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EXHIBIT 10.17
WARRANT
to Purchase up to an Aggregate of Ordinary Shares
(Subject to Adjustment) of
ViryaNet Ltd.
at U.S. $ per share
VOID AFTER 10:00 a.m. (prevailing Tel Aviv time)
on
THIS IS TO CERTIFY that the holder specified below ("Holder") is entitled to
purchase, subject to the provisions of this Warrant, from ViryaNet Ltd. (the
"Company"), at any time during the period commencing (the
"Effective Date") and ending on , an aggregate of up to
(subject to adjustment) fully paid and nonassessable Ordinary Shares, nominal
value New Israeli Shekel ("NIS") 0.10 per share (the "Ordinary Shares"), of the
Company at a price of US$ per share or the NIS equivalent thereof (the
"Exercise Price"). The amount and kind of securities purchasable pursuant to the
rights granted hereunder and the Exercise Price for such securities are subject
to adjustment pursuant to the further provisions of this Warrant.
1. EXERCISE OF WARRANT
Subject to the provisions hereof, this Warrant may be exercised in whole
or in part, at any time or from time to time on or after the Effective Date
and until . This Warrant shall be exercised by presentation and
surrender hereof to the Company at the principal office of the Company;
accompanied by
1. a written notice of exercise and
2. payment to the Company, for the account of the Company, of the Exercise
Price for the number of Ordinary Shares specified in such notice.
The Exercise Price for the number of Ordinary Shares specified in the notice
shall be payable in immediately available good funds, at the option of the
Holder, in U.S. dollars or the NIS equivalent thereof, based on the
Representative Rate of Exchange published by the Bank of Israel known as of
the time of payment.
Upon such presentation and surrender, the Company shall issue promptly to
the Holder the Ordinary Shares to which the Holder is entitled hereunder. In
the event the Exercise Price has been paid in U.S. dollars, the certificate
representing the Ordinary Shares issued upon such exercise shall bear a
stamp from an Israeli commercial bank confirming that the Ordinary Shares
were
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purchased with foreign currency. In the event that the Warrant is exercised
pursuant to the net exercise provisions below, the Company shall apply to
the Bank of Israel, if necessary, in order to obtain such stamp.
If this Warrant should be exercised in part only, the Company shall, upon
surrender of this Warrant for cancellation, execute and deliver a new
Warrant evidencing the rights of the Holder to purchase the balance of the
Ordinary Shares purchasable hereunder. Upon receipt by the Company of this
Warrant, in proper form for exercise, the Holder shall be deemed to be the
holder of record of the Ordinary Shares issuable upon such exercise,
notwithstanding that the share transfer books of the Company shall then be
closed or that certificates representing such Ordinary Shares shall not then
be actually delivered to the Holder. The Company shall pay any and all
expenses, any stamp duty and any other charges that may be payable in
connection with the issuance of the Ordinary Shares and the preparation and
delivery of share certificates pursuant to this Paragraph 1 in the name of
the Holder.
No fractions of Ordinary Shares shall be issued in connection with the
exercise of this Warrant, and the number of Ordinary Shares issued shall be
rounded down to the nearest whole number.
Notwithstanding the foregoing, in lieu of exercising this Warrant as
provided above, in whole or in part, the Holder may elect to receive,
Ordinary Shares equal to the value of the Warrant (or the portion thereof
being canceled) by written notice of such election to the Company, at the
principal office of the Company, in which event the Company shall issue to
the Holder, for no additional consideration, that number of Ordinary Shares
computed using the following formula:
Y(A - B)
X = -----------------
A
X equals the number of Ordinary Shares to be issued to the Holder;
Y equals the number of Ordinary Shares which would otherwise have been
purchasable under this Warrant (or the portion thereof being canceled);
B equals the Exercise Price in effect at the time of exercise pursuant to
this formula (as may have been or be adjusted pursuant to the terms of
this Warrant); and
A shall equal the "Fair Value" of one share of the Company's Ordinary
Shares. Fair Value shall mean in the event that this Warrant is
exercised in accordance with the above formula (i) if in connection with
a merger of the Company with or into another Company in which the
Company is not the surviving company ("Merger") or the sale of all or
substantially all of the assets of the Company ("Sale"), the value of
one Ordinary Share as determined for the purposes of the Merger or Sale,
or (ii) if other than in connection with an a Merger or Sale and if a
public market exists for the securities then subject to this Warrant and
such securities are listed on a
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U.S. nationally recognized stock exchange or on the Nasdaq stock market,
then the Fair Value shall equal the last sale or trading price of one
Ordinary Share as reported on such exchange or market, as applicable;
provided, however, if no public market exists for the securities then
the Fair Value shall be determined in good faith by the Board of
Directors of the Company, but if such determination is challenged in
good faith by the Holder, then as determined by an independent appraiser
mutually satisfactory to the Company and the Holder, which determination
shall be binding upon the parties.
2. RESERVATION OF SHARES: PRESERVATION OF RIGHTS
The Company hereby agrees that at all times it will maintain and reserve
such number of authorized but unissued Ordinary Shares so that this Warrant
may be exercised without additional authorization of Ordinary Shares after
giving effect to all other options, warrants, convertible securities and
other rights to acquire Ordinary Shares of the Company. In addition, the
Company will maintain and reserve such number of authorized but unissued
Ordinary Shares as will be sufficient to permit the conversion in full of
all issued or issuable Ordinary Shares. All shares of Ordinary Shares
issuable pursuant to the terms hereof, when issued upon exercise of this
Warrant in accordance with the terms hereof shall be duly and validly issued
and fully paid and nonassessable, not subject to preemptive rights and shall
be free and clear of all liens, encumbrances, equities and claims. The
Company further agrees that it will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or sale of assets, or by
any other voluntary act, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to be
observed or performed hereunder by the Company.
3. EXCHANGE OR LOSS OF WARRANT
This Warrant is exchangeable, upon presentation and surrender hereof at the
principal office of the Company, only in connection with a partial exercise
hereof. The Company shall be under no obligation to issue replacement
warrants for the aggregate number of shares covered hereby except as
described herein. The term "Warrant" as used herein includes any Warrant or
Warrants for which this Warrant may be exchanged. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft
or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, the Company will
execute and deliver a new Warrant of like terms, tenor and date.
4. ADJUSTMENT
The number of Ordinary Shares purchasable upon the exercise of this Warrant
and the Exercise Price shall be subject to adjustment from time to time or
upon exercise as provided in this paragraph 4.
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4.1. If, during the term of this Warrant, the Company shall distribute a
stock dividend or shares of capital stock pursuant to a
reclassification of its Ordinary Shares to the holders of Ordinary
Shares (i.e., bonus shares), the number of Ordinary Shares
purchasable upon exercise of this Warrant shall be increased by
multiplying such number of shares to be purchased under this Warrant
by a fraction of which the denominator shall be the number of
Ordinary Shares outstanding at the close of business on the day
immediately preceding the date of such distribution and the
numerator shall be the sum of such number of shares and the total
number of bonus shares, such increase to become effective
immediately after the opening of business on the date following such
distribution, and upon the happening of such an event the Exercise
Price shall be adjusted appropriately.
4.2. If, during the term of this Warrant, the outstanding Ordinary Shares
shall be subdivided into a greater number of Ordinary Shares, the
number of Ordinary Shares purchasable upon exercise of this Warrant
at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately
increased, and, conversely, if the outstanding Ordinary Shares shall
each be combined into a smaller number of Ordinary Shares, the
number of Ordinary Shares purchasable upon exercise of this Warrant
at the opening of business on the day following the day upon which
such combination becomes effective shall be proportionately
decreased, and in each such case the Exercise Price shall be
adjusted appropriately.
4.3. Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets
(a) In case the Company shall reorganize its capital, reclassify
its capital stock, consolidate or merge with or into another
corporation or sell, transfer or otherwise dispose of all or
substantially all of its property, assets or business to
another corporation and pursuant to the terms of such
reorganization, reclassification, merger, consolidation or
disposition of assets, (i) shares of capital stock of the
successor or acquiring corporation or of the Company (if it is
the surviving corporation) or (ii) any cash, shares of stock
or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights)
in addition to or in lieu of capital stock of the successor or
acquiring corporation ("Other Property") are to be received by
or distributed to the holders of Ordinary Shares of the
Company who are holders immediately prior to such transaction,
then the Holder shall have the right thereafter to receive,
upon exercise of this Warrant, the number of shares of capital
stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and Other
Property receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or
disposition of assets by a holder
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of the number of shares of Ordinary Shares for which this
Warrant is exercisable immediately prior to such event.
(b) In case of any such reorganization, reclassification, merger,
consolidation or disposition of assets, the successor or
acquiring corporation shall expressly assume the due and
punctual observance and performance of each and every covenant
and condition of this Warrant to be performed and observed by
the Company and all the obligations and liabilities hereunder,
subject to such modifications as may be deemed appropriate (as
determined by resolution of the Board of Directors of the
Company) in order to provide for adjustments of shares of the
Ordinary Shares for which this Warrant is exercisable, which
modifications shall be as nearly equivalent as practicable to
the adjustments provided for in this Section 4.
(c) The provisions of this subsection 4.3 shall similarly apply
to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
4.4. Other Dilutive Events
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In case any event shall occur as to which the preceding subsections
4.1 through 4.3 are not strictly applicable but as to which the
failure to make any adjustment would not fairly protect the purchase
rights represented by this Warrant in accordance with the essential
intent and principles hereof then, in each such case, the Board of
Directors of the Company shall, in good faith, determine what
adjustments are necessary to preserve the purchase rights of the
Holder represented by this Warrant. The Company will notify the
Holder of any such adjustments.
5. NOTICE OF ADJUSTMENTS
Whenever the number of Ordinary Shares for which this Warrant is exercisable
is adjusted as provided in paragraph 4 hereof or whenever the rate at which
the Ordinary Shares are convertible into Ordinary Shares is adjusted
pursuant to the Company's Articles of Association, the Company shall
promptly compute such adjustment and mail to the Holder at the last address
provided to the Company in writing a certificate, signed by the principal
financial officer of the Company, setting forth the number of Ordinary
Shares for which this Warrant is exercisable and the exercise price as a
result of such adjustment, a brief statement of the facts requiring such
adjustment and the detailed computation thereof and when such adjustment has
or will become effective.
6. RIGHTS OF THE HOLDER
6.1. Without limiting the foregoing or any remedies available to the
Holder, the Holder will be entitled to specific performance of the
obligations hereunder, and injunctive relief against actual or
threatened violations of the obligations of any person subject to this
Warrant.
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6.2. This Warrant shall not entitle the Holder to any voting rights or
other rights as a shareholder of the Company whatsoever, except the
rights expressed herein and no dividend or interest shall be payable
or accrue in respect of this Warrant.
7. NOTICE GENERALLY
Any notice, demand, request, consent, approval, declaration, delivery or
communication hereunder to be made pursuant to the provisions of this
Warrant shall be sufficiently given or made if in writing and shall be
deemed to have been validly served, given or delivered (a) when sent after
receipt of confirmation or answer back if sent by telex or telecopy or other
similar facsimile transmission, (b) two (2) business days after deposit with
a reputable international two (2) day courier with all charges prepaid or
(c) when delivered if hand-delivered by messenger, all of which shall be
properly addressed to the party to be notified and sent to the address or
number indicated, to the Holder, or the holder of Ordinary Shares at its
last known address appearing on the books of the Company maintained for such
purpose, and to the Company at:
ViryaNet Ltd.
Science Based Industries Campus
P.O. Box 23052
Jerusalem 91230, Israel
or at such other address as may be submitted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice.
8. TERMINATION
This Warrant and the rights conferred hereby shall terminate on
9. LIMITATION ON TRANSFER
9.1 This Warrant shall be transferable in whole or in part only to a
subsidiary of the Holder.
9.2 This Warrant and the Ordinary Shares issued upon the exercise of this
Warrant shall be subject to the applicable terms and conditions of the
Company's Articles of Association, including, without limitation, any
restrictions and/or limitations on the transfer of securities of the
Company.
9.3 Without derogating from Section 9.1 above, the Holder understands that
neither this Warrant nor the Ordinary Shares issued upon exercise of
this Warrant have been registered under the Securities Act of 1933
(the "Securities Act") and that the Warrant and such Ordinary Shares
issued upon the exercise of this Warrant must be held indefinitely,
unless they are subsequently registered under the Securities Act or
the Holder obtains an opinion of counsel, in form and substance
satisfactory to the Company and
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its counsel, that such registration is not required. The Holder
further acknowledges and understands that the Company is under no
obligation to register the Ordinary Shares issued upon the exercise of
this Warrant
The Holder is aware of the adoption of Rule 144 by the Securities and
Exchange Commission under the Securities Act, which permits limited
public resales of securities acquired in a non-public offering,
subject only to the satisfaction of certain conditions. The Holder
acknowledges and understands that the conditions for resale set forth
in Rule 144 have not been satisfied and that the Company has no plans
to satisfy these conditions in the foreseeable future.
The Holder hereby represents that will not sell, transfer or otherwise
dispose of the Warrant and the Ordinary Shares issued upon the
exercise of this Warrant in violation of the Securities Act, the
Securities Exchange Act of 1934, or the rules promulgated thereunder,
including Rule 144 under the Securities Act. The Holder agrees that he
or she will not dispose of the Warrant and the Ordinary Shares issued
upon exercise of this Warrant unless and until he or she has complied
with all requirements of the Company's Article of Association, and of
this Warrant applicable to the disposition of the Warrant and to the
disposition of the Ordinary Shares issued upon the exercise of this
Warrant and it, he or she has provided the Company with written
assurances, in substance and form satisfactory to the Company, that
the proposed disposition does not require registration under the
Securities Act or all appropriate action necessary for compliance with
the registration requirements of the Securities Act or with any
exemption from registration available under the Securities Act
(including Rule 144) has been taken.
9.4 All certificates evidencing the Ordinary Shares issued upon the
exercise of this Warrant shall bear the following legends:
"THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED,
ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE
TERMS OF THE COMPANY'S ARTICLES OF ASSOCATION OF THE COMPANY AND THE
REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE
SHARES). INCLUDING CERTAIN RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED
TRANSFER
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."
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9.5 If required by the authorities of any state in connection with the
issuance of the Purchased Shares, the legend or legends required by
such state authorities shall also be endorsed on all such
certificates.
10. GOVERNING LAW
This Warrant shall be governed by, and construed in accordance with, the
laws of the State of Israel, without giving effect to the rules respecting
conflict of law, and the parties hereto irrevocably submit to the exclusive
jurisdiction of the Courts of Israel in respect of any dispute or matter
arising out of or connected with this Warrant.
DATED: VIRYANET LTD.
By:
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Name: Samuel HaCohen
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Title: Chairman and CEO
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Agreed to and accepted:
By:
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Name:
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Title:
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Address:
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