EXHIBIT 10.10
NOGATECH, INC.
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES B PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement"),
is made and entered into as of January 13, 2000 by and between NOGATECH,
INC., a Delaware corporation (hereinafter the "Corporation"), and Nomura
International plc, a public limited company incorporated under the laws of
England and Wales ("Investor").
RECITALS
A. The Corporation desires to raise money by the sale of its
Series B Convertible Preferred Stock (hereinafter, the "Series B Preferred
Stock").
B. The Investor desires to purchase shares of Series B Preferred
Stock from the Corporation on the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained in this Agreement, the parties agree
as follows:
1. AUTHORIZATION AND SALE OF SERIES B PREFERRED STOCK.
a. AUTHORIZATION. The Corporation will authorize on, or
before, the Closing the sale and issuance of up to one million one hundred
ninety-six thousand one hundred seventy-two (1,196,172) shares of its Series
B Preferred Stock (hereinafter the "Purchased Shares") to Investor having the
rights, privileges and preferences as set forth in the Second Amended and
Restated Certificate of Incorporation (hereinafter the "Certificate")
substantially in form and substance to EXHIBIT A attached hereto and
incorporated by reference herein.
b. SALE OF SERIES B PREFERRED STOCK. Subject to the terms
and conditions hereof, the Corporation will issue and sell to Investor and
Investor will purchase from the Corporation the Purchased Shares at a per
share purchase price of Four U.S. Dollars and Eighteen Cents (U.S. $4.18),
for an aggregate purchase price of Five Million U.S. Dollars (U.S.
$5,000,000) (the "Purchase Price").
2. ISSUANCE AND PAYMENT.
a. CLOSING. Subject to the terms and conditions hereof,
the closing of the purchase and sale of the Purchased Shares (hereinafter the
"Closing") shall be held (via facsimile transmittal and wire transfers) at
the offices of Bay Venture Counsel, LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on or about January 15, 2000, or at such other
time and place upon which the Corporation and Investor shall agree (the date
of the Closing is hereinafter referred to as the "Closing Date"). Investor
shall wire the Purchase Price to the Corporation's account in accordance with
the wiring instructions set forth on Schedule 2.a. hereto. The wire
instructions shall include a message identifying the Corporation as the
recipient of the wire.
b. DELIVERY OF DOCUMENTS BY THE CORPORATION AT THE CLOSING.
At the Closing, the Corporation will deliver to Investor
executed originals of the following documents:
i. Copy of a Special Resolution of the Corporation's
shareholders, attached hereto as EXHIBIT B, by which, among other things, the
Second Amended and Restated Certificate of Incorporation of the Corporation
as in effect to date shall be amended pursuant to the Amended Certificate.
ii. Copies of resolutions of the Corporation's Board
of Directors, attached hereto as EXHIBIT C, approving the transactions
contemplated by this Agreement
iii. this Agreement;
iv. a stock certificate ("Certificate"), registered
in the name of Investor, representing the Purchased Shares to be purchased by
Investor, substantially in the form of EXHIBIT D attached hereto and
incorporated by reference herein;
v. an opinion of United States counsel (the "BVC
Opinion") substantially in the Form of EXHIBIT E attached hereto and
incorporated by reference herein;
vi. an opinion of special Delaware counsel (the "PHS
Opinion") substantially in the form of EXHIBIT F attached hereto and
incorporated by reference herein;
vii. an opinion of Israeli counsel (the "▇▇▇▇▇▇▇ Behar
Opinion") substantially in the Form of EXHIBIT G attached hereto and
incorporated by reference herein;
viii. a Waiver of the Right of First Refusal Agreement
("Waiver") signed by Challenge Fund-Etgar, L.P., ▇▇▇ ▇▇▇▇ Dreyfus & Cie,
S.A., ▇▇▇▇▇ ▇▇▇▇▇▇ Corex Israeli Industries Ltd., Holland Venture BV, Ophir
Holdings Ltd., Docor International BV, Inventech Ltd., and Ronchal
Investments N.V. (collectively, the "Existing Investors") pursuant to which
the Existing Investors, among other things, waive their right of first
refusal and consent to the sale and issuance of the Purchased to Investor,
substantially in the form of EXHIBIT H attached hereto and incorporated by
reference herein;
ix. an Shareholders Agreement (the "Shareholders
Agreement") substantially in the form of EXHIBIT I attached hereto;
x. an Liquidation Preference Agreement (the
"Liquidation Preference Agreement") substantially in the form of EXHIBIT J
attached hereto; and
xi. a Second Amended and Restated Registration Rights
Agreement (the "Registration Rights Agreement") substantially in the form of
Exhibit K attached hereto.
c. DELIVERY OF DOCUMENTS BY THE INVESTOR AT THE CLOSING. At
the Closing, Investor will deliver to the Corporation executed copies of (i)
this Agreement; (ii) the Shareholders Agreement; (iii) the Liquidation
Preference Agreement; and (iv) the Registrations Rights Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. Except as
set forth on Schedule 3 attached hereto, the Corporation hereby represents
and warrants to Investor, and acknowledges that the Investor is entering into
this Agreement in reliance thereon, as follows:
a. ORGANIZATION.
i. As of the date hereof, the Corporation is duly
organized, validly existing and in good standing under the laws of the State
of Delaware, and has full corporate power and authority to own, lease and
operate its properties and assets and to conduct its business as now being
conducted and as proposed to be conducted. Except as set forth in Section
3.a.i. of Schedule 3 attached hereto, the Corporation has all requisite power
and authority to execute and deliver this Agreement, and other agreements
contemplated hereby or which are ancillary hereto, and to consummate the
transactions contemplated hereby and thereby. Neither the nature of the
Corporation's business as now conducted nor its ownership or leasing of
property require that the Corporation be qualified to do business or in good
standing in any jurisdiction other than the State of Delaware. Copies of the
Corporation's Second Amended and Restated Certificate of Incorporation and
Bylaws, as in effect on the date hereof are attached hereto as EXHIBITS A AND
L and incorporated by reference herein, respectively. The Corporation has not
taken any action or failed to take any action, which action or failure would
preclude or prevent the Corporation from conducting its business after the
Closing in the manner heretofore conducted. The Corporation has all
franchises, permits, licenses, and any similar authority necessary for the
conduct of its business as now being conducted and as proposed to be
conducted by it, the lack of which would have a material adverse effect on
the business, properties, prospects, or financial condition of the
Corporation, and the Corporation believes that it can obtain, without undue
burden or expense, any similar authority for the conduct of its business as
planned to be conducted. The Corporation is not in default under any of such
franchises, permits, licenses, or other similar authority which would have a
material adverse effect on the business,
properties, prospects or financial condition of the Corporation.
ii. The Corporation's wholly-owned subsidiary,
Nogatech Ltd., an Israeli company (the "Nogatech Ltd."), is duly organized,
validly existing and in good standing under the laws of the State of Israel,
and has full corporate power and authority to own, lease and operate its
properties and assets and to conduct its business as now being conducted and
as proposed to be conducted. Neither the nature of Nogatech Ltd.'s business
as now conducted nor its ownership or leasing of property require that
Nogatech Ltd. be qualified to do business or in good standing in any
jurisdiction other than the State of Israel. Nogatech Ltd. has not taken any
action or failed to take any action, which action or failure would preclude
or prevent Nogatech Ltd. from conducting its business after the Closing in
the manner heretofore conducted. Nogatech Ltd. has all franchises, permits,
licenses, and any similar authority necessary for the conduct of its business
as now being conducted and as proposed to be conducted by it, the lack of
which would have a material adverse effect on the business, properties,
prospects, or financial condition of Nogatech Ltd., and the Corporation
believes that Nogatech Ltd. can obtain, without undue burden or expense, any
similar authority for the conduct of its business as planned to be conducted.
Nogatech Ltd. is not in default under any of such franchises, permits,
licenses, or other similar authority which would have a material adverse
effect on the business, properties, prospects or financial condition of
Nogatech Ltd.
iii. The Corporation's wholly-owned subsidiary, Nogatech
California, a California corporation ("Nogatech California," and together
with Nogatech Ltd., "Subsidiaries" or each a "Subsidiary"), is duly
organized, validly existing and in good standing under the laws of the State
of California, and has full corporate power and authority to own, lease and
operate its properties and assets and to conduct its business as now being
conducted and as proposed to be conducted. Neither the nature of Nogatech
California's business as now conducted nor its ownership or leasing of
property require that Nogatech California be qualified to do business or in
good standing in any jurisdiction other than the State of California.
Nogatech California has not taken any action or failed to take any action,
which action or failure would preclude or prevent Nogatech California from
conducting its business after the Closing in the manner heretofore conducted.
Nogatech California has all franchises, permits, licenses, and any similar
authority necessary for the conduct of its business as now being conducted
and as proposed to be conducted by it, the lack of which would have a
material adverse effect on the business, properties, prospects, or financial
condition of Nogatech California, and the Corporation believes that Nogatech
California. can obtain, without undue burden or expense, any similar
authority for the conduct of its business as planned to be conducted.
Nogatech California is not in default under any of such franchises, permits,
licenses, or other similar authority which would have a material adverse
effect on the business, properties, prospects or financial condition of
Nogatech California.
b. OWNERSHIP OF STOCK.
i. Immediately prior to the Closing, the
Corporation's authorized capital stock shall include only two authorized
classes of capital stock consisting of (A) thirty-two million (32,000,000)
shares of Preferred Stock, thirty million (30,000,000) shares of which have
been designated as Series A Convertible Preferred Stock; and (B) forty
million (40,000,000) shares of a sole class of Common Stock. Immediately
prior to the Closing (not taking into account the Closing), the Corporation
will have a total of eight hundred thirty-eight thousand seven hundred forty
(838,740) shares of Common Stock outstanding; a total of fifteen million nine
hundred six three hundred four (15,906,304) shares of Series A Preferred
Stock outstanding; and up to (Y) three million two hundred ninety-two
thousand nine hundred forty (3,292,940) shares of Common Stock subject to
issuance pursuant to outstanding options granted to employees under stock
plans; and (Z) two million five hundred eighty-six thousand five hundred
sixty-seven (2,586,567) shares of Common Stock subject to issuance to
investors pursuant to investor stock option agreements. Attached hereto as
Attachment 3.b.i. is a capitalization table setting forth a detailed summary
of the equity holdings of the Corporation taking into account the Closing.
To the extent that such capitalization table identifies sets forth the names
and beneficial holdings of shareholders of the Corporation, such information
is based on information received by the Corporation as of Closing from the
shareholders of record of the Corporation.
ii. Simultaneously with the Closing, the
Corporation's authorized capital stock shall include only two authorized
classes of capital stock consisting of (i) thirty-two
million (32,000,000) shares of Preferred Stock, thirty million (30,000,000)
shares of which have been designated as Series A Convertible Preferred Stock,
and one million one hundred ninety-six thousand one hundred seventy-two
(1,196,172) of which have been designated as Series B Convertible Preferred
Stock; (ii) forty million (40,000,000) shares of a sole class of Common
Stock. Immediately prior to, or simultaneous with, the Closing (taking into
consideration the Closing), the Corporation will have a total of eight
hundred thirty-eight thousand seven hundred forty (838,740) shares of Common
Stock outstanding; a total of fifteen million nine hundred six thousand three
hundred four (15,906,304) shares of Series A Preferred Stock outstanding; and
(iii) and up to one million one hundred ninety-six thousand one hundred
seventy-two (1,196,172) shares of Series B Convertible Preferred Stock
outstanding; and up to (A) ) three million two hundred ninety-two thousand
nine hundred forty (3,292,940) shares Common Stock subject to issuance
pursuant to outstanding options granted to employees under stock plans; and
(B) two million five hundred eighty-six thousand five hundred sixty-seven
(2,586,567) shares of Common Stock subject to issuance to investors pursuant
to investor stock option agreements (together with (A) of this Section
3.b.(ii), the "Options"). Immediately prior to, or simultaneous with, the
Closing (taking into consideration the Closing), the Corporation has reserved
(X) one million one hundred ninety-six thousand one hundred seventy-two
(1,196,172) shares of the outstanding Common Stock for issuance upon
conversion of the Series B Preferred Stock; (Y) seventeen million one hundred
ninety-seven thousand one hundred seventy (17,197,170) shares of Common Stock
for issuance upon conversion of the outstanding Series A Preferred Stock; and
(Z) five million eight hundred seventy-nine thousand five hundred seven
(5,879,507) shares of Common Stock subject to issuance upon exercise of the
Options.
iii. Except for the transactions contemplated by this
Agreement and as described in Section 3.b. (i), 3.b. (ii) and in Section 3.b.
(iii) of Schedule 3, herein, there are no other capital stock, preemptive
rights, convertible securities, outstanding warrants, options or other rights
to subscribe for, purchase or acquire from the Corporation any capital stock
of the Corporation and there are no contracts or binding commitments
providing for the issuance of, or the granting of rights to acquire, any
capital stock of the Corporation or under which the Corporation is, or may
become, obligated to issue any of its securities. At the Closing, the
Purchased Shares will be duly authorized, validly issued, fully paid,
nonassessable, and free of any preemptive rights, and will have the rights,
preferences, privileges, and restrictions set forth in the Amended
Certificate, and will be free and clear of any liens, claims, encumbrances or
third party rights of any kind and duly registered in the name of each
Investor in the Corporation's stock register. The Common Stock issuable upon
conversion of the Purchased Shares have been duly authorized and reserved for
issuance by all necessary corporate action and, when issued and allotted in
accordance with the terms of the Amended Certificate, will be duly and
validly issued, fully paid, nonassessable, and free of any preemptive rights,
will have the rights, preferences, privileges and restrictions set forth in
the Amended Certificate, and will be free and clear of any liens,
encumbrances, claims, or third party rights of any kind and duly registered
in the name of each Investor in the Corporation's stock register. Except as
provided in certain of the material agreements set forth in Section 3.m.A.1.
of Schedule 3, the Corporation is not under any obligation to register for
trading on any securities exchange any of its currently outstanding
securities or any of its securities which may hereafter be issued. Since its
incorporation, there has been no declaration or payment by the Corporation of
dividends, or any distribution by the Corporation of any assets of any kind
to any of its shares in redemption of or as the purchase price for any of the
Corporation's securities.
iv. Simultaneously with the Closing, (A) Nogatech
Ltd.'s authorized capital stock shall include only one authorized class of
capital stock consisting of seventeen thousand six hundred (17,600) Ordinary
Shares; and (B) Nogatech California's authorized capital stock shall include
only one authorized class of capital stock consisting of one thousand (1,000)
shares of Common Stock.
c. SUBSIDIARIES. The Corporation does not own any of the
issued and outstanding capital stock of any other company other than the
Subsidiaries, and is not a participant in any partnership or joint venture.
d. DIRECTORS, OFFICERS. Immediately prior to the Closing,
the directors of the Corporation are ▇▇▇▇▇▇ Hod, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ Dogon, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇. Except as set forth in Section 3.d of Schedule 3, the
Corporation has no agreement, obligation or commitment with respect to the
election of any individual or individuals to its Board of Directors and, to
the best of the Corporation's
knowledge, there is no voting agreement or other arrangement among the
holders of the Corporation's shares. As of the Closing, ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ is
the Corporation's Chief Executive Officer, and Yaron Garmazi is the
Corporation's Chief Financial Officer and Secretary. All agreements,
commitments and understandings, whether written or oral, with respect to any
compensation to be provided to any of the Corporation's directors or officers
have been fully disclosed in writing to Investor. Simultaneous with the
Closing, the directors of Nogatech Ltd. are ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇
Garmazi, and the officers of Nogatech Ltd. are ▇▇. ▇▇▇▇ ▇▇▇▇▇▇, Chief
Executive Officer, and Yaron Garmazi, Chief Financial Officer and Secretary.
The directors and officers of Nogatech California are the same as the
directors and officers of the Corporation.
e. FINANCIAL STATEMENTS. The Corporation has furnished
Investor with the financial statements attached hereto as EXHIBIT M and
incorporated by reference herein (the "Financial Statements"). The Financial
Statements have been prepared in accordance with United States generally
accepted accounting principles and are true and correct in all material
respects, are in accordance with the books and records of the Corporation,
and fairly and accurately present in all material respects the financial
position of the Corporation as of such dates and the results of its
operations for the periods then ended. Neither the Corporation nor either
Subsidiary has liabilities, debts or obligations, whether accrued, absolute
or contingent, other than liabilities (i) set forth in the Financial
Statements, or (ii) as may occur in the ordinary course of business since the
date of the Financial Statements Balance Sheet, and have not or will not have
singly or in the aggregate a materially adverse effect on the Corporation's
or Subsidiary's business, prospects, condition (financial or otherwise),
affairs, operations or assets.
f. AUTHORIZATION; APPROVALS. All corporate action on the
part of the Corporation necessary for the authorization, execution, delivery,
and performance of all of the Corporation's obligations under this Agreement
and for the authorization, issuance, and allotment of the Purchased Shares
being sold under this Agreement and of the Common Stock issuable upon
conversion of the Purchased Shares has been (or will be) taken prior to the
Closing. This Agreement, when executed and delivered by or on behalf of the
Corporation, shall constitute the valid and legally binding obligations of
the Corporation, legally enforceable against the Corporation in accordance
with their respective terms, except as such enforceability may be subject to
or limited by bankruptcy, insolvency, reorganization, arrangement, or
moratorium or other similar laws relating to or affecting the rights of
creditors, or general principles of equity, regardless of whether considered
in a proceeding in equity or at law. Except as set forth on Schedule 3.f. of
Schedule 3, no consent, approval, order, license, permit, action by, or
authorization of or designation, declaration, or filing with any governmental
authority on the part of the Corporation is required that has not been, or
will not have been, obtained by the Corporation prior to the Closing in
connection with the valid execution, delivery and performance of this
Agreement or the offer, sale, or issuance of the Purchased Shares.
g. COMPLIANCE WITH OTHER INSTRUMENTS. Neither the
Corporation nor any Subsidiary is in default (i) under, in the case of the
Corporation, its Amended Certificate or Bylaws, in the case of Nogatech
California, its Articles of Incorporation as currently in effect or Bylaws,
and in the case of Nogatech Ltd., its Memorandum and Articles of Association,
or other formative documents, or under any note, indenture, mortgage, lease,
agreement, contract, purchase order or other instrument, document or
agreement to which the Corporation or any Subsidiary is a party or by which
the Corporation or any Subsidiary or any of their respective property is
bound or affected, or (ii) with respect to any law, statute, ordinance,
regulation, order, writ, injunction, decree, or judgment of any court or any
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, including without limitation, all
certificates of approval as issued by the Investment Center of the Ministry
of Industry and Trade of the State of Israel to any Subsidiary], which
default, in any such case, would adversely affect or in the future is
reasonably likely to have a material adverse effect on the Corporation's or
any Subsidiary's business, prospects, condition (financial or otherwise),
affairs, operations or assets. Except as set forth in Section 3.g of Schedule
3, to the best of the Corporation's knowledge, no third party is in material
default under any agreement, contract or other instrument, document or
agreement to which either the Corporation or any Subsidiary is a party or by
which it or any of their respective property is affected. Neither the
Corporation nor any Subsidiary is a party to or bound by any order, judgment,
decree or award of any governmental authority, agency, court, tribunal or
arbitrator.
h. NO BREACH. Neither the execution and delivery of this
Agreement nor
compliance by the Corporation with the terms and provisions hereof and
thereof, will conflict with, or result in a breach or violation of, any of
the terms, conditions and provisions of (i) the Amended Certificate or the
Bylaws, or other governing instruments of the Corporation, (ii) any judgment,
order, injunction, decree, or ruling of any court or governmental authority,
domestic or foreign, (iii) any agreement, contract, lease, license or
commitment to which the Corporation is a party or to which it is subject, or
(iv) applicable law. Such execution, delivery and compliance will not (A)
give to others any rights, including rights of termination, cancellation or
acceleration, in or with respect to any agreement, contract or commitment
referred to in this paragraph, or to any of the properties of the Corporation
or any Subsidiary or (B) otherwise require the consent or approval of any
person, which consent or approval has not heretofore been obtained.
i. RECORDS. The Corporation has made available to or
provided Investor with accurate and complete copies of the minutes of every
meeting of the Corporation's Stockholders and Board of Directors (and any
committee thereof). No resolutions have been passed, enacted, consented to or
adopted by the directors (or any committee thereof) or Stockholders of the
Corporation, except for those so provided. The corporate records of the
Corporation have been maintained in accordance with all applicable statutory
requirements and are complete and accurate in all respects.
j. OWNERSHIP OF ASSETS. Neither the Corporation nor any
Subsidiary currently leases or licenses any property or owns any material
assets other than as described in detail in Section 3.j. of Schedule 3 hereto.
k. INTELLECTUAL PROPERTY AND OTHER INTANGIBLE ASSETS.
i. Each of the Corporation and each Subsidiary, as
the case may be, owns or has the right to use, free and clear of all liens,
claims and restrictions, except as set forth in Section 3.k. (i) of Schedule
3 hereto, all patents, trademarks, service marks, trade names and copyrights,
and applications, licenses and rights with respect to the foregoing, and all
trade secrets, including know-how, inventions, designs, processes, works of
authorship, computer programs and technical data and information
(collectively herein "Intellectual Property") used and sufficient for use in
the conduct of its business as now conducted and as proposed to be conducted,
without infringing upon or violating any right, lien, or claim of others,
including without limitation any of its past or present shares, past and
present employees and employers of the founding shares, and past and present
employees and employers of the past and present employees of the Corporation
or any Subsidiary, as applicable. Except as set forth in Section 3.k. (i) of
Schedule 3, neither the Corporation nor any Subsidiary is obligated or under
any liability whatsoever to make any payments by way of royalties, fees or
otherwise to any owner or licensee of, or other claimant to, any patent,
trademark, service ▇▇▇▇, trade name, copyright or other intangible asset,
with respect to the use thereof or in connection with the conduct of its
business as now conducted or as proposed to be conducted or otherwise.
ii. Any and all Intellectual Property in connection
with the Corporation's and each Subsidiary's business which was developed, is
currently being developed, or will be developed in the future, by any
employee of each Subsidiary, shall be the property solely of such Subsidiary.
The Corporation and each Subsidiary has taken security measures to protect
the secrecy, confidentiality and value of all the Intellectual Property,
which measures are reasonable and customary in the industry in which the
Corporation and the Subsidiaries operate. Except as set forth on Section 3.k.
(ii) of Schedule 3, each Subsidiary's past and present employees and other
persons who, either alone or in concert with others, developed, invented,
discovered, derived, programmed or designed the Intellectual Property, or who
has knowledge of or access to information about the Intellectual Property
have entered into a written agreement with the Subsidiary, in the case of the
Nogatech California, in the form set forth as EXHIBIT N attached hereto and
incorporated by reference herein (the "U.S. Proprietary Information and
Non-Competition Agreement"), and in the case of Nogatech Ltd., in the form
set forth as EXHIBIT O attached hereto and incorporated by reference herein
(the "Israeli Proprietary Information and Non-Competition Agreement").
iii. Neither the Corporation nor any Subsidiary has
received any communications alleging that the Corporation or any Subsidiary
has violated or by conducting its business as proposed, would violate, any of
the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity. To the
best of the Corporation's knowledge, none of either Subsidiary's employees
are obligated under any contract
(including licenses, covenants or commitments of any nature) or other
agreement, or are subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of such employee's
best efforts to promote the interests of the Corporation or any Subsidiary,
as applicable, or that would conflict with the Corporation's or any
Subsidiary's business as conducted and as proposed to be conducted. Neither
the execution nor delivery of this Agreement, nor the carrying on of the
Corporation's or either Subsidiary's business by the employees of either
Subsidiary, nor the conduct of the Corporation's or the Subsidiary's business
as proposed to be conducted, will conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any
contract, covenant or instrument under which either of the Subsidiaries'
employees are obligated. It is not, and will not become, necessary to utilize
any inventions of either of the Subsidiary's employees (or people either
Subsidiary currently intends to hire) made prior to their employment by
Subsidiary, other than those that have been assigned to the Subsidiaries
pursuant to the U.S. Proprietary Information and Non-Competition Agreement or
the Israeli Proprietary Information and Non-Competition Agreement, as
applicable, signed by such employee.
l. TAXES. Neither the Corporation nor any Subsidiary has
made any elections under applicable laws or regulations (other than elections
related solely to methods of accounting, depreciation or amortization) that
would have a material adverse effect on the Corporation or any Subsidiary,
its financial condition, its business as presently conducted or proposed to
be conducted or any of its properties or assets. Each of the Corporation and
each Subsidiary is current in the payment of all its tax liabilities and has
not received notice of any tax delinquencies.
m. CONTRACTS. Section 3.m. of Schedule 3 contains a true
and complete list of all written and oral contracts and agreements to which
either the Corporation or any Subsidiary is a party or by which either of its
property is bound, except for those contract or agreements which if
terminated would not have a material adverse effect on the Corporation's or
any Subsidiary's business, prospects, condition (financial or otherwise)
affairs, operations or assets. To the best of the Corporation's knowledge,
each of such contracts and agreements is in full force and effect, and none
of the Corporation, any Subsidiary or, to the best of the Corporation's
knowledge, any other party thereto is in breach thereof, except for a breach
which would not have a material adverse effect on the Corporation's or any
Subsidiary's business, prospects, condition (financial or otherwise) affairs,
operations or assets. True and correct copies of all such contracts
identified on Section 3.m. of Schedule 3 have been delivered to Investor.
Except as set forth in Section 3.m. of Schedule 3 hereto, neither the
Corporation nor any Subsidiary has employment or consulting contracts,
deferred compensation agreements or bonus, incentive, profit-sharing, or
pension plans currently in force and effect, or any understanding with
respect to any of the foregoing, except for those contracts, agreements,
plans or understandings which if enforced would not have a material adverse
effect on the Corporation's or any Subsidiary's business, prospects,
condition (financial or otherwise) affairs, operations or assets. Neither
the Corporation nor any Subsidiary has either received or served any notice
of termination under any agreement or contract identified in Section 3.m. of
Schedule 3.
n. LITIGATION. No action, proceeding or governmental
inquiry or investigation is pending or threatened against the Corporation,
any Subsidiary or any of the Corporation's or any Subsidiary's officers,
directors, or employees (in their capacity as such), or against any of the
Corporation's or any Subsidiary's properties, before any court, arbitration
board or tribunal or administrative or other governmental agency, nor is
there any basis for the foregoing, which if decided against the Corporation
or any Subsidiary, as the case may be, would have a material adverse effect
on the Corporation's or any Subsidiary's, as applicable, business, prospects,
condition (financial or otherwise) affairs, operations or assets. The
foregoing includes, without limiting its generality, actions pending or
threatened involving the prior employment of any of the Corporation's or any
Subsidiary's employees or use by any of them in connection with the
Corporation's or any Subsidiary's business of any information, property or
techniques allegedly proprietary to any of their former employers. Neither
the Corporation nor any Subsidiary is a party to or subject to the provisions
of any order, writ, injunction, judgment or decree of any court or
governmental agency or instrumentality. There is no action, suit, proceeding
or investigation by the Corporation or any Subsidiary currently pending or
that the Corporation or any Subsidiary intends to initiate.
o. NO PUBLIC OFFER. Neither the Corporation nor anyone
acting on its behalf has offered or will offer securities of the Corporation
or any part thereof or any similar securities for issuance or sale to, or
solicit any offer to acquire any of the same from, anyone so as to make
issuance and sale of the Purchased Shares not exempt from the registration
requirements of Section 5 of the
U.S. Securities Act of 1933, as amended (the "Securities Act") or the Israeli
Securities Law, 1968. Assuming Investor's representations and warranties
contained herein are true and correct as of the Closing, none of the
Purchased Shares issued and outstanding has been offered or sold in such a
manner as to make the issuance and sale of such Purchased Shares not exempt
from such registration requirements, and all such Purchased Shares have been
offered and sold in compliance with all applicable federal and state
securities laws.
p. INTERESTED PARTY TRANSACTIONS. Except as set forth in
Section 3.p. of Schedule 3 attached hereto, no officer, director or
Stockholder of the Corporation, or any affiliate of any such person or entity
of the Corporation, has or has had, either directly or indirectly, (i) an
interest in any person or entity which (A) furnishes or sells services or
products which are furnished or sold or are proposed to be furnished or sold
by the Corporation or any Subsidiary, or (B) purchases from or sells or
furnishes to the Corporation or any subsidiary any goods or services, or (ii)
a beneficial interest in any contract or agreement to which the Corporation
is a party or by which it may be bound or affected. Except as set forth in
Section 3.p. of Schedule 3 attached hereto, there are no existing
arrangements or proposed transactions between the Corporation or any
Subsidiary and any of either the Corporation's or either Subsidiary's
officers, directors, or holders of more than 5% of the capital stock of the
Corporation, or any affiliate or associate of any such person. Except as set
forth in Section 3.p. of Schedule 3 attached hereto, no employee,
Stockholder, officer, or director of the Corporation or Subsidiary is
indebted to the Corporation or Subsidiary, nor is the Corporation or any
Subsidiary indebted (or committed to make loans or extend or guarantee
credit) to any of them.
q. BROKERS. Except as set forth in Section 3.q. of
Schedule 3 hereto, no agent, broker, investment banker, person or firm acting
in a similar capacity on behalf of or under the authority of the Corporation
are or will be entitled to any broker's or finder's fee or any other
commission or similar fee, directly or indirectly, on account of any action
taken by the Corporation in connection with any of the transactions
contemplated under this Agreement. The Corporation agrees to indemnify and
hold Investor harmless from and against any claim or liability resulting from
any party claiming any such commission or fee, if such claims shall be
contrary to the foregoing statement.
r. FULL DISCLOSURE. Neither this Agreement, its Schedule
nor any certificates made or delivered in connection herewith contains any
untrue statement of a material fact or omits to state a material fact
necessary to make the statements herein or therein not misleading, in view of
the circumstances in which they were made. There is no material fact or
information relating to the business, prospects, condition (financial or
otherwise), affairs, operations, or assets of the Corporation that has not
been disclosed to the Investor in writing by the Corporation.
s. EFFECTIVENESS; SURVIVAL; INDEMNIFICATION. Each
representation and warranty herein is deemed to be made on the date of this
Agreement and at the Closing, and shall survive and remain in full force and
effect after the Closing. In the event of any breach or misrepresentation of
any covenant, warranty or representation made by the Corporation under this
Agreement, the Corporation shall indemnify the Investor and hold them
harmless from any and all loss, damage (including, without limitation, any
decrease in the value of the Purchased Shares), liability and expense
(including reasonable legal fees and costs)("Losses") sustained or incurred
by Investor as a result of or in connection with said breach or
misrepresentation for a period of three (3) years following the Closing,
except with respect to Losses which may be incurred as a result of a breach
of the representations contained in Sections j, k and l of this Section 3,
with respect to which the Corporation's indemnification obligation shall
remain in effect for a period of five (5) years following the Closing.
t. USE OF PROCEEDS. The Corporation shall use the proceeds
of this financing only for (i) working capital purposes; or (ii) capital
investment.
u. EMPLOYEES. Neither the Corporation nor any Subsidiary
have employment agreements with any officer or employee or any other
consultant or person which is not terminable by it at will, without
liability, upon thirty (30) days prior notice. As of the date hereof, neither
the Corporation nor any Subsidiary have deferred compensation covering any of
its officers or employees. Each of the Corporation and each Subsidiary have
complied with all applicable employment laws. Section 3.m. of Schedule 3
attached hereto lists all employment, non-competition and confidentiality
agreements between the Corporation and each Subsidiary and any employee or
consultant of the Corporation and either the Subsidiary and true and correct
copies of such agreements have been delivered to the Investor. To the best
of the Corporation's knowledge, neither the Corporation nor any
Subsidiary is aware that any officer or any key employee, including without
limitation, any hardware or software engineer of the Corporation or any
Subsidiary, or that any group of key employees, including without limitation,
any group of hardware or software engineers of the Corporation or any
Subsidiary, intends to terminate his or their employment with the Corporation
or any Subsidiary, nor does the Corporation or any Subsidiary have a current
intention to terminate the employment of any officer, key employee or group
of key employees, including without limitation, any hardware or software
engineer or group of hardware or software engineers of the Corporation or any
Subsidiary.
v. A true and correct copy of the Business Plan as in
effect as of December 1999 is attached hereto as EXHIBIT P (the "Business
Plan"). The parties are aware that the Business Plan is based upon various
estimates and assumptions, and contains certain forecasts of results and
operations of the Corporation. Such estimates, assumptions and forecasts are
subject to significant uncertainties and contingencies, many of which are
beyond the Corporation's control. There is no assurance that such estimates,
assumptions and forecasts will be realized, and actual results may vary
significantly from those shown. The Corporation does not know of any material
fact which contradicts such estimates, assumptions and forecasts in any
material respect, and such estimates, assumptions and forecasts represent the
Corporation's reasonable professional judgment as of December 1999. The
Corporation is not aware of any material adverse changes since that time that
would cause the Corporation to believe that such estimates and assumptions
and the forecasts derived therefrom are no longer valid.
4. INVESTOR REPRESENTATIONS AND WARRANTIES. Without derogating
from the liability of the Corporation to Investor under this Agreement,
Investor represents and warrants to the Corporation that:
a. INVESTMENT. Investor is acquiring the Purchased Shares
and any shares of Common Stock issuable pursuant to conversion of the
Purchased Shares (hereinafter collectively the "Securities") for investment
for its own account, and not with a present intention to resell in connection
with, any distribution thereof, and it has no present intention of selling or
distributing any such Securities. Investor understands that the Securities
have not been registered under the Securities Act by reason of a specific
exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment as
expressed herein.
b. RULE 144. Investor acknowledges that because the
Securities have not been registered under the Securities Act, the Securities
must be held indefinitely unless subsequently registered under the Securities
Act or an exemption from such registration is available. Investor is aware of
the provisions of Rule 144 promulgated under the Securities Act, which
permits limited resale of shares purchased in a private placement under
certain circumstances.
c. NO PUBLIC MARKET. Investor understands that no public
market now exists for any securities issued by the Corporation and that it is
uncertain whether a public market will ever exist for any such securities.
d. ACCESS TO DATA. The Investor have had an opportunity to
discuss the Corporation's business, management and financial affairs with its
management and to obtain any additional information requested by them, that
they believe is necessary or appropriate for deciding whether or not to
purchase the Securities. Investor acknowledges that no representations or
warranties have been made by the Corporation or any agent thereof except as
set forth in this Agreement and the attachments thereto.
e. INVESTMENT EXPERIENCE. Investor is an "Accredited
Investor" as that term is defined in Regulation D promulgated by the
Securities and Exchange Commission.
f. PREVIOUS INVESTMENTS. Investor is an investor in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment contemplated
herein.
g. RISKS. Investor understands that an investment in the
Corporation involves a high degree of risk and is suitable only for an
investor who can afford a loss of its entire investment and who has no need
for liquidity from its investment.
h. USE OF PROCEEDS. Investor acknowledges and agrees that
the Corporation may use the proceeds of this financing for (i) working
capital purposes; or (ii) capital investment.
5. INVESTOR'S CONDITIONS TO CLOSING. The obligations of Investor
to purchase the Purchased Shares and transfer funds at the Closing are
subject to the fulfillment at or before the Closing of the following
conditions precedent, any one or more of which may be waived in whole or in
part by Investor, which waiver shall be at the sole discretion of Investor:
a. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Corporation in this Agreement shall have been true and
correct when made, and shall be true and correct as of the Closing as if made
on the date of the Closing.
b. COVENANTS. All covenants, agreements, and conditions
contained in this Agreement shall be performed, satisfied or complied with by
the Corporation prior to the Closing.
c. CONSENTS, ETC. The Corporation shall have secured all
permits, consents and authorizations that shall be necessary or required
lawfully to consummate this Agreement and to issue the Purchased Shares to be
purchased by Investor at the Closing, and shall have prepared the Amended
Certificate.
d. PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated by this
Agreement and all documents and instruments incident to such transactions
shall be satisfactory in substance and form to Investor and it's counsel, and
Investor and their counsel shall have received all such counterpart originals
or certified or other copies of such documents as Investor or it's counsel
may reasonably request.
e. DUE DILIGENCE REVIEW. Investor's legal and financial
due diligence review of the Corporation shall have been completed to the
satisfactory of Investor at their sole discretion.
f. ABSENCE OF ADVERSE CHANGES. From the date hereof until
the Closing, there will have been no material adverse change in the financial
or business condition of the Corporation, in the sole judgment of the
Investor.
6. CORPORATION'S CONDITIONS TO CLOSING. The Corporation's
obligations to sell and issue the Purchased Shares at the Closing are subject
to the fulfillment at or before the Closing of the conditions that:
a. all covenants, agreements and conditions contained in
this Agreement to be performed, or complied with, by Investor prior to the
Closing shall have been performed or complied with by Investor prior to or at
the Closing;
b. the representations and warranties made by the Investor
in this Agreement shall have been true and correct when made, and shall be
true and correct as of the date of the Closing, which conditions may be
waived in whole or in part by the Corporation, and which waiver shall be at
the sole discretion of the Corporation; and
c. the Corporation shall have secured all permits,
consents, approvals and authorizations that shall be necessary or required to
lawfully consummate this Agreements (including all Schedules and Exhibits
attached hereto) and to issue the Purchased Shares to be purchased by
Investor at the Closing.
7. RESTRICTIVE LEGENDS. Each Certificate or other written
documentation representing any of the Securities which the Investor is
purchasing or may purchase hereunder and any other securities issued upon any
stock split, stock dividend, recapitalization, merger, consolidation or
similar event (unless no longer required in the opinion of the counsel for
the Corporation) shall be stamped or otherwise imprinted with the legends
substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE
SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED
UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING
SUCH SECURITIES, OR THE HOLDER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER
OF THE SECURITIES SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE QUALIFICATION
REQUIREMENTS UNDER STATE LAW."
"A STATEMENT OF THE RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS GRANTED
TO OR IMPOSED ON THE SERIES B CONVERTIBLE PREFERRED STOCK OF THE CORPORATION
AND UPON THE HOLDERS THEREOF AS ESTABLISHED BY THE SECOND AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION MAY BE OBTAINED BY ANY SHAREHOLDER UPON
REQUEST AND WITHOUT CHARGE AT THE PRINCIPAL OFFICES OF THE CORPORATION."
"THE SHARES OF SERIES B CONVERTIBLE PREFERRED STOCK ARE CONVERTIBLE INTO
COMMON STOCK AT THE TIMES AND ON THE TERMS SET FORTH IN THE SECOND AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION OF THE CORPORATION."
"NOTWITHSTANDING ANY OTHER LEGEND PROVISION CONTAINED HEREIN, THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD, ASSIGNED,
PLEDGED OR HYPOTHECATED UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE OR
HYPOTHECATION COMPLIES WITH THE TERMS AND PROVISIONS OF THAT CERTAIN SERIES B
PREFERRED STOCK PURCHASE AGREEMENT DATED AS OF JANUARY 13, 2000 BETWEEN THE
COMPANY AND THE ORIGINAL HOLDER OF THE SHARES, THAT CERTAIN SECOND AMENDED
AND RESTATED REGISTRATION RIGHTS AGREEMENT DATED AS OF JANUARY 13, 2000 BY
AND AMONG THE CORPORATION, THE HOLDER OF THE SHARES AND THE ORIGINAL HOLDER
OF THE SHARES AND THAT CERTAIN SHAREHOLDERS AGREEMENT DATED AS OF JANUARY 13,
2000, BY AND AMONG THE CORPORATION AND THE ORIGINAL HOLDER OF THE SHARES.
ANY SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE OR HYPOTHECATION OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IN VIOLATION OF SUCH AGREEMENTS SHALL BE VOID
AND INVALID."
The Corporation shall be entitled to enter stop transfer notices on
its stock books with respect to the Securities.
8. AFFIRMATIVE COVENANTS OF THE CORPORATION.
a. REPORTS. The Corporation shall deliver to each Investor:
i. ANNUAL FINANCIAL STATEMENTS. So long as Investor
owns shares of the Corporation, or until the Corporation effects a registered
underwritten public offering of its Common Stock, the earlier of the two, as
soon as practicable, but in any event within 75 days after the end of each
fiscal year of the Corporation, a consolidated balance sheet of the
Corporation as of the end of such year, and statements of income and
statements of cash flow of the Corporation for such year, setting forth in
each case in comparative form the figures for the previous fiscal year, all
in reasonable detail, prepared in accordance with U.S. generally accepted
accounting principles (GAAP), audited by a firm of Independent Certified
Public Accountants in the State of California and accompanied by an opinion
of such firm which opinion shall state that such balance sheet and statements
of income and cash flow have been prepared in accordance with GAAP applied on
a basis consistent with that of the preceding fiscal year, and present fairly
and accurately the financial position of the Corporation as of their date,
and that the audit by such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards.
ii. QUARTERLY FINANCIAL STATEMENTS. So long as
Investor owns of record and beneficially at least five percent (5%) of the
Corporation's issued and outstanding Series B Stock, or until the Corporation
effects a registered underwritten public offering of its Common Stock, the
earlier of the two, as soon as practicable, but in any event within
forty-five (45) days after the end of each quarter of each fiscal year of the
Corporation, an unaudited consolidated balance sheet of the Corporation as at
the end of each such period and unaudited consolidated statements of (i)
income, (ii) cash flow, and (iii) management's analysis of results and a
statement of an executive officer
explaining any differences from budget of the Corporation for such period
and, in the case of the first, second and third quarterly periods, for the
period from the beginning of the current fiscal year to the end of such
quarterly period, setting forth in each case in comparative form the figures
for the corresponding period of the previous fiscal year, all in reasonable
detail and certified, by the chief financial officer (or if none, by the
chief executive officer) of the Corporation, that such financial statements
were prepared in accordance with GAAP applied on a basis consistent with that
of preceding periods and, except as otherwise stated therein, fairly present
the financial position of the Corporation as of their date subject to (y)
there being no footnotes contained therein and (z) changes resulting from
year-end audit adjustments.
iii. ANNUAL PLAN. So long as Investor owns of record
and beneficially at least five percent (5%) of the Corporation's issued and
outstanding Series B Stock, the management of the Corporation shall establish
annually an operating plan and budget for the Corporation prepared on a
quarterly basis (the "Annual Plan"), in consultation with the Corporation's
Board of Directors (the "Board"). The Annual Plan for the following year
shall be submitted to the Board for its approval and shall be delivered to
the each Investor at least thirty (30) days prior to the first day of the
year covered by such Annual Plan. The Annual Plan for the year 2000 is
attached hereto as EXHIBIT Q and incorporated by reference herein. The
Annual Plan for the year 2000 sets forth financial projections for the
Corporation for the period from January 1999 through December 2001. The
parties are aware that these projections are only estimates and the
Corporation's actual financial results may vary significantly from those
projections. The actual financial results of the Corporation for the year
ended December 31, 1999 are as set forth in the Financial Statements. The
Corporation makes no representation or warranty that the financial
projections set forth in the Annual Plan for the year 2000 for the period
January 2000 through December 2001 will reflect the actual financial results
of the Corporation during such time period.
iv MONTHLY SUMMARY. So long as Investor owns of
record and beneficially at least five percent (5%) of the Corporation's
issued and outstanding Series B Stock, no later than five (5) business days
following the end of each calendar month, the Corporation shall deliver to
each Investor a brief summary of the Corporation's and each Subsidiary's
activities for such calendar month. The Corporation shall not be obligated to
attach financial statements to such monthly summary or refer to financial
statements in such monthly summary. Such monthly summary may be prepared by
any knowledgeable employee of the Corporation or the Subsidiary.
b. KEY MAN INSURANCE. No later than 90 days after
Closing, the Corporation shall obtain a reasonbale amout of "key man"
insurance coverage covering the following employees of Nogatech Ltd.: (i)
▇▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer; (ii) ▇▇▇▇ ▇▇▇▇▇▇, Senior Asic Engineer;
and (iii) ▇▇▇▇ ▇▇▇▇▇▇▇▇,, Vice President Engineering.
c. DISASTER RECOVERY PLAN. Within 30 days following the
Closing, the Corporation shall implement a disaster recover plan which shall
require the Corporation and the Subsidiaries to produce and retain back-up
copies of its software every two weeks and which shall be stored at an
address other than the Corporation's or its Subsidiaries principal place of
business.
d. EMPLOYEE NON-COMPETE AND PROPRIETARY INFORMATION
AGREEMENTS. Within 60 days following the Closing, the Corporation shall and
shall cause each Subsidiary to amend the terms of its non-competition and
proprietary information agreements, as applicable, with its employees in a
manner reasonably satisfactory to counsel to Investor and the Corporation.
e. CO-LEAD MANAGER AND CO-FINANCIAL ADVISOR. The
Corporation agrees that following the Closing, prior the consummation of the
Corporation's underwritten initial public offering of its Common Stock
("IPO"), (i) the Corporation will consider and consult with Investor as to
Investor's or any of its affiliates' participation in the IPO on customary
and reasonable terms as a co-lead manager or co-financial advisor to the
extent that Investor or any of its affiliates is able to participate in such
capacities under applicable laws or regulations, including NASD rules, and
(ii) if Investor or any of its affiliates becomes a co-lead manager or
co-financial advisor in the IPO, Investor or its affiliates, as the case may
be, will have no direct influence over the valuation or timing of the IPO.
Notwithstanding the foregoing, the Corporation shall have no obligation
whatsoever to engage Investor or any of its affiliates as a co-lead manager
or co-financial advisor for the IPO.
9. VISITATION RIGHTS. Notwithstanding any other provision in
this Agreement, with
respect to the Corporation's Board of Directors, Investor shall have the
rights set forth in this Section 9:
a. VISITATION RIGHTS. As long as Investor holds at least
400,000 of the Purchased Shares of the Corporation's issued and outstanding
share capital, Investor shall be entitled to appoint one observer on their
behalf (the "Observer") prior to any meeting of the Board of Directors of the
Corporation. The Corporation shall invite the Observer to attend all meetings
of its Board of Directors in a non-voting observer capacity and, in this
respect, shall give the Observer copies of all notices, minutes, consents and
other materials that the Corporation provides to its directors. The
Corporation reserves the right to exclude the Observer from access to any
material or meeting or portion thereof only in those instances where the
Corporation believes, upon written advice of counsel (a copy of which shall
be delivered to the Investor), that such exclusion is necessary to preserve
the attorney-client privilege or for other similar reasons. The Observer may
participate in discussions of matters brought to the Board.
b. CONFIDENTIAL INFORMATION. The Investor agrees to, and
agrees to cause its Observer to, hold in confidence and trust and not use or
disclose any confidential information provided to or learned in connection
with its rights hereunder. This Section 9.b. shall not apply to the
following: (1) information available in the public domain; (2) information
known to Investor prior to the date of the Board of Directors meeting where
the confidential information is first disclosed; and (3) information first
learned by Investor or the Observer from a third-party having an unqualified,
legal right both to possess and disclose such confidential information to the
Investor.
10. NEGATIVE COVENANTS. Except as otherwise provided by law and in
the Corporation's Amended Certificate, the Corporation shall not, without the
vote or written consent of the holders of a majority of the shares of Series
B Preferred Stock, voting as a separate class:
a. increase the authorized number of shares of Series B
Preferred Stock or the Preferred Stock of the Corporation;
b. create any new class or series of shares having
preference over the Series B Preferred Stock;
c. merge, consolidate, or reorganize, where such merger,
consolidation, or reorganization directly involves more than fifty percent
(50%) of the Corporation's Common and Preferred Stock or results in the
change of a majority of the members of the Board of Directors;
d. sell all or substantially all of its assets or permit
the sale of any of its Subsidiary's assets or issue more than 50% of the
Corporation's or sell or permit the issuance of any of its Subsidiary's
Common Stock or Ordinary Shares, as the case may be, in one transaction or a
series of related transactions.
e. enter into a transaction with a related party on terms
and conditions which are not done in the ordinary course of business or which
are not done on terms and conditions which represent a fair value to the
Corporation, unless approved by an Audit Committee that shall be established.
11. MISCELLANEOUS.
a. SURVIVAL. Subject to Section 3.s. herein, the covenants
and agreements made herein (other than those set forth in Section 9) shall
survive the Closing of the transactions contemplated hereby and shall end
upon the consummation of an IPO.
b. INITIAL PUBLIC OFFERING. The Corporation shall use its
best efforts to consummate a public offering of its shares as soon as
practical according to the best interests of the Corporation as determined by
the Board.
c. SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided 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.
d. ENTIRE AGREEMENT. This Agreement and the exhibits
attached hereto and the other documents delivered pursuant hereto constitute
the full and entire understanding and agreement between and among the parties
with regard to the subjects hereof and thereof and supersede all other
agreements, including without limitation the Term Sheet dated December 22,
1999 between the parties hereto.
e. NOTICE. Any notice, payment, report or other
communication required or permitted to be given by one party to any other
party by this Agreement shall be in writing and either (i) served personally
on the other party or parties; (ii) sent by express, registered or certified
first class mail, postage prepaid, addressed to the other party or parties at
its or their address or addresses as indicated next to their signatures
below, or to such other address as any addressee shall have therefor
furnished to the other parties by like notice; (iii) delivered by commercial
courier to the other party or parties; or (iv) sent by facsimile. Such notice
shall be deemed received (A) on the third day after sending if sent by one
day courier; (B) to the extent such day is a business day as recognized by
the country of sender's principal place of business, on the day of
transmission of such notice by facsimile, or, to the extent such day is not a
business day as recognized by the country of sender's principal place of
business, on the first business day of the sender following the day of
transmission, in each case if the recipient has the capability to receive a
facsimile at its address, the sender has the capability of obtaining from its
facsimile machine a confirmation of transmission and the sender mails to the
recipient a copy of such confirmation by regular first class mail no later
than the next business day (as recognized by the country of sender's
principal place of business) following such transmission; and (C) upon
receipt if sent by other methods.
f. TITLES AND SUBTITLES. The titles of the Sections and
subsections of this Agreement are for the convenience of reference only and
are not to be considered in construing this Agreement.
g. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
h. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts between Delaware residents entered into and to be performed
entirely within the State of Delaware.
i. DISPUTES. Any dispute arising out of the transactions
contemplated by this Agreement shall be adjudicated by a court of competent
jurisdiction sitting in the city of Tel Aviv/Jaffa, subject, in any event, to
the provisions of section 13(h) of this Agreement. The parties hereby submit
themselves to the exclusive jurisdiction of such courts for the purposes
hereof.
j. ATTORNEYS FEES. If either party to this Agreement shall
bring any action for any relief against the other, declaratory or otherwise,
arising out of this Agreement, the losing party shall pay to the prevailing
party a reasonable sum as determined by the court for attorneys fees incurred
in bringing such suit and/or enforcing any judgment granted therein, all of
which shall be deemed to have accrued upon the commencement of such action
and shall be paid whether or not such action is prosecuted to judgment. Any
judgment or order entered in such action shall contain a specific provision
providing for the recovery of attorneys fees and costs incurred in enforcing
such judgment. For the purposes of this section, attorneys fees shall
include, without limitation, fees incurred in the following: (1)
post-judgment motions; (2) contempt proceedings; (3) garnishment, levy and
debtor and third-party examinations; (4) discovery; and, (5) bankruptcy
litigation. Should judicial proceedings be commenced to enforce or carry out
this provision or any award or judgment in connection with this Agreement,
the prevailing party in such proceedings shall be entitled to reasonable
attorneys' fees and costs in addition to other relief. Either party shall
have the right, prior to receiving an arbitration award, to obtain
preliminary relief from a court of competent jurisdiction to avoid injury or
prejudice to that party.
k. EXPENSES. Each of the Corporation and Investor shall
pay all its own costs and expenses that it incurs with respect to
negotiation, execution, delivery and performance of this Agreement.
[THIS SPACE WAS INTENTIONALLY LEFT BLANK]
SIGNATURE PAGE TO THE PURCHASE AGREEMENT
If this Agreement is satisfactory to the Purchaser, please so indicate by
signing the acceptance on a counterpart of this Agreement and deliver such
counterpart to the Corporation whereupon this Agreement will become binding
between the Corporation and each such Purchaser in accordance with its terms.
INVESTOR:
NOMURA INTERNATIONAL plc
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By: /s/ K. Yamazse
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(Signature)
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(Print Name and Title)
CORPORATION:
NOGATECH, INC.
a Delaware corporation
[NEW ADDRESS]
By: /s/ ▇. ▇▇▇▇▇▇
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(Signature)
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(Print Name and Title)
