EXHIBIT 4.20
LOAN AGREEMENT
This "LOAN AGREEMENT" is entered into this 31st day of July, 2003 between
Vertical Ventures, LLC, (the "LENDER") and e-SIM Ltd., an Israeli company having
its principal place of business at 00 Xxxxxx Xxxxxx, XXX 00000, Xxxxxxxxx 00000,
Xxxxxx (the "BORROWER") (together the "PARTIES").
WHEREAS, The Lender and the Borrower wish that the Lender should provide the
Borrower a loan in the amount of $100,000 (the "LOAN"), upon the terms and
conditions set out hereafter.
THEREFORE, the Parties agree as follows.
1. DEFINITIONS
All the capitalized terms used in the Loan Agreement and not otherwise
defined herein below shall have the meaning assigned to them therein. The
terms below shall have the following meanings:
"Business Day" means a day on which principal banking business is
transacted in Israel, and on which banking corporations customarily conduct
clearing of banking documents.
"Closing Date" means the date of this Loan Agreement.
"Loan Period" means the period until August 1, 2004.
"Holder" any person holding any of the Borrower's securities, including;
without limitation, shares, options, warrants or convertible debentures.
"Material" means, unless otherwise specifically provided in the Loan
Agreement, a change and/or effect (including, without limitation, any
agreement) which gives rise to an expense, liability, obligation, payment
or damage in an aggregate amount in excess of USD 250,000 (two hundred and
fifty thousand).
"USD" or "$" means United States Dollars.
2. LOAN TERM, AND INTEREST
2.1 The aggregate amount of the Loan shall be USD100,000 (one hundred
thousand), that shall be made available on August 1, 2003 to the Borrower
by wire transfer to the Borrower's account no. 0000000, Branch 060 with
Israel Discount Bank Ltd.
2.2 Subject to Section 3, the Loan shall be repaid, without interest, in one
lump sum payment, on August 1, 2004 (the "DUE DATE");
2.3 The Loan will be granted in USD.
3. CONVERSION
3.1 The Loan may be converted into Ordinary Shares of the Borrower at any time
by the Lender until the Due Date by notice to the Borrower, at a price per
share of $0.18 (eighteen U.S. Cents) (the "Exercise Price").
3.2 If the Lender elects to convert the entire amount of the Loan into Ordinary
Shares pursuant to Section 3.1, it will receive, upon such exercise, a
further Warrant to purchase shares on the terms of the Warrant attached
hereto. Sections 4, 5, 6, 7, 8, 9, 10, 11, 12, 14 and 16 of the Warrant
shall apply to the exercise of the conversion rights provided for in
Section 3.1 herein and to any shares issued pursuant to such exercise.
3.3 In the event the Borrower effects an equity raising in an amount of at
least $100,000 (One Hundred Thousand U.S. Dollars) at any time prior to the
Due Date, the Borrower may require the Lender to convert the Loan, at the
Exercise Price. Upon such exercise, the provisions of Section 3.2 will
apply as if the Lender had elected to convert the Loan.
4. COVENANTS AND UNDERTAKINGS OF THE BORROWER
The Borrower undertakes towards the Lender that, from the Closing Date and
so long as any amounts are owing under the Loan Agreement, it will:
4.1 inform the Lender, forthwith upon becoming aware thereof, of the occurrence
of an Event of Default (as specified in Clause 5 below), or of the
occurrence of any event which, with the giving of a notice or the lapse of
time or both, would constitute an Event of Default;
4.2 obtain or cause to be obtained, at any time and from time to time, such
registration, licenses, consents, approvals, authorizations and exemptions
as may be required by any applicable law or regulation, to enable the
Borrower to perform its obligations under the Loan Agreement or required
for the validity or enforceability of the Loan Agreement;
4.3 be responsible for all stamp duty, if any, payable on the Loan Agreement,
any documents thereunder or any of the documents provided by way of
collateral;
4.4 fully and punctually fulfill all its debts and obligations to the Lender;
4.5 notify the Lender of any breach or of any likely breach of any of the
conditions or undertakings whatsoever towards the Lender immediately upon
it becoming aware of the same;
4.6 maintain its corporate existence, rights, governmental approvals and
franchises necessary to the conduct of the Borrower's business;
4.7 promptly pay and discharge, or cause to be paid and discharged, when due
and payable, all lawful taxes, assessments and governmental charges or
levies imposed upon the income, profits, property or the Borrower's
business;
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4.8 without derogating from the Lender's rights under law -
4.8.1 subject to prior notice and appointment, permit an authorized
representative of the Lender to visit and inspect any of the
properties of the Borrower during the Borrower's regular business
hours, including, without limitation, its books of account, and to
discuss its affairs, finances and accounts with the Borrower's
officers and auditor, all at such reasonable times and as often as the
Lender may reasonably request, provided that inspection of the
Borrower's source code shall only be made by a third party consultant
acceptable to the Lender and the Borrower;
4.8.2 deliver to the Lender the information and reports described in this
Sub-Clause 8 as follows:
4.8.2.1 immediately upon the occurrence of any event likely to have a
significant and/or Material adverse impact upon the Borrower, a
summary of such event and its implications;
4.8.2.2 With reasonable promptness, such other information and data
with respect to the Borrower, as the Lender may from time to time
request;
4.8.2.3 All information (including, without limitation, all financial
statements) provided by the Borrower to other Holders and the
press releases of the Borrower to the press.
4.9 keep true records and books of account in which full, true and correct
entries will be made of all dealings or transactions in relation to the
Borrower's business and affairs.
4.10 no other facility shall derogate from any of the Lender's rights,.
4.11 without derogating from the Borrower's undertakings and obligations under
the Loan Agreement, observe and perform towards the Lender, all of the
Borrower's other undertakings and obligations that it has undertaken
towards any of the Borrower's Holders with respect to the Borrower's
conduct of the Borrower's business, including all the undertakings to
disclose information.
5. EVENTS OF DEFAULT AND ACCELERATION OF REPAYMENT OF THE LOAN
Notwithstanding anything herein contained, upon the occurrence of any of
the events set out hereunder and at any time thereafter, or if the Borrower
shall adopt any resolution and/or shall cause and/or allow any such
occurrence, the Lender shall be entitled without thereby prejudicing any
other right of the Lender under the Loan Agreement, upon the Borrower's
failure to cure such occurrence within 10 (ten) days after the Lender's
written notice to the Borrower to such effect, to declare the Unpaid
Balance of the Loan, in whole or in part, to be immediately due and
payable:
5.1 If on the Due Date, the Loan, has not entirely been paid, and is not paid
within 7 days of Lender sending a demand letter to the Borrower;
5.2 If, according to the Lender, the Borrower's rights have been compromised or
changed by its Documents of Incorporation, in a manner that Materially
damages the Lender's rights according to this Loan Agreement and all
remaining securities, guarantees, documents signed and/or to be signed by
the Borrower or anyone on its behalf regarding the Loan and the securities
and the guarantees.
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5.3 If a receiver (permanent or temporary) or a receiver and manager (permanent
or temporary), or liquidator (permanent or temporary) is appointed to the
Borrower's Business and/or assets or any part of thereof and the
appointment has not been canceled within 45 days and/or in case of
settlement or composition of creditors according to Section 350 of the
Companies Law, 5759-1999 (the "Companies Law"), excluding composition of
creditors as aforementioned approved by the Lender, or if an application is
lodged for the appointment of a receiver (permanent or temporary) or a
receiver and manager (permanent or temporary) or a liquidator (permanent or
temporary) to the Borrower's Business and/or assets or any part thereof and
such application is not withdrawn within 45 days or if an application is
lodged by the Borrower for a settlement or composition of creditors without
the Lender's consent which will not be unreasonably withheld (and in the
case of an application by the Borrower no notice to cure need be given by
the Lender).
5.4 If the Borrower reaches a decision to dissolve, or if a liquidation order
is issued against it, and in such event, no 10 day period of notice shall
be required.
5.5 If any attachment is imposed on all the assets of the Borrower, or on any
material part of them or if any execution of court decision is carried out
on them, and the attachment or execution is be removed within 45 days of
the date attachment was imposed or date the aforementioned execution was
performed, as the case may be;
5.6 If the Borrower has defaulted or will not fulfill one or more of its
obligations under the terms and conditions of this Loan Agreement;
5.7 If the Lender deems that an incident has occurred that xxxxx or might harm
the financial ability of the Borrower to fulfill its commitments or any
Material part thereof and the effect of which is or will be to materially
adversely affect, in the reasonable opinion of the Lender, the Borrower's
ability to repay to the Lender any debt due to the Lender under the Loan
Agreement.
5.8 In any case that a stay or extension has been provided or if there is a
need of providing prior notice, that extension or stay will be canceled
automatically and will not apply and there will be no need of prior notice
if in the Lender's reasonable opinion it might endanger the Lender's rights
and/or the Borrowers ability to pay the Loan or any part of it.
5.9 If any representation, warranty, certificate, statement or opinion made or
delivered pursuant to the Loan Agreement shall prove to have been
incorrect, inaccurate or untrue in any material respect when made or
delivered and the effect of which is or will be to materially adversely
affect, in the reasonable opinion of the Lender, the Borrower's ability to
repay to the Lender any debt due to the Lender under the Loan Agreement;
5.10 If any representation, warranty, certificate, statement or opinion made or
delivered pursuant to the Loan Agreement, ceases to be correct, accurate or
true in any respect and the effect of which is or will be to Materially
adversely affect, in the reasonable opinion of the Lender, any right to
which the Lender is entitled under the Loan Agreement, including the
repayment of the Loan;
5.11 If any event defined as an Event of Default pursuant to any other agreement
executed between the Borrower and the Lender has occurred;
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5.12 If any consent, authorization, license or approval of, registration with or
declaration to any government or public bodies or authorities or courts,
required to be obtained or made by the Borrower in connection with the
execution, delivery, validity, enforceability or admissibility in evidence
of the Loan Agreement or the performance by the Borrower of its respective
obligations under the Loan Agreement, is not granted or is revoked or
terminated or expires and is not renewed or otherwise ceases to be in full
force and effect.
5.13 If the Borrower becomes obligated to indemnify any of its office holders
(within the meaning of Section 1 of the Companies Law), in an amount
exceeding USD 250,000 (two hundred and fifty thousand) or the equivalent
thereof in another currency which is not covered by insurance.
Notwithstanding the aforesaid, in any of the events of default specified in
sections 5.2 to 5.13, the Lender shall not be entitled, during the period
until August 1, 2004, to declare the Unpaid Balance of the Loan, in whole
or in part, to be immediately due and payable if such declaration would
render the Borrower unable to continue as a going concern.
6. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender (which representations
and warranties shall remain true until the Loan is repaid in full and for
as long as the Lender is a Holder) that:-
6.1 The Borrower is a company duly organized and validly existing under the
laws of the State of Israel and has power and authority to own its property
and assets and to transact the business in which it is engaged;
6.2 The Borrower has power to enter into and to perform its obligations under
the Loan Agreement and has taken all necessary corporate and legal action
to authorize the raising of the Loan upon the terms and conditions of the
Loan Agreement and to authorize the execution, delivery and performance of
the Loan Agreement;
6.3 The Loan Agreement constitutes a legal, valid and binding obligation of the
Borrower, enforceable in accordance with its terms and no further actions
or registrations are required to effect or maintain such enforceability;
6.4 The execution, delivery and performance of the Loan Agreement will not
violate any provisions of any law or regulation or of any order or decree
of any court or authority to which the Borrower is subject or the
Certificate of Incorporation, the Memorandum or the Articles of Association
of the Borrower;
6.5 Subject to the Credit Agreements entered into with Israel Discount Bank,
Ltd. and Industrial Development Bank of Israel, as the case may be, the
Borrower has not created a presently valid floating charge over any of its
assets, and there is not in existence any undertaking on the part of the
Borrower in favor of any third party not to create charges over any of its
assets.
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6.6 Each document delivered to and/or signed in favor of the Lender will be in
terms and conditions that are reasonably acceptable to the Lender,
accompanied, if required by the Lender, by confirmation of the passing of
the appropriate resolution and confirmation from a lawyer that such
resolution has been duly passed;
6.7 no material litigation or administrative proceedings before or of, any
court, arbitration or governmental authority, is pending or to the
knowledge of the Borrower, threatened against the Borrower or its assets,
which might have a Material adverse effect on the business, assets or
financial condition of the Borrower, or on the ability of the Borrower to
perform its obligations hereunder, other than a claim by Gaio, Inc. against
the Borrower.
6.8 it is unaware of any breach of any of the above conditions and/or any of
the conditions detailed in this document and that all representations made
by it or by any of its officers and attorney on its behalf are correct.
7. MISCELLANEOUS
7.1 The Borrower and the Lender shall perform such further acts and execute
such further documents as may reasonably be necessary to carry out and give
full effect to the provisions of the Loan Agreement.
7.2 No delay or omission to exercise any right, power, or remedy accruing to
either the Lender of the Borrower upon any breach or default under the Loan
Agreement, shall be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent, or
approval of any kind or character on the part of the Lender or the Borrower
of any breach or default under the Loan Agreement, must be in writing and
shall be effective only to the extent specifically set forth in such
writing. All remedies, either under the Loan Agreement or by law or
otherwise afforded to the Lender, shall be cumulative and not alternative.
7.3 If any provision of the Loan Agreement is held by a court of competent
jurisdiction to be unenforceable under applicable law, then such provision
shall be excluded from the Loan Agreement and the remainder of the Loan
Agreement shall be interpreted as if such provision were so excluded and
shall be enforceable in accordance with its terms; provided, however, that
in such event the Loan Agreement shall be interpreted so as to give effect,
to the greatest extent consistent with and permitted by applicable law, to
the meaning and intention of the excluded provision as determined by such
court of competent jurisdiction.
7.4 Whether or not explicitly provided in the Loan Agreement -
7.4.1 The word "including" shall mean including, without limitation.
7.4.2 Any reference to any law is deemed to refer to all applicable and relevant
and/or equivalent laws (including case law), statutes, codes or ordinances
and all rules and regulations promulgated thereunder, unless the context
otherwise requires.
e-SIM Ltd. Vertical Ventures, LLC
--------------- ---------------
Name: [______] Name: [______]
Title: [______] Title: [______
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Date: July 31, 2003
To: Vertical Ventures, LLC
WARRANT
To purchase Ordinary Shares
of
E-SIM LTD.
VOID AFTER 24:00 p.m. (prevailing Israel time)
On the last day of the Warrant Period (defined below)
e-SIM Ltd., a company registered in Israel (the "COMPANY") hereby grants to
Vertical Ventures, LLC (the "HOLDER"), the right to purchase from the Company
fully paid and non-assessable Ordinary Shares of the Company, par value NIS 0.1
per share in such number as is specified herein. The shares which are
purchasable pursuant to this Warrant are referred to herein as "Warrant Shares".
1. DEFINITIONS
For the purpose of this Warrant:
1.1 "PUBLIC OFFERING" shall mean the next underwritten public offering of the
Company's shares, pursuant to an effective registration statement under the
Securities Act of 1933, as amended, (the "SECURITIES ACT") or pursuant to
the corresponding securities laws of any other jurisdiction (other than a
registration statement effected solely to implement an employee benefit
plan).
1.2 "LIQUIDITY EVENT" shall mean (a) the sale of all or substantially all of
the Company's shares, property and/or assets (including by way of share
swap); or (b) the merger or consolidation of the Company with or into
another company following which more than fifty percent (50%) of the
Company's shares are held by persons who, prior to the said transaction,
held, in the aggregate, less than five percent (5%) of the Company's
shares, other than a merger, share swap or other re-organization that is
carried out in order for the Company to become a subsidiary of a company
(newly-organized or otherwise) which is registered outside of Israel
(provided that in such merger, share swap or other re-organization, all
shareholders and option holders receive a pro-rata share of the shares and
options issued in the non-Israeli company).
1.3 "EXIT TRANSACTION" shall mean a Public Offering or a Liquidity Event.
1.4 "EFFECTIVE DATE" shall mean the date of execution of this Warrant.
1.5 "WARRANT AMOUNT" shall mean Three Hundreds Thousands United States Dollars
(US $300,000).
1.6 "WARRANT PERIOD" shall mean the period for exercise of this Warrant, as
determined pursuant to Section 3.
1.7 "EXERCISE PRICE" shall mean the exercise price of each Warrant Share
purchasable hereunder, which shall be $0.54, subject to modification
pursuant to Section 9.
1.8 "ARTICLES" shall mean the articles of association of the Company, as they
may be amended from time to time.
1.9 "LOAN" shall mean a loan of $100,000 granted by the Holder to the Company
in accordance with an agreement between the Company and the Holder of even
date.
2. NUMBER OF SHARES AVAILABLE FOR PURCHASE
Provided the Holder has converted the Loan in full into Ordinary Shares of
the Company, this Warrant may be exercised to purchase that number of
Warrant Shares determined by dividing the Warrant Amount by the Exercise
Price.
3. WARRANT PERIOD.
The Warrant may be exercised, in whole or in part, and on one or more
occasions, during the period commencing from date of conversion of the Loan
and ending three (3) years following the Effective Date. If the Loan is not
converted in accordance with the loan agreement between the Holder and the
Company, the Warrant may not be exercised.
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4. NOTICE OF EVENTS.
Notwithstanding the foregoing or any other rights of the Holder pursuant to
the provisions of this Warrant, if at any time the Company shall offer for
subscription to the holders of Ordinary Shares any additional shares of any
class, other rights or any equity security of any kind, or there shall be
any capital reorganization or reclassification of the capital shares of the
Company, or consolidation or merger of the Company with, or sale of all or
substantially all of its assets to another person or there shall be a
voluntary or involuntary dissolution, liquidation or winding-up of the
Company, then, in any one or more of said cases, the Company shall give the
Holder written notice, by first class mail, postage prepaid, addressed to
the Holder at the address of the Holder as shown on the books of the
Company, of the date on which (i) a record shall be taken for such
subscription rights or (ii) such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up shall
take place, as the case may be. Such notice shall also specify the date as
of which the holders of record of Ordinary Shares shall participate in such
subscription rights, or shall be entitled to exchange their Ordinary Shares
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, as the case may be. Such written notice shall be given by not
later than seven (7) business days prior to the action in question and by
not later than seven (7) business days prior to the record date in respect
thereto.
5. EXERCISE OF WARRANT
5.1 EXERCISE. Subject to the provisions hereof, this Warrant may be
exercised in whole or in part, on one or more occasions at any time
during the Warrant Period. This Warrant shall be exercised by
presentation and surrender hereof to the Company at the principal
office of the Company or at such other office or agency as the Company
may designate in writing, accompanied by a written notice of exercise
in the form attached hereto as EXHIBIT 5.1 and for the purpose of
determining the relevant Exercise Price, the Warrant shall be deemed
to have been exercised at such time.
5.2 EXERCISE FOR CASH. If the Holder, at its sole discretion, elects to
make a cash payment for the Warrant Shares it shall make such payment
by not later than seven (7) days from giving the Exercise Notice to
the Company in an amount equal to the Exercise Price multiplied by the
number of Warrant Shares specified in such notice. The Exercise Price
for the number of Warrant Shares specified in the notice shall be
payable in immediately available funds, in U.S. dollars, or the NIS
equivalent thereof, according to the Company's preference, based on
the Representative Rate of Exchange last published by the Bank of
Israel prior to the time of payment.
5.3 PARTIAL EXERCISE, ETC. If this Warrant should be exercised in part
only, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new Warrant evidencing the rights
of the Holder to purchase the balance of the shares purchasable
hereunder.
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5.4 ISSUANCE OF THE WARRANT SHARES. Upon presentation and surrender of the
notice of exercise and after the payment of the Exercise Price
pursuant to section 5.2, the Company shall issue promptly to the
Holder the shares to which the Holder is entitled.
As of and from the close of business on the date of receipt by the
Company of the notice of exercise and the Exercise Price, if
applicable, the Holder shall be deemed to be the Holder of the shares
issuable upon such exercise, notwithstanding that the share transfer
books of the Company shall then be closed and that certificates
representing such shares shall not then be actually delivered to the
Holder. The Company shall pay the stamp duty that may be payable in
connection with the issuance of the shares and the preparation and
delivery of share certificates pursuant to this Section 5 in the name
of the Holder. No fractions of shares shall be issued in connection
with the exercise of this Warrant and the number of shares shall be
rounded to the nearest whole number.
All Warrant Shares issued shall be fully paid and non-assessable.
5.5 CONDITIONAL EXERCISE. Any purchase of Warrant Shares by the Holder in
connection with the receipt of a notice of an anticipated Exit
Transaction or equity-raising event may be made conditional upon the
consummation and closing of such Exit Transaction or equity-raising
event of the Company.
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6. RESERVATION OF SHARES AND PRESERVATION OF RIGHTS OF HOLDER
The Company hereby agrees that promptly following the Effective Date, it
will convene a general meeting of its shareholders at which it will bring
to a vote an increase of the Company's share capital such that this Warrant
may be exercised without additional authorization of Warrant Shares.
Following the abovementioned increase of share capital, the Company will at
all times maintain and reserve, free from preemptive rights, lien or other
third party rights, such number of authorized but un-issued shares in its
capital so that this Warrant may be exercised without additional
authorization of Warrant Shares after giving effect to all other options,
warrants, convertible securities and other rights to acquire shares of the
Company. The Company further agrees that it will not, by charter amendment
or through reorganization, voluntary liquidation, consolidation, merger,
dissolution, winding up or sale of assets, or by any other voluntary act,
avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder
by the Company.
7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Holder that as of the
Effective Date:
7.1. The grant of this Warrant shall require approval of the board of
directors, the audit committee, and shareholders of the Company. The
Company will apply for all necessary approvals, but does not warrant
that such approvals will be obtained.
7.2. The Warrant Shares when paid for and issued in accordance with the
terms hereof shall be duly authorized, will be validly issued, fully
paid and nonassessable, not subject to any preemptive rights (other
than preemptive rights waived prior to the issue of this Warrant or
shortly thereafter) and issued free and clear of all debts, liens,
encumbrances, taxes, charges, equities, claims, any rights of third
parties and any other liabilities, other than any such liability
created by the Holder, and other than tax liabilities in connection
with: (i) this Warrant and the Holder's rights set forth herein, (ii)
the exercise of this Warrant and/or the rights set forth herein, (iii)
the issuance of the Warrant Shares (other than any stamp tax, which
shall be borne by the Company only), and/or (iv) the disposition of
the Warrant Shares. If the Company is subject to a withholding
requirement in connection with an exercise of this Warrant, it may
postpone any issuance of Warrant Shares until the Holder sufficiently
proves that the applicable tax has been paid by the Holder or provides
exemption from such withholding obligation.
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8. INVESTMENT REPRESENTATION
Neither this Warrant nor the Warrant Shares issuable upon the exercise of
this Warrant have been registered under the Securities Act, or any other
securities laws. The Holder acknowledges by acceptance of this Warrant that
(a) it has acquired this Warrant for investment and not with a view to
distribution; (b) it has either a pre-existing personal or business
relationship with the Company, or its executive officers, or by reason of
its business or financial experience, it has the capacity to protect its
own interests in connection with the transaction; and (c) it is an
accredited investor as that term is defined in Regulation D promulgated
under the Securities Act. The Holder agrees that any Warrant Shares
issuable upon exercise of this Warrant will be acquired for investment and
not with a view to distribution, that such Warrant Shares will not be
registered under the Securities Act and applicable state securities laws or
any other securities laws and that such Warrant Shares may have to be held
indefinitely unless they are subsequently registered or qualified under the
Securities Act and applicable state securities laws, or an exemption from
such registration and qualification is available. The Holder, by acceptance
hereof, consents to the placement of legend(s) on all securities hereunder
as to the applicable restrictions on transferability in order to ensure
compliance with the Securities Act, unless in the opinion of counsel for
the Company such legend is not required in order to ensure compliance with
the Securities Act. The Company may issue stop transfer instructions to its
transfer agent in connection with such restrictions.
9. ADJUSTMENT
The number and kind of securities purchasable initially upon the exercise
of this Warrant and the Exercise Price shall be subject to adjustment from
time to time upon the occurrence of certain events, as follows:
9.1. ADJUSTMENT FOR SHARES SPLITS AND COMBINATIONS. If the Company at any
time or from time to time effects a subdivision of the outstanding
shares, the number of shares issuable upon exercise of this Warrant
immediately before the subdivision shall be proportionately increased,
and conversely, if the Company at any time or from time to time
combines the outstanding shares, the number of shares issuable upon
exercise of this Warrant immediately before the combination shall be
proportionately decreased. Any adjustment under this Section y9.19.1
shall become effective at the close of business on the date the
subdivision or combination becomes effective.
9.2. ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the event the
Company at any time, or from time to time makes, or fixes a record
date for the determination of holders of shares entitled to receive a
dividend or other distribution payable in additional shares of the
Company, then and in each such event the number of shares issuable
upon exercise of this Warrant shall be increased as of the time of
such issuance or, in the event such a record date is fixed, as of the
close of business on such record date, by multiplying the number of
shares issuable upon exercise of this Warrant by a fraction: (i) the
numerator of which shall be the total number of shares of the Company
issued and outstanding immediately prior to the time of such issuance
or the close of business on such record date plus the number of shares
issuable in payment of such dividend or distribution, and (ii) the
denominator of which is the total number of shares of the Company
issued and outstanding immediately prior to the time of such issuance
or the close of business on such record date; PROVIDED, HOWEVER, that
if such record date is fixed and such dividend is not fully paid or if
such distribution is not fully made on the date fixed thereof, the
number of shares issuable upon exercise of this Warrant shall be
recomputed accordingly as of the close of business on such record date
and thereafter the number of shares issuable upon exercise of this
Warrant shall be adjusted pursuant to this Section 9.2 as of the time
of actual payment of such dividends or distributions.
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9.3. FUNDAMENTAL TRANSACTIONS. If, at any time while this Warrant is
outstanding, (1) a Liquidity Event occurs, (2) any tender offer or
exchange offer (whether by the Company or another Person) is completed
pursuant to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (3)
the Company effects any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or
property (in any such case, a "FUNDAMENTAL TRANSACTION"), then the
Holder shall have the right thereafter to receive, upon exercise of
this Warrant, the same amount and kind of securities, cash or property
as it would have been entitled to receive upon the occurrence of such
Fundamental Transaction if it had been, immediately prior to such
Fundamental Transaction, the holder of the number of Warrant Shares
then issuable upon exercise in full of this Warrant (the "ALTERNATE
CONSIDERATION"). For purposes of any such exercise, the determination
of the Exercise Price shall be appropriately adjusted to apply to such
Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among
the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to
the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to the
Alternate Consideration it receives upon any exercise of this Warrant
following such Fundamental Transaction. At the Holder's option and
request, any successor to the Company or surviving entity in such
Fundamental Transaction shall issue to the Holder a new warrant
substantially in the form of this Warrant and consistent with the
foregoing provisions and evidencing the Holder's right to purchase the
Alternate Consideration for the aggregate Exercise Price upon exercise
thereof.
9.4. OTHER TRANSACTIONS. In the event that the Company shall issue shares
to its shareholders as a result of a split-off, spin-off or the like,
then the Company shall only complete such issuance or other action if,
as part thereof, allowance is made to protect the economic interest of
the Holder either by increasing the number of Warrant Shares,
adjusting the Exercise Price, and/or by procuring that the Holder
shall be entitled, on economically proportionate terms, determined in
good faith by the Company's Board of Directors, to acquire additional
shares of the spun-off or split-off entities, in the event of an
exercise of this Warrant.
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9.5. OTHER DILUTIVE EVENTS. In case any event shall occur as to which the
preceding Sections 9.1 through 9.4 are not strictly applicable but as
to which the failure to make any adjustment would not fairly protect
the rights to receive shares represented by this Warrant in accordance
with the essential intent and principles hereof, then, in each such
case, the Company's Board of Directors shall, in good faith, determine
what adjustments are necessary to preserve the rights of the Holder to
receive shares represented by this Warrant.
9.6 ADJUSTMENT OF EXERCISE PRICE. Upon each adjustment in the number of
Warrant Shares purchasable hereunder, the Exercise Price shall be
proportionately increased or decreased, as the case may be, in a
manner that is the inverse of the manner in which the number of
Warrant Shares purchasable hereunder shall be adjusted.
10. NOTICE OF CHANGES AND EXCHANGE OR LOSS OF WARRANT
10.1 Whenever the number of Warrant Shares for which this Warrant is
exercisable is adjusted as provided in Sections 4 and 9, the Company
shall promptly compute such adjustment and deliver to the Holder a
certificate, signed by a principal financial officer of the Company,
setting forth the number of Warrant Shares for which this Warrant is
exercisable and the Exercise Price as a result of such adjustment, a
brief statement of the facts requiring such adjustment and the
computation thereof and when such adjustment has or will become
effective.
10.2 Upon receipt by the Company of a declaration by an officer of the
Holder of the loss, theft, destruction or mutilation of this Warrant,
and (in the case of loss, theft or destruction) of a declaration that
the Holder will provide indemnification, and reimbursement to the
Company of all reasonable expenses incidental thereto and surrender
and cancellation of this Warrant, if mutilated, the Company will
execute and deliver a new Warrant of like tenor and date.
11. ASSIGNMENT
The Holder may offer, sell or otherwise dispose of this Warrant, in whole
or in part and on one or more occasions, to any party controlled,
controlling or under common control of more than 25% with the Holder
provided such assignee does not compete with the Company and provided that
such assignment may only be made after conversion of the Loan into Ordinary
Shares in the Company.
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12. RIGHTS OF THE HOLDER
The Holder shall not, by virtue hereof, be entitled to any rights of a
shareholder in the Company, unless specifically stated herein.
13. TERMINATION
This Warrant and the rights conferred hereby shall terminate at the
aforementioned time on the last day of the Warrant Period.
14. REGISTRATION RIGHTS
The following provisions govern the registration of the Company's
securities:
14.4. DEFINITIONS. As used herein, the following terms have the following
meanings:
14.4.1 "REGISTRABLE WARRANT SHARES": means (i) all Warrant Shares, to
be issued to Holder upon the exercise thereof; and (ii) any
securities issued or issuable with respect to the shares
described in (i) above by way of bonus share distributions, share
splits or other recapitalizations or share conversions; and all
shares that Holder may hereafter purchase pursuant to its
preemptive rights, rights of first refusal or otherwise, or
shares issued on conversion or exercise of other securities so
purchased. Registrable Warrant Shares, if transferred in
accordance with the Articles of Association of the Company, will
remain Registrable Warrant Shares for the purpose of the Warrant.
14.4.2. "OTHER SECURITIES" means the shares of the Company held by
other shareholders who were granted registration rights with
respect to such securities pursuant to any agreements between the
Company and such shareholders.
14.1.3 "COMPANY REGISTRATION" means a registration statement or
similar document filed with the United States Securities and
Exchange Commission or any other relevant securities authority in
another jurisdiction with respect to the registration of any of
the Company's securities under the Securities Act or any other
applicable securities law, other than pursuant to a registration
of securities issuable on Form S-8 or any similar form available
for non-United States companies such as the Company, or any
successor form thereto, or pursuant to an employee stock option,
stock purchase or similar benefit plan.
- 9 -
14.2 DEMAND REGISTRATION - Subject to the conditions of this Section 14.2,
if the Company shall receive a written request from the Holder that
the Company file a registration statement under the Securities Act
then the Company shall, within thirty (30) days of the receipt
thereof, give written notice of such request to all holders of Other
Securities having a right to a demand registration, and use its best
efforts to effect, as soon as practicable, the registration under the
Securities Act of all Registrable Warrant Shares that the Holders
requests to be registered.
The Company shall not be required to effect a registration pursuant to
this Section 14.2 (i) prior to the effective date of the registration
statement pertaining to the IPO; (ii) after the Company has effected
one (1) registration pursuant to this Section 14.3, and such
registration have been declared or ordered effective; (iii) during the
period starting with the date of filing of, and ending on the date one
hundred eighty (180) days following the effective date of the
registration statement pertaining to a public offering; PROVIDED that
the Company makes reasonable best efforts to cause such registration
statement to become effective; (iv) if within thirty (30) days of
receipt of a written request from the Holder, the Company gives notice
to the Holder of the Company's intention within ninety (90) days to
make a public offering or file a draft or final registration statement
preparatory to a public offering; or (v) if the Company shall furnish
to the Holder a certificate signed by the Chairman of the Board
stating that in the good faith judgment of the Board of Directors of
the Company, it would be materially detrimental to the Company or its
shareholders for such registration statement to be effected at such
time, in which event the Company shall have the right to defer such
filing for a period of not more than one hundred twenty (120) days
after receipt of the request of the Holder.
14.3 PIGGYBACK REGISTRATION - At least thirty (30) days prior to the filing
of a Company Registration, the Company will give written notice to the
holders of the Registrable Warrant Shares of its intention to effect
such a registration. The Company will include in such Company
Registration all Registrable Warrant Shares and, subject to the
provisions of Section 14.4 below, all Other Securities with respect to
which the Company has received written requests for inclusion therein
within thirty (30) days after the Company gives such notice
("Piggyback Requests"). The foregoing notwithstanding, subject to the
provisions of Section 14.5 the holders of the Registrable Warrant
Shares will not be permitted to piggyback rights on the IPO if the
managing underwriters for the Company advise such holders in writing,
as well as to all other shareholders with similar rights, that such
IPO piggyback rights must be waived in order for the Company to effect
the IPO.
14.4 ALLOCATION - If the managing underwriters advise the Company in
writing that, in their opinion, the number of Registrable Warrant
Shares and Other Securities requested in Piggyback Requests to be
included in a Company Registration exceeds the number that can be sold
in such offering without adversely affecting such underwriters'
ability to effect an orderly distribution of such securities, the
Company will include in such Company Registration: (i) first, the
Company's securities; (ii) second, the number of Registrable Warrant
Shares requested to be included that, in the opinion of such
underwriters, can be sold, as well as any Other Securities with a
right to request participation on a pro rata basis; and (iii) third,
any Other Securities without a right to request participation on a pro
rata basis requested to be included which, in the opinion of the
managing underwriters, can be sold in such offering pro rata among the
respective holders thereof on the basis of the number of shares then
owned by each such holder.
- 10 -
14.5 TERM - The rights granted hereunder shall terminate when all
Registrable Warrant Shares have been effectively registered, or can be
sold freely without registration, under the Securities Act or any
other applicable securities law or otherwise without limitation with
respect to offerees or the size or timing of the transaction.
14.6 REGISTRATION EXPENSES - The Company shall be responsible for all
registration expenses incurred by holders of Registrable Warrant
Shares in connection with any Company Registration, including, (a) the
fees of one legal counsel for the holders of Registrable Warrant
Shares participating in the registration; and (b) all expenses
incident to the Company's performance of or compliance with this
Agreement, including without limitation, expenses incurred in
connection with the preparation of a prospectus and the procedures set
forth herein. Notwithstanding the foregoing, however, underwriters'
discounts, fees and commissions in respect of the sale of Registrable
Warrant Shares or Other Securities shall be paid by the sellers, pro
rata in accordance with the number of shares sold in the offering.
14.7 PRECONDITIONS TO PARTICIPATION IN UNDERWRITTEN REGISTRATIONS - No
holder of Registrable Warrant Shares or Other Securities may
participate in any underwritten registration hereunder unless such
person, (a) agrees to the sale of (including any restriction on the
sale of) its securities on the basis provided in any customary
underwriting arrangements, including customary lock-up periods as
required by the underwriters with respect to any shares, applicable
law, or stock exchanges; and (b) provides any relevant information and
completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements, and other documents required
under the terms of such underwriting arrangements.
The Company and the Holder will provide each other customary
indemnities in respect of any representations or claims made in any
registration statement or for any violations of any securities laws.
14.8 RULE 144 - With a view to making available the benefits of Rule 144
under the Securities Act or similar rule then in effect ("Rule 144")
available to the holders of Registrable Warrant Shares and Other
Securities, after the initial public offering of any securities of the
Company, the Company shall (i) make and keep available adequate
current public information with respect to the Company within the
meaning of Rule 144(c) or similar rule then in effect ("Rule 144(c)");
(ii furnish to any holder of Registrable Warrant Shares upon request,
(i) a written statement by the Company as to its compliance with the
informational requirements of Rule 144(c); or (ii) a copy of the most
recent annual or quarterly report of the Company; and (iii) comply
with all other necessary filings and other requirements so as to
enable the holders of Registrable Warrant Shares to sell Registrable
Warrant Shares under Rule 144.
14.9 ASSIGNMENT OF REGISTRATION RIGHTS - Any of the holders of the
Registrable Warrant Shares may assign its rights to cause the Company
to register Registrable Warrant Shares pursuant to this Warrant to a
transferee of the majority of its Registrable Warrant Shares.
- 11 -
14.10 FOREIGN OFFERINGS - The provisions of this Section 14 shall apply,
mutatis mutandis, to any registration of the securities of the Company
outside of the United States.
15. GOVERNING LAW
This Warrant shall be governed by, and interpreted in accordance with, the
laws of the State of Israel, without giving effect to the rules respective
conflict of law, and the parties hereto irrevocably submit to the exclusive
jurisdiction of the Courts of Tel Aviv in respect of any dispute or matter
arising out of or connected with this Warrant.
16. INDEMNIFICATION
16.1 INDEMNIFICATION BY THE COMPANY. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless the Holder,
the officers, directors, agents, investment advisors and employees of
the Holder, any person who controls the Holder (as defined in the
Companies Law, 5759-1999 (the "COMPANIES LAW")) to the fullest extent
permitted by applicable law, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation,
reasonable costs of preparation and reasonable attorneys' fees) and
expenses (collectively, "Losses"), as incurred, arising out of or
relating to any untrue or alleged untrue statement of a material fact
contained in the registration statement or arising out of or relating
to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not
misleading, except to the extent, but only to the extent, that such
untrue statements or omissions are based solely upon information
regarding the Holder furnished in writing to the Company by the Holder
expressly for use therein, or to the extent that such information
relates to the Holder or the Holder's proposed method of distribution
of Registrable Warrant Shares and was reviewed and expressly approved
in writing by the Holder expressly for use in the registration
statement. The Company shall notify the Holder promptly of the
institution, threat or assertion of any proceeding of which the
Company is aware in connection with the transactions contemplated by
this Warrant.
16.2 INDEMNIFICATION BY HOLDER. The Holder shall indemnify and hold
harmless the Company, its directors, officers, agents and employees,
each person who controls the Company (as defined in the Companies
Law), and the directors, officers, agents or employees of such
controlling persons, to the fullest extent permitted by applicable
law, from and against all Losses, as incurred, arising solely out of
or based solely upon any untrue statement of a material fact contained
in any registration statement or arising solely out of or based solely
upon any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading to the extent,
but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by the Holder to
the Company specifically for inclusion in such registration statement
or to the extent that such untrue statements or omissions are based
solely upon information regarding the Holder furnished in writing to
the Company by the Holder expressly for use therein, or to the extent
that such information relates to the Holder or the Holder's proposed
method of distribution of Registrable Warrant Shares and was reviewed
and expressly approved in writing by the Holder expressly for use in
the registration statement. In no event shall the liability of the
Holder hereunder be greater in amount than the dollar amount of the
net proceeds received by the Holder upon the sale of the Registrable
Warrant Shares giving rise to such indemnification obligation.
- 12 -
16.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any proceeding shall be
brought or asserted against any party entitled to indemnity hereunder
(an "INDEMNIFIED PARTY"), such Indemnified Party shall promptly notify
the party from whom indemnity is sought (the "INDEMNIFYING PARTY") in
writing, and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except to the extent that it shall be finally determined by
a court of competent jurisdiction that such failure shall have
proximately and materially adversely prejudiced the Indemnifying
Party.
e-SIM Ltd.
By: ___________________
Title: ___________________
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EXHIBIT 5.1
NOTICE OF EXERCISE
To: e-SIM Ltd.
1. The undersigned hereby elects to purchase _________ Shares of e-SIM Ltd.,
pursuant to the terms of the attached Warrant.
2. In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the Shares are being acquired solely for the account of
the undersigned and not as a nominee for any other party, or for
investment, and that the undersigned will not offer, sell or otherwise
dispose of any such Shares except under circumstances that will not result
in a violation of the Securities Act of 1933, as amended, or any other
securities laws.
3. Please issue a certificate representing said Shares in the name of the
undersigned, at the following address:
4. Please issue a new Warrant for the unexercised portion of the attached
Warrant (if any) in the name of the undersigned.
---------------------- ----------------------
(Date) (Print Name of Holder)
----------------------
(Signature)
Name:
Title:
Telephone:
- 14 -
