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Exhibit 10.28
PREFERRED SHARE PURCHASE AGREEMENT
This Preferred Share Purchase Agreement ("Agreement") is made and
entered into as of the _____ day of June, 1999, by and among SOFTWATCH LTD., an
Israeli company (the "Seller" or the "Company"), MEDSCAPE, INC., a Delaware
corporation ("Medscape"), and the persons and entities set forth on Schedule 1
attached hereto (collectively, the "Purchasers"), if any.
In consideration of the mutual promises and covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. BASIC TRANSACTION
1.1 Authorization of Shares. Prior to the Closing (as defined below)
Seller shall have authorized the issuance and sale to the Purchasers of up to
1,085,521 Series A Preferred Shares (the "Shares" or the "Preferred Shares"),
nominal value NIS 0.01 per share, having all of the powers, designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions of such preferences and rights set
forth in the Restated Articles of Association of Seller (the "Restated
Articles") attached hereto as Exhibit A, for a total purchase price of up to
$3,130,750 ($2.8841 per Preferred Share) (the "Purchase Price").
1.2 Issuance of the Shares. Subject to the terms and conditions hereof
and in reliance upon the representations, warranties, covenants and agreements
contained herein, Seller will issue and allot the Shares to the Purchasers, and
the Purchasers will purchase the Shares from Seller, in each case at the Closing
(as hereinafter defined). Each Purchaser shall purchase the number of Shares and
pay the portion of the Purchase Price indicated opposite its name in Schedule 1.
2. CLOSING
2.1 Time and Place. The closing of the transaction provided for in
Section 1.2 above (the "Closing") shall be held three (3) business days after
fulfillment or waiver of all of the closing conditions set forth in Section 2.3
(the "Closing Date") at the offices of Xxxxx Xxxxx & Co., 3 Xxxxxx Xxxxxx
Street, Tel Aviv, or at such other location as the parties might otherwise
mutually agree to.
2.2 Closing Deliveries.
2.2.1 Seller shall deliver the following to the Purchasers at
the Closing:
2.2.1.1 A copy of the Restated Articles duly stamped
to indicate
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filing with the Registrar of Companies;
2.2.1.2 A counterpart copy of the Registration Rights
Agreement, by and between Seller and Medscape (the "Registration Rights
Agreement"), substantially in the form of Exhibit E attached hereto, duly
executed on behalf of the Seller and Medscape and any other parties thereto, if
any.;
2.2.1.3 Certificate(s) representing the Shares to be
issued at the Closing duly executed on behalf of Seller and registered in the
name of each Purchaser for the number of shares set forth in Schedule 1;
2.2.1.4 An undertaking to the Seller and Medscape
(the "No Sale Undertaking"), substantially in the form attached hereto as
Exhibit B, duly executed by Xxxx Xxxxxx and Asaf Evenheim;
2.2.1.5 A counterpart copy of the License and Web
Site Development Agreement, by and between Medscape and Seller (the "License
Agreement"), attached hereto as Exhibit C, duly executed on behalf of Seller;
and
2.2.1.6 An opinion from Goldfarb, Levy, Eran & Co.,
legal counsel to Seller, addressed to the Purchasers, dated as of the Closing
Date, in the form of Exhibit D attached hereto.
2.2.2 The Purchasers shall deliver the following to Seller at
the Closing:
2.2.2.1 The Purchase Price set forth in Section 1.1
by wire transfer in immediately available funds to an account specified by
Seller at least two (2) business days prior to the date of Closing, with each
Purchaser being responsible for its respective portion of the Purchase Price;
2.2.2.2 A counterpart copy of the Registration Rights
Agreement duly executed on behalf of Purchasers; and
2.2.2.3 A counterpart copy of the License Agreement
duly executed on behalf of Medscape.
2.2.3 The deliveries referred to in clauses (a) and (b) of
this Section 2.2 shall be deemed to occur simultaneously with one another, and
are conditions precedent to the Closing of this Agreement.
2.2.4 The Seller hereby agrees, undertakes and covenants that
it shall (i) upon the Closing record the issuance of the Shares in the name of
the Purchasers on the Seller's Registrar of Members, (ii) upon the Closing
provide the Purchasers and their legal counsel with a
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copy of the decision of the Seller's Board of Directors approving the Share
issuance, and (iii) promptly after the Closing, file a copy of the report of
such share issuance with the Registrar of Companies.
2.3 Purchasers' Conditions to Closing. The Purchasers' obligation to
consummate the purchase of the Shares hereunder is subject to the fulfillment,
prior to or at the Closing, of each of the following conditions (any or all of
which may be waived by Medscape on behalf of the Purchasers):
2.3.1 all representations and warranties of the Seller
contained herein to the Purchasers shall be true and correct at the time of the
Closing as though made again at that time, as confirmed by a "bring down
certificate" substantially in the form attached hereto as Schedule 2.3.1;
2.3.2 the Seller shall have performed and complied in all
respects with all obligations and covenants required by this Agreement to be
performed or complied with by it prior to or at the Closing, as confirmed by the
bring down certificate;
2.3.3 by resolution substantially in the form attached hereto
as Schedule 2.3.3, the Board of Directors shall have (i) approved the Seller's
execution of this Agreement; and (ii) issued the Shares to the Purchasers
against payment of the Purchase Price;
2.3.4 by resolution substantially in the form attached hereto
as Schedule 2.3.4, the shareholders of the Seller shall have replaced the
Articles of Association of the Seller with the Restated Articles;
2.3.5 the Seller shall have received all necessary
authorizations, approvals, permits and consents if any, of any governmental
authority or regulatory body of any state, person or entity that are required by
the Seller in connection with the issuance of the Shares as contemplated by this
Agreement including all necessary approvals of the Investment Center and Office
of the Chief Scientist of the Israeli Ministry of Industry and Trade;
2.3.6 the Seller shall have provided the Purchasers with
copies of letters executed by all shareholders waiving all rights of pre-emption
with respect to the issuance of the Shares or shall include a representation to
such effect in the bring down certificate;
2.3.7 there shall have been no material adverse change in the
financial, business or other condition of the Seller;
2.3.8 the Seller shall have delivered to the Purchasers the
opinion and other documents referred to in Section 2.2.1 above;
2.3.9 all loans advanced to the Company by Xxxx Xxxxxx and/or
Xxxxxxx
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Xxxxxxx Xxxxx shall be evidenced by agreements executed in writing, in a form
reasonably acceptable to Medscape; and
2.3.10 Xxxx Xxxxxxxxx, Xxxx Xxxxxxxx, Xxxx Xxxxxxx and
Healthcourt 2% Partnership shall have provided the Company with a letter
substantially in the form of Schedule 2.3.10 attached hereto.
3. REPRESENTATIONS AND WARRANTIES OF SELLER.
In order to induce the Purchasers to enter into this Agreement and
purchase the Shares, Seller represents and warrants to the Purchasers as
follows:
3.1 Organization and Corporate Power. Seller is a company duly
organized and validly existing under the laws of the State of Israel, with all
requisite corporate power and authority to own its properties and to conduct its
business as presently conducted and as presently proposed to be conducted.
Softwatch Inc. (the "Subsidiary") is duly organized, validly existing and in
good standing under the laws of the State of Delaware, with all requisite
corporate authority to own its properties and to conduct its business as
presently conducted and as presently proposed to be conducted. Seller is
qualified to do business and is in good standing in each jurisdiction in which
the failure to be so qualified would have a Material Adverse Effect (as defined
below). Seller has all requisite corporate power and authority to enter into
this Agreement, the Registration Rights Agreement and the License Agreement
(collectively, the "Documents") and to perform its obligations hereunder and
thereunder, including, without limitation, the issuance and allotment of the
Shares.
3.2 Due Authorization; Enforceability; No Conflicts. Prior to Closing,
Seller shall have taken all corporate and shareholder action necessary to
authorize the execution, delivery and performance by it of each of the
Documents. Assuming the due execution and delivery of each of the Documents by
the Purchasers and other parties thereto, each of the Documents shall constitute
a valid and binding obligation of Seller, enforceable against Seller in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to the
enforcement of creditors' rights generally, the availability of equitable
remedies and to general equity principles. The execution, delivery and
performance by Seller of each of the Documents and compliance by Seller with the
terms hereof and thereof will not violate, conflict with or cause an event of
default under Seller's Memorandum of Association or Articles of Association, or
any resolutions of Seller's Board of Directors or shareholders or any agreement,
instrument, judgment, order, law, rule or regulation by which Seller is bound or
to which any of Seller's properties are subject, except where such violation,
conflict or event of default would not result in a material adverse effect on
Seller's business, financial condition, results of operations or properties (a
"Material Adverse Effect"). The Shares, upon issuance in
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accordance with the terms of this Agreement, will be duly authorized, validly
issued, fully paid and nonassessable and free of any liens, claims or
encumbrances ("Encumbrances") other than the terms and provisions of the
Restated Articles and restrictions imposed by applicable Israeli, United States
and state securities laws.
3.3 Capitalization. The authorized capital stock of Seller shall
consist, immediately prior to the Closing of NIS 120,000, divided into (a)
10,914,479 Ordinary Shares, nominal value NIS 0.01 per share, of which 6,236,974
shares will be issued and outstanding immediately prior to the Closing, and (b)
1,085,521 Series A Preferred Shares, of which 1,085,521 will be outstanding upon
the issuance of the Shares to be sold to the Purchasers hereunder. All
outstanding Ordinary Shares as of the date hereof were issued and allotted by
Seller in compliance with all applicable Israeli securities laws. Except with
respect to the Shares or as set forth on Schedule 3.3 annexed hereto or in the
Restated Articles or the Share Purchase Agreement (the "1998 Agreement"), dated
as of August 21, 1998, by and between the Company and Kraft Group LLC, there are
no outstanding subscriptions, rights, options, warrants, conversion rights,
agreements or other claims for the purchase or acquisition from Seller or the
Subsidiary of any shares of their respective share capital or obligating Seller
or the Subsidiary to issue, repurchase or otherwise acquire, any shares of their
respective share capital or any securities convertible into, exercisable or
exchangeable for, or otherwise entitling the holder to acquire, any shares of
the share capital of Seller or the Subsidiary. Except as set forth in the
Restated Articles or the 1998 Agreement, no person is entitled to any preemptive
or similar rights with respect to the issuance of any share capital of Seller or
the Subsidiary. Except as set forth on Schedule 3.3, in the Restated Articles or
as contemplated by the 1998 Agreement, no person has the right to nominate or
elect one or more directors of Seller. The Preferred Shares immediately
following the Closing will represent, in the aggregate, 12.524% of the
outstanding share capital of Seller and the voting power of such issued shares
will represent, in the aggregate no less than 12.524% of the total number of
votes able to be cast on any matter by all voting securities of Seller on the
Closing Date (treating for purposes of these calculations (i) all Shares
issuable hereunder to Purchasers as if they were issued as of such date, (ii)
all securities convertible into, exchangeable or exercisable for Ordinary Shares
(collectively, "Ordinary Share Equivalents") outstanding on the date hereof as
having been converted, exchanged or exercised, and (iii) as having been issued
on the date hereof, any Ordinary Shares or Ordinary Share Equivalents issuable
pursuant to (A) any contract entered into by Seller prior to the date hereof, or
(B) any preemptive right granted by Seller prior to the date hereof).
3.4 Memorandum of Association and Articles of Association. The copies
of Seller's Memorandum of Association and Articles of Association provided to
Medscape or its representatives prior to the date hereof are true, correct and
complete copies thereof as currently in effect.
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3.5 Intentionally Omitted.
3.6 Subsidiaries. Except for the Subsidiary, Seller has no subsidiaries
and does not own of record or beneficially, and has no commitment or obligation
to acquire, any capital stock or equity interest or investment in any
corporation, partnership, limited liability company, joint venture, association,
trust or other business entity. Seller owns all of the issued and outstanding
shares of capital stock of the Subsidiary.
3.7 Taxes. All income tax returns and Value Added Tax reports
(collectively the "Tax Returns") required to be filed by the Company or the
Subsidiary on or before the date hereof, have been or will be filed with the
appropriate government agencies and tax authorities in all jurisdictions in
which such Tax Returns are required to be filed, and all tax liabilities which
are due with respect to each of the tax years for which the statue of
limitations has not barred the assessment of deficiencies for tax purposes have
been or will be fully paid and have been reflected in the Financial Statements
referred to in Section 3.14. Neither Seller nor the Subsidiary is a party to any
pending action, proceeding or, to the Seller's knowledge, investigation by any
governmental authority for the assessment or collection of taxes nor does Seller
or the Subsidiary have knowledge of any such threatened action, proceeding or
investigation. Each of Seller and the Subsidiary has withheld and paid all taxes
required to be withheld in connection with any amounts paid or owing to any
employee, creditor, independent contractor or other third party with respect to
the business of Seller or the Subsidiary.
3.8 Consents. No consent of, order or approval by, or filing with any
governmental authority is required in connection with Seller's execution,
delivery and performance of each of the Documents, including the issuance of the
Shares to Purchasers hereunder, other than the filing of the Restated Articles
with the Registrar of Companies and receipt of approval of the Office of the
Chief Scientist and the Investment Center.
3.9 Offering. Based on the representations, warranties and covenants of
the Purchasers set forth herein, and assuming due compliance by the Purchasers
with the terms of this Agreement and the other Documents in all relevant
respects, the issuance and allotment of the Shares to the Purchasers as
contemplated by this Agreement is exempt from the registration requirements of
the Securities Act of 1933, as amended (the "Securities Act"), and applicable
blue sky laws.
3.10 Certain Agreements. Other than as set forth in the Documents, in
the 1998 Agreement or in the Share Purchase and Warrant Investment Agreement
(the "1997 Agreement"), dated as of February 15, 1997, by and between the
Company and Platinum Health Ventures Limited or on Schedule 3.10, there are no
agreements to which Seller is a party pursuant to which Seller is under any
obligation to any person to register for sale under the Securities Act any of
its
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currently outstanding securities or any of its securities that may hereafter be
issued, and, except for the 1998 Agreement and as set forth on Schedule 3.10,
Seller is not a party to, and has no knowledge of, any agreements relating to
the voting of Seller's share capital.
3.11 Litigation. There is neither pending nor, to Seller's knowledge,
threatened, any action, suit, proceeding or claim, to which either Seller or the
Subsidiary is a party, or to which the properties of Seller or the Subsidiary
can reasonably be expected to be subject.
3.12 Properties. (a) The Company and the Subsidiary has no assets other
than office furniture and equipment, computer hardware (the "Assets"), and
Intellectual Property Rights (as defined and described more fully in Section
3.13 below).
(b) The Company is the sole and unconditional owner of, and
has good title to, all Assets, and such Assets are free and clear of any
mortgages, liens, pledges, charges, liens, security interests, or encumbrances
of any kind, except which may arise in the ordinary course of business and which
do not have a Material Adverse Effect.
3.13 Intellectual Property. Seller or the Subsidiary is the sole and
exclusive owner of, with all right, title and interest in and to (free and clear
of any lien) all trademarks, trademark registrations, service marks, service
xxxx registrations, trade names, company names, patents, design patents,
copyright registrations and copyrights and pending applications therefor, in
each case which are used in or required for the business of Seller or the
Subsidiary as currently being conducted (collectively, the "Intellectual
Property Rights") and has sole and exclusive rights, without being contractually
obligated to pay any compensation to any third party in respect thereof in
respect of which they are being used as of the date of this Agreement or as
otherwise stated in the description of goods and services contained in the
relevant materials relating to any Intellectual Property Rights filed with the
United States Copyright Office or the United States Patent and Trademark Office
or the Israeli equivalents thereof. Except as set forth on Schedule 3.13 and the
License Agreement, neither Seller nor the Subsidiary has granted any licenses or
other rights to the Intellectual Property Rights to any other person and no
other person has granted to Seller or the Subsidiary any licenses or other
rights to the Intellectual Property Rights. Each such license granted to Seller
and/or the Subsidiary is valid and binding on Seller or the Subsidiary, as the
case may be, and to the knowledge of Seller, the other parties thereto, and the
intellectual property used by Seller and/or the Subsidiary pursuant to such
license will be available to Seller and/or the Subsidiary on terms and
conditions after the Closing which are identical to the terms and conditions in
force prior to the Closing. Except as set forth on Schedule 3.13, there are no
interferences, oppositions, cancellations or other contested proceedings
pending, or to the knowledge of Seller threatened, in the United States
Copyright Office, the United States Patent and Trademark Office or comparable
office in the State of Israel or any foreign federal, state or local court or
before any governmental entity, relating to any registration, grant, license or
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pending application with respect to any Intellectual Property Rights and Seller
has no knowledge of any facts that could reasonably be expected to give rise to
any such interferences, oppositions, cancellations or other contested
proceeding.
Except as set forth on Schedule 3.13, (i) neither Seller nor the
Subsidiary has been sued or charged or been a defendant in any claim, suit,
action or proceeding which involves a claim of infringement of any Intellectual
Property Rights, (ii) to the knowledge of Seller, there are no other claims
threatened that either Seller or the Subsidiary is infringing any existing
patent, trademark or copyright or any basis for any such claim, without regard
to whether any such patent, trademark or copyright is ultimately found to be
valid, (iii) to the knowledge of Seller, there are no continuing infringements
by any other person or persons of the Intellectual Property Rights and (iv) to
the knowledge of Seller, the use of the Intellectual Property Rights in
connection with the business of Seller and the Subsidiary as currently being
conducted, does not infringe the patent, trademark, copyright or any other right
of any third party.
3.14 Financial Statements; Obligations. Seller has heretofore delivered
to Medscape or its representatives the following financial statements of Seller:
(i) the audited financial statements for the fiscal years ended December 31,
1998 and 1997 and (ii) the unaudited balance sheet for the fiscal quarter ended
March 31, 1999 (collectively, the "Seller Financial Statements"). The Seller
Financial Statements have been prepared from the books and records of Seller and
fairly present in all material respects the income and assets and liabilities of
Seller for the periods indicated in accordance with Israeli generally accepted
accounting principles consistently applied throughout the periods presented.
Except as reflected in the Seller Financial Statements, there are no material
loan agreements, promissory notes, conditional sale agreements, pledges,
security agreements, financing statements (with respect to the Subsidiary),
documents granting or evidencing a lien on any assets of Seller or the
Subsidiary, guarantees, assumptions of obligations for borrowed money, purchase
money indebtedness or other obligation of reimbursement of any maker of a letter
of credit (collectively, "Obligations") entered into by Seller or the
Subsidiary.
3.15 No Material Adverse Change. Since the end of the most recent
period reflected in the Seller Financial Statements, Seller has in all material
respects conducted its business in the ordinary course consistent with past
practice and there has not been any materially adverse change in the business,
assets, condition (financial or otherwise) or results of operations of Seller.
3.16 No Defaults. There is no existing default, or any event, act or
circumstance which, with the passage of time, the giving of notice or both,
would become a default, by Seller or the Subsidiary under any material contract
or agreement to which Seller or the Subsidiary is a party or by which any
material part of its assets or properties is bound. To the knowledge of Seller,
there is no existing default by any other party under any such contract or any
event, act or circumstance which, with the passage of time, the giving of notice
or both, would become a default by such
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other party under any such contract, which default could reasonably be expected
to have a Material Adverse Effect.
3.17 Compliance With Laws. Neither the Seller nor the Subsidiary is in
material violation of any applicable statutes, laws, regulations, ordinances,
rules, judgments, orders or decrees applicable thereto. Neither Seller nor the
Subsidiary has received notice of any alleged material violation of any statute,
law, regulation, ordinance, rule, judgment, order or decree from any
governmental authority applicable to Seller or the Subsidiary or any of their
respective assets or properties which has not been disposed of to its respective
satisfaction.
3.18 Absence of Undisclosed Liabilities. Except as otherwise disclosed
on any schedule hereto, neither Seller nor the Subsidiary has any material
liabilities or obligations (whether accrued, absolute, contingent, unliquidated
or otherwise, whether due or to become due) other than (i) liabilities or
obligations reserved against or otherwise disclosed in Seller Financial
Statements, (ii) liabilities or obligations arising since March 31, 1999 which
were incurred in the ordinary course of business of Seller consistent (in amount
and kind) with past practice and (iii) liabilities or obligations pursuant to
the Documents or the Subsidiary.
3.19 Related Party Transactions. Except as set forth on Schedule 3.19
hereto, no current or former shareholder, director, officer or employee of
Seller or the Subsidiary is presently, or has been directly or indirectly
through such person's affiliation with any other person or entity, a party to
any agreement or transaction with Seller or the Subsidiary, other than in
connection with any such person's duties as a shareholder, director, officer or
employee of Seller or the Subsidiary.
3.20 Disclosure. Neither this Agreement nor any certificate or written
statement furnished or made available to Purchasers pursuant to this Agreement
by or on behalf of Seller contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein and therein not misleading; provided, however, the Seller does
not guarantee that any financial projections or other future expectations
presented to the Purchasers will be achieved, but does represent that the
assumptions on which such projections were made were reasonable under the
circumstances and are, to the Company's best knowledge, reasonable on the date
hereof.
3.21 Insurance. Schedule 3.21 hereto sets forth a list of all insurance
coverage carried by Seller or the Subsidiary, the carrier and the terms and
amount of coverage.
3.22 Information Technology. Seller has provided to Medscape or its
representatives true, correct and complete copies of all internal analyses
prepared by it, if any, addressing the "Year 2000" issue. Except as set forth on
Schedule 3.22, each of Seller and the Subsidiary has the unrestricted right to
use all software associated with its databases. All computer programming
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software of the Company and the Subsidiary offered for licensing or in use on
the internet has been written and tested to be Year 2000 Compliant (as defined
below). As used in this Agreement, the term "Year 2000 Compliant" shall mean the
ability of the software to provide the following functions:
(a) Handle date information before, during and after January
1, 2000, including but not limited to accepting date input, providing date
output and performing calculations on dates or portions of dates;
(b) Function accurately in accordance with its specifications
before, during and after January 1, 2000 without any material change in
operations associated with the advent of a new century; and
(c) Respond to two digit data input in a way that resolves
ambiguity as to century in a disclosed, defined and predetermined manner.
3.23 Contracts. Schedule 3.23 contains a true and complete list of all
material contracts as of the date hereof. Except for contracts listed on
Schedule 3.23 (the "Contracts"), neither Seller nor the Subsidiary is a party to
or bound by, or derives any benefit from, any material contract which is a:
(a) contract not made in the ordinary course of business;
(b) covenant not to compete or confidentiality agreement;
(c) contract for the sale of any of the assets of Seller or
the Subsidiary (other than sales of inventory to customers in the ordinary
course of business) or the grant of any preferential rights to purchase any
assets of Seller or the Subsidiary or requiring the consent of any party to the
transfer thereof;
(d) any loan agreement, indenture, promissory note or
conditional sales agreement or any pledge, security agreement, deed of trust,
financing statement or other document granting any lien on any asset or property
of Seller or the Subsidiary;
(e) any revocable or irrevocable power of attorney to any
person for any reason;
(f) contract with or permit by or from any governmental entity
(except those as to which the failure to possess would not have a Material
Adverse Effect);
(g) contract which involves or is reasonably expected to
involve aggregate future payments, obligations or revenues in excess of Fifty
Thousand Dollars ($50,000) (whether in payment of a debt, as a result of any
guarantee or indemnification, for services or goods or
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otherwise and including any barter arrangements) or which, as of the Closing
Date, will have a remaining term exceeding one year, in each case other than
orders to purchase or sell goods or services in the ordinary course of business
consistent with past practice;
(h) any agreement with the Office of the Chief Scientist, BIRD
Foundation or Investment Center.
Except as disclosed on Schedule 3.23, each Contract is a valid and
binding obligation of Seller or the Subsidiary, as the case may be, and, to the
knowledge of Seller, the other parties thereto, enforceable in accordance with
its terms, except as such enforceability may be limited by the effect of
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
by general principles of equity, and is in full force and effect. Except as
disclosed on Schedule 3.23, neither Seller nor the Subsidiary is (with or
without the lapse of time or the giving of notice, or both) in material breach
or default under any Contract and, to the knowledge of Seller, the other parties
thereto are not (with or without the lapse of time or the giving of notice, or
both) in material breach or default under any such Contract. Neither Seller nor
the Subsidiary has, except as disclosed on Schedule 3.23, received or given any
notice of the intention of any party to terminate or to modify in any material
respect any Contract. True and complete copies of all Contracts referred to on
Schedule 3.23, together with all modifications, amendments and proposed
modifications thereto, have been previously delivered to Medscape or its
representatives.
3.24 Employees. Schedule 3.24 is a true and complete list of the names
of each individual who is employed or retained as an independent contractor or
consultant (either directly or indirectly) by Seller or the Subsidiary who is
paid a base salary plus bonus or commission, a retainer or a fee for services
rendered at an annual rate of Fifty Thousand Dollars ($50,000) or more and who
devotes all or substantially all of his or her time to the business of Seller or
the Subsidiary on the date hereof, along with his or her current job title,
compensation, and any employee benefit enjoyed which is not generally available
to employees of Seller. Neither Seller nor the Subsidiary is a party to any
agreements with labor unions or associations representing employees of Seller or
the Subsidiary. No work stoppage against Seller or the Subsidiary is pending or,
to the knowledge of Seller, threatened. Neither Seller nor the Subsidiary is
involved in or, to the knowledge of Seller, threatened with any labor dispute,
arbitration, lawsuit or administrative proceeding (other than immaterial
grievances) relating to labor matters involving the employees of Seller or the
Subsidiary (excluding workers compensation and unemployment compensation
claims). Except as otherwise disclosed in Schedule 3.24, all employees, officers
and consultants of the Company are parties to undertakings of confidentiality
and non-competition in favor of the Company.
3.25 Employee Benefit Plans and Employment Agreements. All amounts
which the
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Seller is required by law or by agreement with its employees to deduct from such
employees' salaries and/or transfer to such employees' pension, life insurance,
incapacity insurance, continuing education fund or other plans have been duly
paid into the appropriate fund or funds, and the Seller does not have any
outstanding obligation to make any such transfer or provision. There are no
agreements or arrangements (whether or not legally enforceable) for the payment
of any pensions, allowances, lump sums or other like benefits on retirement,
death or termination or during periods of sickness or disablement for the
benefit of any officer or former officer or employee or former employee of the
Seller or for the benefit of the dependents of any such person in effect as of
the date hereof.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
In order to induce Seller to enter into this Agreement and issue and
sell the Shares, each Purchaser, severally and not jointly, represents and
warrants solely with respect to itself to Seller as follows:
4.1 Organization, Good Standing and Corporate Power. Such Purchaser has
all requisite power and authority to own its properties, conduct its business,
enter into this Agreement and the other Documents and perform its obligations
hereunder and thereunder.
4.2 Due Authorization; Enforceability; No Conflicts. Such Purchaser has
taken all action necessary to authorize the execution, delivery and performance
by it of each of the Documents. Assuming the due execution and delivery of this
Agreement and the other Documents by Seller and other parties thereto, each of
the Documents constitutes a valid and binding obligation of such Purchaser,
enforceable against such Purchaser in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to the enforcement of creditors' rights generally, the
availability of equitable remedies and general equity principles. The execution,
delivery and performance by such Purchaser of each of the Documents and
compliance by such Purchaser with the terms hereof and thereof will not violate,
conflict with or cause an event of default under such Purchaser's Certificate of
Incorporation (if applicable), or any other agreement, instrument, judgment,
order, law, rule or regulation by which such Purchaser is bound or to which any
properties of such Purchaser are subject.
4.3 Consents. No consent of, order or approval by, or filing with any
governmental authority or other third party is required in connection with such
Purchaser's execution, delivery and performance of each of the Documents,
including the purchase of the Shares by such Purchaser hereunder.
4.4 Suitability as an Investor. Such Purchaser is an experienced
investor capable of evaluating the merits and risks of the investment
contemplated by this Agreement. Without
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derogating from the representations and warranties made by Seller, such
Purchaser has reviewed and inspected all of the information provided to it by
Seller in connection with this Agreement and the transactions contemplated
hereby and has been afforded the opportunity to ask questions and receive
answers from representatives of the Seller. Such Purchaser represents that it
can bear the economic risk of its investment in the Shares and is investing in
its own name and for its own account.
4.5 Investment Intent. Such Purchaser is acquiring the Shares for
investment for its own account and not with view to, or for resale in connection
with, any distribution thereof. Such Purchaser understands that the Shares have
not been registered under the Securities Act or applicable state securities laws
by reason of certain exemptions from the registration provisions thereof that
depend upon, among other things, the truth and accuracy of such Purchaser's
representations and warranties herein. Such Purchaser has not taken or
authorized anyone else to take, and will not take or authorize anyone else to
take, any action hereafter that would cause the loss of the exemptions for the
issuance of the Shares from the requirements of the Securities Act and any
applicable blue sky laws.
4.6 Restricted Transferability. Such Purchaser acknowledges that the
Shares must be held indefinitely unless they are subsequently registered under
the Securities Act or an exemption from such registration is available, and that
certificates for such Shares will bear the legend referred to in the
Registration Rights Agreement.
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
5.1 Survival of Representations, Warranties and Covenants. The
representations and warranties of Seller set forth in Section 3 shall survive
the Closing until the second anniversary of the date thereof, except those set
forth in Sections 3.3 and 3.7 which shall survive until the expiration of the
applicable statute of limitations. The representations and warranties of
Purchasers set forth in Section 4 shall survive the Closing until the second
anniversary of the date thereof. The covenants of Seller set forth in this
Agreement which relate to periods following the Closing shall survive the
Closing indefinitely.
5.2 Indemnification by Seller. Seller agrees to indemnify and hold
harmless Medscape from and against any and all assessments, judgments, debts,
obligations, liabilities, losses, costs, damages or expenses (including
interest, penalties and reasonable out-of-pocket fees, expenses and
disbursements in connection with any action, suit or proceeding) (collectively,
"Damages"), suffered, paid or incurred by Medscape resulting from or caused by
or arising out of: (i) any breach of the representations and warranties made by
Seller to Purchasers in this Agreement and (ii) any failure by Seller to perform
any covenant or agreement of Seller contained in this
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Agreement.
5.3 Indemnification by Purchaser. Each Purchaser, severally and not
jointly, agrees to indemnify and hold harmless Seller from and against any and
all Damages suffered, paid or incurred by Seller resulting from or caused by or
arising out of: (i) any breach of the representations and warranties made by
such Purchaser to Seller in this Agreement and (ii) any failure by such
Purchaser to perform any agreement of such Purchaser contained in this
Agreement.
5.4 Limitations on Indemnity. Notwithstanding the foregoing and with
the exception of a claim asserted pursuant to Section 5.5 below, no claims shall
be asserted under this Section 5 unless the amount claimed is in excess of
$50,000, in which case a claim can be submitted for the entire amount at issue).
In no event other than intentional misrepresentation or fraud shall the
liability of any party for breach of representations and warranties under this
Section 5 or this Agreement exceed the Purchase Price.
5.5 Indemnity Regarding Capitalization. Notwithstanding anything to the
contrary in this Section 5 and in addition to any other remedies available to
the Purchasers hereunder, in the event the Seller breaches any of the
representations and warranties as contained in Section 3.3 above, in a manner
which results in the dilution of a Purchaser's relative shareholding in the
Company as contemplated herein, or otherwise injures a Purchaser, then such
Purchaser shall be entitled to the issuance of such number of additional
Preferred Shares, or, at such Purchaser's sole discretion, Ordinary Shares of
the Company, as is necessary to maintain such Purchaser's relative shareholding
in the Company as contemplated herein or remedy such injury.
5.6 Exclusive Remedy. Purchasers and Seller acknowledge and agree that
the foregoing indemnification provisions in this Section 5 shall be the
exclusive remedy of Purchasers and Seller with respect to the transactions
contemplated by this Agreement; provided, however, that the foregoing
indemnification provisions are in addition to, and not in derogation of, any
non-monetary equitable remedies available to the parties and any statutory,
equitable or common law remedy any party hereto may have for fraud or other
intentional malfeasance.
6. COVENANTS OF SELLER
6.1 Information Rights. For so long as Seller is not subject to the
periodic reporting requirements of Section 12 of the Securities Exchange Act of
1934, as amended, Medscape shall have the right to receive the information
stated in this Section 6.1 from Seller:
6.1.1 Periodic Financial and Other Information. So long as
Medscape is the holder of at least 3% of the Seller's issued and outstanding
Ordinary Shares (on an as-converted basis):
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6.1.1.1 within 120 days after the end of each fiscal
year of Seller, commencing with the year ending December 31, 1999, Seller will
provide Medscape with financial statements of Seller for such fiscal year,
consisting of an income statement, balance sheet and statement of changes in
financial position, which shall have been duly audited by an independent
certified public accounting firm, and prepared in accordance with Israeli
generally accepted accounting principles consistently applied ("Israeli GAAP");
6.1.1.2 within 45 days after the end of each
quarterly accounting period of each fiscal year of Seller, commencing with the
quarter ending June 30, 1999, Seller will provide Medscape with unaudited but
reviewed financial statements for such period which will be prepared in
accordance with Israeli GAAP; and
6.1.1.3 within ten days of receipt or transmittal by
Seller, Seller will provide Medscape with notification of any actual or
threatened litigation which could, if determined adversely to Seller or the
Subsidiary, have a Material Adverse Effect.
6.1.2 Additional Information. So long as Medscape is the
holder of at least 3% of the Seller's issued and outstanding Ordinary Shares (on
an as-converted basis), Seller will permit Medscape or any representative of
Medscape to visit and inspect Seller's premises and properties, including its
books and records of account, from time to time, and to discuss Seller's
business, finances and accounts with Seller's officers at reasonable times
during Seller's regular business hours, upon reasonable advance written notice
to Seller and in a manner that will not unreasonably interfere with the normal
business operations of Seller.
6.1.3 Confidentiality. Each Purchaser agrees that any
information obtained pursuant to Sections 6.1.1 or 6.1.2 or from its
representation on Seller's Board of Directors will not be disclosed without the
prior written consent of Seller; provided that, in connection with periodic
reports to its shareholders, each Purchaser may, without first obtaining such
written consent, make general statements, not containing technical or other
confidential information, regarding the nature of progress of Seller's business.
Notwithstanding any provision herein to the contrary, it is hereby clarified
that (a) Medscape shall not be entitled to receive pursuant to Sections 6.1.1 or
6.1.2 any information that relates to any direct or indirect competitor of
Medscape; (b) Medscape shall not be entitled to receive pursuant to Sections
6.1.1 or 6.1.2 copies of, or information relating to the terms of, any
agreements between Seller and any of Seller's customers; and (c) the information
rights provided to Medscape in Sections 6.1.1 and 6.1.2 shall automatically
terminate in the event that there is a Change of Control (as defined below) of
Medscape involving a Seller Competitor (a list of Seller Competitors is provided
on Schedule 6.1.3 attached hereto). As used herein, "Change of Control" means
the merger or consolidation of Medscape into or with, or the acquisition of
Medscape by, another entity, or the sale of all or substantially all of the
shares, properties or assets of Medscape, in each case under circumstances
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in which the holders of a majority (by voting power) of the outstanding capital
stock of Medscape immediately prior to such merger, consolidation, acquisition
or sale own less than a majority (by voting power) of outstanding capital stock
of Medscape or the surviving or resulting entity or acquirer, as the case may
be, immediately following such merger, consolidation, acquisition or sale.
6.1.4 Books and Records. So long as Medscape is the holder of
any Shares, Seller will keep books and records of account in which full,
accurate and correct entries in all material respects will be made of all
dealings and transactions in relation to the business and affairs of Seller in
accordance with Israeli GAAP.
6.2 Use of Proceeds. Seller will use the proceeds from the sale of the
Shares for the purposes set forth in the Seller's Business Plan, a copy of which
has been provided to the Purchasers. In addition, Seller will be responsible for
paying all stamp tax incurred in connection with the issuance of the Shares.
6.3 Budget and Operating Forecast. So long as Medscape is the holder of
at least 3% of the Seller's issued and outstanding Ordinary Shares (on an
as-converted basis): (a) the business of Seller shall be conducted in all
material respects in accordance with an annual operating plan and budget (the
"Budget") for every fiscal year of Seller. The Budget shall be prepared by
Seller and shall be submitted to, at least thirty (30) days before the beginning
of each fiscal year of Seller for approval by, the Board of Directors of Seller.
(b) Seller shall provide Medscape with a copy of its Budget
for fiscal year 1999, which shall be approved by the Board of Directors of
Seller within 45 days of the date hereof. So long as Medscape is the holder of
at least 3% of the Seller's issued and outstanding Ordinary Shares (on an
as-converted basis), Seller shall deliver to Medscape a copy of each annual
Budget duly approved by the Board of Directors of Seller within 15 days of such
approval.
6.4 System of Accounting. Until the end of the Exclusivity Period (as
defined in Section 6.8(c) below), the books of account and other financial and
corporate records of Seller and the Subsidiary shall be maintained in accordance
with good business and accounting practices and the financial condition of
Seller shall be accurately reflected in the financial statements referred to in
Section 6.1.
6.5 Compliance with Laws. Until the end of the Exclusivity Period (as
defined in Section 6.8(c) below), Seller shall comply with, and cause the
Subsidiary to comply with, all applicable laws, rules, regulations and orders in
all material respects.
6.6 Insurance. Until the end of the Exclusivity Period (as defined in
Section 6.8(c) below), each of Seller and the Subsidiary shall maintain
insurance by reputable insurers
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customarily obtained to cover comparable businesses and assets in amounts, scope
and coverage which are consistent with prudent industry practices. Seller will
obtain and keep in effect key man life insurance, naming the Company as
beneficiary, with respect to Xxxx Xxxxxx and Xxxx Xxxxxxxx in the amount of
$1,000,000 each.
6.7 Intellectual Property Rights. Unless otherwise decided by the
Company's Board of Directors, Seller shall cause all Intellectual Property
Rights, including, without limitation, technological developments, inventions,
discoveries or improvements made by employees or agents of Seller and the
Subsidiary to be fully documented in appropriate engineering form in accordance
with the prevailing industrial professional standards, and where possible and
appropriate, file and prosecute United States and foreign patent applications
relating to and protecting such developments. In addition, Seller shall use its
best efforts to cause all Intellectual Property Rights, including, without
limitation, all technological developments, inventions, discoveries or
improvements made by any employee of Seller or the Subsidiary to be owned by
Seller and, where possible and appropriate, obtain legal protection for the
benefit of Seller with respect to such property.
6.8 Acquisition or Licensing Proposals. (a) Seller agrees that neither
it nor the Subsidiary nor any of the officers and directors of it or the
Subsidiary shall and that it shall direct and use its best efforts to cause its
and the Subsidiary's representatives not to, directly or indirectly, initiate,
solicit, encourage or otherwise facilitate any inquiries or the making of any
proposal or offer with respect to (i) a merger, reorganization, share exchange,
consolidation or similar transaction involving any Seller Competitor (as defined
below), or any purchase of, or tender offer for, 15% or more of the equity
securities of it or the Subsidiary or 15% or more of its and the Subsidiary's
assets (based on the fair market value thereof) taken as a whole by any Medscape
Competitor (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal") or (ii) a licensing agreement with any Medscape
Competitor with respect to its Intellectual Property Rights (any such proposal
or offer being hereinafter referred to as a "Licensing Proposal"). Seller
further agrees that neither it nor the Subsidiary nor any of the officers and
directors of it or the Subsidiary shall, and that it shall direct and use its
best efforts to cause its representatives not to, directly or indirectly, have
any discussions with or provide any confidential information or data to any
person relating to an Acquisition Proposal or Licensing Proposal or engage in
any negotiations concerning an Acquisition Proposal or Licensing Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal or Licensing Proposal. Seller agrees that it will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any Acquisition Proposal or
Licensing Proposal. Seller also agrees that it will promptly request each person
that has heretofore executed a confidentiality agreement in connection with its
consideration of any Acquisition Proposal or Licensing Proposal to return all
confidential
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information heretofore furnished to such person by or on behalf of it or the
Subsidiary. For the purposes of this Agreement, a "Medscape Competitor" is as
defined in Schedule 6.8 attached hereto..
(b) Seller agrees that it will take the necessary steps to
promptly inform the individuals or entities referred to in the first sentence
hereof of the obligations undertaken in this Section 6.8.
(c) The obligations of Seller and the Subsidiary under this
Section 6.8 shall expire on September 30, 1999; provided, however, that the
obligations of Seller under this Section 6.8 shall continue until October 31,
1999, with respect to the following persons: WebMD, Healtheon and InteliHeatlh.
The period through October 31, 1999 shall be called the "Exclusivity Period".
6.9 Warrants and Option. Seller hereby undertakes to use its
best efforts to ensure that, by Closing, or as soon as practicable thereafter,
all outstanding warrants and options to purchase shares of the Company as at the
date of Closing shall be evidenced by agreements executed in writing.
7. EXERCISE OF PRE-EMPTION RIGHTS
7.1 Pre-emption Rights. It is hereby clarified that the Shares
issued hereunder to those Purchasers other than Medscape, are issued pursuant
to, and in full satisfaction of, their rights of pre-emption with respect to the
issuance of the Shares to Medscape and such Purchasers hereby waive any further
rights of pre-emption with respect to such issuance to Medscape that they may
have.
8. MISCELLANEOUS
8.1 Expenses. Each party will pay all of its own expenses in connection
with the negotiation of this Agreement, the performance of its obligations
hereunder and the consummation of the transactions contemplated hereby.
8.2 Further Assurance. Purchasers and Seller covenant and agree to take
any and all such further action and to execute, acknowledge and deliver such
instruments, documents and agreements as the other party hereto may reasonably
request to effectuate, consummate or confirm the transactions contemplated
hereby.
8.3 Amendment and Waiver. This Agreement may be amended only in a
writing signed by the parties hereto. Any provision of this Agreement may be
waived by the party entitled to the benefit thereof only in a writing executed
by the party against whom such waiver is sought to be enforced. No waiver shall
be deemed a waiver of any other provision of this Agreement,
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and no waiver of a breach hereunder shall be deemed a waiver of any other or
subsequent breach of this Agreement.
8.4 Notice. All notices, demands and other communications to be given
or delivered hereunder shall be in writing and will be deemed to have been given
if personally delivered, sent by overnight courier or telecopied (in each such
case delivery will be effective upon receipt) or mailed by certified mail,
postage prepaid, return receipt requested (delivery will be effective three days
after the date of mailing) to the addresses indicated below or to such other
addresses as the parties may specify on notice as herein provided:
If to Medscape:
Medscape, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xx. Xxxx Xxxxxx
President and Chief Operating Officer
Telecopier: (000) 000-0000
With a copies to:
Patterson, Belknap, Xxxx & Xxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. XxXxxxx, Esq.
Telecopier: (000) 000-0000
and
Xxxxx Xxxxx & Co.
00 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxx
Attention: Xxxxx Xxxxxxxxx, Esq.
Telecopier: (000-0) 000-0000
If to Seller:
Softwatch Ltd.
0 Xx'xx Xxxxxx
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Ramat Gan, Israel
Attention: Xxxx Xxxxxx
Telecopier: (000-0) 000-0000
With a copy to:
Goldfarb, Levy, Eran & Co.
Eliahu House
2 Ibn Xxxxxx Xxxxxx
Xxx Xxxx 00000, Xxxxxx
Attention: Barak X. Xxxxx
Telecopier: (000-0) 000-0000
If to Minols, Ltd:
Minols Ltd.
00 Xxxxxx Xxxx.
XX Xxx 0000
Xxxxx, 00000, Xxxxxx
Attention: Xxxxx Xxxxxx
If to X. Xxxxxxx:
X. Xxxxxxx
00 Xxxxxx Xxxxxxxx
Xxxxxxxxx 00000
Attention: A Heifetz
If to Kraft Group LLC:
Kraft Group LLC
Xxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx, 00000
Attention: Xxxxxx X. Xxxxx/Xxxxxxxx X. Xxxxx
With a copy to:
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Xxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx, 00000
Attention: Xxxxx X. Xxxxx Esq./
Xxxxxxxx X. Xxxxxxxxx Esq.
8.5 Binding Agreement; Assignment. This Agreement and all of the
provisions hereof will be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. No Purchaser will
be entitled to assign any of its rights and obligations hereunder to any third
party without the prior written consent of Seller which may be granted or
withheld in the sole and absolute discretion of Seller.
8.6 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
8.7 Captions. The captions used in this Agreement are for convenience
of reference only and do not constitute a part of this Agreement and will not be
deemed to limit, characterize or in any way affect any provision of this
Agreement and all provisions of this Agreement will be enforced and construed as
if no captions had been used in this Agreement.
8.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which need not contain signatures of more than one party,
but all such counterparts taken together will constitute one and the same
instrument. Signatures may be exchanged by telecopy, with original signatures to
follow. Each party to this Agreement agrees that it will be bound by its own
telecopied signature and that it accepts the telecopied signatures of the other
party to this Agreement.
8.9 Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of Israel, without reference
to the choice of law provisions thereof.
[Remainder of the page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Preferred Share
Purchase Agreement to be executed and delivered on their behalf as of the day
and year first above written.
SOFTWATCH LTD. MEDSCAPE, INC.
by: /s/ Xxxx Xxxxxx by: /s/ Xxxx X. Xxxxxx
--------------------- ---------------------
name : Xxxx Xxxxxx name: Xxxx X. Xxxxxx
------------------ ---------------------
title: CEO and President title: President and CEO
------------------ ---------------------
KRAFT GROUP LLC MINOLS LTD.
by: /s/ Xxxxxx Xxxxx by: /s/ X. Xxxxxx
--------------------- ---------------------
name: Xxxxxx Xxxxx name: X. Xxxxxx
------------------ ---------------------
title: title: CEO
------------------ ---------------------
/s/ X. Xxxxxxx
-------------------------
X. XXXXXXX
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Exhibits and Schedules
Exhibit A Restated Articles
Exhibit B No Sale Undertaking
Exhibit C License Agreement
Exhibit D Opinion of Counsel
Exhibit E Registration Rights Agreement
Schedule 1 The Purchasers and Number of Shares Purchased
by Each
Schedule 2.3.1 Bring Down Certificate
Schedule 2.3.3 Board of Directors Resolution
Schedule 2.3.4 Shareholders Resolution
Schedule 2.3.10 Healthcourt Letter
Schedule 3.3 Capitalization
Schedule 3.10 Agreements
Schedule 3.13 Intellectual Property
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Schedule 3.19 Related Party Transactions
Schedule 3.21 Insurance
Schedule 3.22 Information Technology
Schedule 3.23 Contracts
Schedule 3.24 Employees
Schedule 6.1.3 Seller Competitors
Schedule 6.8 Medscape Competitors
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SCHEDULE 1: THE PURCHASERS
NAME PURCHASE PRICE FOR PREFERRED SHARES SERIES A PREFERRED SHARES
---- ----------------------------------- -------------------------
Medscape, Inc. $2,999,954 1,040,170
Kraft Group LLC $ 122,998 42,647
Minols Ltd. $ 5,998 2,080
X. Xxxxxxx $ 1,799 624
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Exhibits and Schedules
Exhibit A Restated Articles
Exhibit B No Sale Undertaking
Exhibit C License Agreement
Exhibit D Opinion of Counsel
Exhibit E Registration Rights Agreement
Schedule 1 The Purchasers and Number of Shares Purchased by Each
Schedule 2.3.1 Bring Down Certificate
Schedule 2.3.3 Board of Directors Resolution
Schedule 2.3.4 Shareholders Resolution
Schedule 2.3.10 Healthcourt Letter
Schedule 3.3 Capitalization
Schedule 3.10 Agreements
Schedule 3.13 Intellectual Property
Schedule 3.19 Related Party Transactions
Schedule 3.21 Insurance
Schedule 3.22 Information Technology
Schedule 3.23 Contracts
Schedule 3.24 Employees
Schedule 6.1.3 Seller Competitors
Schedule 6.8 Medscape Competitors
27
THE COMPANIES ORDINANCE
A COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
SOFTWATCH LTD.
PRELIMINARY
1. Second Schedule Excluded
The regulations contained in the second schedule to the Company's
Ordinance (New Version) 5743-1983 (the "Companies Ordinance") shall not apply to
the Company.
2. Interpretation
(a) Unless the subject or the context otherwise requires: words
and expressions defined in the Companies Ordinance in force on the date when
these Articles or any amendment thereto, as the case may be, first became
effective shall have the same meanings herein; words and expressions importing
the singular shall include the plural and vice versa; words and expressions
importing the masculine gender shall include the feminine gender; and words and
expressions importing persons shall include bodies corporate.
(b) The captions in these Articles are for convenience only and
shall not be deemed a part hereof or affect the construction of any provision
hereof.
3. Private Company
The Company is a private company, and accordingly:
(a) the number of members for the time being of the Company
(exclusive of persons who are in the employment of the Company and of persons
who having been formerly in the employment of the Company were, while in such
employment, and have continued after termination of such employment to be,
members of the Company), shall not exceed fifty (50), but where two or more
persons jointly own one or more shares in the Company, they shall, for the
purposes of this Article, be treated as a single member;
(b) any invitation to the public to subscribe for any shares or
debentures or debenture stock of the Company is hereby prohibited; and
(c) the right to transfer shares in the Company shall be
restricted as hereinafter provided.
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SHARE CAPITAL
4. Share Capital
The share capital of the Company is One Hundred Twenty Thousand New
Israeli Shekels (NIS 120,000) divided into 10,914,479 (ten million nine hundred
fourteen thousand four hundred seventy nine) Ordinary Shares of a nominal value
of One Agora (NIS 0.01) each ("Ordinary Shares") and 1,085,521 (one million
eighty five thousand five hundred twenty one) Series A Preferred Shares of a
nominal value of One Agora (NIS 0.01) each ("Preferred Shares"). The Preferred
Shares shall have the rights, preference, privileges and restrictions granted to
and imposed on Preferred Shares as may be specifically indicated herein and/or
as the context may so reasonably require. The Ordinary Shares shall have all
residual rights not specifically associated with the Preferred Shares.
5. The Preferred Shares
5.1 Dividend Provisions. The holders of Preferred Shares shall be
entitled to receive dividends, in respect of their holdings on an as-converted
basis as of the record date for such distribution.
5.2 Liquidation Preference
5.2.1 In the event of (i) any dissolution of the Company,
followed by the liquidation and winding up of the Company, (ii) any liquidation
or winding up of the Company as a result of any bankruptcy, reorganization or
similar proceedings, (iii) any foreclosure by creditors of substantially all of
the assets of, or equity interests in the Company, or (iv) any deemed
liquidation, dissolution or winding up of the Company pursuant to subarticle
5.2.4, the holders of Preferred Shares shall be entitled to receive, prior and
in preference to any distribution of any of the assets of the Company to the
holders of Ordinary Shares by reason of their ownership thereof, an amount per
share in US dollars equal to the greater of: (i) the amount paid or credited as
paid for the purchase of such Preferred Share (the "Original Issue Price"), plus
all declared but unpaid dividends; or (ii) the amount which would be received if
the Preferred Share was converted into an Ordinary Share (the "Series A
Liquidation Preference").
5.2.2 If the assets and funds distributed to the holders of
the Preferred Shares shall be insufficient to permit payment to such holders of
the full Series A Liquidation Preference, then the entire assets or property of
the Company legally available for distribution shall be distributed ratably to
the holders of the Preferred Shares in proportion to the aggregate Series A
Liquidation Preference.
5.2.3 After payment to the holders of the Preferred Shares
in the amounts set forth in subarticle 5.2.1, the entire remaining assets and
funds of the Company legally available for distribution, if any, shall be
distributed among the holders of Ordinary Shares in proportion to
29
the Ordinary Shares then held by them.
5.2.4 For purposes of subarticle 5.2.1, in the event of any
merger of the Company or sale of all or substantially all of the assets or
shares of the Company other than any such transaction following which the
shareholders of the Company retain by virtue of their share ownership in the
Company a majority equity interest in the surviving or successor corporation,
the holders of a majority of the Preferred Shares then outstanding shall have
the right to determine whether such transaction will be treated as a liquidation
event pursuant to Sub-article 5.2.1.
5.3 Conversion. The holders of the Preferred Shares shall have
conversion rights as follows (the "Conversion Rights"):
5.3.1 Right to Convert; Automatic Conversion
5.3.1.1 Subject to subarticle 5.3.3, each Preferred
Share shall be convertible, at the option of the holder of such share, at any
time after the date of issuance of such share, into such number of fully paid
and nonassessable Ordinary Shares of the Company as is determined by dividing
the applicable Original Issue Price for such share by the Conversion Price at
the time in effect for such share. The initial Conversion Price per Preferred
Share shall be the Original Issue Price, or US$2.8841, provided, however, that
the Conversion Prices for the Preferred Shares shall be subject to adjustment as
set forth in subarticles 5.3.3 and 5.3.4.
5.3.1.2 Each Preferred Share shall automatically be
converted into Ordinary Shares at the Conversion Price at the time in effect for
such Preferred Share (i) immediately prior to the consummation of the Company's
sale of its Ordinary Shares to the public in an underwritten public offering in
which (A) the proceeds to the Company are not less than US$10 million (net of
underwriting discounts) and (B) the offering price to the public (prior to
underwriting commissions and expenses) is at least three times the Original
Issue Price per share (subject to adjustment for share splits, share dividends,
reclassifications and like events) (a "Qualified IPO") or (ii) upon the
affirmative vote of seventy-five percent (75%) of the outstanding Preferred
Shares.
5.3.2 Mechanics of Conversion. Before any holder of
Preferred Shares shall be entitled to convert the same into Ordinary Shares the
holder shall surrender the certificate or certificates therefor, duly endorsed,
at the office of the Company or of any transfer agent for the Preferred Shares,
and shall give written notice by registered mail, postage prepaid, to the
Company at its principal corporate office, of the election to convert the same
and shall state therein the name or names of any nominee for such holder in
which the certificate or certificates for shares of Ordinary Shares are to be
issued. The Company shall, as soon as practicable thereafter, issue and deliver
at such office to such holder of Preferred Shares, or to the nominee or nominees
of such holder, a certificate or certificates for the number of Ordinary Shares
to which such holder shall be entitled as aforesaid. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the Preferred
30
Shares to be converted, and the person or persons entitled to receive the
Ordinary Shares issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such Ordinary Shares as of such date. If the
conversion is in connection with an underwritten public offering of securities,
the conversion may, at the option of any holder tendering Preferred Shares for
conversion, be conditioned upon the closing of the sale of securities pursuant
to such offering, in which event the person(s) entitled to receive the Ordinary
Shares issuable upon such conversion of the Preferred Shares shall not be deemed
to have converted such Preferred Shares until immediately prior to the closing
of such sale of securities.
5.3.3 Conversion Price Adjustments of Preferred Shares. The
Conversion Price of the Preferred Shares shall be subject to adjustment from
time to time as follows:
5.3.3.1 Adjustment of Conversion Price Upon Issuance
of Additional Ordinary Shares. Upon each bona fide issuance by the Company of
any Additional Ordinary Shares (including Additional Ordinary Shares deemed to
be issued pursuant to subarticle 5.3.3.1.5) at a price per share less than the
Conversion Price, the Conversion Price of the Preferred Shares will be reduced
to an amount equal to the existing Conversion Price multiplied by a fraction (i)
the numerator of which is the sum of (A) the total number of shares of Ordinary
Shares outstanding (on a fully-diluted basis after giving effect to all options
and warrants to purchase Ordinary Shares and assuming the conversion into
Ordinary Shares of all Preferred Shares or convertible securities) plus (B) the
number of Additional Ordinary Shares that can be purchased at the existing
Conversion Price for the total consideration received for the issuance of
Additional Ordinary Shares and (ii) the denominator of which is the number of
outstanding Ordinary Shares on a fully diluted basis and on an as converted
basis, plus the number of Additional Ordinary Shares issued in the new issuance.
The formula can be expressed algebraically as follows:
P' = P x N + np/P
--------
N + n
where:
N = Number of Ordinary Shares outstanding prior to the
dilutive issuance of shares (on a fully-diluted basis after
giving effect to all options and warrants to purchase Ordinary
Shares and assuming the conversion into Ordinary Shares of all
Preferred Shares or convertible securities)
P = Conversion Price of the Preferred Shares prior to the
dilutive issuance
P'= New Conversion Price of the Preferred Shares after the
dilutive issuance
n= Number of Additional Ordinary Shares issued in the dilutive
issuance
p= Price per share in the dilutive issuance
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5.3.3.1.2 No adjustments of the Conversion
Price for the Preferred Shares shall be made in an amount less than one cent per
share provided that any adjustments which are not required to be made by reason
of this sentence shall be carried forward and shall be either taken into account
in any subsequent adjustment made prior to 3 years from the date of the event
giving rise to the adjustment being carried forward, or shall be made at the end
of 3 years from the date of the event giving rise to the adjustment being
carried forward. No adjustment of such Conversion Price pursuant to subarticles
5.3.3.1.1 through 5.3.3.1.6 shall be made if it has the effect of increasing the
Conversion Price above the Conversion Price in effect immediately prior to such
adjustment.
5.3.3.1.3 In the case of the issuance of
Additional Ordinary Shares for cash, the consideration shall be deemed to be the
amount of cash received therefor after giving effect to any discounts or
commissions, paid or incurred by the Company for any underwriting or otherwise
in connection with the issuance and sale thereof.
5.3.3.1.4 In the case of the issuance of
Additional Ordinary Shares for a consideration in whole or in part other than
cash, the consideration other than cash shall be deemed to be the fair value
thereof as determined (in good faith) by the Board of Directors.
5.3.3.1.5 In the case of the issuance of
warrants or options to purchase or rights to subscribe for Additional Ordinary
Shares, or securities by their terms convertible into or exchangeable for
Additional Ordinary Shares or options or warrants to purchase or rights to
subscribe for such convertible or exchangeable securities, the aggregate maximum
number of Additional Ordinary Shares deliverable upon exercise (assuming the
satisfaction of any conditions to exercisability, including without limitation
the passage of time, but without taking into account potential antidilution
adjustments) of such options or warrants to purchase or rights to subscribe for
Additional Ordinary Shares or upon conversion or an exchange of such convertible
or exchangeable securities shall be deemed to have been issued at the time full
consideration for such options or warrants to purchase or securities by their
terms convertible into or exchangeable for or rights to subscribe for Additional
Ordinary Shares have been paid for at a consideration equal to the consideration
(determined in the manner provided in subarticles 5.3.3.1.3 and 5.3.3.1.4), if
any, received by the Company upon the issuance of such options, warrants or
rights or securities plus any additional consideration payable to the Company
pursuant to the term of such options or rights or securities (without taking
into account potential antidilution adjustments) for the Additional Ordinary
Shares covered thereby.
5.3.3.1.6 For purposes of subarticle 5.3.3.1
hereof, the consideration for any Additional Ordinary Shares shall be taken into
account at the U.S. dollar equivalent thereof, on the day such Additional
Ordinary Shares are issued or deemed to be issued pursuant to subarticle
5.3.3.1.5.
5.3.3.2 "Additional Ordinary Shares" shall mean
shares of any class issued (or deemed to have been issued pursuant to
subarticle_5.3.3.1.5) by the Company other than:
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5.3.3.2.1 Ordinary Shares issued pursuant to
a transaction described in subarticles 5.3.3.3, 5.3.3.4, 5.3.3.5, 5.3.4 or 5.3.5
hereof;
5.3.3.2.2 Ordinary Shares or any other
securities pursuant to a share option or other incentive plan or as part of a
compensation arrangement to an officer, employee, director or consultant
approved by the Board of Directors;
5.3.3.2.3 Ordinary Shares issued on
conversion of Preferred Shares;
5.3.3.2.4 Ordinary Shares issued in the
Company's Qualified IPO;
5.3.3.2.5 Ordinary Shares issued pursuant to
a merger or acquisition that is approved by the Board of Directors.
5.3.3.3 Adjustment of Conversion Price Upon
Subdivision or Combination of Ordinary Shares. If the Company shall subdivide or
combine its Ordinary Shares, the Conversion Price shall be proportionately
reduced, in case of subdivision of shares, as at the effective date of such
subdivision, or if the Company shall fix a record date for the purpose of so
subdividing, as at such record date, whichever is earlier, or shall be
proportionately increased, in the case of combination of shares, as at the
effective date of such combination or, if the Company shall fix a record date
for the purpose of so combining, as at such record date, whichever is earlier.
5.3.3.4 Adjustment of Conversion Price Upon Share
Dividend Declaration. If the Company at any time shall pay a dividend payable in
additional Ordinary Shares or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly, additional
Ordinary Shares (hereinafter referred to as "Ordinary Share Equivalents"), then
the Conversion Price shall be adjusted as at the date the Company shall fix as
the record date for the purpose of receiving such dividend (or if no such record
date is fixed, as at the date of such payment), to that price determined by
multiplying the Conversion Price in effect immediately prior to such record date
(or if no such record date is fixed then immediately prior to such payment) by a
fraction, (a) the numerator of which shall be the total number of Ordinary
Shares outstanding and those issuable with respect to such Ordinary Share
Equivalents being determined from time to time in the manner provided for deemed
issuance in subarticle 5.3.3.1.5) immediately prior to such dividend, and (b)
the denominator of which shall be the total number of Ordinary Shares
outstanding and those issuable with respect to such Ordinary Share Equivalents
(determined as aforesaid) immediately after such dividend (plus, in the event
that the Company paid cash for fractional shares, the number of additional
shares which would have been outstanding had the Company issued fractional
shares in connection with such dividend).
5.3.3.5 If the Company at any time shall make a
distribution of its assets to
33
the holders of its Ordinary Shares as a dividend in liquidation or partial
liquidation or by way of return of capital or other than as a dividend payable
out of earnings or surplus legally available for dividends, the holders of
Preferred Shares shall, upon exercise of the Conversion Rights, be entitled to
receive, in addition to the number of Ordinary Shares receivable thereupon, and
without payment of any additional consideration therefor, a sum equal to the
amount of such assets as would have been payable to such holder as owner of that
number of Ordinary Shares of the Company receivable by exercise of the
Conversion Rights had such holder been the holder of record of such Ordinary
Shares on the record date for such distribution; and an appropriate provision
therefor shall be made a part of any such distribution. Notwithstanding the
foregoing, this subarticle 5.3.3.5 shall not apply where an equivalent
distribution is declared for the benefit of the Preferred Shares (calculated on
the basis of the number of Ordinary Shares into which such Preferred Shares
could then be converted) at the same time as the dividend is declared for the
Ordinary Shares.
5.3.4 Other Distributions. In the event the Company shall
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by the Company or other persons, assets (excluding cash
dividends) or options, warrants or rights not referred to in subarticle 5.3.3.3
then, in each such case for the purpose of this subarticle 5.3.4, the holders of
the Preferred Shares shall be entitled to receive such distribution in respect
of their holdings, on an as-converted basis as of the record date for such
distribution.
5.3.5 Recapitalizations. If at any time or from time to
time there shall be a recapitalization of the Ordinary Shares (other than a
subdivision, combination or merger or sale of assets transaction provided for
elsewhere in this Article or Article 5.4), provision shall be made so that the
holders of the Preferred Shares shall thereafter be entitled to receive upon
conversion of the Preferred Shares the number of Ordinary Shares or other
securities or property of the Company or otherwise, to which a holder of
Ordinary Shares deliverable upon conversion would have been entitled immediately
prior to such recapitalization. In any such case, appropriate adjustment shall
be made in the application of the provisions of this Article with respect to the
rights of the holders of the Preferred Shares after the recapitalization to the
end that the provisions of this Article (including adjustment of the Conversion
Price then in effect and the number of shares issuable upon conversion of the
Preferred Shares) shall be applicable after that event as nearly equivalent as
may be practicable.
5.3.6 No Impairment. The Company will not, by amendment of
its Articles of Association or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Article 5 and in the taking of all such action as may be
necessary or appropriate in order to protect the Conversion Rights of the
holders of the Preferred Shares against impairment.
5.3.7 No Fractional Shares and Certificate as to
Adjustments.
34
5.3.7.1 No fractional shares shall be issued upon
conversion of the Preferred Shares, and the aggregate number of Ordinary Shares
to be issued of to each converting holder shall be rounded to the nearest whole
share.
5.3.7.2 Upon the occurrence of each adjustment or
readjustment of the Conversion Price of Preferred Shares pursuant to this
Article 5, the Company, at its expense, shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and prepare and furnish to
each holder of Preferred Shares a certificate setting forth each adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall furnish or cause to be furnished to
such holder a like certificate setting forth (A) such adjustment and
readjustment, (B) the Conversion Price at the time in effect, and (C) the number
of Ordinary Shares and the amount, if any, of other property which at the time
would be received upon the conversion of a Preferred Share.
5.3.8 Notices of Record Date. In the event of any taking by
the Company of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (including a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of any class or any
other securities or property, or to receive any other right, the Company shall
mail to each holder of Preferred Shares, at least 20 days prior to the date
specified therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend, distribution or right, and the amount
and character of such dividend, distribution or right.
5.3.9 Notices. Any notice required by the provisions of
this Article 5 to be given to the holders of Preferred Shares shall be deemed
given 10 business days after being deposited in the Israeli mail, postage
prepaid, and addressed to each holder of record at his address appearing on the
books of this Company; provided that, in the case of shareholders located
outside of Israel, such notice shall be sent by airmail or by telex or
telecopier or other rapid form of written communication, and confirmation of
such notice shall be sent by airmail.
5.4 Reclassification
5.4.1 In case of any reclassification or change of
outstanding securities issuable upon exercise of the Conversion Rights (other
than a change in nominal value, or as a result of a subdivision or combination),
the Company shall, without payment of any additional consideration therefor,
issue to the holders of Preferred Shares new Preferred Shares, as applicable,
with the same respective rights, preferences, privileges and restrictions
granted to and imposed on the Preferred Shares in these Articles but providing
that the holder of the new Preferred Shares shall have the right to exercise the
conversion rights granted by such new Preferred Shares and procure upon such
exercise of such conversion rights, in lieu of each Ordinary Share theretofore
issuable upon exercise of the Conversion Rights of the Preferred Shares, the
kind and amount of shares of stock, other securities, money and assets
receivable upon such reclassification or change by a holder of one Ordinary
Share issuable upon exercise of the Conversion Rights had they been exercised
immediately prior to such reclassification or
35
change. The provisions of this subarticle 5.4.1 shall similarly apply to
successive reclassifications and changes.
5.4.2 The Company shall give each holder of record of
Preferred Shares written notice of such impending transaction not later than
twenty-one (21) days prior to the shareholders' meeting called to approve such
transaction, or twenty-one (21) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this Article 5.4, and the Company shall thereafter give such holders prompt
notice of any material changes.
5.4.3 The provisions of this Article 5.4 are in addition to
the provisions of Article 5.3 and the protective provisions of Article 5.6
hereof. Nothing in this Article 5.4 shall prevent the holders of the Preferred
Shares from exercising the rights to convert the Preferred Shares into Ordinary
Shares prior to the conclusion of a transaction contemplated herein.
5.5 Voting Rights. The holder of each share of the Preferred
Shares shall have the right to one vote for each share of Ordinary Shares into
which such Preferred Shares could then be converted (with any fractional share
determined on an aggregate conversion basis being rounded to the nearest whole
share), and with respect to such vote, such holder shall have full voting rights
and powers equal to the voting rights and powers of the holders of Ordinary
Shares, and shall be entitled, notwithstanding any provision hereof, to notice
of any shareholders' meeting in accordance with the Articles of Association of
the Company, and shall be entitled to vote, together with holders of Ordinary
Shares, with respect to any question upon which holders of Ordinary Shares have
the right to vote.
5.6 Specific Voting Provisions
5.6.1 Notwithstanding any other provision of these Articles
to the contrary, any action or resolution of the Company's general meeting, or
of the Company's Board of Directors or any committee thereof, as applicable,
regarding any of the following issues shall require the consent of Medscape,
Inc., a Delaware corporation ("Medscape") and, in addition and if applicable,
the consent of a Director appointed by Medscape as well. The consent of Medscape
and/or a Director appointed by Medscape as set forth above shall be required (i)
with respect to sub-articles (b), (c), and (e) below, until the earlier of (x)
the closing of a Qualified IPO, and (y) Medscape ceasing to hold at least 7% of
the issued and outstanding share capital of the Company (on an as converted
basis); and (ii) with respect to sub-articles (a), (d) and (f) through (i)
below, until October 31, 1999 (the "Exclusivity Period"):
(a) any increase in the number of authorized
share capital of the Company;
(b) authorization, creation or issue of any
shares of any class or series of shares or any other securities convertible into
equity securities of the Company, or
36
reclassification of any existing shares to equity securities or any of the
securities convertible into equity securities, with a liquidation priority
superior to the Preferred Shares;
(c) declaration or payment of any dividends on
the Company's Ordinary Shares without making a similar payment with respect to
the Company's Preferred Shares;
(d) the entering into of a transaction that
would occasion the sale of all or substantially all of the Company's assets or
the acquisition of the Company by another entity by means of merger or
consolidation resulting in the exchange of the outstanding shares of the Company
for securities or consideration issued, or caused to be issued, by the acquiring
corporation or its subsidiary, unless the shareholders of the Company hold at
least 50% of the voting power of the surviving corporation in such a
transaction.
(e) amendment of the Memorandum of Association
or Articles of Association of the Company in a manner that adversely affects the
rights attached only to the Preferred Shares (as compared to the rights of other
classes of shares);
(f) guaranty by the Company of any material
obligation of any third party except in the ordinary course of business;
(g) creation of a mortgage, pledge or security
interest in, or the granting of consent to any affiliate for the creation of a
mortgage, pledge or security interest in, all or substantially all of the assets
of the Company or of any affiliate, as the case may be;
(h) (i) any material change to the compensation
of management personnel of the Company from that being provided as of [Closing
Date]; and (ii) where the aggregate compensation to be provided to all
management personnel is to be in excess of an annual amount of $1,500,000; or
(i) establishment of a committee of the Board of
Directors or establishment of the board of directors of a subsidiary without a
representative of the holders of the Preferred Shares.
5A. Increase of Share Capital
(a) Subject to the provisions of Article 5.6, the Company may,
from time to time, by Special Resolution, whether or not all the shares then
authorized have been issued, and whether or not all the shares theretofore
issued have been called up for payment, increase its share capital by the
creation of new shares. Any such increase shall be in such amount and shall be
divided into share of such nominal amounts, and such shares shall confer such
rights and preferences, and shall be subject to such restrictions, as such
Special Resolution shall provide.
(b) Except to the extent otherwise provided in such Special
Resolution, such new
37
shares shall be subject to all the provisions applicable to the shares of the
original capital.
6. Special Rights; Modifications of Rights
(a) Subject to the provisions of the Memorandum of Association of
the Company, and without prejudice to any special rights previously conferred
upon the holders of existing shares in the Company, the Company may, from time
to time, by Special Resolution, provide for shares with such preferred or
deferred rights or rights of redemption or other special rights and/or such
restrictions, whether in regard to dividends, voting, repayment of share capital
or otherwise, as may be stipulated in such Special Resolution.
(b) (i) If at any time the share capital is divided into
different classes of shares, the rights attached to any class, unless otherwise
provided by these Articles, may be modified or abrogated by the Company, by
Special Resolution, subject to the consent in writing of the holders of
seventy-five per cent (75%) of the issued shares of such class or the sanction
of a Special Resolution passed at a separate General Meeting of the holders of
the shares of such class.
(ii) The provisions of these Articles relating to General
Meetings shall, mutatis mutandis, apply to any separate General Meeting of the
holders of the shares of a particular class, provided, however, that the
requisite quorum at any such separate General Meeting shall be one or more
members present in person or proxy and holding not less than seventy-five per
cent (75%) of the issued shares of such class.
(iii) Unless otherwise provided by these Articles, the
enlargement of an existing class of shares, or the issuance of additional shares
thereof, shall not be deemed, for purposes of this Article 6(b), to modify or
abrogate the rights attached to the previously issued shares of such class or of
any other class.
7. Consolidation, Subdivision, Cancellation and Reduction of Share Capital
(a) Subject to Article 5.6, the Company may, from time to time, by
Special Resolution (subject, however, to the provisions of Article 6(b) hereof
and to applicable law):
(i) consolidate and divide all or any of its issued or
unissued share capital into shares of larger nominal value than its existing
shares,
(ii) subdivide its shares (issued or unissued) or any of
them, into shares of smaller nominal value than is fixed by the Memorandum of
Association (subject, however, to the provisions of the Companies Ordinance),
and the resolution whereby any share is subdivided may determine that, as among
the holders of the shares resulting from such subdivision, one or more of the
shares may, as compared with the others, have any such preferred or deferred
rights or rights of redemption or other special rights, or be subject to any
such restrictions, as the Company has power to attach to unissued or new shares.
38
(iii) cancel any shares which, at the date of the adoption
of such Special Resolution, have not been taken or agreed to be taken by any
person, and diminish the amount of its share capital by the amount of the shares
so cancelled, or
(iv) reduce its share capital in any manner, and with and
subject to any incident authorized, and consent required, by law.
(b) With respect to any consolidation of issued shares into shares
of larger nominal value, and with respect to any other action which may result
in fractional shares, the Board of Directors may settle any difficulty which may
arise with regard thereto, as it deems fit, including, inter alia, resort to one
or more of the following actions:
(i) determine, as to the holder of shares so
consolidated, which issued shares shall be consolidated into each share of
larger nominal value;
(ii) allot, in contemplation of or subsequent to such
consolidation or other action, such shares or fractional shares sufficient to
preclude or remove fractional share holdings;
(iii) redeem, in the case of redeemable preference shares,
and subject to applicable law, such shares or fractional shares sufficient to
preclude or remove fractional share holdings;
(iv) cause the transfer of fractional shares by certain
shareholders of the Company to other shareholders thereof so as to most
expediently preclude or remove any fractional shareholdings, and cause the
transferees to pay the transferors the fair value of fractional shares so
transferred, and the Board of Directors is hereby authorized to act as agent for
the transferors and transferees with power of substitution for purposes of
implementing the provisions of this sub-Article 7(b)(iv).
SHARES
8. Issuance of Share Certificates; Replacement of Lost Certificates
(a) Share certificates shall be issued under the seal of the
rubber stamp of the Company and shall bear the signatures of two Directors (or
if there be only one Director, the signature of such Director), or of any other
person or persons authorized thereto by the Board of Directors.
(b) Each member shall be entitled to one numbered certificate for
all the shares of any class registered in his name, and if the Board of
Directors so approves, to several certificates, each for one or more of such
shares. Each certificate may specify the serial numbers of the shares
represented thereby and may also specify the amount paid up thereon.
39
(c) A share certificate registered in the names of two or more
persons shall be delivered to the person first named in the Registrar of Members
in respect of such co-ownership.
(d) If a share certificate is defaced, lost or destroyed, it may
be replaced, upon payment of such fee, and upon the furnishing of such evidence
of ownership and such indemnity, as the Board of Directors may think fit.
9. Registered Holder
Except as otherwise provided in these Articles, the Company shall be
entitled to treat the registered holder of any share as the absolute owner
thereof, and, accordingly, shall not, except as ordered by a court of competent
jurisdiction, or as required by statute, be bound to recognize any equitable or
other claim to, or interest in such share on the part of any other person.
10. Allotment of Shares
(a) The unissued shares from time to time shall be under the
control of the Board of Directors, who shall have the power to allot, subject to
any agreement of the Company, shares or otherwise dispose of them to such
persons, on such terms and conditions (including inter alia terms relating to
calls as set forth in Article 12(f) hereof), and either at nominal value or at a
premium, or, subject to the provisions of the Companies Ordinance, at a
discount, and at such times, as the Board of Directors may think fit, and the
power to give to any person the option to acquire from the Company any shares,
either at par or at a premium, or, subject as aforesaid, at a discount, during
such time and for such consideration as the Board of Directors may think fit.
(b) Notwithstanding the provisions of Article 10(a), the Company
will not, prior to the closing of a Qualified IPO, issue any Ordinary Shares,
any rights to subscribe for or to purchase, or any options or warrants for the
purchase of, Ordinary Shares or any other shares or other securities convertible
into or exchangeable for Ordinary Shares or any Ordinary Shares issued upon
exercise thereof (in each case, a "Ordinary Share Equivalent") for a purchase
price of $2.8841 or more per Ordinary Share (appropriately adjusted for any
subsequent change in the capitalization of the Company effectuated after the
date hereof) without first complying with the provisions of this Article 10(b).
The Company grants to each holder of Preferred Shares, to Kraft Group LLC and to
the HiTec Investors Group (collectively, the "Designated Shareholders") the
preemptive right to purchase its pro rata portion of any Ordinary Shares or
Ordinary Share Equivalents that the Company may, from time to time, propose to
sell or issue. In the event that the Company proposes to issue or sell any
additional Ordinary Shares or Ordinary Share Equivalents, it shall give each of
the Designated Shareholders written notice of its intention, describing the
price and terms upon which the Company proposes to issue or sell such Ordinary
Shares or Ordinary Share Equivalents. Each Designated Shareholder shall have
thirty (30) days from the date of receipt of any such notice to elect to
purchase up to its pro rata share of the Ordinary Shares or Ordinary Share
Equivalents, as the case may be, being issued or sold for the price and upon the
terms specified in the notice from the Company by giving written notice (a
"Preemptive Rights Notice") to the Company and stating therein the quantity of
Ordinary Shares
40
or Ordinary Share Equivalents to be purchased by such Designated Shareholder.
The closing for any purchase by a Designated Shareholder pursuant to this
Article 10(b) shall occur within thirty (30) days from the date of the receipt
by the Company of the Preemptive Rights Notice at a place and time chosen by the
Designated Shareholder. At such closing the Designated Shareholder will deliver
the purchase price to the Company and the Company will issue and deliver the
certificate(s) representing the Ordinary Shares or Ordinary Share Equivalents,
as the case may be, to be issued to such Designated Shareholder. Notwithstanding
the foregoing, the aforesaid rights of the Designated Shareholders shall not
apply to Ordinary Shares and Ordinary Share Equivalents issued or issuable: (i)
upon conversion of Preferred Shares; (ii) granted to employees, consultants, or
directors pursuant to stock option, stock grant, stock purchase, or similar
plans and arrangements approved by the Board of Directors; (iii) as a dividend
or other distribution; (iv) in a merger or acquisition that is approved by the
Board of Directors; or (v) upon exercise or conversion of securities with
respect to which the Designated Shareholders previously had an opportunity to
exercise the pre-emptive right pursuant to this Article 10(b).
11. Payment in Installments
If by the terms of allotment of any share, the whole or any part of the
price thereof shall be payable in installments, every such installment shall,
when due, be paid to the Company by the then registered holder(s) of the share
of the person(s) entitled thereto.
12. Calls on Shares
(a) The Board of Directors may, from time to time, make such calls
as it may think fit upon members in respect of any sum unpaid in respect of
shares held by such members which is not, by the terms of allotment thereof or
otherwise, payable at a fixed time, and each member shall pay the amount of
every call so made upon him (and of each installment thereof if the same is
payable in installments), to the person(s) and at the time(s) and place(s)
designated by the Board of Directors, as any such time(s) may be thereafter
extended and/or such person(s) or place(s) changed. Unless otherwise stipulated
in the resolution of the Board of Directors (and in the notice hereafter
referred to), each payment in response to a call shall be deemed to constitute a
pro rata payment on account of all shares in respect of which such call was
made.
(b) Notice of any call shall be given in writing to the member(s)
in question not less than fourteen (14) days prior to the time of payment,
specifying the time and place of payment, and designating the person to whom
such payment shall be made, provided, however, that before the time for any such
payment, the Board of Directors may, by notice in writing to such member(s),
revoke such call in whole or in part, extend such time, or alter such person
and/or place. In the event of a call payable in installments, only one notice
thereof need be given.
(c) If, by the terms of allotment of any share or otherwise, any
amount is made payable at any fixed time, every such amount shall be payable at
such time as if it were a call duly made by the Board of Directors and of which
due notice had been given, and all the provisions herein contained with respect
to such calls shall apply to each such amount.
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(d) The joint holders of a share shall be jointly and severally
liable to pay all calls in respect thereof and all interest payable thereon.
(e) Any amount unpaid in respect of a call shall bear interest
from the date on which it is payable until actual payment thereof, at such rate
(not exceeding the then prevailing debitory rate charged by leading commercial
banks in Israel), and at such time(s) as the Board of Directors may prescribe.
(f) Upon the allotment of shares, the Board of Directors may
provide for differences among the allottees of such shares as to the amount of
calls and/or the times of payment thereof.
13. Prepayment
With the approval of the Board of Directors, any member may pay to the
Company any amount not yet payable in respect of his shares, and the Board of
Directors may approve the payment of interest on any such amount until the same
would be payable if it had not been paid in advance, at such rate and time(s) as
may be approved by the Board of Directors. The Board of Directors may at any
time cause the Company to repay all or any part of the money so advanced,
without premium or penalty. Nothing in this Article 13 shall derogate from the
right of the Board of Directors to make any call before or after receipt by the
Company of any such advance.
14. Forfeiture and Surrender
(a) If any member fails to pay any amount payable in respect of a
call, or interest thereon as provided for herein, on or before the day fixed for
payment of the same, the Company, by resolution of the Board of Directors, may
at any time thereafter, so long as the said amount or interest remains unpaid,
forfeit all or any of the shares in respect of which said call had been made.
Any expense incurred by the Company in attempting to collect any such amount or
interest, including, inter alia, attorneys' fees and costs of suit, shall be
added to, and shall, for all purposes (including the accrual of interest
thereon), constitute a part of the amount payable to the Company in respect of
such call.
(b) Upon the adoption of a resolution of forfeiture, the Board of
Directors shall cause notice thereof to be given to such member, which notice
shall state that, in the event of the failure to pay the entire amount so
payable within a period stipulated in the notice (which period shall not be less
than fourteen (14) days and which may be extended by the Board of Directors),
such shares shall be ipso facto forfeited, provided, however, that, prior to the
expiration of such period, the Board of Directors may nullify such resolution of
forfeiture, but no such nullification shall estop the Board of Directors from
adopting a further resolution of forfeiture in respect of the non-payment of the
same amount.
(c) Whenever shares are forfeited as herein provided, all
dividends theretofore declared in respect thereof and not actually paid shall be
deemed to have been forfeited at the
42
same time.
(d) The Company, by resolution of the Board of Directors, may
accept the voluntary surrender of any share.
(e) Any share forfeited or surrendered as provided herein shall
become the property of the Company, and the same, subject to the provisions of
these Articles, may be sold, re-allotted or otherwise disposed of as the Board
of Directors thinks fit.
(f) Any member whose shares have been forfeited or surrendered
shall cease to be a member in respect of the forfeited or surrendered shares,
but shall, notwithstanding, be liable to pay, and shall forthwith pay, to the
Company, all calls, interest and expenses owing upon or in respect of such
shares at the time of forfeiture or surrender, together with interest thereon
from the time of forfeiture or surrender until actual payment, at the rate
prescribed in Article 12(e) above, and the Board of Directors, in its
discretion, may enforce the payment of such moneys, or any part thereof, but
shall not be under any obligation to do so. In the event of such forfeiture or
surrender, the Company, by resolution of the Board of Directors, may accelerate
the date(s) of payment of any or all amounts then owing by the member in
question (but not yet due) in respect of all shares owned by such member, solely
or jointly with another, and in respect of any other matter or transaction
whatsoever.
(g) The Board of Directors may at any time, before any share so
forfeited or surrendered shall have been sold, re-allotted or otherwise disposed
of, nullify the forfeiture or surrender on such conditions as it thinks fit, but
no such nullification shall estop the Board of Directors from re-exercising its
powers of forfeiture pursuant to this Article 14.
15. Intentionally omitted.
16. Sale after Forfeiture or Surrender or in Enforcement of Lien
Upon any sale of shares after forfeiture or surrender or for enforcing
a lien, the Board of Directors may appoint some person to execute an instrument
of transfer of the shares so sold and cause the purchaser's name to be entered
in the Register of Members in respect of such shares, and the purchaser shall
not be bound to see to the regularity of the proceedings, or to the application
of the purchase money, and after his name has been entered in the Register of
Members in respect of such shares, the validity of the sale shall not be
impeached by any person, and the remedy of any person aggrieved by the sale
shall be in damages only and against the Company exclusively.
17. Redeemable Shares
The Company may, subject to applicable law, issue redeemable shares and
redeem the same.
18. Conversion of Shares into Stock
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(a) The Board of Directors may, with the sanction of the members
previously given by Special Resolution, convert any paid-up shares into stock,
and may, with like sanction, reconvert any stock into paid-up shares of any
denomination.
(b) The holders of stock may transfer the same, or any part thereof, in
the same manner and subject to the same regulations, as the shares from which
the stock arose might have been transferred prior to conversion, or as near
thereto as circumstances admit, provided, however, that the Board of Directors
may from time to time fix the minimum amount of stock so transferable, and
restrict or forbid the transfer of fractions of such minimum, but the minimum
shall not exceed the nominal value of each of the shares from which such stock
arose.
(c) The holders of stock shall, in accordance with the amount of stock
held by them, have the same rights and privileges as regards dividends, voting
at meetings of the Company and other matters as if they held the shares from
which such stock arose, but no such right or privilege, except participation in
the dividends and profits of the Company, shall be conferred by any such aliquot
part of such stock as would not, if existing in shares, have conferred that
right or privilege.
(d) Such of the Articles of the Company as are applicable to paid-up
shares shall apply to stock, and the words "share" and "shareholder" (or
"member") therein shall include "stock" and "stockholder."
TRANSFER OF SHARES
19. Effectiveness and Registration
(a) Except as otherwise provided in this Article 19, no transfer of
shares in the Company, and no assignment of an option to acquire such shares
from the Company, shall be effective unless the transfer or assignment has been
approved by the Board of Directors, and the Board of Directors may, either
approve or refuse to approve any such transfer or assignment, provided that such
approval shall not be unreasonably withheld.
(b) No transfer of shares shall be registered unless a proper
instrument of transfer (in form and substance satisfactory to the Board of
Directors) has been submitted to the Company, together with the share
certificate(s) and such other evidence of title as the Board of Directors may
reasonably require. Until the transferee has been registered in the Register of
Members in respect of the shares so transferred, the Company may continue to
regard the transferor as the owner thereof. The Board of Directors, may, from
time to time, prescribe a fee for the registration of a transfer.
(c) Without derogating from the provisions of Article 19(a) or (b), the
following provisions shall govern transfers of shares in the Company, except to
the extent waived in
44
writing (before or after the effective date of these Articles) by a shareholder
who would otherwise be entitled thereto or under Article 20(d):
(i) Any shareholder proposing to transfer all or any of his
shares (the "Offeror") shall first request the Company, by written notice (which
shall contain all the information necessary to enable the Company so to do), to
offer such shares (the "Offered Shares"), on the terms of the proposed transfer,
to all the other shareholders in the Company (the "Offerees"). The Company shall
comply with such request by sending the Offerees a written notice (the "Offer"),
stating therein the identity of the Offeror and of the proposed transferee(s)
and the proposed terms of sale of the Offered Shares. Any Offeree may accept
such offer in respect of all or any of the Offered Shares by giving the Company
notice to that effect within fifteen (15) days after being served with the
Offer.
(ii) If the acceptances, in the aggregate, are in respect of
all of, or more than, the Offered Shares, then the accepting Offerees shall
acquire the Offered Shares, on the terms aforementioned, in proportion to their
respective holdings provided that no Offerees shall be entitled to acquire under
the provisions of this Article 19(c)(ii) more than the number of Offered Shares
initially accepted by such Offeree, and upon the allocation to him of the full
number of shares so accepted, he shall be disregarded in any subsequent
computations and allocations hereunder. Any shares remaining after the
computation of such respective entitlements shall be re-allocated among the
accepting Offerees (other than those to be disregarded as aforesaid), in the
same manner, until one hundred per cent (100%) of the Offered Shares have been
allocated as aforesaid.
(iii) If the acceptances, in the aggregate, are in respect of
less than the number of Offered Shares, the Offeror, at the expiration of the
aforementioned fifteen-day period, shall be entitled, at his option, to transfer
to the accepting Offerees (but not to less than all of them) the numbers of
shares as to which they respectively accepted the Offer (or such lesser numbers
as they may then respectively agree to accept), and to transfer all or any part
of the balance of the Offered Shares to the proposed transferee(s) identified in
the Offer, or, in such event, he may, at his option, regard the Offer as
entirely rejected, and thereupon transfer all (but not less than all) of the
Offered Shares to such proposed transferee(s), provided, however, that in no
event shall the Offeror transfer any of the Offered Shares to any transferee
other than such accepting Offerees or such proposed transferee(s) or transfer
the same on terms more favorable to the buyer(s) than those stated in the Offer,
and provided further that any of the Offered Shares not transferred within
ninety (90) days after the expiration of such fifteen-day period shall again be
subject to the provisions of this Article 19(c).
(iv) For the purposes of any Offer under this Article 19(c),
the respective holdings of any number of accepting Offerees shall mean the
respective proportions of the aggregate number of Ordinary Shares held by such
accepting Offerees, treating all Preferred Shares as if converted into Ordinary
Shares, as determined prior to such Offer.
(v) Anything in this Article 19(c) to the contrary
notwithstanding, a corporate
45
shareholder may transfer any of its shares to any successor of such shareholder
by amalgamation, merger, or consolidation, or to any person, firm or corporation
to which, at the same time, substantially all the business and assets of such
shareholder are being sold, or to a subsidiary of such shareholder or to a
corporation of which such shareholder is a subsidiary; and an individual
shareholder may transfer his shares to any relative (herein defined as any
lineal ascendant or descendant of the shareholder (including any descendant of
the shareholder recognized by law as his descendant), his spouse, any ascendant
or descendant of said shareholder's spouse, or the spouse of any of said
shareholder's ascendant or descendant), but no subsequent transfer of any of
such shares may be made except in conformity with the provisions of Article
19(c) provided, however, that no such transfer shall be made to any transferee,
unless such transferee agrees in writing to be bound by all agreements binding
upon the shareholders immediately prior to such transfer.
(vi) In the event that the Company has outstanding shares of
more than one class, the following rules shall apply in respect of Article
19(c):
(1) Shares of each such class may be offered in the
proportionate, as nearly as may be, to the outstanding shares of each such
class.
(2) Offers pursuant to Article 19(c)(i) shall be
given to each shareholder only in respect of shares of the class(es) then owned
by him.
(d) Without derogating from the provisions of Articles 19(a), or (b)
and subject to Article 19(f) below, until the earlier to occur of (i) [two years
from the Closing Date] or (ii) the closing of a Qualified IPO, the following
provisions shall govern transfers of shares in the Company, except to the extent
waived in writing (before or after the effective date of these Articles) by a
shareholder who would otherwise be entitled thereto or under Article 19(e):
(i) If the right of first refusal set forth in Article 19(c) above
is not exercised and if at any time either Xxxx Xxxxxx or Asaf Even-Haim (in
this Article, the "Selling Shareholder") intends to sell any shares, other than
a transfer in accordance with Article 19(c)(v) above, such Selling Shareholder
shall so notify the holders of the Preferred Shares (the "Preferred
Shareholders"), describing in such notification the material terms of such
proposed sale. Upon receipt of such notice, each Preferred Shareholder shall
have the right to exercise the option contained in sub-article 19(d)(ii) below.
(ii) Each Preferred Shareholder shall have the option, exercisable
by written notice to the Selling Shareholder, within 10 business days after
receipt of the notice described in Article 19(d)(i) above, to require the
Selling Shareholder to provide as part of his proposed sale that such Preferred
Shareholder be given the right to participate in the sale, pro rata in
proportion to the respective numbers of Ordinary Shares owned by the Selling
Shareholder and all Preferred Shareholders electing to participate in the
proposed sale (on an as-converted basis) at such time, on the same terms and
conditions as the Selling Shareholder. If such option is exercised by any
Preferred Shareholder, the Selling Shareholder shall not proceed with such sale
unless such
46
Preferred Shareholder is given the right to participate.
(e) Notwithstanding anything to the contrary in this Article 19, the
shares held by Kraft Group LLC may be transferred to any members of the family
of Xxxxxx X. Xxxxx and to any entity directly controlled him.
(f) In the event that any person or entity makes an offer to purchase
all of the issued and outstanding share capital of the Company, and the
shareholders holding more than 80% of the issued and outstanding share capital
of the Company entitled to vote at General Meetings of the Company indicate
their acceptance of such offer, and such offer is approved by a majority of the
Company's Board of Directors, then, at the closing of such transactions, all of
the holders of all shares in the Company shall transfer such shares to such
person or entity; provided, however, that the consideration for all of the
Company's shares shall in any event be allocated among the members in accordance
with Article 5.2 of these Articles.
20. Suspension of Registration
The Board of Directors may suspend the registration of transfers during
the fourteen (14) days immediately preceding the Annual General Meeting.
TRANSMISSION OF SHARES
21. Decedents' Shares
(a) In case of a share registered in the names of two or more holders,
the Company may recognize the survivor(s) as the sole owner(s) thereof unless
and until the provisions of Article 21(b) have been effectively invoked.
(b) Any person becoming entitled to a share in consequence of the death
of any person, upon producing evidence of the grant of probate or letters of
administration or declaration of succession (or such other evidence as the Board
of Directors may reasonably deem sufficient that he sustains the character in
respect of which he proposes to act under this Article or of his title), shall
be registered as a member in respect of such share, or may, subject to the
regulations as to transfer herein contained, transfer such share.
22. Receivers and Liquidators
(a) The Company may recognize the receiver or liquidator of any
corporate member in winding-up or dissolution, or the receiver or trustee in
bankruptcy of any member, as being entitled to the shares registered in the name
of such member.
(b) The receiver or liquidator of a corporate member in winding-up or
dissolution, or the receiver or trustee in bankruptcy of any member, upon
producing such evidence as the Board
47
of Directors may deem sufficient that he sustains the character in respect of
which he proposes to act under this Article or of his title, shall with the
consent of the Board of Directors (which the Board of Directors may grant or
refuse in its absolute discretion), be registered as a member in respect of such
shares, or may, subject to the regulations as to transfer herein contained,
transfer such shares.
GENERAL MEETINGS
23. Annual General Meeting
An Annual General Meeting shall be held once in every calendar year at
such time (within a period of not more than fifteen (15) months after the last
preceding Annual General Meeting) and at such place either within or without the
State of Israel as may be determined by the Board of Directors.
24. Extraordinary General Meetings
All General Meetings other than Annual General Meetings shall be called
"Extraordinary General Meetings." The Board of Directors may, whenever it thinks
fit, convene an Extraordinary General Meeting at such time and place, within or
without the State of Israel, as may be determined by the Board of Directors, and
shall be obliged to do so upon a requisition in writing in accordance with
Section 109 of the Companies Ordinance.
25. Notice of General Meetings; Omission to Give Notice
(a) Not less than seven (7) business days' prior notice shall be given
of every General Meeting, provided, however, that a Special Resolution shall not
be passed unless at least twenty-one (21) days' prior notice shall have been
given of the meeting at which it is proposed to pass the same. Each such notice
shall specify the place and the day and hour of the meeting and the general
nature of each item to be acted upon thereat. Notice shall be given to all
members who would be entitled to attend and vote at such meeting, if it were
held on the date when such notice is issued. Anything herein to the contrary
notwithstanding, with the consent of all members entitled to vote thereon, a
resolution may be proposed and passed at such meeting although a lesser notice
than hereinabove prescribed has been given.
(b) The accidental omission to give notice of a meeting to any member,
or the non-receipt of notice sent to such member, shall not invalidate the
proceedings at such meeting, provided, that such member confirms to the Company,
in writing, that it agrees to the proceedings and resolutions adopted in such
meeting.
PROCEEDINGS AT GENERAL MEETINGS
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26. Quorum
(a) Two or more members (not in default in payment of any sum referred
to in Article 32(a) hereof), present in person or by proxy and holding shares
conferring in the aggregate a majority of the voting power of the Company shall
constitute a quorum at General Meetings. No business shall be transacted at a
General Meeting, or at any adjournment thereof, unless the requisite quorum is
present when the meeting proceeds to business.
(b) If within an hour from the time appointed for the meeting a quorum
is not present, the meeting, if convened upon requisition under Sections 109 or
110 of the Companies Ordinance, shall be dissolved, but in any other case it
shall stand adjourned to the same day in the next week, at the same time and
place, or to such day and at such time and place as the Chairman may determine
with the consent of the holders of a majority of the voting power represented at
the meeting in person or by proxy and voting on the question of adjournment. No
business shall be transacted at any adjourned meeting except business which
might lawfully have been transacted at the meeting as originally called. At such
adjourned meeting, any two (2) members (not in default as aforesaid) present in
person or by proxy, shall constitute a quorum.
27. Chairman
The Chairman, if any, of the Board of Directors shall preside as
Chairman at every General Meeting of the Company. If there is no such Chairman,
or if at any meeting he is not present within fifteen (15) minutes after the
time fixed for holding the meeting or is unwilling to act as Chairman, the
members present shall choose someone of their number to be Chairman. The office
of Chairman shall not, by itself, entitle the holder thereof to vote at any
General Meeting nor shall it entitle such holder to a second or casting vote
(without derogating, however, from the rights of such Chairman to vote as a
shareholder or proxy of a shareholder if, in fact, he is also a shareholder or
such proxy).
28. Adoption of Resolutions at General Meetings
(a) (i) An Ordinary Resolution shall be deemed adopted if approved by
the holders of a majority of the voting power represented at the meeting in
person or by proxy and voting thereon.
(ii) A Special or Extraordinary Resolution shall be deemed
adopted if approved by the holders of not less than seventy-five percent (75%)
of the voting power represented at the meeting in person or by proxy and voting
thereon.
(b) Every question submitted to a General Meeting shall be decided by a
show of hands, but if a written ballot is demanded by any member present in
person or by proxy and entitled to vote at the meeting, the same shall be
decided by such ballot. A written ballot may be demanded before the proposed
resolution is voted upon or immediately after the declaration by the Chairman of
the results of the vote by a show of hands. If a vote by written ballot is taken
49
after such declaration, the results of the vote by a show of hands shall be of
no effect, and the proposed resolution shall be decided by such written ballot.
The demand for a written ballot may be withdrawn at any time before the same is
conducted, in which event another member may then demand such written ballot.
The demand for a written ballot shall not prevent the continuance of the meeting
for the transaction of business other than the question on which the written
ballot has been demanded.
(c) A declaration by the Chairman of the meeting that a resolution has
been carried unanimously, or carried by a particular majority, or lost, and an
entry to that effect in the minute book of the Company, shall be conclusive
evidence of the fact without proof of the number or proportion of the votes
recorded in favor of or against such resolution.
(d) Shareholders may participate in a General Meeting by means of a
conference telephone call or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and participation
in a meeting pursuant to this Article shall constitute presence in person at
such meeting.
29. Resolutions in Writing
A resolution in writing signed by all members of the Company then
entitled to attend and vote at General Meetings or to which all such members
have given their written consent (by letter, facsimile, telecopier, telegram,
telex or otherwise), or their oral consent by telephone (provided that a written
summary thereof has been approved and signed by the Chairman of the Board of
Directors of the Company) shall be deemed to have been unanimously adopted by a
General Meeting duly convened and held.
30. Power to Adjourn
(a) The Chairman of a General Meeting at which a quorum is present may,
with the consent of the holders of a majority of the voting power represented in
person or by proxy and voting on the question of adjournment (and shall if so
directed by the meeting), adjourn the meeting from time to time and from place
to place, but no business shall be transacted at any adjourned meeting except
business which might lawfully have been transacted at the meeting as originally
called.
(b) It shall not be necessary to give any notice of an adjournment,
whether pursuant to Article 26(b) or Article 30(a), unless the meeting is
adjourned for thirty (30) days or more in which event notice thereof shall be
given in the manner required for the meeting as originally called.
31. Voting Power
Subject to the provisions of Articles 5.6 and 32(a) and subject to any
provision hereof conferring special rights as to voting, or restricting the
right to vote, every member shall have one
50
vote for each share held by him of record, on every resolution, without regard
to whether the vote hereon is conducted by a show of hands, by written ballot or
by any other means.
32. Voting Rights
(a) No member shall be entitled to vote at any General Meeting (or be
counted as a part of the quorum thereat), unless all calls and other sums then
payable by him in respect of his shares in the Company have been paid, but this
Article shall not apply to separate General Meetings of the holders of a
particular class of shares pursuant to Article 6(b).
(b) A company or other corporate body being a member of the Company
may, by resolution of its directors or any other managing body thereof,
authorize any person to be its representative at any meeting of the Company. Any
person so authorized shall be entitled to exercise on behalf of such member all
the power which the latter could have exercised if it were an individual
shareholder. Upon the request of the Chairman of the meeting, written evidence
of such authorization (in form acceptable to the Chairman) shall be delivered to
him.
(c) Any member entitled to vote may vote either personally or by proxy
(who need not be a member of the Company), or, if the member is a company or
other corporate body, by a representative authorized pursuant to Article 32(b).
(d) If two or more persons are registered as joint holders of any
share, the vote of the senior who tenders a vote, in person or by proxy, shall
be accepted to the exclusion of the vote(s) of the other joint holder(s); and
for this purpose seniority shall be determined by the order in which the names
stand in the Register of Members.
PROXIES
33. Instrument of Appointment
(a) The instrument appointing a proxy shall be in writing and shall be
substantially in the following form:
"I _____________________ of __________________________________
(Name of Shareholder) (Address of Shareholder)
being a member of ___________________________ hereby appoint
(Name of the Company)
________________________of _____________________________
(Name of Proxy) (Address of Proxy)
as my proxy to vote for me and on my behalf at the General Meeting of the
Company to be held on the _____ day of ___________, 19__ and at any
adjournment(s) thereof.
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Signed this ______ day of ____________, 19__.
_________________________________
(Signature of Appointer)
or in any usual or common form or in such other form as may be approved by the
Board of Directors. It shall be duly signed by the appointer or his duly
authorized attorney or, if such appointer is a company or other corporate body,
under its common seal or stamp or the hand of its duly authorized agent(s) or
attorney(s).
(b) The instrument appointing a proxy (and the power of attorney or
other authority, if any, under which such instrument has been signed) shall
either be delivered to the Company (at its Registered Office, or at its
principal place of business or at the offices of its registrar and/or transfer
agent or at such place as the Board of Directors may specify) not less than
forty-eight (48) hours before the time fixed for the meeting at which the person
named in the instrument proposes to vote, or presented to the Chairman at such
meeting.
34. Effect of Death of Appointor or Revocation of Appointment
A vote cast pursuant to an instrument appointing a proxy shall be valid
notwithstanding the previous death of the appointing member (or of his
attorney-in-fact, if any, who signed such instrument), or the revocation of the
appointment or the transfer of the share in respect of which the vote is cast,
provided no written intimation of such death, revocation or transfer shall have
been received by the Company or by the Chairman of the meeting before such vote
is cast and provided, further, that the appointing member, if present in person
at said meeting, may revoke the appointment by means of a writing, oral
notification to the Chairman, or otherwise.
BOARD OF DIRECTORS
35. Powers of Board of Directors
(a) In General
The management of the business of the Company shall be vested
in the Board of Directors, which may exercise all such powers and do all such
acts and things as the Company is authorized to exercise and do, and are not
hereby or by law required to be exercised or done by the Company in General
Meeting. The authority conferred on the Board of Directors by this Article 35
shall be subject to the provisions of the Companies Ordinance, of these Articles
and any regulation or resolution consistent with these Articles adopted from
time to time by the Company in General Meeting, provided, however, that no such
regulation or resolution shall invalidate any prior act done by or pursuant to a
decision of the Board of Directors which would have been valid if such
regulation or resolution had not been adopted.
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(b) Borrowing Power
The Board of Directors may from time to time, in its
discretion, cause the Company to borrow or secure the payment of any sum or sums
of money for the purposes of the Company, and may secure or provide for the
repayment of such sum or sums in such manner, at such times and upon such terms
and conditions in all respects as it thinks fit, and, in particular, by the
issuance of bonds, perpetual or redeemable debentures, debenture stock, or any
mortgages, charges, or other securities on the undertaking or the whole or any
part of the property of the Company, both present and future, including its
uncalled or called but unpaid capital for the time being.
(c) Reserves
The Board of Directors may, from time to time, set aside any
amount(s) out of the profits of the Company as a reserve or reserves for any
purpose(s) which the Board of Directors, in its absolute discretion, shall think
fit, and may invest any sum so set aside in any manner and from time to time
deal with and vary such investments, and dispose of all or any part thereof, and
employ any such reserve or any part thereof in the business of the Company
without being bound to keep the same separate from other assets of the Company,
and may subdivide or redesignate any reserve or cancel the same or apply the
funds therein for another purpose, all as the Board of Directors may from time
to time think fit.
36. Exercise of Powers of Directors
(a) A meeting of the Board of Directors at which a quorum is present
shall be competent to exercise all the authorities, powers and discretions
vested in or exercisable by the Board of Directors.
(b) Subject to Article 5.6, a resolution proposed at any meeting of the
Board of Directors shall be deemed adopted if approved by a majority of the
Directors present when such resolution is put to a vote and voting thereon.
(c) A resolution in writing signed by all Directors then in office and
lawfully entitled to vote thereon (as conclusively determined by the Chairman of
the Audit Committee ("Va'adat Bikoret"), and in the absence of such
determination - by the Chairman of the Board of Directors) or to which all such
Directors have given their consent (by letter, telegram, telex, facsimile,
telecopier or otherwise), or their oral consent by telephone (provided that a
written summary thereof has been approved and signed by the Chairman of the
Board of Directors of the Company) shall be deemed to have been unanimously
adopted by a meeting of the Board of Directors duly convened and held.
37. Delegation of Powers
(a) The Board of Directors may, subject to the provisions of the
Companies
53
Ordinance, delegate any or all of its powers to committees, each consisting of
two or more persons (all of whose members must be Directors), and it may from
time to time revoke such delegation or alter the composition of any such
committee. Any Committee so formed (in these Articles referred to as a
"Committee of the Board of Directors"), shall, in the exercise of the powers so
delegated, conform to any regulations imposed on it by the Board of Directors.
The meetings and proceedings of any such Committee of the Board of Directors
shall, mutatis mutandis, be governed by the provisions herein contained for
regulating the meetings of the Board of Directors, so far as not superseded by
any regulations adopted by the Board of Directors under this Article. Unless
otherwise expressly provided by the Board of Directors in delegating powers to a
Committee of the Board of Directors, such Committee shall not be empowered to
further delegate such powers.
(b) Without derogating from the provisions of Article 50, the Board of
Directors may, subject to the provisions of the Companies Ordinance, from time
to time appoint a Secretary to the Company, as well as officers, agents,
employees and independent contractors, as the Board of Directors may think fit,
and may terminate the service of any such person. The Board of Directors may,
subject to the provisions of the Companies Ordinance, determine the powers and
duties, as well as the salaries and emoluments, of all such persons, and may
require security in such cases and in such amounts as it thinks fit.
(c) The Board of Directors may from time to time, by power of attorney
or otherwise, appoint any person, company, firm or body of persons to be the
attorney or attorneys of the Company at law or in fact for such purpose(s) and
with such powers, authorities and discretions, and for such period and subject
to such conditions, as it thinks fit, and any such power of attorney or other
appointment may contain such provisions for the protection and convenience of
persons dealing with any such attorney as the Board of Directors may think fit,
and may also authorize any such attorney to delegate all or any of the powers,
authorities and discretions vested in him.
38. Number of Directors
Until otherwise determined by Ordinary Resolution of the Company, the
Board of Directors of the Company shall consist of not less than two (2) nor
more than seven (7) Directors.
39. Appointment and Removal of Directors
The Board of Directors shall be composed of seven (7) directors
appointed by written notice to the Company as follows: one (1) Director shall be
appointed by HITEC Investors Group (H.I.G.) for as long as it holds, together,
at least six percent (6%) of the Company's issued and paid-up share capital, one
(1) Director shall be appointed by Kraft Group LLC. for as long as it holds at
least four percent (4%) of the Company's issued and outstanding share capital;
and, during the Exclusivity Period only, one (1) Director shall be appointed by
the holders of a majority in interest of the Preferred Shares. The remaining
four (4) directors will be appointed by written notice to the Company given by
the holders, from time to time, of shares conferring a majority of the voting
power of the Company. Any Director(s) may only be removed from office
54
by the shareholder(s) that designated such Director, and any vacancy, however
created, in the Board of Directors may only be filled by the shareholder(s) that
designated the previous incumbent of such vacancy. The director appointed by the
holders of a majority of the Preferred Shares, if appointed by Medscape, shall
not attend or participate in any discussions or votes of the Board of Directors
regarding transactions between the Company and any direct competitor of
Medscape.
40. Qualification of Directors
No person shall be disqualified to serve as a Director by reason of his
not holding shares in the Company or by reason of his having served as a
Director in the past.
41. Continuing Directors in the Event of Vacancies
Subject to the provisions of Article 39, in the event of one or more
vacancies in the Board of Directors, the continuing Directors may continue to
act in every matter, and, pending the filling of any vacancy pursuant to the
provisions of Article 39, may temporarily fill any such vacancy, provided,
however, that if they number less than a majority of the number provided for
pursuant to Article 38 hereof, they may only act in an emergency, and may call a
General Meeting of the Company for the purpose of electing Directors to fill any
or all vacancies, so that at least a majority of the number of Directors
provided for pursuant to Article 38 hereof are in office as a result of said
meeting.
42. Vacation of Office
(a) The office of a Director shall be vacated, ipso facto, upon his
death, or if he be found lunatic or become of unsound mind, or if he become
bankrupt, or, if the Director is a company, upon its winding-up.
(b) The office of a Director shall be vacated by his written
resignation. Such resignation shall become effective on the date fixed therein,
or upon the delivery thereof to the Company, whichever is later.
43. Remuneration of Directors
No Director shall be paid any remuneration by the Company for his
services as Director except as may be approved pursuant to the provisions of the
Companies Ordinance.
44. Conflict of Interests
Subject to the provisions of the Companies Ordinance, the Company may
enter into any contract or otherwise transact any business with any Director in
which contract or business such Director has a personal interest, directly or
indirectly; and may enter into any contract of otherwise transact any business
with any third party in which contract or business a Director has a personal
interest, directly or indirectly.
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45. Alternate Directors
(a) A Director may, by written notice to the Company, appoint an
alternate for himself (in these Articles referred to as "Alternate Director"),
remove such Alternate Director and appoint another Alternate Director in place
of any Alternate Director appointed by him whose office has been vacated for any
reason whatsoever. Unless the appointing Director, by the instrument appointing
an Alternate Director or by written notice to the Company, limits such
appointment to a specified period of time or restricts it to a specified meeting
or action of the Board of Directors, or otherwise restricts its scope, the
appointment shall be for an indefinite period, and for all purposes.
(b) Any notice given to the Company pursuant to Article 45(a) shall
become effective on the date fixed therein, or upon the delivery thereof to the
Company, whichever is later.
(c) An Alternate Director shall have all the rights and obligations of
the Director who appointed him, provided, however, that he may not in turn
appoint an alternate for himself (unless the instrument appointing him otherwise
expressly provides), and provided further that an Alternate Director shall have
no standing at any meeting of the Board of Directors or any committee thereof
while the Director who appointed him is present.
(d) Any natural person, whether or not he be a member of the Board of
Directors, may act as an Alternate Director. One person may act as Alternate
Director for several Directors, and in such event he shall have a number of
votes (and shall be treated as the number of persons for purposes of
establishing a quorum) equal to the number of Directors for whom he acts as
Alternate Director. If an Alternate Director is also a Director in his own right
his rights as an Alternate Director shall be in addition to his rights as a
Director.
(e) An Alternate Director shall alone be responsible for his own acts
and defaults, and he shall not be deemed the agent of the Director(s) who
appointed him.
(f) The office of an Alternate Director shall be vacated under the
circumstances, mutatis mutandis, set forth in Article 42, and such office shall
ipso facto be vacated if the Director who appointed such Alternate Director
ceases to be a Director.
PROCEEDINGS OF THE BOARD OF DIRECTORS
46. Meetings
(a) The Board of Directors may meet and adjourn its meetings and
otherwise regulate such meetings and proceedings as the Directors think fit.
(b) Any Director may at any time, and the Secretary, upon the request
of such Director, shall, convene a meeting of the Board of Directors, but not
less than two (2) days'
56
notice (oral or written) shall be given of any meeting so convened.
(c) Directors may attend any meeting via telephone so long as all
Directors participating in the meeting may hear each other and be heard by each
other.
47. Quorum
Until otherwise unanimously decided by the Board of Directors, a quorum
at a meeting of the Board of Directors shall be constituted by the presence of a
majority of the Directors then in office who are lawfully entitled to
participate in the meeting (as conclusively determined by the Chairman of the
Audit Committee and in the absence of such determination - by the Chairman of
the Board of Directors), but shall not be less than two.
48. Chairman of the Board of Directors
The Board of Directors may from time to time elect one of its members
to be the Chairman of the Board of Directors, remove such Chairman from office
and appoint another in its place. The Chairman of the Board of Directors shall
preside at every meeting of the Board of Directors, but if there is no such
Chairman, or if at any meeting he is not present within fifteen (15) minutes of
the time fixed for the meeting, or if he is unwilling to take the chair, the
Directors present shall choose one of their number to be the chairman of such
meeting.
49. Validity of Acts Despite Defects
Subject to the provisions of the Companies Ordinance, all acts done
bona fide at any meeting of the Board of Directors, or of a Committee of the
Board of Directors, or by any person(s) acting as Director(s), shall,
notwithstanding that it may afterwards be discovered that there was some defect
in the appointment of the participants in such meetings or any of them or any
person(s) acting as aforesaid, or that they or any of them were disqualified, be
as valid as if there were no such defect or disqualification.
GENERAL MANAGER
50. General Manager
The Board of Directors may from time to time appoint one or more
persons, whether or not Directors, as General Manager(s) of the Company and may
confer upon such person(s), and from time to time modify or revoke, such
title(s) (including Managing Director, Director General or any similar or
dissimilar title) and such duties and authorities of the Board of Directors as
the Board of Directors may deem fit, subject to such limitations and
restrictions as the Board of Directors may from time to time prescribe. Such
appointment(s) may be either for a fixed term or without any limitation of time,
and the Board of Directors may from time to time (subject to the provisions of
the Companies Ordinance and of any contract between any such person and the
57
Company) fix his or their salaries and emoluments, remove or dismiss
him or them from office and appoint another or others in his or their place or
places.
MINUTES
51. Minutes
(a) Minutes of each General Meeting and of each meeting of the Board of
Directors shall be recorded and duly entered in books provided for that purpose.
Such minutes shall, in all events, set forth the names of the persons present at
the meeting and all resolutions adopted thereat.
(b) Any minutes as aforesaid, if purporting to be signed by the
chairman of the meeting or by the chairman of the next succeeding meeting, shall
constitute prima facia evidence of the matters recorded therein.
DIVIDENDS
52. Declaration of Dividends
Subject to Article 5.6, the Board of Directors may from time to time
declare, and cause the Company to pay, such interim dividend as may appear to
the Board of Directors to be justified by the profits of the Company. The final
dividend in respect of any fiscal period shall be proposed by the Board of
Directors and shall be payable only after the same has been approved by Ordinary
Resolution of the Company, but no such resolution shall provide for the payment
of an amount exceeding that proposed by the Board of Directors for the payment
of such final dividend, and no such resolution or any failure to approve a final
dividend shall affect any interim dividend theretofore declared and paid. The
Board of Directors shall determine the time for payment of such dividends, both
interim and final, and the record date for determining the shareholders entitled
thereto.
53. Funds Available for Payment of Dividends
No dividend shall be paid otherwise than out of the profits of the
Company.
54. Amount Payable by Way of Dividends
Subject to the rights of the holders of shares with special rights as
to dividends, any dividend paid by the Company shall be allocated among the
members entitled thereto in proportion to the nominal value of their respective
holdings of the shares in respect of which such dividend is being paid.
58
55. Interest
No dividend shall carry interest as against the Company.
56. Payment in Specie
Upon the recommendation of the Board of Directors approved by Ordinary
Resolution of the Company, a dividend may be paid, wholly or partly, by the
distribution of specific assets of the Company or by distribution of paid up
shares, debentures or debenture stock of the Company or of any other companies,
or in any one or more of such ways.
57. Capitalization of Profits, Reserves etc.
Upon the recommendation of the Board of Directors approved by Ordinary
Resolution of the Company, the Company -
(a) may cause any moneys, investments, or other assets forming part of
the undivided profits of the Company, standing to the credit of a reserve fund,
or to the credit of a reserve fund for the redemption of capital, or in the
hands of the Company and available for dividends, or representing premiums
received on the issuance of shares and standing to the credit of the share
premium account, to be capitalized and distributed among such of the
shareholders as would be entitled to receive the same if distributed by way of
dividend and in the same proportion, on the footing that they become entitled
thereto as capital, or may cause any part of such capitalized fund to be applied
on behalf of such shareholders in paying up in full, either at par or at such
premium as the resolution may provide, any unissued shares or debentures or
debenture stock of the Company which shall be distributed accordingly, in
payment, in full or in part, of the uncalled liability on any issued shares or
debentures or debenture stock; and
(b) may cause such distribution or payment to be accepted by such
shareholders in full satisfaction of their interest in the said capitalized sum.
58. Implementation of Powers under Articles 56 and 57
For the purpose of giving full effect to any resolution under Articles
56 or 57, and without derogating from the provisions of Article 7(b) hereof, the
Board of Directors may settle any difficulty which may arise in regard to the
distribution as it thinks expedient, and, in particular, may issue fractional
certificates, and may fix the value for distribution of any specific assets, and
may determine that cash payments shall be made to any members upon the footing
of the value so fixed, or that fractions of less value than the nominal value of
one share may be disregarded in order to adjust the rights of all parties, and
may vest any such cash, shares, debentures, debenture stock or specific assets
in trustees upon such trusts for the persons entitled to the dividend or
capitalized fund as may seem expedient to the Board of Directors. Where
requisite, a proper contract shall be filed in accordance with Section 130 of
the Companies Ordinance, and the Board of Directors may appoint any person to
sign such contract on behalf of the persons entitled
59
to the dividend or capitalized fund.
59. Deductions from Dividends
The Board of Directors may deduct from any dividend or other moneys
payable to any member in respect of a share any and all sums of money then
payable by him to the Company on account of calls or otherwise in respect of
shares of the Company and/or on account of any other matter of transaction
whatsoever.
60. Retention of Dividends
(a) The Board of Directors may retain any dividend or other moneys
payable or property distributable in respect of a share on which the Company has
a lien, and may apply the same in or toward satisfaction of the debts,
liabilities, or engagements in respect of which the lien exists.
(b) The Board of Directors may retain any dividend or other moneys
payable or property distributable in respect of a share in respect of which any
person is, under Articles 21 or 22, entitled to become a member, or which any
person is, under said Articles, entitled to transfer, until such person shall
become a member in respect of such share or shall transfer the same.
61. Unclaimed Dividends
All unclaimed dividends or other moneys payable in respect of a share
may be invested or otherwise made use of by the Board of Directors for the
benefit of the Company until claimed. The payment by the Directors of any
unclaimed dividend or such other moneys into a separate account shall not
constitute the Company a trustee in respect thereof, and any dividend unclaimed
after a period of seven (7) years from the date of declaration of such dividend,
and any such other moneys unclaimed after a like period from the date the same
were payable, shall be forfeited and shall revert to the Company, provided,
however, that the Board of Directors may, at its discretion, cause the Company
to pay any such dividend or such other moneys, or any part thereof, to a person
who would have been entitled thereto had the same not reverted to the Company.
62. Mechanics of Payment
Any dividend or other moneys payable in cash in respect of a share may
be paid by check or warrant sent through the post to, or left at, the registered
address of the person entitled thereto or by transfer to a bank account
specified by such person (or, if two or more persons are registered as joint
holders of such share or are entitled jointly thereto in consequence of the
death or bankruptcy of the holder or otherwise, to any one of such persons or to
his bank account), or to such person and at such address as the person entitled
thereto may by writing direct. Every such check or warrant shall be made payable
to the order of the person to whom it is sent, or to such person as the person
entitled thereto as aforesaid may direct, and payment of the check or warrant
60
by the banker upon whom it is drawn shall be a good discharge to the Company.
Every such check or warrant shall be sent at the risk of the person entitled to
the money represented thereby.
63. Receipt from a Joint Holder
If two or more persons are registered as joint holders of any share, or
are entitled jointly thereto in consequence of the death or bankruptcy of the
holder or otherwise, any one of them may give effectual receipts for any
dividend or other moneys payable or property distributable in respect of such
share.
ACCOUNTS
64. Books of Account
The Board of Directors shall cause accurate books of account to be kept
in accordance with the provisions of the Companies Ordinance and of any other
applicable law. Such books of account shall be kept at the Registered Office of
the Company, or at such other place or places as the Board of Directors may
think fit, and they shall always be open to inspection by all Directors. No
member, not being a Director, shall have any right to inspect any account or
book or other similar document of the Company, except as conferred by law or
authorized by the Board of Directors or by Ordinary Resolution of the Company.
65. Audit
At least once in every fiscal year the accounts of the Company shall be
audited and the correctness of the profit and loss account and balance sheet
certified by one or more duly qualified auditors.
66. Auditors
The appointment, authorities, rights and duties of the auditor(s) of
the Company, shall be regulated by applicable law, provided, however, that in
exercising its authority to fix the remuneration of the auditor(s), the members
in General Meeting may, by Ordinary Resolution, act (and in the absence of any
action in connection therewith shall be deemed to have so acted), to authorize
the Board of Directors to fix such remuneration subject to such criteria or
standards, if any, as may be provided in such Ordinary Resolution, and if no
such criteria or standards are so provided, such remuneration shall be fixed in
an amount commensurate with the volume and nature of the services rendered by
such auditor(s).
BRANCH REGISTERS
67. Branch Registers
61
Subject to and in accordance with the provisions of Sections 71 to 80,
inclusive, of the Companies Ordinance and to all orders and regulations issued
thereunder, the Company may cause branch registers to be kept in any place
outside Israel as the Board of Directors may think fit, and, subject to all
applicable requirements of law, the Board of Directors may from time to time
adopt such rules and procedures as it may think fit in connection with the
keeping of such branch registers.
RIGHTS OF SIGNATURE, STAMP AND SEAL
68. Rights of Signature, Stamp and Seal
(a) The Board of Directors shall be entitled to authorize any person or
persons (who need not be Directors) to act and sign on behalf of the Company,
and the acts and signature of such person(s) on behalf of the Company shall bind
the Company insofar as such person(s) acted and signed within the scope of his
or their authority.
(b) The Company shall have at least one official stamp.
(c) The Board of Directors may provide for a seal. If the Board of
Directors so provides, it shall also provide for the safe custody thereof. Such
seal shall not be used except by the authority of the Board of Directors and in
the presence of the person(s) authorized to sign on behalf of the Company, who
shall sign every instrument to which such seal is affixed.
(d) The Company may exercise the powers conferred by Section 102 of the
Companies Ordinance regarding a seal for use abroad, and such powers shall be
vested in the Board of Directors.
NOTICES
69. Notices
(a) Any written notice or other document may be served by the Company
upon any member either personally or by sending it by prepaid registered mail
(airmail if sent to a place outside Israel) addressed to such member at his
address as described in the Register of Members or such other address as he may
have designated in writing for the receipt of notices and other documents. Any
written notice or other document may be served by any member upon the Company by
tendering the same in person to the Secretary or the General Manager of the
Company at the principal office of the Company or by sending it by prepaid
registered mail (airmail if posted outside Israel) to the Company at its
Registered Address. Any such notice or other document shall be deemed to have
been served two (2) business days after it has been posted (seven (7) business
days if sent to a place not located on the same continent as the place from
where it was posted), or when actually received by the addressee if sooner than
two days or
62
seven days, as the case may be, after it has been posted, or when
actually tendered in person, to such member (or to the Secretary or the General
Manager), provided, however, that notice may be sent by cablegram, telex,
telecopier (facsimile) or other electronic means and confirmed by registered
mail as aforesaid, and such notice shall be deemed to have been given
twenty-four (24) hours after such cablegram, telex, telecopy or other electronic
communication has been sent or when actually received by such member (or by the
Company), whichever is earlier. If a notice is, in fact, received by the
addressee, it shall be deemed to have been duly served, when received,
notwithstanding that it was defectively addressed or failed, in some respect, to
comply with the provisions of this Article 69(a).
(b) All notices to be given to the members shall, with respect to any
share to which persons are jointly entitled, be given to whichever of such
persons is named first in the Register of Members, and any notice so given shall
be sufficient notice to the holders of such share.
(c) Any member whose address is not described in the Register of
Members, and who shall not have designated in writing an address for the receipt
of notices, shall not be entitled to receive any notice from the Company.
INSURANCE AND INDEMNITY
70. Insurance and Indemnity
(a) For purposes of these Articles, the term "Office Holder" shall mean
every Director and every officer of the Company, including, without limitation,
each of the persons defined as "Nosei Misra" in Chapter D'1 of the Companies
Ordinance.
(b) Subject to the provisions of the Companies Ordinance, the Company
may enter into a contract for the insurance of all or part of the liability of
any Office Holder, in respect of one of the following:
(i) a breach of his duty of care to the Company or to another
person;
(ii) a breach of his fiduciary duty to the Company, provided
that the Office Holder acted in good faith and had reasonable cause to assume
that such act would not prejudice the interests of the Company;
(iii) a financial obligation imposed on him in favor of
another person in respect of an act performed in his capacity as an Office
Holder.
(c) Subject to the provisions of the Companies Ordinance, the Company
may indemnify an Office Holder in respect of one of the following:
(i) a financial obligation imposed on him in favor of another
person by a court judgment, including a compromise judgment or an arbitrator's
award approved by court, in
63
respect of an act performed in his capacity as an Office Holder;
(ii) reasonable litigation expenses, including attorneys'
fees, expended by an Office Holder or charged to him by a court, in a proceeding
instituted against him by the Company or on its behalf or by another person, or
in a criminal charge from which he was acquitted, all in respect of an act
performed in his capacity as an Office Holder.
(d) The provisions of Articles 70(a), 70(b) and 70(c) above are not
intended, and shall not be interpreted, to restrict the Company in any manner in
respect of the procurement of insurance and/or in respect of indemnification (i)
in connection with any person who is not an Office Holder, including, without
limitation, any employee, agent, consultant or contractor of the Company who is
not an Office Holder, and/or (ii) in connection with any Office Holder to the
extent that such insurance and/or indemnification is not specifically prohibited
under law; provided that the procurement of any such insurance and/or the
provision of any such indemnification shall be approved by the Audit Committee
of the Company.
WINDING UP
71. Winding Up
If the Company be wound up, then, subject to applicable law and to the
rights of the holders of shares with special rights upon winding up, the assets
of the Company available for distribution among the members shall be distributed
to them in proportion to the nominal value of their respective holdings of the
shares in respect of which such distribution is being made.
64
May __, 1999
Xx. Xxxx Xxxxxx
Medscape, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Xxxxxx Xxxxxx
Dear Xx. Xxxxxx:
Reference is hereby made to the Share Purchase Agreement (the
"Agreement") dated as of May __, 1999 by and between Medscape, Inc., Softwatch
Ltd. (the "Company') and each of the other Purchasers (as defined therein). In
accordance with Section 2.2.1.4 of the Agreement and in order to induce you to
enter into and consummate the transactions contemplated in the Agreement, we
hereby undertake, beginning as of the Closing (as defined in the Agreement) and
terminating upon the conclusion of the Exclusivity Period (as defined in the
Agreement), not to sell, transfer, encumber or otherwise dispose of any shares
of the Company owned by us, either beneficially or of record, without your prior
written consent.
Very truly yours,
Xxxx Xxxxxx Xxxxx Xxxxxxxx
65
June __, 1999
Medscape, Inc. (the "PURCHASER")
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
We have acted as legal counsel to Softwatch Ltd. (the "COMPANY"), a
private company established under the laws of Israel, in connection with the
Preferred Share Purchase Agreement dated as of June __, 1999 (the "Agreement")
by and among the Company, Medscape, Inc. and the individuals and entities listed
on Schedule 1 attached thereto. We are providing you this opinion pursuant to
Section 2.2.1.6 of the Agreement. All capitalized terms used herein have the
meaning ascribed to such terms in the Agreement unless otherwise defined herein.
As such counsel, we have examined a final copy of the Agreement, the
Registration Rights Agreement and such other documents as we have considered
necessary or desirable to examine for the purpose of rendering this opinion. In
all such examinations, we have assumed the due execution and delivery of such
other documents by the parties thereto (pursuant to due authorization) (other
than the Company), the genuineness of all signatures, the authenticity and
completeness of all documents submitted to us as originals, the conformity to
original documents of documents submitted to us as certified or photostatic
copies, the authenticity of the originals of such latter documents and the legal
capacity of all signatories to such documents (other than the signatories of the
Company). As to matters of fact, we have relied upon the representations and
warranties of the Company contained in the Agreement and have made no
independent checks or verification of such factual matters. Except as expressly
set forth in this opinion, we have not undertaken any independent investigation
(other than review of the Company's Memorandum and Articles of Association and
the Board Resolution which authorises the issuance of the Shares) to determine
the existence or absence of such facts and have not conducted a "due diligence"
review of the Company. We have not examined any records of any court,
administrative tribunal or other similar entity in connection with our opinions
expressed herein. Except to the extent expressly set forth herein or as we
otherwise believe to be necessary to our opinion, we have not undertaken any
independent investigation to determine the existence or absence of any fact, and
no inference as to our knowledge of the existence or absence of any fact should
be drawn from our representation of the Company or the rendering of the opinion
set forth below. All of our opinions herein are based on our actual knowledge,
namely the
66
current actual knowledge of the attorney(s) of this firm who have worked on the
transactions referred to herein. Our opinions below are further subject to the
following qualifications and exceptions:
(i) We express no opinion as to the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws relating
to or affecting the rights of creditors generally, including, without
limitation, laws relating to fraudulent transfers or conveyances,
preferences and equitable subordination; and
(ii) We express no opinion as to limitations imposed by general principles
of equity upon the availability of equitable remedies with respect to
any documents referred to herein; and
(iii) We express no opinion as to the effect of foreign laws, judicial
determinations or governmental actions affecting creditors' rights or
the Company's performance of its obligations under the Agreement or the
Registration Rights Agreement; and
(iv) Our opinions expressed herein are based upon current statues, rules,
regulations, cases and official interpretive opinions which, in our
experience, are normally applicable to the type of transaction provided
for in the Agreement ; and
(v) We are members of the Israel Bar and we express no opinion as to any
matter relating to the laws of any jurisdiction other than the laws of
Israel. Our opinion relates only to Israeli laws. Any opinion herein
which relates to laws of any jurisdiction other than the State of
Israel is qualified by the assumption that the laws of such
jurisdiction are identical in all respects to the laws of the State of
Israel. We express no opinion as to the effect of foreign laws,
judicial determinations or governmental actions affecting creditors'
rights or the Company's performance of its obligations under the
Agreement or the Registration Rights Agreement.
Except as otherwise indicated, our opinions expressed herein are
rendered as of, and are based upon the facts in existence and known to us on,
the date hereof.
Based upon and subject to the qualifications set forth in this letter
and to any factual matters, documents or events not disclosed to us and except
as set forth in the Agreement and the Schedules thereto, we are of the opinion
that as of the Closing:
1. The Company is a private company duly organized and validly existing
under the laws of the State of Israel.
2. (a) The registered share capital of the Company immediately prior
to the Closing is one hundred twenty thousand New Israeli Shekels (120,000)
divided into 10,914,479 Ordinary Shares, nominal value NIS 0.01 each, and
1,085,521 Series A Preferred Shares, nominal value NIS 0.01 each.
(b) The Shares, when paid for in accordance with the Agreement,
will be duly authorized, validly issued, fully paid, nonassessable, and, free of
any third-party preemptive rights (other than pre-emptive rights specified in
Section 3.3 of the Agreement or Schedule 3.3 which have not been exercised or
waived until the date hereof) and, except as may have been created by them, the
holders of the Shares will have good title to such shares, free and clear of all
liens, security interests, pledges, charges, encumbrances, shareholders'
agreements and voting trusts.
(c) Except as disclosed on Schedule 3.3 to the Agreement, to the
best of our knowledge, there are not as of the date hereof any outstanding or
authorized subscriptions, options, warrants,
67
calls, rights, commitments, or any other agreements of any character directly
obligating the Company to issue (i) any additional shares or (ii) any securities
convertible into or exchangeable for any shares.
3. All corporate action on the part of the Company necessary for the
authorization, execution, delivery, and performance of all the of Company's
obligations under the Agreement and the Registration Rights Agreement and for
the authorization, issuance, and allotment of the Shares being issued and
allotted under the Agreement has been taken prior to the Closing, except for
such obligations which by their terms are to be taken following the Closing.
Each of the Agreement and the Registration Rights Agreement has been executed
and delivered by or on behalf of the Company, and the Agreement constitutes the
valid and legally binding obligation of the Company, legally enforceable against
the Company in accordance with its terms. No material consent of, approval of or
filing with, any governmental authority on the part of the Company is required
that has not been obtained by the Company prior to the Closing in connection
with the valid execution, delivery and performance of this Agreement and the
Registration Rights Agreement or the issuance and allotment of the Shares.
4. Neither the execution and delivery of the Agreement or the Registration
Rights Agreement nor compliance by the Company with the terms and provisions
thereof, will conflict with, or result in a breach or violation of, any of the
terms, conditions and provisions of the Company's Memorandum of Association or
the Company's Articles of Association.
5. The Articles of Association of the Company as they appear in Exhibit A
to the Agreement were validly adopted and are in full force and effect.
This opinion is rendered only to you and is solely for your benefit in
connection with the Agreement. This opinion may not be relied upon by you for
any other purpose; nor may this opinion be provided to, quoted to or relied upon
by any other person (other than your attorneys and accountants in respect of the
transactions contemplated under the Agreement) or entity for any purpose without
our prior written consent.
This opinion is provided to you as a legal opinion only and not as a
guaranty or warranty of the matters addressed herein. This opinion is based upon
currently existing statutes, rules, regulations and judicial decisions, and we
disclaim any obligation to advise you of any change in any of these sources of
law or subsequent legal or factual developments which might affect any matters
or opinions set forth herein.
Yours faithfully,
Goldfarb, Levy, Eran & Co.
68
Exhibit E
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") made as of the
____ day of June, 1999, by and among Softwatch Ltd., an Israeli company (the
"Company"), Medscape, Inc., a Delaware corporation ("Medscape"), Kraft Group
LLC, a Delaware limited liability corporation ("Kraft"), Platinum Health
Ventures Ltd., a British Virgin Islands company ("Platinum") and Xxx Xxxxx
("Xxxxx").,
In consideration of the mutual promises and covenants set forth herein,
the parties hereby agree as follows:
1. Registration. The following provisions govern the registration
of the Company's securities:
1.1 Definitions. As used herein, the following terms have the
following meanings:
"Holder" means any holder of outstanding Registrable Shares or shares
convertible into Registrable Shares, who acquired such Registrable
Shares or shares convertible into Registrable Shares in a transaction
or series or transactions not involving any registered public offering.
"Form S-3" means Form S-3 or Form F-3 under the Securities Act, 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 (with the exception of Xxx Xxxxx)
holding fifty percent (50%) of the Registrable Shares, assuming for
purposes of such determination the conversion of all shares convertible
into Registrable Shares.
"Register", "registered" and "registration" refer to a registration
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.
"Registrable Shares": (i) All Ordinary Shares issuable upon conversion
of the Series A Preferred Shares, (ii) all Ordinary Shares issued to
Kraft pursuant to the Share Purchase Agreement between the Company and
Kraft dated as of August 21, 1998, (iii) all Ordinary Shares issued to
Platinum pursuant to the Share Purchase and Warrant Investment
Agreement between the Company and Platinum dated as of February 15,
1997, (iv) all Ordinary Shares issued to Raviv pursuant to a Consulting
Agreement between the Company and Raviv dated as of January 1, 1996 and
(v) all Ordinary Shares issued by the Company in respect of such
shares, including bonus shares, share dividends and all Ordinary Shares
that may be purchased pursuant to preemptive rights or rights of first
refusal, or any other similar right.
69
"Securities Act" means the U.S. Securities Act of 1933,as amended.
1.2 Incidental Registration. Following an initial public offering
of Ordinary Shares of the Company registered under the Securities Act ("IPO"),
if the Company at any time proposes to register any of its securities, other
than in a demand registration under Section 1.3 or Section 1.4 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 request, so as to permit the disposition of
the shares so registered. Notwithstanding any other provision of this Section
1.2, if the managing underwriter advises the Company in writing that marketing
factors require a limitation of the number of shares to be underwritten, then
there shall be excluded from such registration and underwriting to the extent
necessary to satisfy such limitation, first shares held by shareholders other
than the Holders, then to the extent necessary, shares held by the Holders (pro
rata to the respective number of Registrable Shares required by the Holders to
be included in the registration); provided, however, that in any event all
Registrable Shares must be included in such registration prior to any other
shares of the Company (with the exception of shares to be issued by the Company
to the public).
1.3 Demand Registration.
(a) At any time beginning nine (9) months following the closing of
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 sale under the Securities Act. Any such demand must request the
registration of shares in a minimum amount of five million United States dollars
($5,000,000). Within twenty (20) days after receipt of any such request, the
Company shall give written notice of such request to the other Holders and 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 effect the
registration of all Registrable Shares as to which it has received requests for
registration for sale under the Securities Act specified in the request for
registration; provided, however, that the Company shall not be required to
effect any registration under this Section 1.3 within a period of one hundred
and eighty (180) days following the effective date of a previous registration.
Notwithstanding any other provision of this Section 1.3, if the managing
underwriter advises the Holders in writing that marketing factors require a
limitation of the number of shares to be underwritten, then there shall be
excluded from such registration and underwriting to the extent necessary to
satisfy such limitation, first shares held by shareholders other than the
Holders, then shares which the Company may wish to register for its own account,
and thereafter, to the extent necessary, shares held by the Holders (pro rata to
the respective number of Registrable Shares required by the Holders to be
included in the registration); provided, however, that in any event all
Registrable Shares must be included in such registration prior to any other
shares of the Company. The Company shall not register securities for sale for
its
70
own account in any registration requested pursuant to this Section 1.3 unless
permitted to do so by the written consent of Holders who hold at least
seventy-five percent (75%) of the Registrable Shares as to which registration
has been requested. 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 1.3 and to become effective less than
one hundred twenty (120) days after the effective date of any registration
requested pursuant to Section 1.3. The Company shall not be required to effect
more than two (2) registrations under this Section 1.3.
(b) The Company shall not be required to effect any registration
requested pursuant to this Section 1.3 if the registration rights granted
pursuant to this Section 1.3 have been exercised by the Holders on two previous
occasions. The right of the Holders under this Section 1.3 shall not be deemed
to have been exercised if:
(i) the requisite notice given by the Initiating
Holders pursuant to this Section 1.3 is withdrawn prior to the date of filing of
registration statement or if a registration statement filed by the Company under
the Securities Act pursuant to this Section 1.3 is withdrawn prior to its
effective date, in either case, by written notice to the Company from the
Initiating Holders that have elected not to proceed with the offering
contemplated by such registration statement because (y) a development in the
Company's affairs has occurred or has become known to the Initiating Holders
subsequent to the date of the notice by the Initiating Holders to the Company
requesting registration or the filing of such registration statement which, in
the reasonable judgment of Initiating Holders or the managing underwriter of the
proposed public offering, adversely affects the market price or marketability of
such Registrable Securities or (z) a registration statement filed by the Company
pursuant to this Section 1.3, in the judgment of the Initiating Holders or the
managing underwriter of the proposed public offering, contains 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
light of the circumstances under which made (other than any such statement or
omission relating to the Initiating Holders and based on information supplied or
failed to be supplied by the Initiating Holders) and the Company has not,
promptly after written notice thereof, corrected such statement or omission in
an amendment to such registration statement filed pursuant to Section 1.3; or
(ii) a registration statement pursuant to this
Section 1.3 shall have become effective under the Securities Act and (x) the
underwriters shall not purchase any Registrable Securities because of a failure
of condition contained in the underwriting agreement (other than a condition to
be performed by the Holders) relating to the offering covered by such
registration statement or (y) the offering of any Registrable Securities
pursuant to such registration statement is interfered with by any stop order,
injunction or other order or requirement of the SEC or other governmental agency
or court.
1.4 Form S-3 Registration. In case the Company shall receive from
any Holder or Holders a written request or requests that the Company effect a
registration on Form S-3, and any related qualification or compliance, with
respect to Registrable Shares where the aggregate net proceeds from the sale of
such Registrable Shares equals at least Five Hundred Thousand United States
dollars ($500,000), the Company will within twenty (20) 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 effect such registration under
the Securities Act and all such qualifications and compliances
71
as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Holder's or Holders' Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any other Holder or 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 1.4, (i) if Form S-3 is
not available for such offering by the Holders; (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 Securities and such other
securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than Five Hundred Thousand
United States dollars ($500,000); (iii) if the Company shall furnish to the
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company it would be
seriously detrimental to the Company or its stockholders for such Form S-3
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-3 registration statement
for a period of not more than ninety (90) days after receipt of the request of
the Holder or Holders under this Section 1.4; provided, however, that the
Company shall not utilize this right more than once in any twelve (12) month
period; (iv) if the Company has, within the twelve (12) month period preceding
the date of such request, already effected two (2) registrations on Form S-3 for
the Holders pursuant to this Section 1.4; (v) during the period starting with
the date sixty (60) days prior to the Company's estimated date of filing of, and
ending on the date six (6) months immediately following the effective date of,
any registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), 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 such
registration statement is made in good faith; or (vi) in any particular
jurisdiction in which the Company would be required to qualify to do business or
to execute a general consent to service of process in effecting such
registration, qualification or compliance; (iv) the Holders have previously
required the Company to file six (6) S-3 registrations.
1.5 Designation of Underwriter. (a) In the case of any
registration effected pursuant to Section 1.3 or 1.4, the Initiating Holders
that submitted the request for registration shall have the right to designate
the managing underwriter(s) in any underwritten offering.
(b) In the case of any registration initiated by the
Company, the Company shall have the right to designate the managing underwriter
in any underwritten offering.
1.6 Expenses. All expenses incurred in connection with any
registration under Section 1.2, Section 1.3 or Section 1.4 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.
1.7 Indemnities. In the event of any registered offering of
Ordinary Shares pursuant to this Section 1:
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1.7.1 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 contained in
any registration statement filed under the Securities Act pursuant to the
provisions of this Agreement or included in the related prospectus, as amended
or supplemented, or (ii) the omission or 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 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, liability,
action or proceeding; provided, however, that the Company will not be liable in
any such case to the extent that 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 inclusion therein; 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 1.7.1 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 or delayed. 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.
1.7.2 Each Holder participating in a registration hereunder
will indemnify and hold harmless the Company, any underwriter for the Company,
and each person, if any, who controls the Company or such underwriter, from and
against any and all losses, damages, claims, liabilities, 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 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 each such Holder will reimburse the Company, 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,
73
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 strict
conformity with written information furnished by such Holder specifically for
inclusion therein. 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 included in
any registration statement declared effective under the Securities Act pursuant
to the provisions of this Agreement, 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
1.7.2 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 Holder, which consent shall not be unreasonably withheld or
delayed. In no event shall the liability of a Holder exceed the gross proceeds
from the offering received by such Holder.
1.7.3 Promptly after receipt by an indemnified party
pursuant to the provisions of Sections 1.7.1 or 1.7.2 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 Section
1.7.1 or 1.7.2, promptly notify the indemnifying party of the commencement
thereof. 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 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 so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party pursuant to the provisions of said Sections 1.7.1 or 1.7.2 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
74
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.
1.7.4 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
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 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.
1.8 Obligations of the Company. Whenever required under this
Section 1 to effect the registration of any Registrable Shares, the Company
shall, as expeditiously as possible:
1.8.1 prepare and file with the SEC, within sixty (60) days
of a request therefor, a registration statement with respect to such Registrable
Shares and use its best efforts to cause such registration statement to become
effective, and, upon the request of the holders of a majority of the Registrable
Shares registered thereunder, keep such registration statement effective for a
period of up to nine (9) months or, if sooner, until the distribution
contemplated in the Registration Statement has been completed.
1.8.2 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.
1.8.3 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.
1.8.4 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.
1.8.5 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.
1.8.6 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.
75
1.8.7 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.
1.8.8 furnish, at the request of any Holder requesting
registration of Registrable Shares pursuant to this Section 1, on the date that
such Registrable Shares are delivered to the underwriters for sale in connection
with a registration pursuant to this Section 3, if such securities are being
sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders 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,
if any, and to the Holders requesting registration of Registrable Shares.
1.9 Assignment of Registration Rights. Any of the Holders may
assign its rights to cause the Company to register Shares pursuant to this
Section 1 to a transferee of all or any part of its Registrable Shares. The
transferor shall, within twenty (20) days after such transfer, furnish the
Company with written notice of the name and address of such transferee and the
securities with respect to which such registration rights are being assigned,
and the transferee's written agreement to be bound by this Section 1.
1.10 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 for up to one hundred and eighty (180) days, and
all Holders will agree to abide by such customary "lock-up" period of up to one
hundred and eighty (180) days as is required by the underwriter in such
registration, provided, however, that the Holders shall only be required to so
agree if all directors, executive officers and other affiliates of the Company
shall also agree to abide by such customary "lock-up" period under identical
terms.
1.11 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 the steps it has taken to so comply.
76
2. Termination of Prior Registration Rights. Any registration
rights granted by the Company to any of the parties hereto are hereby superceded
in their entirety by this Agreement, and such prior registration rights are no
longer of any force or effect.
3. Miscellaneous
3.1 Further Assurances. Each of the parties hereto shall perform
such further acts and execute such further documents as may reasonably be
necessary to carry out and give full effect to the provisions of this Agreement
and the intentions of the parties as reflected thereby.
3.2 Governing Law. This Agreement shall be governed by and
construed according to the laws of the State of New York, without regard to the
conflict of laws provisions thereof.
3.3 Successors and Assigns; Assignment. Except as otherwise
expressly limited herein, the provisions hereof shall inure to the benefit of,
and be binding upon, the successors, assigns, heirs, executors, and
administrators of the parties hereto. Notwithstanding any other provision
contained herein, no party hereto shall be authorized to assign any portion of
its rights or obligations hereunder without the prior written consent of the
other party hereto.
3.4 Entire Agreement; Amendment and Waiver. This Agreement
constitute the full and entire understanding and agreement between the parties
with regard to the subject matters hereof. Any term of this Agreement may be
amended and the observance of any term hereof may be waived (either
prospectively or retroactively and either generally or in a particular instance)
only with the written consent of all of the parties to this Agreement.
3.5 Notices, etc. All notices and other communications required or
permitted hereunder to be given to a party to this Agreement shall be in writing
and shall be telecopied or mailed by registered or certified mail, postage
prepaid, or otherwise delivered by hand or by messenger, addressed to such
party's address as set forth below:
If to Medscape, Inc.:
Medscape, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xx. Xxxx Xxxxxx
President and Chief Operating
Officer
Telecopier: (000) 000-0000
With copies to:
Patterson, Belknap, Xxxx & Tyler LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. XxXxxxx, Esq.
Telecopier: (000) 000-0000
and
77
Xxxxx Xxxxx & Co.
00 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxx
Attention: Xxxxx Xxxxxxxxx, Esq.
Telecopier: (000-0) 000-0000
If to Kraft Group LLC:
Kraft Group LLC
Xxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx, 00000
Attention: Xxxxxx X. Xxxxx/Xxxxxxxx X. Xxxxx
With a copy to:
Xxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx, 00000
Attention: Xxxxx X. Xxxxx Esq./
Xxxxxxxx X. Xxxxxxxxx Esq.
If to Platinum Health Ventures Ltd.:
Platinum Health Ventures Ltd.
c\o Xxxxx Xxxxxxxxxxxx, Adv.
00X Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, 00000, Xxxxxx
Telecopier: (000-0)000-0000
If to Xxx Xxxxx:
Xxx Xxxxx
__________________________
__________________________
__________________________
Attention: _______________
Telecopier: ______________
if to the Company:
Softwatch Ltd.
0 Xx'xx Xxxxxx
Xxxxx Xxx, Xxxxxx
Attention: Xxxx Xxxxxx
78
Telecopier: (000-0) 000-0000
With a copy to:
Goldfarb, Levy, Eran & Co.
Eliahu House
2 Ibn Xxxxxx Xxxxxx
Xxx Xxxx 00000, Xxxxxx
Attention: Barak X. Xxxxx
Telecopier: (000-0) 000-0000
or such other address with respect to a party as such party shall notify each
other party in writing as above provided. Any notice sent in accordance with
this Section 3.5 shall be effective (i) if mailed, ten (10) business days after
mailing, (ii) if sent by messenger, upon delivery, and (iii) if sent via
telecopier, upon transmission and electronic confirmation of receipt or (if
transmitted and received on a non-business day) on the first business day
following transmission and electronic confirmation of receipt.
3.6 Delays or Omissions. No delay or omission to exercise any
right, power, or remedy accruing to any party upon any breach or default under
this Agreement, shall be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent, or approval of
any kind or character on the part of any party of any breach or default under
this Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any of the parties, shall be
cumulative and not alternative.
3.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and enforceable against
the parties actually executing such counterpart, and all of which together shall
constitute one and the same instrument.
[Remainder of the page intentionally left blank]
79
IN WITNESS WHEREOF the parties have signed this Agreement as of the
date first hereinabove set forth.
SOFTWATCH LTD. MEDSCAPE, INC.
by: ________________________ by: ________________________
name: ________________________ name: ________________________
title: ________________________ title: ________________________
KRAFT GROUP LLC PLATINUM HEALTH VENTURE LTD.
by: ________________________ by: ________________________
name: ________________________ name: ________________________
title: ________________________ title: ________________________
_________________________________
XXX XXXXX
by: ________________________
name: ________________________
title: ________________________
80
SCHEDULE 1: THE PURCHASERS
NAME PURCHASE PRICE FOR PREFERRED SHARES SERIES A PREFERRED SHARES
---- ----------------------------------- -------------------------
Medscape, Inc. $2,999,954 1,040,170
Kraft Group LLC $ 122,998 42,647
Minols Ltd. $ 5,998 2,080
X. Xxxxxxx $ 1,799 624
22
81
BRING DOWN CERTIFICATE
June __, 1999
To the Purchasers (as defined in the Preferred
Share Purchase Agreement)
Ladies and Gentlemen:
Pursuant to Sections 2.3.1 and 2.3.2 of the Preferred Share Purchase
Agreement dated as of June __, 1999 (the "Agreement") by and among Softwatch
Ltd. (the "Company"), Medscape, Inc., and the persons and entities set forth on
Schedule 1 attached to the Agreement, if any, the undersigned hereby certifies
that as of the date of Closing (as defined in the Agreement):
1. The representations and warranties of the Company are true and correct
in all material respects with the same force and effect as the same were true
and correct as of the date of the Agreement, except to the extent such
representations and warranties expressly relate to an earlier time.
2. All covenants and agreements required by the Agreement to have been
performed by the Company at or prior to the Closing have been performed or
complied with in all respects.
Very truly yours,
SOFTWATCH LTD.
By: ____________________________
82
SOFTWATCH LTD.
(the "Company")
UNANIMOUS ACTION OF THE BOARD OF DIRECTORS
The undersigned, being all the members of the Board of Directors of the
Company, in writing and without a meeting, pursuant to the Company's Articles of
Association of the Company, hereby unanimously adopt the following resolutions
as of this __ day of ___, 1999:
IT IS HEREBY RESOLVED AS FOLLOWS:
1. RESOLVED, unanimously, that the execution, delivery and performance of the
Share Purchase Agreement (the "Purchase Agreement") dated as of June __, 1999 by
and among the Company, Medscape, Inc. ("Medscape") and the individuals and
entities listed on Schedule 1 to the Purchase Agreement be, and they hereby are,
approved.
2. RESOLVED, unanimously, that the execution, delivery and performance of the
Registration Rights Agreement (the "Rights Agreement") dated as of June __, 1999
by and among the Company, Medscape, Kraft Group LLC, Platinum Health Ventures
Ltd. and Xxx Xxxxx be, and they hereby are, approved.
3. RESOLVED, unanimously, to issue and allot Series A Preferred Shares of the
Company, nominal value NIS 0.01 each, to each of the Purchasers in accordance
with the number of shares listed next to the name of each such Purchaser on
Schedule 1 to the Purchase Agreement upon receipt of the purchase price from
such Purchaser as listed next to the name of each such Purchaser on Schedule 1
to the Purchase Agreement.
4. RESOLVED, unanimously, that Xxxx Xxxxxx be, and he hereby is, authorized and
empowered, in the name and on behalf of the Company, to make or cause to be
made, and to execute and deliver, the Purchase Agreement, the Rights Agreement
and all such additional agreements, documents, instruments and certificates, and
to do or cause to be done all such acts and things, and to take all such steps
as he may at any time or from time to time deem necessary or desirable in
connection with or in furtherance of the consummation of the transactions
described in the foregoing resolutions, and in connection with or in furtherance
of the consummation of the transactions contemplated under the Purchase
Agreement.
5. RESOLVED, unanimously, that the Consulting Agreement by and between the
Company and Xxx Xxxxxx dated May 11, 1998 is hereby approved, ratified and
confirmed.
6. RESOLVED, unanimously (without the participation of Xxxx Xxxxxxx, who has a
personal interest in the matter), subject to approval by the Company's
shareholders, that the Consulting Agreement by and between the Company and Xxxx
Xxxxxxx dated June 15, 1997 is hereby approved, ratified and confirmed.
83
7. RESOLVED, unanimously (without the participation of Xxx Xxxxxxxx, who has a
personal interest in the matter), subject to approval by the Company's
shareholders, that the Consulting Agreement by and between the Company and Xxx
Xxxxxxxx dated March 8, 1998 together with the amendment thereto dated January
5, 1999 are hereby approved, ratified and confirmed and attached hereto as
Exhibit A.
8. RESOLVED, unanimously, that the Letter of Understanding (the "Letter of
Understanding") by and among the Company, Softwatch, Inc., Xxxx Xxxxxxxx and
Healthcourt Technologies, Inc. dated April 2, 1998 is hereby approved, ratified
and confirmed.
9. RESOLVED, unanimously (without the participation of Xxxx Xxxxxxx, who has a
personal interest in the matter), subject to approval by the Company's
shareholders, that the Convertible Loan Agreement by and among the Company, Xxxx
Xxxxxxxx Xxxx Xxxxxxxxx and Xxxx Xxxxxxx dated May 10, 1998 is hereby approved,
ratified and confirmed.
10. RESOVLED, unanimously, to amend Section 14.1 of the Company's Key Employee
and Directors Share Option Plan as follows: the year 1996 is hereby replaced
with the year 2006.
11. RESOLVED, unanimously, to issue to HealthCourt 1% Partnership
("HealthCourt") 455 Ordinary Shares of the Company, nominal value NIS 0.01 each,
which is the difference between the number of shares actually issued (55,090) to
HealthCourt pursuant to the Letter of Understanding and the number of shares
(55,545) which should have been issued to HealthCourt by the Company pursuant to
the Letter of Understanding.
12. RESOLVED, unanimously (without the participation of Xxxx Xxxxxx, who has a
personal interest in the matter), subject to approval by the Company's
shareholders, that the Loan Agreement by and among the Company and Xxxx Xxxxxx,
attached hereto as Exhibit B is hereby approved, ratified and confirmed.
13. RESOLVED, unanimously, that the terms set forth in the draft Term Sheet by
and among the Company and Xxxx Xxxxx dated September 30, 1996 are hereby
approved, ratified and confirmed.
14. RESOLVED, unanimously (without the participation of Xxxx Xxxxxx and Xxxx
Xxxxxxxx, who have a personal interest in the matter), that the Share Purchase
Agreement by and among the Company, Xxxx Xxxxxx and Xxxx Xxxxxxxx dated
September 1, 1995 is hereby approved, ratified and confirmed.
15. RESOLVED, unanimously (without the participation of Xxxxxxx Xxxxxxx Xxxxx,
who has a personal interest in the matter), subject to approval by the Company's
shareholders, that the Loan Agreement by and among the Company and Xxxxxxx
Xxxxxxx Xxxxx dated August 5, 1997 is hereby approved, ratified and confirmed.
16. RESOLVED, unanimously (without the participation of Xxxxxxx Xxxxxxx Xxxxx,
who has a personal interest in the matter), subject to approval by the Company's
shareholders, that the
84
Loan Agreement by and among the Company and Xxxxxxx Xxxxxxx Xxxxx, attached
hereto as Exhibit C is hereby approved, ratified and confirmed.
17. RESOLVED, to approve the execution of warrant and option agreements in favor
of the following parties, in respect of such warrants and options previously
granted to such parties:
Xxx Xxxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Xxxxxxx Xxxxx and Platinum Health
Ventures
18. It is hereby clarified that by a Consulting Agreement between the Company
and Xxx Xxxxxxxx ("Xxxxxxxx") dated March 8, 1998 (the "Original Agreement"),
the Company agreed to xxxxx Xxxxxxxx options to purchase an aggregate of 88,650
ordinary shares. In the amendment to such Consulting Agreement dated January 5,
1999 (the "Amending Agreement") it is mistakenly stated that "Xx. Xxxxxxxx will
be compensated for his services by receiving an additional 79,982 share options.
This will be added to his total existing 86,650 share options". This mistake was
subsequently corrected by the Company and Xxxxxxxx stating that, in accordance
with the Original Agreement, Xxxxxxxx is entitled to options to purchase an
aggregate of 88,650 ordinary shares and by the Amending Agreement he is entitled
to additional options to purchase an aggregate of 77,982 ordinary shares. IT IS
THEREFORE RESOLVED, unanimously, that any previous resolution of the Company's
Board which may be deemed to issue additional shares to Xxxxxxxx be deemed
amended in accordance with the above.
19. RESOLVED, unanimously (without the participation of Xxxxxxx Xxxxxxx Xxxxx,
who has a personal interest in the matter), subject to approval by the Company's
shareholders, that the issuance by the Company of 63 Ordinary Shares to Xxxxxxx
Xxxxxxx Xxxxx pursuant to the Board of Directors resolution dated June 10, 1996
is hereby approved, ratified and confirmed.
20. RESOLVED, unanimously, that the execution by the Company of the following
lease agreements is hereby approved, ratified and confirmed:
The lease agreement between the Company and Xxxxxx Xxxxxxx dated June 13, 1996,
as amended on April 29, 1999;
The lease agreement between the Company and Altira Properties (1979) Ltd.,
Altira Investments Ltd. and Altira (1993) Ltd. dated May 16, 1999.
85
IN WITNESS WHEREOF, the undersigned have signed this instrument as of the date
first set forth above.
______________________________ _______________________________
Xxxx Xxxxxx Xxxx Xxxxxxxx
______________________________ _______________________________
Xxxx Xxxxxxx Xxxx Xxxxx
______________________________ _______________________________
Xxxxx Xxxxxx Xxxxxx Xxxxxxxx
86
SOFTWATCH LTD.
Private Company No. 00-000000-0
(the "Company")
Minutes of an extraordinary meeting (the "Meeting") of the shareholders
of the Company, held at the Company's offices on June ___, 1999.
Present: Legal Quorum
Chairman: Xx. Xxxx Xxxxxx
THE FOLLOWING RESOLUTIONS WERE ADOPTED BY THE SHAREHOLDERS AT THE MEETING:
1. RESOLVED, as a special resolution (which was approved by no less
than seventy-five percent (75%) of the shareholders present in person or by
proxy voting on such resolution) to increase the share capital of the Company by
the amount of NIS 20,000, so that following such increase the share capital of
the Company shall be NIS 120,000, divided into 10,800,000 Ordinary Shares,
nominal value NIS 0.01 each, and 1,200,000 Series A Preferred Shares, nominal
value NIS 0.01 each..
2. RESOLVED, as a special resolution (which was approved by no less
than seventy-five percent (75%) of the shareholders present in person or by
proxy voting on such resolution) to approve and adopt the Amended Articles of
Association (the "Amended Articles") of the Company, in the form attached hereto
as Exhibit A and that the Amended Association replace in their entirety the
previously existing Articles of Association of the Company.
3. RESOLVED, that the execution, delivery and performance of the Share
Purchase Agreement (the "Purchase Agreement") dated as of June __, 1999 by and
among the Company, Medscape, Inc. ("Medscape") and the individuals and entities
listed on Schedule 1 to the Purchase Agreement be, and they hereby are,
approved.
4. RESOLVED, that the execution, delivery and performance of the Registration
Rights Agreement (the "Rights Agreement") dated as of June __, 1999 by and among
the Company, Medscape, Kraft Group LLC, Platinum Health Ventures Ltd. and Xxx
Xxxxx be, and they hereby are, approved.
5. RESOLVED, that the Consulting Agreement by and between the Company and Xxxx
Xxxxxxx dated June 15, 1997 is not adverse to the best interests of the Company
and is hereby approved, ratified and confirmed.
6. RESOLVED, that the Consulting Agreement by and between the Company and Xxx
Xxxxxxxx dated March 8, 1998 together with amendment thereto dated January 5,
1999 are not adverse to the best interests of the Company and are hereby
approved, ratified and confirmed and attached hereto as Exhibit B.
87
7. RESOLVED, that the Letter of Understanding (the "Letter of Understanding") by
and among the Company, Softwatch, Inc., Xxxx Xxxxxxxx and Healthcourt
Technologies, Inc. dated August 11, 1998 is not adverse to the best interests of
the Company and is hereby approved, ratified and confirmed.
8. RESOLVED, that the Convertible Loan Agreement by and among the Company, Xxxx
Xxxxxxxx Xxxx Xxxxxxxxx and Xxxx Xxxxxxx dated May 10, 1998 is not adverse to
the best interests of the Company and is hereby approved, ratified and
confirmed.
9. RESOLVED, that the provision of a loan to the Company in the amount of
$209,663 by Xxxx Xxxxxx between 1994 and 1997 on the terms described to the
shareholders at the Meeting is not adverse to the best interests of the Company
and is hereby approved, ratified and confirmed.
10. RESOLVED, that the Loan Agreement by and among the Company and Xxxxxxx
Xxxxxxx Xxxxx dated August 5, 1997 is not adverse to the best interests of the
Company and is hereby approved, ratified and confirmed.
11. RESOLVED, to approve the execution of warrant and option agreements in favor
of the following parties, in respect of such warrants and options previously
granted to such parties:
Xxx Xxxxxxxx;
Xxxxxxx Xxxxx;
Xxxxxxx Xxxxxxx Xxxxx; and
Platinum Health Ventures.
12. RESOLVED, that the transaction described in the Board of Directors
resolution dated August 10, 1994, in which the Company issued certain shares to
Xxxx Xxxxxxxx and granted Xxxx Xxxxxx the right to repurchase such shares, is
not adverse to the best interests of the Company and is hereby approved,
ratified and confirmed.
13. RESOLVED, that the issuance of shares to Xxxx Xxxxxxxx pursuant to
the Board of Directors resolution dated May 14, 1996 is not adverse to the best
interests of the Company and is hereby approved, ratified and confirmed.
14. RESOLVED, that the issuance of shares to Xxx Xxxxx pursuant to the
Board of Directors resolution dated July 10, 1996 is not adverse to the best
interests of the Company and is hereby approved, ratified and confirmed.
15. RESOLVED, that the grant of options to Xxxx Xxxxxxxx pursuant to
the Board of Directors resolution dated November 27, 1996 is not adverse to the
best
88
interests of the Company and is hereby approved, ratified and confirmed.
16. RESOLVED, that the issuance of shares to Xxx Xxxxx pursuant to the
Board of Directors resolution dated December 26, 1996 is not adverse to the best
interests of the Company and is hereby approved, ratified and confirmed.
17. RESOLVED, that the amendments to the Company's Directors and Key
Employee Share Option Plan and International Employee Stock Option Plan pursuant
to the Board of Directors resolution dated November 27, 1996 and February 3,
1997 are not adverse to the best interests of the Company and are hereby
approved, ratified and confirmed.
18. RESOLVED, that the amendments to the terms of options granted to
Xxxx Xxxxxxxx pursuant to the Board of Directors resolution dated April 2, 1997
are not adverse to the best interests of the Company are hereby approved,
ratified and confirmed.
19. RESOLVED, that the grant of options to Xxxx Xxxxxxxx pursuant to
the Board of Directors resolution dated August 1, 1997 is not adverse to the
best interests of the Company and is hereby approved, ratified and confirmed.
20. RESOLVED, that the issuance of shares to Xxxx Xxxxxxx and the
conversion into share options of a debt owed by the Company to Xxx Xxxxx
pursuant to the Board of Directors resolution dated December 9, 1998 is not
adverse to the best interests of the Company and is hereby approved, ratified
and confirmed.
21. RESOLVED, that the issuance of shares to Xxx Xxxxx and Xxxx Xxxxx
pursuant to the Board of Directors resolution dated February 10, 1998 is not
adverse to the best interests of the Company and is hereby approved, ratified
and confirmed.
22. RESOLVED, that the Loan Agreement between the Company and Xxxx
Xxxxx dated August 5, 1997 and the warrants granted to Xxxx Xxxxx as of August
5, 1997 are not adverse to the best interests of the Company and are hereby
approved, ratified and confirmed.
23. RESOLVED, that the issuance of shares to Xxxx Xxxxxxxx pursuant to
the Board of Directors resolution dated May 14, 1996 is not adverse to the best
interests of the Company and is hereby approved, ratified and confirmed.
24. RESOLVED, that the issuance by the Company of 63 Ordinary Shares to Xxxxxxx
Xxxxxxx Xxxxx pursuant to the Board of Directors resolution dated June 10, 1996
is not adverse to the best interests of the Company and is hereby approved,
ratified and confirmed.
25. RESOLVED, that the Share Purchase Agreement by and among the Company, Xxxx
Xxxxxx and Xxxx Xxxxxxxx dated September 1, 1995 is not adverse to the best
interests of the Company and is hereby approved, ratified and confirmed.
89
26. RESOLVED, that the Softwatch Ltd. International Employee Stock Option Plan
is hereby approved, ratified and confirmed.
------------------
Xx. Xxxx Xxxxxx
Chairman
90
1
To: Softwatch Ltd.
On May 10, 1998, we, the undersigned, Xxxx Xxxxxxxxx, Xxxx
Xxxxxxxx and Xxxx Xxxxxxx (collectively, the "Investors") entered into a
convertible loan agreement (the "Loan Agreement") with Softwatch Ltd. (the
"Company") pursuant to which the Investors lent the Company the amount of
$65,000 (the "Loan"), which Loan was stated to be convertible into shares at a
price per share of US$0.71.
By a Letter of Understanding by and between the Company, SoftWatch
Inc., Xxxx Xxxxxxxx and Healthcourt Technologies Inc. ("Healthcourt
Technologies") dated August 11, 1998 superceding and replacing a Letter of
Understanding by and between the parties dated April 2, 1998, (the "Investment
Agreement"), the Investors and all other shareholders in Healthcourt (together,
the "Healthcourt Shareholders") were granted the right to purchase 111,090
Ordinary Shares of the Company during a subsequent investment in the Company at
a price per share as provided for in such subsequent investment, or as otherwise
mutually agreed.
By a Share Purchase Agreement by and between the Company and Kraft
Group LLC dated August 21, 1998, the Healthcourt Shareholders were granted the
right to exercise their right to purchase up to 111,090 Ordinary Shares pursuant
to the Letter of Understanding dated August 11, 1998.
Pursuant to and in accordance with the rights given to the
Healthcourt Shareholders in the Investment Agreement and the Kraft Group Share
Purchase Agreement dated August 21, 1998, on March 19, 1999, and at the request
of Healthcourt Technologies and the Healthcourt Shareholders, the Company issued
111,090 Ordinary Shares to a limited partnership called Healthcourt 2%
Partnership ("Healthcourt").
It is hereby confirmed that only certain of the 111,090 Ordinary
Shares were issued to Healthcourt Technologies pursuant to the Investment
Agreement. Instead, the following actions were taken: (i) The Investors fully
converted the Loan into
91
2
91,549 Ordinary Shares, which shares were issued, at the Investors' request,
directly to Healthcourt Shareholders; (ii) The Investors waived all rights to
purchase 91,549 Ordinary Shares pursuant to the Investment Agreement; and (iii)
The balance of the 111,090 Ordinary Shares (being 19,541 Ordinary Shares) were
issued directly to the Healthcourt Shareholders, for valuable consideration,
pursuant to the Investment Agreement.
92
3
We, the undersigned, hereby confirm that we have no claim for the
issuance to us by the Company of any further shares, options, warrants or other
securities of the Company resulting from the Loan Agreement, the Investment
Agreement or an Agreement of Accession between ourselves and the Company dated
November 6, 1998.
Dated:
-------------
------------------- ----------------------
Xxxx Xxxxxxxxx Xxxx Xxxxxxxx
------------------- ----------------------
Xxxx Xxxxxxx Healthcourt 2%
Partnership
93
SCHEDULE 3.3
CAPITALIZATION
CURRENT CAPITALIZATION TABLE AS OF THE EFFECTIVE DATE OF THE AGREEMENT:
SHAREHOLDER SHARES OPTIONS TOTAL %
----------- ------ ------- ----- ------
Xxxx Xxxxxx 3,400,000 3,400,000 44.84%
Xxxx Xxxxxxxx 519,800 360,312 880,112 11.61%
Xxxx Xxxxx 545,299 29,450 574,749 7.58%
Kraft Group 309,440 309,440 4.08%
Platinum Health Ventures 283,088 283,088 3.73%
Xxx Xxxxx 223,075 30,944 254,019 3.35%
Xxx Xxxxxxxx 140,712 100,218 240,930 3.18%
Xxxxx Xxxxxx 200,000 200,000 2.64%
Xxxx. X. Xxxxxxx 100,000 100,000 200,000 2.64%
Xxxx Xxxxxxx 62,487 104,145 166,632 2.20%
Xxxx Xxxxxxxx 144,554 144,554 1.91%
Firepond (X. Xxxxxxxx & X. Xxxxx) 136,584 136,584 1.80%
Healthcourt 2% 111,090 111,090 1.47%
MDC Group LLC 106,778 106,778 1.41%
Employees (ESOP) (<1%) 287,860 287,860 3.80%
Other stakeholders (<1%) 235,205 50,936 286,141 3.77%
----------------------- -------------- -------- -----
TOTAL 6,236,974 1,345,003 7,581,977 100%
PURSUANT TO A CONSULTING AGREEMENT BY AND BETWEEN THE COMPANY AND XX. XXX XXXXXX
DATED MAY 11, 1998, XX. XXXXXX WILL BE PARTLY COMPENSATED FOR HIS ONGOING
CONSULTING SERVICES BY ISSUING OPTIONS TO PURCHASE SHARES IN LIEU OF HIS
CONSULTING FEES. THIS TABLE ONLY ACCOUNTS FOR OPTIONS PREVIOUSLY ACCOUNTED TO
XX. XXXXXX PURSUANT TO SAID CONSULTING AGREEMENT.
THE RESTATED ARTICLES OF ASSOCIATION REFLECT ALL OF THE COMPANY'S COMMITMENTS
WITH REGARDS TO THE ELECTION OF BOARD MEMBERS.
EXCEPT FOR THE PREEMPTIVE RIGHTS PROVIDED IN THE AGREEMENT BY AND BETWEEN THE
COMPANY AND HITEC INVESTORS GROUP DATED JANUARY 29, 1998 AND THE SHARE PURCHASE
AGREEMENT BY AND BETWEEN THE COMPANY AND THE KRAFT GROUP LLC DATED AUGUST 21,
1998 NO OTHER PERSON OR ENTITY IS ENTITLED TO PREEMPTIVE RIGHTS AS OF THE
EFFECTIVE DATE OF THIS AGREEMENT.
94
SCHEDULE 3.10
CERTAIN AGREEMENTS
CONSULTING AGREEMENT BY AND BETWEEN THE COMPANY AND XXX XXXXX DATED JANUARY 1,
1996.
95
SCHEDULE 3.13
INTELLECTUAL PROPERTY
THE FOLLOWING TABLE REPRESENTS ALL CONTRACTS REGARDING SOFTWATCH'S INTELLECTUAL
PROPERTY LICENSE CONTRACTS:
LTD./INC. PARTIES AGREEMENT TITLE DATE
LTD Teva Xxxxxx Partners License Agreement 13-Jan-98
LTD Teva Xxxxxx Partners Escrow Agreement 13-Feb-98
INC Accordant Health Services LOI License 2-Jul-98
LTD Teva Xxxxxx Partners Service and Maintenance Agreement 6-Jul-98
INC HMR/Hrava /product Group XXX License 5-Jan-99
INC HMR Diabetes Group XXX License 22-Jan-99
INC Procter &Gamble License agreement 19-Feb-99
INC Third Age Media MEDIA PARTNER CO-BRANDING Agreement 19-Feb-99
INC XxXxxx-Xxxxxxxx Letter 4-May-99
INC MediSense License agreement 6-May-99
96
SCHEDULE 3.19
RELATED PARTY TRANSACTIONS
Agreements with current or former shareholder, director, officer, or employee of
Seller or the Subsidiary.
LTD./INC. PARTIES AGREEMENT TITLE DATE
LTD Xxxx Xxxxxxxx Employment Agreement 7-Aug-94
LTD Xxxx Xxxxxxxx Terms 1-Aug-95
LTD Xxxx Xxxxxxxx Share Purchase Agreement 1-Sep-95
LTD Xxx Xxxxx Consulting and Investment Agreement 1-Jan-96
LTD Xxxxxxx Xxxxxxx Xxxxx Consulting Agreement 18-Jul-96
LTD Xxxxxxx Xxxxxxx Xxxxx Investment Agreement 18-Jul-96
LTD Xxxx Xxx Consulting Agreement 15-Feb-97
LTD Xxxxxxx Xxxxxxx Xxxxx Loan Agreement 5-Aug-97
LTD Xxxxxxx Xxxxxxx Xxxxx Warrant 11-Aug-97
LTD Xxx Xxxxxxxx Consulting Agreement I 8-Mar-98
LTD Xxxx Xxxxxxxxx, Xxxx Xxxxxxx, Xxxx Loan Agreement 10-May-98
Xxxxxxxx
LTD Xxxx Xxxxxxx Consulting Agreement 15-Jun-98
LTD/INC Xxxx Xxxxxxxx & Healthcourt LQLI 11-Aug-98
LTD Healthcourt Technologies Inc Agreement of Accession 6-Nov-98
Investors
LTD Xxx Xxxxxxxx Amendment To Consulting Agreement(11)(as 5-Jan-99
subsequently amended)
LTD Xxxx Xxxxxxxx & Healthcourt 1% Share restriction Agreement 1% 14-Jan-99
Investors
LTD Healthcourt Technologies Inc Asset Purchase Agreement 14-Jan-99
LTD Xxxx Xxxxxxxx & Healthcourt 2% Share Restriction Agreement 2% 19-Mar-99
Investors
LTD/INC Xxx Xxxxxxxx Consulting Agreement II 7-Apr-99
LTD Xxxx Xxxxxx Loan Understanding 1997 (date unknown)
97
SCHEDULE 3.21
INSURANCE
SOFTWATCH LTD. HAS OBTAINED THE FOLLOWING INSURANCE COVERAGE FROM MENORA
INSURANCE COMPANY LTD. IN THE FOLLOWING AMOUNTS:
BURGLARY - 97,037 NIS
FIRE - 217, 830 NIS
BUSINESS - 1,272,370 NIS
ELECTRONIC EQUIPMENT - 96,700 NIS EARTHQUAKES AND OTHER NATURAL DISASTERS -
762,060 NIS THIRD PARTY (WORK RELATED ACCIDENTS) - COVERAGE OF UP TO $5,000,000.
THE POLICY EXPIRES ON JULY 31, 1999.
SOFTWATCH INC. HAS OBTAINED THE FOLLOWING INSURANCE COVERAGE: LIABILITY
INSURANCE IN THE FOLLOWING AMOUNTS:
GENERAL AGGREGATED - $2,000,000
PRODUCTS - $2,000,000
PERSONAL INJURY - $1,000,000
EACH OCCURRENCE - $ 1,000,000
FIRE DAMAGE - $ 50,000
MEDICAL EXPENSES - $5,000
EQUIPMENT INSURANCE IN THE AMOUNT OF $10,000 COVERING ALL OFFICE EQUIPMENT AND
OFFICE FURNITURE. SOFTWATCH INC. ALSO INSURES THE COMPANY CAR.
98
SCHEDULE 3.22
INFORMATION TECHNOLOGY
SOFTWATCH SOFTWARE HAS BEEN WRITTEN AND DESIGNED WITH THE INTENT TO BE YEAR 2000
COMPLIANT. THE COMPANY HAS NOT DONE A COMPREHENSIVE TESTING OF THE SYSTEM FOR
THE YEAR 2000.
99
SCHEDULE 3.23
MATERIAL CONTRACTS
[GRAPHIC OMITTED]
LTD/INC Parties Agreement Title Date
LTD Asat Evenhaim Employment Agreement 7-Aug-94
LTD Office of chief scientist R&D Grant Num 17511 13-Sep-94
LTD Xx. X. Xxxxxxx Consulting Agreement 1-Oct-94
LTD Xx. X. Xxxxxxx Finder Agreement 23-Oct-94
LTD Asat Evenhaim Terms 1-Aug-95
LTD Asat Evenhaim Share Purchase Agreement 1-Sep-95
LTD Xx. Xxxxx Xxxxxx Consulting Agreement 24-Oct-95
LTD Ministry of Industry and Trade Export Grant File 2 - 645195 12-Dec-95
LTD Xxx Xxxxx Consulting and Investment Agreement 1-Jan-96
LTD Office of chief scientist R&D Grant Num 20019 22-Jan-96
LTD/INC Xxxxx Xxxxxxx (Ex employee) Employee Agreement 23-Apr-96
LTD/INC Xxxx Xxxxx (Ex consultant) Term Sheet 1-May-96
LTD Xxxxxx Xxxxxxx Office Lease 13-Jun-96
LTD Xxxxxxx Xxxxxxx Xxxxx Consulting Agreement 18-Jul-96
LTD Xxxxxxx Xxxxxxx Xxxxx Investment Agreement 18-Jul-96
LTD Xx. Xxxx Xxxxx Consulting Agreement - Term Sheet (unsigned) 30-Sep-96
LTD Xxxx Xxxxxx Loan Understanding 1997 (date unknown)
LTD Xxxx Xxx Consulting Agreement 15-Feb-97
LTD Platinum Health Ventures Limited Share Purchase And Warrant Investments Agreement 15-Feb-97
LTD/INC AccessNet Ltd Finder Agreement 9-Jun-97
LTD Xxxxxxx Xxxxxxx Xxxxx Loan Agreement 5-Aug-97
LTD Xxxxxxx Xxxxxxx Xxxxx Warrant 11-Aug-97
LTD Triangle Technologies Finder Agreement 1-Sep-97
LTD Platinum Health Ventures Limited Warrant (II) 7-Oct-97
LTD Ministry of Industry and Trade Approved Enterprise Program 13-Oct-97
LTD Firepond Consulting Agreement I (includes warrant) 1-Nov-97
LTD Ministry of Industry and Trade Export Grant File 2 - 365196 3-Nov-97
LTD/INC Medical Telecommunications Agreement for Defining a Business Relationship 21-Nov-97
Associations LLC
LTD Xxx Xxxxxx Partners License Agreement 13-Jan-98
LTD Hitec Investors Group (HIG) Letter of Company Undertaking 29-Jan-98
INC Center of Burlington Office Lease 4-Feb-98
LTD Teva Xxxxxx Partners Escrow Agreement 13-Feb-98
LTD Xxx Xxxxxxxx Consulting Agreement I 8-Mar-95
LTD Office of chief scientist R&D Grant Num 22754 24-Mar-96
LTD SoftWatch Inc Loan Agreement 1-Apr-98
LTD Software FX, Inc Agreement 033098 License and Rights 6-Apr-98
LTD CIS XXX 13-Apr-98
LTD Health Concepts Inc XXX 15-Apr-98
LTD Xxxxxxxx Xxxx Xxxx Legal Consulting (Warrants) 19-Apr-98
LTD Xxxx Xxxxxxxxx, Xxxx Xxxxxxx, Xxxx Loan Agreement 10-May-98
Xxxxxxxx
LTD/INC Xx. Xxx Xxxxxx Consulting Agreement 11-May-98
LTD Firepond Consulting Agreement II 1-Jun-98
LTD Xxxx Xxxxxxx Consulting Agreement 15-Jun-98
INC Xxxx Xxxxx MD Letter 29-Jun-98
INC Accordant Health Services LOI License 2-Jul-96
LTD Teva Xxxxxx Partners Service and Maintenance Agreement 6-Jul-96
INC Xxxx Xxxxx MD Letter 24-Jul-98
LTD/INC Xxxx Xxxxxxxx & Healthcourt XXX 11-Aug-98
LTD Kraft LLC Share Purchase Agreement 21-Aug-98
LTD Direct Computation Computer leasing Agreement 7-Oct-98
LTD Healthcourt Technologies Inc Agreement of Accession 6-Nov-98
Investors
LTD Xxx Xxxxxxxx Amendment to Consulting Agreement (II) (as 6-Jan-99
subsequently amended)
INC HMR/Hrava/product Group XXX License 5-Jan-99
LTD Xxxx Xxxxxxxx & Healthcourt 1% Share restriction Agreement 1% 14-Jan-99
Investors
LTD Healthcourt Technologies Inc Asset Purchase Agreement 14-Jan-99
INC HMR Diabetes Group XXX License 22-Jan-99
INC Xxxxxxx & Xxxxxx License agreement 18-Feb-99
INC Third Age Media MEDIA PARTNER CO-BRANDING Agreement 19-Feb-99
INC Center of Burlington Amendment to Office Lease and Services Agreement 26-Feb-99
LTD Xxxx Xxxxxxxx & Healthcourt 2% Share Restriction Agreement 2% 19-Mar-99
Investors
LTD/INC Xxx Xxxxxxxx Consulting Agreement II 7-Apr-99
INC Harvard Net Service and Maintenance Agreement 12-Apr-99
INC HR LOGIC Service and Maintenance Agreement 13-Apr-99
INC Center of Burlington Office Lease 16-Apr-99
LTD Marodi Meneshe Office Lease 29-Apr-99
INC XxXxxx-Xxxxxxxx Letter 4-May-99
INC MediSense License agreement 6-May-99
INC Harvard Net Service and Maintenance Agreement 14-May-99
LTD Altira Office Lease 16-May-99
100
THE COMPANY IS USING THE SERVICES OF A SUBCONTRACTOR TO PROVIDE ACCOUNT
MANAGEMENT, CONTENT SERVICES AND SITE SUPPORT SERVICES FOR THREE OF SOFTWATCH'S
ACCOUNTS: HMR RHEUMATOID ARTHRITIS GROUP; HMR DIABETES GROUPS AND PROCTER &
XXXXXX OSTEOPOROSIS GROUP. THE SUBCONTRACTOR CALLED INTOUCH SOLUTIONS IS ALSO
PROVIDING ADDITIONAL SALES AGENT SERVICES AND IS LOCATED IN KANSAS CITY. IT WAS
AGREED THAT INTOUCH SOLUTIONS WILL BE RECEIVING 40% OF THE REVENUES ON THOSE
SPECIFIC DEALS. THE FINAL AGREEMENT IS IN NEGOTIATIONS AND IS EXPECTED TO COVER
THE NEXT 12 MONTHS.
101
SCHEDULE 6.1.3
SELLER COMPETITORS
The following is a list of Seller Competitors:
Xxxxxx.xxx
BroadVision
Caresoft
Clarify
CyberDiet
Xx. Xxxx
eDiets
Exchange Applications
HealthDesk
Healtheon
HealthMagic
Xxxxx Xxxxx
Mediconsult
Patinet Info systems
peregrine Systems
PHDI
Phys
remedy Corp
Siebel
USWeb
Vantive
Vignette
WebMD
XxxxxxXxxxxxxxxxxxx.xxx
102
SCHEDULE 6.8
DEFINITION OF MEDSCAPE COMPETITOR
"Medscape Competitor" shall mean any web-site or online service that provides
healthcare news, information and/or interactive tools or features to physicians,
allied healthcare professionals or consumers, including, without limitation,
those listed below; provided, however, that the Term Medscape Competitor shall
not include any web-site operated by a pharmaceutical or medical device company
focussed on a single product or medical condition (e.g., MSWatch by Teva).
InteliHealth
Healtheon
WebMD
OnHealth
Xx. Xxxx/Empower
Mediconsult
MD Consult
BetterHealth
Xxxxx.xxx
iVillage/Thrive
HealthScout
HealthGate
Physician's Online
Mayo Clinic Health Oasis
PlanetRx
Xxxxxxxxx.xxx
CVS/Soma
Walmart
Walgreen
RiteAide
Xxxx.xxx
CareInsite
AOL
Excite
Lycos
GO Network
Infoseek
@Home
AltaVista
Snap
MSN
MSNBC
Mining Company
Ask Xx. Xxxx
America's Doctor
QD Online
CyBear
Medicalogic
Medsite
