REGISTRATION RIGHTS AGREEMENT BY AND AMONG ISRAEL TECHNOLOGY ACQUISITION CORP. AND THE STOCKHOLDERS LISTED ON SCHEDULE A HERETO DATED AS OF _____________ ____, 2006
Exhibit
10.4
BY
AND AMONG
AND
THE
STOCKHOLDERS
LISTED ON SCHEDULE A HERETO
DATED
AS OF _____________ ____, 2006
1
This
Registration Rights Agreement (this “Agreement”) is made and entered into as
of _____ __, 2006, by and among Israel Technology Acquisition Corp., a
Delaware corporation (“Parent”) and the stockholders listed on Schedule A hereto
(the “Stockholders”) (as herein defined).
RECITALS
WHEREAS,
this
Agreement is being entered into pursuant to that certain Agreement and Plan
of
Merger (the “Merger Agreement”) dated February 28, 2006 by and among Parent,
ITAC Acquisition Subsidiary Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent and IXI Mobile, Inc, a Delaware corporation.
WHEREAS,
in
order to induce the Stockholders to approve the Merger and adopt the Merger
Agreement and consummate the transactions contemplated therein, Parent has
agreed to the registration of Parent Common Stock (as defined in the Merger
Agreement; terms used but not defined in this Registration Rights Agreement
shall have the meanings ascribed to them in the Merger Agreement) under the
Securities Act, upon the terms and subject to the conditions provided
herein.
1.
Definitions.
For
purposes of this Agreement:
1.1 “Affiliate”
means,
with respect to any specified Person, any other Person who or which, directly
or
indirectly, controls, is controlled by, or is under common control with such
specified Person, including without limitation any partner, officer, director,
manager or employee of such Person and any venture capital fund now or hereafter
existing that is controlled by or under common control with one or more general
partners or managing members of, or shares the same management company with,
such Person.
1.2 “Applicable
Time”
means
any time immediately prior to which a Stockholder or any agent thereof
(including any broker-dealers) or any underwriter of Registrable Securities
enters into an agreement or arrangement for the sale of the Registrable
Securities registered pursuant to a registration statement filed pursuant to
this Agreement.
1.3 “Damages”
means
any loss, claim, damage, or liability (joint or several) to which a party hereto
may become subject under the Securities Act, the Exchange Act, or other federal
or state law, insofar as such loss, claim, damage, or liability (or any action
in respect thereof) arises out of or is based upon (i) any untrue statement
or
alleged untrue statement of a material fact contained in any registration
statement, final prospectus contained in such registration statement, the
General Disclosure Package (if any), or any Parent-Represented Limited Free-Use
Writing Prospectus (when considered together with the General Disclosure
Package, if any), or any amendments or supplements thereto, (ii) an
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading;
or
(iii) any violation or alleged violation by any other party hereto of the
Securities Act, the Exchange Act, any state securities law, or any rule or
regulation promulgated under the Securities Act, the Exchange Act, or any state
securities law.
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1.4 “Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
1.5 “Excluded
Registration”
means
a
registration relating either to the sale of securities to employees of Parent
pursuant to a stock option, stock purchase, or similar plan or to an SEC Rule
145 transaction; a registration on any form that does not include substantially
the same information as would be required to be included in a registration
statement covering the sale of the Registrable Securities; or a registration
in
which the only Parent Common Stock being registered is Parent Common Stock
issuable upon conversion of debt securities that are also being
registered.
1.6 “Form
S-3”
means
such form under the Securities Act as in effect on the date hereof or any
registration form under the Securities Act subsequently adopted by the SEC
that
permits incorporation of substantial information by reference to other documents
filed by Parent with the SEC.
1.7 “General
Disclosure Package”
means
(i) any Parent-Represented General Free-Use Writing Prospectus issued
immediately prior to the Applicable Time and (ii) the Statutory
Prospectus.
1.8 “Immediate
Family Member”
means
a
child,
stepchild,
grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law,
or
sister-in-law,
including adoptive relationships, of a natural person referred to
herein.
1.9 “Initiating
Stockholders”
means,
collectively, Stockholders who properly initiate a registration request under
this Agreement.
1.10 “Parent-Represented
Free-Use Writing Prospectus”
means
any “issuer free writing prospectus”, as defined in SEC Rule 433 under the
Securities Act, relating to securities of Parent in the form filed or required
to be filed with the SEC or, if not required to be filed, in the form retained
in the Parent’s records pursuant to Rule 433(g) under the Securities
Act.
1.11 “Parent-Represented
General Free-Use Writing Prospectus”
means
any Parent-Represented Free-Use Writing Prospectus that is intended for general
distribution to prospective investors.
1.12 “Parent-Represented
Limited Free-Use Writing Prospectus”
means
any Parent-Represented Free-Use Writing Prospectus that is not a
Parent-Represented General Free-Use Writing Prospectus.
1.13 “Person”
means
any individual, corporation, partnership, trust, limited liability company,
association or other
entity.
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1.14 “Register,”
“registered,”
and
“registration”
refer
to a registration effected by preparing and filing a registration statement
or
similar document in compliance with the Securities Act, and the declaration
or
ordering of effectiveness of such registration statement or
document.
1.15 “Registrable
Securities”
means
all Parent Common Stock issuable to the Stockholders pursuant to the Merger
Agreement, excluding in all cases, however, any Registrable Securities sold
by a
Person in a transaction in which the rights under Section 2 hereof are not
assigned pursuant to Section 2.11 or any shares for which registration rights
have terminated pursuant to Section 2.12 of this Agreement.
1.16 “SEC”
means
the Securities and Exchange Commission.
1.17 “SEC
Rule 144”
means
Rule 144 promulgated by the SEC under the Securities Act.
1.18 “SEC
Rule 144(k)”
means
Rule 144(k) promulgated by the SEC under the Securities Act.
1.19 “SEC
Rule 145”
means
Rule 145 promulgated by the SEC under the Securities Act.
1.20 “SEC
Rule 433”
means
Rule 433 promulgated by the SEC under the Securities Act.
1.21 “Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
1.22 “Selling
Expenses”
means
all underwriting discounts, selling commissions, and stock transfer taxes
applicable to the sale of Registrable Securities, and fees and disbursements
of
counsel for any Stockholder, except as provided in Section 2.7.
1.23 “Statutory
Prospectus”
means
the most recent preliminary prospectus that is included in the registration
statement immediately prior to the Applicable Time.
2.
Registration
Rights.
Parent
covenants and agrees as follows:
2.1
Demand
Registration.
(a) If
at any
time commencing one hundred eighty (180) days after the Effective Time, Parent
receives a request from Stockholders (a “Stockholder Request Notice”) of at
least twenty-five percent ( 25%) of the Registrable Securities then outstanding
that Parent effect a registration with respect to Registrable Securities with
a
reasonably anticipated aggregate offering price of $5,000,000 (the “Demand
Threshold”) then outstanding, then Parent shall (i) within ten (10) days after
the date such request is given, give notice thereof (the “Parent Demand Notice”)
to all Stockholders other than the Initiating Stockholders; and (ii) as soon
as
practicable, and in any event within sixty (60) days after the date such request
is given by the Initiating Stockholders, file a registration statement under
the
Securities Act covering all Registrable Securities that the Initiating
Stockholders
requested
to be
registered and any
additional Registrable Securities requested to be included in such registration
by any other Stockholders, as specified by notice given by each such Stockholder
to Parent within twenty (20) days of the date the Parent Demand Notice is given,
and in each case, subject
to the limitations of Section 2.1(b). Parent
shall
be
obligated to effect registration and qualification pursuant to this Section
2.1(a) no more than two (2) times during the term of this Agreement subject
to
the terms and conditions hereof. It is understood among the parties
that any
of Registrable Securities which are subject to any contractual restriction
on
transfer as the result of any agreement between the Stockholder and Parent
shall
not be included in any registration statement pursuant to this Agreement until
such restrictions have lapsed or have otherwise been terminated and such
Registrable Securities shall not be included in determining whether the Demand
Threshold has been met or exceeded.
4
(b) Notwithstanding
the foregoing obligations, if Parent furnishes to Stockholders requesting a
registration pursuant to this Section 2.1 a certificate signed by Parent’s chief
executive officer stating that in the good faith judgment of Parent’s Board of
Directors it would be materially detrimental to Parent and its stockholders
for
such registration statement to either become effective or remain effective
for
as long as such registration statement otherwise would be required to remain
effective, because such action would (i) materially interfere with a significant
acquisition, corporate reorganization, or other similar transaction involving
Parent; (ii) require premature disclosure of material information that Parent
has a bona fide business purpose for preserving as confidential; or
(iii) render Parent unable to comply with requirements under the Securities
Act or Exchange Act, then Parent shall have the right to defer taking action
with respect to such filing, and any time periods with respect to filing or
effectiveness thereof shall be tolled correspondingly, for a period of not
more
than sixty (60) days after the request of the Initiating Stockholders is given
;
provided,
however,
that
Parent may not invoke this right more than once in any twelve (12) month period;
and provided
further
that
Parent shall not register any securities for its own account or that of any
other stockholder during such sixty (60) day period other than an Excluded
Registration.
(c) Parent
shall not be obligated to effect, or to take any action to effect, any
registration pursuant to this Section 2.1 during the period that is sixty
(60) days before Parent’s good faith estimate of the date of filing of, and
ending on a date that is one hundred eighty (180) days after the effective
date
of, a Parent-initiated registration, provided,
that
Parent is actively employing in good faith commercially reasonable efforts
to
cause such registration statement to become effective.
A
registration shall not be counted as “effected” for purposes of this Section 2.1
until such time as the applicable registration statement has been declared
effective by the SEC and such Registrable Securities so requested by the
Initiating Stockholders have been registered, unless the Initiating Stockholders
withdraw their request for such registration, elect not to pay the registration
expenses therefor, and
forfeit their right to one demand registration statement pursuant
to Section 2.1(a),
in which case such withdrawn registration statement shall be counted as
“effected” for purposes of this Section 2.1.
2.2
Parent
Registration.
If
Parent proposes to register (including, for this purpose, a registration
effected by Parent for stockholders other than the Stockholders) any of its
stock or other securities under the Securities Act in connection with the public
offering of such securities solely for cash (other than an Excluded
Registration), Parent shall, at such time, promptly give each Stockholder notice
of such registration. Upon the request of each Stockholder given within twenty
(20) days after such notice is given by Parent, Parent shall, subject to the
provisions of Section 2.4, cause to be registered all of the Registrable
Securities that each such Stockholder has requested to be included in such
registration. Parent shall have the right to terminate or withdraw any
registration initiated by it under this Section 2.2 before the effective date
of
such registration, whether or not any Stockholder has elected to include
Registrable Securities in such registration. The expenses of such withdrawn
registration shall be borne by Parent in accordance with Section 2.7.
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2.3
Form
S-3 Registration.
If
Parent receives a request from Stockholders of at least five percent (5%) of
the
Registrable Securities then outstanding that Parent effect a registration on
Form S-3 with respect to all or a part of the Registrable Securities owned
by
such Initiating Stockholders, then Parent shall:
(a) within
ten (10) days after the date such request is given, give notice of the proposed
registration to all Stockholders other than the Initiating Stockholders (the
“S-3 Notice”); and
(b) as
soon
as practicable (and in any event within 45 days from such request) to effect
such registration as would permit or facilitate the sale and distribution of
all
or such portion of such Initiating Stockholders’ Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any other Stockholders joining in such request as are specified
in
a request given to Parent within fifteen (15) days after the S-3 Notice is
given; provided,
however,
that
Parent shall not be obligated to effect any such registration pursuant to this
Section 2.3 (i) if Form S-3 is not then available for such offering by the
Stockholders; (ii) if the Stockholders, together with the Stockholders of any
other securities of Parent entitled to and requesting inclusion in such
registration, propose to sell Registrable Securities and such other securities
(if any) at an aggregate price to the public of less than $1,000,000; (iii)
if
Parent furnishes to the Stockholders a certificate signed by the chief executive
officer of Parent stating that in the good-faith judgment of the Board of
Directors of Parent, it would be materially detrimental to Parent and its
stockholders for such Form S-3 registration to be effected at such time, in
which event Parent shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than sixty (60) days after
receipt of the request of the Initiating Stockholders under this Section 2.3;
provided,
however,
that
Parent shall not invoke this right more than twice in any twelve (12) month
period; and provided
further
that
Parent shall not register any securities for its own account or that of any
other stockholder during such sixty (60) day period other than an Excluded
Registration. Notwithstanding
the aforesaid, the
Company shall not be required to effect more than two registrations
on Form S-3 in
any 12
month period pursuant to this Section 2.3.
(c) Registrations
effected pursuant to this Section 2.3 shall not be counted as demands for
registration or registrations effected pursuant to Section 2.1.
2.4
Underwriting
Requirements.
6
(a) If,
pursuant to Section 2.1 the Initiating Stockholders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise Parent as a part of their request made pursuant to Section
2.1(a) or Section 2.3, and Parent shall include such information in the Parent
Demand Notice or the S-3 Notice, as the case may be. The underwriter will be
selected by the Parent and shall be reasonably acceptable to a majority in
interest of the Initiating Stockholders. In such event, the right of any
Stockholder to include such Stockholder’s Registrable Securities in such
registration shall be conditioned upon such Stockholder’s participation in such
underwriting and the inclusion of such Stockholder’s Registrable Securities in
the underwriting to the extent provided herein. All Stockholders proposing
to
distribute their securities through such underwriting shall (together with
Parent as provided in Section 2.5(e)) enter into an underwriting agreement
in
customary form with the underwriter(s) selected for such underwriting.
Notwithstanding any other provision of this Section 2.4, if the underwriter(s)
advise(s) the Initiating Stockholders in writing that marketing factors require
a limitation on the number of shares to be underwritten, then the Initiating
Stockholders shall so advise all Stockholders of Registrable Securities that
otherwise would be underwritten pursuant hereto, and the number of Registrable
Securities that may be included in the underwriting shall be allocated among
all
Stockholders of Registrable Securities, including the Initiating Stockholders,
in proportion (as nearly as practicable) to the number of Registrable Securities
of Parent owned by each Stockholder; provided,
however,
that
the number of Registrable Securities held by the Stockholders to be included
in
such underwriting shall not be reduced unless all other securities are first
entirely excluded from the underwriting. To facilitate the allocation of shares
in accordance with the above provisions, Parent or the underwriters may round
the number of shares allocated to any Stockholder to the nearest 100 shares.
(b) In
connection with any offering involving an underwriting of shares of Parent’s
capital stock pursuant to Section 2.2, Parent shall not be required to include
any of the Stockholders’ Registrable Securities in such underwriting unless the
Stockholders accept the terms of the underwriting as agreed upon between Parent
and its underwriters, and then only in such quantity as the underwriters in
their sole discretion determine will not jeopardize the success of the offering
by Parent. If the total number of securities, including Registrable Securities,
requested by stockholders to be included in such offering exceeds the number
of
securities to be sold (other than by Parent) that the underwriters in their
reasonable discretion determine is compatible with the success of the offering,
then Parent shall be required to include in the offering only that number of
such securities, including Registrable Securities, which the underwriters and
Parent in their sole discretion determine will not jeopardize the success of
the
offering. In no event shall any Registrable Securities be excluded from such
offering unless all other stockholders’ securities have been first excluded. If
the underwriters determine that less than all of the Registrable Securities
requested to be registered can be included in such offering, then the
Registrable Securities that are included in such offering shall be apportioned
pro rata among the selling Stockholders based on the number of Registrable
Securities held by all selling Stockholders or in such other proportions as
shall mutually be agreed to by all such selling Stockholders. Notwithstanding
the foregoing, in no event shall the number of Registrable Securities included
in the offering be reduced below thirty-five percent (35%) of the total number
of securities included in such offering. For purposes of the provision in this
Section 2.4(b) concerning apportionment, for any selling stockholder that is
an
Stockholder and a partnership, limited liability company, or corporation, the
partners, members, retired partners, retired members, stockholders, and
Affiliates of such Stockholder, or the estates and Immediate Family Members
of
any such partners, retired partners, members, and retired members and any trusts
for the benefit of any of the foregoing Persons, shall be deemed to be a single
“selling Stockholder,” and any pro rata reduction with respect to such “selling
Stockholder” shall be based upon the aggregate number of Registrable Securities
owned by all Persons included in such “selling Stockholder,” as defined in this
sentence.
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(c) For
purposes of Section 2.1 and Section 2.3, a registration shall not be counted
as
“effected” if, as a result of an exercise of the underwriter’s cutback
provisions in Section 2.4(a), fewer than eighty percent (80%) of the total
number of Registrable Securities that Stockholders have requested to be included
in such registration statement are actually included.
2.5
Obligations
of Parent.
Whenever
required under this Section 2 to effect the registration of any Registrable
Securities, Parent shall, as expeditiously as reasonably possible:
(a) prepare
and file with the SEC a registration statement with respect to such Registrable
Securities and use its commercially reasonable efforts to cause such
registration statement to become effective and, upon the request of the
Stockholders of a majority of the Registrable Securities registered thereunder,
keep such registration statement effective for a period of up to one hundred
fifty (150) days or, if earlier, until the distribution contemplated in the
registration statement has been completed; provided,
however,
that
(i) such one hundred fifty (150) day period shall be extended for a period
of
time equal to the period the Stockholder refrains, at the request of an
underwriter of Parent Common Stock (or other securities), from selling any
securities included in such registration, and (ii) in the case of any
registration of Registrable Securities on Form S-3 that are intended to be
offered on a continuous or delayed basis, subject to compliance with applicable
SEC rules, such one hundred fifty (150) day period shall be extended by up
to an
additional one hundred fifty (150) days, if necessary, to keep the registration
statement effective until all such Registrable Securities are sold;
(b) 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 Securities Act in order to
enable the disposition of all securities covered by such registration
statement;
(c) furnish
to the selling Stockholders [ ] copies of a prospectus, including a preliminary
prospectus, as required by the Securities Act, and such other documents as
the
Stockholders may reasonably request in order to facilitate their disposition
of
their Registrable Securities;
(d) use
its
commercially reasonable efforts to register and qualify the securities covered
by such registration statement under such other securities or blue-sky laws
of
such jurisdictions as shall be reasonably requested by the selling Stockholders;
provided
that
Parent
shall not be required to qualify to do business or to file a general consent
to
service of process in any such states or jurisdictions, unless Parent is already
subject to service in such jurisdiction and except as may be required by the
Securities Act;
(e) 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 underwriters of such offering;
8
(f) use
its
commercially reasonable efforts to cause all such Registrable Securities covered
by such registration statement to be listed on a national securities exchange
or
trading system and each securities exchange and trading system (if any) on
which
similar securities issued by Parent are then listed;
(g) provide
a
transfer agent and registrar for all Registrable Securities registered pursuant
to this Agreement and provide a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such
registration;
(h) promptly
make available for inspection by the selling Stockholders, any underwriter
participating in any disposition pursuant to such registration statement, and
any attorney or accountant or other agent retained by any such underwriter
or
selected by the selling Stockholders, all financial and other records, pertinent
corporate documents, and properties of Parent, and cause Parent’s officers,
directors, employees, and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant,
or
agent in connection with any such registration statement, in each case, subject
to the execution of appropriate confidentiality agreements;
(i) notify
each selling Stockholder, promptly after Parent receives notice thereof, of
the
time when such registration statement has been declared effective or a
supplement to any prospectus forming a part of such registration statement
has
been filed; and
(j) after
such registration statement becomes effective, notify each selling Stockholder
of any request by the SEC that Parent amend or supplement such registration
statement or prospectus.
2.6
Furnish
Information.
It
shall be a condition precedent to the obligations of Parent to take any action
pursuant to this Section 2 with respect to the Registrable Securities of any
selling Stockholder that such Stockholder shall furnish to Parent such
information regarding itself, the Registrable Securities held by it, and the
intended method of disposition of such securities as is reasonably required
to
effect the registration of such Stockholder’s Registrable
Securities.
2.7
Expenses
of Registration.
All
expenses (other than Selling Expenses) incurred in connection with
registrations, filings, or qualifications pursuant to Section 2, including
all registration, filing, and qualification fees; printers’ and accounting fees;
fees and disbursements of counsel for Parent; and the reasonable fees and
disbursements of one counsel for the selling Stockholders, shall be borne and
paid by Parent; provided,
however,
that
Parent shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 2.1 or Section 2.3 if the registration
request is subsequently withdrawn at the request of the Stockholders of a
majority of the Registrable Securities to be registered (in which case all
selling Stockholders shall bear such expenses pro rata based upon the number
of
Registrable Securities that were to be included in the withdrawn registration),
unless the Stockholders of a majority of the Registrable Securities agree to
forfeit their right to one registration pursuant to Section 2.1 or Section
2.3,
as the case may be; provided
further
that if,
at the time of such withdrawal, the Stockholders have learned of a material
adverse change in the condition, business, or prospects of Parent from that
known to the Stockholders at the time of their request and have withdrawn the
request with reasonable promptness after learning of such information, then
the
Stockholders shall not be required to pay any of such expenses and shall not
forfeit their right to one registration pursuant to Section 2.1 or Section
2.3.
All Selling Expenses relating to Registrable Securities registered pursuant
to
this Section 2 shall be borne and paid by the Stockholders pro rata on the
basis
of the number of Registrable Securities registered on their behalf.
9
2.8
Delay
of Registration.
No
Stockholder shall have any right to obtain or seek an injunction restraining
or
otherwise delaying any registration pursuant to this Agreement as the result
of
any controversy that might arise with respect to the interpretation or
implementation of this Section 2.
2.9
Indemnification.
If
any
Registrable Securities are included in a registration statement under this
Section 2:
(a) To
the
extent permitted by law, Parent will indemnify and hold harmless each selling
Stockholder, and the partners, members, officers, directors, and stockholders
of
each such Stockholder; legal counsel and accountants for each such Stockholder;
any underwriter (as defined in the Securities Act) for each such Stockholder;
and each Person, if any, who controls such Stockholder or underwriter within
the
meaning of the Securities Act or the Exchange Act, against any Damages, and
Parent will pay to each such Stockholder, underwriter, controlling Person,
or
other aforementioned Person any legal or other expenses reasonably incurred
thereby in connection with investigating any matter or defending any proceeding
from which Damages may result, as such expenses are incurred; provided,
however,
that
the indemnity agreement contained in this Section 2.9(a) shall not apply to
amounts paid in settlement of any such investigation or proceeding if such
settlement is effected without the consent of Parent, which consent shall not
be
unreasonably withheld, nor shall Parent be liable for any Damages to the extent
that they arise out of or are based upon actions or omissions made in reliance
upon and in conformity with written information furnished by or on behalf of
any
such Stockholder, underwriter, controlling Person, or other aforementioned
Person expressly for use in connection with such registration.
(b) To
the
extent permitted by law, each selling Stockholder, severally and not jointly,
will indemnify and hold harmless Parent, and each of its directors, each of
its
officers who has signed the registration statement, each Person (if any), who
controls Parent within the meaning of the Securities Act, legal counsel and
accountants for Parent, any underwriter (as defined in the Securities Act),
any
other Stockholder selling securities in such registration statement, and any
controlling Person of any such underwriter or other Stockholder, against any
Damages, in each case only to the extent that such Damages arise out of or
are
based upon actions or omissions made in reliance upon and in conformity with
written information furnished by or on behalf of such selling Stockholder
expressly for use in connection with such registration; and each such selling
Stockholder will pay to Parent and each other aforementioned Person any legal
or
other expenses reasonably incurred thereby in connection with investigating
any
investigation or defending any proceeding from which Damages may result, as
such
expenses are incurred; provided,
however,
that
the indemnity agreement contained in this Section 2.9(b) shall not apply to
amounts paid in settlement of any such investigation or proceeding if such
settlement is effected without the consent of the Stockholder, which consent
shall not be unreasonably withheld; and provided
further
that in
no event shall any indemnity under this Section 2.9(b) exceed the proceeds
from
the offering (net of any Selling Expenses) received by such Stockholder, except
in the case of fraud or willful misconduct by such Stockholder.
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(c) Promptly
after receipt by an indemnified party under this Section 2.9 of notice of
the commencement of any action (including any governmental action) for which
a
party may be entitled to indemnification hereunder, such indemnified party
will,
if a claim in respect thereof is to be made against any indemnifying party
under
this Section 2.9, give the indemnifying party notice of the commencement
thereof. The indemnifying party shall have the right to participate in such
action and, to the extent the indemnifying party so desires, participate jointly
with any other indemnifying party to which notice has been given, and to assume
the defense thereof with counsel mutually satisfactory to the parties;
provided,
however,
that an
indemnified party (together with all other indemnified parties that may be
represented without conflict by one counsel) shall have the right to retain
one
separate counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained
by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such action. The failure to give notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall relieve such indemnifying party of any liability to the indemnified
party under this Section 2.9, to the extent that such failure materially
prejudices the indemnifying party’s ability to defend such action. The failure
to give notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section
2.9.
(d) To
provide for just and equitable contribution to joint liability under the
Securities Act in any case in which either (i) any party otherwise entitled
to
indemnification hereunder makes a claim for indemnification pursuant to this
Section 2.9 but it is judicially determined (by the entry of a final judgment
or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not
be
enforced in such case, notwithstanding the fact that this Section 2.9 provides
for indemnification in such case, or (ii) contribution under the Securities
Act
may be required on the part of any party hereto for which indemnification is
provided under this Section 2.9, then, and in each such case, such parties
will contribute to the aggregate losses, claims, damages, liabilities, or
expenses to which they may be subject (after contribution from others) in such
proportion as is appropriate to reflect the relative fault of the each of
indemnifying party and the indemnified party in connection with the statements,
omissions, or other actions that resulted in such loss, claim, damage,
liability, or expense, as well as to reflect any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or allegedly untrue statement of a material fact, or the
omission or alleged omission of a material fact, relates to information supplied
by the indemnifying party or by the indemnified party and the parties’ relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission; provided,
however,
that,
in any such case, (x) no Stockholder will be required to contribute any amount
in excess of the public offering price of all such Registrable Securities
offered and sold by such Stockholder pursuant to such registration statement,
and (y) no Person guilty of fraudulent misrepresentation (within the meaning
of
section 11(f) of the Securities Act) will be entitled to contribution from
any
Person who was not guilty of such fraudulent misrepresentation; and provided
further
that in
no event shall a Stockholder’s liability pursuant to this Section 2.9(d), when
combined with the amounts paid or payable by such Stockholder pursuant to
Section 2.9(b), exceed the proceeds from the offering (net of any Selling
Expenses) received by such Stockholder, except in the case of willful misconduct
or fraud by such Stockholder.
11
(e) Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in any underwriting agreement entered into in connection
with an underwritten public offering are in conflict with the foregoing
provisions, the provisions in such underwriting agreement shall
control.
(f) Unless
otherwise superseded by an underwriting agreement entered into in connection
with an underwritten public offering, the obligations of Parent and Stockholders
under this Section 2.9 shall survive the completion of any offering of
Registrable Securities in a registration under this Section 2, and otherwise
shall survive the termination of this Agreement.
2.10 Reports
Under Exchange Act.
With a
view to making available to the Stockholders the benefits of SEC Rule 144 and
any other rule or regulation of the SEC that may at any time permit a
Stockholder to sell securities of Parent to the public without registration
or
pursuant to a registration on Form S-3, Parent shall:
(a) make
and
keep public information available, as those terms are understood and defined
in
SEC Rule 144;
(b) use
best
efforts to file with the SEC in a timely manner all reports and other documents
required of Parent under the Securities Act and the Exchange Act (at any time
after Parent has become subject to such reporting requirements);
and
(c) furnish
to any Stockholder, so long as the Stockholder owns any Registrable Securities,
forthwith upon request (i) a written statement by Parent that it has complied
with the reporting requirements of SEC Rule 144 or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3 (at any time
after Parent so qualifies); (ii) a copy of the most recent annual or quarterly
report of Parent and such other reports and documents so filed by Parent; and
(iii) such other information as may be reasonably requested in availing any
Stockholder of any rule or regulation of the SEC that permits the selling of
any
such securities without registration (at any time after Parent has become
subject to the reporting requirements under the Exchange Act) or pursuant to
such Form S-3 (at any time after Parent so qualifies to use such
form).
2.11 Assignment
of Registration Rights.
The
rights to cause Parent to register Registrable Securities pursuant to this
Section 2 may be assigned (but only with all related obligations) by a
Stockholder to a transferee of such Registrable Securities that
(i)
is an Affiliate, partner, member, limited partner, retired partner, retired
member, or stockholder of a Stockholder; or (ii) is a Stockholder’s Immediate
Family Member or trust for the benefit of an individual Stockholder or one
or
more of such Stockholder’s Immediate Family Members; provided,
however,
that
(x) Parent is, within a reasonable time after such transfer, furnished with
written notice of the name and address of such transferee and the Registrable
Securities with respect to which such registration rights are being transferred;
(y) such transferee agrees in writing to be bound by and subject to the
terms and conditions of this Agreement, including the provisions of this Section
2.11. For the purposes of determining the number of shares of Registrable
Securities held by a transferee, the holdings of a
transferee
(1) that
is an Affiliate, limited partner, retired partner, member, retired member,
or
stockholder
of
a
Stockholder; (2) who
is
a
Stockholder’s Immediate
Family Member;
or
(3) that is a trust for the benefit of an individual Stockholder or such
Stockholder’s Immediate Family Member
shall be
aggregated together and with those of the transferring Stockholder; provided
further
that all
transferees who would not qualify individually for assignment of registration
rights shall have a single attorney-in-fact for the purpose of exercising any
rights, receiving notices, or taking any action under this Section
2.
12
2.12 Termination
of Registration Rights
(a) The
right
of any Stockholder to request registration or inclusion of Registrable
Securities in any registration pursuant to Section 2.1, Section 2.2, or Section
2.3 shall terminate three (3) years from the Effective Date or if sooner, with
respect to any Stockholder who beneficially owns less than two percent (2%)
of
the Parent’s outstanding capital stock, when all of such Stockholder’s
Registrable Securities could be sold without restriction under SEC Rule
144(k).
3. Miscellaneous
3.1
Successors
and Assigns.
Except
as expressly provided for herein, each Stockholder hereby agrees that it shall
not, and may not, assign any of its rights and obligations hereunder. The terms
and conditions of this Agreement inure to the benefit of and are binding upon
the respective successors and permitted assignees of the parties. Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and permitted assignees
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
3.2
Governing
Law.
This
Agreement shall be governed by and construed in accordance with the law of
the
State of Delaware regardless of the law that might otherwise govern under
applicable principles of conflicts of law thereof.
3.3
Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument. This Agreement may also be executed and delivered by facsimile
signature and in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
3.4
Titles
and Subtitles.
The
titles and subtitles used in this Agreement are for convenience only and are
not
to be considered in construing or interpreting this Agreement.
3.5
Notices.
All
notices and other communications hereunder shall be in writing and shall be
deemed given if delivered personally or by commercial delivery service, or
sent
via telecopy (receipt confirmed) to the parties at the following addresses
or
telecopy numbers (or at such other address or telecopy numbers for a party
as
shall be specified by like notice):
13
if
to
Parent, to:
0
Xxxx
Xxxxxx, 0xx
Xxxxx
Givaat
Xxxxxx
Israel
54030
Attention:
Xxxxxx Xxxxxxx, Chief Executive Officer
000-0-000-0000
telephone
000-0-000-0000
telecopy
with
a
copy to:
Naschitz,
Xxxxxxx & Co
0
Xxxxx
Xxxxxx
Xxx-Xxxx
Xxxxxx
00000
Attention:
Xxxxx X. Xxxxxxx, Adv.
000-0-000-0000
telephone
000-0-000-0000
telecopy
if
to
Stockholders, to:
[ ]
with
a
copy to:
[ ]
3.6
Amendments
and Waivers.
Any term
of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance, and
either retroactively or prospectively) only with the written consent of Parent
and the Stockholders of a majority of the Registrable Securities then
outstanding. Notwithstanding the foregoing, this Agreement may not be amended
or
terminated and the observance of any term hereof may not be waived with respect
to any Stockholder without the written consent of such Stockholder, unless
such
amendment, termination, or waiver applies to all Stockholders in the same
fashion. Parent shall give prompt notice of any amendment or termination hereof
or waiver hereunder to any party hereto that did not consent in writing to
such
amendment, termination, or waiver. Any amendment, termination, or waiver
effected in accordance with this Section 3 shall be binding on all parties
hereto, regardless of whether any such party has consented thereto. No waivers
of or exceptions to any term, condition, or provision of this Agreement, in
any
one or more instances, shall be deemed to be or construed as a further or
continuing waiver of any such term, condition, or provision.
14
3.7
Severability.
In case
any one or more of the provisions contained in this Agreement is for any reason
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provision of this
Agreement, and such invalid, illegal, or unenforceable provision shall be
reformed and construed so that it will be valid, legal, and enforceable to
the
maximum extent permitted by law.
3.8
Aggregation
of Stock.
All
shares of Registrable Securities held or acquired by Affiliates shall be
aggregated together for the purpose of determining the availability of any
rights under this Agreement.
3.9
Entire
Agreement.
This
Agreement (including any Schedule hereto) constitutes the full and entire
understanding and agreement between the parties with respect to the subject
matter hereof, and any other written or oral agreement relating to the subject
matter hereof existing between the parties is expressly canceled.
3.10 Delays
or Omissions.
No
delay or omission to exercise any right, power, or remedy accruing to any party
under this Agreement, upon any breach or default of any other party under this
Agreement, shall impair any such right, power, or remedy of such nonbreaching
or
nondefaulting party, nor shall it be construed to be a waiver of or acquiescence
to any such breach or default, or to any similar breach or default thereafter
occurring, nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring.
All
remedies, whether under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
3.11 Other
Registration Rights.
The
Parent shall not grant to any third party any registration rights more favorable
than or inconsistent with any of those contained herein, so long as any of
the
registration rights under this agreement remains in effect.
3.12 Changes
in Common Stock.
If, and
as often as, there is any change in the Common Stock by way of a stock split,
stock dividend, combination or reclassification, or through a merger,
consolidation, reorganization or recapitalization, or by any other means,
appropriate adjustment shall be made in the provisions hereof so that the rights
and privileges granted hereby shall continue with respect to the Common Stock
as
so changed.
3.13 Remedies
upon Default or Delay.
Without
limitation of any other remedy available to a Stockholder under applicable
law
or otherwise, if the Parent shall (1) fail to register Registrable Securities
after it shall have been requested to do so by a Stockholder, or (2) fail to
perform any of its obligations hereunder and a result of such failure
Stockholders have not been able to sell their Registrable Securities, or (3)
act
or fail to act in any manner such that one or more Stockholders have been
delayed in the sale of their Registrable Securities, which delay is not
expressly permitted by this Agreement, then any Stockholder adversely affected
by such action, failure or delay shall in addition to all other remedies under
the law, including a claim for damages, be entitled to a temporary or permanent
injunction, without showing any actual damage, and/or a decree for specific
performance, in accordance with the provisions hereof.
[Signature
page follows]
15
IN
WITNESS WHEREOF,
the
parties have executed this Agreement as of the date first written
above.
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PARENT:
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By:__________________________________
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Name:
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Title:
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STOCKHOLDERS:
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By:__________________________________
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Name:
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Title:
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16
SCHEDULE
A
Stockholders
