction
entered into by the Company or a Subsidiary other than in the
ordinary course of business;
(ix) the loss of the services of any
key employee, or material change in the composition or duties of
the senior management of the Company or any Subsidiary;
(x) the loss or threatened loss of
any customer which has had or could reasonably be expected to have
a Material Adverse Effect; or
(xi) any other event or condition of
any character that has had or could reasonably be expected to have
a Material Adverse Effect.
4.9 SEC Filings; F-3
Eligibility .
(a) At the time of filing thereof,
the SEC Filings complied as to form in all material respects with
the requirements of the 1934 Act and did not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading.
(b) Each registration statement and
any amendment thereto filed by the Company since January 1, 2002
pursuant to the 1933 Act and the rules and regulations thereunder,
as of the date such statement or amendment became effective,
complied as to form in all material respects with the 1933 Act and
did not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
in order to make the statements made therein not misleading; and
each prospectus filed pursuant to Rule 424(b) under the 1933 Act,
as of its issue date and as of the closing of any sale of
securities pursuant thereto did not contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were
made, not misleading.
(c) The Company is eligible to use
Form F-3 to register the Registrable Securities (as such term is
defined in the Registration Rights Agreement) for sale by the
Investors as contemplated by the Registration Rights
Agreement.
4.10 No Conflict, Breach,
Violation or Default . The execution, delivery and performance
of the Transaction Documents by the Company and the issuance and
sale of the Securities will not conflict with or result in a breach
or violation of any of the terms and provisions of, or constitute a
default under (i) the Company’s memorandum of association or
articles of association, both as in effect on the date hereof (true
and complete copies of which have been made provided to the
Investors), or (ii)(a) any statute, rule, regulation or order of
any governmental agency or body or any court, domestic or foreign,
having jurisdiction over the Company, any Subsidiary or any of
their respective assets or properties, or (b) any agreement or
instrument to which the Company or any Subsidiary is a party or by
which the Company or a Subsidiary is bound or to which any of their
respective assets or properties is subject; provided, however, that
approval of the Company’s stockholders may be required for
the issuance of any Repayment Shares and shares that may be issued
pursuant to Section 7 of the Note.
4.11 Tax Matters . The
Company and each Subsidiary has timely prepared and filed all tax
returns required to have been filed by the Company or such
Subsidiary with all appropriate governmental agencies and timely
paid all taxes shown thereon or otherwise owed by it. The charges,
accruals and reserves on the books of the Company in respect of
taxes for all fiscal periods are adequate in all material respects,
and there are no material unpaid assessments against the Company or
any Subsidiary nor, to the Company’s Knowledge, any basis for
the assessment of any additional taxes, penalties or interest for
any fiscal period or audits by any
federal, state or local taxing authority except
for any assessment which is not material to the Company and its
Subsidiaries, taken as a whole. All taxes and other assessments and
levies that the Company or any Subsidiary is required to withhold
or to collect for payment have been duly withheld and collected and
paid to the proper governmental entity or third party when due.
There are no tax Liens or claims pending or, to the Company’s
Knowledge, threatened against the Company or any Subsidiary or any
of their respective assets or property. There are no outstanding
tax sharing agreements or other such arrangements between the
Company and any Subsidiary or other corporation or
entity.
4.12 Title to Properties .
Except as disclosed in the SEC Filings, the Company and each
Subsidiary has good and marketable title to all real properties and
all other properties and assets owned by it, in each case free from
Liens, other than Permitted Liens and Liens in connection with the
Senior Debt, and defects that would materially affect the value
thereof or materially interfere with the use made or currently
planned to be made thereof by them; and except as disclosed in the
SEC Filings, the Company and each Subsidiary holds any leased real
or personal property under valid and enforceable leases with no
exceptions that would materially interfere with the use made or
currently planned to be made thereof by them.
4.13 Certificates, Authorities
and Permits . The Company and each Subsidiary possess adequate
certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the business
now operated by it, and neither the Company nor any Subsidiary has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit that, if
determined adversely to the Company or such Subsidiary, could
reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.
4.14 No Labor Disputes . No
material labor dispute with the employees of the Company or any
Subsidiary exists or, to the Company’s Knowledge, is
imminent.
4.15 Intellectual Property
.
(a) No Intellectual Property of the
Company or its Subsidiaries which is necessary for the conduct of
Company’s and each of its Subsidiaries’ respective
businesses as currently conducted or as currently proposed to be
conducted has been or is now involved in any cancellation, dispute
or litigation, and, to the Company’s Knowledge, no such
action is threatened. Neither the Company nor its Subsidiaries owns
any right, title and interest in any patent or patent
application.
(b) All of the licenses and
sublicenses and consent, royalty or other agreements concerning
Intellectual Property which are necessary for the conduct of the
Company’s and each of its Subsidiaries’ respective
businesses as currently conducted or as currently proposed to be
conducted to which the Company or any Subsidiary is a party or by
which any of their assets are bound (other than generally
commercially available, non-custom, off-the-shelf software
application programs having a retail acquisition price of less than
$10,000 per license) (collectively, “License
Agreements”) are valid and binding obligations of the Company
or its Subsidiaries that are parties thereto and, to the
Company’s Knowledge, the other
parties thereto, enforceable in accordance with
their terms, except to the extent that enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws affecting the
enforcement of creditors’ rights generally, and there exists
no event or condition which will result in a material violation or
breach of or constitute (with or without due notice or lapse of
time or both) a default by the Company or any of its Subsidiaries
under any such License Agreement.
(c) The Company and its Subsidiaries
own or have the valid right to use all of the Intellectual Property
that is necessary for the conduct of the Company’s and each
of its Subsidiaries’ respective businesses as currently
conducted and for the ownership, maintenance and operation of the
Company’s and its Subsidiaries’ properties and assets,
free and clear of all Liens (other than Permitted Liens and Liens
in connection with the Senior Debt), adverse claims or obligations
to license all such owned Intellectual Property and Confidential
Information, other than licenses entered into in the ordinary
course of the Company’s and its Subsidiaries’
businesses. The Company and its Subsidiaries have a valid and
enforceable right to use all third party Intellectual Property and
Confidential Information used or held for use in the respective
businesses of the Company and its Subsidiaries.
(d) To the Company’s
Knowledge, the conduct of the Company’s and its
Subsidiaries’ businesses as currently conducted does not
infringe or otherwise impair or conflict with (collectively,
“Infringe”) any Intellectual Property rights of any
third party or any confidentiality obligation owed to a third
party, and, to the Company’s Knowledge, the Intellectual
Property and Confidential Information of the Company and its
Subsidiaries which are necessary for the conduct of Company’s
and each of its Subsidiaries’ respective businesses as
currently conducted are not being Infringed by any third party.
There is no litigation or order pending or outstanding or, to the
Company’s Knowledge, threatened or imminent, that seeks to
limit or challenge or that concerns the ownership, use, validity or
enforceability of any Intellectual Property or Confidential
Information of the Company and its Subsidiaries and the
Company’s and its Subsidiaries’ use of any Intellectual
Property or Confidential Information owned by a third party, and,
to the Company’s Knowledge, there is no valid basis for the
same.
(e) The consummation of the
transactions contemplated hereby and by the other Transaction
Documents will not result in the alteration, loss, impairment of or
restriction on the Company’s or any of its
Subsidiaries’ ownership or right to use any of the
Intellectual Property or Confidential Information which is
necessary for the conduct of Company’s and each of its
Subsidiaries’ respective businesses as currently conducted or
as currently proposed to be conducted.
(f) The Company and its Subsidiaries
have taken reasonable steps to protect the Company’s and its
Subsidiaries’ rights in their Intellectual Property and
Confidential Information. Each employee, consultant and contractor
who has had access to Confidential Information which is necessary
for the conduct of Company’s and each of its
Subsidiaries’ respective businesses as currently conducted or
as currently proposed to be conducted has executed an agreement to
maintain the confidentiality of such Confidential Information and
has executed appropriate agreements that are substantially
consistent with the Company’s standard forms thereof. Except
under confidentiality obligations, there has been no material
disclosure of any of the Company’s or its Subsidiaries’
Confidential Information to any third party.
4.16 Environmental Matters .
Neither the Company nor any Subsidiary is in violation of any
statute, rule, regulation, decision or order of any governmental
agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or
relating to the protection or restoration of the environment or
human exposure to hazardous or toxic substances (collectively,
“Environmental Laws”), owns or operates any real
property contaminated with any substance that is subject to any
Environmental Laws, is liable for any off-site disposal or
contamination pursuant to any Environmental Laws, and is subject to
any claim relating to any Environmental Laws, which violation,
contamination, liability or claim has had or could reasonably be
expected to have a Material Adverse Effect, individually or in the
aggregate; and there is no pending or, to the Company’s
Knowledge, threatened investigation that might lead to such a
claim.
4.17 Litigation . Except as
described on Schedule 4.17 , there are no pending actions,
suits or proceedings against or affecting the Company, its
Subsidiaries or any of its or their properties; and to the
Company’s Knowledge, no such actions, suits or proceedings
are threatened or contemplated.
4.18 Financial Statements .
The financial statements included in each SEC Filing present
fairly, in all material respects, the consolidated financial
position of the Company as of the dates shown and its consolidated
results of operations and cash flows for the periods shown, and
such financial statements have been prepared in conformity with
United States generally accepted accounting principles applied on a
consistent basis (“GAAP”) (except as may be disclosed
therein or in the notes thereto, and, in the case of quarterly
financial statements, as permitted by Form 6-K under the 1934 Act).
Except as set forth in the financial statements of the Company
included in the SEC Filings filed prior to the date hereof or as
described on Schedule 4.18 , neither the Company nor any of
its Subsidiaries has incurred any liabilities, contingent or
otherwise, except those incurred in the ordinary course of
business, consistent (as to amount and nature) with past practices
since the date of such financial statements, none of which,
individually or in the aggregate, have had or could reasonably be
expected to have a Material Adverse Effect.
4.19 Insurance Coverage . The
Company and each Subsidiary maintains in full force and effect
insurance coverage that is customary for comparably situated
companies for the business being conducted and properties owned or
leased by the Company and each Subsidiary, and the Company
reasonably believes such insurance coverage to be adequate against
all liabilities, claims and risks against which it is customary for
comparably situated companies to insure.
4.20 Compliance with Nasdaq
Continued Listing Requirements . Except as described in
Schedule 4.20 , the Company is in compliance with applicable
Nasdaq continued listing requirements. There are no proceedings
pending or, to the Company’s Knowledge, threatened against
the Company relating to the continued listing of the
Company’s Ordinary Shares on Nasdaq and the Company has not
received any notice of, nor to the Company’s
Knowledge is there any basis for, the delisting
of the Ordinary Shares from Nasdaq. The issuance of the Securities,
other than the Repayment Shares and other shares that may be issued
in connection with Section 7 of the Note, as contemplated hereby
does not and will not require approval of the Company’s
stockholders pursuant to Nasdaq Marketplace Rule
4350(i).
4.21 Brokers and Finders . No
Person will have, as a result of the transactions contemplated by
the Transaction Documents, any valid right, interest or claim
against or upon the Company, any Subsidiary or an Investor for any
commission, fee or other compensation pursuant to any agreement,
arrangement or understanding entered into by or on behalf of the
Company.
4.22 No Directed Selling Efforts
or General Solicitation . Neither the Company nor any Person
acting on its behalf has conducted any general solicitation or
general advertising (as those terms are used in Regulation D) in
connection with the offer or sale of any of the
Securities.
4.23 No Integrated Offering .
Neither the Company nor any of its Affiliates, nor any Person
acting on its or their behalf has, directly or indirectly, made any
offers or sales of any Company security or solicited any offers to
buy any security, under circumstances that would adversely affect
reliance by the Company on Section 4(2) for the exemption from
registration for the transactions contemplated hereby or would
require registration of the Securities under the 1933
Act.
4.24 Private Placement . The
offer and sale of the Securities to the Investors as contemplated
hereby is exempt from the registration requirements of the 1933
Act.
4.25 Questionable Payments
. Neither the Company nor any of its Subsidiaries
nor, to the Company’s Knowledge, any of their respective
current or former stockholders, directors, officers, employees,
agents or other Persons acting on behalf of the Company or any
Subsidiary, has on behalf of the Company or any Subsidiary or in
connection with their respective businesses: (a) used any corporate
funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (b) made any
direct or indirect unlawful payments to any governmental officials
or employees from corporate funds; (c) established or maintained
any unlawful or unrecorded fund of corporate monies or other
assets; (d) made any false or fictitious entries on the books and
records of the Company or any Subsidiary; or (e) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other
unlawful payment of any nature.
4.26 Transactions with
Affiliates . Except as disclosed in the SEC Filings, none of
the officers or directors of the Company and, to the
Company’s Knowledge, none of the employees of the Company is
presently a party to any transaction with the Company or any
Subsidiary (other than as holders of stock options and/or warrants,
and for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or
from any officer, director or such employee or, to the
Company’s Knowledge, any entity in which any officer,
director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.
4.27 Internal Controls . The
Company is in material compliance with the provisions of the
Sarbanes-Oxley Act of 2002 currently applicable to the Company. The
Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. Since
the date of the 20-F, there have been no significant changes in the
Company’s internal controls (as such term is defined in Item
307(b) of Regulation S-K) or, to the Company’s Knowledge, in
other factors that could significantly affect the Company’s
internal controls. The Company maintains and will continue to
maintain a standard system of accounting established and
administered in accordance with GAAP and the applicable
requirements of the 1934 Act.
4.28 Disclosures . Neither
the Company nor any Person acting on its behalf has provided the
Investors or their agents or counsel with any information that
constitutes or might constitute material, non-public information.
The written materials delivered to the Investors in connection with
the transactions contemplated by the Transaction Documents do not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made,
not misleading.
5. Representations and Warranties
of the Investors . Each of the Investors hereby severally, and
not jointly, represents and warrants to the Company
that:
5.1 Organization and
Existence . Such Investor is a validly existing corporation,
limited partnership or limited liability company and has all
requisite corporate, partnership or limited liability company power
and authority to invest in the Securities pursuant to this
Agreement.
5.2 Authorization . The
execution, delivery and performance by such Investor of the
Transaction Documents to which such Investor is a party have been
duly authorized and will each constitute the valid and legally
binding obligation of such Investor, enforceable against such
Investor in accordance with their respective terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability, relating to
or affecting creditors’ rights generally.
5.3 Purchase Entirely for Own
Account . The Securities to be received by such Investor
hereunder will be acquired for such Investor’s own account,
not as nominee or agent, and not with a view to the resale or
distribution of any part thereof in violation of the 1933 Act, and
such Investor has no present intention of selling, granting any
participation in, or
otherwise distributing the same in violation of
the 1933 Act without prejudice, however, to such Investor’s
right at all times to sell or otherwise dispose of all or any part
of such Securities in compliance with applicable federal and state
securities laws . Nothing contained herein shall be deemed a
representation or warranty by such Investor to hold the Securities
for any period of time. Such Investor is not a broker-dealer
registered with the SEC under the 1934 Act or an entity engaged in
a business that would require it to be so registered.
5.4 Investment Experience .
Such Investor acknowledges that it can bear the economic risk and
complete loss of its investment in the Securities and has such
knowledge and experience in financial or business matters that it
is capable of evaluating the merits and risks of the investment
contemplated hereby.
5.5 Disclosure of Information
. Such Investor has had an opportunity to receive all information
related to the Company requested by it and to ask questions of and
receive answers from the Company regarding the Company, its
business and the terms and conditions of the offering of the
Securities. Such Investor acknowledges receipt of copies of the SEC
Filings. Neither such inquiries nor any other due diligence
investigation conducted by such Investor shall modify, amend or
affect such Investor’s right to rely on the Company’s
representations and warranties contained in this
Agreement.
5.6 Restricted Securities .
Such Investor understands that the Securities are characterized as
“restricted securities” under the U.S. federal
securities laws inasmuch as they are being acquired from the
Company in a transaction not involving a public offering and that
under such laws and applicable regulations such securities may be
resold without registration under the 1933 Act only in certain
limited circumstances.
5.7 Legends . It is
understood that, except as provided below, certificates evidencing
the Securities may bear the following or any similar
legend:
(a) “The securities
represented hereby may not be transferred unless (i) such
securities have been registered for sale pursuant to the Securities
Act of 1933, as amended, (ii) such securities may be sold pursuant
to Rule 144(k), or (iii) the Company has received an opinion of
counsel reasonably satisfactory to it that such transfer may
lawfully be made without registration under the Securities Act of
1933 or qualification under applicable state securities
laws.”
(b) If required by the authorities
of any state in connection with the issuance of sale of the
Securities, the legend required by such state authority.
5.8 Accredited Investor .
Such Investor is an accredited investor as defined in Rule 501(a)
of Regulation D, as amended, under the 1933 Act.
5.9 No General Solicitation .
Such Investor did not learn of the investment in the Securities as
a result of any public advertising or general
solicitation.
5.10 Brokers and Finders . No
Person will have, as a result of the transactions contemplated by
the Transaction Documents, any valid right, interest or claim
against or upon the Company, any Subsidiary or an Investor for any
commission, fee or other compensation pursuant to any agreement,
arrangement or understanding entered into by or on behalf of such
Investor.
6. Conditions to Closing
.
6.1 Conditions to the
Investors’ Obligations . The obligation of each Investor
to purchase the Notes at the Closing is subject to the fulfillment
to such Investor’s satisfaction, on or prior to the Closing
Date, of the following conditions, any of which may be waived by
such Investor (as to itself only):
(a) The representations and
warranties made by the Company in Section 4 hereof qualified as to
materiality shall be true and correct at all times prior to and on
the Closing Date, except to the extent any such representation or
warranty expressly speaks as of an earlier date, in which case such
representation or warranty shall be true and correct as of such
earlier date, and, the representations and warranties made by the
Company in Section 4 hereof not qualified as to materiality shall
be true and correct in all material respects at all times prior to
and on the Closing Date, except to the extent any such
representation or warranty expressly speaks as of an earlier date,
in which case such representation or warranty shall be true and
correct in all material respects as of such earlier date. The
Company shall have performed in all material respects all
obligations and conditions herein required to be performed or
observed by it on or prior to the Closing Date.
(b) The Company shall have obtained
any and all consents, permits, approvals, registrations and waivers
necessary or appropriate for consummation of the purchase and sale
of the Securities and the consummation of the other transactions
contemplated by the Transaction Documents, all of which shall be in
full force and effect (subject only to the approval of the
Company’s stockholders which may or may not be required for
the issuance of the Repayment Shares and shares that may be issued
pursuant to Section 7 of the Note).
(c) The Company shall have executed
and delivered the Registration Rights Agreement.
(d) The Company shall notify Nasdaq
of the possible issuance of the Company’s shares to the
Investor pursuant to the Conversion Price as per Section 6 of the
Note, for inclusion in The Nasdaq SmallCap Market upon official
notice of issuance.
(e) No judgment, writ, order,
injunction, award or decree of or by any court, or judge, justice
or magistrate, including any bankruptcy court or judge, or any
order of or by any governmental authority, shall have been issued,
and no action or proceeding shall have been instituted by any
governmental authority, enjoining or preventing the consummation of
the transactions contemplated hereby or in the other Transaction
Documents.
(f) The Company shall have delivered
a Certificate, executed on behalf of the Company by its Chief
Executive Officer or its Chief Financial Officer, dated as of the
Closing Date, certifying to the fulfillment of the conditions
specified in subsections (a), (b), (d), (e) and (i) of this Section
6.1.
(g) The Company shall have delivered
a Certificate, executed on behalf of the Company by its Secretary,
dated as of the Closing Date, certifying the resolutions adopted by
the Board of Directors of the Company approving the transactions
contemplated by this Agreement and the other Transaction Documents
and the issuance of the Securities, certifying the current versions
of the memorandum of association or articles of association of the
Company and certifying as to the signatures and authority of
persons signing the Transaction Documents and related documents on
behalf of the Company.
(h) The Investors shall have
received an opinion from the Company’s counsel, dated as of
the Closing Date, to the effect set forth in Exhibit C
attached hereto.
(i) No stop order or suspension of
trading shall have been imposed by Nasdaq, the SEC or any other
governmental or regulatory body with respect to public trading in
the Ordinary Shares.
6.2 Conditions to Obligations of
the Company . The Company’s obligation to sell and issue
the Notes at the Closing is subject to the fulfillment to the
satisfaction of the Company on or prior to the Closing Date of the
following conditions, any of which may be waived by the
Company:
(a) The representations and
warranties made by the Investors in Section 5 hereof, other than
the representations and warranties contained in Sections 5.3, 5.4,
5.5, 5.6, 5.7, 5.8 and 5.9 (the “Investment
Representations”), shall be true and correct in all material
respects when made, and shall be true and correct in all material
respects on the Closing Date with the same force and effect as if
they had been made on and as of said date. The Investment
Representations shall be true and correct in all respects when
made, and shall be true and correct in all respects on the Closing
Date with the same force and effect as if they had been made on and
as of said date. The Investors shall have performed in all material
respects all obligations and conditions herein required to be
performed or observed by them on or prior to the Closing
Date.
(b) The Investors shall have
executed and delivered the Registration Rights
Agreement.
(c) The Investors shall have
delivered the Purchase Price to the Company.
(d) The Company shall have obtained
any and all consents, permits, approvals, registrations and waivers
necessary or appropriate for consummation of the purchase and sale
of the Securities and the consummation of the other transactions
contemplated by the Transaction Documents, all of which shall be in
full force and effect.
(e) No judgment, writ, order,
injunction, award or decree of or by any court, or judge, justice
or magistrate, including any bankruptcy court or judge, or any
order of or by any governmental authority, shall have been issued,
and no action or proceeding shall have been instituted by any
governmental authority, enjoining or preventing the consummation of
the transactions contemplated hereby or in the other Transaction
Documents.
6.3 Termination of Obligations to
Effect Closing; Effects .
(a) The obligations of the Company,
on the one hand, and the Investors, on the other hand, to effect
the Closing shall terminate as follows:
(i) Upon the mutual written consent
of the Company and the Investors;
(ii) By the Company if any of the
conditions set forth in Section 6.2 shall have become incapable of
fulfillment, and shall not have been waived by the
Company;
(iii) By an Investor (with respect
to itself only) if any of the conditions set forth in Section 6.1
shall have become incapable of fulfillment, and shall not have been
waived by the Investor; or
(iv) By either the Company or any
Investor (with respect to itself only) if the Closing has not
occurred on or prior to July 30, 2004;
provided, however, that, except in the case of
clause (i) above, the party seeking to terminate its obligation to
effect the Closing shall not then be in breach of any of its
representations, warranties, covenants or agreements contained in
this Agreement or the other Transaction Documents if such breach
has resulted in the circumstances giving rise to such party’s
seeking to terminate its obligation to effect the
Closing.
(b) In the event of termination by
the Company or any Investor of its obligations to effect the
Closing pursuant to this Section 6.3, written notice thereof shall
forthwith be given to the other Investors and the other Investors
shall have the right to terminate their obligations to effect the
Closing upon written notice to the Company and the other Investors.
Nothing in this Section 6.3 shall be deemed to release any party
from any liability for any breach by such party of the terms and
provisions of this Agreement or the other Transaction Documents or
to impair the right of any party to compel specific performance by
any other party of its obligations under this Agreement or the
other Transaction Documents.
7. Covenants and Agreements of
the Company .
7.1 Reservation of Ordinary
Shares . The Company shall at all times reserve and keep
available out of its authorized but unissued Ordinary Shares,
solely for the purpose of providing for the conversion of the
Notes, such number of Ordinary Shares as shall from time to time
equal the number of shares sufficient to permit the conversion of
the Notes issued pursuant to this Agreement in accordance with
their respective terms.
7.2 [Intentionally
Omitted]
7.3 No Conflicting Agreements
. The Company will not take any action, enter into any agreement or
make any commitment that would conflict or interfere in any
material respect with the Company’s obligations to the
Investors under the Transaction Documents.
7.4 [Intentionally
Omitted]
7.5 [Intentionally
Omitted]
7.6 Listing of Underlying Shares
and Related Matters . Prior to the Closing Date, the Company
shall take all necessary action to cause the Conversion Shares to
be listed on the Nasdaq SmallCap Market and prior to the issuance
thereof, the Company shall take all necessary action to cause the
Repayment Shares and Payment Shares to be listed on the Nasdaq
SmallCap Market. Further, if the Company applies to have its
Ordinary Shares or other securities traded on any other principal
stock exchange or market, it shall include in such application the
Conversion Shares and the Payment Shares and will take such other
action as is necessary to cause such Ordinary Shares to be so
listed. Prior to the issuance thereof, the Company shall take all
necessary action to cause the Repayment Shares to be so listed. The
Company will use commercially reasonable efforts to continue the
listing and trading of its Ordinary Shares on the Nasdaq SmallCap
Market and, in accordance, therewith, will use commercially
reasonable efforts to comply in all respects with the
Company’s reporting, filing and other obligations under the
bylaws or rules of such market or exchange, as
applicable.
7.7 Termination of Covenants
. The provisions of Sections 7.2 through 7.5 shall terminate and be
of no further force and effect on the date on which the
Company’s obligations under the Registration Rights Agreement
to register or maintain the effectiveness of any registration
covering the Registrable Securities (as such term is defined in the
Registration Rights Agreement) shall terminate.
7.8 Removal of Legends . Upon
the earlier of (i) registration for resale pursuant to the
Registration Rights Agreement and receipt by the Company of the
Investor’s written confirmation that such Securities will not
be disposed of except in compliance with the prospectus delivery
requirements of the 1933 Act or (ii) Rule 144(k) becoming available
the Company shall, upon an Investor’s written request,
promptly cause certificates evidencing the Investor’s
Securities to be replaced with certificates which do not bear such
restrictive legends, and Conversion Shares subsequently issued upon
due conversion of the Notes and Payment Shares subsequently issued
under the terms of the Notes shall not bear such restrictive
legends provided the provisions of either clause (i) or clause (ii)
above, as applicable, are satisfied with respect to such Conversion
Shares and Payment Shares. When the Company is required to cause
unlegended certificates to replace previously issued legended
certificates, if unlegended certificates are not delivered to an
Investor within seven (7) Business Days of submission by that
Investor of legended certificate(s) to the Company’s transfer
agent together with a representation
letter in customary form, the Company shall be
liable to the Investor for liquidated damages in an amount equal to
1% of the aggregate purchase price of the Securities evidenced by
such certificate(s) for each thirty (30) day period (or portion
thereof, on a pro-rata basis) beyond such seven (7) Business Day
that the unlegended certificates have not been so delivered. For
avoidance of doubt and as an example only, in the event that the
Company is three days late in causing an unlegended US$100,000
certificate to be delivered to Investor after the lapse of the
initial seven (7) Business Day, the Company would be liable for
liquidated damages in the amount of US$100.00.
7.9 Negative Pledge . So long
as any amounts are outstanding under the Notes, the Company shall
not, and shall cause each of its Subsidiaries not to, create,
incur, assume or suffer to exist any Lien upon any of its property,
whether now owned or hereafter acquired other than (i) Liens
securing the Senior Debt, (ii) Permitted Liens and (iii)
indebtedness for borrowed money which is subordinated in right of
payment to the Notes on terms reasonably satisfactory to the
Investors.
8. Survival and
Indemnification .
8.1 Survival . The
representations, warranties, covenants and agreements contained in
this Agreement shall survive the Closing of the transactions
contemplated by this Agreement for a period of two
years.
8.2 Indemnification . The
Company agrees to indemnify and hold harmless each Investor and its
Affiliates and their respective directors, officers, employees and
agents from and against any and all losses, claims, damages,
liabilities and expenses (including without limitation reasonable
attorney fees and disbursements and other expenses incurred in
connection with investigating, preparing or defending any action,
claim or proceeding, pending or threatened and the costs of
enforcement thereof) (collectively, “Losses”) to which
such Person may become subject as a result of any breach of
representation, warranty, covenant or agreement made by or to be
performed on the part of the Company under the Transaction
Documents, and will reimburse any such Person for all such amounts
as they are incurred by such Person.
8.3 Conduct of Indemnification
Proceedings . Promptly after receipt by any Person (the
“ Indemnified Person”) of notice of any demand,
claim or circumstances which would or might give rise to a claim or
the commencement of any action, proceeding or investigation in
respect of which indemnity may be sought pursuant to Section 8.2,
such Indemnified Person shall promptly notify the Company in
writing and the Company shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such
Indemnified Person, and shall assume the payment of all fees and
expenses; provided , however , that the failure of
any Indemnified Person so to notify the Company shall not relieve
the Company of its obligations hereunder except to the extent that
the Company is materially prejudiced by such failure to notify. In
any such proceeding, any Indemnified Person shall have the right to
retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless: (i) the
Company and the Indemnified Person shall have mutually agreed to
the retention of such counsel; or (ii) in the reasonable judgment
of counsel to such Indemnified Person representation of both
parties by the same counsel would be
inappropriate due to actual or potential
differing interests between them. The Company shall not be liable
for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, but if
settled with such consent, or if there be a final judgment for the
plaintiff, the Company shall indemnify and hold harmless such
Indemnified Person from and against any loss or liability (to the
extent stated above) by reason of such settlement or judgment.
Without the prior written consent of the Indemnified Person, which
consent shall not be unreasonably withheld, the Company shall not
effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional
release of such Indemnified Person from all liability arising out
of such proceeding.
9. Miscellaneous .
9.1 Successors and Assigns .
This Agreement may not be assigned by a party hereto without the
prior written consent of the Company or the Investors, as
applicable, provided, however, that an Investor may assign its
rights and delegate its duties hereunder in whole or in part to an
Affiliate or to a third party acquiring some or all of its
Securities in a private transaction without the prior written
consent of the Company or the other Investors, after notice duly
given by such Investor to the Company and the other Investors,
provided, that no such assignment or obligation shall affect the
obligations of such Investor hereunder. The provisions of this
Agreement shall inure to the benefit of and be binding upon the
respective permitted successors and assigns of the parties. Nothing
in this Agreement, express or implied, is intended to confer upon
any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
9.2 Counterparts; Faxes .
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement may also be
executed via facsimile, which shall be deemed an
original.
9.3 Titles and Subtitles .
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or
interpreting this Agreement.
9.4 Notices . Unless
otherwise provided, any notice required or permitted under this
Agreement shall be given in writing and shall be deemed effectively
given as hereinafter described (i) if given by personal delivery,
then such notice shall be deemed given upon such delivery, (ii) if
given by telex or telecopier, then such notice shall be deemed
given upon receipt of confirmation of complete transmittal, (iii)
if given by mail, then such notice shall be deemed given upon the
earlier of (A) receipt of such notice by the recipient or (B) three
days after such notice is deposited in first class mail, postage
prepaid, and (iv) if given by an internationally recognized
overnight air courier, then such notice shall be deemed given one
business day after delivery to such carrier. All notices shall be
addressed to the party to be
notified at the address as follows, or at such
other address as such party may designate by ten days’
advance written notice to the other party:
If to the Company:
ViryaNet Ltd.
8 HaMarpe Street
Har Hotzvim
P.O. Box 45041
Jerusalem 91450
Israel
Attention:
Fax:
With a copy to:
Meitar Liquornik Geva & Leshem
Brandwein
16 Abba Hillel Silver Rd.
Ramat Gan 52506, Israel
Attention: Raanan Lerner,
Adv.
Fax:
If to the Investors:
to the addresses set forth on the signature
pages hereto.
9.5 Expenses . The parties
hereto shall pay their own costs and expenses in connection
herewith, except that the Company shall pay the reasonable fees and
expenses of counsel to the Investors not to exceed US$35,000 in the
aggregate. Such expenses shall be paid not later than the Closing.
The Company shall reimburse the Investors upon demand for all
reasonable out-of-pocket expenses incurred by the Investors,
including without limitation reimbursement of attorneys’ fees
and disbursements, in connection with any amendment, modification
or waiver of this Agreement or the other Transaction Documents
requested by the Company. In the event that legal proceedings are
commenced by any party to this Agreement against another party to
this Agreement in connection with this Agreement or the other
Transaction Documents, the party or parties which do not prevail in
such proceedings shall severally, but not jointly, pay their pro
rata share of the reasonable attorneys’ fees and other
reasonable out-of-pocket costs and expenses incurred by the
prevailing party in such proceedings.
9.6 Amendments and Waivers .
Any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively),
only with the written consent of the Company and the Investors. Any
amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any Securities purchased under
this Agreement at the time outstanding, each future holder of all
such Securities, and the Company.
9.7 Publicity . Except as set
forth below, no public release or announcement concerning the
transactions contemplated hereby shall be issued by the Company or
the Investors without the prior consent of the Company (in the case
of a release or announcement by the Investors) or the Investors (in
the case of a release or announcement by the Company) (which
consents shall not
