EXHIBIT B SHAREHOLDERS' AGREEMENT by and among BREEDIT CORP. and NOVOMIC LTD. and SHAREHOLDERS LISTED ON EXHIBIT A
EXHIBIT B
SHAREHOLDERS' AGREEMENT
by and among
and
NOVOMIC LTD.
and
SHAREHOLDERS LISTED ON EXHIBIT A
Dated as of February 08, 2016 EXHIBIT B
SHAREHOLDERS’ AGREEMENT
THIS SHAREHOLDERS' AGREEMENT (the “Agreement”) is made as of the 8th day of February 2016 by and among BreedIT Corp., a publicly traded Delaware corporation, with principal offices at ▇▇ ▇▇'▇▇▇▇▇ ▇▇., ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ("BRDT" or the “Company“), Novomic Ltd., Israeli company, with principal office at ▇▇ ▇▇'▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇-▇▇▇▇▇▇, ▇▇▇▇▇▇ ("Novomic") and each of the shareholders listed on Exhibit A hereto (the "Shareholders"). Each of the Company, Novomic and the Shareholders shall be referred to individually, as a "Party" and collectively, the "Parties".
W I T N E S S E T H:
WHEREAS, on February 08, 2016, BRDT, Novomic, YMY Industries Ltd. ("YMY"), Microdel Ltd. ("Microdel") (together, YMY and Microdel shall be referred to as the "Novomic Founders") and the Novomic Shareholders (as defined in the Merger Agreement thereto) have executed a merger agreement under which Novomic shall be merged with and into the Company such that all of the issued and outstanding share capital of Novomic owned by the Novomic Shareholders shall be transferred to BRDT in consideration for such number of shares of BRDT common stock, par value $0.0001 (the "BRDT Shares") that shall be issued to Novomic Shareholders upon Closing (the "Merger Agreement"); and
WHEREAS, the Novomic Shareholders, upon the Closing of the Merger Agreement, will be the holders of a majority of the outstanding BRDT Shares and, as a result, shall be in position under the Delaware General Corporation Law (the "DGCL") to elect all of the members of the Company's Board of Directors, among other rights and powers; and
WHEREAS, notwithstanding the foregoing recital, the Parties wish to set forth herein certain agreements relating to the Shareholders’ rights in the Company and obligations as shareholders of the Company on and after the Closing of the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the Parties hereto agree as follows:
1. Conflict With The Certificate Of Corporation Of The Company
1.1. Conflict of Terms. In the event of any conflict between the terms of this
Agreement and those of the Certificate of Incorporation of the Company, as
amended (the "Certificate"), then, as between the Parties, the terms of this
Agreement shall prevail and the Parties shall jointly and promptly take all such
steps necessary under the DGCL, including, but not limited to convening a
special shareholders' meeting at which all of the Shareholders, as defined
herein, agree to vote all of their BRDT Shares held by the Shareholders at any
such meeting or, in the alternative, shall by written consent pursuant to the
provisions of Section 228 of Title 8 of the DGCL, agree and consent to implement
any amendment to the Certificate, as may be necessary to effect the intention
and terms of this Agreement.
1.2. Waiver. Each Shareholder, to the fullest extent permitted by applicable
law, hereby waives any rights that it may have under any provision of the
Certificate or under applicable law which might be inconsistent with the terms
of this Agreement, and to the extent such rights cannot validly be waived, each
Shareholder undertakes to exercise such rights only to the extent consistent
with this Agreement.
2. Board Of Directors
2.1. Number of Directors. The Parties agree that the Board of Directors of the
Company following the Closing (the "Board") shall consist of three (3)
directors. The size of the Board may be increased or decreased by an amendment
to this Agreement, the Company's Certificate of Incorporation and/or the
Company's Bylaws as may then be in effect, in accordance with applicable
provisions of the DGCL.
2.2. Rights to Appoint and Dismiss Directors. The Parties agree that the
directors shall be appointed/elected to, and will be subject to dismissal from,
the Board, in the event that the Board consists of three (3) directors, as
follows:
2.2.1. BRDT Representatives (as defined in the Merger Agreement) shall be
entitled to appoint and dismiss one (1) director. The identity of any such
appointed director by BRDT Representatives (but not any subsequent dismissal)
shall be subject to the consent of the Novomic Founders, which shall not be
unreasonably withheld.
2.3. Each of the two (2) Novomic Founders shall be entitled to appoint and
dismiss one (1) director.
2.4. Chairman of the Board. The Chairman of the Board shall be appointed by the
majority of the directors serving on the Board. The Chairman of the Board will
participate as a full voting member of the Board.
2.5. Method of Appointment or Removal. Appointment of Board directors shall be
made by providing written notice of such appointment to the Company by the BRDT
Representatives and the Novomic Founders, as the case may be, in accordance with
the provisions of the DGCL. Removal of Board directors shall be made by
providing written notice of such removal to the Company. The Company and the
Novomic Shareholders shall take all necessary actions in order to affect such
appointment or dismissal of the Board directors, including, without limitation,
the convening of a general meeting of the Shareholders and the approval of such
appointments and dismissals in accordance with and subject to the provisions of
the DGCL.
2.6. Reimbursement of Directors. The Company will reimburse all non-employee
directors for their reasonable expenses incurred in their services as a director
of the Company which are pre-approved by the Chief Executive Officer of the
Company or are covered by a policy approved by the Board, including any expenses
incurred to attend Board meetings.
2.7. Quorum at Board Meetings. The quorum for convening a Board meeting shall be
a majority of the directors then serving.
2.8. Directors’ and Officers’ Indemnification and Insurance. The Company shall
enter into an indemnification agreement with each of its officers and directors
to the greatest extent permitted by the Israeli Companies Law, 5759-1999 and
DGCL and shall obtain directors’ and officers’ insurance with coverage in an
amount of not less than $5 million.
2.9. Board of Directors of Subsidiaries and Committees. The above mentioned
composition of the Board, methods of appointment and removal, reimbursement of
Directors, Quorum and Directors' and Officers' Indemnification and Insurance, as
described in Sections 2.1-2.8 (inclusive), shall apply to any board of
directors of any subsidiary of the Company and any committee of the Board and/or
any committee of any subsidiary of the Company, if applicable.
3. Nomination of CFO
Following the date of this Agreement, Company shall nominate a Chief Financial
Officer subject to the recommendation of BRDT Representatives and the consent of
the Novomic Founders, which shall not be unreasonably withheld.
4. ESOP
Following the date of this Agreement, Company may establish an employee stock
option plan (the "Plan") and reserve such number of common stocks for issuance
under such plan up to a maximum of ten (10%) percent of the issued and
outstanding capital stock of the Company at the date of this Agreement. All
terms of the Plan shall be determined by Company's Board following the date of
this Agreement.
5. Use of Proceeds
Company shall use the gross proceeds from the Merger (i.e., BRDT’s cash position
at the Closing) for research and development and for the working capital,
general corporate purposes and the repayment of the Company's debt as shall be
as of January 1st, 2016.
Following the date of this Agreement and until the first anniversary therefrom,
Company shall extend a monthly sum of US$8,000 for the benefit of investors'
relations and public relations, which sum shall be managed by Company's Board.
6. Repayment of Novomic's Shareholders' Loans
It is agreed by the Parties, that at the date of this Agreement, Novomic shall
have certain outstanding shareholders loans, the aggregate sum of which shall
not exceed US$150,000 (the "Novomic Shareholders' Loans").
It is further agreed that, following the date of this Agreement, the Novomic
Shareholders Loans shall be repaid only from the 'Net Profit' of Novomic,
provided that such repayment shall not exceed thirty (30%) percent of Novomic's
aforesaid 'Net Profit', from time to time.
For the purpose of this Section 6, "Net Profit" means Net profit as disclose in
the annual or quarterly financial statements filed with the SEC and included in
the 10K/10Q.
7. Annual Budget
The management of the Company shall furnish the Board, an annual operating plan
and budget for the Company (the "Annual Budget"), including detailed monthly
financial projections for each forthcoming month, at least sixty (60) days prior
to the first day of the month covered by such plan. The management of the
Company shall notify and provide the Board with such information or documents as
any director shall deem reasonable or shall request in connection with such
matters.
The management of the Company shall furnish the Board, an updated Annual Budget,
including detailed quarterly financial projections for each forthcoming quarter,
(three) 3 times per each fiscal year.
8. Access and Visitation Rights
Each of the Shareholders holding not less than ten (10%) percent (either alone
or together with other Shareholders) and/or any of their representatives shall
have, at reasonable times and upon reasonable written notice, full access to all
books and records of the Company, shall be entitled to review them, at its sole
and absolute discretion, shall be entitled to inspect the properties of the
Company, discuss its affairs and consult with the management of the Company, all
subject to a confidentiality undertaking as set forth in Section 9 below. The
above mentioned access and visitation rights of the Shareholders and their
representatives shall also apply to any of the Company's subsidiaries.
9. Confidentiality
The Parties agree that any information obtained pursuant to this Agreement shall
not be disclosed without the prior written consent of the Company.
Notwithstanding the above, (i) in connection with reports to its shareholders,
partners and/or members, each Shareholder may, without first obtaining such
written consent: (A) make general statements regarding the nature and progress
of the Company's business, (B) provide other information reasonably requested by
its shareholders, partners and/or members in connection with periodic reports,
provided that, (x) such shareholders, partners and/or members shall agree to
maintain such information in confidence, and (y) the Shareholders may not annex
to such reports the full financial information to be provided hereunder by the
Company; (ii) in connection with any requirement(s) or request(s), pursuant to
any applicable law, made by any governmental entities whatsoever, the
Shareholders may, without first obtaining such written consent, provide such
information regarding the Company to any such governmental entities, provided
that such Shareholder promptly notifies the Company of such disclosure and takes
reasonable steps to minimize the extent of any such required disclosure; and
(iii) the Shareholders may disclose such information, without the prior written
consent of the Company, to its directors, investment committee members and
officers and employees on a need to know basis, provided that such individuals
are bound by similar non-disclosure restrictions as the Shareholders'
restrictions set forth herein, with respect to such information.
10. Dividend Policy
It is hereby agreed between the Parties hereto that, subject to applicable laws,
the Company shall distribute dividends in respect of any financial year in an
amount equal to at least fifty (50%) percent of its distributable net profits in
respect of such financial year, subject to reasonable and proper reserves being
maintained for working capital requirements or other liabilities of the Company
as the Board considers reasonably appropriate.
11. Filing of Registration Statement
Immediately following the date of this Agreement, the Company shall prepare and
cause to be filed with the U.S. Securities and Exchange Commission (the "SEC")
as soon as reasonably practicable a registration statement on Form S-1 (the
"Registration Statement") for the purpose of registering for public resale, to
the maximum extent permissible under Rule 415 promulgated by the SEC ("Rule
415") under Securities Act (as defined below) in which all or the majority of
the BRDT Shares owned of record by all the shareholders of the Company
immediately prior to the date of this Agreement, including the BRDT Shares
underlying the Warrants (as defined in the Merger Agreement) (collectively the
"Original Shareholders"), shall be registered in accordance with the Securities
Act (as defined below), pursuant to a registration statement S-1 to be filed
within ninety (90) days following the date of this Agreement or as soon
thereafter as reasonably practicable, to permit their public resale of the BRDT
Shares to the maximum extent permissible under Rule 415.
12. Registration Rights
12.1. The following provisions govern the registration of the Company's
securities.
12.1.1. Definitions. As used herein, the following terms have the following
meanings:
“Commission” or “SEC” means the U.S. Securities and Exchange Commission and any
successor agency of the federal government administering the Securities Act and
the Exchange Act.
“Common Stock” means the shares of Common Stock, par value US$0.0001 per share,
of the Company.
"Effective Date" means the date that the SEC declares the Registration Statement
effective under the Securities Act.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and
any similar or successor Federal statute, and the rules and regulations of the
Commission thereunder, all at the same shall be in effect from time to time.
“Holder” means any Original Shareholder as defined in Section 11 above.
"OTCQB" means the trading market maintained by OTC Markets, on which trading
market the BRDT's shares of Common Stock are subject to quotation.
"Person" means an individual, a company, a joint venture, a corporation, a
limited liability company, a partnership, a limited liability partnership, a
trust, an unincor-porated organization or other entity of any kind or character
or a governmental or regulatory authority.
“Public Offering” means a public offering and resale of shares of Common Stock
pursuant to an effective Registration Statement under the Securities Act.
“Register”, “registered” and “registration” refer to a registration affected by
filing a registration statement in compliance with the Securities Act and the
declaration or ordering by the SEC of effectiveness of such registration
statement, or the equivalent actions under the laws of another jurisdiction.
“Registrable Common Stock” means all the shares of Common Stock held by the
Original Shareholders.
"Registration Statement" means a “Form "S-1" under the Securities Act (as
defined below), as in effect on the date hereof or any registration form under
the Securities Act subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.
“Securities Act” means the Securities Act of 1933, as amended, and any similar
or successor Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time and their
equivalent in any other jurisdiction.
12.2. Demand Registration. No earlier than six (6) months after the Effective
Date of the Registration Statement, and subject to section 12.10 below,
provided that the Company’s shares of Common Stock are then publicly traded and
subject to quotation on the OTCQB or similar trading market or listed on a
national exchange, all or a majority (but not less than a majority) of the
Shareholders may request in writing that all or part of the Registrable Common
Stock issued to them in the Merger Agreement shall be registered under the
Securities Act by the filing with the SEC of a Registration Statement on Form
S-1 so as to permit public resale of the subject Registrable Common Stock (the
"Novomic Shareholders Registration Statement"), subject to the provisions and
limitations of Rule 415. The Shareholders owning a majority but not less than a
majority of the BRDT Shares may make up to two (2) such requests for demand
registration. Within twenty (20) days after receipt of any such request, the
Company shall give written notice of such demand registration request to the
other Shareholders and the Original Shareholders (sometimes collectively
referred to as the "BRDT Holders") and said BRDT Holders shall have an
additional twenty-five (25) days to request that their Registrable Common Stock
be included in such Novomic Shareholder Registration Statement. Notwithstanding
the foregoing, the Shareholders understand that the number of shares of
Registrable Common Stock is or may be subject to the limitations of Rule 415 of
the Securities Act. Thereupon, the Company shall use commercially reasonable
efforts to cause the Novomic Shareholders Registration Statement to be filed
with the SEC, the Parties understanding that the process of preparing a
Registration Statement with current business disclosure and financial statements
may take up to sixty (60) days to prepare and file with the SEC. The Parties
further understand that the SEC may take approximately thirty (30) days to
review and comment on the Registration Statement and that it may take
approximately four (4) months or less for said Registration Statement to be
declared effective by the SEC under the Securities Act; provided, however, that
the Company shall not be required to effect any registration under this Section
12.2 (i) within a period of one hundred and eighty (180) days following the
Effective Date of any previous Registration Statement; (ii) if the Shareholders
entitled to inclusion in such Registration Statement, propose to sell
Registrable Common Stock and such other securities (if any) at an aggregate
price to the public (net of any underwriters' discounts or commissions) of less
or equal to one million United States (US$1,000,000) dollars, (iii) if, at the
time of the request from the Shareholders the Company gives notice within thirty
(30) days of such request that it is engaged in preparation of a registration
statement for a firmly underwritten registered Public Offering (for which the
registration statement will be filed within ninety (90) days) in which the
Shareholders may include their BRDT Shares Registrable Common Stock pursuant to
Section 12.3 below (subject to underwriting limitations set forth below in this
Section 12.2), (iv) if the Company furnishes to the Shareholders a certificate
signed by the Chairman of the Board certifying that it is not in the Company's
best interests to file such registration statement, the Company may defer the
filing for up to ninety (90) days, and such right may be utilized only once
during any twelve (12) month period, (v) in any particular jurisdiction in which
the Company would be required to execute a general consent to service of process
in effecting such registration, unless the Company is already subject to service
in such jurisdiction and except as may be required under the Securities Act, or
(vi) if the Holder proposes to dispose of Registrable Common Stock that may be
immediately registered on Form S-1.
Notwithstanding any other provision of this Section 12.2, if the managing
underwriter advises the Shareholders in writing that marketing factors require a
limitation of the number of BRDT Shares to be underwritten, then there shall be
excluded from such registration statement and underwriting to the extent
necessary to satisfy such limitation, first, BRDT Shares held by holders other
than the Shareholders, as defined herein, second, shares of Common Stock which
the Company may wish to register for its own account, and thereafter, to the
extent necessary and only in the event that all other selling shareholders are
excluded from registration, stocks held by the Shareholders; provided, however,
that in any event all Registrable Common Stock must be included in such
registration prior to any other BRDT Shares.
12.3. Piggyback Registration Rights
12.3.1. General. Each time, subject to section 12.10 below, the Company
proposes to register any shares of Common Stock under the Securities Act on a
form which would permit registration of Registrable Common Stock for resale to
the public, for its own account and/or for the account of any other Person for
sale in a Public Offering, the Company will give notice to the BRDT Holders of
its intention to do so. The BRDT Holders may, by written response delivered to
the Company within twenty (20) days after the date of delivery of such notice,
request that all or a specified part of the Registrable Common Stock be included
in such registration statement. The Company thereupon will use commercially
reasonable efforts to cause to be included in such registration statement under
the Securities Act, all Registrable Common Stock that the Company has been so
requested to register by the BRDT Holders, to the extent required, subject to
Rule 415, in order to permit the public resale and disposition of the
Registrable Common Stock to be so registered; provided that (i) if, at any time
after giving written notice of its intention to register any securities, the
Company shall determine for any reason not to proceed with the proposed
registration of the securities to be sold by it, the Company may, at its
election, give written notice of such determination to the BRDT Holders and the
Novomic Founders and, thereupon, shall be relieved of its obligation to register
any Registrable Common Stock in connection with such registration (but not from
its obligation to pay the Registration Expenses in connection therewith), and
(ii) if such registration involves an underwritten offering, the BRDT Holders
must sell the Registrable Common Stock to the underwriter(s) selected by the
Company, on the same terms and conditions as apply to the Company (with such
differences as may be customary or appropriate in combined primary and secondary
offerings, and, in any event, without providing for indemnification or
contribution obligations in excess of what is required by Section 12.3.6
below). No registration of Registrable Common Stock effected under this
Section 12.3 shall relieve the Company of any of its obligations to effect
registrations of Registrable Common Stock pursuant to Section 12.2 hereof. It
is hereby clarified that the piggyback right of the BRDT Holders under this
Section 12.3 may be exercised in an unlimited number of times.
12.3.2. Excluded Transactions. The Company shall not be obligated to effect any
registration of Registrable Common Stock under this Section 12.3 or give any
notice to Shareholders of the Company’s intent to register Registrable Common
Stock, in each case incidental to the registration of any of its securities in
connection with:
12.3.2.1. Any Public Offering relating to employee benefit plans or dividend
reinvestment plans or any similar plans;
12.3.2.2. Any Public Offering relating to the acquisition or merger after the
date hereof by the Company or any of its subsidiaries of or with any other
businesses except to the extent such Public Offering is for the sale of
securities for cash; or
12.3.2.3. A registration on any registration form that does not permit secondary
sales or does not include substantially the same information statement covering
the sale of the Registrable Common Stock.
12.3.3. Additional Procedures. The BRDT Holders participating in any Public
Offering pursuant to this Section 12.3 shall take all such actions and execute
all such documents and instruments that are reasonably requested by the Company
and/or any underwriter to effect the sale of their Registrable Common Stock in
such Public Offering, including being a party to the underwriting agreement
entered into by the Company and any other BRDT Holders in connection therewith
(including customary selling stockholder representations, warranties,
indemnifications and “lock-up” agreements) for the benefit of the underwriters
contained therein.
Notwithstanding any other provision of this Section 12.3, if the managing
underwriter advises the BRDT Holders in such Public Offering in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then there shall be excluded from such registration and
underwriting to the extent necessary to satisfy such limitation, first, stocks
held by holders of BRDT Shares other than the BRDT Holders , second, shares
which the Company may wish to register for its own account, third- shares held
by the Novomic Founders, and thereafter, to the extent necessary and only in the
event that all other selling shareholders are excluded from registration, stocks
held by the BRDT Holders ; provided, however, that in any event all Registrable
Common Stock must be included in such registration prior to any other capital
stock of the Company.
12.3.4. Form S-1 Registration. Subject to section 12.10 below, in case the
Company receives from the BRDT Holders a written request that the Company effect
a registration on Form S-1, if available, and any related qualification or
compliance, with respect to Registrable Common Stock, the Company shall within
twenty (20) days after receipt of any such request give written notice of the
proposed registration, and any related qualification or compliance, to all other
BRDT Holders, including Original Shareholders, among others, and shall use
commercially reasonable efforts to include in such registration all Registrable
Common Stock held by all such Persons who wish to participate in such
registration and provide the Company with written requests for inclusion therein
within fifteen (15) days after the receipt of the Company's notice. Thereupon,
the Company shall use commercially reasonable efforts to effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of the BRDT holders' Registrable Common Stock as are specified in such
request, together with all or such portion of the Registrable Common Stocks of
any other BRDT holder or holders joining in such request as are specified in a
written request given within fifteen (15) days after receipt of such written
notice from the Company; provided, however, that the Company shall not be
obligated to effect any such registration, qualification or compliance, pursuant
to this Section 12.3.4, (i) if Form S-1 is not available for such offering by
such BRDT holders ; (ii) if the BRDT Holders, together with the holders of any
other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Common Stock and such other securities (if any) at
an aggregate price to the public (net of any underwriters' discounts or
commissions) of less than one million United States (US$1,000,000) dollars;
(iii) if the Company shall furnish to the BRDT Holders a certificate signed by
the Chairman of the Board of the Company stating that in the good faith judgment
of the Board it would be seriously detrimental to the Company or its
shareholders for such Form S-1 registration statement to be effected at such
time, in which event the Company shall have the right to defer the filing of the
Form S-1 registration statement for a period of not more than ninety (90) days
after receipt of the request of the Holder under this Section 12.3.4. It is
hereby clarified that the right of the BRDT Holders under this Section 12.3.4
may be exercised in an unlimited number of times.
Notwithstanding any other provision of this Section 12.3.4, if the managing
underwriter advises the Holders in writing that marketing factors require a
limitation of the number of shares to be underwritten, then there shall be
excluded from such registration and underwriting to the extent necessary to
satisfy such limitation, first- shares held by shareholders other than the
Holder, second- shares which the Company may wish to register for its own
account, and thereafter, to the extent necessary and only in the event that all
other selling shareholders are excluded from registration, shares held by the
BRDT Holders.
12.3.5. Designation of Underwriter. (A) In the event of any registration
effected pursuant to Section 12.2 or 12.3.4, the Holder shall have the right
to designate the managing underwriter(s) in any underwritten offering; (B) In
the event of any registration initiated by the Company, the Company shall have
the right to designate the managing underwriter in any underwritten offering.
12.3.6. Expenses. All expenses, including the reasonable fees and expenses of
one counsel for the participating Holders, incurred in connection with any
registration under Section 12.2, Section 12.3 or Section 12.3.4 shall be
borne by the Company; provided, however, that each of the BRDT Holders
participating in such registration shall pay its pro rata portion of discounts
or commissions payable to any underwriter.
12.4. Indemnities. In the event of any registered offering of Common Stock
pursuant to this Section 12.4:
12.4.1. The Company will indemnify and hold harmless, to the fullest extent
permitted by law, any BRDT Holders and any underwriter for such BRDT Holders,
and each person, if any, who controls the BRDT Holders or such underwriter, from
and against any and all losses, damages, claims, liabilities, joint or several,
costs and expenses (including any amounts paid in any settlement effected with
the Company’s consent) to which the BRDT Holders or any such underwriter or
controlling Person may become subject under applicable law or otherwise, insofar
as such losses, damages, claims, liabilities (or actions or proceedings in
respect thereof), costs or expenses arise out of or are based upon (i) any
untrue statement or alleged untrue statement of any material fact contained in
the registration statement or included in the prospectus, as amended or
supplemented, or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances in which they are made, not
misleading or (iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, or any rule or regulation promulgated under
the Securities Act or the Exchange Act, or any state securities or blue sky laws
applicable to the Company and relating to action or inaction required of the
Company in connection with such registration or qualification under such state
securities or blue sky laws; and the Company will reimburse the BRDT Holders,
such underwriter and each such controlling Person of the BRDT Holders or the
underwriter, promptly upon demand, for any reasonable legal or any other
expenses incurred by them in connection with investigating, preparing to defend
or defending against or appearing as a third-party witness in connection with
such loss, claim, damage, liability, action or proceeding; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, damage, liability, cost or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished in writing by a BRDT Holders, such
underwriter or such controlling Persons in writing specifically for inclusion
therein; provided, further, that this indemnity shall not be deemed to relieve
any underwriter of any of its due diligence obligations; provided, further, that
the indemnity agreement contained in this subsection 12.4.1 shall not apply to
amounts paid in settlement of any such claim, loss, damage, liability or action
if such settlement is effected without the consent of the Company, which consent
shall not be unreasonably withheld. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the selling
shareholder, the underwriter or any controlling Person of the selling
shareholder or the underwriter, and regardless of any sale in connection with
such offering by the selling shareholder. Such indemnity shall survive the
transfer of securities by a selling shareholder made in conformity with the
provisions of this Agreement.
12.4.2. Each Holder participating in registration hereunder will indemnify and
hold harmless the Company (including each of its directors and officers,
employees, legal counsel and accountants), and each other seller of Registrable
Common Stock under such registration statement (and each Person, if any, who
controls such seller), any underwriter for the Company, and each Person, if any,
who controls the Company or such underwriter (for the purposes of this Section
12.4.1, each of the above, the "Indemnitee"), to the fullest extent permitted
by law, from and against any and all losses, damages, claims, liabilities, costs
or expenses (including any amounts paid in any settlement effected with the
selling shareholder's consent) to which the Company or any such person, holder,
controlling Person and/or any such underwriter may become subject under
applicable law or otherwise, insofar as such losses, damages, claims,
liabilities (or actions or proceedings in respect thereof), costs or expenses
arise out of or are based on (i) any untrue or alleged untrue statement of any
material fact contained in the registration statement or included in the
prospectus, as amended or supplemented, or (ii) the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances in
which they were made, not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, or any rule or
regulation promulgated under the Securities Act or the Exchange Act, or any
state securities or blue sky laws applicable to the Company and relating to
action or inaction required of the Company or the BRDT Holders in connection
with such registration or qualification under such state securities or blue sky
laws, and each such BRDT Holders will reimburse the Indemnitees, promptly upon
demand, for any reasonable legal or other expenses incurred by them in
connection with investigating, preparing to defend or defending against or
appearing as a third-party witness in connection with such loss, claim, damage,
liability, action or proceeding; in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was so made in conformity with written information furnished by
such BRDT Holders specifically for inclusion therein. The foregoing indemnity
agreement is subject to the condition that, insofar as it relates to any such
untrue statement (or alleged untrue statement) or omission (or alleged omission)
made in the preliminary prospectus but eliminated or remedied in the amended
prospectus at the time the registration statement becomes effective or in the
final prospectus, such indemnity agreement shall not inure to the benefit of (i)
the Company and (ii) any underwriter, if a copy of the final prospectus was not
furnished to the person or entity asserting the loss, liability, claim or damage
at or prior to the time such furnishing is required by the Securities Act;
provided, further, that this indemnity shall not be deemed to relieve any
underwriter of any of its due diligence obligations, to the extent they exist;
provided, further, that the indemnity agreement contained in this
subsection 12.4.1shall not apply to amounts paid in settlement of any such
claim, loss, damage, liability or action if such settlement is effected without
the consent of the BRDT Holders affected thereby, as the case may be, which
consent shall not be unreasonably withheld.
12.4.3. Promptly after receipt by an indemnified party pursuant to the
provisions of Sections 12.4.1 or 12.4.1 of notice of the commencement of any
action involving the subject matter of the foregoing indemnity provisions, such
indemnified party will, if a claim thereof is to be made against the
indemnifying party pursuant to the provisions of said Section 12.4.1 or
12.4.1, promptly notify the indemnifying party of the commencement thereof. The
failure to notify an indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability that it may have to any indemnified party, except to the extent that
the indemnifying party is prejudiced in its ability to defend such action. In
case such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the defendants in any action include both the
indemnified party and the indemnifying party and there is a conflict of
interests which would prevent counsel for the indemnifying party from also
representing the indemnified party, the indemnified party or parties (together
with all other indemnified parties which may be represented without conflict by
one counsel) shall have the right to select one separate counsel to participate
in the defense of such action on behalf of all such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party pursuant to the provisions of said Sections
12.4.1 or 12.4.1 for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed counsel in accordance with the provision
of the preceding sentence, (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the notice of the commencement
of the action and within fifteen (15) days after written notice of the
indemnified party’s intention to employ separate counsel pursuant to the
previous sentence, or (iii) the indemnifying party has authorized the employment
of counsel for the indemnified party at the expense of the indemnifying party.
The indemnified party shall reasonably cooperate with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the indemnified party which relates to such action or
claim. The indemnifying party shall keep the indemnified party apprised at all
times as to the status of the defense or any settlement negotiations with
respect thereto. No indemnifying party will consent, without the prior written
consent of the indemnified party, to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation. Following indemnification as
provided for hereunder, the indemnifying party shall be subrogated to all rights
of the indemnified party with respect to all third parties, firms or
corporations relating to the matter for which indemnification has been made.
12.4.4. If recovery is not available under the foregoing indemnification
provisions, for any reason other than as specified therein, the parties entitled
to indemnification by the terms thereof shall be entitled to contribution to
liabilities and expenses as more fully set forth in an underwriting agreement to
be executed in connection with such registration. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered the parties’ relative knowledge and access to information concerning
the matter with respect to which the claim was asserted, the opportunity to
correct and prevent any statement or omission, and any other equitable
considerations appropriate under the circumstances.
12.4.5. In the event that any BRDT Holder who is a party to this Agreement
participates in a registration under this Section 10, then the provisions of
this Section 12.3.6 shall apply to it, mutatis mutandis.
12.4.6. Notwithstanding the foregoing, to the extent that the provisions on
indemnification contained in the underwriting agreements entered into among the
selling BRDT Holders, the Company and the underwriters in connection with the
underwritten Public Offering are in conflict with the foregoing provisions, the
provisions in the underwriting agreement shall be controlling as to the
Registrable Common Stock or any other securities requested to be registered by
any selling BRDT Holders in the Public Offering.
12.5. Obligations of the Company. Whenever required under this Section 10 to
effect the registration of any Registrable Common Stock, the Company shall, as
expeditiously as possible:
12.5.1. prepare and file with the SEC a registration statement with respect to
such Registrable Common Stock and use its best efforts to cause such
registration statement to become effective, and, upon the request of the BRDT
Holders registered thereunder, keep such registration statement effective for a
period of up to nine (9) months or, if sooner, until the distribution
contemplated in the registration statement has been completed.
12.5.2. prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Common Stock
covered by such registration statement for the period set forth in Section
12.5.1.
12.5.3. furnish to the BRDT Holders participating in such registration such
numbers of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as they may reasonably request in order to facilitate the disposition of
Registrable Common Stock owned by them.
12.5.4. in the event of any underwritten Public Offering, enter into and perform
its obligations under an underwriting agreement, in usual and customary form,
with the managing underwriter of such offering. Each BRDT Holderparticipating in
such underwriting shall also enter into and perform its obligations under such
an agreement.
12.5.5. notify each holder of Registrable Common Stock covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act or Exchange Act of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing.
12.5.6. cause all Registrable Common Stock registered pursuant hereunder to be
listed on each securities exchange on which similar securities issued by the
Company are then listed.
12.5.7. provide a transfer agent and registrar for all Registrable Common Stock
registered pursuant hereunder and a CUSIP number for all such Registrable Common
Stock, in each case not later than the Effective Date of such registration.
12.5.8. furnish, at the request of any BRDT Holder requesting registration of
Registrable Common Stock pursuant to this Section 12, on the date that such
Registrable Common Stock are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 10, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten Public
Offering, addressed to the underwriters, if any, and to the BRDT Holders
requesting registration of Registrable Common Stock and (ii) a letter dated such
date, from the independent certified public accountants of the Company, in form
and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten Public Offering, addressed to the
underwriters, if any, and to the BRDT Holders requesting registration of
Registrable Common Stock.
12.6. Assignment of Registration Rights. Without derogating from the provisions
regarding transfer of BRDT Shares set forth in the Certificate of Incorporation,
as amended from time to time, any of the BRDT Holders may assign its rights to
cause the Company to register Registrable Common Stock pursuant to this
Section 12 to a transferee of all or substantially all of its Registrable
Common Stock. The transferor shall, within twenty (20) days after such transfer,
furnish the Company with written notice of the name and address of such
transferee and the securities with respect to which such registration rights are
being assigned, and the transferee's written agreement to be bound by this
Agreement.
12.7. Lock-Up. In any registration of the BRDT Shares all BRDT Holders agree
that any sales of Registrable Common Stock may be subject to a “lock-up”
restricting such sales, and all BRDT Holders will agree to abide by such
customary “lock-up” period of up to eighteen (18) months from the date of the
Prospectus approval and the Effective Date declared by the SEC and in connection
with other registrations, as shall be recommended by the underwriter in such
registration, provided that such obligation shall only apply where the officers,
directors and shareholders holding at least 1% of the share capital of the
Company are subject to a similar lock-up restriction. Any discretionary releases
from the "lock-up" be allocated to BRDT Holders of Registrable Common Stock on
pro-rata basis.
12.8. Public Information. At any time and from time to time after the earlier of
the close of business on such date as (a) a registration statement filed by the
Company under the Securities Act becomes effective, (b) the Company registers a
class of securities under Section 12 of the Exchange Act, or (c) the Company
issues an offering circular meeting the requirements of Regulation A under the
Securities Act, the Company shall undertake to make publicly available and
available to the BRDT Holders pursuant to Rule 144, such information as is
necessary to enable the BRDT Holders to make sales of Registrable Common Stock
pursuant to that Rule. The Company shall comply with the current public
information requirements of Rule 144, including, without limitation, file with
the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and Exchange Act so long as the Company remains
subject to such requirements and the filing of such reports and other documents
is required for the applicable provisions of Rule 144, and shall furnish
thereafter to any BRDT Holder, upon request, (i) a written statement executed by
the Company that it has complied with the reporting requirements of Rule 144,
the Securities Act and the Exchange Act; (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents as may
be necessary to qualify under Rule 144; and (iii) such other information as may
be reasonably requested to permit the Investors to sell such securities pursuant
to Rule 144 without registration.
12.9. Future Registration Rights. Any future registration rights granted by the
Company shall be subject to the approval of a majority of the BRDT Holders,
unless such future registration rights are subordinate to the BRDT Holders'
rights hereunder.
12.10. Termination of Registration Rights. The right of the BRDT Holders to
request registration or inclusion in any registration pursuant to this Section
12 shall terminate and be of no further force and effect five (5) years
following the Effective Date of the initial Registration Statement.
12.11. Information by BRDT Holder (s). Each BRDT Holder included in any
registration shall furnish to the Company such information regarding such BRDT
Holder, the Registrable Common Stock held by him/her/it and the distribution
proposed by such BRDT Holder as the Company may reasonably request in writing
and as shall be required in connection with any registration, qualification or
compliance referred to in this Section 12.
13. MISCELLANEOUS.
13.1. Further Assurances. Each of the Parties hereto shall perform such further
acts and execute such further documents as may reasonably be necessary to carry
out and give full effect to the provisions of this Agreement and the intentions
of the parties as reflected.
13.2. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed according to the laws of the State of Israel, without regard to the
conflict of laws provisions thereof. Any dispute arising under or in relation to
this Agreement shall be resolved exclusively in the competent court in Tel
Aviv-Jaffa, and each of the Parties hereby irrevocably submits to the exclusive
jurisdiction of such court. Without derogating from the above, the Parties
hereto approve and acknowledge that Company is a publicly traded Delaware
corporation, having shares of Common Stock subject to quotation on the OTCQB e,
and therefore subject to the laws of the United States, and the rules and
regulations promulgated by the SEC under the Securities Act and the Exchange
Act, as such may be applicable, from time to time.
13.3. Successors and Assigns; Assignment. Except as otherwise expressly limited
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, permitted assigns, heirs, executors, and administrators of
the Parties hereto. None of the rights, privileges, or obligations set forth in,
arising under, or created by this Agreement may be assigned or transferred
without the prior consent in writing of each Party to this Agreement, with the
exception of assignments and transfers (a) from a BRDT Holder, the Novomic
Founders or a shareholders of the Company to a Permitted Transferees (as such
term is defined under the Amended and Restated Certificate of Incorporation);
and (b) from the Company, to a successor in interest.
13.4. Entire Agreement; Amendment and Waiver. This Agreement and the Schedules
hereto constitute the full and entire understanding and agreement between the
parties with regard to the subject matters hereof and thereof and supersede any
prior understanding or agreement with respect to its subject matter. Any term of
this Agreement may be amended only with the written consent of the Company and a
seventy-five (75%) percent majority of the Novomic Shareholders. The observance
of any term hereof may be waived (either prospectively or retroactively and
either generally or in a particular instance) only with the written consent of
the Party against such waiver is sought and to such extent set forth therein.
13.5. Aggregation of Shares. All securities of the Company held or acquired by
any Person shall be aggregated together with securities of the Company held by
such respective Person's Permitted Transferees or Affiliate for the purpose of
determining the availability of any rights under these Articles.
13.6. Notices, etc. All notices and other communications required or permitted
hereunder to be given to a Party to this Agreement shall be in writing and shall
be faxed or mailed by registered or certified mail, postage prepaid, or
otherwise delivered by hand, electronically (including by email) or by
messenger, addressed to such Party’s address as set forth above or at such other
address as the Party shall have furnished to each other Party in writing in
accordance with this provision.
If to the Company: BreedIT Corp
▇▇ ▇▇'▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ Fax:
e-mail:
Attn:
With a copy to: ▇▇▇ Lahat & Co. Law Offices,
▇ ▇▇▇▇▇▇▇▇▇ ▇▇.,
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇▇-▇-▇▇▇▇▇▇▇
e-mail: ▇▇▇.▇▇▇▇▇@▇▇▇▇▇.▇▇.▇▇
Attn: ▇▇▇ Lahat, Adv.
If to Novomic:
Novomic Ltd.
▇▇ ▇▇'▇▇▇▇▇▇▇ ▇▇.,
▇▇▇▇-▇▇▇▇▇▇, ▇▇▇▇▇▇
Email:
With a copy, which shall not constitute a notice:
▇▇▇▇▇▇ ▇▇▇▇▇, Adv.
▇▇ ▇▇'▇▇▇▇▇▇▇ ▇▇.,
▇▇▇▇-▇▇▇▇▇▇, ▇▇▇▇▇▇
Tel: ▇▇▇-▇▇▇▇▇▇▇
Fax: ▇▇-▇▇▇▇▇▇▇
Email: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
or such other address with respect to a Party as such Party shall notify each
other Party in writing as above provided. Any notice sent in accordance with
this Section 13.4 shall be effective (i) if mailed, seven (7) business days
after mailing, (ii) if sent by messenger, upon delivery, (iii) if sent via fax,
upon transmission and electronic confirmation of receipt or (if transmitted and
received on a non-business day) on the first business day following transmission
and electronic confirmation of receipt (provided, however, that any notice of
change of address shall only be valid upon receipt), and (iv) if sent by
electronic mail, upon transmission and notice by telephone of such transmission
or (if transmitted and received on a non-business day) on the first business day
following transmission and notice by telephone.
13.7. Delays or Omissions. No delay or omission to exercise any right, power, or
remedy accruing to any Party upon any breach or default under this Agreement,
shall be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent, or approval of any kind or
character on the part of any Party of any breach or default under this
Agreement, or any waiver on the part of any Party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any of the Parties, shall be
cumulative and not alternative.
13.8. Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be unenforceable under applicable law, then such
provision shall be excluded from this Agreement and the remainder of this
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 this 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.
13.9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and enforceable against
the parties actually executing such counterpart, and all of which together shall
constitute one and the same instrument.
13.10. Further Assurances. Each of the Parties hereto shall perform such further
acts and execute such further documents as may reasonably be necessary to carry
out and give full effect to the provisions of this Agreement and the intentions
of the Parties as reflected thereby.
-Signature pages to follow-
[Signature page for the Shareholders' Agreement dated February 08, 2016]
IN WITNESS WHEREOF the Parties have signed this Agreement as of the date first
hereinabove set forth.
BreedIT Corp. Novomic Ltd.
[Signature page for Shareholders' Agreement dated February 08, 2016]
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
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