Exhibit 1.1
[FORM OF UNDERWRITING AGREEMENT]
__________ SHARES
SAIFUN SEMICONDUCTORS LTD.
ORDINARY SHARES, NOMINAL VALUE NIS 0.01 PER SHARE
UNDERWRITING AGREEMENT
March ___, 2006
XXXXXX BROTHERS INC.
CITIGROUP GLOBAL MARKETS INC.
DEUTSCHE BANK SECURITIES INC.
CIBC WORLD MARKETS CORP.
XXXXXXX XXXXX & COMPANY, L.L.C.
XXXXXXX XXXXX & ASSOCIATES, INC.
XX XXXXXXXXX + CO., LLC
As Representatives of the several
Underwriters named in Schedule 1,
c/x Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Saifun Semiconductors Ltd., a company organized under the laws of the
State of Israel (the "COMPANY"), and certain shareholders of the Company named
in Schedule 2 attached hereto (the "SELLING SHAREHOLDERS"), propose to sell an
aggregate of ______ shares (the "FIRM SHARES") of the Company's ordinary shares,
nominal value NIS 0.01 per share (the "ORDINARY SHARES"). Of the ________ Firm
Shares, _______ are being sold by the Company and _______ by the Selling
Shareholders.
In addition, the Selling Shareholders propose to grant to the
Underwriters (the "UNDERWRITERS") named in Schedule 1 attached to this agreement
(the "AGREEMENT") an option to purchase up to an additional _______ Ordinary
Shares on the terms set forth in Section 3 (the "OPTION SHARES"). The Firm
Shares and the Option Shares, if purchased, are hereinafter collectively called
the "SHARES." This is to confirm the agreement concerning the purchase of the
Shares from the Company and the Selling Shareholders by the Underwriters.
SECTION 1. Representations, Warranties and Agreements of the Company. The
Company represents, warrants and agrees that:
(a) A registration statement on Form F-1 with respect to the Shares
has (i) been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "SECURITIES ACT"), and the rules and
regulations (the "RULES AND REGULATIONS") of the Securities and Exchange
Commission (the "COMMISSION") thereunder, (ii) been filed with the Commission
under the Securities Act and (iii) become effective under the Securities Act.
Copies of such registration statement and each of the amendments thereto have
been delivered by the Company to you as the representatives (the
"REPRESENTATIVES") of the Underwriters. As used in this Agreement, "APPLICABLE
TIME" means [______][a.m.][p.m.] (New York City time) on the date of this
Agreement; "EFFECTIVE DATE" means the date and the time as of which such
registration statement, or the most recent post-effective amendment thereto, if
any, was declared effective by the Commission; "ISSUER FREE WRITING PROSPECTUS"
means each "free writing prospectus" (as defined in Rule 405 of the Rules and
Regulations) prepared by or on behalf of the Company or used or referred to by
the Company in connection with the offering of the Shares; "PRELIMINARY
PROSPECTUS" means any preliminary prospectus relating to the Shares included in
such registration statement or filed with the Commission pursuant to Rule 424(b)
of the Rules and Regulations; "PRICING DISCLOSURE PACKAGE" means, as of the
Applicable Time, the most recent Preliminary Prospectus, together with each
Issuer Free Writing Prospectus filed or used by the Company on or before the
Applicable Time, other than a road show that is an Issuer Free Writing
Prospectus but is not required to be filed under Rule 433 of the Rules and
Regulations; "PROSPECTUS" means the final prospectus relating to the Shares, as
filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations;
and "REGISTRATION STATEMENT" means such registration statement, as amended at
the Effective Date, including any Preliminary Prospectus or the Prospectus and
all exhibits to such registration statement. Any reference to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include any
documents incorporated by reference therein pursuant to Form F-1 under the
Securities Act as of the date of such Preliminary Prospectus or the Prospectus,
as the case may be. Any reference to the "MOST RECENT PRELIMINARY PROSPECTUS"
shall be deemed to refer to the latest Preliminary Prospectus included in the
Registration Statement or filed pursuant to Rule 424(b) prior to or on the date
hereof. Any reference to any amendment or supplement to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include any
document filed under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), after the date of such Preliminary Prospectus or the
Prospectus, as the case may be, and before the date of such amendment or
supplement and incorporated by reference in such Preliminary Prospectus or the
Prospectus, as the case may be; and any reference to any amendment to the
Registration Statement shall be deemed to include any annual report of the
Company on Form 20-F filed with the Commission pursuant to Section 13(a) or
15(d) of the Exchange Act after the Effective Date and before the date of such
amendment that is incorporated by reference in the Registration Statement. Any
reference to the term "Registration Statement" shall be deemed to include the
abbreviated registration
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statement to register additional Ordinary Shares under Rule 462(b) under the
Rules and Regulations (the "RULE 462 REGISTRATION STATEMENT"). The Commission
has not issued any order preventing or suspending the use of any Preliminary
Prospectus or Prospectus or suspending the effectiveness of the Registration
Statement, and no proceeding for such purpose has been instituted or to the
Company's knowledge threatened by the Commission.
(b) The Company was not at the time of initial filing of the
Registration Statement and at the earliest time thereafter that the Company or
another offering participant made a bona fide offer (within the meaning of Rule
164(h)(2) of the Rules and Regulations) of the Shares, is not on the date hereof
and will not be on the applicable Delivery Date an "ineligible issuer" (as
defined in Rule 405). The Company has met all the conditions for incorporation
by reference pursuant to the General Instructions to Form F-1.
(c) The Registration Statement conformed and will conform in all
material respects on the Effective Date and on the applicable Delivery Date, and
any amendment to the Registration Statement filed after the date hereof will
conform in all material respects when filed, to the requirements of the
Securities Act and the Rules and Regulations. The Preliminary Prospectus
conformed, and the Prospectus will conform, in all material respects when filed
with the Commission pursuant to Rule 424(b) and on the applicable Delivery Date
to the requirements of the Securities Act and the Rules and Regulations. The
documents incorporated by reference in any Preliminary Prospectus or the
Prospectus conformed, when filed with the Commission, in all material respects
to the requirements of the Exchange Act or the Securities Act, as applicable,
and the rules and regulations of the Commission thereunder.
(d) The Registration Statement did not, as of the Effective Date and
as of the Applicable Time, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided that no representation or
warranty is made as to information contained in or omitted from the Registration
Statement in reliance upon and in conformity with written information furnished
to the Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein, which information is specified in Section
10(f).
(e) The Prospectus will not, as of its date and on the applicable
Delivery Date (as defined in Section 5), contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that no representation or
warranty is made as to information contained in or omitted from the Prospectus
in reliance upon and in conformity with written information furnished to the
Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein, which information is specified in Section
10(f).
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(f) The documents incorporated by reference in any Preliminary
Prospectus or the Prospectus did not, when filed with the Commission, contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(g) The Pricing Disclosure Package did not, as of the Applicable Time,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading[,
except that the price of the Shares and disclosures directly relating thereto
will be included on the cover page of the Prospectus; provided that no
representation or warranty is made as to information contained in or omitted
from the Pricing Disclosure Package in reliance upon and in conformity with
written information furnished to the Company through the Representatives by or
on behalf of any Underwriter specifically for inclusion therein, which
information is specified in Section 10(f).]
(h) Each Issuer Free Writing Prospectus (including, without
limitation, any road show that is a free writing prospectus under Rule 433), as
set forth on Schedule 4 hereto, when considered together with the Pricing
Disclosure Package as of the Applicable Time, did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading[, except that the price
of the Shares and disclosures directly relating thereto will be included on the
cover page of the Prospectus], and no information set forth in any such Issuer
Free Writing Prospectus contradicts or conflicts with the information contained
in the Registration Statement or the Prospectus.
(i) The Company has not made any offer relating to the Shares that
would constitute an Issuer Free Writing Prospectus without the prior written
consent of the Representatives. The Company has retained in accordance with the
Rules and Regulations all Issuer Free Writing Prospectuses that were not
required to be filed pursuant to the Rules and Regulations.
(j) The Company has been duly incorporated and is validly existing
under the laws of the State of Israel, is duly qualified to do business in each
jurisdiction in which its ownership or lease of property or the conduct of its
businesses requires such qualification, and has all power and authority
necessary to own or hold its properties and to conduct the businesses in which
it is engaged, except where the failure to be so qualified or in good standing,
individually or in the aggregate, would not reasonably be expected to have a
material adverse effect on the condition (financial or otherwise), results of
operations, shareholders' equity, properties, business or prospects of the
Company and its subsidiaries taken as a whole (a "MATERIAL ADVERSE EFFECT"). No
proceeding has been instituted by the Registrar of Companies in Israel for the
dissolution of the Company.
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(k) Each subsidiary (as defined in Section 20) of the Company has been
duly organized, is validly existing and is in good standing, where applicable,
as a corporation or other business entity under the laws of its jurisdiction of
organization and is duly qualified to do business and in good standing, where
applicable, as a foreign corporation or other business entity in each
jurisdiction in which its ownership or lease of property or the conduct of its
businesses requires such qualification, except where the failure to be in good
standing or so qualified, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect. Each subsidiary of the Company
has all power and authority necessary to own or hold its properties and to
conduct the businesses in which it is engaged. The Company does not own or
control, directly or indirectly, any corporation, association or other entity
other than the subsidiaries listed in Exhibit 21 to the Registration Statement.
None of the subsidiaries of the Company is a "significant subsidiary," as such
term is defined in Rule 405 of the Rules and Regulations.
(l) The Company has an authorized capitalization as set forth in each
of the most recent Preliminary Prospectus and the Prospectus, and all of the
issued shares of the Company have been duly authorized and validly issued and,
as except as set forth in each of the most recent Preliminary Prospectus and the
Prospectus are fully paid and non-assessable, conform to the description thereof
contained in each of the most recent Preliminary Prospectus and the Prospectus
and were issued in compliance with federal and state securities laws and not in
violation of any preemptive right, resale right, right of first refusal or
similar right. All of the Company's options, warrants and other rights to
purchase or exchange any securities for Ordinary Shares have been duly
authorized and validly issued, conform to the description thereof contained in
each of the most recent Preliminary Prospectus and the Prospectus and were
issued in compliance with the laws of the State of Israel. All of the issued
shares of each subsidiary of the Company have been duly authorized and validly
issued, are fully paid and non-assessable and are owned directly or indirectly
by the Company, free and clear of all liens, encumbrances, equities or claims,
except for such liens, encumbrances, equities or claims as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(m) The Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly authorized and, upon payment and delivery
therefor in accordance with this Agreement, will be validly issued, fully paid
and non-assessable, will conform to the description therof contained in the most
recent Preliminary Prospectus and the Prospectus, will be issued in compliance
with federal and state securities laws, including the laws of the State of
Israel, and will be free of statutory and contractual preemptive rights, resale
rights, rights of first refusal and similar rights. To the Company's knowledge,
the Shares to be sold by the Selling Shareholders will be sold in compliance
with federal and state securities laws, including the laws of the State of
Israel.
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(n) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement. This
Agreement has been duly and validly authorized, executed and delivered by the
Company.
(o) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby and the
application of the proceeds from the sale of Shares as described under "Use of
Proceeds" in each of the most recent Preliminary Prospectus and the Prospectus
will not (i) conflict with or result in a breach or violation of any of the
terms or provisions of, impose any lien, charge or encumbrance upon any property
or assets of the Company and its subsidiaries, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement, license or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its subsidiaries is
subject; (ii) result in any violation of the provisions of the memorandum of
association, articles of association, charter or bylaws (or similar
organizational documents) of the Company or any of its subsidiaries; or (iii)
result in any violation of any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Company or any
of its subsidiaries or any of their properties or assets; except, in the case of
clauses (i) and (iii), for such conflicts, breaches, violations or defaults as
would not reasonably be expected to have a Material Adverse Effect.
(p) Except for the registration of the Shares under the Securities Act
and such consents, approvals, authorizations, registrations or qualifications as
may be required under the Exchange Act, by the National Association of
Securities Dealers, Inc. (the "NASD") and under applicable state or foreign
securities laws in connection with the purchase and distribution of the Shares
by the Underwriters, no consent, approval, authorization or order of, or filing
or registration with, any such court or governmental agency or body or any third
party is required for the execution, delivery and performance of this Agreement
by the Company or any of the other documents to be entered into by the Company
in connection with the sale of the Shares by the Company and the Selling
Shareholders and the consummation by the Company of the transactions
contemplated hereby and thereby and the application of the proceeds from the
sale of Shares as described under "Use of Proceeds" in the most recent
Preliminary Prospectus and the Prospectus. Subject to the Underwriters'
compliance with their obligations in Section 4 hereof, the Company is not
required to publish a prospectus in Israel under the laws of the State of
Israel.
(q) The Company and each of its subsidiaries have such permits,
licenses, consents, approvals, authorizations, orders, registrations,
qualifications, filings, patents, franchises, certificates of need and other
approvals or authorizations of governmental or regulatory authorities
("PERMITS") as are necessary under applicable law to own their properties and
conduct their businesses in the manner described in the most recent Preliminary
Prospectus and the Prospectus, except for any of the foregoing that could not
reasonably be expected to have a Material Adverse Effect; each such Permit is
valid and in full force and effect, and neither the Company nor any subsidiary
has
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received notice of any investigation or proceedings which results in or, if
decided adversely to the Company or any subsidiary, could reasonably be expected
to result in, the revocation of, or imposition of a materially burdensome
restriction on, any Permit; each of the Company and its subsidiaries has
fulfilled and performed all of its obligations with respect to the Permits, and
no event has occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other impairment of the
rights of the holder or any such Permits, except for any of the foregoing that
could not reasonably be expected to have a Material Adverse Effect.
(r) Except as identified in the most recent Preliminary Prospectus,
there are no contracts, agreements or understandings between the Company and any
person granting such person the right (other than rights which have been waived
in writing or otherwise satisfied) to require the Company to file a registration
statement under the Securities Act with respect to any securities of the Company
owned or to be owned by such person or to require the Company to include such
securities in the securities registered pursuant to the Registration Statement.
(s) The licensing agreements to which the Company is a party (each a
"LICENSING AGREEMENT" and, collectively, the "LICENSING AGREEMENTS"), as
described in the Prospectus under "Business--Licenses," are, and on each
Delivery Date such Licensing Agreements will be, in full force and effect
except where the failure to be in full force and effect would not reasonably be
expected to have a Material Adverse Effect. The Company has not breached and is
not currently in breach of any provision of any Licensing Agreement, except for
breaches that would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect. Except as would not reasonably
be expected to have a Material Adverse Effect, the Company is not currently
involved in any disputes regarding the Licensing Agreements.
(t) The Company has not sold or issued any securities that would be
integrated with the offering of the Shares contemplated by this Agreement
pursuant to the Securities Act or the Rules and Regulations or the
interpretations thereof by the Commission, nor has the Company issued or offered
any Ordinary Shares or securities convertible or exercisable into its Ordinary
Shares to any persons during the 12 months preceding the date of the Delivery
Date (as defined in Section 5 hereof), other than (i) as described in the
Prospectus or (ii) the issuance of options pursuant to the Company's stock
option plans or the issuance of Ordinary Shares pursuant to the exercise of such
options.
(u) Except as described in the most recent Preliminary Prospectus,
neither the Company nor any of its subsidiaries has sustained, since the date of
the latest audited financial statements included or incorporated by reference in
the most recent Preliminary Prospectus, any material loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, and since such date, except as described in the most recent
Preliminary Prospectus, there has not been any change in the share capital of
the Company (other than the grant of options pursuant to the Company's stock
option plans or upon exercise of outstanding options, convertible securities,
rights or warrants described in the most recent Preliminary Prospectus) or any
material change in the long-term debt of the Company and its subsidiaries or any
material adverse change, or any development involving a prospective adverse
change, in or affecting the condition (financial or otherwise), results of
operations, shareholders'
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equity, properties, management, business or prospects of the Company and its
subsidiaries taken as a whole, in each case except as could not reasonably be
expected to have a Material Adverse Effect.
(v) Since the date as of which information is given in the most recent
Preliminary Prospectus through the date hereof, and except as may otherwise be
disclosed in the most recent Preliminary Prospectus, the Company has not (i)
issued or granted any securities other than the exercise of outstanding options
pursuant to the Company's stock options plans, (ii) incurred any liability or
obligation, direct or contingent, other than liabilities and obligations which
were incurred in the ordinary course of business, (iii) entered into any
transaction not in the ordinary course of business or (iv) purchased any of its
outstanding share capital, nor declared or paid any dividend on its share
capital.
(w) The historical financial statements of Company (including the
related notes and supporting schedules) filed as part of the Registration
Statement or included in the most recent Preliminary Prospectus comply as to
form in all material respects with the requirements of Regulations S-X under the
Securities Act and present fairly the financial condition, results of operations
and cash flows of the Company, at the dates and for the periods indicated, and,
have been prepared in conformity with accounting principles generally accepted
in the United States applied on a consistent basis throughout the periods
involved. Solely with respect to the line item "Equity in losses of equity
method investees" in the consolidated statements of operations of the Company
the foregoing representation is based on the audit reports of KPMG Deutsche
Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprufungsgesellschaft and
Somekh Xxxxxxx, a member of KPMG International filed as part of the Registration
Statement and included in the Prospectus.
(x) Xxxx Xxxxx Xxxxxx & Kasierer, a member of Ernst & Young Global,
who have certified certain financial statements of the Company and its
consolidated subsidiaries, whose report appears in the most recent Preliminary
Prospectus and who have delivered the initial letter referred to in Section 9(h)
hereof, are independent public accountants as required by the Securities Act and
the Rules and Regulations.
(y) The Company and each of its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them, in each case free and clear of all liens,
encumbrances and defects, except such as are described in the most recent
Preliminary Prospectus or such as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to be
made of such property by the Company and its subsidiaries; and all assets held
under lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases, with such exceptions as do not materially
interfere with the use made and proposed to be made of such assets by the
Company and its subsidiaries.
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(z) The Company and each of its subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the conduct
of their respective businesses and the value of their respective properties and
as is customary for companies engaged in similar businesses in similar
industries. All policies of insurance of the Company and its subsidiaries are in
full force and effect, except where the failure to be in full force and effect
would not reasonably be expected to have a Material Adverse Effect; the Company
and its subsidiaries are in compliance with the terms of such policies in all
material respects; and neither the Company nor any of its subsidiaries has
received notice from any insurer or agent of such insurer that capital
improvements or other expenditures are required or necessary to be made in order
to continue such insurance.
(aa) Except as described in the most recent Preliminary Prospectus and
the Registration Statement, the Company and each of its subsidiaries own or, to
the Company's knowledge, possess a valid and enforceable right to use all: (i)
patents and patent applications, (ii) registered and unregistered trademarks,
service marks, trade names, trademark applications and service xxxx
applications, (iii) registered and unregistered copyrights and copyright
applications, and (iv) other intellectual property (including trade secrets,
know-how and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) (the "Intellectual Property") necessary for
the conduct of their respective businesses as currently being conducted and as
described in the Registration Statement and most recent Preliminary Prospectus
and to the Company's knowledge, the conduct of their respective businesses does
not conflict with any Intellectual Property rights of any third party, nor have
they received any notice of any claim of conflict with, any such Intellectual
Property rights of any third party, which claim, if the subject of an
unfavorable decision, ruling or judgment, would reasonably be expected to result
in a material adverse effect. Except as described in the most recent Preliminary
Prospectus and the Registration Statement (i) the Company is not aware of any
infringement by third parties of any of its Intellectual Property; (ii) there is
no pending or, to the Company's knowledge, threatened action, suit, proceeding
or claim by others challenging the Company's rights in or to any such
Intellectual Property; and (iii) there is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others that the
Company infringes or otherwise violates any patent, trademark, copyright, trade
secret or other proprietary rights of others.
(bb) Except as described in the most recent Preliminary Prospectus,
there are no legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property or assets of the
Company or any of its subsidiaries is the subject that would reasonably be
expected to have a Material Adverse Effect or would reasonably be expected to
have a material adverse effect on the performance of this Agreement or the
consummation of the transactions contemplated hereby; and to the best of the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or by others.
(cc) There are no contracts or other documents of a character required
to be described in the Registration Statement or the most recent Preliminary
Prospectus
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or, in the case of documents, to be filed as exhibits to the Registration
Statement, that are not described and filed as required.
(dd) Except as described in the most recent Preliminary Prospectus, no
relationship, direct or indirect, exists between or among the Company, on the
one hand, and the directors, officers, shareholders, customers or suppliers of
the Company, on the other hand, which is required to be described in the most
recent Preliminary Prospectus or the Prospectus which is not so described. Since
July 30, 2002, the Company has not, directly or indirectly, including through
any subsidiary, extended or maintained credit, or arranged for the extension of
credit, or renewed or amended any extension of credit, in the form of a personal
loan to or for any of its directors or executive officers other than such loans
as have been repaid in full to the Company.
(ee) No labor disturbance by the employees of the Company or its
subsidiaries exists or, to the knowledge of the Company, is imminent that would
reasonably be expected to have a Material Adverse Effect. Without limiting the
generality of the foregoing, the Company and its subsidiaries are in compliance,
in all material respects, with the labor and employment laws and collective
bargaining agreements applicable to its employees in Israel.
(ff) The Company and each of its subsidiaries have filed all Israeli
and United States federal, state and local income and franchise tax returns
required to be filed through the date hereof, subject to permitted extensions,
and have paid all taxes due thereon, except where a failure to file such tax
returns or to pay such taxes would not reasonably be expected to have a Material
Adverse Effect, and no tax deficiency has been determined adversely to the
Company or any of its subsidiaries, nor does the Company have any knowledge of
any tax deficiencies that would, in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(gg) The Company and each of its subsidiaries (i) make and keep
accurate books and records and (ii) maintain internal accounting controls which
provide reasonable assurance that (A) transactions are executed in accordance
with management's general or specific authorization, (B) transactions are
recorded as necessary to permit preparation of the Company's financial
statements in conformity with accounting principles generally accepted in the
United States and to maintain accountability for its assets, (C) access to their
respective assets is permitted only in accordance with management's general or
specific authorization and (D) the recorded accountability for their respective
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(hh) Neither the Company nor any of its subsidiaries (i) is in
violation of its memorandum of association, articles of association, charter or
by-laws (or similar organizational documents), as applicable, (ii) is in
default, and no event has occurred that, with notice or lapse of time or both,
would constitute such a default, in the due performance or observance of any
term, covenant or condition contained in any material indenture, mortgage, deed
of trust, loan agreement, license or other agreement or
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instrument to which it is a party or by which it is bound or to which any of its
properties or assets is subject or (iii) is in violation of any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over it or its property or assets or has failed to obtain any
license, permit, certificate, franchise or other governmental authorization or
permit necessary to the ownership of its property or to the conduct of its
business, except in the case of clauses (ii) and (iii), to the extent any such
conflict, breach, violation or default would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(ii) Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee or affiliate of
the Company that is controlled by the Company or any of its subsidiaries has (i)
used any corporate funds of the Company for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds of the Company; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977 in connection with Company activities; or (iv) made any
bribe, rebate, payoff, influence payment, kickback or other unlawful payment in
connection with Company activities.
(jj) The operations of the Company and its subsidiaries are and have
been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced by
any governmental agency (collectively, the "MONEY LAUNDERING LAWS") and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
subsidiaries with respect to the Money Laundering Laws is pending or, to the
best knowledge of the Company, threatened.
(kk) Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee or affiliate of
the Company or any of its subsidiaries is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department ("OFAC"); and the Company will not directly or indirectly
use the proceeds of the offering, or lend, contribute or otherwise make
available such proceeds to any subsidiary, joint venture partner or other person
or entity, for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.
(ll) There is and has been no failure on the part of the Company and
any of the Company's directors or officers, in their capacities as such, to
comply with Section 402 of the Xxxxxxxx-Xxxxx Act of 2002.
(mm) The Company is not, and as of the applicable Delivery Date and,
after giving effect to the offer and sale of the Shares and the application of
the proceeds
11
therefrom as described under "Use of Proceeds" in the most recent Preliminary
Prospectus and the Prospectus will not be, an "investment company" within the
meaning of such term under the Investment Company Act of 1940, as amended (the
"INVESTMENT COMPANY ACT"), and the rules and regulations of the Commission
thereunder.
(nn) (i) The Company and each of its subsidiaries have established and
maintain disclosure controls and procedures (as such term is defined in Rule
13a-15 under the Exchange Act), (ii) such disclosure controls and procedures are
designed to ensure that the information required to be disclosed by the Company
and its subsidiaries in the reports they will file or submit under the Exchange
Act is accumulated and communicated to management of the Company and its
subsidiaries, including their respective principal executive officers and
principal financial officers, as appropriate, to allow timely decisions
regarding required disclosure to be made and (iii) such disclosure controls and
procedures are effective in all material respects to perform the functions for
which they were established.
(oo) Since the date of the most recent balance sheet of the Company
and its consolidated subsidiaries reviewed or audited by Xxxx Xxxxx Xxxxxx &
Kasierer, a member of Ernst & Young Global, and the audit committee of the board
of directors of the Company, (i) the Company has not been advised of (A) any
significant deficiencies in the design or operation of internal controls that
could adversely affect the ability of the Company and each of its subsidiaries
to record, process, summarize and report financial data, or any material
weaknesses in internal controls and (B) any fraud, whether or not material, that
involves management or other employees who have a significant role in the
internal controls of the Company and each of its subsidiaries, and (ii) since
that date, there have been no significant changes in internal controls or in
other factors that could significantly affect internal controls, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
(pp) The Company has not distributed and, prior to the later to occur
of any Delivery Date and completion of the distribution of the Shares, will not
distribute without the consent of Xxxxxx Brothers Inc. ("XXXXXX") any written
offering material, other than the Preliminary Prospectus, the Prospectus and any
Issuer Free Writing Prospectus which the Representatives have consented to in
accordance with Sections 1(i) or 6(a)(f) [and any Issuer Free Writing Prospectus
set forth on Schedule __ hereto] to the Company's knowledge, would be deemed to
be offering material in connection with the offering and sale of the Shares, it
being understood that any press release regarding the distribution of the Shares
issued subsequent to the completion of the distribution of the Shares and any
earnings release issued regarding the results of operations and financial
condition of the Company for the quarter ended [March 30, 2006], shall not be
deemed to be offering material in connection with the offering and sale of the
Shares.
(qq) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or that has constituted or that would
reasonably be expected to cause or result in the stabilization or manipulation
of the price of the Shares or any security of the Company to facilitate the sale
or resale of any of the Shares.
12
(rr) The Company has complied with the requirements of The NASDAQ
National Market with respect to the listing of the Shares.
(ss) There are no contracts, agreements or understandings between the
Company or any of its subsidiaries and any person that would give rise to a
valid claim against the Company or any of its subsidiaries or any Underwriter
for a brokerage commission, finder's fee or other like payment in connection
with the offering and sale of the Shares contemplated by this Agreement.
(tt) The Company was not, for the taxable year ended December 31,
2005, and upon the consummation of the transactions described hereby and the
application of the proceeds as described in the Registration Statement under the
caption "Use of Proceeds" is not expected to become for the taxable year ending
December 31, 2006 or any taxable year thereafter, a Passive Foreign Investment
Company ("PFIC") within the meaning of Section 1297 of the Code.
(uu) Except as disclosed in the Registration Statement and the
Prospectus, the Company and each of its subsidiaries is in compliance in all
material respects with all conditions and requirements stipulated by the
instruments of approval granted to it by the Investment Center of the Ministry
of Industry and Trade with respect to the "Approved Enterprise" status of any of
the Company's facilities and any other tax benefits received by the Company as
set forth under the caption "Law for the Encouragement of Capital Investments,
1959" in the Prospectus and by Israeli laws and regulations relating to such
"Approved Enterprise" status and the aforementioned other tax benefits received
by the Company; and the Company has not received any notice of any proceeding or
investigation relating to revocation or modification of any "Approved
Enterprise" status granted with respect to any of the Company's facilities. All
information supplied by the Company with respect to the applications relating to
such "Approved Enterprise" status was true, correct and complete in all material
respects when supplied to the appropriate authorities.
(vv) The Company believes based on its current ownership that it is
not a Controlled Foreign Corporation ("CFC") within the meaning of Section 957
of the Code. No shareholder of the Company other than Xx. Xxxx Xxxxx, Chief
Executive Officer and Chairman of the Company, and his wife, Xxxxx Xxxxx, is, as
of the date of this Agreement, considered a United States shareholder within the
meaning of Section 957 of the Code.
(ww) Except for stamp duty, and assuming that none of the Underwriters
is otherwise subject to taxation in Israel, the issuance, delivery and sale to
the Underwriters of the Shares to be sold by the Company and the Selling
Shareholders are not subject to any tax imposed by the State of Israel or any
political subdivision thereof. There are no transfer taxes or other similar fees
or charges under Federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the execution and
delivery of this Agreement or the sale by the Company and the Selling
Shareholders of their Shares.
13
Any certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Shares shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Underwriter.
SECTION 2. Representations, Warranties and Agreements of the Selling
Shareholders. Each Selling Shareholder, severally and not jointly, represents,
warrants and agrees that:
(a) Neither the Selling Shareholder nor any person acting on behalf of
the Selling Shareholder (other than, if applicable, the Company and the
Underwriters) has used or referred to any "free writing prospectus" (as defined
in Rule 405) in connection with the offering of the Shares; provided that the
foregoing shall not apply to any Selling Shareholder acting on behalf of the
Company with respect to an Issuer Free Writing Prospectus.
(b) The Selling Shareholder has, and immediately prior to any Delivery
Date on which the Selling Shareholder is selling Shares, the Selling Shareholder
will have, good and valid title to, or a valid "security entitlement" within the
meaning of Section 8-501 of the New York Uniform Commercial Code (the "UCC") in
respect of, the Shares to be sold by the Selling Shareholder hereunder on such
Delivery Date, free and clear of all liens, encumbrances, equities or claims,
except for any liens, encumbrances, equities or claims arising under the Custody
Agreement (as defined below); provided, however, that with respect to Shares
that are to be delivered on such Delivery Date pursuant to the exercise of
options (the "FUTURE SHARES"), the Selling Shareholder makes such representation
only as of the Delivery Date.
(c) The Shares to be sold by the Selling Shareholder hereunder, which
are represented by the certificates held in custody for the Selling Shareholder
(except with respect to any Future Shares), are, or with respect to any Future
Shares will be, subject to the interest of the Underwriters and the other
Selling Shareholders thereunder, the arrangements made by the Selling
Shareholder for such custody are to that extent irrevocable, and the obligations
of the Selling Shareholder hereunder shall not be terminated by any act of the
Selling Shareholder, by operation of law, by the death or incapacity of any
individual Selling Shareholder or, in the case of a trust, by the death or
incapacity of any executor or trustee or the termination of such trust, or the
occurrence of any other event.
(d) Upon payment for the Shares to be sold by such Selling
Shareholder, delivery of such Shares, as directed by the Underwriters, to Cede &
Co. ("CEDE") or such other nominee as may be designated by The Depository Trust
Company ("DTC"), registration of such Shares in the name of Cede or such other
nominee and the crediting of such Stock on the books of DTC to securities
accounts of the Underwriters (assuming that neither DTC nor any such Underwriter
has notice of any adverse claim (within the meaning of Section 8-105 of the UCC)
to such Shares), (i) DTC shall be a "protected purchaser" of such Shares within
the meaning of Section 8-303 of the UCC,
14
(ii) under Section 8-501 of the UCC, the Underwriters will acquire a valid
security entitlement in respect of such Shares and (iii) no action based on any
"adverse claim," within the meaning of Section 8-102 of the UCC, to such Shares
may be asserted against the Underwriters with respect to such security
entitlement. For purposes of this representation, such Selling Shareholder may
assume that when such payment, delivery and crediting occur, (A) such Shares
will have been registered in the name of Cede or another nominee designated by
DTC, in each case on the Company's share registry in accordance with its
certificate of incorporation, bylaws and applicable law, (B) DTC will be
registered as a "clearing corporation" within the meaning of Section 8-102 of
the UCC and (C) appropriate entries to the accounts of the several Underwriters
on the records of DTC will have been made pursuant to the UCC.
(e) Except with respect to Future Shares, the Selling Shareholder has
placed in custody under a custody agreement (the "CUSTODY AGREEMENT" and,
together with all other similar agreements executed by the other Selling
Shareholders, the "CUSTODY AGREEMENTS") with American Stock Transfer & Trust
Company, as custodian (the "CUSTODIAN"), for delivery under this Agreement,
certificates in negotiable form representing the Shares to be sold by the
Selling Shareholder hereunder. The Selling Shareholder has duly executed an
irrevocable notice of exercise with respect to any Future Shares it is selling
hereunder and the Future Shares, when issued upon exercise, will be subject to
the provisions of the Custody Agreement.
(f) The Selling Shareholder has duly and irrevocably executed and
delivered a power of attorney (the "POWER OF ATTORNEY" and, together with all
other similar agreements executed by the other Selling Shareholders, the "POWERS
OF ATTORNEY") appointing Messrs. Xxxxx Xxxx and Xxxxx Xxxx as attorneys-in-fact,
with full power of substitution, and with full authority (exercisable by any one
or more of them) to execute and deliver this Agreement and to take such other
action as may be necessary or desirable to carry out the provisions hereof on
behalf of the Selling Shareholder.
(g) The Selling Shareholder has full right, power and authority,
corporate or otherwise, to enter into this Agreement, the Custody Agreement and
the Power of Attorney.
(h) This Agreement has been duly and validly authorized, executed and
delivered by or on behalf of the Selling Shareholder.
(i) The Power of Attorney and the Custody Agreement have been duly and
validly authorized, executed and delivered by or on behalf of the Selling
Shareholder and constitute valid and legally binding obligations of the Selling
Shareholder enforceable against the Selling Shareholder in accordance with their
terms, subject to (i) the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, (ii) general equitable principles
(whether considered in a proceeding in equity or at law) and (iii) an implied
covenant of good faith and fair dealing.
15
(j) The execution, delivery and performance of this Agreement, the
Custody Agreement and the Power of Attorney by the Selling Shareholder and the
consummation by the Selling Shareholder of the transactions contemplated hereby
and thereby do not and will not (i) conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement, license or other
agreement or instrument to which the Selling Shareholder is a party or by which
the Selling Shareholder is bound or to which any of the property or assets of
the Selling Shareholder is subject, (ii) result in any violation of the
provisions of the charter or by-laws (or similar organizational documents), as
applicable, if such Selling Shareholder is not a natural person, of the Selling
Shareholder, (iii) result in any violation of the provisions of the deed of
trust (or similar organizational documents), as applicable, if such Selling
Shareholder is not a natural person, of the Selling Shareholder or (iv) result
in any violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Selling Shareholder or
the property or assets of the Selling Shareholder.
(k) No consent, approval, authorization or order of, or filing or
registration with, any court or governmental agency or body having jurisdiction
over the Selling Shareholder or the property or assets of the Selling
Shareholder is required for the execution, delivery and performance of this
Agreement, the Custody Agreement or the Power of Attorney by the Selling
Shareholder and the consummation by the Selling Shareholder of the transactions
contemplated hereby and thereby, except for the registration of the Shares under
the Securities Act and such consents, approvals, authorizations, registrations
or qualifications as may be required under the Exchange Act and applicable state
or foreign securities laws, including the law of the State of Israel, in
connection with the purchase and sale of the Shares by the Underwriters.
(l) To the knowledge of the Selling Shareholder, the Registration
Statement did not, as of the Applicable Time and the Effective Date, contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, that no representation or warranty is made as to information contained
in or omitted from the Registration Statement in reliance upon and in conformity
with written information furnished to the Company through the Representatives by
or on behalf of any Underwriter specifically for inclusion therein, which
information is specified in Section 10(f); provided, further, that solely with
respect to each Selling Shareholder listed under the sub-heading "NON-PRINCIPAL
SELLING SHAREHOLDERS" on Schedule 2 hereto (collectively, the "NON-PRINCIPAL
SELLING SHAREHOLDERS"), this Section 2(l) shall only apply to the extent that
any statements in or omission from the Registration Statement are based on
written information furnished to the Company by the Selling Shareholder
specifically for use therein or contained in a representation or warranty given
by the Selling Shareholder in this Agreement, the Power of Attorney or the
Custody Agreement.
(m) To the knowledge of the Selling Shareholder, the Prospectus will
not, as of its date and on the applicable Delivery Date, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to
16
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, that no representation or warranty is made
as to information contained in or omitted from the Prospectus in reliance upon
and in conformity with written information furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for inclusion
therein, which information is specified in Section 10(f); provided, further,
that solely with respect to the Non-Principal Selling Shareholders, this Section
2(m) shall only apply to the extent that any statements in or omission from the
Prospectus are based on written information furnished to the Company by the
Selling Shareholder specifically for use therein or contained in a
representation or warranty given by the Selling Shareholder in this Agreement,
the Power of Attorney or the Custody Agreement.
(n) To the knowledge of the Selling Shareholder, the Pricing
Disclosure Package did not, as of the Applicable Time, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading[, except that the price
of the Shares and disclosures directly relating thereto will be included on the
cover page of the Prospectus]; provided, that no representation or warranty is
made as to information contained in or omitted from the Pricing Disclosure
Package in reliance upon and in conformity with written information furnished to
the Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein, which information is specified in Section
10(f); provided, further, that solely with respect to the Non-Principal Selling
Shareholders, this Section 2(n) shall only apply to the extent that any
statements in or omission from the Pricing Disclosure Package are based on
written information furnished to the Company by the Selling Shareholder
specifically for use therein or contained in a representation or warranty given
by the Selling Shareholder in this Agreement, the Power of Attorney or the
Custody Agreement.
(o) To the knowledge of the Selling Shareholder, each Issuer Free
Writing Prospectus (including, without limitation, any road show that is a free
writing prospectus under Rule 433), when considered together with the Pricing
Disclosure Package as of the Applicable Time, did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading[, except that the price
of the Shares and disclosures directly relating thereto will be included on the
cover page of the Prospectus]; provided, that no representation or warranty is
made as to information contained in or omitted from the Pricing Disclosure
Package in reliance upon and in conformity with written information furnished to
the Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein, which information is specified in Section
10(f); provided, further, that, solely with respect to the Non-Principal Selling
Shareholders, this Section 2(o) shall only apply to the extent that any
statements in or omission from each Issuer Free Writing Prospectus (including,
without limitation, any road show that is a free writing prospectus under Rule
433) are based on written information furnished to the Company by the Selling
17
Shareholder specifically for use therein or contained in a representation or
warranty given by the Selling Shareholder in this Agreement, the Power of
Attorney or the Custody Agreement.
(p) The Selling Shareholder has not taken and will not take, directly
or indirectly, any action that is designed to or that has constituted or that
could reasonably be expected to cause or result in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares.
(q) The Selling Shareholder listed under the sub-heading "PRINCIPAL
SELLING SHAREHOLDER" on Schedule 2 hereto (the "PRINCIPAL SELLING SHAREHOLDER"),
has not been prompted to sell Ordinary Shares by any information concerning the
Company that is not set forth in the Registration Statement and the Prospectus
or any documents incorporated by reference therein.
Any certificate signed by any Selling Shareholders or by any officer
of any Selling Shareholder, as applicable, and delivered to the Representatives
or counsel for the Underwriters in connection with the offering of the Shares
shall be deemed a representation and warranty by such Selling Shareholders, as
to matters covered thereby, to each Underwriter.
SECTION 3. Purchase of the Shares by the Underwriters. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell _______ Firm Shares
and each Selling Shareholder agrees to sell the number of Firm Shares set forth
opposite its name in Schedule 2 hereto, severally and not jointly, to the
several Underwriters and each of the Underwriters, severally and not jointly,
shall purchase that number of Firm Shares set forth opposite that Underwriter's
name in Schedule 1 hereto. The respective purchase obligations of the
Underwriters with respect to the Firm Shares shall be rounded among the
Underwriters to avoid fractional shares, as the Representatives may determine.
In addition, each Selling Shareholder grants to the Underwriters an
option to purchase up to the number of Option Shares set forth opposite such
Selling Shareholder's name in Schedule 2 hereto, severally and not jointly. Such
options are exercisable in the event that the Underwriters sell more Firm Shares
than the number of Firm Shares in the offering and as set forth in Section 5
hereof. Except as provided in Section 11 hereof, each Underwriter agrees,
severally and not jointly, to purchase the number of Option Shares (subject to
such adjustments to eliminate fractional shares as the Representatives may
determine) that bears the same proportion to the total number of Option Shares
to be sold on such Delivery Date as the number of Firm Shares set forth in
Schedule 1 hereto opposite the name of such Underwriter bears to the total
number of Firm Shares.
The price of both the Firm Shares and any Option Shares purchased by
the Underwriters shall be $__________ per share.
18
The Company and the Selling Shareholders shall not be obligated to
deliver any of the Firm Shares or, in the case of the Selling Shareholders,
Option Shares, each to be delivered on the applicable Delivery Date, except upon
payment for all such Shares to be purchased on such Delivery Date as provided
herein.
SECTION 4. Offering of Shares by the Underwriters. Upon authorization by
the Representatives of the release of the Firm Shares, the several Underwriters
propose to offer the Firm Shares for sale upon the terms and conditions to be
set forth in the Prospectus. Each of the Underwriters hereby covenants and
agrees that it will not offer the Shares in Israel, except that such Underwriter
may offer for sale and sell Shares to entities which qualify under Section
15A(b)(1) of the Israeli Securities Law, 1968 and appear in the Addendum
thereto.
SECTION 5. Delivery of and Payment for the Shares. Delivery of and payment
for the Firm Shares shall be made at 10:00 A.M., New York City time, on the
fourth full business day following the date of this Agreement or at such other
date or place as shall be determined by agreement between the Representatives
and the Company. This date and time are sometimes referred to as the "INITIAL
DELIVERY DATE." Delivery of the Firm Shares shall be made to the Representatives
for the account of each Underwriter against payment by the several Underwriters
through the Representatives of the respective aggregate purchase prices of the
Firm Shares being sold by the Company and the Selling Shareholders to or upon
the order of the Company and the Selling Shareholders by wire transfer in
immediately available funds to the accounts specified by the Company and the
Selling Shareholders. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each Underwriter hereunder. Delivery of the Firm Shares shall be
made through the facilities of The Depository Trust Company unless the
Representatives shall otherwise instruct.
The options granted in Section 3 will expire 30 days after the date of
this Agreement and may be exercised in whole or from time to time in part by
written notice being given by the Representatives to the Selling Shareholders;
provided that if such date falls on a day that is not a business day, the option
granted in Section 3 will expire on the next succeeding business day. Such
notice shall set forth the aggregate number of Option Shares as to which the
option is being exercised, the names in which the Option Shares are to be
registered, the denominations in which the Option Shares are to be issued and
the date and time, as determined by the Representatives, when the Option Shares
are to be delivered; provided, however, that this date and time shall not be
earlier than the Initial Delivery Date nor earlier than the second business day
after the date on which the options shall have been exercised nor later than the
fifth business day after the date on which the options shall have been
exercised. The date and time the Option Shares are delivered are sometimes
referred to as an "OPTION SHARES DELIVERY DATE" and the Initial Delivery Date
and any Option Shares Delivery Date are sometimes each referred to as a
"DELIVERY DATE."
19
Delivery of and payment for the Option Shares shall be made at the
place specified in the first sentence of the first paragraph of this Section 5
(or at such other place as shall be determined by agreement between the
Representatives and the Selling Shareholders) at 10:00 A.M., New York City time,
on each such Option Shares Delivery Date. Delivery of Option Shares shall be
made to the Representatives for the account of each Underwriter against payment
by the several Underwriters through the Representatives of the respective
aggregate purchase prices of the Option Shares being sold by the Selling
Shareholders to or upon the order of the Selling Shareholders by wire transfer
in immediately available funds to the accounts specified by and the Selling
Shareholders. Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligation of
each Underwriter hereunder. Delivery of the Options Shares shall be made through
the facilities of The Depository Trust Company unless the Representatives shall
otherwise instruct.
SECTION 6. Further Agreements of the Company and the Underwriters.
(i) The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives (which approval shall not be unreasonably withheld) and to file
such Prospectus pursuant to Rule 424(b) under the Securities Act not later than
the Commission's close of business on the second business day following the
execution and delivery of this Agreement; to make no further amendment or any
supplement to the Registration Statement or to the Prospectus except as
permitted herein; to advise the Representatives, promptly after it receives
notice thereof, of the time when any amendment or supplement to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish the
Representatives with copies thereof; to advise the Representatives, promptly
after it receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of the Preliminary
Prospectus or any Issuer Free Writing Prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding or examination for any such purpose,
or of any request by the Commission for the amending or supplementing of the
Registration Statement, the Prospectus or any Issuer Free Writing Prospectus or
for additional information; and, in the event of the issuance of any stop order
or of any order preventing or suspending the use of the Preliminary Prospectus
or the Prospectus or any Issuer Free Writing Prospectus or suspending any such
qualification, to use promptly its reasonable best efforts to obtain its
withdrawal;
(b) To furnish promptly to each of the Representatives and to counsel
for the Underwriters a signed copy of the Registration Statement as originally
filed with the Commission, and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request: (A)
conformed
20
copies of the Registration Statement as originally filed with the Commission and
each amendment thereto (in each case excluding exhibits other than this
Agreement and the computation of per share earnings), (B) each Preliminary
Prospectus, the Prospectus and any amended or supplemented Prospectus, (C) each
Issuer Free Writing Prospectus and (D) any document incorporated by reference in
any Preliminary Prospectus (or the Prospectus); and, if the delivery of a
prospectus is required at any time after the date hereof in connection with the
offering or sale of the Shares or any other securities relating thereto and if
at such time any events shall have occurred as a result of which the Prospectus
as then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made
when such Prospectus is delivered, not misleading, or, if for any other reason
it shall be necessary to amend or supplement the Prospectus in order to comply
with the Securities Act, to notify the Representatives and, upon their request,
to file such document and to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended or
supplemented Prospectus that will correct such statement or omission or effect
such compliance;
(d) To file promptly with the Commission any amendment or supplement
to the Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the reasonable judgment of the Company or the
Representatives, be required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to rule 424 of the Rules and Regulations, any document incorporated by
reference in the Prospectus or any amendment to any document incorporated by
reference in the Prospectus, to furnish a copy thereof to the Representatives
and counsel for the Underwriters and obtain the consent of the Representatives
to the filing, which shall not be unreasonably withheld;
(f) Not to make any offer relating to the Shares that would constitute
an Issuer Free Writing Prospectus without the prior written consent of the
Representatives.
(g) To retain in accordance with the Rules and Regulations all Issuer
Free Writing Prospectuses not required to be filed pursuant to the Rules and
Regulations; and if at any time after the date hereof any events shall have
occurred as a result of which any Issuer Free Writing Prospectus, as then
amended or supplemented, would conflict with the information in the Registration
Statement, the most recent Preliminary Prospectus or the Prospectus or would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or, if for any other
reason it shall be necessary to amend or supplement any Issuer Free Writing
Prospectus, to notify the Representatives and, upon their request, to file such
document
21
and to prepare and furnish without charge to each Underwriter as many copies as
the Representatives may from time to time reasonably request of an amended or
supplemented Issuer Free Writing Prospectus that will correct such conflict,
statement or omission or effect such compliance;
(h) As soon as practicable after the Effective Date to make generally
available to the Company's security holders and to deliver to the
Representatives an earnings statement of the Company and its subsidiaries (which
need not be audited) complying with Section 11(a) of the Securities Act and the
Rules and Regulations (including, at the option of the Company, Rule 158);
(i) For a period of two years following the Effective Date, to furnish
to the Representatives copies of all materials furnished by the Company to its
shareholders generally and all public reports and all reports and financial
statements furnished by the Company to the principal national securities
exchange or market upon which the Shares may be listed pursuant to requirements
of or agreements with such exchange or to the Commission pursuant to the
Exchange Act or any rule or regulation of the Commission thereunder (it being
understood that filing on XXXXX shall be deemed to constitute delivery
hereunder);
(j) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Shares for offering and
sale under the securities laws of such jurisdictions as the Representatives may
request and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Shares; provided that in connection therewith
the Company shall not be required to (i) qualify as a foreign corporation in any
jurisdiction in which it would not otherwise be required to so qualify, (ii)
file a general consent to service of process in any such jurisdiction or (iii)
subject itself to taxation in any jurisdiction in which it would not otherwise
be subject; and
(k) For a period of 90 days from the date of the Prospectus (the
"LOCK-UP PERIOD"), not to, directly or indirectly, (1) offer for sale, sell,
pledge or otherwise dispose of (or enter into any transaction or device that is
designed to, or could be expected to, result in the disposition by any person at
any time in the future of) any Ordinary Shares or securities convertible into or
exchangeable for Ordinary Shares, or sell or grant options, rights or warrants
with respect to any Ordinary Shares or securities convertible into or
exchangeable for Ordinary Shares, (2) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of such Ordinary Shares, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Ordinary Shares or other securities, in cash or otherwise, (3) file or cause to
be filed a registration statement, including any amendments, with respect to the
registration of any Ordinary Shares or securities convertible, exercisable or
exchangeable into Ordinary Shares or any other securities of the Company (other
than any registration statement on Form S-8) or (4) publicly disclose the
intention to do any of the foregoing, in each case without the prior
22
written consent of Xxxxxx, on behalf of the Underwriters, and to cause each
officer, director and Selling Shareholder of the Company set forth on Schedule 3
hereto to furnish to the Representatives, prior to the Initial Delivery Date, a
letter or letters, substantially in the form of Exhibit A hereto (the "LOCK-UP
AGREEMENTS") (provided that the foregoing shall not apply to (w) the Shares to
be sold hereunder, (x) the grant of options to purchase Ordinary Shares pursuant
to the employee benefit plans described in the Prospectus, qualified stock
option plans or other employee compensation plans described in the Prospectus,
(y) the issuance of Ordinary Shares pursuant to the Company's employee benefit
plans, employee stock purchase plan, qualified stock option plans or other
employee compensation plans described in the Prospectus, or (z) the issuance of
Ordinary shares or securities convertible into Ordinary Shares, pursuant to the
exercise of warrants or convertible securities described in the Prospectus).
Notwithstanding the foregoing paragraph, if (1) during the last 17
days of the Lock-Up Period, the Company issues an earnings release or material
news or a material event relating to the Company occurs or (2) prior to the
expiration of the Lock-Up Period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of the
Lock-Up Period, then the Company shall notify each officer, director and Selling
Shareholder of the Company set forth on Schedule 3 hereto in writing that the
restrictions imposed in the preceding paragraph shall continue to apply until
the expiration of the 18-day period beginning on the issuance of the earnings
release or the announcement of the material news or the occurrence of the
material event, unless Xxxxxx, on behalf of the Underwriters, waives such
extension in writing. For the purposes of this Section 6(k), the issuance of a
notice in accordance with Rule 101(e) of Regulation FD shall be deemed to
satisfy the Company's obligation to give notice in writing hereunder.
(l) To furnish to its shareholders as soon as practicable after the
end of each fiscal year an annual report (including a balance sheet and
statements of income, shareholders' equity and cash flow of the Company and its
consolidated subsidiaries) certified by independent public accountants and
prepared in conformity with accounting principles generally accepted in the
United States, and to make available to its shareholders, as soon as practicable
after the end of each of the first three quarters of each fiscal year prepared
in conformity with accounting principles generally accepted in the United States
(beginning with the fiscal quarter ending after the Effective Date of the
Registration Statements), consolidated summary financial information of the
Company and its consolidated subsidiaries for such quarter in reasonable detail;
(ii) Each Underwriter severally agrees that such Underwriter shall not
include any "issuer information" (as defined in Rule 433) in any "free writing
prospectus" (as defined in Rule 405) used or referred to by such Underwriter
without the prior consent of the Company (any such issuer information with
respect to whose use the Company has given its consent, "Permitted Issuer
Information"); provided that (i) no such consent shall be required with respect
to any such issuer information contained in any document filed by the Company
with the Commission prior to the use of such free writing prospectus and (ii)
"issuer information," as used in this Section 6(ii), shall not be deemed to
include
23
information prepared by or on behalf of such Underwriter on the basis of or
derived from issuer information.
SECTION 7. Further Agreements of the Selling Shareholders. Each Selling
Shareholder agrees:
(a) During the Lock-Up Period, not to, directly or indirectly, (1)
offer for sale, sell, pledge or otherwise dispose of (or enter into any
transaction or device that is designed to, or could be expected to, result in
the disposition by any person at any time in the future of) any Ordinary Shares
or securities convertible into or exchangeable for Ordinary Shares (other than
the Shares), or sell options, rights or warrants with respect to any Ordinary
Shares or securities convertible into or exchangeable for Ordinary Shares, (2)
enter into any swap or other derivatives transaction that transfers to another,
in whole or in part, any of the economic benefits or risks of ownership of such
Ordinary Shares, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Ordinary Shares or other securities, in
cash or otherwise, (3) make any demand for or exercise any right or file or
cause to be filed a registration statement, including any amendments, with
respect to the registration of any Ordinary Shares or securities convertible,
exercisable or exchangeable into Ordinary Shares or any other securities of the
Company (other than any registration statement on Form S-8) or (4) publicly
disclose the intention to do any of the foregoing, in each case without the
prior written consent of Xxxxxx, on behalf of the Underwriters. Notwithstanding
the foregoing, if (1) during the last 17 days of the Lock-Up Period, the Company
issues an earnings release or material news or a material event relating to the
Company occurs or (2) prior to the expiration of the Lock-Up Period, the Company
announces, in the manner set forth in Section 6(k), that it will release
earnings results during the 16-day period beginning on the last day of the
Lock-Up Period, then the restrictions imposed in the preceding paragraph shall
continue to apply until the expiration of the 18-day period beginning on the
issuance of the earnings release or the announcement of the material news or the
occurrence of the material event, unless Xxxxxx, on behalf of the Underwriters,
waives such extension in writing.
(b) Prior to engaging in any transaction or taking any other action
that is subject to the terms of Section 7(a) during the period from the date of
this Agreement to and including the 34th day following the expiration of the
Lock-Up Period, it will give notice thereof to the Company and will not
consummate such transaction or take any such action if, at any time, it has
received written notice from the Company, including in the manner set forth in
Section 6(k), setting forth that the Lock-Up Period has been extended (pursuant
to Section 7(a)) until the expiration of the Lock-Up Period as so extended.
(c) That the Shares to be sold by the Selling Shareholders hereunder,
which are represented by the certificates held in custody for the Selling
Shareholders (except with respect to any Future Shares), are, or with respect to
any Future Shares will be, subject to the interest of the Underwriters and the
other Selling Shareholders thereunder, that the arrangements made by the Selling
Shareholders for such custody are to that extent irrevocable, and that the
obligations of the Selling Shareholders hereunder
24
shall not be terminated by any act of the Selling Shareholders, by operation of
law, by the death or incapacity of any individual Selling Shareholders or, in
the case of a trust, by the death or incapacity of any executor or trustee or
the termination of such trust, or the occurrence of any other event.
(d) Neither the Selling Shareholder nor any person acting on behalf of
the Selling Shareholder (other than, if applicable, the Company and the
Underwriters) shall use or refer to any "free writing prospectus" (as defined in
Rule 405) in connection with the offering of the Shares; provided that the
foregoing shall not apply to any Selling Shareholder acting on behalf of the
Company with respect to an Issuer Free Writing Prospectus.
(e) To deliver to the Representatives prior to the Initial Delivery
Date a properly completed and executed United States Treasury Department Form
W-8 (if the Selling Shareholder is a non-United States person) or Form W-9 (if
the Selling Shareholder is a United States person).
SECTION 8. Expenses The Company agrees, whether or not the transactions
contemplated by this Agreement are consummated or this Agreement is terminated,
to pay all the costs, expenses, fees and taxes, in excess of $_______ in the
aggregate, incident to and in connection with (a) the authorization, issuance,
sale and delivery of the Shares and any stamp duties or other taxes payable in
that connection, and the preparation and printing of certificates for the
Shares; (b) the costs incident to the preparation, printing and filing under the
Securities Act of the Registration Statement (including any exhibits thereto),
any Preliminary Prospectus, the Prospectus, any Issuer Free Writing Prospectus
and any amendment or supplement thereto; (c) the distribution of the
Registration Statement (including any exhibits thereto), any Preliminary
Prospectus, the Prospectus, any Issuer Free Writing Prospectus and any amendment
or supplement thereto or any document incorporated by reference therein, all as
provided in this Agreement; (d) the production and distribution of this
Agreement, any supplemental agreement among the Underwriters and any other
related documents in connection with the offering, purchase, sale and delivery
of the Shares; (e) the delivery and distribution of the Custody Agreements and
the Powers of Attorney and the fees and expenses of the Custodian and any
Attorney-in-Fact; (f) any required review by the NASD of the terms of sale of
the Shares (including related fees and expenses of counsel to the Underwriters);
(g) the listing of the Shares on The NASDAQ National Market; (h) the investor
presentations on any "road show" undertaken in connection with the marketing of
the Shares, including, without limitation, expenses associated with any
electronic road show, travel and lodging expenses of the representatives and
officers of the Company and the cost of any aircraft chartered in connection
with the road show provided, however, that the Underwriters agree to pay 50% of
the cost of any aircraft chartered in connection with the road show; and (i) all
other costs and expenses incident to the performance of the obligations of the
Company and the Selling Shareholders under this Agreement; provided that, the
Underwriters agree to pay the foregoing expenses up to an amount not to exceed
________ after such expenses have been paid or have accrued by the Company and
an invoice therefor has been sent by the Company to Xxxxxx; provided, further,
that except
25
as provided in this Section 8 and in Section 13, the Underwriters shall pay
their own costs and expenses, including the costs and expenses of their counsel,
any transfer taxes on the Shares which they may sell and the expenses of
advertising any offering of the Shares made by the Underwriters; provided,
further, that the Selling Shareholders shall pay the fees and expenses of their
counsel (other than the fees and expenses of one U.S. and one Israeli counsel
for all of the Selling Shareholders which shall be paid by the Company) and all
underwriting discounts, selling commissions and transfer taxes payable in
connection with their respective sales of the Shares to the Underwriters.
SECTION 9. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the Company
and the Selling Shareholders contained herein, to the performance by the Company
and the Selling Shareholders of their obligations hereunder, and to each of the
following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in
accordance with Section 6(a); the Company shall have complied with all filing
requirements applicable to any Issuer Free Writing Prospectus used or referred
to after the date hereof; no stop order suspending the effectiveness of the
Registration Statement or preventing or suspending the use of the Prospectus or
any Issuer Free Writing Prospectus shall have been issued and no proceeding or
examination for such purpose shall have been initiated or threatened by the
Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus or otherwise shall
have been complied with or otherwise resolved to the Commission's satisfaction.
(b) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Custody Agreements, the
Powers of Attorney, the Shares, the Registration Statement, the Issuer Free
Writing Prospectus and the Prospectus, and all other legal matters relating to
this Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Underwriters, and the
Company and the Selling Shareholders shall have furnished to such counsel all
documents and information that they may reasonably request to enable them to
pass upon such matters.
(c) Eitan, Mehulal, Pappo, Kugler, Advocates, Patent Attorneys,
outside Israeli counsel for the Company and the Selling Shareholders (with
respect to the Selling Shareholders, solely in connection with the opinions to
be provided hereunder), shall have furnished to the Representatives its written
opinions, as outside Israeli counsel to the Company and the Selling
Shareholders, addressed to the Underwriters and dated each such Delivery Date,
substantially in the forms attached hereto as Exhibit B-1 and Exhibit B-2.
(d) White & Case LLP, outside U.S. counsel for the Company, shall have
furnished to the Representatives its written opinion, as outside U.S. counsel to
the
26
Company, addressed to the Underwriters and dated each such Delivery Date,
substantially in the form attached hereto as Exhibit B-3.
(e) Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP, outside U.S. counsel for the
Selling Shareholders, shall have furnished to the Representatives its written
opinion, as outside U.S. counsel to the Selling Shareholders, addressed to the
Underwriters and dated each such Delivery Date, substantially in the form
attached hereto as Exhibit B-4.
(f) The Representatives shall have received from Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, U.S. counsel for the Underwriters, such opinion or opinions,
dated such Delivery Date, with respect to the issuance and sale of the Shares,
the Registration Statement, the Prospectus and the Pricing Disclosure Package
and other related matters as the Representatives may reasonably require, and the
Company and Selling Shareholders shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling them to pass
upon such matters.
(g) The Representatives shall have received from Meitar Liquornik Geva
& Leshem Xxxxxxxxx, Israeli counsel for the Underwriters, such opinion or
opinions, dated such Delivery Date, with respect to the issuance and sale of the
Shares, the Registration Statement, the Prospectus and the Pricing Disclosure
Package and other related matters as the Representatives may reasonably require,
and the Company and Selling Shareholders shall have furnished to such counsel
such documents as they reasonably request for the purpose of enabling them to
pass upon such matters.
(h) At the time of execution of this Agreement, the Representatives
shall have received from each of (i) Xxxx Xxxxx Xxxxxx & Kasierer, a member of
Ernst & Young Global, (ii) KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft Wirtschaftsprufungsgesellschaft and (iii) Somekh Xxxxxxx, a
member of KPMG International, a letter, in form and substance satisfactory to
the Representatives, addressed to the Underwriters and dated the date hereof (x)
confirming that they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission and (y) stating, as of the date hereof (or, with respect to
matters involving changes or developments since the respective dates as of which
specified financial information is given in the most recent Preliminary
Prospectus, as of a date not more than five days prior to the date hereof), the
conclusions and findings of such firm with respect to the financial information
and other matters ordinarily covered by accountants' "COMFORT LETTERS" to
underwriters in connection with registered public offerings.
(i) With respect to the letter of each of (x) Xxxx Xxxxx Xxxxxx &
Kasierer, a member of Ernst & Young Global, (y) KPMG Deutsche
Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprufungsgesellschaft, and
(z) Somekh Xxxxxxx, a member of KPMG International, referred to in the preceding
paragraph and delivered to the Representatives concurrently with the execution
of this Agreement (the "INITIAL LETTERS"), the Company shall have furnished to
the Representatives a letter (the
27
"BRING-DOWN LETTER") of each such accountants, addressed to the Underwriters and
dated such Delivery Date (i) confirming that they are independent public
accountants within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date of
the bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five days
prior to the date of the bring-down letter), the conclusions and findings of
such firm with respect to the financial information and other matters covered by
the initial letters and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.
(j) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chief Executive Officer and its
Chief Financial Officer stating that:
(i) The representations, warranties and agreements of the Company
in Section 1 are true and correct on and as of such Delivery Date, and the
Company has complied with all its agreements contained herein and satisfied all
the conditions on its part to be performed or satisfied hereunder at or prior to
such Delivery Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued; and no proceedings or examination for
that purpose have been instituted or, to the knowledge of such officers,
threatened; and
(iii) They have carefully examined the Registration Statement,
the Prospectus and the Pricing Disclosure Package and, in their opinion, (A) (1)
the Registration Statement, as of the Effective Date, (2) the Prospectus, as of
its date and on the applicable Delivery Date, and (3) the Pricing Disclosure
Package, as of the Applicable Time did not and do not contain any untrue
statement of a material fact and did not and do not omit to state a material
fact required to be stated therein (except in the case of the Prospectus and the
Pricing Disclosure Package, in light of the circumstances under which they were
made) or necessary to make the statements therein not misleading [except, in the
case of the Pricing Disclosure Package, that the price of the Shares and
disclosures directly relating thereto are included on the cover page of the
Prospectus,], and (B) since the Effective Date no event has occurred that should
have been set forth in a supplement or amendment to the Registration Statement,
the Prospectus or any Issuer Free Writing Prospectus that has not been so set
forth.
(k) Each Selling Shareholders (or the Custodian or one or more
attorneys-in-fact on behalf of the Selling Shareholders) shall have furnished to
the Representatives on such Delivery Date a certificate, dated such Delivery
Date, signed by, or on behalf of, the Selling Shareholders (or the Custodian or
one or more attorneys-in-fact on behalf of the Selling Shareholders) stating
that the representations, warranties and agreements of the Selling Shareholders
contained herein are true and correct on and as of
28
such Delivery Date and that the Selling Shareholders has complied with all its
agreements contained herein and has satisfied all the conditions on its part to
be performed or satisfied hereunder at or prior to such Delivery Date.
(l) Except as described in the most recent Preliminary Prospectus, (i)
neither the Company nor any of its subsidiaries shall have sustained since the
date of the latest audited financial statements included or incorporated by
reference in the most recent Preliminary Prospectus any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree or (ii) since such date there shall not have been any change in
the share capital of the Company or any of its subsidiaries (other than the
grant of options pursuant to the Company's stock option plans or upon exercise
of outstanding options, convertible securities, rights or warrants described in
the Prospectus) or any material change in the long-term debt of the Company and
its subsidiaries or any change, or any development involving a prospective
change, in or affecting the condition (financial or otherwise), results of
operations, shareholders' equity, properties, management, business or prospects
of the Company and its subsidiaries taken as a whole, the effect of which, in
any such case described in clause (i) or (ii), is, in the judgment of the
Representatives, so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares
being delivered on such Delivery Date on the terms and in the manner
contemplated in the Prospectus.
(m) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or
materially limited or the settlement of such trading generally shall have been
materially disrupted or minimum prices shall have been established on any such
exchange or such market by the Commission, by such exchange or by any other
regulatory body or governmental authority having jurisdiction, (ii) a banking
moratorium shall have been declared by federal or state authorities, (iii) the
United States shall have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States or there shall have been a
declaration of a national emergency or war by the United States or there shall
have occurred any other calamity or crisis, or (iv) there shall have occurred
such a material adverse change in general economic, political or financial
conditions, including, without limitation, as a result of terrorist activities
after the date hereof (or the effect of international conditions on the
financial markets in the United States shall be such), as to make it, in the
judgment of the Representatives, impracticable or inadvisable to proceed with
the public offering or delivery of the Shares being delivered on such Delivery
Date on the terms and in the manner contemplated in the Prospectus.
(n) The Lock-Up Agreements between the Representatives and the
officers, directors and shareholders of the Company set forth on Schedule 3,
delivered to
29
the Representatives on or before the date of this Agreement, shall be in full
force and effect on such Delivery Date.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
SECTION 10. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Underwriter,
its directors, officers and employees and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Securities Act, from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of Shares), to which that
Underwriter, director, officer, employee or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained (A) in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto, (B) any Issuer Free Writing Prospectus or in
any amendment or supplement thereto, (C) any Permitted Issuer Information used
or referred to in any "free writing prospectus" (as defined in Rule 405) used or
referred to by any Underwriter, or (D) any "road show", (as defined in Rule 433)
or its equivalent with respect to presentations in the State of Israel, not
constituting an Issuer Free Writing Prospectus (a "NON-PROSPECTUS ROAD SHOW"),
(ii) the omission or alleged omission to state in any Preliminary Prospectus,
the Registration Statement, the Prospectus, any Issuer Free Writing Prospectus
Shares or in any amendment or supplement thereto or in any Permitted Issuer
Information or any Non-Prospectus Road Show, any material fact required to be
stated therein or necessary to make the statements therein not misleading or
(iii) any act or failure to act or any alleged act or failure to act by any
Underwriter in connection with, or relating in any manner to, the Shares or the
offering contemplated hereby, and which is included as part of or referred to in
any loss, claim, damage, liability or action arising out of or based upon
matters covered by clause (i) or (ii) above (provided that the Company shall not
be liable under this clause (iii) to the extent that it is determined in a final
judgment by a court of competent jurisdiction that such loss, claim, damage,
liability or action resulted directly from any such acts or failures to act
undertaken or omitted to be taken by such Underwriter through its gross
negligence or willful misconduct), and shall reimburse each Underwriter and each
such director, officer, employee or controlling person promptly upon demand for
any legal or other expenses reasonably incurred by that Underwriter, director,
officer, employee or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in
any
30
Preliminary Prospectus, the Registration Statement, the Prospectus, any Issuer
Free Writing Prospectus or in any amendment or supplement thereto or in any
Permitted Issuer Information, or any Non-Prospectus Road Show, in reliance upon
and in conformity with written information concerning such Underwriter furnished
to the Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein, which information consists solely of the
information specified in Section 10(f). The foregoing indemnity agreement is in
addition to any liability that the Company may otherwise have to any Underwriter
or to any director, officer, employee or controlling person of that Underwriter.
(b) The Selling Shareholders, including the Principal Selling
Shareholder, severally and not jointly, shall indemnify and hold harmless each
Underwriter, its directors, officers and employees, and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Securities Act,
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of Shares), to which
that Underwriter, director, officer, employee or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement, the Prospectus, any Issuer
Free Writing Prospectus or in any amendment or supplement thereto or in any
Permitted Issuer Information, any Non-Prospectus Road Show, or any "free writing
prospectus" (as defined in Rule 405), prepared by or on behalf of the Selling
Shareholder or used or referred to by the Selling Shareholder in connection with
the offering of the Shares in violation of Section 7(d) (a "SELLING SHAREHOLDER
FREE WRITING PROSPECTUS"), provided, however, that in the case of the Principal
Selling Shareholder, the Principal Selling Shareholder knew that such statements
were untrue or inaccurate, (ii) the omission or alleged omission to state in any
Preliminary Prospectus, Registration Statement, the Prospectus, any Issuer Free
Writing Prospectus or in any amendment or supplement thereto or in any Permitted
Issuer Information, any Non-Prospectus Road Show, or any Selling Shareholder
Free Writing Prospectus, any material fact, provided, however, that in the case
of the Principal Selling Shareholder, the Principal Selling Shareholder knew
that such statements were required to be stated therein or knew that such
statements were necessary to make the statements therein not misleading, and
shall reimburse each Underwriter, its directors, officers and employees and each
such controlling person promptly upon demand for any legal or other expenses
reasonably incurred by that Underwriter, its directors, officers and employees
or controlling persons in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred or (iii) any breach of any representation or warranty
of such Selling Shareholder in this Agreement or any certificate or other
agreement delivered pursuant hereto or contemplated hereby; provided, however,
that the Selling Shareholders will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement in or omission or alleged omission
from any
31
of such documents in reliance upon and in conformity with written information
furnished to the Company by an Underwriter through the Representatives
specifically for use therein; provided, further, that each Non-Principal Selling
Shareholder shall only be subject to such liability to the extent that the
untrue statement or alleged untrue statement or omission or alleged omission is
based on information provided in writing by such Non-Principal Selling
Shareholder or contained in a representation or warranty given by such
Non-Principal Selling Shareholder in this Agreement, the Power of Attorney or
the Custody Agreement. The liability of each Selling Shareholder, including the
Principal Selling Shareholder, under the indemnity agreement contained in this
paragraph shall be limited to an amount equal to the total net proceeds from the
offering of the Shares purchased under the Agreement received by such Selling
Shareholder, as set forth in the table on the cover page of the Prospectus. The
foregoing indemnity agreement is in addition to any liability that the Selling
Shareholder may otherwise have to any Underwriter or any officer, employee or
controlling person of that Underwriter.
(c) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, each Selling Shareholder, their respective directors,
officers and employees, and each person, if any, who controls the Company or
such Selling Shareholder within the meaning of Section 15 of the Securities Act,
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company, such Selling Shareholder or any
such director, officer, employee or controlling person may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage, liability
or action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or in
any amendment or supplement thereto or in any Non-Prospectus Road Show, or (ii)
the omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or in
any amendment or supplement thereto or in any Non-Prospectus Road Show, any
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information concerning such
Underwriter furnished to the Company through the Representatives by or on behalf
of that Underwriter specifically for inclusion therein, which information is
limited to the information set forth in Section 10(f), and shall reimburse the
Company, such Selling Shareholder and any such director, officer or controlling
person for any legal or other expenses reasonably incurred by the Company, such
Selling Shareholder or any such director, officer or controlling person in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred. The
foregoing indemnity agreement is in addition to any liability that any
Underwriter may otherwise have to the Company, such Selling Shareholder or any
such director, officer, employee or controlling person.
32
(d) Promptly after receipt by an indemnified party under this Section
10 of notice of any claim or the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 10, notify the indemnifying party in writing of the
claim or commencement; provided, however, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have
under this Section 10 except to the extent it has been judicially determined
that it has been materially prejudiced by such failure; provided, further, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 10. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 10 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, that the indemnified party shall have the right to employ its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the Company, the Selling Shareholder and the
Underwriters shall have so mutually agreed; (ii) the indemnifying party has
failed within a reasonable time to retain counsel reasonably satisfactory to the
indemnified party; (iii) the indemnified party shall have reasonably concluded
that there may be legal defenses available to them that are different from or in
addition to those available to the indemnifying party; or (iv) the named parties
in any such proceeding (including any impleaded parties) include both the
indemnified party, on the one hand, and the indemnifying party, on the other
hand, and representation of both sets of parties by the same counsel would be
inappropriate due to actual or potential differing interests between them, and
in any such event the fees and expenses of such separate counsel shall be paid
by the indemnifying party. No indemnifying party shall (i) without the prior
written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding and does not include any
findings of fact or admissions of fault or culpability as to the indemnified
party, or (ii) be liable for any settlement of any such action effected without
its written consent (which consent shall not be unreasonably withheld), but if
settled with the consent of the indemnifying party or if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment to the extent provided in
this Section 10.
33
(e) If the indemnification provided for in this Section 10 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 10(a) or 10(c) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and the Selling Shareholders, on the one hand, and the
Underwriters, on the other hand, from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Selling Shareholders, on the one hand, and the Underwriters, on the other,
with respect to the statements or omissions that resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Shareholders, on the one hand, and the Underwriters, on the other, with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Shares purchased under this
Agreement (before deducting expenses) received by the Selling Shareholders, as
set forth in the table on the cover page of the Prospectus, on the one hand, and
the total underwriting discounts and commissions received by the Underwriters
with respect to the Shares purchased under this Agreement, as set forth in the
table on the cover page of the Prospectus, on the other hand. The relative fault
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company, the Selling Shareholders or
the Underwriters, the intent of the parties and their relative knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Shareholders and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section 10(e) were
to be determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation which does
not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
Section 10(e) shall be deemed to include, for purposes of this Section 10(e),
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 10(e), no Underwriter shall be
required to contribute any amount in excess of the amount by which the net
proceeds from the sale of the Shares underwritten by it exceeds the amount of
any damages which such Underwriter has otherwise paid or become liable to pay by
reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute as provided in this Section 10(e) are
several in proportion to their respective underwriting obligations and not
joint.
34
(f) The Underwriters severally confirm and the Company and each
Selling Shareholder acknowledges and agrees that the statements regarding
delivery of the Shares by the Underwriters set forth in the last paragraph on
the cover page of the Prospectus and the legend concerning over-allotments on
the inside front cover page of the Prospectus and the following information
under the caption "Underwriting" in the most recent Preliminary Prospectus and
the Prospectus, (i) concession and reallowance figures, (ii) the information in
the table in the first paragraph, (iii) the information under the subheading
"Stabilization, Short Positions and Penalty Bids," (iv) the information under
the subheading "Discretionary Sales" and (v) the information under the
subheading "Electronic Distribution," are correct and constitute the only
information concerning such Underwriters furnished in writing to the Company by
or on behalf of the Underwriters specifically for inclusion in any Preliminary
Prospectus, the Registration Statement, the Prospectus, any Issuer Free Writing
Prospectus or in any amendment or supplement thereto or in any Non-Prospectus
Road Show.
SECTION 11. Defaulting Underwriters.
If, on any Delivery Date, any Underwriter defaults in the performance
of its obligations under this Agreement, the remaining non-defaulting
Underwriters shall be obligated to purchase the Shares that the defaulting
Underwriter agreed but failed to purchase on such Delivery Date in the
respective proportions which the number of Firm Shares set forth opposite the
name of each remaining non-defaulting Underwriter in Schedule 1 hereto bears to
the total number of Firm Shares set forth opposite the names of all the
remaining non-defaulting Underwriters in Schedule 1 hereto; provided, however,
that the remaining non-defaulting Underwriters shall not be obligated to
purchase any of the Shares on such Delivery Date if the total number of Shares
which the defaulting Underwriter or Underwriters agreed but failed to purchase
on such date exceeds 9.09% of the total number of Shares to be purchased on such
Delivery Date, and any remaining non-defaulting Underwriter shall not be
obligated to purchase more than 110% of the number of the Shares which it agreed
to purchase on such Delivery Date pursuant to the terms of Section 3. If the
foregoing maximums are exceeded, the remaining non-defaulting Underwriters, or
those other underwriters satisfactory to the Representatives who so agree, shall
have the right, but shall not be obligated, to purchase, in such proportion as
may be agreed upon among them, all the Shares to be purchased on such Delivery
Date. If the remaining Underwriters or other underwriters satisfactory to the
Representatives do not elect to purchase the Shares which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such Delivery Date,
this Agreement (or, with respect to any Option Shares Delivery Date, the
obligation of the Underwriters to purchase, and of the Selling Shareholders to
sell, the Option Shares) shall terminate without liability on the part of any
non-defaulting Underwriter or the Company and the Selling Shareholders, except
that the Company will continue to be liable for the payment of expenses to the
extent set forth in Sections 8 and 13. As used in this Agreement, the term
"UNDERWRITER" includes, for all purposes of this Agreement unless the context
requires otherwise, any party not listed in Schedule 1 hereto that, pursuant to
this Section 11, purchases Shares that a defaulting Underwriter agreed but
failed to purchase.
35
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company and the Selling Shareholders for damages
caused by its default. If other Underwriters are obligated or agree to purchase
the Shares of a defaulting or withdrawing Underwriter, either the
Representatives or the Company may postpone the Delivery Date for up to seven
full business days in order to effect any changes that, in the opinion of
counsel for the Company or counsel for the Underwriters, may be necessary in the
Registration Statement, the Prospectus or in any other document or arrangement.
SECTION 12. Termination. The obligations of the Underwriters hereunder may
be terminated by the Representatives by notice given to and received by the
Company and the Selling Shareholders prior to delivery of and payment for the
Shares if, prior to that time, any of the events described in Sections 9(n) and
9(p), shall have occurred or if the Underwriters shall decline to purchase the
Shares for any reason permitted under this Agreement.
SECTION 13. Reimbursement of Underwriters' Expenses. (a) If any Selling
Shareholder shall fail to tender the Shares for delivery to the Underwriters by
reason of any failure, refusal or inability on the part of the Selling
Shareholder to perform any agreement on their part to be performed, or because
any other condition to the Underwriters' obligations hereunder required to be
fulfilled by the Company or the Selling Shareholder is not fulfilled for any
reason or (b) the Underwriters shall decline to purchase the Shares for any
reason permitted under this Agreement, the Company will reimburse the
Underwriters for all reasonable out-of-pocket expenses (including reasonable
fees and disbursements of counsel) incurred by the Underwriters in connection
with this Agreement and the proposed purchase of the Shares, and upon demand the
Company shall pay the full amount thereof to the Representatives. If this
Agreement is terminated pursuant to Section 11 by reason of the default of one
or more Underwriters, neither the Company nor any Selling Shareholder shall be
obligated to reimburse any defaulting Underwriter on account of those expenses.
No action taken pursuant to this Section 13 shall relieve any Selling
Shareholder so defaulting from liability, if any, in respect of such default.
SECTION 14. No Fiduciary Duty. The Company and the Selling Shareholders
acknowledge and agree that in connection with this offering, sale of the Shares
or any other services the Underwriters may be deemed to be providing hereunder,
notwithstanding any preexisting relationship, advisory or otherwise, between the
parties or any oral representations or assurances previously or subsequently
made by the Underwriters: (i) no fiduciary or agency relationship between the
Company, the Selling Shareholders and any other person, on the one hand, and the
Underwriters, on the other, exists; (ii) the Underwriters are not acting as
advisors, expert or otherwise, to either the Company or the Selling
Shareholders, including, without limitation, with respect to the determination
of the public offering price of the Shares, and such relationship between the
Company and the Selling Shareholders, on the one hand, and the Underwriters, on
the other, is entirely and solely commercial, based on arms-length negotiations;
(iii) any duties and obligations that the Underwriters may have to the Company
or the Selling
36
Shareholders shall be limited to those duties and obligations specifically
stated herein; and (iv) the Underwriters and their respective affiliates may
have interests that differ from those of the Company and the Selling
Shareholders. The Company and the Selling Shareholders hereby waive any claims
that the Company or the Selling Shareholders may have against the Underwriters
with respect to any breach of fiduciary duty in connection with this offering of
Shares.
SECTION 15. Research Analyst Independence. The Company and the Selling
Shareholders acknowledge that the Underwriters' research analysts and research
departments are required to be independent from their respective investment
banking divisions and are subject to certain regulations and internal policies,
and that such Underwriters' research analysts may hold views and make statements
or investment recommendations and/or publish research reports with respect to
the Company and/or the offering that differ from the views of their respective
investment banking divisions. The Company and the Selling Shareholders
acknowledge that each of the Underwriters is a full service securities firm and
as such from time to time, subject to applicable securities laws, may effect
transactions for its own account or the account of its customers and hold long
or short positions in debt or equity securities of the companies that may be the
subject of the transactions contemplated by this Agreement.
SECTION 16. Notices, Etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex
or facsimile transmission to Xxxxxx Brothers Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Syndicate Registration (Fax: 000-000-0000), with a
copy, in the case of any notice pursuant to Section 8(c), to the Director of
Litigation, Office of the General Counsel, Xxxxxx Brothers Inc., 000 Xxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000; (Fax: 000-000-0000).
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Xxxx Xxxxx (Fax: x000 (0) 000-0000);
(c) if to any Selling Shareholders, shall be delivered or sent by mail
or facsimile transmission to such Selling Shareholders at the address set forth
on Schedule 2 hereto
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof. The Company shall be entitled to act and rely upon any
request, consent, notice or agreement given or made on behalf of the
Underwriters by Xxxxxx on behalf of the Representatives.
SECTION 17. Agent for Service; Submission to Jurisdiction; Waiver of
Immunities. By the execution and delivery of this Agreement, the Company and
each Selling Shareholder not located in the United States hereby designates and
appoints
37
Saifun Semiconductors USA, Inc. as the authorized agent of the Company upon whom
process may be served in any suit, proceeding or other action against the
Company or the Selling Shareholders instituted by any Underwriter or by any
person controlling an Underwriter as to which such Underwriter or any such
controlling person is a party and based upon this Agreement, or in any other
action against the Company or the Selling Shareholders in any federal or state
court sitting in the County of New York, arising out of the offering made by the
Prospectus or any purchase or sale of Shares in connection therewith. The
Company and the Selling Shareholders expressly accept jurisdiction of any such
court in respect of any such suit, proceeding or other action and, without
limiting other methods of obtaining jurisdiction, expressly submits to
nonexclusive personal jurisdiction of any such court in respect of any such
suit, proceeding or other action. Such designation and appointment shall be
irrevocable, unless and until a successor authorized agent in the County and
State of New York reasonably acceptable to the Underwriters shall have been
appointed by the Company or the Selling Shareholders, such successor shall have
accepted such appointment and written notice thereof shall have been given to
the Underwriters. The Company and the Selling Shareholders further agree that
service of process upon its authorized agent or successor shall be deemed in
every respect personal service of process upon the Company and the Selling
Shareholders in any such suit, proceeding or other action. In the event that
service of any process or notice of motion or other application to any such
court in connection with any such motion in connection with any such action or
proceeding cannot be made in the manner described above, such service may be
made in the manner set forth in conformance with the Hague Convention on the
Service Abroad of Judicial and Extrajudicial Documents on Civil and Commercial
Matters or any successor convention or treaty. The Company and the Selling
Shareholders hereby irrevocably waive any objection that it may have or
hereafter have to the laying of venue of any such action or proceeding arising
out of or based on the Shares, or this Agreement or otherwise relating to the
offering, issuance and sale of the Shares in any Federal or state court sitting
in the County of New York and hereby further irrevocably waives any claim that
any such action or proceeding in any such court has been brought in an
inconvenient forum. The Company and the Selling Shareholders agree that any
final judgment after exhaustion of all appeals or the expiration of time to
appeal in any such action or proceeding arising out of the sale of the Shares or
this Agreement rendered by any such Federal court or state court shall be
conclusive and may be enforced in any other jurisdiction by suit on the judgment
or in any other manner provided by law. Nothing contained in this Agreement
shall affect or limit the right of the Underwriters to serve any process or
notice of motion or other application in any other manner permitted by law or
limit or affect the right of the Underwriters to bring any action or proceeding
against the Company, the Selling Shareholders or any of their property in the
courts of any other jurisdiction. The Company and the Selling Shareholders
further agree to take any and all action, including the execution and filing of
all such instruments and documents, as may be necessary to continue such
designations and appointments or such substitute designations and appointments
in full force and effect. The Company and the Selling Shareholders hereby agree
with the Underwriters to the nonexclusive jurisdiction of the courts of the
State of New York, or the Federal courts sitting in the County of New York in
connection with
38
any action or proceeding arising from the sale of the Shares or this Agreement
brought by the Company or the Underwriters.
SECTION 18. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Company, the
Selling Shareholders and their respective personal representatives and
successors. This Agreement and the terms and provisions hereof are for the sole
benefit of only those persons, except that (A) the representations, warranties,
indemnities and agreements of the Company and the Selling Shareholders contained
in this Agreement shall also be deemed to be for the benefit of the directors,
officers and employees of the Underwriters and each person or persons, if any,
who control any Underwriter within the meaning of Section 15 of the Securities
Act and (B) the indemnity agreement of the Underwriters contained in Section
10(c) of this Agreement shall be deemed to be for the benefit of the directors
of the Company, the officers of the Company who have signed the Registration
Statement and any person controlling the Company within the meaning of Section
16 of the Securities Act. Nothing in this Agreement is intended or shall be
construed to give any person, other than the persons referred to in this Section
18, any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
SECTION 19. Survival. The respective indemnities, representations,
warranties and agreements of the Company, the Selling Shareholders and the
Underwriters contained in this Agreement or made by or on behalf on them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Shares and shall remain in full force and effect, regardless of
any investigation made by or on behalf of any of them or any person controlling
any of them.
SECTION 20. Definition of the Terms "Business Day" and "Subsidiary". For
purposes of this Agreement, (a) "BUSINESS DAY" means each Monday, Tuesday,
Wednesday, Thursday or Friday that is not a day on which banking institutions in
New York are generally authorized or obligated by law or executive order to
close and (b) "SUBSIDIARY" has the meaning set forth in Rule 405 of the Rules
and Regulations.
SECTION 21. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 22. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original, but all such counterparts
shall together constitute one and the same instrument.
SECTION 23. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
39
If the foregoing correctly sets forth the agreement among the Company,
the Selling Shareholders and the Underwriters, please indicate your acceptance
in the space provided for that purpose below.
Very truly yours,
SAIFUN SEMICONDUCTORS LTD.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
THE SELLING STOCKHOLDERS NAMED IN
SCHEDULE 2 TO THIS AGREEMENT
By:
---------------------------------
Attorney-in-Fact
Name:
-------------------------------
Title:
------------------------------
Accepted:
XXXXXX BROTHERS INC.
CITIGROUP GLOBAL MARKETS INC.
DEUTSCHE BANK SECURITIES INC.
CIBC WORLD MARKETS CORP.
XXXXXXX XXXXX & COMPANY, L.L.C.
XXXXXXX XXXXX & ASSOCIATES, INC.
XX XXXXXXXXX + CO., LLC
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By XXXXXX BROTHERS INC.
By:
---------------------------------
Authorized Representative
SCHEDULE 1
Underwriters Number of Firm Shares
------------ ---------------------
Xxxxxx Brothers Inc. .................................. -
Citigroup Global Markets Inc. ......................... -
Deutsche Bank Securities Inc........................... -
CIBC World Markets Corp................................ -
Xxxxxxx Xxxxx & Company, L.L.C......................... -
Xxxxxxx Xxxxx & Associates, Inc........................ -
XX Xxxxxxxxx + Co., LLC................................ -
Total.................................................. -
SCHEDULE 2
PRINCIPAL SELLING SHAREHOLDER
Number of Firm Number of Option
Name and Address of Principal Selling Shareholders Shares Shares
-------------------------------------------------- -------------- ----------------
Xx. Xxxx Xxxxx
-------------- ----------------
Total
============== ================
NON-PRINCIPAL SELLING SHAREHOLDERS
Number of Firm Number of Option
Name and Address of Non-Principal Selling Shareholders Shares Shares
------------------------------------------------------ -------------- ----------------
-------------- ----------------
Total
============== ================
SCHEDULE 3
PERSONS DELIVERING LOCK-UP AGREEMENTS
[TO BE UPDATED]
Directors and Officers
Xx. Xxxx Eitan
Xxxxxxx Xxxx
Xxxxx Xxxx
Xx. Xxxxxx Xxxxxx
Xxxxx Xxxx
Xxxxxx Xxxxxx
Xx. Xxx Xxxxxx-Xxxxxx
Xxxx Xxxxxxxxxxx
Xxxx Xxxxx
Xxxx Xxxxxx
Xxxxxxx Xxxxxx
Dr. Xxxx Xxxxx
Shareholders
[TO COME]
EXHIBIT A
LOCK-UP AGREEMENT
_________, 2006
XXXXXX BROTHERS INC.
CITIGROUP GLOBAL MARKETS INC.
DEUTSCHE BANK SECURITIES INC.
CIBC WORLD MARKETS CORP.
XXXXXXX XXXXX & COMPANY, L.L.C.
XXXXXXX XXXXX & ASSOCIATES, INC.
XX XXXXXXXXX + CO., LLC
c/x Xxxxxx Brothers Inc.
000 0xx Xxxxxx
Xxx Xxxx, XX 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Brothers Inc. ("XXXXXX") proposes
to enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT") with
Saifun Semiconductors Ltd., a company organized under the laws of the State of
Israel (the "COMPANY"), and the Selling Shareholders named in Schedule 2 to the
Underwriting Agreement, providing for the public offering (the "PUBLIC
OFFERING") by the several Underwriters, including Xxxxxx (the "UNDERWRITERS"),
of Ordinary Shares, nominal value NIS 0.01 per share, of the Company (the
"ORDINARY SHARES"). In the event of any change in the identity of the
Underwriters, this agreement shall inure to the benefit of such Underwriters
that are party to the Underwriting Agreement whether or not such Underwriters
are listed above.
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Xxxxxx on behalf of the
Underwriters, it will not, during the period (the "LOCK-UP PERIOD") commencing
on the date hereof and ending 90 days (together with any extension thereto
pursuant to the terms hereof) after the date of the final prospectus relating to
the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any Ordinary Shares or any
securities convertible into or exercisable or exchangeable for Ordinary Shares
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Ordinary
Shares, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Ordinary Shares or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (a) the
sale of any Shares to the Underwriters pursuant to the Underwriting Agreement,
(b) transactions relating to Ordinary Shares or other securities acquired in
open market transactions after the completion of the Public Offering, (c) the
exercise of stock options granted pursuant to the Company's stock
option/incentive plans or otherwise outstanding on the date hereof, provided
that it shall apply to any Ordinary Shares issued upon such exercise, (d) the
establishment of any contract, instruction or plan that satisfies all of the
requirements of Rule 10b5-1(c)(1)(i)(B) under the Securities Exchange Act of
1934 (a "PLAN") provided that (i) no sales of Ordinary Shares or securities
convertible into, or exchangeable or exercisable for, Ordinary Shares, shall be
made pursuant to a Plan prior to the expiration of the Lock-up Period, and (ii)
there shall be no public announcement or notification (including pursuant to the
filing of Form 144 under the Securities Act of 1933) of a Plan nor of the
intention to sell Ordinary Shares, or securities convertible into or
exchangeable or exercisable for the Ordinary Shares pursuant to a Plan prior to
the expiration of the Lock-up Period, (e) transfers of Ordinary Shares or any
security convertible into Ordinary Shares as a bona fide gift or gifts (which
shall include, in the case of an individual, a gift occurring at death by will
or intestacy, and transfers during lifetime to a trust or other entity for bona
fide estate planning or tax purposes), (f) distributions of Ordinary Shares or
any security convertible into Ordinary Shares to limited partners or
shareholders of the undersigned or (g) transfers to an entity controlling,
controlled by or under common control with, the undersigned; provided that in
the case of any transfer or distribution pursuant to clause (e) and (f), each
donee, distributee or other transferee shall sign and deliver a letter
substantially in the form of this letter. In addition, the undersigned agrees
that, without the prior written consent of Xxxxxx on behalf of the Underwriters,
it will not, during the period commencing on the date hereof and ending 90 days
after the date of the Prospectus, make any demand for or exercise any right with
respect to, the registration of any Ordinary Shares or any security convertible
into or exercisable or exchangeable for Ordinary Shares. The undersigned also
agrees and consents to the entry of stop transfer instructions with the
Company's transfer agent and registrar against the transfer of the undersigned's
share of Ordinary Shares except in compliance with the foregoing restrictions.
Notwithstanding the foregoing, if (1) during the last 17 days of the 90-day
restricted period the Company issues an earnings release or material news or a
material event relating to the Company occurs; or (2) prior to the expiration of
the 90-day restricted period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of the
90-day period, then the Company shall notify the undersigned in writing that the
restrictions imposed by this letter shall continue to apply until the expiration
of the 18-day period beginning on the issuance of the earnings release or the
announcement of the material news or the occurrence of the material event,
unless Xxxxxx, on behalf of the Underwriters, waives such extension in writing.
For the purposes of this agreement, the issuance of notice in accordance with
Rule 101(e) of Regulation FD shall be deemed to satisfy the Company's obligation
to give notice in writing hereunder.
Prior to engaging in any transaction or taking any other action that is
subject to the terms set forth above, during the period from the date of this
Agreement to and including the 34th day following the expiration of the Lock-Up
Period, the undersigned will give notice thereof to the Company and will not
consummate such transaction or take any such action if, at any time, it has
received written notice from the Company, including in the manner set forth in
the paragraph above, setting forth that the Lock-Up Period has been extended (as
set forth above) until the expiration of the Lock-Up Period as so extended..
The undersigned understands that the Company and the Underwriters are
relying upon this agreement in proceeding toward consummation of the Public
Offering. The undersigned further understands that this agreement is irrevocable
and shall be binding upon the undersigned's heirs, legal representatives,
successors and assigns.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
The agreement set forth herein shall be terminated if (1) prior to the
execution of the Underwriting Agreement, the Company notifies you that it does
not intend to proceed with the Public Offering, (2) for any reason the
Underwriting Agreement shall be terminated prior to the closing of the Public
Offering in accordance with its terms, or (3) the closing of the Public Offering
does not occur by April 30, 2006.
Very truly yours,
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(Name)
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(Address)
