<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 23, 2000
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
RADVISION LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
ISRAEL 3576 NOT APPLICABLE
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
--------------------------
24 RAOUL WALLENBERG ST.
TEL AVIV 69719, ISRAEL
972-3-645-5220
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------------
RADVISION, INC.
575 CORPORATE DRIVE
MAHWAH, NEW JERSEY 07430
201-529-4300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
--------------------------
COPIES TO:
<TABLE>
<S> <C> <C>
DAVID P. STONE, ESQ. BRIAN B. MARGOLIS, ESQ.
WEIL, GOTSHAL & MANGES LLP BROBECK, PHLEGER & HARRISON LLP
767 FIFTH AVENUE 1633 BROADWAY
NEW YORK, NY 10153 NEW YORK, NY 10019
212-310-8000 YAEL LANGER, ADV. 212-581-1600
FACSIMILE: 212-310-8007 RADVISION LTD. FACSIMILE: 212-586-7878
24 RAOUL WALLENBERG STREET
ODED ERAN, ADV. TEL AVIV 69719, ISRAEL DAN SHAMGAR, ADV.
ASHOK J. CHANDRASEKHAR, ADV. 972-3-645-5292 MEITAR, LIQUORNIK, GEVA & CO.
GOLDFARB, LEVY, ERAN & CO. FACSIMILE: 972-3-649-8248 16 ABBA HILLEL SILVER ROAD
2 IBN GVIROL STREET RAMAT GAN 52506, ISRAEL
TEL AVIV 64077, ISRAEL 972-3-610-3100
972-3-608-9999 FACSIMILE: 972-3-610-3111
FACSIMILE: 972-3-608-9909
</TABLE>
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If the delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
OFFERING PRICE PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE PER ORDINARY AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) SHARE(2) PRICE(2) REGISTRATION FEE
<S> <C> <C> <C> <C>
ORDINARY SHARES, NIS 0.1 PER SHARE.......... 4,370,000 $13.00 $56,810,000 $14,998
</TABLE>
(1) Includes 570,000 Ordinary Shares subject to the Underwriters' over-allotment
option.
(2) Estimated solely for the purpose of calculating the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
SUBJECT TO COMPLETION, DATED FEBRUARY 23, 2000
PROSPECTUS
3,800,000 SHARES
[LOGO]
ORDINARY SHARES
------------------------------------------------------------
This is our initial public offering of ordinary shares. We are offering
3,800,000 ordinary shares. No public market currently exists for our ordinary
shares.
We propose to list the ordinary shares on the Nasdaq National Market under the
symbol RVSN. We anticipate the public offering price to be between $11.00 and
$13.00 per ordinary share.
INVESTING IN THE ORDINARY SHARES INVOLVES RISKS. RISK FACTORS BEGIN ON PAGE 4.
<TABLE>
<CAPTION>
Per Share Total
---------- -----------
<S> <C> <C>
Public Offering Price....................................... $ $
Underwriting Discount....................................... $ $
Proceeds to RADVision....................................... $ $
</TABLE>
We have granted the underwriters the right to purchase up to 570,000 additional
ordinary shares within 30 days to cover over-allotments.
Upon the sale of the ordinary shares in the initial public offering, we and some
of our existing shareholders will sell an additional 1,625,228 ordinary shares
to Siemens and an additional 1,000,000 ordinary shares to Samsung in a
concurrent private placement at the initial public offering price.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE ISRAEL SECURITIES AUTHORITY HAS GRANTED US AN EXEMPTION FROM ISRAEL'S
PROSPECTUS DELIVERY REQUIREMENTS APPLICABLE TO THIS OFFERING. YOU SHOULD NOT
INTERPRET THAT EXEMPTION AS VALIDATING THE MATTERS CONTAINED IN THIS PROSPECTUS
OR AS AN APPROVAL OF THEIR RELIABILITY OR ADEQUACY, NOR SHOULD YOU INTERPRET
THAT EXEMPTION AS AN EXPRESSION OF OPINION CONCERNING THE QUALITY OF THE
SECURITIES OFFERED BY THIS PROSPECTUS.
Lehman Brothers, on behalf of the underwriters, expects to deliver the ordinary
shares to purchasers on or about , 2000.
- --------------------------------------------------------------------------------
LEHMAN BROTHERS
SALOMON SMITH BARNEY
U.S. BANCORP PIPER JAFFRAY
FIDELITY CAPITAL MARKETS
A DIVISION OF NATIONAL FINANCIAL SERVICES CORPORATION
, 2000
<PAGE>
[Picture of packet network depicting deployment of
RADVision products and technology]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 1
Risk Factors.......................... 4
Forward-Looking Statements............ 13
Note to Investors..................... 13
Private Placement..................... 14
Use Of Proceeds....................... 14
Dividend Policy....................... 14
Capitalization........................ 15
Dilution.............................. 16
Selected Consolidated Financial
Data................................ 17
Management's Discussion And Analysis
Of Financial Condition And Results
Of Operations....................... 18
Business.............................. 30
Management............................ 45
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Principal Shareholders................ 55
Related Party Transactions............ 57
Shares Eligible For Future Sale....... 61
Description Of Share Capital.......... 63
Conditions In Israel.................. 66
Taxation And Government Programs...... 68
Underwriting.......................... 77
Legal Matters......................... 80
Experts............................... 80
Enforceability Of Civil Liabilities... 80
Where You Can Find Additional
Information......................... 81
Index To Consolidated Financial
Statements.......................... F-1
</TABLE>
Until , 2000, 25 days after the date of this prospectus, all
dealers that buy, sell or trade our ordinary shares, whether or not
participating in this offering, may be required to deliver a prospectus. This is
in addition to the dealers' obligation to deliver a prospectus when acting as
underwriters and when selling their unsold allotments or subscriptions.
i
<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED IN THIS PROSPECTUS. BEFORE YOU
DECIDE TO INVEST IN OUR ORDINARY SHARES, YOU SHOULD CAREFULLY READ THE ENTIRE
PROSPECTUS, INCLUDING THE SECTION ENTITLED "RISK FACTORS" AND OUR CONSOLIDATED
FINANCIAL STATEMENTS AND THE NOTES TO THOSE FINANCIAL STATEMENTS.
RADVISION
We are a leading designer, developer and supplier of products and technology
that enable real-time voice, video and data communications over packet networks,
including the Internet and other networks based on the Internet protocol or IP.
We have over 250 customers including Alcatel, Bosch, Cisco Systems, Madge
Networks, Nippon Telegraph & Telephone, Nortel Networks, Philips Electronics,
Shanghai Bell, Siemens and 3Com. Our products and technology are used by our
customers to develop systems that enable enterprises and service providers to
migrate their voice and video communications from traditional telephone networks
to next generation packet networks.
The use of packet networks for real-time voice, video and data
communications is expected to grow dramatically. This anticipated growth is due
to the inherent benefits of packet networks and the advent of new technologies
and standards that have enabled real-time communications over these networks.
ICM Global Intelligence, a market research firm, forecasts that revenues for
network equipment associated with voice-over-IP, or IP telephony, will grow from
$477 million in 1999 to $7.1 billion in 2004. Perey Research & Consulting, an
industry consulting firm, forecasts revenues for network equipment associated
with IP video communications to grow from $22 million in 1999 to more than
$643 million in 2003.
We are one of the few companies to offer customers IP communications
products and technology that support both real-time voice and video as well as
voice-only packet-based communications. Our products and technology consist of:
- RADVision gateways, which interface between traditional telephone networks
and IP networks;
- RADVision gatekeepers, which control, manage and monitor real-time voice,
video and data traffic over packet networks;
- RADVision IP conferencing bridges, which enable voice and multimedia
conferencing over packet networks among three or more participants; and
- RADVision software development kits, which provide the core technology
necessary to build interoperable, standards-compliant products,
applications and services for real-time voice and video communication over
packet networks.
We believe that we have established ourselves as a technology leader in
providing enabling technology and products for a broad range of standards-based
IP communications products and services. Our goal is to continue to be the
leading provider of innovative products and technology for real-time IP
communications. Our customers rely on our accumulated expertise with IP
communications standards and technology to significantly reduce their
development cycle and improve their time to market in the rapidly growing market
for IP-based voice and video communication. Our customers can deploy our
products as a complete network solution for real-time IP communications,
integrate our products into their own IP communications systems, or use our
technology to build their own standards-compliant IP communications products,
systems and applications for enterprises and service providers.
We were incorporated under the laws of the State of Israel in 1992 and began
operations in October 1992. Our principal executive offices are located at 24
Raoul Wallenberg St., Tel Aviv 69719, Israel and our telephone number is
011-972-3-645-5220.
1
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Ordinary shares offered in this offering..... 3,800,000 shares
Private placement
Ordinary shares offered by us to Siemens... 365,767 shares
Ordinary shares offered by us to Samsung... 225,055 shares
Ordinary shares to be outstanding after this
offering and the private placement......... 17,975,846 shares
Use of proceeds.............................. We expect to use the net proceeds from this
offering to finance the continued growth of
our business and for general corporate
purposes.
Proposed Nasdaq National Market symbol....... RVSN
</TABLE>
The number of ordinary shares referred to in the preceding table to be
outstanding after this offering excludes:
- 3,101,623 shares issuable upon the exercise of outstanding options under
our share option plans; and
- up to 61,900 additional ordinary shares reserved for issuance under our
share option plans.
PRIVATE PLACEMENT
Concurrently with this offering, Samsung Electro-Mechanics Co., Ltd. and
Samsung Venture Investment Corporation, affiliates of Samsung Corporation, and
Siemens Aktiengesellschaft have agreed to purchase an aggregate of 2,625,228 of
our ordinary shares at the initial public offering price in a private placement.
Of the 2,625,228 ordinary shares, we will sell 590,822 ordinary shares in the
private placement and the remaining 2,034,406 ordinary shares will be sold by
some of our existing shareholders, including our chairman of the board, our
chief executive officer and some of our other directors.
ABOUT THIS PROSPECTUS
Unless otherwise indicated, all information contained in this prospectus:
- gives effect to the sale of an aggregate of 590,822 ordinary shares by us
to Siemens and Samsung in a private placement concurrent with this
offering at the initial public offering price to be effected immediately
after the closing of this offering;
- assumes no exercise of the underwriters' option to purchase from us up to
570,000 additional ordinary shares to cover over-allotments;
- reflects the conversion of all our preferred shares into ordinary shares
on a 1-to-1 basis before the share recapitalization referred to below;
- reflects the conversion of 2,770 ordinary shares into deferred shares
before the share dividend referred to below;
- assumes an initial offering price of $12.00 per ordinary share, the
midpoint of the estimated initial public offering price range; and
- reflects a 211-for-1 share recapitalization of our ordinary shares,
following the conversion of our preferred shares into ordinary shares, as
the result of a share split and share dividend that will be effected
before this offering.
------------------------
We have a registered trademark for RADVision-Registered Trademark-. All
other trademarks and trade names appearing in this prospectus are owned by their
holders.
2
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues.............................................. $ 871 $ 1,491 $ 4,899 $ 8,894 $17,550
Gross profit.......................................... 301 721 3,689 7,482 14,697
Operating loss........................................ (1,497) (2,067) (1,062) (852) (2,801)
Net loss.............................................. (1,499) (2,025) (1,056) (829) (2,696)
Basic and diluted net loss per ordinary share......... $ (0.21) $ (0.21) $ (0.10) $ (0.08) $ (0.26)
Weighted average number of ordinary shares used in
computing basic and diluted net loss per ordinary
share............................................... 7,217 9,499 10,234 10,492 10,538
Pro forma basic and diluted net loss per ordinary
share............................................... $ (0.20)
Weighted average number of ordinary shares used in
computing pro forma basic and diluted net loss per
ordinary share...................................... 13,496
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
--------------------------
PRO FORMA
ACTUAL AS ADJUSTED
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 2,605 $43,013
Working capital............................................. 814 41,222
Total assets................................................ 13,261 53,669
Total bank debt, net of current maturities.................. 67 67
Shareholders' equity........................................ 3,481 43,889
</TABLE>
Pro forma basic and diluted net loss per ordinary share gives effect to the
conversion of all outstanding preferred shares into ordinary shares, which will
take place before the completion of this offering.
The pro forma as adjusted information included above in the consolidated
balance sheet data gives effect to:
- the conversion of our preferred shares;
- this offering of our ordinary shares; and
- the private placement by us of 590,822 ordinary shares to Siemens and
Samsung at the initial public offering price.
3
<PAGE>
RISK FACTORS
INVESTING IN OUR ORDINARY SHARES INVOLVES A HIGH DEGREE OF RISK. BEFORE
PURCHASING OUR ORDINARY SHARES, YOU SHOULD CAREFULLY CONSIDER THE RISKS
DESCRIBED BELOW IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS. OUR
BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION MAY BE MATERIALLY AND
ADVERSELY AFFECTED DUE TO ANY OF THE FOLLOWING RISKS. THE TRADING PRICE OF OUR
ORDINARY SHARES COULD DECLINE DUE TO ANY OF THESE RISKS, AND YOU COULD LOSE ALL
OR PART OF YOUR INVESTMENT.
RISKS RELATING TO OUR BUSINESS
WE HAVE A HISTORY OF LOSSES AND WE CANNOT ASSURE YOU THAT WE WILL OPERATE
PROFITABLY IN THE FUTURE.
We incurred significant losses in every fiscal year from our inception and
we may continue to incur losses in the future. We reported net losses of
$829,000 and $2,696,000 for 1998 and 1999. As of December 31, 1999, our
accumulated deficit was $9,277,000. We cannot assure you that we will operate
profitably in the future.
OUR QUARTERLY FINANCIAL PERFORMANCE IS LIKELY TO VARY SIGNIFICANTLY IN THE
FUTURE. OUR REVENUES AND OPERATING RESULTS IN ANY QUARTER MAY NOT BE INDICATIVE
OF OUR FUTURE PERFORMANCE AND IT MAY BE DIFFICULT FOR INVESTORS TO EVALUATE OUR
PROSPECTS.
Our quarterly revenues and operating results have varied significantly in
the past and are likely to continue to vary significantly in the future.
Fluctuations in our quarterly financial performance may result from the fact
that we may receive a small number of relatively large orders in any given
quarter. Because these orders generate disproportionately large revenues, our
revenues and the rate of growth of our revenues for that quarter may reach
levels that may not be sustained in subsequent quarters. In addition, some of
our products have lengthy sales cycles. For example, it typically takes from
three to twelve months after we first begin discussions with a prospective
customer before we receive an order from that customer. We also have a limited
order backlog, which makes revenues in any quarter substantially dependent upon
orders we deliver in that quarter. Because of these factors, our revenues and
operating results in any quarter may not meet market expectations or be
indicative of future performance and it may be difficult for investors to
evaluate our prospects.
UNLESS OUR REVENUES GROW IN EXCESS OF OUR INCREASING EXPENSES, WE WILL NOT BE
PROFITABLE.
We expect that our operating expenses will increase significantly in the
future, both to finance the planned expansion of our sales and marketing and
research and development activities and to fund the anticipated growth in our
revenues. However, our revenues may not grow apace or even continue at their
current level. If our revenues do not increase as anticipated or if expenses
increase at a greater pace than our revenues, we will not be profitable. Even if
we achieve profitability, we may not be able to sustain or increase
profitability on a quarterly or annual basis.
IF THE USE OF PACKET-BASED NETWORKS AS A MEDIUM FOR REAL-TIME VOICE, VIDEO AND
DATA COMMUNICATIONS DOES NOT CONTINUE TO GROW, THE DEMAND FOR OUR PRODUCTS AND
TECHNOLOGY WILL SLOW AND OUR REVENUES WILL DECLINE.
Our future success depends on the growth in the use of packet-based
networks, including the Internet and other IP networks, as a medium for
real-time voice, video and data communications. If the use of packet-based
networks does not expand, the demand for our products and technology will slow
and our revenues will decline. Market acceptance of packet-based networks as a
viable alternative to circuit-switched networks for the transmission of
real-time voice and video communications is not proven and may be inhibited by
concerns about quality of service and potentially inadequate development of the
necessary infrastructure.
4
<PAGE>
WE MUST DEVELOP NEW PRODUCTS AND TECHNOLOGY AND ENHANCEMENTS TO EXISTING
PRODUCTS AND TECHNOLOGY TO REMAIN COMPETITIVE. IF WE FAIL TO DO SO, WE MAY LOSE
MARKET SHARE TO OUR COMPETITORS AND OUR REVENUES MAY DECLINE.
The market for our products and technology is characterized by rapid
technological change, new and improved product introductions, changes in
customer requirements and evolving industry standards. Our future success will
depend to a substantial extent on our ability to:
- timely identify new market trends; and
- develop, introduce and support new and enhanced products and technology on
a successful and timely basis.
If we fail to develop and deploy new products and technology or product and
technology enhancements on a successful and timely basis, we may lose market
share to our competitors and our revenues may decline.
We are currently developing new products and technology and enhancements to
our existing products and technology. For example, we are currently developing
technology in the form of a software development kit designed to be compatible
with the new Media Gateway Control Protocol industry standard, commonly referred
to as MGCP, a standard complementary to the H.323 standard designed for larger
networks, as well as a gatekeeper software development kit designed for
telecommunications carriers. We expect to commercially introduce these software
development kits in 2000. We may not be successful in developing or introducing
to the market these or any other new products or technology.
INDUSTRY STANDARDS OTHER THAN THOSE WITH WHICH OUR PRODUCTS AND TECHNOLOGY
COMPLY MAY ATTAIN GREATER ACCEPTANCE THAN THE STANDARDS WITH WHICH OUR PRODUCTS
AND TECHNOLOGY COMPLY. IF ONE OR MORE ALTERNATIVE STANDARDS WERE TO GAIN GENERAL
ACCEPTANCE, SALES OF OUR PRODUCTS MIGHT SUFFER.
Currently, all of our revenues are derived from the sale of products and
technology which comply with the H.323 industry standard for real-time voice,
video and data communications over packet networks. If one or more alternative
standards, including, for example, Session Initiation Protocol, commonly
referred to as SIP, were to gain general acceptance, our sales of
H.323-compliant products and our anticipated sales of MGCP-compliant products
might suffer. Because of our concentration on developing H.323 and
MGCP-compliant products and technology, we might be at a disadvantage in
developing and marketing products and technology compliant with alternative
standards and our revenues might decline if alternative standards were to gain
general acceptance. In addition, we intend to invest substantial resources to
develop new products and technology to address industry standards that we expect
to be adopted and to address markets which we expect to develop. If these
expectations ultimately prove to be incorrect, our investments may be of little
or no value, even if we are successful in developing the new products or
technology.
COMPETITION IN THE MARKETS FOR OUR PRODUCTS AND TECHNOLOGY IS INTENSE. WE MAY
NOT BE ABLE TO COMPETE EFFECTIVELY IN THESE MARKETS AND WE MAY LOSE MARKET SHARE
TO OUR COMPETITORS.
The markets for our products and technology are highly competitive and we
expect competition to intensify in the future. We may not be able to compete
effectively in these markets and we may lose market share to our competitors.
The principal competitors in the market for our products currently include
Ezenia!, formerly known as Video-Server, White Pine Software and the in-house
developers employed by manufacturers of telecommunications equipment and
systems. Other companies, including Accord Networks, have announced products
that may compete with our products. The principal competitors in the market for
our technology, primarily sold in the form of software development kits,
currently include DataBeam, a subsidiary of Lotus/IBM; DynamicSoft; Elemedia, a
subsidiary of
5
<PAGE>
Lucent; and Trillium Digital Systems. Additional competitors may enter each of
our markets at any time. Moreover, our customers may seek to develop internally
the products that we currently sell to them and compete with us.
OUR SOFTWARE DEVELOPMENT KIT REVENUES WILL DECREASE IF OUR CUSTOMERS CHOOSE TO
USE SOURCE CODE WHICH IS AVAILABLE FOR FREE.
Both Vovida Networks, Inc. and OpenH323 offer H.323 source code for free. In
addition, Vovida offers MGCP and SIP source code for free. If our customers
choose to use the free source code offered by these organizations instead of
purchasing our technology, our revenues from the sale of our software
development kits will decline.
MOST OF OUR COMPETITORS HAVE GREATER RESOURCES THAN WE DO. THIS MAY LIMIT OUR
ABILITY TO COMPETE EFFECTIVELY WITH THEM AND DISCOURAGE CUSTOMERS FROM
PURCHASING OUR PRODUCTS AND TECHNOLOGY.
Most of our competitors have greater financial, personnel and other
resources than we do, which may limit our ability to compete effectively with
them. These competitors may be able to respond more quickly to new or emerging
technologies or changes in customer requirements. These competitors may also:
- benefit from greater economies of scale;
- offer more aggressive pricing; or
- devote greater resources to the promotion of their products.
Any of these advantages may discourage customers from purchasing our
products and technology. If we are unable to compete successfully against our
existing or potential competitors, our revenues and margins will decline.
OUR AGREEMENTS WITH OUR CUSTOMERS DO NOT HAVE MINIMUM PURCHASE REQUIREMENTS. IF
OUR CUSTOMERS DECREASE OR CEASE PURCHASING OUR PRODUCTS AND TECHNOLOGY, OUR
REVENUES WILL DECLINE.
Our agreements with our customers do not have minimum purchase requirements
nor do they require our customers to purchase any products from us. If any or
all of our customers cease to purchase or reduce their purchases of our products
and technology at any time, our revenues will decline. We cannot assure you that
our customers will not choose to independently develop for themselves, or
purchase from others, products and technology similar to our products and
technology. Moreover, if our customers do not successfully market and sell the
systems and products into which they incorporate our products and technology,
the demand of these customers for our products and technology will decline. Our
customers' sales of systems and products containing our products and technology
may be adversely affected by circumstances over which we have no control and
over which our customers may have little, if any, control.
WE ARE DEPENDENT UPON A LIMITED NUMBER OF SUPPLIERS OF KEY COMPONENTS. IF THESE
SUPPLIERS DELAY OR DISCONTINUE MANUFACTURE OF THESE COMPONENTS, WE MAY
EXPERIENCE DELAYS IN SHIPMENTS, INCREASED COSTS AND CANCELLATION OF ORDERS FOR
OUR PRODUCTS.
We currently obtain key components used in the manufacture of our products
from a single supplier or from a limited number of suppliers. We do not have
long-term supply contracts with our suppliers. Any delays in delivery of or
shortages in these components could interrupt and delay manufacturing of our
products and result in the cancellation of orders for our products. In addition,
these suppliers could discontinue the manufacture or supply of these components
at any time. We may not be able to identify and integrate alternative sources of
supply in a timely fashion or at all. Any
6
<PAGE>
transition to alternate suppliers may result in delays in shipment and increased
expenses and may limit our ability to deliver products to our customers.
Furthermore, if we are unable to identify an alternative source of supply, we
would have to modify our products to use a substitute component, which may cause
delays in shipments, increased design and manufacturing costs and increased
prices for our products.
Recently, we have experienced shortages in the supply of flash memory
components that we integrate into our gateway and IP conferencing bridges as a
result of an earthquake in Taiwan, the location of the manufacturer who supplies
our principal supplier of flash memory components. We cannot assure you that we
will be able to obtain sufficient supplies of flash memory components in a
timely manner or at all. If we cannot obtain sufficient supplies of these
components, the shipment of our products may be delayed and we may lose
customers. Even if sufficient supplies are available, we cannot assure you that
these supplies will be available to us on favorable terms.
WE INTEND TO MANUFACTURE AND MAINTAIN AN INVENTORY OF CUSTOMIZED PRODUCTS FOR
SOME CUSTOMERS WHO WILL HAVE NO OBLIGATION TO PURCHASE THESE PRODUCTS. IF THESE
CUSTOMERS FAIL TO PURCHASE THESE PRODUCTS, OUR FINANCIAL RESULTS MAY BE HARMED.
To satisfy the timing requirements of some of our larger customers, we
intend to manufacture and maintain an inventory of some of our products that we
will customize to the specifications of these customers. The size of this
inventory will be based upon the purchasing history and forecasts of these
customers, which we currently estimate to be approximately two months of sales
to these customers. These customers will have no obligation to purchase the
inventoried products at any time. If the customers for whom the inventoried
products are manufactured do not purchase them, we may be required to modify the
products for sale to others and we may be unable to find other purchasers. In
either case, the value of the products may be materially diminished which may
have a negative impact on our financial results.
UNDETECTED ERRORS MAY INCREASE OUR COSTS AND IMPAIR THE MARKET ACCEPTANCE OF OUR
PRODUCTS AND TECHNOLOGY.
Our products and technology have occasionally contained, and may in the
future contain, undetected errors when first introduced or when new versions are
released. Our customers integrate our products and technology into systems and
products that they develop themselves or acquire from other vendors. As a
result, when problems occur in equipment or a system into which our products or
technology have been incorporated, it may be difficult to identify the cause of
the problem. Regardless of the source of these errors, we must divert the
attention of our engineering personnel from our research and development efforts
to address the errors. We cannot assure you that we will not incur warranty or
repair costs, be subject to liability claims for damages related to product
errors or experience delays as a result of these errors in the future. Any
insurance policies that we may have may not provide sufficient protection should
a claim be asserted. Moreover, the occurrence of errors, whether caused by our
products or technology or the products of another vendor, may result in
significant customer relations problems and injury to our reputation and may
impair the market acceptance of our products and technology.
WE RELY ON THIRD PARTY TECHNOLOGY LICENSES. IF WE ARE UNABLE TO CONTINUE TO
LICENSE THIS TECHNOLOGY ON REASONABLE TERMS, WE MAY FACE DELAYS IN RELEASES OF
OUR PRODUCTS AND MAY BE REQUIRED TO REDUCE THE FUNCTIONALITY OF OUR PRODUCTS
DERIVED FROM THIS TECHNOLOGY.
We rely on technology that we license from third parties, including software
that is integrated with internally developed software and used in our products
to perform key functions. For example, we license T.120 data collaboration
software from Data Connection Limited and voice compression
7
<PAGE>
technology from Siemens. If we are unable to continue to license any of this
software on commercially reasonable terms, we will face delays in releases of
our products or will be required to reduce the functionality of our products
until equivalent technology can be identified, licensed or developed, and
integrated into our current products.
THIRD PARTIES MAY INFRINGE UPON OR MISAPPROPRIATE OUR INTELLECTUAL PROPERTY,
WHICH COULD IMPAIR OUR ABILITY TO COMPETE EFFECTIVELY AND NEGATIVELY AFFECT OUR
PROFITABILITY.
Our success depends upon the protection of our technology, trade secrets and
trademarks. Our profitability could suffer if third parties infringe upon our
intellectual property rights or misappropriate our technology and other assets.
To protect our rights to our intellectual property, we rely on a combination of
trade secret protection, trademark law, confidentiality agreements and other
contractual arrangements. The protective steps we have taken may be inadequate
to deter infringement or misappropriation. We may be unable to detect the
unauthorized use of our intellectual property or take appropriate steps to
enforce our intellectual property rights. Policing unauthorized use of our
products and technology is difficult. In addition, the laws of some foreign
countries in which we currently or may in the future sell our products do not
protect our proprietary rights to as great an extent as do the laws of the
United States. Failure to adequately protect or to promptly detect unauthorized
use of our intellectual property could devalue our proprietary content and
impair our ability to compete effectively. Further, defending our intellectual
property rights could result in the expenditure of significant financial and
managerial resources, whether or not the defense is successful.
OUR PRODUCTS MAY INFRINGE ON THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS, WHICH
COULD INCREASE OUR COSTS AND NEGATIVELY AFFECT OUR PROFITABILITY.
Third parties may assert against us infringement claims or claims that we
have infringed a patent, copyright, trademark or other proprietary right
belonging to them. For example, in 1998, Lucent alleged that some products
manufactured by us infringed specified Lucent patents. See "Business--Legal
Proceedings." Any infringement claim, even if not meritorious, could result in
the expenditure of significant financial and managerial resources and could
negatively affect our profitability.
OUR GROWTH WILL CONTINUE TO PLACE A SIGNIFICANT STRAIN ON OUR RESOURCES AND MUST
BE MANAGED EFFECTIVELY. IF WE ARE UNABLE TO MANAGE OUR EXPANDING OPERATIONS
EFFECTIVELY, OUR REVENUES MAY NOT INCREASE, OUR COST OF OPERATIONS MAY RISE AND
WE MAY REMAIN UNPROFITABLE.
Because of the growth in our revenues, we are actively expanding our
operations. If we are unable to manage our expanding operations effectively, our
revenues may not increase, our cost of operations may rise and we may remain
unprofitable. From January 1, 1998 through December 31, 1999, the number of our
employees increased from 42 to 192. This growth has placed, and will continue to
place, a significant strain on our managerial, operational and financial
resources. We cannot assure you that:
- we have made adequate allowance for the costs and risks associated with
this expansion; or
- our systems, procedures or controls will be adequate to support our
expanding operations.
Any delay in implementing, or transitioning to, new or enhanced systems,
procedures or controls may seriously harm our ability to forecast sales demand
accurately, manage our product inventory and record and report financial and
management information on a timely and accurate basis.
8
<PAGE>
OUR BUSINESS COULD BE ADVERSELY AFFECTED IF OUR SENIOR MANAGERS, INCLUDING OUR
CHIEF FINANCIAL OFFICER WHO RECENTLY JOINED US, DO NOT WORK TOGETHER EFFECTIVELY
AS A TEAM.
Our chief financial officer joined us in November 1999 and has not
previously worked with us. If our senior managers do not work together
effectively as a team to successfully manage our growth, our business could be
adversely affected.
WE ARE DEPENDENT ON OUR SENIOR MANAGEMENT, PARTICULARLY AMI AMIR, OUR CO-FOUNDER
AND CHIEF EXECUTIVE OFFICER. ANY LOSS OF THE SERVICES OF OUR SENIOR MANAGEMENT
WOULD NEGATIVELY AFFECT OUR BUSINESS.
Our future success depends to a large extent on the continued services of
our senior management and key personnel. In particular, we are highly dependent
on the services of Ami Amir, our co-founder and chief executive officer. We do
not carry key-man life insurance for any of our senior management. Any loss of
the services of Mr. Amir, other members of senior management or other key
personnel would negatively affect our business.
OUR FAILURE TO RETAIN AND ATTRACT PERSONNEL COULD HARM OUR BUSINESS, OPERATIONS
AND PRODUCT DEVELOPMENT EFFORTS.
Our products require sophisticated research and development, marketing and
sales, and technical customer support. Our success depends on our ability to
attract, train and retain qualified research and development, marketing and
sales and technical customer support personnel. We intend to increase
substantially the number of our employees who perform these functions.
Competition for personnel in all of these areas is intense and we may not be
able to hire sufficient personnel to achieve our goals or support the
anticipated growth in our business. The market for the highly-trained personnel
we require is very competitive, due to the limited number of people available
with the necessary technical skills and understanding of our products and
technology. If we fail to attract and retain qualified personnel, our business,
operations and product development efforts would suffer.
OUR NON-COMPETITION AGREEMENTS WITH OUR EMPLOYEES MAY NOT BE ENFORCEABLE. IF ANY
OF THESE EMPLOYEES LEAVES US AND JOINS A COMPETITOR, OUR COMPETITOR COULD
BENEFIT FROM THE EXPERTISE OUR FORMER EMPLOYEE GAINED WHILE WORKING FOR US.
We currently have non-competition agreements with all of our employees in
Israel. These agreements prohibit our employees, if they cease to work for us,
from directly competing with us or working for our competitors. Under current
U.S. and Israeli law, we may not be able to enforce these non-competition
agreements. If we are unable to enforce any of these agreements, our competitors
that employ our former employees could benefit from the expertise our former
employees gained while working for us. In addition, we do not have
non-competition agreements with our employees outside of Israel.
GOVERNMENT REGULATION COULD DELAY OR PREVENT PRODUCT OFFERINGS, RESULTING IN
DECREASED REVENUES.
Our products are designed to operate with local telephone systems throughout
the world and therefore must comply with the regulations of the Federal
Communications Commission and other regulations affecting the transmission of
voice, video and data over telecommunications and other media. Each time we
introduce a new product, we are required to obtain regulatory approval in the
countries in which it is offered. In addition, we must periodically obtain
renewals of the regulatory approvals for the use of our products in countries
where we have already obtained approval. We cannot assure you that regulatory
approval for our current products will be renewed or that regulatory approval
for future products will be obtained. If we do not obtain the necessary
approvals and renewals, we may be required to delay the sales of our products in
those countries until approval for use is granted or renewed. This could result
in decreased revenues.
9
<PAGE>
RISKS RELATING TO THIS OFFERING
MESSRS. YEHUDA AND ZOHAR ZISAPEL WILL HAVE SIGNIFICANT INFLUENCE OVER MATTERS
REQUIRING SHAREHOLDER APPROVAL, WHICH COULD DELAY OR PREVENT A CHANGE OF
CONTROL.
After this offering, Messrs. Yehuda and Zohar Zisapel, who are brothers,
will beneficially own, directly or through entities they control, approximately
22.0% of the ordinary shares then outstanding. In addition, in connection with
the private placement, Messrs. Yehuda and Zohar Zisapel, Ami Amir, Siemens and
some of our other existing shareholders, who will collectively own approximately
47.6% of the ordinary shares after this offering and the private placement, have
agreed to enter into a voting agreement under which they will act together in
the nomination and election of directors. As a result, these shareholders may
control the outcome of various actions that require shareholder approval. For
example, they may be able to elect most of our directors, delay or prevent a
transaction in which shareholders might receive a premium over the prevailing
market price for their shares or prevent changes in control or management.
A TOTAL OF 14,175,846, OR 78.9%, OF OUR OUTSTANDING ORDINARY SHARES FOLLOWING
THIS OFFERING AND THE CONCURRENT PRIVATE PLACEMENT ARE RESTRICTED FROM IMMEDIATE
RESALE, BUT MAY BE SOLD INTO THE MARKET IN THE NEAR FUTURE. THIS COULD CAUSE THE
MARKET PRICE OF OUR ORDINARY SHARES TO DROP SIGNIFICANTLY, EVEN IF OUR BUSINESS
IS DOING WELL.
After this offering and the concurrent private placement, we will have
17,975,846 ordinary shares outstanding. This includes the 3,800,000 ordinary
shares we are selling in this offering, which may be resold in the public market
immediately after this offering. The remaining 14,175,846 ordinary shares,
representing approximately 78.9% of our total outstanding ordinary shares
following this offering, will become available for resale in the public market
as shown in the chart below. As restrictions on resale end, the market price of
our ordinary shares could drop significantly if the holders of these restricted
shares sell them or are perceived by the market as intending to sell them.
<TABLE>
<CAPTION>
NUMBER OF SHARES/
PERCENTAGE OF TOTAL
OUTSTANDING DATE OF AVAILABILITY FOR RESALE INTO PUBLIC MARKET
- ------------------- ------------------------------------------------------------
<C> <S>
567,566 / 3.2% 90 days after the date of this prospectus due to the
requirements of the U.S. securities laws.
10,824,802 / 60.2% 180 days after the date of this prospectus, due to an
agreement these shareholders have with the underwriters.
However, the underwriters may waive this restriction and
allow these shareholders to sell their shares at any time.
2,625,228 / 14.6% 270 days after the date of this prospectus, due to an
agreement these shareholders will enter into with us in
connection with the private placement.
158,250 / 0.9% More than 270 days after the date of this prospectus due to
the requirements of the U.S. securities laws.
</TABLE>
OUR MANAGEMENT WILL HAVE BROAD DISCRETION CONCERNING THE USE OF THE PROCEEDS OF
THIS OFFERING, AND IF THE PROCEEDS ARE NOT APPLIED EFFECTIVELY, OUR RESULTS OF
OPERATIONS MAY SUFFER.
Our management will have broad discretion concerning the use of the proceeds
of this offering. Investors will be relying on the judgment of management for
the application of the proceeds of this offering. The results and the
effectiveness of the application of the proceeds are uncertain and if the
proceeds are not applied effectively, our results of operations may suffer.
YOU WILL EXPERIENCE IMMEDIATE AND SIGNIFICANT DILUTION OF BOOK VALUE PER SHARE
FROM THE PRICE YOU PAY FOR ANY ORDINARY SHARES YOU PURCHASE IN THIS OFFERING.
The initial public offering price of our ordinary shares will be
substantially higher than the net tangible book value per ordinary share of the
outstanding ordinary shares immediately after this
10
<PAGE>
offering. Assuming an initial public offering price of $12.00 per ordinary
share, you will incur immediate dilution of $9.16 in the net tangible book value
per ordinary share from the price you pay for any ordinary shares you purchase
in this offering.
IF WE ARE CHARACTERIZED AS A PASSIVE FOREIGN INVESTMENT COMPANY, OUR U.S.
SHAREHOLDERS MAY SUFFER ADVERSE TAX CONSEQUENCES, INCLUDING HIGHER TAX RATES AND
POTENTIALLY PUNITIVE INTEREST CHARGES ON THE PROCEEDS OF SHARE SALES.
Generally, if for any taxable year 75% or more of our gross income is
passive income, or at least 50% of our assets are held for the production of, or
produce, passive income, we may be characterized as a passive foreign investment
company for U.S. federal income tax purposes. If we are characterized as a
passive foreign investment company, our U.S. shareholders may suffer adverse tax
consequences, including having gains realized on the sale of our shares be
treated as ordinary income, rather than capital gain income, and having
potentially punitive interest charges apply to the proceeds of share sales. For
purposes of determining if we are a passive foreign investment company, the
proceeds of this offering will constitute a passive asset and the income
generated by the proceeds will, until we employ it in the course of our
business, constitute passive income. Therefore, the timeliness of our use of the
proceeds of this offering may affect our status as a passive foreign investment
company.
RISKS RELATING TO OUR LOCATION IN ISRAEL
CONDITIONS IN ISRAEL AFFECT OUR OPERATIONS AND MAY LIMIT OUR ABILITY TO PRODUCE
AND SELL OUR PRODUCTS, WHICH COULD DECREASE OUR REVENUES.
We are incorporated under Israeli law and our principal offices, our
manufacturing facilities and our research and development facilities are located
in Israel. Political, economic and military conditions in Israel directly affect
our operations. Since the establishment of the State of Israel in 1948, a number
of armed conflicts have taken place between Israel and its Arab neighbors and a
state of hostility, varying in degree and intensity, has led to security and
economic problems for Israel. We could be adversely affected by any major
hostilities involving Israel, the interruption or curtailment of trade between
Israel and its trading partners, a significant increase in inflation, or a
significant downturn in the economic or financial condition of Israel. Despite
the progress towards peace between Israel and its Arab neighbors, the future of
these peace efforts is uncertain. Several Arab countries still restrict business
with Israeli companies. We could be adversely affected by restrictive laws or
policies directed towards Israel or Israeli businesses.
BECAUSE ALL OF OUR REVENUES ARE GENERATED IN U.S. DOLLARS OR ARE LINKED TO THE
U.S. DOLLAR WHILE A PORTION OF OUR EXPENSES ARE INCURRED IN NEW ISRAELI SHEKELS,
OUR RESULTS OF OPERATIONS WOULD BE ADVERSELY AFFECTED IF INFLATION IN ISRAEL IS
NOT OFFSET ON A TIMELY BASIS BY A DEVALUATION OF THE NEW ISRAELI SHEKEL AGAINST
THE U.S. DOLLAR.
All of our revenues are in dollars or are linked to the dollar, while a
portion of our expenses, principally salaries and the related personnel
expenses, are in new Israeli shekels, or NIS. As a result, we are exposed to the
risk that the rate of inflation in Israel will exceed the rate of devaluation of
the NIS in relation to the dollar or that the timing of this devaluation lags
behind inflation in Israel. This would have the effect of increasing the dollar
cost of our operations. In 1997 and 1998, the rate of devaluation of the NIS
against the dollar exceeded the rate of inflation, a reversal from prior years.
However, in 1999, while the rate of inflation was low, there was a devaluation
of the dollar against the NIS. We cannot predict any future trends in the rate
of inflation in Israel or the rate of devaluation of the NIS against the dollar.
If the dollar cost of our operations in Israel increases, our dollar-measured
results of operations will be adversely affected.
11
<PAGE>
THE GOVERNMENT GRANTS WE HAVE RECEIVED FOR RESEARCH AND DEVELOPMENT EXPENDITURES
RESTRICT OUR ABILITY TO MANUFACTURE PRODUCTS AND TRANSFER TECHNOLOGIES OUTSIDE
OF ISRAEL AND REQUIRE US TO SATISFY SPECIFIED CONDITIONS THAT WE MAY FAIL TO
SATISFY. IF WE FAIL TO SATISFY THESE CONDITIONS, WE MAY BE REQUIRED TO REFUND
GRANTS PREVIOUSLY RECEIVED.
We currently receive grants from the government of Israel through the Office
of the Chief Scientist of the Ministry of Industry and Trade, commonly referred
to as the Chief Scientist, for the financing of a significant portion of our
research and development expenditures in Israel. In 1998 and 1999, we received
grants from the Chief Scientist totaling approximately $1.1 million and
$1.1 million, representing 26.5% and 15.0% of our total research and development
expenditures in these periods. The terms of the Chief Scientist grants restrict
our ability to manufacture products, or transfer technologies, developed using
Chief Scientist grants outside of Israel. This restriction may impair our
ability to enter into original equipment manufacturer agreements or similar
arrangements for those products or technologies. In the past, we obtained
approvals from the Chief Scientist for the licensing of source code of some of
our products and we expect that similar approvals will be required in the
future. We cannot assure you that the approvals of the Chief Scientist will be
obtained on terms that are acceptable to us. In addition, if we fail to comply
with any of the conditions imposed by the Chief Scientist, we may be required to
refund any payments previously received, together with interest and penalties.
THE TAX BENEFITS THAT WE CURRENTLY RECEIVE FROM OUR APPROVED ENTERPRISE PROGRAMS
REQUIRE US TO SATISFY SPECIFIED CONDITIONS. IF WE FAIL TO SATISFY THESE
CONDITIONS, WE MAY BE REQUIRED TO PAY ADDITIONAL TAXES AND WOULD LIKELY BE
DENIED THESE BENEFITS IN THE FUTURE.
The Investment Center of the Ministry of Industry and Trade has granted
approved enterprise status to several investment programs at our manufacturing
facility. The portion of our income derived from these approved enterprise
programs commencing when we begin to generate net income from these programs
will be exempt from tax for a period of two years and will be subject to a
reduced tax for an additional five to eight years, depending on the percentage
of our share capital held by non-Israelis. The benefits available to an approved
enterprise program are dependent upon the fulfillment of conditions stipulated
in applicable law and in the certificate of approval. If we fail to comply with
these conditions, in whole or in part, we may be required to pay additional
taxes for the period in which we benefited from the tax exemption or reduced tax
rates and would likely be denied these benefits in the future.
THE TAX BENEFITS AVAILABLE TO APPROVED ENTERPRISE PROGRAMS MAY BE REDUCED OR
ELIMINATED IN THE FUTURE. THIS WOULD LIKELY INCREASE OUR TAXES.
From time to time, the government of Israel has discussed reducing or
eliminating the benefits available to approved enterprise programs. We cannot
assure you that these tax benefits will be continued in the future at their
current levels or at all. If these tax benefits were reduced or eliminated, our
taxes would likely increase.
IT MAY BE DIFFICULT TO ENFORCE A U.S. JUDGMENT AGAINST US, OUR OFFICERS AND
DIRECTORS AND THE ISRAELI EXPERTS NAMED IN THIS PROSPECTUS OR TO ASSERT U.S.
SECURITIES LAWS CLAIMS IN ISRAEL OR SERVE PROCESS ON SUBSTANTIALLY ALL OF OUR
OFFICERS AND DIRECTORS AND THESE EXPERTS.
We are incorporated in Israel. Substantially all of our executive officers
and directors and the Israeli experts named in this prospectus are nonresidents
of the United States, and a substantial portion of our assets and the assets of
these persons are located outside the United States. Therefore, it may be
difficult for an investor, or any other person or entity, to enforce a U.S.
court judgment based upon the civil liability provisions of the U.S. federal
securities laws in an Israeli court against us or any of those persons or to
effect service of process upon these persons in the United States. Additionally,
it may be difficult for an investor, or any other person or entity, to enforce
civil liabilities under U.S. federal securities laws in original actions
instituted in Israel. See "Enforceability of Civil Liabilities."
12
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that address our
strategy; the anticipated development of our products and technology; our
anticipated use of proceeds; our projected capital expenditures and liquidity;
our development of additional revenue sources; the market acceptance of our
products and technology; and our technological advancement. These statements may
be found in the sections of this prospectus entitled "Prospectus Summary," "Risk
Factors," "Use of Proceeds," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business" and in this prospectus
generally, including the section of this prospectus entitled "Business--Industry
Background" which contains information obtained from independent industry
sources. Actual results could differ materially from those anticipated in these
forward-looking statements as a result of various factors, including all the
risks discussed in "Risk Factors" and elsewhere in this prospectus.
In addition, statements that use the terms believe, do not believe, expect,
plan, intend, estimate, anticipate and similar expressions are intended to
identify forward-looking statements. All forward-looking statements in this
prospectus reflect our current views about future events and are based on
assumptions and are subject to risks and uncertainties. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update or revise any forward-looking statements.
NOTE TO INVESTORS
Investors may rely only on the information contained in this prospectus. We
and the underwriters have not authorized anyone to provide any different or
additional information. This prospectus is not an offer to sell or a
solicitation of an offer to buy ordinary shares in any jurisdiction where it is
unlawful. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of ordinary shares.
13
<PAGE>
PRIVATE PLACEMENT
Siemens and Samsung have agreed to purchase in a private placement
concurrently with this offering an aggregate of 2,625,228 ordinary shares at the
initial public offering price from us and some of our existing shareholders,
including our chairman of the board, our chief executive officer and some of our
other directors. Each shareholder participating in the private placement will
sell approximately 19.3% of its holdings. Siemens and Samsung have represented
that they will be purchasing our ordinary shares for investment and not with a
view to resale, and have agreed to a 270-day lock-up following the closing of
this offering. The number of shares they will purchase from us and our existing
shareholders and the aggregate purchase price they will pay to us and our
existing shareholders are as follows:
<TABLE>
<CAPTION>
NUMBER OF ORDINARY SHARES AGGREGATE PURCHASE PRICE
--------------------------------- ---------------------------------
PRICE PER PURCHASED PURCHASED FROM OUR PAID TO OUR EXISTING
SHARE FROM US EXISTING SHAREHOLDERS PAID TO US SHAREHOLDERS
--------- --------- --------------------- ---------- --------------------
<S> <C> <C> <C> <C> <C>
Siemens.............. $12.00 365,767 1,259,461 $4,389,204 $15,113,532
Samsung.............. 12.00 225,055 774,945 2,700,660 9,299,340
------- --------- ---------- -----------
590,822 2,034,406 $7,089,864 $24,412,872
======= ========= ========== ===========
</TABLE>
Concurrent with Siemen's investment in us, we will enter into a licensing
agreement with Siemens to license our technology to Siemens worldwide. In
addition, we have entered into a letter of intent with Samsung to jointly
develop voice over IP products and solutions. We believe that the private
placement and the associated business agreements will enhance our ongoing
relationships with these key strategic customers and will help us sustain our
market leadership position.
USE OF PROCEEDS
We estimate that we will receive net proceeds of approximately
$47.5 million from:
- the sale by us of 3,800,000 ordinary shares in this offering, after
deducting the underwriting discount and the estimated offering expenses;
and
- the sale by us of 590,822 ordinary shares to Siemens and Samsung in the
concurrent private placement at the initial public offering price.
We expect to use the net proceeds to finance the continued growth of our
business and for general corporate purposes. Our principal purposes for
conducting this offering are to:
- provide working capital for general corporate purposes;
- fund possible acquisitions of additional businesses and technologies or
investments in public or private companies in related businesses or the
establishment of joint ventures that are complementary to our current or
future business; and
- provide a public market for our ordinary shares, which would facilitate
our issuing equity securities as consideration for acquisitions and
incentive compensation to employees.
We have no plans or commitments for any specific acquisition, investment or
joint venture and we cannot be sure that we will complete any acquisition,
investment or joint venture.
Pending use of the net proceeds as described above, we intend to invest the
net proceeds in short-term, interest-bearing, investment-grade instruments, or
bank deposits with interest and principal linked to the U.S. dollar or the
Israel consumer price index, or deposit the net proceeds in U.S. dollar bank
accounts in Israel or outside of Israel.
DIVIDEND POLICY
We have never declared or paid any cash dividend on our ordinary shares and
we do not anticipate paying any cash dividends on our ordinary shares in the
future. We currently intend to retain all future earnings to finance our
operations and to expand our business.
14
<PAGE>
CAPITALIZATION
The following table presents our capitalization as of December 31, 1999:
- on an actual basis;
- on a pro forma basis to give effect to the conversion of all outstanding
preferred shares into ordinary shares, which will take place before this
offering; and
- on a pro forma as adjusted basis to give effect to:
- the conversion of preferred shares referred to above;
- the sale by us of 3,800,000 ordinary shares in this offering at the
initial public offering price and the receipt by us of the estimated
net proceeds of this offering, after deducting the underwriting
discount and estimated offering expenses payable by us; and
- the sale by us of 590,822 ordinary shares in the concurrent private
placement to Siemens and Samsung at the initial public offering price
and the receipt by us of the proceeds of the private placement.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
---------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- -------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Long term debt, excluding current maturities................ $ 67 $ 67 $ 67
Shareholders' equity:
Preferred shares:
Authorized actual--25,000 shares; authorized pro forma
and pro forma as adjusted--none; issued and
outstanding actual--14,015 shares; issued and
outstanding pro forma and pro forma as
adjusted--none........................................ 4 -- --
Ordinary shares:
Authorized actual--12,332,317 shares; authorized pro
forma and pro forma as adjusted--25,000,000 shares;
issued and outstanding actual--10,627,859 shares;
issued and outstanding pro forma--13,585,024 shares;
issued and outstanding pro forma as
adjusted--17,975,846 shares........................... 17 21 124
Additional paid-in capital................................ 13,789 13,789 61,184
Deferred compensation..................................... (1,052) (1,052) (1,052)
Accumulated deficit....................................... (9,277) (9,277) (9,277)
------ ------ -------
Total shareholders' equity.............................. 3,481 3,481 50,979
------ ------ -------
Total capitalization.................................. $3,548 $3,548 $51,046
====== ====== =======
</TABLE>
The actual, pro forma and pro forma as adjusted information presented in the
table excludes:
- 3,101,623 ordinary shares issuable upon exercise of options outstanding
under our share option plans as of the date of this prospectus at a
weighted average exercise price of $2.83 per ordinary share; and
- up to 61,900 additional ordinary shares reserved for issuance under our
share option plans.
The number of preferred shares in the above table are presented on an actual
basis without giving effect to the 211-for-1 share recapitalization because the
preferred shares will be converted into ordinary shares before the share
recapitalization is effected.
The number of ordinary shares in the above table are presented on an actual
basis after giving effect to the conversion of 2,770 ordinary shares into
deferred shares which will occur before completion of this offering. The 2,770
deferred shares reflect the 10-for-1 stock split that will be effected before
this offering but do not reflect the 20.1 share dividend which will not be
distributed to holders of deferred shares.
Immediately before the completion of this offering, we will increase our
authorized share capital to 25,000,000 ordinary shares.
15
<PAGE>
DILUTION
Our pro forma consolidated net tangible book value as of December 31, 1999
was approximately $3.5 million, or $0.26 per ordinary share. We have calculated
our pro forma consolidated net tangible book value per share by:
- subtracting our consolidated liabilities from our consolidated tangible
assets; and
- dividing the difference by the number of ordinary shares outstanding on a
pro forma basis after giving effect to the conversion of all outstanding
preferred shares into ordinary shares and the share recapitalization that
will be effected before this offering.
After giving effect to:
- the sale by us of 3,800,000 ordinary shares in this offering at the
initial public offering price and receipt by us of the estimated net
proceeds of this offering, after deducting the underwriting discount and
estimated offering expenses; and
- the sale by us of 590,822 ordinary shares in the aggregate to Siemens and
Samsung in the concurrent private placement at the initial public offering
price and receipt by us of the proceeds of the private placement,
our pro forma consolidated net tangible book value as of December 31, 1999 would
have been approximately $51.0 million, or $2.84 per ordinary share. This
represents an immediate increase in pro forma consolidated net tangible book
value of $2.58 per ordinary share to existing shareholders and an immediate
dilution of $9.16 per ordinary share to new investors purchasing ordinary shares
in this offering.
Dilution per share represents the difference between the price per share to
be paid by new investors for the ordinary shares sold in this offering and the
pro forma consolidated net tangible book value per share immediately after this
offering and the private placement. The following table illustrates this per
share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $12.00
Pro forma consolidated net tangible book value per share
before this offering.................................... $0.26
Increase in pro forma consolidated net tangible book value
per share attributable to new investors in this
offering................................................ 2.23
Increase in pro forma consolidated net tangible book value
per share attributable to the private placement to
Siemens and Samsung..................................... 0.35
-----
Pro forma consolidated net tangible book value per share
after this offering and the private placement............. 2.84
------
Dilution per share to new investors......................... $ 9.16
======
</TABLE>
The following table presents the differences between the total consideration
paid to us and the average price per share paid by existing shareholders, by the
investors in the private placement and by new investors purchasing ordinary
shares in this offering:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- -------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders...................... 13,585,024 75.6% $12,180,000 18.8% $ 0.89
Siemens and Samsung........................ 590,822 3.3% 7,089,864 10.9% 12.00
New investors.............................. 3,800,000 21.1% 45,600,000 70.3% 12.00
---------- ----- ----------- -----
Total.................................... 17,975,846 100.0% $64,869,864 100.0%
========== ===== =========== =====
</TABLE>
The above table does not reflect:
- 3,101,623 ordinary shares issuable upon exercise of options outstanding
under our share option plans; and
- up to 61,900 additional ordinary shares reserved for issuance under these
plans.
To the extent outstanding options are exercised, there will be further
dilution to new investors.
16
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
We have derived the following selected consolidated financial data from our
consolidated financial statements.
The following data were derived from our audited consolidated financial
statements presented elsewhere in this prospectus:
- consolidated statement of operations data for the years ended December 31,
1997, 1998 and 1999; and
- consolidated balance sheet data as of December 31, 1998 and 1999.
The following data were derived from our audited consolidated financial
statements not included in this prospectus:
- consolidated statement of operations data for the years ended December 31,
1995 and 1996; and
- consolidated balance sheet data as of December 31, 1995, 1996, 1997.
Our consolidated financial statements have been prepared in U.S. dollars and
according to generally accepted accounting principles in the United States.
You should read the selected consolidated financial data together with the
section of this prospectus entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our consolidated financial
statements included elsewhere in this prospectus.
We have calculated pro forma basic and diluted net loss per share assuming
the conversion of all outstanding preferred shares into ordinary shares. Please
see notes 2 and 17 of the notes to our consolidated financial statements for an
explanation of the number of shares used in computing per share data.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues.................................................... $ 871 $ 1,491 $ 4,899 $8,894 $17,550
Cost of revenues............................................ 570 770 1,211 1,412 2,853
------- ------- ------- ------ -------
Gross profit................................................ 301 721 3,689 7,482 14,697
------- ------- ------- ------ -------
Operating expenses:
Research and development.................................. 1,331 1,775 2,706 4,292 7,309
Less participation by the Chief Scientist................. 438 497 890 1,140 1,097
------- ------- ------- ------ -------
Research and development, net............................. 893 1,278 1,816 3,152 6,212
Marketing and selling, net................................ 660 1,260 2,364 4,402 9,406
General and administrative................................ 242 250 494 664 1,403
Deferred compensation..................................... -- -- 77 116 477
------- ------- ------- ------ -------
Total operating expenses.................................... 1,795 2,788 4,751 8,334 17,498
------- ------- ------- ------ -------
Operating loss.............................................. (1,494) (2,067) (1,062) (852) (2,801)
Financing income (expenses), net............................ (5) 42 6 23 105
------- ------- ------- ------ -------
Net loss.................................................... $(1,499) $(2,025) $(1,056) $ (829) $(2,696)
======= ======= ======= ====== =======
Basic and diluted net loss per ordinary share............... $ (0.21) $ (0.21) $ (0.10) $(0.08) $ (0.26)
Weighted average number of ordinary shares used in computing
basic and diluted net loss per ordinary share............. 7,217 9,499 10,234 10,492 10,538
Pro forma basic and diluted net loss per ordinary share..... $ (0.20)
Weighted average number of ordinary shares used in computing
pro forma basic and diluted net loss per ordinary share... 13,496
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
----------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 481 $1,349 $ 435 $3,305 $ 2,605
Working capital............................................. 2,088 1,071 873 4,318 814
Total assets................................................ 3,006 3,073 3,704 9,371 13,261
Total bank debt, less current maturities.................... -- 23 106 130 67
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Shareholders' equity........................................ 2,361 1,453 1,363 5,450 3,481
</TABLE>
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
We are a leading designer, developer and supplier of products and technology
that enable real-time voice, video and data communications over packet networks,
including the Internet and other IP networks.
We were incorporated in January 1992, commenced operations in October 1992
and commenced sales of our products in the fourth quarter of 1994. Before that
time, our operations consisted primarily of research and development and
recruiting personnel. In 1995, we established a wholly owned subsidiary in the
United States, RADVision Inc., which conducts our sales and marketing activities
in North America.
All of our revenues are generated in U.S. dollars or are linked to the
dollar and a majority of our expenses are incurred in dollars. Consequently, we
use the dollar as our functional currency. Transactions and balances in other
currencies are converted into dollars according to the principles in Financial
Accounting Standards Board Statement No. 52. Gains and losses arising from
conversion are recorded as interest income or expense, as applicable. Our
consolidated financial statements are prepared in dollars and according to
generally accepted accounting principles in the United States.
REVENUES. We generate revenues from the sale of our products and our
technology, which is primarily sold in the form of software development kits, as
well as related maintenance and support services. We generally recognize
revenues from the sale of our products and technology upon shipment and when
collection is probable. Revenues generated from maintenance and support services
are deferred and recognized ratably over the period of the term of service. We
price our products on a per unit basis, and grant discounts based upon unit
volumes. We price our software development kits on the basis of a fixed-fee plus
royalties from products developed using the software development kits. We expect
our revenues from the sale of both our products and our technology to increase,
though we expect that the rate of growth of our revenues from the sale of our
products will exceed the rate of growth of our revenues from the sale of our
technology.
We sell our products and technology through direct sales and various
indirect distribution channels in North America, Europe, the Far East and
Israel. For the year ended December 31, 1999, approximately 52% of our revenues
were generated in the United States.
COST OF REVENUES. Our cost of revenues consists of component and material
costs, direct labor costs, subcontractor fees, overhead related to manufacturing
and depreciation of manufacturing equipment. Our gross margin is affected by the
selling prices for our products as well as the proportion of our revenues
generated from the sale of our technology. Our revenues from the sale of our
technology have higher gross margins than our revenues from the sale of our
products and we offer greater discounts to our high volume OEM customers. As the
relative proportion of our revenues from our products increases as a percentage
of our total revenues and we generate a higher percentage of our revenues from
sales to our high volume OEM customers, our gross margins will decline.
RESEARCH AND DEVELOPMENT EXPENSES, NET. Our research and development
expenses consist primarily of compensation and related costs for research and
development personnel, expenses for testing facilities and depreciation of
equipment. All of our research and development costs are expensed as incurred.
Research and development expenses are presented net of payments received from
the Chief Scientist. We do not currently intend to apply for a material amount
of grants from the Chief Scientist in the future. However, we expect to continue
to make substantial investments in research and development.
18
<PAGE>
MARKETING AND SELLING EXPENSES, NET. Our marketing and selling expenses
consist primarily of compensation and related costs for sales personnel,
marketing personnel, sales commissions, marketing programs, public relations,
promotional materials, travel expenses, trade show exhibit expenses and
royalties paid to the government of Israel. Marketing and selling expenses are
presented net of marketing grants received from the government of Israel.
GENERAL AND ADMINISTRATIVE EXPENSES. Our general and administrative
expenses consist primarily of salaries and related expenses for executive,
accounting and human resources personnel, professional fees, provisions for
doubtful accounts and other general corporate expenses.
DEFERRED COMPENSATION. Amortization of deferred compensation results from
the granting of options to employees with exercise prices per share determined
to be below the fair market value per share of our ordinary shares on the dates
of grant. The deferred compensation is being amortized to operating expenses
over the vesting period of the individual options.
FINANCING INCOME, NET. Our financing income consists primarily of interest
earned on bank deposits, gains and losses from the conversion of monetary
balance sheet items denominated in non-dollar currencies into dollars and
interest expense incurred on outstanding debt.
TAXES. Israeli companies are generally subject to income tax at the
corporate tax rate of 36%. However, several of our investment programs at our
manufacturing facility in Tel Aviv have been granted approved enterprise status
and, therefore, we are eligible for the reduced tax benefits described later in
this section in "--Corporate Tax Rate." These benefits should result in income
recognized by us being tax exempt or taxed at a lower rate for a specified
period after we begin to report taxable income and exhaust any net operating
loss carry-forwards. However, these benefits may not be applied to reduce the
tax rate for any income derived by our U.S. subsidiary.
RESULTS OF OPERATIONS
The following table presents consolidated statement of operations data for
the periods indicated as a percentage of total revenues.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Revenues.................................................... 100.0% 100.0% 100.0%
Cost of revenues............................................ 24.7 15.9 16.3
----- ----- -----
Gross profit................................................ 75.3 84.1 83.7
Operating expenses:
Research and development.................................. 55.2 48.3 41.6
Less participation by the Chief Scientist................. 18.2 12.8 6.3
----- ----- -----
Research and development, net............................. 37.0 35.5 35.3
Marketing and selling, net................................ 48.3 49.4 53.6
General and administrative................................ 10.1 7.5 8.0
Deferred compensation..................................... 1.6 1.3 2.7
----- ----- -----
Total operating expenses................................ 97.0 93.7 99.6
----- ----- -----
Operating loss.............................................. (21.7) (9.6) (15.9)
Financing income, net....................................... 0.1 0.3 0.6
----- ----- -----
Net loss.................................................... (21.6)% (9.3)% (15.3)%
===== ===== =====
</TABLE>
19
<PAGE>
YEARS ENDED DECEMBER 31, 1998 AND 1999
CONSOLIDATED STATEMENT OF OPERATIONS
REVENUES. Revenues increased from $8.9 million for the year ended
December 31, 1998 to $17.6 million for the year ended December 31, 1999, an
increase of $8.7 million, or 97.3%. This increase was due to an increase of
$1.5 million, or 214.3%, in sales of RADVision IP conferencing bridges, an
increase of $233,000, or 43.6%, in sales of our standards-compliant version of
RADVision video interface units, which we introduced in 1998, an increase of
$2.9 million, or 67.4%, in sales of H.323 software development kits, as well as
an increase in sales of our other products and technology in response to
increased market demand. Revenues from IP conferencing bridges increased from
$699,000 for the year ended December 31, 1998 to $2.2 million for the year ended
December 31, 1999. The increase in revenues from IP conferencing bridges was
primarily attributable to an increase in the sales price of our IP conferencing
bridges. Revenues from video interface units increased from $535,000 for the
year ended December 31, 1998 to $818,000 for the year ended December 31, 1999.
The increase in revenues from video interface units was primarily attributable
to a global growth in demand for these units as customers moved from ISDN-based
networks to IP-based networks. Revenues from H.323 software development kits
increased from $4.3 million for the year ended December 31, 1998 to
$7.2 million for the year ended December 31, 1999. This increase in revenues
from H.323 software development kits was primarily attributable to increased
market demand for this technology.
Revenue from sales to customers in the United States increased from
$4.6 million, or 51.7% of revenue, for the year ended December 31, 1998, to
$9.1 million, or 51.6% of revenue, for the year ended December 31, 1999, an
increase of $4.5 million, or 97.8%. This increase in sales to customers in the
United States was primarily attributable to the more rapid adoption of our
technology in the United States as compared to the rest of the world. Revenue
from sales to customers in Europe increased from $2.3 million, or 25.8% of
revenue, for the year ended December 31, 1998, to $4.0 million, or 23.1% of
revenue, for the year ended December 31, 1999, an increase of $1.7 million, or
73.9%. Revenue from sales to customers in the Far East increased from $942,000,
or 10.6% of revenue, for the year ended December 31, 1998, to $2.7 million, or
15.2% of revenue, for the year ended December 31, 1999, an increase of
$1.8 million, or 191.1%. This increase in sales to customers in the Far East as
a percentage of total sales was primarily attributable to increased sales
efforts in this region.
COST OF REVENUES. Cost of revenues increased from $1.4 million for the year
ended December 31, 1998 to $2.9 million for the year ended December 31, 1999, an
increase of $1.5 million, or 107.1%. This increase was attributable to the
increase in our revenues. Gross profit as a percentage of revenues decreased
from 84.1% for the year ended December 31, 1998 to 83.7% for the year ended
December 31, 1999.
RESEARCH AND DEVELOPMENT, NET. Research and development expenses, net
increased from $3.2 million for the year ended December 31, 1998 to
$6.2 million for the year ended December 31, 1999, an increase of $3.0 million,
or 93.8%. This increase was primarily attributable to an increase in the number
of research and development personnel whom we employed. We have increased our
research and development personnel to support our existing and expected new
product lines and to accommodate the growth of our business. Research and
development expenses, net as a percentage of revenues decreased from 35.5% for
the year ended December 31, 1998 to 35.3% for the year ended December 31, 1999.
MARKETING AND SELLING, NET. Marketing and selling expenses, net increased
from $4.4 million for the year ended December 31, 1998 to $9.4 million for the
year ended December 31, 1999, an increase of $5.0 million, or 113.6%. This
increase was primarily attributable to a $2.5 million, or 114.7%, increase in
personnel-related expenses resulting from our increasing the number of our sales
and
20
<PAGE>
marketing employees in 1999 and to an increase of $836,000, or 78.8%, in
promotional expenses. We have increased our sales and marketing expenses in
response to current and expected growth in the market for our products.
Marketing and selling expenses, net as a percentage of revenues increased from
49.5% for the year ended December 31, 1998 to 53.6% for the year ended
December 31, 1999. We expect that marketing and selling expenses will continue
to increase in proportion to our continued growth.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
from $664,000 for the year ended December 31, 1998 to $1.4 million for the year
ended December 31, 1999, an increase of $736,000, or 110.8%. This increase was
primarily attributable to an increase of $340,000, or 89.5%, in personnel
expenses and occupancy costs and to an increase of $96,000, or 114.3%, in
recruitment costs. General and administrative expenses as a percentage of
revenues increased from 7.5% for the year ended December 31, 1998 to 8.0% for
the year ended December 31, 1999. We expect that general and administrative
expenses will increase due to our recruiting efforts as we continue to increase
the number of our employees.
DEFERRED COMPENSATION. Deferred compensation expenses increased from
$116,000 for the year ended December 31, 1998 to $477,000 for the year ended
December 31, 1999, an increase of $361,000, or 311.2%. This increase was
primarily attributable to an increase in the difference between the exercise
price and the fair market value of our ordinary shares as of the date of grant
of the options. Deferred compensation at December 31, 1999 amounted to
$1.1 million, which will be amortized over the period during which the options
vest, which is generally four to five years.
NET LOSS. Net loss increased from $829,000 for the year ended December 31,
1998 to $2.7 million for the year ended December 31, 1999, an increase of
$1.9 million, or 229.2%. Net loss increased as a percentage of revenues from
9.3% for the year ended December 31, 1998 to 15.3% for the year ended
December 31, 1999.
CONSOLIDATED BALANCE SHEETS
TRADE RECEIVABLES. Trade receivables increased from $2.6 million for the
year ended December 31, 1998 to $3.2 million for the year ended December 31,
1999, an increase of $0.6 million, or 23.1%. This increase was primarily
attributable to an increase in sales of our products during the year ended
December 31, 1999.
ALLOWANCE FOR DOUBTFUL ACCOUNTS. Allowance for doubtful accounts increased
from $73,000 for the year ended December 31, 1998 to $225,000 for the year ended
December 31, 1999, an increase of $152,000, or 208.2%. This increase was
primarily attributable to an increase in sales of our products during the year
ended December 31, 1999. Allowance for doubtful accounts as a portion of trade
receivables increased from 2.77% for the year ended December 31, 1998 to 6.54%
for the year ended December 31, 1999. This increase was primarily attributable
to an outstanding debt from one customer for $105,000.
OTHER RECEIVABLES AND PREPAID EXPENSES. Other receivables and prepaid
expenses increased from $887,000 for the year ended December 31, 1998 to
$1.5 million for the year ended December 31, 1999, an increase of $0.6 million,
or 67.6%. This increase was primarily attributable to an increase in grants from
the Chief Scientist, which increased other receivables and prepaid expenses from
$336,000 for the year ended December 31, 1998 to $731,000 for the year ended
December 31, 1999, an increase of $395,000, or 117.6%.
INVENTORIES. Inventories increased from $873,000 for the year ended
December 31, 1998 to $2.4 million for the year ended December 31, 1999, an
increase of $1.5 million, or 171.8%. This
21
<PAGE>
increase was primarily attributable to an increase in inventory in response to
anticipated growth in sales.
TRADE PAYABLES. Trade payables increased from $0.6 million for the year
ended December 31, 1998 to $2.6 million for the year ended December 31, 1999, an
increase of $2.0 million, or 333.3%. This increase was primarily attributable to
an increase in trade payables in connection with the increase in inventory.
OTHER PAYABLES AND ACCRUED EXPENSES. Other payables and accrued expenses
increased from $2.6 million for the year ended December 31, 1998 to
$6.3 million for the year ended December 31, 1999, an increase of $3.7 million,
or 142.3%. This increase was primarily attributable to an increase of $788,000
in accrued employee expenses, an increase of $699,000 in accrued deferred income
and an increase of $710,000 in development costs paid by customers which will be
recognized only after all criteria for revenue recognition according to
SOP 97-2 are met.
YEARS ENDED DECEMBER 31, 1997 AND 1998
REVENUES. Revenues increased from $4.9 million for the year ended
December 31, 1997 to $8.9 million for the year ended December 31, 1998, an
increase of $4.0 million, or 81.6%. This increase was due primarily to an
increase in sales of RADVision H.323 software development kits and related
support services, as well as the receipt of several large orders in 1998 for our
products and technology. Revenue from H.323 software development kits and
related support services increased from $2.4 million for the year ended
December 31, 1997 to $4.4 million for the year ended December 31, 1998, an
increase of $2.0 million, or 83.3%. This increase in revenues from sales of
H.323 software development kits was primarily attributable to the release of an
enhanced version of the software development kits during the first quarter of
1998, which resulted in increased sales.
Revenue from sales to customers in the United States increased from
$3.0 million, or 61.2% of revenue, for the year ended December 31, 1997, to
$4.6 million, or 51.7% of revenue, for the year ended December 31, 1998, an
increase of $1.6 million, or 53.3%. Revenue from sales to customers in Europe
increased from $632,000, or 12.9% of revenue, for the year ended December 31,
1997, to $2.3 million, or 25.8% of revenue, for the year ended December 31,
1998, an increase of $1.7 million, or 263.9%. Revenue from sales to customers in
the Far East increased from $332,000, or 6.8% of revenue, for the year ended
December 31, 1997, to $942,000, or 10.6% of revenue, for the year ended
December 31, 1998, an increase of $610,000, or 183.7%. This increase in sales to
customers in Europe and the Far East as a percentage of total sales was
primarily attributable to the increased adoption of our technologies in those
regions. These technologies had been adopted in the United States in the
previous year. As a result, sales to customers in the United States as a
percentage of total sales decreased, despite the growth in actual sales to these
customers.
COST OF REVENUES. Cost of revenues increased from $1.2 million for the year
ended December 31, 1997 to $1.4 million for the year ended December 31, 1998, an
increase of $200,000, or 16.7%. This increase was due to the increase in our
revenues, which was partially offset by a decrease in our cost of materials.
Gross profit as a percentage of revenues increased from 75.3% for 1997 to 84.1%
for 1998. This increase was due to the increase in our sales of technology,
which generated higher margins.
RESEARCH AND DEVELOPMENT, NET. Research and development expenses, net
increased from $1.8 million for the year ended December 31, 1997 to
$3.2 million for the year ended December 31, 1998, an increase of $1.4 million,
or 77.8%. This increase was attributable to an increase in personnel-related
expenses resulting from our increasing the number of our research and
development employees in 1998 associated with new product and technology
development. Research and development expenses, net decreased as a percentage of
revenues from 37.0% for the year ended December 31, 1997 to 35.5% for the year
ended December 31, 1998.
22
<PAGE>
MARKETING AND SELLING, NET. Marketing and selling expenses, net increased
from $2.4 million for the year ended December 31, 1997 to $4.4 million for the
year ended December 31, 1998, an increase of $2.0 million, or 83.3%. This
increase was primarily attributable to an increase of $1.1 million, or 101.8%,
in personnel and related expenses and an increase of $513,000, or 93.6%, in
public relations, advertising and other promotional expenses. Marketing and
selling expenses, net increased as a percentage of revenues from 48.3% for the
year ended December 31, 1997 to 49.5% for the year ended December 31, 1998.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
from $494,000 for the year ended December 31, 1997 to $664,000 for the year
ended December 31, 1998, an increase of $170,000, or 34.4%. This increase was
primarily attributable to an increase of $48,000, or 15.4%, in personnel
expenses and to an increase of $81,000, or 2,700%, in travel expenses. General
and administrative expenses as a percentage of revenues decreased from 10.1% for
the year ended December 31, 1997 to 7.5% for the year ended December 31, 1998.
DEFERRED COMPENSATION. Deferred compensation expenses increased from
$77,000 for the year ended December 31, 1997 to $116,000 for the year ended
December 31, 1998, an increase of $39,000, or 50.6%. This increase was primarily
attributable to an increase in the amount of options granted in 1998 and the
growth in our personnel. Deferred compensation at December 31, 1998 amounted to
$78,000, which is amortized over the period during which the options vest, which
is generally four to five years.
NET LOSS. Net loss decreased from $1,056,000 for the year ended
December 31, 1997 to $829,000 for the year ended December 31, 1998, a decrease
of $227,000, or 21.5%. Net loss decreased as a percentage of revenues from 21.6%
for the year ended December 31, 1997 to 9.3% for the year ended December 31,
1998.
23
<PAGE>
QUARTERLY RESULTS OF OPERATIONS
The following tables present consolidated statements of operations data for
each of the eight fiscal quarters ended December 31, 1999, in dollars and as a
percentage of revenues. In management's opinion, this unaudited information has
been prepared on the same basis as our audited consolidated financial statements
and includes all adjustments, consisting only of normal recurring adjustments,
necessary for fair presentation of the unaudited information for the quarters
presented. The results of operations for any quarter are not necessarily
indicative of results that we might achieve for any subsequent periods.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31,
1998 1998 1998 1998 1999 1999 1999 1999
-------- -------- --------- -------- -------- -------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenues.................. $1,357 $1,657 $2,875 $3,006 $3,393 $3,979 $4,623 5,555
Cost of revenues.......... (216) (284) (458) (454) (454) (592) (642) (1,165)
------ ------ ------ ------ ------ ------ ------ -------
Gross profit.............. 1,141 1,373 2,417 2,552 2,939 3,387 3,981 4,390
Operating expenses:
Research and
development........... 822 1,063 1,111 1,296 1,338 1,847 2,054 2,069
Less participation by
the Chief Scientist... (193) (298) (309) (339) (208) (318) (245) (325)
------ ------ ------ ------ ------ ------ ------ -------
Research and
development, net...... 629 765 802 957 1,130 1,529 1,809 1,744
Marketing and selling,
net................... 860 994 1,198 1,351 1,642 1,825 2,308 3,631
General and
administrative........ 110 146 194 214 236 287 295 585
Deferred compensation... 29 29 29 29 93 93 93 198
------ ------ ------ ------ ------ ------ ------ -------
Operating income (loss)... (487) (561) 194 1 (162) (347) (524) (1,768)
Financing income
(expenses), net......... 7 (14) 26 3 97 (1) 20 (11)
------ ------ ------ ------ ------ ------ ------ -------
Net income (loss)......... $ (480) $ (575) $ 220 $ 4 $ (65) $ (348) $ (504) $(1,779)
====== ====== ====== ====== ====== ====== ====== =======
AS A PERCENTAGE OF
REVENUES:
Revenues.................. 100% 100% 100% 100% 100% 100% 100% 100%
Cost of revenues.......... (16) (17) (16) (15) (13) (15) (14) (21)
------ ------ ------ ------ ------ ------ ------ -------
Gross profit.............. 84 83 84 85 87 85 86 79
Operating expenses:
Research and
development........... 61 64 39 43 39 47 44 37
Less participation by
the Chief Scientist... (14) (18) (11) (11) (6) (8) (5) (6)
------ ------ ------ ------ ------ ------ ------ -------
Research and
development, net...... 47 46 28 32 33 39 39 31
Marketing and selling,
net................... 63 60 42 45 48 46 50 65
General and
administrative........ 8 9 7 7 7 7 6 11
Deferred compensation... 2 2 1 1 3 2 2 4
------ ------ ------ ------ ------ ------ ------ -------
Operating income (loss)... (36) (34) 7 0 (5) (9) (11) (32)
Financing income
(expenses), net......... 1 (1) 1 0 3 0 0 (0)
------ ------ ------ ------ ------ ------ ------ -------
Net income (loss)......... (35)% (35)% 8% 0% (2)% (9)% (11)% (32)%
====== ====== ====== ====== ====== ====== ====== =======
</TABLE>
24
<PAGE>
We expect our operating results to fluctuate significantly in the future as
a result of various factors, many of which are outside our control.
Consequently, we believe that period-to-period comparisons of our operating
results may not necessarily be meaningful and, as a result, you should not rely
on them as an indication of future performance.
LIQUIDITY AND CAPITAL RESOURCES
Since our inception, we have financed our operations through cash generated
by operations and a combination of private placements of our share capital and
borrowings under lines of credit. Through December 31, 1999, we have raised a
total of approximately $12.2 million in aggregate net proceeds in four private
placements. As of December 31, 1999, we had approximately $2.6 million in cash
and cash equivalents. As of December 31, 1999, our working capital was $814,000.
In December 1999, we issued 158,250 ordinary shares to Intel for $250,000,
or $1.58 per share, which is $10.42 less than the assumed initial public
offering price of $12.00 per share. The shares were issued under an agreement
entered into with Intel in 1996 under which Intel agreed to invest $1.0 million
in us through the purchase of ordinary shares in three installments of $500,000,
$250,000 and $250,000 upon our achieving specified milestones or, in the case of
the third installment, at Intel's option before the initial public offering of
our ordinary shares.
Net cash used in operating activities was approximately $1.0 million for the
year ended December 31, 1997 and $0.8 million for the year ended December 31,
1998. Net cash provided by operating activities was $1.4 million for the year
ended December 31, 1999.
For the year ended December 31, 1997, cash used in operating activities was
primarily attributable to a net loss of $1.1 million and an increase in trade
receivables of $1.4 million, offset in part by an increase in other payables and
accrued expenses of $1.1 million. For the year ended December 31, 1997, the
increase in accounts receivable was attributable to our increase in sales.
For the year ended December 31, 1998, cash used in operating activities was
attributable primarily to a net loss of approximately $829,000, an increase in
trade receivables of $724,000, an increase in other receivables and prepaid
expenses of $626,000 and an increase in inventory of $447,000, offset in part by
depreciation of approximately $360,000 and an increase in other payables and
accrued expenses of approximately $964,000. For the year ended December 31,
1998, the increase in accounts receivable was primarily attributable to higher
sales levels during the fourth quarter.
For the year ended December 31, 1999, cash provided by operating activities
was primarily attributable to an increase in trade payables of $1.9 million, an
increase of $3.5 million in other payables and accrued expenses and an increase
in depreciation of $718,000, offset in part by a net loss of approximately
$2.7 million, an increase in trade receivables of $647,000, an increase in other
receivables and prepaid expenses of $430,000 and an increase in inventory of
$1.6 million.
The increase in inventory for the year ended December 31, 1999 was primarily
in anticipation of expected growth in product revenue as well as a greater need
for evaluation units. The increase in accounts receivable for the year ended
December 31, 1999 was primarily the result of increased sales as compared to the
previous year. In addition, we increased our allowance for doubtful accounts to
address the increase in our accounts receivable balance. The increase in
payables for the year ended December 31, 1999 was primarily due to a change in
the timing of some of our accounts payable.
Net cash used in investing activities was approximately $428,000 for the
year ended December 31, 1997, $1.1 million for the year ended December 31, 1998
and $2.3 million for the year ended December 31, 1999. For the year ended
December 31, 1999, $2.4 million of cash used in investing activities was for
purchases of property and equipment, partially offset by $74,000 in proceeds
from the sale of property and equipment.
Net cash provided by financing activities was $484,000 for the year ended
December 31, 1997, $4.8 million for the year ended December 31, 1998, and
$177,000 for the year ended December 31,
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1999. For the year ended December 31, 1997, cash provided by financing
activities was attributable to $889,000 in proceeds from the issuance of
ordinary shares, offset in part by $525,000 in decrease in short term credit.
For the years ended December 31, 1998 and 1999, cash provided by financing
activities was attributable principally to proceeds from the issuance of
preferred shares.
As of December 31, 1999, our principal commitments consisted of obligations
outstanding under operating leases. Although we have no material commitments for
capital expenditures, we anticipate an increase in capital expenditures and
lease commitments consistent with our anticipated growth in operations,
infrastructure and personnel. We also may establish additional operations as we
expand globally.
As of December 31, 1999, we had $131,000 outstanding under an equipment term
loan facility. As of December 31, 1999, we had a $2.5 million line of credit,
all of which was unused.
Our capital requirements are dependent on many factors, including market
acceptance of our products and the allocation of resources to our research and
development efforts, as well as our marketing and sales activities. In the last
three years, we have experienced substantial increases in our expenditures as a
result of the growth in our operations and personnel. We intend to increase our
expenditures in the future consistent with our anticipated growth. We anticipate
that our cash resources will be used primarily to fund our operating activities,
as well as for capital expenditures.
We believe that the net proceeds from this offering and the private
placement, together with our current cash, cash equivalents and borrowing
capacity, will be sufficient to meet our anticipated cash needs for working
capital and capital expenditures for at least the next 12 months. During and
after this period, if cash generated from operations is insufficient to satisfy
our liquidity requirements, we may seek to sell additional equity or increase
the available borrowings under our line of credit. If we are unable to obtain
this additional financing, we may be required to reduce the scope of our planned
product development and marketing efforts, which could harm our business,
financial condition and operating results.
CORPORATE TAX RATE
Israeli companies are generally subject to income tax at the corporate tax
rate of 36%. However, several investment programs at our manufacturing facility
in Tel Aviv have been granted approved enterprise status and we are, therefore,
eligible for tax benefits under the Law for the Encouragement of Capital
Investments, 1959. We have derived, and expect to continue to derive, a
substantial portion of our income from the approved enterprise programs at our
manufacturing facility.
Subject to compliance with applicable requirements, the portion of our
income derived from the approved enterprise programs will be eligible for the
following tax benefits commencing in the first year in which it generates
taxable income:
<TABLE>
<CAPTION>
YEAR AFTER WE
BEGIN GENERATING
TAXABLE INCOME TAX BENEFIT
---------------- -----------
<S> <C>
1-2........................ Tax-exempt
3-7........................ Corporate tax of up to 25%
8-10....................... Corporate tax of up to 25% if more than 25% of
our shares are held by non-Israeli investors
</TABLE>
The period of tax benefits for our approved enterprise programs has not yet
commenced, because we have yet to realize taxable income. These benefits should
result in income recognized by us being tax exempt or taxed at a lower rate for
a specified period after we begin to report taxable income and exhaust any net
operating loss carry-forwards. However, these benefits may not be applied to
reduce the tax rate for any income derived by our U.S. subsidiary.
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As of December 31, 1999, our net operating loss carry-forwards for Israeli
tax purposes amounted to approximately $2.3 million. Under Israeli law, these
net operating losses may be carried forward indefinitely and offset against
future taxable income. We expect that, during the period in which these tax
losses are utilized, our income will be substantially tax exempt. Therefore,
there will be no tax benefit available from these losses and no deferred income
taxes have been included in our financial statements. Deferred taxes for other
temporary differences are immaterial.
As of December 31, 1999, the net operating loss carry-forwards of our U.S.
subsidiary for U.S. tax purposes amounted to approximately $2.2 million. These
losses are available to offset any future U.S. taxable income of our U.S.
subsidiary and will expire in the years 2010 through 2014.
IMPACT OF INFLATION AND CURRENCY FLUCTUATIONS
The dollar cost of our operations is influenced by the extent to which any
inflation in Israel is offset, is offset on a lagging basis, or is not offset by
the devaluation of the NIS in relation to the dollar. When the rate of inflation
in Israel exceeds the rate of devaluation of the NIS against the dollar,
companies experience increases in the dollar cost of their operations in Israel.
Unless offset by a devaluation of the NIS, inflation in Israel will have a
negative effect on our profitability as we receive payment in dollars or
dollar-linked NIS for all of our sales while we incur a portion of our expenses,
principally salaries and related personnel expenses, in NIS.
The following table presents information about the rate of inflation in
Israel, the rate of devaluation of the NIS against the U.S. dollar, and the rate
of inflation of Israel adjusted for such devaluation:
<TABLE>
<CAPTION>
ISRAELI INFLATION
YEAR ENDED ISRAELI INFLATION ISRAELI DEVALUATION ADJUSTED FOR
DECEMBER 31, RATE % RATE % DEVALUATION %
------------ ----------------- ------------------- -----------------
<S> <C> <C> <C>
1995 8.1 3.9 4.1
1996 10.6 3.7 6.6
1997 7.0 8.8 (1.7)
1998 8.6 17.6 (7.7)
1999 1.3 (0.1) 1.3
</TABLE>
We cannot assure you that we will not be materially and adversely affected
in the future if inflation in Israel exceeds the devaluation of the NIS against
the dollar or if the timing of the devaluation lags behind inflation in Israel.
A devaluation of the NIS in relation to the dollar has the effect of
reducing the dollar amount of any of our expenses or liabilities which are
payable in NIS, unless these expenses or payables are linked to the dollar. This
devaluation also has the effect of decreasing the dollar value of any asset
which consists of NIS or receivables payable in NIS, unless the receivables are
linked to the dollar. Conversely, any increase in the value of the NIS in
relation to the dollar has the effect of increasing the dollar value of any
unlinked NIS assets and the dollar amounts of any unlinked NIS liabilities and
expenses.
Because exchange rates between the NIS and the dollar fluctuate
continuously, with a historically declining trend in the value of the NIS,
exchange rate fluctuations and especially larger periodic devaluations will have
an impact on our profitability and period-to-period comparisons of our results.
The effects of foreign currency re-measurements are reported in our consolidated
financial statements in current operations.
MARKET RISK
We currently do not invest in, or hold for trading or other purposes, any
financial instruments subject to market risk. We currently pay interest on our
equipment term loan facility based on the London interbank offered rate. As a
result, changes in the general level of interest rates directly affect
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the amount of interest payable by us under this facility. However, because our
outstanding debt under this facility has never exceeded $218,000, we do not
expect our exposure to market risk from changes in interest rates to be
material.
GOVERNMENT GRANTS
We principally conduct our research and development operations in Israel.
Our research and development efforts have been financed through internal
resources and grants from the Chief Scientist. For the years ended December 31,
1998 and 1999, the Chief Scientist provided grants for research and development
efforts of approximately $1.1 million in 1998 and 1999, representing 25.9% and
14.6% of our total research and development expenses in these periods. We do not
intend to apply for a material amount of grants from the Chief Scientist in the
future.
Under Israeli law, royalties on the revenues derived from sales of products
and services developed using Chief Scientist grants are payable to the Israeli
government, generally at the rate of 3.0% during the first three years, 4.0%
over the following three years and 5.0% in or after the seventh year. The
maximum aggregate royalties payable generally cannot exceed 100%-150% of the
dollar-linked value of the total grants received. Royalties payable in
connection with grants received under programs approved after January 1, 1999,
however, will be subject to interest on the dollar-linked value of the total
grants received at an annual rate of the London interbank offered rate
applicable to 12-month dollar deposits. Based upon the aggregate grants received
to date, we expect that we will continue to pay royalties to the Israeli
government on sales of our products and related services for the foreseeable
future. For the last three years, we have paid or accrued royalties to the
Israeli government as follows:
<TABLE>
<CAPTION>
YEAR ENDED ROYALTIES PAID
DECEMBER 31, OR ACCRUED
- ------------ --------------
<S> <C>
1997 $ 83,000
1998 178,000
1999 495,000
</TABLE>
The government of Israel does not own proprietary rights in technology
developed using its funding and there is no restriction on the export of
products manufactured using the technology. The technology is, however, subject
to other legal restrictions, including the obligation to manufacture the product
based on this technology in Israel and to obtain the Chief Scientist's consent
to transfer the technology to a third party. This restriction may impair our
ability to enter into original equipment manufacturer agreements or similar
arrangements for those products and technologies. In the past, we obtained
approvals from the Chief Scientist for the licensing of source code of some of
our products and we expect that similar approvals will be required in the
future. These restrictions continue to apply even after we have paid the full
amount of royalties payable for the grants.
The Israeli government, through the Fund for the Encouragement of Marketing
Activities, awards grants to Israeli companies for overseas marketing expenses,
including expenses for maintaining branches, advertising, catalogs, exhibitions
and surveys, up to a maximum rate of 33% of these expenses, not to exceed
$1.2 million annually. In 1998, we received grants from the marketing fund
totaling approximately $178,000, and are required to pay royalties in connection
with these grants at a rate of 3.0% of the increase in our sales generated
outside of Israel from the date of the grant up to the total dollar-linked
amount of the grants. Marketing grants are currently awarded only to companies
whose annual exports in the year preceding the application did not exceed
$15.0 million. As of December 31, 1999, our contingent liability to the Israeli
government for grants received from the marketing fund was $199,000. If we fail
to satisfy the terms and conditions of the grants, we may be required to refund
the grants already received and would likely be denied these grants in the
future.
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<PAGE>
YEAR 2000
The year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any computer programs
or hardware that have date-sensitive software may recognize a date using 00 as
the year 1900 rather than the year 2000. This could result in system failures or
miscalculations, causing disruptions of operations for any company using these
computer programs or hardware. As a result, many companies' computer systems may
need to be upgraded or replaced to avoid year 2000 issues.
Our products and technology are generally integrated into larger networks
involving sophisticated hardware and software products supplied by other
vendors. Each of our customers' networks involves different combinations of
third-party products. We cannot evaluate whether all of their products are year
2000 compliant. We may face claims based on year 2000 problems in other
companies' products or based on issues arising from the integration of multiple
products within the overall network. Although no claims have been made, we may
in the future be required to defend our products and technology in legal
proceedings that could be expensive regardless of the merits of these claims.
Our internal systems have not suffered any interruptions following
December 31, 1999. In addition, we have not been made aware that any of our
major suppliers or manufacturers have suffered disruptions in their systems.
We have not indentified any year 2000 problems that could adversely affect
our business operations. However, we believe that it is not possible to
determine with complete certainty that all year 2000 problems affecting us have
been identified or corrected. The number of devices that could be affected and
the interactions among these devices are simply too numerous. As a result, we
believe that the following consequences are possible:
- operational inconveniences and inefficiencies for us, our suppliers, our
manufacturers and our customers that will divert management's time and
attention and financial and human resources from ordinary business
activities;
- business disputes and claims for pricing adjustments or penalties due to
year 2000 problems by our customers; and
- business disputes alleging that we failed to comply with the terms of
contracts or industry standards of performance, some of which could result
in litigation or contract termination.
To date, we have not experienced any material interruptions in our
operations related to year 2000 issues and do not expect that future costs will
be material. We have not incurred any significant expenses to date, and we do
not anticipate that the total costs associated with our year 2000 remediation
efforts, including both expenses incurred and any to be incurred in the future,
will be of any significance to our operations. However, if we, our customers,
our suppliers, or our customers' third-party providers fail to remedy any year
2000 issues, our business could be interrupted and we could experience a
material loss of revenues.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133
established accounting and reporting standards requiring that every derivative
instrument be recorded on the balance sheet at its fair value. SFAS No. 133
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. Special accounting
for qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the statement of operations. SFAS No. 133 is
effective for fiscal years beginning after June 15, 2000. We believe that the
adoption of SFAS No. 133 will not have a material effect on our financial
statements.
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<PAGE>
BUSINESS
OVERVIEW
We are a leading designer, developer and supplier of products and technology
that enable real-time voice, video and data communications over packet networks,
including the Internet and other networks based on the Internet protocol or IP.
Our products and technology are used by our customers to develop systems that
enable enterprises and service providers to use next generation packet networks
for real-time IP communications. We have over 250 customers including Alcatel,
Bosch, Cisco, Madge, NTT, Nortel, Philips, Shanghai Bell, Siemens and 3Com.
INDUSTRY BACKGROUND
GROWTH IN COMMUNICATIONS
In recent years, communications networks have experienced dramatic growth in
traffic. This growth is expected to continue due to a number of factors,
including:
- an increasing need for enterprises to expand their networks to enable them
to send, access and receive information quickly, economically and
globally;
- an increasing use of the Internet and other packet networks for
communicating and engaging in commercial transactions;
- an increase in available bandwidth at declining prices; and
- the introduction of new voice, video and data communications services and
applications.
LIMITATIONS OF TRADITIONAL NETWORKS
Traditionally, circuit-switched networks have been the principal medium for
the transmission of communications. Circuit-switched technology dedicates a
circuit with a fixed amount of bandwidth for the duration of the connection,
regardless of a user's actual bandwidth usage. The recent growth in data
communications traffic, particularly the growth in the number of Internet users,
has placed significant strains on the capacity of traditional circuit-switched
networks. Circuit-switched networks were initially deployed to handle only voice
communications. These networks were not designed to handle data efficiently and
cannot scale cost-effectively to accommodate the growth in data traffic.
Moreover, circuit-switched networks were built based on proprietary, complex
technologies which have historically limited the entrance of new competitors and
hindered the development and introduction of new services.
ADVANTAGES OF PACKET-BASED NETWORKS
While circuit-switched networks were principally designed to handle analog
voice traffic, packet-based networks were principally designed for transmitting
digital information. Packet-based networks, including IP networks, transmit
voice, video and data information in the form of small digital packages called
packets. Voice, video and data packets are sent over a single network
simultaneously and reassembled at the destination. Packet switching enables more
efficient utilization of available network bandwidth than circuit-switching,
allowing more calls to travel through a packet network at the same time.
Moreover, packet networks allow for the cost-efficient expansion of capacity as
communications traffic increases. In addition, packet networks are built using
open standards, like IP, which promote competition by allowing different vendors
to build products and applications that can interoperate with one another. By
using packet technologies based on open standards, new services can be deployed
rapidly and economically.
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THE NEED FOR INDUSTRY STANDARDS FOR REAL-TIME IP COMMUNICATIONS
Originally, enterprises and communications service providers deployed packet
networks primarily for handling data traffic and not for real-time IP
communications. Technical barriers initially hampered the use of packet networks
for real-time communications. For example, packet networks were not designed to
guarantee the sequential delivery of packets and packets could be lost. In
addition, the time of delivery of packets was dependent upon the amount of
packet traffic being transmitted over the network. For real-time communications,
it is critical that the packets associated with a specific voice or video
communication be transmitted in the correct sequence and in a timely manner.
Early attempts at real-time IP communications solved these technical problems by
using proprietary solutions developed by individual vendors. However,
proprietary solutions from different vendors meant that different vendor
products could not inter-operate with one another.
To enable the global deployment of real-time IP communications networks,
industry standards and protocols were developed to promote interoperability of
real-time communications over packet networks. H.323 is currently the most
widely deployed industry-wide protocol for real-time IP communications. H.323
was developed by a team of computing, telephony and networking experts under the
direction and auspices of the International Telecommunications Union, or ITU-T,
a United Nations organization, with the goal of specifying a universal real-time
standard that would ensure interoperability of all packet-based networks and
products. H.323 provides the technical framework for developing
standards-compliant products and systems for real-time voice and video
communication over packet networks. All components of an H.323 compliant
network, including terminals, gateways, gatekeepers and conferencing bridges,
use the H.323 protocol to communicate.
Today, H.323 is the standard of choice for the builders of real-time IP
communications solutions for enterprises. The ITU-T is continuously enhancing
H.323 and publishing new versions to support the evolving requirements of next
generation packet networks. Other emerging standards like MGCP, or Media Gateway
Control Protocol, and SIP, or Session Initiation Protocol, are also being
developed to address the complex requirements of multi-protocol packet networks.
The widespread acceptance of industry protocols and standards for IP
communications has enabled the deployment of packet networks for real-time
communications by ensuring interoperability and is facilitating the migration to
IP communications.
GROWTH IN REAL-TIME VOICE AND VIDEO IP COMMUNICATIONS
Due to the inherent benefits of packet networks and the advent of new
technologies and standards that have enabled real-time communications over these
networks, the use of packet networks for real-time voice, video and data
communications is expected to grow dramatically. ICM Global Intelligence, a
market research firm, forecasts that revenues for network equipment associated
with voice-over-IP, or IP telephony, will grow from $477 million in 1999 to
$7.1 billion in 2004. Perey Research & Consulting, an industry consulting firm,
forecasts revenues for network equipment associated with IP video communications
to grow from $22 million in 1999 to more than $643 million in 2003.
This anticipated growth in real-time IP communications is expected to be
driven primarily by enterprises and communications service providers migrating
to packet networks. As enterprises move from centralized organizations to
distributed networks of employees, customers, suppliers and business partners,
they require more effective communications capabilities to support their
operations and remain competitive in a global and rapidly changing market.
Packet networks are well-suited for enterprises because they provide enterprises
with the following advantages:
- cost-effective increases in capacity to meet increasing communications
traffic demands;
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- support for new communications applications, like video conferencing and
data collaboration, for improved workforce productivity;
- interoperability with different network configurations of their customers,
suppliers and partners; and
- cost savings associated with simplified network management resulting from
creating a single network that handles all communications, rather than
having to maintain separate telephone and computer networks.
Communications service providers have also begun to deploy packet networks
in an effort to compete more effectively in a deregulated market. Global
deregulation and rapid technological advances have resulted in the emergence of
many new communications service providers, increased competition among
traditional telecommunications carriers, lower prices, innovative new product
and service offerings and accelerated customer turnover. To remain competitive,
communications service providers must be able to develop and introduce new
services to differentiate themselves in the market and attract and maintain
customers. Packet networks are well-suited to accomplish these objectives
because they enable the rapid deployment of new and differentiated solutions. In
addition, packet-based technology allows new competitors to enter the market
quickly without substantial investment in infrastructure.
KEY ATTRIBUTES OF REAL-TIME VOICE AND VIDEO IP COMMUNICATIONS SOLUTIONS
To migrate their voice and video communications to packet networks,
enterprises and communications service providers require a real-time IP
communications solution that provides:
- reliable real-time voice, video and data communications functionality;
- interoperability with the existing circuit-switched networks as well as
with other IP equipment and systems;
- applications, features and functionality comparable to those available
over traditional telephone networks, including call transfer, conferencing
and caller identification;
- scalability to permit cost-effective increases in capacity to meet demand;
- standards compliance, so that products from different vendors can work
together in one network; and
- flexibility to adapt to rapidly changing network environments in response
to the evolving needs of enterprises and to accommodate a mobile business
environment.
OUR SOLUTION
We provide standards-based products and technology for real-time voice,
video and data communications over packet networks for enterprises and service
providers. Our products and technology offer the following benefits:
REAL-TIME VOICE, VIDEO AND DATA COMMUNICATIONS FUNCTIONALITY. We are one of
the few companies that offer IP communications products which support both
voice-only, as well as combined voice, video and data communications. We believe
that this dual functionality is attractive to enterprises and service providers
that seek a flexible IP communications solution which can provide enhanced
multimedia functionality in addition to IP telephony capabilities. We believe
our products enable developers of IP communications solutions to offer features
and functions generally unavailable in competitive solutions.
MARKET LEADING TECHNOLOGY FOR STANDARDS BASED REAL-TIME IP
COMMUNICATIONS. We were one of the original five members of the ITU-T committee
responsible for defining the H.323 standard which has
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been adopted worldwide for real-time packet-based communications. We believe our
technology is recognized as the market-leading implementation of the H.323
industry standard for real-time voice, video and data communications over packet
networks. We have been actively involved in the development of protocols for
real-time communications since the inception of the industry in 1994 and were
the first-to-market with enabling products and technology for voice, video and
data communications over IP networks. We believe that our technology has become
the technology of choice among developers of standards-compliant IP
communications systems. Because we were first to market and have achieved broad
market penetration, our customers benefit from our ability to develop and
provide them market-tested, proven products and technology. Using our products
and technology, our customers can develop unique capabilities with increased
functionality that will differentiate their IP communications solutions in the
market. We believe that the accumulated knowledge that we have gained
participating in the development of industry standards provides us with a
competitive advantage and positions us to be among the first to market products
and technology based on the latest technological advances.
INTEROPERABILITY. We provide our customers with products and technology
that are interoperable across a broad range of IP communications systems. Our
products and technology have been integrated into IP communications systems
developed by more than 250 communications equipment providers. Because our
products and technology are broadly deployed across various segments of the IP
communications industry, we believe that the interoperability of our products
and technology with products from different vendors is virtually assured. We
believe that our long-standing involvement in the definition of standards and
accumulated experience with product development across our broad customer base
provides us with a competitive advantage in addressing interoperability needs.
We continue to participate actively in defining industry standards by working
closely with industry consortia on a broad spectrum of IP communications
protocols to ensure continued interoperability of our products and technology
across multiple protocols.
IMPROVED TIME TO MARKET. Our customers rely on our accumulated expertise
with IP communications standards and core technology to significantly reduce
their development cycle and improve time to market. Communications equipment
providers seeking to market standards-compliant systems for real-time voice and
video communications over packet networks require standards-compliant building
blocks to develop their products. Implementing standards as deployable products
and technology is a complex task that requires significant technical knowledge
and expertise as well as substantial investments of time and resources. Our
products and technology enable our customers to shorten their own development
time by integrating our proven enabling products and technology into their
solutions. Rather than dedicate in-house resources to implementing industry
standards, these developers can use our products and technology and focus their
core competencies on building enhanced systems, products and applications.
BROAD RANGE OF PRODUCT ENVIRONMENTS. Our products and technology provide
our customers with flexibility to design individual products and applications or
complete systems. Our customers can build a complete network solution for
real-time IP communications using our full suite of products or integrate
RADVision products with their own products or other vendor products into their
real-time IP communications solution. Similarly, our technology has been
designed to enable the development of a broad range of products and
applications, from those that can service single users, including hand held
devices and residential IP phones, to multi-user products, like highly complex,
powerful carrier class gateways. Taken together, our products and technology
provide all of the key network components necessary to build a real-time IP
communications solutions.
DISTRIBUTED ARCHITECTURE. We designed our products based on a distributed
architecture. With a distributed architecture, the core functions needed for
real-time IP communications are dispersed throughout the network at the site of
each gateway, IP conferencing bridge and gatekeeper, rather than
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aggregated at a single centralized location. This distributed approach offers
several advantages compared to a traditional centralized architecture. The
distributed architecture of our products enables better utilization of network
bandwidth, because communications need not be routed through a centralized
location but rather can be routed over the shortest path to minimize bandwidth
usage. Similarly, our distributed architecture is a scalable solution, allowing
a network manager to add network resources at distributed locations
incrementally as the network grows. Our distributed architecture also provides
redundancy and increased fault tolerance and reliability because, unlike a
centralized architecture, failure at one location will not compromise the entire
network.
OUR STRATEGY
Our goal is to be the leading provider of innovative products and technology
that enable real-time voice and video communications over packet networks. Key
elements of our strategy include the following:
- MAINTAIN AND EXTEND OUR TECHNOLOGY LEADERSHIP. We believe that we have
established ourselves as a technology leader in providing core-enabling
technology for a broad range of IP communications products and services.
We have accumulated extensive knowledge and expertise as designers and
developers of commercial products and technology for real-time
packet-based communications. We place considerable emphasis on research
and development to expand the capabilities of our existing products, to
develop new products and to improve our existing technology and
capabilities. We believe that our future success will depend upon our
ability to maintain our technological leadership, to enhance our existing
products and to introduce on a timely basis new commercially viable
products addressing the needs of our customers. We intend to continue to
devote a significant portion of our personnel and financial resources to
research and development.
- STRENGTHEN AND EXPAND OUR RELATIONSHIPS WITH OEM CUSTOMERS. We have
established and continue to maintain collaborative working relationships
with many OEMs in the IP communications market, including Bosch, Cisco,
Nortel, Philips, Polycom and Siemens. We work closely with our OEM
customers to integrate our products and core technology into their
solutions. Our core technology and our system design expertise enable us
to assist these customers in the development of complete solutions that
contain enhanced features and functionality compared to competitive
alternatives. We have generally established long-term relationships with
our OEM customers in connection with a few products and subsequently
expanded these relationships by increasing the number and range of
products sold to these customers. We intend to expand the depth and
breadth of our existing OEM relationships while initiating similar new
relationships with leading OEMs focused on the IP communications market.
- CONTINUE TO OFFER NEW AND ENHANCED PRODUCTS AND FEATURES. We believe we
have consistently been either first, or among the first, to market
products that support real-time voice, video and data communications over
packet networks. We were the first to market with IP gateways that provide
combined voice, video and data functionality, and first to market with
software development kits for the development of H.323-compliant IP
communications products and applications. We intend to utilize our
technological expertise as a basis for market leadership by continuing to
be first-to-market with new and enhanced products and features that
address the increasingly sophisticated needs of our customers and the
evolving markets they serve. In addition, we believe that our
participation in the drafting of industry standards gives us the ability
to quickly identify emerging trends to develop new products and
technologies that are at the forefront of technological evolution in the
IP communications industry. We currently expect to introduce several new
or enhanced products in 2000, including our MGCP software development kits
and carrier class gatekeepers for large-scale networks.
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- EXPAND THE DISTRIBUTION CHANNELS FOR OUR PRODUCTS. We intend to continue
to focus our sales and marketing efforts on expanding our distribution
channels, including broadening the number of systems integrators that
distribute our products. Systems integrators provide us a channel for
feedback from their customers, the end-users of our products, which gives
us valuable insight into evolving industry trends and customer
requirements. Systems integrators represent an important independent
marketing channel for our products that provides us with increased market
presence through the relationships and existing customer base of these
systems integrators. In addition, endorsements by leading systems
integrators strengthen our brand name awareness. As part of this strategy
to expand our distribution channels, we intend to open an office in Asia
in 2000.
- CONTINUE OUR ACTIVE INVOLVEMENT IN SHAPING INDUSTRY STANDARDS FOR IP
COMMUNICATIONS. We actively participate in and contribute to the
formulation of standards for IP communications. We intend to continue our
active involvement in the organizations that define the standards for
real-time communications over next generation packet networks. Our
knowledge and expertise gained in participating in the development of
these industry standards enable us to be among the first to market
products based on new standards adopted. We are continually improving and
enhancing our core enabling H.323 technology to ensure that we maintain
our leadership position as a provider of superior H.323 software
development kits. We are also investing significant resources in
developing other emerging protocols, like MGCP. Because of our involvement
in defining these IP communications standards, we believe we are
well-positioned to quickly develop enhanced functionality and new products
based on multiple protocols.
OUR PRODUCTS AND TECHNOLOGY
RADVision products and technology provide the core building blocks needed
for standards-based real-time voice, video and data communications over packet
networks. Our customers can deploy our products as a complete network solution
for IP communications, integrate our products into their own IP communications
systems or use our technology to build their own standards-compliant IP
communications products, systems and applications for enterprises and service
providers.
Our products and technology consist of:
- RADVision gateways, which interface between traditional circuit-switched
networks and IP networks;
- RADVision gatekeepers, which control, manage and monitor real-time voice,
video and data traffic over packet networks;
- RADVision IP conferencing bridges, which enable voice or multimedia
conferencing over packet networks among three or more participants; and
- RADVision software development kits, which provide the core technology
necessary to build interoperable, standards-compliant products, systems
and applications for real-time voice and video communication over packet
networks.
RADVISION GATEWAYS
To achieve the successful deployment of IP communications systems by
enterprises and service providers, users who are connected to packet networks
must be able to communicate with users who are connected to circuit-switched
telephone networks. RADVision gateways provide an interface between traditional
circuit-switched telephone networks and the new packet-based networks. A gateway
converts voice, video and data signals received from a circuit-switched network
into packets, that it then transmits in real-time over a packet-based network.
When the direction of the communication is reversed, the gateway converts the
packets back into circuit-switched signals.
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We offer RADVision multimedia gateways, which support real-time voice, video
and data communications, and RADVision voice gateways, which support voice-only
communications.
RADVISION MULTIMEDIA GATEWAYS
Our RADVision multimedia gateways can support up to 30 voice calls or 15
multimedia calls simultaneously. We sell these gateways principally to systems
integrators and OEMs who offer IP communications solutions to enterprises for
next generation networks. These gateways provide the following benefits:
- REAL-TIME VOICE, VIDEO AND DATA COMMUNICATIONS. Our multimedia gateways
support real-time voice and video calls, data collaboration as well as
voice-only calls.
- INTEROPERABILITY. Our multimedia gateways are H.323 compliant and are
designed to be fully interoperable with other IP network components.
- EMBEDDED GATEKEEPER. Our multimedia gateways contain an embedded
gatekeeper that provides the gateway with similar functionality to that of
a corporate telephone system, known as a private branch exchange, or PBX,
including call and network management capabilities such as controlling how
calls are routed, who may use the networks and how bandwidth is allocated.
This embedded gatekeeper is offered free to the customer who may choose to
use it or disable it. Customers who disable the embedded gatekeeper can
purchase a gatekeeper from us or from another gatekeeper vendor.
- ADVANCED CALL FUNCTIONALITY. Our multimedia gateways can support advanced
PBX-like functions including call transfer and call forwarding.
A typical configuration of our RADVision multimedia gateways in a packet
network is shown below.
[LOGO]
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RADVISION VOICE GATEWAYS
Our RADVision voice gateways are optimized for voice-only functionality. Our
RADVision voice gateways can support up to 30 voice calls simultaneously. These
gateways were developed based upon the technology contained in our multimedia
gateways for voice and video calls and can be easily up-graded to a multimedia
gateway. We sell our RADVision voice gateways to OEMs that build solutions for
enterprises and require gateways to interface voice calls between traditional
circuit-switched telephone networks and packet networks.
Our voice gateways are designed for two principal applications:
- as gateways to connect traditional PBXs for circuit-switched networks with
new PBXs built for packet-based networks, also known as IP/PBXs, and
- as gateways to interconnect two circuit-switched PBX systems over a packet
network, thus bypassing the circuit-switched network.
Our RADVision voice gateways contain embedded gatekeepers and are
interoperable with other H.323 compliant network components. Our RADVision voice
gateways also provide the advanced call functionality of our multimedia
gateways.
A configuration of our RADVision voice gateways demonstrating both
applications of these gateways is shown below.
[LOGO]
RADVISION VIDEO INTERFACE UNITS
Enterprises have invested significant resources in outdated, or legacy,
videoconferencing equipment that are designed to function only over
circuit-switched networks. Our RADVision video interface unit
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was designed to extend the life of this equipment by allowing legacy
videoconferencing systems to be connected directly to a packet network rather
than the circuit-switched network. Our RADVision video interface units are
affordable, single user gateways designed specifically to interconnect legacy
video equipment with packet networks. Because most new videoconferencing systems
are designed to connect directly to packet networks, we expect that the market
for these units will decrease significantly over time.
RADVISION GATEKEEPERS
Gatekeepers perform the essential network function of controlling and
managing real-time voice, video and data communications on a packet-based
network. Gatekeepers define and control how traffic is routed over a
packet-based network by identifying the IP destination address and routing the
traffic to that destination. Gatekeepers also enable the provisioning of
advanced PBX-like functions, including call forwarding, multi-point conferencing
and call transfer. Network managers use gatekeepers to configure, monitor and
manage the voice and video call activity on a packet network to ensure optimal
implementation of the network. Gatekeepers log and track call activity and
maintain details of network activity which permit the network manager to monitor
IP communications activity on the network, including number of calls, number of
users and bandwidth usage.
We provide a free embedded gatekeeper in our gateways. We also sell a
stand-alone gatekeeper software application that is designed to be installed on
any computer that supports the Microsoft Windows NT operating system. We sell
this off-the-shelf application to systems integrators as a complementary product
to our family of gateways and IP conferencing bridges. These customers combine
RADVision gatekeeper application software with other IP network components to
build complete IP communications solutions. These customers typically purchase
our gatekeeper application in conjunction with the purchase of our gateways or
IP conferencing bridges to use instead of our free embedded gatekeeper.
We also sell gatekeeper technology in the form of software development kits
that enable our OEM customers to build and customize their own gatekeeper
applications. Our gatekeeper software development kit offers the software
developer full control over a wide range of gatekeeper functions and the
flexibility to customize and further differentiate the gatekeeper to respond to
the needs of their particular market. By using RADVision software development
kits, our customers can build upon our proven technology and bring their
gatekeeper products to market quickly.
RADVISION IP CONFERENCING BRIDGES
While communications between two parties involves point-to-point
connections, conferencing between multiple parties involves multipoint
communications among three or more participants. In traditional circuit-switched
networks, conferencing bridges connect callers to each other through a central
bridge that conducts the conference call. As enterprises migrate to packet
networks, IP conferencing bridges are needed to conduct conference calls over
these next generation networks. We were one of the first and remain one of a few
companies to offer IP conferencing bridges for multipoint communications.
Traditionally, voice or video conferencing required the conference to be
arranged in advance by a network administrator and remain attended by an
operator for the duration of the conference. Our RADVision IP conferencing
bridges allow voice or video conferencing among multiple participants over IP
networks without any advance arrangements or the assistance of an operator.
Participants simply dial a number and the conferencing bridge automatically
arranges the conference call. Additional participants can join the conference
while it is in progress or by being added to the conference by any party already
participating in the conference. Traditional conferencing bridges were primarily
built as large complex carrier class bridges that were not appropriate for
installation within an enterprise, requiring enterprises to contract with
external service providers to conduct conference calls. Our
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RADVision IP conferencing bridges are substantially less expensive and are
designed to be deployed locally within an enterprise network, eliminating the
need to contract with a service provider for conferencing services.
Our RADVision IP conferencing bridges can support up to 15 simultaneous
voice and video calls or 24 voice-only calls. Like our gateways, our
conferencing bridges include an embedded gatekeeper. Multiple conferencing
bridges can be combined to increase the number of simultaneous conferences, and
conferencing bridges can be linked together to provide a solution for very large
conferences, allowing for multiple conference panels with many remote viewers.
A configuration of our RADVision IP conferencing bridges for multipoint
conferencing between three or more participants is shown below.
[LOGO]
RADVISION H.323 SOFTWARE DEVELOPMENT KIT
H.323 is currently the most widely deployed standard for real-time IP
communications. All components of an H.323-compliant network, including
terminals, gateways, gatekeepers and conferencing bridges, use the H.323
protocol to communicate. As a result, communications equipment providers seeking
to market H.323-compliant IP telephony and multimedia products, systems and
applications need H.323 core software to develop their solutions. Rather than
dedicate in-house resources to developing H.323 technology, these providers seek
to build upon our proven enabling technologies.
We sell the core enabling technology for real-time IP communications in the
form of software development kits. Our RADVision H.323 software development kits
provide developers with the core software building blocks needed to develop
H.323-compliant products, systems and applications. Our RADVision H.323 software
development kit is an integrated set of software programs which execute
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the H.323 protocol and perform the functions necessary to establish and maintain
real-time voice, video and data communications over packet-based networks. Our
technology enables our customers to focus on their core competencies and
dramatically reduces the time to market of H.323-compliant IP communications
products, systems and applications. Our RADVision H.323 software development
kits can be used to develop a broad spectrum of products, including gateways,
gatekeepers, conferencing bridges, IP telephones and other H.323-compliant
products.
PRODUCTS AND TECHNOLOGY UNDER DEVELOPMENT
We intend to capitalize upon our technological leadership in real-time IP
communications to develop new products and technology that meet the evolving
needs of the IP communications market. Our future product and technology
offerings are expected to include:
RADVISION MGCP SOFTWARE DEVELOPMENT KITS. Media gateway control protocol,
commonly referred to as MGCP, provides functions that complement H.323 and has
been developed for large packet networks operated by telecommunications carriers
and service providers that require gateways that can support a practically
unlimited number of calls. MGCP is the protocol by which a centralized gateway
controller communicates with and controls the numerous gateways throughout a
packet network and manages the network traffic through those gateways. MGCP has
been adopted by large telecommunications companies and Internet service
providers as well as by cable television companies building IP communications
solutions over their networks. Our RADVision MGCP software development kit will
be used to build MGCP compliant gateways. We intend to commercially release our
MGCP software development kit in 2000. We may also develop and introduce in the
future products that are based on other industry standards such as SIP,or
Session Initiation Protocol, to the extent we believe that these products are
feasible and there is a market opportunity for these products.
RADVISION CARRIER CLASS GATEKEEPERS. Gatekeepers are generally designed to
manage hundreds of simultaneous voice calls. Large packet networks operated by
telecommunications carriers and service providers require gatekeepers that can
support a practically unlimited number of calls. We are currently enhancing our
RADVision gatekeeper to provide core functionality necessary for large IP
communications networks operated by telecommunications carriers and services
providers. Our carrier class gatekeeper software development kit release will
support high performance, high reliability, carrier class platforms, including
network platforms developed by Cisco, Compaq and Hewlett-Packard. We expect our
customers to introduce systems for creating new IP-based services incorporating
our carrier class gatekeeper in 2000.
CUSTOMERS
We sell our products to OEMs, systems integrators and value added resellers,
or VARs. Our OEM customers purchase our products to integrate with products that
they developed in-house to build complete IP communications solutions. Our
systems integrator customers either purchase our full suite of products or
integrate our individual products with products of other manufacturers to build
complete IP communications solutions. Our VAR customers purchase our products to
resell to end-users as separate units, or as part of a family of related product
offerings, either under our RADVision label or under their private label.
We sell our technology in the form of software development kits to
developers of IP communications products, systems and applications for
developing their own IP communications solutions based on our core enabling
technology.
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The following is a representative list of our customers who have purchased
more than $200,000 of our products or technology since January 1, 1999:
<TABLE>
<S> <C> <C>
Alcatel Frebon International PictureTel
Bosch Telecommunications LG Information and Philips
Cisco Systems Communications Shanghai Bell
Computer and Communications Madge Networks Siemens
Laboratory NTT 3Com
France Telecom Nortel VCON
</TABLE>
SALES AND MARKETING
SALES ORGANIZATION. We market and sell our products through multiple
channels in North America, Europe, the Far East and Israel. Our products are
sold to end-users principally through indirect channels by OEMs, system
integrators and value added resellers. We market and sell our technology,
primarily in the form of software development kits, directly to developers of IP
communications products and applications. In Taiwan, Korea and Japan, we sell
our software development kits indirectly through local sales representatives.
Our sales organization is managed from our corporate headquarters in Tel
Aviv. We currently have sales offices in Tel Aviv, Israel, in Mahwah, New Jersey
and in Sunnyvale, California. We intend to establish a sales office in Asia in
the year 2000. North America is currently our largest market, contributing
approximately 54% of our total sales for the year ended December 31, 1999.
We have dedicated sales teams to support our larger strategic accounts as
well as to identify potential strategic customers who would deploy our products
on large scales and generate significant revenues for us.
MARKETING ORGANIZATION. Our marketing organization develops strategies and
implements programs to support the sale of our products and technology and to
support and enhance our market position as an industry leader. Our current
marketing efforts include various programs designed to increase industry
visibility, including press/analyst tours, trade shows and events, speaking
engagements and ongoing interaction with analysts and the media as well as
targeted marketing programs. Additional programs include technical seminars
where customers and other industry participants are educated in real-time IP
communications technology and the benefits of our products and technology. We
also view our web site as an important marketing tool. We intend to enhance our
web site to create a reference site for IP communications, featuring broad-based
coverage of issues relevant to the IP communications industry, as well as
important product and market trends.
To reinforce and further strengthen our market position as a technology
leader in the field of real-time IP communications, we actively participate in
key industry consortia. We are a member of the board of directors of the
International Multimedia Telecommunications Consortia, or IMTC, a global
organization to promote interoperable multimedia communications solutions based
on international standards, and are responsible for directing its marketing
activities. We regularly participate in IMTC-sponsored InterOP events, a
vendor-neutral forum where IMTC members test the interoperability of their
products.
We are also active in defining and reviewing evolving IP communications
standards that are being developed by international standards bodies including:
- the ITU-T, which has published the H.323 standard;
- the Internet Engineering Task Force, or IETF, which has published the SIP
standard; and
- CableLabs, an organization of cable operators which is currently working
on defining the MGCP standard.
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CUSTOMER CARE AND SUPPORT
Our ability to provide our customers with responsive and qualified customer
care and support services globally is essential to attract and retain customers,
build brand loyalty and maintain our leadership position in the market. We
believe our customer care and support organizational structure enables us to
provide superior technical support and customer service on a cost- and
time-efficient basis.
We provide global customer care and support for our products and technology.
Our customer care and technical support teams are located in Tel Aviv, Israel,
in Mahwah, New Jersey and in Sunnyvale, California. We assist our customers with
the initial installation, set-up and training. In addition, our technical
support team trains and certifies our customers to provide local support in each
of the geographical areas in which our products are sold. We also provide
customers the option of obtaining, for a fee, 24 hours a day, 7 days a week
help-desk support.
In addition, customers who purchase our software development kits generally
request that we provide them ongoing engineering and technical support services
to integrate our technology into their products, although these services are not
essential for the use of our software development kits. Our standard software
development kit contract provides for one year of support services, renewable
annually at the customer's option. Customers who have contracted for support
services receive all relevant software updates and enhancements as well as
access to our customer care and technical support teams.
RESEARCH AND DEVELOPMENT
We place considerable emphasis on research and development to expand the
capabilities of our existing products and technology, to develop new products
and to improve our existing technologies and capabilities. We believe that our
future success will depend upon our ability to maintain our technological
leadership, to enhance our existing products and technology and to introduce on
a timely basis new commercially viable products and technology addressing the
needs of our customers. We intend to continue to devote a significant portion of
our personnel and financial resources to research and development. As part of
our product development process, we seek to maintain close relationships with
our customers to identify market needs and to define appropriate product
specifications.
As of December 31, 1999, our research and development staff consisted of
approximately 94 employees. Our research and development activities are
conducted at our facilities in Tel Aviv, Israel and in our office in Mahwah, New
Jersey. To introduce new, high quality products, we deploy procedures for the
design, development and quality assurance of our new product developments. Our
team is divided according to our existing product lines. Each product line team
is headed by a team leader and includes software or hardware engineers and
quality control technicians.
MANUFACTURING AND ASSEMBLY
Our manufacturing operations consist of materials planning and procurement,
out-sourcing of sub-assemblies, final assembly, product assurance testing,
quality control and packaging and shipping. We assemble and test our products at
our facilities in Tel Aviv, Israel. We test our products both during and after
the assembly process using internally developed product assurance testing
procedures. We have a flexible assembly process that enables us to configure our
products at the final assembly stage for customers who require that our products
be modified to bear their private label. This flexibility is designed to reduce
our assembly cycle time and reduce our need to maintain a large inventory of
finished goods. We use an enterprise resource planning, or ERP, system that we
purchased from BAAN Systems that we modified to our specific needs. This system
allows us to use just in time procurement and manufacturing procedures. We
believe that the efficiency of our assembly process to date is largely due to
our product architecture and our commitment to assembly process design. We
manufacture our
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software development kits on CD-ROMs and package and ship them accompanied by
relevant documentation.
As part of our commitment to quality, we have been certified as an ISO 9002
supplier. The ISO 9002 standard defines the procedures required for the
manufacture of products with predictable and stable performance and quality. We
are continuously trying to improve our quality based on the guidelines dictated
by the ISO 9002 standard.
INTELLECTUAL PROPERTY
We rely on copyright, trademark and trade secret laws, confidentiality
agreements and other contractual arrangements with our customers, third-party
distributors, employees and others to protect our intellectual property.
Despite our efforts to protect our proprietary rights, unauthorized parties
may attempt to copy aspects of our products and technology or obtain and use
information that we regard as proprietary. Policing unauthorized use of our
products and technology is difficult. In addition, the laws of some foreign
countries in which we currently or may in the future sell products do not
protect our proprietary rights to as great an extent as do the laws of the
United States. Our means of protecting our proprietary rights may not be
adequate and our competitors may independently develop similar technology,
duplicate our products or design around our intellectual property.
We rely on technology that we license from third parties, including software
that is integrated with internally developed software and used in our products
to perform key functions. For example, we license T.120 data collaboration
software from Data Connection Limited and voice compression technology from
Siemens. If we are unable to continue to license any of this software on
commercially reasonable terms, we will face delays in releases of our products
or will be required to reduce the functionality of our products until equivalent
technology can be identified, licensed or developed, and integrated into our
current products.
COMPETITION
We compete in a new, rapidly evolving and highly competitive and fragmented
market. We expect competition to intensify in the future. We believe that the
main competitive factors in our market are time to market, product quality,
features, cost, technological performance, scalability, compliance with industry
standards and customer relationships.
The principal competitors in the market for our products and software
development kits currently include:
<TABLE>
<CAPTION>
PRODUCTS SOFTWARE DEVELOPMENT KITS
- --------------------------------------- ------------------------------------------------------
<S> <C>
- - Ezenia!, formerly known as Video- - DataBeam, a subsidiary of Lotus/IBM
Server - DynamicSoft
- - White Pine Software - Elemedia, a subsidiary of Lucent
- - In-house developers employed by - Trillium Digital Systems
manufacturers of telecommunications
equipment and systems
</TABLE>
Other companies, including Accord Networks, have announced products that may
compete with ours. Additional competitors may enter each of our markets at any
time.
Both Vovida Networks, Inc. and OpenH323 offer H.323 source code for free. In
addition, Vovida offers MGCP and SIP source code for free. If our customers
choose to use the free source code offered by these organizations instead of
purchasing our technology, our revenues from the sale of our software
development kits will decline.
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FACILITIES
Our headquarters and principal administrative, finance, sales and marketing
and promotion operations are located in approximately 25,481 square feet of
leased office space in Tel Aviv, Israel. The expiration dates of the lease of
our principal offices range from August 2000 to December 2000. We intend to
relocate our corporate headquarters in Tel Aviv, Israel to new facilities in
2000. In the United States, we lease approximately 9,000 square feet in Mahwah,
New Jersey expiring in May 2002 and approximately 1,232 square feet in
Sunnyvale, California expiring in December 2002.
EMPLOYEES
As of December 31, 1999, we had 192 employees worldwide, of whom 94 were
employed in research and development, 53 in sales and marketing, 10 in
management and administration and 35 in operations. We have standard employment
agreements with all of our employees located in Israel. Of our employees, 153
are based in Israel and 39 are based in the United States.
None of our employees is represented by a labor union. To date, we have not
experienced any work stoppages.
LEGAL PROCEEDINGS
We are not party to any material legal proceedings.
In 1998, Lucent sent correspondence to our affiliate, RAD Data
Communications Ltd., alleging that some products manufactured by RAD and some of
its affiliates, including us, infringe upon specified Lucent patents and
offering to license these patents to RAD and its affiliates. In subsequent
correspondence, RAD requested that Lucent specifically substantiate each
allegation of infringement before RAD or any of its affiliates would be prepared
to enter into any licensing arrangements. RAD has recently received further
correspondence from Lucent in which Lucent has, among other things, reiterated
its claims. RAD does not believe Lucent has substantiated its claims and has
communicated this belief to Lucent. RAD advises us that the alleged infringement
claims are unresolved.
The elements of our products that Lucent has alleged infringe upon its
patents are contained within components which we obtain from a third party
manufacturer. We believe that the third party manufacturer has a license to use
these patents and that this license may inure to us.
In any event, based on Lucent's fee and royalty schedule for licensing the
relevant patents, we believe that any licensing fee and royalty payments that we
may be required to pay for the right to use Lucent's patents would not have a
material impact on our earnings. As a result, we do not believe that Lucent's
allegations will have a material adverse effect upon us, our business, financial
condition or liquidity.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table lists our current directors and executive officers:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- --------------------------------------------------------
<S> <C> <C>
Yehuda Zisapel 57 Chairman of the Board of Directors
Ami Amir 55 Chief Executive Officer, President and Director
Eli Doron 47 Chief Technical Officer and Executive Vice President
Yeshayahu Gordon 43 Vice President, Global Sales
Michelle Blank 45 Vice President, Global Marketing
David Seligman 41 Chief Financial Officer
Yael Langer 35 General Counsel and Secretary
Zohar Zisapel 50 Director
Adi Gan 31 Director
Dan Goldstein 45 Director
Hillel E. Milo 49 Director
Efraim Wachtel 54 Director
Andreas Mattes 38 Director Nominee
</TABLE>
- ---------------
Adi Gan, Dan Goldstein and Hillel Milo are independent directors.
Andreas Mattes shall become a director upon the closing of the private
placement.
YEHUDA ZISAPEL has served as a director of RADVision since our inception and
as our chairman of the board of directors since August 1999. Mr. Zisapel is also
a founder and a director of RAD Data Communications Ltd., a leading worldwide
data communications company headquartered in Israel, of which he has served as a
director since 1979, and its affiliate, BYNET Data Communications Ltd.
Mr. Zisapel also serves as the chairman of the board of RIT Technologies Ltd.
and RADWARE Ltd. and as a director of other companies in the RAD-BYNET group,
including SILICOM Ltd. and RADCOM Ltd. Mr. Zisapel has a B.Sc. and an M.Sc.
degree in electrical engineering from the Technion, Israel Institute of
Technology and an M.B.A. degree from Tel Aviv University. Yehuda Zisapel and
Zohar Zisapel are brothers.
AMI AMIR, our co-founder, has served as our chief executive officer,
president and a director since our inception. From March 1987 to November 1992,
Mr. Amir was the president of RAD Data Communications Inc. Before March 1987,
Mr. Amir held senior engineering positions for Simtech Advanced Training and
Simulation Systems, Tadiran Electronic Industries and Elbit Systems Ltd.
Mr. Amir has a B.Sc. degree in electronics and computer science from the
Technion Israel Institute of Technology.
ELI DORON, our co-founder, has served as our executive vice president and
chief technical officer since July 1998. From October 1992 to July 1998,
Mr. Doron was our vice president of research and development. From October 1983
to October 1992, Mr. Doron held senior engineering positions at Simtech Advanced
Training and Simulation Systems. Mr. Doron has a B.Sc. degree in electronics and
computer science from Ben Gurion University.
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YESHAYAHU GORDON has served as our vice president of global sales since May
1999 and as our vice president of sales and marketing since August 1997. From
April 1995 to July 1997, Mr. Gordon was president of RADVision Inc. From
May 1994 to April 1995, Mr. Gordon was president of Radlinx Inc. From
August 1990 to May 1994, Mr. Gordon was the district sales manager for
Orbotech Inc. and, before August 1990, sales representative for DEC Israel.
Mr. Gordon has a B.Sc. degree in physics and computer science from Tel Aviv
University.
MICHELLE BLANK has served as our vice president of global marketing since
May 1999. From June 1997 to May 1999, Ms. Blank was president of RADVision Inc.
From September 1990 to June 1997, Ms. Blank acted as an independent consultant
to several technology companies. Ms. Blank has a Ph.D. degree in cognitive
science from The University of Texas.
DAVID SELIGMAN has served as our chief financial officer since
November 1999. From July 1996 until November 1999, Mr. Seligman was the chief
financial officer and secretary of LanOptics Ltd. From October 1993 until
June 1996, Mr. Seligman was a senior financial analyst for Fidelity Investments
Systems Company. Mr. Seligman has a B.A. in political science and geography and
an M.B.A. in accounting and finance from Tel Aviv University.
YAEL LANGER has served as our general counsel since July 1998. Ms. Langer is
also general counsel and secretary of RAD and other companies in the RAD-BYNET
group. From December 1995 to July 1998, Ms. Langer served as assistant general
counsel to companies in the RAD-BYNET group. From September 1993 until
July 1995, Ms. Langer was a member of the legal department of Poalim Capital
Markets and Investments Ltd. Ms. Langer has an LL.B. degree from the Hebrew
University in Jerusalem.
ZOHAR ZISAPEL has served as a director of RADVision since our inception and
was chairman of the board of directors until August 1999. Mr. Zisapel is also a
founder and a director of RAD, of which he has served as president since
January 1982, and a director of other companies in the RAD-BYNET group,
including RADCOM, SILICOM, RIT and RADWARE. Mr. Zisapel previously served as
head of the electronics research department in the Israeli Ministry of Defense.
Mr. Zisapel received B.Sc. and M.Sc. degrees in electrical engineering from the
Technion, Israel Institute of Technology and an M.B.A. degree from Tel Aviv
University. Zohar Zisapel and Yehuda Zisapel are brothers.
ADI GAN has served as a director of RADVision since August 1998. Since
January 1998, Mr. Gan has been an investment manager with Evergreen's Venture
Capital Group. From August 1995 until January 1998, Mr. Gan was employed by
TesCom Ltd., initially as a project manager and then as a manager of the
real-time system division of TesCom Ltd. Mr. Gan has a B.Sc. in physics from the
Technion, Israel Institute of Technology, and a M.Sc. in chemistry from Tel Aviv
University.
DAN GOLDSTEIN has served as a director of RADVision since January 2000. In
1985, Mr. Goldstein founded Formula Systems (1985) Ltd. and has been its chief
executive officer and chairman of the board of directors since that time.
Mr. Goldstein is also the chairman of the board of directors of other companies
in the Formula Systems group, including ForSoft Ltd., Sintec Advanced
Technologies Ltd., F.C.T. Formula Computer Technologies Ltd. and Applicom
Software Industries (1990) Ltd., and is a director of Crystal Systems Solutions
Ltd. Mr. Goldstein has a B.Sc. degree in mathematics and computer science and an
M.B.A. in business administration from Tel Aviv University.
HILLEL E. MILO has served as a director of RADVision since May 1995. Until
July 1999, Mr. Milo was president and chief executive officer of Israel Infinity
Venture Capital Fund. Since January 1995, Mr. Milo has been chief executive
officer and managing director of Clal Venture Capital Fund L.P. In 1993,
Mr. Milo co-founded Walden Israel Venture Capital fund and has been the general
partner of that fund since that time. Mr. Milo has a B.Sc. in mechanical
engineering and a M.A. in management science from the University of Alabama.
46
<PAGE>
EFRAIM WACHTEL has served as a director of RADVision since March 1998.
Mr. Wachtel has been president and chief executive officer of RAD since
November 1997. From October 1985 to November 1997, Mr. Wachtel was vice
president of sales and marketing of RAD. Before October 1985, Mr. Wachtel held
various research and development positions in several companies in Israel and in
the U.S. Mr. Wachtel has a B.Sc. degree in electrical engineering from the
Technion, Israel Institute of Technology.
ANDREAS MATTES will be appointed a director of RADVision effective upon the
closing of the private placement. Since April 1999, Mr. Mattes has been the
president of enterprise networks of Siemens Information and Communication
Networks. From October 1998 until April 1999, Mr. Mattes was the president of
central sales of Siemens Information and Communication Networks. From June 1997
until October 1998, Mr. Mattes was the president of international market sales
of Siemens Private Networks. From October 1995 until June 1997, Mr. Mattes was
the vice president of product management enterprise switching of Siemens Private
Networks.
BOARD OF DIRECTORS
Our articles of association to be adopted before the consummation of this
offering provide that directors are elected at our annual general meeting of the
shareholders by a vote of the holders of a majority of the voting power
represented at that meeting. Each director, except for the external directors
described below, holds office until the next annual general meeting of the
shareholders.
INDEPENDENT DIRECTORS
Upon consummation of this offering, our ordinary shares will be listed for
quotation on the Nasdaq National Market and we will be subject to the rules of
the Nasdaq National Market applicable to listed companies. Under the Nasdaq
rules, we are required to appoint a minimum of three independent directors. The
independence standard under the Nasdaq rules excludes any person who is a
current or former employee of a company or its affiliates as well as the
immediate family members of an executive officer of a company or its affiliates.
Our three independent directors, Adi Gan, Dan Goldstein and Hillel Milo, meet
the independence standard of the Nasdaq rules.
ISRAELI COMPANIES LAW
We are subject to the provisions of the new Israeli Companies Law,
5739-1999, which became effective on February 1, 2000 and supersedes most of the
provisions of the Israeli Companies Ordinance (New Version), 5743-1983. The
Companies Law authorizes the minister of justice to adopt regulations exempting
from the provisions described below companies, like us, whose shares are traded
outside of Israel.
EXTERNAL DIRECTORS
QUALIFICATIONS OF EXTERNAL DIRECTORS
Under the Companies Law, companies incorporated under the laws of Israel
whose shares have been offered to the public in or outside of Israel are
required to appoint two external directors. The Companies Law provides that a
person may not be appointed as an external director if he or his relative,
partner, employer or any entity under his control has or had during the two
years preceding the date of appointment any affiliation with:
- the company;
- any entity controlling the company; or
- any entity controlled by the company or by this controlling entity.
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<PAGE>
The term affiliation includes:
- an employment relationship;
- a business or professional relationship maintained on a regular basis;
- control; and
- service as an office holder.
No person can serve as an external director if the person's position or
other business creates, or may create, conflict of interests with the person's
responsibilities as an external director.
Until the lapse of two years from termination of office, a company may not
engage an external director to serve as an office holder and cannot employ or
receive services from that person, either directly or indirectly, including
through a corporation controlled by that person.
ELECTION OF EXTERNAL DIRECTORS
External directors are to be elected by a majority vote at a shareholders'
meeting, provided that either:
- the majority of shares voted at the meeting, including at least one third
of the shares of non-controlling shareholders voted at the meeting, vote
in favor of the election; or
- the total number of shares voted against the election of the external
director does not exceed one percent of the aggregate voting rights in the
company.
The initial term of an external director is three years and may be extended
for an additional three years. Each committee of a company's board of directors
is required to include at least one external director. Under the provisions of
the Companies Law, we are required to designate the initial external directors
at a shareholders' meeting to be convened no later than August 1, 2000. We
intend to elect two directors as external directors after this offering.
AUDIT COMMITTEE
NASDAQ REQUIREMENTS
Under the Nasdaq rules, we are required to form an audit committee
consisting of at least three independent directors, all of whom are financially
literate and one of whom has accounting or related financial management
expertise. The responsibilities of the audit committee under the Nasdaq rules
include, among other things, evaluating the independence of a company's outside
auditors. Our current audit committee complies with the Nasdaq rules. In
addition, we are required to adopt an audit committee charter. We have adopted
an audit committee charter that complies with Nasdaq specifications.
COMPANIES LAW REQUIREMENTS
Under the Companies Law, the board of directors of any company that is
required to nominate external directors must also appoint an audit committee,
comprised of at least three directors including all of the external directors,
but excluding a:
- chairman of the board of directors;
- general manager;
- chief executive officer; and
48
<PAGE>
- controlling shareholder and any director employed by the company or who
provides services to the company on a regular basis.
The role of the audit committee is to examine flaws in the business
management of the company, in consultation with the internal auditor and the
company's independent accountants, and suggest appropriate course of action.
APPROVAL OF INTERESTED PARTY TRANSACTIONS
The approval of the audit committee is required to effect specified actions
and transactions with office holders and interested parties. An interested party
is defined in the Companies Law as a 5% or greater shareholder, any person or
entity who has the right to designate one director or more or the general
manager of the company or any person who serves as a director or as a general
manager. An audit committee may not approve an action or a transaction with an
interested party or with an office holder unless at the time of approval the two
external directors are serving as members of the audit committee and at least
one of whom was present at the meeting in which an approval was granted.
INTERNAL AUDITOR
Under the Companies Law, the board of directors must appoint an internal
auditor proposed by the audit committee. The role of the internal auditor is to
examine, whether the company's actions comply with the law, integrity and
orderly business procedure. Under the Companies Law, the internal auditor may
not be an interested party, an office holder, or an affiliate, or a relative of
an interested party, an office holder or affiliate, nor may the internal auditor
be the company's independent accountant or its representative. We intend to
appoint an internal auditor that complies with the requirements of the Companies
Law after this offering.
APPROVAL OF SPECIFIED RELATED PARTY TRANSACTIONS UNDER ISRAELI LAW
FIDUICIARY DUTIES OF OFFICE HOLDERS
The Companies Law imposes a duty of care and a duty of loyalty on all office
holders of a company, including directors and executive officers. The duty of
care requires an office holder to act with the level of care which a reasonable
office holder in the same position would have acted under the same
circumstances. The duty of care includes a duty to use reasonable means to
obtain:
- information on the appropriateness of a given action brought for his
approval or performed by him by virtue of his position; and
- all other important information pertaining to these actions.
The duty of loyalty of an office holder includes a duty to:
- refrain from any conflict of interest between the performance of his
duties in the company and his personal affairs;
- refrain from any activity that is competitive with the company;
- refrain from exploiting any business opportunity of the company to receive
a personal gain for himself or others; and
- disclose to the company any information or documents relating to a
company's affairs which the office holder has received due to his position
as an office holder.
Each person listed in the table under "--Directors and Executive Officers"
above is an office holder.
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<PAGE>
DISCLOSURE OF PERSONAL INTERESTS OF AN OFFICE HOLDER
The Companies Law requires that an office holder of a company promptly
disclose any personal interest that he may have and all related material
information known to him, in connection with any existing or proposed
transaction by the company. If the transaction is an extraordinary transaction,
the office holder must also disclose any personal interest held by:
- the office holder's spouse, siblings, parents, grandparents, descendants,
spouse's descendants and the spouses of any of these people; or
- any corporation in which the office holder is a 5% or greater shareholder,
director or general manager or in which he has the right to appoint at
least one director or the general manager.
Under Israeli law, an extraordinary transaction is a transaction:
- other than in the ordinary course of business;
- otherwise than on market terms; or
- that is likely to have a material impact of the company's profitability,
assets or liabilities.
Under the Companies Law, once an office holder complies with the above
disclosure requirement, the board of directors may approve a transaction between
the company and an office holder, or a third party in which an office holder has
a personal interest, unless the articles of association provide otherwise. A
transaction that is adverse to the company's interest may not be approved.
If the transaction is an extraordinary transaction, both the audit committee
and the board of directors must approve the transaction. Under specific
circumstances, shareholder approval may also be required. An office holder who
has a personal interest in a matter, which is considered at a meeting of the
board of directors or the audit committee, may not be present at this meeting or
vote on this matter.
DISCLOSURE OF PERSONAL INTERESTS OF A CONTROLLING SHAREHOLDER
Under the Companies Law, the disclosure requirements which apply to an
office holder also apply to a controlling shareholder of a public company. A
controlling shareholder includes a shareholder that holds 25% or more of the
voting rights in a public company if no other shareholder owns more than 50% of
the voting rights in the company. Extraordinary transactions with a controlling
shareholder or in which a controlling shareholder has a personal interest, and
the terms of compensation of a controlling shareholder who is an office holder,
require the approval of the audit committee, the board of directors and the
shareholders of the company. The shareholder approval may include either:
- at least one-third of the shareholders who have no personal interest in
the transaction and are present and voting, in person, by proxy or by
written ballot, at the meeting; or
- a majority of the voting power present and voting, provided that the
shareholders who have no personal interest in the transaction who vote
against the transaction do not represent more than one percent of the
voting rights in the company.
In addition, a private placement of securities that will increase the
relative holdings of a shareholder that holds five percent or more of the
company's outstanding share capital or that will cause any person to become, as
a result of the issuance, a holder of more than five percent of the company's
outstanding share capital, requires approval by the board of directors and the
shareholders of the company.
50
<PAGE>
EXCULPATION, INSURANCE AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the Companies Law, an Israeli company may not exempt an office holder
from liability for a breach of his duty of loyalty, but may exempt in advance an
office holder from his liability to the company, in whole or in part, for a
breach of his duty of care.
OFFICE HOLDER INSURANCE
Our articles of association provide that, subject to the provisions of the
Companies Law, we may enter into a contract for the insurance of the liability
of any of our office holders for:
- a breach of his duty of care to us or to another person;
- a breach of his duty of loyalty to us, provided that the office holder
acted in good faith and had reasonable cause to assume that his act would
not prejudice our interests; or
- a financial liability imposed upon him in favor of another person
concerning an act performed by him in his capacity as an office holder.
INDEMNIFICATION OF OFFICE HOLDERS
Our articles of association provide that we may indemnify an office holder
against:
- a financial liability imposed on him in favor of another person by any
judgment concerning an act performed in his capacity as an office holder;
and
- reasonable litigation expenses, including attorneys' fees, expended by the
office holder or charged to him by a court relating to an act performed in
his capacity as an office holder, in connection with:
- proceedings we institute against him or instituted on our behalf or by
another person;
- a criminal charge from which he was acquitted; or
- a criminal charge in which he was convicted for a criminal offense that
does not require proof of intent.
Our articles of association also include the following:
- We are authorized to grant in advance an undertaking to indemnify an
office holder, provided that the undertaking is:
- limited to specified events which the board of directors determines to
be anticipated; and
- limited in amount determined by the board of directors to be reasonable
under the circumstances.
- We are authorized to indemnify retroactively an office holder.
LIMITATIONS ON INSURANCE AND INDEMNIFICATION
The Companies Law provides that a company may not indemnify an office holder
nor enter into an insurance contract which would provide coverage for any
monetary liability incurred as a result of any of the following:
- a breach by the office holder of his duty of loyalty unless the office
holder acted in good faith and had a reasonable basis to believe that the
act would not prejudice the company;
- a breach by the office holder of his duty of care if the breach was done
intentionally or recklessly;
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<PAGE>
- any act or omission done with the intent to derive an illegal personal
benefit; or
- any fine levied against the office holder.
In addition, under the Companies Law, indemnification of, and procurement of
insurance coverage for, our office holders must be approved by our audit
committee and our board of directors and, in specified circumstances, by our
shareholders.
We have agreed to indemnify our office holders to the fullest extent
permitted under the Companies Law. Before this offering, we intend to obtain
directors and officers liability insurance for the benefit of our office
holders.
COMMITTEES
Our board of directors has formed an audit committee, a share incentive
committee, an option committee, an executive committee and a compensation
committee.
Our audit committee, which consists of Adi Gan, Dan Goldstein and Hillel
Milo, our three independent directors, exercises the powers of the board of
directors in matters relating to our accounting, reporting and financial control
practices. Upon the appointment of our external directors under the Companies
Law, the external directors will also serve on our audit committee.
Our share incentive committee, which consists of Yehuda Zisapel, Hillel Milo
and Ami Amir, administers our key employee share incentive plan.
Our option committee, which consists of Yehuda Zisapel, Hillel Milo and Ami
Amir, administers our consultants option plan.
Our executive committee, which consists of Yehuda Zisapel, Hillel Milo and
Ami Amir, is responsible for managing our daily operations and acting on behalf
of our board of directors in exigent circumstances.
Our compensation committee, which consists of Yehuda Zisapel and Hillel
Milo, sets the annual compensation for Ami Amir, our chief executive officer.
COMPENSATION OF DIRECTORS AND OFFICERS
The following table presents all compensation we paid to all of our
directors and officers as a group for the year ended December 31, 1999. The
table does not include any amounts we paid to reimburse any of our affiliates
for costs incurred in providing us with services during this period, including
services provided by Yael Langer who is also our officer.
<TABLE>
<CAPTION>
PENSION,
RETIREMENT
SALARIES, FEES, AND OTHER
COMMISSIONS AND SIMILAR
BONUSES BENEFITS
--------------- ----------
<S> <C> <C>
All directors and officers as a group, consisting of eleven
persons................................................... $628,000 $73,000
</TABLE>
As of December 31, 1999, our directors and executive officers as a group,
consisting of eleven persons, held options to purchase an aggregate of 320,298
ordinary shares. All our officers work full time for us except Yael Langer, who
is also an officer of other companies in the RAD-BYNET group. Ms. Langer devotes
between 15% to 30% of her time to us. Other than reimbursement for expenses, we
do not compensate our directors for serving on our board of directors.
Under the Companies Law, the board of directors must approve all
compensation arrangements of office holders who are not directors. Directors'
compensation arrangements also require audit committee approval before board
approval and shareholder approval.
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<PAGE>
KEY EMPLOYEE SHARE INCENTIVE PLAN
GENERAL
In April 1996, we adopted our key employee share incentive plan. Employees
of RADVision and its subsidiaries or of affiliates of RADVision belonging to the
RAD-BYNET group are eligible to participate in the plan. Options granted under
this plan are for a term of sixty-two months from the date of the grant of the
option. The following table presents option grant information for this plan as
of December 31, 1999:
<TABLE>
<CAPTION>
ORDINARY SHARES RESERVED WEIGHTED AVERAGE
FOR OPTION GRANTS OPTIONS GRANTED EXERCISE PRICE
- ------------------------ --------------- ----------------
<S> <C> <C>
3,163,523 3,038,323 $2.86
</TABLE>
The 3,163,523 ordinary shares indicated in the above table as having been
reserved for option grants reflect the total number of ordinary shares reserved
for grants under this plan and our consultants option plan in the aggregate. We
intend to grant further options under this plan to our executive officers and
employees.
PLAN ADMINISTRATION
The share incentive committee of our board of directors administers the
plan. Under the plan, the committee has the authority to determine, in its
discretion:
- the persons to whom options are granted;
- the number of shares underlying each option award;
- the time or times at which the award shall be made;
- the exercise price, vesting schedule and conditions under which the
options may be exercised; and
- any other matter necessary or desirable for the administration of the
plan.
OPTION TRUST
Under the plan, all options, or shares issued upon exercise of options, are
held in trust and registered in the name of a trustee selected by the share
incentive committee. The trustee may not release the options or ordinary shares
to the beneficiaries of these options or shares before the later of:
- the second anniversary of the registration of the options in the name of
the trustee; and
- the initial public offering of our ordinary shares.
During this period, voting rights attached to the ordinary shares issued
upon exercise of the options may be exercised by the trustee.
TERMINATION AND AMENDMENT
Our board of directors may terminate or amend the plan, provided that any
action by our board of directors, which will alter or impair the rights of an
option holder, requires the prior consent of that option holder.
CONSULTANTS OPTION PLAN
GENERAL
In March 1999, we adopted our consultants option plan. Our employees and
directors and consultants employed by us are eligible to participate in the
plan. Options granted under the plan are
53
<PAGE>
for a term of sixty-two months from the date of grant of the option. The
following table presents option grant information for this plan as of
December 31, 1999:
<TABLE>
<CAPTION>
ORDINARY SHARES RESERVED WEIGHTED AVERAGE
FOR OPTION GRANTS OPTIONS GRANTED EXERCISE PRICE
- ------------------------ --------------- ----------------
<S> <C> <C>
3,163,523 63,300 $1.18
</TABLE>
The 3,163,523 ordinary shares indicated in the above table as having been
reserved for option grants reflect the total number of ordinary shares reserved
for grants under this plan and our key employee share incentive plan in the
aggregate.
PLAN ADMINISTRATION
The option committee of our board of directors administers the plan. Under
the plan, the committee has the authority to determine, in its discretion:
- the persons to whom options are granted;
- the number of shares underlying each option award;
- the time or times at which the award shall be made;
- the exercise price, vesting schedule and conditions under which the
options may be exercised; and
- any other matter necessary or desirable for the administration of the
plan.
OPTION TRUST
Under the plan, all options, or shares issued upon exercise of options, are
held in trust and registered in the name of a trustee selected by the option
committee. The trustee may not release the options or ordinary shares to the
beneficiaries of these options or shares before the initial public offering of
our ordinary shares.
During this period, voting rights attached to the ordinary shares issued
upon exercise of the options may be exercised by the trustee.
TERMINATION AND AMENDMENT
Our board of directors may terminate or amend the plan, provided that any
action by our board of directors, which will alter or impair the rights of an
option holder, requires the prior consent of that option holder.
EMPLOYMENT AGREEMENTS
At the start of their employment, our employees in North America generally
sign offer letters specifying basic terms and conditions of employment as well
as non-disclosure agreements. At the start of their employment, our employees in
Israel generally sign written employment agreements that include confidentiality
and non-compete provisions.
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<PAGE>
PRINCIPAL SHAREHOLDERS
The following table presents information covering the beneficial ownership
of our ordinary shares as of the date of this prospectus, as adjusted to reflect
the sale of the ordinary shares in this offering and the concurrent private
placement, by:
- each person who is known to own beneficially more than 5% of the
outstanding ordinary shares; and
- all directors and executive officers as a group.
The percentage of ordinary shares in the table below is based on:
- 13,585,024 ordinary shares outstanding before this offering and the
concurrent private placement; and
- 17,975,846 ordinary shares outstanding immediately following this offering
and the concurrent private placement.
Total shares beneficially owned in the table below include shares that may
be acquired upon the exercise of options that are exercisable within 60 days of
the date of this prospectus. The shares that may be issued under these options
are treated as outstanding only for purposes of determining the percent owned by
the person or group holding the options but not for the purpose of determining
the percentage ownership of any other person or group.
Unless otherwise noted below, each shareholder's address is c/o
RADVision Ltd., 24 Raoul Wallenberg St., Tel Aviv 69719, Israel.
<TABLE>
<CAPTION>
TOTAL SHARES PERCENTAGE OF
BENEFICIALLY OWNED ORDINARY SHARES
-------------------------------- --------------------------------
BEFORE OFFERING AFTER OFFERING BEFORE OFFERING AFTER OFFERING
AND PRIVATE AND PRIVATE AND PRIVATE AND PRIVATE
NAME PLACEMENT PLACEMENT PLACEMENT PLACEMENT
- ---- --------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Yehuda Zisapel (1)........................ 2,939,863 2,371,751 21.7% 13.2%
Zohar Zisapel (2)......................... 3,081,022 2,485,631 22.7 13.8
Siemens Aktiengesellschaft (3)............ -- 1,625,228 -- 9.0
Clal Venture Capital Fund LP (4).......... 1,244,900 1,004,330 9.2 5.6
Evergreen group (5)....................... 1,167,463 941,858 8.6 5.2
Samsung entities (6)...................... -- 1,000,000 -- 5.6
All directors and executive officers as a
group
(12 persons) (7)........................ 9,014,764 7,922,932 65.4 43.6
</TABLE>
- ------------------------
(1) After giving effect to the private placement, includes 409,903 ordinary
shares owned of record by RAD Data Communications Ltd.
(2) After giving effect to the private placement, includes:
- 409,903 ordinary shares owned of record by RAD Data Communications Ltd.;
- 571,106 ordinary shares owned of record by Michael and Klil Holdings
(93) Ltd.; and
- 571,106 ordinary shares owned of record by Lomsha Ltd.
(3) The address of Siemens Aktiengesellschaft is Hofmannstrasse 51, D-81359,
Munich, Germany.
(4) The address of Clal Venture Capital Fund LP is Atidim Technological Park,
Building No. 4, Tel Aviv, Israel. Hillel Milo, chief executive officer and
managing director of Clal Venture Capital Fund LP and a director of
RADVision, disclaims beneficial ownership of the ordinary shares held by
Clal Venture Capital Fund LP except to the extent of his proportional
interest in the ordinary shares.
55
<PAGE>
(5) After giving effect to the private placement, consists of:
- 29,960 ordinary shares owned by Evergreen Canada-Israel Management Ltd.;
- 127,839 ordinary shares owned by the Periscope I Fund, Israeli
Partnership;
- 498,931 ordinary shares owned by the Periscope I Fund, L.P.; and
- 285,128 ordinary shares owned by IJT Technologies Ltd.
The address of the Evergreen group is 96 Rothschild Avenue, Tel Aviv,
Israel. Adi Gan, an investment manager of the Evergreen group's venture
capital group and a director of RADVision, disclaims beneficial ownership of
the ordinary shares held by the Evergreen group except to the extent of his
proportional interest in the ordinary shares.
(6) After giving effect to the private placement, consists of:
- 600,000 ordinary shares owned by Samsung Electro-Mechanics Co. Ltd.; and
- 400,000 ordinary shares owned by Samsung Venture Investment Corporation.
The address of Samsung Electro-Mechanics Co. Ltd. is 314 Maetan 3-Dong,
Paldal-Gu, Suwon, Kyunggi-D, Korea 442-743. The address of Samsung Venture
Investment Corporation is Samsung Yeok Sam Bldg. 647-9, Yeok Sam-Dong, Kang
Nam-Gu, Korea 135-080.
(7) Includes 205,514 ordinary shares issuable upon the exercise of options
exercisable within 60 days of the date of this prospectus.
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<PAGE>
RELATED PARTY TRANSACTIONS
THE RAD-BYNET GROUP
Yehuda and Zohar Zisapel are co-founders, directors and principal
shareholders of RADVision. Individually or together, they are also founders,
directors and principal shareholders of several other companies which, together
with us and the other subsidiaries and affiliates, are known as the RAD-BYNET
group. These corporations include:
AB-NET Ltd.
BYNET Data Communications Ltd.
BYNET Electronics Ltd.
BYNET SEMECH Ltd.
BYNET Systems Applications Ltd.
Commerce.net Ltd.
Giganet Ltd.
IP-RAD Ltd.
RADCOM Ltd.
RAD Data Communications
RADGuard Ltd.
RADLAN Computer Communications Ltd.
RAD Network Devices
RAD-OP Ltd.
RADView Software Ltd.
RADWARE Ltd.
RADWIN Ltd.
RIT Technologies Ltd.
RND Networks
SILICOM Ltd.
In addition to engaging in other businesses, members of the RAD-BYNET group
are actively engaged in designing, manufacturing, marketing and supporting data
communications products, none of which currently compete with our products. Some
of the products of members of the RAD-BYNET group are complementary to, and may
be used in connection with, our products.
Members of the RAD-BYNET group provide us with legal, human resources and
administrative services, and we reimburse each company for its costs in
providing these services. The aggregate amount of these reimbursements was
approximately $155,000, $152,000 and $196,000 in 1997, 1998 and 1999.
AGREEMENT WITH RADCOM LTD.
In January 1999, we entered into an agreement to license our H.323 software
development kit to RADCOM Ltd., an affiliated company controlled by Yehuda and
Zohar Zisapel and a member of the RAD-BYNET group. The agreement, which was
based on our standard form, provides for an aggregate fee of $187,000. This fee
includes maintenance and support services for one year and minimum royalty
payments on sales of products which incorporate the technology contained in the
software development kit during the first two years of the agreement. In
addition, the agreement provides that RADCOM has an option to extend the
maintenance and support services for additional annual periods as well as an
option to purchase additional RADVision products and technology at specified
discounts.
LEASE ARRANGEMENTS
We lease from RIT Technologies Ltd., RAD Data Communication Ltd. and several
other companies, all of which are affiliated companies controlled by Yehuda
Zisapel and Zohar Zisapel and members of the RAD-BYNET group, office space of
approximately 21,830 square feet in Tel Aviv, Israel, for an aggregate monthly
rent of approximately $40,000. The expiration dates of these lease agreements
range from August 2000 to December 2000. Under most of these lease agreements,
we have the option to extend the term of the lease for additional periods.
We lease from RAD Data Communications, an affiliated company controlled by
Yehuda Zisapel and Zohar Zisapel and a member of the RAD-BYNET group,
approximately 9,000 square feet for our facility in New Jersey, for a monthly
rent of approximately $6,500. The term of the lease is five years, commencing
May 1997 and terminating in May 2002. The monthly rent payments include a 15%
intra-group discount. If the property is sold, this discount would no longer
apply and our monthly payments will increase.
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SUPPLY ARRANGEMENT
We purchase from RAD Data Communications components which we integrate into
our multimedia RADVision products. The aggregate purchase price of these
components was approximately $252,000 for the year ended December 31, 1998, and
approximately $216,000 for the nine month period ended September 30, 1999.
We generally ascertain the market prices for goods and services that can be
obtained at arms length from unaffiliated third parties before entering into any
transaction with a member of the RAD-BYNET group for those goods and services.
In addition, all of our transactions to date with members of the RAD-BYNET group
were approved unanimously by our shareholders. As a result, we believe that the
terms of the transactions in which we have engaged and are currently engaged
with other members of the RAD-BYNET group are beneficial to us and no less
favorable to us than terms which might be available to us from unaffiliated
third parties. Any future transaction and arrangement with entities, including
other members of the RAD-BYNET group, in which our office holders have a
personal interest will require approval by our audit committee, our board of
directors and, if applicable, our shareholders.
PRIVATE PLACEMENTS
1995
In April 1995, we issued in a private placement to investors, including RAD
Data Communications Ltd. and Clal Venture Capital Fund LP, an aggregate of
5,159,583 ordinary shares for an aggregate purchase price of approximately
$4.9 million, or $0.95 per share.
1996
In September 1996, we agreed to issue in a private placement to new
investors and existing shareholders, including Clal Venture Capital Fund LP, an
aggregate of 1,030,946 ordinary shares at an aggregate purchase price of
approximately $1.6 million, or $1.55 per share. Out of the aggregate 1,030,946
shares, we issued 714,235 shares during September and October 1996. Under an
agreement with Intel Corporation, we issued an additional 158,461 shares in
November 1997 and an additional 158,250 shares in December 1999 in exchange for
an additional aggregate investment in us of $500,000.
1997
In May through July 1997, we issued in a private placement to existing
shareholders, including RAD Data Communications Ltd., Zohar Zisapel and Clal
Venture Capital Fund LP, an aggregate of 269,447 ordinary shares at an aggregate
purchase price of approximately $650,000, or $2.41 per share.
1998
In May 1998, we issued in a private placement to new investors and existing
shareholders, including the Evergreen group, Zohar Zisapel, RAD Data
Communications Ltd. and Clal Venture Capital Fund LP, an aggregate of 2,957,165
preferred shares at an aggregate purchase price of approximately $5 million, or
$1.69 per share. We also issued 121,114 ordinary shares at NIS 0.1 per share to
the May 1997 investors as an anti-dilution adjustment to the shares they
purchased in the May 1997 private placement.
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REGISTRATION RIGHTS
1995
In connection with the private placement of our ordinary shares in
April 1995, several of our shareholders were granted registration rights for
their ordinary shares. The agreements grant registration rights to each of:
- Yehuda Zisapel, Zohar Zisapel, RAD Data Communications Ltd. and the
employees' trust, as a group;
- Clal Venture Capital Fund LP and ECI Telecom Ltd., as a group; and
- other shareholder groups specified in the agreements.
Under the agreements, each of these shareholder groups will have the right
to make a single demand for the registration of their ordinary shares
outstanding at the time of this offering, provided that:
- the shareholder group owns at least 2% of our outstanding share capital;
and
- the demand covers shares representing a market value of at least
$3 million and does not include shares which may be sold without
restriction within three months from the date of the demand.
The shareholders' rights will be exercisable at any time commencing on the
first anniversary of the consummation of this offering and for a period of three
years. In addition, each of the investors in the April 1995 private placement
has the right to have its ordinary shares included in some of our registration
statements, provided that the shareholder owns at least 2% of our outstanding
share capital at the time it exercises this right.
1996
In connection with the private placement of our ordinary shares in
September 1996, Intel Corporation was granted registration rights for their
ordinary shares. The agreement provides for registration rights on the same
terms and conditions as contained in the private placement agreements of
April 1995.
1998
In connection with the private placement of our preferred shares in
May 1998, several of our shareholders were granted registration rights for the
ordinary shares outstanding or to be issued upon conversion of their preferred
shares, which represent 2,957,165 ordinary shares in the aggregate.
The agreement provides that the purchasers of the preferred shares in
May 1998, as a group, will have the right to make a demand on two occasions for
the registration of their ordinary shares outstanding at the time of this
offering, provided that:
- the demand covers shares representing a market value of at least
$3 million; and
- the demand does not include shares which may be sold without restriction
within three months from the date of the demand.
The shareholders' rights will be exercisable at any time commencing on the
first anniversary of the consummation of this offering and for a period of three
years or, in specified cases, for a period of five years. In addition, each of
the investors in the May 1998 private placement has the right to have its
ordinary shares included in some of our registration statements. The agreement
also provides that if subsequent investors in RADVision are granted more
favorable terms concerning demand or other
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registration rights, each of the investors will be granted identical rights, for
so long as they own at least 5% of our outstanding shares at that time.
AGREEMENTS WITH OUR CHIEF EXECUTIVE OFFICER
FOUNDERS AGREEMENT
In January 1992, Messrs. Yehuda and Zohar Zisapel, entered into an agreement
with Ami Amir, under which Ami Amir agreed to serve as our chief executive
officer for a period of not less than 5 years. In consideration for his
services, Zohar Zisapel and Yehuda Zisapel transferred 11% of our then
outstanding share capital to Ami Amir. The agreement provides that so long as
Ami Amir is our shareholder or director, he may not engage in business
activities that compete with us or pertain to data communications. In addition,
none of the parties may disclose to third parties information pertaining to our
business. The agreement also gives each of Messrs. Yehuda and Zohar Zisapel and
Ami Amir a right of first refusal if any of them attempts to transfer their
shares to a third party.
GRANT OF SECURITIES
Under agreements between us, Messrs. Yehuda and Zohar Zisapel and Ami Amir
dated April 7, 1995 and January 1, 1999, we issued 196,652 ordinary shares and
granted 119,848 options to Ami Amir. The shares and options will vest over a
five year period, commencing January 1, 1999. This five-year period will be
reduced by a factor of two upon the consummation of this offering.
LOAN AGREEMENT
In July 1997, we entered into an agreement with Ami Amir under which we
loaned him approximately $66,000 at an annual interest rate of 1% linked to the
Israel consumer price index. The loan is scheduled to be repaid upon the earlier
of the termination of his employment with us or the sale by Ami Amir of all or
any portion of his shares of RADVision. As of December 31, 1999, the outstanding
balance of this loan was approximately $65,000, consisting of principal and
accrued interest. Ami Amir's shares of RADVision serve as collateral for the
payment of the loan.
VOTING AGREEMENT
Upon consummation of the private placement, Siemens and some of our existing
shareholders, including our chairman of the board and chief executive officer
and some of our other directors, will enter into a voting agreement which
provides that, in respect of the election of our directors, they will nominate
and vote for a nominee of Siemens to serve as a director and as many other
nominees as the other shareholders party to the agreement shall unanimously
propose to serve as directors, which shall at a minimum be equal to the number
of directors which these shareholders have appointed to the board at the date of
this prospectus. In the event that all directors, except for one director,
decide that the continuation of a director on our board may damage our business
prospects, then the director shall be removed from our board. The voting
agreement expires three years following the date of this prospectus, provided
that it shall be automatically extended for two additional one-year periods,
unless any of the parties to the agreement notifies each of the other parties 60
days before the expiration date of the then current term. After giving effect to
this offering and the concurrent private placement, 8,548,296 ordinary shares,
representing approximately 47.6% of the outstanding shares, will be subject to
the voting agreement.
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SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of our ordinary shares in the public market
could adversely affect prevailing market prices of our ordinary shares.
Assuming no exercise of outstanding options, we will have an aggregate of
17,975,846 ordinary shares outstanding upon completion of this offering and the
concurrent private placement. Of these shares, the 3,800,000 shares sold in this
offering will be freely tradable without restriction or further registration
under the Securities Act, unless the shares are purchased by affiliates under
Rule 144 of the Securities Act.
The remaining 14,175,846 ordinary shares will be held by our existing
shareholders and the investors in the concurrent private placement and will be
restricted securities. Restricted securities may be sold in the public market
only if registered or if they qualify for an exemption from registration under
Rule 144 of the Securities Act. These rules are summarized below.
The following table indicates approximately when the 14,175,846 ordinary
shares that are not being sold in this offering, but which will be outstanding
at the time this offering is complete, will be eligible for sale into the public
market, under the provisions of Rule 144 or 701:
ELIGIBILITY OF RESTRICTED SHARES FOR SALE IN PUBLIC MARKET
<TABLE>
<S> <C>
90 days after the date of this prospectus................... 567,566
180 days after the date of this prospectus.................. 10,824,802
270 days after the date of this prospectus.................. 2,625,228
More than 270 days after the date of this prospectus........ 158,250
</TABLE>
LOCK-UP AGREEMENTS
Our officers and directors, all of our employees and substantially all of
our existing shareholders have signed lock-up agreements under which they agreed
not to dispose of or hedge any ordinary shares or any securities convertible
into or exchangeable for ordinary shares for a period of 180 days after the date
of this prospectus. Dispositions can be made sooner with the prior written
consent of Lehman Brothers Inc. In addition, in connection with the private
placement, Siemens and Samsung have signed lock-up agreements prohibiting the
disposition of the shares they acquire in the private placement for a period of
270 days after the date of this prospectus.
RULE 144
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned ordinary shares
for at least one year would be entitled to sell within any three-month period a
number of shares that does not exceed the greater of:
- 1% of the number of ordinary shares then outstanding, which will equal
approximately 179,758 ordinary shares immediately after this offering; or
- the average weekly trading volume of the ordinary shares on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice on Form 144 in connection with the sale.
Sales under Rule 144 are also subject to manner of sale provisions and
notice requirements and to the availability of current public information about
us.
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RULE 144(K)
Under Rule 144(k), a person:
- who is not considered to have been one of our affiliates at any time
during the 90 days preceding a sale; and
- who has beneficially owned the shares proposed to be sold for at least two
years, including the holding period of any prior owner other than an
affiliate,
is entitled to sell his shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144. Therefore,
unless otherwise restricted, these shares may be sold immediately upon the
completion of this offering.
RULE 701
In general, under Rule 701, any of our employees, directors, officers,
consultants or advisors who purchases ordinary shares from us in connection with
a compensatory stock or option plan or other written agreement before the
effective date of this offering is entitled to resell these shares. These shares
can be resold 90 days after the effective date of this offering in reliance on
Rule 144, without having to comply with restrictions, including the holding
period, contained in Rule 144.
The Securities and Exchange Commission has indicated that Rule 701 will
apply to typical stock options granted by an issuer before it becomes subject to
the reporting requirements of the Securities Exchange Act of 1934, along with
the shares acquired upon exercise of these options, including exercises after
the date of this prospectus. Securities issued in reliance on Rule 701 are
restricted securities and, subject to the contractual restrictions described
above, beginning 90 days after the date of this prospectus, may be sold:
- by persons other than affiliates subject only to the manner of sale
provisions of Rule 144; and
- by affiliates under Rule 144 without compliance with its one year minimum
holding period requirement.
OPTIONS
Following the completion of this offering we intend to file a registration
statement on Form S-8 under the Securities Act covering 3,163,523 ordinary
shares reserved for issuance under our share option plans. The registration
statement on Form S-8 will become effective automatically upon filing. As of
December 31, 1999, options to purchase 3,101,623 ordinary shares were issued and
outstanding, of which options to purchase 542,903 ordinary shares had vested.
Ordinary shares registered under the registration statement will, subject to
vesting provisions and Rule 144 volume limitations applicable to our affiliates,
be available for sale in the open market immediately after the 180-day lock-up
agreements expire.
REGISTRATION RIGHTS
Commencing on the first anniversary of the completion of this offering, the
holders of 12,935,144 ordinary shares are entitled to request that we register
their ordinary shares under the Securities Act. After these ordinary shares are
registered, they will become freely tradable without restriction under the
Securities Act. Any sales of securities by these shareholders could have a
material adverse effect on the trading price of our ordinary shares.
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DESCRIPTION OF SHARE CAPITAL
Upon completion of this offering, we will be authorized to issue 25,000,000
ordinary shares. On January 18, 2000, our board of directors declared, and our
shareholders approved, effective immediately before this offering:
- a share dividend of 20.1 ordinary shares for each ordinary share then
outstanding; and
- a 10-for-1 share split.
In addition, before the share split and the distribution of the share
dividend, each preferred share will automatically convert into one ordinary
share. Immediately following the conversion of our preferred shares, the share
split and the distribution of the share dividend, there will be 13,585,024
ordinary shares issued and outstanding.
Upon completion of this offering, all outstanding ordinary shares, including
the ordinary shares issued in this offering, will be validly issued and fully
paid and will not have preemptive rights, rights of first refusal, except for a
contractual right of first refusal among the founders, or co-sale rights. The
ownership or voting of ordinary shares by non-residents of Israel is not
restricted in any way by our memorandum of association, our articles of
association or the laws of the State of Israel, except for ownership by
nationals of countries which are, or have been, in a state of war with Israel
may not be recognized as owners of ordinary shares.
DEFERRED SHARES
As of December 31, 1999, our authorized share capital includes 12,760
deferred shares, as adjusted for the share split, all of which are issued and
outstanding. The deferred shares were created upon the conversion of ordinary
shares allocated to a trust and held on behalf of our employees when the
employees to whom the shares were allocated left us. Our shareholders have
resolved that, effective upon completion of this offering, an additional 2,770
ordinary shares be converted into deferred shares due to additional employee
departures. The deferred shares confer no rights or privileges on their holders
except for the right to receive upon our dissolution or liquidation NIS 0.1 per
deferred share. Holders of deferred shares will not receive the share dividend.
TRANSFER OF SHARES AND NOTICES
Fully paid ordinary shares are issued in registered form and may be freely
transferred under our articles of association unless the transfer is restricted
or prohibited by another instrument. Our articles of association provide that
each shareholder of record is entitled to receive at least 21 days' prior notice
of any shareholders' meeting.
ELECTION OF DIRECTORS
Our ordinary shares do not have cumulative voting rights in the election of
directors. As a result, the holders of ordinary shares that represent more than
50% of the voting power represented at a shareholders meeting have the power to
elect most of our directors.
DIVIDEND AND LIQUIDATION RIGHTS
We may declare a dividend to be paid to the holders of ordinary shares
according to their rights and interests in our profits. In the event of our
liquidation, after satisfaction of liabilities to creditors, our assets will be
distributed to the holders of ordinary shares in proportion to the nominal value
of their holdings. This right may be affected by the grant of preferential
dividend or distribution rights to the holders of a class of shares with
preferential rights that may be authorized in the future. The board of directors
may declare interim dividends and propose the final dividend for any fiscal year
only out of
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retained earnings. Under the Companies Law, the declaration of a dividend does
not require the approval of the shareholders of the company, unless the
company's articles of association require otherwise. Our articles of association
provide that the declaration of a dividend must be approved by an ordinary
shareholders' resolution, which may decrease but not increase the amount
proposed by the board of directors.
VOTING
Holders of ordinary shares have one vote for each ordinary share held on all
matters submitted to a vote of shareholders. These voting rights may be affected
by the grant of any special voting rights to the holders of a class of shares
with preferential rights that may be authorized in the future.
QUORUM
The quorum required for an ordinary meeting of shareholders consists of at
least two shareholders present in person or by proxy who hold or represent
between them at least 33 1/3% of the issued share capital. A meeting adjourned
for lack of a quorum generally is adjourned to the same day in the following
week at the same time and place or any time and place as the directors designate
in a notice to the shareholders. At the reconvened meeting, the required quorum
consists of any two members present in person or by proxy.
RESOLUTIONS
An ordinary resolution, like a resolution for the declaration of dividends,
requires approval by the holders of a majority of the voting rights represented
at the meeting, in person, by proxy or by written ballot, and voting on the
resolution. Under our articles of association, a special or extraordinary
resolution requires approval of the holders of 65% of the voting rights
represented at the meeting and voting on the resolution. Special or
extraordinary resolutions include resolutions for:
- amending our memorandum of association or articles of association;
- approving changes in capitalization;
- winding-up; or
- authorization of a class of shares with special rights.
Under the Companies Law, unless otherwise provided in the articles of
association or applicable law, all resolutions of the shareholders require a
simple majority and all shareholders meetings require prior notice of at least
21 days. However, companies, such as ours, which have been incorporated before
the Companies Law became effective, must specifically amend their articles of
association to provide for the shareholder voting requirements contained in the
Companies Law. The Companies Law requires that the first amendment of a
company's articles of association following the effective date of the Companies
Law be approved by holders of 75% of the voting rights represented at the
meeting, in person, by proxy or by written ballot, and voting on the amendment.
SHAREHOLDER DUTIES
Under the Companies Law, a shareholder has a duty to act in good faith
towards the company in which he hold shares and towards the company's other
shareholders and to refrain from abusing his power in the company. This duty
extends to voting in the general meeting of shareholders on the following
matters:
- any amendment to the articles of association;
- an increase of the company's authorized share capital;
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- a merger; or
- approval of some of the acts and transactions which require shareholder
approval.
In addition, a shareholder has the general duty to refrain from depriving
rights of other shareholders. Furthermore, any controlling shareholder, any
shareholder who knows that it possesses the power to determine the outcome of a
shareholder vote and any shareholder that, under the provisions of the articles
of association, has the power to appoint an office holder in the company, is
under a duty to act in fairness towards the company. The Companies Law does not
describe the substance of these duties.
REGISTRATION RIGHTS
For a discussion of registration rights we have granted to shareholders,
please see the section of this prospectus entitled "Related Party
Transactions--Registration Rights."
ANTI-TAKEOVER PROVISION
The Companies Law requires a party who wishes to acquire shares of a
publicly-held company without the approval of its minority shareholders to
acquire 95% of all outstanding shares not held by the acquirer before the
acquisition. Even if the acquirer acquires 95% of the outstanding shares, the
remaining minority shareholders may seek to block the acquisition in court.
MERGERS AND ACQUISITIONS UNDER ISRAELI LAW
The Companies Law includes provisions that allow a merger transaction and
requires that each company that is party to a merger approve the transaction by
its board of directors and a vote of the majority of its shares, voting on the
proposed merger at a shareholders' meeting called on at least 21 days' prior
notice. In determining whether a majority has approved the merger, shares held
by the other party to the merger or any person holding at least 25% of the other
party to the merger are excluded from the vote. The Companies Law does not
require court approval of a merger other than in specified situations. Upon the
request of a creditor of either party to the proposed merger, the court may
delay or prevent the merger if it concludes that there exists a reasonable
concern that as a result of the merger, the surviving company will be unable to
satisfy the obligations of any of the parties to the merger. In addition, a
merger may not be completed unless at least 70 days have passed from the time
that a proposal for approval of the merger has been filed with the Israeli
Registrar of Companies.
The Companies Law also provides that an acquisition of shares in a public
company on the open market must be made by means of a tender offer if as a
result of the acquisition the purchaser would become a 25% shareholder of the
company. If there already is another shareholder who holds more than 25% but
less than 50% of the company's outstanding share capital, the Companies Law
provides that an acquisition of shares in a public company on the open market
must be made by means of a tender offer if as a result of the acquisition the
purchaser would become a 45% shareholder of the company. However, under the
Companies Law, if following any acquisition of shares, the acquirer who hold 90%
or more of the Company's shares, the acquisition must be made by means of a
tender offer for all of the shares of the class. These rules do not apply if the
acquisition is made by way of a merger.
MODIFICATION OF CLASS RIGHTS
Under our articles of association, the rights attached to any class, unless
otherwise provided by the terms of the class, including voting, rights to
dividends and the like, may be varied by:
- written consent of holders of 65% of the issued shares of that class; or
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- adoption of a resolution by the holders of 65% of the shares of that class
at a special meeting of the holders of that class.
ISRAELI SECURITIES LAW REQUIREMENTS
We have received from the Israeli Securities Authority an exemption from
Israel's prospectus delivery requirements applicable to the offering. We have
also received from the Israeli Securities Authority an exemption from the
reporting obligations to which Israeli companies whose shares are publicly
traded are subject, provided that a copy of each of the reports filed by us
under applicable United States securities laws shall be available for public
review at our offices.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our ordinary shares is American Stock
Transfer & Trust Company, New York, New York.
CONDITIONS IN ISRAEL
We are incorporated under the laws of, and our principal offices and
manufacturing and research and development facilities are located in, the State
of Israel. Therefore, we are directly affected by political, economic and
military conditions in Israel.
POLITICAL CONDITIONS
Since the establishment of the State of Israel in 1948, a number of armed
conflicts have taken place between Israel and its Arab neighbors and a state of
hostility, varying from time to time in intensity and degree, has led to
security and economic problems for Israel. Israel signed a peace treaty with
Egypt in 1979 and a peace treaty with Jordan in 1994. Since 1993, a joint
Israeli-Palestinian declaration of principles and several other agreements have
been signed between Israel and the Palestinians. As of the date of this
prospectus, Israel has not entered into any peace agreement with Syria and
Lebanon. We cannot assure you whether any peace agreement with Syria and Lebanon
will be signed.
Despite the progress towards peace between Israel and its Arab neighbors and
the Palestinians, some countries, companies and organizations continue to
participate in a boycott of Israeli firms and others doing business with Israel
or with Israeli companies. Although we are precluded from marketing our products
to these countries, we believe that in the past, the boycott has not had a
material adverse effect on us. However, restrictive laws, policies or practices
directed towards Israel or Israeli businesses could have an adverse impact on
the expansion of our business.
All male adult citizens and permanent residents of Israel under the age of
48 are, unless exempt, obligated to perform up to 39 days of military reserve
duty annually. Additionally, these residents are subject to being called to
active duty at any time under emergency circumstances. Many of our officers and
employees are currently obligated to perform annual reserve duty. While we have
operated effectively under these requirements since we began operations, we
cannot assess the full impact of these requirements on our workforce or business
if conditions should change, and we cannot predict the effect on us of any
expansion or reduction of these obligations.
ECONOMIC CONDITIONS
Israel's economy has been subject to numerous destabilizing factors,
including a period of rampant inflation in the early to mid-1980s, low foreign
exchange reserves, fluctuations in world commodity prices, military conflicts
and civil unrest. The Israeli government has intervened in various sectors of
the economy, by utilizing fiscal and monetary policies, import duties, foreign
currency restrictions and
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control of wages, prices and foreign currency exchange rates. In 1998, the
Israeli currency control regulations were liberalized significantly to allow
Israeli residents to deal in foreign currency and non-residents of Israel to
purchase and sell Israeli currency and assets. The Israeli government has
periodically changed its policies in all these areas. There are currently no
Israeli currency control restrictions on remittances of dividends on the
ordinary shares or the proceeds from the sale of the shares. However,
legislation remains in effect under which currency controls can be imposed by
administrative action at any time.
The Israeli government's monetary policy contributed to relative price and
exchange rate stability in recent years, despite fluctuating rates of economic
growth and a high rate of unemployment. We cannot assure you that the Israeli
government will be successful in its attempts to keep prices and exchange rates
stable. Price and exchange rate instability may have a material adverse effect
on us.
TRADE RELATIONS
Israel is a member of the United Nations, the International Monetary Fund,
the International Bank for Reconstruction and Development and the International
Finance Corporation. Israel is a member of the World Trade Organization and is
signatory to the Global Agreement on Trade in Services. In addition, Israel has
been granted preferences under the Generalized System of Preferences from the
United States, Australia, Canada and Japan. These preferences allow Israel to
export the products covered by these programs either duty-free or at reduced
tariffs.
Israel and the EEC, known now as the European Union, concluded a free trade
agreement in July 1975 which confers various advantages on Israeli exports to
most European countries and obligates Israel to lower its tariffs on imports
from these countries over a number of years. In 1985, Israel and the United
States entered into an agreement to establish a free trade area. The free trade
area has eliminated all tariff and specified non-tariff barriers on most trade
between the two countries. On January 1, 1993, an agreement between Israel and
the European Free Trade Association, known as the EFTA, established a free-trade
zone between Israel and the EFTA nations. In November 1995, Israel entered into
a new agreement with the European Union, which includes redefinement of rules of
origin and other improvements, including providing for Israel to become a member
of the research and technology programs of the European Union. In recent years,
Israel has established commercial and trade relations with a number of other
nations, including Russia, China, India, Turkey and other nations in Eastern
Europe and Asia.
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TAXATION AND GOVERNMENT PROGRAMS
ISRAELI TAX CONSIDERATIONS AND GOVERNMENT PROGRAMS
The following is a summary of the current tax structure applicable to
companies in Israel, with special reference to its effect on us. The following
also contains a discussion of the material Israeli and United States tax
consequences to persons purchasing our ordinary shares offered by this
prospectus and Israeli government programs benefiting us. To the extent that the
discussion is based on new tax legislation which has not been subject to
judicial or administrative interpretation, we cannot assure you that the tax
authorities will accept the views expressed in the discussion in question. The
discussion is not intended, and should not be taken, as legal or professional
tax advice and is not exhaustive of all possible tax considerations.
PROSPECTIVE PURCHASERS OF OUR ORDINARY SHARES SHOULD CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE UNITED STATES, ISRAELI OR OTHER TAX CONSEQUENCES OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF ORDINARY SHARES, INCLUDING, IN
PARTICULAR, THE EFFECT OF ANY FOREIGN, STATE OR LOCAL TAXES.
GENERAL CORPORATE TAX STRUCTURE
Israeli companies are subject to company tax at the rate of 36% of taxable
income. However, the effective tax rate payable by a company, which derives
income from an approved enterprise discussed further below, may be considerably
less.
TAX BENEFITS UNDER THE LAW FOR THE ENCOURAGEMENT OF CAPITAL INVESTMENTS,
1959
The Law for the Encouragement of Capital Investments, 1959, commonly
referred to as the Investment Law, provides that a proposed capital investment
in eligible facilities may, upon application to the Investment Center of the
Ministry of Industry and Trade of the State of Israel, be designated as an
approved enterprise. Each certificate of approval for an approved enterprise
relates to a specific investment program delineated both by its financial scope,
including its capital sources, and by its physical characteristics, for example,
the equipment to be purchased and utilized under the program. The tax benefits
derived from any certificate of approval relate only to taxable income
attributable to the specific approved enterprise. If a company has more than one
approval or only a portion of its capital investments is approved, its effective
tax rate is the result of a weighted average of the applicable rates.
Taxable income of a company derived from an approved enterprise is subject
to company tax at the maximum rate of 25%, rather than 36%, for the benefit
period. This period is ordinarily seven years, or ten years if the company
qualifies as a foreign investors' company as described below, commencing with
the year in which the approved enterprise first generates taxable income.
However, this period is limited to twelve years from commencement of production
or 14 years from the date of approval, whichever is earlier. The Investment Law
also provides that a company that has an approved enterprise within Israel will
be eligible for a reduced tax rate for the remainder of the benefit period.
A company owning an approved enterprise may elect to receive an alternative
package of benefits. Under the alternative package of benefits, a company's
undistributed income derived from an approved enterprise will be exempt from
company tax for a period of between two and ten years from the first year of
taxable income, depending on the geographic location of the approved enterprise
within Israel, and the company will be eligible for a reduced tax rate for the
remainder of the benefits period.
A company that has an approved enterprise program is eligible for further
tax benefits if it qualifies as a foreign investors' company. A foreign
investors' company is a company more than 25% of whose share capital and
combined share and loan capital is owned by non-Israeli residents. A company
which qualifies as a foreign investors' company and has an approved enterprise
program is eligible for tax benefits for a ten year benefit period. Income
derived from the approved enterprise program will be
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exempt from tax for a period of two years and will be subject to a reduced tax
for an additional eight years. The tax rate is for the additional eight years is
25% unless the level of foreign investment exceeds 49%, in which case the tax
rate is 20% if the foreign investment is more than 49% and less than 74%; 15% if
more than 74% and less than 90%; and 10% if 90% or more.
A company that has elected the alternative package of benefits and that
subsequently pays a dividend out of income derived from the approved enterprise
during the tax exemption period will be subject to tax on of the amount
distributed. The rate of the tax will be the rate which would have been
applicable had the company not elected the alternative package of benefits. This
rate is generally 10%-25%, depending on the percentage of the company's shares
held by foreign shareholders. The dividend recipient is taxed at the reduced
rate applicable to dividends from approved enterprises which is 15%, if the
dividend is distributed during the tax exemption period or within 12 years after
the period. The company must withhold this tax at source, regardless of whether
the dividend is converted into foreign currency.
Subject to applicable provisions concerning income under the alternative
package of benefits, all dividends are considered to be attributable to the
entire enterprise and their effective tax rate is the result of a weighted
average of the various applicable tax rates. Under the Investment Law, a company
that has elected the alternative package of benefits is not obliged to
distribute exempt retained profits, and may generally decide from which year's
profits to declare dividends. We currently intend to reinvest any income derived
from our approved enterprise programs and not to distribute the income as a
dividend.
The Investment Center bases its decision whether or not to approve an
application on the criteria in the Investment Law and regulations, the then
prevailing policy of the Investment Center and the specific objectives and
financial criteria of the applicant. Therefore, we cannot assure you that any of
our applications will be approved. In addition, the benefits available to an
approved enterprise are conditional upon the fulfillment of conditions
stipulated in the Investment Law and its regulations and the criteria in the
specific certificate of approval, as described above. If a company does not meet
these conditions, it would be required to refund the amount of tax benefits,
with the addition of the consumer price index linkage adjustment and interest.
The Investment Center of the Ministry of Industry and Trade has granted
several investment programs at our manufacturing facility approved enterprise
status under Israeli law. We have elected the alternative package of benefits in
connection with these approved enterprise programs. The portion of our income
derived from these approved enterprise programs will be exempt from tax for a
period of two years and will be subject to a reduced tax for an additional five
to eight years depending on the percentage of our share capital held by
non-Israelis, commencing when we begin to realize net income from these
programs. The benefits available to an approved enterprise program are dependent
upon the fulfillment of conditions stipulated in applicable law and in the
certificate of approval.
We have derived, and expect to continue to derive, a substantial portion of
our income from our approved enterprise programs. Subject to compliance with
applicable requirements, income derived from our approved enterprise programs
will be tax exempt for a period of two years commencing in the first year in
which there is taxable income and will be subject for the subsequent period of
five years to a reduced company tax of up to 25%, or eight years if the
percentage of non-Israeli investors who hold our ordinary shares exceeds 25%.
The period of tax benefits for our approved enterprise programs has not yet
commenced, because we have yet to realize taxable income.
GRANTS UNDER THE LAW FOR THE ENCOURAGEMENT OF INDUSTRIAL RESEARCH AND
DEVELOPMENT, 1984
Under the Law for the Encouragement of Industrial Research and Development,
1984, commonly referred to as the Research Law, research and development
programs which meet specified criteria and are approved by a governmental
committee of the Office of the Chief Scientist are eligible for grants of up to
50% of the project's expenditure, as determined by the research committee, in
exchange for the
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<PAGE>
payment of royalties from the sale of products developed under the program.
Regulations under the Research Law generally provide for the payment of
royalties to the Chief Scientist of 3-5% on sales of products and services
derived from our technology developed using these grants until 100%-150% of the
dollar-linked grant is repaid. Following the full repayment of the grant, there
is no further liability for repayment.
The terms of the Israeli government participation also require that the
manufacture of products developed with government grants be performed in Israel.
However, under the regulations of the Research Law, if any of the manufacturing
is performed outside Israel by any entity other than us, assuming we receive
approval from the Chief Scientist for the foreign manufacturing, we may be
required to pay increased royalties. The increase in royalties depends upon the
manufacturing volume that is performed outside of Israel follows:
<TABLE>
<CAPTION>
MANUFACTURING VOLUME ROYALTIES TO THE CHIEF SCIENTIST
OUTSIDE OF ISRAEL AS A PERCENTAGE OF GRANT
- ------------------------------------- -------------------------------------
<S> <C>
less than 50% 120%
between 50% and 90% 150%
more than 90% 300%
</TABLE>
The technology developed with Chief Scientist grants may not be transferred
to third parties without the prior approval of a governmental committee under
the Research Law. The approval, however, is not required for the export of any
products developed using the grants. Approval of the transfer of technology may
be granted in specific circumstances, only if the recipient abides by the
provisions of the Research Law and related regulations, including the
restrictions on the transfer of know-how and the obligation to pay royalties in
an amount that may be increased. We cannot assure you that any consent, if
requested, will be granted.
Effective for grants received from the Chief Scientist under programs
approved after January 1, 1999, the outstanding balance of the grants will be
subject to interest equal to the 12 month London interbank offered rate
applicable to dollar deposits that is published on the first business day of
each calendar year.
The funds generally available for grants from the Chief Scientist were
reduced for 1998, and the Israeli authorities have indicated that the government
may further reduce or abolish grants from the Chief Scientist in the future.
Even if these grants are maintained, we cannot assure you that we will receive
Chief Scientist grants in the future. In addition, each application to the Chief
Scientist is reviewed separately, and grants are based on the program approved
by the research committee. Generally, expenditures supported under other
incentive programs of the State of Israel are not eligible for grants from the
Chief Scientist. We cannot assure you that applications to the Chief Scientist
will be approved and, until approved, the amounts of any grants are not
determinable.
TAX BENEFITS AND GRANTS FOR RESEARCH AND DEVELOPMENT
Israeli tax law allows, under specific conditions, a tax deduction in the
year incurred for expenditures, including capital expenditures, relating to
scientific research and development projects, if the expenditures are approved
by the relevant Israeli government ministry, determined by the field of
research, and the research and development is for the promotion of the company
and is carried out by or on behalf of the company seeking the deduction.
Expenditures not so approved are deductible over a three-year period. However,
expenditures made out of proceeds made available to us through government grants
are not deductible according to Israeli law.
TAX BENEFITS UNDER THE LAW FOR THE ENCOURAGEMENT OF INDUSTRY (TAXES), 1969
According to the Law for the Encouragement of Industry (Taxes), 1969,
generally referred to as the Industry Encouragement Law, an industrial company
is a company resident in Israel, at least 90%
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of the income of which, in a given tax year, determined in Israeli currency
exclusive of income from specified government loans, capital gains, interest and
dividends, is derived from an industrial enterprise owned by it. An industrial
enterprise is defined as an enterprise whose major activity in a given tax year
is industrial production activity. We believe that we currently qualify as an
industrial company within the definition of the Industry Encouragement Law.
Under the Industry Encouragement Law, industrial companies are entitled to
the following preferred corporate tax benefits:
- deduction of purchases of know-how and patents over an eight-year period
for tax purposes;
- deduction of specified expenses incurred in connection with a public
issuance of securities over a three-year period for tax purposes;
- right to elect, under specified conditions, to file a consolidated tax
return with additional related Israeli industrial companies; and
- accelerated depreciation rates on equipment and buildings.
Eligibility for benefits under the Industry Encouragement Law is not subject
to receipt of prior approval from any governmental authority.
We believe that we currently qualify as an industrial company within the
definition of the Industry Encouragement Law. We cannot assure you that we will
continue to qualify as an industrial company or that the benefits described
above will be available to us in the future.
SPECIAL PROVISIONS RELATING TO TAXATION UNDER INFLATIONARY CONDITIONS
The Income Tax Law (Inflationary Adjustments), 1985, generally referred to
as the Inflationary Adjustments Law, represents an attempt to overcome the
problems presented to a traditional tax system by an economy undergoing rapid
inflation. The Inflationary Adjustments Law is highly complex. Its features
which are material to us can be described as follows:
- There is a special tax adjustment for the preservation of equity as
follows:
- Where a company's equity, as calculated in accordance with the law,
exceeds the depreciated cost of fixed assets, a deduction from taxable
income is permitted equal to the excess multiplied by the applicable
annual rate of inflation. The maximum deduction permitted in any single
tax year is 70% of taxable income, with the unused portion permitted to
be carried forward.
- Where a company's depreciated cost of fixed assets exceeds its equity,
then the excess multiplied by the applicable annual rate of inflation
is added to taxable income.
- Subject to specified limitations, depreciation deductions on fixed assets
and losses carried forward are adjusted for inflation based on the
increase in the consumer price index.
- Gains on traded securities, which are normally exempt from tax, are
taxable in specified circumstances. However, dealers in securities are
subject to the regular tax rules applicable to business income in Israel.
CAPITAL GAINS TAX ON SALES OF OUR ORDINARY SHARES
Israeli law imposes a capital gains tax on the sale of capital assets. The
law distinguishes between real gain and inflationary surplus. The inflationary
surplus is a portion of the total capital gain that is equivalent to the
increase of the relevant asset's purchase price which is attributable to the
increase in the Israeli consumer price index between the date of purchase and
the date of sale. The real gain is the excess of the total capital gain over the
inflationary surplus. The inflationary surplus accumulated from and after
December 31, 1993, is exempt from any capital gains tax in Israel while the real
gain is added
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<PAGE>
to ordinary income, which is taxed at ordinary rates of 30% to 50% for
individuals and 36% for corporations.
Under current law, sales of our ordinary shares offered by this prospectus
are exempt from Israeli capital gains for so long as they are quoted on Nasdaq
or listed on a stock exchange in specified countries and we qualify as an
industrial company. We cannot assure you that we will maintain this
qualification or our status as an industrial company. Moreover, dealers in
securities in Israel are taxed at regular tax rates applicable to business
income.
Under the convention between the United States and Israel concerning taxes
on income, Israeli capital gains tax will not apply to the sale, exchange or
disposition of ordinary shares by a person:
- who qualifies as a resident of the United States within the meaning of the
U.S.-Israel tax treaty; and
- who is entitled to claim the benefits afforded to the person by the
U.S.-Israel tax treaty.
However, this exemption will not apply if the treaty U.S. resident holds,
directly or indirectly, shares representing 10% or more of our voting power
during any part of the 12-month period preceding the sale, exchange or
disposition, subject to specified conditions. In this case, the sale, exchange
or disposition would be subject to Israeli tax, to the extent applicable.
However, under the U.S.-Israel tax treaty, the treaty U.S. resident would be
permitted to claim a credit for the taxes against the U.S. federal income tax
imposed on the sale, exchange or disposition, subject to the limitations in U.S.
laws applicable to foreign tax credits. The U.S.-Israel tax treaty does not
relate to U.S. state or local taxes.
TAXATION OF NON-RESIDENT HOLDERS OF SHARES
Non-residents of Israel are subject to income tax on income accrued or
derived from sources in Israel. These sources of income include passive income,
including dividends, royalties and interest, as well as non-passive income from
services provided in Israel. On distributions of dividends other than bonus
shares or stock dividends, income tax is withheld at source. Unless a different
rate is provided in a treaty between Israel and the shareholder's country of
residence, the withholding rate is as follows:
<TABLE>
<CAPTION>
DIVIDENDS NOT GENERATED BY AN
APPROVED ENTERPRISE
---------------------------------------
DIVIDENDS GENERATED BY AN U.S. COMPANY HOLDING 10% OTHER
APPROVED ENTERPRISE OR MORE OF OUR SHARES NON-RESIDENT
------------------------- ------------------------ ------------
<S> <C> <C>
15% 12.5% 25%
</TABLE>
Under an amendment to the Inflationary Adjustments Law, non-Israeli
corporations might be subject to Israeli taxes on the sale of traded securities
in an Israeli company, subject to the provisions of any applicable double
taxation treaty.
FOREIGN EXCHANGE REGULATIONS
We are permitted to pay in Israeli and non-Israeli currency:
- dividends to holders of our ordinary shares; and
- any amounts payable to the holders of our ordinary shares upon our
dissolution, liquidation or winding up.
If we make any payments in Israeli currency, the payments may be converted
into freely repatriable dollars at the rate of exchange prevailing at the time
of conversion.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
Subject to the limitations described in the next paragraph, the following
discussion describes the material United States federal income tax consequences
to a holder of our ordinary shares, referred to for purposes of this discussion
as a U.S. holder, that is:
- a citizen or resident of the United States,
- a corporation created or organized in the United States or under the laws
of the United States or of any state,
- an estate, the income of which is includible in gross income for United
States federal income tax purposes regardless of its source, or
- a trust, if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more U.S.
persons have the authority to control all substantial decisions of the
trust.
This summary is not a comprehensive description of all of the tax
considerations that may be relevant to each person's decision to purchase
ordinary shares. This summary considers only U.S. holders that will own ordinary
shares as capital assets.
This discussion is based on current provisions of the Internal Revenue Code
of 1986, current and proposed Treasury regulations, and administrative and
judicial decisions as of the date of this prospectus, all of which are subject
to change, possibly on a retroactive basis. This discussion does not address all
aspects of United States federal income taxation that may be relevant to any
particular shareholder based on the shareholder's individual circumstances. In
particular, this discussion does not address the potential application of the
alternative minimum tax or the United States federal income tax consequences to
U.S. holders that are subject to special treatment, including U.S. holders that:
- are broker-dealers or insurance companies;
- have elected mark-to-market accounting;
- are tax-exempt organizations;
- are financial institutions or financial services entities;
- hold ordinary shares as part of a straddle, hedge or conversion
transaction with other investments;
- own directly, indirectly or by attribution at least 10% of our voting
power; and
- have a functional currency that is not the U.S. dollar.
In addition, this discussion does not address any aspect of state, local or
non-United States tax laws.
Additionally, the discussion does not consider the tax treatment of persons
who hold ordinary shares through a partnership or other pass-through entity or
the possible application of United States federal gift or estate tax. Material
aspects of United States federal income tax relevant to a holder other than a
U.S. holder, or a non-U.S. holder, are also discussed below.
EACH PROSPECTIVE INVESTOR IS ADVISED TO CONSULT HIS OWN TAX ADVISOR FOR THE
SPECIFIC TAX CONSEQUENCES TO HIM OF PURCHASING, HOLDING OR DISPOSING OF OUR
ORDINARY SHARES.
TAXATION OF DIVIDENDS PAID ON ORDINARY SHARES
A U.S. holder will be required to include in gross income as ordinary income
the amount of any distribution paid on ordinary shares, including any Israeli
taxes withheld from the amount paid, on the date the distribution is received to
the extent the distribution is paid out of our current or accumulated earnings
and profits as determined for United States federal income tax purposes.
Distributions in
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excess of earnings and profits will be applied against and will reduce the U.S.
holder's basis in the ordinary shares and, to the extent in excess of the basis,
will be treated as gain from the sale or exchange of ordinary shares.
Distributions of current or accumulated earnings and profits paid in foreign
currency to a U.S. holder will be includible in the income of a U.S. holder in a
U.S. dollar amount calculated by reference to the exchange rate on the day the
distribution is received. A U.S. holder that receives a foreign currency
distribution and converts the foreign currency into U.S. dollars after receipt
will have foreign exchange gain or loss based on any appreciation or
depreciation in the value of the foreign currency against the U.S. dollar, which
will generally be U.S. source ordinary income or loss.
U.S. holders will have the option of claiming the amount of any Israeli
income taxes withheld at source either as a deduction from gross income or as a
dollar-for-dollar credit against their United States federal income tax
liability. Individuals who do not claim itemized deductions, but instead utilize
the standard deduction, may not claim a deduction for the amount of the Israeli
income taxes withheld, but the amount may be claimed as a credit against the
individual's United States federal income tax liability. The amount of foreign
income taxes that may be claimed as a credit in any year is subject to complex
limitations and restrictions, which must be determined on an individual basis by
each shareholder. These limitations include rules which limit foreign tax
credits allowable for specific classes of income to the United States federal
income taxes otherwise payable on each class of income. The total amount of
allowable foreign tax credits in any year cannot exceed the pre-credit U.S. tax
liability for the year attributable to foreign source taxable income.
A U.S. holder will be denied a foreign tax credit for Israeli income tax
withheld from dividends received on the ordinary shares:
- to the extent the U.S. holder has not held the ordinary shares for at
least 16 days of the 30 day period beginning on the date which is 15 days
before the ex-dividend date; or
- to the extent the U.S. holder is under an obligation to make related
payments on substantially similar or related property.
Any days during which a U.S. holder has substantially diminished its risk of
loss on the ordinary shares are not counted toward meeting the 16 day holding
period required by the statute. In addition, distributions of current or
accumulated earnings and profits will be foreign source passive income for
United States foreign tax credit purposes and will not qualify for the dividends
received deduction available to corporations.
TAXATION OF THE DISPOSITION OF ORDINARY SHARES
Upon the sale, exchange or other disposition of ordinary shares, a U.S.
holder will recognize capital gain or loss in an amount equal to the difference
between the U.S. holder's basis in the ordinary shares, which is usually the
cost of the shares, and the amount realized on the disposition. If, as
anticipated, the ordinary shares are publicly traded, a disposition of shares
will be considered to occur on the trade date, regardless of the holder's method
of accounting. Capital gain from the sale, exchange or other disposition of
ordinary shares held more than one year is long-term capital gain, and is
eligible for a maximum 20% rate of taxation for individuals. Gain or loss
recognized by a U.S. holder on a sale, exchange or other disposition of ordinary
shares will be treated as United States source income for United States foreign
tax credit purposes. The deductibility of a capital loss recognized on the sale,
exchange or other disposition of ordinary shares is subject to limitations.
A U.S. holder that uses the cash method of accounting calculates the U.S.
dollar value of the proceeds received on the sale as of the date that the sale
settles. However, a U.S. holder that uses the accrual method of accounting is
required to calculate the value of the proceeds of the sale as of the trade date
and may therefore realize foreign currency gain or loss. The U.S. holder may
avoid realizing foreign currency gain or loss if he has elected to use the
settlement date to determine its proceeds of
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sale for purposes of calculating the foreign currency gain or loss. In addition,
a U.S. holder that receives foreign currency upon disposition of ordinary shares
and converts the foreign currency into U.S. dollars after receipt will have
foreign exchange gain or loss based on any appreciation or depreciation in the
value of the foreign currency against the U.S. dollar, which will generally be
U.S. source ordinary income or loss.
TAX CONSEQUENCES IF WE ARE A PASSIVE FOREIGN INVESTMENT COMPANY
We will be a passive foreign investment company, or PFIC, if 75% or more of
our gross income in a taxable year, including the pro rata share of the gross
income of any company, U.S. or foreign, in which we are considered to own 25% or
more of the shares by value, is passive income. Alternatively, we will be
considered to be a PFIC if at least 50% of our assets in a taxable year,
averaged over the year and ordinarily determined based on fair market value and
including the pro rata share of the assets of any company in which we are
considered to own 25% or more of the shares by value, are held for the
production of, or produce, passive income. Passive income includes amounts
derived by reason of the temporary investment of funds raised in this offering.
If we were a PFIC, and a U.S. holder did not make an election to treat us as
a qualified electing fund as described below, excess distributions by us to a
U.S. holder would be taxed in a special way. Excess distributions are amounts
received by a U.S. holder on our stock in any taxable year that exceed 125% of
the average distributions received by the U.S. holder from us in the shorter of:
- the three previous years; or
- the U.S. holder's holding period for ordinary shares before the present
taxable year.
Excess distributions must be allocated ratably to each day that a U.S.
holder has held our stock. A U.S. holder would then be required to include
amounts allocated to the current taxable year in its gross income as ordinary
income for that year. Further, a U.S. holder would be required to pay tax on
amounts allocated to each prior taxable year at the highest rate in effect for
that year on ordinary income and the tax would be subject to an interest charge
at the rate applicable to deficiencies for income tax.
The entire amount of gain that is realized by a U.S. holder upon the sale or
other disposition of ordinary shares will also be treated as an excess
distribution and will be subject to tax as described above.
A U.S. holder's tax basis in our ordinary shares that were inherited from a
deceased person who was a U.S. holder would not receive a step-up to fair market
value as of the date of the deceased's death but would instead be equal to the
deceased's basis, if lower.
The special PFIC rules described above will not apply to a U.S. holder if
the U.S. holder makes an election to treat us as a qualified electing fund in
the first taxable year in which the U.S. holder owns ordinary shares and if we
comply with specified reporting requirements. Instead, a shareholder of a
qualified electing fund is required for each taxable year to include in income a
pro rata share of the ordinary earnings of the qualified electing fund as
ordinary income and a pro rata share of the net capital gain of the qualified
electing fund as long-term capital gain, subject to a separate election to defer
payment of taxes. If deferred, the taxes will be subject to an interest charge.
We will supply U.S. holders with the information needed to report income and
gain under a QEF election if we are classified as a PFIC.
The QEF election is made on a shareholder-by-shareholder basis and can be
revoked only with the consent of the Internal Revenue Service, or IRS. A
shareholder makes a QEF election by attaching a completed IRS Form 8621,
including the PFIC annual information statement, to a timely filed United States
federal income tax return and by filing a copy of the form with the IRS Service
Center in
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Philadelphia, Pennsylvania. Even if a QEF election is not made, a shareholder in
a PFIC who is a U.S. person must file a completed IRS Form 8621 every year.
A U.S. holder of PFIC stock which is publicly traded could elect to mark the
stock to market annually, recognizing as ordinary income or loss each year an
amount equal to the difference as of the close of the taxable year between the
fair market value of the PFIC stock and the U.S. holder's adjusted tax basis in
the PFIC stock. Losses would be allowed only to the extent of net mark-to-market
gain previously included by the U.S. holder under the election for prior taxable
years. If the mark-to-market election were made, then the rules presented above
would not apply for periods covered by the election.
We do not believe that we will be a PFIC in 2000. However, the tests for
determining PFIC status are applied annually and it is difficult to make
accurate predictions of future income and assets, which are relevant to this
determination. Therefore, there can be no assurance that we will not become a
PFIC in 2000 or in a subsequent year. U.S. holders who hold ordinary shares
during a period when we are a PFIC will be subject to these rules, even if we
cease to be a PFIC, subject to specified exceptions for U.S. holders who made a
QEF election. U.S. holders are urged to consult their tax advisors about the
PFIC rules, including QEF and mark-to-market elections.
TAX CONSEQUENCES FOR NON-U.S. HOLDERS OF ORDINARY SHARES
Except as described in "Information Reporting and Back-up Withholding"
below, a non-U.S. holder of ordinary shares will not be subject to U.S. federal
income or withholding tax on the payment of dividends on, and the proceeds from
the disposition of, ordinary shares, unless:
- the item is effectively connected with the conduct by the non-U.S. holder
of a trade or business in the United States and:
- in the case of a resident of a country which has a treaty with the
United States, the item is attributable to a permanent establishment;
or
- in the case of an individual, the item is attributable to a fixed place
of business in the United States;
- the non-U.S. holder is an individual who holds the ordinary shares as a
capital asset and is present in the United States for 183 days or more in
the taxable year of the disposition and does not qualify for an exemption;
or
- the non-U.S. holder is subject to tax under the provisions of United
States tax law applicable to U.S. expatriates.
INFORMATION REPORTING AND BACK-UP WITHHOLDING
U.S. holders generally are subject to information reporting requirements for
dividends paid in the United States on ordinary shares. Under existing
regulations, dividends are not subject to back-up withholding. U.S. holders are
subject to information reporting and back-up withholding at a rate of 31% on
proceeds paid from the disposition of ordinary shares unless the U.S. holder
provides IRS Form W-9 or establishes an exemption.
Non-U.S. holders generally are not subject to information reporting or
back-up withholding for dividends paid on, or upon the disposition of, ordinary
shares, provided that the non-U.S. holder provides a taxpayer identification
number, certifies to its foreign status, or establishes another exemption to the
information reporting or back-up withholding requirements.
Treasury regulations effective January 1, 2001 impose back-up withholding on
dividends paid in the United States on ordinary shares unless the U.S. holder
provides IRS Form W-9 or establishes an exemption. Prospective investors should
consult their tax advisors concerning the effect, if any, of these Treasury
regulations on an investment in ordinary shares.
The amount of any back-up withholding will be allowed as a credit against a
U.S. or non-U.S. holder's United States federal income tax liability and may
entitle the holder to a refund, provided that required information is furnished
to the IRS.
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UNDERWRITING
GENERAL
Under the underwriting agreement, which is filed as an exhibit to the
registration statement relating to this prospectus, each of the underwriters
named below, for whom Lehman Brothers Inc., Salomon Smith Barney Inc., U.S.
Bancorp Piper Jaffray Inc. and Fidelity Capital Markets, a division of National
Financial Services Corporation, are acting as representatives, has agreed to
purchase from us the number of ordinary shares shown opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
Lehman Brothers Inc.........................................
Salomon Smith Barney Inc....................................
U.S. Bancorp Piper Jaffray Inc..............................
Fidelity Capital Markets, a division of
National Financial Services Corporation...................
---------
Total................................................. 3,800,000
=========
</TABLE>
The underwriting agreement provides that the underwriters' obligations to
purchase ordinary shares depend on the satisfaction of the conditions contained
in the underwriting agreement, and that if any of the ordinary shares are
purchased by the underwriters under the underwriting agreement, then all of the
ordinary shares which the underwriters have agreed to purchase under the
underwriting agreement must be purchased. The conditions contained in the
underwriting agreement include that:
- the representations and warranties made by us to the underwriters are
true;
- there is no material change in the financial markets; and
- we deliver customary closing documents to the underwriters.
COMMISSIONS AND EXPENSES
The representatives had advised us that the underwriters propose to offer
the ordinary shares directly to the public at the public offering price
presented on the cover page of this prospectus, and to selected dealers, who may
include the underwriters, at the public offering price less a selling concession
not in excess of $ per share. The underwriters may allow, and the
selected dealers may reallow, a concession not in excess of $ per
share to brokers and dealers. After the offering, the underwriters may change
the offering price and other selling terms.
The following table summarizes the underwriting discounts and commissions we
will pay. The underwriting discounts and commissions are equal to the public
offer price per share less the amount paid to us per share. The underwriting
discounts and commissions will equal 7% of the public offering price.
<TABLE>
<CAPTION>
TOTAL
-------------------------------
WITHOUT WITH
PER SHARE OVER-ALLOTMENT OVER-ALLOTMENT
--------- -------------- --------------
<S> <C> <C> <C>
Underwriting discounts and commissions to be paid by
us................................................... $ $ $
</TABLE>
We estimate that the total expenses of the offering, including registration,
filing and listing fees, printing fees and legal and accounting expenses but
excluding underwriting discounts and commissions, will be approximately
$2,000,000.
77
<PAGE>
OVER-ALLOTMENT OPTION
We have granted to the underwriters an option to purchase up to an aggregate
of 570,000 additional ordinary shares, exercisable solely to cover
over-allotments, if any, at the public offering price less the underwriting
discounts and commissions shown on the cover page of this prospectus. The
underwriters may exercise this option at any time, and from time to time, until
30 days after the date of the underwriting agreement. To the extent the
underwriters exercise this option, each underwriter will be committed, so long
as the conditions of the underwriting agreement are satisfied, to purchase a
number of additional ordinary shares proportionate to that underwriter's initial
commitment as indicated in the preceding table, and we will be obligated, under
the over-allotment option, to sell the ordinary shares to the underwriters.
LOCK-UP AGREEMENTS
We have agreed that, without the prior written consent of Lehman
Brothers Inc., we will not, directly or indirectly, offer, sell or dispose of
any ordinary shares or any securities which may be converted into or exchanged
for any ordinary shares for a period of 180 days from the date of this
prospectus. Each of our officers and directors, all of our employees and
substantially all of our existing shareholders have agreed under lock-up
agreements that, without the prior written consent of Lehman Brothers Inc., they
will not, directly or indirectly, offer, sell or otherwise dispose of any
ordinary shares or any securities which may be converted into or exchanged for
any ordinary shares for a period of 180 days from the date of this prospectus.
In addition, in connection with the private placement, Siemens and Samsung have
agreed not to dispose of the shares they acquire in the private placement for a
period of 270 days from the date of this prospectus.
OFFERING PRICE DETERMINATION
Before this offering, there has been no public market for the ordinary
shares. The initial public offering price will be negotiated between the
representatives and us. In determining the initial public offering price of the
ordinary shares, the representatives will consider prevailing market conditions,
our historical performance and capital structure, estimates of our business
potential and earnings prospects, an overall assessment of our management and
the consideration of these factors in relation to market valuation of companies
in related businesses.
INDEMNIFICATION
We have agreed to indemnify the underwriters against liabilities relating to
the offering, including liabilities under the Securities Act and liabilities
arising from breaches of the representations and warranties contained in the
underwriting agreement and to contribute to payments that the underwriters may
be required to make for these liabilities.
STABILIZATION, SHORT POSITIONS AND PENALTY BIDS
Until the distribution of the ordinary shares is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters and
selling group members to bid for and purchase ordinary shares. As an exception
to these rules, the representatives are permitted to engage in transactions that
stabilize the price of the ordinary shares. These transactions may consist of
bids or purchases for the purpose of stabilizing, fixing or maintaining the
price of the ordinary shares.
The underwriters may create a short position in the ordinary shares in
connection with the offering, which means that they may sell more ordinary
shares than are presented on the cover page of this prospectus. If the
underwriters create a short position, then the representatives may reduce that
short position by purchasing ordinary shares in the open market. The
representatives also may elect to reduce any short position by exercising all or
part of the over-allotment option described in this prospectus.
78
<PAGE>
The underwriters have informed us that they do not intend to confirm sales
to discretionary accounts that exceed 5% of the total number of ordinary shares
offered by them.
The representatives also may impose a penalty bid on underwriters and
selling group members. This means that if the representatives purchase ordinary
shares in the open market to reduce the underwriters' short position or to
stabilize the price of the ordinary shares, they may reclaim the amount of the
selling concession from the underwriters and selling group members who sold
those ordinary shares as part of the offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might be in the absence of these purchases. The imposition of a
penalty bid could have an effect on the price of a security to the extent that
it were to discourage resales of the security by purchasers in an offering.
Neither we nor any of the underwriters make any representation or prediction
concerning the direction or magnitude of any effect that the transactions
described above may have on the price of the ordinary shares. In addition,
neither we nor any of the underwriters make any representation that the
representatives will engage in these transactions or that any transaction, once
commenced, will not be discontinued without notice.
STAMP TAXES
Purchasers of the ordinary shares offered in this prospectus may be required
to pay stamp taxes and other charges under the laws and practices of the country
of purchase, in addition to the offering price listed on the cover page of this
prospectus.
FIDELITY CAPITAL MARKETS
Fidelity Capital Markets, a division of National Financial Services
Corporation, is acting as an underwriter in this offering and will be
facilitating electronic distribution of information through the Internet,
intranet and other proprietary electronic technology.
OFFERS AND SALES IN ISRAEL
The underwriters have agreed that:
- they will not offer or sell the ordinary shares in Israel to more than 35
potential purchasers in the aggregate;
- they will deliver to us the names and addresses of these potential
purchasers within seven days of the consummation of this offering; and
- they will obtain representations from each of these potential purchasers
who purchases ordinary shares that he is purchasing ordinary shares for
investment purposes only, and not for the purposes of resale.
DIRECTED SHARE PROGRAM
At our request, the underwriters have reserved up to 228,000 ordinary
shares, or 6% of the ordinary shares offered by this prospectus, for sale under
a directed share program to officers, directors, employees, business associates
and persons otherwise connected to us. All of the persons purchasing the
reserved shares must commit to purchase no later than the close of business on
the day following the date of this prospectus. The number of shares available
for sale to the general public will be reduced to the extent these persons
purchase the reserved shares.
79
<PAGE>
LEGAL MATTERS
The validity of the ordinary shares being offered by this prospectus and
other legal matters in connection with this offering relating to Israeli law
will be passed upon for us by Goldfarb, Levy, Eran & Co., Tel Aviv, Israel. Some
legal matters in connection with this offering relating to United States law
will be passed upon for us by Weil, Gotshal & Manges LLP, New York, New York.
Some legal matters in connection with this offering relating to Israeli law
will be passed upon for the underwriters by Meitar, Liquornik, Geva & Co., Ramat
Gan, Israel. Some legal matters in connection with this offering relating to
United States law will be passed upon for the underwriters by Brobeck,
Phleger & Harrison LLP, New York, New York.
EXPERTS
Our financial statements at December 31, 1998 and 1999 and for the years
ended December 31, 1997, 1998 and 1999 appearing in this prospectus have been
audited by Luboshitz Kasierer, a member firm of Arthur Andersen, independent
auditors, as stated in their report on the financial statements appearing
elsewhere in this prospectus, and are included in reliance upon their report
given upon the authority of this firm as experts in auditing and accounting.
ENFORCEABILITY OF CIVIL LIABILITIES
Service of process upon us and upon our directors and officers and the
Israeli experts named in this prospectus, substantially all of whom reside
outside the United States, may be difficult to obtain within the United States.
Furthermore, because substantially all of our assets and substantially all of
our directors and officers are located outside the United States, any judgment
obtained in the United States against us or any of our directors and officers
may not be collectible within the United States.
We have been informed by our legal counsel in Israel, Goldfarb, Levy,
Eran & Co., that there is doubt concerning the enforceability of civil
liabilities under the Securities Act and the Exchange Act in original actions
instituted in Israel. However, subject to specified time limitations, Israeli
courts may enforce a United States final executory judgment in a civil matter,
including a monetary or compensatory judgment in a non-civil matter, obtained
after due process before a court of competent jurisdiction according to the laws
of the state in which the judgment is given and the rules of private
international law currently prevailing in Israel. The rules of private
international law currently prevailing in Israel do not prohibit the enforcement
of judgment of Israeli courts, provided that:
- the judgment is enforceable in the state in which it was given;
- adequate service of process has been effected and the defendant has had a
reasonable opportunity to present his arguments and evidence;
- the judgment and the enforcement of the judgment are not contrary to the
law, public policy, security or sovereignty of the State of Israel;
- the judgment was not obtained by fraud and does not conflict with any
other valid judgment in the same matter between the same parties; and
- an action between the same parties in the same matter is not pending in
any Israeli court at the time the lawsuit is instituted in the foreign
court.
We have irrevocably appointed RADVision Inc. as our agent to receive service
of process in any action against us in any federal court or court of the State
of New York arising out of this offering or any purchase or sale of securities
in connection with this offering.
If a foreign judgment is enforced by an Israeli court, it generally will be
payable in Israeli currency, which can then be converted into non-Israeli
currency and transferred out of Israel. The usual practice in an action before
an Israeli court to recover an amount in a non-Israeli currency is for the
Israeli court to issue a judgment for the equivalent amount in Israeli currency
at the rate of exchange in force
80
<PAGE>
on the date of the judgment, but the judgment debtor may make payment in foreign
currency. Pending collection, the amount of the judgment of an Israeli court
stated in Israeli currency ordinarily will be linked to the Israeli consumer
price index plus interest at the annual statutory rate set by Israeli
regulations prevailing at the time. Judgment creditors must bear the risk of
unfavorable exchange rates.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form F-1 under the Securities Act in connection with this offering
of our ordinary shares. This prospectus does not contain all of the information
contained in the registration statement. The rules and regulations of the
Securities and Exchange Commission allow us to omit various information from
this prospectus that is included in the registration statement. Statements made
in this prospectus concerning the contents of any contract, agreement or other
document are summaries of all material information about the documents
summarized, but are not complete descriptions of all terms of these documents.
If we filed any of these documents as an exhibit to the registration statement,
you may read the document itself for a complete description of its terms.
You may read and copy the registration statement, including the related
exhibits and schedules, and any document we file with the Securities and
Exchange Commission without charge at the Securities and Exchange Commission's
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies
of the material may be obtained by mail from the public reference branch of the
Securities and Exchange Commission at this address at rates specified by the
Securities and Exchange Commission. Please call the Securities and Exchange
Commission at 1-800-SEC-0330 for further information on the public reference
room. In addition, the registration statement is publicly available through the
website maintained by the Securities and Exchange Commission on the Internet's
worldwide web located at http://www.sec.gov.
We are not currently subject to the informational requirements of the
Securities Exchange Act of 1934. As a result of this offering, we will become
subject to the informational requirements of the Exchange Act applicable to
foreign private issuers and will fulfill the obligations of these requirements
by filing reports with the Securities and Exchange Commission. You may obtain
copies of the documents that we file electronically with the Securities and
Exchange Commission through its website located at http://www.sec.gov.
As a foreign private issuer, we will be exempt from the rules under the
Exchange Act relating to the furnishing and content of proxy statements, and our
officers, directors and principal shareholders will be exempt from the reporting
and short-swing profit recovery provisions contained in Section 16 of the
Exchange Act.
In addition, we will not be required under the Exchange Act to file periodic
reports and financial statements with the Securities and Exchange Commission as
frequently or as promptly as United States companies whose securities are
registered under the Exchange Act. However, we intend to file with the
Securities and Exchange Commission, within 180 days after the end of each fiscal
year, an annual report on Form 20-F containing financial statements which will
be examined and reported on, with an opinion expressed, by an independent public
accounting firm. We also intend to file with the Securities and Exchange
Commission reports on Form 6-K containing unaudited financial information for
the first three quarters of each fiscal year, within 60 days after the end of
each quarter.
81
<PAGE>
RADVISION LTD.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Report of Independent Public Accountants.................... F-2
Consolidated Balance Sheets as of December 31, 1998 and
1999...................................................... F-3
Consolidated Statements of Operations for the years ended
December 31, 1997, 1998 and 1999.......................... F-4
Consolidated Statements of Changes in Shareholders' Equity
for the years ended December 31, 1997, 1998 and 1999 ..... F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1998 and 1999.......................... F-6
Notes to the Consolidated Financial Statements.............. F-7
</TABLE>
F-1
<PAGE>
After the change in share capital and stock split discussed in note 17 to
the financial statements is effected, we expect to be in a position to render
the following audit report.
<TABLE>
<S> <C>
LUBOSHITZ KASIERER
MEMBER FIRM OF ARTHUR ANDERSEN
</TABLE>
Tel Aviv, Israel
February 22, 2000
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and the Shareholders of
RADVision Ltd.
We have audited the accompanying consolidated balance sheets of
RADVision Ltd. (an Israeli corporation) as of December 31, 1998 and 1999, and
the related consolidated statements of operations, changes in shareholders'
equity and cash flows for the years ended December 31, 1997, 1998 and 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
the Company as of December 31, 1998 and 1999, and the results of operations,
changes in shareholders' equity and cash flows for the years ended December 31,
1997, 1998 and 1999, in conformity with accounting principles generally accepted
in the United States.
F-2
<PAGE>
RADVISION LTD.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, 1999
DECEMBER 31, PRO FORMA
------------------------- SHAREHOLDERS' EQUITY
NOTE 1998 1999 NOTE 2
-------- ----------- ----------- ---------------------
<S> <C> <C> <C> <C>
Current assets
Cash and cash equivalents................................. (3) $ 3,304,738 $ 2,604,735
Trade receivables, net of allowance for doubtful
accounts................................................ (4) 2,567,346 3,214,462
Other receivables and prepaid expenses.................... (4) 886,951 1,516,576
Inventories............................................... (5) 872,632 2,433,422
----------- -----------
Total current assets.................................... 7,631,667 9,769,195
----------- -----------
Property and equipment, net of accumulated depreciation..... (6) 1,444,534 3,021,015
----------- -----------
Deposit with insurance companies............................ 295,001 470,361
----------- -----------
Total assets............................................ $ 9,371,202 $13,260,571
=========== ===========
Current liabilities
Current maturities of long-term loans..................... $ 74,602 $ 63,901
Trade payables............................................ 634,083 2,557,978
Other payables and accrued expenses....................... (7) 2,604,836 6,333,376
----------- -----------
Total current liabilities............................... 3,313,521 8,955,255
----------- -----------
Long-term liabilities
Bank loans................................................ (8) 130,146 67,383
Accrued severance pay..................................... (9) 477,836 756,812
----------- -----------
607,982 824,195
----------- -----------
Total liabilities......................................... 3,921,503 9,779,450
----------- -----------
Commitments and contingencies (10)
Shareholders' equity (11)
Preferred shares of NIS 0.1 par value:
Authorized 25,000 shares; issued and outstanding 14,015
shares as of December 31, 1998 and 1999; issued and
outstanding pro forma as of December 31, 1999 - none.... 3,825 3,825
Ordinary shares of NIS 0.1 par value:
Authorized - 12,332,317 shares as of December 31, 1998 and
1999; issued and outstanding - 10,528,056 and 10,627,859
shares as of December 31, 1998 and 1999; authorized pro
forma - 25,000,000 shares; issued and outstanding pro
forma - 13,585,024 shares as of December 31, 1999....... 16,641 16,820 $ 20,645
Additional paid-in capital.................................. 12,088,150 13,788,618 13,788,618
Deferred compensation....................................... (78,378) (1,051,549) (1,051,549)
Accumulated deficit......................................... (6,580,539) (9,276,593) (9,276,593)
----------- ----------- -----------
Total shareholders' equity.............................. 5,449,699 3,481,121 $ 3,481,121
----------- ----------- -----------
Total liabilities and shareholders' equity.............. $ 9,371,202 $13,260,571
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-3
<PAGE>
RADVISION LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
----------------------------------------
NOTE 1997 1998 1999
-------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Revenues........................................ (12) $ 4,899,211 $ 8,894,414 $17,549,903
Cost of revenues................................ 1,210,650 1,412,147 2,853,393
------------ ----------- -----------
Gross profit.................................... 3,688,561 7,482,267 14,696,510
------------ ----------- -----------
Operating expenses
Research and development expenses............. 2,706,343 4,291,743 7,308,476
Less-participation by the Chief Scientist of
the Government of Israel.................... (10) 890,326 1,139,749 1,096,722
------------ ----------- -----------
Research and development expenses, net........ 1,816,017 3,151,994 6,211,754
Marketing and selling expenses, net........... (13) 2,364,556 4,402,008 9,406,187
General and administrative expenses........... 493,593 663,772 1,402,280
Deferred compensation......................... 76,591 116,115 477,476
------------ ----------- -----------
Total operating expenses.................... 4,750,757 8,333,889 17,497,697
------------ ----------- -----------
Operating loss.................................. (1,062,196) (851,622) (2,801,187)
Financing income, net........................... 6,001 22,447 105,133
------------ ----------- -----------
Net loss........................................ $ (1,056,195) $ (829,175) $(2,696,054)
============ =========== ===========
Basic and diluted net loss per ordinary share... $ (0.10) $ (0.08) $ (0.26)
============ =========== ===========
Weighted average number of ordinary shares
outstanding--basic and diluted................ 10,233,711 10,491,764 10,538,395
============ =========== ===========
Pro forma basic and diluted net loss per
ordinary share (unaudited).................... (2) $ (0.20)
===========
Weighted average number of ordinary shares
outstanding--pro forma basic and diluted
(unaudited)................................... (2) 13,495,560
===========
</TABLE>
THE ACCOMPANYING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-4
<PAGE>
RADVISION LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
PREFERRED SHARES ORDINARY SHARES
-------------------- --------------------- ADDITIONAL DEFERRED ACCUMULATED
SHARES AMOUNT SHARES AMOUNT PAID-IN CAPITAL COMPENSATION DEFICIT
--------- -------- ---------- -------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance as of
January 1, 1997........ -- $ -- 10,065,333 $15,893 $ 6,132,408 $ -- $(4,695,169)
Ordinary shares issued... -- -- 373,048 589 888,763 (1) -- --
Deferred compensation.... -- -- -- -- 159,084 (159,084) --
Amortization of deferred
compensation........... -- -- -- -- -- 76,591 --
Net loss................. -- -- -- -- -- -- (1,056,195)
--------- ------ ---------- ------- ----------- ----------- -----------
Balance as of
December 31, 1997...... -- -- 10,438,381 16,482 7,180,255 (82,493) (5,751,364)
Ordinary shares issued... -- -- 89,675 159 -- -- --
Preferred shares
issued................. 2,957,165 3,825 -- -- 4,795,895 (2) -- --
Deferred compensation.... -- -- -- -- 112,000 (112,000) --
Amortization of deferred
compensation........... -- -- -- -- -- 116,115 --
Net loss................. -- -- -- -- -- -- (829,175)
--------- ------ ---------- ------- ----------- ----------- -----------
Balance as of
December 31, 1998...... 2,957,165 3,825 10,528,056 16,641 12,088,150 (78,378) (6,580,539)
Ordinary shares issued... -- -- 158,250 179 249,821 -- --
Deferred compensation.... -- -- -- -- 1,466,647 (1,466,647) --
Amortization of deferred
compensation........... -- -- -- -- (16,000) 493,476 --
Net loss................. -- -- -- -- -- -- (2,696,054)
--------- ------ ---------- ------- ----------- ----------- -----------
Balance as of
December 31, 1999...... 2,957,165 $3,825 10,686,306 $16,820 $13,788,618 $(1,051,549) $(9,276,593)
========= ====== ========== ======= =========== =========== ===========
<CAPTION>
TOTAL
-----------
<S> <C>
Balance as of
January 1, 1997........ $ 1,453,132
Ordinary shares issued... 889,352
Deferred compensation.... --
Amortization of deferred
compensation........... 76,591
Net loss................. (1,056,195)
-----------
Balance as of
December 31, 1997...... 1,362,880
Ordinary shares issued... 159
Preferred shares
issued................. 4,799,720
Deferred compensation.... --
Amortization of deferred
compensation........... 116,115
Net loss................. (829,175)
-----------
Balance as of
December 31, 1998...... 5,449,699
Ordinary shares issued... 250,000
Deferred compensation.... --
Amortization of deferred
compensation........... 477,476
Net loss................. (2,696,054)
-----------
Balance as of
December 31, 1999...... $ 3,481,121
===========
</TABLE>
- ------------------------------
(1) Net of issuance expenses of approximately $9,000.
(2) Net of issuance expenses of approximately $85,000.
THE ACCOMPANYING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-5
<PAGE>
RADVISION LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
------------------------------------------
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss.................................................. $(1,056,195) $ (829,175) $(2,696,054)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Income and expenses not affecting operating cash
flows:
Depreciation........................................ 204,357 360,331 718,444
Severance pay....................................... 31,741 39,051 103,616
Amortization of deferred compensation............... 76,591 116,115 477,476
Other............................................... 1,511 17,159 19,308
Changes in operating assets and liabilities:
Increase in trade receivables....................... (1,391,255) (724,060) (647,116)
Increase in other receivables and prepaid
expenses.......................................... (32,324) (625,820) (429,625)
Decrease (increase) in inventories.................. 101,043 (447,200) (1,560,790)
Increase in trade payables.......................... 42,826 282,924 1,923,895
Increase in other payables and accrued expenses..... 1,051,813 963,589 3,528,540
----------- ----------- -----------
Net cash provided by (used in) operating
activities.................................... (969,892) (847,086) 1,437,694
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment........................ (460,193) (1,102,164) (2,388,490)
Proceeds from sale of property and equipment.............. 32,097 19,285 74,257
----------- ----------- -----------
Net cash used in investing activities........... (428,096) (1,082,879) (2,314,233)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of share capital................................. 889,352 4,799,879 250,000
Decrease in short-term credit............................. (524,716) (54,055) (10,701)
Long-term loans received.................................. 452,080 100,000 --
Repayment of long-term loans.............................. (333,336) (45,734) (62,763)
----------- ----------- -----------
Net cash provided by financing activities....... 483,380 4,800,090 176,536
----------- ----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............ (914,608) 2,870,125 (700,003)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 1,349,221 434,613 3,304,738
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 434,613 $ 3,304,738 $ 2,604,735
=========== =========== ===========
CASH PAID DURING THE PERIOD IN RESPECT OF INTEREST.......... $ 29,387 $ 22,715 $ 15,839
NON-CASH ACTIVITY........................................... -- -- $ 200,000
=========== =========== ===========
</TABLE>
THE ACCOMPANYING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-6
<PAGE>
RADVISION LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--GENERAL
RADVision Ltd., referred to in these consolidated financial statements as
the Company, an Israeli corporation, designs, develops and supplies products and
technology that enable real-time voice, video and data communications over
packet networks, including the Internet and other networks based on the Internet
protocol.
The consolidated financial statements include the financial statements of
the Company and its wholly-owned subsidiaries, RADVision Inc., in the United
States and RADVision B.V. in the Netherlands. The subsidiaries are primarily
engaged in the sale and marketing of the Company's products and technology.
The financial statements of the Company have been prepared in U.S. dollars,
as the currency of the primary economic environment in which the operations of
the Company are conducted is the U.S. dollar. All of the Company's sales are in
U.S. dollars or are dollar-linked. Most purchases of materials and components
and most marketing costs are denominated in U.S. dollars. Therefore, the
functional currency of the Company is the U.S. dollar.
Transactions and balances originally denominated in U.S. dollars are
presented at their original amounts. Transactions and balances in other
currencies are translated into U.S. dollars in accordance with the principles
set forth in Statement No. 52 of the Financial Accounting Standards Board of the
United States. Items have been translated as follows:
-- Monetary items--at the exchange rate in effect on balance sheet date.
-- Non monetary items--at historical exchange rates.
-- Revenue and expense items--at the exchange rates in effect as of date of
recognition of those items, excluding depreciation and other items
deriving from non-monetary items.
All exchange gains and losses from the translation mentioned above, which
are immaterial for all periods presented, are reflected in the statement of
operations. The representative rate of exchange at December 31, 1999 was
U.S.$1.00 = NIS 4.153; and at December 31, 1998 and 1997 was U.S.$1.00 =
NIS 4.16 and NIS 3.536.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
The financial statements are prepared according to generally accepted
accounting principles in the United States. The significant accounting policies
followed in the preparation of the financial statements, applied on a consistent
basis, are as follows:
A. PRINCIPLES OF CONSOLIDATION
The financial statements include the accounts of the Company and its
wholly-owned subsidiaries in the United States and Netherlands. Material
intercompany balances and transactions have been eliminated.
B. CASH AND CASH EQUIVALENTS
All highly liquid investments with an original maturity of three months or
less are considered cash equivalents.
F-7
<PAGE>
RADVISION LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. ALLOWANCE FOR DOUBTFUL ACCOUNTS
Allowance for doubtful accounts is computed for specific debts the
collectibility of which is doubtful based upon the Company's experience.
D. INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined on
the moving average basis.
E. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed by the
straight-line method over the estimated useful life of the assets, ranging from
3 to 15 years.
F. REVENUE RECOGNITION
Revenues from products and technology sales are recognized according to
SOP 97-2, when delivery has occurred, persuasive evidence of arrangement exists,
the vendor's fee is fixed or determinable and collectability is probable.
Revenues from maintenance and support services are deferred and recognized
ratably over the service period.
G. RESEARCH AND DEVELOPMENT COSTS
Research and development costs, net of participations by the Government of
Israel through the Ministry of Industry and Trade, Office of the Chief
Scientist, are charged to operations as incurred. Software development costs are
considered for capitalization when technological feasibility is established
according to Statement of Financial Accounting Standards No. 86, "Accounting for
the Costs of Computer Software to be Sold, Leased or Otherwise Marketed." Costs
incurred after achievement of technological feasibility in the process of
software production have not been material. Therefore, the Company has not
capitalized any of its research and development expenses and does not anticipate
that its development process will differ materially in the future.
H. INCOME TAXES
The Company accounts for income taxes under the liability method of
accounting. Under the liability method, deferred taxes are determined based on
the differences between the financial statement and tax bases of assets and
liabilities at enacted tax rates in effect in the year in which the differences
are expected to reverse. Valuation allowances are established, when necessary,
to reduce deferred tax assets to amounts expected to be realized.
I. FAIR VALUE OF FINANCIAL INSTRUMENTS
Unless otherwise noted, the carrying amount of financial instruments
approximates fair value.
J. PROVISION FOR WARRANTY COSTS
The Company warrants its products for a twelve-month period. Provisions for
warranty costs are based on the Company's past experience.
F-8
<PAGE>
RADVISION LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
K. BASIC AND DILUTED NET LOSS PER SHARE
Basic and diluted net loss per share are presented according to SFAS
No. 128, "Earnings per share", for all periods presented.
Basic and diluted net loss per share have been computed using the
weighted-average number of ordinary shares outstanding during the period. Basic
and diluted pro forma net loss per share, as presented in the statements of
operations, have been computed using the weighted average number of ordinary
shares outstanding during the period and also give effect to the automatic
conversion of the preferred shares into ordinary shares upon the closing of an
initial public offering, using the as-if converted method from original date of
issuance.
All preferred shares and outstanding share options have been excluded from
the calculation of diluted net loss per share because all these securities are
antidilutive for all periods presented. The total number of shares related to
the outstanding options excluded from the calculations of diluted net loss per
share were 649,880, 1,430,580 and 2,667,251 for the years ended December 31,
1997, 1998 and 1999.
L. PRO FORMA SHAREHOLDERS' EQUITY
Upon the closing of an initial public offering, all of the preferred shares
outstanding will automatically be converted into an identical number of ordinary
shares. Pro forma shareholders' equity at December 31, 1999, as adjusted for the
assumed conversion of the preferred shares outstanding at December 31, 1999, is
disclosed in the balance sheet. Pro forma share and per share data is adjusted
to reflect the conversion and the share split and share dividend effected after
December 31, 1999. See note 17.
M. SHARE-BASED COMPENSATION
The Company has adopted the disclosure provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," and the accounting rules in
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees." The Company has provided the necessary pro forma disclosures as if
the fair value method had been applied. See note 11(B).
N. USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
O. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
established accounting and reporting standards requiring that every derivative
instrument be recorded on the balance sheet at its fair value. SFAS No. 133
requires that changes in the derivative's fair value be recognized currently in
earnings
F-9
<PAGE>
RADVISION LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the statement of operations. SFAS No. 133 is
effective for fiscal years beginning after June 15, 2000. The Company believes
that the adoption of SFAS No. 133 will not have a material effect on its
financial statements.
NOTE 3--CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1998 1999
---------- ----------
<S> <C> <C>
Cash in banks, primarily in U.S. dollars............. $ 955,053 $1,828,335
Bank deposits in U.S. dollars, bearing annual
interest rate of 4.3%.............................. 1,350,000 615,875
Bank deposits in NIS, bearing annual interest rate of
10.3%.............................................. 999,685 160,525
---------- ----------
$3,304,738 $2,604,735
========== ==========
</TABLE>
The interest rates are as of December 31, 1999.
NOTE 4--TRADE RECEIVABLES, NET
A. Trade receivables are presented net of allowance for doubtful accounts in
the amount of $72,539 and $224,705 as of December 31, 1998 and 1999.
B. Other receivables and prepaid expenses include grants receivable from the
Government of Israel in the amount of $442,681 and $864,444 as of December 31,
1998 and 1999.
NOTE 5--INVENTORIES
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1998 1999
-------- ----------
<S> <C> <C>
Materials and components.............................. $393,206 $1,037,633
Work in process....................................... 136,772 634,969
Finished products..................................... 342,654 760,820
-------- ----------
$872,632 $2,433,422
======== ==========
</TABLE>
F-10
<PAGE>
RADVISION LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6--PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1998 1999
---------- ----------
<S> <C> <C>
COST
Research and development equipment........................ $ 751,565 $1,370,345
Motor vehicles............................................ 513,200 1,039,715
Manufacturing equipment................................... 114,366 236,208
Office furniture and equipment and leasehold
improvements............................................ 811,833 1,753,264
---------- ----------
2,190,964 4,399,532
---------- ----------
ACCUMULATED DEPRECIATION
Research and development equipment........................ 378,017 669,773
Motor vehicles............................................ 105,704 148,674
Manufacturing equipment................................... 62,396 109,383
Office furniture and equipment and leasehold
improvements............................................ 200,313 450,687
---------- ----------
746,430 1,378,517
---------- ----------
NET BOOK VALUE.............................................. $1,444,534 $3,021,015
========== ==========
</TABLE>
For the years ended December 31, 1997, 1998 and 1999, depreciation expense
was $204,357, $360,331 and $718,444.
The Company's property and equipment are primarily located in Israel.
NOTE 7--OTHERS PAYABLES AND ACCRUED EXPENSES
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1998 1999
---------- ----------
<S> <C> <C>
Deferred income............................................. $1,521,763 $2,930,587
Employees and employee institutions(1)...................... 705,973 1,493,704
Accrued royalties........................................... 289,000 476,000
Tax withholding payable..................................... -- 403,000
Offering expenses payable................................... -- 200,000
Accrued expenses............................................ 88,100 830,085
---------- ----------
$2,604,836 $6,333,376
========== ==========
</TABLE>
- ------------------------
(1) Employees and employee institutions include salaries, bonuses and employee
institutions payable. The employee institutions include amounts deducted
from employees payroll for December 1998 and 1999, respectively, for
educational funds and insurance policies funds.
F-11
<PAGE>
RADVISION LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8--LONG-TERM BANK LOANS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1999
-------- --------
<S> <C> <C>
Loans linked to the U.S. dollar......................... $204,748 $131,284
Less--current maturities................................ 74,602 63,901
-------- --------
$130,146 $ 67,383
======== ========
</TABLE>
The loans bear interest at an annual rate of the London interbank offered
rate plus 1%, which was 5.5% at December 31, 1999, and mature in equal quarterly
installments through 2002.
NOTE 9--ACCRUED SEVERANCE PAY
Under Israeli law and labor agreements, the Company is required to make
severance payments to its dismissed employees and employees leaving its
employment in other circumstances. The Company's severance pay liability to its
employees, which is calculated on the basis of the salary of each employee for
the last month of the reported period multiplied by the years of the employee's
employment, is reflected in the Company's balance sheet on the accrual basis,
and is partially funded by purchase of insurance policies in the name of the
Company. The severance pay expense for the years ended December 31, 1997, 1998
and 1999 amounted to $113,579, $134,248 and $365,076.
NOTE 10--COMMITMENTS AND CONTINGENCIES
A. In connection with its research and development, the Company received and
accrued participation payments from the Office of the Chief Scientist of
the Ministry of Industry and Trade in Israel in the total amount of
approximately $4.5 million. In return for the Government of Israel's
participation, the Company is committed to pay royalties at a rate of
3% - 5% of sales of the developed product, up to 100% - 150% of the
amount of grants received, or for grants received under programs approved
after January 1, 1999, 100% plus interest at the London interbank offered
rate. The Company's total commitment for royalties payable with respect
to future sales, based on Government of Israel participations received or
accrued, net of royalties paid or accrued, totaled approximately
$3.7 million as of December 31, 1999. In the event that the development
program does not result in the sale of products, the Company is not
obligated to repay any grants. However, if the Company fails to comply
with any of the conditions imposed by the Chief Scientist, it could be
required to refund any payments previously received, together with
interest and penalties.
B. In connection with its marketing activities, the Company received and
accrued participation payments from the Government of Israel--Fund for
the Encouragement of Marketing Activities, in the total amount of
approximately $686,000. In return for the participation payments, the
Company is committed to pay royalties at a rate of 4% of the Company's
total increase in export sales, from the end of the second year of
implementation of the marketing plan until the date at which the
participation has been fully repaid. The Company's total commitment for
royalties payable with respect to future sales, based on Government of
Israel participations received or accrued, net of royalties paid or
accrued, totaled approximately $199,000 as of December 31, 1999.
F-12
<PAGE>
RADVISION LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10--COMMITMENTS AND CONTINGENCIES (CONTINUED)
C. In connection with its research and development, the Company received
and accrued participation payments from the Israel U.S. Binational
Industrial Research and Development Foundation (BIRDF), in the total
amount of approximately $188,000. In return for the participation, the
Company is committed to pay royalties at a rate of 2.5% of proceeds from
the first year's sales and 5% of the proceeds from the succeeding years'
sales, up to the amount of the grant. Once the amount of the grant has
been repaid, royalties will be payable at the rate of 2.5% of proceeds,
until additional royalties equal to one half of the grant amount have
been repaid. The Company's total commitment for royalties payable with
respect to future sales, based on Government participations received or
accrued, net of royalties paid or accrued, totaled approximately $276,000
as of December 31, 1999.
D. The Company and its U.S. subsidiary operate from leased premises in Tel
Aviv, Israel and in Mahwah, New Jersey and Sunnyvale, California. Lease
agreements expire in December 1999 through May 2002 (some with renewal
options). Annual minimum future rental payments due under the above
agreements, at the exchange rate in effect on December 31, 1999, are
approximately as follows:
<TABLE>
<S> <C>
2000.............................................. $510,877
2001.............................................. 129,910
2002.............................................. 74,514
--------
$715,301
========
</TABLE>
E. The Company is committed to pay royalties to third parties for the
integration of these third parties' technologies into the Company's
products. Royalties are payable based on the sales volume of these
products, for as long as the Company uses these technologies, without
limit on the amount of royalties payable. The rates of these royalties
are based on a fixed amount per product sold by the Company in the range
of $1.00 to $5.00 per unit sold.
F. In 1998, a third party sent correspondence to the Company's affiliate
alleging that some products manufactured by the Company infringe upon
patents held by the third party and offered to license these patents to
the Company. In subsequent correspondence, the Company's affiliate
requested that the third party specifically substantiate each allegation
of infringement before the Company's affiliate would be prepared to enter
into any licensing arrangements. The Company does not believe that these
allegations will have a material adverse effect upon its business,
financial condition or liquidity. The Company's affiliate has recently
received further correspondence from the third party, in which the third
party has, among other things, reiterated its claims. The Company's
affiliate does not believe the third party has substantiated its claims
and has communicated this belief to the third party. The Company's
affiliate has advised the Company that the alleged infringement claims
are unresolved.
NOTE 11--SHAREHOLDERS' EQUITY
A. The Company's preferred shares confer the same right as the Company's
ordinary shares except that the preferred shares have preference over the
ordinary shares in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company. Each share of
F-13
<PAGE>
RADVISION LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11--SHAREHOLDERS' EQUITY (CONTINUED)
<TABLE>
<S> <C>
</TABLE>
preferred shares is convertible into ordinary shares at a conversion rate
of 1-to-1 at any time, at the holder's option, and automatically upon an
initial public offering of the Company.
B. The Company adopted a key employee share incentive plan which provides
for the grant by the Company of option awards to purchase up to an
aggregate of 3,163,523 ordinary shares to officers, employees, directors
and consultants of the Company, its subsidiaries and affiliates. The
options vest ratably over vesting periods ranging from three to five
years. The options expire 62 months from the date of issuance. The
exercise price of options under the plan is at varying prices ranging
from $0.95 to $1.74.
Transactions related to the share incentive plan during the years ended
December 31, 1997, 1998 and 1999 and the weighted average exercise prices
per share and weighted average fair value of the options at the date of
grant are summarized as follows:
<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE FAIR
AVERAGE VALUE OF
OUTSTANDING EXERCISE PRICE OPTIONS
OPTIONS PER SHARE GRANTED
----------- -------------- ------------
<S> <C> <C> <C>
Outstanding as of January 1, 1997......... 132,930 $1.33
Options granted........................... 516,950 1.43 $0.57
--------- -----
Outstanding as of December 31, 1997....... 649,880 1.41
Options granted........................... 791,250 1.18 $0.29
Options forfeited......................... (10,550) 1.64
--------- -----
Outstanding as of December 31, 1998....... 1,430,580 1.28
Options granted........................... 1,421,296 1.18 $1.14
Options forfeited......................... (184,625) 1.18
--------- -----
Outstanding as of December 31, 1999....... 2,667,251 $1.23
========= =====
</TABLE>
The following table summarizes information about options outstanding and
exercisable at December 31, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------------- -------------------------
NUMBER WEIGHTED- NUMBER
OUTSTANDING AVERAGE WEIGHTED- OUTSTANDING WEIGHTED-
AT REMAINING AVERAGE AT AVERAGE
DECEMBER 31, CONTRACTUAL EXERCISE DECEMBER 31, EXERCISE
EXERCISE PRICE 1999 LIFE PRICES 1999 PRICES
- -------------- ------------ ----------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
$0.95 - $0.98........ 860,458 4.38 $0.95 34,098 $0.96
1.18................. 1,023,350 3.43 1.18 349,733 1.18
1.58 - 1.64.......... 688,493 4.01 1.59 114,643 1.63
1.74................. 94,950 2.42 1.74 44,310 1.74
--------- -------
2,667,251 542,903
========= =======
</TABLE>
The amounts of deferred compensation recognized arising from the
difference between the exercise price and the fair market value on the
date of the grant of $112,000 and $1,466,647
F-14
<PAGE>
RADVISION LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11--SHAREHOLDERS' EQUITY (CONTINUED)
for options granted in the years ended December 31, 1998 and 1999 are
included in shareholders' equity and was amortized over the vesting
periods of the options according to APB 25. Under APB 25, the deferred
compensation expense for the years ended December 31, 1997, 1998 and
1999, amounted to $76,591, $116,115 and $477,476.
If deferred compensation had been determined under the alternative fair
value accounting method provided for under SFAS Statement No. 123,
"Accounting for Stock-Based Compensation," the Company's net loss and net
loss per share would have been increased to the following pro forma
amounts:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
--------------------------------------
1997 1998 1999
----------- --------- ------------
<S> <C> <C> <C>
Net loss:
As reported........................... $(1,056,195) $(829,175) $ (2,696,054)
Pro forma............................. (1,148,999) (956,396) (2,733,876)
Net loss per share:
As reported........................... $ (0.10) $ (0.08) $ (0.26)
Pro forma............................. (0.11) (0.09) (0.26)
</TABLE>
Under SFAS No. 123, the fair value of each option grant is estimated on
the date of grant using the Black-Scholes option-pricing model with the
following weighted-average assumptions used for grants in 1997, 1998 and
1999:
- expected life of the options of 2.57, 2.72 and 2.84;
- no dividend yield;
- expected volatility of 0%; and
- risk-free interest rate of 5%.
C. Authorized share capital includes 12,760 deferred shares of par value
NIS 0.1 each. The deferred shares confer no rights or privileges on their
holders except for the right to receive upon dissolution or liquidation
the par value of the deferred shares.
D. In 1998, the Company issued 121,114 ordinary shares at NIS 0.1 per share
as an anti-dilution adjustment to existing shareholders that purchased
shares in a 1997 private placement. Pursuant to a resolution adopted by
the board of directors of the Company in connection with the 1997 private
placement, the shareholders who participated in the private placement
were granted anti-dilution rights. These anti-dilution rights were
triggered in 1998 when the Company issued preferred shares at a lower
price per share than the price per share at which the shares sold in the
1997 private placement were offered.
E. Amounts due for shares issued, but not yet fully paid, as of
December 31, 1999 was approximately $300,000.
F. In December 1999, the Company issued 158,250 ordinary shares to Intel
for $250,000, or $1.58 per share, which is $10.42 less than the assumed
initial public offering price of $12.00 per share. The shares were issued
under an agreement entered into with Intel in 1996 under which Intel
agreed to invest $1.0 million in the Company through the purchase of
ordinary
F-15
<PAGE>
RADVISION LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11--SHAREHOLDERS' EQUITY (CONTINUED)
shares in three installments of $500,000, $250,000 and $250,000 upon the
Company's achieving specified milestones or, in the case of the third
installment, at Intel's option before the Company's initial public
offering of its ordinary shares.
G. Subsequent Events--see note 17(C).
NOTE 12--REVENUES
The Company's sales by geographic area are as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
-------------------------------------
1997 1998 1999
---------- ---------- -----------
<S> <C> <C> <C>
United States........................................... $3,012,256 $4,569,477 $ 9,062,187
Europe.................................................. 632,278 2,248,880 4,045,882
Far East................................................ 331,649 942,460 2,662,865
Israel.................................................. 616,804 857,552 1,310,208
Other................................................... 306,224 276,045 468,761
---------- ---------- -----------
$4,899,211 $8,894,414 $17,549,903
========== ========== ===========
</TABLE>
The Company manages its business on the basis of one reportable segment.
NOTE 13--MARKETING AND SELLING EXPENSES, NET
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
------------------------------------
1997 1998 1999
---------- ---------- ----------
<S> <C> <C> <C>
Marketing and selling expenses........................... $2,445,923 $4,580,113 $9,604,250
Participation by the Government of Israel................ 81,367 178,105 198,063
---------- ---------- ----------
Marketing and selling expenses, net...................... $2,364,556 $4,402,008 $9,406,187
========== ========== ==========
Marketing and selling expenses include: Royalties to the
Government of Israel................................... $ 175,236 $ 366,736 $ 896,249
========== ========== ==========
</TABLE>
NOTE 14--CONCENTRATION OF CREDIT RISK
For the periods ended December 31, 1998 and 1999, no single customer
accounted for more than 10% of the Company's sales and no customer represented
more than 10% of trade receivables. The Company does not generally require
collateral to support credit sales. Allowances are maintained for potential
credit losses.
F-16
<PAGE>
RADVISION LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 15--RELATED PARTY BALANCES AND TRANSACTIONS
A. BALANCES WITH RELATED PARTIES
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1999
-------- --------
<S> <C> <C>
Receivables............................................. $ 72,476 $124,264
Trade payables.......................................... 88,946 305,325
</TABLE>
B. TRANSACTIONS WITH RELATED PARTIES
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
---------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Revenues(1).................................. $285,813 $ 47,429 $166,812
Cost of revenues(3)(4)....................... 124,177 252,655 384,951
Research and development
expenses(2)(3)............................. 12,823 3,017 362,573
Marketing, selling, general and
administrative expenses(2)(3).............. 405,650 201,238 343,873
Purchase of property and
equipment(5)............................... 37,695 64,225 283,752
</TABLE>
- ------------------------
(1) Includes revenues from agreements to license the Company's technology
to RADCOM Ltd. and RAD Data Communications Ltd., affiliated
companies. The agreements are based on the Company's standard form
and include a licensing fee, maintenance and support services for one
year and minimum royalty payments on sales of products which
incorporate the technology.
(2) Includes legal, human resources and administrative services provided
to the Company by affiliated companies which the Company reimburses
for the costs incurred in providing these services.
(3) Includes rental fees based on lease agreements with RIT Technologies
Ltd., RAD Data Communications Ltd., and several other affiliated
companies. Under these lease agreements, the Company leases office
space of approximately 21,830 and 9,000 square feet, in Israel and in
New Jersey, respectively. The expiration dates of these lease
agreements range from August 2000 to May 2002.
(4) Includes the purchase of components from RAD Data Communications
Ltd., an affiliated company, which the Company integrates into its
products.
(5) Includes property and equipment that were purchased mainly from BYNET
Data Communications Ltd., an affiliated company.
NOTE 16--TAXES ON INCOME
A. The Company's investment program totaling $122,000 has been granted
Approved Enterprise status under the Law for Encouragement of Capital
Investments, 1959. In addition, the Company was granted Approved
Enterprise status for an expansion of a previous program totaling
$210,000. The Company is entitled to a benefit period of seven years on
income derived from these programs, as follows: a full income tax
exemption for the first two years
F-17
<PAGE>
RADVISION LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 16--TAXES ON INCOME (CONTINUED)
and a reduced income tax rate of 25% (instead of the regular rate of 36%)
for the remaining five year period. If foreign shareholdings in the
Company exceed 25%, the period for which the Company is entitled to a
reduced income tax is extended to eight years.
If the Company distributes a cash dividend out of retained earnings which
were tax exempt due to its approved enterprise status, the Company would
have to pay a 25% corporate tax on the amount distributed, and a further
15% withholding tax would be deducted from the amounts distributed to the
recipients.
Should the Company derive income from sources other than the approved
enterprise programs during the relevant period of benefits, this income
will be taxable at the regular corporate tax rate, which is 36%.
The benefits from the Company's approved enterprise programs are
dependent upon the Company fulfilling the conditions stipulated by the
Law for Encouragement of Capital Investments, 1959, and the regulations
published under this law, as well as the criteria in the approval for the
specific investment in the Company's approved enterprise programs. If the
Company does not comply with these conditions, the tax benefits may be
canceled, and the Company may be required to refund the amount of the
canceled benefits, with the addition of linkage differences and interest.
As of the date of these financial statements, the Company believes it has
complied with these conditions.
B. The Company is subject to the Income Tax Law (Inflationary Adjustments),
1985, measuring income on the basis of changes in the Israeli Consumer
Price Index.
C. The Company is an Industrial Company under the Law for Encouragement of
Industry (Taxes), 1969 and is therefore entitled to tax benefits, mainly
accelerated depreciation of machinery and equipment and deduction of
expenses incurred in connection with a public offering.
D. Through December 31, 1994, the Company's losses for tax purposes were
assigned to a shareholder, and are not available to the Company.
E. As of December 31, 1999, the Company's net operating loss carryforwards
for tax purposes amounted to approximately $2.3 million. These net
operating losses may be carried forward indefinitely and offset against
future taxable income. The Company expects that during the period in
which these tax losses are utilized its income would be substantially tax
exempt. Therefore, the income tax rate of the Company during the
tax-exempt period will be zero, and there will be no tax benefit
available from these losses and no deferred income taxes have been
included in these financial statements. Deferred taxes in respect of
other temporary differences are immaterial.
F. The U.S. subsidiary's carryforward tax losses through December 31, 1999
amounted to approximately $2.2 million. These losses are available to
offset any future U.S. taxable income of the U.S. subsidiary and will
expire in the years 2010 - 2014.
F-18
<PAGE>
RADVISION LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 16--TAXES ON INCOME (CONTINUED)
Details of deferred tax assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1998 1999
--------- ---------
<S> <C> <C>
Net operating loss carryforwards.............. $ 560,000 $ 770,000
Less--valuation allowance..................... (560,000) (770,000)
========= =========
$ -- $ --
========= =========
</TABLE>
G. The Company has been assessed for tax purposes through the year 1995.
H. A reconciliation between the theoretical tax benefit, assuming all income
is taxed at the statutory rate applicable to the income of the Company,
and the actual tax expense as reported in the statements of operations is
as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Theoretical tax benefit computed at the
statutory rate (36%)...................... $(380,230) $(298,503) $(863,264)
Loss and other items for which deferred
taxes were not provided................... 369,000 277,000 819,000
Non-deductible expenses..................... 11,230 21,503 44,264
--------- --------- ---------
Income tax benefit.......................... $ -- $ -- $ --
========= ========= =========
</TABLE>
NOTE 17--SUBSEQUENT EVENTS
A. After December 31, 1999, the Company:
- increased its authorized share capital to 25,000,000 ordinary shares;
- effected a 10-for-1 share split with respect to its ordinary shares and
deferred shares;
- converted 2,770 ordinary shares into deferred shares; and
- issued 20.1 shares for each outstanding ordinary share as a share
dividend.
After the conversion of preferred shares into ordinary shares (see
note 2(L)), the increase in share capital, the share dividend and the
share split, the Company's authorized share capital consists of
25,000,000 ordinary and deferred shares of NIS 0.1 par value each, of
which 13,585,024 ordinary shares and 15,530 deferred shares are issued
and outstanding. All references to per share amounts and the number of
shares in these financial statements have been restated to reflect the
above increase in share capital, share split and share dividend.
B. The Board of Directors has authorized the Company to file a registration
statement with the United States Securities and Exchange Commission for
an initial public offering of its ordinary shares. Upon the closing of
the initial public offering, all outstanding preferred shares will be
converted into an identical number of ordinary shares.
C. Concurrently with the initial public offering, the Company has agreed to
issue 590,822 ordinary shares at the initial public offering price in a
private placement to Siemens Aktiengesellschaft, Samsung
Electro-Mechanics Co. Ltd. and Samsung Venture Investment Corporation for
aggregate consideration of approximately $7,090,000.
F-19
<PAGE>
3,800,000 SHARES
[LOGO]
Ordinary Shares
----------------
PROSPECTUS
, 2000
------------------------
LEHMAN BROTHERS
SALOMON SMITH BARNEY
U.S. BANCORP PIPER JAFFRAY
FIDELITY CAPITAL MARKETS
a division of National Financial Services Corporation
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses, other than underwriting commissions, expected to be incurred
by RADVision in connection with the issuance and distribution of the securities
being registered under this Registration Statement will be paid by RADVision and
are estimated to be as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $ 14,998
National Association of Securities Dealers, Inc. Filing
Fee....................................................... 6,181
Nasdaq National Market Filing Fee........................... 95,000
Israeli Taxes............................................... 520,000
Printing and Engraving...................................... 200,000
Legal Fees and Expenses..................................... 400,000
Accounting Fees and Expenses................................ 120,000
Indemnification Policy for Directors and Officers........... 400,000
Miscellaneous............................................... 243,821
----------
Total................................................. $2,000,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under the Companies Law, an Israeli company may not exempt an office holder
from liability with respect to a breach of his duty of loyalty, but may exempt
in advance an office holder from his liability to the company, in whole or in
part, with respect to a breach of his duty of care.
OFFICE HOLDER INSURANCE
Our articles of association provide that, subject to the provisions of the
Companies Law, we may enter into a contract for the insurance of the liability
of any of our office holders with respect to:
- a breach of his duty of care to us or to another person;
- a breach of his duty of loyalty to us, provided that the office holder
acted in good faith and had reasonable cause to assume that his act would
not prejudice our interests; or
- a financial liability imposed upon him in favor of another person
concerning an act performed by him in his capacity as an office holder.
INDEMNIFICATION OF OFFICE HOLDERS
Our articles of association provide that we may indemnify an office holder
against:
- a financial liability imposed on him in favor of another person by any
judgment, including a settlement or an arbitrator's award approved by a
court concerning an act performed in his capacity as an office holder; and
- reasonable litigation expenses, including attorneys' fees, expended by the
office holder or charged to him by a court, in proceedings we institute
against him or instituted on our behalf or by another person, or in a
criminal charge from which he was acquitted, or a criminal charge in which
he was convicted for a criminal offense that does not require proof of
intent, in each case relating to an act performed in his capacity as an
office holder.
II-1
<PAGE>
Our articles of association also include the following:
- We are authorized to grant in advance an undertaking to indemnify an
office holder, provided that the undertaking is limited to specified
events which the board of directors deems to be anticipated and limited in
amount determined by the board of directors to be reasonable under the
circumstances.
- We are authorized to indemnify retroactively an office holder.
LIMITATIONS ON INSURANCE AND INDEMNIFICATION
The Companies Law provides that a company may not indemnify an office holder
nor enter into an insurance contract which would provide coverage for any
monetary liability incurred as a result of any of the following:
- a breach by the office holder of his duty of loyalty unless the office
holder acted in good faith and had a reasonable basis to believe that the
act would not prejudice the company;
- a breach by the office holder of his duty of care if the breach was done
intentionally or recklessly;
- any act or omission done with the intent to derive an illegal personal
benefit; or
- any fine levied against the office holder.
In addition, under the Companies Law, indemnification of, and procurement of
insurance coverage for, our office holders must be approved by our audit
committee and our board of directors and, in specified circumstances, by our
shareholders.
We have agreed to indemnify our office holders to the fullest extent
permitted under the Companies Law. Before this offering, we intend to obtain
directors and officers liability insurance for the benefit of our office
holders.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Described below are unregistered securities sold by RADVision during the
three years preceding the filing of this Registration Statement. The share
figures below reflect the share split and share dividend to be effected prior to
the offering.
In September 1996, RADVision agreed to issue and sell an aggregate of
1,030,946 ordinary shares in a private placement at an aggregate purchase price
of approximately $1.6 million. Out of the aggregate 1,030,946 shares, the
Company issued an aggregate of 714,235 shares in September 1996 to Clal Venture
Capital Fund LP, ECI Telecom Ltd., Intel Corporation, Madge Network
(Israel) Ltd. and The Trust Company of Maritime Bank of Israel. Pursuant to an
agreement with Intel Corporation, the Company issued an additional 158,461
shares in November 1997 and an additional 158,250 shares in December 1999 in
exchange for an additional aggregate investment in the Company of $500,000.
From May through July 1997, RADVision issued and sold an aggregate of
269,447 ordinary shares in a private placement to Zohar Zisapel, Michael and
Klil Holdings (93) Ltd., Lomsha Ltd., Madge Network (Israel) Ltd., Zohar Gilon,
Avraham Neuman, Yair Tauman, W.S.P. Capital Investments Ltd., RAD Data
Communications Ltd., The Trust Company of Maritime Bank of Israel, ECI Telecom,
Intel Corporation and Clal Venture Capital Fund LP, at an aggregate purchase
price of approximately $650,000.
In May 1998, RADVision issued and sold an aggregate of 2,957,165 preferred
shares in a private placement to the Evergreen Group, Dovrat Shrem Founders
Group, Canada Israel Opportunity Fund L.P., The Canada Israel Opportunity Fund
II, Dovrat Shrem & Co. Ltd., Rubin Gruber, C.E.
II-2
<PAGE>
Unterberg, Towbin LLC, C.E. Unterberg, Towbin Private Equity Partners LP, C.E.
Unterberg, Towbin Private Equity Partners CV, C.E. Unterberg, Towbin Profit
Sharing Plan FBO Alex Bernstein, Steimatzsky Ltd., Zohar Zisapel, Michael and
Klil Holdings (93) Ltd., Lomsha Ltd., Zohar Gilon, Avraham Neuman, Yair Tauman,
W.S.P. Capital Investments Ltd. RAD Data Communications Ltd., The Trust Company
of Maritime Bank of Israel and Houston Venture Partners, Ltd., at an aggregate
purchase price of $5 million. The Evergreen Group consists of Evergreen Canada
Israel Management Ltd., IJT Technologies Ltd., Periscope I Fund, L.P., Periscope
I Fund Israeli Partnership. We also issued 121,114 ordinary shares at par value
to Zohar Zisapel, Michael and Klil Holdings (93) Ltd., Lomsha Ltd, Zohar Gilon,
Avraham Neuman, Yair Tauman, W.S.P. Capital Investments Ltd. RAD Data
Communications Ltd., The Trust Company of Maritime Bank of Israel, Madge Network
(Israel) Ltd., ECI Telecom, Intel Corporation and Clal Venture Capital Fund LP
as an anti-dilution adjustment to the shares they purchased in the May 1997
private placement.
Each of the securities referred to above was sold (i) pursuant to exemptions
from registration under Section 4(2) of the Securities Act and/or (ii) to
persons who were neither nationals nor residents of the United States and no
facilities or instrumentalities of United States interstate commerce were used
in connection with any offer or sale thereof. No underwriter or underwriting
discount or commission was involved in any of such sales. The recipients of
securities in each such transaction represented their intentions to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof and appropriate legends were affixed to the share
certificates and warrants issued in such transactions. All recipients had
adequate access, through their relationship with us, to information about us.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- --------------------- ------------------------------------------------------------ --------
<C> <S> <C>
1 Form of Underwriting Agreement
3.1 Memorandum of Association of Registrant (English translation
accompanied by Hebrew original)
3.2 Articles of Association of Registrant
4.1 Form of Ordinary Share Certificate*
4.2 Agreement, dated as of April 14, 1995, by and among
Registrant, RAD Data Communications Ltd. and Yehuda Zisapel
and Zohar Zisapel
4.3 Agreement, dated as of April 18, 1995, by and among
Registrant, Clal Venture Capital Fund LP and Yehuda Zisapel
and Zohar Zisapel
4.4 Agreement, dated as of April 18, 1995, by and among
Registrant, Lannet Data Communications Ltd. and Yehuda
Zisapel and Zohar Zisapel
4.5 Agreement, dated as of April 19, 1995, by and among
Registrant, ECI Telecom Ltd. and Yehuda Zisapel and Zohar
Zisapel
4.6 Agreement, dated as of April 24, 1995, by and among
Registrant, Zohar Gilon, Avraham Neuman, Yair Tauman and
W.S.P. Capital Investments Ltd., and Yehuda Zisapel and
Zohar Zisapel
4.7 Agreement, dated as of April 26, 1995, by and among
Registrant, Lerosh Investments Ltd., Gevahim Investments
House Limited Ltd., Yoav Chelouche, Permal Emerging Growth V
Ltd., Maritime--Julex Investment Ltd., Shraga Blazer and Eli
Luz and Yehuda Zisapel and Zohar Zisapel
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- --------------------- ------------------------------------------------------------ --------
<C> <S> <C>
4.8 Agreement, dated as of April 27, 1995, by and among
Registrant, Finovelec, Factory Systemes, Houston Venture
Partners, Ltd. and Yehuda Zisapel and Zohar Zisapel
4.9 Agreement, dated September 12, 1996, by and among Registrant
and Intel Corporation, as amended
4.10 Agreement, dated May 12, 1998, by and among Registrant,
Evergreen Canada Israel Management Ltd., IJT Technologies
Ltd., Periscope I Fund, L.P., Periscope I Fund Israeli
Partnership, Dovrat Shrem Trust Company Ltd., Rubin Gruber,
C.E. Unterberg, Towbin LLC, C.E. Unterberg, Towbin Private
Equity Partners LP, C.E. Unterberg, Towbin Private Equity
Partners CV, C.E. Unterberg, Towbin Profit Sharing Plan FBO
Alex Bernstein and Steimatzsky Ltd.
4.11 Share Purchase Agreement, dated February 22, 2000, among
Registrant, Siemens Aktiengesellschaft and the persons
listed on Exhibit I thereto.
4.12 Share Purchase Agreement, dated February 22, 2000, among
Registrant, Samsung Electro-Mechanics Co. Ltd., Samsung
Venture Investment Corp. and the persons listed on
Exhibit I thereto.
5 Opinion of Goldfarb, Levy, Eran & Co.*
10.1 Key Employee Share Incentive Plan, as amended
10.2 Consultants Option Plan, as amended
10.3 License Agreement, dated January , 1999, between
Registrant and RADCOM Ltd.*
10.4 Lease Agreement, dated , between Registrant and
RIT Technologies Ltd.*
10.5 Lease Agreement, dated , between Registrant and
RAD Data Communications Ltd.*
21 Subsidiaries of the Registrant
23.1 Consent of Luboshitz Kasierer
23.2 Consent of Goldfarb, Levy Eran & Co. (included in Exhibit
5.1 hereto)*
23.3 Consent of Weil, Gotshal & Manges LLP*
24 Power of Attorney (included in the signature pages to the
Registration Statement)
99 Consent of Nominee Director
</TABLE>
(b) FINANCIAL STATEMENT SCHEDULES
Schedule II--Valuation and Quantifying Accounts
- ------------------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes to provide to the
Underwriters at the closing specified in the underwriting agreement,
certificates in such denominations and registered in such names as required by
the Underwriters to permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 14 above, or
otherwise, the Registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is
II-4
<PAGE>
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and this offering of such securities at that time shall be
deemed to be the initial BONA FIDE offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-1 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Tel Aviv, Israel, on the 22nd day of February, 2000.
<TABLE>
<S> <C> <C>
RADVISION LTD.
By: /s/ YEHUDA ZISAPEL
-----------------------------------------
Name: Yehuda Zisapel
Title: Chairman of the Board of Directors
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints Yael Langer and Ami Amir, and each of them, his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to (i) act on, sign and file with the Securities and Exchange
Commission any and all amendments (including post-effective amendments) to this
registration statement together with all schedules and exhibits thereto and any
subsequent registration statement field pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, together with all schedules and exhibits
thereto, (ii) act on, sign and file such certificates, instruments, agreements
and other documents as may be necessary or appropriate in connection therewith,
(iii) act on and file any supplement to any prospectus included in this
registration statement or any such amendment or any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as
amended, and (iv) take any and all actions which may be necessary or appropriate
to be done, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
II-6
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<C> <S> <C>
/s/ YEHUDA ZISAPEL Chairman of the Board of February 22, 2000
- ------------------------------------------- Directors
Yehuda Zisapel
/s/ AMI AMIR Chief Executive Officer February 22, 2000
- ------------------------------------------- (principal executive
Ami Amir officer)
/s/ DAVID SELIGMAN Chief Financial Officer February 22, 2000
- ------------------------------------------- (principal financial and
David Seligman accounting officer)
/s/ ZOHAR ZISAPEL Director February 22, 2000
- -------------------------------------------
Zohar Zisapel
/s/ ADI GAN Director February 22, 2000
- -------------------------------------------
Adi Gan
/s/ DAN GOLDSTEIN Director February 22, 2000
- -------------------------------------------
Dan Goldstein
/s/ HILLEL E. MILO Director February 22, 2000
- -------------------------------------------
Hillel E. Milo
/s/ EFRAIM WACHTEL Director February 22, 2000
- -------------------------------------------
Efraim Wachtel
</TABLE>
Authorized Representative
in the United States:
RADVision Inc.
By: /s/ EUGENE WOLF Febuary 22, 2000
----------------------------------------------
Name: Eugene Wolf
Title: President
II-7
<PAGE>
SCHEDULE II
VALUATION AND QUANTIFYING ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS
-----------------------------------
BALANCE AT THE CHARGED TO BAD CHARGED TO BALANCE AT THE
BEGINNING OF PERIOD DEBT EXPENSES COST OF GOODS SOLD END OF PERIOD
------------------- -------------- ------------------ --------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1997
Allowance for doubtful accounts.... --
Allowance for warranty reserve..... $ 5,000 $ 12,656 $ 17,656
YEAR ENDED DECEMBER 31, 1998
Allowance for doubtful accounts.... -- $ 72,539 $ 72,539
Allowance for warranty reserve..... $17,656 $ 3,854 $ 13,802
YEAR ENDED DECEMBER 31, 1999
Allowance for doubtful accounts.... $72,539 $152,166 $224,705
Allowance for warranty reserve..... $13,802 $ 23 $ 13,825
Allowance for inventory reserve.... -- $100,000 $100,000
</TABLE>
<PAGE>
BPH DRAFT 01/25/00
Exhibit 1
[Form of the Underwriting Agreement]
3,800,000 SHARES
RADVISION LTD.
ORDINARY SHARES
UNDERWRITING AGREEMENT
_________, 2000
LEHMAN BROTHERS INC.
SALOMON SMITH BARNEY INC.
U.S. BANCORP PIPER JAFFRAY INC.
FIDELITY CAPITAL MARKETS,
a division of National Financial Services Corporation
As Representatives of the several
Underwriters named in Schedule I,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
RADVision Ltd., a corporation organized under the laws of the
State of Israel (the "Company"), proposes to sell an aggregate of 3,800,000
shares (the "Firm Stock") of the Company's Ordinary Shares, par value NIS 0.1
per share (the "Ordinary Shares"). In addition, the Company proposes to grant to
the Underwriters named in Schedule 1 hereto (the "Underwriters") an option to
purchase up to an additional 570,000 Ordinary Shares on the terms and for the
purposes set forth in Section 2 (the "Option Stock"). The Firm Stock and the
Option Stock, if purchased, are hereinafter collectively called the "Stock."
This Agreement is to confirm the agreement concerning the purchase of the Stock
from the Company by the Underwriters.
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
Stock has (i) been prepared by the Company in conformity with the requirements
of the United States Securities Act of 1933, as amended (the "Securities Act"),
and the rules and regulations (the "Rules and Regulations") of the United States
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 the
amendments thereto have been delivered by the Company to you as the
representatives (the "Representatives") of the Underwriters. As used in this
Agreement, "Effective Time" means the date and the time as
<PAGE>
of which such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission; "Effective
Date" means the date of the Effective Time; "Preliminary Prospectus" means each
prospectus included in such registration statement, or amendments thereof,
before it became effective under the Securities Act and any prospectus filed
with the Commission by the Company with the consent of the Representatives
pursuant to Rule 424(a) of the Rules and Regulations; "Registration Statement"
means such registration statement, as amended at the Effective Time, including
all information contained in the final prospectus filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations in accordance with Section
5(a) hereof and deemed to be a part of the registration statement as of the
Effective Time pursuant to paragraph (b) of Rule 430A of the Rules and
Regulations; and "Prospectus" means such final prospectus, as first filed with
the Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the Rules and
Regulations. The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be, conform in all material respects to the requirements of the
Securities Act and the Rules and Regulations and do not and will not, as of the
applicable effective date (as to the Registration Statement and any amendment
thereto) and as of the applicable filing date (as to the Prospectus and any
amendment or supplement thereto) 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 or 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.
(c) The Company and each of its subsidiaries (as defined in
Section 15) have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective
jurisdictions of incorporation, are duly qualified to do business and are in
good standing as foreign corporations in each jurisdiction in which their
respective ownership or lease of property or the conduct of their respective
businesses requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the business, financial
condition or results of operations of the Company and its subsidiaries, taken
as a whole, and have all power and authority necessary to own or hold their
respective properties and to conduct the businesses in which they are engaged.
(d) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued and outstanding securities of the
Company (including all options, warrants, convertible securities and rights to
acquire shares of the Company) have been duly and validly authorized and issued
and conform to the description thereof contained in the Prospectus; all of the
issued and outstanding shares of capital stock of the Company are fully paid and
non-assessable; and all of the issued shares of capital stock of each subsidiary
of the Company have been duly and validly authorized and issued and 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.
2
<PAGE>
(e) The shares of the Stock to be issued and sold by the
Company to the Underwriters hereunder have been duly and validly authorized and,
when issued and delivered against payment therefor as provided herein, will be
duly and validly issued, fully paid and non-assessable and the Stock will
conform to the description thereof contained in the Prospectus.
(f) This Agreement has been duly authorized, executed and
delivered by the Company.
(g) The execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions contemplated
hereby will not 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 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, nor will such actions result in
any violation of the provisions of the Memorandum or Articles of Association of
the Company or the charter or by-laws or other governing corporate documents of
any of its subsidiaries or 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; and except for the
registration of the Stock under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under the
Exchange Act and applicable state securities laws in connection with the
purchase and distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration with, any such
court or governmental agency or body is required for the execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby.
(h) Except as described in the Prospectus, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right (other than rights with respect to the offering
which have been waived or 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 or in any securities being registered pursuant to any
other registration statement filed by the Company under the Securities Act.
(i) Except as described in the Prospectus or elsewhere in the
Registration Statement, the Company has not sold or issued any Ordinary Shares
during the six-month period preceding the date of the Prospectus, including any
sales pursuant to Rule 144A under, or Regulations D or S of, the Securities Act,
other than shares issued pursuant to employee benefit plans, qualified stock
options plans or other employee compensation plans or pursuant to outstanding
options, rights or warrants.
(j) Neither the Company nor any of its subsidiaries has
sustained, since the date of the latest audited financial statements included in
the 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,
3
<PAGE>
otherwise than as set forth or contemplated in the Prospectus; and, since such
date, there has not been any change in the capital stock or long-term debt of
the Company or any of its subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity or results
of operations of the Company and its subsidiaries, otherwise than as set forth
or contemplated in the Prospectus.
(k) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or included in
the Prospectus present fairly the financial condition and results of operations
of the entities purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved.
(l) Luboshitz Kasierer, a member firm of Arthur Andersen, who
have certified certain financial statements of the Company, whose report appears
in the Prospectus and who have delivered the initial letter referred to in
Section 7(h) hereof, are independent public accountants as required by the
Securities Act and the Rules and Regulations.
(m) 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 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 real property and buildings held
under lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases, with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.
(n) Except as described in the Prospectus, 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.
(o) Each of the Company and its subsidiaries owns or possesses
adequate rights to use all patents, patent rights or licenses, inventions,
collaborative research agreements, trade secrets, know-how, trademarks, service
marks, trade names and copyrights (collectively, "Intellectual Property") which
are necessary to conduct its businesses as described in the Registration
Statement and Prospectus; the expiration of any Intellectual Property will not
have a material adverse effect on the consolidated financial position,
stockholders' equity, results of operations, business or prospects of the
Company and its subsidiaries that is not otherwise disclosed in the Prospectus;
other than as disclosed in the prospectus, the Company has not received any
notice of, and has no knowledge of, any infringement of or conflict with
asserted rights of the Company by others with respect to any Intellectual
Property; and, other than as disclosed in the prospectus, the Company has not
received any notice of, and has no knowledge of, any infringement of or conflict
with asserted rights of others with respect to any Intellectual Property which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or
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finding, might reasonably be expected to have a material adverse effect on the
consolidated financial position, stockholders' equity, results of operations,
business or prospects of the Company and its subsidiaries. To the Company's
knowledge, there is no claim being made against the Company regarding
Intellectual Property other than that described in the Prospectus under the
caption "Business--Legal Proceedings". To the Company's knowledge, the Company
and its subsidiaries do not in the conduct of their business as now or proposed
to be conducted as described in the Prospectus, infringe or conflict with any
right or patent of any third party, or any discovery, invention, product or
process which is the subject of a patent application filed by any third party,
known to the Company or its subsidiaries, which such infringement or conflict is
reasonably likely to have a material adverse effect on the consolidated
financial position, stockholders' equity, results of operations, business or
prospects of the Company and its subsidiaries.
(p) Except as described in the 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 which, if determined adversely to the Company
or any of its subsidiaries, could reasonably be expected to have a material
adverse effect on the consolidated financial position, stockholders' equity,
results of operations, business or prospects of the Company and its
subsidiaries; and to the best of the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others.
(q) The allegations contained in correspondence from Lucent
Technologies to RAD Data Communications Ltd., an affiliate of the Company, that
are described in the Prospectus under the caption "Business--Legal Proceedings"
will not have a material adverse effect on the consolidated financial position,
stockholders' equity, results of operations, business or prospects of the
Company and its subsidiaries.
(r) There are no contracts or other documents which are
required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and Regulations
which have not been described in the Prospectus or filed as exhibits to the
Registration Statement.
(s) 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 Prospectus which is not so described.
(t) No labor disturbance by the employees of the Company
exists or, to the knowledge of the Company, is imminent which could reasonably
be expected to have a material adverse effect on the consolidated financial
position, stockholders' equity, results of operations, business or prospects of
the Company and its subsidiaries.
(u) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in
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ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for
which the Company would have any liability; the Company has not incurred and
does not expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
(v) The Company has filed all federal, state and local income
and franchise tax returns required to be filed through the date hereof and has
paid all taxes due thereon, and no tax deficiency has been determined adversely
to the Company or any of its subsidiaries which has had (nor does the Company
have any knowledge of any tax deficiency which, if determined adversely to the
Company or any of its subsidiaries, could reasonably be expected to have) a
material adverse effect on the consolidated financial position, stockholders'
equity, results of operations, business or prospects of the Company and its
subsidiaries, taken as a whole.
(w) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be disclosed in
the Prospectus, the Company has not (i) issued or granted any securities, (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) declared or paid any dividend on its capital stock.
(x) The Company (i) makes and keeps accurate books and records
and (ii) maintains internal accounting controls which provide reasonable
assurance that (A) transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit preparation
of its financial statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
authorization and (D) the reported accountability for its assets is compared
with existing assets at reasonable intervals.
(y) Neither the Company nor any of its subsidiaries (i) is in
violation of its charter or by-laws, (ii) is in default in any material respect,
and no event has occurred which, 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 or other agreement or 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 in any material respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its property or
assets may be subject or has failed to obtain any material license, permit,
certificate, franchise or other governmental authorization or permit necessary
to the ownership of its property or to the conduct of its business.
(z) The Company has reviewed, and is continuing to review, its
operations, products and services to evaluate the extent to which the business
or operations of the Company or its subsidiaries will be affected by the Year
2000 problem (that is, any significant risk that
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computer hardware or software applications used by the Company or its
subsidiaries will not, in the case of dates or time periods occurring after
December 31, 1999, function at least as effectively as in the case of dates or
time periods occurring prior to January 1, 2000); as a result of such review,
the Company has no reason to believe, and does not believe, that there are any
issues related to the Company's preparedness for the Year 2000 that (i) are of a
character required to be described or referred to in the Prospectus by the
Securities Act that have not been accurately described in the Prospectus or (ii)
could reasonably be expected to have a material adverse effect on the financial
position, stockholders' equity, results of operations or business of the
Company.
(aa) Neither the Company nor any of its subsidiaries, nor any
director, officer, agent, employee or other person associated with or acting on
behalf of the Company or any of its subsidiaries, has used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.
(bb) To the Company's knowledge, there has been no storage,
disposal, generation, manufacture, refinement, transportation, handling or
treatment of toxic wastes, medical wastes, hazardous wastes or hazardous
substances by the Company or any of its subsidiaries (or, to the knowledge of
the Company, any of their predecessors in interest) at, upon or from any of the
property now or previously owned or leased by the Company or its subsidiaries in
violation of any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit or which would require remedial action under any applicable
law, ordinance, rule, regulation, order, judgment, decree or permit, except for
any violation or remedial action which would not have, or could not be
reasonably likely to have, singularly or in the aggregate with all such
violations and remedial actions, a material adverse effect on the general
affairs, management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries; to the Company's knowledge,
there has been no material spill, discharge, leak, emission, injection, escape,
dumping or release of any kind onto such property or into the environment
surrounding such property of any toxic wastes, medical wastes, solid wastes,
hazardous wastes or hazardous substances due to or caused by the Company or any
of its subsidiaries or with respect to which the Company or any of its
subsidiaries has knowledge, except for any such spill, discharge, leak,
emission, injection, escape, dumping or release which would not have or would
not be reasonably likely to have, singularly or in the aggregate with all such
spills, discharges, leaks, emissions, injections, escapes, dumpings and
releases, a material adverse effect on the general affairs, management,
financial position, stockholders' equity or results of operations of the Company
and its subsidiaries; and the terms "hazardous wastes", "toxic wastes",
"hazardous substances" and "medical wastes" shall have the meanings specified in
any applicable local, state, federal and foreign laws or regulations with
respect to environmental protection.
(cc) Neither the Company nor any of its subsidiaries is an
"investment company" within the meaning of such term under the Investment
Company Act of 1940 and the rules and regulations of the Commission thereunder.
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(dd) Subject to applicable law, none of the subsidiaries is
currently prohibited, directly or indirectly, from paying any dividends to the
Company, from making any other distribution on the subsidiary's capital stock,
from repaying to the Company any loans or advances to the subsidiary from the
Company or from transferring any of such subsidiary's property or assets to the
Company, except as described in or contemplated by the Prospectus.
(ee) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected to cause
or result in stabilization or manipulation of the price of the Ordinary Shares
to facilitate the sale or resale of the Ordinary Shares.
(ff) Each officer and director of the Company and each
beneficial owner of the outstanding issued share capital of the Company set
forth on Schedule II hereto has agreed to sign an agreement substantially in the
form attached hereto as EXHIBIT A (the "Lock-up Agreements"). The Company has
provided to counsel for the Underwriters a complete and accurate list of all
securityholders of the Company and the number and type of securities held by
each securityholder.
(gg) Except for the applicable stamp duty under Israeli law,
there are no transfer taxes or similar fees or charges under U.S. 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 issuance
and sale by the Company of the Ordinary Shares.
(hh) The Company is not, and does not believe that, upon the
consummation of the transactions contemplated hereby and the application of the
proceeds as described in the Registration Statement under the caption "Use of
Proceeds," it will become, a passive foreign investment company (a "PFIC") as
defined in Section 1296 of the Code.
(ii) The Company has received an exemption from the Israel
Securities Authority to offer and sell the Stock, which exemption was in full
force and effect on the date hereof and which shall be in full force and effect
on the date of the Prospectus, on the date that any post-effective amendment to
the Registration Statement shall become effective, when any supplement or
amendment to the Prospectus is filed with the Commission, and at the Closing
Date.
(jj) Except as described in the Prospectus, the Company is in
compliance with all material conditions and requirements stipulated by the
instruments of approval entitling it or any of its operations to the status of
"Approved Enterprise" under Israeli law and by Israeli laws and regulations
relating to such Approved Enterprise status, except such non-compliance as would
not have a Material Adverse Effect. All information supplied by the Company with
respect to such applications was true, correct and complete in all material
respects when supplied to the appropriate authorities.
(kk) Except as described in the Prospectus, the Company is not
in material violation of any conditions or requirements stipulated by the
instruments of approval granted to any of them by the Office of Chief Scientist
in the Ministry of Industry & Trade and any applicable laws and regulations,
with respect to any research and development grants given to it
8
<PAGE>
by such office, which violation, individually or in the aggregate, could have a
Material Adverse Effect. All information supplied by the Company with respect to
such applications was true, correct and complete in all material respects when
supplied to the appropriate authorities.
(ll) The Company's employment agreements in Israel do not
differentiate between compensation paid to employees for a 43 hour work week or
for maximum daily hours, and compensation for overtime work. The Company
believes that it does not have any material exposure by reason of claims by the
employees due to (i) the fact that most of the employees of the Company are in
position of "special trust," (ii) the agreement by the employees to be
compensated on a fixed basis, (iii) the payment by the Company of higher
salaries, which take into account payments for additional hours, (iv) the
distribution of bonuses and stock options by the Company, which come in part as
compensation for additional hours, (v) the fact that a non-material number of
overtime hours has been reported, and (vi) the fact that most employees sign a
"waiver of claims" letter upon termination of employment.
2. PURCHASE OF THE STOCK 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 3,800,000 shares of
the Firm Stock to the several Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase the number of shares of the Firm
Stock set opposite that Underwriter's name in Schedule 1 hereto. The respective
purchase obligations of the Underwriters with respect to the Firm Stock shall be
rounded among the Underwriters to avoid fractional shares, as the
Representatives may determine.
In addition, the Company grants to the Underwriters an option to
purchase up to 570,000 shares of Option Stock. Such option is granted solely for
the purpose of covering over-allotments in the sale of Firm Stock and is
exercisable as provided in Section 4 hereof. Shares of Option Stock shall be
purchased severally for the account of the Underwriters in proportion to the
number of shares of Firm Stock set opposite the name of such Underwriters in
Schedule 1 hereto. The respective purchase obligations of each Underwriter with
respect to the Option Stock shall be adjusted by the Representatives so that no
Underwriter shall be obligated to purchase Option Stock other than in 100 share
amounts. The price of both the Firm Stock and any Option Stock shall be $[_____]
per share.
The Company shall not be obligated to deliver any of the Stock to
be delivered on the First Delivery Date or the Second any Delivery Date (as
hereinafter defined), as the case may be, except upon payment for all the Stock
to be purchased on such Delivery Date as provided herein.
3. OFFERING OF STOCK BY THE UNDERWRITERS. Upon authorization by the
Representatives of the release of the Firm Stock, the several Underwriters
propose to offer the Firm Stock for sale upon the terms and conditions set forth
in the Prospectus.
It is understood that up to 228,000 shares of the Firm Stock (the
"Directed Shares") will initially be reserved by the several Underwriters for
offer and sale upon the terms and conditions set forth in the Prospectus and in
accordance with the rules and regulations of the National Association of
Securities Dealers, Inc. (the "Directed Share Program") to employees
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<PAGE>
and persons having business relationships with the Company and its subsidiaries
(the "Directed Share Participants") who have heretofore delivered to the
Representatives offers to purchase shares of Firm Stock in form satisfactory to
the Representatives, and that any allocation of such Firm Stock among the
Directed Share Participants will be made in accordance with timely directions
received by the Representatives from the Company; PROVIDED, that under no
circumstances will the Representatives or any Underwriter be liable to the
Company or to any Directed Share Participant for any action taken or omitted in
good faith in connection with the Directed Share Program. It is further
understood that any Directed Shares which are not purchased by the Directed
Share Participants will be offered by the Underwriters to the public upon the
terms and conditions set forth in the Prospectus.
4. DELIVERY OF AND PAYMENT FOR THE STOCK. Delivery of and payment for
the Firm Stock shall be made at the office of Brobeck, Phleger & Harrison LLP,
1633 Broadway, New York, NY 10019, at 10:00 A.M., New York 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 "First Delivery
Date." On the First Delivery Date, the Company shall deliver or cause to be
delivered certificates representing the Firm Stock to the Representatives for
the account of each Underwriter against payment to or upon the order of the
Company of the purchase price by wire transfer in certified or official bank
check or checks payable in immediately available funds. 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. Upon
delivery, the Firm Stock shall be registered in such names and in such
denominations as the Representatives shall request in writing not less than two
full business days prior to the First Delivery Date. For the purpose of
expediting the checking and packaging of the certificates for the Firm Stock,
the Company shall make the certificates representing the Firm Stock available
for inspection by the Representatives in New York, New York, not later than 2:00
P.M., New York City time, on the business day prior to the First Delivery Date.
The option granted in Section 2 will expire 30 days after the
date of this Agreement and may be exercised in whole or in part from time to
time by written notice being given to the Company by the Representatives. Such
notice shall set forth the aggregate number of shares of Option Stock as to
which the option is being exercised, the names in which the shares of Option
Stock are to be registered, the denominations in which the shares of Option
Stock are to be issued and the date and time, as determined by the
Representatives, when the shares of Option Stock are to be delivered; PROVIDED,
HOWEVER, that this date and time shall not be earlier than the First Delivery
Date nor earlier than the second business day after the date on which the option
shall have been exercised nor later than the fifth business day after the date
on which the option shall have been exercised. The date and time the shares of
Option Stock are delivered are sometimes referred to as the "Second Delivery
Date" and the First Delivery Date and the any Second Delivery Date are sometimes
each referred to as a "Delivery Date").
Delivery of and payment for the Option Stock shall be made at the
place specified in the first sentence of the first paragraph of this Section 4
(or at such other place as shall be determined by agreement between the
Representatives and the Company) at 10:00 A.M., New
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York City time, on the such Second Delivery Date. On the such Second Delivery
Date, the Company shall deliver or cause to be delivered the certificates
representing the Option Stock to the Representatives for the account of each
Underwriter against payment to or upon the order of the Company of the purchase
price by wire transfer in certified or official bank check or checks payable in
immediately available funds. 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. Upon delivery, the Option Stock
shall be registered in such names and in such denominations as the
Representatives shall request in the aforesaid written notice. For the purpose
of expediting the checking and packaging of the certificates for the Option
Stock, the Company shall make the certificates representing the Option Stock
available for inspection by the Representatives in New York, New York, not later
than 2:00 P.M., New York City time, on the business day prior to the such Second
Delivery Date.
5. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than Commission's close of business on the second
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act; 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 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 any Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Stock for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the Registration
Statement or the 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 any Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly its 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: (i)
conformed 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 (ii) each Preliminary Prospectus, the Prospectus and any
amended or supplemented Prospectus; and, if the delivery of a prospectus is
required at any time after the Effective Time in connection with the offering or
sale of the Stock or any other securities relating thereto and if at such time
any events shall have occurred as a
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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 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 which
will correct such statement or omission or effect such compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the 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, to furnish a copy thereof to
the Representatives and counsel for the Underwriters and obtain the consent of
the Representatives to the filing;
(f) 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);
(g) For a period of five years following the Effective Date,
to furnish to the Representatives copies of all materials furnished by the
Company to its shareholders and all public reports and all reports and financial
statements furnished by the Company to the principal national securities
exchange upon which the Ordinary 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;
(h) So long as the Company is required to file an annual
report on Form 20-F with the Commission, to file with the Commission within 60
days after the end of each of the first three fiscal quarters a report on Form
6-K containing quarterly interim reports that include (i) an unaudited
consolidated statement of operations, balance sheet, statement of cash flows and
statement of changes in shareholders' equity, all prepared in accordance with
U.S. GAAP and (ii) a management's discussion and analysis in abbreviated form
comparing the results of operations for the most recent fiscal quarter and the
year-to-date to the same periods of the previous fiscal year and the Company's
liquidity and capital resources for the most recent fiscal quarter.
(i) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock 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
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complete the distribution of the Stock; PROVIDED that, in connection therewith,
the Company shall not be required to qualify as a foreign corporation or to file
a general consent to service of process in any jurisdiction;
(j) For a period of 180 days from the date of the Prospectus,
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
into Ordinary Shares (other than the Stock), or sell or grant options, rights or
warrants with respect to any Ordinary Shares or securities convertible into or
exchangeable into Ordinary Shares (other than the grant of options pursuant to
option plans existing on the date hereof), or (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, for a
period of 180 days after the date of the final Prospectus relating to the
Offering, in each case without the prior written consent of Lehman Brothers
Inc.; and to cause each officer and director of the Company to furnish to the
Representatives, prior to the First Delivery Date, a letter or letters, in form
and substance satisfactory to counsel for the Underwriters, pursuant to which
each such person shall agree 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 into Ordinary Shares (other than the Stock), or
sell or grant options, rights or warrants with respect to any Ordinary Shares or
securities convertible into or exchangeable into Ordinary Shares (other than the
grant of options pursuant to option plans existing on the date hereof), or (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, for a period of 180 days after the date of the final
Prospectus relating to the Offering, without the prior written consent of Lehman
Brothers Inc.;
(k) Prior to the Effective Date, to apply for the inclusion of
the Stock on the Nasdaq National Market System and to use its best efforts to
complete that listing, subject only to official notice of issuance, prior to the
First Delivery Date;
(l) To maintain a transfer agent and, if necessary under the
Company's jurisdiction of incorporation, a registrar (which may be the same
entity as the transfer agent) for its Ordinary Shares;
(m) To apply the net proceeds from the sale of the Stock being
sold by it in the manner set forth in the Prospectus;
(n) To obtain Directors and Officers liability insurance in
the minimum amount of $10 million which shall apply to the offering contemplated
hereby;
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(o) To take such steps as shall be necessary to ensure that
neither the Company nor any subsidiary shall become an "investment company"
within the meaning of such term under the Investment Company Act of 1940 and the
rules and regulations of the Commission thereunder; and
(p) To the extent consistent with its other business goals, to
use its best efforts to avoid becoming a PFIC.
6. EXPENSES. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Stock and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement and any amendments and
exhibits thereto; (c) the costs of distributing the Registration Statement as
originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Preliminary Prospectus, the
Prospectus and any amendment or supplement to the Prospectus, all as provided in
this Agreement; (d) the costs of producing and distributing this Agreement and
any other related documents in connection with the offering, purchase, sale and
delivery of the Stock; (e) the filing fees incident to securing any required
review by the National Association of Securities Dealers, Inc. of the terms of
sale of the Stock; (f) any applicable listing or other fees; (g) the fees and
expenses of qualifying the Stock under the securities laws of the several
jurisdictions as the Representatives may designate and of preparing, printing
and distributing a Blue Sky Memorandum (including related fees and expenses of
counsel to the Underwriters); (h) all costs and expenses of the Underwriters,
including the fees and disbursements of counsel for the Underwriters and any
stamp duties or other taxes incurred by the Underwriters, incident to the offer
and sale of shares of the Directed Shares by the Underwriters to the Directed
Share Participants, as described in Section 3; and (i) all other costs and
expenses incident to the performance of the obligations of the Company under
this Agreement; PROVIDED that, except as provided in this Section 6 and in
Section 11 the Underwriters shall pay their own costs and expenses, including
the costs and expenses of their counsel, any transfer taxes on the Stock which
they may sell and the expenses of advertising any offering of the Stock made by
the Underwriters.
7. 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 contained
herein, to the performance by the Company of its 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 5(a); no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that 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.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to such Delivery Date that the Registration Statement or the
Prospectus or any amendment
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or supplement thereto contains an untrue statement of a fact which, in the
opinion of Brobeck, Phleger & Harrison LLP, counsel for the Underwriters, is
material or omits to state a fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to make the
statements therein not misleading.
(c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the Stock, the
Registration Statement 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 shall have furnished to such counsel all documents and information that
they may reasonably request to enable them to pass upon such matters.
(d) Weil, Gotshal & Manges LLP, U.S. counsel to the Company,
shall have furnished to the Representatives its written opinion, addressed to
the Underwriters and dated such Delivery Date, substantially in the form of
EXHIBIT B attached hereto.
(e) Goldfarb, Levy, Eran & Co., foreign counsel to the
Company, shall have furnished to the Representatives its written opinion,
addressed to the Underwriters and dated such Delivery Date, substantially in the
form of EXHIBIT C attached hereto.
(f) The Representatives shall have received from Brobeck,
Phleger & Harrison LLP, U.S. counsel for the Underwriters, such opinion or
opinions, dated such Delivery Date, with respect to the issuance and sale of the
Stock, the Registration Statement, the Prospectus and other related matters as
the Representatives may reasonably require, and the Company 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 & Co., foreign counsel for the Underwriters, such opinion or
opinions, dated such Delivery Date, with respect to the issuance and sale of the
Stock, the Registration Statement, the Prospectus and other related matters as
the Representatives may reasonably require, and the Company 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 Luboshitz Kasierer, a member firm of
Arthur Andersen, a letter, in form and substance satisfactory to the
Representatives, addressed to the Underwriters and dated the date hereof (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 hereof (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 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.
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(i) With respect to the letter of Luboshitz Kasierer, a member
firm of Arthur Andersen, referred to in the preceding paragraph and delivered to
the Representatives concurrently with the execution of this Agreement (the
"initial letter"), the Company shall have furnished to the Representatives a
letter (the "bring-down letter") of 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 letter 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 Chairman of the Board, its
President and its Chief Financial Officer stating that:
(i) The representations, warranties and agreements of
the Company in Section 1 are true and correct as of such
Delivery Date; the Company has complied with all its
agreements contained herein; and the conditions set forth in
Sections 7(a) and 7(k) have been fulfilled; and
(ii) They have carefully examined the Registration
Statement and the Prospectus and, in their opinion (A) as of
the Effective Date, the Registration Statement and Prospectus
did not include any untrue statement of a material fact and
did not omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, and (B) since the Effective Date no event has
occurred which should have been set forth in a supplement or
amendment to the Registration Statement or the Prospectus.
(k) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the 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, otherwise than as set
forth or contemplated in the Prospectus or (ii) since such date there shall not
have been any change in the capital stock or long-term debt of the Company or
any of its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectus, 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 Stock being delivered on such Delivery Date on the terms and in the
manner contemplated in the Prospectus.
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(l) 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 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 (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (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 a
majority in interest of the several Underwriters, impracticable or inadvisable
to proceed with the public offering or delivery of the Stock being delivered on
such Delivery Date on the terms and in the manner contemplated in the
Prospectus.
(m) The Nasdaq National Market System shall have approved the
Stock for inclusion, subject only to official notice of issuance and evidence of
satisfactory distribution.
(n) The Company shall have provided to counsel for the
Underwriters true, accurate and complete copies of the Lock-up Agreements for
each person or entity listed on Schedule II hereof and each such agreement shall
be in full force and effect on each Delivery Date.
(o) On or before each Delivery Date, the Representatives and
counsel for the Underwriters shall have received such information, documents and
opinions as they may reasonably require for the purposes of enabling them to
pass upon the issuance and sale of the Ordinary Shares as contemplated herein,
or in order to evidence the accuracy of any of the representations and
warranties, or the satisfaction of any of the conditions or agreements, herein
contained.
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.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company shall indemnify and hold harmless each
Underwriter, its officers and employees and each person, if any, who controls
any Underwriter within the meaning 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 Stock), to which that Underwriter,
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 (A) any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
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<PAGE>
thereto, (B) in any materials or information provided to investors by, or with
the approval of, the Company in connection with the marketing of the offering of
the Stock ("Marketing Materials"), including any roadshow or investor
presentations made to investors by the Company (whether in person or
electronically), or (C) in any blue sky application or other document prepared
or executed by the Company (or based upon written information furnished by the
Company) specifically for the purpose of qualifying any or all of the Stock
under the securities laws of any state or other jurisdiction (any such
application, document or information being hereinafter called a "Blue Sky
Application"), (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, in any Marketing Materials or in any Blue Sky Application
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 Stock 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 officer, employee or controlling
person promptly upon demand for any legal or other expenses reasonably incurred
by that Underwriter, 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 Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any such amendment or supplement, 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. The foregoing indemnity agreement is in
addition to any liability which the Company may otherwise have to any
Underwriter or to any officer, employee or controlling person of that
Underwriter.
(b) In connection with the offer and sale of the Directed
Shares, the Company agrees, promptly upon a request in writing, to indemnify and
hold harmless U.S. Bancorp Piper Jaffray Inc. and the other Underwriters from
and against any loss, claim, damage, expense, liability or action which (i)
arises out of, or is based upon, any untrue statement or alleged untrue
statement of a material fact contained in any material prepared by or with the
approval of the Company for distribution to Directed Share Participants in
connection with the Directed Share Program or any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, (ii) arises out of the failure of
any Directed Share Program participant to pay for and accept delivery of
Directed Shares that the Participant agreed to purchase or (iii) is otherwise
related to the Directed Share Program, other than losses, claims, damages or
liabilities (or expenses relating thereto) that are finally judicially
determined to have resulted directly from the bad faith or gross negligence of
U.S. Bancorp Piper Jaffray Inc.
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<PAGE>
(c) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, its officers and employees, each of its
directors, and each person, if any, who controls the Company within the meaning
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 or any
such director, officer 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, or (B) in any Blue Sky Application or (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky
Application 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, and shall
reimburse the Company and any such director, officer or controlling person for
any legal or other expenses reasonably incurred by the Company 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 which any Underwriter may otherwise have to the
Company or any such director, officer, employee or controlling person.
(d) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; PROVIDED, HOWEVER, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, 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 8.
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 8 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 Representatives shall have the right to employ counsel to represent jointly
the Representatives and those other Underwriters and their respective officers,
employees and controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Underwriters
against the Company under this Section 8 if, in the reasonable judgment of the
Representatives, it is advisable for the Representatives and those Underwriters,
officers, employees and controlling persons to be jointly
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represented by separate counsel, and in that event the fees and expenses of such
separate counsel shall be paid by the Company. 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, 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 of 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.
(e) If the indemnification provided for in this Section 8
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Sections 8(a), 8(b) or 8(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 on the one hand and the Underwriters on the
other from the offering of the Stock 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 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 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 Stock purchased under this Agreement
(before deducting expenses) received by the Company on the one hand, and the
total underwriting discounts and commissions received by the Underwriters with
respect to the shares of the Stock purchased under this Agreement, on the other
hand, bear to the total gross proceeds from the offering of the shares of the
Stock under this Agreement, in each case as set forth in the table on the cover
page of the Prospectus. 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 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 and the Underwriters agree that it would not
be just and equitable if contributions pursuant to this Section 8(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
8(e) shall be deemed to include, for purposes of this Section 8(e), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or
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defending any such action or claim. Notwithstanding the provisions of this
Section 8(e), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Stock underwritten by
it and distributed to the public was offered to the public 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 8(e) are
several in proportion to their respective underwriting obligations and not
joint.
(f) The Underwriters severally confirm and the Company
acknowledges that the statements with respect to the public offering of the
Stock by the Underwriters set forth on the cover page of, the legend concerning
over-allotments on the inside front cover page of and the information contained
in paragraphs 3, 10, 11, 12, 13, 14 and 17 under the caption "Underwriting" in,
the Prospectus 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 the Registration Statement and the
Prospectus.
9. DEFAULTING UNDERWRITERS. If, on either 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
Stock which the defaulting Underwriter agreed but failed to purchase on such
Delivery Date in the respective proportions which the number of shares of the
Firm Stock set opposite the name of each remaining non-defaulting Underwriter in
Schedule 1 hereto bears to the total number of shares of the Firm Stock set
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 Stock on such Delivery Date if the
total number of shares of the Stock which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such date exceeds 9.09% of the
total number of shares of the Stock 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 shares of the Stock which it agreed to purchase on
such Delivery Date pursuant to the terms of Section 2. 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 Stock 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 of Stock which the
defaulting Underwriter or Underwriters agreed but failed to purchase on such
Delivery Date, this Agreement (or, with respect to the Second Delivery Date, the
obligation of the Underwriters to purchase, and of the Company to sell, the
Option Stock) shall terminate without liability on the part of any
non-defaulting Underwriter or the Company, except that the Company will continue
to be liable for the payment of expenses to the extent set forth in Sections 5
and 8. 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 who, pursuant to this Section 9, purchases Firm
Stock which a defaulting Underwriter agreed but failed to purchase.
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Nothing contained herein shall relieve a defaulting Underwriter
of any liability it may have to the Company for damages caused by its default.
If other underwriters are obligated or agree to purchase the Stock 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.
10. TERMINATION. The obligations of the Underwriters hereunder may be
terminated by the Representatives by notice given to and received by the Company
prior to delivery of and payment for the Firm Stock if, prior to that time, any
of the events described in Sections 7(k) or 7(l), shall have occurred or if the
Underwriters shall decline to purchase the Stock for any reason permitted under
this Agreement.
11. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If (a) the Company shall
fail to tender the Stock for delivery to the Underwriters by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the Company is
not fulfilled, the Company will reimburse the Underwriters for all reasonable
out-of-pocket expenses (including fees and disbursements of counsel) incurred by
the Underwriters in connection with this Agreement and the proposed purchase of
the Stock, and upon demand the Company shall pay the full amount thereof to the
Representatives. If this Agreement is terminated pursuant to Section 9 by reason
of the default of one or more Underwriters, the Company shall not be obligated
to reimburse any defaulting Underwriter on account of those expenses.
12. 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 Lehman Brothers Inc., 3 World Financial
Center, New York, New York 10285, Attention: Syndicate Department (Fax:
212-526-6588), with a copy, in the case of any notice pursuant to Section 8(e),
to the Director of Litigation, Office of the General Counsel, Lehman Brothers
Inc., 3 World Financial Center, 10th Floor, New York, NY 10285;
(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: Yael Langer (Fax Number: 011-972-3-649-8248);
PROVIDED, HOWEVER, that any notice to an Underwriter pursuant to Section 8(e)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. 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 Lehman Brothers Inc.
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13. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Company, and
their respective 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 contained
in this Agreement shall also be deemed to be for the benefit of the 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 8(c) of this Agreement shall be deemed to be for the benefit of
directors of the Company, officers of the Company who have signed the
Registration Statement and any person controlling the Company within the meaning
of Section 15 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 13, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
14. SURVIVAL. The respective indemnities, representations, warranties
and agreements of the Company 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 Stock 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.
15. DEFINITION OF THE TERMS "BUSINESS DAY" AND "SUBSIDIARY". For
purposes of this Agreement, (a) "business day" means each Monday, Tuesday,
Wednesday, Thursday or Friday which 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" means each of RADVision, Inc. (in the United States)
and RADVision B.V. (in the Netherlands), which are the Company's only
subsidiaries within the meaning set forth in Rule 405 of the Rules and
Regulations.
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF NEW YORK.
17. CONSENT TO JURISDICTION. Each party irrevocably agrees that any
legal suit, action or proceeding arising out of or based upon this Agreement or
the transactions contemplated hereby ("Related Proceedings") may be instituted
in the federal courts of the United States of America located in the City of New
York or the courts of the State of New York in each case located in the Borough
of Manhattan in the City of New York (collectively, the "Specified Courts"), and
irrevocably submits to the exclusive jurisdiction (except for proceedings
instituted in regard to the enforcement of a judgment of any such court (a
"Related Judgment"), as to which such jurisdiction is non-exclusive) of such
courts in any such suit, action or proceeding. The parties further agree that
service of any process, summons, notice or document by mail to such party's
address set forth above shall be effective service of process for any lawsuit,
action or other proceeding brought in any such court. The parties hereby
irrevocably and unconditionally waive any objection to the laying of venue of
any lawsuit, action or other proceeding in the Specified Courts, and hereby
further irrevocably and unconditionally waive and agree not to plead or claim in
any such court that any such lawsuit, action or other proceeding brought in any
such court has been brought in an inconvenient forum. The Company hereby
irrevocably appoints RADVision, Inc. which currently maintains an office at
575 Corporate Drive, Mahwah,
23
<PAGE>
New Jersey 07430, United States of America, as its agent to receive service of
process or other legal summons for purposes of any such action or proceeding
that may be instituted in any state or federal court in the City and State of
New York.
18. 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.
19. 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.
24
<PAGE>
If the foregoing correctly sets forth the agreement between the Company
and the Underwriters, please indicate your acceptance in the space provided for
that purpose below.
Very truly yours,
RADVISION LTD.
By:
---------------------------------------
Ami Amir
Chief Executive Officer and President
Accepted:
LEHMAN BROTHERS INC
SALOMON SMITH BARNEY INC.
U.S. BANCORP PIPER JAFFRAY INC.
FIDELITY CAPITAL MARKETS,
a division of National Financial Services Corporation
For themselves and as Representatives
of the several Underwriters named in Schedule 1
hereto
LEHMAN BROTHERS INC.
By:
-------------------------------------
AUTHORIZED REPRESENTATIVE
<PAGE>
SCHEDULE I
SCHEDULE OF UNDERWRITERS
<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF
SHARES
<S> <C>
Lehman Brothers Inc...............................................
Salomon Smith Barney Inc..........................................
U.S. Bancorp Piper Jaffray Inc....................................
FIDELITY CAPITAL MARKETS,
a division of National Financial Services Corporation...........
----------
Total................................................. ==========
</TABLE>
I-1
<PAGE>
Schedule II
SIGNATORIES TO THE LOCK-UP AGREEMENTS
II-1
<PAGE>
EXHIBIT A
FORM OF LOCK-UP AGREEMENT
LEHMAN BROTHERS INC.
SALOMON SMITH BARNEY INC.
U.S. BANCORP PIPER JAFFRAY INC.
FIDELITY CAPITAL MARKETS,
a division of National Financial Services Corporation
As Representatives of the
several underwriters
c/o LEHMAN BROTHERS INC.
Three World Financial Center
New York, NY 10285
Ladies and Gentlemen:
The undersigned understands that you, as Representatives of the several
underwriters and certain other firms, propose to enter into an Underwriting
Agreement (the "Underwriting Agreement") providing for the purchase by you and
such other firms (collectively the "Underwriters") of Ordinary Shares, par value
NIS 0.1 per share (the "Ordinary Shares"), of RADVision Ltd. (the "Company") and
that the Underwriters propose to reoffer the Ordinary Shares to the public (the
"Offering").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of Lehman
Brothers Inc., the undersigned will not, 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 (including,
without limitation, Ordinary Shares that may be deemed to be beneficially owned
by the undersigned in accordance with the rules and regulations of the
Securities and Exchange Commission and Ordinary Shares that may be issued upon
exercise of any option or warrant) or securities convertible into or
exchangeable for Ordinary Shares owned by the undersigned on the date of
execution of this Lock-Up Letter Agreement or on the date of the completion of
the Offering, or (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, for a period of 180 days after the date of the
final Prospectus relating to the Offering. The lock-up restriction described in
this paragraph shall not apply to: (a) bona fide gifts, provided the donee or
donees thereof agree to be bound by this Lock-Up Letter Agreement, (b)
distributions of Ordinary Shares to limited partners or shareholders of the
undersigned, provided that the distributees thereof agree in writing to be bound
by the terms of this Lock-Up Letter Agreement, (c) dispositions to any trust for
the direct or indirect benefit of the undersigned or the immediate family of the
undersigned, provided that such trust agrees in writing to be bound by the terms
of this Lock-Up Letter Agreement, (d) transfers in a private sale transaction
pursuant to a valid private placement exemption, provided that any such
transferees in
A-1
<PAGE>
connection with any such transaction shall have agreed in writing to be bound by
the terms of this Lock-Up Letter Agreement, (e) in the context of (i) a merger,
consolidation, reorganization or sale of all or substantially all of the assets
of Company in which the Ordinary Shares of the Company are converted into or
exchanged for cash, securities (other than securities of the Company) or other
property or (ii) a tender offer or other change of control transaction in which
a third party becomes the beneficial owner of more than 50% of the Company's
Ordinary Shares, any transfer (or agreement to transfer) to the party who will
control the Company or the surviving entity subsequent to consummation of such
transaction, or (f) with the prior written consent of Lehman Brothers Inc.
In furtherance of the foregoing, the Company and its Transfer Agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
It is understood that, (i) if the Company notifies you that it does not
intend to proceed with the Offering and (ii) if the Underwriting Agreement
(other than the provisions thereof which survive termination) shall terminate or
be terminated prior to payment for and delivery of the Ordinary Shares, we will
be released from our obligations under this Lock-Up Letter Agreement.
Furthermore, the provisions of this Lock-Up Letter Agreement shall become
effective only upon execution of the Underwriting Agreement.
The undersigned understands that the Company and the Underwriters will
proceed with the Offering in reliance on this Lock-Up Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents reasonably
necessary in connection with the enforcement hereof. Any obligations of the
undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
Dated: ___________________ By:
-----------------------
Name:
Title:
A-2
<PAGE>
EXHIBIT B
MATTERS TO BE COVERED IN THE OPINION OF U.S. COUNSEL TO THE COMPANY
(i) RADVision, Inc. (the "U.S. Subsidiary") has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation;
(ii) The U.S. Subsidiary has the corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus;
(iii) Each of the Company and the U.S. Subsidiary is duly qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction in the United States, if any, in which the ownership or leasing of
its properties or the conduct of its business requires such qualification,
except where the failure to be so qualified or be in good standing would not
have a Material Adverse Effect. To the best of such counsel's knowledge, the
Company does not own or control, directly or indirectly, any corporation,
association or other entity organized under the laws of a jurisdiction within
the United States other than the U.S. Subsidiary;
(iv) All issued and outstanding shares of capital stock of the U.S.
Subsidiary have been duly authorized and validly issued and are fully paid and
nonassessable, and, to the best of such counsel's knowledge, have not been
issued in violation of or subject to any preemptive right, co-sale right,
registration right, right of first refusal or other similar right, and are owned
by the Company free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest;
(v) Assuming the due authorization, execution and delivery of the
Underwriting Agreement by the Representatives and the Company, the Underwriting
Agreement is a valid and binding agreement of the Company, enforceable in
accordance with its terms, except as rights to indemnification hereunder may be
limited by applicable law and except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting creditors' rights generally or by general equitable principles;
(vi) The Registration Statement was declared effective under the
Securities Act as of the date and time specified in such opinion, the Prospectus
was filed with the Commission pursuant to the subparagraph of Rule 424(b) of the
Rules and Regulations specified in such opinion on the date specified therein,
and no stop order suspending the effectiveness of the Registration Statement has
been issued and, to the best of such counsel's knowledge, no proceeding for that
purpose is pending or threatened by the Commission;
(vii) The 8-A Registration Statement complied as to form in all
material respects with the requirements of the Exchange Act; the 8-A
Registration Statement has become effective under the Exchange Act; and the Firm
Shares or the Option Shares have been validly registered under the Securities
Act, the Exchange Act and the applicable rules and regulations of the Commission
thereunder;
B-1
<PAGE>
(viii) The Registration Statement and the Prospectus and any further
amendments or supplements thereto made by the Company prior to such Delivery
Date (other than the financial statements and related schedules therein, as to
which such counsel need express no opinion) comply as to form in all material
respects with the requirements of the Securities Act and the applicable rules
and regulations thereunder;
(ix) To the best of such counsel's knowledge, there are no agreements,
contracts, leases or documents to which the Company is a party of a character
required to be described or referred to in the Prospectus or to be filed as an
exhibit to the Registration Statement which are not described or referred to
therein or filed as required;
(x) The issue and sale of the shares of Stock being delivered on such
Delivery Date by the Company and the compliance by the Company with all of the
provisions of this Agreement and the consummation of the transactions
contemplated hereby will not 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 or other agreement or instrument known
to such counsel to which the Company or the U.S. Subsidiary is a party or by
which the Company or the U.S. Subsidiary is bound or to which any of the
property or assets of the Company or the U.S. Subsidiary is subject, nor will
such actions result in any violation of the provisions of the charter or by-laws
of the U.S. Subsidiary or any statute or any order, rule or regulation known to
such counsel of any court or governmental agency or body having jurisdiction
over the Company or the U.S. Subsidiary or any of their properties or assets;
and, except for the registration of the Stock under the Securities Act and such
consents, approvals, authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Stock by the Underwriters,
no consent, approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body is required for the execution,
delivery and performance of this Agreement by the Company and the consummation
of the transactions contemplated hereby;
(xi) No consent, approval, authorization or order of or qualification
with any court, government or governmental agency or body having jurisdiction
over the Company or any of its subsidiaries, or over any of their properties or
operations is necessary in connection with the consummation by the Company of
the transactions herein contemplated, except (i) such as have been obtained
under the Securities Act, (ii) such as may be required under U.S. state or other
securities or Blue Sky laws in connection with the purchase and the distribution
of the Shares by the Underwriters, (iii) such as may be required by the National
Association of Securities Dealers, Inc. and (iv) such as may be required under
the federal or provincial laws of Canada;
(xii) To the best of such counsel's knowledge and other than as set
forth in the 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
which, if determined adversely to the Company or any of its subsidiaries, might
have a material adverse effect on the consolidated financial position,
stockholders' equity, results of operations, business or prospects of the
Company and its subsidiaries; and, to the best of such counsel's knowledge, no
such proceedings are threatened or contemplated by governmental authorities or
threatened by others;
B-2
<PAGE>
(xiii) To the best of such counsel's knowledge, except as set forth in
the Prospectus, no holders of Ordinary Shares or other securities of the Company
have registration rights with respect to securities of the Company and, except
as set forth in the Prospectus, all holders of securities of the Company having
rights known to such counsel to registration of such shares of Ordinary Shares
or other securities, because of the filing of the Registration Statement by the
Company have, with respect to the offering contemplated thereby, waived such
rights or such rights have expired by reason of lapse of time following
notification of the Company's intent to file the Registration Statement or have
included securities in the Registration Statement pursuant to the exercise of
and in full satisfaction of such rights;
(xiv) The Company is not and, after giving effect to the offering and
the sale of the Shares and the application of the proceeds thereof as described
in the Prospectus, will not become, an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended;
(xv) The Company meets all of the conditions necessary for the use of
Form F-1;
(xvi) The Shares have been duly approved for inclusion on The Nasdaq
National Market, subject to the consummation of the transactions completed by
this Agreement and to official notice of issuance;
(xvii) The statements in the Prospectus, insofar as such statements
refer to contracts or agreements in the English language to which the U.S.
Subsidiary is a party or to decrees and proceedings of or with respect to the
Company which are governed by the laws of a jurisdiction in the United States,
present fairly, in all material respects, the information required by applicable
law to be shown with respect to such contracts, agreements, decrees and
proceedings, and insofar as such statements refer to statements of U.S. federal
or New York law or legal conclusions, have been reviewed by such counsel and, in
the opinion of such counsel, are accurate in all material respects;
(xviii) The statements under the captions "Risk Factors - Shares
Eligible for Future Sale," "Shares Eligible for Future Sale," and "Taxation and
Government Programs - United States Federal Income Tax Considerations" (insofar
as such matters relate to U.S. federal law) in the Prospectus constitutes a fair
summary thereof, subject to the limitations set forth therein;
(xix) The Company is not, and, assuming the application of the net
proceeds from the sale of the Stock as described in the Prospectus under the
caption "Use of Proceeds," will not become, an "investment company" as such term
is defined in the 1940 Act;
(xx) The Company is not, and will not as a result of the consummation
of the transactions contemplated by this Agreement become, a PFIC; and
(xxi) The statements in the Prospectus under the heading "Related Party
Transactions" have been reviewed by such counsel and, in the opinion of such
counsel, set forth all existing agreements, arrangements, understandings or
transactions, or proposed agreements, arrangements, understandings or
transactions, between or among the Company and any of its
B-3
<PAGE>
subsidiaries, on the one hand, and any officer, director or shareholder of the
Company or any of its subsidiaries, or with any partner, affiliate or associate
of any of the foregoing persons or entities, on the other hand, required to be
set forth or described thereunder pursuant to Item 404 of Regulation S-K of the
Rules and Regulations.
In addition, such counsel shall state that such counsel has participated
in conferences with officials and other Representatives of the Company, the
Representatives, Underwriters' Counsel and the independent certified public
accountants of the Company, at which such conferences the contents of the
Registration Statement and Prospectus and related matters were discussed, and
although they have not verified the accuracy or completeness of the statements
contained in the Registration Statement or the Prospectus, nothing has come to
the attention of such counsel which leads them to believe that, at the time the
Registration Statement became effective and at all times subsequent thereto up
to and on the First Closing Date or Second Closing Date, as the case may be, the
Registration Statement and any amendment or supplement thereto (other than the
financial statements including supporting schedules and other financial and
statistical information derived therefrom, as to which such counsel need express
no comment) contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or at the First Closing Date or the Second
Closing Date, as the case may be, the Registration Statement, the Prospectus and
any amendment or supplement thereto (except as aforesaid) contained any untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
B-4
<PAGE>
EXHIBIT C
MATTERS TO BE COVERED IN THE OPINION OF FOREIGN COUNSEL TO THE COMPANY
(i) The Company has been duly incorporated and is validly existing as a
corporation under the laws of the State of Israel;
(ii) The Company has the corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus;
(iii) The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction, if any, in which the
ownership or leasing of its properties or the conduct of its business requires
such qualification, except where the failure to be so qualified or be in good
standing would not have a Material Adverse Effect. To the best of such counsel's
knowledge, the Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the U.S. Subsidiary and
RADVision B.V.;
(iv) The authorized, issued and outstanding share capital of the Company
is as set forth in the Prospectus under the caption "Capitalization" as of the
dates stated therein, the issued and outstanding shares of share capital of the
Company have been duly and validly issued, are fully paid and nonassessable, and
conform to the description thereof in the Prospectus, and, to the best of such
counsel's knowledge, will not have been issued in violation of or subject to any
preemptive right, co-sale right, registration right, right of first refusal or
other similar right;
(v) The Firm Shares or the Option Shares, as the case may be, to be
issued by the Company pursuant to the terms of this Agreement have been duly
authorized and, upon issuance and delivery against payment therefor in
accordance with the terms hereof, will be duly and validly issued and fully paid
and nonassessable, and will not have been issued in violation of or subject to
any preemptive right, co-sale right, registration right, right of first refusal
or other similar right;
(vi) The Company has the corporate power and authority to enter into this
Agreement and to issue, sell and deliver to the Underwriters the Stock to be
issued and sold by it hereunder;
(vii) The Registration Statement has been duly authorized and executed by
the Company and the filing of such documents with the Commission has been duly
authorized by the Company.
(viii) The certificates for the Stock are in due and proper form under
the laws of the State of Israel.
(ix) This Agreement has been duly authorized by all necessary corporate
action on the part of the Company and has been duly executed and delivered by
the Company and, assuming due authorization, execution and delivery by you, is a
valid and binding agreement of the Company, enforceable in accordance with its
terms;
C-1
<PAGE>
(x) The information in the Prospectus under the caption "Description of
Ordinary Shares," to the extent that it constitutes matters of law or legal
conclusions, has been reviewed by such counsel and is a fair summary of such
matters and conclusions; and the forms of certificates evidencing the Ordinary
Shares and filed as exhibits to the Registration Statement comply with Israeli
law;
(xi) The performance of this Agreement and the consummation of the
transactions herein contemplated (other than the performance of the Company's
indemnification obligations hereunder, concerning which no opinion need be
expressed) will not (a) result in any violation of the Company's memorandum of
association or articles of association or (b) result in a material breach or
violation of any of the terms and provisions of, or constitute a default under,
any bond, debenture, note or other evidence of indebtedness, or any lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument known to such counsel to which the Company is a
party or by which its properties are bound or (c) result in a material breach or
violation of any applicable statute, rule or regulation or (d) to the best of
such counsel's knowledge, any order, writ or decree of any Israeli court,
government or governmental agency or body having jurisdiction over the Company
or any of its subsidiaries, or over any of their properties or operations;
(xii) No consent, approval, authorization, order of, filing by or
qualification with any Israeli court, regulatory, administrative, government or
governmental agency or body having jurisdiction over the Company or over any of
its properties or operations is necessary in connection with the issuance and
sale of the Shares, the execution and delivery of this Agreement and the
consummation by the Company of the transactions herein contemplated, except such
consents, approvals, authorizations, orders, filings or qualifications that have
been previously obtained or made;
(xiii) To the best of such counsel's knowledge and other than as set
forth in the Prospectus, there are no legal or governmental proceedings pending
in any Israeli court or governmental body 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 which, if determined adversely to the Company
or any of its subsidiaries, might have a material adverse effect on the
consolidated financial position, stockholders' equity, results of operations,
business or prospects of the Company and its subsidiaries; and, to the best of
such counsel's knowledge, no such proceedings are threatened or contemplated by
Israeli governmental authorities or threatened by others;
(xiv) To the best of such counsel's knowledge, neither the Company nor
any of its subsidiaries is presently (a) in material violation of its respective
charter or bylaws (or similar organizational documents), or (b) in material
breach of any applicable Israeli statute, rule or regulation known to such
counsel or, to the best of such counsel's knowledge, any order, writ or decree
of any Israeli court or governmental agency or body having jurisdiction over the
Company, or over any of its properties or operations; and
C-2
<PAGE>
(xv) To the best of such counsel's knowledge, except as set forth in the
Registration Statement and the Prospectus, no holders of Ordinary Shares or
other securities of the Company have registration rights with respect to
securities of the Company and, except as set forth in the Prospectus, all
holders of securities of the Company having rights known to such counsel to
registration of such shares of Ordinary Shares or other securities, because of
the filing of the Registration Statement by the Company have, with respect to
the offering contemplated thereby, waived such rights or such rights have
expired by reason of lapse of time following notification of the Company's
intent to file the Registration Statement or have included securities in the
Registration Statement pursuant to the exercise of and in full satisfaction of
such rights;
(xvi) The statements under the captions "Enforceability of Civil
Liabilities," "Risk Factors--Risks Relating to Our Location in Israel,"
"Dividend Policy," "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Corporate Tax Rate," "Management," "Description of
Ordinary Shares" and "Taxation and Government Programs--Israeli Tax
Considerations and Government Programs" in the Prospectus, insofar as they
describe Israeli laws, rules or regulations and insofar as they describe the
contents of certain provisions of the documents described therein, are accurate
in all material respects, subject to the limitations set forth therein, and do
not contain any 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;
(xvii) The statements in the Prospectus, under the heading "Related Party
Transactions," have been reviewed by such counsel and, in the opinion of such
counsel, set forth all existing agreements, arrangements, understandings or
transactions, or proposed agreements, arrangements, understandings or
transactions, between or among the Company and any of its subsidiaries, on the
one hand, and any officer, director or shareholder of the Company or any of its
subsidiaries, or with any partner, affiliate or associate of any of the
foregoing persons or entities, on the other hand, required to be set forth or
described thereunder pursuant to Item 404 of Regulation S-K of the Rules and
Regulations;
(xviii) It is not necessary, either to ensure the validity of the
Prospectus or to ensure compliance by the Underwriters with mandatory provisions
of Israeli law, to obtain any authorization, approval, consent, order or
permission of, or to effect any further filing, recording or registration with,
any public authority or government agency in respect of the issue of the Stock
by the Company or the offering and sale of the Stock in Israel, assuming that
the Underwriters do not distribute the Prospectus or otherwise offer or solicit
the sale of the Shares to more than 35 offerees in the aggregate resident in
Israel, or otherwise offer or solicit to the public in Israel within the meaning
of Section 15(a) of the Israel Securities Law, 5728 - 1968, except such
governmental authorizations as have been obtained;
(xix) The Company has the power to submit, and has taken all necessary
corporate action to submit to the jurisdiction of any state or U.S. federal
court in New York and to appoint RADVision, Inc. which currently maintains an
office at 575 Corporate Drive, Mahwah, New Jersey 07430, United States of
America, as the authorized agent of the Company for the purpose described in
Section 17 of this Agreement;
C-3
<PAGE>
(xx) On the assumption that the jurisdiction clause in Section 16 of this
Agreement is valid and binding under the laws of the State of New York by which
this Agreement is expressly governed, Israeli courts would give effect to the
parties' choice of courts in New York to settle disputes arising from this
Agreement;
(xxi) A final and conclusive judgment against the Company for a
definitive sum of money entered by any court in the United States in any action
arising out of or in connection with or with respect to any transaction
contemplated by this Agreement would be enforced by Israeli courts, according to
the rules of Enforceability of Civil Liabilities as described in the Prospectus;
(xxii) Such counsel has no reason to believe that the Registration
Statement (except as to the financial statements and schedules and other
financial and statistical data contained therein, as to which such counsel need
not express any opinion or belief) contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the Prospectus
(except as to the financial statements and schedules and other financial and
statistical data contained therein, as to which such counsel need not express
any opinion or belief), contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(xxiii) To the best of such counsel's knowledge, except as set forth in
the Registration Statement and Prospectus, the Company is in compliance with all
material conditions and requirements stipulated by the instruments of approval
entitling it or any of its operations to the status of "Approved Enterprise"
under Israeli law and by Israeli laws and regulations relating to such Approved
Enterprise status, except such non-compliance as would not have a Material
Adverse Effect; and
(xxiv) To the best of such counsel's knowledge, except as set forth in
the Registration Statement and Prospectus, neither the Company nor any of its
subsidiaries is in material violation of any conditions or requirements
stipulated by the instruments of approval granted to any of them by the Office
of Chief Scientist in the Ministry of Industry and Trade, with respect to any
research and development grants given to it by such office, except such
violations, individually or in the aggregate, as would not have a Material
Adverse Effect.
In addition, such counsel shall state that such counsel has participated
in conferences with officials and other Representatives of the Company, the
Representatives, Underwriters' Counsel and the independent certified public
accountants of the Company, at which such conferences the contents of the
Registration Statement and Prospectus and related matters were discussed, and
although they have not verified the accuracy or completeness of the statements
contained in the Registration Statement or the Prospectus, nothing has come to
the attention of such counsel which leads them to believe that, at the time the
Registration Statement became effective and at all times subsequent thereto up
to and on the First Closing Date or Second Closing Date, as the case may be, the
Registration Statement and any amendment or supplement thereto (other than the
financial statements including supporting schedules and other financial and
statistical information derived therefrom, as to which such counsel need express
no comment) contained
C-4
<PAGE>
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or at the First Closing Date or the Second Closing Date, as the
case may be, the Registration Statement, the Prospectus and any amendment or
supplement thereto (except as aforesaid) contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
<PAGE>
EXHIBIT 3.1
<PAGE>
TRANSLATION
(Emblem of the State of Israel)
MEMORANDUM OF ASSOCIATION
1. Name of the Company
RAD Vision Ltd. (in English)
2. Purposes for which the Company was founded:
Development, production and marketing of products in the field of
electronics in general and data communications specifically.
3. The responsibilities of the members are limited.
4. Share capital of the Company is 19,800 NIS, divided into
19,800 shares, par value 1.00 NIS each.
We, the undersigned hereinbelow, wish to incorporate as a company according to
this Memorandum of Association and agree that each of us will take the number of
Company share capital listed next to our names.
<TABLE>
<CAPTION>
- ---------------------- -------------------- --------------------- --------------------- --------------------
NAME OF SIGNATORIES IDENTITY NO. ADDRESS NUMBER OF SHARES SIGNATURE
- ---------------------- -------------------- --------------------- --------------------- --------------------
<S> <C> <C> <C> <C>
Yehuda Zisapel 007146053 Kissufim 23, Tel 50 /s/
Aviv
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Zohar Zisapel 008792566 Alon 2, 50 /s/
Ramat Efal
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</TABLE>
Witness to signatures:
/s/ KAREN RIMON
- ---------------------
Karen Rimon, Advocate
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<PAGE>
Exhibit 3.2
---------------------------
ARTICLES OF ASSOCIATION
OF
RADVISION LTD.
(ADOPTED BY SPECIAL RESOLUTION PASSED ON JANUARY 18, 2000)
---------------------------
<PAGE>
PUBLIC COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
RADVISION LTD.
(ADOPTED BY SPECIAL RESOLUTION PASSED ON JANUARY 18, 2000)
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM NO. DESCRIPTION PAGE NO.
<S> <C> <C>
1. Preliminary................................................
2. Public Company.............................................
3. Office.....................................................
4. Share Capital..............................................
5. Share Certificates.........................................
6. Lien on Shares.............................................
7. Calls on Shares............................................
8. Forfeiture of Shares.......................................
9. Transfer of Shares.........................................
10. Transmission of Shares.....................................
11. Alterations of Capital.....................................
12. Increase of Capital........................................
13. Variation of Class Rights..................................
14. General Meetings...........................................
15. Proceedings at General Meetings............................
16. Votes of Shareholders......................................
17. Corporations Acting by Representatives.....................
19. Directors..................................................
20 Powers and Duties of Directors.............................
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21. Borrowing Powers...........................................
22. Election and Removal of Directors..........................
23. Alternate Directors........................................
24. Proceedings of Directors...................................
25. General Manager............................................
26. Minutes....................................................
27. Stamp and Signatures.......................................
28. Secretary..................................................
29. Dividends and Reserves.....................................
30. Capitalization of Reserves.................................
31. Accounts...................................................
32. Audit......................................................
33. Auditors...................................................
34. Notices....................................................
35. Reconstruction.............................................
36. Insurance and Indemnity....................................
37. Winding Up.................................................
</TABLE>
b
<PAGE>
PUBLIC COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
RADVISION LTD.
(ADOPTED BY SPECIAL RESOLUTION PASSED ON JANUARY 18, 2000)
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PRELIMINARY
1. The regulations contained in the Second Schedule to the Companies
Ordinance shall not apply to the Company.
2. (a) In these Articles, unless the context otherwise requires, the
following words and expressions have the following meanings:
"THESE ARTICLES" these Articles of Association of
the Company, as amended from time
to time;
"AUDITORS" the auditors of the Company, from
time to time;
"THE BOARD" the Directors or a quorum of such
Directors assembled as a meeting of
Directors duly convened;
"COMPANIES LAW" the Companies Law, 5759-1999;
"COMPANIES ORDINANCE" the Companies Ordinance (New
Version), 5743-1983;
"THE COMPANY" RadVision Limited;
"DIRECTOR" a director of the Company, from
time to time;
"MONTH" Gregorian month;
"OFFICE" the registered office for the time
being of the Company;
"OFFICE HOLDER' every Director and every other
person defined, under the Statutes,
as a "NOSEI MISRA";
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"ORDINARY RESOLUTION" a resolution approved at a General
Meeting of the Company by
shareholders present, in person, by
proxy, or by written ballot, or
deemed under the Statutes to be
present, holding greater than fifty
percent (50%) of the total voting
power attached to the shares whose
holders were present, in person, by
proxy, or by written ballot, or
deemed under the Statutes to be
present, at such General Meeting an
voted thereon.
"REGISTER" the register of shareholders or, as
from the date of the coming into
force of the Companies Law, the
register of shareholders, including
any such register allowed under
Article 47;
"SECRETARY" subject to the provisions of the
Statues includes joint Secretaries,
a temporary or an assistant
Secretary or any other person
appointed by the Board to perform
any of the duties of the Secretary;
"SHAREHOLDER" any person whose name is entered in
the Register as a holder of a share
in the Company; prior to the entry
into force of the Companies Law,
reference to a "shareholder" are
deemed to be references to a
"member" as defined in the
Companies Ordinance.;
"SPECIAL RESOLUTION" a resolution approved at a General
Meeting of the Company by
shareholders present, in person, by
proxy, or by written ballot, or
deemed under the Statutes to be
present, holding at least
sixty-five percent (65%) of the
total voting power attached to the
shares whose holders were present,
in person, by proxy, by written
ballot or deemed under the Statutes
to be present, at such General
Meeting an voted thereon. Prior to
the effectiveness of the Companies
Law, the "Special Resolution" shall
have the meaning assigned to it in
the Companies Ordinance.
"STATUTES" the Companies Ordinance or the
Companies Law (and any regulations
adopted thereunder), whichever
shall be in force at the time of an
act or decision as to which
referece to the "statutes" is made
herein;
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<PAGE>
"UNITED STATES" the United States of America;
"WRITING" includes printing, typewriting,
lithography, photography and any
other mode or modes of presenting
or reproducing words in a visible
form;
"YEAR" Gregorian year.
(b) Words and expressions importing:
(i) the singular number shall include the plural number
and VICE VERSA;
(ii) the masculine gender shall include the feminine
gender and VICE VERSA.
(c) References to an Article by number are to the identified
Article of these Articles.
(d) Any word or expression defined in the Statutes shall, if not
otherwise defined herein, bear the same meaning in these
Articles as in the Statutes.
(e) The headings in these Articles are inserted for convenience
only and shall not be deemed a part hereof nor affect the
construction of any provision hereof.
(f) References in these Articles to any statute or regulation
shall also be deemed to include a reference to any
re-enactment thereof or amendment thereto, as in force from
time to time.
(g) References in these Articles to a "PERSON" shall be construed
broadly and shall include an individual, firm, company,
corporation, governmental entity (including any department or
agency thereof), association or partnership (whether or not
having separate legal entity).
PUBLIC COMPANY
3. The Company is a Public Company as such term is defined in the
Companies Ordinance.
OFFICE
4. Subject to the Statutes, the Office shall be at such place as the Board
may from time to time designate.
SHARE CAPITAL
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<PAGE>
5. The authorized share capital of the Company is 2,500,000 New Israeli
Shekels divided into 25,000,000 Shares divided into 24,984,470 Ordinary
Shares of a nominal value of ten Agorot (NIS 0.10) each and 15,530
Deferred Shares of a nominal value of ten Agorot (NIS 0.10) each.
6. Subject to the Statutes and these Articles and to the terms of any
resolution creating new shares, the unissued shares from time to time
shall be under the control of the Board which may, subject as
aforesaid, allot the same to such persons, against cash, or for such
other consideration which is not cash, with such restrictions and
conditions, in excess of their nominal value, or at their nominal
value, or at a discount to their nominal value, and at such times as
the Board shall deem appropriate. Subject as aforesaid, the Board shall
have the power to cause the Company to grant to any person the option
to acquire from the Company any unissued shares, and on such terms as
the Board shall deem appropriate.
7. From and after the date of the coming into force of the Companies Law,
the Board shall have the power, to the extent permitted under the
Statutes and these Articles, to cause the Company to purchase shares of
the Company during such period, for such consideration and on such
terms as the Board shall deem fit.
8. The Company shall not issue bearer shares or exchange a share
certificate for a bearer share certificate.
9. Subject to the Statutes, the Company may pay a commission at a rate not
exceeding ten percent (10%) of the price at which the shares are issued
to any person in consideration of his subscribing or agreeing to
subscribe (whether absolutely or conditionally) for any shares in the
Company or procuring or agreeing to procure subscriptions (whether
absolute or conditional) for any shares in the Company.
10. Subject to the Statutes and these Articles, and without prejudice to
any special rights previously conferred upon the holders of any
existing shares or class of shares, the Company may, from time to time
in a Special Resolution, create shares with such preferential,
deferred, qualified or other special rights, privileges, restrictions
or conditions, whether in regard to dividend, voting, return of capital
of otherwise as may be stipulated in such Special Resolution.
11. The Company shall have the power to issue redeemable shares and redeem
the same all in accordance with, and subject to, the provisions of the
Statutes.
12. If two or more persons are registered in the Register as joint holders
of any share, any one of such persons may give effective receipts for
any dividends or other moneys payable in respect of such share.
13. Except as otherwise expressly provided in these Articles, the Company
shall be entitled to treat the registered holder of any share as the
absolute owner thereof and, accordingly, shall not, except as required
by law or as ordered by a court of competent jurisdiction, be bound to
recognize (even when having notice thereof) any equitable or other
claim to, or interest in, such share on the part of any other person.
4
<PAGE>
SHARE CERTIFICATES
14. Every shareholder shall be entitled, without payment, to receive within
two (2) months after allotment of shares or registration of transfer of
shares (unless the conditions of issue provide for a longer interval)
one (1) certificate representing all the shares of each class
registered in his name, specifying the number, class and distinguishing
numbers of the shares in respect of which it is issued and the amount
(if less than nominal value) paid thereon and any other detail the
Company is required, under the Statutes, to include in a share
certificate.
15. In the case of a share registered in the name of two or more persons,
the Company shall not be bound to issue more than one certificate to
such persons, and delivery of such certificate to any one of them shall
be sufficient delivery to all.
16. Where a shareholder has transferred only a part of the shares
represented in a certificate, the old certificate shall be cancelled
and he shall be entitled, without charge, to a new certificate
representing the balance of his shares.
17. (a) Any two or more certificates representing shares of any one
class held by any shareholder may at his request be cancelled
and a single new certificate for such shares issued in lieu
thereof.
(b) If any shareholder shall surrender for cancellation a share
certificate representing shares held by him and request the
Company to issue in lieu thereof two (2) or more share
certificates representing such shares in such numbers as he
may specify, the Board, or some other person authorized by the
Board for such purposes, may, if it thinks fit, comply with
such request.
(c) The Company may, in its sole discretion, charge to any
shareholder making a request pursuant to paragraphs (a) or (b)
of this Article any out-of-pocket expenses incurred by it in
complying with such request.
(d) If a share certificate is defaced, worn out, destroyed or
lost, it may on request be replaced without charge (other than
payment of out of pocket expenses incurred by the Company in
connection therewith) upon the furnishing of evidence of
ownership and such indemnity as the Board, or some other
person authorized by the Board for such purpose, shall
require, and (in the case of defacement or wearing out) on
delivery to the Company of the old certificates.
(e) In the case of shares registered in the Register in the name
of two (2) or more persons, any such request mentioned in this
Article may be made by any one of such persons.
18. A Registration Company (as such term is defined in the Securities Law
5728-1968) shall be entitled, without payment, to receive, within such
time as may be prescribed under the Statutes or, if not prescribed as
aforesaid, within such time period as the Board may deem fit, a
certificate that specifies the number and class of shares, together
with any other details the Company is required, under the Statutes, for
inclusion therein, that are registered in its name in the Register.
5
<PAGE>
19. Every share certificate and certificate referred to in Article 19 shall
be signed by one Director and countersigned by the Secretary or some
other person authorised by the Board for such purpose.
LIEN ON SHARES
20. The Company shall have a first and paramount lien upon every partly
paid or unpaid share for all moneys owing from a shareholder to the
Company, whether presently payable or not, payable at a fixed time or
on demand in respect of that share whether the period for payment has
actually arrived or not, and notwithstanding that it is the joint debt
or liability of the shareholder or his estate. Such lien shall apply
whether before or after notice is given to the Company of any interest
or claim of any person other than the holder or holders of such share.
The Company's lien (if any) on a share shall extend to all dividends or
other moneys from time to time, payable in respect of such share. The
Board may waive any lien which has arisen and may resolve that any
share shall be (or be issued on terms that it is) wholly or partially
exempt from the provisions of this Article.
21. The Board may cause the Company to sell, in such manner as the Board
may think fit, any shares subject to a lien, but no sale shall be made
until such time as the sum in respect of which such lien exists is
presently payable and until a demand and notice in writing stating the
amount due and demanding payment thereof and giving notice of intention
to sell in default shall have been served on such shareholder or the
persons (if any) entitled to the shares by reason of his death or
bankruptcy and default in payment shall have been made by him or them
for seven (7) days after service of such notice.
22. The net proceeds of any sale of a share subject to any lien, after
payment of any costs incurred by the Company in connection with such
sale, shall be applied in or towards satisfaction of the amount due to
the Company in respect of such share, and any balance shall (subject to
a like lien for any amount not presently payable as existed upon the
shares prior to the sale) be paid to the shareholder or the person (if
any) entitled by reason of transmission of shares on death or
bankruptcy to the shares so sold.
23. To give effect to any such sale as aforesaid, the Board may authorise a
person to transfer the shares sold to, or in accordance with the
directions of, the purchaser and may enter the transferee's name in the
Register as holder of the shares, and the purchaser shall not be bound
to see to the application of the purchase money, nor shall his title to
the shares be affected by any irregularity or invalidity in the
proceedings in reference to the sale.
CALLS ON SHARES
24. Subject to the provisions of these Articles and to the terms of
allotment of the shares, the Board may from time to time make such
calls on the shareholders in respect of all moneys unpaid on their
shares (whether on account of the nominal amount of the shares or by
way of premium or, if the shares shall have been issued at a discount
to
6
<PAGE>
their nominal value, on account of all moneys unpaid on such shares) as
it may think fit, provided that at least 14 (fourteen) days' notice is
given of each call. Each shareholder shall be liable to pay the amount
of every call so made on him to the Board. A call may be wholly or in
part revoked or the time fixed for its payment postponed by the Board.
A person upon whom a call is made shall remain liable for calls made
upon him notwithstanding the subsequent transfer of the shares in
respect of which the call was made. Unless otherwise stipulated by the
Board and in the notice given in respect of the call each payment in
response to a call shall be deemed to constitute a pro rata payment on
account of all the shares in respect of which such call was made.
25. A call shall be deemed to have been made at the time when the
resolution of the Board authorising such call was passed and may be
made payable by installments.
26. The joint holders of a share shall be jointly and severally liable for
the payment of all calls and installments in respect hereof.
27. If a call or instalment payable in respect of a share is not paid
before or on the day appointed for payment thereof, the person from
whom the said call or instalment is due shall pay interest on the
amount of the call or instalment from the day appointed for pay thereof
to the time of actual payment at such rate (not exceeding the then
prevailing rate of interest for unauthorised overdrafts as charged by
the Bank Hapoalim B.M. or any other leading commercial Bank in Israel
as the Board may, at its discretion, nominate) as the Board shall fix,
but the Board may waive payment of such interest wholly or in part. The
provisions of this Article shall not deprive the Company, or derogate
from, any other rights or remedies the Company may have against such
person pursuant to these Articles or law.
28. No shareholder shall be entitled to receive any dividend or other
payment or distribution or be present or vote at any general meeting
either personally or (save as proxy for another shareholder) by proxy,
or by any other means as may be permitted under the Statutes, or be
reckoned in a quorum, or to exercise any other privilege as a
shareholder until he shall have paid all calls for the time being due
and payable on every share registered in his name, whether registered
alone or jointly with any other person, together with interest and
expenses, (as referred to in Article 32(a) thereon).
29. Any sum which by the terms of issue of a share is made payable upon
allotment or at any fixed date, whether on account of the nominal value
of the share or by way of premium, or, if such share shall have been
issued at a discount to its nominal value, on account of the amount
payable in respect of such share, shall for all purposes of these
Articles be deemed to be a call duly made and payable on the date fixed
for payment, and in case of non-payment all the relevant provisions of
these Articles as to payment of interest and expenses, forfeiture or
otherwise shall apply as if such sum were a call duly made and
notified.
30. Subject to the terms of allotment, the Board may make arrangements on
the issue of shares for a difference between the registered holders
thereof in the amounts and times of payment of calls.
7
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31. With the approval of the Board, a shareholder may advance to the
Company all or any part of the sums due on his shares beyond the sums
actually called upon thereon, and the Board may approve the payment of
interest on such moneys so paid in advance or such much thereof as
exceeds the amount for the time being called up on the shares in
respect of which such advance has been made, at such rate and times as
may be approved by the Board, in addition to the dividend payable upon
such part of the share in respect of which such advance has been made
as is actually called up provided that no dividend shall be payable on
so much of the moneys paid up on a share as exceeds the amount for the
time being called up thereon. The Board may at any time cause the
Company to repay the amount so advanced upon at least three (3) months'
written notice to such shareholder of its instruction to do so, unless
before the expiration of such notice the amount so advanced shall have
been called up on the share in respect of which it was advanced.
FORFEITURE OF SHARES
32. (a) If a shareholder fails to pay the whole or any part of any
call or instalment of a call on or before the day appointed
for the payment thereof, the Board may at any time thereafter,
during such time as the call or instalment or any part thereof
remains unpaid, serve a notice on him or on the person
entitled to the share by transmission, requiring payment of
such call or instalment or such part thereof as remains
unpaid, together with interest as provided for in accordance
with Article 27 and any expenses incurred by the Company by
reason of such non-payment.
(b) The notice shall:
(i) name a further day (not earlier than the expiration
of fourteen (14) days from the date of the notice) on
or before which such call or instalment or part
thereof and all interest and expenses that have
accrued by reason of such non-payment are to be paid;
(ii) name the place where the payment is to be made; and
(iii) state that, in the event of non-payment at or before
the time and at the place appointed, the shares in
respect of which such call was made or instalment was
due will be liable to be forfeited.
(c) If the requirements of any such notice as aforesaid are not
complied with, any share in respect of which such notice has
been given may at any time thereafter, before the payment
required by the notice has been made, be forfeited by a
resolution of the Board to that effect. A forfeiture of shares
shall include all dividends in respect of the shares not
actually paid before the forfeiture, notwithstanding that they
shall have been declared.
33. When any share has been forfeited in accordance with these Articles,
notice of the forfeiture shall forthwith be given to the registered
holder of the share or to the person entitled to the share by
transmission, as the case may be, and an entry of such notice having
been given and of the forfeiture with the date thereof shall forthwith
be made
8
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in the Register in respect of such share; but the provisions of this
paragraph are directory only, and no forfeiture shall be in any manner
invalidated by any omission or neglect to give such notice or to make
such entry as aforesaid.
34. Notwithstanding any such forfeiture as aforesaid, the Board may, at any
time before the forfeited shares have been otherwise disposed of, annul
the forfeiture, on the terms of payment of all calls and interest due
thereon and all expenses incurred in respect of the share and on such
further terms (if any) as it shall see fit but no such nullification
shall estop the Board from adopting a further resolution of forfeiture
in respect of the non-payment of such amounts.
35. The Company may, by resolution of the Board, accept a surrender of any
share liable to be forfeited hereunder. A surrendered share shall be
treated as if it has been forfeited.
36. Subject to the provisions of the Statutes, every share which shall be
forfeited or surrendered shall thereupon become the property of the
Company and may be sold, re-allotted or otherwise disposed of either to
the person who was before forfeiture or surrender the holder thereof or
entitled thereto or to any other person on such terms and in such
manner as the Board shall think fit, and the Board may, if necessary,
authorise a person to transfer the same to such other person as
aforesaid.
37. A person whose shares have been forfeited or surrendered shall cease to
be a shareholder in respect of them but shall notwithstanding the
forfeiture or surrender remain liable to pay to the Company all calls
made and not paid on such shares at the time of forfeiture or
surrender, and interest thereon to the date of payment in the same
manner in all respects as if the shares had not been forfeited or
surrendered, and to satisfy all (if any) claims and demands which the
Company might have enforced in respect of the shares at the time of
forfeiture or surrender without any reduction or allowance for the
value of the shares at the time of forfeiture. In the event of any such
forfeiture or surrender, the Company, by resolution of the Board, may
accelerate the date(s) of payment of any or all amounts then owing to
the Company by the shareholder in question (but not yet due) in respect
of shares, whether registered in his name or registered jointly with
any other person forfeited or surrendered as aforesaid.
38. The forfeiture or surrender of a share shall involve the extinction at
the time of forfeiture or surrender of all interest in and all claims
and demands against the Company in respect of the share as between the
shareholder whose share is forfeited or surrendered and the Company,
except only such of those rights and liabilities as are by these
Articles expressly saved, or as are by the Statutes given or imposed in
the case of past shareholders.
39. A declaration that the declarant is a Director or Secretary of the
Company and that a share has been duly forfeited or surrendered
pursuant to these Articles, and stating the date on which it was
forfeited or surrendered, shall, as against all persons claiming to be
entitled to the share adversely to the forfeiture or surrendered
thereof, be conclusive evidence of the facts therein stated and such
declaration, together with the receipt of the Company for the
consideration (if any) given for the share on the sale or disposition
thereof and a certificate of proprietorship of the share delivered to
the
9
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person to whom the same is sold or disposed of, shall constitute a good
title to the share. Subject to the execution of any necessary transfer
document, such person shall be registered as the holder of the share
and shall be discharged from all calls made prior to such sale or
disposition and shall not be bound to see to the application of the
purchase money or other consideration (if any), nor shall his title to
the share be affected by any act, omission or irregularity relating to
or connected with the proceedings in reference to the forfeiture or
surrender, sale, re-allotment or disposal of the share.
TRANSFER OF SHARES
40. Subject to applicable restrictions contained in these Articles, any
shareholder may transfer all or any of his shares by instrument in
writing in any usual or common form signed by the transferor and, in
the case of a partly paid share, the transferee, or in such other form
as the Board shall from time to time approve. The transferor shall be
deemed to remain the holder of the share until the name of the
transferee is entered in the Register in respect thereof.
41. The instrument of transfer of a share must be delivered to the Office,
or such other place that the Board shall from time to time approve,
accompanied by the certificate for the shares to be transferred and/or
such other evidence (if any) as the Board, or some other person
authorised by the Board for such purpose, may require to prove the
title of the intending transferor.
42. Every instrument of transfer of a share must be in respect of only one
class of share.
43. Subject to Article 48, all instruments of transfer which shall be
registered in the Register shall (except in case of fraud) be retained
by the Company, but any instrument of transfer which the Board may
refuse to register in the Register shall (except in case of fraud) be
returned to the party presenting the same.
44. The Board may, in its absolute discretion, refuse to register a
transfer of any share which is not fully paid up.
45. Intentionally Omitted.
46. No fee shall be charged:
(i) for registration of a transfer; or
(ii) on the registration of any probate, letters of administration,
certificate of death or marriage, power of attorney, notice or
other instrument relating to or affecting the title to any
shares.
47. The Company shall maintain a Register and, if applicable, a register of
Substantial Shareholders as required by the Statutes. Subject to and in
accordance with the provisions of the Statutes, the Company may cause
to be kept in any other country, a branch register or registers of
shareholders resident in such other country, and to
10
<PAGE>
exercise all the other powers mentioned in the Statutes relating to
such branch registers.
48. The Company shall be entitled to destroy: (a) all instruments of
transfer of shares and all other documents on the face of which entries
are made in the Register at any time after the expiration of six (6)
years from the date of registration of the same; (b) all dividend
mandates and notifications of change of name or address at any time
after the expiration of two (2) years from the date of recording; and
(c) all share certificates which have been cancelled at any time after
the expiration of one (1) year from the date of cancellation. If the
Company destroys a document in good faith and without notice of any
claim (regardless of the parties) to which the document might be
relevant, it shall conclusively be presumed in favour of the Company
that every instrument of transfer so destroyed was a valid and
effective instrument duly and properly registered, every share
certificate so destroyed was a valid and effective document duly and
properly cancelled and every other document mentioned above so
destroyed was a valid and effective document in accordance with the
recorded particulars in the books or records of the Company. Nothing in
this Article shall be construed as imposing upon the Company any
liability in respect of the destruction of any document at an earlier
date than that provided above or if the condition as to good faith and
absence of notice is not met. References in this Article to the
destruction of any document include references to its disposal in any
manner.
TRANSMISSION OF SHARES
49. In the case of the death of a shareholder, the survivor or survivors,
where the deceased was a joint holder, and where he was a sole or only
surviving holder, the executors or administrators of the deceased, or
failing executors or administrators, the heirs declared by a court of
competent jurisdiction to be entitled to such shares of the deceased,
shall be the only persons recognised by the Company as having any title
to his shares, but nothing herein contained shall release the estate of
a deceased holder (whether sole or joint) from any liability in respect
of any share solely or jointly held by him.
50. Subject to the provisions of these Articles, any person becoming
entitled to a share in consequence of the death or bankruptcy of a
shareholder may, on such evidence as to his title being produced as the
Board may require, elect either to be registered himself as holder of
the share or to have some person nominated by him registered as the
transferee thereof.
51. If the person so becoming entitled shall elect to be registered
himself, he shall deliver or send to the Company a notice in writing
signed by him stating that he so elects. If he shall elect to have
another person registered, he shall testify his election by executing a
transfer of such share to such person. All the provisions of these
Articles relating to the right to transfer and the registration of
transfers of shares shall be applicable to any such notice or transfer
as aforesaid as if the death or bankruptcy of the shareholder had not
occurred and the notice or transfer were a transfer executed by such
shareholder.
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52. A person entitled to a share in consequence of the death or bankruptcy
of a shareholder shall be entitled to receive, and may give a discharge
for, any dividends or other moneys payable in respect of the share, but
he shall not be entitled in respect of it to receive notices of, or to
attend or vote at meetings of the Company, or, save as aforesaid, to
exercise any of the rights or privileges of a shareholder unless and
until he shall become a shareholder in respect of the share.
ALTERATION OF CAPITAL
53. (a) The Company may, from time to time, by Special Resolution
subject to Article 56:
(i) consolidate and divide all or any of its issued or
unissued share capital into shares of larger nominal
value than its existing shares;
(ii) cancel any shares which at the date of the adoption
of such Special Resolution have not been taken or
agreed to be taken by any person, and diminish the
amount of its share capital by the amount of the
shares so cancelled;
(iii) subject to the Statutes, subdivide its shares (issued
or outstanding) or any of them, into shares of
smaller nominal value than is fixed by the Memorandum
of Association, and the resolution whereby any share
is subdivided may determine that, as among the
holders of the shares resulting form such
subdivision, one or more of the shares may, as
compared with the others, have special rights, or be
subject to any such restrictions, as the Company has
power to attach to unissued or new shares;
(iv) reduce its share capital and any capital redemption
reserve fund in any way that may be considered
expedient and, in particular, exercise any or all of
the powers conferred under the Statutes in relation
to such reduction of share capital or capital
redemption reserve.
(b) Upon any consolidation or subdivision of shares, the Board may
settle any difficulty which may arise with regard thereto, as
it deems fit, including (but without prejudice to the
generality of the foregoing), in the event of a consolidation
or any action which may result in fractional shares:
(i) allotting, in contemplation of, or such subsequent
to, such consolidation or other action, such shares
or fractional shares sufficient to preclude or remove
fractional shareholdings;
(ii) making such arrangements for the sale or transfer of
the fractional shares to such person or persons at
such times and at such price as the Board thinks fit
so as to most expeditiously preclude or remove any
fractional shareholdings. The Board shall cause the
Company to distribute the net proceeds of sale in due
proportion among the shareholders who would have been
entitled to the fractional shares sold
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or transferred as aforesaid. For the purpose of
giving effect to a sale, the Board is authorised to
appoint some person to transfer such fractions sold
to the purchaser and to receive the purchase price
therefor. The name of the purchaser of such share or
fractions shall, upon presentation of the instrument
of transfer, be entered in the Register as the holder
thereof and such purchaser shall not be bound to see
to the application of the purchase money and the
title of the purchaser shall not be affected by an
irregularity in, or invalidity of the proceedings
relating to, such sale;
(iii) to the extent as may be permitted under the Statutes
redeem or purchase such fractional shares sufficient
to preclude and remove such fractional shareholding
and the Board shall cause the Company to distribute
the net proceeds payable in connection with such
redemption or purchase in due proportion among the
shareholders who would have been entitled to such
fractional shares.
(iv) determining, as to the holders of shares so
consolidated, which issued shares shall be
consolidated into each share of a larger nominal
value.
INCREASE OF CAPITAL
54. The Company may from time to time, Special Resolution, whether or not
all the shares then authorised have been issued, and whether or not all
the shares theretofore issued have been fully called up for payment,
increase its share capital by the creation of new shares, such new
capital to be of such amount and to be divided into shares of such
respective amounts and (subject to any special rights for the time
being attached to any existing class of shares) to carry such
preferential, deferred or other special rights (if any) or to be
subject to such conditions or restrictions (if any) in regard to
dividend, return of capital, voting or otherwise as such Special
Resolution shall provide.
55. Except so far as otherwise provided in such Special Resolution or
pursuant to these Articles, the Special Resolution creating the new
shares, or by the conditions of issue thereof, any new share capital
shall be considered as part of the original ordinary share capital of
the Company, and shall be subject to all the provisions applicable to
such original ordinary share capital.
VARIATION OF CLASS RIGHTS
56. If at any time the share capital is divided into different classes of
shares, the rights attached to any class (unless otherwise provided by
the terms of issue of the shares of that class) may be varied with the
sanction of a Special Resolution passed at a separate general meeting
of the holders of the shares of that class. The provisions of these
Articles relating to general meetings shall MUTATIS MUTANDIS apply to
every such separate general meeting, save that the necessary quorum
shall be not less than two (2) shareholders present in person, or by
proxy, or deemed, by the Statutes, to be present at such meeting,
holding at least thirty-three and one-third percent (331/3%) of the
voting rights of the issued shares of the class
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57. Unless otherwise provided by these Articles, the enlargement of an
authorised class of shares, or the issuance of additional shares
thereof out of the authorised and unissued share capital, shall not be
deemed, for the purposes of Article 56 to vary, modify or abrogate the
rights attached to previously issued shares of such class or of any
other class of shares.
GENERAL MEETINGS
58. (a) General meetings shall be held at least once in every calendar
year at such time, being not more than fifteen (15) months
after the last preceding general meeting, and at such place as
may be determined by the Board. Such general meetings shall be
called "ANNUAL GENERAL MEETINGS" and all other general
meetings of the Company shall be called "EXTRAORDINARY GENERAL
Meetings". Subject to the Statutes, meetings of the Company
may be held within or outside Israel.
(b) The Board may, whenever it thinks fit, and it shall, within
twenty-one (21) days after receiving a requisition in writing
by shareholders or directors, as provided in the Statutes,
convene an Extraordinary General Meeting. Any such requisition
must state the objectives for which the meeting is to be
called, be signed by the requisitioners, and deposited at the
Office. Such requisition may consist of several documents in
like form, each signed by one (1) or more requisitioners. If
the Board does not within twenty-one (21) days from the date
of the deposit of such requisition proceed to convene a
meeting, the requisitioners, or any of them representing more
than fifty percent (50%) of the total voting rights of all the
requisitioners, may themselves convene the meeting, but any
meeting so convened shall not be held after three (3) months
from the date on which the requisition was deposited, as
aforesaid, at the Office.
59. At least twenty-one (21) days' notice of a general meeting, specifying
the place, the day and the hour of the meeting, shall be given in the
manner hereinafter mentioned to such shareholders, as are under the
provisions of these Articles, and such persons, as are under the
Statutes, entitled to receive notices from the Company, provided that
the accidental omission to give such notice to, or the non-receipt of
such notice by, any such shareholder or person shall not invalidate any
resolution passed or proceeding held at any such meeting, and, with the
consent of all the shareholders for the time being entitled to receive
notices of meetings, a meeting may be convened upon a shorter notice or
without notice and generally in such manner as such shareholders may
approve. A waiver or consent as aforesaid may be validly given in
writing retrospectively even after the date of the meeting.
60. Notice of a general meeting shall include:
(a) the agenda for such meeting. The contents of such agenda shall
be determined by the Secretary according to the Board
instructionsbut shall include the following:
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(i) if such meeting is being held pursuant to a
requisition of shareholders or Directors in the
manner as provided by the Statutes, particulars of
the objectives for which such meeting has been called
as aforesaid;
(ii) any subject as may be requested for inclusion in the
manner referred to in Article 61;
(iii) any other particulars as may be required under the
Statutes.
(b) the text of any resolution which is proposed to be put and
voted upon at such meeting, unless the Statutes permit a
general description of the text; and
(c) any other matter as so required, under the Statutes, for
inclusion in any such notice.
61. Any shareholder or shareholders of the Company that holds, at least,
one percent (1%) of the voting rights in the issued share capital of
the Company may, as provided by the Statutes, request that the Board
includes a subject in the agenda of a general meeting to be held in the
future. Any such request must be in writing, give particulars of the
subject which is requested to be included in such agenda, be signed by
the shareholder or shareholders making such request and must be
deposited at the Office and addressed to the Board. The Board will
include, in the agenda for a general meeting, a subject, requested as
aforesaid, if the Board deems that such subject is suitable for
discussion at a general meeting.
62. Subject to the Statutes, all general meetings shall be held at such
time and place as the Board may determine. The Board may, in its
absolute discretion, resolve to enable persons entitled to attend a
general meeting to do so by simultaneous attendance and participation
at the principal meeting place and a satellite meeting place or places
anywhere in the world and the shareholders present in person, by proxy
or by written ballot at satellite meeting places shall be counted in
the quorum for and entitled to vote at the general meeting in question,
and that meeting shall be duly constituted and its proceedings valid
provided that the Chairman of the general meeting is satisfied that
adequate facilities are available throughout the general meeting to
ensure that shareholders attending at all the meeting place are able
to:
(i) participate in the business for which the meeting has been
convened;
(ii) hear all persons who speak (whether by the use of microphones,
loudspeakers, audio-visual communications equipment or
otherwise) in the principal meeting place and any satellite
meeting place, and
(iii) be heard by all other persons so present in the same way.
The Chairman of the general meeting shall be present at, and the
meeting shall be deemed to take place at, the principal meeting place.
PROCEEDINGS AT GENERAL MEETINGS
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63. (a) No business shall be transacted at any general meeting unless
a quorum is present when the meeting proceeds to business. For
all purposes the quorum shall not be less than two (2)
shareholders present in person, or by proxy, or deemed, by the
Statutes, to be present at such meeting, holding, in the
aggregate, at least, thirty-three and one-third percent
(33 1/3%) of the voting rights in the issued share capital of
the Company.
(b) If within half an hour (or within such longer time not
exceeding one (1) hour as the Chairman of the meeting may
decide) from the time appointed for the holding of a general
meeting a quorum is not present, the meeting shall stand
adjourned to the same day in the next week at the same time
and place (unless such day shall fall on a public holiday
either in Israel or the United States, in which case the
meeting will be adjourned to the first day, not being a
Friday, Saturday or Sunday, which follows such public
holiday). If at such adjourned meeting a quorum is not present
within one-half an hour from the time appointed for holding
the meeting, the shareholders present, in person, by proxy or
by written ballot or deemed, pursuant to the Statutes, to be
present, shall be a quorum save that if the general meeting
was convened upon requisition of the shareholders or
Directors, as provided by the Statutes, a quorum at such
adjourned meeting shall be not less than two (2) shareholders
present, in person, or by proxy, or deemed, pursuant to the
Statutes, to be present, holding, at least, the minimum
percentage of the issued share capital, or voting rights of
the issued share capital, of the Company that would entitle,
under the Statutes, such shareholders to requisition an
Extraordinary General Meeting.
64. The Chairman (if any) of the Board shall preside at every general
meeting of the Company. If there be no such Chairman or if at any
meeting he shall not be present within fifteen (15) minutes after the
time appointed for holding the same, or shall be unwilling to act as
Chairman, the Deputy Chairman (if any) shall if present and willing to
act preside at such meeting but if the Chairman and Deputy Chairman
shall not be so present and willing to act the Directors present shall
choose one of their number to act, or if there is only one Director
present he shall be Chairman if willing to act. If there is no Director
present and willing to act, the shareholders present and entitled to
vote shall choose one of their number to be Chairman of the meeting.
The Chairman of any general meeting shall not, by virtue of such
office, be entitled to vote at any general meeting nor shall the
Chairman have a second or casting vote (without derogation, however
from the rights of such Chairman to vote as a shareholder or proxy of a
shareholder if, in fact, he is also a shareholder or a duly appointed
proxy).
65. (a) The Chairman may, with the consent of any general meeting at
which a quorum is present, and shall, if so directed by the
meeting, adjourn any meeting from time to time and from place
to place as the meeting shall determine. The Chairman of the
meeting may, at his sole discretion and without the
requirement for the consent of the meeting, adjourn or
otherwise make alternative appropriate arrangements for any
general meeting at which in his opinion the venue arrangements
cannot cater in an orderly fashion so as to enable the
shareholders present adequately to hear, speak and vote on the
matters before the meeting. Without prejudice to the
generality of the
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foregoing, the Chairman of the meeting may in such
circumstances direct that the meeting be held simultaneously
in two or more venues connected for the duration of the
meeting by audio or audio-visual links or in two or more
consecutive sessions with the votes taken being aggregated or
that it be adjourned to a later time on the same day or a
later date at the same or any other venue.
(b) Whenever a meeting is adjourned for twenty-one (21) days or
more, notice of the adjourned meeting shall be given in the
same manner as in the case of an original meeting. Save as
aforesaid, no shareholder shall be entitled to any notice of
an adjournment or of the business to be transacted at any
adjourned meeting.
(c) No business shall be transacted at any adjourned meeting other
than the business which might have been transacted at the
meeting from which the adjournment took place.
66. (a) Subject to these Articles and the Statutes a resolution of the
Company in a general meeting shall be deemed adopted if passed
as an Ordinary Resolution. Every vote at a general meeting
shall be conducted according to the number of votes to which
each shareholder is entitled on the basis of the number of
shares held by him which confer on him a right to vote at a
general meeting.
(b) At any general meeting, a resolution, in respect of any
business, put to vote of the meeting shall be decided on a
poll and such poll shall be held in such manner, at such time
and at such place as the Chairman of the general meeting
directs (including the use of ballot or voting papers or
tickets), whether immediately or after an interval or
postponement, or in any other way, and the results of the poll
shall be deemed to be the resolution at the general meeting
for which such poll was taken. The holding of a poll shall not
prevent the continued business of the general meeting.
(d) A resolution in writing signed by all shareholders of the
Company then entitled to attend and vote at general meetings
or to which all such shareholders have given their written
consent (by letter, facsimile telecopier, telegram, telex,
e-mail or otherwise), or their oral consent by telephone
(provided that a written summary thereof has been approved and
signed by the Chairman) shall be deemed to have been
unanimously adopted by a general meeting duly commenced and
held.
67. A declaration by the Chairman of the meeting that a resolution has been
carried, or has been carried unanimously or by a particular majority,
lost, or not carried by a particular majority shall be conclusive and
entry to that effect in the minute book of the Company shall be
conclusive evidence thereof, without proof of the number or proportion
of the votes recorded in favour of or against such resolution. Without
derogating from the generality of the foregoing, if:
(a) any objection shall be raised to the qualification of any
voter; or
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(b) any votes have been counted which ought not to have been
counted or which might have been rejected; or
(c) any votes are not counted which ought to have been counted,
the objection or error shall not vitiate the decision of the meeting or
adjourned meeting on any resolution unless it is raised or pointed out
at the meeting or, as the case may be, the adjourned meeting at which
the vote objected to is given or tendered or at which the error occurs.
Any objection or error shall be referred to the Chairman of the
meeting; and shall only vitiate the decision of the meeting on any
resolution if the Chairman decides that it may have affected the
decision of the meeting. The decision of the Chairman on such matters
shall be final and conclusive.
VOTES OF SHAREHOLDERS
68. Subject to any rights or restrictions for the time being attached to
any class or classes of shares and to these Articles, every shareholder
who is present, in person, by proxy, or by written ballot or is deemed
under the Statutes to be present shall be entitled to have one vote for
each share of which he is the holder.
69. A shareholder in respect of whom an order has been made by any court
having jurisdiction in matters concerning mental disorder may vote in
person, by proxy or by written ballot, by the person authorised by such
court or by law to act on such shareholder's behalf, provided that such
evidence as the Board, or some other person who may be authorized by
the Board for such purpose, may require of the authority of the person
claiming to vote shall have been deposited at the Office, or at such
other place as is specified in accordance with these Articles for the
lodgment of instruments of proxy, not less than forty-eight (48) hours
before the time appointed for holding the meeting or adjourned meeting.
70. If two (2) or more persons are registered as the holder of a share,
then in voting on any question the vote of the senior who tenders the
vote, whether in person, by proxy, or by written ballot or by any other
means that the Statutes expressly prescribe, shall be accepted to the
exclusion of the votes of the other registered holders of the share,
and for this purpose seniority shall be determined by the order in
which the names stand in the Register.
71. No shareholder shall, unless the Board otherwise determines, be
entitled in respect of any share held by that shareholder, to vote at
any general meeting, personally or by proxy or by any other lawful
means, or at any separate meeting of the holders of any class of
shares, or to exercise any other right conferred by virtue of being a
shareholder in relation to any such meeting if any call or other sum
presently payable by the shareholder in respect of that share remains
unpaid.
72. Votes may be given personally, by proxy, by ballot (in accordance with
the Companies Law) or by any other manner that the Company is required,
under the Statutes, to recognise and a shareholder entitled to more
than one vote need not use all his votes or cast all the votes he uses
in the same way. Any person (whether a shareholder of the Company or
not) may be appointed to act as a proxy.
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73. An instrument appointing a proxy:
(i) shall:
(a) be in writing under the hand of the appointor or of
his attorney duly authorised in writing, or if such
appointor is a corporation, either under its seal or
under the hand of some officer or attorney duly
authorised in that behalf;
(b) be deemed to include the power to vote on any
amendment of a resolution put to the meeting for
which it is given as the proxy thinks fit; and
(c) unless the contrary is stated therein, be valid as
well for any adjournment of the meeting as for the
meeting to which it relates;
(ii) whether for a specified meeting or otherwise, shall be in the
following form or as near thereto as circumstances will admit
or in such other form as the Board may approve:
"I, ___________, of _________________ and entitled to
______ votes hereby appoint ___________ of
__________________________ and failing him
_______________________ of _____________________ to
vote for me and on my behalf at the (Annual,
Extraordinary or adjourned, as the case may be)
general meeting of the Company to be held on the
________ day of ____________ and at every adjournment
thereof. AS WITNESS MY HAND THIS _______ DAY OF
___________."
74. (a) The instrument appointing a proxy and the power of attorney or
other authority (if any) under which it is signed, or a
notarially certified copy of such power or authority shall be
deposited at the Office, or at such other place, whether in
Israel or elsewhere, as the Board may from time to time either
generally or in a particular case or class of cases prescribe,
not less than forty-eight (48) hours before the time appointed
for holding the meeting or adjourned meeting at which the
person named in the instrument proposes to vote, and in
default the instrument of proxy shall be invalid. No
instrument appointing a proxy shall be valid after the
expiration of twelve (12) months from the date stated in it as
the date of its execution, except at an adjourned meeting
where the meeting was originally held within twelve (12)
months from such date. Where valid but differing instruments
of proxy or other instrument which the Company is required,
under the Statutes, to recognise in relation to the exercise
of the voting rights in respect of a share, are delivered in
respect of the same share for use at the same meeting, the
instrument which is delivered last (regardless of its date or
of the date of its execution) shall be treated as replacing
and revoking the others as regards that share; if the Board,
or some other person as may be authorised by the Board for
such purpose, is unable to determine which was the last
delivered, none of them shall be treated as valid in respect
of that
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share. Delivery of an instrument appointing a proxy or any
other instrument, as aforesaid, shall not preclude a
shareholder from attending and voting in person at the
meeting.
(b) The Board may cause the Company to send, by post or otherwise,
instruments of proxy to shareholders for use at any general
meeting.
75. A vote given in accordance with the terms of an instrument of proxy or
by the duly authorised representative of a corporation shall be valid
notwithstanding the death or mental disorder of the principal or the
revocation of the instrument of proxy, or the determination of the
authority of the person voting, or of the authority under which the
instrument of proxy was executed, or the transfer of the share in
respect of which the instrument of proxy is given, unless notice in
writing of such death, mental disorder determination, revocation or
transfer shall have been received by the Company at the office, or at
such other place as is referred to in Article 73, at least twenty-four
(24) hours [before the commencement of the meeting or adjourned
meeting.
CORPORATIONS ACTING BY REPRESENTATIVES
76. Any corporation which is a shareholder of the Company may, by
resolution of its directors or other governing body, authorise such
person as it thinks fit to act as its representative at any meeting of
the Company, or at any meeting of any class of shareholders of the
Company, and the person so authorised shall be entitled to exercise the
same powers on behalf of the corporation which he represents as that
corporation could exercise if it were an individual shareholder of the
Company.
DIRECTORS
77. Unless otherwise determined by an ordinary resolution, the number of
Directors shall be not less than five (5) and not more than nine (9) as
may be determined by Ordinary Resolution of the Company
78. Subject to the Statutes, no person shall be disqualified to serve as a
Director by reason of his not holding shares in the Company or by
reason of his having served as a Director in the past.
79. Subject to the Statutes, the remuneration of a Director shall be such
sum (if any) as shall from time to time be approved by the Company in
general meeting. The Directors and their alternates shall be entitled
to be repaid all reasonable travelling, hotel and other expenses
incurred by them arising from their travelling to and from Board
meetings or meetings of any committee of the Board. If by any
arrangement, approved by the Board, any Director shall perform or
render any special duties or services outside his ordinary duties as a
Director, the Board may cause the Company to pay him special
remuneration, in addition to his ordinary remuneration, and such
special remuneration may be by way of salary, commission, participation
in profits, or otherwise as may be arranged, all subject to the
provisions of the Statutes with regard to all such matters.
80. The office of a Director shall be vacated, IPSO FACTO:
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(a) if he becomes bankrupt or suspends payment or colludes or
compounds with his creditors;
(b) if he be declared legally incompetent;
(c) if by notice in writing given to the Company he resigns his
office;
(d) if he is removed from office by an ordinary resolution of the
general meeting of the Company;
(e) if, under the Statutes, he is required to resign his office;
or
(f) upon his death.
81. Subject to the provisions of the Statutes, no Director shall be
disqualified by virtue of his office from holding any office or place
of profit in the Company or in any company in which the Company shall
be a shareholder or otherwise interested, or from contracting with the
Company as vendor, purchaser or otherwise, nor shall any such contract,
or any contract or arrangement entered into by or on behalf of the
Company in which any Director shall be in any way interested be
avoided, nor, other than as required by the Statutes, shall any
Director be liable to account to the Company for any profit arising
from any such office or place of profit or realised by any such
contract or arrangement by reason only of such Director's holding that
office or of the fiduciary relations thereby established, but the
nature of his interest, as well as any material fact or document, must
be disclosed by him at the meeting of the Board at which the contract
or arrangement is first considered, if his interest then exists, or, in
any other case, at no later than the first meeting of the Board after
the acquisition of his interest.
82. As from the coming into force of the Companies Law and otherwise
subject to the provisions of the Statutes, the entering into of a
transaction by the Company with an Office Holder or a third party in
which an Office Holder has a personal interest (as more fully described
in Section 270(1) of the Companies Law), which is not an "extraordinary
transaction" shall, if such Office Holder is a Director or the General
Manager, be approved in such manner as may be prescribed by the Board,
from time to time, and in the absence of thereof, will require the
approval of the Board. If such Office Holder is not a Director, then
such transaction shall be approved in such manner as may be prescribed
by the General Manager from time to time and in the absence of any such
determination, with the approval of the General Manager, according to
guidelines from the Board of Directors..
POWERS AND DUTIES OF DIRECTORS
83. The business of the Company shall be managed by the Board, which may
exercise all such powers of the Company and perform on behalf of the
Company all such acts as may be exercised and performed by the Company
as are not by the Statutes or by these Articles required to be
exercised or done by the Company in general meeting or (if the Company
is under an obligation, under the Statutes, to appoint a General
Manager),
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the General Manager, subject nevertheless to the provisions of the
Statutes and of these Articles and to such regulations (not being
inconsistent with such aforesaid provisions) as may be prescribed by
the Company in general meeting, but no regulation made by the Company
in general meeting shall invalidate any prior act of the Board which
would have been valid if such regulation had not been made. The general
powers given by this Article shall not be limited or restricted by any
special authority or power given to the Board by any other Article.
84. Subject to the provisions of these Articles and the Statues, the Board
may at any time and from time to time, by power of attorney or
otherwise, appoint any person to be the attorney or attorneys of the
Company for such purposes and with such powers, authorities and
discretions (not exceeding those vested in or exercisable by the Board
under these Articles) and for such period and subject to such
conditions as it may think fit, and any such power of attorney may
contain such provisions for the protection and convenience of persons
dealing with any such attorney as the Board may think fit, and may also
authorise any such attorney to sub-delegate all or any of the powers,
authorities and discretions vested in him.
85. The Directors may act as a Board at any time notwithstanding any
vacancy in their body provided always that in case the Directors shall
at any time be reduced in number to less than the minimum number
prescribed by or in accordance with these Articles it shall be lawful
for them to act as a Board for the purpose of filling any vacancies in
their body or for summoning a general meeting of the Company, but not
for any other purpose.
BORROWING POWERS
86. Subject to the Statutes and these Articles, the Board may cause the
Company to borrow money and to mortgage or charge its undertaking,
property and assets (present or future) and uncalled capital or any
part thereof and issue debentures and other securities, whether
outright or as collateral security for any debt, liability or
obligation of the Company or of any third party.
ELECTION OR REMOVAL OF DIRECTORS
87. (a) All the Directors (other than, if any, the Directors referred
to in paragraph (c) of this Article) shall be elected annually
at the Annual General Meeting, by ordinary resolution, and
shall hold office until, and shall retire from office on, the
conclusion of the next following Annual General Meeting and
shall be eligible for re-election at such meeting.
(b) Except for Directors whose term of office expires pursuant to
Article 87(a) (including any Director appointed in the
circumstances set out in this Article 87), no person shall be
nominated for the office of a Director at an Annual General
Meeting unless, not less than seven (7) days and not more than
forty-two (42) days prior to the date set for such meeting, a
notice signed by a shareholder entitled to participate and
also present at the meeting with respect to which notice was
given, indicating his intention of proposing a candidate to
the office of a Director and accompanied with the written
consent
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thereto of such candidate of his willingness to be appointed
as a Director, was delivered to the Office.
(c) To the extent required under the Statutes, as construed by the
appropriate courts, the Company shall appoint or arrange the
election of two (2) persons as Public or, as required as
aforesaid, External Directors. The appointment or election and
removal of such Directors shall be made in accordance with the
Statutes. The provisions of Articles 87(a) and (b) shall not
apply to a Director who is a Public Director.
(d) Notwithstanding the provisions of paragraphs (b) and (c) of
this Article, no person shall be nominated or appointed to the
office of a Director if such person is disqualified, under the
Statutes, from being appointed as a Director.
88. The Board may at any time appoint any other person as a Director,
whether to fill a vacancy or whether in addition to those of their body
but so that the total number of Directors shall not at any time exceed
any maximum number (if any) fixed by or in accordance with these
Articles. Any Director so appointed shall hold office until the first
Annual General Meeting convened after such appointment and shall be
eligible for re-election at such Annual General Meeting.
ALTERNATE DIRECTORS
89. (a) A Director may, by written notice to the Company given in the
manner set forth in Article 87(b), appoint any individual who
is qualified to serve as a Director, to act as alternate
Director at meetings of the Board in his place during his
absence (and, at his discretion, to revoke such nomination)
provided that such individual is not a Director or is a person
acting as an alternate Director for any other Director.
(b) Any appointment or removal of an alternate Director shall be
effected by an instrument in writing delivered at the Office
and signed by the appointor or by such other method as may be
approved by the Board.
(c) An alternate Director shall be entitled to receive notice of
meetings of the Board and of any committee of the Board of
which the appointor is a member, to attend and to vote at any
such meeting at which his appointor is not personally present
and generally to perform all the functions of his appointor
(except as regards power to appoint an alternate, unless the
instrument of his appointment states otherwise) as a Director
in his absence. Save as otherwise provided in these Articles,
an alternate Director shall be deemed for all purposes to be a
Director.
(d) An alternate Director shall not be entitled to receive from
the Company in respect of his appointment as alternate
Director any remuneration.
(e) An alternate Director shall IPSO FACTO cease to be an
alternate Director if his appointor ceases for any reason to
be a Director or on the happening of any
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event which, if he were a Director, would cause him to vacate
the office of Director.
PROCEEDINGS OF DIRECTORS
90. Board meetings will be convened in accordance with the needs of the
Company and, in any event, shall be convened at least once every three
(3) months. Save as aforesaid, the Board may meet, adjourn and
otherwise regulate its meetings as it thinks fit. Board meetings may be
convened at any time by the Chairman of the Board. The Chairman of the
Board shall convene a Board meeting upon the request of any two (2)
Directors as soon as practicable after receiving such request and shall
otherwise convene a Board meeting as provided by the Statutes. If the
Chairman of the Board does not, within fourteen (14) days after the
date of receiving a request from two Directors as aforesaid, convene a
Board meeting, then the Director requesting the convening of such Board
meeting may convene the Board meeting. If the Chairman of the Board
does not, within fourteen (14) days after being obliged to convene a
Board meeting as provided under the Statutes, convene a Board meeting,
the person who, as provided in the Statutes in such circumstances, is
entitled to convene the Board meeting, may convene such meeting. Notice
of a Board meeting shall be prepared in accordance with the Statutes
and shall be served upon the members of the Board, not less than three
(3) days before such meeting.
91. Notice of a Board Meeting may be given orally or in writing, and if
given in writing, may be sent by hand, post, facsimile or electronic
mail to a Director at the address, facsimile number or electronic mail
address given by such Director to the Company for such purpose. Any
such notice shall be deemed duly received, if sent by post, five (5)
days following the day when any such notice was duly posted and if
delivered by hand or transmitted by facsimile transmission or
electronic mail, such notice shall be deemed duly received by the
Director on the date of delivery or, as the case may be, transmission
of the same. Notwithstanding anything contained to the contrary herein,
failure to deliver notice to a Director of any such meeting in the
manner required hereby may be waived by such Director and a meeting
shall be deemed to have been duly convened notwithstanding such
defective notice if such failure or defect is waived prior to action
being taken at such meeting, by all Directors entitled to participate
at such meeting to whom notice was not duly given as aforesaid.
92. Any Director may participate in a meeting of the board by means of
telephone or similar communication equipment whereby all the Directors
participating in the meeting can hear each other and the Directors
participating in this manner shall be deemed to be present in person at
such meeting and shall be entitled to vote or be counted in a quorum
accordingly. Such a meeting shall be deemed to take place where the
largest group of those participating is assembled or, if there is no
such group, where the Chairman of the meeting then is.
93. Until otherwise decided by the Board, a quorum at a meeting of the
Board shall be constituted by the presence in person, by alternate or
by telephone or similar communication equipment (as referred to in
Article 92) of a majority of the Directors out of which the Chairman of
the Board is one then in office who are lawfully entitled to
participate and vote at the meeting. If within one-half an hour (or
within such
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longer time not exceeding one (1) hour as the Chairman of the meeting
may decide) from the time appointed for the holding of the Board
meeting a quorum is not present, the Board meeting shall stand
adjourned to the same day in the next week at the same time and place
(unless such day shall fall on a public holiday either in Israel or the
United States, in which case the meeting will be adjourned to the first
day, not being a Friday, Saturday or Sunday, which follows such public
holiday). If at such adjourned Board meeting a quorum is not present
within half an hour from the time appointed for holding the meeting,
the Directors present, in person, by alternate or by telephone or
similar communication equipment (as referred to in Article 92) who are
lawfully entitled to participate and vote at such meeting shall be a
quorum. No business shall be transacted at a meeting of the Board of
Directors unless the requisite quorum is present (in person, by
alternate or by telephone as aforesaid) when the meeting proceeds to
business. For the purpose of these Articles an alternate Director shall
be counted in a quorum.
94. A resolution proposed at a Board Meeting shall be deemed adopted if
supported by such number (rounded-up in case of fraction) of Directors
equal to a majority of the number of Directors then in office and who
were lawfully entitled to vote on such resolution.
95. The Chairman shall not have a second or casting vote at any Board
meeting.
96. A resolution in writing signed by all the Directors then in office
lawfully entitled to vote thereon (including by facsimilia), shall be
as effective for all purposes as a resolution passed at a meeting of
the Board duly convened, held and constituted and may consist of
several documents in like form each signed by one or more of the
Directors. For the purpose of this Article, the signature of an
alternate Director, the appointer of which is entitled to vote on such
resolution, shall suffice in lieu of the signature of the Director
appointing him.
97. The Board may from time to time elect or otherwise appoint a Director
to be Chairman or Deputy Chairman and determine the period for which
each of them is to hold office.
98. The Chairman, or in his absence the Deputy Chairman, shall preside at
meetings of the Board, but if no such Chairman or Deputy Chairman shall
be elected or appointed, or if at any meeting the Chairman or Deputy
Chairman shall not be present within fifteen (15) minutes after the
time appointed for holding the same, or if the Chairman, or, if
applicable, Deputy Chairman, is unwilling or unable to chair such
meeting, the Directors present shall choose one of their number to be
Chairman of such meeting.
99. The Board may delegate all or any of its powers, authorities and
discretions (except for those powers, authorities and discretions
which, under the Statutes, the Board is unable to delegate) to any
committee consisting of such shareholders of the Board as the Board
may, from time to time, think fit. The Board may, subject to the
Statutes, widen, curtail or revoke such delegation of powers and
authorities. Any committee so formed shall in the exercise of the
power, authorities and discretions so delegated conform to any
regulations that may be lawfully imposed on it by the Board. The Board
shall appoint an audit committee, the members of which and the
authorities,
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powers and discretions of which shall be governed by the Statutes. The
meetings and proceedings of a committee shall be governed by the
provisions herein contained for regulating the meetings and proceedings
of the Board, so far as the same are applicable thereto and are not
lawfully suspended or superseded by any regulations imposed by the
Board.
100. All acts done BONA FIDE by any meeting of the Board, or of a committee
of the Board, or by any person acting as a Director or alternate
Director or a member of such committee shall, notwithstanding that it
be afterwards discovered that there was some defect in the appointment
of any such Director or such committee or person acting as aforesaid,
or that they or any of them were disqualified, or had vacated office or
were not entitled to vote, be as valid as if every such person had been
duly appointed or had duly continued in office and was qualified and
had continued to be a Director or, as the case may be, an alternate
Director and had been entitled to vote.
GENERAL MANAGER
101. Subject to these Articles and the Statutes, the Board may from time to
time appoint one or more persons (other than the Chairman of the
Board), whether or not Directors, as the General Manager, Chief
Executive Officer, or President of the Company. Subject to the
Statutes, the powers, authorities and discretions any such General
Manager, Chief Executive Officer or President shall have shall be those
that the Board may, at its discretion, lawfully confer on the same. The
Board may, from time to time, as the Board may deem fit, modify or
revoke, such title(s), duties and authorities the Board conferred as
aforesaid. Subject to these Articles and the Statutes, any such
appointment(s) and any such powers, authorities and discretions,
conferred as aforesaid may be either for a fixed term or without any
limitation of time, and may be made upon such conditions and subject to
such limitations and restrictions as the Board may, from time to time,
determine and the Board may from time to time (subject to the
provisions of the Statutes and of any contract between any such person
and the Company) fix his or their salaries and remove or dismiss him or
them from office and appoint another or others in his or their place.
MINUTES
102. The Company shall cause minutes to be made of all general meetings of
the Company and also of all appointments of Directors and Office
Holders and of the proceedings of all meetings by the Board, and
committees, and of the attendances thereat, and all business transacted
at such meetings, (which shall include any written resolution of the
directors under Article 96 above) and any such minute of any meeting,
if purporting to be signed by the Chairman of such meeting, or by the
Chairman of the next succeeding meeting, shall be conclusive evidence
without any further proof of the facts therein stated. Minutes of a
meeting shall be kept at the Office of the period, and in the manner,
as prescribed in the Statutes.
103. Intentionally Omitted.
STAMP AND SIGNATURES
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104. (a) The Company may have one or more official stamps.
(b) The Company may keep an official stamp for documents made for
foreign jurisdiction purposes, and may authorise, from time to
time, a person appointed for this purpose to make use of such
stamp. The provisions of Section 102 of the Companies
Ordinance shall apply to this Article, and the term "seal"
shall have the meaning of "stamp".
(c) A document shall be deemed signed by the Company upon the
fulfillment of all of the following:
(1) The Company's stamp was stamped on the document by a
person authorised therefor by the Board, or the
document bears the name of the Company in print;
(2) It bears the signature of one or more person
authorized, generally or in the specific instance, to
sign such document by the Board.
(d) An authorisation of one or more persons by the Board to sign
on a document on behalf of the Company shall be deemed to
include the authority to stamp the Company's stamp thereon,
unless otherwise provided by the Board.
(e) an authorisation by the Board as provided in Article 104(d)
may be for a specific document or for a certain sort of
document or for all the Company's documents or for a definite
period of time or for an unlimited period of time, provided
that any such authority may be terminated by the Board, at any
time.
(f) The provisions of this Article shall apply both to the
Company's documents executed in Israel and the Company's
documents executed abroad.
SECRETARY
105. The Board may appoint a Secretary of the Company on any terms it thinks
proper. The Board may from time to time by resolution appoint a
temporary substitute for the Secretary who shall be deemed to be the
Secretary during the term of his appointment.
DIVIDENDS AND RESERVES
106. The Board may, before recommending any dividend, set aside, out of the
profits of the Company, such sums as it thinks proper as reserve or
reserves, which shall, at the discretion of the Board, be applicable
for any purpose to which the profits of the Company may be properly
applied and pending such application may, at the like discretion,
either be employed in the business of the Company as the Board may,
from time to time, deem fit. The Board may, also without placing the
same to reserve, carry forward any profits which it may deem prudent
not to divide.
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107. The Company in a general meeting may, by ordinary resolution, declare
dividends in accordance with the respective rights of the shareholders
but no dividends shall exceed the amount recommended by the Board.
108. The Board may, from time to time, cause the Company to pay to the
shareholders such interim dividends as appear to the Board to be
justified by the profits of the Company. The validity of any interim
dividend shall not be affected by the subsequent failure of the
Company, in general meeting to declare a dividend, or by the general
meeting's declaration of a lesser dividend, pursuant to Article 107.
109. Subject to these Articles, the Company may declare and pay any dividend
permitted under the Statutes.
110. No dividend shall bear interest or linkage against the Company.
111. (a) All dividends unclaimed for one year, after having been
declared, may be invested or otherwise made use of by the
Company as the Board shall think fit, until the same be
claimed and so that the Company shall not thereby be
constituted as a trustee in respect thereof.
(b) Any dividend or other sum remaining unclaimed for a period of
seven (7) years after having been declared shall be forfeited
and shall revert to the Company.
112. Subject to any special or restricted rights conferred upon the holders
of shares as to dividends, all dividends shall be declared and paid
proportionately to the amount paid up on account of the nominal value
of the shares in respect of which the dividend is being paid. As
regards shares not fully paid throughout the period in respect of which
the dividend is paid, dividends in respect thereto shall be apportioned
and paid pro rata according to amounts deemed under this Article to be
paid up on account of the nominal value of such shares during any
portion or portions of the period in respect of which the dividend is
paid. For this purpose, the amount deemed to be paid on account on the
nominal value of such partly paid shares shall be such proportion of
the nominal value as the amount paid to the Company with respect to the
share bears to its full issuance price. No amount paid on a share, in
advance of a call, shall be treated as paid up on a share.
113. Where any dividend is declared by the Company in general meeting
pursuant to Article 104, or is determined to be paid by resolution of
the Board passed in accordance with Article 108, the ordinary
resolution of the Company in general meeting or (as the case may be)
the resolution of the Board may provide that such dividend shall be
payable to the shareholders (or, if applicable, to any class of
shareholders) registered as such on the date of such resolution or such
other date as such resolution may specify. Notwithstanding the
foregoing, if any shares are issued on terms providing that they shall
rank for dividends as from a specified date, or to a specified extent,
they shall rank for dividends accordingly.
114. The Board may deduct from any dividend payable to any shareholder all
sums of money (if any) presently payable by him to the Company on
account of calls or
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otherwise in relation to the shares of the Company. The Board may
retain any dividend or other moneys payable on or in respect of a share
on which the Company has a lien, and may apply the same in or toward
the satisfaction of the debts, liabilities or engagement in respect of
which the lien exists.
115. Subject to the provisions of the Statutes, any general meeting
declaring a dividend may, upon the recommendation of the Board, direct
payment of such dividend wholly or partly by the distribution of
specific assets of the Company, or by distribution of paid up shares,
debentures, or debenture stock of the Company or any other companies or
in any one or more of such ways, and the Board shall give effect to
such resolution, and where any difficulty arises in regard to such
distribution, the Board may settle the same as it thinks expedient, and
in particular may issue fractional certificates and fix the value for
distribution of such specific assets or any part thereof and may
determine that cash payments shall be made to any shareholders on the
basis of the value so fixed in order to adjust the rights of all
parties, and may vest any such specific assets in trustees as may seem
expedient to the Board. When deemed requisite a proper contract shall
be prepared and filed in accordance with the Statutes and the Board may
appoint any person to sign such contract on behalf of the persons
entitled to share in such distribution and such appointment shall be
effective and binding on such persons.
116. The Board may cause the Company to pay the dividends, interest or other
moneys payable on shares in respect of which any person is by
transmission entitled to be registered as holder to such person upon
production of such certificate and evidence as would be required if
such person desired to be registered as a shareholder in respect of
such shares.
117. Any dividend, interest or other moneys payable in cash on or in respect
of a share may be paid by check or warrant sent through the post to the
registered address of the holder or person entitled thereto and in the
case of two or more persons being registered as joint holders of such
share, to the registered address of that one of the joint holders who
is first named on the Register, or to such person and to such address
or by such other means offered by the Company as the holder or joint
holders or person entitled thereto, as applicable, may agree in writing
with the Company. Every such check or warrant shall be made payable to
the order of the person to whom it is sent or to such person as the
shareholder, person entitled or joint holders direct and the payment of
the check or warrant by the bankers on whom it is drawn shall be a good
discharge to the Company. Any one of two or more persons registered as
joint holders of a share may give effectual receipts for any dividends
or other moneys payable in respect of the shares held by them as joint
holders. Every check or warrant shall be sent at the risk of the person
entitled to the money it represents and the Company shall not be
responsible nor shall have any liability for any check or warrant lost
in transmission or in respect of sums lost or delayed in the course of
payment by a method offered by the Company as aforesaid.
CAPITALIZATION OF RESERVES
118. The Company in general meeting may, on the recommendation of the Board,
pass a resolution that any sum not required for the payment or
provision of any fixed
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preferential dividend and: (a) for the time being standing to the
credit of any reserve fund or reserve account of the Company, including
premiums received on the issue of any shares, debentures or debenture
stock of the Company, or (b) being undivided profits in the hands of
the Company, be capitalized, and that such sum be set free for
distribution and be appropriated as capital to and amongst the
shareholders in the proportions to which they would have been therein
entitled had such sum been distributed by way of dividends on the
shares and in such manner as the resolution may direct, and such
resolution shall be effective, and the Board shall in accordance with
such resolution apply such sum in paying up in full any unissued shares
in the capital of the Company on behalf of the shareholders as
aforesaid, and appropriate such shares and distribute the same credited
as fully paid-up amongst such shareholders in the proportion aforesaid
in satisfaction of their shares and interests in the said capitalized
sum, or shall apply such sum or any part thereof on behalf of the
shareholders aforesaid in paying up the whole or part of any uncalled
balance which shall for the time being be unpaid in respect of any
issued shares held by such shareholders or otherwise deal with such sum
as directed by such resolution. Where difficulty arises in respect of
any such distribution, the Board may settle the same as it thinks
expedient, and in particular it may issue fractional certificates, fix
the value for distribution of any fully paid-up shares, make such
payments to any shareholders on the footing of the value so fixed in
order to adjust rights, and vest any such shares in trustees upon such
trusts for the persons entitled to share in the appropriation and
distribution as may seem just and expedient to the Board. When deemed
requisite a proper contract for the allotment and acceptance of the
shares to be distributed as aforesaid shall be prepared and filed in
accordance with the Statutes, and the Board may appoint any person to
sign such contract on behalf of the persons entitled to share in the
appropriation and distribution and such appointment shall be effective
and binding on such persons.
ACCOUNTS
119. The Board shall cause accounting records to be kept in accordance with
applicable law. The books of account shall be kept at the Office, or at
such other place or places as the Board shall deem fit (either within
the State of Israel or elsewhere in the world) and shall be open for
inspection by shareholders of the Board. No shareholder (not being a
Director) shall have any right of inspecting any account or book or
document of the Company, except as conferred by the Statutes or as
authorized by the Board or by resolution of the Company in general
meeting.
AUDIT
120. At least once every fiscal year, the accounts of the Company shall be
examined and audited and the correctness of the profit and loss account
and balance sheet certified by one or more duly qualified auditors.
AUDITORS
121. The appointment, authorities, rights and duties of the Auditors shall
be regulated by applicable law, provided, however, that in exercising
its authority to fix the remuneration of the Auditors, the Company in
general meeting may, by ordinary
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resolution, act (and in the absence of any action in connection
therewith, shall be deemed to have so acted), to authorize the Board to
fix such remuneration, subject to such criteria or standards, if any,
as may be provided in such resolution, and if no such criteria or
standards are so provided, such remuneration shall be fixed in an
amount commensurate with the volume and nature of the services rendered
by such Auditors.
NOTICES
122. A notice to a shareholder may be served, as general notice to all
shareholders, by publication in one of the daily Hebrew newspapers
appearing in Israel and in one daily English language newspaper
appearing in the City of New York, and otherwise in such manner as may
be required under the Statutes, but in place of the publication of
general notice as aforesaid, notice may be served on each shareholder
individually or by hand or by post to the registered address of each
shareholder. The date of such publication in the newspaper shall be
deemed to be the date of service on all the shareholders. A notice
served on a shareholder not sent by post but left at the shareholder's
registered address shall be deemed duly served on the day it was left
there. A notice served on a shareholder through the post shall be
deemed duly served on the day following the day when the envelope
containing it was posted. Proof that an envelope containing a notice
was properly addressed, stamped and posted shall be conclusive evidence
that notice was given. A declaration of an authorized person from the
American Stock Transfer stating that a notice was mailed to a
shareholder should suffice for purposes of this Article. 123. A notice
may be given by the Company to the joint holders of a share by giving
notice to the joint holder named in the Register in respect of the
shares.
124. Subject to the Statutes, where a given number of days' notice extending
over any period is required to be given, the day of service shall be
counted in such number of days or other period.
125. Any shareholder whose address is not described in the Register and who
shall not have designated in writing an address for receipt of notices
shall not be entitled to receive any notice from the Company.
126. Intentionally Omitted
127. Apart from the publication of any advertisement in the press, as
mentioned in Article 122, a person entitled to a share in consequence
of the death or bankruptcy of a shareholder upon supplying to the
Company such evidence as the Board, or such person as may be authorized
for such purpose by the Board, may reasonably require to show his title
to the share, and upon supplying also an address in Israel or the
United States for the service of notices, shall be entitled to have
served upon or delivered to him at such address any notice or document
to which the shareholder but for his death or bankruptcy would be
entitled, and such service or delivery shall for all purposes be deemed
to be sufficient service for delivery of such notice or document on all
persons interested (whether jointly with or as claiming through or
under him) in the share. Save as aforesaid any notice or document
delivered or sent by post to or left at the address of any shareholder
in pursuance of these presents shall, notwithstanding that such
shareholder be then dead or bankrupt, and whether or not the Company
shall
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have notice of his death or bankruptcy, be deemed to have been duly
served or delivered in respect of any share registered in the name of
such shareholder as sole or first-named joint holder.
128. Any notice or other document (including, but not limited to, a share
certificate) may be served or delivered by the Company by reference to
the Register as it stands at any time, as may be determined by the
Board from time to time, being not more than fifteen (15) days before
the date of posting (where the notice or other document is posted) or
otherwise not more than fifteen (15) days before the date of service.
No change in the Register after that time shall invalidate any such
service or delivery. Every person who becomes entitled to a share shall
be bound by any notice in respect of that share which, before his name
is entered in the register, has been duly given, or deemed or to be
duly given to a person from which he derives his title.
RECONSTRUCTION
129. On any sale of the undertaking of the Company, the Board or the
liquidators on a winding-up may, if authorized by special resolution,
accept fully paid or partly paid-up shares, debentures or securities of
any other company, whether Israeli or foreign, either then existing or
to be formed for the purchase in whole or in part of the property of
the Company, and the Board (if the profits of the Company permit), or
the liquidators (on a winding-up), may cause the Company to distribute
such shares, or securities, or any other property of the Company
amongst the shareholders without realization or vest the same in
trustees for them, and any special resolution may provide for the
distribution or appropriation of the cash shares, or other securities,
benefits, or property, otherwise than in accordance with the strict
legal rights of the shareholders or contributors of the Company, and
for the valuation of any such securities or property at such price and
in such manner as the meeting may approve, and all holders of shares
shall be bound to accept and shall be bound by any valuation or
distribution so authorized, and shall be deemed to have waived all
rights in relation thereto save only in case the Company is proposed to
be or is in the course of being wound-up, such statutory rights (if
any) under the provisions of the Statutes as are incapable of being
varied or excluded by these presents.
INSURANCE AND INDEMNITY
130. (a) Subject to the provisions of the Companies Ordinance, the
Company may enter into a contract for the insurance of all or
part of the liability of an Office Holder, in respect of any
of the following:
(i) a breach of his duty of care to the Company or to
another person;
(ii) a breach of his fiduciary duty to the Company,
provided that such Office Holder acted in good faith
and had reasonable cause to assume that such act
would not prejudice the interests of the Company;
(iii) a financial liability imposed on him in favor of
another person in respect of an act performed by him
in his capacity as an Office Holder of the Company.
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(b) Subject to the provisions of the Companies Ordinance, the
Company may indemnify an Office Holder in respect of any of
the following:
(i) a financial liability imposed on him in favor of
another person by a court judgment, including a
compromise judgment or an arbitrator's award
confirmed by a court, in respect of an act performed
by virtue of his being an Office Holder of the
Company;
(ii) reasonable litigation costs, including lawyers' fees,
expended by an Office Holder or which were imposed on
an Office Holder by a court in proceedings instituted
against him by the Company or in its name or by any
other person, or in a criminal charge from which he
was acquitted, all in respect of an act performed in
his capacity as an Office Holder or the Company.
(c) Notwithstanding the provisions of Articles 130(a) and 130(b),
as from the date of the coming into force of the Companies
Law, but otherwise, subject to the provisions of the Statutes
with regard to such matters:
(i) the Company may enter into a contract for the
insurance of all or part of the liability of an
Office Holder with respect to an obligation imposed
on such Office Holder due to an act performed by him
in his capacity as an Office Holder of the Company
arising from any of the following:
(aa) a breach of his duty of care to the Company
or to another person;
(bb) a breach of his fiduciary duty to the
Company, provided that the Office Holder
acted in good faith and had reasonable cause
to assume that such act would not prejudice
the interests of the Company;
(cc) a financial liability imposed on such Office
Holder in favor of another person;
(ii) (aa) the Company may undertake, in advance, to
indemnify, or may indemnify, an Office
Holder in respect of, a liability or expense
(as referred to in subparagraph (bb) below)
that may be imposed on such Office Holder
(due to an act performed by him in his
capacity as an Office Holder):
(1) that arises from those categories
of events, and in respect of those
amounts, as the Board may, at the
time of the giving of such
undertaking to indemnify, in its
opinion deem to be reasonable in
the circumstances; or
(2) that arises from an event that took
place prior to the Company giving
such indemnity;
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(bb) the liability and expense referred to in
sub-paragraph (aa) above of this Article
130(c)(ii) are as follows:
(1) a financial liability imposed on an
Office Holder in favor of another
person by a court judgment,
including a compromise judgment
given as a result of a settlement
or an arbitrator's award which has
been confirmed by a court;
(2) reasonable litigation costs,
including lawyers' fees, expended
by an Office Holder or which were
imposed on an Office Holder by a
court in proceedings instituted
against him by the Company or in
its name or by any other person or
in a criminal charge on which he
was acquitted or in a criminal
charge on which he was convicted
for a criminal offense that does
not require proof of criminal
thought (as such term is understood
by the Penal Law, 5737-1977);
(iii) the Company may release, in advance, all or part of
an Office Holder's liability to the Company for
damage which arises from the breach of his duty of
care to the Company (as such term is understood by
Sections 252 and 253 of the Companies Law, 1999).
(d) The provisions of Articles 130(a), 130(b) and 130(c) above are
not intended, and shall not be interpreted, to restrict the
Company in any manner in respect of the procurement of
insurance and/or in respect of indemnification (i) in
connection with any person who is not an Office Holder,
including, without limitation, any employee, agent, consultant
or contractor of the Company who is not an Office Holder,
and/or (ii) in connection with any Office Holder to the extent
that such insurance and/or indemnification is not specifically
prohibited under law; provided that the procurement of any
such insurance and/or the provision of any such
indemnification shall be approved by the Board.
WINDING UP
131. If the Company is wound up, then subject to the Statutes and to the
rights of the holders of shares with special rights upon winding-up,
the assets of the Company available for distribution among the
shareholders shall be distributed to them in proportion to the amounts
paid up or credited as paid up on account of the nominal value of their
respective holdings of the shares at the commencement of the winding
up, in respect of which such distribution is being made, without
reference to amounts paid as a premium.
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Exhibit 4.2
AGREEMENT
THIS AGREEMENT made and entered into as of the 14th day of April, 1995,
by and among RADVISION LTD., an Israeli company of 8 Hanechoshet Street, Tel
Aviv 69710, Israel (the "Company") and RAD DATA COMMUNICATIONS LTD., an Israeli
company with its principal office at 8 Hanechoshet Street, Tel Aviv 69710,
Israel (the "Purchaser") and Yehuda Zisapel and Zohar Zisapel of 8 Hanechoshet
Street, Tel Aviv 69710, Israel (jointly and severally, the "Present
Shareholders").
W I T N E S S E T H :
WHEREAS, the Company is and will be engaged in the business of
developing, manufacturing and marketing of products for video conferencing (the
"Field"); and
WHEREAS, the Company desires to issue and sell, and the Purchaser
desires to purchase ordinary shares, par value One New Israeli Shekel (NIS
1.00), of the Company ("Ordinary Shares"),
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained, the Company and the Purchaser hereby
agree as follows:
SECTION 1
ISSUANCE AND PURCHASE OF SHARES
1.1 The Purchaser undertakes to invest in the Company the amount of
Seven Hundred Ten Thousand and Thirty US Dollars (US$ 710,030) (hereinafter, the
"Investment Amount") on the Closing Date as defined in Section 2 hereinbelow.
All amounts will be deposited in US dollars or their equivalent in NIS to the
Company's account no. 377906 at Bank Hapoalim B.M., Hadar Yosef Branch (610).
1.2 In consideration for and subject to the execution of the
investment, the Company shall issue on the Closing Date three thousand five
hundred and fifteen (3,515) ordinary shares (hereinafter, the "Shares") to the
Purchaser. The Company shall not be obligated to issue any shares whatsoever
before the full Investment Amount is received by it. The Shares, when issued,
will have been validly issued, fully paid and non-assessable, and will be free
of any liens or encumbrances.
1.3 The Investment Amount is part of a total amount of approximately US
$4,930,000 (hereinafter, the "Total Investment") intended to be raised by the
Company from the Purchaser as well as from other investors (hereinafter, the
"Other Purchasers") as set forth in Exhibit 1 attached hereto. In consideration
for the Total Investment, the Company will issue 24,453 Ordinary Shares, par
value 1.- NIS each. After all said shares have been issued, the ownership of the
Company will be as set forth in Exhibit 1.
SECTION 2
CLOSING DATE
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The purchase of the Shares by the Purchaser shall take place on April
25, 1995 (the "Closing"). The date of the Closing is referred to as the "Closing
Date" in this Agreement.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company and the Present Shareholders hereby represent and warrant
to the Purchaser the facts hereinafter set forth in this Section 3.
3.1 CORPORATE POWER. As of the date hereof and as of the Closing, the
Company has and will have all requisite corporate power to enter into and to
perform this Agreement.
3.2 SUBSIDIARIES. The Company has a wholly owned U.S. subsidiary,
RADVISION Inc. in New Jersey. The Company has no other subsidiaries and does not
otherwise own, of record or beneficially, any capital stock or equity interest
in any other corporation, association or business entity.
3.3 ORGANIZATION AND STANDING. The Company is a corporation duly
organized and existing under the laws of the State of Israel and is in good
standing under such laws. The Company has requisite corporate power to own and
operate its properties and assets, and to carry on its business as presently
conducted. The Memorandum of Association and Articles of Association and all
amendments to date of the Company are attached hereto as EXHIBITS "3.3A" AND
"3.3B."
3.4 CAPITALIZATION. The Company's authorized capital is sixty thousand
(60,000) Ordinary Shares. The Company's issued capital stock immediately prior
to the Closing date shall consist of twenty thousand seven hundred thirty-two
(20,732) Ordinary Shares, all of which are duly authorized, validly issued and
free of any liens or encumbrances. Out of the issued share capital, thirteen
thousand eight hundred sixty (13,860) shares are fully paid and six thousand
eight hundred seventy-two (6,872) shares are partially paid. All shares are
non-assessable, and to the best of the Company's knowledge and belief, are
beneficially owned by their holders of record. There are no preemptive,
conversion or other rights, options, or agreements granted or issued by, or
binding upon, the Company or the shareholders which entitle any person, firm or
corporation to purchase or acquire any shares of the Company's capital stock,
except as set forth in this Agreement and in particular, in Sections 3.21, 3.22
and 3.23.
3.5 AUTHORIZATION. All corporate actions on the part of the Company and
its directors and shareholders, required for the authorization, execution,
delivery and performance by the Company of this Agreement and the consummation
of the transactions contemplated herein have been, or will be executed, upon
signature of this Agreement. ThisAgreement is and will be valid and binding
obligations of the Company, enforceable in accordance with its terms. The
execution, delivery and performance by the Company of this Agreement, and
compliance therewith, and the consummation of the transactions contemplated by
this Agreement will not result in any violation of and will not conflict with,
or result in a breach of any of the terms of, or constitute a default under, any
document to which the Company is or will be a party or by which it is or will be
bound, or result in the creation of any mortgage, pledge, lien or encumbrance or
charge upon any of the properties or assets of the Company. To the best of the
Company's knowledge, no third party's consent is required for the Company to
become a party to this
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Agreement. Immediately after the Closing Date, the Company will inform all
governmental authorities that require to be reported of changes in equity,
including, but not limited to the Israel Investment Center and the Office of the
Chief Scientist of the execution of this Agreement.
3.6 OUTSTANDING DEBT. Except as set forth in the Schedule of Exceptions
attached hereto as EXHIBIT "A" ("Schedule of Exceptions"), the Company has no
outstanding indebtedness for borrowed money and is not a guarantor of any debt
or obligation of another. There exists no default by the Company under the
provisions of any agreement or other instrument evidencing or relating to any
indebtedness or obligation.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the
Schedule of Exceptions, the Company has no material liability of any nature,
direct or indirect, absolute or contingent, not adequately reserved against,
excluding any liabilities related to damage which may have been caused by its
products or are related to sales of said products (unless the Company knows or
should have known of such damages or liabilities). The Company has paid, or has
made adequate provisions for the payment of, all taxes, interest, penalties,
assessments or deficiencies owing by it to any taxing authority.
3.8 ABSENCE OF CERTAIN CHANGES. Since December 31, 1994, the business
of the Company has at all times been conducted in the ordinary course. There has
not been any event or condition of any character which has materially adversely
affected the Company's business, prospects or plans.
3.9 CONTRACTS AND CONTRACTUAL ARRANGEMENTS. The Company is a party to
several material agreements, all of which are described in the Schedule of
Exceptions attached hereto. Each of such agreements is in full force and effect
and, to the Company's knowledge, no party thereto is in breach thereof. The
Company is of the opinion that it receives services from affiliated companies
for fair consideration as described in the Schedule of Exceptions attached
hereto. The Company is not obligated to receive services from said affiliated
companies.
3.10 INDEBTEDNESS OF OR TO SHAREHOLDERS, ETC.; CONFLICTS OF INTEREST.
(a) Except as set forth in the Schedule of Exceptions, none of
the Company's shareholders, directors, officers or employees or any of their
affiliates or families is indebted to the Company and the Company has no debt to
any of them except for accrued wages for the current period.
(b) Except as set forth in the Schedule of Exceptions, to the
best of the Company's knowledge, none of the Company's directors, officers,
employees or consultants, or their affiliates or families, directly or
indirectly, own any material interest in any entity which is a competitor of the
Company.
3.11 LITIGATION; INSOLVENCY PROCEEDINGS. To the best of the Company's
knowledge and belief, there are no pending or threatened actions, suits,
proceedings or any investigations against or affecting the Company involving the
possibility of any judgment or liability which would adversely affect its
business.
3.12 INSURANCE. The Company maintains insurance through RAD-Bynet
insurance policies, adequately covering the perils normally insured against by
companies similarly situated.
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All policies of insurance maintained by the Company are attached hereto as
EXHIBIT "3.12." To the best of the Company's knowledge, all such policies are in
full force and effect.
3.13 TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. Except as set forth
in the Schedule of Exceptions, the Company owns, or holds under lease, all real
and personal property used by it in its business. All property owned by the
Company (all of which is listed on EXHIBIT "3.13" hereto) is so owned free and
clear of all mortgages, pledges, liens or charges.
3.14 LEASES. EXHIBIT "3.14" hereto contains a correct and complete list
and description (including the amount of rents) of all leases under which the
Company leases property, real or personal.
3.15 BUSINESS OF THE COMPANY. The Company has no knowledge of (i) the
existence of any pending or planned patent, or any statute, rule, law,
regulation, standard or codes which would materially adversely affect the
condition, financial or otherwise, or the business operations, of the Company;
or (ii) the existence of any other factor which would materially adversely
affect the financial condition, or the operations, of the Company.
3.16 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation
of the terms of its Memorandum or Articles of Incorporation, and it is not in
violation of the terms of any judgment, decree, order, statute, rule or
regulation to which it is subject.
3.17 EMPLOYEES. All the key employees of the Company are listed on
EXHIBIT "3.17" hereto. To the best of the Company's knowledge, no such employee
is in violation of any material term of any employment contract, patent
disclosure agreement, non-competition agreement, or any other contract or
agreement or any restrictive covenant or any other obligation to a former
employer relating to the right of any such employee to be employed by the
Company. To date, all payments due to the Company's employees have been paid
regularly. In addition, the Company made all allowances required by law to cover
the amounts due to its employees and/or officers in connection with their
employment and/or termination of employment, as reflected in EXHIBIT "3.20A."
3.18 DISCLOSURE. This Agreement and the Schedule of Exceptions
delivered to the Purchaser do not contain any material untrue statement and do
not omit to state a material fact necessary in order to make the statements
contained herein not misleading in the light of the circumstances under which
they were made, and such documents represent full disclosure by the Company of
the material facts with respect to the business, prospect and plans of the
Company. The Company confirms that to the date of this Agreement, the Business
Plan dated August, 1994, which was provided to the Purchaser, does not contain
any materially untrue information as far as same relates to the Company itself.
The other information contained therein may have changed since August, 1994.
3.19 PRODUCTS AND OWNERSHIP. A description of the products is enclosed
as EXHIBIT 3.19. To the best of the knowledge and belief of the Company and as
set forth in the Schedule of Exceptions, the Company possesses, or is proceeding
with due diligence to obtain, all patents, patent rights, trademarks, trademark
names, trade name rights and copyrights the Company believes are necessary to
conduct its business as now being conducted and as planned to be conducted
(without conflict with, or infringement upon, any valid rights of others), the
lack of
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which could affect the operations or condition, financial or otherwise, of the
Company. The Company has no knowledge of any infringement by the Company or
claimed infringement upon, or any conflict with, the patent rights, trademarks,
trademark rights, trade names, trade name rights, copyrights, intellectual
property rights or other rights of any person, form or corporation.
3.20 FINANCIAL STATEMENTS. The audited financial statements of the
Company as of December 31, 1994 are attached hereto as EXHIBIT "3.20A" and
adequately reflect the financial situation of the Company. The unaudited
financial statements of the Company as of February 28, 1995 are attached hereto
as EXHIBIT "3.20B." As of December 31, 1994 to date, the Company did not enter
into any material transaction or undertake any material commitment which was not
in the normal course of business, and there was no material change for the worse
in the Company's position, liabilities and assets.
3.21 The agreements with the other purchasers will resemble the
Agreement with Purchaser.
3.22 In the event of any contradiction between this Agreement and the
Inception Agreement, attached hereto as EXHIBIT "3.22." and the current
Memorandum of Association and current Articles of Association, this Agreement
shall prevail.
3.23 On January 1, 1995, a trust in favor of employees of the Company
and certain employees of the RAD-Bynet group was created. Said Trust Agreement
is attached hereto as EXHIBIT "3.23."
3.24 As of the date of this Agreement, the directors of the Company are:
Yehuda Zisapel, Zohar Zisapel and Amos Amir.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
4.1 LEGAL POWER. As of the date hereof and as of the Closing, the
Purchaser has and will have all requisite power to enter into and to perform
this Agreement.
4.2 EXPERIENCE. The Purchaser has sufficient experience and expertise
to evaluate the suitability of its investment in the Company to its needs and
has the capacity to protect its interests with the purchase of the Shares.
4.3 INVESTMENT. The Purchaser is acquiring the Shares for investment for
its own account.
4.4 ACCESS TO DATA. The Purchaser hereby represents that it has had the
full opportunity to discuss management and financial affairs of the Company with
its management and key employees and has had the opportunity to review the
business plan and the Company's facilities. The Purchaser has not been denied
any information that has been requested, and based on the said information has
made a diligent examination of the aspects of the Company's business. The
Purchaser has heretofore received all information that the Purchaser has deemed
necessary and appropriate to enable the Purchaser to evaluate the financial risk
inherent in
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making an investment in the shares of the Company and the Purchaser has received
satisfactory and complete information concerning the business and financial
condition of the Company in response to all inquiries in respect thereof. The
Purchaser is aware that the Company has been in the development stage since its
inception in October 1992, that no sales of its products have taken place, and
that due to the short operating history of the Company there can be no assurance
that the Company will attain profitability. Nothing contained in this Section
4.4 shall derogate from the liability of the Company with respect to the
representations and warranties made in Section 3 above.
4.5 AUTHORIZATION. All corporate or partnership action on the part of
the Purchaser, its respective directors, partners and/or shareholders necessary
for the authorization, execution, delivery, payment and performance by the
Purchaser of this Agreement and the consummation of the transactions
contemplated herein, has been taken.
4.6 Purchaser has sufficient financial resources to enable it to
fulfill its obligations under this Agreement and commits to make its investment
in the Company as set forth in Section 1 hereinabove.
SECTION 5
CONDITIONS OF THE PURCHASER TO CLOSING
The obligations of the Purchaser at the Closing, as referred to in
Section 1 hereof, are subject to the fulfillment of each of the following
conditions:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct
when made, and shall be true and correct in all material respects on Closing
with the same force and effect as if they had been made immediately prior to the
Closing and as of such time except for such changes which result from the
obligations of the parties to this Agreement.
5.2 PERFORMANCE. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Company on or prior to
Closing shall have been performed or complied with in all respects.
5.3 LEGAL INVESTMENT. At the time of the Closing, the purchase and
issuance of the Shares shall be legally permitted by all laws and regulations to
which the Purchaser and the Company are subject.
5.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall have been completed to the
satisfaction (as to substance and form) of the Purchaser.
5.5 PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENT. Each of the
Company's employees shall have executed and delivered to the Company an
Employment Agreement, substantially in the form attached hereto as EXHIBIT
"5.5A" or EXHIBIT "5.5B," which agreement contains non-disclosure and
non-competition provisions therein.
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5.6 RETENTION OF KEY EMPLOYEES. All the persons listed in EXHIBIT
"3.17" shall either be employees of the Company as of the Closing and to the
best of the Company's knowledge, have not informed them that they intend to
leave the Company, or if an employee has left the Company or intends to leave
the Company, the latter has notified the Purchaser of same.
5.7 OPINION OF COMPANY'S COUNSEL. The Purchaser shall have received
from Nehama Sneh, corporate counsel to the Company, a satisfactory opinion in
substantially the form attached as EXHIBIT "5.7."
SECTION 6
CONDITIONS OF COMPANY TO CLOSING
The obligations of the Company at the Closing, as referred to in
Section 1 hereof, are subject to the fulfillment of each of the following
conditions:
6.1 REPRESENTATION. The representations and warranties made by the
Purchaser in Section 4 hereof shall be true and correct when made and shall be
true and correct on Closing with the same force and effect as if they had been
made immediately prior to the Closing and as of such time.
6.2 Purchaser has fulfilled any and all of its obligations set forth in
Section 1.1.
SECTION 6A
BOARD OF DIRECTORS
Subsequent to the Closing, the Board of Directors will consist of six
(6) directors, three of whom will be appointed by Zohar Zisapel, Yehuda Zisapel
and RAD Data Communications Ltd., the fourth will be Amos Amir in his capacity
as Managing Director of the Company, and the fifth and the sixth are entitled to
be appointed by The Trust Company of Maritime Bank of Israel ("Maritime") and
Clal Venture Capital LP ("Clal"). Lannet Data Communications Ltd. and Finovelec,
will have the right to designate one observer each to the Board of Directors.
Upon reasonable notice, Lannet will be permitted to change the status of its
observer to that of director, in which event the number of directors will be
eight (8), Lannet's observer will become the seventh director and Yehuda Zisapel
and Zohar Zisapel will be entitled to appoint another director (the eighth).
SECTION 7
COVENANTS OF THE COMPANY
For as long as the Purchaser's equity interest in the Company will
amount to at least five (5%) percent of the outstanding capital securities
therein and Purchaser has the right to appoint a director or an observer under
Section 6A hereinabove, except where stated otherwise in this Section 7 and in
Section 8, and without derogating from any rights or obligations conferred upon
shareholders, or obligations conferred upon corporations, under applicable law,
the Company hereby covenants and agrees as follows. For the purposes of
calculating Clal's percentage of ownership set forth above, ECI Telecom Ltd.'s
("ECI") equity interest in the Company at the time will be taken into account
and added to that of Clal for as long as Clal is a shareholder of ECI.
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7.1 ADDITIONAL INFORMATION. The Company will permit an employee of the
Purchaser to visit upon a mutually convenient time and inspect any of the
properties of the Company, including its books of account, and to discuss its
affairs, finances and accounts with the Company's officers and the Auditor.
(a) As soon as available after approval by the Board of
Directors, the Company will provide Purchaser with a summary of the budget,
including projected yearly profit and loss accounts and balance sheet, as
contained in its Operating Plan and as approved by its Board of Directors, as
well as information about material changes in the budget, all as approved by the
Board of Directors.
(b) With reasonable promptness, the Company agrees to provide
to Purchaser such information and data with respect to the Company, as the
Purchaser may from time to time reasonably request.
The foregoing provisions of this Section 7.1 shall not be in
limitation of any rights which the Purchaser may have to inspect and copy the
books and records of the Company or to inspect its properties or discuss its
affairs, finances and accounts, under the laws of the State of Israel.
7.2 USE OF PROCEEDS. The Company will use the proceeds of the issuance
and sale of the Shares mainly to fund its activities and its business subject to
any resolutions made by its Board of Directors from time to time.
7.3 BOARD APPROVAL. Without derogating from the Company's Articles of
Association, or any law or practice limiting the authority of the management of
the Company, the Company shall ensure that the approval of the Board of
Directors of the Company shall be required for the following, (i) designation of
all authorized signatories; (ii) approval of the Company's or the subsidiaries'
budget and Operating Plan; (iii) selection of legal counsel of the Company; (iv)
terms of employment of the Managing Director of the Company; and (v) any and all
other matters with regard to which the Board of Directors of the Company
resolves that its prior approval shall be required.
Without derogating from the first sentence of Section 7 hereof, it is
further provided that the Purchaser's rights hereunder shall expire upon a
public offering of the Company's shares regardless of Purchaser's percentage of
ownership at that time.
7.4 Resolutions of the Board of the Company regarding the following
subject matters shall require the consent of five out of six directors. In the
event that the Board will consist of 8 directors as per Section 6.2 hereinabove,
then the following subject matters will require the consent of 6 out of 8
directors, including consent of two directors out of the following: "Clal"
Director, "Maritime" Director, "Lannet" Director:
(a) A merger of the Company with any other entity;
(b) Acquisition or disposition, including mortgage, of other
corporations, real estate, and any material assets out of the ordinary course of
the Company's business;
(c) Replacement of the Company's Managing Director;
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(d) Replacement of the auditors of the Company;
(e) Approval of the distribution of dividends by the Company.
(f) Loans by the Company or any of its subsidiaries to their
directors or officers, or to their relatives or other affiliates, with the
exception of employees receiving shares under the trust as set forth in
subsection 3.23 hereinabove;
(g) Transactions in excess of $20,000 not included in the
approved Operating Plan between the Company or its affiliates and their
directors, officers and employees or their relatives or other affiliates, with
the exception of employees receiving shares under the trust as set forth in
subsection 3.23 hereinabove;
(h) All material transactions or obligations not contemplated in
the budget by the Company or its subsidiaries; and
(i) Resolution to enter a new business field unrelated to the
present field.
Notwithstanding anything to the contrary contained herein, in the event
that a director is not allowed under a specific section of this Agreement to
participate in a board meeting and/or discussion, the majority required will be
(1) 4 out of 5, or (2) 5 out of 7, including only one of the following: the Clal
Director, Maritime Director, or Lannet Director.
7.5 RIGHT OF FIRST REFUSAL FOR IPO. The Company agrees that in the
event that the Board of Directors resolves:
(a) to initially offer shares of the Company on the Israeli
Stock Exchange, then the following will apply:
(1) The Company will inform Clal Issuing Ltd. of said
resolution;
(2) Clal Issuing Ltd. will have an option for twenty
(20) days as of said notice date by the Company to make a proposal to underwrite
the offering (hereinafter, the "Clal Proposal");
(3) The Board of Directors will consider the Clal
Proposal and will, in its sole discretion, resolve whether it is acceptable or
not; and
(4) In the event that the Board resolves not to accept
the Clal Proposal, then the Company will be free to negotiate and agree with any
underwriter whatsoever.
(5) Within five (5) working days after the written
notice of the Company of the best proposal from the underwriter as in (4) above,
Clal will have the option to improve the Clal Proposal to match the
underwriter's proposal. In the event that Clal Issuing Ltd. either fails to
respond or to match the other proposal, Clal's option under this Section 7.5(a)
will terminate and the Board will be free to proceed as it deems fit.
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(b) In the event that the Board of Directors resolves to
initially offer shares of the Company on NASDAQ, with some of the shares
intended for the Israeli public, then the following will apply:
(1) The Company will inform Clal Issuing Ltd. of said
resolution;
(2) The Company will be free to negotiate and agree with
any underwriting house to underwriter the offering, provided that the Company
notifies said underwriter that Clal Issuing Ltd. has a right of first refusal
concerning the offering of the shares of the Company to the Israeli public.
(c) In the event that the Board of Directors resolves to
engage a placement agent for a private offering in the Israeli market, and such
agent is entitled to a commission in return for his services (whether by form of
money or options), then the following will apply:
(1) The Company will inform Clal Venture Capital LP of
said resolution;
(2) Clal Issuing Ltd. will have an option for ten (10)
days as of said notice date by the Company to make a proposal to head the
offering as a placement agent (hereinafter, the "Clal Proposal");
(3) Within five (5) working days after the written
notice of the Company of a proposal from another placement agent, Clal and Clal
Issuing Ltd. will have the option to improve the Clal Proposal to match the
other proposal. In the event that Clal Issuing Ltd. either fails to respond or
to match the other proposal, Clal's option under this Section 7.5(c) will
terminate and the Board will be free to proceed as it deems fit;
(4) The Board of Directors will consider the Clal
Proposal as well as the other proposal(s) and will, in its sole discretion,
resolve whether it is acceptable or not; and
(5) In the event the Board accepts Clal Issuing Ltd.'s
proposal and Clal Issuing Ltd. acts as the said placement agent, then,
notwithstanding anything to the contrary contained herein, the Board, in its
sole discretion, by simple majority, will be free thereafter to resolve that the
services of Clal Issuing Ltd. as a placement agent are not satisfactory, to
terminate such services and to receive such services from any other placement
agent without any further rights or obligations with respect to Clal Issuing
Ltd. or the Purchasers.
(d) It is specifically agreed that:
(1) all discussions concerning the identity of
underwriter or placement agent as well as the terms of the offer under Section
7.5 will be without the presence of Clal's appointed director;
(2) Clal Venture Capital LP's and Clal Issuing Ltd.'s
rights under Section 7.5 will terminate upon acceptance or rejection by the
Board of Directors of the Clal Proposal;
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(3) It is further provided that the rights of Clal
Issuing Ltd., and Clal Venture Capital LP under Section 7.5 shall expire upon a
public offering of the Company's shares regardless of Purchaser's percentage of
ownership at that time.
(4) For the purposes of this Agreement, the address of
Clal Issuing Ltd. is 5 Druianov Street, Tel-Aviv 63143.
SECTION 8
For as long as the Purchaser's equity interest in the Company amounts
to at least two (2%) percent of the outstanding share capital of the Company
therein, and without derogating from any rights conferred upon shareholders, or
obligations conferred upon corporations under applicable law, the Company hereby
covenants and agrees as follows:
8.1 PRE-EMPTIVE RIGHTS. If the Company should at any time or from time
to time propose to issue and sell New Securities, as defined in subsection
8.1(a), a pro rata portion of such New Securities shall first be offered (as
hereinafter provided) to the shareholders of the Company (each of whom shall
hereinafter be referred to as "offeree"). For purposes of this Section 8.1, the
pro rata portion of each Offeree shall mean a fraction of the New Securities to
be issued, of which the aggregate number of shares which are held by the Offeree
on the date of the Company's written notification referred to in subsection
8.1(b) below (the "Notice Date") shall be the numerator and the aggregate number
of shares held by all the Offerees shall be the denominator. The aforesaid
rights of the Offerees shall be subject to the following provisions:
(a) "New Securities" shall mean any capital stock of the
Company, whether or not now authorized, and rights, options or warrants to
purchase capital stock, and securities of any type whatsoever that are, or may
become, convertible into capital stock; provided that the term "New Securities"
shall not include (i) securities purchased under this Agreement; (ii) securities
offered to the public; (iii) securities issued pursuant to the acquisition of
another corporation by the Company by merger, purchase of substantially all the
assets of another corporation or any other reorganization whereby the Company
owns not less than fifty-one percent (51%) of the voting power of such
corporation; (iv) securities issued to employees, consultants or directors of
the Company pursuant to any stock option plan or stock purchase or stock bonus
arrangement approved by the Board of Directors of the Company; or (v) securities
issued pursuant to payment of any dividend or distribution with respect to the
Company's issued and outstanding capital stock.
(b) In the event the Company proposes to undertake an issuance
of New Securities, it shall give each Offeree written notice of its intention,
describing the type of New Securities and the price and the terms upon which the
Company proposes to issue the same, and offering its pro rata portion thereof to
such Offerees at such price and on such terms. Each Offeree shall have
twenty-one (21) days from the date of such notice to accept such offer, in whole
or in part, by written notice to the Company, that has to be received by the
Company during the above mentioned 21 days period. All New Securities as to
which such offers have not been accepted in whole or in part by one or more of
the Offerees (of which fact the Company shall give immediate written notice to
all other Offerees), shall be re-offered to each of the Offerees who have
accepted in full the original offer, and each such Offeree shall have the right,
11
<PAGE>
within ten (10) days of the date of such written notice, to purchase the
respective pro rata portions of such new Securities, the same to be computed as
aforesaid but without regard to the shares held by any Offeree which had not
accepted the original offer in full.
(c) In the event any Offeree fails to accept such offers, the
Company shall have the right to sell within six (6) months or enter into an
agreement, to sell such New Securities as to which such offers were not
accepted, provided, however, that no such sale be effected at a price or upon
terms more favorable to the purchasers thereof than those specified in the
Company's notice pursuant to Section 8.1(b).
(d) Each of Yehuda Zisapel, Zohar Zisapel and RAD Data
Communications Ltd. shall have a right to allocate any unused portion of the New
Securities offered to him to the other.
(e) The Purchaser shall have the right to allocate any unused
portion of the New Securities offered to him to its owners or to a company
affiliated to Purchaser, provided that such recipient of shares will join in
this Agreement as if it had become a party to it as of the receipt of shares.
(f) Notwithstanding anything to the contrary contained herein,
Amos Amir, so long as he is the Managing Director of the Company, will be
entitled to be an Offeree under this Section 8.1.
(g) Each of Lerosh Investments Ltd., Gevahim Investments House
Limited Ltd., Mr. Yoav Chelouche, Permal Emerging Growth V Ltd., Maritime-Julex
Investment Ltd., Mr. Shraga Blazer and Mr. Eli Luz shall have a right to
allocate any unused portion of the New Securities offered to him to the other.
8.2 REGISTRATION RIGHTS. If the Company should elect to offer any of
its securities to the public, the Purchaser and the Present Shareholders shall
have registration rights as set forth in EXHIBIT "8.2" attached hereto.
8.3 RESTRICTIONS. Unless otherwise required by applicable law or under
this Agreement, the Company shall not without the approval of at least 75% of
the shareholders:
(a) amend or repeal any provision of, or add any provision to,
the Company's Articles of Association;
(b) create any new class or classes of securities of the
Company having any preference or priority as to dividends or assets superior to
any such preference or priority of the Ordinary Shares, or reclassify any of its
existing securities into such superior securities; or
(c) approve a merger of the Company with any other entity;
Without derogating from the first sentence of Section 8, it is
further provided that each shareholder's rights under Section 8 (except for 8.2)
shall expire upon the initial public offering of the Company's shares,
regardless of that shareholder's percentage of ownership at that time.
12
<PAGE>
SECTION 8A
The Company agrees and undertakes as follows:
8A.1 BASIC FINANCIAL INFORMATION. The Company will furnish to the
Purchaser the following reports certified, when so required herein, by the
Company's auditors:
(a) As soon as practicable after the end of each calendar quarter, and
in any event within forty-five (45) days thereafter, a balance sheet and a
profit and loss account and of cash flow (including opening cash, income,
expenses and closing cash) of the Company as of the end of such quarterly
period, and for the current fiscal year to date, prepared in accordance with
generally accepted accounting principles consistently applied and setting forth
in comparative form the figures for the corresponding periods of the previous
fiscal year, subject to changes resulting from year-end audit adjustments, all
in reasonable detail, signed by the principal financial or accounting officer of
the Company. There shall be appended to such materials a report of the
management as to the business of the Company and its activities during the
quarter.
(b) Not later than forty-five (45) days after the end of each quarter,
sales figures, backlog and new orders for such quarter.
Without derogating from the first sentence of Section 7, it is further
provided that the Company will not be required to furnish any information under
the provisions of this Section 8A.1 and of Section 8A.2 below subsequent to the
initial public offering.
8A.2 INSURANCE. The Company shall continue to maintain insurance
policies similar to those described in Section 3.12 above.
8A.3 ACCOUNTS AND RECORDS. The Company will keep true records and books
of account in which full, true and correct entries will be made of all dealings
or transactions in relation to its business and affairs in accordance with
generally accepted accounting principles applied on a consistent basis.
8A.4 PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENTS. The Company
will not employ, or continue to employ, any person who will have access to
confidential information with respect to the Company and its operations unless
such person has executed and delivered the Company's standard Employment
agreement then in force containing proprietary information and non-competition
sections to the satisfaction (as to substance and form) of the Company's
counsel.
SECTION 9
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES
Except as set forth in this Section 9, the Present Shareholders and the
Purchaser agree not to sell or transfer any of their shares and rights in the
Company to a third party. This Section 9 will terminate upon the initial
offering of the Company's shares to the public.
9.1 For the purpose of this Section 9, the shareholders, the
Purchaser and the Other Purchasers will be regarded as the following Groups:
13
<PAGE>
(a) Zisapel Group - Yehuda Zisapel, Zohar Zisapel, the Trust and
RAD Data Communications Ltd.
(b) Clal Group - Clal Venture Capital LP, ECI Telecom Ltd.
(c) Finovelec Group - Finovelec, Factory Systemes, Houston
Venture Partners Ltd.
(d) Capital Group - Zohar Gilon, Avraham Neuman, Yair Tauman,
W.S.P. Capital
(e) Maritime Group - Lerosh Investments Ltd., Gevahim Investments
House Limited Ltd., Mr. Yoav Chelouche, Permal Emerging Growth V Ltd.,
Maritime-Julex Investment Ltd., Mr. Shraga Blazer and Mr. Eli Luz.
9.2 Group Members are entitled to transfer shares among
themselves for consideration or without consideration without any
restrictions.
9.3 Except as set forth in sections 9.9, 9.10 and 9.11 hereinbelow,
any shareholder who shall elect to transfer (hereinafter "Seller") all or
part of his shares, not in accordance with subsection 9.2 (hereinafter
"Offered Shares") shall offer them first to the other registered shareholders
of the Company at that time (hereinafter "Offerees") on a pro rata basis
based on their share in the share capital of the Company.
9.4 In the event any such Offeree fails to exercise his right to
purchase his Offered Shares within forty-five (45) days from the date the
offer is made, then the Seller shall have the right to offer the Offered Shares
to a third party at the same price and upon the same terms of sale as those
offered to the other shareholders under section 9.3 and provided that said
third party shall undertake all of Seller's obligations under this Agreement.
(Such third party to be called hereunder, the "Transferee"). In the event
that the shares are not sold to said party within six (6) months as of the
offer to such said third party, then Section 9.3 will apply anew.
9.5 The Board of Directors shall have the right to not approve the
transfer of shares to a third party in each of the following events:
(i) If the third party is a competitor of the Company;
(ii) If there is a possibility of conflict of interest between
the third party and the Company;
(iii) For any other reason, in which case such approval shall
not be unreasonably withheld.
9.6 In the event that Yehuda Zisapel and/or Zohar Zisapel and/or RAD
will sell more than a total of 25% of their shares in the Company to third
parties, then Purchaser will have the right to sell the same portion of
Purchaser's shares in the Company under the same terms and conditions
(hereinafter, the "Tag Along Right"). Purchaser will inform Zisapel in writing
by fax and by confirmation by mail if it intends to exercise its Tag Along Right
within ten (10) days
14
<PAGE>
after the date of notice by Zisapel to Purchaser. Failure to respond will be
deemed as a decision not to Tag Along.
9.7 This Section 9 will supersede Section 14 of the Inception Agreement.
9.8 The terms of the Trust Agreement, EXHIBIT 3.23, will have priority
over this Section 9.
9.9 Finovelec, in its discretion, shall be permitted to freely transfer
up to 5% of its shares (at that time) in the Company to up to 6 of Finovelec
executives, as well as up to an additional 5% of its shares (at that time) in
the Company to IDI (if then an affiliate of Finovelec). Such transfer shall be
considered a transfer among the Finovelec Group, provided that each Transferee,
upon receipt of the shares, will join this Agreement and undertake all of
Finovelec's obligations hereunder and will be considered henceforth a member in
the Finovelec Group for the purpose of this Section 9.
9.10 Clal Venture Capital LP is entitled to transfer all of its shares
in the Company to its partners, provided that each Transferee, upon receipt of
the shares, will join this Agreement and undertake all of Purchaser's
obligations hereunder and will be considered henceforth a member in the Clal
Group for the purpose of this Section 9.
9.11 Each of Zohar Gilon, Avraham Neuman and Yair Tauman is entitled,
once, to transfer his shares to a company directly under the total control of
said person, provided that each Transferee, upon receipt of the shares, will
join this Agreement and undertake all of Purchaser's obligations hereunder and
will be considered henceforth a member in the Capital Group for the purpose of
this Section 9.
SECTION 9A
ANTI-DILUTION
(a) In the event that any time prior to the earlier of the Closing of
the Company's initial public offering or three (3) years from the date of this
Agreement, the Company issues or sells any Ordinary Shares to third parties upon
a private placement (excluding Company employees) for consideration per share of
less than US $135 (an "Offering"), then prior to said private placement the
Purchaser shall be given the option to purchase Ordinary Shares of the Company
at par value (NIS 1.- per share), in an amount computed as set forth below.
(b) The amount of shares to be issued to Purchaser will be computed
according to the following table:
- ------------------------------------- ------------------------------------------
SHARE PRICE AT NEXT PRIVATE PLACEMENT ADDITIONAL SHARES ISSUED TO ALL PURCHASERS
(DISTRIBUTED ON A PRO-RATA BASIS)
- ------------------------------------- ------------------------------------------
$134.99 to $101.01 7,489*
- ------------------------------------- ------------------------------------------
$101.00 to $50.51 17,959*
- ------------------------------------- ------------------------------------------
Less than $50.5 33,642*
- ------------------------------------- ------------------------------------------
* The number and price of shares will be adjusted in the event of any
restructuring of the Company's share capital.
15
<PAGE>
(c) Upon the occurrence of each event giving rise to a right pursuant to
this Section, the Company will, at its expense, promptly compute the number of
Ordinary Shares that each Purchaser is entitled to purchase in accordance with
the terms hereof, and furnish to the Purchaser, a notice of such right and the
number of shares Purchaser is entitled to.
(d) Any and all of Purchaser's rights under this Section 9A will
terminate within the earliest of: (i) the Closing of the Company's initial
public offering or (ii) three (3) years from the date of this Agreement or (iii)
upon the first private placement contemplated after the Closing set forth in
Section 9A hereinabove.
SECTION 10
MISCELLANEOUS
10.1 ARBITRATION. All disputes arising under this Agreement or in
connection with the transactions hereunder shall be resolved between the parties
in good faith; however, if these efforts fail, the dispute shall be resolved by
arbitration by a sole arbitrator within sixty (60) days. The arbitrator shall be
chosen by agreement of the parties hereto. If they fail to so agree within
twenty (20) days after a party shall have requested such arbitration, the
arbitrator shall be appointed by the Chairman of the Israeli Bar who shall also
determine the place of the arbitration proceedings based on the convenience of
the parties involved; provided, however, that the arbitrator chosen shall be
from the jurisdiction chosen by the above-mentioned Chairman. The arbitrator
shall not be bound by any judicial rules of evidence or procedure. The arbitral
award shall be final and binding upon the parties, and judgment upon the award
may be entered in any court having jurisdiction, or application may be made to
such court for a judicial acceptance of the award or for an order of
enforcement, as the case may be. The provisions of this Section 10.1 shall apply
to all disputes arising in connection with this Agreement. Each party shall bear
its own expenses, subject to the arbitration judgment on the issue of expenses.
10.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive (i) any investigation made by the Purchaser
and (ii) the Closing.
10.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto; provided, however, that no party may assign its rights hereunder
without the prior written consent of the other parties hereto.
10.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including the
Schedules and Exhibits hereto) and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subject matters hereof and thereof and supersede all prior
agreements and understandings relating thereto. Neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated except by an
instrument in writing signed by all the parties hereto.
10.5 NOTICES. All notices and other communications required or
permitted to be given or sent hereunder shall be in writing and shall be deemed
to have been sufficiently given or delivered for all purposes if mailed by
registered airmail, transmitted by telex or telecopier, or
16
<PAGE>
delivered by hand to the following respective addresses until otherwise directed
by notice as aforesaid:
To the Purchaser:
RAD Data Communications Ltd.
12 Hanechoshet Street
Tel Aviv 69710, Israel
Attention: Mr. Zohar Zisapel
To the Company:
RADVISION Ltd.
8 Hanechoshet Street
Tel Aviv 69710, Israel
Attention: Mr. Amos Amir
provided, however, that notice of change of address shall be effective only upon
actual receipt.
All notices sent by registered mail shall be deemed to have
been received within seventy-two (72) hours of posting. If delivered by hand,
upon their delivery.
10.6 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy upon any breach or default under this Agreement shall impair any
such right, power or remedy of such holder nor shall it be construed to be a
waiver of any such breach or default, or in acquiescence therein, or of any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any holder of any breach or default under
this Agreement, or any waiver on the part of any holder of any holder of any
provisions or conditions of this Agreement shall be effective only if made in
writing and only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by virtue of law or otherwise afforded
to any holder, shall be cumulative and not alternative.
10.7 WAIVER OF DEFAULT. No waiver with respect to any breach or default
in the performance of any obligation under the terms of this Agreement shall be
deemed to be a waiver with respect to any subsequent breach or default, whether
of similar or different nature.
10.8 RIGHTS; SEVERABILITY. In case any provision of the Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby. The parties hereto shall be obliged to draw up an arrangement in
accordance with the meaning and the object of the invalid provision.
10.9 CONFIDENTIAL INFORMATION. The Purchaser acknowledges that the
information received by it and such information which will be received pursuant
hereto shall be confidential and is intended for the Purchaser's use only for
the purpose of this Agreement, and the Purchaser will not use or allow the use
of such confidential information or reproduce, disclose or
17
<PAGE>
disseminate such information to any other person (other than the Purchaser's
employees or agents having a need to know the contents of such information, and
the Purchaser's attorneys), except in connection with the exercise of rights
under this Agreement, unless the Company has made such information available to
the public generally or the Purchaser is required to disclose such information
by a governmental body or by judicial order, but only to the persons and the
extent so required.
10.10 TITLES AND SUBTITLES. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
10.11 GOVERNING LAW. This Agreement shall be governed exclusively by,
and construed solely in accordance with, the laws of the State of Israel.
10.12 (DELETED)
10.13 Purchaser agrees that the Company will issue to Mr. Eliezer Manor
forty-nine (49) shares against payment of their nominal value.
10.14 Following the Closing, the Company will amend its Memorandum and
Articles of Association to reflect this Agreement. The Present shareholders and
the Purchasers agree to such amendments.
10.15 The Company will bear the cost of stamp tax due in connection with
the issuance of shares according to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
three (3) original copies, one to the Company, one to the Purchaser and one of
the Present Shareholders, as of the date first above-mentioned.
THE COMPANY THE PURCHASER
RADVISION LTD. RAD DATA COMMUNICATIONS LTD.
By: /s/ AMOS AMIR By: /s/ ZOHAR ZISAPEL
---------------------------- ----------------------------
Amos Amir, Managing Director Zohar Zisapel, Managing Director
THE PRESENT SHAREHOLDERS:
/s/ YEHUDA ZISAPEL /s/ ZOHAR ZISAPEL
- -------------------------------- --------------------------------
Yehuda Zisapel Zohar Zisapel
<PAGE>
EXHIBIT 1
<TABLE>
<CAPTION>
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
NO. OF SHARES SHARES TOTAL NO. OWNERSHIP
PRIOR TO INVESTED ISSUED AT AFTER CLOSING AFTER
NAME OF SHAREHOLDER INVESTMENT AMOUNT CLOSING CLOSING
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Yehunda Zisapel 6,930 6,930 15.34%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Zohar Zisapel 6,930 6,930 15.34%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Yehuda Zisapel and Zohar Zisapel (as 5,940 5,940 13.15%
trustees)
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Amos Amir 932 932 2.06%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
RAD Data Communications Ltd. 710,030 3,515 7.78%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Zohar Gilon 60,600 300 .66%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Avraham Neuman 60,600 300 .66%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Yair Tauman 60,600 300 .66%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
W.S.P. Capital Investments Ltd. 37,976 188 .42%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Lannet Data Communications Ltd. 999,900 4,950 10.95%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Lerosh Investments Ltd. 99,990 495 1.10%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Gevahim Investments House Limited Ltd. 20,200 100 .22%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Yoav Chelouche 49,692 246 0.54%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Permal Emerging Growth V Ltd. 194,930 965 2.14%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Maritime-Julex Investment Ltd. 99,990 495 1.10%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Shraga Blazer 5,050 25 0.06%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Eli Luz 30,098 149 0.33%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Clal Venture Capital LP 999,900 4,950 10.95%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
ECI Telecom Ltd. 499,950 2,475 5.48%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Eliezer Manor 49 0.11%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Finovelec 550,046 2,723 6.03%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Factory Systemes 250,076 1,238 2.74%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Houston Venture Partners Ltd. 199,980 990 2.19%
- ------------------------------------------ ================= =============== ============ ============== ============
20,732 4,929,608 45,185 100.00%
- ------------------------------------------ ================= =============== ============ ============== ============
</TABLE>
<PAGE>
EXHIBIT 5.7
To: Purchaser
(as defined in the attached Agreement
dated April 18, 1995)
OPINION
I, the undersigned, as counsel to RADVision Ltd., hereby give my opinion, to the
best of my knowledge at this time as follows:
1. ORGANIZATION AND STANDING. RADVision Ltd. ("RADVision") is a company
duly organized and existing under the laws of the State of Israel and is in good
standing under such laws. RADVision has the requisite corporate power to own and
operate its properties and assets and to carry on its business as presently
conducted.
2. CAPITALIZATION. The RADVision' s authorized capital is sixty
thousand (60,000) Ordinary Shares. The RADVision's issued capital stock
immediately prior to the Closing date shall consist of twenty thousand seven
hundred thirty-two (20,732) Ordinary Shares, all of which are duly authorized,
validly issued and free of any liens or encumbrances. Out of the issued share
capital, thirteen thousand eight hundred sixty (13,860) shares are fully paid
and six thousand eight hundred seventy-two (6,872) shares are partially paid.
All shares are non-assessable, and to the best of RADVision `s knowledge and
belief, are beneficially owned by their holders of record. There are no
preemptive, conversion or other rights, options, or agreements granted or issued
by, or binding upon, RADVision or the shareholders which entitle any person,
firm or corporation to purchase or acquire any shares of RADVision's capital
stock, except as set forth in this Agreement.
The rights, restrictions, privileges and preferences with respect to
RADVision's shares, as set forth in its Memorandum of Association and Articles
of Association, are valid and enforceable. To the best of my knowledge, there
are no outstanding rights, options, warrants, conversion rights or agreements
for the purchase or acquisition from RADVision of any shares of its capital
stock, except as stated in its Memorandum and Articles of Association.
3. COMPLIANCE WITH LAW AND OTHER INSTRUMENTS. The execution, delivery
and performance of the Agreement dated April 18, 1995 between RADVision and the
Purchaser (the "Agreement") will not result in any violation of, or be in
conflict with or constitute a default under, any applicable law, regulation or
order, RADVision's Memorandum of Association or Articles of Association. To the
best of my knowledge, the execution, delivery and performance of the Agreement
and consummation of the transactions contemplated thereby, will not result in
any violation of, or be in conflict with or constitute a default under, any term
of any mortgage, indenture, contract, agreement, instrument, judgment, decree or
order applicable to RADVision, or result in the creation of any mortgage,
pledge, lien, encumbrance or charge upon any of the properties or assets of
RADVision pursuant to any such term.
<PAGE>
4. LITIGATION. To the best of my knowledge, there are neither any
actions, proceedings nor investigations pending or threatened against RADVision
or its assets or properties.
5. EMPLOYMENT AGREEMENTS. The agreements between RADVision and its
employees (except for Danny Levin) as referred to in Sections 5.5 and 5.6 of the
Agreement have been duly executed and delivered by, and constitute valid and
binding obligations of, all such employees, enforceable by RADVision in
accordance with their terms.
6. STATEMENTS AND FACTS. Nothing has come to my attention that would
lead me to believe that the Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein not misleading.
/s/ NEHAMA SNEH
------------------------------
Nehama Sneh
Advocate
Dated: April 18, 1995
(opinion/6)
<PAGE>
EXHIBIT 8.2
REGISTRATION RIGHTS
1. INCIDENTAL REGISTRATION. If the Company shall elect to offer any of
its securities to the public, it shall give notice to the Purchaser of such
intention and shall include in such offering a portion of all shareholders
shares equal to the total amount of shares registered, multiplied by an amount
derived by dividing the number of Shares held by each shareholder by the total
number of shares outstanding at that time. In the event the public offering
involves an underwriting, the rights of the shareholders hereunder shall be
conditional upon the underwriter's determination as to marketing factors
requiring the limitation of such right, and the underwriter may preclude from
the offering any or all securities which could have otherwise been included in
the offering.
2. DEMAND REGISTRATION. At any time commencing one year following the
closing of the Company's initial public offering, and for a period of three (3)
years thereafter, each group of shareholders as defined in section 9.1 and/or
Lannet Data Communications Ltd. shall be entitled to demand one registration of
any or all of its shares held at the time of the initial public offering for
trading on any securities exchange; PROVIDED, however, that such request must
cover Shares representing a market value at the time of such request equal to a
minimum of three million Dollars ($3,000,000); and PROVIDED FURTHER, however,
that such request may not include Shares which within three months from the date
of such request could be sold to the public without restriction, for example
pursuant to the provisions of Rule 144 of the Securities and Exchange
Commission. Within 20 days after receipt, the Company shall give written notice
of such request to the other shareholders and shall include in such registration
all Shares held by them with respect to which the Company receives written
requests for inclusion therein within 15 days after the receipt of the Company's
notice. Thereupon, the Company shall use its best efforts to effect the
registration as soon as possible of all Shares (as to which it has received
requests for registration) for trading on a securities exchange, where the
Shares are then traded, specified in the request for registration. In the event
the registration involves an underwriting, the rights of the shareholders
hereunder shall be conditional upon the underwriter's determination as to
marketing factors requiring the limitation of such right, and the underwriter
may preclude from the offering any or all securities which could have otherwise
been included in the offering. Notwithstanding any other provision of this
clause 2 of Exhibit 8.2, after the Company has effected one such registrations
pursuant to this clause 2, and such registrations have been declared or ordered
effective, in the event that the Company shall furnish to such shareholder(s)
delivering a request for registration a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company it would be seriously detrimental to the Company or its shareholders
for a registration statement to be filed in the near future, the Company's
obligation to use its best efforts to register, qualify or comply under this
clause 2 shall be deferred for a period not to exceed 120 days from the date of
receipt of such request.
3. EXPENSES. All expenses incurred in connection with a registration
under Section 2 shall be borne by the selling shareholders participating in such
registration on a pro rata basis; PROVIDED, however, that the Company shall pay
any expenses associated with such registration which the Company would have
incurred in the ordinary course of business. All
<PAGE>
expenses incurred in connection with a registration under Section 1 shall be
borne by the Company; PROVIDED, however, that each of the shareholders
participating in such registration shall pay its pro rata portion of the fees,
discounts or commissions payable to any underwriter.
<PAGE>
AGREEMENT
THIS AGREEMENT made and entered into as of the 18th day of April, 1995,
by and among RADVISION LTD., an Israeli company of 8 Hanechoshet Street, Tel
Aviv 69710, Israel (the "Company") and CLAL VENTURE CAPITAL LP, an Israeli
limited partnership with its principal office at 5 Druianov Street, Tel Aviv,
Israel (the "Purchaser" or "Clal") and Yehuda Zisapel and Zohar Zisapel of 8
Hanechoshet Street, Tel Aviv 69710, Israel (jointly and severally, the "Present
Shareholders").
W I T N E S S E T H :
WHEREAS, the Company is and will be engaged in the business of
developing, manufacturing and marketing of products for video conferencing (the
"Field"); and
WHEREAS, the Company desires to issue and sell, and the Purchaser
desires to purchase ordinary shares, par value One New Israeli Shekel (NIS
1.00), of the Company ("Ordinary Shares"),
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained, the Company and the Purchaser hereby
agree as follows:
SECTION 1
ISSUANCE AND PURCHASE OF SHARES
1.1 The Purchaser undertakes to invest in the Company the amount of
Nine Hundred Ninety-Nine Thousand Nine Hundred US Dollars (US$ 999,900)
(hereinafter, the "Investment Amount") on the Closing Date as defined in Section
2 hereinbelow. All amounts will be deposited in US dollars or their equivalent
in NIS to the Company's account no. 377906 at Bank Hapoalim B.M., Hadar Yosef
Branch (610).
1.2 In consideration for and subject to the execution of the
investment, the Company shall issue on the Closing Date four thousand nine
hundred and fifty (4,950) ordinary shares (hereinafter, the "Shares") to the
Purchaser. The Company shall not be obligated to issue any shares whatsoever
before the full Investment Amount is received by it. The Shares, when issued,
will have been validly issued, fully paid and non-assessable, and will be free
of any liens or encumbrances.
1.3 The Investment Amount is part of a total amount of approximately US
$ 4,930,000 (hereinafter, the "Total Investment") intended to be raised by the
Company from the Purchaser as well as from other investors (hereinafter, the
"Other Purchasers") as set forth in Exhibit 1 attached hereto. In consideration
for the Total Investment, the Company will issue 24,453 Ordinary Shares, par
value 1.- NIS each. After all said shares have been issued, the ownership of the
Company will be as set forth in Exhibit 1.
SECTION 2
CLOSING DATE
The purchase of the Shares by the Purchaser shall take place on April
25, 1995 (the "Closing"). The date of the Closing is referred to as the "Closing
Date" in this Agreement.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company and the Present Shareholders hereby represent and warrant
to the Purchaser the facts hereinafter set forth in this Section 3.
3.1 CORPORATE POWER. As of the date hereof and as of the Closing, the
Company has and will have all requisite corporate power to enter into and to
perform this Agreement.
3.2 SUBSIDIARIES. The Company has a wholly owned U.S. subsidiary,
RADVISION Inc. in New Jersey. The Company has no other subsidiaries and does not
otherwise own, of record or beneficially, any capital stock or equity interest
in any other corporation, association or business entity.
3.3 ORGANIZATION AND STANDING. The Company is a corporation duly
organized and existing under the laws of the State of Israel and is in good
standing under such laws. The Company has requisite corporate power to own and
operate its properties and assets, and to carry on its business as presently
conducted. The Memorandum of Association and Articles of Association and all
amendments to date of the Company are attached hereto as EXHIBITS "3.3A" AND
"3.3B."
3.4 CAPITALIZATION. The Company's authorized capital is sixty thousand
(60,000) Ordinary Shares. The Company's issued capital stock immediately prior
to the Closing date shall consist of twenty thousand seven hundred thirty-two
(20,732) Ordinary Shares, all of which are duly authorized, validly issued and
free of any liens or encumbrances. Out of the issued share capital, thirteen
thousand eight hundred sixty (13,860) shares are fully paid and six thousand
eight hundred seventy-two (6,872) shares are partially paid. All shares are
non-assessable, and to the best of the Company's knowledge and belief, are
beneficially owned by their holders of record. There are no preemptive,
conversion or other rights, options, or agreements granted or issued by, or
binding upon, the Company or the shareholders which entitle any person, firm or
corporation to purchase or acquire any shares of the Company's capital stock,
except as set forth in this Agreement and in particular, in Sections 3.21, 3.22
and 3.23.
3.5 AUTHORIZATION. All corporate actions on the part of the Company and
its directors and shareholders, required for the authorization, execution,
delivery and performance by the Company of this Agreement and the consummation
of the transactions contemplated herein have been, or will be executed, upon
signature of this Agreement. This Agreement is and will be valid and binding
obligations of the Company, enforceable in accordance with its terms. The
execution, delivery and performance by the Company of this Agreement, and
compliance therewith, and the consummation of the transactions contemplated by
this Agreement will not result in any violation of and will not conflict with,
or result in a breach of any of the terms of, or constitute a default under, any
document to which the Company is or will be a party or by which it is or will be
bound, or result in the creation of any mortgage, pledge, lien or encumbrance or
charge upon any of the properties or assets of the Company. To the best of the
Company's knowledge, no third party's consent is required for the Company to
become a party to this Agreement. Immediately after the Closing Date, the
Company will inform all governmental authorities that require to be reported of
changes in equity, including, but not limited to the Israel Investment Center
and the Office of the Chief Scientist of the execution of this Agreement.
3.6 OUTSTANDING DEBT. Except as set forth in the Schedule of Exceptions
attached hereto as EXHIBIT "A" ("Schedule of Exceptions"), the Company has no
outstanding indebtedness for borrowed money and is not a guarantor of any debt
or obligation of another. There exists no default by the Company under the
provisions of any agreement or other instrument evidencing or relating to any
indebtedness or obligation.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the
Schedule of Exceptions, the Company has no material liability of any nature,
direct or indirect, absolute or contingent, not adequately reserved against,
excluding any liabilities related to damage which may have been caused by its
products or are related to sales of said products (unless the Company knows or
should have known of such damages
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or liabilities). The Company has paid, or has made adequate provisions for the
payment of, all taxes, interest, penalties, assessments or deficiencies owing by
it to any taxing authority.
3.8 ABSENCE OF CERTAIN CHANGES. Since December 31, 1994, the business
of the Company has at all times been conducted in the ordinary course. There has
not been any event or condition of any character which has materially adversely
affected the Company's business, prospects or plans.
3.9 CONTRACTS AND CONTRACTUAL ARRANGEMENTS. The Company is a party to
several material agreements, all of which are described in the Schedule of
Exceptions attached hereto. Each of such agreements is in full force and effect
and, to the Company's knowledge, no party thereto is in breach thereof. The
Company is of the opinion that it receives services from affiliated companies
for fair consideration as described in the Schedule of Exceptions attached
hereto. The Company is not obligated to receive services from said affiliated
companies.
3.10 INDEBTEDNESS OF OR TO SHAREHOLDERS, ETC.; CONFLICTS OF INTEREST.
(a) Except as set forth in the Schedule of Exceptions, none of
the Company's shareholders, directors, officers or employees or any of their
affiliates or families is indebted to the Company and the Company has no debt to
any of them except for accrued wages for the current period.
(b) Except as set forth in the Schedule of Exceptions, to the
best of the Company's knowledge, none of the Company's directors, officers,
employees or consultants, or their affiliates or families, directly or
indirectly, own any material interest in any entity which is a competitor of the
Company.
3.11 LITIGATION; INSOLVENCY PROCEEDINGS. To the best of the Company's
knowledge and belief, there are no pending or threatened actions, suits,
proceedings or any investigations against or affecting the Company involving the
possibility of any judgment or liability which would adversely affect its
business.
3.12 INSURANCE. The Company maintains insurance through RAD-Bynet
insurance policies, adequately covering the perils normally insured against by
companies similarly situated. All policies of insurance maintained by the
Company are attached hereto as EXHIBIT "3.12." To the best of the Company's
knowledge, all such policies are in full force and effect.
3.13 TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. Except as set forth
in the Schedule of Exceptions, the Company owns, or holds under lease, all real
and personal property used by it in its business. All property owned by the
Company (all of which is listed on EXHIBIT "3.13" hereto) is so owned free and
clear of all mortgages, pledges, liens or charges.
3.14 LEASES. EXHIBIT "3.14" hereto contains a correct and complete list
and description (including the amount of rents) of all leases under which the
Company leases property, real or personal.
3.15 BUSINESS OF THE COMPANY. The Company has no knowledge of (i) the
existence of any pending or planned patent, or any statute, rule, law,
regulation, standard or codes which would materially adversely affect the
condition, financial or otherwise, or the business operations, of the Company;
or (ii) the existence of any other factor which would materially adversely
affect the financial condition, or the operations, of the Company.
3.16 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation
of the terms of its Memorandum or Articles of Incorporation, and it is not in
violation of the terms of any judgment, decree, order, statute, rule or
regulation to which it is subject.
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3.17 EMPLOYEES. All the key employees of the Company are listed on
EXHIBIT "3.17" hereto. To the best of the Company's knowledge, nosuch employee
is in violation of any material term of any employment contract, patent
disclosure agreement, non-competition agreement, or any other contract or
agreement or any restrictive covenant or any other obligation to a former
employer relating to the right of any such employee to be employed by the
Company. To date, all payments due to the Company's employees have been paid
regularly. In addition, the Company made all allowances required by law to cover
the amounts due to its employees and/or officers in connection with their
employment and/or termination of employment, as reflected in EXHIBIT "3.20A."
3.18 DISCLOSURE. This Agreement and the Schedule of Exceptions
delivered to the Purchaser do not contain any material untrue statement and do
not omit to state a material fact necessary in order to make the statements
contained herein not misleading in the light of the circumstances under which
they were made, and such documents represent full disclosure by the Company of
the material facts with respect to the business, prospect and plans of the
Company. The Company confirms that to the date of this Agreement, the Business
Plan dated August, 1994, which was provided to the Purchaser, does not contain
any materially untrue information as far as same relates to the Company itself.
The other information contained therein may have changed since August, 1994.
3.19 PRODUCTS AND OWNERSHIP. A description of the products is enclosed
as EXHIBIT "3.19." To the best of the knowledge and belief of the Company and as
set forth in the Schedule of Exceptions, the Company possesses, or is proceeding
with due diligence to obtain, all patents, patent rights, trademarks, trademark
names, trade name rights and copyrights the Company believes are necessary to
conduct its business as now being conducted and as planned to be conducted
(without conflict with, or infringement upon, any valid rights of others), the
lack of which could affect the operations or condition, financial or otherwise,
of the Company. The Company has no knowledge of any infringement by the Company
or claimed infringement upon, or any conflict with, the patent rights,
trademarks, trademark rights, trade names, trade name rights, copyrights,
intellectual property rights or other rights of any person, form or corporation.
3.20 FINANCIAL STATEMENTS. The audited financial statements of the
Company as of December 31, 1994 are attached hereto as EXHIBIT "3.20A" and
adequately reflect the financial situation of the Company. The unaudited
financial statements of the Company as of February 28, 1995 are attached hereto
as EXHIBIT "3.20B." As of December 31, 1994 to date, the Company did not enter
into any material transaction or undertake any material commitment which was not
in the normal course of business, and there was no material change for the worse
in the Company's position, liabilities and assets.
3.21 The agreements with the other purchasers will resemble the
Agreement with Purchaser.
3.22 In the event of any contradiction between this Agreement and the
Inception Agreement, attached hereto as EXHIBIT "3.22," the current Memorandum
of Association and the current Articles of Association, this Agreement shall
prevail.
3.23 On January 1, 1995, a trust in favor of employees of the Company
and certain employees of the RAD-Bynet group was created. Said Trust Agreement
is attached hereto as EXHIBIT "3.23."
3.24 As of the date of this Agreement, the directors of the Company
are: Yehuda Zisapel, Zohar Zisapel and Amos Amir.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
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4.1 LEGAL POWER. As of the date hereof and as of the Closing, the
Purchaser has and will have all requisite power to enter into and to perform
this Agreement.
4.2 EXPERIENCE. The Purchaser has sufficient experience and expertise
to evaluate the suitability of its investment in the Company to its needs and
has the capacity to protect its interests with the purchase of the Shares.
4.3 INVESTMENT. The Purchaser is acquiring the Shares for investment
for its own account.
4.4 ACCESS TO DATA. The Purchaser hereby represents that it has had the
full opportunity to discuss management and financial affairs of the Company with
its management and key employees and has had the opportunity to review the
business plan and the Company's facilities. The Purchaser has not been denied
any information that has been requested, and based on the said information has
made a diligent examination of the aspects of the Company's business. The
Purchaser has heretofore received all information that the Purchaser has deemed
necessary and appropriate to enable the Purchaser to evaluate the financial risk
inherent in making an investment in the shares of the Company and the Purchaser
has received satisfactory and complete information concerning the business and
financial condition of the Company in response to all inquiries in respect
thereof. The Purchaser is aware that the Company has been in the development
stage since its inception in October 1992, that no sales of its products have
taken place, and that due to the short operating history of the Company there
can be no assurance that the Company will attain profitability. Nothing
contained in this Section 4.4 shall derogate from the liability of the Company
with respect to the representations and warranties made in Section 3 above.
4.5 AUTHORIZATION. All corporate or partnership action on the part of
the Purchaser, its respective directors, partners and/or shareholders necessary
for the authorization, execution, delivery, payment and performance by the
Purchaser of this Agreement and the consummation of the transactions
contemplated herein, has been taken.
4.6 Purchaser has sufficient financial resources to enable it to
fulfill its obligations under this Agreement and commits to make its investment
in the Company as set forth in Section 1 hereinabove.
SECTION 5
CONDITIONS OF THE PURCHASER TO CLOSING
The obligations of the Purchaser at the Closing, as referred to in
Section 1 hereof, are subject to the fulfillment of each of the following
conditions:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct
when made, and shall be true and correct in all material respects on Closing
with the same force and effect as if they had been made immediately prior to the
Closing and as of such time except for such changes which result from the
obligations of the parties to this Agreement.
5.2 PERFORMANCE. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Company on or prior to
Closing shall have been performed or complied with in all respects.
5.3 LEGAL INVESTMENT. At the time of the Closing, the purchase and
issuance of the Shares shall be legally permitted by all laws and regulations to
which the Purchaser and the Company are subject.
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5.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall have been completed to the
satisfaction (as to substance and form) of the Purchaser.
5.5 PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENT. Each of the
Company's employees shall have executed and delivered to the Company an
Employment Agreement, substantially in the form attached hereto as EXHIBIT
"5.5A" or EXHIBIT "5.5B," which agreement contains non-disclosure and
non-competition provisions therein.
5.6 RETENTION OF KEY EMPLOYEES. All the persons listed in EXHIBIT
"3.17" shall either be employees of the Company as of the Closing and to the
best of the Company's knowledge, have not informed them that they intend to
leave the Company, or if an employee has left the Company or intends to leave
the Company, the latter has notified the Purchaser of same.
5.7 OPINION OF COMPANY'S COUNSEL. The Purchaser shall have received
from Nehama Sneh, corporate counsel to the Company, a satisfactory opinion in
substantially the form attached as EXHIBIT "5.7."
SECTION 6
CONDITIONS OF COMPANY TO CLOSING
The obligations of the Company at the Closing, as referred to in
Section 1 hereof, are subject to the fulfillment of each of the following
conditions:
6.1 REPRESENTATION. The representations and warranties made by the
Purchaser in Section 4 hereof shall be true and correct when made and shall be
true and correct on Closing with the same force and effect as if they had been
made immediately prior to the Closing and as of such time.
6.2 Purchaser has fulfilled any and all of its obligations set forth in
Section 1.1.
SECTION 6A
BOARD OF DIRECTORS
Subsequent to the Closing, the Board of Directors will consist of six
(6) directors, three of whom will be appointed by Zohar Zisapel, Yehuda Zisapel
and RAD Data Communications Ltd., the fourth will be Amos Amir in his capacity
as Managing Director of the Company, and the fifth and the sixth are entitled to
be appointed by The Trust Company of Maritime Bank of Israel ("Maritime") and
Clal Venture Capital LP ("Clal"). Lannet Data Communications Ltd. ("Lannet") and
Finovelec, will have the right to designate one observer each to the Board of
Directors. Upon reasonable notice, Lannet will be permitted to change the status
of its observer to that of director, in which event the number of directors will
be eight (8), Lannet's observer will become the seventh director and Yehuda
Zisapel and Zohar Zisapel will be entitled to appoint another director (the
eighth).
SECTION 7
COVENANTS OF THE COMPANY
For as long as the Purchaser's equity interest in the Company will
amount to at least five (5%) percent of the outstanding capital securities
therein and Purchaser has the right to appoint a director or an observer under
Section 6A hereinabove, except where stated otherwise in this Section 7 and in
Section 8, and without derogating from any rights or obligations conferred upon
shareholders, or obligations conferred upon corporations, under applicable law,
the Company hereby covenants and agrees as follows. For the purposes of
calculating Clal's percentage of ownership set forth above, ECI Telecom Ltd.'s
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("ECI") equity interest in the Company at the time will be taken into account
and added to that of Clal for as long as Clal is a shareholder of ECI.
7.1 ADDITIONAL INFORMATION. The Company will permit an employee of the
Purchaser to visit upon a mutually convenient time and inspect any of the
properties of the Company, including its books of account, and to discuss its
affairs, finances and accounts with the Company's officers and the Auditor.
(a) As soon as available after approval by the Board of
Directors, the Company will provide Purchaser with a summary of the budget,
including projected yearly profit and loss accounts and balance sheet, as
contained in its Operating Plan and as approved by its Board of Directors, as
well as information about material changes in the budget, all as approved by the
Board of Directors.
(b) With reasonable promptness, the Company agrees to provide
to Purchaser such information and data with respect to the Company, as the
Purchaser may from time to time reasonably request.
The foregoing provisions of this Section 7.1 shall not be in limitation
of any rights which the Purchaser may have to inspect and copy the books and
records of the Company or to inspect its properties or discuss its affairs,
finances and accounts, under the laws of the State of Israel.
7.2 USE OF PROCEEDS. The Company will use the proceeds of the issuance
and sale of the Shares mainly to fund its activities and its business subject to
any resolutions made by its Board of Directors from time to time.
7.3 BOARD APPROVAL. Without derogating from the Company's Articles of
Association, or any law or practice limiting the authority of the management of
the Company, the Company shall ensure that the approval of the Board of
Directors of the Company shall be required for the following: (i) designation of
all authorized signatories; (ii) approval of the Company's or the subsidiaries'
budget and Operating Plan; (iii) selection of legal counsel of the Company; (iv)
terms of employment of the Managing Director of the Company; and (v) any and all
other matters with regard to which the Board of Directors of the Company
resolves that its prior approval shall be required.
Without derogating from the first sentence of Section 7 hereof, it is
further provided that the Purchaser's rights hereunder shall expire upon a
public offering of the Company's shares regardless of Purchaser's percentage of
ownership at that time.
7.4 Resolutions of the Board of the Company regarding the following
subject matters shall require the consent of five out of six directors. In the
event that the Board will consist of 8 directors as per Section 6.2 hereinabove,
then the following subject matters will require the consent of 6 out of 8
directors, including consent of two directors out of the following: "Clal"
Director, "Maritime" Director, "Lannet" Director:
(a) A merger of the Company with any other entity;
(b) Acquisition or disposition, including mortgage, of other
corporations, real estate, and any material assets out of the ordinary course of
the Company's business;
(c) Replacement of the Company's Managing Director;
(d) Replacement of the auditors of the Company;
(e) Approval of the distribution of dividends by the Company;
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(f) Loans by the Company or any of its subsidiaries to their
directors or officers, or to their relatives or other affiliates, with the
exception of employees receiving shares under the trust as set forth in
subsection 3.23 hereinabove;
(g) Transactions in excess of $20,000 not included in the
approved Operating Plan between the Company or its affiliates and their
directors, officers and employees or their relatives or other affiliates, with
the exception of employees receiving shares under the trust as set forth in
subsection 3.23 hereinabove;
(h) All material transactions or obligations not contemplated
in the budget by the Company or its subsidiaries; and
(i) Resolution to enter a new business field unrelated to the
present field.
Notwithstanding anything to the contrary contained herein, in the event
that a director is not allowed under a specific section of this Agreement to
participate in a board meeting and/or discussion, the majority required will be
(1) 4 out of 5, or (2) 5 out of 7, including only one of the following: the Clal
Director, Maritime Director, or Lannet Director.
7.5 RIGHT OF FIRST REFUSAL FOR IPO. The Company agrees that in the
event that the Board of Directors resolves:
(a) to initially offer shares of the Company on the Israeli
Stock Exchange, then the following will apply:
(1) The Company will inform Clal Issuing Ltd. of said
resolution;
(2) Clal Issuing Ltd. will have an option for twenty
(20) days as of said notice date by the Company to make a proposal to underwrite
the offering (hereinafter, the "Clal Proposal");
(3) The Board of Directors will consider the Clal
Proposal and will, in its sole discretion, resolve whether it is acceptable or
not;
(4) In the event that the Board resolves not to
accept the Clal Proposal, then the Company will be free to negotiate and agree
with any underwriter whatsoever; and
(5) Within five (5) working days after the written
notice of the Company of the best proposal from the underwriter as in (4) above,
Clal will have the option to improve the Clal Proposal to match the
underwriter's proposal. In the event that Clal Issuing Ltd. either fails to
respond or to match the other proposal, Clal's option under this Section 7.5(a)
will terminate and the Board will be free to proceed as it deems fit.
(b) In the event that the Board of Directors resolves to
initially offer shares of the Company on NASDAQ, with some of the shares
intended for the Israeli public, then the following will apply:
(1) The Company will inform Clal Issuing Ltd. of said
resolution;
(2) The Company will be free to negotiate and agree
with any underwriting house to underwriter the offering, provided that the
Company notifies said underwriter that Clal Issuing Ltd. has a right of first
refusal concerning the offering of the shares of the Company to the Israeli
public.
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(c) In the event that the Board of Directors resolves to
engage a placement agent for a private offering in the Israeli market, and such
agent is entitled to a commission in return for his services (whether by form of
money or options), then the following will apply:
(1) The Company will inform Clal Venture Capital LP
of said resolution;
(2) Clal Issuing Ltd. will have an option for ten
(10) days as of said notice date by the Company to make a proposal to head the
offering as a placement agent (hereinafter, the "Clal Proposal");
(3) Within five (5) working days after the written
notice of the Company of a proposal from another placement agent, Clal and Clal
Issuing Ltd. will have the option to improve the Clal Proposal to match the
other proposal. In the event that Clal Issuing Ltd. either fails to respond or
to match the other proposal, Clal's option under this Section 7.5(c) will
terminate and the Board will be free to proceed as it deems fit;
(4) The Board of Directors will consider the Clal
Proposal as well as the other proposal(s) and will, in its sole discretion,
resolve whether it is acceptable or not; and
(5) In the event the Board accepts Clal Issuing
Ltd.'s proposal and Clal Issuing Ltd. acts as the said placement agent, then,
notwithstanding anything to the contrary contained herein, the Board, in its
sole discretion, by simple majority, will be free thereafter to resolve that the
services of Clal Issuing Ltd. as a placement agent are not satisfactory, to
terminate such services and to receive such services from any other placement
agent without any further rights or obligations with respect to Clal Issuing
Ltd. or the Purchasers.
(d) It is specifically agreed that:
(1) all discussions concerning the identity of
underwriter or placement agent as well as the terms of the offer under Section
7.5 will be without the presence of Clal's appointed director;
(2) Clal Venture Capital LP's and Clal Issuing Ltd.'s
rights under Section 7.5 will terminate upon acceptance or rejection by the
Board of Directors of the Clal Proposal;
(3) It is further provided that the rights of Clal
Issuing Ltd., and Clal Venture Capital LP under Section 7.5 shall expire upon a
public offering of the Company's shares regardless of Purchaser's percentage of
ownership at that time; and
(4) For the purposes of this Agreement, the address
of Clal Issuing Ltd. is 5 Druianov Street, Tel-Aviv 63143.
SECTION 8
For as long as the Purchaser's equity interest in the Company amounts
to at least two (2%) percent of the outstanding share capital of the Company
therein, and without derogating from any rights conferred upon shareholders, or
obligations conferred upon corporations under applicable law, the Company hereby
covenants and agrees as follows:
8.1 PRE-EMPTIVE RIGHTS. If the Company should at any time or from time
to time propose to issue and sell New Securities, as defined in subsection
8.1(a), a pro rata portion of such New Securities
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shall first be offered (as hereinafter provided) to the shareholders of the
Company (each of whom shall hereinafter be referred to as "offeree"). For
purposes of this Section 8.1, the pro rata portion of each Offeree shall mean a
fraction of the New Securities to be issued, of which the aggregate number of
shares which are held by the Offeree on the date of the Company's written
notification referred to in subsection 8.1(b) below (the "Notice Date") shall be
the numerator and the aggregate number of shares held by all the Offerees shall
be the denominator. The aforesaid rights of the Offerees shall be subject to the
following provisions:
(a) "New Securities" shall mean any capital stock of the
Company, whether or not now authorized, and rights, options or warrants to
purchase capital stock, and securities of any type whatsoever that are, or may
become, convertible into capital stock; provided that the term "New Securities"
shall not include (i) securities purchased under this Agreement; (ii) securities
offered to the public; (iii) securities issued pursuant to the acquisition of
another corporation by the Company by merger, purchase of substantially all the
assets of another corporation or any other reorganization whereby the Company
owns not less than fifty-one percent (51%) of the voting power of such
corporation; (iv) securities issued to employees, consultants or directors of
the Company pursuant to any stock option plan or stock purchase or stock bonus
arrangement approved by the Board of Directors of the Company; or (v) securities
issued pursuant to payment of any dividend or distribution with respect to the
Company's issued and outstanding capital stock.
(b) In the event the Company proposes to undertake an issuance
of New Securities, it shall give each Offeree written notice of its intention,
describing the type of New Securities and the price and the terms upon which the
Company proposes to issue the same, and offering its pro rata portion thereof to
such Offerees at such price and on such terms. Each Offeree shall have
twenty-one (21) days from the date of such notice to accept such offer, in whole
or in part, by written notice to the Company, that has to be received by the
Company during the above mentioned 21 days period. All New Securities as to
which such offers have not been accepted in whole or in part by one or more of
the Offerees (of which fact the Company shall give immediate written notice to
all other Offerees), shall be re-offered to each of the Offerees who have
accepted in full the original offer, and each such Offeree shall have the right,
within ten (10) days of the date of such written notice, to purchase the
respective pro rata portions of such new Securities, the same to be computed as
aforesaid but without regard to the shares held by any Offeree which had not
accepted the original offer in full.
(c) In the event any Offeree fails to accept such offers, the
Company shall have the right to sell within six (6) months or enter into an
agreement, to sell such New Securities as to which such offers were not
accepted, provided, however, that no such sale be effected at a price or upon
terms more favorable to the purchasers thereof than those specified in the
Company's notice pursuant to Section 8.1(b).
(d) Each of Yehuda Zisapel, Zohar Zisapel and RAD Data
Communications Ltd. shall have a right to allocate any unused portion of the New
Securities offered to him to the other.
(e) The Purchaser shall have the right to allocate any unused
portion of the New Securities offered to him to its owners or to a company
affiliated to Purchaser, provided that such recipient of shares will join in
this Agreement as if it had become a party to it as of the receipt of shares.
(f) Notwithstanding anything to the contrary contained herein,
Amos Amir, so long as he is the Managing Director of the Company, will be
entitled to be an Offeree under this Section 8.1.
(g) Each of Lerosh Investments Ltd., Gevahim Investments House
Limited Ltd., Mr. Yoav Chelouche, Permal Emerging Growth V Ltd., Maritime-Julex
Investment Ltd., Mr. Shraga Blazer
10
<PAGE>
and Mr. Eli Luz shall have a right to allocate any unused portion of the New
Securities offered to him to the other.
8.2 REGISTRATION RIGHTS. If the Company should elect to offer any of
its securities to the public, the Purchaser and the Present Shareholders shall
have registration rights as set forth in EXHIBIT "8.2" attached hereto.
8.3 RESTRICTIONS. Unless otherwise required by applicable law or under
this Agreement, the Company shall not without the approval of at least 75% of
the shareholders:
(a) amend or repeal any provision of, or add any provision to,
the Company's Articles of Association;
(b) create any new class or classes of securities of the
Company having any preference or priority as to dividends or assets superior to
any such preference or priority of the Ordinary Shares, or reclassify any of its
existing securities into such superior securities; or
(c) approve a merger of the Company with any other entity;
Without derogating from the first sentence of Section 8, it is
further provided that each shareholder's rights under Section 8 (except for 8.2)
shall expire upon the initial public offering of the Company's shares,
regardless of that shareholder's percentage of ownership at that time.
SECTION 8A
The Company agrees and undertakes as follows:
8A.1 BASIC FINANCIAL INFORMATION. The Company will furnish to the
Purchaser the following reports certified, when so required herein, by the
Company's auditors:
(a) As soon as practicable after the end of each calendar quarter, and
in any event within forty-five (45) days thereafter, a balance sheet and a
profit and loss account and of cash flow (including opening cash, income,
expenses and closing cash) of the Company as of the end of such quarterly
period, and for the current fiscal year to date, prepared in accordance with
generally accepted accounting principles consistently applied and setting forth
in comparative form the figures for the corresponding periods of the previous
fiscal year, subject to changes resulting from year-end audit adjustments, all
in reasonable detail, signed by the principal financial or accounting officer of
the Company. There shall be appended to such materials a report of the
management as to the business of the Company and its activities during the
quarter.
(b) Not later than forty-five (45) days after the end of each quarter,
sales figures, backlog and new orders for such quarter.
Without derogating from the first sentence of Section 7, it is further
provided that the Company will not be required to furnish any information under
the provisions of this Section 8A.1 and of Section 8A.2 below subsequent to the
initial public offering.
8A.2 INSURANCE. The Company shall continue to maintain insurance
policies similar to those described in Section 3.12 above.
11
<PAGE>
8A.3 ACCOUNTS AND RECORDS. The Company will keep true records and books
of account in which full, true and correct entries will be made of all dealings
or transactions in relation to its business and affairs in accordance with
generally accepted accounting principles applied on a consistent basis.
8A.4 PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENTS. The
Company will not employ, or continue to employ, any person who will have access
to confidential information with respect to the Company and its operations
unless such person has executed and delivered the Company's standard Employment
agreement then in force containing proprietary information and non-competition
sections to the satisfaction (as to substance and form) of the Company's
counsel.
SECTION 9
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES
Except as set forth in this Section 9, the Present Shareholders and the
Purchaser agree not to sell or transfer any of their shares and rights in the
Company to a third party. This Section 9 will terminate upon the initial
offering of the Company's shares to the public.
9.1 For the purpose of this Section 9, the shareholders, the Purchaser
and the Other Purchasers will be regarded as the following Groups:
(a) Zisapel Group - Yehuda Zisapel, Zohar Zisapel, the
Trust and RAD Data Communications Ltd.
(b) Clal Group - Clal Venture Capital LP, ECI Telecom
Ltd.
(c) Finovelec Group - Finovelec, Factory Systemes,
Houston Venture Partners Ltd.
(d) Capital Group - Zohar Gilon, Avraham Neuman, Yair
Tauman, W.S.P. Capital
(e) Maritime Group - Lerosh Investments Ltd., Gevahim
Investments House Limited Ltd., Mr. Yoav Chelouche,
Permal Emerging Growth V Ltd., Maritime-Julex
Investment Ltd., Mr. Shraga Blazer and Mr. Eli Luz.
9.2 Group Members are entitled to transfer shares among themselves for
consideration or without consideration without any restrictions.
9.3 Except as set forth in sections 9.9, 9.10 and 9.11 hereinbelow, any
shareholder who shall elect to transfer (hereinafter "Seller") all or part of
his shares, not in accordance with subsection 9.2 (hereinafter "Offered Shares")
shall offer them first to the other registered shareholders of the Company at
that time (hereinafter "Offerees") on a pro rata basis based on their share in
the share capital of the Company.
9.4 In the event any such Offeree fails to exercise his right to
purchase his Offered Shares within forty-five (45) days from the date the offer
is made, then the Seller shall have the right to offer the Offered Shares to a
third party at the same price and upon the same terms of sale as those offered
to the other shareholders under section 9.3 and provided that said third party
shall undertake all of Seller's obligations under this Agreement. (Such third
party to be called hereunder, the "Transferee"). In the event that the shares
are not sold to said party within six (6) months as of the offer to such said
third party, then Section 9.3 will apply anew.
12
<PAGE>
9.5 The Board of Directors shall have the right to not approve the
transfer of shares to a third party in each of the following events:
(i) If the third party is a competitor of the Company;
(ii) If there is a possibility of conflict of interest between
the third party and the Company;
(iii) For any other reason, in which case such approval shall
not be unreasonably withheld.
9.6 In the event that Yehuda Zisapel and/or Zohar Zisapel and/or RAD
will sell more than a total of 25% of their shares in the Company to third
parties, then Purchaser will have the right to sell the same portion of
Purchaser's shares in the Company under the same terms and conditions
(hereinafter, the "Tag Along Right"). Purchaser will inform Zisapel in writing
by fax and by confirmation by mail if it intends to exercise its Tag Along Right
within ten (10) days after the date of notice by Zisapel to Purchaser. Failure
to respond will be deemed as a decision not to Tag Along.
9.7 This Section 9 will supersede Section 14 of the Inception
Agreement.
9.8 The terms of the Trust Agreement, EXHIBIT "3.23," will have
priority over this Section 9.
9.9 Finovelec, in its discretion, shall be permitted to freely transfer
up to 5% of its shares (at that time) in the Company to up to 6 of Finovelec
executives, as well as up to an additional 5% of its shares (at that time) in
the Company to IDI (if then an affiliate of Finovelec). Such transfer shall be
considered a transfer among the Finovelec Group, provided that each Transferee,
upon receipt of the shares, will join this Agreement and undertake all of
Finovelec's obligations hereunder and will be considered henceforth a member in
the Finovelec Group for the purpose of this Section 9.
9.10 Clal Venture Capital LP is entitled to transfer all of its shares
in the Company to its partners, provided that each Transferee, upon receipt of
the shares, will join this Agreement and undertake all of Purchaser's
obligations hereunder and will be considered henceforth a member in the Clal
Group for the purpose of this Section 9.
9.11 Each of Zohar Gilon, Avraham Neuman and Yair Tauman is entitled,
once, to transfer his shares to a company directly under the total control of
said person, provided that each Transferee, upon receipt of the shares, will
join this Agreement and undertake all of Purchaser's obligations hereunder and
will be considered henceforth a member in the Capital Group for the purpose of
this Section 9.
SECTION 9A
ANTI-DILUTION
(a) In the event that any time prior to the earlier of the Closing of
the Company's initial public offering or three (3) years from the date of this
Agreement, the Company issues or sells any Ordinary Shares to third parties upon
a private placement (excluding Company employees) for consideration per share of
less than US $135 (an "Offering"), then prior to said private placement the
Purchaser shall be given the option to purchase Ordinary Shares of the Company
at par value (NIS 1.- per share), in an amount computed as set forth below.
(b) The amount of shares to be issued to Purchaser will be computed
according to the following table:
13
<PAGE>
- ------------------------------------- ------------------------------------------
SHARE PRICE AT NEXT PRIVATE PLACEMENT ADDITIONAL SHARES ISSUED TO ALL PURCHASERS
(DISTRIBUTED ON A PRO-RATA BASIS)
- ------------------------------------- ------------------------------------------
$134.99 - $101.01 7,489 *
- ------------------------------------- ------------------------------------------
$101. - $50.51 17,959 *
- ------------------------------------- ------------------------------------------
Less than $50.5 33,642 *
- ------------------------------------- ------------------------------------------
*The number and price of shares will be adjusted in the event of any
restructuring of the Company's share capital.
(c) Upon the occurrence of each event giving rise to a right
pursuant to this Section, the Company will, at its expense, promptly compute the
number of Ordinary Shares that each Purchaser is entitled to purchase in
accordance with the terms hereof, and furnish to the Purchaser, a notice of such
right and the number of shares Purchaser is entitled to.
(d) Any and all of Purchaser's rights under this Section 9A will
terminate within the earliest of: (i) the Closing of the Company's initial
public offering or (ii) three (3) years from the date of this Agreement or (iii)
upon the first private placement contemplated after the Closing set forth in
Section 9A hereinabove.
SECTION 10
MISCELLANEOUS
10.1 ARBITRATION. All disputes arising under this Agreement or in
connection with the transactions hereunder shall be resolved between the parties
in good faith; however, if these efforts fail, the dispute shall be resolved by
arbitration by a sole arbitrator within sixty (60) days. The arbitrator shall be
chosen by agreement of the parties hereto. If they fail to so agree within
twenty (20) days after a party shall have requested such arbitration, the
arbitrator shall be appointed by the Chairman of the Israeli Bar who shall also
determine the place of the arbitration proceedings based on the convenience of
the parties involved; provided, however, that the arbitrator chosen shall be
from the jurisdiction chosen by the above-mentioned Chairman. The arbitrator
shall not be bound by any judicial rules of evidence or procedure. The arbitral
award shall be final and binding upon the parties, and judgment upon the award
may be entered in any court having jurisdiction, or application may be made to
such court for a judicial acceptance of the award or for an order of
enforcement, as the case may be. The provisions of this Section 10.1 shall apply
to all disputes arising in connection with this Agreement. Each party shall bear
its own expenses, subject to the arbitration judgment on the issue of expenses.
10.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive (i) any investigation made by the Purchaser
and (ii) the Closing.
10.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto; provided, however, that no party may assign its rights hereunder
without the prior written consent of the other parties hereto.
10.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including the
Schedules and Exhibits hereto) and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subject matters hereof and thereof and supersede all prior
agreements and understandings relating thereto. Neither this Agreement nor any
term hereof may be
14
<PAGE>
amended, waived, discharged or terminated except by an instrument in writing
signed by all the parties hereto.
10.5 NOTICES. All notices and other communications required or
permitted to be given or sent hereunder shall be in writing and shall be deemed
to have been sufficiently given or delivered for all purposes if mailed by
registered airmail, transmitted by telex or telecopier, or delivered by hand to
the following respective addresses until otherwise directed by notice as
aforesaid:
To the Purchaser:
CLAL VENTURE CAPITAL L.P.
5 Druianov Street
Tel Aviv, Israel
Attention: Managing Director
To the Company:
RADVISION Ltd.
8 Hanechoshet Street
Tel Aviv 69710, Israel
Attention: Mr. Amos Amir
provided, however, that notice of change of address shall be effective only upon
actual receipt.
All notices sent by registered mail shall be deemed to have
been received within seventy-two (72) hours of posting. If delivered by hand,
upon their delivery.
10.6 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy upon any breach or default under this Agreement shall impair any
such right, power or remedy of such holder nor shall it be construed to be a
waiver of any such breach or default, or in acquiescence therein, or of any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any holder of any breach or default under
this Agreement, or any waiver on the part of any holder of any holder of any
provisions or conditions of this Agreement shall be effective only if made in
writing and only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by virtue of law or otherwise afforded
to any holder, shall be cumulative and not alternative.
10.7 WAIVER OF DEFAULT. No waiver with respect to any breach or default
in the performance of any obligation under the terms of this Agreement shall be
deemed to be a waiver with respect to any subsequent breach or default, whether
of similar or different nature.
10.8 RIGHTS; SEVERABILITY. In case any provision of the Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby. The parties hereto shall be obliged to draw up an arrangement in
accordance with the meaning and the object of the invalid provision.
10.9 CONFIDENTIAL INFORMATION. The Purchaser acknowledges that the
information received by it and such information which will be received pursuant
hereto shall be confidential and is intended for the Purchaser's use only for
the purpose of this Agreement, and the Purchaser will not use or allow the use
of
15
<PAGE>
such confidential information or reproduce, disclose or disseminate such
information to any other person (other than the Purchaser's employees or agents
having a need to know the contents of such information, and the Purchaser's
attorneys), except in connection with the exercise of rights under this
Agreement, unless the Company has made such information available to the public
generally or the Purchaser is required to disclose such information by a
governmental body or by judicial order, but only to the persons and the extent
so required.
10.10 TITLES AND SUBTITLES. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
10.11 GOVERNING LAW. This Agreement shall be governed exclusively by,
and construed solely in accordance with, the laws of the State of Israel.
10.12 Purchaser and any Transferee under Section 9 are represented by
the Managing Director of Clal Venture Capital LP. Notice sent to the Managing
Director of Clal Venture Capital LP will be deemed as notice sent to Purchaser
and/or any such Transferee. A resolution or request given by the Managing
Director of Clal Venture Capital LP to the Company will be deemed as if given by
Purchaser and any such Transferee. The Company will have no obligation to
provide information or notice whatsoever except to the Managing Director of Clal
Venture Capital LP.
10.13 Purchaser agrees that the Company will issue to Mr. Eliezer Manor
forty-nine (49) shares against payment of their nominal value.
10.14 Following the Closing, the Company will amend its Memorandum and
Articles of Association to reflect this Agreement. The Present shareholders and
the Purchasers agree to such amendments.
10.15 The Company will bear the cost of stamp tax due in connection
with the issuance of shares according to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
three (3) original copies, one to the Company, one to the Purchaser and one of
the Present Shareholders, as of the date first above-mentioned.
THE COMPANY THE PURCHASER
RADVISION LTD. CLAL VENTURE CAPITAL LP
By: /s/ AMOS AMIR By: /s/ CLAL VENTURE CAPITAL LP
-------------------------------- ----------------------------------
Amos Amir, Managing Director , Managing Director
THE PRESENT SHAREHOLDERS:
/s/ YEHUDA ZISAPEL /s/ ZOHAR ZISAPEL
- ------------------------------------ --------------------------------------
Yehuda Zisapel Zohar Zisapel
16
<PAGE>
EXHIBIT 1
<TABLE>
<CAPTION>
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
NO. OF SHARES SHARES TOTAL NO. OWNERSHIP
PRIOR TO INVESTED ISSUED AT AFTER CLOSING AFTER
NAME OF SHAREHOLDER INVESTMENT AMOUNT CLOSING CLOSING
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Yehunda Zisapel 6,930 6,930 15.34%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Zohar Zisapel 6,930 6,930 15.34%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Yehuda Zisapel and Zohar Zisapel (as 5,940 5,940 13.15%
trustees)
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Amos Amir 932 932 2.06%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
RAD Data Communications Ltd. 710,030 3,515 7.78%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Zohar Gilon 60,600 300 .66%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Avraham Neuman 60,600 300 .66%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Yair Tauman 60,600 300 .66%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
W.S.P. Capital Investments Ltd. 37,976 188 .42%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Lannet Data Communications Ltd. 999,900 4,950 10.95%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Lerosh Investments Ltd. 99,990 495 1.10%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Gevahim Investments House Limited Ltd. 20,200 100 .22%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Yoav Chelouche 49,692 246 0.54%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Permal Emerging Growth V Ltd. 194,930 965 2.14%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Maritime-Julex Investment Ltd. 99,990 495 1.10%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Shraga Blazer 5,050 25 0.06%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Eli Luz 30,098 149 0.33%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Clal Venture Capital LP 999,900 4,950 10.95%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
ECI Telecom Ltd. 499,950 2,475 5.48%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Eliezer Manor 49 0.11%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Finovelec 550,046 2,723 6.03%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Factory Systemes 250,076 1,238 2.74%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Houston Venture Partners Ltd. 199,980 990 2.19%
- ------------------------------------------ ================= =============== ============ ============== ============
20,732 4,929,608 45,185 100.00%
- ------------------------------------------ ================= =============== ============ ============== ============
</TABLE>
17
<PAGE>
EXHIBIT 5.7
To: Purchaser
(as defined in the attached Agreement
dated April 18, 1995)
OPINION
I, the undersigned, as counsel to RADVision Ltd., hereby give my opinion, to the
best of my knowledge at this time as follows:
1. ORGANIZATION AND STANDING. RADVision Ltd. ("RADVision") is
a company duly organized and existing under the laws of the State of Israel and
is in good standing under such laws. RADVision has the requisite corporate power
to own and operate its properties and assets and to carry on its business as
presently conducted.
2. CAPITALIZATION. The RADVision' s authorized capital is
sixty thousand (60,000) Ordinary Shares. The RADVision's issued capital stock
immediately prior to the Closing date shall consist of twenty thousand seven
hundred thirty-two (20,732) Ordinary Shares, all of which are duly authorized,
validly issued and free of any liens or encumbrances. Out of the issued share
capital, thirteen thousand eight hundred sixty (13,860) shares are fully paid
and six thousand eight hundred seventy-two (6,872) shares are partially paid.
All shares are non-assessable, and to the best of RADVision `s knowledge and
belief, are beneficially owned by their holders of record. There are no
preemptive, conversion or other rights, options, or agreements granted or issued
by, or binding upon, RADVision or the shareholders which entitle any person,
firm or corporation to purchase or acquire any shares of RADVision's capital
stock, except as set forth in this Agreement.
The rights, restrictions, privileges and preferences with
respect to RADVision's shares, as set forth in its Memorandum of Association and
Articles of Association, are valid and enforceable. To the best of my knowledge,
there are no outstanding rights, options, warrants, conversion rights or
agreements for the purchase or acquisition from RADVision of any shares of its
capital stock, except as stated in its Memorandum and Articles of Association.
3. COMPLIANCE WITH LAW AND OTHER INSTRUMENTS. The execution,
delivery and performance of the Agreement dated April 18, 1995 between RADVision
and the Purchaser (the "Agreement") will not result in any violation of, or be
in conflict with or constitute a default under, any applicable law, regulation
or order, RADVision's Memorandum of Association or Articles of Association. To
the best of my knowledge, the execution, delivery and performance of the
Agreement and consummation of the transactions contemplated thereby, will not
result in any violation of, or be in conflict with or constitute a default
under, any term of any mortgage, indenture, contract, agreement, instrument,
judgment, decree or order applicable to RADVision, or result in the creation of
any mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of RADVision pursuant to any such term.
18
<PAGE>
4. LITIGATION. To the best of my knowledge, there are neither
any actions, proceedings nor investigations pending or threatened against
RADVision or its assets or properties.
5. EMPLOYMENT AGREEMENTS. The agreements between RADVision and
its employees (except for Danny Levin) as referred to in Sections 5.5 and 5.6 of
the Agreement have been duly executed and delivered by, and constitute valid and
binding obligations of, all such employees, enforceable by RADVision in
accordance with their terms.
6. STATEMENTS AND FACTS. Nothing has come to my attention that
would lead me to believe that the Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein not misleading.
/s/ NEHAMA SNEH
---------------------------------
Nehama Sneh
Advocate
Dated: April 18, 1995
--------------
(opinion/6)
19
<PAGE>
EXHIBIT 8.2
REGISTRATION RIGHTS
1. INCIDENTAL REGISTRATION. If the Company shall elect to offer any of
its securities to the public, it shall give notice to the Purchaser of such
intention and shall include in such offering a portion of all shareholders
shares equal to the total amount of shares registered, multiplied by an amount
derived by dividing the number of Shares held by each shareholder by the total
number of shares outstanding at that time. In the event the public offering
involves an underwriting, the rights of the shareholders hereunder shall be
conditional upon the underwriter's determination as to marketing factors
requiring the limitation of such right, and the underwriter may preclude from
the offering any or all securities which could have otherwise been included in
the offering.
2. DEMAND REGISTRATION. At any time commencing one year following the
closing of the Company's initial public offering, and for a period of three (3)
years thereafter, each group of shareholders as defined in section 9.1 and/or
Lannet Data Communications Ltd. shall be entitled to demand one registration of
any or all of its shares held at the time of the initial public offering for
trading on any securities exchange; PROVIDED, however, that such request must
cover Shares representing a market value at the time of such request equal to a
minimum of three million Dollars ($3,000,000); and PROVIDED FURTHER, however,
that such request may not include Shares which within three months from the date
of such request could be sold to the public without restriction, for example
pursuant to the provisions of Rule 144 of the Securities and Exchange
Commission. Within 20 days after receipt, the Company shall give written notice
of such request to the other shareholders and shall include in such registration
all Shares held by them with respect to which the Company receives written
requests for inclusion therein within 15 days after the receipt of the Company's
notice. Thereupon, the Company shall use its best efforts to effect the
registration as soon as possible of all Shares (as to which it has received
requests for registration) for trading on a securities exchange, where the
Shares are then traded, specified in the request for registration. In the event
the registration involves an underwriting, the rights of the shareholders
hereunder shall be conditional upon the underwriter's determination as to
marketing factors requiring the limitation of such right, and the underwriter
may preclude from the offering any or all securities which could have otherwise
been included in the offering. Notwithstanding any other provision of this
clause 2 of Exhibit 8.2, after the Company has effected one such registrations
pursuant to this clause 2, and such registrations have been declared or ordered
effective, in the event that the Company shall furnish to such shareholder(s)
delivering a request for registration a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company it would be seriously detrimental to the Company or its shareholders
for a registration statement to be filed in the near future, the Company's
obligation to use its best efforts to register, qualify or comply under this
clause 2 shall be deferred for a period not to exceed 120 days from the date of
receipt of such request.
3. EXPENSES. All expenses incurred in connection with a registration
under Section 2 shall be borne by the selling shareholders participating in such
registration on a pro rata basis; PROVIDED, however, that the Company shall pay
any expenses associated with such registration which the Company would have
incurred in the ordinary course of business. All expenses incurred in connection
with a registration under Section 1 shall be borne by the Company; PROVIDED,
however, that each of the shareholders participating in such registration shall
pay its pro rata portion of the fees, discounts or commissions payable to any
underwriter.
20
<PAGE>
Exhibit 4.4
AGREEMENT
THIS AGREEMENT made and entered into as of the 18th day of April, 1995,
by and among RADVISION LTD., an Israeli company of 8 Hanechoshet Street, Tel
Aviv 69710, Israel (the "Company") and LANNET DATA COMMUNICATIONS LTD., an
Israeli company with its principal office at Atidim Technology Park, Bldg. 3,
Dvorah Haneviah Street, Tel Aviv 61131, Israel (the "Purchaser" or Lannet) and
Yehuda Zisapel and Zohar Zisapel of 8 Hanechoshet Street, Tel Aviv 69710, Israel
(jointly and severally, the "Present Shareholders").
W I T N E S S E T H :
WHEREAS, the Company is and will be engaged in the business of
developing, manufacturing and marketing of products for video conferencing (the
"Field"); and
WHEREAS, the Company desires to issue and sell, and the Purchaser
desires to purchase ordinary shares, par value One New Israeli Shekel (NIS
1.00), of the Company ("Ordinary Shares");
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained, the Company and the Purchaser hereby
agree as follows:
SECTION 1
ISSUANCE AND PURCHASE OF SHARES
1.1 The Purchaser undertakes to invest in the Company the amount of
Nine Hundred Ninety-Nine Thousand Nine Hundred US Dollars (US $999,900)
(hereinafter, the "Investment Amount") on the Closing Date as defined in Section
2 hereinbelow. All amounts will be deposited in US dollars or their equivalent
in NIS to the Company's account no. 377906 at Bank Hapoalim B.M., Hadar Yosef
Branch (610).
1.2 In consideration for and subject to the execution of the
investment, the Company shall issue on the Closing Date four thousand nine
hundred and fifty (4,950) ordinary shares (hereinafter, the "Shares") to the
Purchaser. The Company shall not be obligated to issue any shares whatsoever
before the full Investment Amount is received by it. The Shares, when issued,
will have been validly issued, fully paid and non-assessable, and will be free
of any liens or encumbrances.
1.3 The Investment Amount is part of a total amount of approximately US
$4,930,000 (hereinafter, the "Total Investment") intended to be raised by the
Company from the Purchaser as well as from other investors (hereinafter, the
"Other Purchasers") as set forth in Exhibit 1 attached hereto. In consideration
for the Total Investment, the Company will issue 24,453 Ordinary Shares, par
value 1.- NIS each. After all said shares have been issued, the ownership of the
Company will be as set forth in Exhibit 1.
<PAGE>
SECTION 2
CLOSING DATE
The purchase of the Shares by the Purchaser shall take place on April
25, 1995 (the "Closing"). The date of the Closing is referred to as the "Closing
Date" in this Agreement.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company and the Present Shareholders hereby represent and warrant
to the Purchaser the facts hereinafter set forth in this Section 3.
3.1 CORPORATE POWER. As of the date hereof and as of the Closing, the
Company has and will have all requisite corporate power to enter into and to
perform this Agreement.
3.2 SUBSIDIARIES. The Company has a wholly owned U.S. subsidiary,
RADVISION Inc. in New Jersey. The Company has no other subsidiaries and does not
otherwise own, of record or beneficially, any capital stock or equity interest
in any other corporation, association or business entity.
3.3 ORGANIZATION AND STANDING. The Company is a corporation duly
organized and existing under the laws of the State of Israel and is in good
standing under such laws. The Company has requisite corporate power to own and
operate its properties and assets, and to carry on its business as presently
conducted. The Memorandum of Association and Articles of Association and all
amendments to date of the Company are attached hereto as EXHIBITS "3.3A" AND
"3.3B."
3.4 CAPITALIZATION. The Company's authorized capital is sixty thousand
(60,000) Ordinary Shares. The Company's issued capital stock immediately prior
to the Closing date shall consist of twenty thousand seven hundred thirty-two
(20,732) Ordinary Shares, all of which are duly authorized, validly issued and
free of any liens or encumbrances. Out of the issued share capital, thirteen
thousand eight hundred sixty (13,860) shares are fully paid and six thousand
eight hundred seventy-two (6,872) shares are partially paid. All shares are
non-assessable, and to the best of the Company's knowledge and belief, are
beneficially owned by their holders of record. There are no preemptive,
conversion or other rights, options, or agreements granted or issued by, or
binding upon, the Company or the shareholders which entitle any person, firm or
corporation to purchase or acquire any shares of the Company's capital stock,
except as set forth in this Agreement and in particular, in Sections 3.21, 3.22
and 3.23.
3.5 AUTHORIZATION. All corporate actions on the part of the Company and
its directors and shareholders, required for the authorization, execution,
delivery and performance by the Company of this Agreement and the consummation
of the transactions
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contemplated herein have been, or will be executed, upon signature of this
Agreement. This Agreement is and will be valid and binding obligations of the
Company, enforceable in accordance with its terms. The execution, delivery and
performance by the Company of this Agreement, and compliance therewith, and the
consummation of the transactions contemplated by this Agreement will not result
in any violation of and will not conflict with, or result in a breach of any of
the terms of, or constitute a default under, any document to which the Company
is or will be a party or by which it is or will be bound, or result in the
creation of any mortgage, pledge, lien or encumbrance or charge upon any of the
properties or assets of the Company. To the best of the Company's knowledge, no
third party's consent is required for the Company to become a party to this
Agreement. Immediately after the Closing Date, the Company will inform all
governmental authorities that require to be reported of changes in equity,
including, but not limited to the Israel Investment Center and the Office of the
Chief Scientist of the execution of this Agreement.
3.6 OUTSTANDING DEBT. Except as set forth in the Schedule of Exceptions
attached hereto as EXHIBIT "A" ("Schedule of Exceptions"), the Company has no
outstanding indebtedness for borrowed money and is not a guarantor of any debt
or obligation of another. There exists no default by the Company under the
provisions of any agreement or other instrument evidencing or relating to any
indebtedness or obligation.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the
Schedule of Exceptions, the Company has no material liability of any nature,
direct or indirect, absolute or contingent, not adequately reserved against,
excluding any liabilities related to damage which may have been caused by its
products or are related to sales of said products (unless the Company knows or
should have known of such damages or liabilities). The Company has paid, or has
made adequate provisions for the payment of, all taxes, interest, penalties,
assessments or deficiencies owing by it to any taxing authority.
3.8 ABSENCE OF CERTAIN CHANGES. Since December 31, 1994, the business
of the Company has at all times been conducted in the ordinary course. There has
not been any event or condition of any character which has materially adversely
affected the Company's business, prospects or plans.
3.9 CONTRACTS AND CONTRACTUAL ARRANGEMENTS. The Company is a party to
several material agreements, all of which are described in the Schedule of
Exceptions attached hereto. Each of such agreements is in full force and effect
and, to the Company's knowledge, no party thereto is in breach thereof. The
Company is of the opinion that it receives services from affiliated companies
for fair consideration as described in the Schedule of Exceptions attached
hereto. The Company is not obligated to receive services from said affiliated
companies.
3.10 INDEBTEDNESS OF OR TO SHAREHOLDERS, ETC.; CONFLICTS OF INTEREST.
(a) Except as set forth in the Schedule of Exceptions, none of
the Company's shareholders, directors, officers or employees or any of their
affiliates or families
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is indebted to the Company and the Company has no debt to any of them except for
accrued wages for the current period.
(b) Except as set forth in the Schedule of Exceptions, to
the best of the Company's knowledge, none of the Company's directors, officers,
employees or consultants, or their affiliates or families, directly or
indirectly, own any material interest in any entity which is a competitor of the
Company.
3.11 LITIGATION; INSOLVENCY PROCEEDINGS. To the best of the Company's
knowledge and belief, there are no pending or threatened actions, suits,
proceedings or any investigations against or affecting the Company involving the
possibility of any judgment or liability which would adversely affect its
business.
3.12 INSURANCE. The Company maintains insurance through RAD-Bynet
insurance policies, adequately covering the perils normally insured against by
companies similarly situated. All policies of insurance maintained by the
Company are attached hereto as EXHIBIT "3.12." To the best of the Company's
knowledge, all such policies are in full force and effect.
3.13 TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. Except as set forth
in the Schedule of Exceptions, the Company owns, or holds under lease, all real
and personal property used by it in its business. All property owned by the
Company (all of which is listed on EXHIBIT "3.13" hereto) is so owned free and
clear of all mortgages, pledges, liens or charges.
3.14 LEASES. EXHIBIT "3.14" hereto contains a correct and complete list
and description (including the amount of rents) of all leases under which the
Company leases property, real or personal.
3.15 BUSINESS OF THE COMPANY. The Company has no knowledge of (i) the
existence of any pending or planned patent, or any statute, rule, law,
regulation, standard or codes which would materially adversely affect the
condition, financial or otherwise, or the business operations, of the Company;
or (ii) the existence of any other factor which would materially adversely
affect the financial condition, or the operations, of the Company.
3.16 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation
of the terms of its Memorandum or Articles of Incorporation, and it is not in
violation of the terms of any judgment, decree, order, statute, rule or
regulation to which it is subject.
3.17 EMPLOYEES. All the key employees of the Company are listed on
EXHIBIT "3.17" hereto. To the best of the Company's knowledge, no such employee
is in violation of any material term of any employment contract, patent
disclosure agreement, non-competition agreement, or any other contract or
agreement or any restrictive covenant or any other obligation to a former
employer relating to the right of any such employee to be employed by the
Company. To date, all payments due to the Company's employees have been paid
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regularly. In addition, the Company made all allowances required by law to cover
the amounts due to its employees and/or officers in connection with their
employment and/or termination of employment, as reflected in Exhibit "3.20a."
3.18 DISCLOSURE. This Agreement and the Schedule of Exceptions
delivered to the Purchaser do not contain any material untrue statement and do
not omit to state a material fact necessary in order to make the statements
contained herein not misleading in the light of the circumstances under which
they were made, and such documents represent full disclosure by the Company of
the material facts with respect to the business, prospect and plans of the
Company. The Company confirms that to the date of this Agreement, the Business
Plan dated August, 1994, which was provided to the Purchaser, does not contain
any materially untrue information as far as same relates to the Company itself.
The other information contained therein may have changed since August, 1994.
3.19 PRODUCTS AND OWNERSHIP. A description of the products is enclosed
as EXHIBIT 3.19. To the best of the knowledge and belief of the Company and as
set forth in the Schedule of Exceptions, the Company possesses, or is proceeding
with due diligence to obtain, all patents, patent rights, trademarks, trademark
names, trade name rights and copyrights the Company believes are necessary to
conduct its business as now being conducted and as planned to be conducted
(without conflict with, or infringement upon, any valid rights of others), the
lack of which could affect the operations or condition, financial or otherwise,
of the Company. The Company has no knowledge of any infringement by the Company
or claimed infringement upon, or any conflict with, the patent rights,
trademarks, trademark rights, trade names, trade name rights, copyrights,
intellectual property rights or other rights of any person, form or corporation.
3.20 FINANCIAL STATEMENTS. The audited financial statements of the
Company as of December 31, 1994 are attached hereto as EXHIBIT "3.20A" and
adequately reflect the financial situation of the Company. The unaudited
financial statements of the Company as of February 28, 1995 are attached hereto
as EXHIBIT "3.20B." As of December 31, 1994 to date, the Company did not enter
into any material transaction or undertake any material commitment which was not
in the normal course of business, and there was no material change for the worse
in the Company's position, liabilities and assets.
3.21 The agreements with the other purchasers will resemble the
Agreement with Purchaser.
3.22 In the event of any contradiction between this Agreement and the
Inception Agreement, attached hereto as EXHIBIT "3.22," and the current
Memorandum of Association and current Articles of Association, this Agreement
shall prevail.
3.23 On January 1, 1995, a trust in favor of employees of the Company
and certain employees of the RAD-Bynet group was created. Said Trust Agreement
is attached hereto as EXHIBIT "3.23."
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3.24 As of the date of this Agreement, the directors of the Company
are: Yehuda Zisapel, Zohar Zisapel and Amos Amir.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
4.1 LEGAL POWER. As of the date hereof and as of the Closing, the
Purchaser has and will have all requisite power to enter into and to perform
this Agreement.
4.2 EXPERIENCE. The Purchaser has sufficient experience and expertise
to evaluate the suitability of its investment in the Company to its needs and
has the capacity to protect its interests with the purchase of the Shares.
4.3 INVESTMENT. The Purchaser is acquiring the Shares for investment
for its own account.
4.4 ACCESS TO DATA. The Purchaser hereby represents that it has had the
full opportunity to discuss management and financial affairs of the Company with
its management and key employees and has had the opportunity to review the
business plan and the Company's facilities. The Purchaser has not been denied
any information that has been requested, and based on the said information has
made a diligent examination of the aspects of the Company's business. The
Purchaser has heretofore received all information that the Purchaser has deemed
necessary and appropriate to enable the Purchaser to evaluate the financial risk
inherent in making an investment in the shares of the Company and the Purchaser
has received satisfactory and complete information concerning the business and
financial condition of the Company in response to all inquiries in respect
thereof. The Purchaser is aware that the Company has been in the development
stage since its inception in October 1992, that no sales of its products have
taken place, and that due to the short operating history of the Company there
can be no assurance that the Company will attain profitability. Nothing
contained in this Section 4.4 shall derogate from the liability of the Company
with respect to the representations and warranties made in Section 3 above.
4.5 AUTHORIZATION. All corporate or partnership action on the part of
the Purchaser, its respective directors, partners and/or shareholders necessary
for the authorization, execution, delivery, payment and performance by the
Purchaser of this Agreement and the consummation of the transactions
contemplated herein, has been taken.
4.6 Purchaser has sufficient financial resources to enable it to
fulfill its obligations under this Agreement and commits to make its investment
in the Company as set forth in Section 1 hereinabove.
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SECTION 5
CONDITIONS OF THE PURCHASER TO CLOSING
The obligations of the Purchaser at the Closing, as referred to in
Section 1 hereof, are subject to the fulfillment of each of the following
conditions:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct
when made, and shall be true and correct in all material respects on Closing
with the same force and effect as if they had been made immediately prior to the
Closing and as of such time except for such changes which result from the
obligations of the parties to this Agreement.
5.2 PERFORMANCE. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Company on or prior to
Closing shall have been performed or complied with in all respects.
5.3 LEGAL INVESTMENT. At the time of the Closing, the purchase and
issuance of the Shares shall be legally permitted by all laws and regulations to
which the Purchaser and the Company are subject.
5.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall have been completed to the
satisfaction (as to substance and form) of the Purchaser.
5.5 PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENT. Each of the
Company's employees shall have executed and delivered to the Company an
Employment Agreement, substantially in the form attached hereto as EXHIBIT
"5.5A" or EXHIBIT "5.5B," which agreement contains non-disclosure and
non-competition provisions therein.
5.6 RETENTION OF KEY EMPLOYEES. All the persons listed in EXHIBIT
"3.17" shall either be employees of the Company as of the Closing and to the
best of the Company's knowledge, have not informed them that they intend to
leave the Company, or if an employee has left the Company or intends to leave
the Company, the latter has notified the Purchaser of same.
5.7 OPINION OF COMPANY'S COUNSEL. The Purchaser shall have received
from Nehama Sneh, corporate counsel to the Company, a satisfactory opinion in
substantially the form attached as EXHIBIT "5.7."
SECTION 6
CONDITIONS OF COMPANY TO CLOSING
The obligations of the Company at the Closing, as referred to in
Section 1 hereof, are subject to the fulfillment of each of the following
conditions:
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6.1 REPRESENTATION. The representations and warranties made by the
Purchaser in Section 4 hereof shall be true and correct when made and shall be
true and correct on Closing with the same force and effect as if they had been
made immediately prior to the Closing and as of such time.
6.2 Purchaser has fulfilled any and all of its obligations set forth in
Section 1.1.
SECTION 6A
BOARD OF DIRECTORS
Subsequent to the Closing, the Board of Directors will consist of six
(6) directors, three of whom will be appointed by Zohar Zisapel, Yehuda Zisapel
and RAD Data Communications Ltd., the fourth will be Amos Amir in his capacity
as Managing Director of the Company, and the fifth and the sixth are entitled to
be appointed by The Trust Company of Maritime Bank of Israel ("Maritime") and
Clal Venture Capital LP ("Clal"). Lannet and Finovelec, will have the right to
designate one observer each to the Board of Directors. Upon reasonable notice,
Lannet will be permitted to change the status of its observer to that of
director, in which event the number of directors will be eight (8), Lannet's
observer will become the seventh director and Yehuda Zisapel and Zohar Zisapel
will be entitled to appoint another director (the eighth).
SECTION 7
COVENANTS OF THE COMPANY
For as long as the Purchaser's equity interest in the Company will
amount to at least five (5%) percent of the outstanding capital securities
therein and Purchaser has the right to appoint a director or an observer under
Section 6A hereinabove, except where stated otherwise in this Section 7 and in
Section 8, and without derogating from any rights or obligations conferred upon
shareholders, or obligations conferred upon corporations, under applicable law,
the Company hereby covenants and agrees as follows. For the purposes of
calculating Clal's percentage of ownership set forth above, ECI Telecom Ltd.'s
("ECI") equity interest in the Company at the time will be taken into account
and added to that of Clal for as long as Clal is a shareholder of ECI.
7.1 ADDITIONAL INFORMATION. The Company will permit an employee of the
Purchaser to visit upon a mutually convenient time and inspect any of the
properties of the Company, including its books of account, and to discuss its
affairs, finances and accounts with the Company's officers and the Auditor.
(a) As soon as available after approval by the Board of
Directors, the Company will provide Purchaser with a summary of the budget,
including projected yearly profit and loss accounts and balance sheet, as
contained in its Operating Plan and as approved by its Board of Directors, as
well as information about material changes in the budget, all as approved by the
Board of Directors.
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(b) With reasonable promptness, the Company agrees to provide
to Purchaser such information and data with respect to the Company, as the
Purchaser may from time to time reasonably request.
The foregoing provisions of this Section 7.1 shall not be in
limitation of any rights which the Purchaser may have to inspect and copy the
books and records of the Company or to inspect its properties or discuss its
affairs, finances and accounts, under the laws of the State of Israel.
7.2 USE OF PROCEEDS. The Company will use the proceeds of the issuance
and sale of the Shares mainly to fund its activities and its business subject to
any resolutions made by its Board of Directors from time to time.
7.3 BOARD APPROVAL. Without derogating from the Company's Articles of
Association, or any law or practice limiting the authority of the management of
the Company, the Company shall ensure that the approval of the Board of
Directors of the Company shall be required for the following, (i) designation of
all authorized signatories; (ii) approval of the Company's or the subsidiaries'
budget and Operating Plan; (iii) selection of legal counsel of the Company; (iv)
terms of employment of the Managing Director of the Company; and (v) any and all
other matters with regard to which the Board of Directors of the Company
resolves that its prior approval shall be required.
Without derogating from the first sentence of Section 7 hereof, it is
further provided that the Purchaser's rights hereunder shall expire upon a
public offering of the Company's shares regardless of Purchaser's percentage of
ownership at that time.
7.4 Resolutions of the Board of the Company regarding the following
subject matters shall require the consent of five out of six directors. In the
event that the Board will consist of 8 directors as per Section 6.2 hereinabove,
then the following subject matters will require the consent of 6 out of 8
directors, including consent of two directors out of the following: "Clal"
Director, "Maritime" Director, "Lannet" Director:
(a) A merger of the Company with any other entity;
(b) Acquisition or disposition, including mortgage, of other
corporations, real estate, and any material assets out of the ordinary course of
the Company's business;
(c) Replacement of the Company's Managing Director;
(d) Replacement of the auditors of the Company;
(e) Approval of the distribution of dividends by the Company.
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(f) Loans by the Company or any of its subsidiaries to their
directors or officers, or to their relatives or other affiliates, with the
exception of employees receiving shares under the trust as set forth in
subsection 3.23 hereinabove;
(g) Transactions in excess of $20,000 not included in the
approved Operating Plan between the Company or its affiliates and their
directors, officers and employees or their relatives or other affiliates, with
the exception of employees receiving shares under the trust as set forth in
subsection 3.23 hereinabove;
(h) All material transactions or obligations not contemplated
in the budget by the Company or its subsidiaries; and
(i) Resolution to enter a new business field unrelated to the
present field.
Notwithstanding anything to the contrary contained herein, in the event
that a director is not allowed under a specific section of this Agreement to
participate in a board meeting and/or discussion, the majority required will be
(1) 4 out of 5, or (2) 5 out of 7, including only one of the following: the Clal
Director, Maritime Director, or Lannet Director.
7.5 RIGHT OF FIRST REFUSAL FOR IPO. The Company agrees that in the
event that the Board of Directors resolves:
(a) to initially offer shares of the Company on the Israeli
Stock Exchange, then the following will apply:
(1) The Company will inform Clal Issuing Ltd. of said
resolution;
(2) Clal Issuing Ltd. will have an option for twenty
(20) days as of said notice date by the Company to make a proposal to underwrite
the offering (hereinafter, the "Clal Proposal");
(3) The Board of Directors will consider the Clal
Proposal and will, in its sole discretion, resolve whether it is acceptable or
not; and
(4) In the event that the Board resolves not to
accept the Clal Proposal, then the Company will be free to negotiate and agree
with any underwriter whatsoever.
(5) Within five (5) working days after the written
notice of the Company of the best proposal from the underwriter as in (4) above,
Clal will have the option to improve the Clal Proposal to match the
underwriter's proposal. In the event that Clal Issuing Ltd. either fails to
respond or to match the other proposal, Clal's option under this Section 7.5(a)
will terminate and the Board will be free to proceed as it deems fit.
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(b) In the event that the Board of Directors resolves to
initially offer shares of the Company on NASDAQ, with some of the shares
intended for the Israeli public, then the following will apply:
(1) The Company will inform Clal Issuing Ltd. of said
resolution;
(2) The Company will be free to negotiate and agree
with any underwriting house to underwriter the offering, provided that the
Company notifies said underwriter that Clal Issuing Ltd. has a right of first
refusal concerning the offering of the shares of the Company to the Israeli
public.
(c) In the event that the Board of Directors resolves to
engage a placement agent for a private offering in the Israeli market, and such
agent is entitled to a commission in return for his services (whether by form of
money or options), then the following will apply:
(1) The Company will inform Clal Venture Capital LP
of said resolution;
(2) Clal Issuing Ltd. will have an option for ten
(10) days as of said notice date by the Company to make a proposal to head the
offering as a placement agent (hereinafter, the "Clal Proposal");
(3) Within five (5) working days after the written
notice of the Company of a proposal from another placement agent, Clal and Clal
Issuing Ltd. will have the option to improve the Clal Proposal to match the
other proposal. In the event that Clal Issuing Ltd. either fails to respond or
to match the other proposal, Clal's option under this Section 7.5(c) will
terminate and the Board will be free to proceed as it deems fit;
(4) The Board of Directors will consider the Clal
Proposal as well as the other proposal(s) and will, in its sole discretion,
resolve whether it is acceptable or not; and
(5) In the event the Board accepts Clal Issuing
Ltd.'s proposal and Clal Issuing Ltd. acts as the said placement agent, then,
notwithstanding anything to the contrary contained herein, the Board, in its
sole discretion, by simple majority, will be free thereafter to resolve that the
services of Clal Issuing Ltd. as a placement agent are not satisfactory, to
terminate such services and to receive such services from any other placement
agent without any further rights or obligations with respect to Clal Issuing
Ltd. or the Purchasers.
(d) It is specifically agreed that:
(1) all discussions concerning the identity of
underwriter or placement agent as well as the terms of the offer under Section
7.5 will be without the presence of Clal's appointed director;
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(2) Clal Venture Capital LP's and Clal Issuing Ltd.'s
rights under Section 7.5 will terminate upon acceptance or rejection by the
Board of Directors of the Clal Proposal;
(3) It is further provided that the rights of Clal
Issuing Ltd., and Clal Venture Capital LP under Section 7.5 shall expire upon a
public offering of the Company's shares regardless of Purchaser's percentage of
ownership at that time.
(4) For the purposes of this Agreement, the address
of Clal Issuing Ltd. is 5 Druianov Street, Tel-Aviv 63143.
SECTION 8
For as long as the Purchaser's equity interest in the Company amounts
to at least two (2%) percent of the outstanding share capital of the Company
therein, and without derogating from any rights conferred upon shareholders, or
obligations conferred upon corporations under applicable law, the Company hereby
covenants and agrees as follows:
8.1 PRE-EMPTIVE RIGHTS. If the Company should at any time or from time
to time propose to issue and sell New Securities, as defined in subsection
8.1(a), a pro rata portion of such New Securities shall first be offered (as
hereinafter provided) to the shareholders of the Company (each of whom shall
hereinafter be referred to as "offeree"). For purposes of this Section 8.1, the
pro rata portion of each Offeree shall mean a fraction of the New Securities to
be issued, of which the aggregate number of shares which are held by the Offeree
on the date of the Company's written notification referred to in subsection
8.1(b) below (the "Notice Date") shall be the numerator and the aggregate number
of shares held by all the Offerees shall be the denominator. The aforesaid
rights of the Offerees shall be subject to the following provisions:
(a) "New Securities" shall mean any capital stock of the
Company, whether or not now authorized, and rights, options or warrants to
purchase capital stock, and securities of any type whatsoever that are, or may
become, convertible into capital stock; provided that the term "New Securities"
shall not include (i) securities purchased under this Agreement; (ii) securities
offered to the public; (iii) securities issued pursuant to the acquisition of
another corporation by the Company by merger, purchase of substantially all the
assets of another corporation or any other reorganization whereby the Company
owns not less than fifty-one percent (51%) of the voting power of such
corporation; (iv) securities issued to employees, consultants or directors of
the Company pursuant to any stock option plan or stock purchase or stock bonus
arrangement approved by the Board of Directors of the Company; or (v) securities
issued pursuant to payment of any dividend or distribution with respect to the
Company's issued and outstanding capital stock.
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(b) In the event the Company proposes to undertake an issuance
of New Securities, it shall give each Offeree written notice of its intention,
describing the type of New Securities and the price and the terms upon which the
Company proposes to issue the same, and offering its pro rata portion thereof to
such Offerees at such price and on such terms. Each Offeree shall have
twenty-one (21) days from the date of such notice to accept such offer, in whole
or in part, by written notice to the Company, that has to be received by the
Company during the above mentioned 21 days period. All New Securities as to
which such offers have not been accepted in whole or in part by one or more of
the Offerees (of which fact the Company shall give immediate written notice to
all other Offerees), shall be re-offered to each of the Offerees who have
accepted in full the original offer, and each such Offeree shall have the right,
within ten (10) days of the date of such written notice, to purchase the
respective pro rata portions of such new Securities, the same to be computed as
aforesaid but without regard to the shares held by any Offeree which had not
accepted the original offer in full.
(c) In the event any Offeree fails to accept such offers, the
Company shall have the right to sell within six (6) months or enter into an
agreement, to sell such New Securities as to which such offers were not
accepted, provided, however, that no such sale be effected at a price or upon
terms more favorable to the purchasers thereof than those specified in the
Company's notice pursuant to Section 8.1(b).
(d) Each of Yehuda Zisapel, Zohar Zisapel and RAD Data
Communications Ltd. shall have a right to allocate any unused portion of the New
Securities offered to him to the other.
(e) The Purchaser shall have the right to allocate any unused
portion of the New Securities offered to him to its owners or to a company
affiliated to Purchaser, provided that such recipient of shares will join in
this Agreement as if it had become a party to it as of the receipt of shares.
(f) Notwithstanding anything to the contrary contained herein,
Amos Amir, so long as he is the Managing Director of the Company, will be
entitled to be an Offeree under this Section 8.1.
(g) Each of Lerosh Investments Ltd., Gevahim Investments House
Limited Ltd., Mr. Yoav Chelouche, Permal Emerging Growth V Ltd., Maritime-Julex
Investment Ltd., Mr. Shraga Blazer and Mr. Eli Luz shall have a right to
allocate any unused portion of the New Securities offered to him to the other.
8.2 REGISTRATION RIGHTS. If the Company should elect to offer any of
its securities to the public, the Purchaser and the Present Shareholders shall
have registration rights as set forth in EXHIBIT "8.2" attached hereto.
8.3 RESTRICTIONS. Unless otherwise required by applicable law or under
this Agreement, the Company shall not without the approval of at least 75% of
the shareholders:
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(a) amend or repeal any provision of, or add any provision to,
the Company's Articles of Association;
(b) create any new class or classes of securities of the
Company having any preference or priority as to dividends or assets superior to
any such preference or priority of the Ordinary Shares, or reclassify any of its
existing securities into such superior securities; or
(c) approve a merger of the Company with any other entity;
Without derogating from the first sentence of Section 8, it is
further provided that each shareholder's rights under Section 8 (except for 8.2)
shall expire upon the initial public offering of the Company's shares,
regardless of that shareholder's percentage of ownership at that time.
SECTION 8A
The Company agrees and undertakes as follows:
8A.1 BASIC FINANCIAL INFORMATION. The Company will furnish to the
Purchaser the following reports certified, when so required herein, by the
Company's auditors:
(a) As soon as practicable after the end of each calendar
quarter, and in any event within forty-five (45) days thereafter, a balance
sheet and a profit and loss account and of cash flow (including opening cash,
income, expenses and closing cash) of the Company as of the end of such
quarterly period, and for the current fiscal year to date, prepared in
accordance with generally accepted accounting principles consistently applied
and setting forth in comparative form the figures for the corresponding
periods of the previous fiscal year, subject to changes resulting from
year-end audit adjustments, all in reasonable detail, signed by the principal
financial or accounting officer of the Company. There shall be appended to
such materials a report of the management as to the business of the Company
and its activities during the quarter.
(b) Not later than forty-five (45) days after the end of each
quarter, sales figures, backlog and new orders for such quarter.
Without derogating from the first sentence of Section 7, it is further
provided that the Company will not be required to furnish any information under
the provisions of this Section 8A.1 and of Section 8A.2 below subsequent to the
initial public offering.
8A.2 INSURANCE. The Company shall continue to maintain insurance
policies similar to those described in Section 3.12 above.
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<PAGE>
8A.3 ACCOUNTS AND RECORDS. The Company will keep true records and books
of account in which full, true and correct entries will be made of all dealings
or transactions in relation to its business and affairs in accordance with
generally accepted accounting principles applied on a consistent basis.
8A.4 PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENTS. The
Company will not employ, or continue to employ, any person who will have access
to confidential information with respect to the Company and its operations
unless such person has executed and delivered the Company's standard Employment
agreement then in force containing proprietary information and non-competition
sections to the satisfaction (as to substance and form) of the Company's
counsel.
SECTION 9
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES
Except as set forth in this Section 9, the Present Shareholders and the
Purchaser agree not to sell or transfer any of their shares and rights in the
Company to a third party. This Section 9 will terminate upon the initial
offering of the Company's shares to the public.
9.1 For the purpose of this Section 9, the shareholders, the Purchaser
and the Other Purchasers will be regarded as the following Groups:
(a) Zisapel Group - Yehuda Zisapel, Zohar Zisapel, the
Trust and RAD Data Communications Ltd.
(b) Clal Group - Clal Venture Capital LP, ECI Telecom
Ltd.
(c) Finovelec Group - Finovelec, Factory Systemes,
Houston Venture Partners Ltd.
(d) Capital Group - Zohar Gilon, Avraham Neuman, Yair
Tauman, W.S.P. Capital
(e) Maritime Group - Lerosh Investments Ltd., Gevahim
Investments House Limited Ltd., Mr. Yoav Chelouche, Permal Emerging Growth V
Ltd., Maritime-Julex Investment Ltd., Mr. Shraga Blazer and Mr. Eli Luz.
9.2 Group Members are entitled to transfer shares among themselves for
consideration or without consideration without any restrictions.
9.3 Except as set forth in sections 9.9, 9.10 and 9.11 hereinbelow, any
shareholder who shall elect to transfer (hereinafter "Seller") all or part of
his shares, not in accordance with subsection 9.2 (hereinafter "Offered Shares")
shall offer them first to the other registered
15
<PAGE>
shareholders of the Company at that time (hereinafter "Offerees") on a pro rata
basis based on their share in the share capital of the Company.
9.4 In the event any such Offeree fails to exercise his right to
purchase his Offered Shares within forty-five (45) days from the date the offer
is made, then the Seller shall have the right to offer the Offered Shares to a
third party at the same price and upon the same terms of sale as those offered
to the other shareholders under section 9.3 and provided that said third party
shall undertake all of Seller's obligations under this Agreement. (Such third
party to be called hereunder, the "Transferee"). In the event that the shares
are not sold to said party within six (6) months as of the offer to such said
third party, then Section 9.3 will apply anew.
9.5 The Board of Directors shall have the right to not approve the
transfer of shares to a third party in each of the following events:
(i) If the third party is a competitor of the Company;
(ii) If there is a possibility of conflict of interest
between the third party and the Company;
(iii) For any other reason, in which case such approval
shall not be unreasonably withheld.
9.6 In the event that Yehuda Zisapel and/or Zohar Zisapel and/or RAD
will sell more than a total of 25% of their shares in the Company to third
parties, then Purchaser will have the right to sell the same portion of
Purchaser's shares in the Company under the same terms and conditions
(hereinafter, the "Tag Along Right"). Purchaser will inform Zisapel in writing
by fax and by confirmation by mail if it intends to exercise its Tag Along Right
within ten (10) days after the date of notice by Zisapel to Purchaser. Failure
to respond will be deemed as a decision not to Tag Along.
9.7 This Section 9 will supersede Section 14 of the Inception
Agreement.
9.8 The terms of the Trust Agreement, EXHIBIT 3.23, will have priority
over this Section 9.
9.9 Finovelec, in its discretion, shall be permitted to freely transfer
up to 5% of its shares (at that time) in the Company to up to 6 of Finovelec
executives, as well as up to an additional 5% of its shares (at that time) in
the Company to IDI (if then an affiliate of Finovelec). Such transfer shall be
considered a transfer among the Finovelec Group, provided that each Transferee,
upon receipt of the shares, will join this Agreement and undertake all of
Finovelec's obligations hereunder and will be considered henceforth a member in
the Finovelec Group for the purpose of this Section 9.
9.10 Clal Venture Capital LP is entitled to transfer all of its shares
in the Company to its partners, provided that each Transferee, upon receipt of
the shares, will join this
16
<PAGE>
Agreement and undertake all of Purchaser's obligations hereunder and will be
considered henceforth a member in the Clal Group for the purpose of this Section
9.
9.11 Each of Zohar Gilon, Avraham Neuman and Yair Tauman is entitled,
once, to transfer his shares to a company directly under the total control of
said person, provided that each Transferee, upon receipt of the shares, will
join this Agreement and undertake all of Purchaser's obligations hereunder and
will be considered henceforth a member in the Capital Group for the purpose of
this Section 9.
SECTION 9A
ANTI-DILUTION
(a) In the event that any time prior to the earlier of the Closing of
the Company's initial public offering or three (3) years from the date of this
Agreement, the Company issues or sells any Ordinary Shares to third parties upon
a private placement (excluding Company employees) for consideration per share of
less than US $135 (an "Offering"), then prior to said private placement the
Purchaser shall be given the option to purchase Ordinary Shares of the Company
at par value (NIS 1.- per share), in an amount computed as set forth below.
(b) The amount of shares to be issued to Purchaser will be computed
according to the following table:
- ------------------------------------- ------------------------------------------
SHARE PRICE AT NEXT PRIVATE PLACEMENT ADDITIONAL SHARES ISSUED TO ALL PURCHASERS
(DISTRIBUTED ON A PRO RATA BASIS)
- ------------------------------------- ------------------------------------------
$134.99 to $101.01 7,489 *
- ------------------------------------- ------------------------------------------
$101.00 to $50.51 17,959 *
- ------------------------------------- ------------------------------------------
Less than $50.50 33,642 *
- ------------------------------------- ------------------------------------------
* The number and price of shares will be adjusted in the event of any
restructuring of the Company's share capital.
(c) Upon the occurrence of each event giving rise to a right
pursuant to this Section, the Company will, at its expense, promptly compute the
number of Ordinary Shares that each Purchaser is entitled to purchase in
accordance with the terms hereof, and furnish to the Purchaser, a notice of such
right and the number of shares Purchaser is entitled to.
(d) Any and all of Purchaser's rights under this Section 9A will
terminate within the earliest of: (i) the Closing of the Company's initial
public offering or (ii) three (3) years from the date of this Agreement or (iii)
upon the first private placement contemplated after the Closing set forth in
Section 9A hereinabove.
SECTION 10
MISCELLANEOUS
10.1 ARBITRATION. All disputes arising under this Agreement or in
connection with the transactions hereunder shall be resolved between the parties
in good faith; however,
17
<PAGE>
if these efforts fail, the dispute shall be resolved by arbitration by a sole
arbitrator within sixty (60) days. The arbitrator shall be chosen by agreement
of the parties hereto. If they fail to so agree within twenty (20) days after a
party shall have requested such arbitration, the arbitrator shall be appointed
by the Chairman of the Israeli Bar who shall also determine the place of the
arbitration proceedings based on the convenience of the parties involved;
provided, however, that the arbitrator chosen shall be from the jurisdiction
chosen by the above-mentioned Chairman. The arbitrator shall not be bound by any
judicial rules of evidence or procedure. The arbitral award shall be final and
binding upon the parties, and judgment upon the award may be entered in any
court having jurisdiction, or application may be made to such court for a
judicial acceptance of the award or for an order of enforcement, as the case may
be. The provisions of this Section 10.1 shall apply to all disputes arising in
connection with this Agreement. Each party shall bear its own expenses, subject
to the arbitration judgment on the issue of expenses.
10.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive (i) any investigation made by the Purchaser
and (ii) the Closing.
10.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto; provided, however, that no party may assign its rights hereunder
without the prior written consent of the other parties hereto.
10.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including the
Schedules and Exhibits hereto) and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subject matters hereof and thereof and supersede all prior
agreements and understandings relating thereto. Neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated except by an
instrument in writing signed by all the parties hereto.
10.5 NOTICES. All notices and other communications required or
permitted to be given or sent hereunder shall be in writing and shall be deemed
to have been sufficiently given or delivered for all purposes if mailed by
registered airmail, transmitted by telex or telecopier, or delivered by hand to
the following respective addresses until otherwise directed by notice as
aforesaid:
To the Purchaser:
LANNET Data Communications Ltd.
Atidim Technology Park, Bldg. 3
Dvorah Haneviah Street
Tel Aviv 61131, Israel
Attention: Mr. Benny Hanigal
To the Company:
18
<PAGE>
RADVISION Ltd.
8 Hanechoshet Street
Tel Aviv 69710, Israel
Attention: Mr. Amos Amir
provided, however, that notice of change of address shall be effective only upon
actual receipt.
All notices sent by registered mail shall be deemed to have
been received within seventy-two (72) hours of posting. If delivered by hand,
upon their delivery.
10.6 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy upon any breach or default under this Agreement shall impair any
such right, power or remedy of such holder nor shall it be construed to be a
waiver of any such breach or default, or in acquiescence therein, or of any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any holder of any breach or default under
this Agreement, or any waiver on the part of any holder of any holder of any
provisions or conditions of this Agreement shall be effective only if made in
writing and only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by virtue of law or otherwise afforded
to any holder, shall be cumulative and not alternative.
10.7 WAIVER OF DEFAULT. No waiver with respect to any breach or default
in the performance of any obligation under the terms of this Agreement shall be
deemed to be a waiver with respect to any subsequent breach or default, whether
of similar or different nature.
10.8 RIGHTS; SEVERABILITY. In case any provision of the Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby. The parties hereto shall be obliged to draw up an arrangement in
accordance with the meaning and the object of the invalid provision.
10.9 CONFIDENTIAL INFORMATION. The Purchaser acknowledges that the
information received by it and such information which will be received pursuant
hereto shall be confidential and is intended for the Purchaser's use only for
the purpose of this Agreement, and the Purchaser will not use or allow the use
of such confidential information or reproduce, disclose or disseminate such
information to any other person (other than the Purchaser's employees or agents
having a need to know the contents of such information, and the Purchaser's
attorneys), except in connection with the exercise of rights under this
Agreement, unless the Company has made such information available to the public
generally or the
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<PAGE>
Purchaser is required to disclose such information by a governmental body or by
judicial order, but only to the persons and the extent so required.
10.10 TITLES AND SUBTITLES. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
10.11 GOVERNING LAW. This Agreement shall be governed exclusively by,
and construed solely in accordance with, the laws of the State of Israel.
10.12 Purchaser and any Transferee under Section 9 are represented by
Mr. Benny Hanigal. Notice sent to Mr. Benny Hanigal will be deemed as notice
sent to Purchaser and/or any such Transferee. A resolution or request given by
Mr. Benny Hanigal to the Company will be deemed as if given by Purchaser and any
such Transferee. The Company will have no obligation to provide information or
notice whatsoever except to Mr.
Benny Hanigal.
10.13 Purchaser agrees that the Company will issue to Mr. Eliezer Manor
forty-nine (49) shares against payment of their nominal value.
10.14 Following the Closing, the Company will amend its Memorandum and
Articles of Association to reflect this Agreement. The Present shareholders and
the Purchasers agree to such amendments.
10.15 The Company will bear the cost of stamp tax due in connection
with the issuance of shares according to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
three (3) original copies, one to the Company, one to the Purchaser and one of
the Present Shareholders, as of the date first above-mentioned.
THE COMPANY THE PURCHASER
RADVISION LTD. LANNET DATA COMMUNICATIONS LTD.
By: /s/ AMOS AMIR By: /s/ BENNY HANIGAL
------------------------------- --------------------------------
Amos Amir, Managing Director Benny Hanigal, Managing Director
THE PRESENT SHAREHOLDERS:
/s/ YEHUDA ZISAPEL /s/ ZOHAR ZISAPEL
- ----------------------------------- ------------------------------------
Yehuda Zisapel Zohar Zisapel
(INV5-RVS/6)
20
<PAGE>
EXHIBIT 1
<TABLE>
<CAPTION>
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
NO. OF SHARES SHARES TOTAL NO. OWNERSHIP
PRIOR TO INVESTED ISSUED AT AFTER CLOSING AFTER
NAME OF SHAREHOLDER INVESTMENT AMOUNT CLOSING CLOSING
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Yehunda Zisapel 6,930 6,930 15.34%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Zohar Zisapel 6,930 6,930 15.34%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Yehuda Zisapel and Zohar Zisapel (as 5,940 5,940 13.15%
trustees)
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Amos Amir 932 932 2.06%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
RAD Data Communications Ltd. 710,030 3,515 7.78%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Zohar Gilon 60,600 300 .66%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Avraham Neuman 60,600 300 .66%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Yair Tauman 60,600 300 .66%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
W.S.P. Capital Investments Ltd. 37,976 188 .42%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Lannet Data Communications Ltd. 999,900 4,950 10.95%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Lerosh Investments Ltd. 99,990 495 1.10%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Gevahim Investments House Limited Ltd. 20,200 100 .22%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Yoav Chelouche 49,692 246 0.54%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Permal Emerging Growth V Ltd. 194,930 965 2.14%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Maritime-Julex Investment Ltd. 99,990 495 1.10%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Shraga Blazer 5,050 25 0.06%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Eli Luz 30,098 149 0.33%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Clal Venture Capital LP 999,900 4,950 10.95%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
ECI Telecom Ltd. 499,950 2,475 5.48%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Eliezer Manor 49 0.11%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Finovelec 550,046 2,723 6.03%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Factory Systemes 250,076 1,238 2.74%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Houston Venture Partners Ltd. 199,980 990 2.19%
- ------------------------------------------ ================= =============== ============ ============== ============
20,732 4,929,608 45,185 100.00%
- ------------------------------------------ ================= =============== ============ ============== ============
</TABLE>
21
<PAGE>
EXHIBIT 8.2
REGISTRATION RIGHTS
1. INCIDENTAL REGISTRATION. If the Company shall elect to offer any of
its securities to the public, it shall give notice to the Purchaser of such
intention and shall include in such offering a portion of all shareholders
shares equal to the total amount of shares registered, multiplied by an amount
derived by dividing the number of Shares held by each shareholder by the total
number of shares outstanding at that time. In the event the public offering
involves an underwriting, the rights of the shareholders hereunder shall be
conditional upon the underwriter's determination as to marketing factors
requiring the limitation of such right, and the underwriter may preclude from
the offering any or all securities which could have otherwise been included in
the offering.
2. DEMAND REGISTRATION. At any time commencing one year following the
closing of the Company's initial public offering, and for a period of three (3)
years thereafter, each group of shareholders as defined in section 9.1 and/or
Lannet Data Communications Ltd. shall be entitled to demand one registration of
any or all of its shares held at the time of the initial public offering for
trading on any securities exchange; PROVIDED, however, that such request must
cover Shares representing a market value at the time of such request equal to a
minimum of three million Dollars ($3,000,000); and PROVIDED FURTHER, however,
that such request may not include Shares which within three months from the date
of such request could be sold to the public without restriction, for example
pursuant to the provisions of Rule 144 of the Securities and Exchange
Commission. Within 20 days after receipt, the Company shall give written notice
of such request to the other shareholders and shall include in such registration
all Shares held by them with respect to which the Company receives written
requests for inclusion therein within 15 days after the receipt of the Company's
notice. Thereupon, the Company shall use its best efforts to effect the
registration as soon as possible of all Shares (as to which it has received
requests for registration) for trading on a securities exchange, where the
Shares are then traded, specified in the request for registration. In the event
the registration involves an underwriting, the rights of the shareholders
hereunder shall be conditional upon the underwriter's determination as to
marketing factors requiring the limitation of such right, and the underwriter
may preclude from the offering any or all securities which could have otherwise
been included in the offering. Notwithstanding any other provision of this
clause 2 of Exhibit 8.2, after the Company has effected one such registrations
pursuant to this clause 2, and such registrations have been declared or ordered
effective, in the event that the Company shall furnish to such shareholder(s)
delivering a request for registration a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company it would be seriously detrimental to the Company or its shareholders
for a registration statement to be filed in the near future, the Company's
obligation to use its best efforts to register, qualify or comply under this
clause 2 shall be deferred for a period not to exceed 120 days from the date of
receipt of such request.
22
<PAGE>
3. EXPENSES. All expenses incurred in connection with a registration
under Section 2 shall be borne by the selling shareholders participating in such
registration on a pro rata basis; PROVIDED, however, that the Company shall pay
any expenses associated with such registration which the Company would have
incurred in the ordinary course of business. All expenses incurred in connection
with a registration under Section 1 shall be borne by the Company; PROVIDED,
however, that each of the shareholders participating in such registration shall
pay its pro rata portion of the fees, discounts or commissions payable to any
underwriter.
23
<PAGE>
Exhibit 4.5
AGREEMENT
THIS AGREEMENT made and entered into as of the 19th day of April, 1995,
by and among RADVISION LTD., an Israeli company of 8 Hanechoshet Street, Tel
Aviv 69710, Israel (the "Company") and ECI TELECOM LTD., an Israeli company with
its principal office at 30 Hasivim Street, Petach Tikva, Israel (the "Purchaser"
or "ECI") and Yehuda Zisapel and Zohar Zisapel of 8 Hanechoshet Street, Tel Aviv
69710, Israel (jointly and severally, the "Present Shareholders").
W I T N E S S E T H :
WHEREAS, the Company is and will be engaged in the business of
developing, manufacturing and marketing of products for video conferencing (the
"Field"); and
WHEREAS, the Company desires to issue and sell, and the Purchaser
desires to purchase ordinary shares, par value One New Israeli Shekel (NIS
1.00), of the Company ("Ordinary Shares"),
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained, the Company and the Purchaser hereby
agree as follows:
SECTION 1
ISSUANCE AND PURCHASE OF SHARES
1.1 The Purchaser undertakes to invest in the Company the amount of
Four Hundred Ninety-Nine Thousand Nine Hundred and Fifty US Dollars (US$
499,950) (hereinafter, the "Investment Amount") on the Closing Date as defined
in Section 2 hereinbelow. All amounts will be deposited in US dollars or their
equivalent in NIS to the Company's account no. 377906 at Bank Hapoalim B.M.,
Hadar Yosef Branch (610).
1.2 In consideration for and subject to the execution of the
investment, the Company shall issue on the Closing Date two thousand four
hundred and seventy-five (2,475) ordinary shares (hereinafter, the "Shares") to
the Purchaser. The Company shall not be obligated to issue any shares whatsoever
before the full Investment Amount is received by it. The Shares, when issued,
will have been validly issued, fully paid and non-assessable, and will be free
of any liens or encumbrances.
1.3 The Investment Amount is part of a total amount of approximately US
$ 4,930,000 (hereinafter, the "Total Investment") intended to be raised by the
Company from the Purchaser as well as from other investors (hereinafter, the
"Other Purchasers") as set forth in Exhibit 1 attached hereto. In consideration
for the Total Investment, the Company will issue 24,453 Ordinary Shares, par
value 1.- NIS each. After all said shares have been issued, the ownership of the
Company will be as set forth in Exhibit 1.
<PAGE>
SECTION 2
CLOSING DATE
The purchase of the Shares by the Purchaser shall take place on
______________, 1995 (the "Closing"). The date of the Closing is referred to as
the "Closing Date" in this Agreement.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company and the Present Shareholders hereby represent and warrant
to the Purchaser the facts hereinafter set forth in this Section 3.
3.1 CORPORATE POWER. As of the date hereof and as of the Closing, the
Company has and will have all requisite corporate power to enter into and to
perform this Agreement.
3.2 SUBSIDIARIES. The Company has a wholly owned U.S. subsidiary,
RADVISION Inc. in New Jersey. The Company has no other subsidiaries and does not
otherwise own, of record or beneficially, any capital stock or equity interest
in any other corporation, association or business entity.
3.3 ORGANIZATION AND STANDING. The Company is a corporation duly
organized and existing under the laws of the State of Israel and is in good
standing under such laws. The Company has requisite corporate power to own and
operate its properties and assets, and to carry on its business as presently
conducted. The Memorandum of Association and Articles of Association and all
amendments to date of the Company are attached hereto as EXHIBITS "3.3a" AND
"3.3b."
3.4 CAPITALIZATION. The Company's authorized capital is sixty thousand
(60,000) Ordinary Shares. The Company's issued capital stock immediately prior
to the Closing date shall consist of twenty thousand seven hundred thirty-two
(20,732) Ordinary Shares, all of which are duly authorized, validly issued and
free of any liens or encumbrances. Out of the issued share capital, thirteen
thousand eight hundred sixty (13,860) shares are fully paid and six thousand
eight hundred seventy-two (6,872) shares are partially paid. All shares are
non-assessable, and to the best of the Company's knowledge and belief, are
beneficially owned by their holders of record. There are no preemptive,
conversion or other rights, options, or agreements granted or issued by, or
binding upon, the Company or the shareholders which entitle any person, firm or
corporation to purchase or acquire any shares of the Company's capital stock,
except as set forth in this Agreement and in particular, in Sections 3.21, 3.22
and 3.23.
3.5 AUTHORIZATION. All corporate actions on the part of the Company and
its directors and shareholders, required for the authorization, execution,
delivery and performance by the Company of this Agreement and the consummation
of the transactions contemplated herein have been, or will be executed, upon
signature of this Agreement. This Agreement is and will be valid and binding
obligations of the Company, enforceable in accordance with its terms. The
execution, delivery and performance by the Company of this Agreement, and
compliance therewith, and the consummation of the transactions contemplated by
this Agreement will not
2
<PAGE>
result in any violation of and will not conflict with, or result in a breach of
any of the terms of, or constitute a default under, any document to which the
Company is or will be a party or by which it is or will be bound, or result in
the creation of any mortgage, pledge, lien or encumbrance or charge upon any of
the properties or assets of the Company. To the best of the Company's knowledge,
no third party's consent is required for the Company to become a party to this
Agreement. Immediately after the Closing Date, the Company will inform all
governmental authorities that require to be reported of changes in equity,
including, but not limited to the Israel Investment Center and the Office of the
Chief Scientist of the execution of this Agreement.
3.6 OUTSTANDING DEBT. Except as set forth in the Schedule of Exceptions
attached hereto as EXHIBIT "A" ("Schedule of Exceptions"), the Company has no
outstanding indebtedness for borrowed money and is not a guarantor of any debt
or obligation of another. There exists no default by the Company under the
provisions of any agreement or other instrument evidencing or relating to any
indebtedness or obligation.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the
Schedule of Exceptions, the Company has no material liability of any nature,
direct or indirect, absolute or contingent, not adequately reserved against,
excluding any liabilities related to damage which may have been caused by its
products or are related to sales of said products (unless the Company knows or
should have known of such damages or liabilities). The Company has paid, or has
made adequate provisions for the payment of, all taxes, interest, penalties,
assessments or deficiencies owing by it to any taxing authority.
3.8 ABSENCE OF CERTAIN CHANGES. Since December 31, 1994, the business
of the Company has at all times been conducted in the ordinary course. There has
not been any event or condition of any character which has materially adversely
affected the Company's business, prospects or plans.
3.9 CONTRACTS AND CONTRACTUAL ARRANGEMENTS. The Company is a party to
several material agreements, all of which are described in the Schedule of
Exceptions attached hereto. Each of such agreements is in full force and effect
and, to the Company's knowledge, no party thereto is in breach thereof. The
Company is of the opinion that it receives services from affiliated companies
for fair consideration as described in the Schedule of Exceptions attached
hereto. The Company is not obligated to receive services from said affiliated
companies.
3.10 INDEBTEDNESS OF OR TO SHAREHOLDERS, ETC.; CONFLICTS OF INTEREST.
(a) Except as set forth in the Schedule of Exceptions, none of the
Company's shareholders, directors, officers or employees or any of their
affiliates or families is indebted to the Company and the Company has no debt to
any of them except for accrued wages for the current period.
(b) Except as set forth in the Schedule of Exceptions, to the best of
the Company's knowledge, none of the Company's directors, officers, employees or
consultants, or their affiliates or families, directly or indirectly, own any
material interest in any entity which is a competitor of the Company.
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3.11 LITIGATION; INSOLVENCY PROCEEDINGS. To the best of the Company's
knowledge and belief, there are no pending or threatened actions, suits,
proceedings or any investigations against or affecting the Company involving the
possibility of any judgment or liability which would adversely affect its
business.
3.12 INSURANCE. The Company maintains insurance through RAD-Bynet
insurance policies, adequately covering the perils normally insured against by
companies similarly situated. All policies of insurance maintained by the
Company are attached hereto as EXHIBIT "3.12." To the best of the Company's
knowledge, all such policies are in full force and effect.
3.13 TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. Except as set forth
in the Schedule of Exceptions, the Company owns, or holds under lease, all real
and personal property used by it in its business. All property owned by the
Company (all of which is listed on EXHIBIT "3.13" hereto) is so owned free and
clear of all mortgages, pledges, liens or charges.
3.14 LEASES. EXHIBIT "3.14" hereto contains a correct and complete list
and description (including the amount of rents) of all leases under which the
Company leases property, real or personal.
3.15 BUSINESS OF THE COMPANY. The Company has no knowledge of (i) the
existence of any pending or planned patent, or any statute, rule, law,
regulation, standard or codes which would materially adversely affect the
condition, financial or otherwise, or the business operations, of the Company;
or (ii) the existence of any other factor which would materially adversely
affect the financial condition, or the operations, of the Company.
3.16 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation
of the terms of its Memorandum or Articles of Incorporation, and it is not in
violation of the terms of any judgment, decree, order, statute, rule or
regulation to which it is subject.
3.17 EMPLOYEES. All the key employees of the Company are listed on
EXHIBIT "3.17" hereto. To the best of the Company's knowledge, no such employee
is in violation of any material term of any employment contract, patent
disclosure agreement, non-competition agreement, or any other contract or
agreement or any restrictive covenant or any other obligation to a former
employer relating to the right of any such employee to be employed by the
Company. To date, all payments due to the Company's employees have been paid
regularly. In addition, the Company made all allowances required by law to cover
the amounts due to its employees and/or officers in connection with their
employment and/or termination of employment, as reflected in EXHIBIT "3.20A."
3.18 DISCLOSURE. This Agreement and the Schedule of Exceptions
delivered to the Purchaser do not contain any material untrue statement and do
not omit to state a material fact necessary in order to make the statements
contained herein not misleading in the light of the circumstances under which
they were made, and such documents represent full disclosure by the Company of
the material facts with respect to the business, prospect and plans of the
Company. The Company confirms that to the date of this Agreement, the Business
Plan dated August, 1994, which was provided to the Purchaser, does not contain
any materially untrue information as far as
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same relates to the Company itself. Theother information contained therein may
have changed since August, 1994.
3.19 PRODUCTS AND OWNERSHIP. A description of the products is enclosed
as EXHIBIT "3.19." To the best of the knowledge and belief of the Company and as
set forth in the Schedule of Exceptions, the Company possesses, or is proceeding
with due diligence to obtain, all patents, patent rights, trademarks, trademark
names, trade name rights and copyrights the Company believes are necessary to
conduct its business as now being conducted and as planned to be conducted
(without conflict with, or infringement upon, any valid rights of others), the
lack of which could affect the operations or condition, financial or otherwise,
of the Company. The Company has no knowledge of any infringement by the Company
or claimed infringement upon, or any conflict with, the patent rights,
trademarks, trademark rights, trade names, trade name rights, copyrights,
intellectual property rights or other rights of any person, form or corporation.
3.20 FINANCIAL STATEMENTS. The audited financial statements of the
Company as of December 31, 1994 are attached hereto as EXHIBIT "3.20A" and
adequately reflect the financial situation of the Company. The unaudited
financial statements of the Company as of February 28, 1995 are attached hereto
as Exhibit "3.20b." As of December 31, 1994 to date, the Company did not enter
into any material transaction or undertake any material commitment which was not
in the normal course of business, and there was no material change for the worse
in the Company's position, liabilities and assets.
3.21 The agreements with the other purchasers will resemble the
Agreement with Purchaser.
3.22 In the event of any contradiction between this Agreement and the
Inception Agreement, attached hereto as EXHIBIT "3.22," the current Memorandum
of Association and the current Articles of Association, this Agreement shall
prevail.
3.23 On January 1, 1995, a trust in favor of employees of the Company
and certain employees of the RAD-Bynet group was created. Said Trust Agreement
is attached hereto as EXHIBIT "3.23."
3.24 As of the date of this Agreement, the directors of the Company
are: Yehuda Zisapel, Zohar Zisapel and Amos Amir.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
4.1 LEGAL POWER. As of the date hereof and as of the Closing, the
Purchaser has and will have all requisite power to enter into and to perform
this Agreement.
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4.2 EXPERIENCE. The Purchaser has sufficient experience and expertise
to evaluate the suitability of its investment in the Company to its needs and
has the capacity to protect its interests with the purchase of the Shares.
4.3 INVESTMENT. The Purchaser is acquiring the Shares for investment
for its own account.
4.4 ACCESS TO DATA. The Purchaser hereby represents that it has had the
full opportunity to discuss management and financial affairs of the Company with
its management and key employees and has had the opportunity to review the
business plan and the Company's facilities. The Purchaser has not been denied
any information that has been requested, and based on the said information has
made a diligent examination of the aspects of the Company's business. The
Purchaser has heretofore received all information that the Purchaser has deemed
necessary and appropriate to enable the Purchaser to evaluate the financial risk
inherent in making an investment in the shares of the Company and the Purchaser
has received satisfactory and complete information concerning the business and
financial condition of the Company in response to all inquiries in respect
thereof. The Purchaser is aware that the Company has been in the development
stage since its inception in October 1992, that no sales of its products have
taken place, and that due to the short operating history of the Company there
can be no assurance that the Company will attain profitability. Nothing
contained in this Section 4.4 shall derogate from the liability of the Company
with respect to the representations and warranties made in Section 3 above.
4.5 AUTHORIZATION. All corporate or partnership action on the part of
the Purchaser, its respective directors, partners and/or shareholders necessary
for the authorization, execution, delivery, payment and performance by the
Purchaser of this Agreement and the consummation of the transactions
contemplated herein, has been taken.
4.6 Purchaser has sufficient financial resources to enable it to
fulfill its obligations under this Agreement and commits to make its investment
in the Company as set forth in Section 1 hereinabove.
SECTION 5
CONDITIONS OF THE PURCHASER TO CLOSING
The obligations of the Purchaser at the Closing, as referred to in
Section 1 hereof, are subject to the fulfillment of each of the following
conditions:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct
when made, and shall be true and correct in all material respects on Closing
with the same force and effect as if they had been made immediately prior to the
Closing and as of such time except for such changes which result from the
obligations of the parties to this Agreement.
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5.2 PERFORMANCE. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Company on or prior to
Closing shall have been performed or complied with in all respects.
5.3 LEGAL INVESTMENT. At the time of the Closing, the purchase and
issuance of the Shares shall be legally permitted by all laws and regulations to
which the Purchaser and the Company are subject.
5.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall have been completed to the
satisfaction (as to substance and form) of the Purchaser.
5.5 PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENT. Each of the
Company's employees shall have executed and delivered to the Company an
Employment Agreement, substantially in the form attached hereto as EXHIBIT
"5.5A" or EXHIBIT "5.5B," which agreement contains non-disclosure and
non-competition provisions therein.
5.6 RETENTION OF KEY EMPLOYEES. All the persons listed in EXHIBIT
"3.17" shall either be employees of the Company as of the Closing and to the
best of the Company's knowledge, have not informed them that they intend to
leave the Company, or if an employee has left the Company or intends to leave
the Company, the latter has notified the Purchaser of same.
5.7 OPINION OF COMPANY'S COUNSEL. The Purchaser shall have received
from Nehama Sneh, corporate counsel to the Company, a satisfactory opinion in
substantially the form attached as EXHIBIT "5.7."
SECTION 6
CONDITIONS OF COMPANY TO CLOSING
The obligations of the Company at the Closing, as referred to in
Section 1 hereof, are subject to the fulfillment of each of the following
conditions:
6.1 REPRESENTATION. The representations and warranties made by the
Purchaser in Section 4 hereof shall be true and correct when made and shall be
true and correct on Closing with the same force and effect as if they had been
made immediately prior to the Closing and as of such time.
6.2 Purchaser has fulfilled any and all of its obligations set forth in
Section 1.1.
SECTION 6 A
BOARD OF DIRECTORS
Subsequent to the Closing, the Board of Directors will consist of six
(6) directors, three of whom will be appointed by Zohar Zisapel, Yehuda Zisapel
and RAD Data Communications Ltd., the fourth will be Amos Amir in his capacity
as Managing Director of the Company, and the fifth
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and the sixth are entitled to be appointed by The Trust Company of Maritime Bank
of Israel ("Maritime") and Clal Venture Capital LP ("Clal"). Lannet Data
Communications Ltd. ("Lannet") and Finovelec, will have the right to designate
one observer each to the Board of Directors. Upon reasonable notice, Lannet will
be permitted to change the status of its observer to that of director, in which
event the number of directors will be eight (8), Lannet's observer will become
the seventh director and Yehuda Zisapel and Zohar Zisapel will be entitled to
appoint another director (the eighth).
SECTION 7
COVENANTS OF THE COMPANY
For as long as the Purchaser's equity interest in the Company will
amount to at least five (5%) percent of the outstanding capital securities
therein and Purchaser has the right to appoint a director or an observer under
Section 6A hereinabove, except where stated otherwise in this Section 7 and in
Section 8, and without derogating from any rights or obligations conferred upon
shareholders, or obligations conferred upon corporations, under applicable law,
the Company hereby covenants and agrees as follows. For the purposes of
calculating Clal's percentage of ownership set forth above, ECI Telecom Ltd.'s
("ECI") xequity interest in the Company at the time will be taken into account
and added to that of Clal for as long as Clal is a shareholder of ECI.
7.1 ADDITIONAL INFORMATION. The Company will permit an employee of the
Purchaser to visit upon a mutually convenient time and inspect any of the
properties of the Company, including its books of account, and to discuss its
affairs, finances and accounts with the Company's officers and the Auditor.
(a) As soon as available after approval by the Board of Directors, the
Company will provide Purchaser with a summary of the budget, including projected
yearly profit and loss accounts and balance sheet, as contained in its Operating
Plan and as approved by its Board of Directors, as well as information about
material changes in the budget, all as approved by the Board of Directors.
(b) With reasonable promptness, the Company agrees to provide to
Purchaser such information and data with respect to the Company, as the
Purchaser may from time to time reasonably request.
The foregoing provisions of this Section 7.1 shall not be in limitation
of any rights which the Purchaser may have to inspect and copy the books and
records of the Company or to inspect its properties or discuss its affairs,
finances and accounts, under the laws of the State of Israel.
7.2 USE OF PROCEEDS. The Company will use the proceeds of the issuance
and sale of the Shares mainly to fund its activities and its business subject to
any resolutions made by its Board of Directors from time to time.
7.3 BOARD APPROVAL. Without derogating from the Company's Articles of
Association, or any law or practice limiting the authority of the management of
the Company, the Company
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shall ensure that the approval of the Board of Directors of the Company shall be
required for the following, (i) designation of all authorized signatories; (ii)
approval of the Company's or the subsidiaries' budget and Operating Plan; (iii)
selection of legal counsel of the Company; (iv) terms of employment of the
Managing Director of the Company; and (v) any and all other matters with regard
to which the Board of Directors of the Company resolves that its prior approval
shall be required.
Without derogating from the first sentence of Section 7 hereof, it is
further provided that the Purchaser's rights hereunder shall expire upon a
public offering of the Company's shares regardless of Purchaser's percentage of
ownership at that time.
7.4 Resolutions of the Board of the Company regarding the following
subject matters shall require the consent of five out of six directors. In the
event that the Board will consist of 8 directors as per Section 6.2 hereinabove,
then the following subject matters will require the consent of 6 out of 8
directors, including consent of two directors out of the following: "Clal"
Director, "Maritime" Director, "Lannet" Director:
(a) A merger of the Company with any other entity;
(b) Acquisition or disposition, including mortgage, of other
corporations, real estate, and any material assets out of the ordinary course of
the Company's business;
(c) Replacement of the Company's Managing Director;
(d) Replacement of the auditors of the Company;
(e) Approval of the distribution of dividends by the Company.
(f) Loans by the Company or any of its subsidiaries to their directors
or officers, or to their relatives or other affiliates, with the exception of
employees receiving shares under the trust as set forth in subsection 3.23
hereinabove;
(g) Transactions in excess of $20,000 not included in the approved
Operating Plan between the Company or its affiliates and their directors,
officers and employees or their relatives or other affiliates, with the
exception of employees receiving shares under the trust as set forth in
subsection 3.23 hereinabove;
(h) All material transactions or obligations not contemplated in the
budget by the Company or its subsidiaries; and
(i) Resolution to enter a new business field unrelated to the present
field.
Notwithstanding anything to the contrary contained herein, in the event
that a director is not allowed under a specific section of this Agreement to
participate in a board meeting and/or discussion, the majority required will be
(1) 4 out of 5, or (2) 5 out of 7, including only one of the following: the Clal
Director, Maritime Director, or Lannet Director.
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7.5 RIGHT OF FIRST REFUSAL FOR IPO. The Company agrees that in the
event that the Board of Directors resolves:
(a) to initially offer shares of the Company on the Israeli Stock
Exchange, then the following will apply:
(1) The Company will inform Clal Issuing Ltd. of said
resolution;
(2) Clal Issuing Ltd. will have an option for twenty (20) days
as of said notice date by the Company to make a proposal to underwrite the
offering (hereinafter, the "Clal Proposal");
(3) The Board of Directors will consider the Clal Proposal and
will, in its sole discretion, resolve whether it is acceptable or not; and
(4) In the event that the Board resolves not to accept the
Clal Proposal, then the Company will be free to negotiate and agree with any
underwriter whatsoever.
(5) Within five (5) working days after the written notice of
the Company of the best proposal from the underwriter as in (4) above, Clal will
have the option to improve the Clal Proposal to match the underwriter's
proposal. In the event that Clal Issuing Ltd. either fails to respond or to
match the other proposal, Clal's option under this Section 7.5(a) will terminate
and the Board will be free to proceed as it deems fit.
(b) In the event that the Board of Directors resolves to initially
offer shares of the Company on NASDAQ, with some of the shares intended for the
Israeli public, then the following will apply:
(1) The Company will inform Clal Issuing Ltd. of said
resolution;
(2) The Company will be free to negotiate and agree with any
underwriting house to underwriter the offering, provided that the Company
notifies said underwriter that Clal Issuing Ltd. has a right of first refusal
concerning the offering of the shares of the Company to the Israeli public.
(c) In the event that the Board of Directors resolves to engage a
placement agent for a private offering in the Israeli market, and such agent is
entitled to a commission in return for his services (whether by form of money or
options), then the following will apply:
(1) The Company will inform Clal Venture Capital LP of said
resolution;
(2) Clal Issuing Ltd. will have an option for ten (10) days as
of said notice date by the Company to make a proposal to head the offering as a
placement agent (hereinafter, the "Clal Proposal");
(3) Within five (5) working days after the written notice of
the Company of a proposal from another placement agent, Clal and Clal Issuing
Ltd. will have the option to
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improve the Clal Proposal to match the other proposal. In the event that Clal
Issuing Ltd. either fails to respond or to match the other proposal, Clal's
option under this Section 7.5(c) will terminate and the Board will be free to
proceed as it deems fit;
(4) The Board of Directors will consider the Clal Proposal as
well as the other proposal(s) and will, in its sole discretion, resolve whether
it is acceptable or not; and
(5) In the event the Board accepts Clal Issuing Ltd.'s
proposal and Clal Issuing Ltd. acts as the said placement agent, then,
notwithstanding anything to the contrary contained herein, the Board, in its
sole discretion, by simple majority, will be free thereafter to resolve that the
services of Clal Issuing Ltd. as a placement agent are not satisfactory, to
terminate such services and to receive such services from any other placement
agent without any further rights or obligations with respect to Clal Issuing
Ltd. or the Purchasers.
(d) It is specifically agreed that:
(1) all discussions concerning the identity of underwriter or
placement agent as well as the terms of the offer under Section 7.5 will be
without the presence of Clal's appointed director;
(2) Clal Venture Capital LP's and Clal Issuing Ltd.'s rights
under Section 7.5 will terminate upon acceptance or rejection by the Board of
Directors of the Clal Proposal;
(3) It is further provided that the rights of Clal Issuing
Ltd., and Clal Venture Capital LP under Section 7.5 shall expire upon a public
offering of the Company's shares regardless of Purchaser's percentage of
ownership at that time.
(4) For the purposes of this Agreement, the address of Clal
Issuing Ltd. is 5 Druianov Street, Tel-Aviv 63143.
SECTION 8
For as long as the Purchaser's equity interest in the Company amounts
to at least two (2%) percent of the outstanding share capital of the Company
therein, and without derogating from any rights conferred upon shareholders, or
obligations conferred upon corporations under applicable law, the Company hereby
covenants and agrees as follows:
8.1 PRE-EMPTIVE RIGHTS. If the Company should at any time or from time
to time propose to issue and sell New Securities, as defined in subsection
8.1(a), a pro rata portion of such New Securities shall first be offered (as
hereinafter provided) to the shareholders of the Company (each of whom shall
hereinafter be referred to as "offeree"). For purposes of this Section 8.1, the
pro rata portion of each Offeree shall mean a fraction of the New Securities to
be issued, of which the aggregate number of shares which are held by the Offeree
on the date of the Company's written notification referred to in subsection
8.1(b) below (the "Notice Date") shall be the numerator and the aggregate number
of shares held by all the Offerees shall be the denominator. The aforesaid
rights of the Offerees shall be subject to the following provisions:
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(a) "New Securities" shall mean any capital stock of the Company,
whether or not now authorized, and rights, options or warrants to purchase
capital stock, and securities of any type whatsoever that are, or may become,
convertible into capital stock; provided that the term "New Securities" shall
not include (i) securities purchased under this Agreement; (ii) securities
offered to the public; (iii) securities issued pursuant to the acquisition of
another corporation by the Company by merger, purchase of substantially all the
assets of another corporation or any other reorganization whereby the Company
owns not less than fifty-one percent (51%) of the voting power of such
corporation; (iv) securities issued to employees, consultants or directors of
the Company pursuant to any stock option plan or stock purchase or stock bonus
arrangement approved by the Board of Directors of the Company; or (v) securities
issued pursuant to payment of any dividend or distribution with respect to the
Company's issued and outstanding capital stock.
(b) In the event the Company proposes to undertake an issuance of New
Securities, it shall give each Offeree written notice of its intention,
describing the type of New Securities and the price and the terms upon which the
Company proposes to issue the same, and offering its pro rata portion thereof to
such Offerees at such price and on such terms. Each Offeree shall have
twenty-one (21) days from the date of such notice to accept such offer, in whole
or in part, by written notice to the Company, that has to be received by the
Company during the above mentioned 21 days period. All New Securities as to
which such offers have not been accepted in whole or in part by one or more of
the Offerees (of which fact the Company shall give immediate written notice to
all other Offerees), shall be re-offered to each of the Offerees who have
accepted in full the original offer, and each such Offeree shall have the right,
within ten (10) days of the date of such written notice, to purchase the
respective pro rata portions of such new Securities, the same to be computed as
aforesaid but without regard to the shares held by any Offeree which had not
accepted the original offer in full.
(c) In the event any Offeree fails to accept such offers, the Company
shall have the right to sell within six (6) months or enter into an agreement,
to sell such New Securities as to which such offers were not accepted, provided,
however, that no such sale be effected at a price or upon terms more favorable
to the purchasers thereof than those specified in the Company's notice pursuant
to Section 8.1(b).
(d) Each of Yehuda Zisapel, Zohar Zisapel and RAD Data Communications
Ltd. shall have a right to allocate any unused portion of the New Securities
offered to him to the other.
(e) The Purchaser shall have the right to allocate any unused portion
of the New Securities offered to him to its owners or to a company affiliated to
Purchaser, provided that such recipient of shares will join in this Agreement as
if it had become a party to it as of the receipt of shares.
(f) Notwithstanding anything to the contrary contained herein, Amos
Amir, so long as he is the Managing Director of the Company, will be entitled to
be an Offeree under this Section 8.1.
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(g) Each of Lerosh Investments Ltd., Gevahim Investments House Limited
Ltd., Mr. Yoav Chelouche, Permal Emerging Growth V Ltd., Maritime-Julex
Investment Ltd., Mr. Shraga Blazer and Mr. Eli Luz shall have a right to
allocate any unused portion of the New Securities offered to him to the other.
8.2 REGISTRATION RIGHTS. If the Company should elect to offer any of
its securities to the public, the Purchaser and the Present Shareholders shall
have registration rights as set forth in EXHIBIT "8.2" attached hereto.
8.3 RESTRICTIONS. Unless otherwise required by applicable law or under
this Agreement, the Company shall not without the approval of at least 75% of
the shareholders:
(a) amend or repeal any provision of, or add any provision to, the
Company's Articles of Association;
(b) create any new class or classes of securities of the Company having
any preference or priority as to dividends or assets superior to any such
preference or priority of the Ordinary Shares, or reclassify any of its existing
securities into such superior securities; or
(c) approve a merger of the Company with any other entity;
Without derogating from the first sentence of Section 8, it is further
provided that each shareholder's rights under Section 8 (except for 8.2) shall
expire upon the initial public offering of the Company's shares, regardless of
that shareholder's percentage of ownership at that time.
SECTION 8A
The Company agrees and undertakes as follows:
8A.1 BASIC FINANCIAL INFORMATION. The Company will furnish to the
Purchaser the following reports certified, when so required herein, by the
Company's auditors:
(a) As soon as practicable after the end of each calendar quarter, and
in any event within forty-five (45) days thereafter, a balance sheet and a
profit and loss account and of cash flow (including opening cash, income,
expenses and closing cash) of the Company as of the end of such quarterly
period, and for the current fiscal year to date, prepared in accordance with
generally accepted accounting principles consistently applied and setting forth
in comparative form the figures for the corresponding periods of the previous
fiscal year, subject to changes resulting from year-end audit adjustments, all
in reasonable detail, signed by the principal financial or accounting officer of
the Company. There shall be appended to such materials a report of the
management as to the business of the Company and its activities during the
quarter.
(b) Not later than forty-five (45) days after the end of each quarter,
sales figures, backlog and new orders for such quarter.
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Without derogating from the first sentence of Section 7, it is further
provided that the Company will not be required to furnish any information under
the provisions of this Section 8A.1 and of Section 8A.2 below subsequent to the
initial public offering.
8A.2 INSURANCE. The Company shall continue to maintain insurance
policies similar to those described in Section 3.12 above.
8A.3 ACCOUNTS AND RECORDS. The Company will keep true records and books
of account in which full, true and correct entries will be made of all dealings
or transactions in relation to its business and affairs in accordance with
generally accepted accounting principles applied on a consistent basis.
8A.4 PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENTS. The
Company will not employ, or continue to employ, any person who will have access
to confidential information with respect to the Company and its operations
unless such person has executed and delivered the Company's standard Employment
agreement then in force containing proprietary information and non-competition
sections to the satisfaction (as to substance and form) of the Company's
counsel.
SECTION 9
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES
Except as set forth in this Section 9, the Present Shareholders and the
Purchaser agree not to sell or transfer any of their shares and rights in the
Company to a third party. This Section 9 will terminate upon the initial
offering of the Company's shares to the public.
9.1 For the purpose of this Section 9, the shareholders, the Purchaser
and the Other Purchasers will be regarded as the following Groups:
(a) Zisapel Group - Yehuda Zisapel, Zohar Zisapel, the Trust and
RAD Data Communications Ltd.
(b) Clal Group - Clal Venture Capital LP, ECI Telecom Ltd.
(c) Finovelec Group - Finovelec, Factory Systemes, Houston Venture
Partners Ltd.
(d) Capital Group - Zohar Gilon, Avraham Neuman, Yair Tauman,
W.S.P. Capital
(e) Maritime Group - Lerosh Investments Ltd., Gevahim Investments
House Limited Ltd., Mr. Yoav Chelouche, Permal Emerging Growth
V Ltd., Maritime-Julex Investment Ltd., Mr. Shraga Blazer and
Mr. Eli Luz.
9.2 Group Members are entitled to transfer shares among themselves for
consideration or without consideration without any restrictions.
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9.3 Except as set forth in sections 9.9, 9.10 and 9.11 hereinbelow, any
shareholder who shall elect to transfer (hereinafter "Seller") all or part of
his shares, not in accordance with subsection 9.2 (hereinafter "Offered Shares")
shall offer them first to the other registered shareholders of the Company at
that time (hereinafter "Offerees") on a pro rata basis based on their share in
the share capital of the Company.
9.4 In the event any such Offeree fails to exercise his right to
purchase his Offered Shares within forty-five (45) days from the date the offer
is made, then the Seller shall have the right to offer the Offered Shares to a
third party at the same price and upon the same terms of sale as those offered
to the other shareholders under section 9.3 and provided that said third party
shall undertake all of Seller's obligations under this Agreement. (Such third
party to be called hereunder, the "Transferee"). In the event that the shares
are not sold to said party within six (6) months as of the offer to such said
third party, then Section 9.3 will apply anew.
9.5 The Board of Directors shall have the right to not approve the
transfer of shares to a third party in each of the following events:
(a) If the third party is a competitor of the Company;
(b) If there is a possibility of conflict of interest between the
third party and the Company;
(c) For any other reason, in which case such approval shall not be
unreasonably withheld.
9.6 In the event that Yehuda Zisapel and/or Zohar Zisapel and/or RAD
will sell more than a total of 25% of their shares in the Company to third
parties, then Purchaser will have the right to sell the same portion of
Purchaser's shares in the Company under the same terms and conditions
(hereinafter, the "Tag Along Right"). Purchaser will inform Zisapel in writing
by fax and by confirmation by mail if it intends to exercise its Tag Along Right
within ten (10) days after the date of notice by Zisapel to Purchaser. Failure
to respond will be deemed as a decision not to Tag Along.
9.7 This Section 9 will supersede Section 14 of the Inception
Agreement.
9.8 The terms of the Trust Agreement, EXHIBIT 3.23, will have priority
over this Section 9.
9.9 Finovelec, in its discretion, shall be permitted to freely transfer
up to 5% of its shares (at that time) in the Company to up to 6 of Finovelec
executives, as well as up to an additional 5% of its shares (at that time) in
the Company to IDI (if then an affiliate of Finovelec). Such transfer shall be
considered a transfer among the Finovelec Group, provided that each Transferee,
upon receipt of the shares, will join this Agreement and undertake all of
Finovelec's obligations hereunder and will be considered henceforth a member in
the Finovelec Group for the purpose of this Section 9.
15
<PAGE>
9.10 Clal Venture Capital LP is entitled to transfer all of its shares
in the Company to its partners, provided that each Transferee, upon receipt of
the shares, will join this Agreement and undertake all of Purchaser's
obligations hereunder and will be considered henceforth a member in the Clal
Group for the purpose of this Section 9.
9.11 Each of Zohar Gilon, Avraham Neuman and Yair Tauman is entitled,
once, to transfer his shares to a company directly under the total control of
said person, provided that each Transferee, upon receipt of the shares, will
join this Agreement and undertake all of Purchaser's obligations hereunder and
will be considered henceforth a member in the Capital Group for the purpose of
this Section 9.
SECTION 9A
ANTI-DILUTION
(a) In the event that any time prior to the earlier of the Closing of
the Company's initial public offering or three (3) years from the date of this
Agreement, the Company issues or sells any Ordinary Shares to third parties upon
a private placement (excluding Company employees) for consideration per share of
less than US $135 (an "Offering"), then prior to said private placement the
Purchaser shall be given the option to purchase Ordinary Shares of the Company
at par value (NIS 1.- per share), in an amount computed as set forth below.
(b) The amount of shares to be issued to Purchaser will be computed
according to the following table:
- ------------------------------------- ------------------------------------------
SHARE PRICE AT NEXT PRIVATE PLACEMENT ADDITIONAL SHARES ISSUED TO ALL PURCHASERS
(DISTRIBUTED ON A PRO-RATA BASIS)
- ------------------------------------- ------------------------------------------
$134.99 to $101.01 7,489 *
- ------------------------------------- ------------------------------------------
$101.00 to $50.51 17,959 *
- ------------------------------------- ------------------------------------------
Less than $50.5 33,642 *
- ------------------------------------- ------------------------------------------
* The number and price of shares will be adjusted in the event of any
restructuring of the Company's share capital.
(c) Upon the occurrence of each event giving rise to a right pursuant
to this Section, the Company will, at its expense, promptly compute the number
of Ordinary Shares that each Purchaser is entitled to purchase in accordance
with the terms hereof, and furnish to the Purchaser, a notice of such right and
the number of shares Purchaser is entitled to.
(d) Any and all of Purchaser's rights under this Section 9A will
terminate within the earliest of: (i) the Closing of the Company's initial
public offering or (ii) three (3) years from the date of this Agreement or (iii)
upon the first private placement contemplated after the Closing set forth in
Section 9A hereinabove.
16
<PAGE>
SECTION 10
MISCELLANEOUS
10.1 ARBITRATION. All disputes arising under this Agreement or in
connection with the transactions hereunder shall be resolved between the parties
in good faith; however, if these efforts fail, the dispute shall be resolved by
arbitration by a sole arbitrator within sixty (60) days. The arbitrator shall be
chosen by agreement of the parties hereto. If they fail to so agree within
twenty (20) days after a party shall have requested such arbitration, the
arbitrator shall be appointed by the Chairman of the Israeli Bar who shall also
determine the place of the arbitration proceedings based on the convenience of
the parties involved; provided, however, that the arbitrator chosen shall be
from the jurisdiction chosen by the above-mentioned Chairman. The arbitrator
shall not be bound by any judicial rules of evidence or procedure. The arbitral
award shall be final and binding upon the parties, and judgment upon the award
may be entered in any court having jurisdiction, or application may be made to
such court for a judicial acceptance of the award or for an order of
enforcement, as the case may be. The provisions of this Section 10.1 shall apply
to all disputes arising in connection with this Agreement. Each party shall bear
its own expenses, subject to the arbitration judgment on the issue of expenses.
10.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive (i) any investigation made by the Purchaser
and (ii) the Closing.
10.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto; provided, however, that no party may assign its rights hereunder
without the prior written consent of the other parties hereto.
10.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including the
Schedules and Exhibits hereto) and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subject matters hereof and thereof and supersede all prior
agreements and understandings relating thereto. Neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated except by an
instrument in writing signed by all the parties hereto.
10.5 NOTICES. All notices and other communications required or
permitted to be given or sent hereunder shall be in writing and shall be deemed
to have been sufficiently given or delivered for all purposes if mailed by
registered airmail, transmitted by telex or telecopier, or delivered by hand to
the following respective addresses until otherwise directed by notice as
aforesaid:
To the Purchaser:
ECI TELECOM LTD.
30 Hasivim Street
Petach Tikva, Israel
Attention: Managing Director
17
<PAGE>
To the Company:
RADVISION Ltd.
8 Hanechoshet Street
Tel Aviv 69710, Israel
Attention: Mr. Amos Amir
provided, however, that notice of change of address shall be effective only upon
actual receipt.
All notices sent by registered mail shall be deemed to have been
received within seventy-two (72) hours of posting. If delivered byhand, upon
their delivery.
10.6 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy upon any breach or default under this Agreement shall impair any
such right, power or remedy of such holder nor shall it be construed to be a
waiver of any such breach or default, or in acquiescence therein, or of any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any holder of any breach or default under
this Agreement, or any waiver on the part of any holder of any holder of any
provisions or conditions of this Agreement shall be effective only if made in
writing and only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by virtue of law or otherwise afforded
to any holder, shall be cumulative and not alternative.
10.7 WAIVER OF DEFAULT. No waiver with respect to any breach or default
in the performance of any obligation under the terms of this Agreement shall be
deemed to be a waiver with respect to any subsequent breach or default, whether
of similar or different nature.
10.8 RIGHTS; SEVERABILITY. In case any provision of the Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby. The parties hereto shall be obliged to draw up an arrangement in
accordance with the meaning and the object of the invalid provision.
10.9 CONFIDENTIAL INFORMATION. The Purchaser acknowledges that the
information received by it and such information which will be received pursuant
hereto shall be confidential and is intended for the Purchaser's use only for
the purpose of this Agreement, and the Purchaser will not use or allow the use
of such confidential information or reproduce, disclose or disseminate such
information to any other person (other than the Purchaser's employees or agents
having a need to know the contents of such information, and the Purchaser's
attorneys), except in connection with the exercise of rights under this
Agreement, unless the Company has made such information available to the public
generally or the Purchaser is required to disclose such information by a
governmental body or by judicial order, but only to the persons and the extent
so required.
18
<PAGE>
10.10 TITLES AND SUBTITLES. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
10.11 GOVERNING LAW. This Agreement shall be governed exclusively by,
and construed solely in accordance with, the laws of the State of Israel.
10.12 Purchaser and any Transferee under Section 9 are represented by
the Managing Director of ECI Telecom Ltd.. Notice sent to the Managing Director
of ECI Telecom Ltd. will be deemed as notice sent to Purchaser and/or any such
Transferee. A resolution or request given by the Managing Director of ECI
Telecom Ltd. to the Company will be deemed as if given by Purchaser and any such
Transferee. The Company will have no obligation to provide information or notice
whatsoever except to the Managing Director of ECI Telecom Ltd.
10.13 Purchaser agrees that the Company will issue to Mr. Eliezer Manor
forty-nine (49) shares against payment of their nominal value.
10.14 Following the Closing, the Company will amend its Memorandum and
Articles of Association to reflect this Agreement. The Present shareholders and
the Purchasers agree to such amendments.
10.15 The Company will bear the cost of stamp tax due in connection
with the issuance of shares according to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
three (3) original copies, one to the Company, one to the Purchaser and one of
the Present Shareholders, as of the date first above-mentioned.
THE COMPANY THE PURCHASER
RADVISION LTD. ECI TELECOM LTD.
By: /s/ AMOS AMIR By: /s/ ECI TELECOM LTD.
----------------------------- --------------------------------
Amos Amir, Managing Director Executive Vice President
THE PRESENT SHAREHOLDERS:
/s/ YEHUDA ZISAPEL /s/ ZOHAR ZISAPEL
- ---------------------------------- -------------------------------------
Yehuda Zisapel Zohar Zisapel
(INV5-RVS/6)
19
<PAGE>
EXHIBIT "A"
SCHEDULE OF EXCEPTIONS
Pursuant to Section 3 of the Agreement
1. LIABILITIES, MONETARY OBLIGATIONS, ENCUMBRANCES AND GUARANTEES
RADVision's monetary obligations and liabilities as of December 31,
1994 are as described in its financial report of said date.
2. LIABILITIES - ISRAELI TAXATION
2.1 RADVision has not received final tax assessments from the
Israeli tax authorities for the years of its operation.
2.2 RADVision has not finally determined the extent of its
liability in respect of deduction of tax at source regarding
shares issued and/or transferred to employees and/or to a
trust on behalf of its employees.
3. ADDITIONAL LIABILITIES - CLAIMS, ROYALTIES
3.1 RADVision is obligated to pay various royalties and other
payments on sales of its products to the following:
3.1.1 Chief Scientist of the Ministry of Industry and
Commerce; - 3% on sales up to a maximum of 150% off
approved and paid grant.
3.1.2 Bird F - up to 5% on sales up to a maximum of US$
554,563 linked to the United States Consumer Price
Index ("USCPI"). This amount includes the amount to
be paid by Workstation Technologies, Inc. ("WTI")
RADVision has a back-to-back agreement with WTI for
reimbursement to RADVision of amounts paid by
RADVision instead of WTI.
(see Related Parties, hereafter in this schedule).
3.2 Other than above, RADVision's liabilities include those
incurred in the ordinary course of business.
4. ARRANGEMENTS, LIABILITIES AND UNDERTAKINGS IN MATERIAL AGREEMENTS WITH
THIRD PARTIES
RADVision is a party to the following material contractual arrangements
and agreements:
4.1 Lease Agreement (unsigned) between RADVision Ltd. and RAD
Network Devices Ltd. (hereinafter "RND") (an affiliate) for
sublease of 415 square meters until August 1995 for a price of
NIS 41.55 linked to the Israeli Cost of Living ("C.O.L.')
Index payable to RND. The premises belong to Atidim Ltd.
1
<PAGE>
4.2 Cooperation and Project Funding Agreement dated January 27,
1994 by and between RADVision Ltd., Workstation Technologies
Inc. and the Bird Foundation.
4.3 RADVision has an approved credit line totalling USS 1M at Bank
Hapoalim B.M.
5. AGREEMENTS WITH EMPLOYEES
5.1 Trust Agreement of January 1, 1995 between Y. and Z. Zisapel,
and Y. Zisapel, Z. Zisapel and Amos Amir as trustees,
providing for the issue, transfer and holding of shares in
RADVision by the said trustees primarily on behalf of
employees of the Company and of the RAD-Bynet Group, and also
on behalf of Y. and Z. Zisapel.
5.2 Agreement with several employees under which the said
employees joined the Trust Agreement as set out in paragraph
5.1 above.
5.3 Loans to Employees
5.3.1 RADVision granted to several of its employees and to
two employees of RAD Data Communications Ltd. loans
in a total amount of approximately US$ 71,000 under
the Trust Agreement. The above loans are limited to
the C.O.L. index and bear annual interest of
approximately 1% percent.
5.3.2 As of January, 1995, RADVision has not granted any
other loans to employees, except as set forth
hereinbelow.
5.3.3 Loans, as in 5.3.2, if and when given, will be at
varying terms which include the payment of interest
and/or linkage at either of the following rates:
(I) C.O.L. Linkage + 0.5% monthly interest; or
(II) U.S. $ Linkage + 0.5% monthly interest.
5.4 Unsigned Agreement with Mr. Amos Amir according to which Mr.
Amir, in his capacity as Managing Director of the Company was
issued 932 ordinary shares of the Company against US$ 140,732.
The vesting period is four years as of January 1, 1995. Upon
the occurrence of certain events prior to December 31, 1998
(hereinafter -- "Termination Event"), then the non-vested
shares will be transferred to the Employee's Trust without any
consideration therefor. In connection with the purchase of the
said shares, on January 1, 1995, the Board approved a loan in
the amount of NIS 410,642 to Mr. Amos Amir. The loan is linked
to the Cost of Living Index and bears an annual interest rate
of l% (including V.A.T., if applicable, on linkage differences
and interest). In the event that the Termination Event occurs
prior to the vesting period, then that portion of the loan
relating to the non-vested shares (including linkage
differences, interest and V.A.T., if applicable) will be
cancelled.
2
<PAGE>
6. RELATED PARTIES
Yehuda Zisapel and/or Zohar Zisapel own substantial interests in
certain companies (including, but not limited to Lannet Data
Communications Ltd., RAD Data Communications Ltd., Bynet Data
Communications Ltd., RAD Network Devices Ltd., Silicom Ltd., RIT
Technologies Ltd., RADCOM Ltd., RUN--RAD Unlimited Networking Ltd.,
RADNet Ltd., RADView Software Ltd., RADGuard Ltd., RADLinx Ltd. and
RADWay International Ltd.). The said companies are customers and/or
suppliers of goods and services of RADVision, at commercial terms
determined between the parties from time to time. In particular, and
without derogating from the generality of the above, the following
arrangements exist between the above parties and RADVision.
6.1 Founders' Agreement between Y. Zisapel, Z. Zisapel and Amos
Amir dated January 6, 1992 and Amendment No. 1 dated March 23,
1994.
6.2 Long-term loan received by RADVision from RAD Data
Communications Ltd. further to the Founders' Agreement in the
amount of US $630,000. The loan is linked to the C.O.L., with
no interest. The loan was to be repaid on a semi-annual basis.
As of February 28, 1995, the balance of the loan including
linkage differences of about approximately US$ 707, 000.
The loan will be converted into capital on the Closing against
an issuance of 3,515 shares.
6.3 RADVision's insurance policies and the services agreement for
services received from the RAD-Bynet Group are connected with
those of the RAD-Bynet group for cost-saving and efficiency
reasons.
6.4 Non-Disclosure Agreement dated August 9, 1993 between Lannet
Data Communications Ltd. and RADVision Ltd.
6.5 Agreement dated December 30, 1993 between RADVision Ltd. and
Armon Networking Ltd. according to which RADVision will buy
certain products from Armon Networking Ltd.
6.6 Non-Disclosure Agreement between RADVision and Armon
Networking Ltd. with respect to December 30, 1993 Agreement
set forth in 6.5 hereinabove.
6.7 Agreement dated March 8, 1995 between the Company, RADLinx
Ltd., RIT Ltd., RUN-RAD Unlimited Networking Ltd., RADCOM
Ltd., RADGuard Ltd., Armon Networking Ltd., Neurim
Pharmaceuticals (1991) Ltd. and RADNet Ltd., according to
which damage to a car belonging to either party in excess of
US $1500, which is either non-insured or cannot be collected,
will be shared by the parties thereto.
3
<PAGE>
6.8 Agreement dated January 4, 1995 between RADVision Ltd. and
RADLinx Ltd. according to which the parties will share their
expenses in connection with their respective U.S.
subsidiaries, RADVision Inc. and RADLinx Inc.
7. APPROVED ENTERPRISE
RADVision has applied for approval of an investment plan by the
Investment Center of the Ministry of Industry and Commerce.
8. CHIEF SCIENTIST APPROVALS
RADVision has received and applied for further approvals and grants
relating to research and development activities from the Chief
Scientist of the Ministry of Industry and Commerce dated as follows:
8.1 Approval no. 16203 dated September 27, 1993 and replaced on
January 24, 1994.
8.2 Approved grant no. 18224 dated June 1, 1994.
8.3 Approved grant no. 18225 dated September 1, 1994.
8.4 Approved grant no. 18704 dated September 1, 1994.
4
<PAGE>
EXHIBIT 1
<TABLE>
<CAPTION>
NAME OF NO. OF SHARES INVESTED SHARES TOTAL NO. OWNERSHIP
SHAREHOLDER PRIOR TO AMOUNT ISSUED AFTER AFTER CLOSING
INVESTMENT AT CLOSING CLOSING
- ------------------------------ ----------------- --------------- ------------------ --------------- -----------------
<S> <C> <C> <C> <C> <C>
Yehuda Zisapel 6,930 6,930 15.34%
Zohar Zisapel 6,930 6,930 15.34%
Yehuda Zisapel and Zohar 5,940 5,940 13.15%
Zisapel (as trustees)
Amos Amir 932 932 2.06%
RAD Data Communications Ltd. 710,030 3,515 7.78%
Zohar Gilon 60,600 300 0.66%
Avraham Neuman 60,600 300 0.66%
Yair Tauman 60,600 300 0.66%
W.S.P. Capital Investments 37,976 188 0.42%
Ltd.
Lannet Data Communications 999,900 4,950 10.95%
Ltd.
Lerosh Investments Ltd. 99,990 495 1.10%
Gevahim Investments House 20,200 100 0.22%
Limited Ltd.
Yoav Chelouche 49,692 246 0.54%
Permal Emerging Growth V Ltd. 194,930 965 2.14%
Maritime - Julex Investment 99,990 495 1.10%
Ltd.
Shraga Blazer 5,050 25 0.06%
Eli Luz 30,098 149 0.33%
Clal Venture Capital LP 999,900 4,950 10.95%
<PAGE>
<CAPTION>
NAME OF NO. OF SHARES INVESTED SHARES TOTAL NO. OWNERSHIP
SHAREHOLDER PRIOR TO AMOUNT ISSUED AFTER AFTER CLOSING
INVESTMENT AT CLOSING CLOSING
- ------------------------------ ----------------- --------------- ------------------ --------------- -----------------
<S> <C> <C> <C> <C> <C>
ECI Telecom Ltd. 499,950 2,475 5.48%
Eliezer Manor 49 0.11%
Finovelec 550,046 2,723 6.03%
Factory Systemes 250,076 1,238 2.74%
Houston Venture Partners Ltd. 199,980 990 2.19%
20,732 4,929,608 45,185 100.00%
</TABLE>
2
<PAGE>
EXHIBIT 5.7
To: Purchaser
(as defined in the attached Agreement
dated April 19, 1995)
OPINION
I, the undersigned, as counsel to RADVision Ltd., hereby give my opinion, to the
best of my knowledge at this time as follows:
1. ORGANIZATION AND STANDING. RADVision Ltd. ("RADVision") is a company
duly organized and existing under the laws of the State of Israel and is in good
standing under such laws. RADVision has the requisite corporate power to own and
operate its properties and assets and to carry on its business as presently
conducted.
2. CAPITALIZATION. The RADVision's authorized capital is sixty thousand
(60,000) Ordinary Shares. The RADVision's issued capital stock immediately prior
to the Closing date shall consist of twenty thousand seven hundred thirty-two
(20,732) Ordinary Shares, all of which are duly authorized, validly issued and
free of any liens or encumbrances. Out of the issued share capital, thirteen
thousand eight hundred sixty (13,860) shares are fully paid and six thousand
eight hundred seventy-two (6,872) shares are partially paid. All shares are
non-assessable, and to the best of RADVision' s knowledge and belief, are
beneficially owned by their holders of record. There are no preemptive,
conversion or other rights, options, or agreements granted or issued by, or
binding upon, RADVision or the shareholders which entitle any person, firm or
corporation to purchase or acquire any shares of RADVision's capital stock,
except as set forth in this Agreement.
The rights, restrictions, privileges and preferences with respect to
RADVision's shares, as set forth in its Memorandum of Association and Articles
of Association, are valid and enforceable. To the best of my knowledge, there
are no outstanding rights, options, warrants, conversion rights or agreements
for the purchase or acquisition from RADVision of any shares of its capital
stock, except as stated in its Memorandum and Articles of Association.
3. COMPLIANCE WITH LAW AND OTHER INSTRUMENTS. The execution, delivery
and performance of the Agreement dated April 19, 1995 between RADVision and the
Purchaser (the "Agreement") will not result in any violation of, or be in
conflict with or constitute a default under, any applicable law, regulation or
order, RADVision's Memorandum of Association or Articles of Association. To the
best of my knowledge, the execution, delivery and performance of the Agreement
and consummation of the transactions contemplated thereby, will not result in
any violation of, or be in conflict with or constitute a default under, any term
of any mortgage, indenture, contract, agreement, instrument, judgment, decree or
order applicable to RADVision, or result in the creation of any mortgage,
pledge, lien, encumbrance or charge upon any of the properties or assets of
RADVision pursuant to any such term.
4. LITIGATION. To the best of my knowledge, there are neither any
actions, proceedings nor investigations pending or threatened against RADVision
or its assets or properties.
1
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5. EMPLOYMENT AGREEMENTS. The agreements between RADVision and its
employees (except for Danny Levin) as referred to in Sections 5.5 and 5.6 of the
Agreement have been duly executed and delivered by, and constitute valid and
binding obligations of, all such employees, enforceable by RADVision in
accordance with their terms.
6. STATEMENTS AND FACTS. Nothing has come to my attention that would
lead me to believe that the Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein not misleading.
/s/ NEHAMA SNEH
-----------------------------------
Nehama Sneh
Advocate
Dated: April 19, 1995
(opinion/6)
2
<PAGE>
EXHIBIT 8.2
REGISTRATION RIGHTS
1. INCIDENTAL REGISTRATION. the Company shall elect to offer any of its
securities to the public, it shall give notice to the Purchaser of such
intention and shall include in such offering a portion of all shareholders
shares equal to the total amount of shares registered, multiplied by an amount
derived by dividing the number of Shares held by each shareholder by the total
number of shares outstanding at that time. In the event the public offering
involves an underwriting, the rights of the shareholders hereunder shall be
conditional upon the underwriter's determination as to marketing factors
requiring the limitation of such right, and the underwriter may preclude from
the offering any or all securities which could have otherwise been included in
the offering.
2. DEMAND REGISTRATION. At any time commencing one year following the
closing of the Company's initial public offering, and for a period of three (3)
years thereafter, each group of shareholders as defined in section 9.1 and/or
Lannet Data Communications Ltd. shall be entitled to demand one registration of
any or all of its shares held at the time of the initial public offering for
trading on any securities exchange; PROVIDED, however, that such request must
cover Shares representing a market value at the time of such request equal to a
minimum of three million Dollars ($3,000,000); and PROVIDED FURTHER, however,
that such request may not include Shares which within three months from the date
of such request could be sold to the public without restriction, for example
pursuant to the provisions of Rule 144 of the Securities and Exchange
Commission. Within 20 days after receipt, the Company shall give written notice
of such request to the other shareholders and shall include in such registration
all Shares held by them with respect to which the Company receives written
requests for inclusion therein within 15 days after the receipt of the Company's
notice. Thereupon, the Company shall use its best efforts to effect the
registration as soon as possible of all Shares (as to which it has received
requests for registration) for trading on a securities exchange, where the
Shares are then traded, specified in the request for registration. In the event
the registration involves an underwriting, the rights of the shareholders
hereunder shall be conditional upon the underwriter's determination as to
marketing factors requiring the limitation of such right, and the underwriter
may preclude from the offering any or all securities which could have otherwise
been included in the offering. Notwithstanding any other provision of this
clause 2 of Exhibit 8.2, after the Company has effected one such registrations
pursuant to this clause 2, and such registrations have been declared or ordered
effective, in the event that the Company shall furnish to such shareholder(s)
delivering a request for registration a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company it would be seriously detrimental to the Company or its shareholders
for a registration statement to be filed in the near future, the Company's
obligation to use its best efforts to register, qualify or comply under this
clause 2 shall be deferred for a period not to exceed 120 days from the date of
receipt of such request.
3. EXPENSES. All expenses incurred in connection with a registration
under Section 2 shall be borne by the selling shareholders participating in such
registration on a pro rata basis; PROVIDED, however, that the Company shall pay
any expenses associated with such registration
1
<PAGE>
which the Company would have incurred in the ordinary course of business. All
expenses incurred in connection with a registration under Section 1 shall be
borne by the Company; PROVIDED, however, that each of the shareholders
participating in such registration shall pay its pro rata portion of the fees,
discounts or commissions payable to any underwriter.
(INV5-RVS/6)
2
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Exhibit 4.6
AGREEMENT
THIS AGREEMENT made and entered into as of the 24th day of April, 1995,
by and among RADVISION LTD., an Israeli company of 8 Hanechoshet Street, Tel
Aviv 69710, Israel (the "Company") and Messrs. (1) Zohar Gilon, (2) Avraham
Neuman, (3) Yair Tauman and (4) W.S.P. Capital Investments Ltd., an Israeli
company, all of them of 2 Yavne Street, Tel Aviv, Israel (all four of them
together jointly and severally the "Purchaser") and Yehuda Zisapel and Zohar
Zisapel of 8 Hanechoshet Street, Tel Aviv 69710, Israel (jointly and severally,
the "Present Shareholders").
W I T N E S S E T H :
WHEREAS, the Company is and will be engaged in the business of
developing, manufacturing and marketing of products for video conferencing (the
"Field"); and
WHEREAS, the Company desires to issue and sell, and the Purchaser
desires to purchase ordinary shares, par value One New Israeli Shekel (NIS
1.00), of the Company ("Ordinary Shares"),
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained, the Company and the Purchaser hereby
agree as follows:
SECTION 1
ISSUANCE AND PURCHASE OF SHARES
1.1 The Purchaser undertakes to invest in the Company the amount of Two
Hundred Nineteen Thousand Seven Hundred and Seventy-Six US Dollars (US$ 219,776)
(hereinafter, the "Investment Amount") on the Closing Date as defined in Section
2 hereinbelow. All amounts will be deposited in US dollars or their equivalent
in NIS to the Company's account no. 377906 at Bank Hapoalim B.M., Hadar Yosef
Branch (610).
1.2 In consideration for and subject to the execution of the
investment, the Company shall issue on the Closing Date one thousand and
eighty-eight (1,088) ordinary shares (hereinafter, the "Shares") to the
Purchaser. The Company shall not be obligated to issue any shares whatsoever
before the full Investment Amount is received by it. The Shares, when issued,
will have been validly issued, fully paid and non-assessable, and will be free
of any liens or encumbrances.
The above shares will be issued as follows:
Zohar Gilon 300 shares
Avraham Neuman 300 shares
Yair Tauman 300 shares
W.S.P. Capital Investments Ltd. 188 shares
1.3 The Investment Amount is part of a total amount of approximately US
$4,930,000 (hereinafter, the "Total Investment") intended to be raised by the
Company
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from the Purchaser as well as from other investors (hereinafter, the "Other
Purchasers") as set forth in Exhibit 1 attached hereto. In consideration for the
Total Investment, the Company will issue 24,453 Ordinary Shares, par value 1.-
NIS each. After all said shares have been issued, the ownership of the Company
will be as set forth in Exhibit 1.
SECTION 2
CLOSING DATE
The purchase of the Shares by the Purchaser shall take place on April
25, 1995 (the "Closing"). The date of the Closing is referred to as the "Closing
Date" in this Agreement.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company and the Present Shareholders hereby represent and warrant
to the Purchaser the facts hereinafter set forth in this Section 3.
3.1 CORPORATE POWER. As of the date hereof and as of the Closing, the
Company has and will have all requisite corporate power to enter into and to
perform this Agreement.
3.2 SUBSIDIARIES. The Company has a wholly owned U.S. subsidiary,
RADVISION Inc. in New Jersey. The Company has no other subsidiaries and does not
otherwise own, of record or beneficially, any capital stock or equity interest
in any other corporation, association or business entity.
3.3 ORGANIZATION AND STANDING. The Company is a corporation duly
organized and existing under the laws of the State of Israel and is in good
standing under such laws. The Company has requisite corporate power to own and
operate its properties and assets, and to carry on its business as presently
conducted. The Memorandum of Association and Articles of Association and all
amendments to date of the Company are attached hereto as EXHIBITS "3.3A" AND
"3.3B."
3.4 CAPITALIZATION. The Company's authorized capital is sixty thousand
(60,000) Ordinary Shares. The Company's issued capital stock immediately prior
to the Closing date shall consist of twenty thousand seven hundred thirty-two
(20,732) Ordinary Shares, all of which are duly authorized, validly issued and
free of any liens or encumbrances. Out of the issued share capital, thirteen
thousand eight hundred sixty (13,860) shares are fully paid and six thousand
eight hundred seventy-two (6,872) shares are partially paid. All shares are
non-assessable, and to the best of the Company's knowledge and belief, are
beneficially owned by their holders of record. There are no preemptive,
conversion or other rights, options, or agreements granted or issued by, or
binding upon, the Company or the shareholders which entitle any person, firm or
corporation to purchase or acquire any shares of the Company's capital stock,
except as set forth in this Agreement and in particular, in Sections 3.21, 3.22
and 3.23.
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3.5 AUTHORIZATION. All corporate actions on the part of the Company and
its directors and shareholders, required for the authorization, execution,
delivery and performance by the Company of this Agreement and the consummation
of the transactions contemplated herein have been, or will be executed, upon
signature of this Agreement. This Agreement is and will be valid and binding
obligations of the Company, enforceable in accordance with its terms. The
execution, delivery and performance by the Company of this Agreement, and
compliance therewith, and the consummation of the transactions contemplated by
this Agreement will not result in any violation of and will not conflict with,
or result in a breach of any of the terms of, or constitute a default under, any
document to which the Company is or will be a party or by which it is or will be
bound, or result in the creation of any mortgage, pledge, lien or encumbrance or
charge upon any of the properties or assets of the Company. To the best of the
Company's knowledge, no third party's consent is required for the Company to
become a party to this Agreement. Immediately after the Closing Date, the
Company will inform all governmental authorities that require to be reported of
changes in equity, including, but not limited to the Israel Investment Center
and the Office of the Chief Scientist of the execution of this Agreement.
3.6 OUTSTANDING DEBT. Except as set forth in the Schedule of Exceptions
attached hereto as EXHIBIT "A" ("Schedule of Exceptions"), the Company has no
outstanding indebtedness for borrowed money and is not a guarantor of any debt
or obligation of another. There exists no default by the Company under the
provisions of any agreement or other instrument evidencing or relating to any
indebtedness or obligation.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the
Schedule of Exceptions, the Company has no material liability of any nature,
direct or indirect, absolute or contingent, not adequately reserved against,
excluding any liabilities related to damage which may have been caused by its
products or are related to sales of said products (unless the Company knows or
should have known of such damages or liabilities). The Company has paid, or has
made adequate provisions for the payment of, all taxes, interest, penalties,
assessments or deficiencies owing by it to any taxing authority.
3.8 ABSENCE OF CERTAIN CHANGES. Since December 31, 1994, the business
of the Company has at all times been conducted in the ordinary course. There has
not been any event or condition of any character which has materially adversely
affected the Company's business, prospects or plans.
3.9 CONTRACTS AND CONTRACTUAL ARRANGEMENTS. The Company is a party to
several material agreements, all of which are described in the Schedule of
Exceptions attached hereto. Each of such agreements is in full force and effect
and, to the Company's knowledge, no party thereto is in breach thereof. The
Company is of the opinion that it receives services from affiliated companies
for fair consideration as described in the Schedule of Exceptions attached
hereto. The Company is not obligated to receive services from said affiliated
companies.
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3.10 INDEBTEDNESS OF OR TO SHAREHOLDERS, ETC.; CONFLICTS OF INTEREST.
(a) Except as set forth in the Schedule of Exceptions, none of
the Company's shareholders, directors, officers or employees or any of their
affiliates or families is indebted to the Company and the Company has no debt to
any of them except for accrued wages for the current period.
(b) Except as set forth in the Schedule of Exceptions, to the
best of the Company's knowledge, none of the Company's directors, officers,
employees or consultants, or their affiliates or families, directly or
indirectly, own any material interest in any entity which is a competitor of the
Company.
3.11 LITIGATION; INSOLVENCY PROCEEDINGS. To the best of the Company's
knowledge and belief, there are no pending or threatened actions, suits,
proceedings or any investigations against or affecting the Company involving the
possibility of any judgment or liability which would adversely affect its
business.
3.12 INSURANCE. The Company maintains insurance through RAD-Bynet
insurance policies, adequately covering the perils normally insured against by
companies similarly situated. All policies of insurance maintained by the
Company are attached hereto as EXHIBIT "3.12." To the best of the Company's
knowledge, all such policies are in full force and effect.
3.13 TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. Except as set forth
in the Schedule of Exceptions, the Company owns, or holds under lease, all real
and personal property used by it in its business. All property owned by the
Company (all of which is listed on EXHIBIT "3.13" hereto) is so owned free and
clear of all mortgages, pledges, liens or charges.
3.14 LEASES. EXHIBIT "3.14" hereto contains a correct and complete list
and description (including the amount of rents) of all leases under which the
Company leases property, real or personal.
3.15 BUSINESS OF THE COMPANY. The Company has no knowledge of (i) the
existence of any pending or planned patent, or any statute, rule, law,
regulation, standard or codes which would materially adversely affect the
condition, financial or otherwise, or the business operations, of the Company;
or (ii) the existence of any other factor which would materially adversely
affect the financial condition, or the operations, of the Company.
3.16 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation
of the terms of its Memorandum or Articles of Incorporation, and it is not in
violation of the terms of any judgment, decree, order, statute, rule or
regulation to which it is subject.
3.17 EMPLOYEES. All the key employees of the Company are listed on
EXHIBIT "3.17" hereto. To the best of the Company's knowledge, no such employee
is in violation of any material term of any employment contract, patent
disclosure agreement, non-competition agreement, or any other contract or
agreement or any restrictive
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covenant or any other obligation to a former employer relating to the right of
any such employee to be employed by the Company. To date, all payments due to
the Company's employees have been paid regularly. In addition, the Company made
all allowances required by law to cover the amounts due to its employees and/or
officers in connection with their employment and/or termination of employment,
as reflected in EXHIBIT "3.20A."
3.18 DISCLOSURE. This Agreement and the Schedule of Exceptions
delivered to the Purchaser do not contain any material untrue statement and do
not omit to state a material fact necessary in order to make the statements
contained herein not misleading in the light of the circumstances under which
they were made, and such documents represent full disclosure by the Company of
the material facts with respect to the business, prospect and plans of the
Company. The Company confirms that to the date of this Agreement, the Business
Plan dated August, 1994, which was provided to the Purchaser, does not contain
any materially untrue information as far as same relates to the Company itself.
The other information contained therein may have changed since August, 1994.
3.19 PRODUCTS AND OWNERSHIP. A description of the products is enclosed
as EXHIBIT 3.19. To the best of the knowledge and belief of the Company and as
set forth in the Schedule of Exceptions, the Company possesses, or is proceeding
with due diligence to obtain, all patents, patent rights, trademarks, trademark
names, trade name rights and copyrights the Company believes are necessary to
conduct its business as now being conducted and as planned to be conducted
(without conflict with, or infringement upon, any valid rights of others), the
lack of which could affect the operations or condition, financial or otherwise,
of the Company. The Company has no knowledge of any infringement by the Company
or claimed infringement upon, or any conflict with, the patent rights,
trademarks, trademark rights, trade names, trade name rights, copyrights,
intellectual property rights or other rights of any person, form or corporation.
3.20 FINANCIAL STATEMENTS. The audited financial statements of the
Company as of December 31, 1994 are attached hereto as EXHIBIT "3.20A" and
adequately reflect the financial situation of the Company. The unaudited
financial statements of the Company as of February 28, 1995 are attached hereto
as Exhibit "3.20b." As of December 31, 1994 to date, the Company did not enter
into any material transaction or undertake any material commitment which was not
in the normal course of business, and there was no material change for the worse
in the Company's position, liabilities and assets.
3.21 The agreements with the other purchasers will resemble the
Agreement with Purchaser.
3.22 In the event of any contradiction between this Agreement and the
Inception Agreement, attached hereto as EXHIBIT "3.22," and the current
Memorandum of Association and current Articles of Association, this Agreement
shall prevail.
3.23 On January 1, 1995, a trust in favor of employees of the Company
and certain employees of the RAD-Bynet group was created. Said Trust Agreement
is attached hereto as EXHIBIT "3.23."
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3.24 As of the date of this Agreement, the directors of the Company
are: Yehuda Zisapel, Zohar Zisapel and Amos Amir.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
4.1 LEGAL POWER. As of the date hereof and as of the Closing, the
Purchaser has and will have all requisite power to enter into and to perform
this Agreement.
4.2 EXPERIENCE. The Purchaser has sufficient experience and expertise
to evaluate the suitability of its investment in the Company to its needs and
has the capacity to protect its interests with the purchase of the Shares.
4.3 INVESTMENT. The Purchaser is acquiring the Shares for investment
for its own account.
4.4 ACCESS TO DATA. The Purchaser hereby represents that it has had the
full opportunity to discuss management and financial affairs of the Company with
its management and key employees and has had the opportunity to review the
business plan and the Company's facilities. The Purchaser has not been denied
any information that has been requested, and based on the said information has
made a diligent examination of the aspects of the Company's business. The
Purchaser has heretofore received all information that the Purchaser has deemed
necessary and appropriate to enable the Purchaser to evaluate the financial risk
inherent in making an investment in the shares of the Company and the Purchaser
has received satisfactory and complete information concerning the business and
financial condition of the Company in response to all inquiries in respect
thereof. The Purchaser is aware that the Company has been in the development
stage since its inception in October 1992, that no sales of its products have
taken place, and that due to the short operating history of the Company there
can be no assurance that the Company will attain profitability. Nothing
contained in this Section 4.4 shall derogate from the liability of the Company
with respect to the representations and warranties made in Section 3 above.
4.5 AUTHORIZATION. All corporate or partnership action on the part of
the Purchaser, its respective directors, partners and/or shareholders necessary
for the authorization, execution, delivery, payment and performance by the
Purchaser of this Agreement and the consummation of the transactions
contemplated herein, has been taken.
4.6 Purchaser has sufficient financial resources to enable it to
fulfill its obligations under this Agreement and commits to make its investment
in the Company as set forth in Section 1 hereinabove.
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SECTION 5
CONDITIONS OF THE PURCHASER TO CLOSING
The obligations of the Purchaser at the Closing, as referred to in
Section 1 hereof, are subject to the fulfillment of each of the following
conditions:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct
when made, and shall be true and correct in all material respects on Closing
with the same force and effect as if they had been made immediately prior to the
Closing and as of such time except for such changes which result from the
obligations of the parties to this Agreement.
5.2 PERFORMANCE. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Company on or prior to
Closing shall have been performed or complied with in all respects.
5.3 LEGAL INVESTMENT. At the time of the Closing, the purchase and
issuance of the Shares shall be legally permitted by all laws and regulations to
which the Purchaser and the Company are subject.
5.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall have been completed to the
satisfaction (as to substance and form) of the Purchaser.
5.5 PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENT. Each of the
Company's employees shall have executed and delivered to the Company an
Employment Agreement, substantially in the form attached hereto as EXHIBIT
"5.5A" or EXHIBIT "5.5B," which agreement contains non-disclosure and
non-competition provisions therein.
5.6 RETENTION OF KEY EMPLOYEES. All the persons listed in EXHIBIT
"3.17" shall either be employees of the Company as of the Closing and to the
best of the Company's knowledge, have not informed them that they intend to
leave the Company, or if an employee has left the Company or intends to leave
the Company, the latter has notified the Purchaser of same.
5.7 OPINION OF COMPANY'S COUNSEL. The Purchaser shall have received
from Nehama Sneh, corporate counsel to the Company, a satisfactory opinion in
substantially the form attached as EXHIBIT "5.7."
SECTION 6
CONDITIONS OF COMPANY TO CLOSING
The obligations of the Company at the Closing, as referred to in
Section 1 hereof, are subject to the fulfillment of each of the following
conditions:
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6.1 REPRESENTATION. The representations and warranties made by the
Purchaser in Section 4 hereof shall be true and correct when made and shall be
true and correct on Closing with the same force and effect as if they had been
made immediately prior to the Closing and as of such time.
6.2 Purchaser has fulfilled any and all of its obligations set forth in
Section 1.1.
SECTION 6A
BOARD OF DIRECTORS
Subsequent to the Closing, the Board of Directors will consist of six
(6) directors, three of whom will be appointed by Zohar Zisapel, Yehuda Zisapel
and RAD Data Communications Ltd., the fourth will be Amos Amir in his capacity
as Managing Director of the Company, and the fifth and the sixth are entitled to
be appointed by The Trust Company of Maritime Bank of Israel ("Maritime") and
Clal Venture Capital LP ("Clal"). Lannet Data Communications Ltd. ("Lannet") and
Finovelec, will have the right to designate one observer each to the Board of
Directors. Upon reasonable notice, Lannet will be permitted to change the status
of its observer to that of director, in which event the number of directors will
be eight (8), Lannet's observer will become the seventh director and Yehuda
Zisapel and Zohar Zisapel will be entitled to appoint another director (the
eighth).
SECTION 7
COVENANTS OF THE COMPANY
For as long as the Purchaser's equity interest in the Company will
amount to at least five (5%) percent of the outstanding capital securities
therein and Purchaser has the right to appoint a director or an observer under
Section 6A hereinabove, except where stated otherwise in this Section 7 and in
Section 8, and without derogating from any rights or obligations conferred upon
shareholders, or obligations conferred upon corporations, under applicable law,
the Company hereby covenants and agrees as follows. For the purposes of
calculating Clal's percentage of ownership set forth above, ECI Telecom Ltd.'s
("ECI") equity interest in the Company at the time will be taken into account
and added to that of Clal for as long as Clal is a shareholder of ECI.
7.1 ADDITIONAL INFORMATION. The Company will permit an employee of the
Purchaser to visit upon a mutually convenient time and inspect any of the
properties of the Company, including its books of account, and to discuss its
affairs, finances and accounts with the Company's officers and the Auditor.
(a) As soon as available after approval by the Board of
Directors, the Company will provide Purchaser with a summary of the budget,
including projected yearly profit and loss accounts and balance sheet, as
contained in its Operating Plan and as approved by its Board of Directors, as
well as information about material changes in the budget, all as approved by the
Board of Directors.
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(b) With reasonable promptness, the Company agrees to provide
to Purchaser such information and data with respect to the Company, as the
Purchaser may from time to time reasonably request.
The foregoing provisions of this Section 7.1 shall not be in
limitation of any rights which the Purchaser may have to inspect and copy the
books and records of the Company or to inspect its properties or discuss its
affairs, finances and accounts, under the laws of the State of Israel.
7.2 USE OF PROCEEDS. The Company will use the proceeds of the issuance
and sale of the Shares mainly to fund its activities and its business subject to
any resolutions made by its Board of Directors from time to time.
7.3 BOARD APPROVAL. Without derogating from the Company's Articles of
Association, or any law or practice limiting the authority of the management of
the Company, the Company shall ensure that the approval of the Board of
Directors of the Company shall be required for the following, (i) designation of
all authorized signatories; (ii) approval of the Company's or the subsidiaries'
budget and Operating Plan; (iii) selection of legal counsel of the Company; (iv)
terms of employment of the Managing Director of the Company; and (v) any and all
other matters with regard to which the Board of Directors of the Company
resolves that its prior approval shall be required.
Without derogating from the first sentence of Section 7 hereof, it is
further provided that the Purchaser's rights hereunder shall expire upon a
public offering of the Company's shares regardless of Purchaser's percentage of
ownership at that time.
7.4 Resolutions of the Board of the Company regarding the following
subject matters shall require the consent of five out of six directors. In the
event that the Board will consist of 8 directors as per Section 6.2 hereinabove,
then the following subject matters will require the consent of 6 out of 8
directors, including consent of two directors out of the following: "Clal"
Director, "Maritime" Director, "Lannet" Director:
(a) A merger of the Company with any other entity;
(b) Acquisition or disposition, including mortgage, of other
corporations, real estate, and any material assets out of the ordinary course of
the Company's business;
(c) Replacement of the Company's Managing Director;
(d) Replacement of the auditors of the Company;
(e) Approval of the distribution of dividends by the Company;
(f) Loans by the Company or any of its subsidiaries to their
directors or officers, or to their relatives or other affiliates, with the
exception of employees receiving shares under the trust as set forth in
subsection 3.23 hereinabove;
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(g) Transactions in excess of $20,000 not included in the
approved Operating Plan between the Company or its affiliates and their
directors, officers and employees or their relatives or other affiliates, with
the exception of employees receiving shares under the trust as set forth in
subsection 3.23 hereinabove;
(h) All material transactions or obligations not contemplated
in the budget by the Company or its subsidiaries; and
(i) Resolution to enter a new business field unrelated to the
present field.
Notwithstanding anything to the contrary contained herein, in the event
that a director is not allowed under a specific section of this Agreement to
participate in a board meeting and/or discussion, the majority required will be
(1) 4 out of 5, or (2) 5 out of 7, including only one of the following: the Clal
Director, Maritime Director, or Lannet Director.
7.5 RIGHT OF FIRST REFUSAL FOR IPO. The Company agrees that in the
event that the Board of Directors resolves:
(a) to initially offer shares of the Company on the Israeli
Stock Exchange, then the following will apply:
(1) The Company will inform Clal Issuing Ltd. of said
resolution;
(2) Clal Issuing Ltd. will have an option for twenty
(20) days as of said notice date by the Company to make a proposal to underwrite
the offering (hereinafter, the "Clal Proposal");
(3) The Board of Directors will consider the Clal
Proposal and will, in its sole discretion, resolve whether it is acceptable or
not;
(4) In the event that the Board resolves not to
accept the Clal Proposal, then the Company will be free to negotiate and agree
with any underwriter whatsoever; and
(5) Within five (5) working days after the written
notice of the Company of the best proposal from the underwriter as in (4) above,
Clal will have the option to improve the Clal Proposal to match the
underwriter's proposal. In the event that Clal Issuing Ltd. either fails to
respond or to match the other proposal, Clal's option under this Section 7.5(a)
will terminate and the Board will be free to proceed as it deems fit.
(b) In the event that the Board of Directors resolves to
initially offer shares of the Company on NASDAQ, with some of the shares
intended for the Israeli public, then the following will apply:
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(1) The Company will inform Clal Issuing Ltd. of said
resolution;
(2) The Company will be free to negotiate and agree
with any underwriting house to underwriter the offering, provided that the
Company notifies said underwriter that Clal Issuing Ltd. has a right of first
refusal concerning the offering of the shares of the Company to the Israeli
public.
(c) In the event that the Board of Directors resolves to
engage a placement agent for a private offering in the Israeli market, and such
agent is entitled to a commission in return for his services (whether by form of
money or options), then the following will apply:
(1) The Company will inform Clal Venture Capital LP
of said resolution;
(2) Clal Issuing Ltd. will have an option for ten
(10) days as of said notice date by the Company to make a proposal to head the
offering as a placement agent (hereinafter, the "Clal Proposal");
(3) Within five (5) working days after the written
notice of the Company of a proposal from another placement agent, Clal and Clal
Issuing Ltd. will have the option to improve the Clal Proposal to match the
other proposal. In the event that Clal Issuing Ltd. either fails to respond or
to match the other proposal, Clal's option under this Section 7.5(c) will
terminate and the Board will be free to proceed as it deems fit;
(4) The Board of Directors will consider the Clal
Proposal as well as the other proposal(s) and will, in its sole discretion,
resolve whether it is acceptable or not; and
(5) In the event the Board accepts Clal Issuing
Ltd.'s proposal and Clal Issuing Ltd. acts as the said placement agent, then,
notwithstanding anything to the contrary contained herein, the Board, in its
sole discretion, by simple majority, will be free thereafter to resolve that the
services of Clal Issuing Ltd. as a placement agent are not satisfactory, to
terminate such services and to receive such services from any other placement
agent without any further rights or obligations with respect to Clal Issuing
Ltd. or the Purchasers.
(d) It is specifically agreed that:
(1) all discussions concerning the identity of
underwriter or placement agent as well as the terms of the offer under Section
7.5 will be without the presence of Clal's appointed director;
(2) Clal Venture Capital LP's and Clal Issuing Ltd.'s
rights under Section 7.5 will terminate upon acceptance or rejection by the
Board of Directors of the Clal Proposal;
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(3) It is further provided that the rights of Clal
Issuing Ltd., and Clal Venture Capital LP under Section 7.5 shall expire upon a
public offering of the Company's shares regardless of Purchaser's percentage of
ownership at that time; and
(4) For the purposes of this Agreement, the address
of Clal Issuing Ltd. is 5 Druianov Street, Tel-Aviv 63143.
SECTION 8
For as long as the Purchaser's equity interest in the Company amounts
to at least two (2%) percent of the outstanding share capital of the Company
therein, and without derogating from any rights conferred upon shareholders, or
obligations conferred upon corporations under applicable law, the Company hereby
covenants and agrees as follows:
8.1 PRE-EMPTIVE RIGHTS. If the Company should at any time or from time
to time propose to issue and sell New Securities, as defined in subsection
8.1(a), a pro rata portion of such New Securities shall first be offered (as
hereinafter provided) to the shareholders of the Company (each of whom shall
hereinafter be referred to as "offeree"). For purposes of this Section 8.1, the
pro rata portion of each Offeree shall mean a fraction of the New Securities to
be issued, of which the aggregate number of shares which are held by the Offeree
on the date of the Company's written notification referred to in subsection
8.1(b) below (the "Notice Date") shall be the numerator and the aggregate number
of shares held by all the Offerees shall be the denominator. The aforesaid
rights of the Offerees shall be subject to the following provisions:
(a) "New Securities" shall mean any capital stock of the
Company, whether or not now authorized, and rights, options or warrants to
purchase capital stock, and securities of any type whatsoever that are, or may
become, convertible into capital stock; provided that the term "New Securities"
shall not include (i) securities purchased under this Agreement; (ii) securities
offered to the public; (iii) securities issued pursuant to the acquisition of
another corporation by the Company by merger, purchase of substantially all the
assets of another corporation or any other reorganization whereby the Company
owns not less than fifty-one percent (51%) of the voting power of such
corporation; (iv) securities issued to employees, consultants or directors of
the Company pursuant to any stock option plan or stock purchase or stock bonus
arrangement approved by the Board of Directors of the Company; or (v) securities
issued pursuant to payment of any dividend or distribution with respect to the
Company's issued and outstanding capital stock.
(b) In the event the Company proposes to undertake an issuance
of New Securities, it shall give each Offeree written notice of its intention,
describing the type of New Securities and the price and the terms upon which the
Company proposes to issue the same, and offering its pro rata portion thereof to
such Offerees at such price and on such terms. Each Offeree shall have
twenty-one (21) days from the date of such notice to accept such offer, in whole
or in part, by written notice to the Company, that has to be received by the
Company during the above mentioned 21 days period. All New
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Securities as to which such offers have not been accepted in whole or in part by
one or more of the Offerees (of which fact the Company shall give immediate
written notice to all other Offerees), shall be re-offered to each of the
Offerees who have accepted in full the original offer, and each such Offeree
shall have the right, within ten (10) days of the date of such written notice,
to purchase the respective pro rata portions of such new Securities, the same to
be computed as aforesaid but without regard to the shares held by any Offeree
which had not accepted the original offer in full.
(c) In the event any Offeree fails to accept such offers, the
Company shall have the right to sell within six (6) months or enter into an
agreement, to sell such New Securities as to which such offers were not
accepted, provided, however, that no such sale be effected at a price or upon
terms more favorable to the purchasers thereof than those specified in the
Company's notice pursuant to Section 8.1(b).
(d) Each of Yehuda Zisapel, Zohar Zisapel and RAD Data
Communications Ltd. shall have a right to allocate any unused portion of the New
Securities offered to him to the other.
(e) The Purchaser shall have the right to allocate any unused
portion of the New Securities offered to him to its owners or to a company
affiliated to Purchaser, provided that such recipient of shares will join in
this Agreement as if it had become a party to it as of the receipt of shares.
(f) Notwithstanding anything to the contrary contained herein,
Amos Amir, so long as he is the Managing Director of the Company, will be
entitled to be an Offeree under this Section 8.1.
(g) Each of Lerosh Investments Ltd., Gevahim Investments House
Limited Ltd., Mr. Yoav Chelouche, Permal Emerging Growth V Ltd., Maritime-Julex
Investment Ltd., Mr. Shraga Blazer and Mr. Eli Luz shall have a right to
allocate any unused portion of the New Securities offered to him to the other.
8.2 REGISTRATION RIGHTS. If the Company should elect to offer any of
its securities to the public, the Purchaser and the Present Shareholders shall
have registration rights as set forth in EXHIBIT "8.2" attached hereto.
8.3 RESTRICTIONS. Unless otherwise required by applicable law or under
this Agreement, the Company shall not without the approval of at least 75% of
the shareholders:
(a) amend or repeal any provision of, or add any provision to,
the Company's Articles of Association;
(b) create any new class or classes of securities of the
Company having any preference or priority as to dividends or assets superior to
any such preference or priority of the Ordinary Shares, or reclassify any of its
existing securities into such superior securities; or
(c) approve a merger of the Company with any other entity;
13
<PAGE>
Without derogating from the first sentence of Section 8, it is further
provided that each shareholder's rights under Section 8 (except for 8.2) shall
expire upon the initial public offering of the Company's shares, regardless of
that shareholder's percentage of ownership at that time.
SECTION 8A
The Company agrees and undertakes as follows:
8A.1 BASIC FINANCIAL INFORMATION. The Company will furnish to the
Purchaser the following reports certified, when so required herein, by the
Company's auditors:
(a) As soon as practicable after the end of each calendar
quarter, and in any event within forty-five (45) days thereafter, a balance
sheet and a profit and loss account and of cash flow (including opening cash,
income, expenses and closing cash) of the Company as of the end of such
quarterly period, and for the current fiscal year to date, prepared in
accordance with generally accepted accounting principles consistently applied
and setting forth in comparative form the figures for the corresponding
periods of the previous fiscal year, subject to changes resulting from
year-end audit adjustments, all in reasonable detail, signed by the principal
financial or accounting officer of the Company. There shall be appended to
such materials a report of the management as to the business of the Company
and its activities during the quarter.
(b) Not later than forty-five (45) days after the end of
each quarter, sales figures, backlog and new orders for such quarter.
Without derogating from the first sentence of Section 7, it is further
provided that the Company will not be required to furnish any information under
the provisions of this Section 8A.1 and of Section 8A.2 below subsequent to the
initial public offering.
8A.2 INSURANCE. The Company shall continue to maintain insurance
policies similar to those described in Section 3.12 above.
8A.3 ACCOUNTS AND RECORDS. The Company will keep true records and books
of account in which full, true and correct entries will be made of all dealings
or transactions in relation to its business and affairs in accordance with
generally accepted accounting principles applied on a consistent basis.
8A.4 PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENTS. The
Company will not employ, or continue to employ, any person who will have access
to confidential information with respect to the Company and its operations
unless such person has executed and delivered the Company's standard Employment
agreement then in force containing proprietary information and non-competition
sections to the satisfaction (as to substance and form) of the Company's
counsel.
14
<PAGE>
SECTION 9
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES
Except as set forth in this Section 9, the Present Shareholders and the
Purchaser agree not to sell or transfer any of their shares and rights in the
Company to a third party. This Section 9 will terminate upon the initial
offering of the Company's shares to the public.
9.1 For the purpose of this Section 9, the shareholders, the Purchaser
and the Other Purchasers will be regarded as the following Groups:
(a) Zisapel Group - Yehuda Zisapel, Zohar Zisapel,
the Trust and RAD Data Communications Ltd.
(b) Clal Group - Clal Venture Capital LP, ECI
Telecom Ltd.
(c) Finovelec Group - Finovelec, Factory Systemes,
Houston Venture Partners Ltd.
(d) Capital Group - Zohar Gilon, Avraham Neuman,
Yair Tauman, W.S.P. Capital
(e) Maritime Group - Lerosh Investments Ltd.,
Gevahim Investments House Limited Ltd.,
Mr. Yoav Chelouche, Permal Emerging Growth
V Ltd., Maritime-Julex Investment Ltd.,
Mr. Shraga Blazer and Mr. Eli Luz.
9.2 Group Members are entitled to transfer shares among themselves for
consideration or without consideration without any restrictions.
9.3 Except as set forth in sections 9.9, 9.10 and 9.11 hereinbelow, any
shareholder who shall elect to transfer (hereinafter "Seller") all or part of
his shares, not in accordance with subsection 9.2 (hereinafter "Offered Shares")
shall offer them first to the other registered shareholders of the Company at
that time (hereinafter "Offerees") on a pro rata basis based on their share in
the share capital of the Company.
9.4 In the event any such Offeree fails to exercise his right to
purchase his Offered Shares within forty-five (45) days from the date the offer
is made, then the Seller shall have the right to offer the Offered Shares to a
third party at the same price and upon the same terms of sale as those offered
to the other shareholders under section 9.3 and provided that said third party
shall undertake all of Seller's obligations under this Agreement. (Such third
party to be called hereunder, the "Transferee"). In the event that the shares
are not sold to said party within six (6) months as of the offer to such said
third party, then Section 9.3 will apply anew.
15
<PAGE>
9.5 The Board of Directors shall have the right to not approve the
transfer of shares to a third party in each of the following events:
(i) If the third party is a competitor of the Company;
(ii) If there is a possibility of conflict of interest between the
third party and the Company;
(iii) For any other reason, in which case such approval shall not be
unreasonably withheld.
9.6 In the event that Yehuda Zisapel and/or Zohar Zisapel and/or RAD
will sell more than a total of 25% of their shares in the Company to third
parties, then Purchaser will have the right to sell the same portion of
Purchaser's shares in the Company under the same terms and conditions
(hereinafter, the "Tag Along Right"). Purchaser will inform Zisapel in writing
by fax and by confirmation by mail if it intends to exercise its Tag Along Right
within ten (10) days after the date of notice by Zisapel to Purchaser. Failure
to respond will be deemed as a decision not to Tag Along.
9.7 This Section 9 will supersede Section 14 of the Inception
Agreement.
9.8 The terms of the Trust Agreement, EXHIBIT "3.23," will have
priority over this Section 9.
9.9 Finovelec, in its discretion, shall be permitted to freely transfer
up to 5% of its shares (at that time) in the Company to up to 6 of Finovelec
executives, as well as up to an additional 5% of its shares (at that time) in
the Company to IDI (if then an affiliate of Finovelec). Such transfer shall be
considered a transfer among the Finovelec Group, provided that each Transferee,
upon receipt of the shares, will join this Agreement and undertake all of
Finovelec's obligations hereunder and will be considered henceforth a member in
the Finovelec Group for the purpose of this Section 9.
9.10 Clal Venture Capital LP is entitled to transfer all of its shares
in the Company to its partners, provided that each Transferee, upon receipt of
the shares, will join this Agreement and undertake all of Purchaser's
obligations hereunder and will be considered henceforth a member in the Clal
Group for the purpose of this Section 9.
9.11 Each of Zohar Gilon, Avraham Neuman and Yair Tauman is entitled,
once, to transfer his shares to a company directly under the total control of
said person, provided that each Transferee, upon receipt of the shares, will
join this Agreement and undertake all of Purchaser's obligations hereunder and
will be considered henceforth a member in the Capital Group for the purpose of
this Section 9.
SECTION 9A
ANTI-DILUTION
(a) In the event that any time prior to the earlier of the Closing of
the Company's initial public offering or three (3) years from the date of this
Agreement, the Company issues or sells any Ordinary Shares to third parties upon
a private placement
16
<PAGE>
(excluding Company employees) for consideration per share of less than US $135
(an "Offering"), then prior to said private placement the Purchaser shall be
given the option to purchase Ordinary Shares of the Company at par value (NIS
1.- per share), in an amount computed as set forth below.
(b) The amount of shares to be issued to Purchaser will be computed
according to the following table:
- ------------------------------------- ------------------------------------------
SHARE PRICE AT NEXT PRIVATE PLACEMENT ADDITIONAL SHARES ISSUED TO ALL PURCHASERS
(DISTRIBUTED ON A PRO-RATA BASIS)
- ------------------------------------- ------------------------------------------
$134.99 - $101.01 7,489 *
- ------------------------------------- ------------------------------------------
$101. - $50.51 17,959 *
- ------------------------------------- ------------------------------------------
Less than $50.5 33,642 *
- ------------------------------------- ------------------------------------------
* The number and price of shares will be adjusted in the event of any
restructuring of the Company's share capital.
(c) Upon the occurrence of each event giving rise to a right
pursuant to this Section, the Company will, at its expense, promptly compute the
number of Ordinary Shares that each Purchaser is entitled to purchase in
accordance with the terms hereof, and furnish to the Purchaser, a notice of such
right and the number of shares Purchaser is entitled to.
(d) Any and all of Purchaser's rights under this Section 9A will
terminate within the earliest of: (i) the Closing of the Company's initial
public offering or (ii) three (3) years from the date of this Agreement or (iii)
upon the first private placement contemplated after the Closing set forth in
Section 9A hereinabove.
SECTION 10
MISCELLANEOUS
10.1 ARBITRATION. All disputes arising under this Agreement or in
connection with the transactions hereunder shall be resolved between the parties
in good faith; however, if these efforts fail, the dispute shall be resolved by
arbitration by a sole arbitrator within sixty (60) days. The arbitrator shall be
chosen by agreement of the parties hereto. If they fail to so agree within
twenty (20) days after a party shall have requested such arbitration, the
arbitrator shall be appointed by the Chairman of the Israeli Bar who shall also
determine the place of the arbitration proceedings based on the convenience of
the parties involved; provided, however, that the arbitrator chosen shall be
from the jurisdiction chosen by the above-mentioned Chairman. The arbitrator
shall not be bound by any judicial rules of evidence or procedure. The arbitral
award shall be final and binding upon the parties, and judgment upon the award
may be entered in any court having jurisdiction, or application may be made to
such court for a judicial acceptance of the award or for an order of
enforcement, as the case may be. The provisions of this Section 10.1 shall apply
to all disputes arising in connection with this
17
<PAGE>
Agreement. Each party shall bear its own expenses, subject to the arbitration
judgment on the issue of expenses.
10.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive (i) any investigation made by the Purchaser
and (ii) the Closing.
10.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto; provided, however, that no party may assign its rights hereunder
without the prior written consent of the other parties hereto.
10.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including the
Schedules and Exhibits hereto) and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subject matters hereof and thereof and supersede all prior
agreements and understandings relating thereto. Neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated except by an
instrument in writing signed by all the parties hereto.
10.5 NOTICES. All notices and other communications required or
permitted to be given or sent hereunder shall be in writing and shall be deemed
to have been sufficiently given or delivered for all purposes if mailed by
registered airmail, transmitted by telex or telecopier, or delivered by hand to
the following respective addresses until otherwise directed by notice as
aforesaid:
To the Purchaser:
Mr. Zohar Gilon
c/o Capital Holdings Ltd.
2 Yavne Street
Tel Aviv 65791, Israel
To the Company:
RADVISION Ltd.
8 Hanechoshet Street
Tel Aviv 69710, Israel
Attention: Mr. Amos Amir
provided, however, that notice of change of address shall be effective only upon
actual receipt.
All notices sent by registered mail shall be deemed to have been
received within seventy-two (72) hours of posting. If delivered by hand, upon
their delivery.
18
<PAGE>
10.6 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy upon any breach or default under this Agreement shall impair any
such right, power or remedy of such holder nor shall it be construed to be a
waiver of any such breach or default, or in acquiescence therein, or of any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any holder of any breach or default under
this Agreement, or any waiver on the part of any holder of any holder of any
provisions or conditions of this Agreement shall be effective only if made in
writing and only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by virtue of law or otherwise afforded
to any holder, shall be cumulative and not alternative.
10.7 WAIVER OF DEFAULT. No waiver with respect to any breach or default
in the performance of any obligation under the terms of this Agreement shall be
deemed to be a waiver with respect to any subsequent breach or default, whether
of similar or different nature.
10.8 RIGHTS; SEVERABILITY. In case any provision of the Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby. The parties hereto shall beobliged to draw up an arrangement in
accordance with the meaning and the object of the invalid provision.
10.9 CONFIDENTIAL INFORMATION. The Purchaser acknowledges that the
information received by it and such information which will be received pursuant
hereto shall be confidential and is intended for the Purchaser's use only for
the purpose of this Agreement, and the Purchaser will not use or allow the use
of such confidential information or reproduce, disclose or disseminate such
information to any other person (other than the Purchaser's employees or agents
having a need to know the contents of such information, and the Purchaser's
attorneys), except in connection with the exercise of rights under this
Agreement, unless the Company has made such information available to the public
generally or the Purchaser is required to disclose such information by a
governmental body or by judicial order, but only to the persons and the extent
so required.
10.10 TITLES AND SUBTITLES. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
10.11 GOVERNING LAW. This Agreement shall be governed exclusively by,
and construed solely in accordance with, the laws of the State of Israel.
10.12 Purchaser and any Transferee under Section 9 are represented by
Mr. Zohar Gilon. Notice sent to Mr. Zohar Gilon will be deemed as notice sent to
Purchaser and/or any such Transferee. A resolution or request given by Mr. Zohar
Gilon to the Company will be deemed as if given by Purchaser and any such
Transferee. The
19
<PAGE>
Company will have no obligation to provide information or notice whatsoever
except to Mr. Zohar Gilon.
10.13 Purchaser agrees that the Company will issue to Mr. Eliezer Manor
forty-nine (49) shares against payment of their nominal value.
10.14 Following the Closing, the Company will amend its Memorandum and
Articles of Association to reflect this Agreement. The Present shareholders and
the Purchasers agree to such amendments.
10.15 The Company will bear the cost of stamp tax due in connection
with the issuance of shares according to this Agreement.
20
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
three (3) original copies, one to the Company, one to the Purchaser and one of
the Present Shareholders, as of the date first above-mentioned.
THE COMPANY THE PURCHASER
RADVISION LTD.
/s/ ZOHAR GILON
-----------------------------------------
Zohar Gilon
By: /s/ AMOS AMIR /s/ AVRAHAM NEUMAN
---------------------------- -----------------------------------------
Amos Amir, Managing Director Avraham Neuman
/s/ YAIR TAUMAN
-----------------------------------------
Yair Tauman
W.S.P. Capital Investments Ltd.
By: /s/ W.S.P. Capital Investments Ltd.
-------------------------------------
THE PRESENT SHAREHOLDERS:
/s/ YEHUDA ZISAPEL /s/ ZOHAR ZISAPEL
- -------------------------------- -----------------------------------------
Yehuda Zisapel Zohar Zisapel
(inv4-rvs/6)
21
<PAGE>
EXHIBIT "A"
SCHEDULE OF EXCEPTIONS
Pursuant to Section 3 of the Agreement
1. LIABILITIES, MONETARY OBLIGATIONS, ENCUMBRANCES AND GUARANTEES
RADVision' s monetary obligations and liabilities as of December 31,
1994 are as described in its financial report of said date.
2. LIABILITIES -- ISRAELI TAXATION
2.1 RADVision has not received final tax assessments from the
Israeli tax authorities for the years of its operation.
2.2 RADVision has not finally determined the extent of its
liability in respect of deduction of tax at source regarding
shares issued and/or transferred to employees and/or to a
trust on behalf of its employees.
3. ADDITIONAL LIABILITIES -- CLAIMS, ROYALTIES
3.1 RADVision is obligated to pay various royalties and other
payments on sales of its products to the following:
3.1.1 Chief Scientist of the Ministry of Industry and
Commerce; -- 3% on sales up to a maximum of 150%
off approved and paid grant.
3.1.2 Bird F -- up to 5% on sales up to a maximum of US$
554,563 linked to the United States Consumer Price
Index ("USCPI"). This amount includes the amount to
be paid by Workstation Technologies, Inc. ("WTI")
RADVision has a back-to--back agreement with WTI
for reimbursement to RADVision of amounts paid by
RADVision instead of WTI.
(see Related Parties, hereafter in this schedule).
3.2 Other than above, RADVision's liabilities include those
incurred in the ordinary course of business.
4. ARRANGEMENTS, LIABILITIES AND UNDERTAKINGS IN MATERIAL AGREEMENTS WITH
THIRD PARTIES
RADVision is a party to the following material contractual arrangements
and agreements:
4.1 Lease Agreement (unsigned) between RADVision Ltd. and RAD
Network Devices Ltd. (hereinafter "RND") (an affiliate) for
sublease of 415 square meters until August 1995 for a price of
NIS 41.55 linked to the Israeli
1
<PAGE>
Cost of Living ("C.O.L") Index payable to RND. The premises
belong to Atidim Ltd.
4.2 Cooperation and Project Funding Agreement dated January 27,
1994 by and between RADVision Ltd., Workstation Technologies
Inc. and the Bird Foundation.
4.3 RADVision has an approved credit line totalling US$ 1M at Bank
Hapoalim B.M.
5. AGREEMENTS WITH EMPLOYEES
5.1 Trust Agreement of January 1, 1995 between Y. and Z. Zisapel,
and Y. Zisapel, Z. Zisapel and Amos Amir as trustees,
providing for the issue, transfer and holding of shares in
RADVision by the said trustees primarily on behalf of
employees of the Company and of the RAD-Bynet Group, and also
on behalf of Y. and Z. Zisapel.
5.2 Agreement with several employees under which the said
employees joined the Trust Agreement as set out in paragraph
5.1 above.
5.3 Loans to Employees
5.3.1 RADVision granted to several of its employees and to
two employees of RAD Data Communications Ltd. loans
in a total amount of approximately US $71,000 under
the Trust Agreement. The above loans are limited to
the C.O.L. index and bear annual interest of
approximately 1% percent.
5.3.2 As of January, 1995, RADVision has not granted any
other loans to employees, except as set forth
hereinbelow.
5.3.3 Loans, as in 5.3.2, if and when given, will be at
varying terms which include the payment of interest
and/or linkage at either of the following rates:
(I) C.O.L. Linkage + 0.5% monthly interest; or
(II) U.S. $ Linkage + 0.5% monthly interest.
5.4 Unsigned Agreement with Mr. Amos Amir according to which Mr.
Amir, in his capacity as Managing Director of the Company was
issued 932 ordinary shares of the Company against US $140,732.
The vesting period is four years as of January 1, 1995. Upon
the occurrence of certain events prior to December 31, 1998
(hereinafter -- "Termination Event'), then the non-vested
shares will be transferred to the Employee's Trust without any
consideration therefor. In connection with the purchase of the
said shares, on January 1, 1995, the Board approved a loan in
the amount of NIS 410,642 to Mr. Amos Amir. The loan is linked
to the Cost of Living Index and bears an annual interest rate
of 1% (including V.A.T., if applicable, on linkage differences
and interest). In the event that the Termination Event occurs
prior to the vesting period, then that portion of
2
<PAGE>
the loan relating to the non-vested shares (including linkage
differences, interest and V,A.T., if applicable) will be
cancelled.
6. RELATED PARTIES
Yehuda Zisapel and/or Zohar Zisapel own substantial interests in
certain companies (including, but not limited to Lannet Data
Communications Ltd., RAD Data Communications Ltd., Bynet Data
Communications Ltd., RAD Network Devices Ltd., Silicom Ltd., RIT
Technologies Ltd., RADCOM Ltd., RUN-RAD Unlimited Networking Ltd.,
RADNet Ltd., RADView Software Ltd., RADGuard Ltd., RADLinx Ltd. and
RADWay International Ltd.). The said companies are customers and/or
suppliers of goods and services of RADVision, at commercial terms
determined between the parties from time to time. In particular, and
without derogating from the generality of the above, the following
arrangements exist between the above parties and RADVision.
6.1 Founders' Agreement between Y. Zisapel, Z. Zisapel and Amos
Amir dated January 6, 1992 and Amendment No. 1 dated March 23,
1994.
6.2 Long-term loan received by RADVision from RAD Data
Communications Ltd. further to the Founders' Agreement in the
amount of US $630,000. The loan is linked to the C.O.L., with
no interest. The loan was to be repaid on a semi-annual basis.
As of February 28, 1995, the balance of the loan including
linkage differences of about approximately US $707, 000.
The loan will be converted into capital on the Closing against
an issuance of 3,515 shares.
6.3 RADVision's insurance policies and the services agreement for
services received from the RAD-Bynet Group are connected with
those of the RAD-Bynet group for cost-saving and efficiency
reasons.
6.4 Non-Disclosure Agreement dated August 9, 1993 between Lannet
Data Communications Ltd. and RADVision Ltd.
6.5 Agreement dated December 30, 1993 between RADVision Ltd. and
Armon Networking Ltd. according to which RADVision will buy
certain products from Armon Networking Ltd.
6.6 Non-Disclosure Agreement between RADVision and Armon
Networking Ltd. with respect to December 30, 1993 Agreement
set forth in 6.5 hereinabove.
6.7 Agreement dated March 8, 1995 between the Company, RADLinx
Ltd., RIT Ltd., RUN-RAD Unlimited Networking Ltd., RADCOM
Ltd., RADGuard Ltd., Armon Networking Ltd., Neurim
Pharmaceuticals (1991) Ltd. and RADNet Ltd., according to
which damage to a car belonging to either party in excess of
US $1500, which is either non-insured or cannot be collected,
will be shared by the parties thereto.
6.8 Agreement dated January 4, 1995 between RADVision Ltd. and
RADLinx Ltd. according to which the parties will share their
expenses in
3
<PAGE>
connection with their respective U.S. subsidiaries, RADVision
Inc. and RADLinx Inc.
7. APPROVED ENTERPRISE
RADVision has applied for approval of an investment plan by the
Investment Center of the Ministry of Industry and Commerce.
8. CHIEF SCIENTIST APPROVALS
RADVision has received and applied for further approvals and grants
relating to research and development activities from the Chief
Scientist of the Ministry of Industry and Commerce dated as follows:
8.1 Approval no. 16203 dated September 27, 1993 and replaced on
January 24, 1994.
8.2 Approved grant no. 18224 dated June 1, 1994.
8.3 Approved grant no. 18225 dated September 1, 1994.
8.4 Approval grant no. 18704 dated September 1, 1994.
4
<PAGE>
EXHIBIT 1
<TABLE>
<CAPTION>
NAME OF NO. OF SHARES INVESTED SHARES ISSUED TOTAL NO. OWNERSHIP
SHAREHOLDER PRIOR TO AMOUNT AT CLOSING AFTER AFTER
INVESTMENT CLOSING CLOSING
- --------------------------- ------------- -------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C>
Yehuda Zisapel 6,930 6,930 15.34%
Zohar Zisapel 6,930 6,930 15.34%
Yehuda Zisapel 5,940 5,940 13.15%
and Zohar Zisapel
(as trustees)
Amos Amir 932 932 2.06%
RAD Data Communications Ltd. 710,030 3,515 7.78%
Zohar Gilon 60,600 300 0.66%
Avraham Newman 60,600 300 0.66%
Yair Tauman 60,600 300 0.66%
W.S.P. Capital Investments 37,976 188 0.42%
Ltd.
Lannet Data Communications 999,900 4,950 10.95%
Ltd.
Lerosh Investments Ltd. 99,900 495 1.10%
Gevahim Investments House 20,200 100 0.22%
Limited Ltd.
Yoav Chelouche 49,692 246 0.54%
Permal Emerging Growth V 194,930 965 2.14%
Ltd.
Maritime - Julex Investment 99,900 495 1.10%
Ltd.
Shraga Blazer 5,050 25 0.06%
Eli Luz 30,098 149 0.33%
Clal Venture Capital LP 999,900 4,950 10.95%
ECI Telecom Ltd. 499,950 2,475 5.48%
Eliezer Manor 49 0.11%
Finovelec 550,046 2,723 6.03%
Factory Systems 250,076 1,238 2.74%
Houston Venture Partners 199,980 990 2.19%
Ltd.
----------- ------------ ------------ -----
20,732 4,929,608 45,185 100.0%
</TABLE>
<PAGE>
EXHIBIT 5.7
To: Purchaser
(as defined in the attached Agreement
dated April 24, 1995)
OPINION
I, the undersigned, as counsel to RADVision Ltd., hereby give my opinion, to the
best of my knowledge at this time as follows:
1. ORGANIZATION AND STANDING. RADVision Ltd. ("RADVision") is a company
duly organized and existing under the laws of the State of Israel and
is in good standing under such laws. RADVision has the requisite
corporate power to own and operate its properties and assets and to
carry on its business as presently conducted.
2. CAPITALIZATION. The RADVision' s authorized capital is sixty thousand
(60,000) Ordinary Shares. The RADVision' s issued capital stock
immediately prior to the Closing date shall consist of twenty thousand
seven hundred thirty--two (20,732) Ordinary Shares, all of which are
duly authorized, validly issued and free of any liens or encumbrances.
Out of the issued share capital, thirteen thousand eight hundred sixty
(13,860) shares are fully paid and six thousand eight hundred
seventy-two (6,872) shares are partially paid. All shares are
non--assessable, and to the best of RADVision's knowledge and belief,
are beneficially owned by their holders of record. There are no
preemptive, conversion or other rights, options, or agreements granted
or issued by, or binding upon, RADVision or the shareholders which
entitle any person, firm or corporation to purchase or acquire any
shares of RADVision's capital stock, except as set forth in this
Agreement.
The rights, restrictions, privileges and preferences with respect to
RADVision's shares, as set forth in its Memorandum of Association and
Articles of Association, are valid and enforceable. To the best of my
knowledge, there are no outstanding rights, options, warrants,
conversion rights or agreements for the purchase or acquisition from
RADVision of any shares of its capital stock, except as stated in its
Memorandum and Articles of Association.
3. COMPLIANCE WITH LAW AND OTHER INSTRUMENTS. The execution, delivery and
performance of the Agreement dated April 24, 1995 between RADVision and
the Purchaser (the "Agreement") will not result in any violation of, or
be in conflict with or constitute a default under, any applicable law,
regulation or order, RADVision's Memorandum of Association or Articles
of Association. To the best of my knowledge, the execution, delivery
and performance of the Agreement and consummation of the transactions
contemplated thereby, will not result in any violation of, or be in
conflict with or constitute a default under, any term of any mortgage,
indenture, contract, agreement, instrument, judgment, decree or order
applicable to RADVision, or result in the creation of any mortgage,
pledge, lien,
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encumbrance or charge upon any of the properties or assets of RADVision
pursuant to any such term.
4. LITIGATION. To the best of my knowledge, there are neither any actions,
proceedings nor investigations pending or threatened against RADVision
or its assets or properties.
5. EMPLOYMENT AGREEMENTS. The agreements between RADVision and its
employees (except for Danny Levin) as referred to in Sections 5.5 and
5.6 of the Agreement have been duly executed and delivered by, and
constitute valid and binding obligations of, all such employees,
enforceable by RADVision in accordance with their terms.
6. STATEMENTS AND FACTS. Nothing has come to my attention that would lead
me to believe that the Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements therein not misleading.
/s/ NEHAMA SNEH
---------------------------
Nehama Sneh
Advocate
Dated:
------------------------
(opinion/6)
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EXHIBIT 8.2
REGISTRATION RIGHTS
1. INCIDENTAL REGISTRATION. If the Company shall elect to offer any of
its securities to the public, it shall give notice to the Purchaser of such
intention and shall include in such offering a portion of all shareholders
shares equal to the total amount of shares registered, multiplied by an amount
derived by dividing the number of Shares held by each shareholder by the total
number of shares outstanding at that time. In the event the public offering
involves an underwriting, the rights of the shareholders hereunder shall be
conditional upon the underwriter's determination as to marketing factors
requiring the limitation of such right, and the underwriter may preclude from
the offering any or all securities which could have otherwise been included in
the offering.
2. DEMAND REGISTRATION. At any time commencing one year following the
closing of the Company's initial public offering, and for a period of three (3)
years thereafter, each group of shareholders as defined in section 9.1 and/or
Lannet Data Communications Ltd. shall be entitled to demand one registration of
any or all of its shares held at the time of the initial public offering for
trading on any securities exchange; PROVIDED, however, that such request must
cover Shares representing a market value at the time of such request equal to a
minimum of three million Dollars ($3,000,000); and PROVIDED FURTHER, however,
that such request may not include Shares which within three months from the date
of such request could be sold to the public without restriction, for example
pursuant to the provisions of Rule 144 of the Securities and Exchange
Commission. Within 20 days after receipt, the Company shall give written notice
of such request to the other shareholders and shall include in such registration
all Shares held by them with respect to which the Company receives written
requests for inclusion therein within 15 days after the receipt of the Company's
notice. Thereupon, the Company shall use its best efforts to effect the
registration as soon as possible of all Shares (as to which it has received
requests for registration) for trading on a securities exchange, where the
Shares are then traded, specified in the request for registration. In the event
the registration involves an underwriting, the rights of the shareholders
hereunder shall be conditional upon the underwriter's determination as to
marketing factors requiring the limitation of such right, and the underwriter
may preclude from the offering any or all securities which could have otherwise
been included in the offering. Notwithstanding any other provision of this
clause 2 of Exhibit 8.2, after the Company has effected one such registrations
pursuant to this clause 2, and such registrations have been declared or ordered
effective, in the event that the Company shall furnish to such shareholder(s)
delivering a request for registration a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company it would be seriously detrimental to the Company or its shareholders
for a registration statement to be filed in the near future, the Company's
obligation to use its best efforts to register, qualify or comply under this
clause 2 shall be deferred for a period not to exceed 120 days from the date of
receipt of such request.
3. EXPENSES. All expenses incurred in connection with a registration
under Section 2 shall be borne by the selling shareholders participating in such
registration on a
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pro rata basis; PROVIDED, however, that the Company shall pay any expenses
associated with such registration which the Company would have incurred in the
ordinary course of business. All expenses incurred in connection with a
registration under Section 1 shall be borne by the Company; PROVIDED, however,
that each of the shareholders participating in such registration shall pay its
pro rata portion of the fees, discounts or commissions payable to any
underwriter.
(INV4-RVS/6)
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Exhibit 4.7
AGREEMENT
THIS AGREEMENT made and entered into as of the 26th day of April, 1995,
by and among RADVISION LTD., an Israeli company of 8 Hanechoshet Street, Tel
Aviv 69710, Israel (the "Company") and (1) Lerosh Investments Ltd., (2) Gevahim
Investments House Limited Ltd., (3) Mr. Yoav Chelouche, (4) Permal Emerging
Growth V Ltd., (5) Maritime - Julex Investment Ltd., (6) Mr. Shraga Blazer and
(7) Mr. Eli Luz, all of them of 35 Achad Ha'am Street, Tel Aviv, Israel (all
seven of them together jointly and severally the "Purchaser") and Yehuda Zisapel
and Zohar Zisapel of 8 Hanechoshet Street, Tel Aviv 69710, Israel (jointly and
severally, the "Present Shareholders").
W I T N E S S E T H :
WHEREAS, the Company is and will be engaged in the business of
developing, manufacturing and marketing of products for video conferencing (the
"Field"); and
WHEREAS, the Company desires to issue and sell, and the Purchaser
desires to purchase ordinary shares, par value One New Israeli Shekel (NIS
1.00), of the Company ("Ordinary Shares"),
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained, the Company and the Purchaser hereby
agree as follows:
SECTION 1
ISSUANCE AND PURCHASE OF SHARES
1.1 The Purchaser undertakes to invest in the Company the
amount of Four Hundred Ninety-Nine Thousand Nine Hundred Fifty US
Dollars (US$ 499,950) (hereinafter, the "Investment Amount") on the
Closing Date as defined in Section 2 hereinbelow. All amounts will be
deposited in US dollars or their equivalent in NIS to the Company's
account no. 377906 at Bank Hapoalim B.M., Hadar Yosef Branch (610).
1.2 In consideration for and subject to the execution of the
investment, the Company shall issue on the Closing Date two thousand
four hundred seventy-five (2,475) ordinary shares (hereinafter, the
"Shares") to the Purchaser. The Company shall not be obligated to issue
any shares whatsoever before the full Investment Amount is received by
it. The Shares, when issued, will have been validly issued, fully paid
and non-assessable, and will be free of any liens or encumbrances.
The above shares will be issued as follows:
Lerosh Investments Ltd. 495 shares
Gevahim Investments House Limited Ltd. 100 shares
Yoav Chelouche 246 shares
Permal Emerging Growth V Ltd. 965 shares
Maritime - Julex Investment Ltd. 495 shares
Shraga Blazer 25 shares
Eli Luz 149 shares
<PAGE>
1.3 The Investment Amount is part of a total amount of
approximately US $4,930,000 (hereinafter, the "Total Investment")
intended to be raised by the Company from the Purchaser as well as from
other investors (hereinafter, the "Other Purchasers") as set forth in
Exhibit 1 attached hereto. In consideration for the Total Investment,
the Company will issue 24,453 Ordinary Shares, par value 1.- NIS each.
After all said shares have been issued, the ownership of the Company
will be as set forth in Exhibit 1.
SECTION 2
CLOSING DATE
The purchase of the Shares by the Purchaser shall take place
on April 27, 1995 (the "Closing"). The date of the Closing is referred
to as the "Closing Date" in this Agreement.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company and the Present Shareholders hereby represent and
warrant to the Purchaser the facts hereinafter set forth in this
Section 3.
3.1 CORPORATE POWER. As of the date hereof and as of the
Closing, the Company has and will have all requisite corporate power to
enter into and to perform this Agreement.
3.2 SUBSIDIARIES. The Company has a wholly owned U.S.
subsidiary, RADVISION Inc. in New Jersey. The Company has no other
subsidiaries and does not otherwise own, of record or beneficially, any
capital stock or equity interest in any other corporation, association
or business entity.
3.3 ORGANIZATION AND STANDING. The Company is a corporation
duly organized and existing under the laws of the State of Israel and
is in good standing under such laws. The Company has requisite
corporate power to own and operate its properties and assets, and to
carry on its business as presently conducted. The Memorandum of
Association and Articles of Association and all amendments to date of
the Company are attached hereto as EXHIBITS "3.3A" AND "3.3B."
3.4 CAPITALIZATION. The Company's authorized capital is sixty
thousand (60,000) Ordinary Shares. The Company's issued capital stock
immediately prior to the Closing date shall consist of twenty thousand
seven hundred thirty-two (20,732) Ordinary Shares, all of which are
duly authorized, validly issued and free of any liens or encumbrances.
Out of the issued share capital, thirteen thousand eight hundred sixty
(13,860) shares are fully paid and six thousand eight hundred
seventy-two (6,872) shares are partially paid. All shares are
non-assessable, and to the best of the Company's knowledge and belief,
are beneficially owned by their holders of record. There are no
preemptive, conversion or other rights, options, or agreements granted
or issued by, or binding upon, the Company or the shareholders which
entitle any person, firm or corporation to purchase or acquire any
shares of the Company's capital stock, except as set forth in this
Agreement and in particular, in Sections 3.21, 3.22 and 3.23.
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3.5 AUTHORIZATION. All corporate actions on the part of the
Company and its directors and shareholders, required for the
authorization, execution, delivery and performance by the Company of
this Agreement and the consummation of the transactions contemplated
herein have been, or will be executed, upon signature of this
Agreement. This Agreement is and will be valid and binding obligations
of the Company, enforceable in accordance with its terms. The
execution, delivery and performance by the Company of this Agreement,
and compliance therewith, and the consummation of the transactions
contemplated by this Agreement will not result in any violation of and
will not conflict with, or result in a breach of any of the terms of,
or constitute a default under, any document to which the Company is or
will be a party or by which it is or will be bound, or result in the
creation of any mortgage, pledge, lien or encumbrance or charge upon
any of the properties or assets of the Company. To the best of the
Company's knowledge, no third party's consent is required for the
Company to become a party to this Agreement. Immediately after the
Closing Date, the Company will inform all governmental authorities that
require to be reported of changes in equity, including, but not limited
to the Israel Investment Center and the Office of the Chief Scientist
of the execution of this Agreement.
3.6 OUTSTANDING DEBT. Except as set forth in the Schedule of
Exceptions attached hereto as EXHIBIT "A" ("Schedule of Exceptions"),
the Company has no outstanding indebtedness for borrowed money and is
not a guarantor of any debt or obligation of another. There exists no
default by the Company under the provisions of any agreement or other
instrument evidencing or relating to any indebtedness or obligation.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
the Schedule of Exceptions, the Company has no material liability of
any nature, direct or indirect, absolute or contingent, not adequately
reserved against, excluding any liabilities related to damage which may
have been caused by its products or are related to sales of said
products (unless the Company knows or should have known of such damages
or liabilities). The Company has paid, or has made adequate provisions
for the payment of, all taxes, interest, penalties, assessments or
deficiencies owing by it to any taxing authority.
3.8 ABSENCE OF CERTAIN CHANGES. Since December 31, 1994, the
business of the Company has at all times been conducted in the ordinary
course. There has not been any event or condition of any character
which has materially adversely affected the Company's business,
prospects or plans.
3.9 CONTRACTS AND CONTRACTUAL ARRANGEMENTS. The Company is a
party to several material agreements, all of which are described in the
Schedule of Exceptions attached hereto. Each of such agreements is in
full force and effect and, to the Company's knowledge, no party thereto
is in breach thereof. The Company is of the opinion that it receives
services from affiliated companies for fair consideration as described
in the Schedule of Exceptions attached hereto. The Company is not
obligated to receive services from said affiliated companies.
3.10 INDEBTEDNESS OF OR TO SHAREHOLDERS, ETC.; CONFLICTS OF
INTEREST.
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(a) Except as set forth in the Schedule of Exceptions, none
of the Company's shareholders, directors, officers or employees or any
of their affiliates or families is indebted to the Company and the
Company has no debt to any of them except for accrued wages for the
current period.
(b) Except as set forth in the Schedule of Exceptions, to the
best of the Company's knowledge, none of the Company's directors,
officers, employees or consultants, or their affiliates or families,
directly or indirectly, own any material interest in any entity which
is a competitor of the Company.
3.11 LITIGATION; INSOLVENCY PROCEEDINGS. To the best of the
Company's knowledge and belief, there are no pending or threatened
actions, suits, proceedings or any investigations against or affecting
the Company involving the possibility of any judgment or liability
which would adversely affect its business.
3.12 INSURANCE. The Company maintains insurance through
RAD-Bynet insurance policies, adequately covering the perils normally
insured against by companies similarly situated. All policies of
insurance maintained by the Company are attached hereto as EXHIBIT
"3.12." To the best of the Company's knowledge, all such policies are
in full force and effect.
3.13 TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. Except as
set forth in the Schedule of Exceptions, the Company owns, or holds
under lease, all real and personal property used by it in its business.
All property owned by the Company (all of which is listed on EXHIBIT
"3.13" hereto) is so owned free and clear of all mortgages, pledges,
liens or charges.
3.14 LEASES. EXHIBIT "3.14" hereto contains a correct and
complete list and description (including the amount of rents) of all
leases under which the Company leases property, real or personal.
3.15 BUSINESS OF THE COMPANY. The Company has no knowledge of
(i) the existence of any pending or planned patent, or any statute,
rule, law, regulation, standard or codes which would materially
adversely affect the condition, financial or otherwise, or the business
operations, of the Company; or (ii) the existence of any other factor
which would materially adversely affect the financial condition, or the
operations, of the Company.
3.16 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation of the terms of its Memorandum or Articles of Incorporation,
and it is not in violation of the terms of any judgment, decree, order,
statute, rule or regulation to which it is subject.
3.17 EMPLOYEES. All the key employees of the Company are
listed on EXHIBIT "3.17" hereto. To the best of the Company's
knowledge, no such employee is in violation of any material term of any
employment contract, patent disclosure agreement, non-competition
agreement, or any other contract or agreement or any restrictive
covenant or any other obligation to a former employer relating to the
right of any such employee to be employed by the Company. To date, all
payments due to the Company's employees have
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been paid regularly. In addition, the Company made all allowances
required by law to cover the amounts due to its employees and/or
officers in connection with their employment and/or termination of
employment, as reflected in Exhibit "3.20a."
3.18 DISCLOSURE. This Agreement and the Schedule of Exceptions
delivered to the Purchaser do not contain any material untrue statement
and do not omit to state a material fact necessary in order to make the
statements contained herein not misleading in the light of the
circumstances under which they were made, and such documents represent
full disclosure by the Company of the material facts with respect to
the business, prospect and plans of the Company. The Company confirms
that to the date of this Agreement, the Business Plan dated August,
1994, which was provided to the Purchaser, does not contain any
materially untrue information as far as same relates to the Company
itself. The other information contained therein may have changed since
August, 1994.
3.19 PRODUCTS AND OWNERSHIP. A description of the products is
enclosed as EXHIBIT 3.19. To the best of the knowledge and belief of
the Company and as set forth in the Schedule of Exceptions, the Company
possesses, or is proceeding with due diligence to obtain, all patents,
patent rights, trademarks, trademark names, trade name rights and
copyrights the Company believes are necessary to conduct its business
as now being conducted and as planned to be conducted (without conflict
with, or infringement upon, any valid rights of others), the lack of
which could affect the operations or condition, financial or otherwise,
of the Company. The Company has no knowledge of any infringement by the
Company or claimed infringement upon, or any conflict with, the patent
rights, trademarks, trademark rights, trade names, trade name rights,
copyrights, intellectual property rights or other rights of any person,
form or corporation.
3.20 FINANCIAL STATEMENTS. The audited financial statements of
the Company as of December 31, 1994 are attached hereto as EXHIBIT
"3.20A" and adequately reflect the financial situation of the Company.
The unaudited financial statements of the Company as of February 28,
1995 are attached hereto as Exhibit "3.20b." As of December 31, 1994 to
date, the Company did not enter into any material transaction or
undertake any material commitment which was not in the normal course of
business, and there was no material change for the worse in the
Company's position, liabilities and assets.
3.21 The agreements with the other purchasers will resemble
the Agreement with Purchaser.
3.22 In the event of any contradiction between this Agreement
and the Inception Agreement, attached hereto as EXHIBIT "3.22," the
current Memorandum of Association and the Current Articles of
Association, this Agreement shall prevail.
3.23 On January 1, 1995, a trust in favor of employees of the
Company and certain employees of the RAD-Bynet group was created. Said
Trust Agreement is attached hereto as EXHIBIT "3.23."
3.24 As of the date of this Agreement, the directors of the
Company are: Yehuda Zisapel, Zohar Zisapel and Amos Amir.
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SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Each of the Purchaser represents and warrants to the Company
as follows:
4.1 LEGAL POWER. As of the date hereof and as of the Closing,
the Purchaser has and will have all requisite power to enter into and
to perform this Agreement.
4.2 EXPERIENCE. The Purchaser has sufficient experience and
expertise to evaluate the suitability of its investment in the Company
to its needs and has the capacity to protect its interests with the
purchase of the Shares.
4.3 INVESTMENT. The Purchaser is acquiring the Shares for
investment for its own account.
4.4 ACCESS TO DATA. The Purchaser hereby represents that it
has had the full opportunity to discuss management and financial
affairs of the Company with its management and key employees and has
had the opportunity to review the business plan and the Company's
facilities. The Purchaser has not been denied any information that has
been requested, and based on the said information has made a diligent
examination of the aspects of the Company's business. The Purchaser has
heretofore received all information that the Purchaser has deemed
necessary and appropriate to enable the Purchaser to evaluate the
financial risk inherent in making an investment in the shares of the
Company and the Purchaser has received satisfactory and complete
information concerning the business and financial condition of the
Company in response to all inquiries in respect thereof. The Purchaser
is aware that the Company has been in the development stage since its
inception in October 1992, that no sales of its products have taken
place, and that due to the short operating history of the Company there
can be no assurance that the Company will attain profitability. Nothing
contained in this Section 4.4 shall derogate from the liability of the
Company with respect to the representations and warranties made in
Section 3 above.
4.5 AUTHORIZATION. All corporate or partnership action on the
part of the Purchaser, its respective directors, partners and/or
shareholders necessary for the authorization, execution, delivery,
payment and performance by the Purchaser of this Agreement and the
consummation of the transactions contemplated herein, has been taken.
4.6 Purchaser has sufficient financial resources to enable it
to fulfill its obligations under this Agreement and commits to make its
investment in the Company as set forth in Section 1 hereinabove.
SECTION 5
CONDITIONS OF THE PURCHASER TO CLOSING
The obligations of the Purchaser at the Closing, as referred
to in Section 1 hereof, are subject to the fulfillment of each of the
following conditions:
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5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The
representations and warranties made by the Company in Section 3 hereof
shall be true and correct when made, and shall be true and correct in
all material respects on Closing with the same force and effect as if
they had been made immediately prior to the Closing and as of such time
except for such changes which result from the obligations of the
parties to this Agreement.
5.2 PERFORMANCE. All covenants, agreements and conditions
contained in this Agreement to be performed or complied with by the
Company on or prior to Closing shall have been performed or complied
with in all respects.
5.3 LEGAL INVESTMENT. At the time of the Closing, the purchase
and issuance of the Shares shall be legally permitted by all laws and
regulations to which the Purchaser and the Company are subject.
5.4 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated hereby and
all documents and instruments incident to such transactions shall have
been completed to the satisfaction (as to substance and form) of the
Purchaser.
5.5 PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENT.
Each of the Company's employees shall have executed and delivered to
the Company an Employment Agreement, substantially in the form attached
hereto as EXHIBIT "5.5A" or EXHIBIT "5.5B," which agreement contains
non-disclosure and non-competition provisions therein.
5.6 RETENTION OF KEY EMPLOYEES. All the persons listed in
EXHIBIT "3.17" shall either be employees of the Company as of the
Closing and to the best of the Company's knowledge, have not informed
them that they intend to leave the Company, or if an employee has left
the Company or intends to leave the Company, the latter has notified
the Purchaser of same.
5.7 OPINION OF COMPANY'S COUNSEL. The Purchaser shall have
received from Nehama Sneh, corporate counsel to the Company, a
satisfactory opinion in substantially the form attached as EXHIBIT
"5.7."
SECTION 6
CONDITIONS OF COMPANY TO CLOSING
The obligations of the Company at the Closing, as referred to
in Section 1 hereof, are subject to the fulfillment of each of the
following conditions:
6.1 REPRESENTATION. The representations and warranties made by
the Purchaser in Section 4 hereof shall be true and correct when made
and shall be true and correct on Closing with the same force and effect
as if they had been made immediately prior to the Closing and as of
such time.
6.2 Purchaser has fulfilled any and all of its obligations set
forth in Section 1.1.
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SECTION 6A
BOARD OF DIRECTORS
Subsequent to the Closing, the Board of Directors will consist
of six (6) directors, three of whom will be appointed by Zohar Zisapel,
Yehuda Zisapel and RAD Data Communications Ltd., the fourth will be
Amos Amir in his capacity as Managing Director of the Company, and the
fifth and the sixth are entitled to be appointed by The Trust Company
of Maritime Bank of Israel ("Maritime") and Clal Venture Capital LP
("Clal"). Lannet Data Communications Ltd. ("Lannet") and Finovelec,
will have the right to designate one observer each to the Board of
Directors. Upon reasonable notice, Lannet will be permitted to change
the status of its observer to that of director, in which event the
number of directors will be eight (8), Lannet's observer will become
the seventh director and Yehuda Zisapel and Zohar Zisapel will be
entitled to appoint another director (the eighth).
SECTION 7
COVENANTS OF THE COMPANY
For as long as the Purchaser's equity interest in the Company
will amount to at least five (5%) percent of the outstanding capital
securities therein and Purchaser has the right to appoint a director or
an observer under Section 6A hereinabove, except where stated otherwise
in this Section 7 and in Section 8, and without derogating from any
rights or obligations conferred upon shareholders, or obligations
conferred upon corporations, under applicable law, the Company hereby
covenants and agrees as follows. For the purposes of calculating Clal's
percentage of ownership set forth above, ECI Telecom Ltd.'s ("ECI")
equity interest in the Company at the time will be taken into account
and added to that of Clal for as long as Clal is a shareholder of ECI.
7.1 ADDITIONAL INFORMATION. The Company will permit an
employee of the Purchaser to visit upon a mutually convenient time and
inspect any of the properties of the Company, including its books of
account, and to discuss its affairs, finances and accounts with the
Company's officers and the Auditor.
(a) As soon as available after approval by the Board of
Directors, the Company will provide Purchaser with a summary of the
budget, including projected yearly profit and loss accounts and balance
sheet, as contained in its Operating Plan and as approved by its Board
of Directors, as well as information about material changes in the
budget, all as approved by the Board of Directors.
(b) With reasonable promptness, the Company agrees to provide
to Purchaser such information and data with respect to the Company, as
the Purchaser may from time to time reasonably request.
The foregoing provisions of this Section 7.1 shall not be in
limitation of any rights which the Purchaser may have to inspect and
copy the books and records of the Company or to inspect its properties
or discuss its affairs, finances and accounts, under the laws of the
State of Israel.
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7.2 USE OF PROCEEDS. The Company will use the proceeds of the
issuance and sale of the Shares mainly to fund its activities and its
business subject to any resolutions made by its Board of Directors from
time to time.
7.3 BOARD APPROVAL. Without derogating from the Company's
Articles of Association, or any law or practice limiting the authority
of the management of the Company, the Company shall ensure that the
approval of the Board of Directors of the Company shall be required for
the following, (i) designation of all authorized signatories; (ii)
approval of the Company's or the subsidiaries' budget and Operating
Plan; (iii) selection of legal counsel of the Company; (iv) terms of
employment of the Managing Director of the Company; and (v) any and all
other matters with regard to which the Board of Directors of the
Company resolves that its prior approval shall be required.
Without derogating from the first sentence of Section 7
hereof, it is further provided that the Purchaser's rights hereunder
shall expire upon a public offering of the Company's shares regardless
of Purchaser's percentage of ownership at that time.
7.4 Resolutions of the Board of the Company regarding the
following subject matters shall require the consent of five out of six
directors. In the event that the Board will consist of 8 directors as
per Section 6.2 hereinabove, then the following subject matters will
require the consent of 6 out of 8 directors, including consent of two
directors out of the following: "Clal" Director, "Maritime" Director,
"Lannet" Director:
(a) A merger of the Company with any other entity;
(b) Acquisition or disposition, including mortgage, of other
corporations, real estate, and any material assets out of the ordinary
course of the Company's business;
(c) Replacement of the Company's Managing Director;
(d) Replacement of the auditors of the Company;
(e) Approval of the distribution of dividends by the Company.
(f) Loans by the Company or any of its subsidiaries to their
directors or officers, or to their relatives or other affiliates, with
the exception of employees receiving shares under the trust as set
forth in subsection 3.23 hereinabove;
(g) Transactions in excess of $20,000 not included in the
approved Operating Plan between the Company or its affiliates and their
directors, officers and employees or their relatives or other
affiliates, with the exception of employees receiving shares under the
trust as set forth in subsection 3.23 hereinabove;
(h) All material transactions or obligations not contemplated
in the budget by the Company or its subsidiaries; and
(i) Resolution to enter a new business field unrelated to the
present field.
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Notwithstanding anything to the contrary contained herein, in
the event that a director is not allowed under a specific section of
this Agreement to participate in a board meeting and/or discussion, the
majority required will be (1) 4 out of 5, or (2) 5 out of 7, including
only one of the following:
the Clal Director, Maritime Director, or Lannet Director.
7.5 RIGHT OF FIRST REFUSAL FOR IPO. The Company agrees that in
the event that the Board of Directors resolves:
(a) to initially offer shares of the Company on the Israeli
Stock Exchange, then the following will apply:
(1) The Company will inform Clal Issuing Ltd. of said
resolution;
(2) Clal Issuing Ltd. will have an option for twenty
(20) days as of said notice date by the Company to make a proposal to
underwrite the offering (hereinafter, the "Clal Proposal");
(3) The Board of Directors will consider the Clal
Proposal and will, in its sole discretion, resolve whether it is
acceptable or not; and
(4) In the event that the Board resolves not to
accept the Clal Proposal, then the Company will be free to negotiate
and agree with any underwriter whatsoever.
(5) Within five (5) working days after the written
notice of the Company of the best proposal from the underwriter as in
(4) above, Clal will have the option to improve the Clal Proposal to
match the underwriter's proposal. In the event that Clal Issuing Ltd.
either fails to respond or to match the other proposal, Clal's option
under this Section 7.5(a) will terminate and the Board will be free to
proceed as it deems fit.
(b) In the event that the Board of Directors resolves to
initially offer shares of the Company on NASDAQ, with some of the
shares intended for the Israeli public, then the following will apply:
(1) The Company will inform Clal Issuing Ltd. of said
resolution;
(2) The Company will be free to negotiate and agree
with any underwriting house to underwriter the offering, provided that
the Company notifies said underwriter that Clal Issuing Ltd. has a
right of first refusal concerning the offering of the shares of the
Company to the Israeli public.
(c) In the event that the Board of Directors resolves to
engage a placement agent for a private offering in the Israeli market,
and such agent is entitled to a commission in return for his services
(whether by form of money or options), then the following will apply:
(1) The Company will inform Clal Venture Capital LP
of said resolution;
10
<PAGE>
(2) Clal Issuing Ltd. will have an option for ten
(10) days as of said notice date by the Company to make a proposal to
head the offering as a placement agent (hereinafter, the "Clal
Proposal");
(3) Within five (5) working days after the written
notice of the Company of a proposal from another placement agent, Clal
and Clal Issuing Ltd. will have the option to improve the Clal Proposal
to match the other proposal. In the event that Clal Issuing Ltd. either
fails to respond or to match the other proposal, Clal's option under
this Section 7.5(c) will terminate and the Board will be free to
proceed as it deems fit;
(4) The Board of Directors will consider the Clal
Proposal as well as the other proposal(s) and will, in its sole
discretion, resolve whether it is acceptable or not; and
(5) In the event the Board accepts Clal Issuing
Ltd.'s proposal and Clal Issuing Ltd. acts as the said placement agent,
then, notwithstanding anything to the contrary contained herein, the
Board, in its sole discretion, by simple majority, will be free
thereafter to resolve that the services of Clal Issuing Ltd. as a
placement agent are not satisfactory, to terminate such services and to
receive such services from any other placement agent without any
further rights or obligations with respect to Clal Issuing Ltd. or the
Purchasers.
(d) It is specifically agreed that:
(1) all discussions concerning the identity of
underwriter or placement agent as well as the terms of the offer under
Section 7.5 will be without the presence of Clal's appointed director;
(2) Clal Venture Capital LP's and Clal Issuing Ltd.'s
rights under Section 7.5 will terminate upon acceptance or rejection by
the Board of Directors of the Clal Proposal;
(3) It is further provided that the rights of Clal
Issuing Ltd., and Clal Venture Capital LP under Section 7.5 shall
expire upon a public offering of the Company's shares regardless of
Purchaser's percentage of ownership at that time.
(4) For the purposes of this Agreement, the address
of Clal Issuing Ltd. is 5 Druianov Street, Tel-Aviv 63143.
SECTION 8
For as long as the Purchaser's equity interest in the Company
amounts to at least two (2%) percent of the outstanding share capital
of the Company therein, and without derogating from any rights
conferred upon shareholders, or obligations conferred upon corporations
under applicable law, the Company hereby covenants and agrees as
follows:
8.1 PRE-EMPTIVE RIGHTS. If the Company should at any time or
from time to time propose to issue and sell New Securities, as defined
in subsection 8.1(a), a pro rata
11
<PAGE>
portion of such New Securities shall first be offered (as hereinafter
provided) to the shareholders of the Company (each of whom shall
hereinafter be referred to as "offeree"). For purposes of this Section
8.1, the pro rata portion of each Offeree shall mean a fraction of the
New Securities to be issued, of which the aggregate number of shares
which are held by the Offeree on the date of the Company's written
notification referred to in subsection 8.1(b) below (the "Notice Date")
shall be the numerator and the aggregate number of shares held by all
the Offerees shall be the denominator. The aforesaid rights of the
Offerees shall be subject to the following provisions:
(a) "New Securities" shall mean any capital stock of
the Company, whether or not now authorized, and rights, options or
warrants to purchase capital stock, and securities of any type
whatsoever that are, or may become, convertible into capital stock;
provided that the term "New Securities" shall not include (i)
securities purchased under this Agreement; (ii) securities offered to
the public; (iii) securities issued pursuant to the acquisition of
another corporation by the Company by merger, purchase of substantially
all the assets of another corporation or any other reorganization
whereby the Company owns not less than fifty-one percent (51%) of the
voting power of such corporation; (iv) securities issued to employees,
consultants or directors of the Company pursuant to any stock option
plan or stock purchase or stock bonus arrangement approved by the Board
of Directors of the Company; or (v) securities issued pursuant to
payment of any dividend or distribution with respect to the Company's
issued and outstanding capital stock.
(b) In the event the Company proposes to undertake an
issuance of New Securities, it shall give each Offeree written notice
of its intention, describing the type of New Securities and the price
and the terms upon which the Company proposes to issue the same, and
offering its pro rata portion thereof to such Offerees at such price
and on such terms. Each Offeree shall have twenty-one (21) days from
the date of such notice to accept such offer, in whole or in part, by
written notice to the Company, that has to be received by the Company
during the above mentioned 21 days period. All New Securities as to
which such offers have not been accepted in whole or in part by one or
more of the Offerees (of which fact the Company shall give immediate
written notice to all other Offerees), shall be re-offered to each of
the Offerees who have accepted in full the original offer, and each
such Offeree shall have the right, within ten (10) days of the date of
such written notice, to purchase the respective pro rata portions of
such new Securities, the same to be computed as aforesaid but without
regard to the shares held by any Offeree which had not accepted the
original offer in full.
(c) In the event any Offeree fails to accept such
offers, the Company shall have the right to sell within six (6) months
or enter into an agreement, to sell such New Securities as to which
such offers were not accepted, provided, however, that no such sale be
effected at a price or upon terms more favorable to the purchasers
thereof than those specified in the Company's notice pursuant to
Section 8.1(b).
(d) Each of Yehuda Zisapel, Zohar Zisapel and RAD
Data Communications Ltd. shall have a right to allocate any unused
portion of the New Securities offered to him to the other.
12
<PAGE>
(e) The Purchaser shall have the right to allocate
any unused portion of the New Securities offered to him to its owners
or to a company affiliated to Purchaser, provided that such recipient
of shares will join in this Agreement as if it had become a party to it
as of the receipt of shares.
(f) Notwithstanding anything to the contrary
contained herein, Amos Amir, so long as he is the Managing Director of
the Company, will be entitled to be an Offeree under this Section 8.1.
(g) Each of Lerosh Investments Ltd., Gevahim
Investments House Limited Ltd., Mr. Yoav Chelouche, Permal Emerging
Growth V Ltd., Maritime-Julex Investment Ltd., Mr. Shraga Blazer and
Mr. Eli Luz shall have a right to allocate any unused portion of the
New Securities offered to him to the other.
8.2 REGISTRATION RIGHTS. If the Company should elect to offer
any of its securities to the public, the Purchaser and the Present
Shareholders shall have registration rights as set forth in Exhibit
"8.2" attached hereto.
8.3 RESTRICTIONS. Unless otherwise required by applicable law
or under this Agreement, the Company shall not without the approval of
at least 75% of the shareholders:
(a) amend or repeal any provision of, or add any
provision to, the Company's Articles of Association;
(b) create any new class or classes of securities of
the Company having any preference or priority as to dividends or assets
superior to any such preference or priority of the Ordinary Shares, or
reclassify any of its existing securities into such superior
securities; or
(c) approve a merger of the Company with any other
entity;
Without derogating from the first sentence of Section
8, it is further provided that each shareholder's rights under Section
8 (except for 8.2) shall expire upon the initial public offering of the
Company's shares, regardless of that shareholder's percentage of
ownership at that time.
SECTION 8A
The Company agrees and undertakes as follows:
8A.1 BASIC FINANCIAL INFORMATION. The Company will furnish to
the Purchaser the following reports certified, when so required herein,
by the Company's auditors:
(a) As soon as practicable after the end of each
calendar quarter, and in any event within forty-five (45) days
thereafter, a balance sheet and a profit and loss account and of cash
flow (including opening cash, income, expenses and closing cash) of
13
<PAGE>
the Company as of the end of such quarterly period, and for the current
fiscal year to date, prepared in accordance with generally accepted
accounting principles consistently applied and setting forth in
comparative form the figures for the corresponding periods of the
previous fiscal year, subject to changes resulting from year-end audit
adjustments, all in reasonable detail, signed by the principal
financial or accounting officer of the Company. There shall be appended
to such materials a report of the management as to the business of the
Company and its activities during the quarter.
(b) Not later than forty-five (45) days after the end
of each quarter, sales figures, backlog and new orders for such
quarter.
Without derogating from the first sentence of Section
7, it is further provided that the Company will not be required to
furnish any information under the provisions of this Section 8A.1 and
of Section 8A.2 below subsequent to the initial public offering.
8A.2 INSURANCE. The Company shall continue to maintain
insurance policies similar to those described in Section 3.12 above.
8A.3 ACCOUNTS AND RECORDS. The Company will keep true records
and books of account in which full, true and correct entries will be
made of all dealings or transactions in relation to its business and
affairs in accordance with generally accepted accounting principles
applied on a consistent basis.
8A.4 PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENTS.
The Company will not employ, or continue to employ, any person who will
have access to confidential information with respect to the Company and
its operations unless such person has executed and delivered the
Company's standard Employment agreement then in force containing
proprietary information and non-competition sections to the
satisfaction (as to substance and form) of the Company's counsel.
SECTION 9
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES
Except as set forth in this Section 9, the Present
Shareholders and the Purchaser agree not to sell or transfer any of
their shares and rights in the Company to a third party. This Section 9
will terminate upon the initial offering of the Company's shares to the
public.
9.1 For the purpose of this Section 9, the shareholders, the
Purchaser and the Other Purchasers will be regarded as the following
Groups:
(a) Zisapel Group - Yehuda Zisapel, Zohar Zisapel, the
Trust and RAD Data Communications Ltd.
(b) Clal Group - Clal Venture Capital LP, ECI Telecom
Ltd.
(c) Finovelec Group - Finovelec, Factory Systemes,
Houston Venture Partners Ltd.
14
<PAGE>
(d) Capital Group - Zohar Gilon, Avraham Neuman, Yair
Tauman, W.S.P. Capital
(e) Maritime Group - Lerosh Investments Ltd., Gevahim
Investments House Limited Ltd., Mr. Yoav Chelouche,
Permal Emerging Growth V Ltd., Maritime-Julex
Investment Ltd., Mr. Shraga Blazer and Mr. Eli Luz.
9.2 Group Members are entitled to transfer shares among
themselves for consideration or without consideration without any
restrictions.
9.3 Except as set forth in sections 9.9, 9.10 and 9.11
hereinbelow, any shareholder who shall elect to transfer (hereinafter
"Seller") all or part of his shares, not in accordance with subsection
9.2 (hereinafter "Offered Shares") shall offer them first to the other
registered shareholders of the Company at that time (hereinafter
"Offerees") on a pro rata basis based on their share in the share
capital of the Company.
9.4 In the event any such Offeree fails to exercise his right
to purchase his Offered Shares within forty-five (45) days from the
date the offer is made, then the Seller shall have the right to offer
the Offered Shares to a third party at the same price and upon the same
terms of sale as those offered to the other shareholders under section
9.3 and provided that said third party shall undertake all of Seller's
obligations under this Agreement. (Such third party to be called
hereunder, the "Transferee"). In the event that the shares are not sold
to said party within six (6) months as of the offer to such said third
party, then Section 9.3 will apply anew.
9.5 The Board of Directors shall have the right to not approve
the transfer of shares to a third party in each of the following
events:
(i) If the third party is a competitor of the Company;
(ii) If there is a possibility of conflict of interest
between the third party and the Company;
(iii) For any other reason, in which case such approval
shall not be unreasonably withheld.
9.6 In the event that Yehuda Zisapel and/or Zohar Zisapel
and/or RAD will sell more than a total of 25% of their shares in the
Company the to third parties, then Purchaser will have the right to
sell the same portion of Purchaser's shares in the Company under the
same terms and conditions (hereinafter, the "Tag Along Right").
Purchaser will inform Zisapel in writing by fax and by confirmation by
mail if it intends to exercise its Tag Along Right within ten (10) days
after the date of notice by Zisapel to Purchaser. Failure to respond
will be deemed as a decision not to Tag Along.
9.7 This Section 9 will supersede Section 14 of the Inception
Agreement.
9.8 The terms of the Trust Agreement, EXHIBIT 3.23, will have
priority over this Section 9.
15
<PAGE>
9.9 Finovelec, in its discretion, shall be permitted to freely
transfer up to 5% of its shares (at that time) in the Company to up to
6 of Finovelec executives, as well as up to an additional 5% of its
shares (at that time) in the Company to IDI (if then an affiliate of
Finovelec). Such transfer shall be considered a transfer among the
Finovelec Group, provided that each Transferee, upon receipt of the
shares, will join this Agreement and undertake all of Finovelec's
obligations hereunder and will be considered henceforth a member in the
Finovelec Group for the purpose of this Section 9.
9.10 Clal Venture Capital LP is entitled to transfer all of
its shares in the Company to its partners, provided that each
Transferee, upon receipt of the shares, will join this Agreement and
undertake all of Purchaser's obligations hereunder and will be
considered henceforth a member in the Clal Group for the purpose of
this Section 9.
9.11 Each of Zohar Gilon, Avraham Neuman and Yair Tauman is
entitled, once, to transfer his shares to a company directly under the
total control of said person, provided that each Transferee, upon
receipt of the shares, will join this Agreement and undertake all of
Purchaser's obligations hereunder and will be considered henceforth a
member in the Capital Group for the purpose of this Section 9.
SECTION 9A
ANTI-DILUTION
(a) In the event that any time prior to the earlier of the
Closing of the Company's initial public offering or three (3) years
from the date of this Agreement, the Company issues or sells any
Ordinary Shares to third parties upon a private placement (excluding
Company employees) for consideration per share of less than US $135 (an
"Offering"), then prior to said private placement the Purchaser shall
be given the option to purchase Ordinary Shares of the Company at par
value (NIS 1.- per share), in an amount computed as set forth below.
(b) The amount of shares to be issued to Purchaser will be
computed according to the following table:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
SHARE PRICE AT NEXT PRIVATE PLACEMENT ADDITIONAL SHARES ISSUED TO ALL PURCHASERS (DISTRIBUTED
ON A PRO-RATA BASIS)
- ---------------------------------------------------------------------------------------------------
<S> <C>
* $134.99 to $101.01 7,489 *
- ---------------------------------------------------------------------------------------------------
* $101.00 to $50.51 17,959 *
- ---------------------------------------------------------------------------------------------------
* Less than $50.5 33,642 *
- ---------------------------------------------------------------------------------------------------
</TABLE>
* The number and price of shares will be adjusted in the event
of any restructuring of the Company's share capital.
(c) Upon the occurrence of each event giving rise to a
right pursuant to this Section, the Company will, at its expense,
promptly compute the number of Ordinary Shares that each Purchaser is
entitled to purchase in accordance with the terms hereof, and
16
<PAGE>
furnish to the Purchaser, a notice of such right and the number of
shares Purchaser is entitled to.
(d) Any and all of Purchaser's rights under this Section
9A will terminate within the earliest of: (i) the Closing of the
Company's initial public offering or (ii) three (3) years from the date
of this Agreement or (iii) upon the first private placement
contemplated after the Closing set forth in Section 9A hereinabove.
SECTION 10
MISCELLANEOUS
10.1 ARBITRATION. All disputes arising under this Agreement or
in connection with the transactions hereunder shall be resolved between
the parties in good faith; however, if these efforts fail, the dispute
shall be resolved by arbitration by a sole arbitrator within sixty (60)
days. The arbitrator shall be chosen by agreement of the parties
hereto. If they fail to so agree within twenty (20) days after a party
shall have requested such arbitration, the arbitrator shall be
appointed by the Chairman of the Israeli Bar who shall also determine
the place of the arbitration proceedings based on the convenience of
the parties involved; provided, however, that the arbitrator chosen
shall be from the jurisdiction chosen by the above-mentioned Chairman.
The arbitrator shall not be bound by any judicial rules of evidence or
procedure. The arbitral award shall be final and binding upon the
parties, and judgment upon the award may be entered in any court having
jurisdiction, or application may be made to such court for a judicial
acceptance of the award or for an order of enforcement, as the case may
be. The provisions of this Section 10.1 shall apply to all disputes
arising in connection with this Agreement. Each party shall bear its
own expenses, subject to the arbitration judgment on the issue of
expenses.
10.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive (i) any investigation made by the
Purchaser and (ii) the Closing.
10.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of,
and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto; provided, however, that no party
may assign its rights hereunder without the prior written consent of
the other parties hereto.
10.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including
the Schedules and Exhibits hereto) and the other documents delivered
pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subject matters hereof
and thereof and supersede all prior agreements and understandings
relating thereto. Neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated except by an instrument in
writing signed by all the parties hereto.
10.5 NOTICES. All notices and other communications required or
permitted to be given or sent hereunder shall be in writing and shall
be deemed to have been sufficiently
17
<PAGE>
given or delivered for all purposes if mailed by registered airmail,
transmitted by telex or telecopier, or delivered by hand to the
following respective addresses until otherwise directed by notice as
aforesaid:
To the Purchaser:
The Trust Company of Maritime Bank of Israel
35 Achad Ha'am Street
Tel Aviv, Israel
Attention: Mr. Yosi Ben-Yosef
To the Company:
RADVISION Ltd.
8 Hanechoshet Street
Tel Aviv 69710, Israel
Attention: Mr. Amos Amir
provided, however, that notice of change of address shall be
effective only upon actual receipt.
All notices sent by registered mail shall be deemed to have
been received within seventy-two (72) hours of posting. If delivered by
hand, upon their delivery.
10.6 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy upon any breach or default under this Agreement
shall impair any such right, power or remedy of such holder nor shall
it be construed to be a waiver of any such breach or default, or in
acquiescence therein, or of any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any
kind or character on the part of any holder of any breach or default
under this Agreement, or any waiver on the part of any holder of any
holder of any provisions or conditions of this Agreement shall be
effective only if made in writing and only to the extent specifically
set forth in such writing. All remedies, either under this Agreement or
by virtue of law or otherwise afforded to any holder, shall be
cumulative and not alternative.
10.7 WAIVER OF DEFAULT. No waiver with respect to any breach
or default in the performance of any obligation under the terms of this
Agreement shall be deemed to be a waiver with respect to any subsequent
breach or default, whether of similar or different nature.
10.8 RIGHTS; SEVERABILITY. In case any provision of the
Agreement shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby. The parties hereto shall
18
<PAGE>
be obliged to draw up an arrangement in accordance with the meaning and
the object of the invalid provision.
10.9 CONFIDENTIAL INFORMATION. The Purchaser acknowledges that
the information received by it and such information which will be
received pursuant hereto shall be confidential and is intended for the
Purchaser's use only for the purpose of this Agreement, and the
Purchaser will not use or allow the use of such confidential
information or reproduce, disclose or disseminate such information to
any other person (other than the Purchaser's employees or agents having
a need to know the contents of such information, and the Purchaser's
attorneys), except in connection with the exercise of rights under this
Agreement, unless the Company has made such information available to
the public generally or the Purchaser is required to disclose such
information by a governmental body or by judicial order, but only to
the persons and the extent so required.
10.10 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and
are not to be considered in construing this Agreement.
10.11 GOVERNING LAW. This Agreement shall be governed
exclusively by, and construed solely in accordance with, the laws of
the State of Israel.
10.12 Purchaser and any Transferee under Section 9 are
represented by the Managing Director of Maritime, presently Mr. Yosi
Ben-Yosef. Notice sent to the Managing Director of Maritime will be
deemed as notice sent to Purchaser and/or any such Transferee. A
resolution or request given by the Managing Director of Maritime to the
Company will be deemed as if given by Purchaser and any such
Transferee. The Company will have no obligation to provide information
or notice whatsoever except to the Managing Director of Maritime.
10.13 Purchaser agrees that the Company will issue to Mr.
Eliezer Manor forty-nine (49) shares against payment of their nominal
value.
10.14 Following the Closing, the Company will amend its
Memorandum and Articles of Association to reflect this Agreement. The
Present shareholders and the Purchasers agree to such amendments.
10.15 The Company will bear the cost of stamp tax due in
connection with the issuance of shares according to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement in three (3) original copies, one to the Company, one to the
Purchaser and one of the Present Shareholders, as of the date first
above-mentioned.
THE COMPANY THE PURCHASER
RADVISION LTD. Lerosh Investments Ltd.
By: /s/ AMOS AMIR By: /s/ LEROSH INVESTMENTS LTD.
------------------------------ -------------------------------
Amos Amir, Managing Director
19
<PAGE>
Gevahim Investments House Limited Ltd.
By: /s/ GEVAHIM INVESTMENTS HOUSE LIMITED LTD.
---------------------------------------------
/s/ YOAV CHLOUCHE
-------------------------------------------------
Yoav Chelouche
Permal Emerging Growth V Ltd.
By: /s/ PERMAL EMERGING GROWTH V LTD.
---------------------------------------------
Maritime - Julex Investment Ltd.
By: /s/ MARITIME-JULEX INVESTMENT LTD.
---------------------------------------------
/s/ SHRAGA BLAZER
-------------------------------------------------
Shraga Blazer
/s/ ELI LUZ
-------------------------------------------------
Eli Luz
THE PRESENT SHAREHOLDERS:
/s/ ZOHAR ZISAPEL
-------------------------------------------------
Zohar Zisapel
/s/ YEHUDA ZISAPEL
-------------------------------------------------
Yehuda Zisapel
20
<PAGE>
EXHIBIT 1
<TABLE>
<CAPTION>
No. of Shares Shares Total No.
Name of prior to Invested Issued After Ownership
Shareholder Investment Amount at Closing Closing after Closing
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Yehuda Zisapel 6,930 6,930 15.34%
Zohar Zisapel 6,930 6,930 15.34%
Yehuda Zisapel 5,940 5,940 13.15%
and Zohar
Zisapel
(as trustees)
Amos Amir 932 932 2.06%
RAD Data 710,030 3,515 7.78%
Communications
Ltd.
Zohar Gilon 60,600 300 0.66%
Avraham Neuman 60,600 300 0.66%
Yair Tauman 60,600 300 0.66%
W.S.P. Capital 37,976 188 0.42%
Investments Ltd.
Lannet Data 999,900 4,950 10.95%
Communications Ltd.
Lerosh Investments Ltd. 99,990 495 1.10%
Gevahim Investments 20,200 100 0.22%
House Limited Ltd.
Yoav Chelouche 49,692 246 0.54%
Permal Emerging Growth 194,930 965 2.14%
V Ltd.
Maritime - Julex 99,990 495 1.10%
Investment Ltd.
Shraga Blazer 5,050 25 0.06%
Eli Luz 30,098 149 0.33%
<PAGE>
Clal Venture Capital 999,900 4,950 10.95%
LP
ECI Telecom Ltd. 499,950 2,475 5.48%
Eliezer Manor 49 0.11%
Finovelec 550,046 2,723 6.03%
Factory Systemes 250,076 1,238 2.74%
Houston Venture 199,980 990 2.19%
Partners Ltd.
20,732 4,929,608 45,185 100.00%
</TABLE>
2
<PAGE>
EXHIBIT 5.7
To: Purchaser
(as defined in the attached Agreement
dated April 26, 1995)
OPINION
I, the undersigned, as counsel to RADVision Ltd., hereby give my opinion, to the
best of my knowledge at this time as follows:
1. ORGANIZATION AND STANDING. RADVision Ltd. ("RADVision") is
a company duly organized and existing under the laws of the State of Israel
and is in good standing under such laws. RADVision has the requisite
corporate power to own and operate its properties and assets and to carry on
its business as presently conducted.
2. CAPITALIZATION. The RADVision `s authorized capital is
sixty thousand (60,000) Ordinary Shares. The RADVision's issued capital stock
immediately prior to the Closing date shall consist of twenty thousand seven
hundred thirty--two (20,732) Ordinary Shares, all of which are duly
authorized, validly issued and free of any liens or encumbrances. Out of the
issued share capital, thirteen thousand eight hundred sixty (13,860) shares
are fully paid and six thousand eight hundred seventy--two (6,872) shares are
partially paid. All shares are non-assessable, and to the best of RADVision'
s knowledge and belief, are beneficially owned by their holders of record.
There are no preemptive, conversion or other rights, options, or agreements
granted or issued by, or binding upon, RADVision or the shareholders which
entitle any person, firm or corporation to purchase or acquire any shares of
RADVision' s capital stock, except as set forth in this Agreement.
The rights, restrictions, privileges and preferences with
respect to RADVision's shares, as set forth in its Memorandum of Association
and Articles of Association, are valid and enforceable. To the best of my
knowledge, there are no outstanding rights, options, warrants, conversion
rights or agreements for the purchase or acquisition from RADVision of any
shares of its capital stock, except as stated in its Memorandum and Articles
of Association.
3. COMPLIANCE WITH LAW AND OTHER INSTRUMENTS. The execution,
delivery and performance of the Agreement dated April 26, 1995 between
RADVision and the Purchaser (the "Agreement") will not result in any
violation of, or be in conflict with or constitute a default under, any
applicable law, regulation or order, RADVision's Memorandum of Association or
Articles of Association. To the best of my knowledge, the execution, delivery
and performance of the Agreement and consummation of the transactions
contemplated thereby, will not result in any violation of, or be in conflict
with or constitute a default under, any term of any mortgage, indenture,
contract, agreement, instrument, judgment, decree or order applicable to
RADVision, or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of RADVision
pursuant to any such term. <PAGE>
4. LITIGATION. To the best of my knowledge, there are neither
any actions, proceedings nor investigations pending or threatened against
RADVision or its assets or properties.
5. EMPLOYMENT AGREEMENTS. The agreements between RADVision
and its employees (except for Danny Levin) as referred to in Sections 5.5 and
5.6 of the Agreement have been duly executed and delivered by, and constitute
valid and binding obligations of, all such employees, enforceable by
RADVision in accordance with their terms.
6. STATEMENTS AND FACTS. Nothing has come to my attention
that would lead me to believe that the Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements therein not misleading.
/s/ NEHAMA SNEH
-----------------------------
Nehama Sneh
Advocate
Dated: April 26, 1995
(opinion/6)
<PAGE>
EXHIBIT 8.2
REGISTRATION RIGHTS
1. INCIDENTAL REGISTRATION. If the Company shall elect to offer any of
its securities to the public, it shall give notice to the Purchaser of such
intention and shall include in such offering a portion of all shareholders
shares equal to the total amount of shares registered, multiplied by an amount
derived by dividing the number of Shares held by each shareholder by the total
number of shares outstanding at that time. In the event the public offering
involves an underwriting, the rights of the shareholders hereunder shall be
conditional upon the underwriter's determination as to marketing factors
requiring the limitation of such right, and the underwriter may preclude from
the offering any or all securities which could have otherwise been included in
the offering.
2. DEMAND REGISTRATION. At any time commencing one year following the
closing of the Company's initial public offering, and for a period of three (3)
years thereafter, each group of shareholders as defined in section 9.1 and/or
Lannet Data Communications Ltd. shall be entitled to demand one registration of
any or all of its shares held at the time of the initial public offering for
trading on any securities exchange; PROVIDED, however, that such request must
cover Shares representing a market value at the time of such request equal to a
minimum of three million Dollars ($3,000,000); and PROVIDED FURTHER, however,
that such request may not include Shares which within three months from the date
of such request could be sold to the public without restriction, for example
pursuant to the provisions of Rule 144 of the Securities and Exchange
Commission. Within 20 days after receipt, the Company shall give written notice
of such request to the other shareholders and shall include in such registration
all Shares held by them with respect to which the Company receives written
requests for inclusion therein within 15 days after the receipt of the Company's
notice. Thereupon, the Company shall use its best efforts to effect the
registration as soon as possible of all Shares (as to which it has received
requests for registration) for trading on a securities exchange, where the
Shares are then traded, specified in the request for registration. In the event
the registration involves an underwriting, the rights of the shareholders
hereunder shall be conditional upon the underwriter's determination as to
marketing factors requiring the limitation of such right, and the underwriter
may preclude from the offering any or all securities which could have otherwise
been included in the offering. Notwithstanding any other provision of this
clause 2 of Exhibit 8.2, after the Company has effected one such registrations
pursuant to this clause 2, and such registrations have been declared or ordered
effective, in the event that the Company shall furnish to such shareholder(s)
delivering a request for registration a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company it would be seriously detrimental to the Company or its shareholders
for a registration statement to be filed in the near future, the Company's
obligation to use its best efforts to register, qualify or comply under this
clause 2 shall be deferred for a period not to exceed 120 days from the date of
receipt of such request.
3. EXPENSES. All expenses incurred in connection with a registration
under Section 2 shall be borne by the selling shareholders participating in such
registration on a pro rata basis; PROVIDED, however, that the Company shall pay
any expenses associated with such registration which the Company would have
incurred in the ordinary course of business. All expenses incurred in connection
with a registration under Section 1 shall be borne by the
<PAGE>
Company; PROVIDED, however, that each of the shareholders participating in such
registration shall pay its pro rata portion of the fees, discounts or
commissions payable to any underwriter.
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<PAGE>
Exhibit 4.8
AGREEMENT
THIS AGREEMENT made and entered into as of the 27th day of
April, 1995, by and among RADVISION LTD., an Israeli company of 8 Hanechoshet
Street, Tel Aviv 69710, Israel (the "Company") and (1) Finovelec of 6,
rue Ancelle, 92521 Neuilly, France, (2) Factory Systemes of 22,
rue Vladimir Jankelevitch-Emerainville, 77437 Marne-la-Valle, France, and (3)
Houston Venture Partners, Ltd. of 401, Louisiana, Houston, Texas 77002 USA, (all
three of them together jointly and severally the "Purchaser") and Yehuda Zisapel
and Zohar Zisapel of 8 Hanechoshet Street, Tel Aviv 69710, Israel (jointly and
severally, the "Present Shareholders").
W I T N E S S E T H :
WHEREAS, the Company is and will be engaged in the business of
developing, manufacturing and marketing of products for video conferencing (the
"Field"); and
WHEREAS, the Company desires to issue and sell, and the Purchaser
desires to purchase ordinary shares, par value One New Israeli Shekel (NIS
1.00), of the Company ("Ordinary Shares"),
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained, the Company and the Purchaser hereby
agree as follows:
SECTION 1
ISSUANCE AND PURCHASE OF SHARES
1.1 The Purchaser undertakes to invest in the Company the amount of One
Million and One Hundred Two US Dollars (US$ 1,000,102) (hereinafter, the
"Investment Amount") on the Closing Date as defined in Section 2 hereinbelow.
All amounts will be deposited in US dollars or their equivalent in NIS to the
Company's account no.
377906 at Bank Hapoalim B.M., Hadar Yosef Branch (610).
1.2 In consideration for and subject to the execution of the
investment, the Company shall issue on the Closing Date four thousand nine
hundred fifty-one (4,951) ordinary shares (hereinafter, the "Shares") to the
Purchaser. The Company shall not be obligated to issue any shares whatsoever
before the full Investment Amount is received by it. The Shares, when issued,
will have been validly issued, fully paid and non-assessable, and will be free
of any liens or encumbrances.
The above shares will be issued as follows:
Finovelec 2,723 shares
Factory Systemes 1,238 shares
Houston Venture Partners Ltd. 990 shares
1.3 The Investment Amount is part of a total amount of approximately US
$ 4,930,000 (hereinafter, the "Total Investment") intended to be raised by the
Company from the Purchaser as well as from other investors (hereinafter, the
"Other Purchasers") as set forth in Exhibit 1 attached hereto. In consideration
for the Total Investment, the Company will issue 24,453 Ordinary Shares,
<PAGE>
par value 1.- NIS each. After all said shares have been issued, the ownership of
the Company will be as set forth in Exhibit 1.
SECTION 2
CLOSING DATE
The purchase of the Shares by the Purchaser shall take place on April
28, 1995 (the "Closing"). The date of the Closing is referred to as the "Closing
Date" in this Agreement.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company and the Present Shareholders hereby represent and warrant
to the Purchaser the facts hereinafter set forth in this Section 3.
3.1 CORPORATE POWER. As of the date hereof and as of the Closing, the
Company has and will have all requisite corporate power to enter into and to
perform this Agreement.
3.2 SUBSIDIARIES. The Company has a wholly owned U.S. subsidiary,
RADVISION Inc. in New Jersey. The Company has no other subsidiaries and does not
otherwise own, of record or beneficially, any capital stock or equity interest
in any other corporation, association or business entity.
3.3 ORGANIZATION AND STANDING. The Company is a corporation duly
organized and existing under the laws of the State of Israel and is in good
standing under such laws. The Company has requisite corporate power to own and
operate its properties and assets, and to carry on its business as presently
conducted. The Memorandum of Association and Articles of Association and all
amendments to date of the Company are attached hereto as EXHIBITS "3.3A" AND
"3.3B."
3.4 CAPITALIZATION. The Company's authorized capital is sixty thousand
(60,000) Ordinary Shares. The Company's issued capital stock immediately prior
to the Closing date shall consist of twenty thousand seven hundred thirty-two
(20,732) Ordinary Shares, all of which are duly authorized, validly issued and
free of any liens or encumbrances. Out of the issued share capital, thirteen
thousand eight hundred sixty (13,860) shares are fully paid and six thousand
eight hundred seventy-two (6,872) shares are partially paid. All shares are
non-assessable, and to the best of the Company's knowledge and belief, are
beneficially owned by their holders of record. There are no preemptive,
conversion or other rights, options, or agreements granted or issued by, or
binding upon, the Company or the shareholders which entitle any person, firm or
corporation to purchase or acquire any shares of the Company's capital stock,
except as set forth in this Agreement and in particular, in Sections 3.21, 3.22
and 3.23.
3.5 AUTHORIZATION. All corporate actions on the part of the Company and
its directors and shareholders, required for the authorization, execution,
delivery and performance by the Company of this Agreement and the consummation
of the transactions contemplated herein have been, or will be executed, upon
signature of this Agreement. This Agreement is and will be valid and binding
obligations of the Company, enforceable in accordance with its terms. The
execution, delivery and performance by the Company of this Agreement, and
compliance therewith, and the consummation of the transactions contemplated by
this Agreement will not result in any
2
<PAGE>
violation of and will not conflict with, or result in a breach of any of the
terms of, or constitute a default under, any document to which the Company is or
will be a party or by which it is or will be bound, or result in the creation of
any mortgage, pledge, lien or encumbrance or charge upon any of the properties
or assets of the Company. To the best of the Company's knowledge, no third
party's consent is required for the Company to become a party to this Agreement.
Immediately after the Closing Date, the Company will inform all governmental
authorities that require to be reported of changes in equity, including, but not
limited to the Israel Investment Center and the Office of the Chief Scientist of
the execution of this Agreement.
3.6 OUTSTANDING DEBT. Except as set forth in the Schedule of Exceptions
attached hereto as EXHIBIT "A" ("Schedule of Exceptions"), the Company has no
outstanding indebtedness for borrowed money and is not a guarantor of any debt
or obligation of another. There exists no default by the Company under the
provisions of any agreement or other instrument evidencing or relating to any
indebtedness or obligation.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the
Schedule of Exceptions, the Company has no material liability of any nature,
direct or indirect, absolute or contingent, not adequately reserved against,
excluding any liabilities related to damage which may have been caused by its
products or are related to sales of said products (unless the Company knows or
should have known of such damages or liabilities). The Company has paid, or has
made adequate provisions for the payment of, all taxes, interest, penalties,
assessments or deficiencies owing by it to any taxing authority.
3.8 ABSENCE OF CERTAIN CHANGES. Since December 31, 1994, the business
of the Company has at all times been conducted in the ordinary course. There has
not been any event or condition of any character which has materially adversely
affected the Company's business, prospects or plans.
3.9 CONTRACTS AND CONTRACTUAL ARRANGEMENTS. The Company is a party to
several material agreements, all of which are described in the Schedule of
Exceptions attached hereto. Each of such agreements is in full force and effect
and, to the Company's knowledge, no party thereto is in breach thereof. The
Company is of the opinion that it receives services from affiliated companies
for fair consideration as described in the Schedule of Exceptions attached
hereto. The Company is not obligated to receive services from said affiliated
companies.
3.10 INDEBTEDNESS OF OR TO SHAREHOLDERS, ETC.; CONFLICTS OF INTEREST.
(a) Except as set forth in the Schedule of Exceptions, none of
the Company's shareholders, directors, officers or employees or any of their
affiliates or families is indebted to the Company and the Company has no debt to
any of them except for accrued wages for the current period.
(b) Except as set forth in the Schedule of Exceptions, to the
best of the Company's knowledge, none of the Company's directors, officers,
employees or consultants, or their affiliates or families, directly or
indirectly, own any material interest in any entity which is a competitor of the
Company.
3
<PAGE>
3.11 LITIGATION; INSOLVENCY PROCEEDINGS. To the best of the Company's
knowledge and belief, there are no pending or threatened actions, suits,
proceedings or any investigations against or affecting the Company involving the
possibility of any judgment or liability which would adversely affect its
business.
3.12 INSURANCE. The Company maintains insurance through RAD-Bynet
insurance policies, adequately covering the perils normally insured against by
companies similarly situated. All policies of insurance maintained by the
Company are attached hereto as EXHIBIT "3.12." To the best of the Company's
knowledge, all such policies are in full force and effect.
3.13 TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. Except as set forth
in the Schedule of Exceptions, the Company owns, or holds under lease, all real
and personal property used by it in its business. All property owned by the
Company (all of which is listed on EXHIBIT "3.13" hereto) is so owned free and
clear of all mortgages, pledges, liens or charges.
3.14 LEASES. EXHIBIT "3.14" hereto contains a correct and complete list
and description (including the amount of rents) of all leases under which the
Company leases property, real or personal.
3.15 BUSINESS OF THE COMPANY. The Company has no knowledge of (i) the
existence of any pending or planned patent, or any statute, rule, law,
regulation, standard or codes which would materially adversely affect the
condition, financial or otherwise, or the business operations, of the Company;
or (ii) the existence of any other factor which would materially adversely
affect the financial condition, or the operations, of the Company.
3.16 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation
of the terms of its Memorandum or Articles of Incorporation, and it is not in
violation of the terms of any judgment, decree, order, statute, rule or
regulation to which it is subject.
3.17 EMPLOYEES. All the key employees of the Company are listed on
EXHIBIT "3.17" hereto. To the best of the Company's knowledge, no such employee
is in violation of any material term of any employment contract, patent
disclosure agreement, non-competition agreement, or any other contract or
agreement or any restrictive covenant or any other obligation to a former
employer relating to the right of any such employee to be employed by the
Company. To date, all payments due to the Company's employees have been paid
regularly. In addition, the Company made all allowances required by law to cover
the amounts due to its employees and/or officers in connection with their
employment and/or termination of employment, as reflected in EXHIBIT "3.20A."
3.18 DISCLOSURE. This Agreement and the Schedule of Exceptions
delivered to the Purchaser do not contain any material untrue statement and do
not omit to state a material fact necessary in order to make the statements
contained herein not misleading in the light of the circumstances under which
they were made, and such documents represent full disclosure by the Company of
the material facts with respect to the business, prospect and plans of the
Company. The Company confirms that to the date of this Agreement, the Business
Plan dated August, 1994, which was provided to the Purchaser, does not contain
any materially untrue information as far as same relates to the Company itself.
The other information contained therein may have changed since August, 1994.
4
<PAGE>
3.19 PRODUCTS AND OWNERSHIP. A description of the products is enclosed
as EXHIBIT "3.19." To the best of the knowledge and belief of the Company and as
set forth in the Schedule of Exceptions, the Company possesses, or is proceeding
with due diligence to obtain, all patents, patent rights, trademarks, trademark
names, trade name rights and copyrights the Company believes are necessary to
conduct its business as now being conducted and as planned to be conducted
(without conflict with, or infringement upon, any valid rights of others), the
lack of which could affect the operations or condition, financial or otherwise,
of the Company. The Company has no knowledge of any infringement by the Company
or claimed infringement upon, or any conflict with, the patent rights,
trademarks, trademark rights, trade names, trade name rights, copyrights,
intellectual property rights or other rights of any person, form or corporation.
3.20 FINANCIAL STATEMENTS. The audited financial statements of the
Company as of December 31, 1994 are attached hereto as EXHIBIT "3.20A" and
adequately reflect the financial situation of the Company. The unaudited
financial statements of the Company as of February 28, 1995 are attached hereto
as EXHIBIT "3.20B." As of December 31, 1994 to date, the Company did not enter
into any material transaction or undertake any material commitment which was not
in the normal course of business, and there was no material change for the worse
in the Company's position, liabilities and assets.
3.21 The agreements with the other purchasers will resemble the
Agreement with Purchaser.
3.22 In the event of any contradiction between this Agreement and the
Inception Agreement, attached hereto as EXHIBIT "3.22," and the current
Memorandum of Association and current Articles of Association, this Agreement
shall prevail.
3.23 On January 1, 1995, a trust in favor of employees of the Company
and certain employees of the RAD-Bynet group was created. Said Trust Agreement
is attached hereto as EXHIBIT "3.23."
3.24 As of the date of this Agreement, the directors of the Company
are: Yehuda Zisapel, Zohar Zisapel and Amos Amir.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
4.1 LEGAL POWER. As of the date hereof and as of the Closing, the
Purchaser has and will have all requisite power to enter into and to perform
this Agreement.
4.2 EXPERIENCE. The Purchaser has sufficient experience and expertise
to evaluate the suitability of its investment in the Company to its needs and
has the capacity to protect its interests with the purchase of the Shares.
4.3 INVESTMENT. The Purchaser is acquiring the Shares forinvestment for
its own account.
5
<PAGE>
4.4 ACCESS TO DATA. The Purchaser hereby represents that it has had the
full opportunity to discuss management and financial affairs of the Company with
its management and key employees and has had the opportunity to review the
business plan and the Company's facilities. The Purchaser has not been denied
any information that has been requested, and based on the said information has
made a diligent examination of the aspects of the Company's business. The
Purchaser has heretofore received all information that the Purchaser has deemed
necessary and appropriate to enable the Purchaser to evaluate the financial risk
inherent in making an investment in the shares of the Company and the Purchaser
has received satisfactory and complete information concerning the business and
financial condition of the Company in response to all inquiries in respect
thereof. The Purchaser is aware that the Company has been in the development
stage since its inception in October 1992, that no sales of its products have
taken place, and that due to the short operating history of the Company there
can be no assurance that the Company will attain profitability. Nothing
contained in this Section 4.4 shall derogate from the liability of the Company
with respect to the representations and warranties made in Section 3 above.
4.5 AUTHORIZATION. All corporate or partnership action on the part of
the Purchaser, its respective directors, partners and/or shareholders necessary
for the authorization, execution, delivery, payment and performance by the
Purchaser of this Agreement and the consummation of the transactions
contemplated herein, has been taken.
4.6 Purchaser has sufficient financial resources to enable it to
fulfill its obligations under this Agreement and commits to make its investment
in the Company as set forth in Section 1 hereinabove.
SECTION 5
CONDITIONS OF THE PURCHASER TO CLOSING
The obligations of the Purchaser at the Closing, as referred to in
Section 1 hereof, are subject to the fulfillment of each of the following
conditions:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct
when made, and shall be true and correct in all material respects on Closing
with the same force and effect as if they had been made immediately prior to the
Closing and as of such time except for such changes which result from the
obligations of the parties to this Agreement.
5.2 PERFORMANCE. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Company on or prior to
Closing shall have been performed or complied with in all respects.
5.3 LEGAL INVESTMENT. At the time of the Closing, the purchase and
issuance of the Shares shall be legally permitted by all laws and regulations to
which the Purchaser and the Company are subject.
5.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall have been completed to the
satisfaction (as to substance and form) of the Purchaser.
6
<PAGE>
5.5 PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENT. Each of the
Company's employees shall have executed and delivered to the Company an
Employment Agreement, substantially in the form attached hereto as EXHIBIT
"5.5A" or EXHIBIT "5.5B," which agreement contains non-disclosure and
non-competition provisions therein.
5.6 RETENTION OF KEY EMPLOYEES. All the persons listed in EXHIBIT
"3.17" shall either be employees of the Company as of the Closing and to the
best of the Company's knowledge, have not informed them that they intend to
leave the Company, or if an employee has left the Company or intends to leave
the Company, the latter has notified the Purchaser of same.
5.7 OPINION OF COMPANY'S COUNSEL. The Purchaser shall have received
from Nehama Sneh, corporate counsel to the Company, a satisfactory opinion in
substantially the form attached as EXHIBIT "5.7."
SECTION 6
CONDITIONS OF COMPANY TO CLOSING
The obligations of the Company at the Closing, as referred to in
Section 1 hereof, are subject to the fulfillment of each of the following
conditions:
6.1 REPRESENTATION. The representations and warranties made by the
Purchaser in Section 4 hereof shall be true and correct when made and shall be
true and correct on Closing with the same force and effect as if they had been
made immediately prior to the Closing and as of such time.
6.2 Purchaser has fulfilled any and all of its obligations set forth in
Section 1.1.
SECTION 6A
BOARD OF DIRECTORS
Subsequent to the Closing, the Board of Directors will consist of six
(6) directors, three of whom will be appointed by Zohar Zisapel, Yehuda Zisapel
and RAD Data Communications Ltd., the fourth will be Amos Amir in his capacity
as Managing Director of the Company, and the fifth and the sixth are entitled to
be appointed by The Trust Company of Maritime Bank of Israel ("Maritime") and
Clal Venture Capital LP ("Clal"). Lannet Data Communications Ltd. ("Lannet") and
Finovelec, will have the right to designate one observer each to the Board of
Directors. Upon reasonable notice, Lannet will be permitted to change the status
of its observer to that of director, in which event the number of directors will
be eight (8), Lannet's observer will become the seventh director and Yehuda
Zisapel and Zohar Zisapel will be entitled to appoint another director (the
eighth).
SECTION 7
COVENANTS OF THE COMPANY
For as long as the Purchaser's equity interest in the Company will
amount to at least five (5%) percent of the outstanding capital securities
therein and Purchaser has the right to appoint a director or an observer under
Section 6A hereinabove, except where stated otherwise in this Section 7 and in
Section 8, and without derogating from any rights or obligations conferred upon
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shareholders, or obligations conferred upon corporations, under applicable law,
the Company hereby covenants and agrees as follows. For the purposes of
calculating Clal's percentage of ownership set forth above, ECI Telecom Ltd.'s
("ECI") equity interest in the Company at the time will be taken into account
and added to that of Clal for as long as Clal is a shareholder of ECI.
7.1 ADDITIONAL INFORMATION. The Company will permit an employee of the
Purchaser to visit upon a mutually convenient time and inspect any of the
properties of the Company, including its books of account, and to discuss its
affairs, finances and accounts with the Company's officers and the Auditor.
(a) As soon as available after approval by the Board of
Directors, the Company will provide Purchaser with a summary of the budget,
including projected yearly profit and loss accounts and balance sheet, as
contained in its Operating Plan and as approved by its Board of Directors, as
well as information about material changes in the budget, all as approved by the
Board of Directors.
(b) With reasonable promptness, the Company agrees to provide
to Purchaser such information and data with respect to the Company, as the
Purchaser may from time to time reasonably request.
The foregoing provisions of this Section 7.1 shall not be in
limitation of any rights which the Purchaser may have to inspect and copy the
books and records of the Company or to inspect its properties or discuss its
affairs, finances and accounts, under the laws of the State of Israel.
7.2 USE OF PROCEEDS. The Company will use the proceeds of the issuance
and sale of the Shares mainly to fund its activities and its business subject to
any resolutions made by its Board of Directors from time to time.
7.3 BOARD APPROVAL. Without derogating from the Company's Articles of
Association, or any law or practice limiting the authority of the management of
the Company, the Company shall ensure that the approval of the Board of
Directors of the Company shall be required for the following, (i) designation of
all authorized signatories; (ii) approval of the Company's or the subsidiaries'
budget and Operating Plan; (iii) selection of legal counsel of the Company; (iv)
terms of employment of the Managing Director of the Company; and (v) any and all
other matters with regard to which the Board of Directors of the Company
resolves that its prior approval shall be required.
Without derogating from the first sentence of Section 7 hereof, it is
further provided that the Purchaser's rights hereunder shall expire upon a
public offering of the Company's shares regardless of Purchaser's percentage of
ownership at that time.
7.4 Resolutions of the Board of the Company regarding the following
subject matters shall require the consent of five out of six directors. In the
event that the Board will consist of 8 directors as per Section 6.2 hereinabove,
then the following subject matters will require the consent of 6 out of 8
directors, including consent of two directors out of the following: "Clal"
Director, "Maritime" Director, "Lannet" Director:
(a) A merger of the Company with any other entity;
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(b) Acquisition or disposition, including mortgage, of other
corporations, real estate, and any material assets out of the ordinary course of
the Company's business;
(c) Replacement of the Company's Managing Director;
(d) Replacement of the auditors of the Company;
(e) Approval of the distribution of dividends by the Company.
(f) Loans by the Company or any of its subsidiaries to their
directors or officers, or to their relatives or other affiliates, with the
exception of employees receiving shares under the trust as set forth in
subsection 3.23 hereinabove;
(g) Transactions in excess of $20,000 not included in the
approved Operating Plan between the Company or its affiliates and their
directors, officers and employees or their relatives or other affiliates, with
the exception of employees receiving shares under the trust as set forth in
subsection 3.23 hereinabove;
(h) All material transactions or obligations not contemplated
in the budget by the Company or its subsidiaries; and
(i) Resolution to enter a new business field unrelated to the
present field.
Notwithstanding anything to the contrary contained herein, in the event
that a director is not allowed under a specific section of this Agreement to
participate in a board meeting and/or discussion, the majority required will be
(1) 4 out of 5, or (2) 5 out of 7, including only one of the following: the Clal
Director, Maritime Director, or Lannet Director.
7.5 RIGHT OF FIRST REFUSAL FOR IPO. The Company agrees that in the
event that the Board of Directors resolves:
(a) to initially offer shares of the Company on the Israeli
Stock Exchange, then the following will apply:
(1) The Company will inform Clal Issuing Ltd. of said
resolution;
(2) Clal Issuing Ltd. will have an option for twenty
(20) days as of said notice date by the Company to make a proposal to underwrite
the offering (hereinafter, the "Clal Proposal");
(3) The Board of Directors will consider the Clal
Proposal and will, in its sole discretion, resolve whether it is acceptable or
not; and
(4) In the event that the Board resolves not to
accept the Clal Proposal, then the Company will be free to negotiate and agree
with any underwriter whatsoever.
(5) Within five (5) working days after the written
notice of the Company of the best proposal from the underwriter as in (4) above,
Clal will have the option to improve the Clal Proposal to match the
underwriter's proposal. In the event that Clal Issuing Ltd. either fails to
9
<PAGE>
respond or to match the other proposal, Clal's option under this Section 7.5(a)
will terminate and the Board will be free to proceed as it deems fit.
(b) In the event that the Board of Directors resolves to
initially offer shares of the Company on NASDAQ, with some of the shares
intended for the Israeli public, then the following will apply:
(1) The Company will inform Clal Issuing Ltd. of said
resolution;
(2) The Company will be free to negotiate and agree
with any underwriting house to underwriter the offering, provided that the
Company notifies said underwriter that Clal Issuing Ltd. has a right of first
refusal concerning the offering of the shares of the Company to the Israeli
public.
(c) In the event that the Board of Directors resolves to
engage a placement agent for a private offering in the Israeli market, and such
agent is entitled to a commission in return for his services (whether by form of
money or options), then the following will apply:
(1) The Company will inform Clal Venture Capital LP
of said resolution;
(2) Clal Issuing Ltd. will have an option for ten
(10) days as of said notice date by the Company to make a proposal to head the
offering as a placement agent (hereinafter, the "Clal Proposal");
(3) Within five (5) working days after the written
notice of the Company of a proposal from another placement agent, Clal and Clal
Issuing Ltd. will have the option to improve the Clal Proposal to match the
other proposal. In the event that Clal Issuing Ltd. either fails to respond or
to match the other proposal, Clal's option under this Section 7.5(c) will
terminate and the Board will be free to proceed as it deems fit;
(4) The Board of Directors will consider the Clal
Proposal as well as the other proposal(s) and will, in its sole discretion,
resolve whether it is acceptable or not; and
(5) In the event the Board accepts Clal Issuing
Ltd.'s proposal and Clal Issuing Ltd. acts as the said placement agent, then,
notwithstanding anything to the contrary contained herein, the Board, in its
sole discretion, by simple majority, will be free thereafter to resolve that the
services of Clal Issuing Ltd. as a placement agent are not satisfactory, to
terminate such services and to receive such services from any other placement
agent without any further rights or obligations with respect to Clal Issuing
Ltd. or the Purchasers.
(d) It is specifically agreed that:
(1) all discussions concerning the identity of
underwriter or placement agent as well as the terms of the offer under Section
7.5 will be without the presence of Clal's appointed director;
(2) Clal Venture Capital LP's and Clal Issuing Ltd.'s
rights under Section 7.5 will terminate upon acceptance or rejection by the
Board of Directors of the Clal Proposal;
10
<PAGE>
(3) It is further provided that the rights of Clal
Issuing Ltd., and Clal Venture Capital LP under Section 7.5 shall expire upon a
public offering of the Company's shares regardless of Purchaser's percentage of
ownership at that time.
(4) For the purposes of this Agreement, the address
of Clal Issuing Ltd. is 5 Druianov Street, Tel-Aviv 63143.
SECTION 8
For as long as the Purchaser's equity interest in the Company amounts
to at least two (2%) percent of the outstanding share capital of the Company
therein, and without derogating from any rights conferred upon shareholders, or
obligations conferred upon corporations under applicable law, the Company hereby
covenants and agrees as follows:
8.1 PRE-EMPTIVE RIGHTS. If the Company should at any time or from time
to time propose to issue and sell New Securities, as defined in subsection
8.1(a), a pro rata portion of such New Securities shall first be offered (as
hereinafter provided) to the shareholders of the Company (each of whom shall
hereinafter be referred to as "offeree"). For purposes of this Section 8.1, the
pro rata portion of each Offeree shall mean a fraction of the New Securities to
be issued, of which the aggregate number of shares which are held by the Offeree
on the date of the Company's written notification referred to in subsection
8.1(b) below (the "Notice Date") shall be the numerator and the aggregate number
of shares held by all the Offerees shall be the denominator. The aforesaid
rights of the Offerees shall be subject to the following provisions:
(a) "New Securities" shall mean any capital stock of the
Company, whether or not now authorized, and rights, options or warrants to
purchase capital stock, and securities of any type whatsoever that are, or may
become, convertible into capital stock; provided that the term "New Securities"
shall not include (i) securities purchased under this Agreement; (ii) securities
offered to the public; (iii) securities issued pursuant to the acquisition of
another corporation by the Company by merger, purchase of substantially all the
assets of another corporation or any other reorganization whereby the Company
owns not less than fifty-one percent (51%) of the voting power of such
corporation; (iv) securities issued to employees, consultants or directors of
the Company pursuant to any stock option plan or stock purchase or stock bonus
arrangement approved by the Board of Directors of the Company; or (v) securities
issued pursuant to payment of any dividend or distribution with respect to the
Company's issued and outstanding capital stock.
(b) In the event the Company proposes to undertake an issuance
of New Securities, it shall give each Offeree written notice of its intention,
describing the type of New Securities and the price and the terms upon which the
Company proposes to issue the same, and offering its pro rata portion thereof to
such Offerees at such price and on such terms. Each Offeree shall have
twenty-one (21) days from the date of such notice to accept such offer, in whole
or in part, by written notice to the Company, that has to be received by the
Company during the above mentioned 21 days period. All New Securities as to
which such offers have not been accepted in whole or in part by one or more of
the Offerees (of which fact the Company shall give immediate written notice to
all other Offerees), shall be re-offered to each of the Offerees who have
accepted in full the original offer, and each such Offeree shall have the right,
within ten (10) days of the date of such written notice, to purchase the
respective pro rata portions of such new Securities, the same
11
<PAGE>
to be computed as aforesaid but without regard to the shares held by any Offeree
which had not accepted the original offer in full.
(c) In the event any Offeree fails to accept such offers, the
Company shall have the right to sell within six (6) months or enter into an
agreement, to sell such New Securities as to which such offers were not
accepted, provided, however, that no such sale be effected at a price or upon
terms more favorable to the purchasers thereof than those specified in the
Company's notice pursuant to Section 8.1(b).
(d) Each of Yehuda Zisapel, Zohar Zisapel and RAD Data
Communications Ltd. shall have a right to allocate any unused portion of the New
Securities offered to him to the other.
(e) The Purchaser shall have the right to allocate any unused
portion of the New Securities offered to him to its owners or to a company
affiliated to Purchaser, provided that such recipient of shares will join in
this Agreement as if it had become a party to it as of the receipt of shares.
(f) Notwithstanding anything to the contrary contained herein,
Amos Amir, so long as he is the Managing Director of the Company, will be
entitled to be an Offeree under this Section 8.1.
(g) Each of Lerosh Investments Ltd., Gevahim Investments House
Limited Ltd., Mr. Yoav Chelouche, Permal Emerging Growth V Ltd., Maritime-Julex
Investment Ltd., Mr. Shraga Blazer and Mr. Eli Luz shall have a right to
allocate any unused portion of the New Securities offered to him to the other.
8.2 REGISTRATION RIGHTS. If the Company should elect to offer any of
its securities to the public, the Purchaser and the Present Shareholders shall
have registration rights as set forth in EXHIBIT "8.2" attached hereto.
8.3 RESTRICTIONS. Unless otherwise required by applicable law or under
this Agreement, the Company shall not without the approval of at least 75% of
the shareholders:
(a) amend or repeal any provision of, or add any provision to,
the Company's Articles of Association;
(b) create any new class or classes of securities of the
Company having any preference or priority as to dividends or assets superior to
any such preference or priority of the Ordinary Shares, or reclassify any of its
existing securities into such superior securities; or
(c) approve a merger of the Company with any other entity;
Without derogating from the first sentence of Section 8, it is
further provided that each shareholder's rights under Section 8 (except for 8.2)
shall expire upon the initial public offering of the Company's shares,
regardless of that shareholder's percentage of ownership at that time.
12
<PAGE>
SECTION 8A
The Company agrees and undertakes as follows:
8A.1 BASIC FINANCIAL INFORMATION. The Company will furnish to the
Purchaser the following reports certified, when so required herein, by the
Company's auditors:
(a) As soon as practicable after the end of each calendar quarter, and
in any event within forty-five (45) days thereafter, a balance sheet and a
profit and loss account and of cash flow (including opening cash, income,
expenses and closing cash) of the Company as of the end of such quarterly
period, and for the current fiscal year to date, prepared in accordance with
generally accepted accounting principles consistently applied and setting forth
in comparative form the figures for the corresponding periods of the previous
fiscal year, subject to changes resulting from year-end audit adjustments, all
in reasonable detail, signed by the principal financial or accounting officer of
the Company. There shall be appended to such materials a report of the
management as to the business of the Company and its activities during the
quarter.
(b) Not later than forty-five (45) days after the end of each quarter,
sales figures, backlog and new orders for such quarter.
Without derogating from the first sentence of Section 7, it is further
provided that the Company will not be required to furnish any information under
the provisions of this Section 8A.1 and of Section 8A.2 below subsequent to the
initial public offering.
8A.2 INSURANCE. The Company shall continue to maintain insurance
policies similar to those described in Section 3.12 above.
8A.3 ACCOUNTS AND RECORDS. The Company will keep true records and books
of account in which full, true and correct entries will be made of all dealings
or transactions in relation to its business and affairs in accordance with
generally accepted accounting principles applied on a consistent basis.
8A.4 PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENTS. The
Company will not employ, or continue to employ, any person who will have access
to confidential information with respect to the Company and its operations
unless such person has executed and delivered the Company's standard Employment
agreement then in force containing proprietary information and non-competition
sections to the satisfaction (as to substance and form) of the Company's
counsel.
SECTION 9
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES
Except as set forth in this Section 9, the Present Shareholders and the
Purchaser agree not to sell or transfer any of their shares and rights in the
Company to a third party. This Section 9 will terminate upon the initial
offering of the Company's shares to the public.
9.1 For the purpose of this Section 9, the shareholders, the Purchaser
and the Other Purchasers will be regarded as the following Groups:
(a) Zisapel Group - Yehuda Zisapel, Zohar Zisapel, the Trust and
RAD Data Communications Ltd.
(b) Clal Group - Clal Venture Capital LP, ECI Telecom Ltd.
13
<PAGE>
(c) Finovelec Group - Finovelec, Factory Systemes, Houston Venture
Partners Ltd.
(d) Capital Group - Zohar Gilon, Avraham Neuman, Yair Tauman,
W.S.P. Capital
(e) Maritime Group - Lerosh Investments Ltd., Gevahim Investments
House Limited Ltd., Mr. Yoav Chelouche, Permal Emerging Growth
V Ltd., Maritime-Julex Investment Ltd., Mr. Shraga Blazer and
Mr. Eli Luz.
9.2 Group Members are entitled to transfer shares among themselves for
consideration or without consideration without any restrictions.
9.3 Except as set forth in sections 9.9, 9.10 and 9.11 hereinbelow, any
shareholder who shall elect to transfer (hereinafter "Seller") all or part of
his shares, not in accordance with subsection 9.2 (hereinafter "Offered Shares")
shall offer them first to the other registered shareholders of the Company at
that time (hereinafter "Offerees") on a pro rata basis based on their share in
the share capital of the Company.
9.4 In the event any such Offeree fails to exercise his right to
purchase his Offered Shares within forty-five (45) days from the date the offer
is made, then the Seller shall have the right to offer the Offered Shares to a
third party at the same price and upon the same terms of sale as those offered
to the other shareholders under section 9.3 and provided that said third party
shall undertake all of Seller's obligations under this Agreement. (Such third
party to be called hereunder, the "Transferee"). In the event that the shares
are not sold to said party within six (6) months as of the offer to such said
third party, then Section 9.3 will apply anew.
9.5 The Board of Directors shall have the right to not approve the
transfer of shares to a third party in each of the following events:
(i) If the third party is a competitor of the Company;
(ii) If there is a possibility of conflict of interest between the
third party and the Company;
(iii) For any other reason, in which case such approval shall not be
unreasonably withheld.
9.6 In the event that Yehuda Zisapel and/or Zohar Zisapel and/or RAD
will sell more than a total of 25% of their shares in the Company to third
parties, then Purchaser will have the right to sell the same portion of
Purchaser's shares in the Company under the same terms and conditions
(hereinafter, the "Tag Along Right"). Purchaser will inform Zisapel in writing
by fax and by confirmation by mail if it intends to exercise its Tag Along Right
within ten (10) days after the date of notice by Zisapel to Purchaser. Failure
to respond will be deemed as a decision not to Tag Along.
9.7 This Section 9 will supersede Section 14 of the Inception
Agreement.
9.8 The terms of the Trust Agreement, EXHIBIT "3.23," will have
priority over this Section 9.
14
<PAGE>
9.9 Finovelec, in its discretion, shall be permitted to freely transfer
up to 5% of its shares (at that time) in the Company to up to 6 of Finovelec
executives, as well as up to an additional 5% of its shares (at that time) in
the Company to IDI (if then an affiliate of Finovelec). Such transfer shall be
considered a transfer among the Finovelec Group, provided that each Transferee,
upon receipt of the shares, will join this Agreement and undertake all of
Finovelec's obligations hereunder and will be considered henceforth a member in
the Finovelec Group for the purpose of this Section 9.
9.10 Clal Venture Capital LP is entitled to transfer all of its shares
in the Company to its partners, provided that each Transferee, upon receipt of
the shares, will join this Agreement and undertake all of Purchaser's
obligations hereunder and will be considered henceforth a member in the Clal
Group for the purpose of this Section 9.
9.11 Each of Zohar Gilon, Avraham Neuman and Yair Tauman is entitled,
once, to transfer his shares to a company directly under the total control of
said person, provided that each Transferee, upon receipt of the shares, will
join this Agreement and undertake all of Purchaser's obligations hereunder and
will be considered henceforth a member in the Capital Group for the purpose of
this Section 9.
SECTION 9A
ANTI-DILUTION
(a) In the event that any time prior to the earlier of the Closing of
the Company's initial public offering or three (3) years from the date of this
Agreement, the Company issues or sells any Ordinary Shares to third parties upon
a private placement (excluding Company employees) for consideration per share of
less than US $135 (an "Offering"), then prior to said private placement the
Purchaser shall be given the option to purchase Ordinary Shares of the Company
at par value (NIS 1.- per share), in an amount computed as set forth below.
(b) The amount of shares to be issued to Purchaser will be computed
according to the following table:
- ------------------------------------- ------------------------------------------
SHARE PRICE AT NEXT PRIVATE PLACEMENT ADDITIONAL SHARES ISSUED TO ALL PURCHASERS
(DISTRIBUTED ON A PRO-RATA BASIS)
- ------------------------------------- ------------------------------------------
$134.99 - $101.01 7,489 *
- ------------------------------------- ------------------------------------------
$101. - $50.51 17,959 *
- ------------------------------------- ------------------------------------------
Less than $50.5 33,642 *
- ------------------------------------- ------------------------------------------
* The number and price of shares will be adjusted in the event of any
restructuring of the Company's share capital.
(c) Upon the occurrence of each event giving rise to a right
pursuant to this Section, the Company will, at its expense, promptly compute the
number of Ordinary Shares that each Purchaser is entitled to purchase in
accordance with the terms hereof, and furnish to the Purchaser, a notice of such
right and the number of shares Purchaser is entitled to.
15
<PAGE>
(d) Any and all of Purchaser's rights under this Section 9A will
terminate within the earliest of: (i) the Closing of the Company's initial
public offering or (ii) three (3) years from the date of this Agreement or (iii)
upon the first private placement contemplated after the Closing set forth in
Section 9A hereinabove.
SECTION 10
MISCELLANEOUS
10.1 ARBITRATION. All disputes arising under this Agreement or in
connection with the transactions hereunder shall be resolved between the parties
in good faith; however, if these efforts fail, the dispute shall be resolved by
arbitration by a sole arbitrator within sixty (60) days. The arbitrator shall be
chosen by agreement of the parties hereto. If they fail to so agree within
twenty (20) days after a party shall have requested such arbitration, the
arbitrator shall be appointed by the Chairman of the Israeli Bar who shall also
determine the place of the arbitration proceedings based on the convenience of
the parties involved; provided, however, that the arbitrator chosen shall be
from the jurisdiction chosen by the above-mentioned Chairman. The arbitrator
shall not be bound by any judicial rules of evidence or procedure. The arbitral
award shall be final and binding upon the parties, and judgment upon the award
may be entered in any court having jurisdiction, or application may be made to
such court for a judicial acceptance of the award or for an order of
enforcement, as the case may be. The provisions of this Section 10.1 shall apply
to all disputes arising in connection with this Agreement. Each party shall bear
its own expenses, subject to the arbitration judgment on the issue of expenses.
10.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive (i) any investigation made by the Purchaser
and (ii) the Closing.
10.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto; provided, however, that no party may assign its rights hereunder
without the prior written consent of the other parties hereto.
10.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including the
Schedules and Exhibits hereto) and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subject matters hereof and thereof and supersede all prior
agreements and understandings relating thereto. Neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated except by an
instrument in writing signed by all the parties hereto.
10.5 NOTICES. All notices and other communications required or
permitted to be given or sent hereunder shall be in writing and shall be deemed
to have been sufficiently given or delivered for all purposes if mailed by
registered airmail, transmitted by telex or telecopier, or delivered by hand to
the following respective addresses until otherwise directed by notice as
aforesaid:
To the Purchaser:
FINOVELEC
6, rue Ancelle
16
<PAGE>
92521 Neuilly, France
Attention: Mr. Jean-Marc Patouillaud
To the Company:
RADVISION Ltd.
8 Hanechoshet Street
Tel Aviv 69710, Israel
Attention: Mr. Amos Amir
provided, however, that notice of change of address shall be effective only upon
actual receipt.
All notices sent by registered mail shall be deemed to have
been received within seventy-two (72) hours of posting. If delivered by hand,
upon their delivery.
10.6 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy upon any breach or default under this Agreement shall impair any
such right, power or remedy of such holder nor shall it be construed to be a
waiver of any such breach or default, or in acquiescence therein, or of any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any holder of any breach or default under
this Agreement, or any waiver on the part of any holder of any holder of any
provisions or conditions of this Agreement shall be effective only if made in
writing and only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by virtue of law or otherwise afforded
to any holder, shall be cumulative and not alternative.
10.7 WAIVER OF DEFAULT. No waiver with respect to any breach or default
in the performance of any obligation under the terms of this Agreement shall be
deemed to be a waiver with respect to any subsequent breach or default, whether
of similar or different nature.
10.8 RIGHTS; SEVERABILITY. In case any provision of the Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby. The parties hereto shall be obliged to draw up an arrangement in
accordance with the meaning and the object of the invalid provision.
10.9 CONFIDENTIAL INFORMATION. The Purchaser acknowledges that the
information received by it and such information which will be received pursuant
hereto shall be confidential and is intended for the Purchaser's use only for
the purpose of this Agreement, and the Purchaser will not use or allow the use
of such confidential information or reproduce, disclose or disseminate such
information to any other person (other than the Purchaser's employees or agents
having a need to know the contents of such information, and the Purchaser's
attorneys), except in connection with the exercise of rights under this
Agreement, unless the Company has made such information available to the public
generally or the Purchaser is required to disclose such information by a
governmental body or by judicial order, but only to the persons and the extent
so required.
17
<PAGE>
10.10 TITLES AND SUBTITLES. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
10.11 GOVERNING LAW. This Agreement shall be governed exclusively by,
and construed solely in accordance with, the laws of the State of Israel.
10.12 Purchaser and any Transferee under Section 9 are represented by
Mr. Jean-Marc Patouillaud. Notice sent to Mr. Jean-Marc Patouillaud will be
deemed as notice sent to Purchaser and/or any such Transferee. A resolution or
request given by Mr. Jean-Marc Patouillaud to the Company will be deemed as if
given by Purchaser and any such Transferee. The Company will have no obligation
to provide information or notice whatsoever except to Mr.
Jean-Marc Patouillaud.
10.13 Purchaser agrees that the Company will issue to Mr. Eliezer Manor
forty-nine (49) shares against payment of their nominal value.
10.14 Following the Closing, the Company will amend its Memorandum and
Articles of Association to reflect this Agreement. The Present shareholders and
the Purchasers agree to such amendments.
10.15 The Company will bear the cost of stamp tax due in connection
with the issuance of shares according to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
three (3) original copies, one to the Company, one to the Purchaser and one of
the Present Shareholders, as of the date first above-mentioned.
THE COMPANY THE PURCHASER
RADVISION LTD.
FINOVELEC
By: /s/ JEAN-MARC PATOUILLAUD
----------------------------------
Jean-Marc Patouillaud
By: /s/ AMOS AMIR Factory Systemes
---------------------------------
Amos Amir, Managing Director
By: /s/ JEROME BERNIER
-----------------------------------
Jerome Bernier
Houston Venture Partners, Ltd.
By: /s/ HARVARD H. HILL
-----------------------------------
Harvard H. Hill
18
<PAGE>
THE PRESENT SHAREHOLDERS:
/s/ YEHUDA ZISAPEL /s/ ZOHAR ZISAPEL
- ------------------------------- --------------------------------
Yehuda Zisapel Zohar Zisapel
(inv6-rvs/6)
19
<PAGE>
EXHIBIT 1
<TABLE>
<CAPTION>
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
NO. OF SHARES SHARES TOTAL NO. OWNERSHIP
PRIOR TO INVESTED ISSUED AT AFTER CLOSING AFTER
NAME OF SHAREHOLDER INVESTMENT AMOUNT CLOSING CLOSING
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Yehunda Zisapel 6,930 6,930 15.34%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Zohar Zisapel 6,930 6,930 15.34%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Yehuda Zisapel and Zohar Zisapel (as 5,940 5,940 13.15%
trustees)
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Amos Amir 932 932 2.06%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
RAD Data Communications Ltd. 710,030 3,515 7.78%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Zohar Gilon 60,600 300 .66%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Avraham Neuman 60,600 300 .66%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Yair Tauman 60,600 300 .66%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
W.S.P. Capital Investments Ltd. 37,976 188 .42%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Lannet Data Communications Ltd. 999,900 4,950 10.95%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Lerosh Investments Ltd. 99,990 495 1.10%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Gevahim Investments House Limited Ltd. 20,200 100 .22%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Yoav Chelouche 49,692 246 0.54%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Permal Emerging Growth V Ltd. 194,930 965 2.14%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Maritime-Julex Investment Ltd. 99,990 495 1.10%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Shraga Blazer 5,050 25 0.06%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Eli Luz 30,098 149 0.33%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Clal Venture Capital LP 999,900 4,950 10.95%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
ECI Telecom Ltd. 499,950 2,475 5.48%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Eliezer Manor 49 0.11%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Finovelec 550,046 2,723 6.03%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Factory Systemes 250,076 1,238 2.74%
- ------------------------------------------ ----------------- --------------- ------------ -------------- ------------
Houston Venture Partners Ltd. 199,980 990 2.19%
- ------------------------------------------ ================= =============== ============ ============== ============
20,732 4,929,608 45,185 100.00%
- ------------------------------------------ ================= =============== ============ ============== ============
</TABLE>
<PAGE>
EXHIBIT 5.7
To: Purchaser
(as defined in the attached Agreement
dated April 27, 1995)
OPINION
I, the undersigned, as counsel to RADVision Ltd., hereby give my opinion, to the
best of my knowledge at this time as follows:
1. ORGANIZATION AND STANDING. RADVision Ltd. ("RADVision") is a company
duly organized and existing under the laws of the State of Israel and is in good
standing under such laws. RADVision has the requisite corporate power to own and
operate its properties and assets and to carry on its business as presently
conducted.
2. CAPITALIZATION. The RADVision's authorized capital is sixty thousand
(60,000) Ordinary Shares. The RADVision's issued capital stock immediately prior
to the Closing date shall consist of twenty thousand seven hundred thirty-two
(20,732) Ordinary Shares, all of which are duly authorized, validly issued and
free of any liens or encumbrances. Out of the issued share capital, thirteen
thousand eight hundred sixty (13,860) shares are fully paid and six thousand
eight hundred seventy-two (6,872) shares are partially paid. All shares are
non-assessable, and to the best of RADVision `s knowledge and belief, are
beneficially owned by their holders of record. There are no preemptive,
conversion or other rights, options, or agreements granted or issued by, or
binding upon, RADVision or the shareholders which entitle any person, firm or
corporation to purchase or acquire any shares of RADVision's capital stock,
except as set forth in this Agreement.
The rights, restrictions, privileges and preferences with respect to
RADVision's shares, as set forth in its Memorandum of Association and Articles
of Association, are valid and enforceable. To the best of my knowledge, there
are no outstanding rights, options, warrants, conversion rights or agreements
for the purchase or acquisition from RADVision of any shares of its capital
stock, except as stated in its Memorandum and Articles of Association.
3. COMPLIANCE WITH LAW AND OTHER INSTRUMENTS. The execution, delivery
and performance of the Agreement dated April 27, 1995 between RADVision and the
Purchaser (the "Agreement") will not result in any violation of, or be in
conflict with or constitute a default under, any applicable law, regulation or
order, RADVision's Memorandum of Association or Articles of Association. To the
best of my knowledge, the execution, delivery and performance of the Agreement
and consummation of the transactions contemplated thereby, will not result in
any violation of, or be in conflict with or constitute a default under, any term
of any mortgage, indenture, contract, agreement, instrument, judgment, decree or
order applicable to RADVision, or result in the creation of any mortgage,
pledge, lien, encumbrance or charge upon any of the properties or assets of
RADVision pursuant to any such term.
4. LITIGATION. To the best of my knowledge, there are neither any
actions, proceedings nor investigations pending or threatened against RADVision
or its assets or properties.
<PAGE>
5. EMPLOYMENT AGREEMENTS. The agreements between RADVision and its
employees (except for Danny Levin) as referred to in Sections 5.5 and 5.6 of the
Agreement have been duly executed and delivered by, and constitute valid and
binding obligations of, all such employees, enforceable by RADVision in
accordance with their terms.
6. STATEMENTS AND FACTS. Nothing has come to my attention that would
lead me to believe that the Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein not misleading.
/s/ NEHAMA SNEH
------------------------------
Nehama Sneh
Advocate
Dated: APRIL 27, 1995
(opinion/6)
<PAGE>
EXHIBIT 8.2
REGISTRATION RIGHTS
1. INCIDENTAL REGISTRATION. If the Company shall elect to offer any of
its securities to the public, it shall give notice to the Purchaser of such
intention and shall include in such offering a portion of all shareholders
shares equal to the total amount of shares registered, multiplied by an amount
derived by dividing the number of Shares held by each shareholder by the total
number of shares outstanding at that time. In the event the public offering
involves anunderwriting, the rights of the shareholders hereunder shall be
conditional upon the underwriter's determination as to marketing factors
requiring the limitation of such right, and the underwriter may preclude from
the offering any or all securities which could have otherwise been included in
the offering.
2. DEMAND REGISTRATION. At any time commencing one year following the
closing of the Company's initial public offering, and for a period of three (3)
years thereafter, each group of shareholders as defined in section 9.1 and/or
Lannet Data Communications Ltd. shall be entitled to demand one registration of
any or all of its shares held at the time of the initial public offering for
trading on any securities exchange; PROVIDED, however, that such request must
cover Shares representing a market value at the time of such request equal to a
minimum of three million Dollars ($3,000,000); and PROVIDED FURTHER, however,
that such request may not include Shares which within three months from the date
of such request could be sold to the public without restriction, for example
pursuant to the provisions of Rule 144 of the Securities and Exchange
Commission. Within 20 days after receipt, the Company shall give written notice
of such request to the other shareholders and shall include in such registration
all Shares held by them with respect to which the Company receives written
requests for inclusion therein within 15 days after the receipt of the Company's
notice. Thereupon, the Company shall use its best efforts to effect the
registration as soon as possible of all Shares (as to which it has received
requests for registration) for trading on a securities exchange, where the
Shares are then traded, specified in the request for registration. In the event
the registration involves an underwriting, the rights of the shareholders
hereunder shall be conditional upon the underwriter's determination as to
marketing factors requiring the limitation of such right, and the underwriter
may preclude from the offering any or all securities which could have otherwise
been included in the offering. Notwithstanding any other provision of this
clause 2 of Exhibit 8.2, after the Company has effected one such registrations
pursuant to this clause 2, and such registrations have been declared or ordered
effective, in the event that the Company shall furnish to such shareholder(s)
delivering a request for registration a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company it would be seriously detrimental to the Company or its shareholders
for a registration statement to be filed in the near future, the Company's
obligation to use its best efforts to register, qualify or comply under this
clause 2 shall be deferred for a period not to exceed 120 days from the date of
receipt of such request.
3. EXPENSES. All expenses incurred in connection with a registration
under Section 2 shall be borne by the selling shareholders participating in such
registration on a pro rata basis; PROVIDED, however, that the Company shall pay
any expenses associated with such registration which the Company would have
incurred in the ordinary course of business. All expenses incurred in connection
with a registration under Section 1 shall be borne by the Company; PROVIDED,
<PAGE>
however, that each of the shareholders participating in such registration shall
pay its pro rata portion of the fees, discounts or commissions payable to any
underwriter.
(INV6-RVS/6)
<PAGE>
Exhibit 4.9
AGREEMENT
This Agreement made and entered into as of the 12th day of September, 1996 by
and among RADVISION LTD., an Israeli company of 8 Hanechoshet Street, Tel Aviv
69710, Israel ("Company") of the first part and Intel Corporation, a Delaware
corporation, with its principal office at 2200 Mission College Blvd., Santa
Clara, California 95052 USA (hereinafter: "Purchaser") of the second part
W I T N E S S E T H :
WHEREAS the Company is and will be engaged in the business of
developing, manufacturing and marketing of products for video conferencing ; and
WHEREAS the Company desires to issue and sell, and Purchaser desires to
purchase ordinary shares, par value One New Israeli Shekel (NIS 1.00), of the
Company (the "Purchaser Shares"),
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained, the Company and the Purchaser hereby
agree as follows:
SECTION 1
ISSUANCE AND PURCHASE OF SHARES
1.1. Purchaser undertakes to invest in the Company the aggregate amount
of Nine Hundred Ninety-Nine Thousand Nine Hundred Ninety-Nine US Dollars (US$
999,999) (hereinafter, the "Investment"), payable in two installments as
described in Section 2 below. The Investment will be deposited in US dollars to
the Company's account no. 377906 at Bank Hapoalim B.M., Hadar Yosef Branch
(610).
1.2. In consideration for, and subject to, the execution of the
Investment as per Section 1.1 above, the Company shall issue to Purchaser the
Purchaser Shares. The Purchaser Shares, when issued, will have been validly
issued, fully paid and non-assessable, and will be free of any liens or
encumbrances.
1.3. The Investment is part of the Company's Second Round of Financing
in the total amount of up to $2,000,000 at a Share price of US $333. The
existing shareholders of the Company have waived their preemptive right to
participate in the Intel Investment of up to $1,000,000. Some of the
shareholders of the Company have already consented to participate in the balance
of up to $1,000,000 investment. Assuming that the existing shareholders of the
Company exercise their above rights and the total investment in the Company in
this Round of Financing is $2,000,000, then the ownership of the Company on a
fully diluted basis will be as set forth in Exhibit "1." Exhibit "1" will be
amended after the First Closing to reflect the actual investment and ownership
of the Company following this Second Round of Investment and assuming the Second
Closing takes place. To remove any doubt, the percentage of Intel's holding in
the Company, irrespective of any Second Round investment by the existing
shareholders (if at all) shall
<PAGE>
not be less than 2.93% and 5.69% following the First Closing and the Second
Closing, respectively.
SECTION 2
CLOSING DATES
2. The purchase of the Purchaser Shares shall take place as follows:
2.1. On a date to be separately agreed upon, Purchaser will invest a
sum of $ U.S. 500,000 (the "First Closing"), against which the Company shall
issue to the Purchaser 1502 Purchaser Shares.
2.2. The balance of $ US 499,999 (the "Balance") will be invested not
later than fourteen (14) days following Company's first shipment to a customer
of its product H.323/H.324 Gateway. (the "Second Closing"). At the Second
Closing, the Company will issue to the Purchaser against the Balance 1,501
Purchaser Shares.
2.3. Upon the occurrence of any of the following events: (i) a
resolution of the Board of Directors of the Company to offer shares of the
Company to the public ("IPO") in a US securities market, or (ii) an execution of
an investment agreement with a third party for the purchase of more than 49% of
the Company's equity, Purchaser will be entitled, at its sole option, to advance
the investment of the Balance and (consequently) advance the Second Closing
date. The Company shall notify the Purchaser within 30 days of the occurrence of
any of the above events. Purchaser will then have a 30 day period as of the date
of notice in which to advance the investment of the Balance and to execute the
Second Closing, regardless of the stage of development of RADVision's
H.323/H.324 Gateway at that time.
2.4. The First Closing and the Second Closing shall be, collectively,
referred to below as the "Closing".
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3. The Company hereby represents and warrants to Purchaser the facts hereinafter
set forth in this Section 3.
3.1 Corporate Power
As of the date hereof and as of the Closing, the Company has and will
have all requisite corporate power to enter into and to perform this Agreement.
3.2. Subsidiaries
The Company has a wholly owned U.S. subsidiary, RADVision Inc.
operating in New Jersey. The Company has no other subsidiaries and does not
otherwise own, of record or beneficially, any capital stock or equity interest
in any other corporation, association or business entity.
2
<PAGE>
3.3. Organization & Standing
The Company is a corporation duly organized and existing under the laws
of the State of Israel and is in good standing under such laws. The Company has
requisite corporate power to own and operate its properties and assets, and to
carry on its business as presently conducted. The Memorandum of Association (the
"Memorandum") and Articles of Association as amended to date (the "Articles") of
the Company are attached hereto as Exhibit "3.3a". The English translation of
the said documents is attached hereto as Exhibit "3.3b." In any event of
contradiction, the language of Exhibit "3.3a" shall prevail.
3.4. Capitalization
The Company's authorized capital is sixty thousand (60,000) Ordinary
Shares of NIS 1 each (the "Shares"). The Company's issued capital stock,
immediately prior to the First Closing date, shall consist of forty five
thousand one hundred and eighty five (45,185) Shares, all of which are duly
authorized, validly issued and free of any liens or encumbrances. Out of the
issued Share capital, all Shares are fully paid, except for 2,376 Shares that
are partially paid. All the Shares are non-assessable, and to the best of the
Company's knowledge and belief, are beneficially owned by their holders of
record. Except as disclosed in the Schedule of Exceptions, Exhibit "3.4," there
are no preemptive, conversion or other rights, options, or agreements granted or
issued by, or binding upon, the Company or the Shareholders which entitle any
person, firm or corporation to purchase or acquire any shares of the Company's
capital stock, except as set forth in this Agreement and its Exhibits. The
Company intends to defer 867 Shares. Intel hereby consents to such resolution as
a shareholder. No additional consent to said resolution will be required by
Intel.
3.5. Authorization
All corporate actions on the part of the Company and its directors and
shareholders, required for the authorization, execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated herein have been (or will be) executed upon signature
of this Agreement. This Agreement is (and will be) a valid and binding
obligation of the Company, enforceable in accordance with its terms. The
execution, delivery and performance by the Company of this Agreement, and
compliance therewith, and the consummation of the transactions contemplated by
this Agreement will not result in any violation of, nor will conflict with, or
result in a breach of any of the terms of, or constitute a default under, any
document to which the Company is (or will be) a party or by which it is (or will
be) bound, or result in the creation of any mortgage, pledge, lien or
encumbrance or charge upon any of the properties or assets of the Company. No
third party's consent is required for the Company to become a party to this
Agreement. Immediately after the First Closing date, the Company will inform all
governmental authorities that require to be reported of changes in equity,
(including, but not limited to the Israel Investment Center and the Office of
the Chief Scientist) of the execution of this Agreement. Notwithstanding the
3
<PAGE>
above, the Company will obtain, prior to the First Closing, the consent of the
Chief Scientist to Purchaser's investment.
3.6. Outstanding Debt
Except as set forth in Exhibit "3.4," the Company has no outstanding
indebtedness for borrowed money and is not a guarantor of any debt or obligation
of another. There exists no default by the Company under the provisions of any
agreement or other instrument evidencing or relating to any indebtedness or
obligation.
3.7. Absence of Undisclosed Liabilities
Except as set forth in Exhibit "3.4," Company has no material liability
of any nature, direct or indirect, absolute or contingent, not adequately
reserved against, excluding any liabilities related to damage which may have
been caused by its products or are related to sales of said products (unless the
Company knows or should have known of such damages or liabilities). The Company
has paid, or has made adequate provisions for the payment of, all taxes,
interest, penalties, assessments or deficiencies owing by it to any taxing
authority.
3.8. Absence of Certain Changes
Since December 31, 1995, the business of the Company has at all times
been conducted in the ordinary course and there has not since been any event or
condition of any character which has materially adversely affected the Company's
business, prospects or plans.
3.9. Contracts and Contractual Arrangements
The Company is a party to several material agreements, all of which are
described in Exhibit "3.4." Each such agreement is in full force and effect and,
to the Company's knowledge, no party thereto is in breach thereof. The Company
is of the opinion that it receives services from affiliated companies for fair
consideration as described in Exhibit "3.4." The Company is not obligated to
receive services from said affiliated companies.
3.10. Indebtedness of (or to) Shareholders & Conflict of Interest
Except as set forth in Exhibit "3.4," none of the Company's
shareholders, directors, officers or employees or any of their affiliates or
families is indebted to the Company and the Company has no debt to any of them
except for accrued wages for the current period.
Except as set forth in Exhibit "3.4," and to the best of the Company's
knowledge, none of the Company's directors, officers, employees or consultants,
or their affiliates or families, directly or indirectly, own any material
interest in any entity which is a competitor of the Company.
3.11. Litigation & Insolvency Proceedings
4
<PAGE>
There are no pending (unless filed but not yet served on the Company)
or threatened actions, suits, proceedings or any investigations (unless unknown
to the Company) by, against or affecting the Company, involving the possibility
of any judgment or liability which would adversely affect its business.
3.12. Insurance
The Company maintains insurance through RAD-BYNET insurance policies,
adequately covering the perils normally insured against by companies similarly
situated. All policies of insurance maintained by the Company are attached
hereto as Exhibit "3.12." At the time of signature of this Agreement, all such
policies are in full force and effect.
3.13. Title to Properties, Liens and Encumbrances
Except as set forth in Exhibit "3.4," the Company owns, or holds under
lease, all real and personal property used by it in its business. All property
owned by the Company (all of which is listed on Exhibit "3.13" hereto) is so
owned free and clear of all mortgages, pledges, liens or charges.
3.14. Leases
Exhibit "3.14" hereto contains a correct and complete list and
description (including the amount of rents) of all leases under which the
Company leases property, real or personal.
3.15. Business of the Company
The Company has no knowledge of (i) the existence of any pending or
planned patent, or any statute, rule, law, regulation, standard or codes which
would materially adversely affect the condition, financial or otherwise, or the
business operations, of the Company; or (ii) the existence of any other factor
which would materially adversely affect the financial condition, or the
operations, of the Company.
3.16. Compliance with Other Instruments
The Company is not in violation of the terms of its Memorandum or
Articles or of the terms of any judgment, decree, order, statute, rule or
regulation to which it is subject.
RADVision applied for and was granted all licenses and permits
materially needed for the conduct of its business. RADVision does not have a
business license. To the best of RADVision's knowledge, any lack of a permit or
license, to the extent such lack exists, including a business license, is not
detrimental to its ordinary course of business.
All material reports, resolutions and other documents required to be
delivered by RADVision to, and filed with the Registrar of Companies, have been
delivered and filed,
5
<PAGE>
except for the 1995 annual report which will be filed no later .than 30 days as
of the First Closing.
3.17. Employees
All the key employees of the Company are listed on Exhibit "3.17"
hereto. To the best of the Company's knowledge, no such employee is in violation
of any material term of any employment contract, patent disclosure agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant or any other obligation to a former employer relating to the right of
any such employee to be employed by the Company. To date, all payments due to
the Company's employees have been paid regularly. In addition, the Company made
all allowances required by law to cover the amounts due to its employees and/or
officers in connection with their employment and/or termination of employment,
as reflected in the attached Exhibit "3.20a."
3.18. Disclosure
This Agreement and the Exhibits delivered to Purchaser do not contain
any material untrue statement and do not omit to state a material fact necessary
in order to make the statements contained herein not misleading in the light of
the circumstances under which they were made, and such documents represent full
disclosure by the Company of the material facts with respect to the business,
prospect and plans of the Company.
3.19 Products & Ownership
A description of the products is enclosed as Exhibit "3.19". As set
forth in Exhibit "B", the Company possesses, or is proceeding with due diligence
to obtain, all patents, patent rights, trademarks, trademark names, trade name
rights and copyrights the Company believes are necessary to conduct its business
as now being conducted and as planned to be conducted (without conflict with, or
infringement upon, any valid rights of others), the lack of which could affect
the operations or condition, financial or otherwise, of the Company. The Company
has no knowledge of any infringement by the Company or claimed infringement
upon, or any conflict with, the patent rights, trademarks, trademark rights,
trade names, trade name rights, copyrights, intellectual property rights or
other rights of any person, form or corporation.
3.20. Financial Statements
The audited financial statements of the Company as of December 31, 1995
are attached hereto as Exhibit "3.20a" and adequately reflect the financial
situation of the Company. The unaudited financial statements of the Company as
of March 31, 1996 are attached hereto as Exhibit "3.20b". As of December 31,
1995 to date, the Company did not enter into any material transaction or
undertake any material commitment which was not in the normal course of
business, and there was no material change for the worse in the Company's
position, liabilities and assets.
6
<PAGE>
3.21. In the event of any contradiction between this Agreement and the
Inception Agreement, attached hereto as Exhibit "3.21", or between this
Agreement and Exhibit "3.3", this Agreement shall always prevail.
3.22. On January 1, 1995, a trust in favor of employees of the Company
and certain employees of the RAD-Bynet group was created. Said Trust Agreement
is attached hereto as Exhibit "3.22a". The Company has decided, in addition, to
adopt a key employee share incentive plan (the "Options Plan") attached hereto
as Exhibit "3.22b". The total number of shares and options reserved to date for
the employees under all plans are 5,362. In the event of any contradiction
between this Agreement and any of the Exhibits "3.3", "3.22a" or "3.22b", then
the Trust Agreement and Option Plan shall always prevail.
3.23. As of the date of this Agreement, the directors of the Company
are: Yehuda Zisapel, Zohar Zisapel, Amos Amir, Hillel Milo, Yosef Ben Yossef and
Gideon Marks.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
4 Purchaser represents and warrants to the Company as follows:
4.1. Legal Power
As of the date hereof and as of the Closing, Purchaser has and will
have all requisite power to enter into and to perform this Agreement.
4.2. Experience.
The Purchaser has sufficient expertise to evaluate the suitability of
its investment in the Company to its needs.
4.3. Investment
The Purchaser is acquiring the Purchaser Shares for investment for its
own account.
4.4. Access to Data
The Purchaser hereby represents that it has had sufficient opportunity
to discuss management and financial affairs of the Company with its management
and key employees and has had the opportunity to review the business plan and
the Company's facilities.
The Purchaser has not been denied any information that has been
requested, and based on the said information has made a diligent examination of
the aspects of the Company's business. The Purchaser has heretofore received the
information that the Purchaser has deemed necessary and appropriate to enable
the Purchaser to evaluate the financial risk inherent in making an investment in
the shares of the Company and the
7
<PAGE>
Purchaser has received satisfactory information concerning the business and
financial condition of the Company in response to all inquiries in respect
thereof. The Purchaser is aware that the Company has been in the development
stage since its inception in October 1992, and that due to the short operating
history of the Company there can be no assurance that the Company will attain
profitability. Nothing contained in this Section 4.3 shall derogate from the
liability of the Company with respect to the representations and warranties made
in Section 3 above.
4.5. Waiver
Purchaser shall have no claims against the Company with respect to any
cause of action which accrued prior to the signing of this Agreement, except for
claims which may be based on the breach of the representations and warranties or
other provisions of this Agreement.
4.6. Authorization
All corporate or partnership action on the part of Purchaser, its
respective directors, partners and/or shareholders necessary for the
authorization, execution, delivery, payment and performance by Purchaser of this
Agreement and the consummation of the transactions contemplated herein, has been
taken.
4.7. Purchaser has sufficient financial resources to enable it to
fulfill its obligations under this Agreement and commits to make the Investment
as set forth in Sections 1 and 2 above.
SECTION 5
CONDITIONS OF PURCHASER TO CLOSING
5. The obligations of Purchaser at the First Closing date are subject to the
fulfillment of each of the following conditions:
5.1. Representations and Warranties Correct
The representations and warranties made by the Company in Section 3
hereof shall be true and correct when made, and shall be true and correct in all
material respects on the First Closing date with the same force and effect as if
they had been made immediately prior to the First date and as of such time
except for such changes which result from the obligations of the parties to this
Agreement.
5.2. Performance
All covenants, agreements and conditions contained in this Agreement to
be performed (or complied with) by the Company on (or prior to) the applicable
Closing date shall have been performed (or complied with) in all respects.
5.3. Legal Investment
8
<PAGE>
At the time of each Closing date, the purchase and issuance of the
Purchaser Shares shall be legally permitted by all laws and regulations to which
Purchaser and the Company are subject.
5.4. Proceedings and Documents
All corporate and other proceedings in connection with the transactions
contemplated hereby and all documents and instruments incident to such
transactions shall have been completed to the satisfaction (as to substance and
form) of Purchaser.
5.5. Retention of Key Employees
All the persons listed in Exhibit "3.17" shall either continue to be
employed by the Company as of the First Closing date or to the Company's
knowledge, if an employee has left or intends to leave the Company, Company has
notified Purchaser of same.
5.6. Opinion of Company's Counsel
The Purchaser shall have received from Nehama Sneh, corporate counsel
to the Company, a satisfactory opinion in the form attached as Exhibit "5.6."
SECTION 6
CONDITIONS OF COMPANY TO CLOSING
6. The obligations of the Company at the First Closing date, are subject to the
fulfillment of each of the following conditions:
6.1. Representation
The representations and warranties made by Purchaser in Section 4
hereof shall be true and correct when made and shall be true and correct on
Closing with the same force and effect as if they had been made immediately
prior to the Closing and as of such time.
6.2. Purchaser has fulfilled any and all of its obligations set forth
in Section 2.
SECTION 6A
BOARD OF DIRECTORS (THE "BOARD")
6A.1 The Board consists of six (6) directors, whose present identity is
as set forth in Section 3.23 hereinabove. Three of the directors are appointed
by Zohar Zisapel, Yehuda Zisapel and RAD Data Communications Ltd., the fourth is
Amos Amir in his capacity as Managing Director of the Company, while the fifth
and the sixth are appointed by The Trust Company of Maritime Bank of Israel
("Maritime") and Clal Venture Capital LP ("Clal"), respectively. Madge Network
(Israel) Ltd. ("Madge") and Finovelec, have the right to designate one observer
each to the Board. Upon reasonable notice, Madge is permitted to change the
status of its observer to that of director, in which event the number of
directors will be increased to eight (8), with Madge's observer
9
<PAGE>
becoming the seventh director and Yehuda Zisapel and Zohar Zisapel being
entitled to appoint the eighth director.
6A.2 Following the First Closing, provided the observer signs a
commitment in the form attached hereto as Exhibit 6A.2, Purchaser shall be
entitled to appoint a non-voting observer to the Company's Board of Directors.
Such observer, once he signs the above commitment, shall be entitled to receive
all notices and materials provided to directors and to attend and participate in
all meetings of the Board of Directors.
SECTION 7
COVENANTS OF THE COMPANY
7. For as long as the Purchaser's equity interest in the Company will amount to
at least five (5%) percent of the outstanding capital securities therein and
Purchaser has the right to appoint an observer under Section 6A hereinabove,
except where stated otherwise in this Section 7 and in Section 8, or until the
IPO (whichever is the earlier occurrence), regardless of Purchaser's percentage
of ownership at that time and without derogating from any rights or obligations
conferred upon shareholders, or obligations conferred upon corporations, under
applicable law, the Company hereby covenants and agrees as follows.
7.1. Additional Information
The Company will permit Purchaser's representative to visit (upon a
mutually convenient time) and inspect any of the properties of the Company,
including its books of account, and to discuss its affairs, finances and
accounts with the Company's officers and its auditors.
7.1.1. As soon as available after approval by the Board, the Company
will provide Purchaser with a summary of the budget, including projected yearly
profit and loss accounts and balance sheet, as contained in its operating plan
as well as information about material changes in the budget, all as approved by
the Board.
7.1.2. With reasonable promptness, the Company agrees to provide to
Purchaser such information and data with respect to the Company, as Purchaser
may from time to time reasonably request.
The foregoing provisions shall not limit any right which Purchaser may
have to inspect and copy the books and records of the Company or to inspect its
properties or discuss its affairs, finances and accounts.
7.2. Use of Proceeds
The Company will use the proceeds of the issuance and sale of the
Purchaser Shares mainly to fund its activities and its business, and subject to
any resolutions made by the Board, from time to time.
7.3. Board Approval
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Without derogating from the provisions of the Articles, or any law or
practice limiting the authority of the management of the Company, the approval
of the Board shall be required for the following: (i) designation of all
authorized signatories; (ii) approval of the Company's (or its subsidiaries')
budget and applicable operating plan ; (iii) selection of legal counsel of the
Company; (iv) terms of employment of the Managing Director of the Company; and
(v) any and all other matters with regard to which the Board resolves that its
prior approval shall be required.
7.4. Resolutions of the Board regarding the following subject matters
shall require the consent of five out of six directors. In the event that the
Board will consist of 8 directors as per Section 6A.1 hereinabove, then the
following subject matters will require the consent of 6 out of 8 directors,
including consent of two directors out of the following: "Clal" Director,
"Maritime" Director, "Madge" Director:
7.4.1. a merger of the Company with any other entity;
7.4.2. acquisition or disposition, including mortgage, of other
corporations, real estate, and any material assets out of the ordinary course of
the Company's business;
7.4.3. replacement of the Company's Managing Director;
7.4.4. replacement of the auditors of the Company;
7.4.5. approval of the distribution of dividends by the Company;
7.4.6. loans by the Company or any of its subsidiaries to their
directors or officers, or to their relatives or other affiliates, with the
exception of employees receiving shares under the trust as set forth in
subsection 3.22 hereinabove;
7.4.7. transactions in excess of $20,000 (not included in the approved
applicable operating plan) between the Company or its affiliates and their
directors, officers and employees or their relatives or other affiliates, with
the exception of employees receiving shares under the trust as set forth in
subsection 3.22 hereinabove;
7.4.8. all material transactions or obligations not contemplated in the
budget by the Company or its subsidiaries; and
7.4.9. resolution to enter a new business field unrelated to the
present field.
Notwithstanding anything to the contrary contained herein, in the event
that a director is not allowed under a specific section of this Agreement or
under the provisions of Israeli law, to participate in a Board meeting and/or
discussion, the majority required will be (1) 4 out of 5, or (2) 5 out of 7,
including only one of the following: the Clal Director, the Maritime Director,
or the Madge Director.
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SECTION 8
ISSUANCE OF RIGHTS
8. Until such time as Purchaser shall cease to hold at least two (2%) percent of
the outstanding share capital of the Company or until the IPO (whichever the
earlier occurrence), and without derogating from any rights conferred upon
shareholders, or obligations conferred upon corporations, under any applicable
law, the Company and Shareholders hereby covenant and agree as follows:
8.1. Pre-emptive Rights. If the Company should at any time or from time
to time propose to issue and sell New Securities, as defined in subsection 8.1.1
below, a pro rata portion of such New Securities shall first be offered (as
hereinafter provided) to the shareholders of the Company (each of whom shall
hereinafter be referred to as "Offeree"), for the purposes of this Section 8.1,
the pro rata portion of each Offeree shall mean a fraction of the New Securities
to be issued, of which the aggregate number of shares which are held by the
Offeree on the date of the Company's written notification referred to in
subsection 8.1.2 below (the "Notice Date") shall be the numerator and the
aggregate number of shares held by all the Offerees shall be the denominator.
The aforesaid rights of Purchaser shall be subject to the following provisions:
8.1.1. "New Securities" shall mean any capital stock of the Company,
whether or not now authorized, and rights, options or warrants to purchase
capital stock, and securities of any type whatsoever that are, or may become,
convertible into capital stock; provided that the term "New Securities" shall
not include (i) securities purchased under this Agreement; (ii) securities
offered to the public; (iii) securities issued pursuant to the acquisition of
another corporation by the Company by merger, purchase of substantially all the
assets of another corporation or any other reorganization whereby the Company
owns not less than fifty-one percent (51%) of the voting power of such
corporation; (iv) securities issued to employees, consultants or directors of
the Company pursuant to any stock option plan or stock purchase or stock bonus
arrangement approved by the Board; or (v) securities issued pursuant to payment
of any dividend or distribution with respect to the Company's issued and
outstanding capital stock.
8.1.2. In the event the Company proposes to undertake an issuance of
New Securities, it shall give each Offeree written notice of its intention,
describing the type of New Securities and the price and the terms upon which the
Company proposes to issue the same, and offering its pro rata portion thereof to
such Offerees at such price and on such terms. Each Offeree shall have
twenty-one (21) days from the date of such notice to accept such offer, in whole
or in part, by written notice to the Company, that has to be received by the
Company during the above mentioned 21 days period. All New Securities as to
which such offers have not been accepted, in whole or in part, by one or more of
the Offerees (of which fact the Company shall give immediate written notice to
all other Offerees), shall be re-offered to each of the Offerees who have
accepted in full the original offer, and each such Offeree shall have the right,
within ten (10) days of the date of such written notice, to purchase the
respective pro rata portions of such new Securities, the same to be computed as
aforesaid but without regard to the shares held by any Offeree which had not
accepted the original offer in full.
8.1.3. In the event any Offeree fails to accept such offers, the
Company shall have the right to sell within six (6) months or enter into an
agreement to sell such New
12
<PAGE>
Securities as to which such offers were not accepted, provided, however, that no
such sale be effected at a price or upon terms more favorable to the purchasers
thereof than those specified in the Company's notice pursuant to Section 8.1.2.
8.1.4. Each of Yehuda Zisapel, Zohar Zisapel and RAD Data
Communications Ltd. shall have a right to allocate any unused portion of the New
Securities offered to him to the other.
8.1.5. Purchaser shall have the right to allocate any unused portion of
the New Securities offered to Purchaser, to its parent or to any of its
subsidiaries which at least 51% of its stock is owned by Purchaser, or to a
company under common control ("Control" being at least 51% of ownership or the
right to appoint the majority of the directors) affiliated with Purchaser,
provided that such recipient of Shares will join in this Agreement as if it had
become a party to it as of the receipt of the Shares, and provided further that
the total number of Purchaser entities does not exceed three (3) at any time.
8.1.6. Notwithstanding anything to the contrary contained herein, Amos
Amir and his wholly-owned companies, so long as he is the Managing Director of
the Company, will be entitled to be an Offeree under this Section 8.1.
8.1.7. Each of Lerosh Investments Ltd., Gevahim Investments House
Limited Ltd., Mr. Yoav Chelouche, Permal Emerging Growth V Ltd., Maritime-Julex
Investment Ltd., Mr. Shraga Blazer and Mr. Eli Luz shall have a right to
allocate any unused portion of the New Securities offered to him to the other.
8.2. Registration Rights
If the Company should elect to offer any of its securities to the
public, Purchaser and present shareholders shall have registration rights as set
forth in Exhibit "8.2" attached hereto.
8.3. Restrictions
The Company shall not, without the approval of at least 75% of the
shareholders:
8.3.1. amend or repeal any provision of, or add any provision to, the
Articles;
8.3.2. create any new class or classes of securities of the Company
having any preference or priority as to dividends or assets superior to
any such preference or priority of the Shares, or reclassify any of its
existing securities into such superior securities; or
8.3.3. approve a merger of the Company with any other entity;
SECTION 8A
ADDITIONAL COVENANTS
The Company further agrees and undertakes as follows:
13
<PAGE>
8A.1. Basic Financial Information
The Company will furnish to the Purchaser the following reports
certified, when so required herein, by the Company's auditors:
8A.1.1. As soon as practicable after the end of each calendar quarter,
and in any event within forty-five (45) days thereafter, a balance sheet and a
profit and loss account and of cash flow (including opening cash, income,
expenses and closing cash) of the Company as of the end of such quarterly
period, and for the current fiscal year to date, prepared in accordance with
generally accepted accounting principles consistently applied and setting forth
in comparative form the figures for the corresponding periods of the previous
fiscal year, subject to changes resulting from year-end audit adjustments, all
in reasonable detail, signed by the principal financial or accounting officer of
the Company. There shall be appended to such materials a report of the
management as to the business of the Company and its activities during the
quarter.
8A.1.2. Not later than forty-five (45) days after the end of each
quarter, sales figures, backlog and new orders for such quarter.
Without derogating from the first sentence of Section 7, it is further
provided that the Company will not be required to furnish any information under
the provisions of this Section 8A.1 and of Section 8A.2 below, subsequent to the
IPO.
8A.2. Insurance
The Company shall continue to maintain insurance policies similar to
those described in Section 3.12 above.
8A.3. Accounts & Records
The Company will keep true records and books of account in which full,
true and correct entries will be made of all dealings or transactions in
relation to its business and affairs in accordance with generally accepted
accounting principles applied on a consistent basis.
8A.4. Proprietary Information & Non-Competition Agreements
The Company will not employ, or continue to employ, any person who will
have access to confidential information with respect to the Company and its
operations unless such person has executed and delivered the Company's standard
Employment agreement then in force containing proprietary information and
non-competition sections to the satisfaction (as to substance and form) of
Purchaser's counsel.
SECTION 9
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES
9. Except as set forth in this Section 9, Purchaser agrees not to sell or
transfer any of its shares and rights in the Company to a third party. This
Section 9 will terminate upon the IPO.
9.1. For the purpose of this Section 9, the Shareholders and the
Purchaser will be regarded as belonging to the following Groups:
14
<PAGE>
9.1.1. Zisapel Group - Yehuda Zisapel, Zohar Zisapel, Lomsha Ltd.,
Michael and Klil Holdings (93) Ltd., the Trust and RAD Data Communications Ltd.
9.1.2. Clal Group - Clal Venture Capital LP, ECI Telecom Ltd.
9.1.3. Finovelec Group - Finovelec, Factory Systems, Houston Venture
Partners Ltd. and Jean-Marc Patouillaud.
9.1.4. Capital Group - Zohar Gilon, Avraham Neuman, Yair Tauman, W.S.P.
Capital
9.1.5. Maritime Group - Lerosh Investments Ltd., Gevahim Investments
House Limited Ltd., Mr. Yoav Chelouche, Permal Emerging Growth V Ltd.,
Maritime-Julex Investment Ltd., Mr. Shraga Blazer and Mr. Eli Luz.
9.1.6. Purchaser Group - Purchaser, its parent, and permitted
transferees as set forth in Section 9.13 hereinbelow, not to exceed a total of
three (3) members.
9.2. Group members are entitled to transfer shares among themselves for
consideration or without consideration without any restrictions.
9.3. Except as set forth in Sections 9.9, 9.10, 9.11, 9.12 and 9.13
hereinbelow, any Shareholder who shall elect to transfer (hereinafter "Seller")
all or part of his shares, not in accordance with subsection 9.2 (hereinafter
"Offered Shares") shall offer them first to the other registered shareholders of
the Company at that time (hereinafter "Offerees") on a pro rata basis based on
their share in the then issued and outstanding share capital of the Company.
9.4. In the event any such Offeree fails to exercise his right to
purchase his Offered Shares within forty-five (45) days from the date the offer
is made, then the Seller shall have the right to offer the Offered Shares to a
third party at the same price and upon the same terms of sale as those offered
to the other shareholders under section 9.3 and provided that said third party
shall undertake all of Seller's obligations under this Agreement. (Such third
party to be called hereunder, the "Transferee"). In the event that the shares
are not sold to said party within six (6) months as of the offer to such said
third party, then Section 9.3 will apply anew.
9.5. The Board shall have the right to not approve the transfer of
shares to a third party in each of the following events:
(i) If the third party is a competitor of the Company;
(ii) If there is a possibility of conflict of interest between the
third party and the Company;
(iii) For any other reason, in which case such approval shall not be
unreasonably withheld.
15
<PAGE>
9.6. In the event that Yehuda Zisapel and/or Zohar Zisapel and/or RAD
sell 25% or more of their shares in the Company to third parties, then Purchaser
will have the right to sell the same portion of Purchaser's shares in the
Company under the same terms and conditions (hereinafter, the "Tag Along
Right"). Purchaser will inform Zisapel in writing by fax and by confirmation by
mail if it intends to exercise its Tag Along Right within ten (10) days after
the date of notice by Zisapel to Purchaser. Failure to respond will be deemed as
a decision not to Tag Along.
9.7. This Section 9 will supersede Section 14 of the Inception
Agreement.
9.8. The terms of the Trust Agreement and the Option Plan (Exhibits
"3.22a" and "3.22b", respectively) will have priority over this Section 9.
9.9. Finovelec, in its discretion, shall be permitted to freely
transfer up to 5% of its shares (at that time) in the Company to up to 6 of
Finovelec executives, as well as up to an additional 5% of its shares (at that
time) in the Company to IDI (if then an affiliate of Finovelec). Such transfer
shall be considered a transfer among the Finovelec Group, provided that each
Transferee, upon receipt of the shares, will join this Agreement and undertake
all of Finovelec's obligations hereunder and will be considered henceforth a
member in the Finovelec Group for the purpose of this Section 9.
9.10. Clal Venture Capital LP is entitled to transfer all of its shares
in the Company to its partners, provided that each Transferee, upon receipt of
the shares, will join this Agreement and undertake all of Purchaser's
obligations hereunder and will be considered henceforth a member in the Clal
Group for the purpose of this Section 9.
9.11. Each of Zohar Gilon, Avraham Neuman and Yair Tauman is entitled,
once, to transfer his shares to a company directly under the total control of
said person, provided that each Transferee, upon receipt of the shares, will
join this Agreement and undertake all of Purchaser's obligations hereunder and
will be considered henceforth a member in the Capital Group for the purpose of
this Section 9.
9.12. Each of Yehuda Zisapel and Zohar Zisapel is entitled to transfer
his shares to one or more companies which are directly under the total control
of transferor, provided that each Transferee, upon receipt of the shares, will
join this Agreement and undertake all of transferor's obligations hereunder and
will be considered henceforth a member in the Zisapel Group.
9.13. Purchaser shall be permitted to freely transfer its shares, or
any part thereof, in the Company to its parent or to any of its subsidiaries (in
which at least 51% of its issued and outstanding capital is owned by Purchaser
or to a company under common control ("control" being at least 51% of ownership
or the right to appoint the majority of the directors) affiliated with
Purchaser, provided that such recipient of shares joins this Agreement by
signing the Undertaking in the form attached hereto as Exhibit "9.13" as if it
had become a party to it as of the receipt of shares and provided further that
the total number of Purchaser entities does not exceed three (3) at any time.
16
<PAGE>
SECTION 9A
ANTI-DILUTION
9A.1. In the event that at any time prior to the earlier of (i) the
closing of the IPO or (ii) three (3) years from the date of this Agreement, the
Company issues or sells any Shares to third parties upon a private placement
(excluding Company employees) for consideration per share of less than US $333
("Purchaser Share Price"), then prior to said private placement Purchaser shall
be given the option to purchase additional Shares at par value (NIS 1.- per
share), as set forth below.
9A.2. The amount of shares to be issued to Purchaser will be computed
according to the following table:
<TABLE>
<CAPTION>
- -------------------------------------------------------- ---------------------------------------------------
SHARE PRICE AT NEXT PRIVATE PLACEMENT CALCULATED AS ADDITIONAL SHARES ISSUED TO THE PURCHASER UNDER
PERCENTAGE OF PURCHASE PRICE THIS AGREEMENT
- -------------------------------------------------------- ---------------------------------------------------
<S> <C>
100% to 66.67% none
- -------------------------------------------------------- ---------------------------------------------------
66.67% to 50% additional 12% of Purchasers' percentage of
ownership
- -------------------------------------------------------- ---------------------------------------------------
49.99% to 25% additional 12% of Purchasers' percentage of
ownership
- -------------------------------------------------------- ---------------------------------------------------
24.99% or less additional 12% of Purchasers' percentage of
ownership
- -------------------------------------------------------- ---------------------------------------------------
</TABLE>
The number and price of shares will be adjusted in the event of any
restructuring of the Company's share capital, such as (i) the issue of
additional Shares as a dividend, bonus share or other distribution on
outstanding shares; (ii) a subdivision of outstanding Shares into a greater
number of shares or (iii) a combination of outstanding Shares into a smaller
number of shares.
9A.3. Upon the occurrence of each event giving rise to a right pursuant
to this Section, the Company will, at its expense, promptly compute the number
of Shares that Purchaser is entitled to purchase in accordance with the terms
hereof and furnish to the Purchaser a notice of such right and the number of
Shares Purchaser is entitled to.
9A.4. Any and all of Purchaser's rights under this Section 9A will
terminate within the earliest of: (i) the Closing of the Company's initial
public offering or (ii) three (3) years from the date of this Agreement or (iii)
upon the first private placement contemplated after the Closing set forth in
Section 9A hereinabove.
SECTION 10
MISCELLANEOUS
10.1. Survival
The representations, warranties, covenants and agreements made herein
shall survive (i) any investigation made by the Purchaser and (ii) the First
Closing.
10.2. Successors and Assigns
17
<PAGE>
Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns,
heirs, executors and administrators of the parties hereto; provided, however,
that no party may assign its rights hereunder without the prior written consent
of the other parties hereto.
10.3. Entire Agreement & Amendment
This Agreement (including the Exhibits hereto) and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subject matters hereof and
thereof and supersede all prior agreements and understandings relating thereto.
Neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated except by an instrument in writing signed by all the parties hereto.
10.4. Notices
All notices and other communications required or permitted to be given
or sent hereunder shall be in writing and shall be deemed to have been
sufficiently given or delivered for all purposes if mailed by registered
airmail, transmitted by fax, or delivered by hand to the following respective
addresses until otherwise directed by notice as aforesaid:
To Purchaser:
INTEL CORPORATION
2200 Mission College Blvd.
Santa Clara, California
95052 USA
Attention: Mr. Andrew Wilson/Randy Tinsley
cc: Mr. Danny Star
Intel Israel
P.O. Box 1659
Haifa 31015, Israel
To the Company:
RADVision Ltd.
8 Hanechoshet Street
Tel Aviv 69710, Israel
Attn: Mr. Amos Amir
cc: Legal Department
8 Hanechoshet Street
Tel-Aviv 69710, Israel
18
<PAGE>
provided, however, that notice of change of address shall be effective only upon
actual receipt.
All notices if (i) sent by registered mail - shall be deemed to have
been received within seventy-two (72) hours of posting; (ii) delivered by hand -
upon their delivery.
10.5. Delays or Omissions
No delay or omission by any party hereto to exercise any right, power
or remedy upon any breach or default under this Agreement shall impair any such
right, power or remedy of such party nor shall it be construed to be a waiver of
any such breach or default, or in acquiescence therein, or of any similar breach
or default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement shall be effective only if made in writing and only
to the extent specifically set forth in such writing. All remedies, either under
this Agreement or by virtue of law or otherwise afforded to any party, shall be
cumulative and not alternative.
10.6. Waiver of Default
No waiver with respect to any breach or default in the performance of
any obligation under the terms of this Agreement shall be deemed to be a waiver
with respect to any subsequent breach or default, whether of similar or
different nature.
10.7. Rights & Severability
In case any provision of the Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby. The parties
hereto shall be obliged to draw up an arrangement in accordance with the meaning
and the object of the invalid provision.
10.8. Confidential Information
Each party acknowledges that the information received by it and such
information which will be received pursuant hereto shall be confidential and is
intended for each party's use only for the purpose of this Agreement, and
neither party will use or allow the use of such confidential information or
reproduce, disclose or disseminate such information to any other person (other
than the other's employees or agents having a need to know the contents of such
information, and the each party's attorneys), except in connection with the
exercise of rights under this Agreement, unless the other party has made such
information available to the public generally or the other party is required to
disclose such information by a governmental body or by judicial order, but only
to the persons and the extent so required.
10.9. Titles and Subtitles
19
<PAGE>
The titles of the sections and subsections of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.
10.10. Governing Law
This Agreement shall be governed exclusively by, and construed solely
in accordance with, the laws of the State of Israel.
10.11. Purchaser and any Transferee under Section 9 are represented by
Mr. Danny Star. Notice sent to Mr. Danny Star will be deemed as notice sent to
Purchaser and/or any such Transferee. A resolution or request given by Mr. Danny
Star to the Company will be deemed as if given by Purchaser and any such
Transferee. The Company will have no obligation to provide information or notice
whatsoever except to Mr.Danny Star.
10.12. Expenses
The Company will bear the cost of stamp tax due in connection with the
issuance of shares according to this Agreement.
10.13. Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
10.14. No later than one hundred twenty (120) days following the First
Closing, the Company will amend its Memorandum and Articles of Association to
reflect this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above-mentioned.
THE COMPANY THE PURCHASER
RADVISION LTD. INTEL CORPORATION
/s/ RADVISION LTD. /s/ INTEL CORPORATION
- --------------------------------- ------------------------------
20
<PAGE>
LIST OF EXHIBITS
Exhibit 1 - Ownership of the Company
Exhibit 3.3a - Present Articles of Association and Memorandum of Association.
Exhibit 3.3b - English translation of Exhibit 3.3a.
Exhibit 3.4 - Schedule of Exceptions.
Exhibit 3.12 - Insurance Policies.
Exhibit 3.13 - List of Company's Properties.
Exhibit 3.14 - List of Company's Leases.
Exhibit 3.17 - List of Key Employees.
Exhibit 3.19 - Description of Company's Products.
Exhibit 3.20a - Audited Financial Statements.
Exhibit 3.20b - Unaudited Financial Statements.
Exhibit 3.21 - Inception Agreement and amendment thereto.
Exhibit 3.22a - Trust Agreement.
Exhibit 3.22b - RADVision Ltd. Key Employee Share Incentive Plan (1996).
Exhibit 5.6 - Legal Counsel Opinion.
Exhibit 6A.2 - Observer's Form of Commitment.
Exhibit 8.2 - Registration Rights.
Exhibit 9.13 - Transferee Form of Undertaking
1
<PAGE>
EXHIBIT 1
September 1996 Investment
Shares pre-money 45185
Preferred shares 867
Effective "old" share 44318
Desired investment 2000000
Desired new shares 6006
Company value (pre) 15000000
Share price 333
Dillution 11.76%
Actual New Shares 4886
Shares post-money 49204
Actual post-money
Shares (+ opt) 51671
Desired total shares
Cost money (+opt.) 52791
Options to employees 2467
<TABLE>
<CAPTION>
Shareholder Number % of New Exact No. of % of
of shares ownership Shares investment of shares ownership
(pre) (pre) amount ($) (post) (actual)
<S> <C> <C> <C> <C> <C> <C>
Yehuda Zisapel 6,930 15.34% 0 0 6,930 13.41%
Lomsha Ltd. 2,130 5.11% 0 0 2,310 4.47%
Michael & Klil 2,130 5.11% 0 0 2,310 4.47%
Zohar Zisapel 2,310 5.11% 0 0 2,310 4.47%
Amos Amir 300 0.66% 0 0 300 0.58%
Plonit Achzakot (Ami) 632 1.40% 0 0 632 1.22%
Nichsei Almonit (Ami) 2,178 4.82% 0 0 2,178 4.22%
Employees Trust 3,762 8.33% 0 0 3,762 7.28%
Madge Networks 4,950 10.95% 831 276,723 5,781 11.19%
Zohar Gilon 300 0.66% 0 0 300 0.58%
Avraham Noyman 300 0.66% 0 0 300 0.58%
Yair Tauman 300 0.66% 0 0 300 0.58%
W.S.P. Capital 188 0.42% 0 0 188 0.36%
RAD Data Communication 3,317 7.34% 0 0 3,317 6.42%
Finovelec 2,723 6.03% 0 0 2,723 5.27%
Maritime Trust Co. 2,475 5.48% 140 46,620 2,615 5.06%
ECI 2,475 5.48% 304 101,232 2,779 5.38%
Factory Systemes 1,238 2.74% 0 0 1,238 2.40%
Houston Partners 990 2.19% 0 0 990 1.92%
Clal Venture Capital 4,950 10.95% 608 202,464 5,558 10.76%
Freeman Bob 198 0.44% 0 0 198 0.38%
Eliezer Manor 49 0.11% 0 0 49 0.09%
Intel* 0 0 3,003 999,999 3,003 5.81%
In two installments
Total shareholders 45,185 100.00% 4,886 1,627,038 50,071 96.90%
participating
as deferred shares Less 867 deferred shares 1.68%
participating Sh.hold 24,453
Plus option plan 4.77%
ama 18.9.96 Total fully diluted 100.00%
lvinv4)
</TABLE>
1
<PAGE>
EXHIBIT 8.2
REGISTRATION RIGHTS
1. Incidental Registration
If the Company shall elect to offer any of its securities to the
public, it shall give notice to the Purchaser of such intention and shall
include in such offering a portion of all shareholders shares equal to the total
amount of shares registered, multiplied by an amount derived by dividing the
number of Shares held by each shareholder by the total number of shares
outstanding at that time. In the event the public offering involves an
underwriting, the rights of the shareholders hereunder shall be conditional upon
the underwriter's determination as to marketing factors requiring the limitation
of such right, and the underwriter may preclude from the offering any or all
securities which could have otherwise been included in the offering.
2. Demand Registration
At any time commencing one year following the closing of the Company's
initial public offering, and for a period of three (3) years thereafter, each
group of shareholders as defined in section 9.1 shall be entitled to demand one
registration of any or all of its shares held at the time of the initial public
offering for trading on any securities exchange; provided, however, that such
request must cover Shares representing a market value at the time of such
request equal to a minimum of three million Dollars ($3,000,000); and provided
further, however, that such request may not include Shares which within three
months from the date of such request could be sold to the public without
restriction, for example pursuant to the provisions of Rule 144 of the
Securities and Exchange Commission. Within 20 days after receipt, the Company
shall give written notice of such request to the other shareholders and shall
include in such registration all Shares held by them with respect to which the
Company receives written requests for inclusion therein within 15 days after the
receipt of the Company's notice. Thereupon, the Company shall use its best
efforts to effect the registration as soon as possible of all Shares (as to
which it has received requests for registration) for trading on a securities
exchange, where the Shares are then traded, specified in the request for
registration. In the event the registration involves an underwriting, the rights
of the shareholders hereunder shall be conditional upon the underwriter's
determination as to marketing factors requiring the limitation of such right,
and the underwriter may preclude from the offering any or all securities which
could have otherwise been included in the offering. Notwithstanding any other
provision of this clause 2 of Exhibit 8.2, after the Company has effected one
such registrations pursuant to this clause 2, and such registrations have been
declared or ordered effective, in the event that the Company shall furnish to
such shareholder(s) delivering a request for registration a certificate signed
by the President of the Company stating that in the good faith judgment of the
Board of Directors of the Company it would be seriously detrimental to the
Company or its shareholders for a registration statement to be filed in the near
future, the Company's obligation to use its
1
<PAGE>
best efforts to register, qualify or comply under this clause 2 shall be
deferred for a period not to exceed 120 days from the date of receipt of such
request.
3. Expenses
All expenses incurred in connection with a registration under Section 2
shall be borne by the selling shareholders participating in such registration on
a pro rata basis; provided, however, that the Company shall pay any expenses
associated with such registration which the Company would have incurred in the
ordinary course of business. All expenses incurred in connection with a
registration under Section 1 shall be borne by the Company; provided, however,
that each of the shareholders participating in such registration shall pay its
pro rata portion of the fees, discounts or commissions payable to any
underwriter.
2
<PAGE>
AMENDMENT TO INVESTMENT IN RADVISION LTD.
BY INTEL CORPORATION
This AMENDMENT is entered into as of November 12, 1997, by and between
RADVision Ltd. ("Company"), Intel Corporation ("Purchaser").
RECITALS
A. The Company and the Purchaser are parties to an agreement: "Investment
in RADVision by Intel Corporation" dated September 12, 1996.
B. The Company and the Purchaser, pursuant to the September 12, 1996
"Investment In RADVision by Intel Corporation" Pre-emptive Rights
clause have subsequently maintained Intel's pro-rata portion of newly
offered shares (representing 123 shares of Preferred Stock).
C. The Company and the Purchaser desire to amend the "Investment In
RADVision by Intel Corporation in connection with the Company's
proposed re-prioritization and financing.
NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, the Company and the Purchasers hereby agree as follows:
1. SECTION 1 OF THE INVESTMENT AGREEMENT IS HEREBY DELETED, AND REPLACED IN
FULL AS FOLLOWS:
"SECTION 1
ISSUANCE AND PURCHASE OF SHARES
1.1 Purchaser undertakes to invest in the Company the, AGGREGATE amount of
Nine Hundred Ninety-Nine Thousand Nine Hundred Ninety-Nine US Dollars
(US $999,999) (hereinafter, the "Investment"), payable in three
instalments as described in Section 2 below. The Investments will be
deposited in US Dollars to the Company's account no. 377906 at Bank
Hapoalim B.M., Hadar Yosef Branch (610).
1.2 In Consideration for, and subject to, the execution of the Investment
as per section 1.1 above, the Company shall issue to the Purchaser the
Purchaser Shares. The Purchaser Shares, when issued, will have been
validly issued, fully paid and non-assessable, and will be free of any
liens or encumbrances.
1.3 The Investment is part of the Company's Second Round of Financing in
the total amount of up to $2,000,000 at a Share price of US $333. The
existing shareholders of the Company have waived their preemptive right
to participate in the Intel Investment of up to $1,000,000. Some of the
shareholders of the Company have already consented to participate in
the balance of up to $1,000,000 investment. Assuming that the existing
shareholders of the Company exercise their above rights and the total
investment in the Company in this Round of Financing is $2,000,000,
then the
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ownership of the Company on a fully diluted basis will be as set forth
in EXHIBIT 1. Exhibit 1 will be amended after the Third Closing to
reflect the actual investment and ownership of the Company following
this Second Round of investment and assuming the Third Closing takes
place. To remove any doubt, the percentage of Intel's holding in the
Company, irrespective of any Second Round investment by the existing
shareholders (if at all) shall not be less than 2.93% and 5.69%
following the First Closing and the Third Closing, respectively."
2. SECTION 2 OF THE INVESTMENT AGREEMENT IS DELETED, AND IS REPLACED IN FULL AS
FOLLOWS:
"SECTION 2
CLOSING DATES
The purchase of the Purchaser Shares shall take place as follows:
2.1 On September 12, 1996, Purchaser invested a sum of $ U.S. 500,000 (the
"FIRST CLOSING") against which the Company issued to the Purchaser 1502
Purchaser Shares.
2.2 The second payment of $ US 250,000 (the "SECOND CLOSING") will be
invested not later than fourteen (14) days following Intel's receipt of
the Company's shipment to Purchaser of the H.323/H.320 Gateway
Prototype, PROVIDED, the H.323/H.320 Gateway Prototype meets the
minimum required product specifications as described in EXHIBIT A to
this Amendment, and is accepted by Purchaser as such. At the Second
Closing, and against which, the Company will issue to the Purchaser 751
Purchaser Shares.
2.3 The balance of $ US 249,999 (the "BALANCE") will be invested not later
than fourteen (14) days following Intel's receipt of written notice of
the Company's first-shipment of either the H.323/H.320 Gateway to
Purchaser and Purchaser's conditioned acceptance thereof, OR delivery
of the H.323/H.324 Gateway to a customer, PROVIDED, the H.323/H.320
Gateway is not delivered or accepted by Purchaser (the "THIRD
CLOSING"). At the Third Closing, the Company will issue to the
Purchaser, against the Balance, the remaining 750 Purchaser Shares.
2.4 Upon the occurrence of any of the following events: (i) a resolution of
the Board of Directors of the Company to offer shares of the Company to
the public ("IPO") in a US securities market, or (ii) an execution of
an investment agreement with a third party for the purchase of more
than 49% of the Company's equity, Purchaser Will be entitled, at its
sole option, to advance the investment of the Balance and
(consequently) advance the Second Closing and Third Closing date. The
Company shall notify the Purchaser within 30 days of the occurrence of
any of the above events. Purchaser will then have a 30 day period as of
the date of notice in which to advance the investment of the Balance
and to execute the Second Closing and Third Closing, regardless of the
stage of development of the H.323/H.324 Gateway or H.323/H.320 Gateway
at that time.
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2.5 The First Closing, Second Closing and the Third Closing shall be,
collectively, referred to below as the "CLOSING.""
3. EXCEPT AS EXPRESSLY AMENDED HEREIN, THE "INVESTMENT IN RADVISION BY INTEL
CORPORATION" AGREEMENT WILL REMAIN IN FULL FORCE AND EFFECT.
4. THIS AMENDMENT MAY BE EXECUTED IN COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED
AN ORIGINAL AND ALL OF WHICH TOGETHER SHALL CONSTITUTE ONE AND THE SAME
INSTRUMENT.
IN WITNESS WHEREOF, the Company and the Purchaser have executed this Amendment
as of the date first above written.
RADVISION LTD.
By: /s/ AMOS AMIR
-----------------------------------
Printed Name: Amos Amir
-------------------------
Title: Managing Director
--------------------------------
INTEL CORPORATION
By: /s/ INTEL CORPORATION
-----------------------------------
Printed Name:
-------------------------
Title:
--------------------------------
SIGNATURE PAGE OF AMENDMENT TO "INVESTMENT
IN RADIVISON LTD. BY INTEL COPORATION"
<PAGE>
Exhibit 4.10
AGREEMENT
THIS AGREEMENT is made and entered into as of the 12th day of May,
1998, by and among RADVision LTD., an Israeli company, having an address at 24
Raoul Wallenberg St., Tel Aviv 69719, Israel (the "Company") and the entities as
identified in EXHIBIT A attached hereto (the "Purchasers").
W I T N E S S E T H :
WHEREAS, the Company is and will be engaged in the business of
developing, manufacturing and marketing products and technologies in the field
of video conferencing; and
WHEREAS, the Company desires to issue and sell, and the Purchasers
desire to purchase Preferred Shares, par value NIS 1.- each, of the Company (the
"Shares").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained, the Company and the Purchasers hereby
agree as follows:
SECTION 1
ISSUANCE AND PURCHASE OF SHARES
1.1 The Purchasers undertake to invest in the Company (the
"Investment") the amount of Two Million United States Dollars (U.S. $2,000,000)
(hereinafter, the "Investment Amount") on the Closing Date as defined in Section
2 hereinbelow. All amounts will be deposited in US dollars or their equivalent
in NIS in the Company's account, No.377906 at Hapoalim Bank, Hadar Yosef Branch
(610).
1.2 In consideration for and subject to the execution of the
Investment, the Company shall issue to the Purchasers on the Closing Date Five
Thousand Seven Hundred Seventy-Four (5,774) Preferred Shares. The Company shall
not be obligated to issue any Preferred Shares whatsoever before the full
Investment Amount is received by it. The Preferred Shares, when issued, will
have been validly issued, fully paid and non-assessable, and will be free of any
liens or encumbrances. After all Preferred Shares have been issued, the
ownership of the Company, on a fully diluted basis, will be as set forth in
EXHIBIT 1.2.
1.3 In addition to the Investment, the Company may receive additional
financing of up to $3,000,000 from additional investors, and from present
shareholders of the Company who may exercise their preemptive rights (these
additional investors and present
<PAGE>
shareholders being collectively referred to as the "Other Purchasers"), thus
increasing the amount of the financing in this round up to $5,000,000
(hereinafter, the "Total Investment"). In consideration for the investment by
the Other Purchasers, the Company will issue such number of Preferred Shares, as
set forth in the attached Exhibit 1.2 (which may be amended after the Closing
Date), all of which will be issued upon substantially similar terms and
conditions as set forth in this Agreement and in any event not better than the
terms of this Agreement. After all said Preferred Shares have been issued to the
Purchasers and the Other Purchasers (hereinafter, the "Shares"), the ownership
of the Company on a fully diluted basis will be as set forth in EXHIBIT 1.2.
1.4 The Preferred Shares shall have all the rights attached to the
existing Ordinary Shares and all the rights specifically set forth in this
Agreement as attached to them.
SECTION 2
CLOSING
2.1 CLOSING DATE. The payment of the Investment Amount by the
Purchasers shall take place on ______________, 1998 (the "Closing"). The date of
the Closing is referred to as the "Closing Date" in this Agreement.
2.2 TRANSACTIONS AT THE CLOSING. Unless otherwise indicated below, the
following transactions shall occur at the Closing, which transactions shall be
deemed to take place simultaneously, and no transactions shall be deemed to have
been completed or any document delivered until all such transactions have been
completed and all required documents delivered:
2.2.1 The Company shall deliver to the Purchasers the
following documents against the transfer of the Investment Amount:
(a) Resolution of the Company's shareholders by which
the Articles of Association of the Company were amended by the Amended Articles
of Association attached hereto as Exhibit 2.2.1.(A)(A) (the "Amended Articles"),
by which the authorized share capital of the Company was changed as described in
the Amended Articles, together with a duly completed notice of such changes to
the Israeli Registrar of Companies, all of the foregoing duly signed.
(b) Validly executed share certificates covering the
Shares, issued in the names of the respective Purchasers, provided, however,
that those certificates being issued to Purchasers entitled to repatriation
rights with respect to the funds invested shall be delivered to such Purchasers
as soon as practicable following the Closing, after
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being stamped by an Israeli commercial bank to indicate that such Shares were
purchased with foreign currency, provided such foreign Purchasers provide all
the necessary documentation required by the bank.
(c) A certificate duly executed by an executive
officer of the Company, dated as of the date of the Closing, in the form
attached hereto as EXHIBIT 2.2.1(C) (the "Compliance Certificate").
(d) An opinion of Nehama Sneh, counsel to the
Company, in the form attached hereto as EXHIBIT 2.2.1(D) (the "Opinion"), dated
as of the date of the Closing.
(e) A waiver of preemptive rights from each current
shareholder of the Company which chooses not to exercise its preemptive rights
to purchase additional Shares in connection with the Investment, whether in full
or in part, shall have been received by the Company.
2.2.2 After the Closing, assuming receipt of the full Investment
Amount, the Company shall register the allotment of the Shares to the Purchasers
in the share transfer register of the Company, in the respective numbers
indicated in Exhibit 1.1 opposite the names of the Purchasers.
2.2.3 Receipt of the full Investment Amount by the Company as evidenced
by bank confirmation.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchasers the facts
hereinafter set forth in this Section 3.
3.1 CORPORATE POWER. As of the date hereof and as of the Closing, the
Company has and will have all requisite corporate power to enter into and to
perform this Agreement.
3.2 ORGANIZATION AND STANDING. The Company is a corporation duly
organized and existing under the laws of the State of Israel. The Company has
requisite corporate power to own, lease and operate its properties and assets,
and to carry on its business as presently conducted. The Company has all
requisite power and authority to execute and deliver this Agreement, and to
consummate the transactions contemplated hereby and thereby. To the best of the
Company's knowledge, neither the nature of the Company's business as now
conducted nor its ownership or leasing of property require that the
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Company be qualified to do business or in good standing in any jurisdiction
other than the State of Israel. The Memorandum of Association and all amendments
to date of the Company are attached hereto as EXHIBIT 3.2(A) and all of these
documents will be in effect on the Closing Date. The Company has not taken any
action or failed to take any action, which action or failure would preclude or
prevent the Company from conducting its business after the Closing Date in the
manner heretofore conducted. The Company has all franchises, permits, licenses,
and any similar authority necessary for the conduct of its business as now being
conducted and as proposed to be conducted by it, the lack of which could
materially and adversely affect the business, properties, prospects, or
financial condition of the Company, and the Company believes that it can obtain,
without undue burden or expense, any similar authority for the conduct of its
business as planned to be conducted. The Company is not in material default
under any of such franchises, permits, licenses, or other similar authority. The
Company does not have a business permit.
3.3 CAPITALIZATION The Company's authorized capital is currently NIS
60,000, divided into 60,000 Shares having a nominal value of NIS 1.00 each. The
Company's authorized capital shall be increased prior to the Closing to be NIS
85,000, divided into 85,000 Shares having a nominal value of NIS 1.00 each. The
Company's issued capital stock immediately prior to the Closing Date shall
consist of 49,471 Ordinary Shares, and no Preferred Shares, all of which are
duly authorized, validly issued and free of any liens or encumbrances, and 1,127
Deferred Shares. The Company has no intent to, and will not, issue the Deferred
Shares or re-convert them into ordinary or other shares at any time. The Company
will increase its share capital prior to the Closing Date to enable the
performance of the Agreement. Out of the issued share capital, all of the shares
are fully paid, except for shares reserved for Employees. All shares are
non-assessable, and, to the best of the Company's knowledge and belief, are
beneficially owned by their holders of record. There are no preemptive,
conversion or other rights, options, or agreements granted or issued by, or
binding upon, the Company or the shareholders which entitle any person, firm or
corporation to purchase or acquire any shares of the Company's capital stock,
except as set forth in this Agreement, and in Section 3.16. The Shares, when
issued and allotted in accordance with this Agreement, will be duly authorized,
validly issued, fully paid, nonassessable, and free of any preemptive rights,
will have the rights, preferences, privileges, and restrictions set forth in the
Company's Amended Articles, and will be free and clear of any liens, claims,
encumbrances or third party rights of any kind and duly registered in the name
of each Purchaser in the Company's share transfer register. The Company is not
under any obligation to register for trading on any securities exchange any of
its currently outstanding securities or any of its securities which may
hereafter be issued. Since its incorporation, there has been no declaration or
payment by the Company of dividends, or any distribution by the Company of any
assets of any kind to any of its shareholders in redemption of or as the
purchase price for any of the Company's securities.
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(a) OWNERSHIP OF SHARES. Except for RADVision, Inc. and RadVision B.V.,
wholly owned subsidiaries, the Company does not own any of the issued and
outstanding share capital of any other company, and is not a participant in any
partnership or joint venture.
3.4 AUTHORIZATION. All corporate actions on the part of the Company and
its directors and shareholders, required for the authorization, execution,
delivery and performance by the Company of this Agreement and the consummation
of the transactions contemplated herein have been, or will be taken, upon
signature of this Agreement or prior to the Closing Date. This Agreement, when
executed and delivered by the Company, will constitute the valid and binding
obligations of the Company, legally enforceable in accordance with its terms.
The execution, delivery and performance by the Company of this Agreement, and
compliance therewith, and the consummation of the transactions contemplated by
this Agreement will not result in any violation of and will not conflict with,
or result in a breach of any of the terms of, or constitute a default under, (i)
the Company's Memorandum of Association or the Articles of Association, or other
governing instruments of the Company, (ii) any judgment, order, injunction,
decree, or ruling of any court or governmental authority, domestic or foreign,
to which the Company is subject, (iii) any agreement, contract, lease, license
or commitment to which the Company is a party or to which it is subject and
which would impair the ability of the Company to execute, deliver or perform
this Agreement, or (iv) applicable law. Such execution, delivery and compliance
will not (a) give to others any material rights, including rights of
termination, cancellation or acceleration, in or with respect to any agreement,
contract or commitment referred to in this paragraph, or to any of the
properties of the Company or (b) otherwise require the consent or approval of
any person. To the best of the Company's knowledge, no third party's consent is
required for the Company to become a party to this Agreement, except for the
approval of the Office of the Chief Scientist of Israel (the "OCS"). Prior to
the Closing Date, the Company will obtain consent from all governmental
authorities requiring prior notification of changes in equity, including, but
not limited to the Israel Investment Center and the OCS. The Purchasers
undertake to cooperate with the Company in order to obtain such consents and to
execute whatever documentation is requested of them in this regard by the
governmental authorities.
3.5 FINANCIAL STATEMENTS. The Company has furnished the Purchasers with
audited financial statements (including balance sheets, income statements and
statements of cash flow) for the period ending December 31, 1997 (the "Balance
Sheet Date") attached hereto as EXHIBIT 3.5 (the "Financial Statements"). To the
best of the Company's knowledge, the Financial Statements are true and correct
in all material respects, are prepared in accordance with the books and records
of the Company, fairly and accurately present in all material respects the
financial position of the Company as of such date and the results of its
operations for the period then ended, and have been prepared in accordance
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with Israeli generally accepted accounting principles ("GAAP") consistently
applied. Except in the ordinary course of business, there exists no default by
the Company under the provisions of any agreement or other instrument evidencing
or relating to any indebtedness or obligation. Since the Balance Sheet Date, and
except as set forth in the Schedule of Exceptions, the Company has operated in
the ordinary and usual course of business, and there has not been:
(i) any material change in the assets, liabilities, condition
(financial or otherwise) or business of the Company from that reflected in the
Financial Statements;
(ii) any damage, destruction or loss, whether or not covered
by insurance, materially affecting the assets, business, properties, condition
(financial or otherwise), operating results, prospects or business of the
Company as such business is presently conducted;
(iii) any waiver by the Company of a valuable right or of a
material debt owed to it;
(iv) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not individually or in the aggregate materially
adverse to the assets, properties, condition (financial or otherwise), operating
results or business of the Company as such business is presently conducted and
proposed to be conducted;
(v) any material change or amendment to a material contract or
arrangement by which the Company or any of its assets is bound or subject;
(vi) any material change in any compensation arrangement or
agreement with any employee of the Company;
(vii) any loans made by the Company to its directors;
(viii) any sale, transfer or lease of, except in the ordinary
course of business, or mortgage or pledge or imposition of lien on, any of the
Company's material assets;
(ix) any change in the accounting methods or accounting
principles or practices employed by the Company.
3.6 ABSENCE OF UNDISCLOSED LIABILITIES AND OUTSTANDING DEBT. Except as
set forth in the Financial Statements or EXHIBIT 3.6 ("Schedule of Exceptions"),
the Company has no material liability of any nature, direct or indirect,
absolute or contingent, not
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adequately reserved against, or outstanding indebtedness for borrowed money. The
Company has paid, or has made adequate provisions for the payment of, all taxes,
interest, penalties, assessments or deficiencies owing by it to any taxing
authority. The Company is not a guarantor of any debt or obligation of another.
There exists no default by the Company under the provisions of any agreement or
other instrument evidencing or relating to any indebtedness or obligation.
3.7 CONTRACTS AND CONTRACTUAL ARRANGEMENTS. The Company is a party to
several material agreements, all of which are described in the Schedule of
Exceptions attached hereto. Each of such agreements is in full force and effect
and, to the Company's knowledge, no party thereto is in breach thereof, nor is
any such breach threatened or contemplated. The Company is of the opinion that
it receives services from affiliated companies for fair consideration as
described in the Schedule of Exceptions attached hereto. The Company is not
obligated to receive services from said affiliated companies. True and correct
copies of all contracts described in the Schedule of Exceptions have been
delivered to the Purchasers. Except as set forth in the Schedule of Exceptions,
the Company has no employment or consulting contracts, deferred compensation
agreements or bonus, incentive, profit-sharing, or pension plans currently in
force and effect, or any understanding with respect to any of the foregoing.
3.8 INDEBTEDNESS OF OR TO SHAREHOLDERS, ETC.; CONFLICTS OF INTEREST.
Other than as set forth in the Schedule of Exceptions or in the Financial
Statements, no officer, director or stockholder of the Company, or any affiliate
or family member of any such person or entity or the Company, has or has had,
either directly or indirectly, (a) an interest in any person or entity which (i)
furnishes or sells services or products which are furnished or sold or are
proposed to be furnished or sold by the Company, or (ii) purchases from or sells
or furnishes to the Company any goods or services, or (b) a beneficial interest
in any contract or agreement to which the Company is a party or by which it may
be bound or affected. Other than as set forth in the Schedule of Exceptions,
there are no existing material arrangements or proposed material transactions
between the Company and any officer, director, or holder of more than 5% of the
capital stock of the Company, or any affiliate or associate of any such person.
Other than as set forth in the Schedule of Exceptions, no employee, shareholder,
officer, or director of the Company, or any of their affiliates or families, is
indebted to the Company, nor is the Company indebted (or committed to make
investments or extend or guarantee credit) to any of them except for accrued
wages for the current period.
3.9 LITIGATION; INSOLVENCY PROCEEDINGS. No action, proceeding or
governmental inquiry or investigation is pending or (to the Company's best
knowledge) threatened against the Company or any of its officers, directors, or
employees (in their capacity as such), or against any of the Company's
properties, before any court, arbitration board or
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tribunal or administrative or other governmental agency, nor (to the Company's
best knowledge) is there is any basis for the foregoing. The foregoing includes,
without limiting its generality, actions pending or threatened involving the
prior employment of any of the Company's employees or use by any of them in
connection with the Company's business or any information, property or
techniques allegedly proprietary to any of their former employers. The Company
is not a party to or subject to the provisions of any order, writ, injunction,
judgment or decree of any court or governmental agency or instrumentality. There
is no action, suit, proceeding or investigation by the Company currently pending
or that the Company intends to initiate.
3.10 INSURANCE. The Company maintains insurance through RAD-Bynet
insurance policies which, in the opinion of the Company's management, adequately
covers the perils normally insured against by companies similarly situated.
Copies of all insurance policies were given to the Purchasers. To the best of
the Company's knowledge, all such policies are in full force and effect.
3.11 TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. The Company leases
the real property set forth in the Schedule of Exceptions hereto. A complete and
accurate copy of the lease agreements has been furnished to counsel for the
Purchasers. Except as set forth on the Schedule of Exceptions hereto, (i) the
Company has good title to all of the properties and assets, both real and
personal, tangible and intangible, that it purports to own, and they are not
subject to any mortgage, pledge, lien, security interest, conditional sale
agreement, encumbrance or charge except routine statutory liens securing
liabilities not yet due and payable and minor liens, encumbrances, restrictions,
exceptions, reservations, limitation and other imperfections which do not
materially detract from the value of the specific asset or the present use of
such asset; and (ii) the Company is not knowingly, after due review, in default
or breach of any material provision of its leases or licenses and holds a valid
leasehold or licensed interest in the property it leases or that is licensed to
it.
3.12 BUSINESS OF THE COMPANY. Except as set forth in the Schedule of
Exceptions, the Company has no knowledge of (i) the existence of any pending or
planned patent, or any statute, rule, law, regulation, standard or codes which
would materially adversely affect the condition, financial or otherwise, or the
business operations, of the Company; or (ii) the existence of any other factor
which would materially adversely affect the financial condition, or the
operations, of the Company.
3.13 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in default
(a) under its Memorandum or Articles of Association or other formative
documents, or under any material note, indenture, mortgage, lease, agreement,
contract, purchase order or other instrument, document or agreement to which the
Company is a party or by which it or
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any of its property is bound or affected or (b) with respect to any law,
statute, ordinance, regulation, order, writ, injunction, decree, or judgment of
any court or any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which default, in any such case, would
adversely affect or in the future is reasonably likely to materially and
adversely affect the Company's business, prospects, condition (financial or
otherwise), affairs, operations or assets. To the Company's best knowledge, no
third party is in default under any material agreement, contract or other
instrument, document or agreement to which the Company is a party or by which it
or any of its property is affected. The Company is not a party to, nor to its
best knowledge is it bound by, any order, judgment, decree or award of any
governmental authority, agency, court, tribunal or arbitrator.
3.14 EMPLOYEES. All the key employees of the Company are listed on
EXHIBIT 3.14 hereto and have executed employment agreements. Except as set forth
in EXHIBIT 3.6, the Company has no employment contract with any officer or
employee or any other consultant or person which is not terminable by it at will
without liability, upon a prior notice of 30 days. The Company has complied with
all applicable employment laws except for such non-compliance as would not cause
a material adverse effect to the business, operations or prospects of the
Company. The forms of standard employment agreements which all employees of the
Company have signed are attached as EXHIBIT 3.14(A) hereto, and include
confidentiality and non-competition provisions. Notwithstanding the foregoing,
the Inception Agreement with Mr. Ami Amir contains a specific provision to that
effect. True and correct copies of such agreements have been delivered to the
Purchasers. To date, all payments due to the Company's employees have been paid
regularly. In addition, the Company believes it made all material allowances
required by law to cover the amounts due to its employees and/or officers in
connection with their employment and/or termination of employment, as reflected
in the Financial Statements.
3.15 The Company has adopted a Trust Agreement and share incentive
option plans for employees of the Company and its affiliates which are attached
hereto as EXHIBIT 3.15(A) AND 3.15(B) (the "Employee Plans"). At the Closing
Date, the total number of shares reserved under the Employee Plans for Employees
of the Company and its affiliates will be 5,727 which includes an increase in
the number of options reserved for employees of the Company and its subsidiaries
of up to 3,000 additional options. To date, options under the Employee Plan have
been granted only to employees of the Company and its affiliates who assist the
Company. In the event of a contradiction between this Agreement and the Employee
Plans and the current Memorandum of Association and Articles of Association, the
Employee Plans shall prevail.
3.16 INTELLECTUAL PROPERTY AND OTHER INTANGIBLE ASSETS.
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(a) Other than as set forth in the Schedule of Exceptions, the Company
owns or has the right to use, free and clear of all liens, claims and
restrictions, all patents, trademarks, service marks, trade names and
copyrights, and applications, licenses and rights with respect to the foregoing,
and all trade secrets, including know-how, inventions, designs, processes, works
of authorship, computer programs and technical data and information
(collectively herein "Intellectual Property") used and in the management's
opinion, sufficient for use in the conduct of its business as now conducted, and
such ownership or right to use, to the Company's best knowledge, does not
infringe upon or violate any right, lien, or claim of others. Except as
described in the Schedule of Exceptions, the Company is not obligated to make
payments by way of royalties, fees or otherwise to an owner or licensee of, or
other claimant to, patents, trademarks, service marks, trade names, copyrights
or other intangible asset, with respect to the use thereof or in connection with
the conduct of its business or otherwise.
(b) Any and all Intellectual Property of any kind currently being
developed, or developed in the future, by any employee of the Company in
connection with his employment by the Company, is and shall remain the property
solely of the Company. The Company has taken security measures to protect the
secrecy, confidentiality and value of all the Intellectual Property, which
measures are reasonable and customary in the industry in which the Company
operates. All of the Company's employees have entered into a written agreement
with the Company in the form of Exhibit 3.14(a).
(c) The Company has not received any communications alleging that the
Company has violated, or by conducting its business as proposed, would violate,
patents, trademarks, trade names, copyrights or trade secrets or other
proprietary rights of other persons or entities. To the best of the Company's
knowledge, its use of the Intellectual Property does not conflict with, violate
or infringe upon any rights of any third party, including any proprietary rights
of any third party.
3.17 The Schedule of Exceptions attached hereto includes a true and
complete list of each of the agreements and contractual arrangements, whether
written or oral, to which both the Company and any of its Interested Parties are
bound, where "Interested Party" means a person who holds 5% or more of the
nominal value of the Company's issued share capital or of voting power in it, or
who is entitled to nominate one or more of its directors or its general manager,
or who is a director or general manager of the Company.
3.18 RECORDS. Minutes of the Company which have been provided to the
Purchasers contain accurate and complete copies of the minutes of every meeting
of the Company's shareholders and Board of Directors. No resolutions have been
passed,
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enacted, consented to or adopted by the directors or shareholders of the
Company, except for those contained in such minute books.
3.19 TAXES. The Company has accurately prepared and duly filed all
income and payroll tax returns and filings that are required to be filed by it
(the "Tax Returns") and has paid or made provision for the payment of all
amounts due pursuant to such returns. Except as set forth in the Schedule of
Exceptions, none of the Tax Returns has been audited by any taxing authority,
the Company has not been advised that any of such Tax Returns will be so
audited, and there are no waivers in effect of the applicable statute of
limitations for any period. There is no "deficiency assessment" or proposed
adjustment of income or payroll taxes which is pending against the Company, and
the Company has no knowledge of any proposed liability for any tax to be
imposed. The Company has not made any elections under applicable laws or
regulations (other than elections that related solely to methods of accounting,
depreciation or amortization) that would have a material adverse effect on the
Company, its financial condition, its business as presently conducted as
described in the Business Plan or proposed to be conducted, or any of its
properties or material assets. The Company has been a "family company" since its
inception until December 31, 1994.
3.20 NO PUBLIC OFFER. Neither the Company nor anyone acting on its
behalf has offered securities of the Company or any part thereof or any similar
securities for issuance or sale to, or solicited any offer to acquire any of the
same from, anyone so as to make issuance and sale of the Preferred Shares not
exempt from the registration requirements of Section 5 of the Securities Act of
1933, as amended, or the Israeli Securities Law, 1968. None of the shares of the
Company's capital stock issued and outstanding, or options to purchase such
shares, have been offered or sold in such a manner as to make the issuance and
sale of such shares or options not exempt from such registration or prospectus
requirements, and all such shares of capital stock have been offered and sold,
and the Shares sold hereunder shall be offered and sold, in compliance with all
applicable state securities laws.
3.21 BROKERS. No agent, broker, investment banker, person or firm
acting in a similar capacity on behalf of or under the authority of the Company
are or will be entitled to any broker's or finder's fee or any other commission
or similar fee, directly or indirectly, on account of any action taken by the
Company in connection with any of the transactions contemplated under the
Agreement.
3.22 DISCLOSURE. This Agreement and the Schedule of Exceptions
delivered to the Purchasers do not contain any material untrue statement and do
not omit to state a material fact necessary in order to make the statements
contained herein not misleading in the light of the circumstances under which
they were made, and such documents represent full
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disclosure by the Company of the material facts with respect to the business,
prospect and plans of the Company. The Company confirms that to the date of this
Agreement, the Business Plan dated July, 1997, which was provided to the
Purchasers, does not contain any materially untrue information as far as same
relates to the Company itself. There is no material fact or information relating
to the business, prospects, condition (financial or otherwise), affairs,
operations, or assets of the Company known to the Company after inquiry that has
not been disclosed to the Purchasers.
3.23 The agreements with the Other Purchasers in this round who are
part of the Total Investment will have terms and conditions which are identical,
in all material respects, to, and not better than, the terms and conditions of
this Agreement.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
The Purchasers represent and warrant to the Company as follows:
4.1 LEGAL POWER. As of the date hereof and as of the Closing, the
Purchasers have and will have all requisite power to enter into and to perform
this Agreement.
4.2 EXPERIENCE. The Purchasers have sufficient experience as investors
in hi-tech companies such as the Company and expertise to evaluate the risk of
their investment in the Company and its suitability to their needs.
4.3 INVESTMENT. The Purchasers are acquiring the Shares for investment
for their own accounts.
4.4 ACCESS TO DATA. The Purchasers hereby represent that they have had
the full opportunity to discuss management and financial affairs of the Company
with its management and have had an opportunity to review the Business Plan and
the Company's facilities. The Purchasers have not been denied any information
that has been requested and based on the said information have made diligent
examination of the Company's business. The Purchasers have heretofore received
information that the Purchasers have deemed necessary and appropriate to enable
the Purchasers to evaluate the financial risk inherent in making an investment
in the shares of the Company and the Purchasers have received satisfactory and
complete information concerning the business and financial condition of the
Company in response to all inquiries in respect thereof. Nothing contained in
this Section 4.4 shall derogate from the liability of the Company with respect
to the representations and warranties made in Section 3 above.
4.5 BROKERS. No agent, broker, investment banker, person or firm acting
in a similar capacity on behalf of or under the authority of the Purchasers are
or will be entitled
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to any broker's or finder's fee or any other commission or similar fee, directly
or indirectly, on account of any action taken by the Purchasers in connection
with any of the transactions contemplated under the Agreement.
4.6 AUTHORIZATION. All corporate or partnership action on the part of
the Purchasers, their respective directors, partners and/or shareholders
necessary for the authorization, execution, delivery, payment and performance by
the Purchasers of this Agreement and the consummation of the transactions
contemplated herein, has been taken.
4.7 Purchasers have sufficient financial resources to enable them to
fulfill their obligations under this Agreement and commit to make their
investment in the Company as set forth in Section 1 hereinabove.
4.8 The Purchasers hereby certify that they are aware
of the Company's commitments under the Encouragement of Research and Development
in Industry Law - 1984, which prohibits the transfer of know-how, manufacturing
and production information and technology to any third party without the prior
consent of the Research Committee, and the Purchasers agree to execute whatever
documentation is requested of them in this regard by the OCS.
SECTION 5
CONDITIONS OF THE PURCHASERS TO CLOSING
The obligations of the Purchasers at the Closing, as referred to in
Section 1 hereof, are subject to the fulfillment of each of the following
conditions:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct
when made, and shall be true and correct in all material respects on Closing
with the same force and effect as if they had been made immediately prior to the
Closing and as of such time, except for such changes as contemplated by this
Agreement.
5.2 PERFORMANCE. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Company on or prior to
Closing shall have been performed or complied with in all respects prior to or
at the Closing.
5.3 LEGAL INVESTMENT. At the time of the Closing, the purchase and
issuance of the Shares shall be legally permitted by all laws and regulations to
which the Purchasers and the Company are subject.
5.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments
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incident to such transactions, including the amendment of the Company's Articles
of Association to reflect the transaction contemplated hereby, shall have been
completed or amended effective as at the Closing to the reasonable satisfaction
(as to substance and form) of the Purchasers.
5.5 PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENT. Each of the
Company's key employees shall have executed and delivered to the Company an
Employment Agreement, substantially in the form attached hereto as EXHIBIT
3.14(A) which agreement contains non-disclosure and non-competition provisions
therein.
5.6 RETENTION OF KEY EMPLOYEES. All the persons listed in EXHIBIT 3.14
shall either be employees of the Company as of the Closing and to the best of
the Company's knowledge, shall not have informed the Company that they intend to
leave the Company, or if an employee has left the Company or intends to leave
the Company, the latter has notified the Purchasers of same.
5.7 CONSENTS, ETC. The Company shall have secured all permits,
consents and authorizations that shall be necessary or required lawfully to
consummate this Agreement and to issue the Shares to be purchased by each
Purchaser at the Closing, and the Amended Articles.
5.8 ABSENCE OF ADVERSE CHANGES. From the date hereof until the Closing,
there will have been no material adverse change in the financial or business
condition of the Company, in the sole, but reasonable judgment of the
Purchasers.
5.9 DELIVERY OF DOCUMENTS. All of the documents to be delivered by the
Company pursuant to Section 2.2 shall be in form and substance reasonably
satisfactory to the Purchasers and their counsel, in their sole discretion, and
shall have been delivered to the Purchasers against the transfer of the
Investment Amount to the Company.
SECTION 6
CONDITIONS OF COMPANY TO CLOSING
The obligations of the Company at the Closing, as referred to in
Section 1 hereof, are subject to the fulfillment of each of the following
conditions:
6.1 REPRESENTATION. The representations and warranties made by the
Purchasers in Section 4 hereof shall be true and correct when made and shall be
true and correct on Closing with the same force and effect as if they had been
made immediately prior to the Closing and as of such time.
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6.2 Purchasers have fulfilled any and all of their obligations set
forth in Section 1.1 and 4.8.
SECTION 7
BOARD OF DIRECTORS
The present directors of the Company are Yehuda Zisapel, Zohar Zisapel,
Hillel Milo, Ami Amir, Efraim Wachtel and Ran Perlman. As of the Closing and for
as long as the Purchasers' collective equity interest in the Company equals at
least 5% of the capital securities therein, the Purchasers will be entitled to
nominate one representative to the Board of Directors, whose identity will be
reasonably acceptable to Yehuda Zisapel, Zohar Zisapel and Ami Amir. The parties
agree that Yiftach Atir will be the first Director so appointed by the
Purchasers. In the event that the Purchasers' collective equity interest in the
Company falls below 5% of the outstanding capital securities therein, the
Purchasers will be entitled to designate one Observer only to the Board of
Directors. The identity of the Observer will be reasonably acceptable to Yehuda
Zisapel, Zohar Zisapel and Ami Amir. Provided that the Observer signs a
commitment in a form customary to that used by the RAD-Bynet Group for
Observers, the Observer shall be entitled to receive all notices and materials
provided to directors and to attend and participate in all meetings of the Board
of Directors. The Observer shall not be entitled to vote.
The Board will convene at least once a quarter.
SECTION 8
COVENANTS OF THE COMPANY
Until the earlier to occur of (a) the closing of an effective
underwritten public offering of the Company's ordinary shares pursuant to an
effective registration statement under the United States Securities Act of 1933,
as amended, or equivalent law of another jurisdiction (an "IPO"), or (b) the
date on which the Purchasers' collective equity interest in the Company falls
below five (5%) percent of the outstanding capital securities therein, on a
fully-diluted basis, and without derogating from any rights or obligations
conferred upon shareholders or upon corporations under applicable law, the
Company hereby covenants and agrees that the special consent set forth in
Section 8.1 shall be needed. Thenceforth, following the earlier of the dates
described above, no special consent shall be needed.
8.1 SPECIAL CONSENT. Resolutions of the Board of the Company regarding
the following subject matters shall require the consent of at least two
directors (the "Outside Directors") appointed by any of the investor groups not
affiliated with the Zisapels, as they will be defined at that time in the
Articles of Association of the Company (collectively, the "Investors") in the
Company, in addition to a simple majority:
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(a) Establishment of any non-wholly owned subsidiary;
(b) Acquisition or disposition, including mortgage, of real estate
out of the ordinary course of the Company's business;
(c) Replacement of the Company's Managing Director;
(d) Replacement of the auditors of the Company;
(e) Approval of the distribution of dividends by the Company,
except for recapitalization prior to an IPO or a merger and
acquisition transaction (an "M&A Transaction");
(f) Transactions in excess of $50,000 not included in the approved
Annual Operating Plan between the Company or its affiliates
and their directors, officers and employees or their relatives
or other affiliates, with the exception of employees receiving
securities;
(g) Resolution to enter a new business field unrelated to the
present field; and
(h) Issuance of shares with rights superior to those of the Shares.
If the Director on behalf of the Purchasers has not responded within 14 days of
notification of such matters, it will be deemed that the required consent is
granted.
SECTION 9
PRE-EMPTIVE RIGHTS
Until the closing of an IPO or an M&A Transaction, and without
derogating from any rights conferred upon shareholders, or obligations conferred
upon corporations under applicable law, the Company hereby covenants and agrees
as follows:
If the Company should at any time or from time to time propose to issue
and sell New Securities, as defined in subsection (a) below, a pro rata portion
of such New Securities shall first be offered (as hereinafter provided) to the
shareholders of the Company (each of whom shall hereinafter be referred to as an
"Offeree"). For purposes of this Section 9, the pro rata portion of each Offeree
shall mean a fraction of the New Securities to be issued, of which the aggregate
number of shares which are held by the Offeree on the date of the Company's
initial written notification referred to in subsection (b) below (the "Notice
Date") shall be the numerator and the aggregate number of shares held by all the
Offerees as of such date shall be the denominator. The aforesaid rights of the
Offerees shall be subject to the following provisions:
(a) "New Securities" shall mean any capital stock of the
Company, whether or not now authorized, and rights, options or warrants to
purchase capital stock, and securities of any type whatsoever that are, or may
become, convertible into capital stock; provided that the term "New Securities"
shall not include (i) securities purchased under this Agreement; (ii) securities
offered to the public; (iii) securities issued pursuant to
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the acquisition of another corporation by the Company by merger, purchase of
substantially all the assets of another corporation or any other reorganization
whereby the Company owns not less than fifty-one percent (51%) of the voting
power of such corporation; (iv) securities issued to employees, consultants or
directors of the Company pursuant to any stock option plan or stock purchase or
stock bonus arrangement approved by the Board of Directors of the Company; or
(v) securities issued pursuant to payment of any dividend or distribution with
respect to the Company's issued and outstanding capital stock.
(b) In the event the Company proposes to undertake an issuance
of New Securities, it shall give each Offeree written notice of its intention,
describing the type of New Securities and the price and the terms upon which the
Company proposes to issue the same, and offering its pro rata portion thereof to
such Offerees at such price and on such terms. Each Offeree shall have
twenty-one (21) days from the Notice Date to accept such offer, in whole or in
part, by written notice to the Company, which notice must be received by the
Company during the above-mentioned 21 day period. All New Securities as to which
such offers have not been accepted, in whole or in part, by one or more of the
Offerees (of which fact the Company shall give immediate written notice to all
other Offerees), shall be re-offered to each of the Offerees who have accepted
in full the original offer, and each such Offeree shall have the right, within
ten (10) days of the date of such written notice, to purchase the respective pro
rata portions of such new Securities, the same to be computed as aforesaid but
without regard to the shares held by any Offeree which had not accepted the
original offer in full.
(c) In the event any Offeree fails to accept such offers, the
Company shall have the right to sell, or to enter into an agreement to sell,
within six (6) months after the Notice Date, such New Securities as to which
such offers were not accepted, provided, however, that no such sale may be
effected at a price or upon terms more favorable to the purchasers thereof than
those specified in the Company's notice pursuant to Section 9(b). If the Company
has not sold the New Securities within said 6-month period, the Company shall
not thereafter issue or sell any New Securities without first offering such
securities to the shareholders in the manner provided above.
(d) Each of Yehuda Zisapel, Zohar Zisapel and RAD Data
Communications Ltd. shall have a right to allocate any unused portion of the New
Securities offered to him to the other or to a wholly owned company.
(e) Each of the Purchasers shall have the right to allocate
any unused portion of the New Securities offered to such Purchaser, to any other
member in the Purchaser Group as defined in Section 11, to its parents or to any
of its subsidiaries, of which at least 51% of the stock is owned by such
Purchaser, or to a company under
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common control affiliated with Purchaser, provided that such recipient of Shares
will join in this Agreement as if it had become a party to it as of the receipt
of the Shares.
(f) Notwithstanding anything to the contrary contained herein,
so long as Amos Amir is the Managing Director of the Company, Amos Amir and his
wholly-owned companies are, and shall continue to be, entitled to be Offerees
under this Section 9. Other than as set forth in this Section 9, Mr. Amir does
not have any preemptive rights to shares of the Company.
(g) Each of Lerosh Investments Ltd., Gevahim Investments House
Limited Ltd., Mr. Yoav Chelouche, Permal Emerging Growth V Ltd., Maritime-Julex
Investment Ltd., Mr. Shraga Blazer and Mr. Eli Luz shall have a right to
allocate any unused portion of the New Securities offered to him to the other.
SECTION 10
AFFIRMATIVE COVENANTS
10.1 USE OF PROCEEDS. The Company will use the Investment Amount to
fund its activities and further its business subject to any resolutions made by
its Board of Directors from time to time.
10.2 BASIC FINANCIAL INFORMATION. Prior to the closing of an IPO or an
M&A Transaction, the Company agrees and undertakes to furnish to the Purchasers'
director and/or Observer (provided that the Observer executes the RAD Group
Observer Form), as the case may be, the following reports certified, when so
required herein, by the Company's auditors:
(a) As soon as practicable after the end of each calendar quarter, and
in any event within forty-five (45) days thereafter, a balance sheet and a
profit and loss account and of cash flow (including opening cash, income,
expenses and closing cash) of the Company as of the end of such quarterly
period, and for the current fiscal year to date, prepared in accordance with
generally accepted accounting principles consistently applied and setting forth
in comparative form the figures for the corresponding periods of the previous
fiscal year, subject to changes resulting from year-end audit adjustments, all
in reasonable detail, signed by the principal financial or accounting officer of
the Company.
(b) Not later than 14 days after the end of each month, a monthly
executive summary in the currently existing format, including a statement of the
cash at the beginning of the month and at the end of the month. This summary
shall be kept confidential.
(c) Not later than ninety (90) days after the end of each fiscal year,
audited annual financial statements.
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10.3 ACCOUNTS AND RECORDS. The Company will keep true records and books
of account in which full, true and correct entries will be made of all dealings
or transactions in relation to its business and affairs in accordance with
generally accepted accounting principles applied on a consistent basis.
10.4 LEGAL FEES AND STAMP TAX. The Company will pay the fees and
expenses, including but not limited to the fees of counsel for the Purchasers,
in connection with the Investment transaction under this Agreement, in an amount
not to exceed $30,000, plus Value Added Tax. The Company will bear the cost of
stamp tax due in connection with the issuance of shares according to this
Agreement.
10.5 SUFFICIENCY OF COMPANY SHARE CAPITAL. The Preferred Shareholders
agree that, in the event at any time the number of authorized Ordinary Shares of
the Company shall be insufficient to permit the conversion of all Preferred
Shares into Ordinary Shares in accordance with the conversion provisions of the
Company's Articles of Association, the Preferred Shareholders shall vote in
favor of such increase in the Company's registered share capital as shall be
necessary to permit such conversion.
SECTION 11
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES
Except as set forth in this Section, the sale, transfer or grant of any
right whatsoever in the Shares of the Company to any third party is prohibited.
This Section will terminate upon the closing of an IPO of the Company.
11.1 For the purposes of this Section and Section 14.3 below, some of
the current shareholders of the Company and the Purchasers will be regarded as
members of the groups set forth below.
(a) "Zisapel Group" shall mean and consist of Yehuda Zisapel, Zohar
Zisapel, both personally and as trustees under the employee share plan,
RAD Data Communications Ltd. and their Permitted Transferees.
(b) "Evergreen Group" shall mean and consist of Evergreen, Dovrat Shrem
Trust Company Ltd. and their Permitted Transferees.
(c) "Clal Group" shall mean and consist of Clal Venture Capital LP, ECI
Telecom Ltd. and their Permitted Transferees.
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(d) "Finovelec Group" shall mean and consist of Finovelec Factory
Systemes, Houston Venture Partners Ltd. and their Permitted
Transferees.
(e) "Capital Group" shall mean and consist of Zohar Gilon, Avraham
Neyman, Yair Tauman, W.S.P. Capital and their Permitted Transferees.
(f) "Maritime Group" shall mean and consist of Lerosh Investments Ltd.,
Gevahim Investments House Limited Ltd., Mr. Yoav Chelouche, Permal
Emerging Growth V Ltd., Maritime-Julex Investment Ltd., Mr. Shraga
Blazer and Mr. Eli Luz and their Permitted Transferees.
11.2 Members of each Group are entitled to transfer shares among
themselves for consideration or without consideration without any restrictions.
"Permitted Transferees" shall mean those parties set forth in Sections 11.8,
11.9, 11.10 and 11.11, below, each with respect to its respective Group.
11.3 Except as set forth in sections 11.8 through 11.11 hereinbelow,
any shareholder of the Company who shall elect to transfer (hereinafter
"Seller") all or part of his shares, not in accordance with subsection 11.2
above (hereinafter "Offered Shares") shall offer them first to the other
registered shareholders of the Company at that time (the "Other Shareholders")
on a pro rata basis based on their share in the share capital of the Company
(on an as-converted basis).
11.4 In the event any such Other Shareholder fails to exercise his
right to purchase his Offered Shares within forty-five (45) days from the date
the offer is made, then the Seller shall have the right to offer the Offered
Shares to a third party at the same price and upon the same terms of sale as
those offered to the other shareholders under section 11.3 and provided that
said third party shall undertake all of the Seller's obligations under this
Agreement (such third party to be called hereunder, the "Transferee"). In the
event that the shares are not sold to said party within six (6) months as of
the offer to such said third party, then Section 11.3 will apply anew.
11.5 The Board of Directors shall have the right to not approve the
transfer of shares to a third party in each of the following events:
(i) If the third party is a competitor of the Company;
(ii) If there is a possibility of a conflict of interest
between the third party and the Company;
(iii) For any other reason, in which case such approval
shall not be unreasonably withheld; provided,
however, that if the third party is a
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venture capital fund or an investment house, such
approval will be deemed granted automatically.
11.6 This Section will supersede Section 14 of the Inception Agreement.
11.7 The terms of the Trust Agreement will have priority over this
Section 11.
11.8 Finovelec, in its discretion, shall be permitted to freely
transfer up to 5% of its shares (at that time) in the Company to up to 6
Finovelec executives, as well as up to an additional 5% of its shares (at that
time) in the Company to IDI (if then an affiliate of Finovelec). Such transfer
shall be considered a transfer among the Finovelec Group, provided that each
Transferee, upon receipt of the shares, will join this Agreement and undertake
all of Purchasers' obligations hereunder and will be considered henceforth a
member in the Finovelec Group for the purpose of this Section.
11.9 Clal Venture Capital L.P. is entitled to transfer all of its
shares in the Company to its partners, provided that each Transferee, upon
receipt of the shares, will join this Agreement and undertake all of Purchasers'
obligations hereunder and will be considered henceforth a member in the Clal
Group for the purpose of this Section.
11.10 Each of Zohar Gilon, Avraham Neyman and Yair Tauman is entitled,
once, to transfer his shares to a company directly under the total control of
said person, provided that each Transferee, upon receipt of the shares, will
join this Agreement and undertake all of Purchasers' obligations hereunder and
will be considered henceforth a member in the Capital Group for the purpose of
this Section.
11.11 Each of the Evergreen group Purchasers identified in EXHIBIT A
shall be permitted to freely transfer its shares, or any part thereof, in the
Company as follows: (a) if such Purchaser is a partnership, to its partners and
to affiliated partnerships managed by the same management company or managing
general partner, or by a management company or managing general partner which is
controlled by, controlling or under common control with its management company
or managing general partner or (b) otherwise, to an entity controlled by,
controlling or under common control with such Purchaser. Such transfer shall be
considered a transfer among the Evergreen Group provided that each Transferee,
upon receipt of the shares, signs EXHIBIT 11.11 and joins this Agreement and
undertakes all of Purchaser's obligations hereunder and will be considered
henceforth a member of the Evergreen Group, for the purpose of this Section, and
provided further that at no time will the number of Evergreen group entities
exceed four (4). Further transfers can be made in accordance with this Section
11.
11.12 Dovrat Shrem Trustees Ltd. shall be permitted to freely transfer
its shares, or any part thereof, in the Company to Dovrat Shrem ("DS"), provided
that
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transferee , upon receipt of the shares, will sign EXHIBIT 11.11 and undertakes
all of the said transferor's obligations hereunder, and will be considered
henceforth as a member of the Purchasers Group and further provided that at no
time will the number of DS entities be more than 1. Further transfers can be
made in accordance with this Section 11.
SECTION 12
TAG ALONG
In the event that Yehuda Zisapel and/or Zohar Zisapel and/or RAD Data
Communications Ltd. sell more than a total of 25% of their shares in the Company
to third parties, then the Purchasers will have the right to sell the same
portion of Purchasers' shares in the Company under the same terms and conditions
(hereinafter, the "Tag Along Right"). The Purchasers will inform the selling
Zisapel in writing by fax and by confirmation by mail if they intend to exercise
their Tag Along Right within ten (10) days after the date of notice by said
Zisapel to Purchasers. Failure to respond will be deemed a decision not to Tag
Along. It is further provided that this Section shall terminate upon the
Company's IPO, or following the closing of an M&A Transaction.
SECTION 13
ANTI-DILUTION PROTECTION
13.1 In the event that during the first three (3) years after the Closing
the Company issues or sells stock or securities convertible into stock of the
Company to third parties (excluding employees and shareholders) upon a private
placement for consideration per share of less than $350 (hereinafter, the "Lower
Share Price"), then the Purchasers will be entitled to purchase such additional
number of shares at par value as if the investment under this Agreement was made
at the Lower Share Price.
(b) Any and all of Purchasers' anti-dilution rights will terminate upon
the earlier of (i) the closing by the Company of a private placement or private
placements (including by existing shareholders) in an aggregate amount of at
least $3,000,000, (ii) the closing of an IPO, or (iii) the date which is three
years from the Closing Date.
13.2 Upon the occurrence of each event giving rise to a right pursuant
to this Section, the Company will, at its expense, promptly compute the number
of shares that each Purchaser is entitled to purchase against par value in
accordance with the terms hereof, and will immediately furnish to the Purchasers
a notice of such right and the number of shares Purchasers are entitled to.
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SECTION 14
REGISTRATION AND PIGGYBACK RIGHTS
14.1 DEFINITIONS. As used herein, the following terms have the
following meanings:
"HOLDER" means any holder of outstanding Registrable Shares or shares
convertible into Registrable Shares, who acquired such Registrable Shares or
shares convertible into Registrable Shares in a transaction or series or
transactions not involving any registered public offering.
"REGISTER," "REGISTERED" and "REGISTRATION" refer to a registration effected by
filing a registration statement in compliance with the Securities Act and the
declaration or ordering by the Commission of effectiveness of such registration
statement, or the equivalent actions under the laws of another jurisdiction.
"REGISTRABLE SHARES": All Ordinary Shares issuable upon conversion of the
Preferred Shares, all Ordinary Shares issued by the Company in respect of such
shares and all Ordinary Shares that the Purchasers may previously or hereafter
purchase pursuant to their preemptive rights, rights of first refusal or
otherwise, or Ordinary Shares issued on conversion or exercise of other
securities so purchased.
14.2 INCIDENTAL REGISTRATION. If the Company shall elect to register
any of its securities it shall give prior notice in writing of at least (30)
days to the Holders of such intention and shall include in such registration a
portion of all Holders' shares equal to the total amount of shares registered,
multiplied by an amount derived by dividing the number of Shares held by each
Holder by the total number of shares outstanding at that time. In the event the
public offering involves an underwriting, the rights of the Holders hereunder
shall be conditional upon the underwriter's determination as to marketing
factors requiring the limitation of such right, and the underwriter may preclude
from the offering any or all securities which could have otherwise been included
in the offering.
14.3 DEMAND REGISTRATION. At any time commencing one year following the
closing of the Company's initial public offering, and for a period of three (3)
years thereafter (or, in the event that the Purchasers still have a right to
nominate a director to the Board of Directors, for a period of five (5) years
thereafter), the Purchasers, as defined in section 11.2 above, shall be entitled
to demand (a) one registration of any or all of its shares held at the time (the
Purchasers being defined herein as one of the Groups) of the initial public
offering for trading on any securities exchange (the "Initial Demand"), and (b)
a second registration of any or all of its shares (the "Second Demand") in the
event no shares of the Company were registered within nine (9) months preceding
such Second Demand and no such registration is contemplated within three (3)
months from the date of the
23
<PAGE>
Second Demand; PROVIDED, however, that the request for such Initial or Second
Demand registrations must cover shares representing a market value at the time
of such request equal to a minimum of three million Dollars ($3,000,000); and
PROVIDED FURTHER, however, that such request may not include shares which within
three months from the date of such request could be sold to the public without
restriction, for example pursuant to the provisions of Rule 144 of the
Securities and Exchange Commission. Within 20 days after receipt, the Company
shall give written notice of such request to the other Holders and shall include
in such registration all shares held by them with respect to which the Company
receives written requests for inclusion therein within 15 days after the receipt
of the Company's notice. Thereupon, the Company shall use its best efforts to
effect the registration as soon as possible of all shares (as to which it has
received requests for registration) for trading on a securities exchange, where
the shares are then traded, specified in the request for registration. In the
event the registration involves an underwriting, the rights of the shareholders
hereunder shall be conditional upon the underwriter's determination as to
marketing factors requiring the limitation of such right, and the underwriter
may preclude from the offering any or all securities which could have otherwise
been included in the offering. Notwithstanding any other provision of this
clause, after the Company has effected one such registration pursuant to this
clause, and such registration has been declared or ordered effective, in the
event that the Company shall furnish to such shareholder(s) delivering a request
for registration a certificate signed by the Managing Director of the Company
stating that in the good faith judgment of the Board of Directors of the Company
it would be seriously detrimental to the Company or its shareholders for a
registration statement to be filed in the near future, the Company's obligation
to use its best efforts to register, qualify or comply under this clause shall
be deferred for a period not to exceed 120 days from the date of receipt of such
request. Notwithstanding any other provision of this Section 14.3, if the
managing underwriter advises the Holders in writing that marketing factors
require a limitation of the number of shares to be underwritten, then the
registration of such shares will be allocated on a pro rata basis among all
shareholders of the Company (based on the number of shares requested to be
included).
14.4 EXPENSES. All expenses incurred in connection with the Initial
Demand registration shall be borne by the Company. All expenses incurred in
connection with the Second Demand registration shall be borne by the selling
shareholders participating in such registration on a pro rata basis; provided,
however, that the Company shall pay any expenses associated with such
registration which the Company would have incurred in the ordinary course of
business if the Company were itself effecting an underwritten offering. All
expenses incurred in connection with an Incidental Registration shall be borne
by the Company; PROVIDED, however, that each of the shareholders participating
in such registration shall pay its pro rata portion of the fees, discounts or
commissions payable to any underwriter.
24
<PAGE>
Notwithstanding anything to the contrary contained herein, the Purchasers
undertake to sign any lock-up commitment as required by the underwriters of the
Company's IPO.
In the event that subsequent investors in the Company are granted better terms
regarding demand or other registration rights, the Purchasers will be granted
identical rights, for as long as they own at least 5% of the Company.
14.5 DESIGNATION OF UNDERWRITER.
(a) In the case of any Demand Registration effected pursuant to
subsection 14.3, the managing underwriter(s) in any underwritten offering shall
be designated by the Company. In the event that such underwriter refuses to
underwrite the offering, then the Purchasers will be entitled to designate the
managing underwriter(s) subject to the consent of the Company to such
underwriter(s), which consent shall not be unreasonably withheld.
(b) In the case of any registration initiated by the Company, the
Company shall have the right to designate the managing underwriter in any
underwritten offering.
14.6 INDEMNITIES.
14.6.1 In the event of any registered offering of Ordinary Shares
pursuant to this Section 14, the Company will indemnify and hold harmless, to
the fullest extent permitted by law, any Holder and any underwriter for such
Holder, and each person, if any, who controls the Holder or such underwriter,
from and against any and all losses, damages, claims, liabilities, joint or
several, costs and expenses (including any amounts paid in any settlement
effected with the Company's consent) to which the Holder or any such underwriter
or controlling person may become subject under applicable law or otherwise,
insofar as such losses, damages, claims, liabilities (or actions or proceedings
in respect thereof), costs or expenses arise out of or are based upon (i) any
untrue statement of any material fact contained in the registration statement or
included in the prospectus, as amended or supplemented, or (ii) the omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances in which they are
made, not misleading, and the Company will reimburse the Holder, such
underwriter and each such controlling person of the Holder or the underwriter,
for any reasonable legal or any other expenses incurred by them in connection
with investigating, preparing to defend or defending against or appearing as a
third-party witness in connection with such loss, claim, damage, liability,
action or proceeding as decided by final judgment of a competent court;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, damage, liability, cost or expense arises out of or
is based upon an untrue statement or omission so made in conformity with
information furnished in writing by a Holder, such underwriter or such
controlling persons in writing
25
<PAGE>
specifically for inclusion therein; provided, further, that the indemnity
agreement contained in this subsection 14.6.1 shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability or action if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld. Such indemnity shall remain in full force and
effect until such Holder sells or transfers his shares to any third party. In no
event shall the liability of the Company exceed the gross proceeds from the
offering received by the Holder regardless of any investigation made by or on
behalf of the selling shareholder, the underwriter or any controlling person of
the selling shareholder or the underwriter, and regardless of any sale in
connection with such offering by the selling shareholder. Such indemnity shall
survive the transfer of securities by a selling shareholder.
14.6.2 Each Holder participating in a registration hereunder will
indemnify and hold harmless the Company, any underwriter for the Company, and
each person, if any, who controls the Company or such underwriter, from and
against any and all losses, damages, claims, liabilities, costs or expenses
(including any amounts paid in any settlement effected with the selling
shareholder's consent) to which the Company or any such controlling person
and/or any such underwriter may become subject under applicable law or
otherwise, insofar as such losses, damages, claims, liabilities (or actions or
proceedings in respect thereof), costs or expenses arise out of or are based on
(i) any untrue or alleged untrue statement of any material fact contained in the
registration statement or included in the prospectus, as amended or
supplemented, or (ii) the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances in which they were made, not
misleading, and each such Holder will reimburse the Company, any underwriter and
each such controlling person of the Company or any underwriter, promptly upon
demand, for any reasonable legal or other expenses incurred by them in
connection with investigating, preparing to defend or defending against or
appearing as a third-party witness in connection with such loss, claim, damage,
liability, action or proceeding; in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was so made in strict conformity with written information
furnished by such Holder specifically for inclusion therein; provided, further,
that the indemnity agreement contained in this subsection 14.6.2 shall not apply
to amounts paid in settlement of any such claim, loss, damage, liability or
action if such settlement is effected without the consent of the Holders, as the
case may be, which consent shall not be unreasonably withheld. In no event shall
the liability of a Holder exceed the gross proceeds from the offering received
by such Holder.
14.6.3 Promptly after receipt by an indemnified party pursuant to the
provisions of Sections 14.6.1 or 14.6.2 of notice of the commencement of any
action involving the subject matter of the foregoing indemnity provisions, such
indemnified party
26
<PAGE>
will, if a claim thereof is to be made against the indemnifying party pursuant
to the provisions of said Section 14.6.1 or 14.6.2, promptly notify the
indemnifying party of the commencement thereof; but the omission to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than hereunder. In case such action is brought
against any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall have the right to participate
in, and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the
defendants in any action include both the indemnified party and the indemnifying
party and there is a conflict of interests which would prevent counsel for the
indemnifying party from also representing the indemnified party, the indemnified
party or parties shall have the right to select one separate counsel to
participate in the defense of such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party pursuant to the provisions of said Sections
14.6.1 or 14.6.2 for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed counsel in accordance with the provision
of the preceding sentence, (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the notice of the commencement
of the action and within 15 days after written notice of the indemnified party's
intention to employ separate counsel pursuant to the previous sentence, or (iii)
the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. No indemnifying
party will consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation.
14.6.4 If recovery is not available under the foregoing indemnification
provisions, for any reason other than as specified therein, the parties entitled
to indemnification by the terms thereof shall be entitled to contribution to
liabilities and expenses as more fully set forth in an underwriting agreement to
be executed in connection with such registration. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered the parties' relative knowledge and access to information concerning
the matter with respect to which the claim was asserted, the opportunity to
correct and prevent any statement or omission, and any other equitable
considerations appropriate under the circumstances.
27
<PAGE>
SECTION 15
LIQUIDATION PREFERENCE
In the event of any liquidation, dissolution or winding up of the
Company, either voluntary or involuntary, or a merger, acquisition or the sale
of the Company's assets, or the majority thereof ("Liquidation Event") during
the first three years from the Closing Date, the owners of Preferred Shares
shall be entitled to receive, prior to any other distribution or payment to any
shareholder of the Company, their pro rata portion of the proceeds up to their
purchase price pursuant to this Agreement. Any remaining proceeds shall be
allocated among all shareholders of the Company on a percentage of ownership pro
rata basis. This liquidation preference will terminate upon the earlier of (a)
the closing by the Company of a private placement or private placements of at
least $3,000,000 in the Company, (b) the closing of an IPO, or (c) the date
which is three years from the Closing Date.
SECTION 16
CONVERSION RIGHTS
The holders of the Preferred Shares shall have conversion rights as
follows:
16.1 Subject to Section 16.2 hereinbelow, the Preferred Shares shall be
convertible, at the option of the holder thereof, at any time after the Closing
at the office of the Company into Ordinary Shares, par value NIS 1.- per share,
of the Company (the "Ordinary Shares") at a conversion rate on a 1 to 1 basis.
All Preferred Shares shall be automatically converted into Ordinary Shares
immediately prior to the Company's IPO or on the closing date of a M&A
Transaction.
16.2 The conversion rate of the Preferred Shares will be appropriately
adjusted in the event that the Company: (i) declares a dividend, or otherwise
makes a distribution, solely on the outstanding Ordinary Shares (and not on any
other class of shares) consisting of Ordinary Shares; (ii) splits or otherwise
reclassifies solely the outstanding Ordinary Shares into a greater or lesser
number of shares (and not any other class of shares).
SECTION 17
VOTING RIGHTS
Holders of the Preferred Shares will be entitled to vote on any matter
submitted to shareholders for their consideration at any shareholders' meeting,
with each Preferred Share having voting power equivalent to the number of
Ordinary Shares into which such Preferred Shares could be converted (one vote
for one Preferred Share).
28
<PAGE>
SECTION 18
MISCELLANEOUS
18.1 GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
and construed according to the laws of the State of Israel, without regard to
the conflict of laws provisions thereof. Any dispute arising under or in
relation to this Agreement shall be resolved in the competent court for Tel
Aviv-Jaffa district, and each of the parties hereby submits irrevocably to the
jurisdiction of such court.
18.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto; provided, however, that no party may assign its rights hereunder
without the prior written consent of the other parties hereto, with the
exception of assignments and transfers between the Groups as described in
Section 11.2.
18.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including the
Schedules and Exhibits hereto) constitutes the full and entire understanding and
agreement between the parties with regard to the subject matters hereof and
thereof and supersede all prior agreements and understandings relating thereto.
Neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated except by an instrument in writing signed by all the parties hereto.
18.4 NOTICES. All notices and other communications required or
permitted to be given or sent hereunder shall be in writing and shall be deemed
to have been sufficiently given or delivered for all purposes if mailed by
registered airmail, transmitted by telecopier, or delivered by hand to the
following respective addresses until otherwise directed by notice as aforesaid:
To the Purchasers:
Evergreen Group
96 Rothschild Blvd.
Tel Aviv, Israel 65224
Fax: 972-3-710-8212
Attention: Yiftach Atir
29
<PAGE>
Dovrat Shrem Trustees Group
37 Shaul Hamelech Blvd.
Tel Aviv, Israel
Fax: 972-3-609-0791
Attention: Tomer Kariv
With a copy to:
Yigal Arnon & Co.
3 Daniel Frisch Street
Tel. Aviv 64731
Attention: David Schapiro, Adv.
Sheryl Ochayon, Adv.
To the Company:
RADVision LTD.
24 Raoul Wallenberg Street
Tel Aviv 69719, Israel
Attention: Mr. Amos Amir, Managing Director
cc: Legal Department
provided, however, that notice of change of address shall be effective only upon
actual receipt.
All notices sent shall be deemed to have been received (i) if by
registered mail, within seventy-two (72) hours of posting, (ii) if delivered by
hand, upon their delivery, and (iii) if sent via telecopier, upon transmission
and electronic confirmation of receipt or (if transmitted and received on a
non-business day) on the first business day following transmission and
electronic confirmation of receipt.
18.6 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy upon any breach or default under this Agreement shall impair any
such right, power or remedy of such holder nor shall it be construed to be a
waiver of any such breach or default, or in acquiescence therein, or of any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any holder of any breach or default under
this Agreement, or any waiver on the part of any holder of any provisions or
conditions of this Agreement shall be effective only if made in writing and only
to the extent specifically set forth in such writing. All remedies, either under
this Agreement or by virtue of law or otherwise afforded to any holder, shall be
cumulative and not alternative.
30
<PAGE>
18.7 WAIVER OF DEFAULT. No waiver with respect to any breach or default
in the performance of any obligation under the terms of this Agreement shall be
deemed to be a waiver with respect to any subsequent breach or default, whether
of similar or different nature.
18.8 RIGHTS; SEVERABILITY. In case any provision of the Agreement shall
be held by a court of competent jurisdiction to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby. The invalid
provision shall be excluded from this Agreement and the remainder of this
Agreement shall be interpreted as if such provision were so excluded and shall
be enforceable in accordance with its terms; provided, however, that in such
event this Agreement shall be interpreted so as to give effect, to the greatest
extent consistent with and permitted by applicable law, to the meaning and
intention of the excluded provision as determined by such court of competent
jurisdiction
18.9 CONFIDENTIAL INFORMATION. The Purchasers acknowledge that the
information received by them and such information which will be received
pursuant hereto shall be confidential and is intended for the Purchasers' use
only for the purpose of this Agreement, and the Purchasers will not use or allow
the use of such confidential information or reproduce, disclose or disseminate
such information to any other person (other than the Purchasers' employees or
agents having a need to know the contents of such information, and the
Purchasers' attorneys), except in connection with the exercise of rights under
this Agreement, unless the Company has made such information available to the
public generally or the Purchasers are required to disclose such information by
a governmental body or by judicial order, but only to the persons and the extent
so required, PROVIDED that, in connection with periodic reports to their
shareholders or partners, the Purchasers may make general statements, not
containing technical or other confidential information, regarding the nature and
progress of the Company's business; and PROVIDED, FURTHER, that the Purchasers
may provide summary information regarding the Company's financial information in
their reports to their respective shareholders or partners, but may not annex to
such reports the full financial information to be provided hereunder by the
Company; and PROVIDED, FURTHER, however, that in the event that a Purchaser is
required to annex financial information obtained from the Company to such
reports, such Purchaser shall only disclose such financial information to the
extent required to do so by applicable law.
18.10 TITLES AND SUBTITLES. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
18.11 REPRESENTATION. The Evergreen Group Purchasers and any Transferee
thereof under Section 11 are represented by Mr. Yiftach Atir. The Dovrat Shrem
Trustees Group
31
<PAGE>
Purchasers and any Transferee thereof under Section 11 are represented by Mr.
Tomer Kariv. Notice sent to Mr. Atir or Mr. Kariv will be deemed as notice sent
to the Evergreen Group Purchasers or the Dovrat Shrem Trustees Group Purchasers,
respectively, and/or any of their respective Transferees. A resolution or
request given by Mr. Atir or Mr. Kariv to the Company will be deemed as if given
by the Evergreen Group Purchasers or the Dovrat Shrem Trustees Group Purchasers,
respectively, and any of their respective Transferees. The Company will have no
obligation to provide information or notice whatsoever except to Messrs. Atir
and Kariv.
18.12 AMENDMENT OF ARTICLES. Effective as of the Closing Date, the
Company will amend its Memorandum and Articles of Association to reflect this
Agreement.
18.13 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and enforceable against
the parties actually executing such counterpart, and all of which together shall
constitute one and the same instrument.
18.14 FURTHER ASSURANCES. Each of the parties hereto shall perform such
further acts and execute such further documents as may reasonably be necessary
to carry out and give full effect to the provisions of this Agreement and the
intentions of the parties as reflected thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
two (2) original copies, one to the Company and one to the Purchasers, as of the
date first above-mentioned.
RADVision LTD.
By: /s/ AMOS AMIR
--------------------------------
Amos Amir
Title: Chief Executive Officer
32
<PAGE>
Evergreen Canada Israel Management Ltd. IJT Technologies Ltd.
By: /s/ EVERGREEN CANADA ISRAEL MANAGEMENT LTD. By: /s/ IJT TECHNOLOGIES LTD.
------------------------------------------- -------------------------
Periscope I Fund, L.P., a Delaware Limited Partnership
By: /s/ PERISCOPE I FUND, L.P., A DELAWARE LIMITED PARTNERSHIP
-------------------------------------------------------------
Periscope I Fund, L.P., an Israeli Limited Partnership
By: /s/ PERISCOPE I FUND, L.P., AN ISRAELI LIMITED PARTNERSHIP
-------------------------------------------------------------
33
<PAGE>
/s/ DOVRAT SHREM TRUST COMPANY LTD. (OBO)
- ---------------------------------------------------
Dovrat Shrem Trust Company Ltd.
(on behalf of Dovrat Shrem Founders Group,
Canada Israel Opportunity Fund L.P.,
The Canada Israel Opportunity Fund II and
Dovrat, Shrem & Co. Ltd.)
/s/ RUBIN GRUBER
- ---------------------------------------------------
Rubin Gruber
34
<PAGE>
/s/ STEIMATZKY LTD.
- --------------------------------
STEIMATZKY LTD.
/s/ C.E. UNTERBERG, TOWBIN, LLC
- --------------------------------
C. E. Unterberg, Towbin, LLC
/s/ C.E. UNTERBERG, TOWBIN PRIVATE EQUITY PARTNERS LP
- ------------------------------------------------------
C.E. Unterberg, Towbin Private Equity Partners LP
/s/ C.E. UNTERBERG, TOWBIN PRIVATE EQUITY PARTNERS CV
- ------------------------------------------------------
C.E. Unterberg, Towbin Private Equity Partners CV
/s/ C.E. UNTERBERG, TOWBIN PROFIT SHARING PLAN FBO ALEX BERNSTEIN
- ------------------------------------------------------------------
C.E. Unterberg, Towbin Profit Sharing Plan FBO Alex Bernstein
35
<PAGE>
LIST OF EXHIBITS
EXHIBIT CONTENTS OF EXHIBIT
A List of Purchasers
1.2 Capitalization Table showing Purchasers, Other Purchasers and
existing shareholders' shares, post-closing
2.2.1(a)(A) Amended Articles of Association (to be annexed prior to Closing)
2.2.1(c) Officer's Compliance Certificate
2.2.1(d) Opinion of Nehama Sneh
2.2.1(f) Waivers of Preemptive Rights
3.2(a) Memorandum of Association
3.5 Financial Statements
3.6 Schedule of Exceptions
3.14 Key Employees
3.14(a) Standard Employment Agreements
3.15(a) Trust Agreement
3.15(b) Option Plan
11.11 Assumption of Purchasers' Obligations by Purchasers' transferee
36
<PAGE>
EXHIBIT A
THE PURCHASERS
<TABLE>
<CAPTION>
- ------------------------------------------------------- -------------------------------------
NAME OF PURCHASER INVESTMENT AMOUNT
- ------------------------------------------------------- -------------------------------------
<S> <C>
Evergreen Canada Israel Management Ltd. 39,827
- ------------------------------------------------------- -------------------------------------
IJT Technologies Ltd. 580,086
- ------------------------------------------------------- -------------------------------------
Periscope I Fund, L.P., a Delaware Limited Partnership 461,644
- ------------------------------------------------------- -------------------------------------
Periscope I Fund, L.P., an Israeli Limited Partnership 118,441
- ------------------------------------------------------- -------------------------------------
- ------------------------------------------------------- -------------------------------------
Dovrat, Shrem Trust Company Ltd.
(for Dovrat Shrem Founders Group) 299,913
- ------------------------------------------------------- -------------------------------------
Dovrat, Shrem Trust Company Ltd.
(for Canada Israel Opportunity Fund L.P.) 250,043
- ------------------------------------------------------- -------------------------------------
Dovrat, Shrem Trust Company Ltd.
(for The Canada Israel Opportunity Fund II) 149,957
- ------------------------------------------------------- -------------------------------------
Dovrat, Shrem Trust Company Ltd.
(for Dovrat, Shrem & Co. Ltd.) 100,086
- ------------------------------------------------------- -------------------------------------
Rubin Gruber 250,000
- ------------------------------------------------------- -------------------------------------
C. E. Unterberg, Towbin, LLC 500,150
- ------------------------------------------------------- -------------------------------------
C.E. Unterberg, Towbin Private Equity Partners LP 411,950
- ------------------------------------------------------- -------------------------------------
C.E. Unterberg, Towbin Private Equity Partners CV 87,850
- ------------------------------------------------------- -------------------------------------
C.E. Unterberg, Towbin Profit Sharing Plan FBO Alex 10,150
Bernstein
- ------------------------------------------------------- -------------------------------------
Steimatzky Ltd. 125,000
- ------------------------------------------------------- -------------------------------------
</TABLE>
37
<PAGE>
EXHIBIT 1.2
RADVISION CAPITALIZATION TABLE
March 1998 Investment
Shares pre-money (excl. 51,498
deferred)
Preferred shares 1,127
Participating shares (ecl. 48,863
trust)
Company value (pre) 18,000,000
Share price 350
Actual New Shares 14,015
Investment 574
Shares post-money (ex. def) 66,087
Shares incl. opt. 68,814
Options to employees as of 2,727
1/98
<TABLE>
<CAPTION>
SHAREHOLDER NUMBER INVESTMENT NEW SHARES ADJUSTMENT TOTAL % PERCENTAGE
OF AMOUNT SHARES PURCHASED SHARES POST IN CO IN CO
SHARES COMMITTED (F-D)
(PRE)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Yehuda Zisapel 6,930 0 0 0 0 6,930 10.49% 10.07%
Zohar Zisapel 2,455 299,950 857 99 45 3,357 5.08% 4.88$
Michael & Klil 2,454 299,950 857 98 44 3,355 5.08% 4.88%
Lomsha Ltd. 2,454 299,950 857 98 44 3,355 5.08% 4.88%
Amos Amir 300 0 0 0 0 300 0.45% 0.44%
Plonit Achzakot (Ami) 632 0 0 0 0 632 0.96% 0.92%
Nichsel Almonit (Ami) 2,178 0 0 0 0 2,178 3.30% 3.17%
Madge Networks 6,027 0 0 246 110 6,137 9.29% 8.92%
Zohar Gilon 313 50,000 143 13 6 462 0.70% 0.67%
TLDVERMOGENSVERWALTUNG 313 88,200 252 13 6 571 0.86% 0.83%
Yair Tauman 313 73,150 209 13 6 528 0.80% 0.77%
W.S.P. Capital 196 100,100 286 8 4 486 0.74% 0.71%
Rad Data Communications 3,458 100,100 286 141 63 3,807 5.76% 5.53%
Finovelec 2,686 0 0 0 0 2,686 4.06% 3.09%
Alan Lacoste 12 0 0 0 0 12 0.02% 0.02%
Jean Marc Patouillaud 25 0 0 0 0 25 0.04% 0.04%
Maritime Trust Co. 2,548 146,300 418 71 32 2,998 4.54% 4.36%
RAD 2,897 0 0 118 53 2,950 4.46% 4.29%
Factory Systemes 1,238 0 0 0 0 1,238 1.87% 1.80%
Houston Partners 990 41,609 119 0 0 1,109 1.68% 1.61%
Clal Venture Capital 5,794 0 0 236 106 5,900 8.93% 8.57%
Freeman Bob 198 0 0 0 0 198 0.30% 0.29%
Eliezer Manor 49 0 0 0 0 49 0.07% 0.07%
Intel 3,126 0 0 123 55 3,181 4.81% 4.62%
Employee Trust 2,635 0 0 0 0 2,635 3.99% 3.83%
Rubin Gruber 250,000 714 0 0 714 1.08% 1.04%
Steimatzky Ltd. 125,000 357 0 0 357 0.54% 0.52%
Unterberg/Gilon 500,150 1,429 0 0 1,429 2.16% 2.08%
Unterberg Towbin Private 411,950 1,177 0 0 1,177 1.78% 1.71%
Equity LP
Unerberg Towbin Private 87,850 251 0 0 251 0.38% 0.36%
Equity CV
E.U. Profit Sharing Plan Alex 10,150 29 0 0 29 0.04% 0.04%
Bernstein
Dovrat Shrem Trust Company 799,999 2,309 0 0 2,309 3.49% 3.36%
Ltd.
Evergreen Canada Israel 39,827 115 0 0 115 0.17% 0.17%
Management Ltd.
IJT technologies Ltd. 580,086 1,675 0 0 1,675 2.53% 2.43%
Periscope I Fund LP (Israeli) 118,441 342 0 0 342 0.52% 0.50%
Periscope I Fund LP (US) 461,645 1,333 0 0 1,333 2.02% 1.94%
(Assuming full investment 50,221 4,884,407 14,015 1,277 574 64,810 98.07% 94.18%
including
employees options)
Employee option plan 3.96%
Total Fully Diluted 98.14%
</TABLE>
<PAGE>
EXHIBIT 4.11
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (the "Agreement") is made and entered into on this
22nd-day of February 2000.
BY AND BETWEEN:
(1) The persons whose names and addresses are set out in the first column
of Exhibit 1 (the "Selling Shareholders"); and
(2) SIEMENS Aktiengesellschaft of Hofmannstrasse 51, D-81359, Munich,
Germany (the "Purchaser"); and
(3) RADVision Ltd. of Raoul Wallenberg Street, Tel Aviv 69719, Israel (the
"Company" and collectively with the Selling Shareholders, the
"Sellers").
WHEREAS:
I. The Company has filed a registration statement with the U.S. Securities
and Exchange Commission for the purpose of an initial public offering
(the "IPO") of its ordinary shares, par value NIS 0.1 per share (the
"Ordinary Shares"); and
II. The Purchaser desires to purchase an aggregate of 1,625,228 Ordinary
Shares (the "Shares") from the Selling Shareholders and the Company,
subject to and in accordance with the terms and conditions set forth
herein; and
III. The Selling Shareholders desire to sell to the Purchaser 1,259,461 of
the Shares (the "Selling Shareholders' Shares") and the Company desires
to sell to the Purchaser 365,767 of the Shares (the "Company's
Shares"), in each case subject to the terms and conditions set forth
herein.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PREAMBLE AND DEFINITIONS
1.1. The preamble to this Agreement and the exhibits and schedules attached
hereto form an integral part of this Agreement.
1.2. In this Agreement and in the exhibits and schedules hereto, unless the
context otherwise requires, the following terms shall bear the meanings
set forth opposite them:
<PAGE>
"CLOSING" The consummation of the transactions
contemplated by this Agreement as
provided in Section 3.
"REGISTRATION STATEMENT" The Company's Registration Statement
on Form F-1 (File No. 333- ), as
amended, initially filed with the
U.S. Securities and Exchange
Commission on February __, 2000
attached hereto as SCHEDULE 1.1.
2. SALE AND PURCHASE OF SHARES
2.1. Subject to the terms and conditions of this Agreement, (i) the Selling
Shareholders agree to sell to the Purchaser, and the Purchaser agrees,
upon the basis of the representations and warranties contained herein,
to purchase from the Selling Shareholders, the Selling Shareholders'
Shares free and clear of any pledges, encumbrances, attachments or any
other third party rights of any nature whatsoever; and (ii) the Company
agrees to sell to the Purchaser, and the Purchaser agrees, upon the
basis of the representations and warranties contained herein, to
purchase from the Company, the Company's Shares free and clear of any
pledges, encumbrances, attachments or any other third party rights of
any nature whatsoever; all of the Shares having all of the rights,
preferences, privileges and restrictions set forth in the form of
amended Articles of Association of the Company (the "NEW ARTICLES") to
be adopted immediately prior to the closing of the IPO; PROVIDED, that,
notwithstanding anything herein to the contrary, the Sellers shall not
be obligated to sell the Shares to the Purchaser unless the Purchaser
purchases all 1,625,228 Shares and the Purchaser shall not be obligated
to buy the Shares from the Sellers unless the Sellers sell all 1,625,228
Shares. The Purchase and sale of the Shares is intended to be a private
placement and not a public offering or part of a public offering.
2.2. Each of the Selling Shareholders hereby waives, with respect to the
Shares to be sold to the Purchaser hereunder, any right of first
refusal, pre-emption or any other right which may be conferred on it by
the Articles of Association of the Company in effect on the date hereof,
by any agreement relating to the Ordinary Shares or otherwise.
2.3. To the extent that any of the Selling Shareholders holds Shares as a
trustee for others, it shall be the responsibility of each such Selling
Shareholder to procure all releases and/or waivers from all persons for
whom such Selling Shareholder holds such Shares in trust. The Selling
Shareholders will deliver at the Closing evidence of such release or
waiver in a form reasonably satisfactory to the Purchaser.
3. CLOSING
3.1. The purchase and sale of the Shares shall be held at the Company's
offices on Raoul Wallenberg Street, Tel Aviv, on the business day of the
IPO at 15:00 (local time) or, if later, upon satisfaction or waiver by
the parties hereto of each of the conditions set forth in Section 4
(such date, the "CLOSING DATE"). At the Closing, the following
transactions shall occur, which transactions shall be deemed to take
place simultaneously and none of them shall be completed or deemed to be
completed until all shall have occurred:
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<PAGE>
3.1.1 Each of the Selling Shareholders shall execute and deliver to the
Company a share transfer deed, in the form required to effect the
transfer of the number of the Selling Shareholders' Shares set forth
opposite their name on Exhibit 2.1 hereto.
3.1.2 Each of the Selling Shareholders shall deliver to the Company its old
share certificate or certify in writing that he lost such share
certificate or the Company shall declare that a share certificate was
never issued to such Selling Shareholder.
3.1.3 The Company shall deliver to the Purchaser, to be held in escrow by the
Escrow Agent as defined below until all Closing conditions have been
fulfilled, a certified copy of a resolution of the Board of Directors
of the Company issuing and allotting the Company's Shares to the
Purchaser, together with a duly completed notice of such issuance to
the Israel Registrar of Companies in form and substance acceptable for
immediate filing with the Israel Registrar of Companies.
3.1.4 The Company shall register the Purchaser in its register of
shareholders as the owner of the Shares and shall have the American
stock transfer agent issue to the Purchaser a validly executed share
certificate representing the Shares within three (3) business days of
the Closing.
3.1.5 The Company shall deliver to the Purchaser, to be held in escrow by the
Escrow Agent as defined below until all Closing conditions have been
fulfilled, a duly executed certificate of confirmation from the
Secretary of the Company certifying that the Purchaser has been duly
registered in the registry of shareholders of the Company as the owner
of the Shares.
3.1.6 Each of the Selling Shareholders, the Company and the Purchaser shall
deliver to the other Parties a written confirmation attesting that all
of the representations, warranties and undertakings provided in this
Agreement are true, correct and effective on and as of the Closing
Date.
3.1.7 In consideration for the Shares, the Purchaser shall deposit with the
Escrow Agent (as defined hereunder) for the benefit of the Sellers the
Purchase Price (as defined hereunder) less any tax which is required to
be withheld pursuant to law, to be transferred to the Escrow Agent's
bank account [details of which shall be provided to the Purchaser in
writing at least 5 business days prior to the Closing Date], in readily
available liquid funds, such funds shall be credited to such account
immediately by bank transfer executed at the Closing.
For purposes of this Agreement, the "PURCHASE PRICE" shall equal the
number of the Shares (transferred and issued) multiplied by the Per
Share Purchase Price (as defined hereinafter). The "PER SHARE PURCHASE
PRICE" shall equal the per share price of the Company's Ordinary Shares
to be offered to the public in the IPO prior to any public trading,
excluding any underwriting discounts and commissions, PROVIDED that in
no event shall the Per Share Purchase Price exceed U.S.$17.00.
3
<PAGE>
3.2. The Sellers hereby irrevocably appoint Advocate Israel Kantor as
trustee (the "ESCROW AGENT") to receive the Purchase Price due by the
Purchaser to the Sellers hereunder. The Escrow Agent shall transfer the
Purchase Price to RAD Data Communications Ltd. (the "Payment Agent")
once all of the Closing conditions have been fulfilled. The Sellers
confirm and acknowledge that payments made by the Purchaser or the
Escrow Agent to the Payment Agent and acknowledged as received by the
Payment Agent shall constitute good and sufficient receipt of such
payments as if the payments were made directly to the Sellers. The
Purchaser shall have no responsibility for the allocation by the
Payment Agent among the Sellers of any sum paid by the Purchaser to the
Payment Agent.
3.3. For the avoidance of doubt and without derogating from any other
documents and agreements which may exist between the parties, it is
hereby clarified that the Purchase Price to be paid at the Closing
shall be full and complete consideration for the Shares and the
Sellers, or any of them, shall not be entitled to any other payment of
any nature whatsoever with respect to the Shares.
4. CLOSING CONDITIONS
4.1. The obligation of the Purchaser to purchase the Shares, and of the
Sellers to sell the Shares, at the Closing shall be subject to the
satisfaction or waiver of the following conditions precedent on or
prior to the Closing Date:
4.1.1. The Voting Agreement among the Purchaser and certain of the
Selling Shareholders, in the form attached hereto as Exhibit
4.1.1 (the "VOTING AGREEMENT"), shall have been executed and
delivered by all the parties thereto.
4.1.2. The Umbrella License Agreement between the Company and the
Purchaser in the form attached hereto as Exhibit 4.1.2 (the
"LICENSE AGREEMENT"), shall have been executed and delivered by
all the parties thereto.
4.1.3. The execution and the delivery of this Agreement and the
consummation of the transactions contemplated hereby shall have
been approved by the following regulatory authorities: (i) the
Investment Center of the Israeli Ministry of Industry and Trade
and (ii) the Office of the Chief Scientist of the Ministry of
Industry and Trade.
4.1.4. The closing of the IPO of the Company's Ordinary Shares shall
have occurred.
4.1.5. All documents to be delivered by the Company and the Selling
Shareholders pursuant to Section 3 above shall be delivered.
4.1.6. The New Articles shall have been duly adopted.
4
<PAGE>
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents
and warrants to the Purchaser as follows:
5.1. ORGANIZATION AND GOOD STANDING. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Israel and has all requisite corporate power and authority to
carry on its business as now conducted.
5.2. AUTHORIZATION. All corporate action on the part of the Company and its
officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, the performance of the
obligations of the Company hereunder and the authorization, issuance
and delivery of the Company's Shares has been taken or will be taken
prior to the Closing. Except as set forth in Section 4.1.3 hereof, no
consent, approval, order, license, permit, action by, or authorization
of or designation, declaration, or filing with any governmental
authority, domestic or foreign, is required in connection with the
valid execution, delivery and performance of this Agreement or the
offer, sale and/or issuance of the Shares.
5.3. BINDING EFFECT. This Agreement constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms.
5.4. NO CONFLICTS. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the compliance
with the terms and provisions hereof will not conflict with, result in
a breach or violation of, or constitute a default under (i) the
Company's Memorandum of Association, and the New Articles; (ii) any
contract, agreement, lease, license or commitment to which the Company
is a party or to which it is subject; (iii) any judgment, order,
injunction, decree or ruling of any court or governmental authority,
domestic or foreign, to which the Company is subject; and/or (iv)
applicable law.
5.5. COMPANY'S SHARES. The Company's Shares, when issued, sold and delivered
in accordance with the terms hereof for the consideration expressed,
will be duly and validly issued, fully paid and nonassessable.
Furthermore, the Company's Shares, when issued, shall be free and clear
of any pledges, encumbrances, attachments or any other third party
rights of any nature whatsoever.
5.6. EXEMPTION FROM REGISTRATION. Assuming the accuracy of the Purchaser's
representations set forth in Section 7 hereof, the offer, sale and
issuance of the Company's Shares to the Purchaser on the Closing Date
as contemplated by this Agreement are exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Securities
Act").
5.7. DISCLOSURE. On the Closing Date, the Registration Statement: (i) does
not include any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading.
5.8. ACCOUNTANTS AND FINANCIAL STATEMENTS. The accountants who have
certified or shall certify the financial statements filed or to be
filed with the Securities and Exchange Commission as part of the
Registration Statement are independent accountants as are required by
the Securities Act. The consolidated financial statements (including
all related notes and schedules) of the
5
<PAGE>
Company and its subsidiaries contained in the Registration Statement
are complete and correct and fairly present the financial position and
results of operations of the Company and its subsidiaries at the
respective dates and for the respective periods to which they apply.
Such financial statements have been prepared in accordance with
generally accepted principles of accounting consistently applied
throughout the periods involved.
5.9. TAX REPORTS AND LIABILITY. The Company has timely complied with all
requirements pertaining to the filing of tax returns and tax reports
and supplied the tax authorities with all required documentation and
information. The Company has duly and timely paid in full all taxes
shown as due on such returns and reports, except for such untimely
payment that would not have a material adverse effect on the Company,
or to the extent such taxes are accrued but not yet due, has adequately
reserved for the timely payment of any and all such taxes when due. The
Company is unaware of any unpaid tax liability or potential tax
liability of the Company pertaining to any period or event prior to the
date of the execution of this Agreement.
6. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS Each of the
Selling Shareholders hereby represents and warrants to the Purchaser as
follows:
6.1. ORGANIZATION AND GOOD STANDING. Such Seller is a corporation, limited
partnership or limited liability company, as applicable, duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization.
6.2. AUTHORIZATION. All corporate action on the part of such Seller, and its
officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, the performance of all
obligations of such Seller hereunder, and the transfer and delivery of
such Selling Shareholders' Shares has been taken or will be taken prior
to the Closing.
6.3. BINDING EFFECT. This Agreement constitutes a valid and binding
agreement of such Selling Shareholder, enforceable against such Selling
Shareholder in accordance with its terms.
6.4. NO CONFLICTS. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the compliance
with the terms and provisions hereof will not conflict with, result in
a breach or violation of, or constitute a default under (i) such
Selling Shareholders' organizational documents; or(ii) any contract or
agreement to which such Selling Shareholder is a party, except in the
case of clause (ii) for such conflict, breach, violation or default
which would not have a material adverse effect on such Selling
Shareholders' business, financial condition or results of operations.
6.5. REGISTRATION STATEMENT. Such Selling Shareholder is familiar with the
Registration Statement and has no knowledge of any material fact,
condition or information not disclosed in the Registration Statement
which has materially adversely affected or may materially adversely
affect the business of the Company or any of its subsidiaries; and the
sale of the Selling Shareholders' Shares owned by such Selling
Shareholder pursuant hereto is not prompted by any information
concerning the Company or any of its subsidiaries which is not set
forth in the Registration Statement.
6
<PAGE>
6.6. TITLE. Such Seller is the record owner of the number of the Selling
Shareholders' Shares set forth opposite the name of such Selling
Shareholder on Exhibit 2.1 hereto and has good and marketable title to
such Shares, free and clear of any pledges, encumbrances, attachments
or any other third party right of any nature whatsoever with respect to
such Shares.
7. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER The Purchaser hereby
represents and warrants to each of the Sellers as follows:
7.1. ORGANIZATION AND GOOD STANDING. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of
Germany.
7.2. AUTHORIZATION. All corporate action on the part of the Purchaser, and
its officers, directors and shareholders necessary for the purchase of
the Shares pursuant to this Agreement and the performance of its
obligations hereunder has been taken or will be taken prior to the
Closing.
7.3. BINDING EFFECT. This Agreement constitutes a valid and binding
agreement of the Purchaser, enforceable against the Purchaser in
accordance with its terms.
7.4. NO CONFLICTS. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the compliance
with the terms and provisions hereof will not conflict with, result in
a breach or violation of, or constitute a default under (i) the
Purchaser's organizational documents; and (ii) any contract or
agreement to which the Purchaser is a party, except in the case of
clause (ii) for such conflict, breach, violation or default which would
not have a material adverse effect on the Purchaser's business,
financial condition or results of operations.
7.5. PURCHASE ENTIRELY FOR OWN ACCOUNT. The Shares will be acquired for
investment for the Purchaser's own account, not as a nominee or agent,
and not with a view to the immediate resale or distribution of any part
thereof, and the Purchaser has no present intention of selling,
granting any participation in, or otherwise distributing the Shares.
7.6. AVAILABLE INFORMATION. The Purchaser has received the following
information: the Registration Statement, audited financial statements
for the year ending December 31, 1999 included in the Registration
Statement and the Business Plan for Year 2000 prior to making its
decision to purchase the Shares.
7.7. INVESTMENT EXPERIENCE. The Purchaser is experienced in evaluating and
investing in securities of companies in the software and information
technology industry. and acknowledges that it is able to fend for
itself, can bear the economic risk of the investment in the Shares, and
has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of the investment
in the Shares. The Purchaser has not been organized solely for the
purpose of acquiring the Shares.
7.8. ACCREDITED INVESTOR. The Purchaser is an "accredited investor," as that
term is defined in Rule 501 of Regulation D of the Securities Act.
7
<PAGE>
7.9. PURCHASER NOT A U.S. PERSON. The Purchaser is not a "U.S. Person"
within the meaning of Rule 902(k) of Regulation S of the Securities
Act.
7.10. PURCHASE MADE IN AN "OFFSHORE TRANSACTION" WITH "NO DIRECTED SELLING
EFFORTS WITHIN THE UNITED STATES." The Purchaser was not physically
present in the United States when the Purchaser was offered the Shares
and the offer was not accompanied by any form of advertising in the
United States or other "directed selling efforts" within the United
States within the meaning of Rule 902(c) of Regulation S of the
Securities Act.
7.11. BROKERAGE COMMISSIONS. No broker's commissions were, or will be
required to be, paid by the Purchaser in connection with this
transaction.
8. REGISTRATION RIGHTS AND STAMP DUTY
8.1 The Selling Shareholders shall assign to the Purchaser the registration
rights attached to the Shares sold by them. Said assignment shall be
effectuated at the Closing.
8.2 The Company shall pay the stamp duty due on the issuance of the
Company's Shares.
9. COVENANTS OF THE PURCHASER
9.1. LOCK UP. Prior to the date which is 270 days after the closing of the
IPO (the "Lockup Date"), the Purchaser shall not, directly or
indirectly, Transfer (as defined below) or offer to Transfer any of the
Shares, and the Purchaser shall sign an undertaking addressed to the
underwriters in the form set forth in Exhibit 8.1 to such effect. In
order to enforce the transfer restrictions set forth in the prior
sentence, the Company may impose stop-transfer instructions with
respect to the Shares until the Lockup Date. As used in this Agreement,
the term "Transfer" shall mean any sale, transfer, assignment,
hypothecation, encumbrance or other disposition, whether voluntary or
involuntary, of any of the Shares. In the case of a hypothecation, the
Transfer shall be deemed to occur both at the time of the initial
pledge and at any pledgee's sale or a sale by any secured creditor or a
retention by the secured creditor of the pledged Shares in complete or
partial satisfaction of the indebtedness for which the Shares are
security.
9.2. MARKET STAND-OFF. In addition to the transfer restrictions set forth in
Section 8.1 (which shall in no way be limited by the following), in
connection with any underwritten public offering by the Company of its
equity securities pursuant to an effective registration statement filed
under the Securities Act, the Purchaser shall not Transfer or offer to
Transfer any of the Shares without the prior written consent of the
Company and its underwriters. Such restriction (the "Market Stand-Off")
shall be in effect for such period of time from and after the effective
date of the final prospectus for the offering as may be requested by
the Company or such underwriters; PROVIDED, HOWEVER, that such Market
Stand-Off shall not exceed 270 days from the Closing. In order to
enforce the Market Stand-Off, the Company may impose stop-transfer
instructions with respect to the Shares until the end of the applicable
stand-off period.
9.3. The Purchaser hereby declares that it will not make an hostile takeover
of the Company.
8
<PAGE>
9.4. LEGAL OBLIGATIONS. Immediately after the Closing, the Purchaser
undertakes to file all the necessary documents and reports required to
be filed by the Purchaser by any relevant authority, in Israel, the US
or elsewhere, and to abide by all the appropriate rules, regulations
and laws applying to a foriegn equity holder, including, without
limitation, undertaking towards the Office of Chief Scientist to comply
with the Research and Development Law and timely filing a Schedule 13D
reporting the acquisition of securities of a public company with the US
Securities and Exchange Commission.
9.5. RIGHT TO A DIRECTOR AND VOTING AGREEMENT. Upon the Closing, the
Purchaser shall be entitled to nominate one director on his behalf to
the Company's Board of Directors by way of a voting agreement. The
Board of Directors meetings, and the minutes thereof, shall be in the
English language. Directors of the Company and of its subsidiaries
shall be entitled to attend meetings of the Board of Directors by means
of a conference call, videoconference or similar means of
telecommunication which ensure that all participating directors are
able to hear each other simultaneously. The Purchaser and the Sellers
listed on Schedule 7 hereto agree to enter into an agreement under
which the foregoing rights of the Purchaser shall be included and to
vote the Ordinary Shares of the Company owned by each of them in favor
of the nomination of one representative of the Purchaser to the Board
of Directors of the Company, and as many other representatives of such
Sellers shall indicate (but in no event less then the number of
representatives as they have immediately prior to the IPO), as more
fully set forth in the Voting Agreement attached hereto (including
certain instances whereby the board members may exclude a member).
10. DEFAULTING SELLING SHAREHOLDER. If, on the Closing Date, any Selling
Shareholder defaults in the performance of its obligations under this
Agreement, any of the remaining non-defaulting Selling Shareholders shall
have the option to sell the Selling Shareholders' Shares which the
defaulting Selling Shareholders agreed but failed to sell on such Closing
Date in the respective proportions which the number of Selling Shareholders'
Shares set forth opposite the name of each Selling Shareholder in Exhibit
2.1 hereto who elects to sell additional Ordinary Shares as a result of such
default bears to the total number of Selling Shareholders' Shares set forth
opposite the names of all the Selling Shareholders on Exhibit 1 hereto who
elect to sell additional Ordinary Shares as a result of such default. If
none (or an insufficient number) of the non-defaulting Selling Shareholders
elect to sell the Shares which the defaulting Selling Shareholders agreed
but failed to sell on the Closing Date, this Agreement shall terminate
without liability on the part of any non-defaulting Selling Shareholders,
the Company or the Purchaser. Nothing herein shall derogate from the rights
of the Purchaser, in law or equity, against such a defaulting Selling
Shareholder.
11. NOTICES
11.1. Any notice, declaration or other communication required or authorized
to be given by any party under this Agreement to any other party shall
be in writing and shall be personally delivered or sent by facsimile
transmission (with a copy by registered mail in either case) addressed
to the other party at the address stated below or such other address
as shall be specified by the party concerned by notice in accordance
with the provisions of this Section. Any notice shall be deemed to
have been received on the next following business day.
11.2. Addresses for the purposes of this Section are as follows:
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<PAGE>
Company: Yael Langer, Adv.
RADVision Ltd.
Raoul Wallenberg Street
Tel-Aviv 69719, Israel
Fax: (3) 6498248
Sellers: As appearing in the first column of Exhibit 1
with a copy to: Yael Langer, Adv.
RADVision Ltd. Legal Department
24 Raoul Wallenberg Street
Tel-Aviv 69719, Israel
Fax: (3) 6498248
Siemens: Hofmannstrasse 51
D-81359 Munich
Germany
Attention: Mr. Guenther Barth
Fax: (89) 7222 3365
With a copy to: Israel Kantor, Adv. and/or Royi Nachimzon, Adv.
Kantor, Elhanani, Tal & Co.
74-76 Rothschild Blvd.
Tel-Aviv 65785, Israel
Fax: (3) 5662960
Payment Agent: RAD Data Communications Ltd.
24 Raoul Wallenberg Street
Tel Aviv 69719
Attention: Eitan Abramovitch
Fax: (3) 648 7350
Escrow Agent: Israel Kantor, Adv.
Kantor, Elhanani, Tal & Co.
74-76 Rothschild Blvd.
Tel-Aviv 65785, Israel
Fax: (3) 5662960
12. GENERAL
12.1 This Agreement shall (except for any obligation fully performed prior
to or at the Closing Date) continue in full force and effect (except
for provisions which, in accordance with their express terms, are
limited in time or otherwise, insofar as they are so limited) after the
Closing Date notwithstanding that the Closing shall have occurred.
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<PAGE>
12.2 All of the parties to this Agreement will after, as well as before and
upon, the Closing Date do all acts and things and sign and execute all
documents and deeds required for the purpose of implementing the terms
of this Agreement.
12.3 None of the rights or obligations under or pursuant to this Agreement
may be assigned or transferred to any other person or entity without
the written consent of all the parties hereto except that the Sellers
and the Purchaser may so transfer or assign to their respective
affiliates or between themselves, PROVIDED that: (i) the assignee shall
be an affiliate of the relevant party at the time it exercises any of
its rights or obligations hereunder; (ii) the assignor shall inform the
other parties hereto of such assignment at least 5 business days prior
to it being effected; (iii) the assignee shall agree in writing to be
bound by all of the terms hereof; (iv) the assignor shall remain liable
for any and all of its obligations under this Agreement.
12.4 This Agreement contains the whole agreement between the parties
relating to the transactions provided for in this Agreement and
supersedes all previous agreements, if any, between such parties in
respect of such matters and each of the parties to this Agreement
acknowledges that in agreeing to enter into this Agreement it has not
relied on any representations or warranties except for those contained
in this Agreement.
12.5 No failure or delay by any party hereto in exercising any claim,
remedy, right, power or privilege under this Agreement shall operate as
a waiver nor shall any single or partial exercise of any claim, remedy,
right, power or privilege preclude any further exercise thereof or
exercise of any other claim, right, power or privilege.
12.6 This Agreement may be executed in two or more counterparts each of
which shall be deemed an original but all of which constitute one and
the same instrument.
12.7 Except as expressly provided herein, this Agreement may be amended or
terminated, and any of the terms hereof waived, only by a document in
writing specifically referring to this Agreement and executed by the
parties hereto or, in the case of a waiver, by the party waiving
compliance. The failure of any party hereto at any time or times to
require performance of any provisions hereof shall in no manner affect
this right at a later time. No waiver by any party hereto of a breach
of any term contained in this Agreement, in any one or more instance,
shall be deemed or construed as a further or continuing waiver of any
such breach or a waiver of any breach of any other form.
12.8 All Ordinary Share numbers in this Agreement give effect to the stock
split and distribution of bonus shares which will take place
immediately prior to the closing of the IPO.
12.9 The timing and text of any public announcement regarding the existence
of this Agreement or the terms hereof shall be agreed between the
parties hereto, such agreement not to be unreasonably withheld and
shall also be approved by the Lead Underwriters of the IPO.
12.10 This Agreement shall not be construed as granting any rights to any
third party. In this Agreement, third party shall mean any person or
entity that is not a party to this Agreement.
13. GOVERNING LAW AND SERVICE OF PROCESS
11
<PAGE>
13.1 This Agreement is subject to and shall be interpreted in accordance
with the laws of the State of Israel.
13.2 For the purposes of any claim under this Agreement, the addresses of
the Selling Shareholders for the purposes of service of process shall
be their addresses as set forth in the first column of Exhibit 1, or
such other address as any Selling Shareholder shall notify the
Purchaser in writing.
14. ARBITRATION
14.1 All disputes arising out of or in connection with this Agreement and
other agreements resulting herefrom, including any question regarding
its existence, validity or termination, shall be finally settled under
the Rules of Arbitration of the International Chamber of Commerce,
Paris France, by three arbitrators in accordance with the said rules.
The seat of arbitration shall be Tel Aviv, Israel. The procedural law
of Israel shall apply where the rules are silent. The language to be
used in the arbitration proceeding shall be English
14.2 The parties undertake to abide by and fully implement the arbitration
award rendered, and this Section 14 shall be deemed to be an
arbitration agreement in accordance with the Arbitration Law-1968.
14.3 Each of the parties or, if there are more than one plaintiff or
defendant, each of Yehuda Zisapel and Zohar Zisapel together on behalf
of the Sellers and the Purchaser shall nominate one arbitrator for
confirmation by the competent authority under the applicable rules
("APPOINTING AUTHORITY") within thirty (30) days. Both arbitrators
shall agree on the third arbitrator within 30 days. In the event that
an arbitrator is to be appointed by more than one party, and they fail
to agree upon the identity of such arbitrator within the aforesaid time
period, any other party to the arbitration may request that such
arbitrator be appointed by the Appointing Authority. Should the two
arbitrators fail, within the above time-limit, to reach agreement on
the third arbitrator, he shall be appointed by the Appointing
Authority.
15. TERMINATION At any time prior to the Closing Date, the Company
shall have the right, in its sole reasonable discretion, to terminate this
Agreement AB INITIO without any liability or adverse affect or without it being
considered a breach of this Agreement, if the Company can substantiate by
reasonable proof that the applicable governmental authorities may prevent the
IPO from going forward or substantially delay the IPO process as a result of the
transactions contemplated by this Agreement. If the closing of the IPO does not
occur within sixty days of the effective date of this Agreement, the Purchaser
shall have a right, in its sole and absolute discretion, to terminate this
Agreement AB INITIO without any penalty, liability or adverse affect, and
without such termination being considered a breach of this Agreement.
12
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by its duly authorized representatives as of the date first above
written.
SIEMENS Aktiengesellschaft
By: /s/ Anthony Maher By: /s/ Christoph Ferner
---------------------------- ----------------------------
Name: Anthony Maher Christoph Ferner
Title: President ICN Siemens Vice President ICN Siemens
RADVision Ltd.
By: /s/ Yehuda Zisapel
----------------------------
Name: Yehuda Zisapel
Title: Chairman of the Board of Directors
THE REST OF THIS PAGE IS LEFT INTENTONALLY BLANK
13
<PAGE>
Name and address of Selling Shareholder Signature
- --------------------------------------- ---------
Yehuda Zisapel By: *
---------------------------
23 Kisufim Street Name: __________________________
Tel Aviv, Israel Title: _________________________
Zohar Zisapel By: *
---------------------------
54 Pinchas Street Name: __________________________
Tel Aviv, Israel Title: _________________________
Michael & Klil Properties (93) Ltd. By: *
---------------------------
12 Hanechoshet Street Name: __________________________
Tel Aviv 69710 Israel Title: _________________________
Lomsha Ltd. By: *
---------------------------
12 Hanechoshet Street Name: __________________________
Tel Aviv 69710 Israel Title: _________________________
Amos Amir By: *
---------------------------
9 Eliahu Hacham Street Name: __________________________
Tel Aviv, Israel Title: _________________________
Plonit Achzakot Ltd. By: *
---------------------------
9 Eliahu Hacham Street Name: __________________________
Tel Aviv, Israel Title: _________________________
14
<PAGE>
Nichsei Almonit Ltd. By: *
---------------------------
12 Hanechoshet Street Name: __________________________
Tel Aviv 69710 Israel Title: _________________________
RAD Data Communications Ltd. By: *
---------------------------
12 Hanechoshet Street Name: __________________________
Tel Aviv 69710 Israel Title: _________________________
Efraim Wachtel By: *
---------------------------
20 Hagefen Street Name: __________________________
Raanana, Israel Title: _________________________
Daniella Ilan By: *
---------------------------
12 Eliahu Hakim Street Name: __________________________
Tel Aviv, Israel Title: _________________________
Yoram Holtz By: *
---------------------------
18 Hakotzer Street Name: __________________________
Ramat Hasharon, Israel Title: _________________________
Dario Zipris By: *
---------------------------
9/5 Ussiskin Street Name: __________________________
Ramat Hasharon, Israel Title: _________________________
Ilan Seidner By: *
---------------------------
3A Kushani Street Name: __________________________
Ramat Aviv Title: _________________________
Arie Oren By: *
---------------------------
8 Tana Street Name: __________________________
Rosh Haayin, Israel Title: _________________________
Aaron Strossberg By: *
---------------------------
16 Brodetsky Street Name: __________________________
Rishon Lezion, Israel Title: _________________________
Eitan Abramovitch By: *
---------------------------
27 Hahatzav Street Name: __________________________
Mevasseret Zion, Israel Title: _________________________
Eli Luz By: *
---------------------------
15
<PAGE>
c/o Trust Company of Maritime Bank of Name: _________________________
Israel Ltd. Title: ________________________
35 Ahad Ha'am Street
Tel Aviv, Israel
Lerosh Investments Ltd. By: *
---------------------------
c/o Trust Company of Maritime Bank of Name: __________________________
Israel Ltd. Title: _________________________
35 Ahad Ha'am Street
Tel Aviv, Israel
Trust Company of Maritime Bank of Israel By: *
Ltd. ---------------------------
35 Ahad Ha'am Street Name: __________________________
Tel Aviv, Israel Title: _________________________
ECI Telecom Ltd. By: *
---------------------------
30 Hasivim Street Name: __________________________
Petach Tikva, Israel Title: _________________________
Factory Systemes SA By: *
---------------------------
22, Rue Vladimir Jankelevitch Name: __________________________
Emerainville, 77437 Marne La Vallee Title: _________________________
Cedex 2, France
Clal Venture Capital LP By: *
---------------------------
Atidim Technology Park, Bldg. 4 Name: __________________________
Tel Aviv, Israel Title: _________________________
Robert Freeman By: *
---------------------------
407 Robbins Road Name: __________________________
Neptune, New Jersey Title: _________________________
Shrem Pudim Kelner Trust Company Ltd. By: *
---------------------------
21 Haarbaah Street Name: __________________________
Tel Aviv, Israel Title: _________________________
Evergreen Canada Israel Management Ltd. By: *
---------------------------
c/o Evergreen Israel Name: __________________________
96 Rothschild Blvd. Title: _________________________
Tel Aviv, Israel
IJT Technologies Ltd. By: *
---------------------------
c/o Evergreen Israel Name: __________________________
96 Rothschild Blvd. Title: _________________________
Tel Aviv, Israel
16
<PAGE>
Periscope I Fund LP, an Israeli partnership By: *
c/o Evergreen Israel ---------------------------
96 Rothschild Blvd. Name: __________________________
Tel Aviv, Israel Title: _________________________
Periscope I Fund LP, a Delaware partnership By: *
c/o Evergreen Israel ---------------------------
96 Rothschild Blvd. Name: __________________________
Tel Aviv, Israel Title: _________________________
* By: /s/ Yehuda Zisapel
----------------------------
Yehuda Zisapel
Attorney-in-fact
17
<PAGE>
EXHIBIT 4.1.1
VOTING AGREEMENT
THIS VOTING AGREEMENT (the "Agreement") made and entered into as of the
____ day of _________, 2000 by and between (1) the persons listed in Schedule I
hereto (the "Existing Shareholders"); and (2) Siemens Aktiengesellschaft (the
"New Shareholder", and together with the Existing Shareholders, collectively
referred to herein as the "Parties").
WHEREAS, the Existing Shareholders, RADVision Ltd. (the "Company") and
the New Shareholder have entered into a Share Purchase Agreement of even date
herewith (the "Share Purchase Agreement"), under which the New Shareholder is
acquiring ordinary shares of the Company, par value NIS 0.1 per share (the
"Ordinary Shares") from the Existing Shareholders and the Company; and
WHEREAS, pursuant to the terms of the Share Purchase Agreement, the
Parties have agreed to enter into an agreement with respect to the voting of the
Ordinary Shares held by each of the Parties.
NOW, THEREFORE, the Parties agree as follows:
1. INTERPRETATION
1.1. The recitals to this Agreement constitute an integral part hereof.
1.2. In this Agreement, all capitalized terms which are not defined herein
shall have the meaning ascribed to such terms in the Share Purchase
Agreement.
2. TERM
Subject to Section 4 hereof, the initial term of this Agreement shall
be for three years from the Closing Date, and thereafter shall be automatically
extended for two successive additional one year periods, unless terminated by
any of the Parties upon written notice to the other Parties given at least sixty
(60) days prior to the expiration date of the then current term.
3. Agreement to Vote for Directors
3.1 Each of the Parties hereby agrees to vote, either in person of by its
nominee or proxy, all Ordinary Shares beneficially owned, directly or
indirectly, by such Party on the date hereof or hereafter acquired, at a
regular or special meeting of the Company's shareholders (or by written
consent) at which the directors ("Directors") of the Company's board of
directors (the "Board") are to be elected, in favor of a slate of directors
consisting of: (i) one nominee of the New Shareholder to the Board, and (ii)
as many other representatives that such Selling Shareholders shall
unanimously
<PAGE>
indicate (but in no event less then the number and identity of
representatives as they have immediately prior to the IPO).
The Parties further agree to cause the existing Board, and future Boards, to
nominate for election such persons in any proxy statement and written ballot
sent to the shareholders of the Company in connection with such election or
meeting.
3.2 At least three days in advance of each regular or special meeting of the
Company's shareholders at which the Directors of the Board are to be
elected, the Parties entitled to select nominees to the Board will notify
the other Parties of the identity of the nominee(s) to be elected to the
Board in accordance with Section 3.1 above.
3.3 Upon the Closing, the nominee of the New Shareholder shall be appointed as a
Director to the Board in accordance with Article 88 of the Company's
Articles of Association, or by the convention of a regular or special
meeting.
4. TERMINATION OF DIRECTORSHIP
In the event that all Directors, except for one Director, decide in good faith
and believing it to be in the best interests of the Company and can substantiate
their decision by reasonable proof that the continuing presence of any Director
appointed by a Party pursuant to Section 3 hereof as a director of the Board may
damage the business prospects of the Company, then (i) the right of such Party
to appoint a Director under this Agreement shall immediately terminate and such
Board Member shall immediately resign from the Board, (ii) the other Parties
shall be released from any obligation to vote their Ordinary Shares in favor of
such Party's nominee, and such party shall be released from its obligations to
vote as well and (iii) the Parties shall take all actions necessary, including,
without limitation, convening a meeting of shareholders, to effect the removal
of such Director from the Board.
5. TRANSFER AND PLEDGE OF ORDINARY SHARES
5.1 Ordinary Shares of a Party to this Agreement transferred to an
Affiliate or to another Party to this Agreement shall continue to be bound by
this Agreement.
For purposes of this Agreement, an "Affiliate" shall mean a 'relative'
(as such term is defined in the Companies Law-1999) and/or any entity in which a
Party hereto, or a 'relative' of a Party hereto, holds an equity interest.
5.2 Any pledge, mortgage, hypothecation, encumbrance and the like
(collectively referred as the "Pledge") of the Ordinary Shares owned by the
Parties hereto shall be subject to: (i) the inclusion of the provisions of this
Agreement in the Pledge documents; and (ii) the written commitment of the
Pledgee to be bound by, and comply with, the provisions of this Agreement,
including the commitment of the Pledgee to bind any transferees to such a
commitment should it exercise the Pledge.
2
<PAGE>
6. REMEDIES
The Parties acknowledge that time is of the essence under this
Agreement for the performance of the acts contemplated hereunder and that this
Agreement, and each provision contained herein, is subject to specific
performance by any court of competent jurisdiction.
7. NOTICES
All notices or other communications required or permitted hereunder
shall be in writing (except as otherwise provided herein) and shall be deemed
duly given when received by delivery in person, by facsimile, telex or telegram
or by an overnight courier service addressed to the address of the respective
Party set forth opposite the name of such Party on Schedule I hereto.
8. SUCCESSORS
The terms and conditions of this Agreement shall inure to the benefit
and be binding upon the respective successors of the Parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the Parties or their respective successors and assigns, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
9. GOVERNING LAW AND ARBITRATION
9.1 This Agreement is subject to and shall be interpreted in accordance
with, the laws of the State of Israel.
9.2 Without derogating from that stated in section 6 above, the Parties
hereto agree that the Arbitration provision of the Share Purchase Agreement
shall be binding upon them with respect to this Agreement and any and all issues
and disputes arising hereunder.
3
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement, as of the
date first above-mentioned.
Siemens Aktiengesellschaft Amos Amir
By:_______________________ ____________________________
Name:
Title:
Yehuda Zisapel Zohar Zisapel
__________________________ ____________________________
Plonit Achzakot Ltd. Nichsei Almonit Ltd.
By:_______________________ By:_________________________
Name: Name:
Title: Title:
Michael and Klil Holdings (93) Ltd. Evergreen Canada Israel Management Ltd.
By:_______________________ By:_________________________
Name: Name:
Title: Title:
Lomsha Ltd. Periscope I Fund, Israeli Partnership
By:_______________________ By:_________________________
Name: Name:
Title: Title:
RAD Data Communications Ltd. Periscope I Fund, LP
By:_______________________ By:_________________________
Name: Name:
Title: Title:
Clal Venture Capital Fund LP IJT Technologies Ltd.
By:_______________________ By:_________________________
Name: Name:
Title: Title:
4
<PAGE>
SCHEDULE I
PARTY ADDRESS
- --------------------------------------------------------------------------------
Siemens Aktiengesellschaft
Yehuda Zisapel Atidim Technllogical Park, Building
No. 4, Tel-Aviv
- --------------------------------------------------------------------------------
Zohar Zisapel 12, Hanechoshet Street, Tel-Aviv
- --------------------------------------------------------------------------------
Michael and Klil Holdings (93) Ltd. 12, Hanechoshet Street, Tel-Aviv
- --------------------------------------------------------------------------------
Lomsha Ltd. 12, Hanechoshet Street, Tel-Aviv
- --------------------------------------------------------------------------------
RAD Data Communications Ltd. 12, Hanechoshet Street, Tel-Aviv
- --------------------------------------------------------------------------------
Amos Amir Eliahu Hakim 9/3, Tel-Aviv
- --------------------------------------------------------------------------------
Plonit Achzakot Ltd. Eliahu Hakim 9/3, Tel-Aviv
- --------------------------------------------------------------------------------
Nichsei Almonit Ltd. Eliahu Hakim 9/3, Tel-Aviv
- --------------------------------------------------------------------------------
Clal Venture Capital Fund LP Atidim Technllogical Park, Building
No. 4, Tel-Aviv
- --------------------------------------------------------------------------------
Evergreen Canada Israel Management Ltd. 96 Rothschild Blvd.
Tel-Aviv 65224
- --------------------------------------------------------------------------------
Periscope I Fund, Israeli Partnership 96 Rothschild Blvd.
Tel-Aviv 65224
- --------------------------------------------------------------------------------
Periscope I Fund, LP 96 Rothschild Blvd.
Tel-Aviv 65224
- --------------------------------------------------------------------------------
IJT Technologies Ltd. 96 Rothschild Blvd.
Tel-Aviv 65224
- --------------------------------------------------------------------------------
5
<PAGE>
Exhibit 4.12
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (the "Agreement") is made as of the 22nd day of
February 2000
BETWEEN:
(1) The persons whose names and addresses are set out in the first column
of Exhibit 1 (the "Selling Shareholders");
(2) Samsung Electro-Mechanics Co.Ltd., a company organized under the laws
of the Republic of Korea, of 314 Maetan 3-Dong, Paldal-Gu, Suwon,
Kyunggi-Do, Korea 442-743 Korea and Samsung Venture Investment Corp., a
company organized under the laws of the Republic of Korea, of and 16th
Floor Samsung Yeok Sam Bldg. 647-9, Yeok Sam-Dong, KangNam-Gu, Korea
135-080 (collectively referred to as the "Purchaser"); and
(3) RADVision Ltd. of Raoul Wallenberg Street, Tel Aviv 69719, Israel (the
"Company" and collectively with the Selling Shareholders, the
"Sellers").
WHEREAS:
A. The Company has filed a registration statement with the U.S. Securities
and Exchange Commission for the purpose of an initial public offering
(the "IPO") of its ordinary shares, par value NIS 0.1 per share (the
"Ordinary Shares");
B. The Purchaser desires to purchase an aggregate of 1,000,000 Ordinary
Shares (the "Shares") from the Sellers according to the following
proportion: Samsung Electro-Mechanics Co., Four Hundred Thousand
(400,000) Shares and Samsung Venture Investment Corp Six Hundred
thousand (600,000) Shares. The purchase of the Shares shall be at a
price per share equal to the initial public offering price of the
Ordinary Shares, subject to the terms and conditions set forth herein;
and
C. The Selling Shareholders desire to sell to the Purchaser Seven Hundred
Seventy Four Thousand Nine Hundred and Forty Five (774,945) of the
Shares (the "Selling Shareholders' Shares") and the Company desires to
sell to the Purchaser Two Hundred Twenty Five Thousand and Fifty Five
(225,055) of the Shares (the "Company's Shares"), in each case subject
to the terms and conditions set forth herein.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Definitions
1.1. In this Agreement and in the exhibits and schedules hereto,
unless the context otherwise requires, the following terms
shall bear the meanings set forth opposite them:
"Closing" The consummation of the
transactions contemplated by this
Agreement as provided in Section 6.
"Registration Statement" The Company's Registration
Statement on Form F-1 (File No.
333- ), as amended, initially
filed with the U.S. Securities and
<PAGE>
2
Exchange Commission on February __,
2000 attached hereto as Schedule
1.1.
2. Sale and Purchase of Shares
2.1. Subject to the terms and conditions of this Agreement, (i) the
Selling Shareholders agree to sell to the Purchaser, and the
Purchaser agrees to purchase from the Selling Shareholders,
the Selling Shareholders' Shares and (ii) the Company agrees
to sell to the Purchaser, and the Purchaser agrees to
purchasers agree to purchase from the Company, the Company's
Shares having the rights, preferences, privileges and
restrictions set forth in the form of amended Articles of
Association of the Company (the "New Articles") to be adopted
immediately prior to the closing of the IPO; provided, that,
notwithstanding anything herein to the contrary, the Sellers
shall not be obligated to sell the Shares to the Purchaser
unless the Purchaser purchases all 1,000,000 Shares. The
purchase and sale of the Shares is intended to be a private
placement and not a public offering or part of a public
offering. The Selling Shareholders and the number of Shares
sold is detailed in Schedule 2.1 attached hereto.
2.2. Each of the Selling Shareholders hereby waives, with respect
to the Shares to be sold to the Purchaser hereunder, any right
of first refusal, pre-emption or any other right which may be
conferred on it by the Articles of Association of the Company
in effect on the date hereof or by any agreement relating to
the Ordinary Shares.
2.3. The Selling Shareholders agree to assign to the Purchaser all
registration rights, including piggyback rights, if any, which
were attached to the Shares sold by them, prior to the
Effective Date.
2.4. The Purchaser respective Shares as noted above may change in
the event any Korean law governing the transaction under this
Agreement dictates so, provided that the aggregate number of
Shares purchased by the Purchaser is 1,000,000 Shares.
To the extent that any of the Selling Shareholder holds Shares as a
trustee for others, it shall be the responsibility each such Selling
Shareholder to procure all releases and/or waivers from all persons for
whom such Selling Shareholder hold such Shares in trust. The Selling
Shareholders will deliver at the Closing evidence of such release or
waiver in a form reasonably satisfactory to the Purchaser.
3. Closing
3.1. The purchase and sale of the Shares shall be held at the
Company's offices on Raoul Wallenberg Street, Tel Aviv, on the
day of the closing of IPO or, if later, upon satisfaction or
waiver of each of the conditions set forth in Sections 4 and 5
(such date, the "Closing Date"), unless otherwise agreed to by
the Sellers and the Purchaser. However, the share certificates
issued by the American Stock Transfer and Trust Company shall
be delivered within 3 business days as of the Closing Date. At
the Closing, each of the Selling Shareholders shall deliver to
the Purchaser the number of the Selling Shareholders' Shares
set forth opposite their name on Exhibit 2.1 hereto and the
Company shall issue and deliver to the Purchaser the Company's
Shares, in each case against payment of the purchase price
therefor by wire transfer of immediately available funds to an
account specified by the Payment Agent prior to the Closing
Date as set forth in Section 3.2. The per share purchase price
for the Shares (the "Per Share Purchase Price") shall be equal
to the per share price paid by the public for the Company's
Ordinary Shares in the IPO, less any underwriting
<PAGE>
3
discounts and commissions; provided that in no event shall the
Per Share Purchase Price exceed U.S.$17.00.
3.2. The Sellers hereby appoint RAD Data Communications Ltd. (the
"Payment Agent") to receive the payment due by the Purchaser
to the Sellers hereunder. The Sellers confirm and acknowledge
that payments made by the Purchaser to the Payment Agent and
acknowledged as received by the Payment Agent shall constitute
good and sufficient receipt of such payments as if the
payments were made directly to the Sellers. Except as
specifically set forth in this Agreement, the Purchaser shall
have no responsibility for the allocation by the Payment Agent
among the Sellers of any sum paid by the Purchaser to the
Payment Agent.
4. Closing Conditions
4.1. The obligation of the Purchaser to purchase the Shares at the
Closing shall be subject to the satisfaction or waiver of the
following conditions precedent on or prior to the Closing
Date:
4.1.1. Reserved.
4.1.2. Reserved.
4.1.3. The execution and the delivery of this Agreement and
the consummation of the transactions contemplated
hereby shall have been approved by the following
regulatory authorities: (i) the Investment Center of
the Israeli Ministry of Industry and Trade and (ii)
the Office of the Chief Scientist of the Ministry of
Industry and Trade; (iii) the Finance Supervisory
Commission of Korea and (iv) the Ministry of Finance
and Economy of Korea.(provided the approval mentioned
in sub-sections (iii) and (iv) shall be obtained by
the Purchaser).
4.1.4. The Sellers shall have delivered to the Purchaser
share certificates representing the Shares (in the
amounts set out in Exhibit 2.1) and, with respect to
the Selling Shareholders' Shares, stock powers duly
executed by the registered holders in favor of the
Purchaser.
4.1.5. The representations and warranties made by the
Selling Shareholders in Section 5 hereof and the
Company in Section 6 hereof shall be true and correct
in all material respects on the date hereof and as of
the Closing Date with the same force and effect as if
they had been made on and as of such date.
4.1.6. The closing of the initial public offering of the
Company's Ordinary Shares shall have occurred.
4.2. The obligation of each of the Sellers and the Company to sell
the Shares to the Purchaser at the Closing shall be subject to
the satisfaction or waiver of the following conditions
precedent on or prior to the Closing Date:
4.2.1. Reserved
4.2.2. Reserved
4.2.3. The execution and the delivery of this Agreement and
the consummation of the transactions contemplated
hereby shall have been approved by the following
regulatory
<PAGE>
4
authorities: (i) the Investment Center of the Israeli
Ministry of Industry and Trade and (ii) the Office of
the Chief Scientist of the Ministry of Industry and
Trade; ; (iii) the Finance Supervisory Commission of
Korea and (iv) the Ministry of Finance and Economy of
Korea.(provided the approval mentioned in
sub-sections (iii) and (iv) shall be obtained by the
Purchaser).
4.2.4. The Purchaser shall have delivered to the Payment
Agent on behalf of the Sellers by wire transfer of
immediately available funds the aggregate purchase
price for the Shares.
4.2.5. The representations and warranties made by the
Purchaser in Section 7 hereof shall be true and
correct in all material respects on the date hereof
and as of the Closing Date with the same force and
effect as if they had been made on and as of such
date.
4.2.6. The closing of the initial public offering of the
Company's Ordinary Shares shall have occurred.
5. Representations and Warranties of the Company The Company hereby
represents and warrants to the Purchaser as follows:
5.1. Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under
the laws of the State of Israel and has all requisite
corporate power and authority to carry on its business as now
conducted.
5.2. Authorization. All corporate action on the part of the Company
and its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement, the
performance of the obligations of the Company hereunder and
the authorization, issuance and delivery of the Company's
Shares has been taken or will be taken prior to the Closing.
5.3. Binding Effect. This Agreement constitutes a valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms.
5.4. No Conflicts. The execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby and
the compliance with the terms and provisions hereof will not
conflict with, result in a breach or violation of, or
constitute a default under (i) the Company's Memorandum of
Association and the New Articles or (ii) any contract or
agreement to which the Company is a party, except in the case
of clause (ii) for such conflict, breach, violation or default
which would not have a material adverse effect on the
Company's business, financial condition or results of
operations.
5.5. Company's Shares. The Company's Shares, when issued, sold and
delivered in accordance with the terms hereof for the
consideration expressed, will be duly and validly issued,
fully paid and nonassessable.
5.6. Exemption from Registration. Assuming the accuracy of the
Purchaser's representations set forth in Section 7 hereof, the
offer, sale and issuance of the Company's Shares to the
Purchaser on the Closing Date as contemplated by this
Agreement are exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act").
5.7. Disclosure. On the Closing Date, the Registration Statement
will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements
therein (in light of the circumstances under which they were
made) not misleading.
<PAGE>
5
6. Representations and Warranties of the Selling Shareholders Each of the
Selling Shareholders hereby represents and warrants to the Purchaser as
follows:
6.1. Organization and Good Standing. Such Seller is a corporation,
limited partnership or limited liability company, as
applicable, duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization.
6.2. Authorization. All corporate action on the part of such
Seller, and its officers, directors and shareholders necessary
for the authorization, execution and delivery of this
Agreement, the performance of all obligations of such Seller
hereunder, and the transfer and delivery of such Selling
Shareholders' Selling Shareholders' Shares has been taken or
will be taken prior to the Closing.
6.3. Binding Effect. This Agreement constitutes a valid and binding
agreement of such Selling Shareholder, enforceable against
such Selling Shareholder in accordance with its terms.
6.4. No Conflicts. The execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby and
the compliance with the terms and provisions hereof will not
conflict with, result in a breach or violation of, or
constitute a default under (i) such Selling Sharholders'
organizational documents or (ii) any contract or agreement to
which such Selling Shareholder is a party, except in the case
of clause (ii) for such conflict, breach, violation or default
which would not have a material adverse effect on such Selling
Shareholders' business, financial condition or results of
operations.
6.5. Registration Statement. Such Selling Shareholder is familiar
with the Registration Statement and has no knowledge of any
material fact, condition or information not disclosed in the
Registration Statement which has materially adversely affected
or may materially adversely affect the business of the Company
or any of its subsidiaries; and the sale of Selling
Shareholders' Shares owned by such Selling Shareholder
pursuant hereto is not prompted by any information concerning
the Company or any of its subsidiaries which is not set forth
in the Registration Statement.
6.6. Title. Such Seller is the record owner of the number of the
Selling Shareholders' Shares set forth opposite the name of
such Selling Shareholder on Exhibit 2.1 hereto and has good
and marketable title to such Shares, free and clear of any
lien or encumbrance and no third party has any rights with
respect to such Shares.
7. Representations and Warranties of the Purchaser The Purchaser hereby
represents and warrants to each of the Sellers as follows:
7.1. Organization and Good Standing. The Purchaser is a corporation
duly organized, validly existing and in good standing under
the laws of the Republic of Korea and has the power and
authority to carry on its business as it is now being
conducted.
7.2. Authorization. All corporate action on the part of the
Purchaser, and its officers, directors and shareholders
necessary for the purchase of the Shares pursuant to this
Agreement and the performance of its obligations hereunder has
been taken or will be taken prior to the Closing.
7.3. Binding Effect. This Agreement constitutes a valid and binding
agreement of the Purchaser, enforceable against the Purchaser
in accordance with its terms.
7.4. No Conflicts. The execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby and
the compliance with the terms and provisions hereof
<PAGE>
6
will not conflict with, result in a breach or violation of, or
constitute a default under (i) the Purchaser's organizational
documents or (ii) any contract or agreement to which the
Purchaser is a party, except in the case of clause (ii) for
such conflict, breach, violation or default which would not
have a material adverse effect on the Purchaser's business,
financial condition or results of operations.
7.5. Purchase Entirely for Own Account. The Shares will be acquired
for investment for the Purchaser's own account, not as a
nominee or agent, and not with a view to the resale or
distribution of any part thereof, and the Purchaser has no
present intention of selling, granting any participation in,
or otherwise distributing the Shares.
7.6. Available Information. The Purchaser has received all the
information, including, but not limited to, the Registration
Statement , it considers necessary or appropriate for deciding
whether to purchase the Shares and has had the opportunity to
ask questions and receive answers from the Company regarding
the business, properties, prospects, and financial condition
of the Company and to obtain additional information necessary
to verify the accuracy of any information furnished to the
Purchaser or to which the Purchaser has had access.
7.7. Investment Experience. The Purchaser is experienced in
evaluating and investing in securities of companies in the
software and information technology industry and acknowledges
that it is able to fend for itself, can bear the economic risk
of the investment in the Shares, and has such knowledge and
experience in financial and business matters that it is
capable of evaluating the merits and risks of the investment
in the Shares. The Purchaser has not been organized solely for
the purpose of acquiring the Shares.
7.8. Accredited Investor. The Purchaser is an "accredited
investor," as that term is defined in Rule 501 of Regulation D
of the Securities Act.
7.9. Purchaser not a U.S. Person. The Purchaser is not a "U.S.
Person" within the meaning of Rule 902(k) of Regulation S of
the Securities Act.
7.10. Purchase made in an "offshore transaction" with "no directed
selling efforts within the United States." The Purchaser was
not physically present in the United States when the Purchaser
was offered the Shares and the offer was not accompanied by
any form of advertising in the United States or other
"directed selling efforts" within the United States within the
meaning of Rule 902(c) of Regulation S of the Securities Act.
7.11. Brokerage Commissions. No broker's commissions were, or will
be required to be, paid by the Purchaser in connection with
this transaction.
8. Covenants of the Purchaser
8.1. Lock Up. Prior to the date which is 270 days after the Closing
(the "Lockup Date"), the Purchaser shall not, directly or
indirectly, Transfer (as defined below) or offer to Transfer
any of the Shares, and the Purchaser shall sign an undertaking
addressed to the underwriters in the form set forth in Exhibit
8.1 to such effect. In order to enforce the transfer
restrictions set forth in the prior sentence, the Company may
impose stop-transfer instructions with respect to the Shares
until the Lockup Date. As used in this Agreement, the term
"Transfer" shall mean any sale, transfer, assignment,
hypothecation, encumbrance or other disposition, whether
voluntary or involuntary, of any of the Shares. In the case of
a hypothecation, the Transfer shall be deemed to occur both at
the time of the initial pledge and at any pledgee's sale or a
sale by any secured creditor or a retention by the secured
<PAGE>
7
creditor of the pledged Shares in complete or partial
satisfaction of the indebtedness for which the Shares are
security.
8.2. Market Stand-Off. In addition to the transfer restrictions set
forth in Section 8.1 (which shall in no way be limited by the
following), in connection with any underwritten public
offering by the Company of its equity securities pursuant to
an effective registration statement filed under the Securities
Act, the Purchaser shall not Transfer or offer to Transfer any
of the Shares without the prior written consent of the Company
and its underwriters. Such restriction (the "Market
Stand-Off") shall be in effect for such period of time from
and after the effective date of the final prospectus for the
offering as may be requested by the Company or such
underwriters; provided, however, that such Market Stand-Off
shall not exceed 270 days. In order to enforce the Market
Stand-Off, the Company may impose stop-transfer instructions
with respect to the Shares until the end of the applicable
stand-off period.
8.3. Standstill. The Purchaser agrees that, prior to the third
anniversary of the Closing, unless specifically invited by the
Company, the Purchaser will not, in any manner, directly or
indirectly, effect any acquisition of Voting Securities (as
defined below), or beneficial ownership thereof if,
immediately after any such acquisition, the Purchaser would
beneficially own, in the aggregate, Voting Securities
representing more than ten percent (10%) of the outstanding
Ordinary Shares of the Company. The Purchaser also agrees
during such period not to make any public request (or
publicize any request) of the Company (or its directors,
officers, employees or agents), directly or indirectly, to
amend or waive any provision of this Section 8.3, including
this sentence. The Purchaser also agrees not to form, join or
in any way participate in a "group" (as defined under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")), or take any other action, in order to circumvent the
provisions of this Section 8.3. For purposes of this
Agreement, (i) the term "Voting Securities" shall refer to all
securities of the Company entitled to vote generally for the
election of directors, and (ii) the term "beneficial
ownership" shall have the meaning set forth in Rule 13d-3
under the Exchange Act. The restrictions set forth in this
Section 8.3 shall be ineffective if an officer of the Company,
duly authorized by the Company's Board of Directors, has
informed the Purchaser in writing of the Company's potential
interest in entering into a sale of all or substantially all
of its assets or shares or a merger in which the Company would
not be the surviving corporation; provided, however, that if
such acquisition, merger or sale is not consummated within
sixty days of such public announcement the restrictions set
forth in this Section 8.3 shall be reinstated.
8.4. Legal Obligations. Immediately after the Closing, the
Purchaser undertakes to file all the necessary documents and
reports required by any relevant authority, in Israel, the US
or elsewhere, and to abide by all the appropriate rules,
regulations and laws applying to a forgien equity holder,
including, without limitation, undertaking towards the Office
of Chief Scientist to comply with the Research and Development
Law and timely filing a Schedule 13D reporting the acquisition
of securities of a public company with the US Securities and
Exchange Commission. In general, the Purchaser will comply
with the continued restrictions which will apply to it as long
as it is a major shareholder, nominating a Board member and an
affiliate of the Company.
8.5. Reserved.
9. Defaulting Selling Shareholder. If, on the Closing Date, any Selling
Shareholder defaults in the performance of its obligations under this
Agreement, any of the remaining non-defaulting Selling Shareholders
shall have the option to sell the Selling Shareholders' Shares which
the defaulting Selling Shareholders agreed but failed to sell on such
Closing Date in the respective
<PAGE>
8
proportions which the number of Selling Sharholders' Shares set forth
opposite the name of each Selling Shareholder on Exhibit 2.1 hereto who
elects to sell additional Ordinary Shares as a result of such default
bears to the total number of Selling Shareholders' Shares set forth
opposite the names of all the Selling Shareholders on Exhibit 1 hereto
who elect to sell additional Ordinary Shares as a result of such
default. If none (or an insufficient number) of the non-defaulting
Selling Shareholders elect to sell the Shares which the defaulting
Selling Shareholders agreed but failed to sell on the Closing Date,
this Agreement shall terminate without liability on the part of any
non-defaulting Selling Shareholders, the Company or the Purchaser.
10. Notices
10.1. Any notice, declaration or other communication required or
authorized to be given by any party under this Agreement to
any other party shall be in writing and shall be personally
delivered or sent by facsimile transmission (with a copy by
registered mail in either case) addressed to the other party
at the address stated below or such other address as shall be
specified by the party concerned by notice in accordance with
the provisions of this Section. Any notice shall be deemed to
have been received on the next following business day.
10.2. Addresses for the purposes of this section are as follows:
Company: Yael Langer, Adv.
RADVision Ltd.
24 Raoul Wallenberg Street
Tel-Aviv 69719, Israel
Fax: (3) 6498248
Sellers: As appearing in the first column of Exhibit 1
with a copy to: Yael Langer, Adv.
RADVision Ltd. Legal Department
24 Raoul Wallenberg Street
Tel-Aviv 69719, Israel
Fax: (3) 6498248
Purchaser: Byung Joo Kang, Senior Manager
Samsung Electro-Mechanics Co., Ltd.
314 Maetan 3-Dong, Paldal-Gu, Suwon,
Kyunggi-Do, Korea 442-743
Fax: (82)331-210-6363
Tae Young Ha, Senior Manager
Samsung Venture Investment Corp.
16th Floor Samsung Yeok Sam Bldg. 647-9,
Yeok Sam-Dong, KangNam-Gu, Korea 135-080
Fax: (82)- 2-3430-5577
Payment Agent: RAD Data Communications Ltd.
24 Raoul Wallenberg Street
Tel Aviv 69719
Attention: Eitan Abramovitch
Fax: (3) 648 7350
<PAGE>
9
11. General
11.1. This Agreement shall (except for any obligation fully
performed prior to or at the Closing Date) continue in full
force and effect (except for provisions which, in accordance
with their terms, are limited in time or otherwise, insofar as
they are so limited) after the Closing Date notwithstanding
that the Closing shall have occurred.
11.2. All of the parties to this Agreement will after, as well as
before and upon, the Closing Date do all acts and things and
sign and execute all documents and deeds requisite for the
purpose of implementing the terms of this Agreement.
11.3. None of the rights or obligations under or pursuant to this
Agreement may be assigned or transferred to any other person
or entity without the written consent of all the parties
except that the Sellers and the Purchaser may so transfer or
assign to their respective Affiliates or between themselves,
provided that the assignee shall be an Affiliate of the
relevant party at the time it exercises any of its rights or
obligations hereunder.
11.4. This Agreement contains the whole agreement between the
parties relating to the transactions provided for in this
Agreement and supersedes all previous agreements if any
between such parties in respect of such matters and each of
the parties to this Agreement acknowledges that in agreeing to
enter into this Agreement it has not relied on any
representations or warranties except for those contained in
this Agreement.
11.5. No failure or delay by any party hereto in exercising any
claim, remedy, right, power or privilege under this Agreement
shall operate as a waiver nor shall any single or partial
exercise of any claim, remedy, right, power or privilege
preclude any further exercise thereof or exercise of any other
claim, right, power or privilege.
11.6. This Agreement may be executed in two or more counterparts
each of which shall be deemed an original but all of which
constitute one and the same instrument.
11.7. Except as expressly provided herein, this Agreement may be
amended or terminated, and any of the terms hereof waived,
only by a document in writing specifically referring to this
Agreement and executed by the parties hereto or, in the case
of a waiver, by the party waiving compliance. The failure of
any party hereto at any time or times to require performance
of any provisions hereof shall in no manner affect this right
at a later time. No waiver by any party hereto of a breach of
any term contained in this Agreement, in any one or more
instance, shall be deemed or construed as a further or
continuing waiver of any such breach or a waiver of any breach
of any other form.
11.8. All Ordinary Share numbers in this Agreement give effect to
the stock split and distribution of bonus shares which will
take place immediately prior to the closing of the IPO.
11 Governing Law and Service of Process
12.1 This Agreement is subject to and shall be interpreted in
accordance with the laws of the State of Israel.
12.2 For the purposes of any claim under this Agreement, the
addresses of the Selling Shareholders for the purposes of
service of process shall be their addresses as set forth in
<PAGE>
10
the first column of Exhibit 1, or such other address as any
Selling Shareholder shall notify the Purchaser in writing.
13 Arbitration
13.1 All disputes arising out of or in connection with this
Agreement and other agreements resulting herefrom, including
any question regarding its existence, validity or termination,
shall be finally settled under the Rules of Arbitration of the
International Chamber of Commerce, by three arbitrators in
accordance with the said rules. The seat of arbitration shall
be Tel Aviv, Israel. The procedural law of Israel shall apply
where the rules are silent. The language to be used in the
arbitration proceeding shall be English.
13.2 The parties undertake to abide by and fully implement the
arbitration award rendered, and this Section 13.1 shall be
deemed to be an arbitration agreement in accordance with the
Arbitration Law 1968.
13.3 Each of the parties or, if there are more than one plaintiff
or defendant, each of Yehuda Zisapel and Zohar Zisapel
together on behalf of the Sellers and the Purchaser shall
nominate one arbitrator for confirmation by the competent
authority under the applicable rules ("Appointing Authority")
within thirty (30) days. Both arbitrators shall agree on the
third arbitrator within 30 days. In the event that an
arbitrator is to be appointed by more than one party, and they
fail to agree upon the identity of such arbitrator within the
aforesaid time period, any other party to the arbitration may
request that such arbitrator be appointed by the Appointing
Authority. Should the two arbitrators fail, within the above
time-limit, to reach agreement on the third arbitrator, he
shall be appointed by the Appointing Authority.
14 Termination At any time prior to the Closing Date, the Company shall
have the right, in its sole discretion, to terminate this Agreement
without any liability or adverse affect or without it being considered
a breach of this Agreement, if the Company, in its sole discretion,
believes that consummating the transactions contemplated by this
Agreement may delay the IPO or have any adverse effect on the IPO
process.
<PAGE>
11
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by its duly authorized representatives as of the date first above written.
Samsung Electro-Mechanics Co., Ltd
By: /s/ Hyung-Do Lee
-------------------------------
Name: Hyung-Do Lee
Title: President and CEO
Samsung Venture Investment Corp.
By: /s/ Jae Han Lee
-------------------------------
Name: Jae Han Lee
Title: C.E.O.
RADVision Ltd.
By: /s/ Yehuda Zisapel
-------------------------------
Name: Yehuda Zisapel
Title: Chairman of the Board of Directors
THE REST OF THIS PAGE IS LEFT INTENTONALLY BLANK
<PAGE>
12
SELLING SHAREHOLDERS
- --------------------------------------------------------------------------------
Name and address of Selling Shareholder Signature
- --------------------------------------- ---------
Yehuda Zisapel By: *
-----------------------------
23 Kisufim Street Name: ____________________________
Tel Aviv, Israel Title: ___________________________
- --------------------------------------------------------------------------------
Zohar Zisapel By: *
-----------------------------
54 Pinchas Street Name: ____________________________
Tel Aviv, Israel Title: ___________________________
- --------------------------------------------------------------------------------
Michael & Klil Properties (93) Ltd. By: *
-----------------------------
12 Hanechoshet Street Name: ____________________________
Tel Aviv 69710 Israel Title: ___________________________
- --------------------------------------------------------------------------------
Lomsha Ltd. By: *
-----------------------------
12 Hanechoshet Street Name: ____________________________
Tel Aviv 69710 Israel Title: ___________________________
- --------------------------------------------------------------------------------
Amos Amir By: *
-----------------------------
9 Eliahu Hacham Street Name: ____________________________
Tel Aviv, Israel Title: ___________________________
- --------------------------------------------------------------------------------
Plonit Achzakot Ltd. By: *
-----------------------------
9 Eliahu Hacham Street Name: ____________________________
Tel Aviv, Israel Title: ___________________________
- --------------------------------------------------------------------------------
Nichsei Almonit Ltd. By: *
-----------------------------
12 Hanechoshet Street Name: ____________________________
Tel Aviv 69710 Israel Title: ___________________________
- --------------------------------------------------------------------------------
RAD Data Communications Ltd. By: *
-----------------------------
12 Hanechoshet Street Name: ____________________________
Tel Aviv 69710 Israel Title: ___________________________
- --------------------------------------------------------------------------------
Efraim Wachtel By: *
-----------------------------
20 Hagefen Street Name: ____________________________
Raanana, Israel Title: ___________________________
- --------------------------------------------------------------------------------
Daniella Ilan By: *
-----------------------------
12 Eliahu Hakim Street Name: ____________________________
Tel Aviv, Israel Title: ___________________________
- --------------------------------------------------------------------------------
Yoram Holtz By: *
-----------------------------
18 Hakotzer Street Name: ____________________________
Ramat Hasharon, Israel Title: ___________________________
- --------------------------------------------------------------------------------
<PAGE>
13
- --------------------------------------------------------------------------------
Dario Zipris By: *
-----------------------------
9/5 Ussiskin Street Name: ____________________________
Ramat Hasharon, Israel Title: ___________________________
- --------------------------------------------------------------------------------
Ilan Seidner By: *
-----------------------------
3A Kushani Street Name: ____________________________
Ramat Aviv Title: ___________________________
- --------------------------------------------------------------------------------
Arie Oren By: *
-----------------------------
8 Tana Street Name: ____________________________
Rosh Haayin, Israel Title: ___________________________
- --------------------------------------------------------------------------------
Aaron Strossberg By: *
-----------------------------
16 Brodetsky Street Name: ____________________________
Rishon Lezion, Israel Title: ___________________________
- --------------------------------------------------------------------------------
Eitan Abramovitch By: *
-----------------------------
27 Hahatzav Street Name: ____________________________
Mevasseret Zion, Israel Title: ___________________________
- --------------------------------------------------------------------------------
Eli Luz By: *
c/o Trust Company of Maritime Bank -----------------------------
of Israel Ltd. Name: __________________________
35 Ahad Ha'am Street Title: _________________________
Tel Aviv, Israel
- --------------------------------------------------------------------------------
Lerosh Investments Ltd. By: *
c/o Trust Company of Maritime Bank -----------------------------
of Israel Ltd. Name: ____________________________
35 Ahad Ha'am Stree Title: ___________________________
Tel Aviv, Israel
- --------------------------------------------------------------------------------
Trust Company of Maritime Bank By: *
of Israel Ltd. -----------------------------
35 Ahad Ha'am Street Name: ____________________________
Tel Aviv, Israel Title: ___________________________
- --------------------------------------------------------------------------------
ECI Telecom Ltd. By: *
-----------------------------
30 Hasivim Street Name: ____________________________
Petach Tikva, Israel Title: ___________________________
- --------------------------------------------------------------------------------
Factory Systemes SA By: *
-----------------------------
22, Rue Vladimir Jankelevitch Emerainville, Name: ____________________________
77437 Marne La Vallee Cedex 2, France Title: ___________________________
- --------------------------------------------------------------------------------
Clal Venture Capital LP By: *
-----------------------------
Atidim Technology Park, Bldg. 4 Name: ____________________________
Tel Aviv, Israel Title: ___________________________
- --------------------------------------------------------------------------------
Robert Freeman By: *
-----------------------------
407 Robbins Road Name: ____________________________
Neptune, New Jersey Title: ___________________________
- --------------------------------------------------------------------------------
Shrem Pudim Kelner Trust Company Ltd. By: *
-----------------------------
21 Haarbaah Street Name: ____________________________
Tel Aviv, Israel Title: ___________________________
- --------------------------------------------------------------------------------
Evergreen Canada Israel Management Ltd. By: *
-----------------------------
c/o Evergreen Israel Name: ____________________________
96 Rothschild Blvd. Title: ___________________________
Tel Aviv, Israel
- --------------------------------------------------------------------------------
IJT Technologies Ltd. By: *
-----------------------------
c/o Evergreen Israel Name: ____________________________
96 Rothschild Blvd. Title: ___________________________
Tel Aviv, Israel
- --------------------------------------------------------------------------------
Periscope I Fund LP, an Israeli partnership By: *
c/o Evergreen Israel -----------------------------
96 Rothschild Blvd. Name: ____________________________
Tel Aviv, Israel Title: ___________________________
- --------------------------------------------------------------------------------
Periscope I Fund LP, a Delaware partnership By: *
c/o Evergreen Israel -----------------------------
96 Rothschild Blvd. Name: ____________________________
Tel Aviv, Israel Title: ___________________________
- --------------------------------------------------------------------------------
* By: /s/ Yehuda Zisapel
----------------------------
Yehuda Zisapel
Attorney-in-fact
<PAGE>
Exhibit 10.1
EXHIBIT 10.1
<PAGE>
RADVISION LTD.
KEY EMPLOYEE SHARE INCENTIVE PLAN (1996)
1. NAME:
This plan, as amended from time to time, shall be known as the
"RADVision Ltd. Key Employee Share Incentive Plan (1996)" (the "Plan").
2. PURPOSE:
2.1. The purpose and intent of the Plan is to provide incentives to
employees of RADVision Ltd. (the "Company") and its
subsidiaries (subject to approval by the Israeli Income Tax
Authorities) by providing them with opportunities to purchase
shares in the Company, pursuant to a plan approved by the
Board of Directors of the Company which is designed to benefit
from, and is made pursuant to, the provisions of Section 102
of the Israeli Income Tax Ordinance [New Version], 1961
(hereinafter - the "Ordinance") and the rules, promulgated
thereunder.
2.2. In addition, and subject to approval by the Israeli Income Tax
Authorities, options to purchase up to approximately three
(3%) percent of the share capital of the Company at the time
of approval of the Plan by the Board of Directors may be
offered to employees of affiliates of the Company belonging to
the RAD-Bynet Group of companies ("RAD-Bynet Affiliates"), in
order to provide them incentives to assist in the promotion of
the business of the Company.
3. ADMINISTRATION:
3.1. The Plan will be administered by a Share Incentive Committee
(the "Committee"), which will consist of such number of
Directors of the Company (not less than two (2) in number), as
may be fixed from time to time by the Board of Directors of
the Company. The Board of Directors shall appoint the members
of the Committee and may from time to time remove members
from, or add members to, the Committee and shall fill
vacancies in the Committee however caused.
<PAGE>
3.2. The Committee shall select one of its members as its Chairman
and shall hold its meetings at such times and places as it
shall determine. Actions at a meeting of the Committee at
which all its members are present, or acts reduced to or
approved in writing by all members of the Committee, shall be
the valid acts of the Committee. The Committee may appoint a
Secretary, who shall keep records of its meetings and shall
make such rules and regulations for the conduct of its
business as it shall deem advisable.
3.3. Subject to the general terms and conditions of this Plan, the
Committee shall have full authority to determine, in its
discretion, from time to time and at any time (i) the persons
("Grantees") to whom "Option Awards" (as hereinafter defined)
shall be granted, (ii) the number of shares to be covered by
each Option Award, (iii) the time or times at which the same
shall be granted, (iv) the price, schedule and conditions on
which such Option Awards may be exercised and on which such
shares shall be paid for, and/or (v) any other matter which is
necessary or desirable for, or incidental to, the
administration of the Plan.
3.4. The Committee may from time to time adopt such rules and
regulations for carrying out the plan as it may deem best. No
member of the Board of Directors or of the Committee shall be
liable for any action or determination made in good faith with
respect to the Plan or any Option Award granted thereunder.
3.5. The interpretation and construction by the Committee of any
provision of the Plan or of any Option Award thereunder shall
be final and conclusive unless otherwise determined by the
Board of Directors.
4. ELIGIBLE GRANTEES:
4.1. No Option Award may be granted to any person serving as a
member of the Committee at the time of the grant.
4.2. Subject to the limitation set forth in Section 4.1 hereof,
Option Awards may be granted to any officer, key employee or
other employee of the Company, its subsidiaries and its
RAD-Bynet Affiliates, whether or not a Director of the
Company, against waiver by such grantee of a certain amount of
his salary. The grant of an Option Award to a Grantee
2
<PAGE>
hereunder shall neither entitle such Grantee to participate,
nor disqualify him from participating, in any other grant of
options pursuant to this Plan or any other share incentive or
stock option plan of the Company or any of its affiliates.
5. TRUSTEE:
The Option Awards and/or shares in the Company which will be issued
upon the exercise of the Option Awards will be held in trust and
registered under the name of a trustee (the "Trustee") who will hold
the same pursuant to the Company's instructions from time to time.
Except as provided for in Section 10.7 hereinbelow, in no event will
the Trustee release the shares before the later of (i) the initial
public offering ("IPO") of the shares of the Company, or (ii) the lapse
of twenty-four (24) months as of the registration of options in the
name of the Trustee on behalf of the Grantee, provided the Grantee
is an employee of RADVision Ltd. Said restriction to this subsection ii
shall not apply to Grantees which are employees of RADVision Inc. The
Trustee shall empower Yehuda Zisapel and Zohar Zisapel together with
all the voting rights of the shares and shall not exercise the voting
rights in any other way whatsoever.
6. RESERVED SHARES:
The Company has reserved 1,600 authorized but unissued Ordinary Shares
(nominal value NIS.1.00 per share) for purposes of the Plan, subject to
adjustment as provided in Section 11 hereof. All shares under the Plan,
in respect of which the right hereunder of a Grantee to purchase the
same shall, for any reason, terminate, expire or otherwise cease to
exist, shall again be available for grant through the Option Awards
under the Plan.
7. OPTION AWARDS:
7.1. The Committee in its discretion may award to Grantees options
to purchase shares in the Company available under the Plan
("Option Awards"). The date of grant of each Option Award
shall be the date specified by the Committee at the time such
award is made.
7.2. The instrument granting an Option Award shall state, INTER
ALIA, the number of shares covered thereby, the dates when it
may be exercised, the option price, the schedule on which such
shares may be paid for and such other terms and conditions as
the Committee at its discretion may prescribe, provided that
they are consistent with this Plan.
3
<PAGE>
8. OPTION PRICE:
The price per share covered by each Option Award shall be as determined
by the Committee on the date of grant, provided that such price per
share for any Option Award shall not be less than the par value of the
share.
9. EXERCISE OF OPTION AWARD:
9.1. Option Awards shall be exercisable pursuant to the terms under
which they were awarded and subject to the terms and
conditions of this Plan.
9.2. An Option Award, or any part thereof, shall be exercisable by
the Grantee's signing and returning to the Company at its
principal office, with a copy to the Trustee, a "Notice of
Exercise" which will also constitute a Share Incentive
Agreement (the "Agreement") in such form and substance as may
be prescribed by the Committee from time to time.
9.3. Anything herein to the contrary notwithstanding, but without
derogating from the provisions of Sections 5 and 10 hereof, if
any Option Award or any part thereof, has not been exercised
and the shares covered thereby not paid for within sixty-two
(62) months after the date of grant (or any other period set
forth in the instrument granting such Option Award pursuant to
Section 7), such Option Award, or such part thereof, and the
right to acquire such shares, shall terminate, all interests
and rights of the Grantee in and to the same shall ipso facto
expire, and, in the event that in connection with such
unexercised options any shares are held in trust as aforesaid,
such trust shall ipso facto expire and the trustee shall
thereafter hold such shares in an unallocated pool until
instructed by the Company that some or all of such shares are
again to be held in trust for one or more Grantees.
9.4. Each payment for shares under an Option Award shall be in
respect of a whole number of shares, shall be effected in cash
or by a cashier's or certified check payable to the order of
the Company, or such other method of payment acceptable to the
Company, and shall be accompanied by a notice stating the
number of shares being paid for thereby.
4
<PAGE>
9.5. In the event that the Company will distribute cash dividends
or any other cash payments to shareholders, then the dividends
(or cash payments) relating to the shares already exercised
will be transferred to the Trustee, who will transfer
dividends (or cash payments) to Grantees who exercised the
Option Awards to the extent exercised.
Each Grantee will be fully liable as a share owner in the
Company to the extent of the number and percentage of shares
held on his behalf by the Trustee as a result of the exercise
of any Option Award up to the nominal value of his shares.
10. TERMINATION OF EMPLOYMENT:
10.1. Subject to the provisions of Sections 10.4 and 10.5 hereof, if
a Grantee should, for any reason, cease to be employed by the
Company or any affiliate thereof, as the case may be, then all
of his rights, if any, in respect of (a) all Option Awards
theretofore granted to him under the Plan and not exercised
(to the extent that they are exercisable at the time of
termination of Employment) within two (2) weeks after such
cessation of employment, and (b) all shares which may be
purchased by him under the Plan and which are not fully paid
for within two (2) weeks after such cessation of employment,
shall ipso facto terminate.
10.2. In the event of such resignation or termination of Employment
of a Grantee from the employ of the Company or an affiliate
thereof, his employment shall, for the purposes of this
Section 10 be deemed to have ceased upon the delivery to the
employer of notice of resignation, or upon the delivery to the
employee of notice of termination of employment, as the case
may be, irrespective of the effective date of such resignation
or termination of employment.
10.3. For the purposes of this Section 10, the following definitions
will apply:
10.3.1 "Purchaser" - the Company (if and as permitted to by
law) and/or any of its affiliates and/or any other
person or entity designated for this purpose by the
Company.
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<PAGE>
10.3.2 "Back Purchase Period" - 90 days commencing on the
last date the Grantee is entitled to exercise all
options to the shares (to the extent they are
exercisable at such time).
10.3.3 "Back Purchase" - the purchase of shares by the
Purchaser during the Back Purchase Period.
10.4. In the event of termination of employment by the Company under
circumstances which do not entitle the employee to severance
pay ("Pitzuei Piturin") under the law (hereinafter
"Termination for Cause"), then said Grantee shall not be
entitled to exercise any Option Awards subsequent to the time
of delivery of the notice of discharge. In addition, the
Purchaser will be entitled to Back Purchase with no time limit
any or all of the shares resulting from the exercise of any
Option Awards exercised prior to the date of Back Purchase.
The price paid for each share will be as the Purchaser
determines, but not less than the par value of the share.
10.5. In the event the employment is terminated either by the
Company or the Grantee for any reason other than Termination
for Cause or for no reason at all before the lapse of ten (10)
years as of the date of the grant, then the Purchaser will be
entitled to Back Purchase within the Back Purchase Period any
or all of the shares held in trust by the Trustee on behalf of
the Grantee at that time. The purchase price per share will be
the higher of:
10.5.1 net after tax annual earnings per share, as provided
for in the annual audited consolidated financial
reports of the Company in US dollars for the previous
year on a non-diluted basis, multiplied by 4; or
10.5.2 per share shareholders' equity on a non-diluted basis
in US dollars.
Notwithstanding anything contained herein to the contrary, in
the event that the Board of Directors of the Company resolves
to sell all or a substantial part of the Company's assets
(hereinafter the "Sale") and such Sale involves a termination
of employment of the Grantee, then the Back Purchase Price
will be determined by the Board of Directors of the Company,
taking into consideration the terms of Sale.
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<PAGE>
10.6. In the event that Purchaser did not Back Purchase all the
shares within the Back Purchase Period, then the shares will
continue to be held by the Trustee on behalf of the Grantee
until the sale of such shares by the Grantee at the later of
(i) the initial public offering ("IPO") of the shares of the
Company or (ii) the lapse of twenty-four (24) months as of the
registration of options in the name of the Trustee on behalf
of the Grantee.
Any shares Back Purchased under subsections 10.4 and/or 10.5
will be released from the Trust upon the Back Purchase,
subject to the provisions of Section 102 of the Ordinance.
10.7. DEATH, DISABILITY, RETIREMENT:
Anything herein to the contrary notwithstanding:
10.7.1 If a Grantee shall die while in the employ of the
Company or any affiliate thereof, his estate, to the
extent that it has acquired by will or by operation
of law the rights of the deceased Grantee under the
Plan, shall be entitled for a period of three (3)
months following the date of death of such Grantee,
to exercise such rights of such Grantee not
theretofore exercised, to the same extent (but only
to the extent), and on the same terms, as the
deceased Grantee could have done during or at the end
of such three-month period had he survived and had he
continued his employ with the Company.
10.7.2 If a Grantee is unable to continue to be employed by
the Company or any affiliate thereof by reason of his
becoming incapacitated while in the employ of the
Company or any affiliate thereof as a result of an
accident or illness or other cause which is approved
by the Committee, such Grantee shall continue to
enjoy rights under the Plan on such terms and
conditions as the Committee in its discretion may
determine.
10.7.3 If a Grantee should retire, he shall continue to
enjoy such rights, if any, under the Plan and on such
terms and conditions as the
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Committee in its discretion may determine. This
subsection 10.7.3 will have priority over Section
10.5.
10.7.4 In no event will any shares be released by the
Trustee under this Section 10.7 from the Trust prior
to the IPO.
10.8. The Company and any Grantee acknowledge that, in case of
cessation of employment within the period of 24 months from
the date of the grant of an Option Award, the benefits
provided in Section 102 of the Ordinance may not be available
to the Grantee, and the Company may be required to withhold
tax on the date of the issuing of shares according to the
Option Awards, and be subject to any other obligations under
law regarding the granting of such Option Awards.
11. ADJUSTMENTS:
Upon the happening of any of the following described events, a
Grantee's rights to purchase shares under the Plan shall be adjusted as
hereinafter provided:
11.1. In the event the Ordinary Shares of the Company shall be
subdivided or combined into a greater or smaller number of
shares or if, upon a merger, consolidation, reorganization,
recapitalization or the like, the Ordinary Shares of the
Company shall be exchanged for other securities of the Company
or of another corporation, then, upon the exercise of an
Option Award, each Grantee shall be entitled, subject to the
conditions herein stated, to purchase such number of Ordinary
Shares or amount of other securities of the Company or such
other corporation as were exchangeable for the number of
Ordinary Shares of the Company which such Grantee would have
been entitled to purchase except for such action, and
appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination, or
exchange.
11.2. In the event that the Company shall issue any of its Ordinary
Shares or other securities as bonus shares (stock dividend)
upon or with respect to any shares which shall at the time be
subject to a right of purchase by a Grantee hereunder, each
Grantee, upon exercising such right, shall be entitled to
receive (for the purchase price payable upon such exercise),
the shares as to which he is exercising his said right and, in
addition thereto (at no additional cost), such number of
shares of the class or
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<PAGE>
classes in which such bonus shares (stock dividend) were
declared, and such amount of cash in lieu of fractional
shares, as is equal to the amount of shares and the amount of
cash in lieu of fractional shares which he would have received
had he been the holder of the shares as to which he is
exercising his said right at all times between the date of the
granting of such right and the date of its exercise.
11.3. Upon the happening of any of the foregoing events, the class
and aggregate number of Ordinary Shares issuable pursuant to
the Plan, in respect of which Option Awards have not yet been
granted, shall also be appropriately adjusted to reflect the
events specified in Sections 11.1 and 11.2 above.
11.4. The Committee shall determine the specific adjustments to be
made under this Section 11, and its determination shall be
conclusive.
12. ASSIGNABILITY AND SALE OF SHARES:
12.1. Except as provided for in Section 10.8 hereinabove, no Option
Award and no shares purchasable hereunder, whether fully paid
or not, shall be assignable, transferable or given as
collateral or any right to them given to any third party
whatsoever, and during the lifetime of the Grantee each and
all of his rights to purchase shares hereunder shall be
exercisable only by him.
12.2. The Grantee will not be allowed to sell any shares purchased
pursuant to the exercise of Option Awards granted hereunder
before the later of the second anniversary of the date of
grant of the Option Awards or the IPO.
13. TERM AND AMENDMENT OF THE PLAN:
13.1. The Plan was adopted by the Board of Directors of the Company
on _____________________ and shall expire when the Board so
resolves (except as to Option Awards outstanding on that
date).
13.2. Subject to applicable laws, the Board of Directors may, at any
time and from time to time, terminate or amend the Plan in any
respect. In no event will any action of the Company alter or
impair the rights of a
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<PAGE>
Grantee, without his consent, under any Option Award
previously granted to him.
14. CONTINUANCE OF EMPLOYMENT:
Neither the Plan nor the Agreement shall impose any obligation on the
Company or an affiliate thereof to continue to keep any Grantee in its
employ, and nothing in the Plan or in any Option Award granted pursuant
thereto shall confer upon any Grantee any right to continue in the
employ of the Company or an affiliate thereof, or restrict the right of
the Company or an affiliate thereto to terminate such employment at any
time.
15. GOVERNING LAW:
The Plan and all instruments issued thereunder or in connection
therewith shall be governed by, and interpreted in accordance with, the
laws of the State of Israel.
16. APPLICATION OF FUNDS:
The proceeds received by the Company from the sale of shares pursuant
to Option Awards granted under the Plan will be used for general
corporate purposes of the Company or any subsidiary thereof.
17. TAX CONSEQUENCES:
Any tax consequences arising from the grant or exercise of any Option
Award, from the payment for shares covered thereby or from any other
event or act (of the Company or the Grantee) hereunder, shall be borne
solely by the Grantee. Furthermore, the Grantee shall agree to
indemnify the Company and the Trustee and hold them harmless against
and from any and all liability for any such tax or interest or penalty
thereon, including without limitation, liabilities relating to the
necessity to withhold, or to have withheld, any such tax from any
payment made to the Grantee.
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Exhibit 10.2
RADVISION LTD. CONSULTANTS OPTION PLAN
1. NAME:
This plan, as amended from time to time, shall be known as the
"RADVision Ltd. Consultants Option Plan (1999)" (the "Plan").
2. PURPOSE:
The purpose and intent of the Plan is to provide incentives to
employees of, directors and consultants of affiliates of RADVision Ltd.
("the Company") belonging to the RAD-Bynet Group of companies
("RAD-Bynet Affiliates"), by providing them with opportunities to
purchase shares in the Company, in order to provide them incentives to
assist in the promotion of the business of the Company.
3. ADMINISTRATION:
3.1. The Plan will be administered by an Option Committee (the
"Committee"), which will consist of such number of Directors
of the Company (not less than two (2) in number), as may be
fixed from time to time by the Board of Directors of the
Company. The Board of Directors shall appoint the members of
the Committee and may from time to time remove members from,
or add members to, the Committee and shall fill vacancies in
the Committee however caused.
3.2. The Committee shall select one of its members as its Chairman
and shall hold its meetings at such times and places as it
shall determine. Actions at a meeting of the Committee at
which all its members are present, or acts reduced to or
approved in writing by all members of the Committee, shall be
the valid acts of the Committee. The Committee may appoint a
Secretary, who shall keep records of its meetings and shall
make such rules and regulations for the conduct of its
business as it shall deem advisable.
<PAGE>
3.3. Subject to the general terms and conditions of this Plan, the
Committee shall have full authority to determine, in its
discretion, from time to time and at any time (i) the persons
("Grantees") to whom "Option Awards" (as hereinafter defined)
shall be granted, (ii) the number of shares to be covered by
each Option Award, (iii) the time or times at which the same
shall be granted, (iv) the price, schedule and conditions on
which such Option Awards may be exercised and on which such
shares shall be paid for, and/or (v) any other matter which is
necessary or desirable for, or incidental to, the
administration of the Plan.
3.4. The Committee may from time to time adopt such rules and
regulations for carrying out the plan as it may deem best. No
member of the Board of Directors or of the Committee shall be
liable for any action or determination made in good faith with
respect to the Plan or any Option Award granted thereunder.
3.5. The interpretation and construction by the Committee of any
provision of the Plan or of any Option Award thereunder shall
be final and conclusive unless otherwise determined by the
Board of Directors.
3.6. The Board of Directors of the Company is empowered to act in
place of the Committee if it deems fit.
4. ELIGIBLE GRANTEES:
4.1. No Option Award may be granted to any person serving as a
member of the Committee at the time of the grant.
4.2. No Option Award may be granted to any person who is a
shareholder in control or will become a shareholder in control
as a result of the Option granted to him. For this section a
shareholder in control is as defined in section 32(9) of the
Ordinance.
4.3. Subject to the limitation set forth in Section 4.1 and 4.2
hereof, Option Awards may be granted to any officer, key
employee or other employee of the Company, its subsidiaries
and its RAD-Bynet Affiliates, whether or not a Director of the
Company, against waiver by such grantee of a certain amount of
his salary. The grant of an Option Award to a Grantee
hereunder shall neither entitle such Grantee to participate,
nor disqualify
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<PAGE>
him from participating, in any other grant of options pursuant
to this Plan or any other share incentive or stock option plan
of the Company or any of its affiliates.
5. TRUSTEE:
The Option Awards and/or shares in the Company which will be issued
upon the exercise of the Option Awards will be held in trust and
registered under the name of a trustee (the "Trustee") who will hold
the same pursuant to the Company's instructions from time to time.
Except as provided for in Section 10.7 hereinbelow, in no event will
the Trustee release the shares before the initial public offering
("IPO") of the shares of the Company. The Trustee shall empower
Yehuda Zisapel and Zohar Zisapel together with all the voting rights of
the shares and shall not exercise the voting rights in any other way
whatsoever.
6. RESERVED SHARES:
The Company has reserved _________ authorized but unissued Ordinary
Shares (nominal value NIS 1.- per share) for purposes of the Plan,
subject to adjustment as provided in Section 11 hereof. All shares
under the Plan, in respect of which the right hereunder of a Grantee to
purchase the same shall, for any reason, terminate, expire or otherwise
cease to exist, shall again be available for grant through the Option
Awards under the Plan.
7. OPTION AWARDS:
7.1. The Committee in its discretion may award to Grantees options
to purchase shares in the Company available under the Plan
("Option Awards"). The date of grant of each Option Award
shall be the date specified by the Committee at the time such
award is made.
7.2. The instrument granting an Option Award shall state, inter
alia, the number of shares covered thereby, the dates when it
may be exercised, the option price, the schedule on which such
shares may be paid for and such other terms and conditions as
the Committee at its discretion may prescribe, provided that
they are consistent with this Plan.
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<PAGE>
8. OPTION PRICE:
The price per share covered by each Option Award shall be as determined
by the Committee on the date of grant, provided that such price per
share for any Option Award shall not be less than the par value of the
share.
9. EXERCISE OF OPTION AWARD:
9.1. Option Awards shall be exercisable pursuant to the terms under
which they were awarded and subject to the terms and
conditions of this Plan.
9.2. An Option Award, or any part thereof, shall be exercisable by
the Grantee's signing and returning to the Company at its
principal office, with a copy to the Trustee, a "Notice of
Exercise" which will also constitute a Share Incentive
Agreement (the "Agreement") in such form and substance as may
be prescribed by the Committee from time to time.
9.3. Anything herein to the contrary notwithstanding, but without
derogating from the provisions of Sections 5 and 10 hereof, if
any Option Award or any part thereof, has not been exercised
and the shares covered thereby not paid for within sixty-two
(62) months after the date of grant (or any other period set
forth in the instrument granting such Option Award pursuant to
Section 7), or, if extended by the Option committee, as
extended, such Option Award, or such part thereof, and the
right to acquire such shares, shall terminate, all interests
and rights of the Grantee in and to the same shall ipso facto
expire, and, in the event that in connection with such
unexercised options any shares are held in trust as aforesaid,
such trust shall ipso facto expire and the trustee shall
thereafter hold such shares in an unallocated pool until
instructed by the Company that some or all of such shares are
again to be held in trust for one or more Grantees.
9.4. Each payment for shares under an Option Award shall be in
respect of a whole number of shares, shall be effected in cash
or by a cashier's or certified check payable to the order of
the Company, or such other method of payment acceptable to the
Company, and shall be accompanied by a notice stating the
number of shares being paid for thereby.
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<PAGE>
9.5. In the event that the Company will distribute cash dividends
or any other cash payments to shareholders, then the dividends
(or cash payments) relating to the shares already exercised
will be transferred to the Trustee, who will transfer
dividends (or cash payments) to Grantees who exercised the
Option Awards to the extent exercised.
Each Grantee will be fully liable as a shareowner in the
Company to the extent of the number and percentage of shares
held on his behalf by the Trustee as a result of the exercise
of any Option Award up to the nominal value of his shares.
10. TERMINATION OF EMPLOYMENT:
10.1. Subject to the provisions of Sections 10.4 and 10.5 hereof, if
a Grantee should, for any reason, cease to be employed or
serve as an officer of an affiliate of the Company, as the
case may be, then all of his rights, if any, in respect of (a)
all Option Awards theretofore granted to him under the Plan
and not exercised (to the extent that they are exercisable at
the time of termination of Employment) within two (2) weeks
after such cessation of employment, and (b) all shares which
may be purchased by him under the Plan and which are not fully
paid for within two (2) weeks after such cessation of
employment, shall ipso facto terminate.
10.2. In the event of such resignation or termination of Employment
of a Grantee from the employ or service as an officer of the
Company or an affiliate thereof, his employment shall, for the
purposes of this Section 10 be deemed to have ceased upon the
delivery to the employer of notice of resignation, or upon the
delivery to the employee of notice of termination of
employment, as the case may be, irrespective of the effective
date of such resignation or termination of employment.
10.3. For the purposes of this Section 10, the following definitions
will apply:
10.3.1 "Purchaser" - the Company (if and as permitted to by
law) and/or any of its affiliates and/or any other
person or entity designated for this purpose by the
Company.
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<PAGE>
10.3.2 "Back Purchase Period" - 90 days commencing on the
last date the Grantee is entitled to exercise all
options to the shares (to the extent they are
exercisable at such time).
10.3.3 "Back Purchase" - the purchase of shares by the
Purchaser during the Back Purchase Period.
10.4. In the event of termination of employment by the Company under
circumstances which do not entitle the employee to severance
pay ("Pitzuei Piturin") under the law (hereinafter
"Termination for Cause"), then said Grantee shall not be
entitled to exercise any Option Awards subsequent to the time
of delivery of the notice of discharge. In addition, the
Purchaser will be entitled to Back Purchase with no time limit
any or all of the shares resulting from the exercise of any
Option Awards exercised prior to the date of Back Purchase.
The price paid for each share will be as the Purchaser
determines, but not less than the par value of the share.
10.5. In the event the employment is terminated either by the
Company or the Grantee for any reason other than Termination
for Cause or for no reason at all before the lapse of ten (10)
years as of the date of the grant, then the Purchaser will be
entitled to Back Purchase within the Back Purchase Period any
or all of the shares held in trust by the Trustee on behalf of
the Grantee at that time. The purchase price per share will be
the higher of:
10.5.1 net after tax annual earnings per share, as provided
for in the annual audited consolidated financial
reports of the Company in US dollars for the previous
year on a non-diluted basis, multiplied by 4; or
10.5.2 per share shareholders' equity on a non-diluted basis
in US dollars.
Notwithstanding anything contained herein to the contrary, in
the event that the Board of Directors of the Company resolves
to sell all or a substantial part of the Company's assets
(hereinafter the "Sale") and such Sale involves a termination
of employment of the Grantee, then the Back Purchase Price
will be determined by the Board of Directors of the Company,
taking into consideration the terms of Sale.
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<PAGE>
10.6. In the event that Purchaser did not Back Purchase all the
shares within the Back Purchase Period, then the shares will
continue to be held by the Trustee on behalf of the Grantee
until the sale of such shares by the Grantee following the
initial public offering ("IPO") of the shares of the Company.
Any shares Back Purchased under subsections 10.4 and/or 10.5
will be released from the Trust upon the Back Purchase.
10.7. DEATH, DISABILITY, RETIREMENT:
Anything herein to the contrary notwithstanding:
10.7.1 If a Grantee shall die while in the employ of the
Company or any affiliate thereof, his estate, to the
extent that it has acquired by will or by operation
of law the rights of the deceased Grantee under the
Plan, shall be entitled for a period of three (3)
months following the date of death of such Grantee,
to exercise such rights of such Grantee not
theretofore exercised, to the same extent (but only
to the extent), and on the same terms, as the
deceased Grantee could have done during or at the end
of such three-month period had he survived and had he
continued his employ with the Company.
10.7.2 If a Grantee is unable to continue to be employed by
the Company or any affiliate thereof by reason of his
becoming incapacitated while in the employ of the
Company or any affiliate thereof as a result of an
accident or illness or other cause which is approved
by the Committee, such Grantee shall continue to
enjoy rights under the Plan on such terms and
conditions as the Committee in its discretion may
determine.
10.7.3 If a Grantee should retire, he shall continue to
enjoy such rights, if any, under the Plan and on such
terms and conditions as the Committee in its
discretion may determine. This subsection 10.7.3 will
have priority over Section 10.5.
7
<PAGE>
10.7.4 In no event will any shares be released by the
Trustee under this Section 10.7 from the Trust prior
to the IPO.
11. ADJUSTMENTS:
Upon the happening of any of the following described events, a
Grantee's rights to purchase shares under the Plan shall be adjusted as
hereinafter provided:
11.1. In the event the Ordinary Shares of the Company shall be
subdivided or combined into a greater or smaller number of
shares or if, upon a merger, consolidation, reorganization,
recapitalization or the like, the Ordinary Shares of the
Company shall be exchanged for other securities of the Company
or of another corporation, then, upon the exercise of an
Option Award, each Grantee shall be entitled, subject to the
conditions herein stated, to purchase such number of Ordinary
Shares or amount of other securities of the Company or such
other corporation as were exchangeable for the number of
Ordinary Shares of the Company which such Grantee would have
been entitled to purchase except for such action, and
appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination, or
exchange.
11.2. In the event that the Company shall issue any of its Ordinary
Shares or other securities as bonus shares (stock dividend)
upon or with respect to any shares which shall at the time be
subject to a right of purchase by a Grantee hereunder, each
Grantee, upon exercising such right, shall be entitled to
receive (for the purchase price payable upon such exercise),
the shares as to which he is exercising his said right and, in
addition thereto (at no additional cost), such number of
shares of the class or classes in which such bonus shares
(stock dividend) were declared, and such amount of cash in
lieu of fractional shares, as is equal to the amount of shares
and the amount of cash in lieu of fractional shares which he
would have received had he been the holder of the shares as to
which he is exercising his said right at all times between the
date of the granting of such right and the date of its
exercise.
11.3. Upon the happening of any of the foregoing events, the class
and aggregate number of Ordinary Shares issuable pursuant to
the Plan, in respect of which Option Awards have not yet been
granted, shall also be
8
<PAGE>
appropriately adjusted to reflect the events specified in
Sections 11.1 and 11.2 above.
11.4. The Committee shall determine the specific adjustments to be
made under this Section 11, and its determination shall be
conclusive.
12. ASSIGNABILITY AND SALE OF SHARES:
12.1. Except as provided for in Section 10.8 hereinabove, no Option
Award and no shares purchasable hereunder, whether fully paid
or not, shall be assignable, transferable or given as
collateral or any right to them given to any third party
whatsoever, and during the lifetime of the Grantee each and
all of his rights to purchase shares hereunder shall be
exercisable only by him.
12.2. The Grantee will not be allowed to sell any shares purchased
pursuant to the exercise of Option Awards granted hereunder
before the later of the second anniversary of the date of
grant of the Option Awards or the IPO.
13. TERM AND AMENDMENT OF THE PLAN:
13.1. The Plan was adopted by the Board of Directors of the Company
on March 1, 1999 and shall expire when the Board so resolves
(except as to Option Awards outstanding on that date).
13.2. Subject to applicable laws, the Board of Directors may, at any
time and from time to time, terminate or amend the Plan in any
respect. In no event will any action of the Company alter or
impair the rights of a Grantee, without his consent, under any
Option Award previously granted to him.
14. CONTINUANCE OF EMPLOYMENT:
Neither the Plan nor the Agreement shall impose any obligation on the
Company or an affiliate thereof to continue to keep any Grantee in its
employ or service, and nothing in the Plan or in any Option Award
granted pursuant thereto shall confer upon any Grantee any right to
continue in the employ of the Company or an affiliate thereof, or
restrict the right of the Company or an affiliate thereto to terminate
such employment at any time.
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<PAGE>
15. GOVERNING LAW:
The Plan and all instruments issued thereunder or in connection
therewith shall be governed by, and interpreted in accordance with, the
laws of the State of Israel.
16. APPLICATION OF FUNDS:
The proceeds received by the Company from the sale of shares pursuant
to Option Awards granted under the Plan will be used for general
corporate purposes of the Company or any subsidiary thereof.
17. TAX CONSEQUENCES:
Any tax consequences arising from the grant or exercise of any Option
Award, from the payment for shares covered thereby or from any other
event or act (of the Company or the Grantee) hereunder, shall be borne
solely by the Grantee. Furthermore, the Grantee shall agree to
indemnify the Company in which he serves as an officer and/or the
affiliate by which he is employed and the Trustee and hold them
harmless against and from any and all liability for any such tax or
interest or penalty thereon, including without limitation, liabilities
relating to the necessity to withhold, or to have withheld, any such
tax from any payment made to the Grantee.
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<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
RADVision Inc. - incorporated under the laws of the State of New Jersey
RADVision B.V. - a company registered under the laws of the Netherlands
<PAGE>
EXHIBIT 23.1
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated February 22, 2000 (and to all references to our Firm) included in or
made a part of this registration statement filed on Form F-1 registering
3,800,000 Ordinary Shares.
/s/ LUBOSHITZ KASIERER
-------------------------------
LUBOSHITZ KASIERER
Member firm of Arthur Andersen
Tel Aviv, February 22, 2000
<PAGE>
EXHIBIT 99
CONSENT OF NOMINEE DIRECTOR
Pursuant to Rule 438, promulgated under the Securities Act of 1933, I,
Andreas Mattes, hereby consent to the use of my name and any references to me
as a nominee director of RADVision Ltd. (the "Company") in the registration
statement on Form F-1 of the Company, filed with the Securities and Exchange
Commission, and all amendments thereto.
/s/ Andreas Mattes
----------------------
Andreas Mattes
Dated: February 22, 2000
