As filed with the Securities and Exchange Commission on February 23, 1999
Registration Statement No. 333-66103
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 1
TO
FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
NUR MACROPRINTERS LTD.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Israel 3555 Not Applicable
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification Number)
organization) Code Number)
</TABLE>
--------------------------
5 David Navon Street
Moshav Magshimim 56910, Israel
(011) 972-3-908-7676
(Address and telephone number of Registrant's principal executive offices)
CT Corporation System
1633 Broadway
New York, New York 10019
(212) 246-5070
(Name, address and telephone number of agent for service)
--------------------------
Copy to:
Rubi Finkelstein, Esq.
Orrick, Herrington & Sutcliffe LLP
30 Rockefeller Plaza
New York, New York 10112
(212) 506-5000 (Phone) (212) 506-3730 (Fax)
--------------------------
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box: |_|
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, check the following box: |X|
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 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(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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
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<CAPTION>
- --------------------------- ---------------- ------------------- ------------------ -------------
Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities Registered Offering Price Aggregate Registration
to be Registered Per Share(1) Offering Price(1) Fee
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ordinary Shares nominal 6,759,444 $3.0625 $20,700,797.25 $5,754.82
value NIS 1.0 per share Shares
- -------------------------------------------------------------------------------------------------
Ordinary Shares Issuable 555,000 $3.0625 $ 1,699,687.50 $ 472.51
Upon Exercise of Warrants Shares
- -------------------------------------------------------------------------------------------------
Ordinary Shares Issuable 1,805,039 $3.0625 $ 5,527,931.94 $1,536.77
Upon Exercise of Options Shares
- -------------------------------------------------------------------------------------------------
Total Registration Fee $27,928,416.69 $7,764.10(2)
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee based
upon the average of the closing bid and ask prices for the Ordinary Shares
on February 18, 1999 on the Nasdaq National Market, in accordance with
Rule 457(c).
(2) The Company has previously paid $3,893.72 towards this amount on
October 26, 1998.
--------------------------
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, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
================================================================================
<PAGE>
NUR MACROPRINTERS LTD.
Cross-Reference Sheet Showing Location in Prospectus of
Information Required by Items in Part I of Form F-1
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<CAPTION>
Registration Statement Item Number and Caption Caption or Location in Prospectus
---------------------------------------------- ---------------------------------
<S> <C>
1. Front of Registration Statement Outside Front
Cover of Prospectus............................ Cover page
2. Inside Front Cover and Outside Back Cover Pages
of Prospectus ................................. Inside Front and Outside Back; Back Cover
Pages
3. Summary Information and Risk Factors............. Prospectus Summary; Risk Factors
4. Use of Proceeds.................................. Use of Proceeds
5. Determination of Offering Price.................. Not Applicable
6. Dilution......................................... Not Applicable
7. Selling Security Holders......................... Selling Security Holders
8. Plan of Distribution............................. Plan of Distribution
9. Legal Proceedings................................ Business-Legal Proceedings
10. Directors, Executive Officers, Promoters and
Control Persons................................ Management
11. Security Ownership of Certain Beneficial Owners
and Management................................. Principal Shareholders
12. Description of Securities........................ Description of Ordinary Securities
13. Interest of Named Experts and Counsel............ Experts; Legal Matters
14. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities. Commission Position on Indemnification
for Securities Act Liabilities.
15. Organization Within Last Five Years.............. Not Applicable
16. Description of Business.......................... Business
17. Management's Discussion and Analysis or Plan of
Operation...................................... Management's Discussion and Analysis
of Financial Condition and Results
18. Description of Property.......................... Business--Facilities
19. Certain Relationships and Related Transactions... Certain Transactions
20. Market for Common Equity and Related Stockholder
Matters........................................ Risk Factors; Market for Common
Equity; Dividend Policy; Principal
Shareholders
21. Executive Compensations.......................... Management
22. Financial Statements............................. Financial Statements
23. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure............ Not Applicable
</TABLE>
1
<PAGE>
SUBJECT TO COMPLETION, DATED FEBRUARY 23, 1999
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitatation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Shelf Registration
Preliminary Prospectus
NUR MACROPRINTERS LTD.
9,119,483 Ordinary Shares
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<S> <C> <C>
Nur Macroprinters Ltd. We develop, manufacture, assemble through a
5 David Navon Street subcontractor, sell, and service digital color
Moshav Magshimim 56910 printers for the printing of large images such as
Israel billboards, posters, and banners. Our primary
customers include commercial printers, design
firms, and billboard companies.
The Offering
o Ordinary shares 6,759,444 We are registering shares currently owned by
shareholders of the company to enable them to sell
o Ordinary shares issuable their shares without certain securities law
upon exercise of warrants restrictions at prevailing market or negotiated
555,000 prices. We will not receive any money from this
o Ordinary shares issuable offering.
upon exercise of options
1,805,039
---------
Total Ordinary shares 9,119,483
=========
</TABLE>
Trading Information
Nasdaq National Market Symbol: NURTF
Last reported bid price on February 18, 1999: $3.00 per share
------------------------------
This Investment Involves a High Degree of Risk. You Should Purchase Shares Only
If You Can Afford a Complete Loss. See "Risk Factors," Page 8.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The Securities Authority of the State of Israel has granted us an exemption from
Israel's publication requirements applicable to this Prospectus. The grant of
such exemption should not be construed as a determination that this Prospectus
is truthful or complete or as an opinion on the quality of the securities
offered in this Prospectus.
------------------------------
February 23, 1999
2
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this
prospectus. It is not complete and does not contain all of the information you
should consider before investing in our stock. Therefore, you should read the
entire prospectus carefully.
Nur Macroprinters Ltd.
Introduction
Nur Macroprinters Ltd. is a world leader in the market for the sale of
very large format digital printing systems. We develop, manufacture, assemble
through a subcontractor, sell, and service digital color printers for the
printing of large images such as billboards, posters, and banners. We also
supply our customers with the inks, solvents, and print substrates for use with
our printers.
On October 6, 1995, we completed our initial public offering and our
shares currently trade on the Nasdaq National Market under the symbol NURTF.
There is no non-United States trading market for our shares.
Our Products
Our printers allow customers to print large color images on demand,
generally in substantially less time, with less labor, and at a lower cost than
traditional methods of printing.
One of our principal products is the Blueboard printer, a second
generation very large format printer introduced in early 1997. The Blueboard
printer can print in variable widths from 0.9 to 5 meters (approximately 3 to
16.4 feet). The Blueboard printer is based on our own continuous ink-jet digital
printing technology and is designed to improve quality and ease of use.
In April 1998, we introduced a faster version of the Blueboard printer,
the Blueboard 2, in response to demand from our customers for increased
productivity. The Blueboard 2 is now also one of our main products. In September
1998, we acquired rights to a certain piezo drop on demand digital printing
technology which we plan to incorporate into a new printer.
Our main product until the end of 1995 was the Outboard printer, which is
capable of printing in widths of up to 1.6 meters (approximately 5.25 feet). At
the end of 1995 we introduced the Wideboard printer, a first generation very
large format printer capable of printing in variable widths of up to 5 meters.
The ink we sell to our customers for use with our printers is resistant to
water and ultraviolet rays and is well suited for indoor and outdoor use. The
substrates we sell to our customers are also suitable for indoor and outdoor use
and are made of vinyl, PVC, paper, and mesh.
Our Customers
We sell our printers and related products primarily to commercial
printers, design and service firms, screen printers, outdoor media companies,
and trade shops. Our customers use our products to print large images such as
billboards, posters, banners, and point of purchase displays for advertising, as
well as decorations and backdrops for showrooms, museums, and exhibits.
3
<PAGE>
Our Strategy
Our strategy is to:
o strengthen our position as a world leader in the very large format
printing market by supplying the most productive and cost-effective very
large format digital printers;
o introduce large format digital ink jet printers to replace current large
format screen printers;
o be our customers' vendor of choice for all of their ink and substrate
needs;
o enable our customers to develop new ways to profit from our printing
systems; and
o provide our customers with state of the art service and supplies.
Where you can obtain additional information:
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Mailing Address Executive Office
P.O. Box 8440 5 David Navon Street
Moshav Magshimim 56910 Moshav Magshimim 56910
Israel Israel
Phone: 972-3-908-7676 Website: http://www.nur.com
</TABLE>
The information on our website is not a part of this Prospectus.
4
<PAGE>
The Offering
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Shares offered assuming exercise of all
warrants and options.................... 9,119,483
Shares outstanding before offering........ 10,880,000
Shares outstanding after offering assuming
exercise of all warrants and options.... 13,240,039
Nasdaq National Market
Trading Symbol.......................... NURTF
Selling Security Holders.................. See "Selling Security Holders," page 49.
Use of Proceeds........................... The selling security holders will receive all of the
proceeds from the sale of their shares to the public.
Nur Macroprinters Ltd. will not receive any proceeds
from the sale of the shares. We will, however, receive
some proceeds if stockholders exercise their warrants
and options. These proceeds will be used for working
capital and general corporate purposes. See "Use of
Proceeds," page 16.
Plan of Distribution...................... We are not aware of any specific plan the selling
security holders may have to sell their shares. We
believe that the selling security holders will sell
their shares at prevailing market prices on the Nasdaq
National Market, without payment of any underwriting
commissions or discounts other than ordinary transaction
costs. We are paying for the preparation of this
Prospectus and the related Registration Statement.
Risk Factors.............................. Investing in our shares is very risky. You should be
able to bear a complete loss of your investment. See
"Risk Factors," page 8.
</TABLE>
5
<PAGE>
Summary Consolidated Financial Information
(in thousands, except per share and operating data)
The following selected consolidated financial data as of December 31, 1996 and
1997 and for the years ended December 31, 1996 and 1997 and the selected
financial data for the year ended December 31, 1995 have been derived from the
Company's Consolidated Financial Statements, set forth elsewhere in this
prospectus. These financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") in Israel. The selected
financial data as of December 31, 1993, 1994 and 1995 and for the years ended
December 31, 1993 and 1994 have been derived from audited financial statements
not included herein, which have also been prepared in accordance with Israeli
GAAP. As applicable to the Company's Consolidated Financial Statements, U.S.
GAAP and Israeli GAAP are identical in all material respects. The selected
consolidated financial data as of September 30, 1998 and for the nine-months
period ended September 30, 1997 and 1998 are derived from the Company's
unaudited consolidated financial statements. The selected Consolidated Financial
Statements set forth below should be read in conjunction with and are qualified
by reference to "Management's Discussions and Analysis of Financial Condition
and Results of Operations", and the Company's Consolidated Financial Statements
included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Nine Months Ended
Years Ended December 31, September 30,
------------------------ -----------------
1993 1994 1995 1996* 1997* 1997* 1998*
---- ---- ---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Sales of printers and related
products $6,880 $10,010 $13,824 $13,639 $18,874 $12,660 $22,824
Sales of printed materials -- -- -- 2,998 3,085 2,171 3,110
------ ------- ------- ------- ------- ------- -------
6,880 10,010 13,824 16,637 21,959 14,831 25,934
------ ------- ------- ------- ------- ------- -------
Cost of revenues:
Cost of sales of printers and
related products 4,861 6,939 9,374 11,528 9,627 6,697 11,283
Cost of sales of printed materials -- -- -- 2,008 1,684 1,182 2,036
------ ------- ------- ------- ------- ------- -------
4,861 6,939 9,374 13,536 11,311 7,879 13,319
------ ------- ------- ------- ------- ------- -------
Gross profit 2,019 3,071 4,450 3,101 10,648 6,952 12,615
------ ------- ------- ------- ------- ------- -------
Research & development expenses 739 497 1,040 1,530 1,726 1,096 3,965
Less royalty-bearing grants 144 161 306 372 43 127 480
------ ------- ------- ------- ------- ------- -------
Research & development expenses, net 595 336 734 1,158 1,683 969 3,485
------ ------- ------- ------- ------- ------- -------
Selling and marketing expenses, net 867 715 1,039 4,823 4,620 2,936 4,347
General & administrative expenses 520 1,099 1,187 2,560 3,439 2,706 3,753
Write-off of debts from related
parties -- -- -- 3,757 -- 99 --
------ ------- ------- ------- ------- ------- -------
1,387 1,814 2,226 11,140 8,059 5,741 8,100
------ ------- ------- ------- ------- ------- -------
Operating income (loss) 37 921 1,490 (9,197) 906 242 1,030
Financial expenses, net 243 65 205 589 320 207 433
Gain (loss) on marketable securities 251 (40) 12 22 -- -- (29)
Other income (expenses), net -- -- 110 76 (8) -- (6)
------ ------- ------- ------- ------- ------- -------
</TABLE>
- -----------------------
* Represents financial information for Nur Macroprinters Ltd. together with its
subsidiaries, Nur Media Solutions S.A. ("Nur Media Solutions"), Nur America Inc.
("Nur America"), Nur Advanced Technologies (Europe) S.A. ("Nur Europe"), and Nur
Marketing and Communication GmbH ("Nur Germany").
6
<PAGE>
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<CAPTION>
Nine Months Ended
Years Ended December 31, September 30,
------------------------ -----------------
1993 1994 1995 1996* 1997* 1997* 1998*
---- ---- ---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) before taxes on income 45 816 1,407 (9,688) 578 35 562
Taxes on income 60 25 221 400 67 -- 227
--------- --------- --------- --------- --------- --------- ---------
Income (loss) after taxes on income (15) 791 1,186 (10,088) 511 35 335
Minority interest in earnings of
subsidiary -- -- -- -- (26) -- (30)
Equity in losses of 50% owned joint
venture (528) (987) (1,125) -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) for the period $ (543) $ (196) $ 61 $(10,088) $ 485 $ 35 $ 305
--------- --------- --------- --------- --------- --------- ---------
Basic and diluted earnings (loss)
per share $(0.15) $(0.05) $0.01 $ (1.47) $0.07 $0.01 $0.03
--------- --------- --------- --------- --------- --------- ---------
Weighted average number of shares
used in computing basic and diluted
earnings (loss) per share 3,624,708 4,123,082 4,904,118 6,880,000 7,293,640 6,880,000 10,880,000
========= ========= ========= ========= ========= ========= ==========
</TABLE>
Balance Sheet Data
(In U.S. Dollars)
<TABLE>
<CAPTION>
December 31, September 30,
-------------------------------- -------------------
1995 1996* 1997* 1997* 1998*
---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Working capital........... $10,597 $ 690 $ 4,674 $ 2,475 $ 4,307
Total assets.............. 16,759 12,161 13,783 11,862 20,200
Total liabilities......... 4,945 10,325 7,998 8,906 14,166
Total shareholders' equity $11,814 $ 1,836 $ 5,785 $ 2,956 $ 5,975
</TABLE>
*Represents financial information for Nur Macroprinters Ltd. together with its
subsidiaries, Nur Media Solutions, Nur America, Nur Europe, and Nur Germany.
7
<PAGE>
RISK FACTORS
Investing in our shares is very risky. You should be able to bear a
complete loss of your investment. To understand the level of risk, you should
carefully consider the following risk factors, as well as the other information
found in this prospectus.
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We need additional financing. We believe that our revenues from operations
together with our capital resources and
credit facilities will be enough to fund our
current activities at their present rate
through April 2000. If we want to proceed
We need to raise more money to with the expansion of our operations, we
successfully run our business. will require additional funds, to be raised
through public or private financing of debt
or equity, to ensure our ability to
maintain our planned operations, after April
1999. If we are unable to raise such funds,
we will have to reduce or eliminate certain
planned expenditures for research and
development, production, or marketing of our
products, any one of which could have a
negative impact on our financial results. In
this regard, how much money we will need
depends on numerous factors, including the
success of our marketing and customer
service efforts, our research and
development activities, and the demand for
our products and services. We cannot
guarantee that additional financing will be
available or that, if available, it will be
obtained on terms we find favorable. We
currently have no commitments for additional
financing.
We depend on a few key products We are highly dependent on the sal of our
in a business subject to rapid principal products, the Blueboard and
technological change. Blueboard 2 printers and related supplies.
Rapid changes in technology, customer
preferences and evolving industry standards
increasingly characterize the market for our
printers. As a result of these factors, our
growth and future financial performance will
depend upon our ability to develop and
market new products and keep pace with the
latest technological advances in the
industry. We must also improve our existing
products to accommodate technological
Our success depends on the advances and customer preferences. During
research and development of new 1997 and through the first nine months of
products. 1998, we invested approximately $5.7
million in research and development projects
of which $1.6 million is related to the
acquisition of technology that caused a one-
time write-off assigned to research and
development. Our business could seriously
suffer if we fail to anticipate or respond
adequately to changes in technology and
customer preferences, or if our products
are delayed in their development or
introduction. Other events beyond our
control could also hurt our business. For
example, one of our competitors could
develop and market a printer that customers
prefer over our printers. We can not assure
you that we will successfully develop any
new products. Finally, we cannot predict how
the introduction of new products by our
competitors will affect sales of our
existing products.
Over the next three years we will In September 1998 we acquired all rights to a
make significant royalty payments. certain drop on demand inkjet technology
suitable for large format digital printers.
Over the next three years we must pay
royalty payments to the seller of up to $1.3
million. If we do not make certain minimum
royalty payments, the Seller of the
technology will have the option to buy-back
the technology. See "Management's Discussion
and Analysis of Financial Condition and
Results of Operations--General--Certain
Royalty Obligations."
Our success depends on our We currently purchase all of the ink and
suppliers and subcontractors. ink-jets used in our printers from one
supplier, Imaje, a French manufacturer of
ink-related products. We have a written
agreement for the supply of the ink, but the
agreement for the supply of the ink-jets is
being re-negotiated. We have been able to
obtain adequate supplies of ink and ink-jets
in the past, although Imaje has occasionally
delivered the supplies late. If this sole
supplier experiences
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8
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any problem that results in production
Imaje is our only supplier of ink delays, our sales to new customers and
and ink-jets. existing customers that rely on our ink to
operate their printers could be hurt.
Because the success of our business depends
on the sale of our printers, such a supply
problem could have a severe effect on our
financial results. Also, if Imaje reduces or
changes the credit or payment terms it
extends to us, our business could be hurt.
We rely on a limited number of We employ a limited number of unaffiliated
subcontractors. subcontractors to manufacture components for
our printers. We currently employ one
independent sub-contractor to assemble our
Blueboard printers. Our subcontractors have,
in the past, been late in delivering
components. We have, however, been able to
obtain adequate supplies of the components
and raw materials necessary to produce our
printers and we have not had any serious
problems with our subcontractors. Because we
rely on subcontractors, we cannot be sure
that we will be able to maintain an adequate
supply of components. Moreover, we cannot be
sure that any of the components we purchase
will satisfy our quality standards and be
delivered on time. Our business could
suffer if we fail to maintain our
relationships with our subcontractors or
fail to develop alternative sources for our
printer components. Also, as our business
grows, we will need to purchase greater
quantities of components on a timely basis,
and any delay in supply could hurt our
sales. We cannot guarantee that we will
develop alternative sources of production
for our products or that we would be able to
replace the sub-contractor that assembles
our Blueboard printers, if required.
We are replacing our largest Scitex Corporation and its subsidiaries
distributor with our own were, through 1998, the most significant
operations. outside distributors of our products,
concentrating in the Far East and the Middle
East. In the fiscal year ended December 31,
1997, and the nine months ended September
30, 1998, our sales to Scitex Corporation
and its subsidiaries accounted for about 10%
and 9% of our total sales. In the first six
months of 1999, we plan to replace Scitex
and its subsidiaries with our own
distribution operations in Shanghai, China
and Tel-Aviv, Israel. We anticipate opening
our distribution operations in Shanghai and
Tel Aviv during the first quarter of 1999.
In the interim, we continue to distribute
our products through Scitex Corporation. Our
business could suffer as we make such
transition due to increased costs and
uncertainties associated with the
development of such business. Our business
could also suffer if our efforts prove
unsuccessful.
Our business is extremely The printing equipment industry is extremely
competitive. competitive and many of our competitors
have greater management, financial,
technical, manufacturing, marketing, sales,
distribution, and other resources than we
do. Our ability to compete depends on
factors both within and outside of our
control, including the performance and
acceptance of our current printers and any
products we develop in the future. We
We have numerous competitors in compete against several companies that
the market for our printers. market digital printing systems based on
electrostatic, drop-on-demand, airbrush, and
other technologies. We also face competition
from existing conventional large format
printing methods, including hand painting,
silk screening, and offset printing. Our
competitors could develop new products, with
existing or new technology, that could be
competitive in price and performance with
our printers. We can offer no assurance that
we can compete effectively with any such
products.
We also face competition in the We also compete with independent
market for printing supplies. manufacturers in the market for printer
supplies, in particular, the inks we
supply. In 1997, and the first nine months
of 1998, ink sales accounted for 21% and 23%
of our total sales, respectively. We cannot
guarantee that we will be able to remain the
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9
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<S> <C>
exclusive or even principal ink manufacturer
for our printers. We recently entered the
substrate business, which is also highly
competitive and characterized by a large
number of suppliers worldwide. We are
developing substrates through subcontractors
that have a high added-value when used with
our printers. We believe we are well
positioned, both in our technical knowledge
and in the minds of our customers, to
succeed in selling high value-added
substrates to our customers. We can not
assure you that we will be able to compete
effectively or achieve significant revenues
in the substrate business.
We depend on our key employees. Our success depends to a significant extent
upon the contributions of key personnel and
our senior executives. Our business could
seriously suffer if one or more of our key
personnel or senior executives were to leave
our company. In addition, we do not have,
and do not contemplate getting, "key-man"
life insurance for any of our key employees.
Our future success will also depend in part
on our continuing ability to retain our key
personnel and senior executives and to
attract other highly qualified employees.
We cannot assure our continued success in
attracting or retaining highly qualified
personnel.
We rely on trade secrets, patents We rely on a combination of trade secrets,
and proprietary rights. licenses, patents, and non-disclosure and
confidentiality agreements to establish and
protect our proprietary rights in our
products. We cannot guarantee that our
existing patents or any future patents will
not be challenged, invalidated, or
circumvented, or that our competitors will
not independently develop or patent
technologies that are substantially
equivalent or superior to our technology. We
cannot be sure that we will receive further
patent protection in Israel, the United
States, or elsewhere, for existing or new
products or applications. Even if we do
secure further patent protection, we cannot
guarantee it will be effective. In some
countries, meaningful patent protection is
not available. We are not aware of any
infringement claims against us involving our
proprietary rights. Third parties may assert
infringement claims against us in the
future, and the cost of responding to such
assertions, regardless of their validity,
could be significant. In addition, such
claims could be found to be valid and result
in large judgments against us. Even if such
claims are not valid, the cost could be
substantial to protect our patent rights.
See "Business--Legal Proceedings."
It is difficult to protect our We believe that our success is less
proprietary rights. dependent upon the legal protection
afforded by patent and other proprietary
rights than on the knowledge, ability,
experience, and technological expertise of
our employees and our key suppliers. Our
policy is to have employees sign
confidentiality agreements, to have selected
parties, including key suppliers,
sub-contractors, and distributors, sign
non-competition agreements, and to have
third parties that we deal with sign
non-disclosure agreements. Although we take
precautionary measures to protect our trade
secrets, we cannot guarantee that others
will not acquire equivalent trade secrets or
steal our exclusive technology. Moreover, we
may not be able to meaningfully protect our
rights that are not protected by patents.
We rely on international sales. Our printers and supplies are sold
worldwide, with revenues generated in
various currencies. There are a number of
risks inherent in international business
activities, including unexpected changes in
regulatory requirements, political
instability, tariffs and other trade
barriers, as well as the burdens of
complying with different foreign laws. To
date, fortunately, these risks have not
materially affected our business or
financial situation. We cannot predict,
however, when exchange or price
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10
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<S> <C>
controls or other restrictions on the
conversion of foreign currencies could
impact our business.
Currency fluctuations are a risk Because we have revenues and expenses in
we face on a daily basis. various currencies, including the U.S.
dollar, the NIS, and certain European
currencies, our financial results are
subject to the effects of fluctuations of
foreign currency exchange rates. In the
future, currency fluctuations could hurt
our profitability. We do not hedge against
fluctuations in currency exchange rates, but
we may do so in the future.
Environmental concerns. We mix athe ink used in our printers with a
methylethyl-keton ("MEK") solvent. MEK is a
hazardous substance and is subject to
various government regulations relating to
its transfer, handling, packaging, use, and
disposal. We store the ink at warehouses in
Europe, the United States and in Israel,
and a shipping company ships it at our
direction. We face potential responsibility
for problems that may arise when we ship the
ink to customers. We believe that we are in
material compliance with all applicable
environmental laws and regulations. If we
fail to comply with these laws or an
accident involving our ink waste or MEK
occurs then our business and financial
results could be adversely affected.
We rely on government grants, tax We receive grants and tax benefits from the
benefits, and other funding from Israeli government, which also sponsors
third parties. programs in which we participate. The
Government of Israel, through the Office
of the Chief Scientist (the "OCS"),
encourages research and development projects
oriented toward products for export. Since
our inception we have used grants from the
OCS to develop our products. Under our
agreement with the OCS, we pay royalties to
the OCS generally at a rate of 2% to 3% on
sales of products developed with the help of
OCS funds. The royalties end when 100% to
150% of the dollar value of the grant is
repaid. During the years ended December 31,
1995, 1996 and 1997 and the nine months
ended September 30, 1998, the OCS provided
us with grants for research and development
expenses in the amounts of $0.31 million,
$0.37 million, $0.04 million, and $0
million, respectively. These grants amounted
to approximately 29%, 24%, 2.5%, and 0%,
respectively, of our total research and
development expenses. During 1995, we paid
approximately $0.10 million in royalties to
the OCS. We did not pay royalties in the
years ended December 31, 1996 and 1997 and
during the nine months ended September 30,
1998. As of September 30, 1998, we had a
contingent liability to pay the OCS $0.993
million in future royalty payments.
The Israeli government has The Israeli Government, through the Fund for
subsidized our international the Encouragement of Marketing Activities of
marketing expenses. the Ministry of Industry and Commerce (the
"Marketing Fund"), awards participation
grants for marketing expenses incurred
overseas. We received grants from the
Marketing Fund totaling approximately $0.253
million in 1995 for the promotion of our
printers and another product that has since
been discontinued. We did not receive any
grants in 1996, but the Marketing Fund
approved grants of up to $0.2 million for
our account in 1997 and $0.4 million for our
account for the nine-month period ended
September 30, 1998. We did receive $0.2
million during the nine-months period ended
for September 30, 1998 out
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
of the $0.6 million allocated to us during
1997 and 1998. We may not be eligible for
additional grants from the Marketing Fund in
the future due to our reaching the maximum
allowed export revenues. We are obligated to
pay a royalty of 3% of the export added
value of our products to the Marketing Fund
until 100% of the grants have been repaid.
The principal amount of the grants are
linked to the U.S. dollar. As of September
30, 1998, we had made royalty payments to
the Marketing Fund totaling $0.08 million,
and have a contingent liability to pay the
Marketing Fund $0.43 million in future
royalty payments.
We receive tax benefits from the Pursuant to the Law of Encouragement of
Israeli government. Capital Investments, the Israeli government
has granted "Approved Enterprise" status to
some of our production facilities.
Consequently, these facilities are eligible
for certain tax benefits for the first
several years in which they generate taxable
income. If we fail to obtain additional
grants, or if our tax benefits are
significantly reduced, our financial
condition could suffer.
We must comply with conditions to In order to receive grants and tax benefits,
receive grants and tax benefits. we must comply with a number of conditions.
If we fail to comply with these conditions
and criteria, the grants and tax benefits
that we receive could be partially or fully
canceled and we would be forced to refund
the amount of the canceled benefits
received, adjusted for inflation and
interest. We believe that we have operated
and will continue to operate in compliance
with the required conditions, although we
cannot be sure. We further believe that the
likelihood is remote that we will be
required to refund grants or tax benefits
that we receive from the OCS, the Marketing
Fund, and under our "Approved Enterprise"
status.
We also receive grants from the Nur Europe has secured two non-related
Government of Belgium grants from local authorities in Belgium.
The first grant will provide up to
approximately $0.5 million, provided Nur
Europe completes an approximately $3.0
million investment program and employs at
least 21 full time employees in Belgium by
December 31, 1999. The second grant provides
reimbursement of up to 70% of our research
and development investment in Belgium. The
maximum amount of this grant is
approximately $1.0 million. If we do not
derive revenue or develop products as a
result of our investment in Belgium, then we
do not have to repay the grant; otherwise,
we will repay the grant over 5 years. See
"Business--Research and Development."
We have experienced financial In the past we experienced financial
difficulties in the past. difficulties. As of December 31, 1996, we
have written off $3.7 million due to
outstanding debts owed to us by Moshe Nur,
our previous Chairman of the Board and major
shareholder, and companies controlled by Mr.
Nur. These companies are now in various
insolvency proceedings. The written off
debts resulted, in part, from ineffective
controls, which failed to prevent
unauthorized transactions and the
misappropriation of funds. These
difficulties resulted in losses of $10.1
million in the year ended December 31, 1996,
and reduced our shareholders' equity to
approximately $1.8 million at such date. In
April 1997, Moshe Nur transferred control of
the Company and subsequently resigned from
the Board of Directors. We have reached a
settlement agreement resolving all
outstanding material claims related to the
insolvency proceedings of Moshe Nur and his
companies. Despite this settlement, in the
future we may be exposed to claims arising
from Moshe Nur's actions. Liabilities
arising from any such claims and the cost to
defend our company may be substantial.
</TABLE>
12
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<TABLE>
<S> <C>
We have recently changed our In April 1997, when Moshe Nur transferred
leadership and have limited control of Nur Macroprinters Ltd., we
management resources to manage replaced most of the members of our Board of
future growth. Directors. We also made several management
changes at such time and recently changed
our Chief Financial Officer. Our recent
growth has placed, and will continue to
place, a significant strain on our
management team, facilities, and other
resources. In order to support our growth,
our new leadership adopted financial
controls and reporting systems and expanded
our management, facilities, financial, and
other resources. To avoid any negative
effects on our business, we must
successfully implement financial controls,
expand our manufacturing, sales, marketing,
and service organizations, and update our
accounting, operational, and management
information systems. Failure to do so
effectively could have a material adverse
effect on our business and financial
results.
Our operating results tend to Our revenues may vary significantly from
fluctuate. quarter to quarter as a result of, among
other factors, the timing of new product
announcements and releases by our
competitors and us. We do not typically have
a material backlog of orders at the
beginning of each quarter. We generally ship
and record a significant portion of our
revenues for orders placed within the same
quarter, primarily in the last month of
the quarter. We may not learn of shortfalls
in sales until late in, or shortly after the
end of, such fiscal period. As a result, our
quarterly earnings may be subject to
significant variations.
We have an uneven history of We have an uneven history of incurred an
financial results. operating loss of approximately $0.32
million in 1991 and $0.22 million in 1992.
In 1993 we made an operating profit for the
first time, earning approximately $0.04
million, which increased to approximately
$0.92 million in 1994, and to $1.49 million
in 1995. In 1996 we incurred an operating
loss of $9.2 million. In 1997 we achieved
an operating income of $0.91 million and in
the nine months ended September 30, 1998 had
operating income of $1.03 million. We cannot
assure profitability in the future.
Important facilities and Our most important facilities and operations
operations are located in Israel. and many of our subcontractors are located
entirely in the State of Israel. Political
and military conditions in Israel directly
affect operations. Since Israel was
established in 1948, a state of hostility
has existed, varying in degree and
intensity, between Israel and certain Arab
countries. Although Israel has entered into
agreements with some of these countries, the
Palestine Liberation Organization and the
Palestinian Authority, and the feuding
parties have signed various declarations in
hopes of resolving some of the hostilities,
we cannot predict the future of the
volatile Middle East and of Israel in
particular. To date, Israel has not entered
into a peace treaty with Lebanon or Syria,
with whom Israel shares its northern
borders, or with certain other Arab
countries with whom a state of hostility
exists. Any major hostilities involving
Israel, the Palestinian Authority, or Arab
countries in the Middle East could have a
serious negative impact on our business
operations.
Some of our officers and Furthermore, all nonexempt male adult
employees are on military citizens of Israel, employees are on
reserve. military reserve. including some of our
officers and employees, are obligated to
perform military reserve duty and are
subject to being called for active duty
under emergency circumstances. While we have
operated effectively under these conditions
in the past, we cannot predict the full
impact of such conditions on us in the
future, particularly if emergency
circumstances occur.
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
We are sensitive to
economic conditions in Israel. Inflation in Israel and devaluation of the
NIS have an impact on our financial results.
Although Israel has substantially reduced
the rates of inflation and devaluation in
recent years, they are still relatively high
and we could experience losses due to
inflation or devaluation. If inflation rates
in Israel increase again and hurt Israel's
economy as a whole, our operations and
financial condition could be negatively
impacted.
We do not know the impact of Israeli law limits foreign currency
recent policy changes on transactions and transactions between
foreign currency transactions. Israeli and non-Israeli residents. The
Controller of Foreign Exchange at the Bank
of Israel, through "general" and "special"
permits, may regulate or waive these
limitations. Until recently, transactions in
foreign currency were strictly regulated. In
May 1998, the Bank of Israel liberalized its
foreign currency regulations by issuing a
new "general permit" pursuant to which
foreign currency transactions are generally
permitted, although certain restrictions
still apply. Restricted transactions include
foreign currency transactions by
institutional investors, including futures
contracts by foreign residents for periods
of more than one month, and investments
outside of Israel by pension funds and
insurers. Under the new general permit, all
foreign currency transactions must be
reported to the Bank of Israel. We cannot
currently assess what impact, if any, this
liberalization will have on us. We also
cannot predict its impact on the value of
the NIS compared to the dollar and the
corresponding effect on our financial
statements.
Service of process and We are organized under the laws of Israel
enforcement of judgments. and our headquarters are in Israel. Certain
of our officers, directors, selling security
holders and named experts in this Prospectus
reside outside of the United States.
Therefore, you may not be able to enforce
any judgment obtained in the U.S. against us
or any of such persons. You may not be able
to enforce civil actions under U.S.
securities laws if you file a lawsuit in
Israel. However, we have been advised by our
Israeli counsel that subject to certain
limitations, Israeli courts may enforce a
final judgment of a U.S. court for
liquidated amounts in civil matters after a
hearing in Israel. We have appointed CT
Corporation System as our agent to receive
service of process in any action against us
in any Federal or State. Court in New York
City arising out of this offering. We have
not given our consent for our agent to
We have appointed an agent to accept service of process in connection with
accept service of process in any other claim. If a foreign judgment is
New York. enforced by an Israeli court, it will be
payable in Israeli currency.
We are preparing for the Many computer systems and software products
Year 2000. will not function properly commencing in the
year 2000 due to a once-common programming
standard that represents years using only
the last two-digits. This is known as the
Year 2000 problem. We are in the process of
upgrading our computers to avoid any
material complications due to the Year 2000
problem. As part of this program, we will
identify those systems and applications that
require modification, redevelopment or
replacement. We expect to be Year 2000
compliant by July 1999 with respect to our
internal systems and our products. Providing
upgrades and changes to our older products
could cost up to $15,000 in the aggregate.
If we do not attain compliance for our
products in time to avoid complications, we
have a contingency plan in place that we
believe will protect our customers. We do
not believe that the failure of our vendors
or other third-party providers' systems to
be Year 2000 compliant will have a
materially negative impact on our business.
See "Management's Discussion and Analysis of
Financial condition and Results of
Operation-Liquidity and Capital Resources-
Year 2000."
</TABLE>
14
<PAGE>
<TABLE>
<S> <C>
Forward-looking statements. In this prospectus we make forward-looking
statements that involve risks and
uncertainties. Our actual results could
differ considerably due to a variety of
factors, including competitive developments,
the risk factors listed above, and the risk
factors listed from time to time in the
reports we file with the U.S. Securities and
Exchange Commission.
</TABLE>
15
<PAGE>
USE OF PROCEEDS
The Company will not receive any money from the sale of the Ordinary
Shares offered by the selling security holders. Management estimates that the
aggregate expense of this offering will be approximately $279,000, all of
which will be borne by the Company.
The gross proceeds to the Company from the exercise of all of the
outstanding Options would be $2.87 million and from the exercise of all
outstanding Warrants would be $1.51 million, assuming no exercise of Warrants
pursuant to cashless exercise provisions thereof. The Company intends to use the
proceeds from the exercise of the Warrants and Options, if any, for working
capital and general corporate purposes.
MARKET FOR COMMON EQUITY
The Company's Ordinary Shares are quoted on the Nasdaq National Market
under the symbol NURTF. There is no non-United States trading market for the
shares.
As of January 15, 1999, there were 136 record holders of Ordinary Shares,
of which 114 represented United States record holders holding approximately
79.31% the outstanding Ordinary Shares of the Company.
The prices set forth below are high and low closing bid prices for the
Ordinary Shares of the Company as reported by Nasdaq National Market. Such
quotations reflect inter-dealer prices, without retail markup, markdown, or
commission and may not necessarily represent actual transactions.
<TABLE>
<CAPTION>
Quarter High Low
- ------- ---- ---
<S> <C> <C>
1st Quarter 1996 5 1/8 2 3/4
2nd Quarter 1996 4 1/2 2 3/8
3rd Quarter 1996 3 1/4 1 3/4
4th Quarter 1996 2 3/4 1 1/2
1st Quarter 1997 2 1/4 1 1/4
2nd Quarter 1997 1 3/4 1
3rd Quarter 1997 2 1/8 1 1/16
4th Quarter 1997 2 1/8 1 1/4
1st Quarter 1998 3 1/8 1 11/16
2nd Quarter 1998 4 1/2 2 1/4
3rd Quarter 1998 3 1/8 1 15/16
4th Quarter 1998 3 3/8 1 3/4
1st Quarter 1999* 3 1/2 2 3/8
</TABLE>
- ----------
* Represents the period from January 1, 1999 through February 18, 1999.
16
<PAGE>
DIVIDEND POLICY
The Company does not anticipate that it will pay any cash dividend on its
Ordinary Shares in the foreseeable future. Dividends, if any, will be paid in
NIS. Dividends paid to shareholders outside Israel will be converted to U.S.
dollars, on the basis of the exchange rate prevailing at the date of payment.
The Company has determined that it will not distribute dividends out of
tax-exempt profits.
CAPITALIZATION
The following table sets forth the actual capitalization of the Company as
of September 30, 1998, and pro forma as adjusted to give effect to (i) the
issuance of 400,000 additional Ordinary Shares upon exercise of the Warrants,
based on the closing bid price of $3.0625 of the Ordinary Shares on February 2,
1999, and (ii) the issuance of 1,805,039 additional Ordinary Shares upon the
exercise of options granted under the Company's stock option plans. See
"Description of Securities" and "Management--Stock Option Plans."
This table should be read in conjunction with the Company's Financial
Statements and the Notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
September 30, 1998
------------------
Pro Forma
Actual as Adjusted
------ -----------
(In thousands)
<S> <C> <C>
Cash and cash equivalents...................................... $ 875 $ 4,142
Ordinary Shares of NIS 1 per nominal value: 20,000,000 shares
authorized; 10,880,000 shares issued and outstanding; 2,205,039
shares issued and outstanding pro forma as adjusted............ 2,729 3,267
Additional paid-in capital..................................... 14,357 17,086
Other Comprehensive Income..................................... (119) (119)
Accumulated Deficit............................................ (10,992) (10,992)
-------- --------
Total shareholders' equity..................................... 5,975 9,242
-------- --------
Total capitalization........................................... $ 6,850 $ 13,384
-------- --------
</TABLE>
17
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
STATEMENTS OF OPERATIONS
(In U.S. Dollars)
The following selected consolidated financial data as of December 31, 1996 and
1997 and for the years ended December 31, 1996 and 1997 and the selected
financial data for the year ended December 31, 1995 have been derived from the
Company's Consolidated Financial Statements, set forth elsewhere in this
prospectus. These financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") in Israel. The selected
financial data as of December 31, 1993, 1994 and 1995 and for the years ended
December 31, 1993 and 1994 have been derived from audited financial statements
not included herein, which have also been prepared in accordance with Israeli
GAAP. As applicable to the Company's Consolidated Financial Statements, U.S.
GAAP and Israeli GAAP are identical in all material respects. The selected
consolidated financial data as of September 30, 1998 and for the nine-months
period ended September 30, 1997 and 1998 are derived from the Company's
unaudited consolidated financial statements. The selected Consolidated Financial
Statements set forth below should be read in conjunction with and are qualified
by reference to "Management's Discussions and Analysis of Financial Condition
and Results of Operations", and the Company's Consolidated Financial Statements
included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Nine Months Ended
Years Ended December 31, September 30,
------------------------ -------------
1993 1994 1995 1996* 1997* 1997* 1998*
---- ---- ---- ----- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Sales of printers and related
products $6,880 $10,010 $13,824 $13,639 $18,874 $12,660 $22,824
Sales of printed materials -- -- -- 2,998 3,085 2,171 3,110
------ ------- ------- ------- ------- ------- -------
6,880 10,010 13,824 16,637 21,959 14,831 25,934
------ ------- ------- ------- ------- ------- -------
Cost of revenues:
Cost of sales of printeres and
related products 4,861 6,939 9,374 11,528 9,627 6,697 11,283
Cost of sales of printed materials -- -- -- 2,008 1,684 1,182 2,036
------ ------- ------- ------- ------- ------- -------
4,861 6,939 9,374 13,536 11,311 7,879 13,319
------ ------- ------- ------- ------- ------- -------
Gross profit 2,019 3,071 4,450 3,101 10,648 6,952 12,615
------ ------- ------- ------- ------- ------- -------
Research & development expenses 739 497 1,040 1,530 1,726 1,096 3,965
Less royalty-bearing grants 144 161 306 372 43 127 480
------ ------- ------- ------- ------- ------- -------
Research & development expenses, net 595 336 734 1,158 1,683 969 3,485
------ ------- ------- ------- ------- ------- -------
Selling and marketing expenses, net 867 715 1,039 4,823 4,620 2,936 4,347
General & administrative expenses 520 1,099 1,187 2,560 3,439 2,706 3,753
Write-off of debts and related
parties -- -- -- 3,757 -- 99 --
------ ------- ------- ------- ------- ------- -------
1,387 1,814 2,226 11,140 8,059 5,741 8,100
------ ------- ------- ------- ------- ------- -------
Operating income (loss) 37 921 1,490 (9,197) 906 242 1,030
Financial expenses, net 243 65 205 589 320 207 433
Gain (loss) on marketable securities 251 (40) 12 22 -- -- (29)
Other income (expenses), net -- -- 110 76 (8) -- (6)
------ ------- ------- ------- ------- ------- -------
</TABLE>
- -------------------
* Represents financial information for the Company together with its
subsidiaries, Nur Media Solutions, Nur America, Nur Europe and Nur Germany.
18
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended
Years Ended December 31, September 30,
------------------------ -------------
1993 1994 1995 1996* 1997* 1997* 1998*
---- ---- ---- ----- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) before taxes on income 45 816 1,407 (9,688) 578 35 562
Taxes on income 60 25 221 400 67 -- 227
--------- --------- --------- --------- --------- --------- ----------
Income (loss) after taxes on income (15) 791 1,186 (10,088) 511 35 335
Minority interest in earnings of
subsidiary -- -- -- -- (26) -- (30)
Equity in losses of 50% owned joint
venture (528) (987) (1,125) -- -- -- --
--------- --------- --------- --------- --------- --------- ----------
Net income (loss) for the period $ (543) $ (196) $ 61 $(10,088) $ 485 $ 35 $ 305
--------- --------- --------- --------- --------- --------- ----------
Basic and diluted earnings (loss)
per share $ (0.15) $ (0.05) $ 0.01 $ (1.47) $ 0.07 $ 0.01 $ 0.03
--------- --------- --------- --------- --------- --------- ----------
Weighted average number of shares
used in computing basic and diluted
earnings (loss) per share 3,624,708 4,123,082 4,904,118 6,880,000 7,293,640 6,880,000 10,880,000
========= ========= ========= ========= ========= ========= ==========
</TABLE>
Balance Sheet Data
(In U.S. Dollars)
<TABLE>
<CAPTION>
December 31, September 30,
------------ -------------
1995 1996* 1997* 1997* 1998*
---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Working capital........... $10,597 $ 690 $ 4,674 $ 2,475 $ 4,307
Total assets.............. 16,759 12,161 13,783 11,862 20,200
Total liabilities......... 4,945 10,325 7,998 8,906 14,166
Total shareholders' equity $11,814 $ 1,836 $ 5,785 $2,956 $5,975
</TABLE>
- ---------------------------
*Represents financial information for Nur Macroprinters Ltd. together with its
subsidiaries, Nur Media Solutions, Nur America, Nur Europe, and Nur Germany.
19
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General
Nur Macroprinters Ltd. (the "Company") is a world leader in the market for
the sale of very large format digital printing systems. The Company develops,
manufacturers, and assembles through a subcontractors, sells, and services
digital, ink-jet color printing systems for on demand, short-run, large format
("LF") and very large format ("VLF") printing. The Company also supplies ink and
its solvent, which are consumable products essential to the operation of the
Company's printers. In June 1998, the Company began supplying substrates for use
with the Company's printers. The Company's total revenues grew from
approximately $13.8 million for the year ended December 31, 1995 to
approximately $22 million for the year ended December 31, 1997 and $25.9 million
for the nine months ended September 30, 1998.
The Company carries out its main research, development and manufacturing
operations at its facilities in Moshav Magshimim and Rosh Ha'ain, Israel. The
Company's main sales and service activities are carried out through its wholly
owned subsidiaries, Nur Europe, located in Brussels, Belgium, and Nur America,
located in Newton, Massachusetts, in the United States. The Company also wholly
owns Nur Media Solutions, located in Brussels, Belgium, which develops and
markets advanced consumables for the Company's printers, and owns 84% of Nur
Germany, located in Kassal, Germany, which is a digital printing and outdoor
advertising company.
The Company incorporated as an Israeli corporation on July 29, 1987, and
the Company's Ordinary Shares have been traded on the Nasdaq National Market
under the symbol NURTF since October 1995.
Revenues from the Company's printers and related materials are derived
from the sale of the Company's printers, inks, substrates, spare parts, and
related services. Revenues from printed materials are derived from Nur Germany's
printing and advertising display services.
Cost of sales of printers and related materials include costs related to
product shipments including materials, labor, overhead, and other direct or
allocated costs involved in the manufacture, warehousing, delivery, support, and
maintenance of products. Cost of sales of printed materials include costs
related to product materials involved in the printing and delivery of printed
materials.
Research and development expenses include mainly labor, materials
consumed, expenses by sub-contractors, consultants, and others. Research and
development expenses are carried to the statement of operations as incurred.
Grants are netted from research and development costs on an accrual basis as the
related expenses are incurred.
The sales and marketing expenses include the costs associated with the
staff of the sales and marketing force of the Company and its subsidiaries,
advertising and promotion of existing and new products, trade shows,
commissions, and other marketing activities.
During 1997, the Company expended significant financial and management
resources to expand its business and product offerings. The Company invested in
strengthening the service and sales organizations in Nur Europe and Nur America,
by hiring additional sales and service staff in both territories. The Company
also invested in the creation and set-up of Nur Media Solutions, a subsidiary
dedicated to the development and marketing of substrates for the use with the
Company's products. The Company continues to expend more resources to this
operation in 1999. During 1997 and 1998, the Company invested in a new line of
printer products aimed at the screen printing market. Revenues from such
printers are expected in the second half of 1999. The Company is also investing
in establishing Company owned distribution operations in Shanghai, China and
Tel-Aviv, Israel, to replace its former distributor.
In the first quarter of 1997, the Company introduced the Blueboard, a 16.4
ft. wide format printer designed and developed by the Company, which became the
Company's principal product. The Blueboard printer was the first product of the
Company developed fully in-house, and as a result contributed significantly to
the increase in the gross margins on equipment, and enhanced the ability of the
Company to introduce upgrades and enhancements to the product.
20
<PAGE>
In April 1998, the Company introduced a faster version of the Blueboard,
the Blueboard 2, in response to increased demand in the VLF printing industry
for increased productivity.
In September 1998, the Company acquired from Meital Electronic Technology
Ltd. ("Meital") all rights (including all related assets) to Meital's piezo
drop-on-demand inkjet technologies for application in large format digital
printers for approximately $3.0 million, consisting of an up-front payment of
$0.75 million, the assumption of certain liabilities, including the legal
dispute (now settled) between Meital and Idanit Technologies Ltd. ("Idanit"), a
division of Scitex Corporation, and future sales based royalties. The Meital
acquisition resulted in the recognition by the Company of a one-time charge
involving a write-off assigned to research and development in the amount of $1.6
million in the third quarter of 1998. As part of such agreement the Company has
also retained Meital's President as a consultant to the Company. See
"Management-Consulting Agreement."
Rental expenses were $42,000, $244,000 and $350,000 for the years ended
December 31, 1995, 1996, and 1997 and $250,000 for the nine months ended
September 30, 1998.
Certain Royalty Obligations
As of September 30, 1998, the Company had a contingent liability to pay
the OCS and the Marketing Fund $0.993 million and $0.43 million, respectively,
in future royalty payments. The Company is obligated to pay each such entity
royalty payments until 100% of the grants have been repaid. The Company is
obligated to pay the OCS and the Marketing Fund royalties in the amount of 2% to
3% of sales and 3% of the export added value of the Company's sale of printers
and related products, respectively, in connection with certain research and
development and marketing grants. During 1995, the Company paid royalties of
approximately $0.10 million to OCS. No royalty payments were made to OCS in
1996, in 1997, or in the nine months ended September 30, 1998. As of September
30, 1998, the Company made royalty payments of $0.08 to the Marketing Fund. The
Company may not be eligible for additional grants from the Marketing Fund in the
future due to the Company reaching the maximum allowed export revenues.
In addition, the Company has future royalty obligations during the next
three years, in connection with the acquisition of technology from Meital, which
will not exceed $1.3 million. If the Company does not meet its obligations to
pay minimum royalty payments, the seller of the technology will have the option
to buy the technology back.
Certain Accounting Policies
The main sources of revenues for the Company are sales of the Company's
printers and related consumable products. Sales are recognized upon shipment of
the product to customers, when no significant vendor obligation remains and
collection is deemed probable.
The accompanying consolidated financial statements have been prepared in
U.S. dollars. The U.S. dollar is the currency of the primary economic
environment in which the operations of the Company and Nur America are
conducted. The U.S. dollar is the functional and reporting currency of the
Company. The majority of sales are made in U.S. dollars and the majority of
purchases of materials and components are invoiced and paid in U.S. dollars. In
addition, a substantial number of other expenses are incurred outside Israel in
U.S. dollars or paid in U.S. dollars or in New Israeli Shekels ("NIS") linked to
the exchange rate of the U.S. dollar.
See note 2 to the Company's Financial Statements included as a part of
this Prospectus for a discussion of the Company's accounting policy for
determining rate of exchange and linkage based amounts.
The Company's transactions and balances denominated in U.S. dollars are
presented in their original amounts. Non-dollar transactions and balances have
been remeasured into U.S. dollars in accordance with Statement 52 of the
Financial Accounting Standards Board ("FASB"). All transaction gains and losses
from remeasurement of monetary balance sheet items denominated in non-dollar
currencies are reflected in the statement of operations as financial income or
expenses, as appropriate.
The functional currencies of Nur International, Nur Europe, and Nur
Germany are their local currencies. The balance sheets of these subsidiaries are
translated into U.S. dollars at the exchange rate prevailing on the date of
21
<PAGE>
the balance sheet. The statements of operations and cash flows are translated at
weighted average exchange rates during each year presented. Translation
adjustments are recorded in a separate component of shareholders' equity.
The Company's consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in Israel. As
applicable to the Company's financial statements, generally accepted accounting
principles in the U.S. and Israel are identical in all material respects.
The Company accounts for stock-based compensation in accordance with the
requirements of Accounting Principles Board Opinion No. 25 ("APB 25")
"Accounting for Stock Issued to Employees." Under APB 25, when the exercise
price of the Company's employee options is less than the fair value of the
underlying shares on the date of grant, compensation expense is recognized.
In accounting for options granted to persons other than employees, the
provisions of Financial Accounting Standards Board Statement No. 123,
"Accounting for Stock Based Compensation" were applied. According to FASB 123,
the fair value of these options was estimated at the grant date using
Black-Scholes options pricing model.
Current and Future Trends
The Company has estimated based on its own market research that the VLF
industry has grown at a rate of 15-20% annually for the last 3 years. The
Company's growth during 1997 and the first nine months of 1998 has exceeded this
growth rate, mainly as a result of increasing market share of the Company in the
VLF market and the introduction of new products. Although there can be no
assurance, the Company believes it will maintain during 1999 a growth rate
similar to the general industry's growth rate in the VLF segment of its
business. The Company is also planning to introduce products to the LF
professional print market during 1999. The gross margins of the Company have,
and are expected to continue to remain at the 1997 levels throughout 1998 and
for the first six months of 1999. Although there is a downward price pressure on
the Company's existing products, there have been certain reductions in the
manufacturing cost of these products. The Company's anticipates a launch of its
new products at gross margins similar to its existing products.
The VLF industry has undergone significant changes in the past few years,
and additional change is anticipated in the future. The most noticeable change
in the industry during 1997 has been the adoption of inkjet technologies by all
major competitors in the industry. Until 1997, the Company had the only
continuous inkjet VLF printer in the market. During 1997, the Company's major
competitors have each introduced an inkjet-based printer to replace their
existing airbrush printers. The new printers, introduced during 1997, are based
on the drop-on-demand technology, as opposed to the continuous inkjet technology
currently used by the Company's printers. To date, the Company has been
successful in maintaining and increasing its growth in revenues from the
Company's printers.
With the cost of digital printing expected to decrease and the ability of
digital technology expected to produce shorter runs more economically, the
Company believes that the use of LF and VLF printing, such as that produced by
the Company's printers, should grow, and that the portion of the market serviced
by digital printing should increase. The ability to produce VLF images digitally
has also opened new media opportunities for advertisers, such as mural printing,
carpet printing, new forms of fleet graphics printing. The growth in demand for
VLF digital printers is fueled by both the replacement of conventional print
methods and the development of new printing applications.
Certain of the statements made in this report are forward-looking
statements that involve risks and uncertainties. Actual results could differ
materially as a result of a variety of factors. See "Risk Factors--Forward
Looking Statements."
22
<PAGE>
Geographic Breakdown of Revenues
The Company sells its services primarily to customers in the Middle East,
Europe and North and Latin America. Revenues are generally recognized at the
location of the sale of the product or service. The table below shows the
breakdown of revenues (dollars in millions) by geographic region for the nine
months ended September 30, 1998, and the years ended December 31, 1997, 1996,
and 1995.
<TABLE>
<CAPTION>
Printed
Printers Ink Materials Others Total
Nine months ended (55%) (23%) (12%) (10%) (100%)
September 30, 1998 ------------ ------------ ------------ ------------ ------------
REGION $ % $ % $ % $ % $ %
- ------------------ ----- ---- ----- ---- ----- ---- ----- ---- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Middle-East &
Asia.................. 1,781 13% 1,462 24% 0 0% 529 21% 3,772 15%
Europe............... 5424 38% 1,711 28% 3,110 100% 1,192 46% 11,437 44%
North & Latin
America............. 6,965 49% 2,913 48% 0 0% 847 33% 10,725 41%
Total Revenues..... 14,170 100% 6,086 100% 3,110 100% 2,568 100% 25,934 100%
====== === ====== === ===== === ===== === ====== ===
<CAPTION>
Printed
Printers Ink Materials Others Total
Year ended (55%) (21%) (14%) (10%) (100%)
December 31, 1997 ------------ ------------ ------------ ------------ ------------
REGION $ % $ % $ % $ % $ %
- ------------------ ----- ---- ----- ---- ----- ---- ----- ---- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Middle-East &
Asia.................. 1,344 11% 1,122 25% 0 0% 583 26% 3,049 14%
Europe............... 6,353 53% 1,549 34% 3,085 100% 862 38% 11,849 54%
North & Latin
America............. 4,326 36% 1,900 42% 0 0% 835 37% 7,061 32%
Total Revenues..... 12,023 100% 4,571 100% 3,085 100% 2,280 100% 21,959 100%
====== === ====== === ===== === ===== === ====== ===
<CAPTION>
Printed
Printers Ink Materials Others Total
Year ended (56%) (15%) (18%) (11%) (100%)
December 31, 1996 ------------ ------------ ------------ ------------ ------------
REGION $ % $ % $ % $ % $ %
- ------------------ ----- ---- ----- ---- ----- ---- ----- ---- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Middle-East &
Asia.................. 6,060 65% 1,400 56% 0 0% 264 14% 7,724 46%
Europe............... 2,410 26% 551 22% 2,998 100% 1,414 77% 7,373 44%
North & Latin
America............. 847 9% 544 22% 0 0% 149 8% 1,540 9%
Total Revenues..... 9,317 100% 2,495 100% 2,998 100% 1,827 100% 16,637 100%
====== === ====== === ===== === ===== === ====== ===
<CAPTION>
Printed
Printers Ink Materials Others Total
Year ended (73%) (11%) (0%) (16%) (100%)
December 31, 1996 ------------ ------------ ------------ ------------ ------------
REGION $ % $ % $ % $ % $ %
- ------------------ ----- ---- ----- ---- ----- ---- ----- ---- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Middle-East &
Asia................. 8,592 85% 652 43% 0 0% 1,726 78% 10,970 79%
Europe............... 1,499 15% 374 25% 0 0% 224 10% 2,097 15%
North & Latin
America............. 0 0% 495 32% 0 0% 262 12% 757 6%
Total Revenues..... 10,091 100% 1,521 100% 0 0% 2,212 100% 13,824 100%
====== === ====== === ===== === ===== === ====== ===
</TABLE>
23
<PAGE>
Results of Operations
The following table sets forth for the periods indicated certain line
items from the Company's statement of operations as a percentage of the
Company's sales:
<TABLE>
<CAPTION>
Nine Months Ended
Years ended December 31, September 30,
------------------------ -----------------
1993 1994 1995 1996* 1997* 1997* 1998*
---- ---- ---- ----- ----- ----- -----
(in percents)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues 100% 100% 100% 100% 100% 100% 100%
Cost of sales of printers and
related products..................... 71 69 68 69 43.9 45.2 43.5
Cost of sales of printed materials... - - - 12 7.6 7.9 7.8
Gross profit......................... 29 31 32 19 48.5 46.9 48.7
Research & development expenses...... 11 5 8 9 7.8 7.4 15.3
Research & development expenses net.. 9 3 5 7 7.7 6.5 13.4
Selling expenses, net................ 12 7 7 29 21 19.8 16.8
General & administrative expenses.... 7 11 9 15 15.7 18.2 14.5
Write-off debts of related parties... (4) - - 23 - 0.7 -
Operating income (loss).............. 1 9 11 (55) 4.1 1.7 4
Financial expenses, net.............. 4 1 2 4 1.5 1.4 1.7
Gain (loss) on marketable securities. 4 - - - - - (0.1)
Other income (expense)............... - - 1 - - - -
Taxes on income (tax benefit)........ 1 - 2 2 0.3 - 0.9
Minority interest in earnings of
subsidiary......................... - - - - 0.1 - (0.1)
Equity in loss of a 50% owned
subsidiary......................... (8) (10) (8) - - - -
Net income (loss) for the year....... (8) (2) - (61) 2.2 0.3 1.2
</TABLE>
- -----------------
*Represents the Company on a consolidated basis with its subsidiaries, Nur Media
Solutions, Nur America, Nur Europe and Nur Germany.
Nine Months Ended September 30, 1998 Compared with Nine Months Ended
September 30,1997
Total revenues increased by 75%, to approximately $25.93 million for the
nine months ended September 30, 1998 from approximately $14.83 million for the
nine months ended September 30, 1997. This was mainly as a result of a growth in
unit sales of the Blueboard printer and growth of ink sales due to a larger
installed base of the Company's printers.
Sales of the Company's printers and related products increased by 80% to
approximately $22.8 million for the nine months ended September 30, 1998 from
approximately $12.6 million for the nine months ended September 30, 1997. The
increase is due to the sale of a larger quantity of printers and growth of ink
revenues from the Company's growing installed base.
Gross profit was approximately $12.6 million for the nine months ended
September 30, 1998, an increase of $5.7 million from $6.9 million for the nine
months ended September 30, 1997. Gross profit as percentage of sales increased
to 48.7% for the nine months ended September 30, 1998 from 46.9% for the nine
months ended September 30, 1997. The increase in the gross profit as a percent
in sales is attributable mainly to a reduction in manufacturing and procurement
costs.
Research and development costs, net of OCS grants, were approximately
$3.48 million for the nine months ended September 30, 1998, rising by 259.6%
from $0.97 million for the nine months ended September 30, 1997, as a result of
a $1.6 million one-time write-off of technology assigned to R&D in connection
with the acquisition of Meital Technologies' rights and related products. The
Company expects to continue to invest significant resources in its research and
development programs for new products and enhancements of existing products. The
Company expects that research and development expenses will continue to increase
in absolute dollar terms as compared to previous years.
24
<PAGE>
Selling and marketing expenses were approximately $4.3 million for the
nine months ended September 30, 1998 compared to approximately $2.9 million for
the nine months ended September 30, 1997. The Company received $0.3 million for
the nine months ended September 30, 1998 from the Marketing Fund for selling and
marketing expenses as compared to $0.15 million for the nine months ended
September 30, 1997. The distribution subsidiaries, Nur Europe and Nur America
incur the majority of sales and marketing expenses. The Company will not be
eligible for support from the Marketing Fund commencing in 1999 due to the
Company reaching the maximum allowed export revenues.
General and administrative expenses were approximately $3.75 million for
the nine months ended September 30, 1998, compared to approximately $2.7 million
for the nine months ended September 30, 1997, representing a 38.7% increase.
This was due primarily to ongoing re-building of the administrative
infrastructure of the company, legal, and audit costs.
Taxes on income were $0.227 million in the nine months ended September 30,
1998 as compared to no taxes in the nine months ended September 30, 1997, due to
taxable income in the Company's subsidiaries.
Financial expenses, net increased to $0.43 million in the nine months
ended September 30, 1998 from $0.20 million in the nine months ended September
30, 1997. Approximately 30% of the financial expenses are due to bank and
interest rate charges and 70% to exchange rate differences.
Year Ended December 31, 1997 Compared with Year Ended December 31, 1996
Total revenues increased by 32.3%, to approximately $21.96 million for the
year ended December 31, 1997 from approximately $16.6 million for the year ended
December 31, 1996, mainly as a result the introduction and market acceptance of
the Blueboard and as a result of the move to direct distribution by the Company
of the Company's products in Europe and the United States, the Company's two
major markets. Growth was also fueled by the growth of sales of the ink as a
result of the growth of the installed base of the Company's printers.
Sales of the Company's printers and related products increased by 38.4% to
approximately $18.8 million for the year ended December 31, 1997 from
approximately $13.6 million for the year ended December 31, 1996. This increase
was attributed primarily to the introduction and market acceptance of the
Blueboard and to increased revenues due to the move from sales through
distributors to direct sales to end users through the Company's subsidiaries in
Europe and the United States.
Gross profit was approximately $10.6 million in the year ended December
31, 1997, an increase of $7.5 million from $3.1 million in the year ended
December 31, 1996. Gross profit as percentage of sales increased to 48.5% in the
year ended December 31, 1997 from 19% in the year ended December 31, 1996. The
increase in gross profit was attributed mainly to the change in distribution
strategy discussed above and reduced manufacturing costs.
A portion of the Company's research and development expenses is funded by
the OCS pursuant to programs entitling the OCS to receive royalties on sales of
products developed with the use of OCS funds. Research and development costs,
net of the OCS grants, were approximately $1.68 million in the year ended
December 31, 1997, rising by 45% from $1.16 million in the year ended December
31, 1996, as a result of increased efforts in developing new products. The
Company expects to continue to invest significant resources in its research and
development programs for new products and enhancements of existing products. The
Company expects that research and development expenses will continue to increase
in absolute dollar terms as compared to previous years.
Selling and marketing expenses were approximately $4.6 million in the year
ended December 31, 1997 compared to approximately $4.8 million in the year ended
December 31, 1996. The Company received $0.2 million in the year ended December
31, 1997 from the Marketing Fund for selling and marketing expenses as compared
to no receipt of such funds in the year ended December 31, 1996. The Company
will not be eligible for support from the Marketing Fund commencing in 1999 due
to the Company reaching the maximum allowed export revenues. The majority of
sales and marketing expenses are incurred by the distribution subsidiaries, Nur
Europe and Nur America.
In early 1997, Moshe Nur, the previous Chairman of the Company and its
former major shareholder, and companies controlled by Moshe Nur, experienced
financial difficulties. These affiliated companies and Moshe Nur had outstanding
debts to the Company stemming from a combination of purchases of printers, spare
parts, ink, and cash transfers. As a result, management of the Company decided
to write-off these debts in the year ended
25
<PAGE>
December 31, 1996, totaling $3.7 million. The Company was in litigation with
Moshe Nur and his court appointed receiver for the return of funds
misappropriated from the Company until September 1998 when a settlement was
reached. See "Business--Legal Proceedings."
In April 1997, following Moshe Nur's financial difficulties, a group of
investors led by Dan Purjes, the Chairman of Josephthal & Co. Inc.
("Josephthal") assumed control of the Company and consequently replaced all but
one of the previous directors. The Chairman, Chief Executive Officer and Chief
Financial Officer of the Company were also consequently replaced. See "Certain
Transactions."
In the year ended December 31, 1997, sales to related parties were 0.8%,
as opposed to 3.6% for the year ended December 31, 1996 as a result of the
change in control of the Company.
General and administrative expenses were approximately $3.4 million for
the year ended December 31, 1997, compared to approximately $2.56 million for
the year ended December 31, 1996, representing a 34.3% increase. This increase
was due primarily to legal and extra-ordinary audit costs resulting from the
change in control and management of the Company, and to the re-building of the
financial and administrative infrastructures of the Company.
Taxes on income decreased by 83.25% to $0.067 million in the year ended
December 31, 1997 as compared to $0.4 million in the year ended December 31,
1996, due to available carry-forward losses (including capital losses) and
deductions aggregating approximately $7.5 million.
Financial expenses, net decreased to $0.32 million in the year ended
December 31, 1997 from $0.59 million in the year ended December 31, 1996.
Year Ended December 31, 1996 Compared with Year Ended December 31, 1995
Following the review of its annual results, the Company found it necessary
to recast the breakdown of its quarterly results for the year ended December 31,
1996. The need for recasting of the quarterly reports arose from the discovery
of non-authorized transactions and misappropriation of funds by former company
officials.
Total revenues increased by 20%, to approximately $16.6 million for the
year ended December 31, 1996 from approximately $13.8 million for the year ended
December 31, 1995.
Sales of the Company's printers and related products increased by 6.4% to
approximately $13.6 million for the year ended December 31, 1996 from
approximately $12.6 million for the year ended December 31, 1995.
Gross profit was approximately $3.1 million in the year ended December 31,
1996, a decrease of 30% from $4.45 million in the year ended December 31, 1995.
Gross profit as percentage of sales decreased to 19% in the year ended December
31, 1996 from 32% in the year ended December 31, 1995, mainly as a result of the
lower gross margins of the Wideboard as compared to the Outboard printer.
Research and development costs, net of the OCS grants, were approximately
$1.16 million in the year ended December 31, 1996, rising by 58% from $0.73
million for the year ended December 31, 1995, as a result of increased efforts
in developing new products.
Selling and marketing expenses were approximately $4.8 million in the year
ended December 31, 1996 compared to approximately $1.04 million in the year
ended December 31, 1995. Selling expenses increased significantly due to the
Company and its subsidiaries undertaking direct sales and marketing in Europe
and the United States, which activities were previously handled by Scitex
Corporation. There was no participation by the Company in the Israeli
government-sponsored Marketing Fund with respect to the selling and marketing
expenses in the year ended December 31, 1996 as compared to a participation of
$0.25 million in the year ended December 31, 1995.
For the year ended December 31, 1996, sales to related parties amounted to
3.6% of total sales, as opposed to 18% for the year ended December 31, 1995.
26
<PAGE>
General and administrative expenses were approximately $2.56 million for
the year ended December 31, 1996, compared to approximately $1.19 million for
the year ended December 31, 1995, representing a 115% increase, mainly due to
the consolidation of the subsidiaries, and increased administrative and
financial staffing expenses relating to the move to a publicly traded company.
Taxes on income increased by 81% to $0.4 in the year ended December 31,
1996 as compared to $0.22 million in the year ended December 31, 1995 due to
increased profitability of Nur Germany.
Financial expenses, net increased to $0.59 million in the year ended
December 31, 1996 from $0.21 million in the year ended December 31, 1995.
Liquidity and Capital Resources
Since the commencement of the Company's activities in the second half of
1991 through mid-1993, the Company financed its operations primarily through
loans and injection of equity by shareholders. In October 1993, the Company
raised, through a private placement, approximately $6 million (approximately $3
million in equity and $3 million in convertible debentures).
Following the 1993 private placement, the Company financed its operations
primarily through cash generated from operations. For the year ended December
31, 1995, the Company's major source of cash was the $6.86 million of net
proceeds from the Company's initial public offering in October 1995.
The Company incurred a loss of approximately $10.1 million in the year
ended December 31, 1996. This loss is comprised of approximately $4.8 million in
losses due to increased expenses associated with the setup of direct sales and
marketing efforts by the Company in Europe and in the United States, and to the
assumption of international support and service; approximately $1.2 million in
research and development expenses; approximately $0.6 million in financing
expenses; approximately $0.4 million in elimination of deferred taxes; and
approximately $3.7 million in losses due to the write-off of debts to the
Company associated with Moshe Nur and companies controlled by him. These debts
resulted, in part, from ineffective controls that failed to prevent unauthorized
transactions and failed to detect the misappropriation of funds. As a result,
the Company's shareholders' equity was reduced to approximately $1.8 million as
of December 31, 1996.
In the year ended December 31, 1997, the Company's net income was $0.485
million. In 1997, additional capital was needed in order to fund accrued debts
to suppliers during the year ended December 31, 1996 and the beginning of 1997,
and to increase the Company's working capital and equity base. In the third and
fourth quarters of 1997, the Company completed a private placement of $4.0
million of Ordinary Shares, from which the Company received net proceeds of
approximately $3.51 million (the "Private Placement").
For the year ended December 31, 1997, the Company's major source of cash
was the $3.51 million of net proceeds from the Private Placement.
Operating activities
In the year ended December 31, 1997, the Company had net income of $0.485
million. Net cash used by operating activities was approximately $2.2 million.
The main changes in the Company's working capital were (i) an increase of
approximately $1.8 million in trade accounts receivable, (ii) a decrease of
approximately $1.24 million in trade payables, and (iii) a decrease of
approximately $1.3 million in customer advances.
In the nine months ended September 30, 1998, the Company had net income of
$0.304 million. Net cash provided by operating activities was approximately
$0.46 million. The main changes in the Company's working capital were (i) an
increase of approximately $3.79 million in trade accounts receivable, (ii) an
increase of approximately $1.3 million in trade inventories, and (iii) an
increase of approximately $4.1 million in trade payables.
Investing activities
The Company's investing activities used approximately $1.59 million in the
year ended December 31, 1995, approximately $0.53 million in the year ended
December 31, 1996, and approximately $1.38 million in the
27
<PAGE>
year ended December 31, 1997. The Company invested approximately $1.48 million
in the year ended December 31, 1997 in the purchase of property and equipment.
The Company's investing activities used approximately $1.7 million in the
nine months ended September 30, 1998, mainly due to the purchase of equipment,
computers and other properties.
Financing activities
Net cash provided by financing activities in the nine months ended
September 30, 1998 was approximately $0.28 million.
The Company maintains long and short-term credit facilities in an
aggregate amount of approximately $2.1 million. At September 30, 1998, the
Company had approximately $1.4 million in long-term loans from banks and others,
$0.21 million of which is payable within 12 months.
As of September 30, 1998, total current assets of the Company amounted to
approximately $16.73 million, out of which $1.0 million was in cash, cash
equivalents and marketable securities, compared with total current liabilities
of approximately $12.4 million. The increase in current assets is attributable
primarily to growth in trade receivables resulting from the growth in the
Company's revenues. The increase of the current liabilities is attributable
primarily to the increase of trade payables.
Net cash provided by financing activities in the year ended December 31,
1995 was approximately $7.04 million. Substantially all of the cash provided in
the year ended December 31, 1995 constituted the net proceeds of the Company's
public offering. Net cash provided by financing activities in the year ended
December 31, 1996 was approximately $1.07 million. Net cash provided by
financing activity for the year ended December 31, 1997 was approximately $3.08
million.
The Company maintains long and short-term credit facilities in an
aggregate amount of approximately $2.6 million. At September 30, 1998, the
Company had approximately $0.61 million in long-term loans from banks and
others, $0.21 million of which is payable within 12 months. Most of the
Company's long term loans are linked to the U.S. dollar bearing interest at a
rate ranging between 6.2% and LIBOR plus 3.12%.
The Company has granted several security interests in its assets to
various banks and leasing companies to secure bank credit lines and lease
facilities.
Impact of Inflation, Devaluation and Fluctuation of Currencies
Most of the Company's sales are in U.S. dollars. In addition, a
substantial number of other expenses are incurred outside Israel in U.S. dollars
or paid in U.S. dollars or in NIS linked to the exchange rate of the U.S.
dollar. Approximately 50% of these costs are denominated in U.S. dollars. Costs
not effectively denominated in U.S. dollars are translated to U.S. dollars, when
recorded, at prevailing exchange rates for the purposes of the Company's
financial statements, and will increase if the rate of inflation in Israel
exceeds the devaluation of the Israeli currency against the U.S. dollar or if
the timing of such devaluations were to lag considerably behind inflation.
Consequently, the Company is and will be affected by changes in the prevailing
NIS/U.S. dollar exchange rate.
The Company might also be affected by the U.S. dollar exchange rate to the
major European currencies - mainly the German Mark and the Belgian Franc.
During 1992 and 1993, the value of the U.S. dollar increased relative to
major currencies and the rate of inflation in Israel exceeded the rate in the
United States. In 1995 and 1996, the value of the U.S. dollar decreased relative
to major currencies, and the rate of inflation in Israel exceeded the rate in
the United States. The annual rate of inflation in Israel in 1995 was 8.1%,
which increased to 10.6% in 1996 and decreased to 7.0% in 1997 and to 4% in the
first nine months of 1998. The NIS was devalued against the U.S. dollar by
approximately 8%, 1%, 3.9%, 3.7%, 8.8% and 8.7% in 1993, 1994, 1995, 1996, 1997
and the first nine months of 1998 respectively. The Company cannot predict
whether the rate of devaluation of the NIS against the U.S. dollar will continue
to exceed the rate of inflation in the future and whether these conditions will
have a material adverse effect on the Company.
28
<PAGE>
The representative dollar exchange rate for converting the NIS to dollars,
as reported by the Bank of Israel, was NIS 3.845 for one dollar US on September
30, 1998. (NIS 3.536 on December 31, 1997, NIS 3.251 on December 31, 1996 and
NIS 3.135 on December 31, 1995).
The Company's transactions and balances denominated in U.S. dollars are
presented at their original amounts. Non-dollar transactions and balances have
been measured into U.S. dollars in accordance with Statement 52 of the FASB. All
transaction gains and losses from remeasurement of monetary balance sheet items
denominated in non-dollar currencies are reflected in the statement of
operations as financial income or expenses, as appropriate. The average exchange
rates during the years ended December 31, 1995, 1996 and 1997 and the nine
months ended September 30, 1998 were NIS 3.011, 3.187, 3.449 and 3.676 for one
dollar US, respectively. The exchange rate as of January 4, 1999 was NIS 4.15
for one dollar.
Current and Future Capital Needs
The Company believes that its revenues from operation together with its
existing capital resources and credit facilities will be sufficient to fund the
Company's current activities at their present rate through April 2000. The
Company will require additional funds, to be raised through public or private
financing of debt or equity, in order to ensure its ability to maintain its
planned operations after April 1999. If such funds are not raised, the Company
may have to reduce or eliminate planned expenditures for research and
development, production, or marketing of its products, any one of which could
have an adverse effect on the Company's business. There can be no assurance that
such additional financing will be available or that, if available, it will be
obtained on terms favorable to the Company. The Company currently has no
commitments for additional financing.
In this regard, the Company's capital requirements and level of expenses
depend upon numerous factors, including the scope and success of the Company's
marketing and customer service efforts, and of its research and development
activities, as well as the demand for the Company's products and services.
Moreover, in the course of the bankruptcy proceedings of Moshe Nur and the
companies controlled by him, the Company in the future may be exposed to claims
arising from the actions of Moshe Nur despite the recent settlement of all
material claims related to such persons and entities. Liabilities arising from
any such claims may be material. See "Business--Legal Proceedings."
Year 2000
The Company's State of Readiness
Many computer systems and software products will not function properly in
the years starting 2000 due to a once-common programming standard that
represents years using only the last two-digits. This is known as the Year 2000
problem.
In 1998, the Company began converting its internal computer systems to be
Year 2000 compliant. As of October 30, 1998, approximately 75% of the Company's
information technology ("IT") systems and approximately 90% of the Company's
non-IT systems were compliant. All of the Company's internal IT and non-IT
systems are expected to be compliant by July 1999. Completion of the Company's
compliance program involves upgrading the operating systems of the remaining 25%
of user workstations.
The applications used in the Company's internal IT and non-IT systems are
commercially available and certified by the vendors of the systems for full Year
2000 compliance. Additionally, the Company has verified the functional behavior
of these applications as being Year 2000 compliant.
The Company does not believe, after contacting appropriate parties, that
the failure of its vendors' or other third-party providers' systems to be Year
2000 compliant will materially adversely affect the Company's financial
performance.
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The Costs to Address the Company's Year 2000 Issues
As of October 30, 1998, the Company had spent approximately $16,000 on its
Year 2000 compliance efforts. This figure includes the expense of updated
software licenses and updated application versions and has been fully expensed.
The total cost of attaining Year 2000 compliance is estimated to be $22,000 and
is being funded through operating cash flows. The Company plans to pay for
expenses and liabilities related to Year 2000 complications out of revenues from
operations and capital resources.
The Risks of the Company's Year 2000 Issues
Based on its compliance efforts, the Company does not anticipate any
significant internal Year 2000 complications.
The Company's primary concern is the compliance of its products. All of
the Company's currently manufactured products are fully compliant; however,
approximately 30 customers who purchased current Company products in the past
will require operating system upgrades. The Company estimates its exposure for
covering the costs related to these upgrades to be approximately $5,000 in the
aggregate.
The Company has tested prior generation products and not found any Year
2000 functionality problems. Further testing is necessary, however. There is a
risk that prior generation products will require changes in application software
to be Year 2000 compliant. The Company estimates its exposure for covering the
costs related to these changes to be $5,000 to $10,000 in the aggregate.
The Company's Contingency Plans
If the Company does not attain compliance for its prior generation
products and complications arise, customers will be advised to reset the
computer clock to a date in the 1990's. The Company has verified that resetting
the internal clock will enable the Company's products to function in accordance
with their specifications.
While the Company believes that it is adequately addressing the Year 2000
problem, there can be no assurance that the costs and liabilities of the Year
2000 problem will not have material adverse effects on its business, financial
condition and results of operations.
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BUSINESS
General
Nur Macroprinters Ltd. (the "Company") is a world leader in the market for
the sale of very large format digital printing systems. The Company develops,
manufactures, assembles through a subcontractor, sells, and services digital
ink-jet color printers for on demand, short-run, large format printing, which
includes widths up to 1.80 meters (approximately 6 feet) ("LF"), and very large
format printing, which includes widths from 1.80 meters to 5.0 meters
(approximately 16.4 feet) ("VLF"). The Company also supplies inks and solvents
essential to the operation of the Company's printers and print substrates for
use with the Company's printers.
In early 1997, the Company introduced the Blueboard printer, a second
generation VLF printer, which prints on substrates of variable widths from 0.9
to 5.0 meters (approximately 3 to 16.4 feet). The Blueboard printer is based on
the Company's proprietary continuous ink-jet technology, but otherwise is a
completely new printer designed for high throughput, high print quality, and
ease of use. In April 1998, the Company introduced a faster version of the
Blueboard printer, the Blueboard 2, in response to demand in the VLF printing
industry for increased productivity. The Blueboard printer, the Blueboard 2
printer and their upgrades are referred to collectively as the "Blueboard
Printers." The Blueboard Printers are the Company's main hardware products.
In September 1998, the Company acquired from Meital all rights (including
all related assets) to Meital's piezo drop on demand inkjet technologies for
application in large format digital printers for approximately $3.0 million,
consisting of an up-front payment of $0.75 million, the assumption of certain
liabilities and future sales based royalties. The Meital acquisition resulted in
the recognition by the Company of a one-time charge involving a write-off
assigned to research and development of $1.6 million in the third quarter of
1998. In addition, the Company has future royalty obligations to Meital, during
the next three years, which will not exceed $1.3 million. If the Company does
not meet its obligation to pay minimum royalty payments, the seller of the
technology will have the option to buy the technology backs for approximately
the royalties paid by the Company to date.
Until the end of 1995, the Outboard printer, which is capable of printing
in widths of up to 1.6 meters (approximately 5 feet), was the Company's
principal product. In the fourth quarter of 1995, the Company introduced its
first generation VLF printer, the Wideboard printer, which is capable of
printing on substrates of variable widths of up to 5 meters. The Outboard
printer, Wideboard printer, Blueboard printer and the Blueboard 2 printer are
referred to collectively herein as the "Company's Printers."
The Company's Printers are targeted principally to commercial printers,
design and service firms, screen printers, outdoor media companies and trade
shops. The Company's Printers are used for a variety of LF and VLF format
printing applications, such as billboards, posters, banners, and point of
purchase displays for advertising, as well as decorations and backdrops for
showrooms, fleet graphics, trade shows, museums, and exhibits. The Company's
Printers allow customers to print LF and VLF color prints on demand, generally
in substantially less time, with less labor and at a lower cost, than
traditional methods of LF printing.
The Company was incorporated as an Israeli corporation on July 29, 1987.
The Company's Ordinary Shares have been traded on the Nasdaq National Market
under the symbol of NURTF since October 1995.
Industry Background
The market for printed applications requiring LF and VLF printing has
expanded over the last few years. LF and VLF printing applications include
billboards, posters, and banners; special event and trade show displays; point
of purchase displays; fleet graphics; decorations and backdrops. For example,
the retail, automotive, cigarette and tobacco, restaurant, travel, and gasoline
industries use outdoor advertising to promote their products in locations which
include roadside billboards and posters displayed on streets and buildings, as
well as the outside of buses, vans, trucks, and trains, so-called fleet
graphics. LF and VLF prints can also be found in theaters as stage decorations,
in museums and exhibitions as backdrops or displays, and on construction sites
as building site coverings. Prior to the introduction of digital printing
systems, LF and VLF short-run prints were produced either by hand painting,
which is relatively slow and expensive, and produces lesser quality images, or
by silk screen or offset printing, both of which are relatively expensive and
time consuming processes.
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With the cost of digital printing expected to decrease and the ability of
digital technology expected to produce shorter runs more economically, the
Company believes that the use of LF and VLF prints, such as those produced by
the Company's Printers, should grow, and that the portion of the market serviced
by digital printing should increase. The ability to produce LF and VLF images
digitally has also opened new media opportunities for advertisers, such as mural
printing, carpet printing, new forms of fleet graphics printing. The growth in
demand for LF and VLF digital printers, is fueled by both the replacement of
conventional print methods and the development of new printing applications.
Traditional LF and VLF Printing Methods
Conventional methods of LF and VLF printing have included hand painting,
silk screen printing, and offset printing. Generally, producing LF and VLF color
prints by traditional methods in short-runs of 100 or less, depending on the
application, has either been relatively slow and expensive or of limited
quality. Because of the inherent limitations of the traditional LF and VLF
printing methods, quality LF and VLF prints produced by these methods are
generally limited to long runs of identical prints, designed and prepared well
in advance or, in the case of hand painting, to single print applications. As a
result, traditional methods of producing LF and VLF prints have not provided
timely and economic solutions for the needs of the short run printing market.
Hand Painting. Hand painting involves either the projection of an image
onto a substrate, which is then drawn onto the substrate and subsequently
painted by hand, or the spraying of paint onto material covered by a template
that has been cut to the desired shape. The process of hand painting is an
alternative mainly in developing countries where labor costs are significantly
lower.
Silk Screen-Printing. The silk screening process is distinguished by its
ability to print finely detailed images on practically any surface, including
paper, plastics, metals, and three-dimensional surfaces. Due to the expense of
creating the silk screen templates, the process is not considered economical for
quantities of fewer than 50 prints. In addition, due to the time and effort
required to create the template, customers are effectively prohibited from
altering a template, whether to correct a mistake, update information, or
customize a print, unless a new template is created. As a result, screen
printing is best suited for print runs requiring an identical image on every
print.
Offset Printing. Offset color printing generally produces very high
quality images compared to hand painting or silk screen printing. However,
because of the complex steps involved in offset color printing, each printing
job, whether small or large, involves substantial setup time and costs. In
addition, much like hand painting and silk screen printing, alterations and
customizations are not economically feasible unless the entire offset color
printing process is repeated. Therefore, offset color printing is generally best
suited for long print runs.
LF and VLF Digital Printing
The introduction of digital printing is aiding in the transformation of
the LF and VLF printing industry by lowering setup costs, shortening turnaround
time, and reducing labor requirements. The Company believes that the
availability of LF and VLF digital printing should lead to an increase in demand
for limited runs for customized and localized advertising campaigns. In
addition, the Company believes that single use applications, such as the use of
banners, displays, and backdrops for trade shows, theme parks, entertainment,
and special events, should become more popular. The Company believes that the
market for LF and VLF printing should increase as current applications gain
market acceptance and as new applications are developed.
Digital printing involves the production of hard-copy images and text from
digital data that is either generated on a computer at the printing site or
originated by a customer on the customer's computer system. The digital data is
then transferred directly from an electronic pre-press or desktop publishing
system to the digital printer. There are currently several digital printing
technologies available, including electrostatic, airbrush, drop-on-demand,
thermal transfer, and continuous ink-jet printing.
Electrostatic Printing. Electrostatic printing is a non-impact printing
technique that employs an array of metal styli, selectively pulsed to a high
potential to generate a charged latent image on dielectric-coated paper, which
is then toned to develop the latent image into a visible image. The achievable
printing resolution is up to 400 dots per square inch ("DPI"). The main drawback
of the technology is the need for special and expensive substrates.
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Moreover, the electrostatic printing process is highly sensitive to both
temperature and humidity and must operate under controlled conditions.
Airbrush Printing. Airbrush printing is accomplished by forcing a low
viscosity colored fluid through small aperture nozzles, thus creating a spray
jet. Computer driven modulation of the spray jets deposits an image-wise colored
layer deposited onto the substrate. The strongest feature of airbrush technology
is the printer's ability to cover large areas with uniform color. One
manufacturer of airbrush printers produces a printer that can also print on both
sides of a poster at the same time. This feature is important for signs that are
backlit.
Drop-on-Demand Ink-Jet Printing ("DOD"). DOD technology involves the
firing of ink drops when needed on the substrate while the printing head travels
across the substrate. Until recently, this technology was limited to dye-based
inks that are not suitable for outdoor use. However, several new DOD printers
that use pigment inks, which are suitable for outdoor use, are now available.
In the VLF market, there are several new DOD based printers. These
printers use a large number of nozzles to achieve print speeds similar to that
of the Company's Printers. As a result of the large number of nozzles the
Company believes that such printers may not be as reliable and productive as the
Company's Printers. Other advantages of the Company's Printers over DOD based
printers are higher color repeatability and handling of larger variety of
substrates on which to print.
Thermal Transfer Printing. Thermal transfer printing is a contact printing
technology that employs arrays of heated needles and pressure to melt and
transfer wax based inks from a carrier roll onto a restricted variety of
substrates.
Continuous Ink-Jet Printing. Continuous ink-jet technology involves the
continuous flow of electrically conductive ink within a closed loop that is
deflected to a specific location on a sheet of paper or other medium. The ink is
separated into uniform micro-drops and the micro-drops are electronically
directed to be printed onto a selected area of the medium. Continuous ink-jet
technology allows for high speed printing and produces images with good
resolutions sufficient for viewing from distances of beyond five feet.
Continuous ink-jet printers also produce multiple copies with consistent color
quality, unlike airbrush printers. The cost of equipment using continuous
ink-jet technology is relatively high in comparison to printers using
electrostatic technology. However, the cost of the output produced with
continuous ink-jet printers is lower than that of electrostatic printers.
Although the printer and printing costs of continuous ink-jet and airbrush
technology are comparable, continuous ink-jet printers produce higher quality
prints, at higher speeds.
The Company believes that its printers are currently the only commercially
available LF or VLF digital printers using multiple continuous ink-jet
deflection technology. The Company believes that the Company's Printers are well
suited to fit the overall needs of the LF and VLF printing market.
The Company's strategy is to:
o strengthen its position as a world leader in the VLF printing market
by supplying the most productive and cost-effective digital VLF
printers;
o introduce LF digital ink jet printers to replace current LF screen
printers;
o be the vendor of choice for all its customers' ink and substrate
needs;
o enable its customers to develop new ways to profit from the
Company's printing systems; and
o provide its customers with state of the art service and supplies.
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Products
The Company's Printers
The Outboard printer, which was introduced in 1992, was the Company's
first product, and, until the end of 1995, its principal product. The Outboard
printer is capable of producing LF prints in widths of up to 1.6 meters. In the
fourth quarter of 1995, the Company introduced the Wideboard printer, which was
the Company's first generation VLF printer and its principal product in 1996.
The Wideboard printer is capable of producing prints of widths of 5 meters. The
Company has discontinued the manufacture of the Outboard printer and of the
Wideboard printer. The Company plans, however, to provide further enhancements
and upgrades to its Outboard and Wideboard installed base.
Since the beginning of 1997, the Company has been marketing and selling
the Blueboard Printer, a second-generation VLF printer that is also capable of
producing prints of up to 5 meters in width with practically no limit on the
length of the print. The Blueboard is designed for high throughput, high print
quality, and ease of use. When wider widths of prints are required, the
Blueboard Printer, as is the case with the other Company's Printers, creates a
print layout in sections that, when sealed and placed together, create a
continuous image due to the Blueboard Printer's high level of color consistency
and accuracy.
In April 1998, the Company introduced a faster version of the Blueboard
printer, the Blueboard 2 printer, in response to demand in the VLF printing
industry for increased productivity. The Blueboard printer and the Blueboard 2
printer are hereinafter referred to as the "Blueboard Printers." In addition,
the Company announced that all Blueboard Printers are upgradable to the new
double speed version for an additional fee. The Blueboard Printers are now the
Company's main hardware products.
The Blueboard Printers accept a wide variety of substrates, differing in
types and sizes, with a new design feeding mechanism which allows for ease of
loading and unloading of substrate rolls weighing 150 Kg or more. The Blueboard
Printers are unique in that they are able to print at their respective top
speeds (up to 320 sq. ft./hr. for the Blueboard and up to 650 sq. ft./hr for the
Blueboard 2) while printing at their respective highest resolutions (70 DPI for
each of the Blueboard Printers). The Blueboard Printers' software accepts many
popular types of image formats (such as TIFF, CT, JPEG, BMP, and PostScript) and
images with various resolutions, and converts them automatically for printing.
In addition, the Blueboard Printers' software can be connected to any
communication configuration supported by the operating system, which enables
smooth integration of the printers in the pre-press environment for higher
productivity. The Blueboard Printers' operating software is based on the
Windows-NT multitasking operating system that enables printing while preparing
the next job for print. The software has sophisticated color correction tables
that enable the printers to match color output according to substrate
characteristics.
The Company's Printers are marketed primarily to commercial printers,
design and service firms, screen printers, outdoor media companies and trade
shops for short-run, LF and VLF printing. The Company's Printers reproduce
images with resolutions of 70 DPI, which allows for superior viewing from
distances of at least 10 feet, depending on the image file resolution. The
Company's Printers are capable of producing millions of distinctive colors. Due
to the constant ink monitoring of its continuous ink-jet printing technology,
the Company's Printers achieve a high level of color consistency for copies
printed from the same batch or from different batches produced from the same
file. Generally, depending upon the required print resolution, the Outboard
printer operates at speeds of between 200 to 600 sq. ft./hr; the Wideboard
printer operates at speeds of between 100 to 300 sq. ft./hr; the Blueboard
printer operates at speeds of up to 300 sq. ft./hr; and the Blueboard 2 operates
at up to 600 sq. ft./hr.
The Company's Printers are digital sheet or roll-fed presses that accept a
wide range of substrates. They print directly from digital data, using no
printing plates. The Company's Printers can be operated in a standalone mode or
in conjunction with pre-press and desktop publishing systems. When configured
with a pre-press system, the pre-press workstation prepares the digital file
containing the specifications for the output to be produced.
The Company's Printers require little operator supervision, enabling one
operator to run several at once. While an operator must be specifically trained
in the operation of a printer, unlike conventional methods such as offset
printing, no special color mixing skills are required.
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The Company's Printers can significantly reduce the setup costs associated
with each print job, the skill level of the personnel required, and the number
of skilled personnel required as compared to traditional methods of LF and VLF
printing. These advantages make LF and VLF short-run color printing
significantly more economical than conventional printing methods. Additionally,
the relatively quick turnaround for the printed product enables the Company's
Printers to produce more output in a given period, thereby lowering the costs of
labor per print.
Unlike hand painting, silk screen, or offset printing, the layout can be
viewed through the pre-press workstation prior to printing, permitting last
minute fine-tuning. By running a single copy of the print, corrections of text,
enhancements of images, and additions of color can all be accomplished with
minimal time, effort, and cost. Additionally, since the format can readily be
changed, the Company's Printers allow the end-user to make each print in the run
different, with little time, effort, or additional cost. For example, if so
desired, different languages, graphics, and text can be added to each print in a
run.
During the years ended December 31, 1995, 1996 and 1997 and the nine
months ended September 30, 1998, sales of the Company's Printers accounted for
approximately 73%, 56%, 55%, and 55%, respectively, of the Company's total
sales. Sales of spare parts used in the Company's Printers accounted for
approximately 5%, 9%, 6% and 4%, of total sales for the years ended December 31,
1995, 1996 and 1997 and the nine months ended September 20, 1998, respectively.
Currently, the retail prices of the Company's Printers generally range from
$400,000 to $500,000 per printer.
Ink
The Company's Printers use a specialized pigment-based ink mixed with a
methyl-ethyl-keton ("MEK") solvent. The ink is resistant to water and
ultraviolet rays, making it fairly durable and thus well-suited for outdoor
conditions. The Company's Printers, through the utilization of the ink, can
print on almost an unlimited variety of substrates, including numerous types of
paper, vinyl, cloth, textiles, mesh, and metals. The ink enables the output of
the Company's Printers to be used both for indoor and outdoor advertising.
During the years ended December 31, 1995, 1996 and 1997 and the nine months
ended September 30, 1998, sales of the ink accounted for approximately 11%, 15%,
21% and 23%, respectively, of the Company's total sales.
The ink was developed jointly with Imaje S.A. ("Imaje"), a French ink
manufacturer, specifically for use in the Company's Printers. The Company has an
exclusive distribution and manufacturing agreement with Imaje.
Substrates
In June 1998, the Company also began supplying cost-effective substrates
designed to work with the Company's Printers and the ink. The Company sells
substrates under the Nur brand name that are manufactured by several different
suppliers for the Company. The substrates are made of vinyl, PVC, paper, and
mesh and are suited for indoor and outdoor use. The substrates will be
distributed worldwide by the Company's sales and service organizations.
Sales and Marketing
The Company currently distributes and sells a vast majority of the
Company's Printers and related products in Western Europe and North America
through its wholly-owned subsidiaries, Nur Europe, and Nur America,
respectively. The Company engages in the sale and marketing of printed material
produced by the Company's Printers through Nur Germany.
In certain Eastern European and Latin American countries, distribution is
performed with the assistance of local dealers and distributors; in the Middle
East and the Far East, Scitex Corporation has distributed the Company's Printers
through December 1998. Until the end of 1996, most worldwide sales of the
Company's Printers had been made through Scitex. In 1999 the Company plans to
develop its own distribution operations in Shanghai China and Tel-Aviv, Israel
to replace the Scitex distribution channels in the Far East and Middle East.
The marketing activities of the Company include participating in relevant
tradeshows worldwide, advertising in trade publications, marketing directly to a
target base, as well as publishing its own newsletter, participating in services
and industry forums and maintaining an internet site. The Company has also
started to sell its consumable products through a dedicated intranet site.
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In April 1998, the Company renamed its previously established wholly-owned
subsidiary, Nur International, to Nur Media Solutions. Nur Media Solutions'
objective is to develop and market a wide range of advanced consumables for the
Company's LF and VLF printers. Included in such consumables are the Company's
cost-effective substrates, which are designed to work with the Company's
existing range of printers and inks and will be distributed worldwide by the
Company's sales and service organizations.
The Israeli Government, through the Marketing Fund, awards participation
grants for marketing expenses incurred overseas, including expenses for
maintaining warehouses and branches, advertising, catalogs, exhibitions and
surveys. In the years ended December 31, 1991, 1992, 1993, and 1995, the Company
received grants from the Marketing Fund totaling approximately $0.4 million for
the promotion of the Outboard Printer and the MegaLight, a discontinued printer.
In 1997, the Company received $0.2 million for the promotion of the Company's
exportation of its printers. In the nine months ended September 30, 1998, the
Company received $0.3 million for the same purpose. The Company did not receive
any grants in 1994 or in 1996. The Company is obligated to pay a royalty of 3%
of the export added value to the Marketing Fund until 100% of the grants have
been repaid. The value of the grants are linked to the U.S. dollar. As of
September 30, 1998, the Company had made royalty payments in respect of such
grants to the Marketing Fund totaling approximately $0.08 million.
Production and Sources of Supply
The Company manufactures and assembles, through a subcontractor, the
Blueboard Printers, directly performing the installation of the Company's
proprietary software into the Blueboard Printers and full system integration and
acceptance testing of the printers. The mechanical assembly of the Blueboard
Printers is carried out by an independent sub-contractor (the "Blueboard
Assembler") at a facility located near the Company's operations in Israel. The
Company purchases most of the components comprising the Blueboard Printers from
third parties.
The Company owns all rights to the Blueboard Printers, including the
rights to the production files and all know-how relating to the manufacture of
the printers, and the Company has the right to obtain the Blueboard Assembler's
production files and all special tooling it uses to manufacture the Blueboard
Printers in the event that the Company should have the need to assemble on its
own printers. The Blueboard Assembler currently has the capacity to assemble up
to about six Blueboard Printers per month. The Company believes that it can
expand production to meet any required increase in production, either through
the Blueboard Assembler, by utilizing additional sub-contractors, or by directly
undertaking assembly of the Blueboard Printers. The Company installs its
computer software and performs full system integration and acceptance testing of
the Blueboard Printers at the Blueboard Assembler's facility.
The Company believes that its relations with the Blueboard Assembler are
satisfactory and that the Blueboard Assembler has complied in all material
respects with the Company's quality standards. If it should become necessary to
replace the Blueboard Assembler with another assembler or if the Company should
undertake the direct production of the Blueboard Printer, the Company believes
that such an event may have a material adverse effect on the Company's
production capabilities due to a possible delay during the transition period.
The Company obtains the ink-jet heads and the ink used in the Company's
Printers from Imaje, the sole manufacturer and supplier of these components. The
Company has an exclusive distribution agreement for the ink with Imaje dated
June 26, 1995. The term of the agreement is currently on a year to year basis
and is renewed automatically on June 26 of each year, unless terminated by
either the Company or Imaje by three month advance written notice. Pursuant to
the agreement, Imaje has agreed to deposit the formula for the ink with a public
notary for the term of the agreement and a period of one year thereafter. The
Company has the right to obtain the formula for the ink from Imaje, if during
the term of the agreement, Imaje ceases to operate as a going concern; ceases to
manufacture the ink or to sell the ink to the Company; or subject to certain
conditions, fails to deliver the ink within three months of a confirmed delivery
date. In the case of any such event, if Imaje does not deliver the formula to
the Company within three months following the Company's written request to
obtain the formula, the public notary shall release the formula to the Company.
The Company believes that it will be able to obtain and/or manufacture adequate
supplies of the ink in the foreseeable future.
The Company's agreement with Imaje for the supply of the ink-jets pursuant
to which Imaje guaranteed to supply a specific number of ink-jets to the Company
until the end of 1998 has expired. In the interim, Imaje continues to supply the
Company with the ink-jets and related parts required by the Company. There can
be no assurance that the Company will be able to obtain adequate supplies of
ink-jets in the future.
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The Company also employs other unaffiliated subcontractors to manufacture
other components for its printers. The Company's subcontractors have, in the
past, been late in delivering components. The Company has, however, been able to
obtain adequate supplies of the components and raw materials necessary to
produce its printers and has not had any serious problems with its
subcontractors. As the Company's business grows, its will need to purchase
greater quantities of components on a timely basis; any delay in supply could
ultimately hurt its sales.
Service and Support
The Company's warranty to its direct customers and the Company's
distributors in most cases covers defects in the Company's Printers for a period
of six months after installation. In most cases the Company has a parallel
warranty from its suppliers and the Blueboard Assembler with respect to most of
the components covered by the Company's warranty. The Company is also committed
to maintaining sufficient spare parts and materials necessary for the operation
of the Company's Printers for a period of five years after the manufacturing
date of the last Blueboard Printer.
Research and Development
The development of new products, technologies, and applications and the
enhancement of existing products are believed to be an integral part of the
Company's operations. As of September 30, 1998, approximately 25% of the
Company's work force was engaged in research, development, and engineering.
The Company is engaged in ongoing research and development projects aimed
at upgrading the capabilities of its printers to include faster operating speeds
and higher resolutions. The Company developed the Blueboard Printer during 1996
and introduced it in early 1997. In the first quarter of 1998, the Company
introduced the Blueboard 2, which is capable of greater printing speed. The
Company started commercial deliveries of the Blueboard 2 in July 1998. The
Blueboard 2 is offered as an upgrade to existing Blueboard customers for an
additional payment, thus enabling existing customers to enjoy the higher
productivity available to new customers.
In September 1998, the Company purchased certain piezo drop-on-demand
technology from Meital. The Company purchased Meital's technology for an
aggregate amount of $3 million, of which payment of $0.85 million is conditional
upon the success of the technology, and $0.9 million will be paid in future
installments.
The Company is currently developing a new printer, the Fresco, into which
it plans to incorporate the piezo drop-on-demand technology purchased from
Meital. The Company believes that, such implementation will enable the Company
to approach the LF screen printing market with a digital alternative to the
traditional screen printing technology. The Company anticipates that the Fresco
will be ready for commercialization in the third quarter of 1999.
Total research and development expenses, before royalty bearing grants,
were approximately $1.04 million, $1.53 million, and $1.73 million in the years
ended December 31, 1995, 1996, and 1997, respectively, and $3.97 million in the
nine months ended September 30, 1998, of which $1.6 million is related to the
acquisition of technology resulting in a one-time write-off assigned to research
and development. Research and development expenditures are comprised principally
of salaries for employees, the hiring of sub-contractors, capital investment in
infrastructure for software and electronic designs, and prototype material
costs. Initially, the Company relied on outside research and development. The
Company began its own research and development operations in early 1994. Nur
Europe received a grant from local authorities in Belgium for reimbursement of
up to 70% of its total research and development investment, which it carries out
in Belgium, up to approximately $1 million. If no revenues are derived from the
technologies and Nur Europe develops no products as a result thereof, then no
repayment of the grant is required. Should revenues be recognized from the
research and development efforts, a progressive 5-year repayment program would
be implemented. Nur Media Solutions has established a research and development
center in Belgium dedicated for the research and development of print substrates
and inks for use with the Company's Printers.
In the past, the Company has received grants from the OCS for the
development of its systems and products, including the Outboard printer. The
Company received approximately $0.31 million, $0.37 million, $0.04 million and
$0.0 million in research and development grants from the OCS in the years ended
December 31, 1995, 1996 and 1997 and the nine months ended September 30, 1998,
respectively. The OCS awards grants of up to 50%
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(and in certain circumstances up to 66%) of a project's approved expenditures in
return for royalties. Under the terms of the Company's funding from the OCS,
royalties are payable generally at a rate of 2% to 3% on sales of products
developed from the funded project and ending when 100% to 150% of the dollar
value of the grant is repaid. During the year ended December 31, 1995, the
Company paid approximately $0.10 million in royalties in respect of such grants
to the OCS. No payments were made to OCS in the years ended December 31, 1996
and 1997. As of September 30, 1998, the Company had a contingent liability to
pay OCS $0.993 million in future royalty payments. The terms of these grants
prohibit the manufacture of products developed with government grants to be
performed outside of Israel or the transfer out of Israel of the technology
developed pursuant to these grants without the prior consent of the OCS. These
restrictions do not bar exports from Israel of products developed with such
technologies. In addition, the know-how from the research and development that
is used to produce the product may not be transferred to third parties or out of
Israel without the approval of the OCS.
Competition
The Company's Printers are targeted primarily at the market for short-run,
LF and VLF printing. In addition to competition from other manufacturers of LF
and VLF digital printers, the Company's products also face competition from
existing traditional LF and VLF printing methods, and from a provider of
printing services which uses its own proprietary digital printing technology.
The most significant competition for the Company's Printers is based on
digital air brush, electrostatic, drop-on-demand, and thermal transfer
technology. In particular, the Company's VLF printers face substantial
competition from the printers using the DOD technology, and printers using
airbrush technology.
Airbrush printers are generally sold at slightly lower prices than the
Company's Printers. Two manufacturers of airbrush printers produce a printer
that can also print on both sides of a poster at the same time. This feature is
important for signs that are backlit. However, airbrush printers have several
drawbacks, including producing prints with blurred details and text, and
requiring the changing of print head and print speed when altering print
resolution. In addition, airbrush printers do not produce copies with a high
level of color consistency and may require corrections and calibrations in order
to produce consistent quality copies. Finally, airbrush printers are slower than
the Company's Printers. The principal manufacturers of airbrush printers are
Signtech Inc. and Vutek Inc.
The Company also competes to a lesser extent with manufacturers of
electrostatic printers, including 3M and Raster Graphics, Inc. Although
electrostatic printing technology is considered to produce high resolution and
good quality color prints, this technology is considered highly sensitive and
requires an environment where the temperature and humidity must be controlled.
The output of electrostatic printers is significantly more expensive than that
of the Company's Printers. In addition, electrostatic printing is often not
suitable for the outdoors, unless the print is laminated at an additional cost,
further adding to the cost of a print.
During 1997, both VLF largest competitors, Signtech and Vutek, as well as
one new competitor, Matan Digital Printing, introduced DOD based printers for
the VLF market. See "--Legal Proceedings." Idanit, a wholly owned subsidiary of
Scitex, is marketing an LF DOD printer that offers a speed higher than the speed
of the Company's Printers, and at a comparable output cost. The Idanit printer
is currently limited to a print width of 5 feet.
The printing industry is large, and many of the Company's competitors
possess greater management, financial, technical, manufacturing, marketing,
sales, distribution, and other resources than those of the Company. As a result,
there can be no assurance that competitors will not develop and market products
utilizing new technology that are competitive in price and performance with the
Company's Printers, and there can be no assurance that the Company could compete
effectively with such products.
Trade Secrets, Patents and Proprietary Rights
The Company currently relies on a combination of trade secrets, licenses,
and patents, together with non-disclosure and confidentiality agreements, to
establish and protect its proprietary rights in its products. No assurance can
be given that the Company's existing patents or any future patents by the
Company will not be challenged, invalidated, or circumvented, or that the
Company's competitors will not independently develop or patent technologies that
are substantially equivalent or superior to the Company's technology. See
"--Legal
38
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Proceedings." There can be no assurance that further patent protection will be
obtained in Israel, the United States, or elsewhere, for existing or new
products or applications, or that such further protection, if obtained, will be
effective. In some countries, meaningful patent protection is not available. The
Company is not aware of any claims that its products infringe upon the
proprietary rights of third parties. However, there can be no assurance that
third parties will not assert infringement claims against the Company in the
future, and the cost of responding to such assertions, regardless of their
validity, could be significant. In addition, such claims may be found to be
valid and could result in awards against the Company, which could have a
material effect on the Company's business. As a result, the cost to the Company
of protecting its patent rights could be substantial. The Company believes that
its success is less dependent upon the legal protection afforded by patent and
other proprietary rights than on the knowledge, ability, experience, and
technological expertise of its employees and its key suppliers. It is the
Company's policy to have employees sign confidentiality agreements, to have
selected parties, including key suppliers, sub-contractors, and distributors,
sign non-competition agreements, and to have third parties sign non-disclosure
agreements. Although the Company takes precautionary measures to maintain its
trade secrets, no assurance can be given that others will not acquire equivalent
trade secrets or otherwise gain access to or disclose the Company's proprietary
technology, or that the Company can meaningfully protect its rights to such
proprietary technology not subject to patent protection.
Employees
As of September 30, 1998, the Company employed 110 persons worldwide,
about 25% of which in research and development. All of the Company's employees
who have access to confidential information are required to sign a
non-disclosure agreement covering all Company confidential information that they
might possess or to which they might have access.
The Company believes its labor relations are satisfactory. The Company
believes its future success will depend, in part, on its ability to continue to
attract, retain, motivate, and develop highly qualified technical, marketing and
sales, and management personnel.
Israeli law generally requires severance pay equal to one month's salary
for each year of employment upon the termination of employment. The Company's
liability for future severance pay obligations is fully provided for by payments
equal to 8.33% of an employee's salary each month made to various managers'
insurance policies and by accrual. The employees of the Company are usually
provided with an additional contribution towards their retirement that amounts
to 10% of wages, of which the employees' and the employer each contributes half.
Furthermore, Israeli employees and employers are required to pay predetermined
sums to the National Insurance Institute, which is similar to the United States
Social Security Administration, and additional sums towards compulsory health
insurance.
Insurance
The Company believes that the insurance coverage for its business is in
accordance with industry standards and is adequate and appropriate in light of
the Company's businesses and the risks to which they are subject.
Facilities
Israel
The Company's main facilities in Moshav Magshimim, Israel, consist of
approximately 13,000 square feet, which the Company uses as its headquarters and
as a research and development facility. The buildings are situated on a plot of
land leased to Moshe Nur and his wife. Mr. Nur served until April 1997 as the
Company's Chairman and was its major shareholder. See "--Legal Proceedings" and
"Certain Transactions."
The Company also subleases approximately 1,780 square feet at the
Blueboard Assembler's facilities in Rosh Ha'ain, Israel, to conduct software
installation and system integration operations for the Blueboard Printers.
United States
Nur America leases office space in Newton Centre, Massachusetts,
consisting of two office suites for use as the subsidiaries' headquarters, sales
office and demonstration and service center. Unless terminated by written
notice, the lease is automatically extended in one-year increments.
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Belgium
Nur Europe leases approximately 6,000 square feet of office space in
Brussels, Belgium, for use as the subsidiaries' headquarters, sales office and
demonstration and service center.
Germany
Nur Germany occupies facilities in Kassel, Germany, consisting of one
building of approximately 3,500 square feet for use as the subsidiaries'
headquarters, sales office and printing center. Nur Germany does not currently
have a formal lease agreement for the facilities.
Legal Proceedings
In September 1998, the district court of Tel Aviv approved a settlement
agreement among the Company and several other parties that, together with other
settlement agreements, resolved all material claims, including those involving
the Company, relating to Mr. Moshe Nur and his affiliated companies. Mr. Nur
served until April 1997 as the Company's Chairman and was its major shareholder.
The parties to the court approved settlement agreement were the Company,
the special manager for Moshe Nur's assets in his bankruptcy proceedings, Moshe
Nur, and other of his family members. The parties to the other settlement
agreements included two Israeli banks, and the temporary receiver of Nur Outdoor
Advertising Ltd. (a company formerly affiliated with Mr. Nur).
According to the agreements, all material claims against the Company
relating to the lease of its facilities in Moshav Magshimim (including
confirmation of the Company's pre-payment of lease until July 2000), alleged
breach of contracts and alleged debts owed to any of the above mentioned parties
were dismissed. Separately, claims related to the ownership of the Company's
shares have been resolved and the temporary injunction on the issuance of
securities by the Company was lifted.
As part of the various settlement agreements, the Company paid an
aggregate of $100,000 and will withdraw its lawsuit against the First
International Bank.
Separately, in December 1998, the Company and certain parties achieved a
settlement agreement that, among other things, resolved several outstanding
legal disputes between the Company and the Matan Parties (defined below) (the
"Matan Settlement Agreement"). The Matan Settlement Agreement resolves several
lawsuits and proceedings pending in courts of Israel and the Israeli Patent
Office. The parties to the Matan Settlement Agreement include Matan Digital
Printing Ltd., Matan Y. Systems Ltd., Sprintek Ltd., Mr. Rami Dochovna (such
four parties, "Matan Parties"), the Company, Meital Electronic Technology Ltd.
("Meital"), Scitex, Idanit and others.
The Matan Settlement Agreement resolved all disputes between the Company
and the Matan Parties, including disputes on patent ownership, alleged royalty
payments due to certain members of the Matan Parties, alleged debts of the
Company to certain members of the Matan Parties and different rights relating to
the technologies of such parties. Under the terms of the Matan Settlement
Agreement, the patents in dispute are the property of the Company; the Company
granted the Matan Parites, Idanit, Scitex and affiliates of Scitex a
non-exclusive perpetual license for use of such patents; the Company is no
longer obligated to pay royalty payments to the Matan Parties in connection with
the sale of the Company's printers; all past debts of the Company to the Matan
Parties are deemed paid in full; and the mutual lawsuits filed in the Tel Aviv
District Court and the Israeli Patent Office were withdrawn.
The Matan Settlement Agreement also resolved all disputes and legal
proceedings between the Company, Idanit, Scitex and Meital, a company that
recently sold substantially all of its assets to the Company.
As part of the Matan Settlement Agreement, the Company is required to pay
a total of $880,000, plus interest and tax, assuming timely payments, to the
Matan Parties, which has been fully provided for and is payable by the Company
in equal quarterly installments over a three year period.
In June 1998, Quantum Securities Ltd. ("Quantum") filed a suit against the
Company claiming that the Company breached an alleged investor relations
agreement between Quantum and the Company. In the suit
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Quantum claims $33,380 in monetary damages and the right to Ordinary Share
purchase warrants to purchase 100,000 Ordinary Shares of the Company at $1.75
per share and 100,000 Ordinary Shares of the Company at $2.00 per share. The
Company has denied that such an agreement with Quantum exists with the Company
and plans to defend itself vigorously. The Company has also counterclaimed for
reimbursement of approximately $17,000 paid to Quantum in the past.
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MANAGEMENT
The executive officers and directors of the Company are:
<TABLE>
<CAPTION>
Name Age Position with the Company
- ---- --- -------------------------
<S> <C> <C>
Dan Purjes(1) 48 Chairman of the Board of Directors
Erez Shachar 35 President, Chief Executive Officer and Director
Hilel Kremer 37 Chief Financial Officer and Secretary
Eyal Israeli 44 Vice President of Operations
Amir Noy 38 Vice President of Marketing
Yoram Ben-Porat 43 Director and President of Nur Media Solutions
Robert L. Berenson(2) 59 Director
Roni Ferber (1)(2) 55 Director
Robert F. Hussey(1)(2) 49 Director
</TABLE>
- ---------
(1) Member of the Company's stock option committee.
(2) Member of the Company's audit committee.
Dan Purjes has served as the Chairman of the Board of the Company since
April 1997. Mr. Purjes is Chairman and Chief Executive Officer of Josephthal, an
investment banking and brokerage firm which is a member of the New York Stock
Exchange. Prior to joining Josephthal in 1985, Mr. Purjes was a Vice President
with a number of securities firms, including Bear Stearns & Co. and L.F.
Rothschild Unterberg Towbin, in their corporate finance and brokerage sales
divisions. He began his Wall Street career at Morgan Stanley & Co. in 1978 as a
director of their computer systems department. Prior to that, Mr. Purjes was a
manager at Citibank and at Philip Morris International in their computer systems
areas. Mr. Purjes earned B.S. and M.S. degrees in computer science from the City
College of New York School of Engineering.
Erez Shachar has served as the Company's President and Chief Executive
Officer since July 1997 and as a Director of the Company since October 1997. Mr.
Shachar has also served as a Director of Nur Europe, Nur America and Nur Media
Solutions since January 1998. Prior to joining the Company, from 1989 to 1997
Mr. Shachar served in various research and development, marketing, sales, and
senior management positions with Scitex Corporation. Mr. Shachar's last position
with Scitex was Vice President of Sales and Marketing of Scitex Europe, and
prior thereto Mr. Shachar held several positions in the marketing organization
of Scitex Europe. Prior to joining Scitex Europe, Mr. Shachar was a software
developer within the research and development group of Scitex. Mr. Shachar holds
a B.Sc. in mathematics and computer science from Tel Aviv University, and a
M.B.A. degree from INSEAD, France.
Hilel Kremer has served as the Chief Financial Officer and Secretary of
the Company since December 1998. Mr. Kremer has also served as a Director of Nur
Europe, Nur America and Nur Media Solutions since December 1998. Prior to
joining the Company, from 1993 to 1998 Mr. Kremer served in various management
positions with Scitex Corporation. Mr. Kremer's last position with Scitex was
Vice President of Finance and Chief Financial Officer of Scitex Asia Pacific,
and prior thereto Mr. Kremer held several positions in the finance organization
of Scitex Europe. Prior to joining Scitex Europe, Mr. Kremer held various
positions in the budgeting department of the Israeli Finance ministry. Mr.
Kremer holds a B.A. in economics from Hebrew University, Jerusalem, and an
M.B.A. degree from INSEAD, France.
Eyal Israeli has served as the Vice President of Operations since June
1996. Prior thereto, since January 1995, Mr. Israeli served as the Director of
Customer Support for Indigo Electronic Printing Systems Ltd. From February 1993
to January 1995, Mr. Israeli served as the Manager of Corporate Customer Support
for Orbotech Ltd. In addition, from January 1989 to 1993, Mr. Israeli served as
Vice President of Customer Support for Optrotech Inc., the U.S. subsidiary of
Optrotech Ltd. Mr. Israeli holds a B.Sc. degree in electronic engineering from
Ben-Gurion University and a M.Sc. degree in electronic systems from Tel Aviv
University.
Amir Noy has served as the Vice President of Marketing since March 1996.
From March 1994 to March 1996, Mr. Noy was the Vice President of Research and
Development of the Company. From 1989 to March 1994, Mr. Noy served as Research
and Development Project Manager with Scitex. Between 1984 and 1989, Mr. Noy
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served as a technical officer for communication with the Israeli Air Force. Mr.
Noy holds B.Sc. and M.Sc. degrees in electrical engineering from the Technion,
Israel Institute of Technology, and a M.B.A. degree from Tel Aviv University.
Yoram Ben-Porat has served as a Director of the Company since March 1991.
Since October 1993, Mr. Ben-Port has served as Director and President of Nur
Media Solutions. Since October 1993, Mr. Ben-Porat has served as the Chief
Executive Officer and Deputy Chairman of the Board of Directors of Nur
International. He was among the founders of the Company and between January and
September 1993, he served as the Chief Executive Officer of the Company. From
1987 until December 1992, Mr. Ben-Porat served as Research and Development and
Business Development Manager of Nur Outdoor and Nur Focus. Prior thereto, he was
an independent consultant to metal finishing process companies in the high
technology industry. Mr. Ben-Porat holds a degree in economics and marketing
from the Tel Aviv College of Management and Administration.
Robert L. Berenson has served as a Director of the Company since July
1998. Mr. Berenson is President of Grey Advertising Inc., the second largest
advertising agency in the United States and sixth largest in the world. He
joined Grey in 1964 as an Assistant Account Executive, rose through the ranks to
become the youngest Executive Vice President in the company's history in 1977
and took his present position as President in 1989. Mr. Berenson is also a
Director of the Better Business Bureau of New York, the Advertising Educational
Foundation and the Federal Law Enforcement Foundation. He holds a B.S./B.A.
degree in journalism and marketing from Syracuse University and an M.S. degree
in journalism from the Medill School at Northwestern University.
Roni Ferber has served as a Director of the Company since July 1998. Since
1991, Mr. Ferber has served as a Financial and Economic Consultant. Mr. Ferber
also serves on the Board of Directors of Omnitech Eichut Ltd., International
Software Group Ltd., Zvi Zorfati Ltd. and Aflkim Consulting and Investments Ltd.
From 1986 to 1992, Mr. Ferber served as a Director and member of the executive
committee and of the investment committee of Caesarea - Edmond Benjamin de
Rothschild Foundation. During that time he also served as a Director and member
of the executive committee of the Caesarea Development Corporation. From 1967 to
1991, Mr. Ferber served as a Director and co-founder of Nikuv Computers Ltd.,
the first Israeli software company to be listed on the Tel Aviv Stock Exchange.
From 1986 to 1991, Mr. Ferber served as CEO of Nikuv Computers Ltd. Mr. Ferber
holds a B.A. in economics from Hebrew University and a B.A. in Semitic languages
from Tel Aviv University. Mr. Ferber is fluent in Hebrew, Arabic, English,
French, German and Italian.
Robert F. Hussey has served as a Director of the Company since September
1997. Prior to joining the Company, from June 1991 to April 1997, Mr. Hussey
served as the President and Chief Executive Officer of Metrovision of North
America. Prior thereto, from 1984 to 1991, Mr. Hussey served as the President,
Chief Executive Officer and Director of POP Radio Corp., a company which he
helped form. From 1979 to 1984, Mr. Hussey served as the Vice
President/Management Supervisor for Grey Advertising, Inc. From 1977 to 1979,
Mr. Hussey was the Director of Financial Advertising for E.F. Hutton. Prior
thereto, from 1973 to 1977, Mr. Hussey served as a Senior Financial Analyst and
Product Manager for American Home Products, Inc. Mr. Hussey holds a B.S. degree
in finance and a M.B.A. degree in international finance from Georgetown
University.
Consulting Agreement
The Company has retained the President of Meital, Kobi Markowitz, as a
consultant to the Company for a two-year period, which commenced in September
1998, in connection with the Company's acquisition of drop-on-demand technology
from Meital. Meital will be paid monthly compensation of approximately
$7,370 for these services and has been granted the option to acquire 100,000
Ordinary Shares at $1.00 per share at the end of the first year of the
agreement.
Terms of Directors
The members of the Board are elected annually at the Company's general
meeting and remain in office until the next annual general meeting of the
Company, unless the director has previously resigned, vacated his office, or was
removed in accordance with the Company's Articles of Association. In addition,
the Board may elect additional members to the Board.
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Alternate Directors
The Articles of Association provide that, subject to the Board's approval,
a director may appoint, by written notice to the Company, any individual
(whether or not such person is then a member of the Board) to serve as an
alternate director. Any alternate director shall have all of the rights and
obligations of the director appointing him or her, except the power to appoint
an alternate (unless the instrument appointing him or her expressly provides
otherwise). The alternate director may not act at any meeting at which the
director appointing him or her is present. Such alternate may act as the
alternate for several directors and have the corresponding number of votes.
Unless the appointing director limits the time period or scope of any such
appointment, such appointment is effective for all purposes and for an
indefinite time, but will expire upon the expiration of the appointing
director's term. There are currently no alternate directors.
Committees of the Board of Directors
The Company's Articles of Association provide that the Board may delegate
all of its powers to committees of the Board as it deems appropriate, subject to
the provisions of the Israeli Companies Ordinance (New Version) 1983, as amended
(the "Companies Ordinance").
Approval of Certain Transactions under the Companies Ordinance; Audit Committee
The Companies Ordinance requires disclosure by an "Office Holder" (as
defined below) to the Company in the event that an Office Holder has a direct or
indirect personal interest in a transaction to which the Company intends to be a
party, and codifies the duty of care and fiduciary duties which an Office Holder
has to the Company. An "Office Holder" is defined in the Companies Ordinance as
a director, managing director, chief business manager, executive vice president,
vice president, other manger directly subordinate to the managing director and
any other person assuming the responsibilities of any of the foregoing positions
without regard to such person's title.
The Companies Ordinance requires that certain transactions, actions, and
arrangements must be approved by an audit committee of the Company's Board (the
"Audit Committee") meeting certain criteria defined in the Companies Ordinance,
and by the Board itself. The Company is also required to maintain the Audit
Committee as a result of the inclusion for quotation of the Ordinary Shares on
the Nasdaq National Market. In certain circumstances, shareholder approval is
also required. The Audit Committee must be comprised of members of the Board who
are not employees of the Company, and the majority of members of the Audit
Committee may not be holders, directly or indirectly through family members, of
more than five percent of the Ordinary Shares.
The Company has appointed an Audit Committee consisting of Robert L.
Berenson, Roni Ferber, and Robert F. Hussey. Approval by the Audit Committee and
the Board is required for (i) proposed transactions to which the Company intends
to be a party in which an Office Holder has a direct or indirect personal
interest, (ii) actions or arrangements which may otherwise be deemed to
constitute a breach of fiduciary duty or of the duty of care of an Office Holder
to the Company, (iii) arrangements with directors as to the terms of office or
compensation, and (iv) indemnification of Office Holders. Arrangements with
directors as to the terms of their service or compensation also require
shareholder approval. All arrangements as to compensation of Office Holders who
are not directors require approval of the Board. In certain circumstances, the
matters referred to in (i), (ii), and (iv) may also require shareholder
approval.
Office holders (including directors) who have a personal interest in a
matter which is considered at a meeting of the Board or the Audit Committee may
not be present at such meeting, may not participate in the discussion, and may
not vote on any such matter, except that such Office Holders may consent in
writing to resolutions adopted by the Board and/or the Audit Committee by
unanimous consent.
Stock Option Committee
In March 1998, the Company established a committee to administer the
Company's stock option plans (the "Stock Option Committee"). The Stock Option
Committee is charged with administering and overseeing the allocation and
distribution of stock options under the approved stock option plans of the
Company. The Stock Option Committee is presently comprised of three members: Dan
Purjes, Roni Ferber and Robert F. Hussey.
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Compensation of Directors and Executive Officers
For the year ended December 31, 1995, the aggregate compensation paid by
the Company to the directors and executive officers of the Company (a total of 6
persons) amounted to $330,000. For the year ended December 31, 1996, the
aggregate compensation paid by the Company to the directors and executive
officers of the Company (a total of 7 persons) amounted to approximately
$523,000. For the year ended December 31, 1997, the aggregate compensation paid
by the Company to the directors and executive officers of the Company (a total
of 13 persons) amounted to approximately $813,000.
In October 1997, the Company undertook to pay its Board members who are
not employees of the Company remuneration for their services as directors. This
remuneration includes an annual payment of $5,000 and an additional payment of
approximately $250 per meeting.
Stock Option Plans
1995 Stock Option Plan
In 1995, the Company's Board adopted a Flexible Stock Incentive Plan (the
"1995 Plan") that provides for grants to employees and consultants of the
Company of stock options. An aggregate amount of not more than 500,000 stock
options is available for grant under the 1995 Plan, including options for future
services (such options, "Service Options"), options for performance (such
options, "Performance Options"), and options to consultants for service or
performance (such options, "Consultant Options").
The Company's Board determines the employees and consultants who are
granted options under the 1995 Plan, the timing of such grants, the terms
thereof, and the number of shares to be covered thereby. The Board also
determines the exercise price for Ordinary Shares subject to the Performance and
Consultants Options under the 1995 Plan and the exercise price for the Service
Options, provided that in no case shall the exercise price of any Service Option
be less than 80% of the fair market value of such Ordinary Shares at the date of
grant (the "Date of Grant"). Service Options usually vest over a four-year
period. One-third of the Service Options vest after the second annual
anniversary of the Date of Grant with an additional one-third vesting on the
third and fourth anniversary of the Date of Grant, respectively. Performance
Options vest under the same terms as applicable to the Service Options.
Consultants Options vest over a specified period of time based on past or future
services rendered or performance targets to be achieved by the Company as
determined by the Board. Notwithstanding the foregoing, the Consultants Options
vest ten years following the Date of Grant. No option may be assigned or
transferred except by will or the laws of descent and distribution.
The Company's 1995 Plan provides that it is to be administered by the
Board or by a committee appointed by the Board and is currently administered by
the Stock Option Committee. The Stock Option Committee has broad discretion to
determine the persons entitled to receive options under the 1995 Plan, the terms
and conditions on which options are granted, and the number of Ordinary Shares
subject thereto, up to an aggregate amount of 500,000 Ordinary Shares.
Under the 1995 Plan for Israeli employees, options and Ordinary Shares
issuable upon the exercise of options granted to Israeli employees of the
Company can be held in a trust until the payment of all taxes due with respect
to the grant and exercise (if any) of such options.
1997 Stock Option Plan
In 1997, the Company's Board adopted the 1997 Plan that provides for
grants to employees and consultants of the Company of stock options. An
aggregate amount of not more than 1,700,000 stock options are available for
grant under the 1997 Plan.
The Company's 1997 Plan provides that it is to be administered by the
Board or by a committee appointed by the Board and is currently administered by
the Stock Option Committee. The Stock Option Committee has broad discretion to
determine the persons entitled to receive options under the 1997 Plan, the terms
and conditions on which options are granted, and the number of Ordinary Shares
subject thereto, up to the maximum aggregate amount permitted under the 1997
Plan. The Stock Option Committee also has discretion to determine the purchase
price to be paid upon the exercise of an option granted under the 1997 Plan.
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The exercise price of the option shares under the 1997 Plan is determined
by the Committee; provided, however, that the exercise price of any option
granted shall not be less than eighty percent (80%) of the Stock Value (as
defined below) at the time of the issuance of such options (the "Date of
Grant"). The "Stock Value" at any time is equal to the then current Fair Market
Value (as defined below) of the Company's Ordinary Shares. For purposes of the
1997 Plan, the "Fair Market Value" means, as of any date, the last reported sale
price, on such date, of the Ordinary Shares on such principal securities
exchange of the most recent prior date on which a sale of the Ordinary Shares
took place.
The Stock Option Committee determines the term of each option granted
under the 1997 Plan; provided, however, that the term of an option shall not be
for more than ten (10) years. Upon termination of employment, all unvested
options lapse. All options granted vest over a four-year period. One-third of
such options vest after the second anniversary of the Date of Grant, one-third
after the third anniversary, and the final third after the fourth anniversary of
the Date of Grant. Notwithstanding the foregoing, the Stock Option Committee may
determine different vesting scheduled for service options granted to employees
in special circumstances.
The options granted are subject to restrictions on transfer, sale, or
hypothecation. All options and Ordinary Shares issuable upon the exercise of
options granted to Israeli employees of the Company are held in trust for a
minimum of two years in accordance with Section 102 of the Israel Income Tax
Ordinance.
1998 Non-Employee Director Share Option Plan
The Company's shareholders approved the 1998 Non-Employee Director Share
Option Plan at its annual meeting of shareholders on December 8, 1998 to provide
for grants of options to purchase Ordinary Shares to non-employee directors of
the Company (the "1998 Plan"). The 1998 Plan will be administered by a committee
appointed by the Board consisting of directors not eligible for awards of
options under the 1998 Plan (the "Committee"). An aggregate amount of not more
than 250,000 Ordinary Shares is reserved for grant under the 1998 Plan. The 1998
Plan will expire on December 8, 2008 (10 years after adoption), unless earlier
terminated by the Board.
Under the 1998 Plan, each non-employee director that served on the 1998
"Grant Date," as defined below, automatically received an option to purchase
10,000 Ordinary Shares on such Grant Date and will receive an option to purchase
an additional 10,000 Ordinary Shares on each subsequent Grant Date thereafter
provided that he or she is a non-employee director on the Grant Date and has
served as such for the entire period since the last Grant Date. The "Grant Date"
means, with respect to 1998, October 26, 1998, and with respect to each
subsequent year, August 1. Directors first elected or appointed after the 1998
Grant Date, will automatically receive on such director's first day as a
director an option to purchase up to 10,000 Ordinary Shares prorated based on
the number of full months of service between the prior Grant Date and the next
Grant Date. Each such non-employee director would also automatically receive, as
of each subsequent Grant Date, an option to purchase 10,000 Ordinary Shares
provided he or she is a non-employee director on the Grant Date and has served
for the entire period since the last Grant Date.
The exercise price of the option shares under the 1998 Plan is 100% of the
Fair Market Value (as defined below) of such Ordinary Shares at the time of
issuance of such options (the "Date of Grant"). The "Fair Market Value" means,
as of any date, the average closing bid and sale prices of the Ordinary Shares
for the date in question as furnished by the National Association of Securities
Dealers, Inc. through Nasdaq or any similar organization if Nasdaq is no longer
reporting such information, or such other market on which the Ordinary Shares
are then traded, or if not then traded, as determined in good faith (using
customary valuation methods) by resolution of the members of the Board of
Directors of the Company, based on the best information available to it. The
exercise price is required to be paid in cash.
The term of each option granted under the 1998 Plan is ten (10) years from
the applicable Date of Grant. All options granted vest immediately after
issuance.
The options granted would be subject to restrictions on transfer, sale or
hypothecation. All options and Ordinary Shares issuable upon the exercise of
options granted to the non-employee directors of the Company could be withheld
until the payment of taxes due with respect to the grant and exercise (if any)
of such options.
46
<PAGE>
Outstanding Options and Warrants to Purchase Ordinary Shares
As of January 15, 1999, the Company has options to purchase a total of
1,805,039 Ordinary Shares outstanding under the Company's stock option plans. Of
such 1,805,039 options, 460,039 have been issued under the 1995 Plan, 1,305,000
have been issued under the 1997 Plan and 40,000 have been issued under the 1998
Plan. The options granted under the 1995 Plan and the 1997 Plan are subject to
various vesting requirements, have been issued at exercise prices ranging from
$0.30 to $3.00 per share with various expiration dates. The options granted
under the 1998 Plan have an exercise price of $2.50 per share are not subject to
vesting requirements and expire on October 26, 2008. See Note 19 to the
Company's Financial Statements included as a part of this Prospectus.
As of January 15, 1999, the Company has warrants exercisable into a total
of 555,000 Ordinary Shares outstanding. Of such warrants, 155,000 were issued to
Josephthal as representative of the underwriters in connection with the
Company's initial public offering in October 1995 (the "IPO Warrants") and
400,000 were issued to Josephthal as placement agent in connection with the
Company's private placement between September and December 1997 (the "Private
Placement Warrants"). The IPO Warrants are exercisable at $7.20 per share no
later than October 2000. The Private Placement Warrants are exercisable at $1.00
per share no later than September and December 2002. Dan Purjes, the Chairman of
the Company is also the Chairman of Josephthal. See "Certain Transactions."
Current directors and officers as a group hold 1,121,671 of the options
and warrants described above.
47
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's Ordinary Shares as of January 15, 1999, by
(i) each person known by the Company to be the beneficial owner of more than 10%
of the outstanding Ordinary Shares and (ii) all of the Company's executive
officers and directors as a group (9 persons). All of the information with
respect to beneficial ownership by the Company's directors, executive officers
and beneficial owners has been furnished by the respective director, executive
officer, or beneficial owner, as the case may be. The Company believes that the
persons named in this table have sole voting and investment power with respect
to the Ordinary Shares indicated.
<TABLE>
<CAPTION>
Ordinary Shares Percentage of
Beneficially Owned Ordinary Shares
Beneficially Owned
------------------ ------------------
<S> <C> <C>
Dan Purjes* 3,985,151 34.65%
All current executive officers and
directors as a group (9 persons) 5,170,593 43.13%
</TABLE>
- ---------------------
* Dan Purjes is Chairman of the Company and Chairman of Josephthal. See "Certain
Transactions."
48
<PAGE>
SELLING SECURITY HOLDERS
The selling security holders own the Ordinary Shares offered hereby. The
following table sets forth certain information with respect to the ownership of
the Ordinary Shares by each selling security holder as of January 15, 1999.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Before Owned After
the Offering(1) the Offering(1)
------------------- --------------------
Percent(2) Shares
Shares(2) (3) Offered(4) Shares Percent(3)
-------- ---------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C>
Purjes, Dan(5) (6) 3,985,151 34.65 619,671 409,200 3.76
WBM I LLC (5) (7) 2,918,780 26.83 2,918,780 0 *
Ben Porat, Yoram(5) (8) 546,442 5.02 37,000 513,442 4.72
Trefoil Israel Investments, LLC 500,000 4.60 500,000 0 *
Shachar, Erez(5) (9) 350,000 2.55 350,000 0 *
Carafe Investment Co. Ltd. 250,000 2.30 250,000 0 *
Omotsu Holdings Limited 250,000 2.30 250,000 0 *
Fuchs, David(5) (10) 215,000 1.98 215,000 0 *
Purjes, Esther 200,000 1.84 200,000 0 *
Horizon Fund Ltd. 171,240 1.57 171,240 0 *
Sarig, Ehud(11) 161,539 1.48 161,539 0 *
Clalit Capital Fund L.P. 150,000 1.38 150,000 0 *
Weisman, Scott(5) (12) 139,219 1.28 139,219 0 *
Owesh, Tajunnisa 125,000 1.15 125,000 0 *
Balk, Mathew(5) (13) 121,323 1.12 121,323 0 *
Hussey, Robert F.(5) (8) 110,000 1.01 110,000 0 *
Markowitz, Kobi(5) 100,000 * 100,000 0 *
Margolin, Michael & Shoshana 85,664 * 85,664 0 *
Gross, Joy 75,000 * 75,000 0 *
Kremer, Hilel(5) (8) 75,000 * 75,000 0 *
Scibelli, James 75,000 * 75,000 0 *
Avnon, Alon(5) (15) 70,000 * 70,000 0 *
Sheib, Fredda 65,000 * 65,000 0 *
Gelman, Gary 60,000 * 60,000 0 *
Davis, Peter S. 50,000 * 50,000 0 *
DeGennaro, Ruth B. 50,000 * 50,000 0 *
Dorigol, S.A. 50,000 * 50,000 0 *
Duggal, Baldev 50,000 * 50,000 0 *
Eastlane Corporation Ltd. 50,000 * 50,000 0 *
Everest Holding 50,000 * 50,000 0 *
First Comet Corporation 50,000 * 50,000 0 *
Holistica International Ltd. 50,000 * 50,000 0 *
Noy, Amir(5) (8) 50,000 * 50,000 0 *
Ornstein, Richard 50,000 * 50,000 0 *
Sagiv, Schlomo(5) (15) 50,000 * 50,000 0 *
Weinrab, Efi(5) 50,000 * 50,000 0 *
Rice, Lawrence R.(5) (13) 48,568 * 46,568 0 *
Card Investment Group, Inc. 40,000 * 40,000 0 *
Roden, Charles(5) (13) 36,680 * 36,680 0 *
Barnea, Michael(5) (16) 30,000 * 30,000 0 *
Grotenstein, Alan 30,000 * 30,000 0 *
Israeli, Eyal(5) (8) 30,000 * 30,000 0 *
Kurman, Nachom(5)(15) 30,000 * 30,000 0 *
Berman, Michael 25,000 * 25,000 0 *
Birn, Dora 25,000 * 25,000 0 *
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Before Owned After
the Offering(1) the Offering(1)
------------------- --------------------
Percent(2) Shares
Shares(2) (3) Offered(4) Shares Percent(3)
-------- ---------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C>
Chnapko, Joseph P. 25,000 * 25,000 0 *
Gell, Brian D. 25,000 * 25,000 0 *
Heymann, Jerry 25,000 * 25,000 0 *
JLR Profit Sharing Plan C(6) FBO Frank
Garriton 25,000 * 25,000 0 *
Padan, Eitan(5) (14) 25,000 * 25,000 0 *
Padan, Uzi 25,000 * 25,000 0 *
Purjes, Esther IRA Delaware Charter 25,000 * 25,000 0 *
Sheib, James C. 25,000 * 25,000 0 *
Trokel, Michael 25,000 * 25,000 0 *
Vitullo, Mary(13) & Purjes, Dan(6) 25,000 * 25,000 0 *
Wagner, George P. Jr. 25,000 * 25,000 0 *
Dovrat, Shrem Skies Fund Ltd. 22,830 * 22,830 0 *
Agam, Mony(5) (15) 22,000 * 22,000 0 *
Dovrat, Shrem Rainbow Fund, Ltd. 20,930 * 20,930 0 *
Ben-Moshe, Boaz & Susan 20,000 * 20,000 0 *
Darbyshire, Chris 20,000 * 20,000 0 *
Gold, Dahlia 20,000 * 20,000 0 *
Murphy, William F. 20,000 * 20,000 0 *
Nano-Cap Hyper Growth Partnership, L.P. 20,000 * 20,000 0 *
Ordinance Capital, L.P. 20,000 * 20,000 0 *
Stein, Raymond 20,000 * 20,000 0 *
Trokel, Stephen L. 20,000 * 20,000 0 *
Berkowitz, Nathan(5) (15) 15,000 * 15,000 0 *
Chenes, Charles A. 15,000 * 15,000 0 *
Continental Stock Transfer Corp. 15,000 * 15,000 0 *
Ivtzan, Amir(5) 15,000 * 15,000 0 *
LoCicero, John(5) (15) 15,000 * 15,000 0 *
Vardi, Gabi(5) 15,000 * 15,000 0 *
Worley, Sam(5) (15) 15,000 * 15,000 0 *
Loew, Michael (5) (17) 12,996 * 12,996 0 *
Bailey-Beck, Adriane (13) & Purjes, Dan (6) 12,500 * 12,500 0 *
Friedland, Stephen 12,500 * 12,500 0 *
Jacob, Varughese & Leela 12,500 * 12,500 0 *
Khan, Khurshid 12,500 * 12,500 0 *
Palma, Susan 12,500 * 12,500 0 *
The Shaar Fund Ltd. 12,500 * 12,500 0 *
Fitzgerald, Paul (5) (13) 12,334 * 12,334 0 *
Larkin, Sherwood P.(5) (13) 12,009 * 12,009 0 *
Achiemeir, Shimshon(5) 12,000 * 12,000 0 *
Feinschmidt, Avi(5) 12,000 * 12,000 0 *
Itzik, Rovien(5) 12,000 * 12,000 0 *
Lagzeil, Shmual(5) (15) 12,000 * 12,000 0 *
Wollfgor, Ronen(5) 12,000 * 12,000 0 *
Arvai, Emilia(13) 10,000 * 10,000 0 *
Berenson, Robert L.(5) (8) 10,000 * 10,000 0 *
Cohen, Morris 10,000 * 10,000 0 *
Colbert, James IRA 10,000 * 10,000 0 *
Ferber, Roni(5) (8) 10,000 * 10,000 0 *
Giullani, Cloudio(5) (15) 10,000 * 10,000 0 *
Handa, Sameer 10,000 * 10,000 0 *
Lowe, James F. 10,000 * 10,000 0 *
Mahtani, Gordan G. 10,000 * 10,000 0 *
Mahtani, Jiwat & Pushpa 10,000 * 10,000 0 *
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Before Owned After
the Offering(1) the Offering(1)
------------------- --------------------
Percent(2) Shares
Shares(2) (3) Offered(4) Shares Percent(3)
-------- ---------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C>
Mayer, Charles 10,000 * 10,000 0 *
Messing, Andrew 10,000 * 10,000 0 *
Morgan, John R. 10,000 * 10,000 0 *
Naz, Mohammad & Rasheeda 10,000 * 10,000 0 *
Patel, Chandu & Kala 10,000 * 10,000 0 *
Rao, Sanjeeva 10,000 * 10,000 0 *
Relyea, William(5) (13) 10,000 * 10,000 0 *
Weisner, Gary(13) 10,000 * 10,000 0 *
White, Laurence 10,000 * 10,000 0 *
Zimmerman, Bernard 10,000 * 10,000 0 *
Lifiland, Michael(5) 9,000 * 9,000 0 *
Miakinkoff, Regina 8,000 * 8,000 0 *
Estate of Peter Sheib, Stuart Ross,
Executor(5) 7,549 * 7,549 0 *
HSB Capital 7,500 * 7,500 0 *
JLR Profit Sharing Plan C(6) FBO Ursula
D. Mell 7,500 * 7,500 0 *
Shaw, Larry & Winstead, Dennis 7,500 * 7,500 0 *
Admoni, Ehud(5) (15) 7,000 * 7,000 0 *
Porush, Naftali & Elaine 7,000 * 7,000 0 *
Porush, Naomi 7,000 * 7,000 0 *
Sectal Capital Markets, Ltd.(5) 6,400 * 6,400 0 *
Dorit, Daniel(5) (15) 6,000 * 6,000 0 *
Antoniades, Adam(13) 5,000 * 5,000 0 *
Bear Stearns Securities Corp. FBO Cindy
Cerruto IRA 5,000 * 5,000 0 *
Bear Stearns Securities Corp. FBO James
Welton IRA 5,000 * 5,000 0 *
Bear Stearns Securities Corp. FBO James
Zogby IRA 5,000 * 5,000 0 *
Block Reed, Annmary 5,000 * 5,000 0 *
Casajuana, Simon(5) (15) 5,000 * 5,000 0 *
Dransfield, Mark(13) 5,000 * 5,000 0 *
Gilbert, Jonathan R. 5,000 * 5,000 0 *
Hawryluk, James B.(13) 5,000 * 5,000 0 *
JLR Profit Sharing Plan B(6) FBO Anthony
Guzzi 5,000 * 5,000 0 *
JLR Profit Sharing Plan C(6) FBO Ralph
DeMarco 5,000 * 5,000 0 *
JLR Profit Sharing Plan C(6) FBO
Salvatore Agosta 5,000 * 5,000 0 *
JLR Profit Sharing Plan C(6) FBO Lloyd
Kagin 5,000 * 5,000 0 *
JLR Profit Sharing Plan C(6) FBO Raymond
A. Mando 5,000 * 5,000 0 *
Larkin Investors 5,000 * 5,000 0 *
Malone, Ena 5,000 * 5,000 0 *
Menikdiwela, Gayathri(17) 5,000 * 5,000 0 *
Rodin, Gregori(5) (15) 5,000 * 5,000 0 *
Sheib, Fredda Custodian for Benjamin Kohn 5,000 * 5,000 0 *
Volpe, Michael(13) 5,000 * 5,000 0 *
Zino, Micheal(5) (15) 5,000 * 5,000 0 *
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Before Owned After
the Offering(1) the Offering(1)
------------------- --------------------
Percent(2) Shares
Shares(2) (3) Offered(4) Shares Percent(3)
-------- ---------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C>
Cohen, Bat-Sheva(5) 4,000 * 4,000 0 *
Cole, Louise(5) (15) 4,000 * 4,000 0 *
Frielich, Jeff(5) (15) 4,000 * 4,000 0 *
Mairom, Ofer(5) (15) 4,000 * 4,000 0 *
JLR Profit Sharing Plan C(6) FBO Robert
N. Martz 3,500 * 3,500 0 *
Sagi, Avi(5) (15) 3,500 * 3,500 0 *
Ofir, Yaakov(5) (15) 3,300 * 3,300 0 *
Araki, Muhamad(5) 3,000 * 3,000 0 *
Bailey-Beck, Adriane IRA(6) (13) 3,000 * 3,000 0 *
Bukai, Avi(5) (15) 3,000 * 3,000 0 *
Charitonenko, Alexey(5) (15) 3,000 * 3,000 0 *
Darshan, Dror(5) (15) 3,000 * 3,000 0 *
Desalt, Esmeralda(5) (15) 3,000 * 3,000 0 *
Fernandes, Jeffrey(5) (15) 3,000 * 3,000 0 *
Futernik, Alexander 3,000 * 3,000 0 *
Ganel, Leonid(5) (15) 3,000 * 3,000 0 *
Goodfriend, David(13) 3,000 * 3,000 0 *
Bear Stearns Securities Corp. FBO Robert
Housner IRA 3,000 * 3,000 0 *
JLR Profit Sharing Plan C(6) FBO Kenneth
P. Cerruto 3,000 * 3,000 0 *
Kanovich, Sergei(15) 3,000 * 3,000 0 *
LeFevre, Carine(5) (15) 3,000 * 3,000 0 *
Mench, James Frederick & Dorothy 3,000 * 3,000 0 *
Pallen, Glenn F. IRA Rollover(13) 3,000 * 3,000 0 *
Pine, Lawrence D.(15) 3,000 * 3,000 0 *
Raz, Chaim(5) (15) 3,000 * 3,000 0 *
Trynin, Arye(5) (15) 3,000 * 3,000 0 *
Yehudovski, Natali(5) (15) 3,000 * 3,000 0 *
Biran, Tammy(5)(15) 2,500 * 2,500 0 *
Bondruvsky, Dimitry(5) (15) 2,500 * 2,500 0 *
Buki, Alex(5) (15) 2,500 * 2,500 0 *
David, Chaim(5) (15) 2,500 * 2,500 0 *
Joselson, Joel(5) (15) 2,500 * 2,500 0 *
Meir, Bali(5) (15) 2,500 * 2,500 0 *
Sidi, Amir(5) (15) 2,500 * 2,500 0 *
Ben-Yosef, Zeev(5) 2,300 * 2,300 0 *
Dolev, Roni(5) 2,300 * 2,300 0 *
Gilboa, Pnina(5) 2,300 * 2,300 0 *
Plat, Lior(5) 2,300 * 2,300 0 *
Adamo, Frank(13) 2,000 * 2,000 0 *
Caparelli, Richard F.(13) 2,000 * 2,000 0 *
Chapman, Sandra L. 2,000 * 2,000 0 *
Heksher, Doron(5) (15) 2,000 * 2,000 0 *
Hirshenzon, Shimon(5) (15) 2,000 * 2,000 0 *
Levine, Marc A.(5) (15) 2,000 * 2,000 0 *
Nuirel, Sofi(5) (15) 2,000 * 2,000 0 *
Porshavoy, Emilia(5) (15) 2,000 * 2,000 0 *
West, John L.(13) 2,000 * 2,000 0 *
Zecharya, Irit(5) (15) 2,000 * 2,000 0 *
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Before Owned After
the Offering(1) the Offering(1)
------------------- --------------------
Percent(2) Shares
Shares(2) (3) Offered(4) Shares Percent(3)
-------- ---------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C>
Satloff, Averell W.(5) (17) 1,528 * 1,528 0 *
Corday, Brian (5) (13) 1,000 * 1,000 0 *
Guzzi, Anthony (5) (13) 210 * 210 0 *
Borgman, Lawrence(5) (13) 156 * 156 0 *
Burke, Dennis(5) (13) 156 * 156 0 *
Kowitski, Steve(5) (13) 156 * 156 0 *
Mando, Raymond A.(5) (13) 45 * 45 0 *
</TABLE>
- --------------------
* Less than 1.00%
(1) Unless otherwise indicated, each shareholder has sole voting and
investment power with respect to the Ordinary Shares indicated as
beneficially owned thereby.
(2) These share amounts include up to an aggregate of 555,000 Ordinary
Shares which may be issued to certain selling security holders upon the
exercise of the Warrants and 1,805,039 Ordinary Shares which may be
issued upon exercise of Options.
(3) In accordance with Rule 13d-3 of the Exchange Act, shares that are not
outstanding, but that are issuable pursuant to the exercise of
outstanding Warrants or Options, all of which are exercisable within 60
days of the date of this Prospectus, have been deemed to be outstanding
for the purpose of computing the percentage of outstanding shares owned
by the individual having such right, but have not been deemed
outstanding for the purpose of computing the percentage for any other
person. See "Description of Securities."
(4) With respect to the selling security holders, it has been assumed that
all Ordinary Shares so offered will be sold.
(5) Includes Ordinary Shares underlying Warrants and/or Options.
(6) Dan Purjes is Chairman of the Company and Chairman of Josephthal & Co.
Inc. See "Certain Transactions."
(7) WBM I LLC is controlled by persons affiliated with Josephthal & Co.
Inc., including Dan Purjes. See "Certain Transactions."
(8) Director of the Company.
(9) Erez Shachar is President, Chief Executive Officer and a Director of the
Company.
(10) David Fuchs is a former Director of the Company, acted as the Company's
Chief Financial Officer from April through October 1997 and is employed
with Josephthal & Co. Inc. See "Certain Transactions."
(11) Of the 161,539 shares being registered on behalf of Mr. Sarig, 125,000
are shares underlying options, Mr. Sarig's right to which are in
dispute.
(12) Scott Weisman is a former Director of the Company and is employed with
Josephthal & Co. Inc. See "Certain Transactions."
(13) Employee of Josephthal & Co. Inc. See "Certain Transactions."
(14) Eitan Padan was the Company's Chief Financial Officer, Vice President of
Finance and Secretary until December 1998.
(15) Employee of the Company.
(16) Michael Barnea acts as legal counsel in Israel to the Company through
Shimonov Barnea & Co. See "Legal Matters."
(17) Former employee of Josephthal & Co. Inc. See "Certain Transactions."
53
<PAGE>
CERTAIN TRANSACTIONS
Private Placement and Other Payments and Grants
Between September and December 1997, the Company effected a private
offering of its Ordinary Shares in the United States, for which Josephthal acted
as exclusive placement agent. As of January 15, 1999, the Chairman of
Josephthal, Dan Purjes, who is also the Company's Chairman, beneficially owns
approximately 34.65% of the Company's Ordinary Shares, and other individuals
affiliated with Josephthal beneficially own approximately 7.30% of the Company's
Ordinary Shares. As compensation for its services as the Company's exclusive
placement agent, Josephthal received fees of $439,000 and warrants to purchase
400,000 Ordinary Shares at an exercise price of $1.00 per share. Payment to
Josephthal in consideration for the banking services rendered by Josephthal to
the Company was approved by the Company's shareholders at its annual meeting in
October 1997.
From April through October 1997, an individual employed by Josephthal was
the Company's acting Chief Financial Officer, for which he received compensation
of approximately $45,000, and Dan Purjes received $20,000 in compensation for
his services as Chairman of the Board of Directors of the Company. Dan Purjes,
Chairman of the Company and Josephthal, and two individuals who are officers of
Josephthal and were simultaneously directors of the Company were granted options
under a company stock option plan to purchase in the aggregate 500,000 Ordinary
Shares of the Company at $1.25 per share. The foregoing payments and grants were
approved by the Company's shareholders at its annual meeting in October 1997.
Certain Facilities and Related Legal Proceedings
The Company's main facilities in Magshimim, Israel (the "Facilities"),
which the Company uses as its headquarters and as a research and development
facility, are situated on a plot of land leased to Moshe Nur and his wife. Moshe
Nur was the Company's Chairman and its major shareholder until April 1997. Moshe
Nur and certain affiliated companies, have been involved in various insolvency
proceedings which involved the Company, until a settlement was reached in
September 1998. According to the settlement agreements, all material claims
against the Company relating to the lease of the Facilities, alleged breach of
contracts and alleged debts owed to any of the above mentioned parties were
dismissed. Specifically, the Company reached an agreement with Moshe Nur's
receiver (and certain creditors) pursuant to which the Company may continue to
lease the Facilities until July 2000 without payment of rent. This rent-free use
of the Facilities was granted to the Company as set against payment previously
made and accounted for as pre-paid rent. Separately, claims related to the
ownership of the Company's shares have been resolved and the temporary
injunction on the issuance of securities by the Company was lifted.
54
<PAGE>
DESCRIPTION OF SECURITIES
Set forth below is a summary of certain information concerning the
Company's capital stock and a brief description of certain provisions contained
in the Memorandum of Association, the Articles of Association and certain
statutory provisions. The Memorandum of Association and the Articles of
Association have been filed as exhibits to the Registration Statement. Such
summary and description do not purport to be complete statements of these
provisions and are qualified in their entirety by reference to such exhibits.
The authorized share capital of the Company consists of 20,000,000
Ordinary Shares, 10,880,000 of which are issued and outstanding, fully paid and
non-assessable. See "Capitalization."
Non-residents of Israel may freely hold and trade the Ordinary Shares
pursuant to general and specific permits issued under Israel's Currency Control
Law, 1978. Neither the Memorandum of Association nor the Articles of Association
make any distinction between residents and non-residents of Israel with respect
to the ownership of Ordinary Shares. None of the Memorandum of Association, the
Articles of Association nor Israeli law make any distinction between residents
and non-residents of Israel with respect to the voting rights related thereto.
Holders of paid-up Ordinary Shares are entitled to participate equally in
the payment of dividends and other distributions and, in the event of
liquidation of the Company, in the distribution of assets after the discharge of
liabilities to creditors. The Board may declare interim dividends, and may
propose the final dividend with respect to any year out of unconsolidated
profits available for dividends after statutory appropriation to capital
reserves. Shareholder approval, in the form of an ordinary resolution (see
below), is required for the declaration of a final dividend. The shareholders
may approve a final dividend in the amount recommended by the Board or in a
lesser amount (but not in a greater amount). If the shareholders do not approve
the final dividend recommended by the Board, in whole or in part, the interim
dividend may have to be returned. Ordinary Shares do not entitle their holders
to preemptive rights.
Each Ordinary Share is entitled to one vote on all matters to be voted on
by shareholders, including the election of directors. The quorum required for
action to be taken at a meeting of shareholders consists of two shareholders
present in person or by proxy and holding in the aggregate more than 50% of all
the outstanding voting rights of the Company. If a meeting is adjourned due to
the lack of a quorum, one or more shareholders, holding not less than 33% of all
the outstanding voting power attached to the Ordinary Shares, present in person
or by proxy at the subsequent adjourned meeting will constitute a quorum. An
ordinary resolution (for example, a resolution to approve the financial
statements, to approve final dividends or to appoint the auditors) requires the
affirmative vote of shareholders present and holding in person or by proxy a
majority of the shares present. A special resolution (for example, a resolution
to amend the Articles of Association, to authorize a change in capitalization or
to adopt certain other major changes as specified in the Israeli Companies
Ordinance) requires the affirmative vote of shareholders present in person or by
proxy and holding shares conferring at least 75% of the votes cast with respect
to the special resolution, at a meeting convened upon at least 21 days' notice.
Certain resolutions relating to transactions involving principal shareholders
require special approvals and disinterested shareholder approval. See "Certain
Transactions."
Holders of the Ordinary Shares do not have cumulative voting rights in the
election of directors. Consequently, the holders of Ordinary Shares in the
aggregate conferring more than 50% of the voting power represented in person or
by proxy will have the power to elect all the directors. Holders of the
remaining Ordinary Shares will not be able to elect any directors. The current
principal shareholders of the Company may be able to elect all the members of
the Board of Directors.
Continental Stock Transfer & Trust Company is the transfer agent and
registrar for the Ordinary Shares.
The Ordinary Shares are quoted on the Nasdaq National Market. However,
there can be no assurance that an active public market for the Ordinary Shares
will be sustained after the Offering. The Company currently has no present
intention to list or quote its securities in Israel or other markets outside the
United States; however, the Company may seek such listings if the Board
determines that it is in the best interest of the Company to do so.
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COMMISSION POSITION ON INDEMNIFICATION FOR SECURITY ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Ordinary Shares of the Company in the
public market could adversely affect the prevailing market prices for the
Ordinary Shares and the ability of the Company to raise equity capital in the
future. The Company has 10,880,000 Ordinary Shares outstanding. Of these shares,
the 1,550,000 shares sold in the Company's initial public offering are, and the
9,119,483 shares sold in this offering (including 2,360,039 shares underlying
outstanding options and warrants) will be, immediately freely tradable in the
public market without restriction under the Securities Act, except for any
shares purchased by an affiliate of the Company (as that term is defined under
the rules and regulations of the Securities Act) which will be subject to the
resale limitations of Rule 144 promulgated under the Securities Act. All of the
remaining Ordinary Shares to be outstanding after the offering, 2,570,556
Ordinary Shares, will be "restricted securities" as that term in defined under
Rule 144 and will not have been registered under the Securities Act. Such
restricted shares may not be sold unless they are registered under the
Securities Act or unless an exemption from registration is available under Rule
144 or otherwise under the Securities Act.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including a person who may be deemed to be an
"affiliate" of the Company as that term is defined under the Securities Act, is
entitled to sell, within any three-month period, a number of restricted Ordinary
Shares as to which at least two years have elapsed from the later of the
acquisition of such shares or in an amount that does not exceed the greater of
(i) one percent of the then outstanding shares of Ordinary Shares (108,800
shares based upon 10,880,000 shares outstanding), or (ii) if the Ordinary Shares
are then quoted on Nasdaq or a national securities exchange, the average weekly
trading volume of the Ordinary Shares during the four calendar weeks preceding
such sale. Sales under Rule 144 are also subject to certain requirements as to
the manner of sale, notice, and the availability of current public information
about the Company. However, a person who is not deemed to have been an affiliate
of the Company during the three months prior to a sale by such person and at
least three years have lapsed from the acquisition of the shares is entitled to
sell them without regard to the volume, manner of sale, or notice requirements
of Rule 144.
EXCHANGE CONTROLS AND OTHER LIMITATIONS
AFFECTING SECURITY HOLDERS
Non-residents of Israel will be able to receive dividends, if declared,
and any amounts payable upon the dissolution, liquidation or winding-up of the
affairs of the Company. Any such payments will be paid in freely repatriable
non-Israeli currencies (including U.S. dollars). Such payments, if made, shall
be made pursuant to a general permit issued by the Controller under the Currency
Control Law, 1978 (the "Currency Control Law").
In May 1998, a new "general permit" was issued, which removed most of the
restrictions prohibited under the law, and thus enabled Israeli citizens to
freely invest outside of Israel and freely convert Israeli currency into
non-Israeli currencies.
ISRAELI TAXATION AND FOREIGN EXCHANGE REGULATIONS
The following is a summary of the current tax laws of the State of Israel
as they relate to the Company and its shareholders. This summary does not
discuss all aspects of Israeli tax law that may be relevant to a particular
investor in light of his personal investment circumstances or to certain types
of investors subject to special treatment under Israeli law (for example,
traders in securities or persons that own, directly or indirectly, 10% or more
of the
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Company's outstanding voting stock). The following also includes a discussion of
certain Israeli government programs benefiting various Israeli businesses such
as the Company. To the extent that the discussion is based on new legislation
yet to be subject to judicial or administrative interpretation, there can be no
assurance that the views expressed herein will accord with any such
interpretation in the future. This discussion is not intended and should not be
construed as legal or professional tax advice, and does not cover all possible
tax considerations.
General Corporate Tax Structure
The Company is subject to corporate tax in Israel. Commencing in the tax
year 1993 through and including 1996, the regular rate of corporate tax to which
Israeli companies are subject decreased by 1% each year, i.e., from 39% in 1993
down to 36% in 1996 and thereafter. However, the effective rate payable by a
company which derives income from an "Approved Enterprise" (as further discussed
below) may be considerably less. See "--Law for the Encouragement of Capital
Investments, 1959."
Taxation Under Inflationary Conditions
The Income Tax Law (Adjustment for Inflation), 1985 (the "Adjustment for
Inflation Law") attempts to overcome some of the problems experienced in a
traditional tax system by an economy experiencing rapid inflation, which was the
case in Israel at the time the Adjustment for Inflation Law was enacted.
Generally, the Adjustment for Inflation Law was designed to neutralize for
Israeli tax purposes the erosion of capital investments in businesses and to
prevent unintended tax benefits resulting from the deduction of inflationary
financing expenses. The Adjustment for Inflation Law applies a supplementary set
of inflationary adjustments to a normal taxable profit computed according to
regular historical cost principles.
The Adjustment for Inflation Law introduced a special tax adjustment for
the preservation of equity based on changes in the Israeli CPI whereby certain
corporate assets are classified broadly into fixed (inflation resistant) assets
and non-fixed assets. Where shareholders' equity, as defined in the Adjustment
for Inflation Law, exceeds the depreciated cost of fixed assets, a corporate tax
deduction which takes into account the effect of inflationary change on such
excess in allowed (up to a ceiling of 70% of taxable income for companies in any
single tax year, with the unused portion permitted to be carried forward on a
linked basis with no ceiling). If the depreciated cost of fixed assets exceeds
shareholders' equity, then such excess multiplied by the annual rate of
inflation is added to taxable income.
In addition, subject to certain limitations, depreciation on fixed assets
and losses carried forward are adjusted for inflation based on changes in the
Israeli CPI. The net effect of the Adjustment for Inflation Law on the Company
might be that the Company's taxable income, as determined for Israeli corporate
tax purposes, will be different than the Company's U.S. dollar income, as
reflected in its financial statements, due to the difference between the annual
changes in the CPI and in the NIS exchange rate with respect to the U.S. Dollar,
causing changes in the actual tax rate.
Law for the Encouragement of Industry (Taxes), 1969
The Company currently qualifies as an "Industrial Company" within the
definition of the Law for the Encouragement of Industry (Taxes), 1969 (the
"Industry Encouragement Law"). According to the Industry Encouragement Law, an
"Industrial Company" is a company resident in Israel, at least 90% of the income
of which in any tax year (exclusive of income from defense loans, capital gains,
interest and dividends), is derived from an "Industrial Enterprise" owned by it.
An "Industrial Enterprise" is defined by that law as an enterprise whose major
activity in a given tax year is industrial production activity.
Included among the tax benefits for an Industrial Company are deductions
of 12.5% per annum of the purchase price of a good-faith acquisition of a patent
or of know-how, an election under certain conditions to file a consolidated
return and accelerated depreciation rates on equipment and buildings.
Eligibility for the benefits under the Industry Encouragement Law is not
subject to receipt of prior approval from any governmental authority. No
assurance can be given that the Company will continue to qualify as an
"Industrial Company" or that the benefits described above will be available in
the future.
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Law for the Encouragement of Capital Investments, 1959
The Law for the Encouragement of Capital Investments, 1959, as amended
(the "Investment Law") provides that a capital investment in production
facilities (or other eligible facilities) may, upon application to the Israel
Investment Center, be designated as an Approved Enterprise. Each certificate of
approval for an Approved Enterprise relates to a specific program delineated
both by its financial scope, including its capital sources, and its physical
characteristics, i.e., the equipment to be purchased and utilized pursuant to
the program. The tax benefits derived from any such certificate of approval
relate only to taxable profits attributable to the specific Approved Enterprise.
Taxable income of a company derived from an Approved Enterprise designated
as such after October 30, 1978, is subject to corporate tax at the rate of 25%
(rather than the 1998 regular corporate tax rate of 36%) throughout the "Benefit
Period"--a period of seven years commencing with the year in which the Approved
Enterprise first generated taxable income (limited to the earlier of twelve
years from the commencement of production or fourteen years from the date of
approval) and, under certain circumstances, extending to a maximum of ten years
therefrom. In the event a company operates under more than one approval or only
part of its capital investments are approved (a "Mixed Enterprise"), its
effective corporate tax rate is the result of a weighted combination of the
various applicable rates.
In addition, a company owning an Approved Enterprise approval after April
1, 1986 (or prior thereto, provided no government grants or loans had previously
been granted in respect to such enterprise) may elect to forego certain
government grants extended to its Approved Enterprise in exchange for an
"alternative package" of tax benefits (the "Alternative Package"). Under the
Alternative Package, a company's undistributed income derived from an Approved
Enterprise will be exempt from corporate tax for a period of between two and ten
years, depending on the geographic location of the Approved Enterprise within
Israel, and such company will be eligible for the tax benefits under the
Investment Law described above for the remainder of the Benefits Period.
Part of the Company's production facilities have been granted the status
of "Approved Enterprise" under the Investment Law, under two separate investment
plans. The implementation of the investments under the first plan was finalized
in 1993. The implementation of the second plan is expected to be finalized in
1998.
According to the provisions of the Investment Law, the Company chose to
enjoy "alternative benefits"--waiver of grants in return for tax exemption.
Accordingly, the Company's income from the Approved Enterprise will be
tax-exempt for a period of two and four years for the first and second plans,
respectively, commencing with the year it first earns taxable income, and
subject to corporate tax at the rate of 25%, for additional periods of five and
three years, for the first and second plans, respectively.
The period of tax benefits, detailed above, is subject to limits of 12
years from the commencement of production, or 14 years from receiving the
approval, whichever is earlier. Given the above mentioned conditions, the period
of benefits for the first plan commenced in the year 1994 and will terminate in
the year 2000, and the period of benefits for the second plan has not yet
commenced.
If dividends are distributed out of such tax-exempt profits, the Company
will be liable for corporate tax at the rate which would have been applied if it
had not chosen the alternative tax benefits (currently 25% for an "Approved
Enterprise"). Therefore, income derived from the Company's "Approved Enterprise"
status is not available for distribution to shareholders as a dividend. See Note
20(a) to the Company's Financial Statements.
The dividend recipient is taxed at the reduced rate applicable to
dividends from Approved Enterprises (15%), if the dividend is distributed during
the tax exemption period or within a specified period thereafter, or for an
unlimited period in the case of a "Foreign Investors' Company" - a company over
25% foreign-owned with an approved enterprise. This tax must be withheld by the
company at source, regardless of whether the dividend is converted into foreign
currency. See "--Capital Gains and Income Taxes Applicable to Non-Israeli
Shareholders."
Subject to certain provisions concerning income subject to the Alternative
Package, all dividends are considered to be attributable to the entire
enterprise, and the effective tax rate is the result of a weighted combination
of the various applicable tax rates.
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The Investment Law also provides that an Approved Enterprise is entitled
to accelerated depreciation on its property and equipment that are included in
an approved investment program.
Grants and certain other incentives received by a company in accordance
with the Investment Law remain subject to final ratification by the Israel
Investment Center, such ratification being conditional upon fulfillment of all
terms of the approved program. Failure to comply with all such terms may require
the return of such grants and incentives (inclusive of interest as of the date
of the grant).
Receipt of grants and tax benefits from the OCS and the Marketing Fund and
under the Company's existing "Approved Enterprise" status and any new programs,
if and when approved, are or will be, as the case may be, subject to various
conditions. The tax benefits derived from the Company's "Approved Enterprise"
status are conditioned upon fulfillment of the conditions stipulated by the
Investment Law, the regulations promulgated thereunder and the criteria set
forth in the certificate of approval issued pursuant to the Investment Law. In
the event of a failure by the Company to comply with these conditions and
criteria, the grants and tax benefits could be canceled, in whole or in part,
and the Company would be required to refund the amount of the canceled benefits,
adjusted for inflation and interest. Management believes that the Company has
operated and will continue to operate in compliance with all the "Approved
Enterprise" conditions and criteria applicable to it from the OCS, the Marketing
Fund and its "Approved Enterprise" status, although there can be no assurance of
this, and that the likelihood is remote that it will be required to refund
grants or tax benefits that it derives from the OCS, the Marketing Fund and
under its "Approved Enterprise" status. There can be no assurance that the
funding and tax benefits will continue. See "Risk Factors--We Rely Upon
Government Grants, Tax Benefits, and Other Funding From Third Parties" and
"Business--Research and Development."
Capital Gains and Income Taxes Applicable to Non-Israeli Shareholders
Under existing regulations, any capital gain realized by an individual
shareholder with respect to the Ordinary Shares acquired on or after the
registration of such shares will be exempt from Israeli Capital Gains Tax if the
Ordinary Shares are listed on an approved foreign securities market (which term
includes the Nasdaq in the United States) and provided that the Company
continues to qualify as an Industrial Company under Israeli law, and provided
the individual does not hold such shares for business purposes.
Upon a distribution of dividends other than bonus shares (stock
dividends), income tax is generally withheld at source at the rate of 25% (or
the lower rate payable with respect to Approved Enterprises, see "--Law for the
Encouragement of Capital Investments, 1959"), unless a double taxation treaty is
in effect between Israel and the shareholder's country of residence that
provides for a lower tax rate in Israel on dividends.
A tax treaty between the United States and Israel (the "Treaty"),
effective since January 1, 1995, provides for a maximum tax of 25% on dividends
paid to a resident of the United States (as defined in the Treaty). Dividends
distributed by an Israeli company and derived from the income of an approved
enterprise are subject to a 15% dividend withholding tax. The Treaty further
provides that a 12.5% Israeli dividend withholding tax would apply to dividends
paid to a United States corporation owning 10% or more of an Israeli company's
voting stock. The 12.5% rate applies only on dividends from a company that does
not have an "Approved Enterprise" in the applicable period.
A non-resident of Israel who has had dividend income derived or accrued in
Israel from which tax was withheld at source is currently exempt from the duty
to file an annual Israeli tax return with respect to such income, provided such
income was not derived from a business carried on in Israel by such non-resident
and that such non-resident does not derive other non-passive income from sources
in Israel. Proposals are being formulated to expand the requirement to file
annual Israeli tax returns.
Tax Benefits for Research and Development
Israeli tax law allows under certain conditions a tax deduction in the
year incurred for expenditures (including non-depreciable capital expenditures)
in 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
enterprise and is carried out by or on behalf of the company seeking such
deduction. Expenditures not so approved are deductible over a three-year period.
However, according to recent
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Israeli Supreme Court decisions, expenditures made out of the proceeds of
government grants are not deductible, i.e., the Company will be able to deduct
the unfunded portion of the research and development expenditures and not the
gross amount.
U.S. TAX CONSIDERATIONS REGARDING ORDINARY SHARES
The following summary describes certain of the principal United States
federal income tax consequences relating to an investment in Ordinary Shares as
of the date hereof. The summary is based on the Internal Revenue Code of 1986
(the "Code"), and existing final, temporary and proposed Treasury Regulations,
Revenue Rulings and judicial decisions, all of which are subject to prospective
and retroactive changes. The Company will not seek a ruling from the Internal
Revenue Service (the "IRS") with regard to the United States federal income tax
treatment relating to an investment in Ordinary Shares and, therefore, there can
be no assurance that the IRS will agree with the conclusions set forth below.
The summary does not purport to address all federal income tax consequences that
may be relevant to particular investors. For example, the summary applies only
to Holders who hold Ordinary Shares as a capital asset within the meaning of
Section 1221 of the Code, and does not address the tax consequences that may be
relevant to investors in special tax situations (including, for example,
insurance companies, tax-exempt organizations, dealers in securities or
currency, banks or other financial institutions, investors that hold Ordinary
Shares as part of a hedge, straddle or conversion transaction, or Holders that
own, directly or indirectly, five percent or more of the Company's outstanding
Ordinary Shares). Further, it does not address the alternative minimum tax
consequences of an investment in Ordinary Shares or the indirect consequences to
Holders of equity interests in investors in Ordinary Shares. ACCORDINGLY,
PERSONS CONSIDERING THE PURCHASE OF ORDINARY SHARES SHOULD CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE APPLICATION OF UNITED STATES FEDERAL INCOME TAX LAWS, AS
WELL AS THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION, TO THEIR
PARTICULAR SITUATIONS.
For purposes of this discussion, "Company" refers to NUR Macroprinters
Ltd., and "U.S. Holder" means a Holder of Ordinary Shares that is a citizen or
resident of the United States, a partnership or corporation created or organized
in the United States or any State thereof (including the District of Columbia),
or an estate or trust the income of which is subject to United States federal
income tax on a net income basis with respect to Ordinary Shares. The term
"non-U.S. Holder" refers to any Holder of Ordinary Shares other than a U.S.
Holder.
Taxation of U.S. Holders
Distributions on Ordinary Shares. Distributions made by the Company with
respect to Ordinary Shares generally will constitute dividends for federal
income tax purposes and will be taxable to a U.S. Holder as ordinary income to
the extent of the Company's undistributed current or accumulated earnings and
profits (as determined for United States federal income tax purposes).
Distributions in excess of the Company's current or accumulated earnings and
profits will be treated first as a nontaxable return of capital reducing the
U.S. Holder's tax basis in the Ordinary Shares, thus increasing the amount of
any gain (or reducing the amount of any loss) which might be realized by such
Holder upon the sale or exchange of such Ordinary Shares. Any such distributions
in excess of the U.S. Holder's tax basis in the Ordinary Shares will be treated
as capital gain to the U.S. Holder and will be either long term or short term
capital gain depending upon the U.S. Holder's federal income tax holding period
for the Ordinary Shares. Dividends paid by the Company generally will not be
eligible for the dividends received deduction available to certain United States
corporate shareholders under Code Sections 243 and 245. The amount of any cash
distribution paid in a foreign currency will equal the U.S. dollar value of the
distribution, calculated by reference to the exchange rate in effect at the time
the dividends are received. A U.S. Holder should not recognize any foreign
currency gain or loss if such foreign currency is converted into U.S. dollars on
the day received. If a U.S. Holder does not convert the foreign currency into
U.S. dollars on the date of receipt, however, such Holder may recognize gain or
loss upon a subsequent sale or other disposition of the foreign currency
(including an exchange of the foreign currency for U.S. dollars). Such gain or
loss, if any, will be ordinary income or loss for United States federal income
tax purposes.
Subject to certain conditions and limitations, any Israeli withholding tax
imposed upon distributions which constitute dividends under United States income
tax law will be eligible for credit against a U.S. Holder's federal income tax
liability. Alternatively, a U.S. Holder may claim a deduction for such amount,
but only for a year in which a U.S. Holder elects to do so with respect to all
foreign income taxes. The overall limitation on foreign taxes
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eligible for credit is calculated separately with respect to specific classes of
income. For this purpose, dividends distributed by the Company with respect to
Ordinary Shares will generally constitute "passive income."
Sale or Exchange of Ordinary Shares. A. U.S. Holder of Ordinary Shares
generally will recognize capital gain or loss upon the sale or exchange of the
Ordinary Shares measured by the difference between the amount realized and the
U.S. Holder's tax basis in the Ordinary Shares. Gain or loss will be computed
separately for each block of shares sold (shares acquired separately at
different times and prices). The gain or loss on such disposition will be long
term capital gain or loss if the Ordinary Shares had been held for more than one
year. The deductibility of capital losses is restricted and generally may only
be used to reduce capital gains to the extent thereof. However, individual
taxpayers generally may deduct annually $3,000 of capital losses in excess of
their capital gains.
Passive Foreign Investment Company. A foreign corporation generally will
be treated as a "passive foreign investment company" ("PFIC") if, after applying
certain "look-through" rules, either (i) 75% or more of its gross income is
passive income or (ii) 50% or more of the average value of its assets is
attributable to assets that produce or are held to produce passive income.
Passive income for this purpose generally includes dividends, interest, rents,
royalties and gains from securities and commodities transactions. The
look-through rules require a foreign corporation that owns at least 25%, by
value, of an operating subsidiary to treat that proportion of the subsidiaries
assets and income as held or received directly by the foreign parent.
The Company does not believe that it is currently a PFIC nor does it
anticipate that it will be a PFIC in the future because it expects that less
than 75% of its annual gross income will be passive income and less than 50% of
its assets will be passive assets, based on the look-through rules, the current
income and assets of the Company and its subsidiaries, and the manner in which
the Company and its subsidiaries are anticipated to conduct their businesses in
the future. However, there can be no assurance that the Company is not or will
not be treated as a PFIC in the future. If the Company were to be treated as a
PFIC, all U.S. Holders may be required, in certain circumstances, to pay an
interest charge together with tax calculated at maximum rates on certain "excess
distributions," including any gain on the sale of Ordinary Shares. In order to
avoid this tax consequence, a U.S. Holder (i) may be permitted to make a
"qualified electing fund" election, in which case, in lieu of such treatment
would be required to include in their taxable income certain undistributed
amounts of the Company's income or (ii) may elect to mark-to-market the Ordinary
Shares and recognize ordinary income (or possible ordinary loss) each year with
respect to such investment and on the sale or other disposition of the Ordinary
Shares. Neither the Company nor its advisors have the duty to or will undertake
to inform U.S. Holders of changes in circumstances that would cause the Company
to become a PFIC. U.S. Holders should consult their own tax advisors concerning
the status of the Company as a PFIC at any point in time after the date of this
Prospectus. The Company does not currently intend to take the action necessary
for a U.S. Holder to make a "qualified electing fund" election in the event the
Company is determined to be a PFIC.
Foreign Personal Holding Company. A foreign corporation may be classified
as a foreign personal holding company (a "FPHC") for federal income tax purposes
if both of the following tests are satisfied: (i) at any time during the taxable
year five or fewer individuals who are United States citizens or residents own
or are deemed to own (under certain attribution rules) more than 50% of its
stock (vote or value) and (ii) at least 60% (50% for years subsequent to the
year in which it becomes a FPHC) of its gross income (regardless of its source),
as specifically adjusted, "is foreign personal holding company income," which
includes dividends, interest, rents, royalties and gain from the sale of stock
or securities.
The Company does not believe that it is currently a FPHC nor does it
anticipate that it will be a FPHC in the future; however, no assurance can be
given that the Company is not or will not become a FPHC as a result of future
changes of ownership or changes in the nature of the income of the Company. If
the Company were to be classified as a FPHC, each U.S. Holder would be required
to include in income as a taxable constructive dividend its pro rata share of
the Company's undistributed foreign personal holding company income.
Taxation of Non-U.S. Holders
Distributions on Ordinary Shares. Distributions made by the Company with
respect to the Ordinary Shares to non-U.S. Holders who are not engaged in the
conduct of a trade or business within the United States will be subject to
United States federal income tax only if 25% or more of the gross income of the
Company (from all
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sources for the three-year period ending with the close of the taxable year
preceding the declaration of the distribution) was effectively connected with
the conduct of a trade or business in the United States by the Company. The
Company does not anticipate engaging in the conduct of a trade or business
within the United States, except through its subsidiaries. However, if the 25%
threshold for such period is exceeded, a portion of any distribution paid by the
Company to a non-U.S. Holder could be subject to federal income tax withholding
at the rate of 30%; the portion of the distribution that could be subject to
withholding would correspond to the portion of the Company's gross income for
the period that is effectively connected to its conduct of a trade or business
within the United States.
Sale or Exchange of Ordinary Shares. A non-U.S. Holder will not be subject
to United States federal income tax on any gain realized upon the sale or
exchange of Ordinary Shares if such Holder has no connection with the United
States other than holding the Ordinary Shares and in particular (i) such gain is
not effectively connected with a trade or business in the United States of the
non-U.S. Holder, (ii) in the case of a non-U.S. Holder who is an individual
which has a "tax home" (as defined in Section 911(d)(3) of the Code) in the
United States, such non-U.S. Holder is not present in the United States for 183
days or more in the taxable year of such disposition, and (iii) the Company is
not and has not been at any time within 5 years preceding such disposition a
"U.S. real property holding corporation" (a "USRPHC") for federal income tax
purposes.
The Company believes that it is not and does not currently intend to
become a USRPHC, but no assurance can be given that the Company is not or will
not become a USRPHC in the future. In general, if the Company is determined to
be a USRPHC then non-U.S. Holders may be subject to United States federal income
tax on the sale or exchange of the Ordinary Shares, and to withholding at a rate
of 10% on any such disposition. However, a non-U.S. Holder will not be subject
to these special rules even if the Company is determined to be a USRPHC provided
that (i) such non-U.S. Holder did not at any time during the five years ending
on the date of sale or disposition actually or constructively own more than 5%
of the Ordinary Shares of the Company and (ii) the Ordinary Shares are then
"regularly traded" on an established securities market in the United States.
Since the Ordinary Shares are traded on the Nasdaq stock market and since it is
regularly quoted by broker dealers, the Ordinary Shares should be considered to
be "regularly traded" on an established securities market. However, it is
possible to interpret the current Temporary Regulations as concluding that the
Ordinary Shares will not be considered "regularly traded" at any time during
which 50% or more thereof is owned by 100 or fewer persons, which will be the
case as of the date of this Prospectus.
United States Business. A non-U.S. Holder engaged in a trade or business
in the United States whose income from the Ordinary Shares (including gain from
the sale or exchange thereof) is effectively connected with the conduct of such
trade or business will generally be subject to regular United States federal
income tax on such income in the same manner as if it were a U.S. Holder. In
addition, if such a Holder is a foreign corporation, it may be subject to a
branch profits tax equal to 30% of its effectively connected earnings and
profits for the taxable year, subject to adjustments.
Backup Withholding
Distributions made by the Company with respect to the Ordinary Shares and
the gross proceeds received from the disposition of the Ordinary Shares may be
subject to certain information reporting to the IRS and to a 31% backup
withholding tax. However, backup withholding generally will not apply to
payments made to certain exempt recipients (such as a corporation or financial
institution) or to a Holder who furnishes a correct taxpayer identification
number or provides a certificate of foreign status and provides certain other
required information. If backup withholding applies, the amount withheld is not
an additional tax, but is credited against such Holder's United States federal
income tax liability.
PLAN OF DISTRIBUTION
This Prospectus covers the sale of Ordinary Shares by the Selling
Security Holders. As used herein, "Selling Security Holders" includes donees and
pledgees selling shares received from a named Selling Security Holder after the
date of this Prospectus. Any distribution of any such securities by the Selling
Security Holders, or by their pledgees, donees, transferees or other successors
in interest may be effected from time to time in one or more of the following
transactions: (a) to underwriters who will acquire securities for their own
account and resell
62
<PAGE>
them in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale (any
public offering price and any discount or concessions allowed or reallowed or
paid to dealers may change from time to time); (b) through brokers, acting as
principal or agent, in transactions (which may involve block transactions) on
the Nasdaq National Market or on such other market or exchange on which the
securities are then listed, in special offerings, exchange distributions
pursuant to the rules of the applicable exchanges or in the over-the-counter
market or otherwise, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, at negotiated prices or at fixed
prices; (c) directly or through brokers or agents in private sales at negotiated
prices; (d) through put or call options transactions relating to the Ordinary
Shares, or through short sales of Ordinary Shares at market prices prevailing at
the time of sale or at negotiated prices; or (e) by any other legally available
means.
The Company will not receive any proceeds from the sale of the Ordinary
Shares offered hereby. The aggregate proceeds to the Selling Security Holders
from the securities offered hereby will be the offering price less applicable
commissions or discounts, if any. There is no assurance that the Selling
Security Holders will sell any of the securities offered hereby.
Josephthal may be deemed to be an affiliate of the Company by virtue of
the fact that Dan Purjes, the Chairman of Josephthal and the Company, owns over
10% of each of Josephthal and the Company. Therefore, Rule 2720 of the Conduct
Rules of the National Association of Securities Dealers, Inc. (the "NASD")
prohibits Josephthal from participating in the distribution of the Shares
without the participation of a qualified independent underwriter. Accordingly,
Cruttenden Roth Incorporated has acted as a "qualified independent underwriter"
in connection with the offering and as such has exercised the usual standards of
due diligence in connection with the offering and conducting due diligence. The
Company will pay Cruttenden Roth Incorporated a total of $75,000, plus expenses,
and has issued to Cruttenden Roth Incorporated a warrant to purchase 25,000
Ordinary Shares of the Company at an exercise price of $4.50 per share, for its
services as qualified independent underwriter (the "QIU Warrant"). The QIU
Warrant is exercisable for a period of four years commencing one year from the
effective date of this Registration Statement, and is restricted from sale,
transfer, assignment or hypothecation for a period of 12 months from the
effective date of the Registration Statement except to officers and/or
partners of Cruttenden Roth Incorporated and other transferees permitted by
NASD Conduct Rules. The qualified independent underwriter will maintain its due
diligence review of the Company until the earliest of July 31, 1999, the time
that the Registration Statement filed in connection with this offering ceases to
be effective, or the qualified independent underwriter's earlier withdrawal as
such. This Prospectus and the Registration Statement of which it forms a part
will be amended to reflect any cessation by Cruttenden Roth Incorporated of its
due diligence review of the Company and its service as qualified independent
underwriter. The qualified independent underwriter has also recommend an initial
price in compliance with Rule 2720 and no sales of Ordinary Shares made through
Josephthal on the effective date of the Registration Statement of which this
Prospectus forms a part may be made at a price in excess of that recommended
price. Sales of Ordinary Shares made through Josephthal after the effective date
of the Registration Statement of which this Prospectus forms a part may not be
made at a price higher than 110% of the closing bid price of the Ordinary Shares
as reported by Nasdaq for the trading day immediately preceding the day of the
sale at issue unless the terms and arrangements relating to such sales through
Josephthal are approved in advance by the NASD's Corporate Financing Department.
The Selling Security Holders and such underwriters, brokers, dealers or
agents, upon effecting a sale of securities, may be considered "underwriters" as
that term is defined in the Securities Act. The Selling Security Holders will be
subject to the Prospectus delivery requirements because the Selling Security
Holders may be deemed to be "underwriters" within meaning of Section 11 of the
Securities Act. Sales effected through agents, brokers or dealers will
ordinarily involve payment of customary brokerage commissions although some
brokers or dealers may purchase such securities as agents for others or as
principals for their own account (compensation as to a particular broker-dealer
might be in excess of customary commissions). The Selling Security Holders will
pay any sales commissions or similar selling expenses applicable to the sale of
Ordinary Shares. A portion of any proceeds of sales and discounts, commissions
or other sellers' compensation may be deemed to be underwriting compensation for
purposes of the Securities Act.
Selling Security Holders also may resell all or a portion of the Ordinary
Shares in open market transactions in reliance upon Rule 144 under the
Securities Act, provided they meet the criteria and conform to the requirements
of such Rule.
Pursuant to applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the securities offered hereby may not
simultaneously engage in market activities for the Ordinary Shares for a
63
<PAGE>
period of five business days prior to the commencement of such distribution. In
addition, each Selling Security Holder and any other person who participates in
a distribution of the securities will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including Regulation M,
which provisions may limit the timing of purchases and may affect the
marketability of the securities and the ability of any person to engage in
market activities for the Ordinary Shares.
At the time a particular offering of securities is made, to the extent
required, a Prospectus supplement will be distributed which will set forth the
number of securities being offered and the terms of the offering, including the
purchase price or the public offering price, the name or names of any
underwriters, dealers or agents, the purchase price paid by any underwriters for
securities purchased from the Selling Security Holders, any discounts,
commissions and other items constituting compensation from the Selling Security
Holders and any discounts, commissions or concessions allowed or reallowed or
paid to dealers. In addition, upon the Company being notified by a Selling
Security Holder that a donee or pledgee intends to sell more than 500 shares, a
supplement to this Prospectus will be filed.
In order to comply with the securities laws of certain states, if
applicable, the securities will be sold in such jurisdictions, if required, only
through registered or licensed brokers or dealers. In addition, in certain
states the securities may not be sold unless the securities have been registered
or qualified for sale in such state or an exemption from registration or
qualification is available and the conditions of such exemption have been
satisfied.
The Company has agreed that it will bear all costs, expenses and fees in
connection with the registration or qualification of the Ordinary Shares under
federal and state securities laws. The Company and each Selling Security Holder
have agreed to indemnify each other and certain other persons against certain
liabilities in connection with the offering of the securities, including
liabilities arising under the Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the Ordinary Shares offered hereby
will be passed upon for the Company by Shimonov Barnea & Co., Israel.
EXPERTS
The Consolidated Financial Statements of the Company at December 31, 1996
and 1997 and for each of the three years in the period ended December 31, 1997,
appearing in this Prospectus have been audited by Kost Forer & Gabbay (a member
of Ernst & Young International), independent auditors, as set forth in their
report thereon appearing elsewhere herein which, as to the years 1996 and 1997,
are based in part on the reports of Willy Knyrim, independent auditor. Such
Consolidated Financial Statements are set forth in reliance upon the report of
such firm given upon the authority as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on form
F-1 under the Securities Act with respect to the Ordinary Shares offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and this offering, reference is made to the Registration
Statement and the exhibits and schedules filed as part thereof. The Registration
Statement, including the exhibits and schedules thereto, may be inspected,
without charge, at the Public Reference Section of the Commission at 450 Fifth
Street N.W., Washington, D.C., and at the regional offices of the Commission
located at 7 World Trade Center, 13th Floor, New York, New York, and 500 West
Madison Street, Suite 1400, Chicago, Illinois. Copies of all or any portion of
the Registration Statement can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment
of the prescribed fees. Such material may also be accessed electronically by
means of the Commission's home page on the Internet at http:\\www.sec.gov.
Descriptions contained in this Prospectus as to the contents of any contract or
other document
64
<PAGE>
filed as an exhibit to the Registration Statement are not necessarily complete
and each such description is qualified by reference to such contract or
document.
ISA EXEMPTION
The Israel Securities Authority has granted the Company an exemption from
the obligation to publish this Prospectus in the manner otherwise required
pursuant to the prevailing laws of the State of Israel.
65
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of
M.NUR MARKETING & COMMUNICATION GmbH
We have audited the accompanying balance sheets of M.Nur Marketing &
Communication GmbH ("the Company") as of December 31, 1996 and 1997 and the
related statements of operations, changes in shareholders equity and cash flows
for each of the two years in the period ended December 31, 1997 and the
company's statement of operations, changes in shareholders equity and cash flows
for the year ended December 1995. 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 as to 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 the Company's management, as well as evaluating
the overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, based on our audits, the financial statements referred to
above present fairly, in all material respects, the financial position of the
Company as of December 31, 1996 and 1997 and the related results of their
operations and cash flows for each of the two years in the period ended December
31, 1997, and the Company's results of operations and cash flows for the year
ended December 31, 1995, in conformity with generally accepted accounting
principles in Germany. As applicable to the Company's financial statements,
generally accepted accounting principles in the United States and in Germany are
identical in all material aspects.
Kassel, Germany
March 9, 1998
Yours truly,
/s/ Willy Knyrim
WILLY KNYRIM
Certified Public Accountants (Germany)
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CONSOLIDATED FINANCIAL STATEMENTS
Page
----
<S> <C>
Report of Independent Auditors F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997 F-3 - F-4
Statements of Operations for the Years Ended December 31, 1995,
1996 and 1997 F-5
Statements of Changes in Shareholders' Equity for the Years Ended
December 31, 1995, 1996 and 1997 F-6
Statements of Cash Flows for the Years Ended December 31, 1995, F-7 - F-9
1996 and 1997
Notes to Consolidated Financial Statements F-10 - F-47
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets as of September 30, 1998 F-48 - F-49
Consolidated Statements of Income for the Nine Months Ended
September 30, 1997 and 1998 F-50
Statements of Changes in Shareholders' Equity for the Nine Months
Ended September 30, 1997 and 1998 F-51
Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 1997 and 1998 F-52 - F-53
Notes to Consolidated Financial Statements F-54 - F-55
</TABLE>
- - - - - - - - - - - -
F-1
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
[logo]
KOST FORER & GABBAY
A MEMBER OF
ERNST & YOUNG INTERNATIONAL
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
We have audited the accompanying consolidated balance sheets of Nur
Macroprinters Ltd. (formerly: Nur Advanced Technologies Ltd.) ("the Company")
and its subsidiaries as of December 31, 1996 and 1997 and the related
consolidated statements of operations, changes in shareholders' equity and
consolidated cash flows for the years then ended, and the statements of
operations, changes in shareholders' equity and cash flows of the Company for
the year ended December 31, 1995. 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 did not audit the
financial statements of a subsidiary, whose statements reflect total assets
constituting 3.8% and 4.9% of consolidated total assets as of December 31, 1996
and 1997 and total revenues constituting 18% and 14% of the related consolidated
total revenues for the years ended December 31, 1996 and 1997, respectively.
These statements were audited by other auditors whose reports have been
furnished to us, and our opinion, insofar as is relates to data included for
these subsidiaries, is based solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards in the United States and Israel, including those prescribed by the
Israeli Auditors' Regulations (Mode of Performance), 1973. Those standards
require that we plan and perform the audit to obtain reasonable assurance as to
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 the Company's
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other auditors,
the financial statements referred to above present fairly, in all material
respects, the consolidated financial position of the Company and its
subsidiaries as of December 31, 1996 and 1997 and the related consolidated
results of their operations and cash flows for the years then ended, and the
results of operations and cash flows of the Company for the years ended December
31, 1995, in conformity with generally accepted accounting principles in Israel.
As applicable to the Company's financial statements, generally accepted
accounting principles in the United States and in Israel are identical in all
material aspects.
Tel-Aviv, Israel KOST, FORER and GABBAY
March 9, 1998 Certified Public Accountants (Israel)
Except for comprehensive income data A Member of Ernst & Young
included in the statements of changes International
in shareholders' equity for which date
is October 20, 1998.
F-2
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31,
-----------------------------
1996 1997
------------ ------------
U.S. dollars in thousands
-----------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS (Note 21):
Cash and cash equivalents (Note 3) 1,738 1,234
Trade receivables (net of allowance for
doubtful accounts:
$ 606 and $ 540 as of December 31, 1996 and
1997, respectively) (Note 4) 4,213 5,981
Other accounts receivable and prepaid
expenses (Note 5) 1,749 1,745
Inventories (Note 6) 2,569 2,252
------------ ------------
Total current assets 10,269 11,212
------------ ------------
LONG-TERM INVESTMENTS:
Restricted long term bank deposit - 150
Long-term trade receivables (Note 7) 90 -
Prepaid expenses 368 137
Severance pay funds (Note 15) 224 262
------------ ------------
Total long-term investments 682 549
------------ ------------
PROPERTY AND EQUIPMENT (Note 8):
Cost 1,024 2,444
Less - accumulated depreciation 343 803
------------ ------------
681 1,641
------------ ------------
OTHER ASSETS, net (Note 9) 529 381
------------ ------------
Total assets 12,161 13,783
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31,
------------------------------
1996 1997
------------ -------------
U.S. dollars in thousands
------------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES (Note 21):
Short-term bank loans (Note 11) 1,462 652
Current maturities of long-term bank loans
(Note 14) 818 527
Trade payables (Note 12) 4,437 3,216
Accrued expenses and other liabilities
(Note 13) 1,517 2,126
Customer advances 1,345 17
------------ -------------
Total current liabilities 9,579 6,538
------------ -------------
LONG-TERM LIABILITIES:
Long-term bank loans, net (Note 14) 408 1,076
Accrued severance pay (Note 15) 338 358
------------ -------------
Total long-term liabilities 746 1,434
------------ -------------
MINORITY INTEREST - 26
------------ -------------
SHAREHOLDERS' EQUITY:
Share capital (Note 19):
Common Shares of NIS 1 per nominal value:
Authorized: 20,000,000
Issued and outstanding: 6,880,000 Common
Shares as of December 31, 1996
10,880,000 Common Shares as of December
31, 1997 1,593 2,729
Additional paid-in capital 11,916 14,383
Other comprehensive income 109 (30)
Accumulated deficit (11,782) (11,297)
------------ -------------
Total shareholders' equity 1,836 5,785
------------ -------------
Total liabilities and shareholders' equity 12,161 13,783
============ =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------
1995 1996 1997
-------------- -------------- ------------
The Company Consolidated Consolidated
-------------- -------------- ------------
U.S. dollars in thousands,
except per share amounts
--------------------------------------------
<S> <C> <C> <C>
Revenues (Note 22a-c)
Sales of printers and related products 13,824 13,639 18,874
Sales of printed materials - 2,998 3,085
-------------- -------------- ------------
13,824 16,637 21,959
-------------- -------------- ------------
Cost of revenues:
Cost of sales of printers and related
products (Note 22d) 9,374 11,528 9,627
Cost of sales of printed materials
(Note 22e) - 2,008 1,684
-------------- -------------- ------------
9,374 13,536 11,311
-------------- -------------- ------------
Gross profit 4,450 3,101 10,648
-------------- -------------- ------------
Research and development expenses
(Note 22f) 1,040 1,530 1,726
Less - royalty-bearing grants 306 372 43
-------------- -------------- ------------
Research and development expenses, net 734 1,158 1,683
-------------- -------------- ------------
Selling and marketing expenses, net
(Note 22g) 1,039 4,823 4,620
General and administrative
expenses (Note 22h) 1,187 2,560 3,439
Write-off of debts of related parties
(Note 22j) - 3,757 -
-------------- -------------- ------------
2,226 11,140 8,059
-------------- -------------- ------------
Operating income (loss) 1,490 (9,197) 906
Financial expenses, net (Note 22i) 205 589 320
Gain on marketable securities 12 22 -
Other income (expenses), net 110 76 (8)
-------------- -------------- ------------
Income (loss) before taxes on income 1,407 (9,688) 578
Taxes on income (Note 20e) 221 400 67
-------------- -------------- ------------
Income (loss) after taxes on income 1,186 (10,088) 511
Minority interest in earnings of
subsidiary - - (26)
Equity in losses of a 50%-owned
joint venture (Note 22k) (1,125) - -
-------------- -------------- ------------
Net income (loss) for the year 61 (10,088) 485
============== ============== ============
Basic and diluted earnings (loss) per
share (Note 2k) 0.01 (1.47) 0.07
============== ============== ============
Weighted average number of shares
used in computing basic and
diluted earnings (loss) per share 4,904,118 6,880,000 7,293,640
============== ============== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
shares
outstanding
---------- Additional Other Total
Common Share paid-in comprehensive Retained Comprehensive shareholders'
shares capital capital income earnings income equity
---------- ---------- ----------- ----------- ----------- ------------- -------------
U.S. dollars in thousands
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance as of January 1, 1995 4,110,801 671 2,174 (17) (2,140) 688
- -----------------------------
Comprehensive income:
Net income for the year - - - - 61 61 61
-----------
Other comprehensive income:
Foreign currency translation
adjustments - - - 65 - 65 65
===========
Comprehensive income - - - - - 126
===========
Settlement of liability to a
company under common control - - - - 385 385
Issuance of shares, net 1,795,614 598 6,957 - - 7,555
Debentures converted into
shares 973,585 324 2,559 - - 2,883
Amortization of deferred
compensation - - 177 - - 177
---------- ---------- ----------- ----------- ----------- ------------
Balance as of December 31, 1995 6,880,000 1,593 11,867 48 (1,694) 11,814
- ------------------------------
Comprehensive income:
Net loss for the year - - - - (10,088) (10,088) (10,088)
-----------
Other comprehensive income:
Foreign currency translation
adjustment - - - 61 - 61 61
-----------
Comprehensive income - - - - - (10,027) -
===========
Amortization of deferred
compensation - - 49 - - 49
---------- ---------- ----------- ----------- ----------- ------------
Balance as of December 31, 1996 6,880,000 1,593 11,916 109 (11,782) 1,836
- -------------------------------
Comprehensive income:
Net income for the year - - - - 485 485 485
-----------
Other comprehensive income:
Foreign currency translation
adjustment - - - (139) - (139) (139)
-----------
Comprehensive income - - - - - 346 -
===========
Issuance of shares, net 4,000,000 1,136 2,376 - - 3,512
Amortization of deferred
compensation - - 91 - - 91
---------- ---------- ----------- ----------- ----------- ------------
Balance as of December 31, 1997 10,880,000 2,729 14,383 (30) (11,297) 5,785
- --------------------------- ========== ========== =========== =========== =========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------
1995 1996 1997
-------------- -------------- ------------
The Company Consolidated Consolidated
------------- -------------- ------------
U.S. dollars in thousands
--------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) for the year 61 (10,088) 485
Adjustments to reconcile net income
(loss) to net cash used in operating
activities:
Minority interest in earnings of
subsidiary - - 26
Depreciation and amortization 189 321 644
Loss (gain) from sale of property and
equipment - (4) 8
Deferred taxes, net 221 400 27
Amortization of deferred compensation 177 49 91
Equity in losses of a 50%-owned joint
venture 1,125 - -
Severance pay, net (136) 83 (18)
Decrease in marketable securities, net 100 490 -
Decrease (increase) in trade
receivables (4,970) 3,625 (1,783)
Decrease (increase) in other accounts
receivable and prepaid expenses (355) (378) 41
Decrease (increase) in inventories 313 (1,738) 317
Increase (decrease) in trade payables 1,463 1,435 (1,248)
Increase in accrued expenses and
other liabilities 299 224 502
Increase (decrease) in customer
advances - 1,345 (1,328)
-------------- -------------- ------------
Net cash used in operating activities (1,513) (4,236) (2,236)
-------------- -------------- ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-7
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------------
1995 1996 1997
-------------- ------------- -----------------
The Company Consolidated Consolidated
------------- -------------- -----------------
U.S. dollars in thousands
------------------------------------------------
<S> <C> <C> <C>
Cash flows from investing activities:
Purchase of a subsidiary (1) - - -
Loans to a subsidiary (589) - -
Proceeds from principal
(repayment of principal) of
short-term loans to affiliates
and a shareholder 268 339 -
Long-term bank deposit (400) - -
Restricted long term bank deposit - - (150)
Proceeds from long-term bank
deposit - 400 -
Purchase of property and equipment (268) (230) (1,479)
Purchase of distribution rights (700) - -
Proceeds from sale of property
and equipment 95 393 15
Prepaid expenses - (368) 231
-------------- ------------- -----------------
Net cash provided by (used in)
investing activities (1,594) 534 (1,383)
-------------- ------------- -----------------
Cash flows from financing activities:
Proceeds from issuance of shares,
net 6,855 - 3,512
Short-term bank credit, net (1) 1,424 (810)
Proceeds from principal of
long-term bank loans 430 - 1,263
Repayment of principal of
long-term bank loans (243) (355) (886)
-------------- ------------- -----------------
Net cash provided by financing
activities 7,041 1,069 3,079
-------------- ------------- -----------------
Effect of exchange rate changes on
cash and cash equivalents (63) 6 36
-------------- ------------- -----------------
Increase (decrease) in cash and
cash equivalents 3,871 (2,627) (504)
Cash and cash equivalents at the
beginning of the year 494 4,365 1,738
-------------- ------------- -----------------
Cash and cash equivalents at the
end of the year 4,365 1,738 1,234
============== ============= =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-8
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------------
1995 1996 1997
-------------- ------------- -----------------
The Company Consolidated Consolidated
------------- -------------- -----------------
U.S. dollars in thousands
------------------------------------------------
<S> <C> <C> <C>
(1) Purchase of subsidiary:
Estimated fair value of assets and
liabilities acquired:
Working capital - 196 -
Fixed assets - (585) -
Long-term loan - 359 -
Accrued severance pay - 30 -
------------- ------------- --------------
- - -
============= ============= ==============
Supplemental disclosure of cash
flow information:
Cash paid during the year for:
Interest 206 763 367
============= ============= ==============
Income taxes 32 38 74
============= ============= ==============
Non-cash financing information:
Debentures converted into shares 2,883 - -
============= ============= ==============
Purchase of distribution rights
against issuance of shares 700 - -
============= ============= ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-9
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1:- GENERAL
a. Organization:
1. Nur Macroprinters Ltd. (formerly: Nur Advanced Technologies
Ltd.) ("the Company"), an Israeli Corporation, is an
industrial company. The Company develops, manufactures and
sells digital continuous ink-jet printing systems and related
consumable products for large format printing. The Company
maintains wholly-owned subsidiaries in Europe and United
States for sales support and marketing. The Company's products
are sold by a network of dealers and distributors. The
principal markets of the Company are located in Europe and
United States.
2. Nur International S.A. ("Nur International"):
a) Purchase of distribution rights:
In May 1995, the Company, Shamrock Holdings of
California Inc. ("Shamrock") and Nur International
entered into an agreement, according to which the
Company repurchased from Nur International the
distribution rights that had been granted to Nur
International. Pursuant to the new agreement, Shamrock
also agreed to exchange its loans to Nur International
totaling $ 1.4 million for 245,614 Common Shares of the
Company. In addition, the Company was given an option to
purchase all Shamrock's shares in Nur International for
$ 0.5 million.
The distribution rights purchased from Nur International
are recorded as an asset at the purchase price less 50%
of unrealized intercompany profits, totaling $ 700
thousand, and are being amortized over a period of five
years. This transaction also gives rise to a $ 700
thousand difference between the Company's investment in
Nur International and its share in the underlying equity
in Nur International. After elimination of the negative
goodwill, the balance (approximately $ 300 thousand) is
recorded as goodwill and is also amortized over a period
of five years.
b) Purchase of additional 50% of the shares:
The Company owned 50% of the shares of Nur International
- a corporate joint venture with Shamrock registered in
Belgium (see Note 23). Nur International and its
subsidiaries were engaged in selling and marketing
continuous ink jet printing systems and related
consumable products, printed materials produced by the
Outboard Printers and in establishing and operating
billboard advertising activities.
F-10
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
In May 1996, the Company and Shamrock signed an agreement as
follows:
(1) Shamrock will not be required to provide further
financing to Nur International in accordance with the
Subscription Agreement of February 3, 1994 (the "First
Agreement").
(2) The Company exercised the option provided, however,
instead of an exercise price of $ 0.5 million, the
Company purchased all of Shamrock's shares in Nur
International, free and clear of any liens,
encumbrances, etc., for a consideration of one dollar.
(3) Notwithstanding the above, for every year during which
Nur International's net income (after taxes) will exceed
$ 1 million, the Company will pay Shamrock a sum equal
to 10% of Nur International's net income, up to a total
of $ 0.5 million (accumulating from the first payment).
Nur International's net income shall be as determined in
its annual audited financial statements. Shamrock's
right to payments under this section will expire upon
the earlier of the payment of the $ 0.5 million
thereunder, or the end of the fiscal year 2002. In 1996
and 1997, Nur International's net income (after taxes)
was less than $ 1, million.
The acquisition is accounted for on the basis of the
purchase method of accounting. Initial difference upon
acquisition totaling $ 923 thousand is netted from the
initial difference (negative goodwill) included in the
investment in Nur International totaling $ 293 thousand,
and the balance totaling $ 630 thousand has been written
off at the acquisition date.
The Company recorded losses in 1995 in the amount of $
630 thousand in regard to the increase in equity since
the Company's loan to Nur International exceeds its
share in the losses of Nur International.
Commencing January 1996, the accounts of Nur
International are consolidated with those of the
Company.
Unaudited pro-forma data of the Company, as if the
acquisition of Nur International had been effected on
January 1, 1995, is as follows:
Year ended
December 31,
1995
-------------
U.S.
dollars in
thousands
-------------
Sales 15,785
Loss (43)
Basic and dilutive loss per share (0.01)
F-11
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3. Nur America Inc. ("Nur America"):
In 1996, the Company established a wholly-owned subsidiary in
the United States - Nur America, which is engaged in marketing
the Company's products and related consumable products in
South America and North America.
4. Nur Advanced Technologies (Europe) S.A. ("Nur Europe"):
In 1996, the Company established a wholly-owned subsidiary in
Belgium - Nur Europe which is engaged in marketing the
Company's products and related consumable products in Europe.
5. Nur Marketing and Communication GmbH ("Nur Germany"):
In December 1997, the Company purchased the shares of Nur
Germany, a 84% owned subsidiary, that was held by Nur
International. Nur Germany is engaged in selling and marketing
consumable printed materials.
b. Financial difficulties:
During 1996, the Company encountered severe financial difficulties.
The Company wrote off $ 3,757 thousand, of outstanding debts due to
the Company from Moshe Nur, the Company's former Chairman of the
Board of Directors and a former major shareholder, and from
companies controlled by Moshe Nur, which are currently in bankruptcy
proceedings (see also Notes 16, 18 and 22j).
c. Investment in a private company:
In December 1997, the Company signed an agreement with a private
company which is engaged in research and development in fields
related to the Company's activity. In accordance with the agreement,
the Company will provide a loan in the amount of $ 300 thousand to
the private company.
The loan is convertible to 26% of the share capital of the private
Company. The loan is linked to dollar and bears interest of Libor +
2.5%. The loan is repayable, under certain conditions, in one
payment in 1999.
Prior to December 31, 1997, the Company provided a loan of
approximately $ 54 thousand. The Company recorded a provision in
respect of the aforementioned amount since the private company is in
the development stage, and there is an uncertainty regarding the
private company's ability to repay the loan.
F-12
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
d. Concentration of risks that may have a significant impact on the
Company:
Suppliers:
The Company purchase all of the ink and ink-jets used in its
printers from one supplier while using the supplier's credit-terms.
The Company's customers rely on the ink to operate their printers.
Because the Company's business depends on the sale of its printers,
a supply problem or a change in credit-terms could have a severe
effect on the Company's financial results.
The Company employs a limited number of unaffiliated subcontractors
to manufacture components for its printers. The Company currently
employs one independent sub-contractor to assemble the Blueboard
printers. Because the Company relies on subcontractors, its business
could suffer if the Company fails to maintain its relationships with
its subcontractors or fails to develop alternative sources for its
printer components.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
The Company's consolidated financial statements have been prepared
in accordance with Generally Accepted Accounting Principles in
Israel ("Israel GAAP"). Israel GAAP and Generally Accepted
Accounting Principles in the United States ("U.S. GAAP") as
applicable to the consolidated financial statements of the Company
are identical in all material respects.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from
those estimates.
a. Financial statements in U.S. dollars:
The accompanying consolidated financial statements have been
prepared in U.S. dollars. The U.S. dollar is the currency of the
primary economic environment in which the operations of the Company
and Nur America are conducted. The U.S. dollar is the functional and
reporting currency of the Company. The majority of sales are made in
U.S. dollars and the majority of purchases of materials and
components are invoiced and paid in U.S. dollars. In addition, a
substantial number of other expenses are incurred outside Israel in
U.S. dollars or paid in U.S. dollars or in New Israeli Shekels
("NIS") linked to the exchange rate of the U.S. dollar.
The Company's transactions and balances denominated in U.S. dollars
are presented at their original amounts. Non-dollar transactions and
balances have been remeasured into U.S. dollars in accordance with
Statement 52 of the Financial Accounting Standards Board ("FASB").
All transaction gains and losses from remeasurement of monetary
balance sheet items denominated in non-dollar currencies are
reflected in the statement of operations as financial income or
expenses, as appropriate.
F-13
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The functional currencies of Nur International, Nur Europe, and Nur
Germany are their local currencies. The balance sheets of these
subsidiaries are translated into U.S. dollars at the exchange rate
prevailing at balance sheet date. The statements of operations and
cash flows are translated at weighted average exchange rates during
each year presented. Translation adjustments are recorded in a
separate component of shareholders' equity.
b. Principles of consolidation:
The consolidated financial statements include the accounts of the
Company and its subsidiaries. Intercompany transactions and balances
have been eliminated.
c. Cash equivalents:
Cash equivalents are short-term highly liquid investments that are
readily convertible to cash with original maturities of three months
or less.
d. Allowance for doubtful accounts:
The allowance for doubtful accounts is determined with respect to
specific debts doubtful of collection.
e. Marketable securities:
Management determines the appropriate classification of its
investments in marketable securities at the time of purchase and
reevaluated such determination at each balance sheet date.
Marketable securities are accounted as trading securities for in
accordance with the provisions of Statement No. 115 of the FASB. The
marketable securities consist of debentures, mutual funds and other
securities which are carried at their market value on balance sheet
date. The change in the difference between the market value and cost
of marketable securities is credited or charged to the statement of
operations.
f. Inventories:
Inventories are stated at the lower of cost or market value. Cost is
determined as follows:
Raw materials - by the "first-in, first-out" method;
work-in-progress and finished products - on the basis of computed
manufacturing costs.
The Company annually reviews the inventory for obsolescence, based
on the sales activity of its products, and provides a reserve where
appropriate.
g. Restricted long term bank deposit:
Restricted long term bank deposit is maintained with banks to secure
leasing facilities for the company's customers. The Company is
restricted from withdrawing any portion of the long term bank
deposit at any time, until repayment of the loan by the customer.
F-14
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
h. Property and equipment:
These assets are stated at cost.
Depreciation is computed using the straight-line method over the
estimated useful lives of the assets.
The annual depreciation rates are as follows:
%
------------------------------------
Building 3%
Machinery and equipment 10 - 33
Motor vehicles 15
Office furniture and equipment 6 - 10
Leasehold improvements over the term of the lease agreement
i. Other assets:
Patent rights are stated at cost. Amortization is computed using the
straight-line method over the estimated useful life of five years.
j. Deferred taxes:
1. The Company follows the asset and liability method of
accounting for income taxes in accordance with Israel GAAP.
Under Israel GAAP, deferred taxes are provided for differences
resulting from changes in the Israeli Consumer Price Index
("CPI") (the basis for the Company's tax reporting) and
changes in the exchange rate of the NIS to the U.S. dollar.
Statement 109 of the FASB, "Accounting for Income Taxes", does
not allow deferred taxes to be recognized for this difference
which, with respect to the Company's financial statements, is
immaterial.
2. The Company has permanently reinvested tax-exempt profits from
its approved enterprise. Accordingly, no deferred taxes were
recorded in respect of these profits. (see Note 20a).
3. No provision has been recorded in the financial statements for
capital tax gains which might be applicable upon sale of the
Company's investment in its subsidiaries since the
subsidiaries incurred losses.
F-15
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
k. Earnings (loss) per share:
Earnings (loss) per share are computed based on the weighted average
number of Common Shares outstanding during each period. Diluted
earnings per share also include share equivalents (stock options)
which have a dilutive effect.
In 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share". Statement 128 replaced the
computation of primary and fully-diluted earnings per share with
basic and diluted earnings per share. Unlike primary earnings per
share, basic earnings per share excluded the dilutive effects of
options, warrants and convertible securities. Diluted earnings per
share is similar to the previously reported fully-diluted earnings
per share. All earnings (loss) per share for all periods have been
presented and, where appropriate, restated to conform to Statement
128 requirements.
l. Accounting for stock-based compensation:
The Company accounts for stock-based compensation in accordance with
the requirements of Accounting Principles Board Opinion No. 25 (APB
25) "Accounting for Stock Issued to Employees". Under APB 25 when
the exercise price of the Company's employee options is less then
the fair value of the underlying Common Shares on the date of grant,
compensation expense is recognized. Pro-forma information with
respect to the fair value of the options is provided according to
the requirements of FASB 123 "Accounting for Stock-Based
Compensation".
In accounting for options granted to persons other than employees,
the provisions of Financial Accounting Standards Board Statement No.
123, "Accounting for Stock Based Compensation" were applied.
According to FASB 123 the fair value of these options was estimated
at the grant date using Black-Scholes option pricing model.
m. Revenue recognition
1. Revenues from sales of products are recognized upon shipment,
when no significant vendor obligations remain and collection
is deemed probable.
2. Revenues from services are recognized upon the provision of
the services.
3. Estimated warranty costs, which to date have been
insignificant, are accrued in the financial statements (in
respect of most of these costs the Company has warranties from
its suppliers).
n. Royalty-bearing grants:
Royalty-bearing grants from the Government of Israel for funding of
approved research projects and for encouraging marketing activities
are recognized at the later of the receipt of governmental approval
for the project or the time the Company incurs the costs related to
such grants, and are netted from such related costs in the statement
of operations.
F-16
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
o. Research and development:
Research and development expenses are carried to the statement of
operations as incurred.
Grants are netted from research and development costs on an accrual
basis as the related expenses are incurred.
p. Advertising expenses:
Advertising expenses are expensed as incurred.
q. Concentrations of credit risk:
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash
equivalents and trade receivables.
The Company's cash and cash equivalents are invested in banks,
either linked or unlinked to the U.S. dollar. Management believes
that the financial institutions that hold the Company's investments
are financially sound and, accordingly, minimal credit risk exists
with respect to these investments.
The Company generally does not require collateral from its
customers; however, in certain circumstances, the Company may
require letters of credit, other collateral or additional
guarantees. The Company performs ongoing credit evaluations of its
debtors. In management's estimations, the allowance for doubtful
accounts adequately covers anticipated losses in respect of its
accounts receivable credit risks.
r. Fair value of financial instruments:
The estimated fair value of financial instruments has been
determined by the Company using available market information and
valuation methodologies. Considerable judgment is required in
estimating fair values. Accordingly, the estimates may not be
indicative of the amounts the Company could realize in a current
market exchange. The carrying amounts of cash and cash equivalents
approximate and the Company's borrowings under its short-term credit
agreements fair values, due to the short term maturities of these
instruments.
The fair value of the Company's long-term loan is estimated using
discounted cash flow analyses, based on the Company's current
increment borrowing rates for similar types of borrowing
arrangements.
F-17
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The carrying amounts and fair values of the Company's financial
instruments at December 31, 1997, are as follows (amounts in
thousands):
Carrying amount Fair value
----------------- --------------
U.S. dollars in thousands
---------------------------------
Cash and cash equivalents 1,738 1,738
Short term bank loans 652 652
Long term loan 1,076 1,076
s. Impact of recently issued accounting standards:
In June 1997, the FASB issued Statements of Financial Accounting
Standards 131, "Disclosure About Segments of an Enterprise and
Related Information". This statement is effective for fiscal years
beginning after December 15, 1997. These statements do not have
measurement effects on the financial statements, however, do require
additional disclosure.
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities". The
Statement establishes accounting and reporting standards requiring
that every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value.
The Statement 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 income statement, and requires
that a company must formally document, designate and assess the
effectiveness of transactions that receive hedge accounting. SFAS
133 is effective for fiscal years beginning after June 15, 1999, and
must be applied to instruments issued, acquired, or substantively
modified after December 31, 1997. The Company does not expect the
adoption of the accounting pronouncement to have a material effect
on its financial position or results of operations.
NOTE 3:- CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
December 31,
Linkage Interest -----------------------
terms rate 1996 1997
------------ -------- --------- ------------
% U.S. dollars in
thousands
-------- -----------------------
<S> <C> <C> <C> <C>
Short-term bank deposits:
U.S. dollars 5.1 1,659 1,031
FF 9.2 74 61
DM 3.3 - 135
Cash in banks:
Unlinked NIS - 5 7
--------- -----------
1,738 1,234
========= ===========
</TABLE>
F-18
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 4:- TRADE RECEIVABLES
<TABLE>
<CAPTION>
December 31,
------------------------
1996 1997
----------- -----------
U.S. dollars in
thousands
------------------------
<S> <C> <C>
Open accounts (1) 4,819 6,340
Notes receivable - 181
----------- -----------
4,819 6,521
Less - allowance for doubtful accounts 606 540
----------- -----------
4,213 5,981
=========== ===========
</TABLE>
(1) Including receivables due from one customer
in the amount of $784 thousand as of
December 31, 1997 (December 31, 1996-
$212 thousand).
NOTE 5:- OTHER ACCOUNTS RECEIVABLE AND
PREPAID EXPENSES
<TABLE>
<S> <C> <C>
Government authorities 621 321
Participations and grants receivable 540 392
Related parties 4 146
Deferred taxes - 8
Advances to suppliers 189 353
Prepaid expenses and other 395 525
----------- -----------
1,749 1,745
=========== ===========
</TABLE>
F-19
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 6:- INVENTORIES
<TABLE>
<S> <C> <C>
Raw materials 945 752
Work-in-progress 270 277
Finished products 1,354 1,223
----------- ----------
2,569 2,252
=========== ==========
</TABLE>
NOTE 7:- LONG-TERM TRADE RECEIVABLES
The long-term trade receivables bear interest at the rate of 9.5% and
are repayable in 1998.
NOTE 8:- PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
Office
Machinery furniture Building
and Motor and and
equipment vehicles equipment leasehold Total
improvements
---------- -------- --------- ----------- -------
U.S. dollars in thousands
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cost as of January 1,
1997*) 33 125 782 84 1,024
Additions 280 64 301 834 1,479
Disposals - (43) (16) - (59)
---------- --------- --------- ---------- -------
Balance as of
December 31, 1997 313 146 1,067 918 2,444
---------- --------- --------- ---------- -------
Accumulated depreciation
as of January 1, 1997*) 12 50 259 22 343
Additions 119 34 244 99 496
Disposals - (20) (16) - (36)
---------- --------- --------- ---------- -------
Balance as of
December 31, 1997 131 64 487 121 803
---------- --------- --------- ---------- -------
Depreciated cost as of
December 31, 1997 182 82 580 797 1,641
========== ========= ========= ========== =======
Depreciated cost as of
December 31, 1996*) 21 75 523 62 681
========== ========= ========= ========== =======
</TABLE>
As for charges, see Note 17.
*) Reclassified.
F-20
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 9:- OTHER ASSETS, NET
<TABLE>
<CAPTION>
December 31,
------------------------
1996 1997
---------- ------------
U.S. dollars in
thousands
------------------------
<S> <C> <C>
Cost:
Distribution rights 700 700
Patent rights 61 61
---------- ------------
761 761
---------- ------------
Accumulated amortization:
Distribution rights 210 350
Patent rights 22 30
---------- ------------
232 380
---------- ------------
Depreciated cost 529 381
========== ============
</TABLE>
NOTE 10:- LEASES
a. Nur America Inc. leases office space and warehouse facilities under
a one-year operating lease agreement.
b. Nur Germany leases office space for a period of 10 years ending in
October 2006.
c. The Company entered into a lease agreement with a former shareholder
(Moshe Nur) according to which the Company leases two adjacent
buildings each of approximately 6,500 square feet. The term of the
lease is approximately 10 years from the date on which all the
changes and improvements in the building required by the Company are
completed.
The lease agreement provides that the rental payment under the lease
will be determined by an independent land assessor. The rental
payments will be linked to the U.S. dollar and will increase every
year by 5%. After five years, another independent land assessor may
be appointed to reassess the rental payment. The Audit Committee
may, at its discretion, appoint an additional land assessor, also to
be approved by the shareholder. If the additional assessor is
appointed, the amount of the rental payment will be the average of
both assessments. If the Company is required to vacate the building
or to cease using the entire or a portion of the building due to any
suit filed relating to the use of the building, then, provided that
the Company had used the building for its intended purposes, the
term of the lease shall terminate immediately. If this occurs within
the first five years of the lease, then the shareholder will agree
to indemnify the Company for relocating expenses, fines levied on
the Company, legal expenses and the carrying amount of the
improvements made in the building at the Company's expense.
F-21
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
During 1996 and 1997, the Company paid $ 545 thousand in respect of
the erection of the building, on behalf of Moshe Nur. In 1997, Moshe
Nur met financial difficulties, resulting in the filing of a
petition in bankruptcy. The amounts paid were recorded as prepaid
rent expenses as of December 31, 1996 and 1997.
The Company's management and its Israeli legal consultants are of
the opinion that, in accordance with the lease agreement, the
Company is entitled to offset this amount against future rent
payments. During 1997, the Company recorded $ 204 thousand as rent
expenses in connection with such prepaid expenses.
On April 29, 1997, the Company received a demand from the Otzar
Hahayal Bank the holder of a mortgage lien on the premises to pay
the bank the rental fees in respect of the aforementioned buildings.
On February 4, 1998 in the context bankruptcy proceeding the special
manager of Moshe Nur's properties filed an application to the court
to compel the company to pay rental fees in respect of the buildings
held by the Company or, alternatively, to issue an eviction order to
remove the Company from the aforementioned premises.
Future minimum rental payments as of December 31, 1997, under the
aforementioned non cancelable leases, are as follows (U.S. dollars
in thousands):
<TABLE>
<S> <C>
1998 28
1999 116
2000 25
2001 25
2002 25
Thereafter 95
-----------
314
===========
</TABLE>
d. Rental expenses were $ 42 thousand, $ 244 thousand and $ 350
thousand for the years ended December 31, 1995, 1996 and 1997,
respectively.
NOTE 11:- SHORT-TERM BANK LOANS
<TABLE>
<CAPTION>
Weighted average
interest December 31,
Linkage --------------------- ---------------------
terms 1996 1997 1996 1997
--------- ---------- ---------- ---------- ----------
U.S. dollars in
% thousands
--------------------- ---------------------
<S> <C> <C> <C> <C> <C>
Revolving bank credit NIS 17 17 1,462 160
Short-term loans U.S. dollar - 7.3 - 453
Short-term loans NIS - 17.7 - 39
---------- ----------
1,462 652
========== ==========
</TABLE>
F-22
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 12:- TRADE PAYABLES
<TABLE>
<CAPTION>
December 31,
-----------------------
1996 1997
--------- ------------
U.S. dollars in
thousands
-----------------------
<S> <C> <C>
Open accounts 3,191 2,695
Notes payable 1,246 521
--------- -----------
4,437 3,216
========= ===========
</TABLE>
NOTE 13:- ACCRUED EXPENSES AND OTHER LIABILITIES
<TABLE>
<CAPTION>
December 31,
----------------------
1996 1997
---------- ----------
U.S. dollars in
thousands
----------------------
<S> <C> <C>
Employees and payroll accruals 577 585
Royalties payable 241 390
Deferred taxes 19 -
Other accrued expenses 680 1,151
----------- ---------
1,517 2,126
=========== =========
</TABLE>
NOTE 14:- LONG-TERM BANK LOANS, NET
a. Composed as follows:
<TABLE>
<CAPTION>
Linkage Interest
terms rate
------- -----------
%
-----------
<S> <C> <C> <C> <C>
From banks U.S. LIBOR
dollar
+3.12 971 289
From leasing companies U.S. 6.2 255 1,314
dollar ---------- ----------
1,226 1,603
Less - current maturities 818 527
---------- ----------
408 1,076
========== ==========
</TABLE>
b. Aggregate maturities of long-term loans:
<TABLE>
<S> <C> <C>
First year (current maturities) 818 527
---------- ----------
Second year 388 190
Third year 20 162
Fourth year - 139
Fifth year and thereafter - 585
---------- ----------
408 1,076
---------- ----------
1,226 1,603
========== ==========
</TABLE>
F-23
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 15:- SEVERANCE PAY, NET
a. The Company's liability for severance pay, pursuant to Israeli law,
is fully accrued. Employee insurance policies are purchased to cover
a portion of this liability. Since these policies are owned by the
Company, the cash value of these policies at each year end is
recorded as an asset of the Company and included in severance pay
funds in the Company's balance sheet.
The Company has no liability for any pension payments to its
employees.
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------
1995 1996 1997
------------ ------------- --------------
The Company Consolidated Consolidated
------------- ------------- --------------
U.S. dollars in thousands
--------------------------------------------
<S> <C> <C> <C>
b. Severance pay expense
included in the
statements of operations 162 217 312
============ ============== ==============
</TABLE>
NOTE 16:- CONTINGENT LIABILITIES
a. The Company entered into several project plans with the Chief
Scientist of the Government of Israel regarding the development of
the printers and the Mega Light, a discontinued product. The Company
has an obligation to pay royalties at the rate of 2% - 3% of the
sales derived from the applicable products developed within the
framework of such research and development projects, up to an amount
equal to 100% - 150% of the grant received, in NIS linked to the
exchange rate of the U.S. dollar.
The Company has no obligation to repay this amount if sales are not
sufficient to satisfy the royalty obligations. As of December 31,
1997, the Company has a contingent obligation to pay royalties in
the amount of $ 993 thousand, excluding the discontinued Mega Light
in respect to which there is no longer royalty obligation.
b. The Company is required to pay royalties to the Fund for the
Encouragement of Marketing Activity at the rate of 3% with respect
to increases in export sales of products for which the Company
received participations for its marketing activities, up to an
amount equal to 100% of the grant received.
The grant is repayable only in respect of sales of the related
products, as a percentage of the growth in export sales.
If there is no increase in export sales, or if the Company ceases
producing the relevant products, the grant is not repayable. As of
December 31, 1997, the Company has a contingent obligation to pay
royalties in the amount of $ 129 thousand.
F-24
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
c. The Company is committed to pay royalties to the developer of the
Outboard Printer at the rate of 4% of sales of these printers and
accessory products, and at the rate of 12% of the gross margin of
the sale of ink for printers. (See also note 16g).
d. The Company has guaranteed to the lessor capital lease payments in
the amount of $ 105 thousand for a printer that was leased by a
subsidiary.
e. In the course of the bankruptcy proceedings of Moshe Nur and the
companies controlled by him, the Company may, in the future, be
exposed to claims arising from the actions of Moshe Nur, the
liability of which could be material.
f. In 1997, claims and threats of claims were brought against the
Company in the ordinary course of business in respect of various
matters. The Company made a provision in the amount of $ 165
thousand in respect of these claims and threats of claims based on
the opinion of the Company's Israeli legal advisors. The Company's
management believes that these provisions are adequate.
g. On December 11, 1997, the Company filed a claim for monetary and
other relief against the developer of the Outboard Printer and three
companies which he controls ("Dochovna Group"). The claim primarily
concerns the monetary damages which the developer and his companies
caused to the Company over the course of the years in which they
collaborated as well as the parallel and competitive activities
carried out by the developer and his companies while infringing upon
the Company's contractual and/or proprietary rights. Simultaneously
with the claim letter, the Company also filed a request for
temporary reliefs of which the most material concern is preventing
the developer's competitive activities and the use he has made of
the Company's commercial know-how.
On January 18, 1998, in response, the developer of the Outboard
Printer and two of the companies he controls filed a claim against
the Company and five other parties (among them, the chief executive
officer and the former Chief Executive Officer). Pursuant to the
claim:
1. The Company is indebted to the developer of the Outboard
Printer or the companies which he controls the amount of $ 376
thousand in respect of printers supplied to the Company in the
past which were not paid for.
2. The Company is indebted to the developer of the Outboard
Printers the amount of $ 1,063 thousand (subject to the
presentation of invoices) in respect of an error in the
calculation of royalties.
3. The Company is prevented from manufacturing and marketing
Blueboard printers as they are identical to the Wideboard
printers which the Company is prohibited from manufacturing
without the agreement of the developer of the Outboard
Printer.
Regarding the manufacture and marketing of the Blueboard printers, a
temporary restraining order against the Company has been requested.
F-25
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
According to the management opinion, and based on the opinion of its
Israeli legal counsel, adequate provision was recorded in the books
of the Company.
h. In the context of the various proceedings under way regarding the
dissolution of Nur Outdoor Advertising a company controlled by Moshe
Nur, the receiver for Nur Outdoor Advertising claimed that the
Company is bound to Nur Outdoor Advertising by an exclusivity
agreement for the marketing of the Company's printers in Israel.
Among others, it is claimed that the Company has breached the
aforementioned agreement and is selling printers in Israel without
paying the royalties due to Nur Outdoor Advertising pursuant to the
aforementioned agreement.
The Company notified Nur Outdoor Advertising's receiver in May 1997,
that the agreement at issue was breached by Nur Outdoor Advertising
and, therefore, it was canceled by the Company and is null and void.
In the opinion of the Company's Israeli legal counsel, a claim will
be filed by the receiver of Nur Outdoor Advertising in respect of
the printers the Company sold in Israel.
The Company's management and its Israeli legal counsel are of the
opinion that no amount will be required to be paid in regards to the
abovementioned lawsuit.
NOTE 17:- CHARGES, GUARANTEES AND RESTRICTED LONG-TERM DEPOSIT
a. As collateral for its liabilities to the banks, the Company granted
an unlimited first priority lien on its machinery and equipment,
vehicles, receivables from Scitex, major customer (hereinafter
"Scitex"), a long-term bank deposit, and marketable securities, as
well as a floating lien (a lien on the assets of the Company as they
exist from time to time) on all its assets.
b. The collateralized liabilities are as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------
1996 1997
----------- -------------
U.S. dollars in thousands
--------------------------
<S> <C> <C>
Short-term bank loan 1,462 652
Long-term liabilities,
including current maturities 1,226 1,603
----------- -------------
2,688 2,255
=========== =============
</TABLE>
F-26
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 18:- TRANSACTIONS AND BALANCES WITH RELATED PARTIES
a. In March 1997, three companies in which Moshe Nur - a former
shareholder - has holdings in various percentages, experienced
financial difficulties and are in different stages of insolvency.
These companies are Nur Outdoor Advertising (Manufacturing and
Production) Ltd.("Nur Outdoor"), Nur Focus Assets and Investments
Ltd. ("Nur Focus Assets") and Nur Focus Production (1995) Ltd. ("Nur
Focus") Consequently, there is a considerable doubt as to whether
these companies will continue as going concerns and whether the
agreements entered with them will remain valid. As to the write-off
of debts of related parties, see Note 22j.
Agreements:
1. Pursuant to an Israeli distribution agreement, the Company and
Nur Outdoor entered into an ink supply agreement commencing
October 1994. According to the ink supply agreement, the
Company will supply Nur Outdoor with the ink for distribution
in Israel. The price of the ink will be determined based upon
the price for the ink paid by Scitex or any other distributor
of the Company's products.
2. The Company entered into maintenance and support agreements
with Nur Outdoor and Nur Focus. According to the maintenance
agreements, the Company undertook to provide Nur Outdoor and
Nur Focus with maintenance and support services for the
Outboard Printers bought by them in consideration for an
annual payment to the Company of $ 25,000 per machine.
3. In 1993, the Company entered into an Israeli Distribution
Agreement for an indefinite period of time with Nur Outdoor
and Nur Focus, affiliates of the Company. According to the
terms of the agreement, Nur Outdoor was granted the exclusive
rights to use, market and distribute the Outboard Printer in
Israel. In addition, under this agreement, Nur Focus is
entitled to purchase Outboard Printers from the Company for
its own use. Pursuant to the Israeli Distribution Agreement,
Nur Outdoor is entitled to purchase Outboard Printers from the
Company on the same terms and conditions as Scitex.
Pursuant to the agreement, Nur Outdoor has the exclusive right
to use, market and distribute the MegaLight for the purpose of
providing advertising media services to third parties in
Israel. This right also extends to future developments of the
MegaLight. Purchase of the MegaLight will be at cost plus 20%,
and maintenance services and materials will be at market
prices, but not less than those granted to I.E.M.
International Media Electronic Ltd. ("IEM"), a subsidiary of
Nur Outdoor.
Nur Outdoor is entitled to royalties at the rate of 7% in
respect of sales of electronic signs to others in Israel.
F-27
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4. In January 1993, the Company entered into an agreement with
Nur Outdoor and Poster Media (Israel) Ltd. ("Poster Media"),
an unrelated party, pursuant to which Nur Outdoor and Poster
Media agreed to establish a joint venture, IEM. Under the
agreement, the Company has agreed not to sell the MegaLight in
Israel for indoor media services to any entity excluding IEM.
In exchange, IEM has agreed to purchase the electronic media
billboards only from the Company.
In May 1995, the Company entered into an agreement with IEM.
According to the agreement, the Company will supply IEM with
editing and production services with respect to advertisements
to be presented on the MegaLight. In consideration for such
services, IEM will pay the Company a monthly payment in NIS
equal to $ 1,500.
Under a separate agreement, IEM leased from the Company three
portable MegaLight boards. IEM will pay the Company
consideration equal to half of IEM's revenues from the
MegaLight during the lease period, less the direct expenses
incurred by it during such period. In addition, IEM agreed to
lease from the Company up to eight MegaLight boards for a
short-term period and to pay for each MegaLight monthly
payments in NIS equal to $ 300.
In 1996, Nur Outdoor purchased the shares of Poster Media in
IEM, and became a 100% shareholder of IEM.
The Company terminated all of the aforementioned agreements in May
1997 (see Note 16h).
b. For a lease agreement with a former shareholder, see Note 10c.
c. Between September and December 1997, the Company effected a private
offering of its Common Shares in the United States (see also Note
19a), for which the investment banking firm of Josephthal and Co.
Inc. ("Josephthal") acted as exclusive placement agent. The chairman
of Josephthal beneficially owns approximately 31.87% of the
Company's Common Shares, and other individuals affiliated with
Josephthal beneficially own approximately 39.51% of the Company's
common Shares. In addition, three members of the Company's board of
directors are affiliated with or employed by Josephthal and the
chairman of Josephthal is the company's chairman. As compensation
for its services as the Company's exclusive placement agent,
Josephthal received fees of $439 thousand and warrants to purchase
400,000 Common Shares at an exercise price of $1.00 per share.
Finally an individual employed by Josephthal was the Company's
acting Chief Financial Officer from April through October 1997 for
which he received compensation of approximately $ 45 thousands.
F-28
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
d. Transactions with related parties:
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------
1995 1996 1997
------------- ------------- -------------
The Company Consolidated Consolidated
------------- ------------- -------------
U.S. dollars in thousands
-------------------------------------------
<S> <C> <C> <C>
Sales:
Nur Outdoor $ 1,625 $ 485 $ 159
Nur Focus 803 113 31
IEM 38 - -
Nur International 26 - -
---------- -------- ----------
$ 2,492 $ 598 $ 190
========== ======== ==========
Cost of sales:
Paid to:
Nur Outdoor $ 283 $ 511 $ 99
Nur Focus 301 7 18
---------- -------- ----------
$ 584 $ 518 $ 117
========== ======== ==========
Selling expenses:
Nur Focus $ 1 $ 130 $ -
Participation from
Nur International (1) (209) - -
Participation in
expenses of
Nur International 206 - -
---------- -------- ----------
$ (2) $ 130 $ -
========== ======== ==========
</TABLE>
(1) Mainly reimbursement of direct salaries and traveling
expenses, which are netted against the applicable expenses
F-29
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------
1995 1996 1997
------------- ----------- -------------
The Company Consolidated Consolidated
------------- ------------- ------------
U.S. dollars in thousands
-----------------------------------------
<S> <C> <C> <C>
General and administrative expenses:
Participation in salary, employee
benefits, maintenance and
bookkeeping to
Nur Outdoor (1) $ 20 $ - $ -
Rent expenses - 153 204
Salary and related benefits
paid to two shareholders
(1997 - three shareholders) 79 244 261
------- --------- -------
$ 99 $ 397 $ 465
======= ========= =======
Financial income:
Nur Focus $ 155 $ 107 $ -
Nur Outdoor 187 182 -
Nur International 134 - -
------- --------- -------
$ 476 $ 289 $ -
======= ========= =======
</TABLE>
As to the write-off of debts of related parties, see Note 22j.
NOTE 19:- SHARE CAPITAL
a. In October 1995, the Company effected a public offering of its
securities in the United States, where its Common Shares are traded
on the over-the-counter market. In the public offering, the Company
issued 1,550,000 Common Shares.
Following the initial public offering of the Company's shares in
October 1995, the Company issued 155,000 warrants to Josephthal.
These warrants are exercisable no later than October 2000 into
155,000 Common Shares of the Company at an exercise price of $ 7.20
per share, or less than 155,000 Common Shares of the Company if the
cashless alternative pursuant with the agreement have been chosen.
Between September and December 1997, the Company effected a private
offering of its securities in the United States. In the private
offering, the Company issued 4,000,000 Common Shares of NIS 1 par
value each in consideration of $ 1 per common share.
After the aforementioned transactions, the Company had 10,880,000
Common Shares of NIS 1 par value each.
F-30
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
b. Stock Option Plan:
In October 1995, the Company's Board of Directors adopted a Flexible
Stock Incentive Plan (the "Stock Incentive Plan"). The Stock
Incentive Plan provides for grants of stock options to the Company's
employees and outside consultants. An aggregate amount of not more
than 500,000 stock options are available for grant under the Stock
Incentive Plan. Of such amount, (i) not more than 414,768 options
are available for grant as stock options on the basis of future
services (such options, "Service Options"), (ii) not more than
18,232 options may be granted as stock options on the basis of
performance (such options, "Performance Options") and (iii) not more
than 67,000 options may be granted as stock options to consultants
on the basis of service or performance in respect of the public
offering (such options, "Consultants Options").
Compensation expenses, which comprise the excess of market value of
stock of the Performance Options over the exercise price at grant
date, are charged to income over a vesting period of ten years or on
an accelerated basis, provided various performance targets are
achieved (the only variable component is the vesting period).
Compensation expenses, which comprise the excess of market value of
stock of the Service Options over the exercise price at grant date,
are charged to expenses over the vesting period of four years.
In October 1997, the Company adopted an additional stock option
plan. According to that option plan, 1,200,000 options will be
granted to Company's employees, directors and consultants. During
1997, the Company granted 825,000 options exercisable from date of
grant (out of which 750,000 options were granted to the Chairman of
the Board of Directors, two directors and to the Chief Executive
Officer) at an exercise price between $ 1.00 to $ 1.50 per share.
The aggregate amount of compensation related to the above options
was $ 18,800 and was accounted for as compensation expense in the
year ended December 31, 1997.
As part of the private offering described in Note 19a above, the
Company issued warrants to the placement agent, Josephthal, expiring
in September 2002 to purchase 400,000 Common Shares of the Company
at an exercise price of $ 1.00 per share, or less than 400,000
Common Shares of the Company if the cashless alternative pursuant
with the agreement have been chosen.
F-31
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The balance of the options at December 31, 1997 is as follows:
<TABLE>
<CAPTION>
Options outstanding
--------------------------
Weighted
Available Number average
for of Exercise exercise
grant options price price
--------- -------- ------ --------
<S> <C> <C> <C> <C>
Balance as of January 1, 1995 - - - -
Stock option plan 500,000 - - -
Options granted
(9 employees and (189,526) 189,526 0.3-4.8 2.32
consultants --------- -------- ------- --------
Balance as of December 31, 1995 310,474 189,526 0.3-4.8 2.32
Options granted
(1 employee) (18,232) 18,232 1.3 1.30
Options expired 87,987 ( 87,987) 1.3-4.8 2.37
--------- -------- -------- -------
Balance as of December 31, 1996 380,229 119,771 0.3-1.75 1.34
Additional stock options plan 1,200,000 - - -
Options granted
(25 employee and a vendor (325,600) 325,600 0.3-1.75 1.33
Options granted (2 employees
and 3 directors) (825,000) 825,000 1-3 1.46
--------- -------- ------- --------
Balance as of December 31, 1997 429,629 1,270,371 0.3-3 1.3
========= ========= ======= ========
</TABLE>
The amount of options exercisable as of December 31, 1995, 1996 and
1997 was 36,539, 54,771 and 849,921, respectively. The remaining
contractual life of those options ranges between 1-4 years.
The weighted average exercise price of options exercisable as of
December 31, 1995, 1996 and 1997 is $ 0.31, $ 1.06 and $ 1.3,
respectively.
The options outstanding as of December 31, 1997 have been separated
into ranges of exercise price, as follows:
<TABLE>
<CAPTION>
Options
outstanding Weighted
as of average Weighted
December 31, remaining average
Exercise price 1997 contractual life exercise price
-------------- --------------- --------------- -------------
<S> <C> <C> <C>
$ 0.3 36,539 4 0.3
$ 1 100,000 5 1
$ 1.25 500,000 5 1.25
$ 1.3 18,232 4 1.3
$ 1.4 360,600 4 1.4
$ 1.5 225,000 5 1.5
$ 1.75 30,000 4 1.75
--------------- -------------
1,270,371 $ 1.3
=============== =============
</TABLE>
F-32
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
c. The Company has elected to follow Accounting Principles Board
Opinion 25, "Accounting for Stock Issued to Employees" (APB 25) and
related interpretations for its employee stock options. As discussed
below, the alternative fair value provided for under FASB Statement
No. 123, "Accounting for Stock-Based Compensation" (FASB 123),
requires the use of option valuation models that were not developed
for use in valuating employee stock options. Where the exercise
price equals the market price of the underlying stock on the grant
date, no compensation expense is recognized under APB 25.
d. In January 1997, the Company granted to its Israeli counsel an
option to purchase 30,000 shares at an exercise price of $1.75 per
share. The fair market value of these options was estimated
according to FASB-123 at the grant date using Black-Scholes value
option pricing model. The aggregate amount of compensation related
to the above options was $ 12,000 and was accounted for as
compensation expense in the year ended December 31, 1997
e. Pro-forma information regarding net income and earnings per share is
required by FASB 123, and has been determined as if the Company has
accounted for its employee stock options under the fair value method
of that Statement. The fair value for these options was estimated at
the grant date using the Black-Scholes option pricing model with the
following weighted-average assumptions for 1995, 1996 and 1997:
risk-free interest rates of 7%, 7% and 6.3% respectively, dividend
yields of 0% volatility factors of the expected market price of the
Company's Common Shares of 1.3, 1.75 and 1.25, respectively, and a
weighted average expected life of the option of 3 years.
The Black-Scholes model was developed for use in estimating the fair
value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected share
price volatility. Because the Company's employee stock options have
characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion,
the existing models do not necessarily provide a reliable single
measure of the value of its employee stock options. For purposes of
pro-forma disclosures, the estimated fair value of the options is
amortized to expense over the options vesting period.
The weighted average fair value of the options at their grant dates
in 1995, 1996 and 1997 was $ 0.65, $ 0.86 and $ 0.42, respectively.
For purposes of pro forma disclosure, the estimated fair value of
the options is amortized to expense over the options vesting period.
Because SFAS 123 is applicable only to options granted subsequent to
December 31, 1994, its pro forma effect will not be fully reflected
until the year 1999.
The total compensation expense included in the statements of
operations for 1995, 1996 and 1997 is $ 177 thousand, $ 49 thousand
and $ 91 thousand, respectively.
F-33
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Pro-forma information is as follows
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------------
1995 1996 1997
--------------------------------------------------
The Company Consolidated Consolidated
-------------- -------------- --------------
U. S. dollars in thousands except per share amount
--------------------------------------------------
<S> <C> <C> <C>
Net income (loss), as 61 (10,088) 485
reported
============= ============= =============
Pro forma net income 53 (10,142) 129
(loss)
============= ============= =============
Pro forma basic earnings
(loss) per share 0.01 (1.47) 0.02
============= ============= =============
Pro forma diluted
earnings (loss) per share 0.01 (1.47) 0.02
============= ============= =============
</TABLE>
f. Dividends:
Dividends if any, will be paid in NIS. Dividends paid to
shareholders outside Israel will be converted into U.S. dollars on
the basis of the exchange rate prevailing at the date of payment.
F-34
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 20:- TAXES ON INCOME
a. Tax benefits under the Law for the Encouragement of Capital
Investments, 1959 (the "law"):
Certain of the Company's production facilities have been granted the
status of "approved enterprise" under the law, under two separate
investment plans.
The implementation of the investments under the first plan was
finalized in 1993. The implementation of the second plan is expected
to be finalized in 1998.
According to the provisions of this law, the Company chose to enjoy
"alternative benefits" which provide tax exemption in exchange for
waiver of grants. Accordingly, the Company's income from the
approved enterprise will be tax-exempt for a period of two and four
years for the first and second plan, respectively, commencing with
the year it first earns taxable income, and subject to corporate tax
at the rate of 25%, for additional periods of five and three years,
for the first and second plan, respectively.
The period of tax benefits detailed above is subject to limits of 12
years from the commencement of production, or 14 years from
receiving the approval, whichever is earlier. Given the
abovementioned conditions, the period of benefits for the first plan
commenced in 1994 and will terminate in 2000. The period of benefits
for the second plan has not yet commenced.
The tax-exempt profits earned by the Company's "approved enterprise"
can be distributed to shareholders without subjecting the Company to
taxes only upon the complete liquidation of the Company. If these
retained tax-exempt profits are distributed in a manner other than
upon the complete liquidation of the Company, they would be taxed at
the corporate tax rate applicable to such profits as if the Company
had not chosen the alternative tax benefits (currently - 25% for an
"approved enterprise") and an income tax liability of approximately
$ 415 would be incurred.
Income from sources other than the "approved enterprise" during the
periods of benefits, will be taxable at regular tax rate of 36%.
The law also entitles the Company to claim accelerated rates of
depreciation on equipment used by the "approved enterprise" during
five tax years.
b. Measurement of results for tax purposes:
Results for tax purposes are measured in terms of earnings in NIS
after certain adjustments for increases in the Israeli CPI. As
explained in Note 2a, the financial statements are prepared in
dollars. The difference between the annual change in the Israeli CPI
and in the NIS/dollar exchange rate causes a difference between
taxable income and the income in dollars as reflected in the
financial statements.
F-35
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
c. Tax benefits under the Law for the Encouragement of Industry
(Taxation), 1969:
The Company is an "industrial company" under the above law and as
such is entitled to claim accelerated rates of depreciation, in
accordance with regulations published under the inflationary
adjustments law.
The Company is also entitled to deduct the offering expenses from
its taxable income in three equal annual payments.
d. A reconciliation of the theoretical tax expense, assuming all income
is taxed at the regular statutory rate applied to corporations in
Israel up to December 31, 1997, and the actual tax expense, is as
follows:
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------
1995 1996 1997
------------- ------------- ------------
The Company Consolidated Consolidated
-------------- ------------- ------------
U.S. dollars in thousands
-------------------------------------------
<S> <C> <C> <C>
Theoretical tax expense (benefit)
computed at the rate of 36%
(1995 - 37%) 520 (3,624) 208
Increase (decrease) in taxes:
Effect of certain adjustments
on the results for tax purposes
and the Israeli CPI 76 49 61
Effect of tax-exempt income
during the benefit period
(see a. above) and other, net (375) - -
Deferred income taxes
resulting from carryforward
losses for which valuation
allowance was recorded - 3,975 -
Utilization of deferred
taxes in respect of - - (202)
carryforward losses
------------- -------------- ------------
Actual tax expense 221 400 67
============= ============== ============
Increase in earnings per share
due to tax-exempt income 0.08 - -
============= ============== ============
</TABLE>
e. The provision for taxes is comprised as follows:
<TABLE>
<S> <C> <C> <C>
Deferred taxes 221 400 (27)
Current taxes - - 94
------------- ------------- ------------
221 400 67
============= ============= ============
</TABLE>
F-36
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
f. Deferred taxes:
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------
1995 1996 1997
-------------- -------------- -------------
The Company Consolidated Consolidated
--------------- ------------- ------------
U.S. dollars in thousands
---------------------------------------------
<S> <C> <C> <C>
Deferred tax assets (liabilities)
are comprised of the following:
Provisions for severance pay 26 76 34
Deductible public offering
expenses 390 195 -
Others (mainly capitalized
royalties) 387 326 120
Net operating loss carryforward - 3,539 3,337
-------------- -------------- -------------
Gross deferred tax assets 803 4,136 3,491
-------------- -------------- -------------
Fixed assets (32) (52) (64)
Inventories - - (12)
-------------- -------------- -------------
Gross deferred tax liabilities (32) (52) (76)
-------------- -------------- -------------
Valuation allowance (1) (390) (4,103) (3,407)
-------------- -------------- -------------
Net deferred tax assets (liabilities) 381 (19) 8
============== ============== =============
Presented as follows:
Current assets 81 - 8
Long-term assets 300 - -
Current liabilities - (19) -
-------------- -------------- -------------
381 (19) 8
============== ============== =============
</TABLE>
(1) The company has provided valuation allowances against the
deferred tax assets in respect of tax loss carryforward and
other temporary differences due to history of losses and
current uncertainty concerning its ability to realize these
deferred tax assets in the future.
F-37
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
g. Income tax assessments, losses and deductions carried forward to
future years:
Final tax assessments have not been received by the Company since
its incorporation. At December 31, 1997, the Company had available
carryforward losses (excluding capital losses totaling $ 2,363
thousand) and deductions aggregating $ 6,286 thousand. Carryforward
losses for tax purposes in the Company are not limited in time.
Nur America, Nur International and Nur Europe had available
carryforward losses aggregating $ 82 thousand, $ 1,372 thousand and
$ 150 thousand, respectively.
The Company has valuation allowances against amounts of the tax
benefits in the accompanying consolidated financial statements due
to its accumulated deficit and the uncertainty as to when these
benefits will be utilized.
h. Income (loss) before income taxes consisted of the following:
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------
1995 1996 1997
-------------- ------------- ------------
Company Consolidated
-------------- ---------------------------
U.S. dollars in thousands
-------------------------------------------
<S> <C> <C> <C>
Domestic $ 1,407 $ (8,947) $ 1,156
Foreign - (741) (578)
-------------- -------------- ------------
$ 1,407 $ (9,688) $ 578
============== ============== ============
</TABLE>
F-38
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 21:- LINKAGE TERMS OF MONETARY BALANCES
The following tables reflect the linkage terms of monetary balances
at each balance sheet date:
<TABLE>
<CAPTION>
December 31, 1997
------------------------------------------------
In other
Linked to In U.S.$ foreign
to or currency
Israeli linked or linked
CPI thereto thereto Unlinked Total
--------- -------- --------- --------- -------
U.S. dollars in thousands
------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Cash and cash equivalents - 1,031 196 7 1,234
Trade receivables - 2,671 3,021 289 5,981
Other accounts receivable
and prepaid expenses 312 391 - 1,034 1,737
Restricted long-term deposit - 150 - - 150
Prepaid expenses - - - 137 137
--------- -------- --------- --------- -------
312 4,243 3,217 1,467 9,239
========= ======== ========= ========= =======
Liabilities:
Short-term bank loans - 453 - 199 652
Trade payables - 154 766 2,296 3,216
Accrued expenses and
other liabilities - 512 - 1,614 2,126
Customer advances - 17 - - 17
Long-term bank loans,
including current maturities - 1,603 - - 1,603
--------- -------- --------- --------- -------
- 2,739 766 4,109 7,614
========= ======== ========= ========= =======
</TABLE>
F-39
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1996
------------------------------------------------
In other
Linked to In U.S.$ foreign
to or currency
Israeli linked or linked
CPI thereto thereto Unlinked Total
--------- -------- --------- --------- -------
U.S. dollars in thousands
------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Cash and cash equivalents - 1,659 74 5 1,738
Trade receivables - 3,658 514 41 4,213
Other accounts receivable
and prepaid expenses 621 539 - 589 1,749
Long-term trade receivables - 90 - - 90
Prepaid expenses - - - 368 368
--------- --------- -------- --------- --------
621 5,946 588 1,003 8,158
========= ========= ======== ========= ========
Liabilities:
Short-term bank loans - - - 1,462 1,462
Trade payables - 1,443 1,542 1,452 4,437
Accrued expenses and
other liabilities - 212 - 1,305 1,517
Customer advances - 1,345 - - 1,345
Long-term bank loans,
including current maturities - 1,226 - - 1,226
--------- --------- -------- --------- --------
- 4,226 1,542 4,219 9,987
========= ========= ======== ========= ========
</TABLE>
F-40
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 22:- SELECTED STATEMENTS OF OPERATIONS DATA
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------
1995 1996 1997
------------- ----------- -----------
The Company Consolidated Consolidated
------------- ----------- -----------
U.S. dollars in thousands
---------------------------------------
<S> <C> <C> <C>
a. Major customer data:
Sales to customer A 8,171 7,665 2,455
============= =========== ===========
Percentage of total sales 59.1% 46.1% 11.18%
============= =========== ===========
Sales to customer B 1,625 485 159
============= =========== ===========
Percentage of total sales 11.8% 2.9% 0.7%
============= =========== ===========
</TABLE>
b. Information regarding Company operations in different geographical
areas:
Inter-segment sales are accounted for at prices comparable to
unaffiliated customer sales.
<TABLE>
<CAPTION>
Year ended December 31, 1997
----------------------------------------------------
Adjustments
United and
Israel Europe States eliminations Consolidated
------- ------- ------- ----------- -----------
U.S. dollars in thousands
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales to
unaffiliated 3,049 11,849 7,061 - 21,959
customers
Transfers between
geographic areas 13,250 - (13,250) -
------- ------- ------- ----------- -----------
Total sales 16,299 11,849 7,061 (13,250) 21,959
======= ======= ======= =========== ===========
Operating income 1,204 199 (195) (302) 906
(loss) ======= ======= ======= ===========
Financial (320)
expenses, net
Other expenses, net (8)
-----------
Income before
taxes on income 578
===========
Identifiable
assets as of
December 31, 1997 11,315 2,518 1,353 (1,403) 13,783
======= ======= ======= =========== ===========
</TABLE>
F-41
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended December 31, 1996
----------------------------------------------------
Adjustments
United and
Israel Europe States eliminations Consolidated
------- ------- ------- ----------- -----------
U.S. dollars in thousands
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales to
unaffiliated
customers 7,724 7,373 1,540 - 16,637
Transfers between
geographic areas 4,398 - (4,398) -
------- ------- ------- ----------- -----------
Total sales 12,122 7,373 1,540 (4,398) 16,637
======= ======= ======= =========== ===========
Operating loss (8,995) (74) (128) - (9,197)
======= ======= ======= ===========
Financial
expenses, net (589)
Gain on
marketable
securities 22
Other income, net 76
-----------
Loss before taxes
on income (9,688)
===========
Identifiable assets
as of December
31, 1996 9,532 4,670 1,208 (3,249) 12,161
======= ======= ======= =========== ===========
</TABLE>
F-42
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------
1995 1996 1997
-------------- ----------- ------------
The Company Consolidated Consolidated
-------------- ----------- ------------
U.S. dollars in thousands
-----------------------------------------
<S> <C> <C> <C>
c. Sales from Israel
classified by
geographical
destinations:
Local:
Israel 2,774 780 679
Export (1):
Europe 5,684 3,957 1,325
U.S.A. 2,564 2,325 907
Others 2,802 662 138
-------------- ----------- ------------
13,824 7,724 3,049
============== =========== ============
(1) Including indirect
export sales to
distributor, which
are presented in
accordance with the
geographical
location of the
end customer.
d. Cost of sales of printers and related products:
Materials consumed 6,666 10,986 8,554
Salaries, wages and
employee benefits 379 627 352
Subcontractors 1,494 526 52
Other manufacturing costs 301 541 542
Depreciation and
amortization 13 34 3
-------------- ----------- ------------
8,853 12,714 9,503
Less (add) decrease
(increase) in
inventories of finished
products and work-in-progress 521 (1,186) 124
-------------- ----------- ------------
9,374 11,528 9,627
============== =========== ============
e. Cost of sales of printed materials:
Materials consumed - 1,650 1,358
Subcontractors - 358 326
-------------- ----------- ------------
- 2,008 1,684
============== =========== ============
</TABLE>
F-43
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------
1995 1996 1997
-------------- ----------- ------------
The Company Consolidated Consolidated
-------------- ----------- ------------
U.S. dollars in thousands
-----------------------------------------
<S> <C> <C> <C>
f. Research and development expenses:
Salaries, wages and employee
benefits 561 898 1,119
Materials and subcontractors 351 529 154
Other costs 128 103 453
-------------- ----------- ------------
1,040 1,530 1,726
============== =========== ============
g. Selling and marketing expenses, net (1):
Salaries, wages and employee
benefits 181 1,603 1,562
Commissions 409 437 247
Traveling 185 503 570
Advertising 240 652 738
Bad debts 132 509 448
Other costs 145 1,119 1,255
-------------- ----------- ------------
1,292 4,823 4,820
Less - participation of the
Fund for the Encouragement
of Marketing Activity 253 - 200
-------------- ----------- ------------
1,039 4,823 4,620
============== =========== ============
(1) Net of participation from
Nur International of
$ 209 thousand in 1995.
h. General and administrative expenses:
Salaries, wages and employee
benefits 463 914 1,048
Office maintenance 300 702 909
Other costs 424 944 1,482
-------------- ----------- ------------
1,187 2,560 3,439
============== =========== ============
</TABLE>
F-44
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------
1995 1996 1997
-------------- ----------- ------------
The Company Consolidated Consolidated
-------------- ----------- ------------
U.S. dollars in thousands
-----------------------------------------
<S> <C> <C> <C>
i. Financial expenses, net:
Expenses:
Interest
On short-term credit 152 682 390
On long-term loans 123 72 193
Loss arising from foreign
currency transactions 351 154 -
-------------- ----------- ------------
626 908 583
-------------- ----------- ------------
Income:
Interest 421 319 234
Gain arising from foreign
currency transactions - - 29
-------------- ----------- ------------
421 319 263
-------------- ----------- ------------
205 589 320
============== =========== ============
</TABLE>
F-45
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
j. Write-off of debts of related parties:
In March 1997, three companies in which Moshe Nur - a former
shareholder - has holdings in various percentages, experienced
financial difficulties (see also Note 18a). The debts stem from the
purchases of printers, spare parts and ink and cash transfers from
the Company.
The management of the company believes that the company will not be
able to collect the debts of these companies and therefore it was
decided to write-off the debts totaling $ 3,757 thousand, comprised
as follows:
<TABLE>
<CAPTION>
Year ended
December 31,
1996
----------------
U.S. dollars
in thousands
----------------
<S> <C>
Nur Outdoor Advertising
(Manufacturing and Production) Ltd. 994
Nur Focus Assets and Investments Ltd. 2,117
Nur Focus Production (1995) Ltd. 646
----------------
3,757
================
</TABLE>
k. Equity in losses of a 50%-owned joint venture:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------
1995 1996 1997
------------- ------------ -----------
The Company Consolidated Consolidated
------------- ------------ -----------
U.S. dollars in thousands
-----------------------------------------
<S> <C> <C> <C>
Equity in post-acquisition
losses (593) - -
Losses from increase in
equity of joint venture (630) - -
Less - amortization of
negative goodwill 98 - -
------------- ------------ -----------
(1,125) - -
============= ============ ===========
</TABLE>
F-46
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 23:- INVESTEES
<TABLE>
<CAPTION>
Percentage of (1)
--------------------------
Name of the Company Ownership Control
------------------------------------------- ---------- -----------
%
--------------------------
<S> <C> <C>
a. Subsidiaries outside Israel:
Active:
-------
Nur International S.A.("Nur International") 100 100
Nur Advanced Technologies (Europe) S.A.
("Nur Europe") 100 100
Nur America Inc. ("Nur America") 100 100
Nur Marketing and Communication GmbH
("Nur Germany") 84 84
Inactive:
---------
Nur Hungaria KFT ("Nur Hungary") (1) 100 100
Good-Lux S.A.("Nur Luxembourg") (1) 100 100
b. Subsidiaries in Israel:
Inactive:
---------
M.B.T. (Nur) Industries Ltd.("M.B.T.") 100 100
Nur Print Technologies (1993) Ltd. ("Nur Print") 100 100
N.A.T. Holdings and Investments (1997) Ltd. 100 100
</TABLE>
(1) Represents the percentages of ownership of Nur International
in these subsidiaries. The shares of some of these
subsidiaries are held in custody by the Company.
F-47
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September
30,
1998
------------
Unaudited
------------
U.S.
dollars
in
thousands
------------
<S> <C>
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents 875
Marketable securities 125
Trade receivables 9,772
Other accounts receivable and prepaid expenses 2,366
Inventories 3,593
------------
Total current assets 16,731
------------
LONG-TERM INVESTMENTS:
Restricted long-term bank deposit 395
Prepaid expenses 88
Severance pay funds 331
------------
Total long-term investments 814
------------
PROPERTY AND EQUIPMENT:
Cost 3,315
Less - accumulated depreciation 968
------------
2,347
------------
OTHER ASSETS, net 308
------------
Total assets 20,200
============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-48
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September
30,
1998
------------
Unaudited
------------
U.S.
dollars
in
thousands
------------
<S> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank loans 1,140
Current maturities of long-term bank loans 214
Trade payables 6,533
Accrued expenses and other liabilities 4,537
------------
Total current liabilities 12,424
------------
LONG-TERM LIABILITIES:
Long-term bank loans, net 1,223
Deferred taxes 62
Accrued severance pay 457
------------
Total long-term liabilities 1,742
------------
MINORITY INTEREST 59
------------
SHAREHOLDERS' EQUITY:
Share capital:
Common Shares of NIS 1 per nominal value:
Authorized: 20,000,000
Issued and outstanding: 6,880,000 Common Shares as of
September, 1997;
10,880,000 Common Shares as of September 30, 1998 2,729
Additional paid-in capital 14,357
Other comprehensive income (119)
Accumulated deficit (10,992)
------------
Total shareholders' equity 5,975
------------
Total liabilities and shareholders' equity 20,200
============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-49
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine months ended
September 30,
--------------------------
1997 1998
------------ ------------
Unaudited
--------------------------
U.S. dollars in
thousands,
except per share amounts
--------------------------
<S> <C> <C>
Revenues
Sales of printers and related products 12,660 22,824
Sales of printed materials 2,171 3,110
------------ ------------
14,831 25,934
------------ ------------
Cost of revenues:
Cost of sales of printers and related products 6,697 11,283
Cost of sales of printed materials 1,182 2,036
------------ ------------
7,879 13,319
------------ ------------
Gross profit 6,952 12,615
------------ ------------
Research and development expenses 1,096 3,965
Less - royalty-bearing grants 127 480
------------ ------------
Research and development expenses, net 969 3,485
------------ ------------
Selling and marketing expenses, net 2,936 4,347
General and administrative expenses 2,706 3,753
Write-off of debts of related parties 99 -
------------ ------------
5,741 8,100
------------ ------------
Operating income 242 1,030
Financial expenses, net 207 433
Loss on marketable securities - 29
Other loss, net - 6
------------ ------------
Income before taxes on income 35 562
Taxes on income - 227
------------ ------------
Income after taxes on income 35 335
Minority interest in losses of subsidiary - 30
------------ ------------
Net income for the period 35 305
============ ============
Basic and diluted earnings per share 0.01 0.03
============ ============
Weighted average number of shares used in
computing basic and diluted earnings per share 6,880,000 10,880,000
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-50
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine months ended September 30, 1997
----------------------------------------------------------------------------------------
Number of
shares
outstanding
---------- Additional Other Total
Common Share paid-in comprehensive Accumulated Comprehensive shareholders'
shares capital capital income deficit income equity
---------- ---------- ----------- ----------- ----------- ----------- ------------
U.S. dollars in thousands
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance as of January 1, 1997 6,880,000 1,593 11,916 109 (11,782) 1,836
- -----------------------------
Comprehensive income:
Net income for the period - - - - 35 35 35
-----------
Other comprehensive income:
Foreign currency
translation adjustment - - - 168 - 168 168
===========
Comprehensive income - - - - - 203 -
===========
Issuance of shares, net 975,000 279 562 - - 841
Amortization of deferred
compensation - - 76 - - 76
---------- ---------- ----------- ----------- ----------- ------------
Balance as of September 30,
- ---------------------------
1997 (Unaudited) 7,855,000 1,872 12,554 277 (11,747) 2,956
- ---------------- ========== ========== =========== =========== =========== ============
Nine months ended September 30, 1997
----------------------------------------------------------------------------------------
Balance as of January 1, 1998 10,880,000 2,729 14,383 (30) (11,297) 5,785
- -----------------------------
Comprehensive income:
Net income for the period - - - - 305 305 305
-----------
Other comprehensive income:
Foreign currency
translation adjustment - - - (89) - (89) (89)
-----------
Comprehensive income - - - - - 216 -
===========
Share capital issuance
expenses - - (47) - - - (47)
Amortization of deferred
compensation - - 21 - - - 21
---------- ---------- ----------- ----------- ----------- ------------
Balance as of September 30,
1998 (Unaudited) 10,880,000 2,729 14,357 (119) (10,992) 5,975
- ---------------- ========== ========== =========== =========== =========== ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-51
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine months ended
September 30,
--------------------------
1997 1998
------------ ------------
Unaudited
--------------------------
U.S. dollars in thousands
--------------------------
<S> <C> <C>
Cash flows from operating activities:
- -------------------------------------
Net income for the period 35 305
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Loss from sale of property and equipment - 6
Minority interest in earnings of subsidiary - 30
Depreciation and amortization 383 259
Deferred taxes, net 51 70
Amortization of deferred compensation 76 21
Severance pay, net 24 30
Write-off of technology assigned to research and
development - 750
Increase in marketable securities, net - (125)
Increase in trade receivables (472) (3,984)
Decrease (increase) in other accounts receivable
and prepaid expenses 769 (632)
Decrease (increase) in inventories 667 (1,403)
Increase (decrease) in trade payables (1,401) 3,423
Increase in accrued expenses and other liabilities 811 2,462
Decrease in customer advances (1,329) (17)
------------ ------------
Net cash provided by (used in) operating activities (386) 1,195
------------ ------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-52
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine months ended
September 30,
--------------------------
1997 1998
------------ ------------
Unaudited
--------------------------
U.S. dollars in thousands
--------------------------
<S> <C> <C>
Cash flows from operating activities:
- -------------------------------------
Prepaid expenses 146 49
Restricted long-term bank deposit - (245)
Purchase of property and equipment (1,136) (893)
Proceeds from sale of property and equipment - 57
Acquisition of technology - (750)
------------ ------------
Net cash used in investing activities (990) (1,782)
------------ ------------
Cash flows from financing activities:
- -------------------------------------
Proceeds from issuance of shares, net 841 -
Share capital issuance expenses - (47)
Short-term bank credit, net 96 488
Proceeds from principal of long-term bank loans 1,216 381
Repayment of principal of long-term bank loans (799) (547)
------------ ------------
Net cash provided by financing activities 1,354 275
------------ ------------
Effect of exchange rate changes on cash and cash
equivalents (43) (47)
------------ ------------
Decrease in cash and cash equivalents (65) (359)
Cash and cash equivalents at the beginning of the
period 1,738 1,234
------------ ------------
Cash and cash equivalents at the end of the period 1,673 875
============ ============
Non-cash investing information:
Inventory transferred to property and equipment - 62
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-53
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1:- GENERAL
The Company develops, manufactures and sells digital continuous
ink-jet printing systems and related consumable products for large
format printing.
These financial statements have been prepared as of September 30, 1998
and for the nine months then ended.
These financial statement are to be read in conjunction with the
annual financial statements of the Company as of December 31, 1997 and
their accompanying notes.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied in the annual financial
statements of the Company as of December 31, 1997 are applied
consistently in these financial statements.
NOTE 3:- UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not
include all the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal
requiring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine-months period ended
September 30, 1998 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1998.
NOTE 4:- ACQUISITION OF TECHNOLOGY
In September 1998, the Company acquired from Meital all rights
(including all related assets) to Meital's piezo DoD inkjet
technologies for application in wide format digital printers for $ 3.0
million, consisting of an up-front payment of $ 750 thousand, the
assumption of certain liabilities and the legal dispute between Idanit
Technologies Ltd. and Meital and future sales based royalties. The
Meital acquisition caused a one-time charge involving a write-off
assigned to research and development in the amount of $ 1.6 million.
In addition, the Company has future royalty obligations, during the
next three years, which will not exceed $ 1.3 million and based on
future sales of Meital's technology-based printers. If such payments
are not paid, Meital has the option to buy the technology back for
approximately the royalties paid by the Company to date.
F-54
<PAGE>
NUR MACROPRINTERS LTD.
(Formerly: Nur Advanced Technologies Ltd.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 5:- LEGAL SETTLEMENTS AND LAWSUIT
a. During September, 1998 the district court of Tel Aviv approved
several settlement agreements among the Company, the special
manager for Moshe Nur's assets in his bankruptcy proceedings,
Moshe Nur and other of his family members, two Israeli banks, and
the temporary receiver of Nur Outdoor Advertising Ltd. (a company
formerly affiliated with Mr. Nur).
According to the agreements, all material claims against the
Company relating to the lease of its offices (including
confirmation of the Company's pre-payment of lease until July
2000), alleged breach of contracts and alleged debts owed to any
of the above mentioned parties were dismissed.
As part of the various settlement agreements, the Company will
pay an aggregate of $100 thousand. A provision was recorded in
the Company's financial statements.
b. In connection with a claim (see Note 16g of the financial
statements for the year ended December 31, 1997), a settlement
was reached between the Company and the Dochovna Group, according
to which the Company will pay a total of $ 880 thousand during a
three year period and the patents under dispute will become
property of the Company.
The settlement agreement also resolves all legal disputes
between Idanit Technologies Ltd. And Meital Technologies,
which the Company recently acquired.
A provision was recorded in the Company's financial statements.
c. In June 1998, Quantum Securities Ltd. ("Quantum") filed a suit
against the Company claiming that the Company breached an
alleged investor relations agreement between Quantum and the
Company. In the suit Quantum claims $33,380 in monetary
damages and the right to Ordinary Share purchase warrants to
purchase 100,000 Ordinary Shares of the Company at $ 1.75 per
share and 100,000 Ordinary Shares of the Company at $2.00 per
share. The Company has denied that such an agreement with
Quantum exists with the Company and plans to defend itself
vigorously. The Company has also counterclaimed for
reimbursement of approximately $ 17,000 paid to Quantum in the
past.
According to the Company's legal counsel, the Company's liability
in connection with this claim will not exceed $ 18,000, which was
fully provided in the Company's financial statements.
- - - - - - - - - -
F-55
<PAGE>
================================================================================
We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this Prospectus. You must not
rely on any unauthorized information. This Prospectus does not offer to sell or
buy any shares in any jurisdiction where it is unlawful. The information in this
Prospectus is current as of February 23, 1999.
-----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary......................... 3
Risk Factors............................... 8
Use of Proceeds........................... 16
Market for Common Equity.................. 16
Dividend Policy........................... 17
Capitalization............................ 17
Selected Consolidated Financial Data...... 18
Management's Discussion and Analysis of
Financial Condition and Results
of Operations......................... 20
Business.................................. 31
Management................................ 42
Principal Shareholders.................... 48
Selling Security Holders.................. 49
Certain Transactions...................... 54
Description of Securities................. 55
Commission Position on Indemnification
for Securities Act Liabilities........ 56
Shares Eligible for Future Sale........... 56
Exchange Controls and Other Limitations
Affecting Security Holdings........... 56
Israeli Taxation and Foreign Exchange
Regulations........................... 56
US Tax Considerations Regarding
Ordinary Shares....................... 60
Plan of Distribution...................... 62
Legal Matters............................. 64
Experts................................... 64
Additional Information.................... 64
ISA Exemption............................. 64
Index to Financial Statements............. F-1
</TABLE>
================================================================================
================================================================================
NUR MACROPRINTERS LTD.
9,119,483
ORDINARY SHARES
---------------
PROSPECTUS
---------------
February 23, 1999
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth an estimate (except for the Securities and
Exchange Commission registration fee, the NASD filing fee and the Nasdaq fee) of
the fees and expenses expected to be incurred by the Company on behalf of the
selling security holders in connection with the issuance and distribution of the
securities being registered under the Registration Statement:
<TABLE>
<CAPTION>
Amount
to be Paid
------------------
<S> <C>
Securities and Exchange Commission registration fee.......... $ 7,764.10
NASD filing fee.............................................. 3,292.84
Nasdaq fee................................................... 8000.00
Printing and engraving expenses.............................. 70,000.00
Legal fees and expenses...................................... 150,000.00
Accounting fees and expenses................................. 30,000.00
Miscellaneous expenses....................................... 10,000.00
------------------
Total................................................ $279,056.94
==================
</TABLE>
Item 14. Indemnification of Directors and Officers
Pursuant to the Registrant's Articles of Association, the Registrant may
indemnify its Office Holders, as defined in the Israeli Companies Ordinance (New
Version), 1983 (the "Israeli Companies Ordinance") for (a) any monetary
obligation imposed upon them for the benefit of a third party by a judgment,
including a settlement approved by the Registrant or an arbitration decision
certified by court, as a result of an act or omission of such person in his
capacity as an Office Holder and (b) reasonable litigation expenses, including
legal fees, incurred by such Office Holder or which he is obligated to pay, in
proceedings brought against him by or on behalf of the Registrant or by others,
or in connection with criminal proceedings in which he was acquitted, in each
case relating to acts or omissions of such person in his capacity of Office
Holder of the Registrant. The Israeli Companies Ordinance defines "Office
Holder" to include directors, managing director, general manager, chief
executive officer, executive vice president, vice president, other manager
directly subordinate to the managing director and any person assuming the
responsibilities of the foregoing positions without regard to such person's
title.
In addition, pursuant to the Israeli Companies Ordinance, indemnification
of, and procurement of insurance coverage for, an Office Holder of the
Registrant is permitted if it is permitted by the Registrant's Articles of
Association and if it is approved by the Registrant's Audit Committee and Board
of Directors. The Registrant's Articles of Association permit such
indemnification and procurement of insurance coverage. In certain circumstances,
the Israeli Companies Ordinance also requires approval of such indemnification
and insurance by the Registrant's shareholders. The approval of indemnification
agreements and procurement of insurance for all of the Registrant's directors
will require shareholder approval. In addition, the approval of indemnification
and procurement of insurance for certain directors who may be deemed to hold 25%
or more of the share capital of the Registrant requires the consent of
disinterested shareholders subject and pursuant to the Israeli Companies
Ordinance.
The Registrant intends to purchase a directors' and officers' liability
insurance policy insuring its Office Holders with respect to those matters
permitted by the Israeli Companies Ordinance.
Item 15. Recent Sales of Unregistered Securities
During the past three years, the Registrant made the following sales of
its unregistered securities.
Between September and December 1997, the Registrant effected a private
offering of its Ordinary Shares in the United States, for which Josephthal & Co.
Inc. ("Josephthal") acted as exclusive placement agent. See "Certain
II-1
<PAGE>
Transactions." The private placement was exempt from the registration
requirements of the Securities Act of 1933 pursuant to Section 4(2) thereof. As
compensation for its services as the Registrant's exclusive placement agent,
Josephthal received fees of $439,000 and warrants to purchase 400,000 Ordinary
Shares at an exercise price of $1.00 per share. Payment to Josephthal in
consideration for the banking services rendered by Josephthal to the Registrant
has been approved by the Registrant's shareholders.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
3.1 Memorandum of Association of the Registrant, in Hebrew with a
translation to English.(1)
3.2 Articles of Association of the Registrant.(1)
3.3 Certificate of Name Change.(2)
4.1 Specimen Certificate for Ordinary Shares.(1)
4.2 Representative's Warrant Agreement dated October 12, 1995.(1)
4.3 Form of Representative's Warrant Certificate.(1)
4.4 Forms of Placement Agent's Warrant Agreement and Certificate
4.5 Forms of Qualified Independent Underwriter's Warrant Agreement and
Certificate.
5.1 Opinion of Shimonov Barnea & Co.
10.1 1995 Stock Option / Stock Purchase Plan.(1)
10.2 Amendment to the 1995 Stock Option / Stock Purchase Plan.
10.3 1997 Stock Option Plan.(3)
10.4 1998 Non-Employee Director Share Option Plan.(4)
10.5 Lease Agreement between the Registrant and Mr. Moshe Nur dated October
4, 1993, as amended on May 29, 1995, in Hebrew with a translation to
English.(1)
10.6 Lease Agreement for office space in Brussels, Belgium between
Nivellease, S.A. and the Registrant dated November 25, 1996.
10.7 Lease Agreement for office space in Newton Centre, Massachusetts
between WHTR Real Estate Limited Partnership and the Registrant dated
July 10, 1998.
10.8 Qualified Independent Underwriting Agreement.
10.9 Distribution Agreement between Imaje S.A. and the Registrant dated
June 26, 1995.(1)
10.10 Settlement Agreements relating to Moshe Nur and his affiliated
companies.
10.11 Bank BBL credit line(s).(5) (P)
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C>
10.12 Banque Artesia credit line(s).(5) (P)
10.13 Fleet National Bank credit line.(5) (P)
10.14 Bank Hapoalim credit line.(5) (P)
10.15 Bank Clali credit line.(5) (P)
10.16 Bank Hapoalin revolving loan agreement.(5) (P)
10.17 Agreement between I.T.S. Machinery Development Ltd. and the
Registrant dated February 10, 1997.
10.18 Form of confidentiality agreement.
10.19 Agreement dated September 13, 1998 between "Meital" Electronic
Technology Ltd. and Markowitz Yaakov and Nur Macroprinters Ltd.
21 List of Subsidiaries of the Registrant.(6)
23.1 Consent of Krost Forer & Gabbay.
23.2 Consent of Willy Knyrim.
23.3 Consent of Shimonov Barnea & Co. (included in Exhibit 5.1).
24 Power of Attorney.(7)
27.1 Financial Data Schedule as of and for the year ended December 31, 1995.(3)
27.2 Financial Data Schedule as of and for the year ended December 31, 1996.(3)
27.3 Financial Data Schedule as of and for the year ended December 31, 1997.(3)
27.4 Financial Data Schedule as of and for the nine months ended September
30, 1997.
27.5 Financial Data Schedule as of and for the nine months ended September
30, 1998.
</TABLE>
- ----------------
1/ Previously filed with the Company's Registration Statement (File No.
33-93160) on Form F-1 and incorporated by reference herein.
2/ Previously filed with the Company's Form 6-K dated January 7, 1998 and
incorporated by reference herein.
3/ Previously filed with the Company's Form 20-F for the year ended December
31, 1997 and incorporated by reference herein.
4/ Previously filed with the Company's Form 6-K dated November 13, 1998 and
incorporated by reference herein.
5/ Filed in summary form. Original filed in paper format pursuant to Form SE.
6/ Previously filed with the Company's Form 20-F for the year ended December
31, 1997 and incorporated by reference herein.
7/ Previously filed with the Company's Form F-1 (File No. 333-66103) on
October 26, 1998.
(b) Financial Statement Schedules
Other than as set fourth below, all schedules have been omitted as the
required information is either not applicable or presented in the financial
statements or notes thereto.
<PAGE>
Report of Independent Auditors
To: Board of Directors
NUR MACROPRINTERS LTD.
We have audited the consolidated financial statements of Nur Macroprinters Ltd.
as of December 31, 1997, 1996, and for each of the two years in the period ended
December 31, 1997, and the financial statements for the year ended December 31,
1995 and have issued our report thereon dated March 9, 1998 (included elsewhere
in this Registration Statement). Our audits also included the financial
statement schedules listed in Item 16(b) of this Registration Statement. These
schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
/s/ Kost, Forer and Gabbay
Tel-Aviv, Israel KOST, FORER AND GABBAY
February 22, 1999 Certified Public Accountants (Israel)
<PAGE>
NUR MACROPRINTERS LTD.
Schedule II - VALUATION AND QUALIFING ACCOUNTS
US DOLLARS in THOUSANDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Balance at Charged to costs Deductions Balance at
December 31, 1994 and expenses December 31, 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Allowance for -- 132 -- 132
doubtful accounts
- ------------------------------------------------------------------------------------------------------
Allowance for -- -- -- --
returns
- ------------------------------------------------------------------------------------------------------
Allowance for price -- -- -- --
protection
- ------------------------------------------------------------------------------------------------------
Total -- 132 -- 132
- ------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Balance at Charged to costs Deductions Balance at
December 31, 1995 and expenses December 31, 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Allowance for 132 499 (25) 606
doubtful accounts
- ------------------------------------------------------------------------------------------------------
Allowance for -- -- -- --
returns
- ------------------------------------------------------------------------------------------------------
Allowance for price -- -- -- --
protection
- ------------------------------------------------------------------------------------------------------
Total 132 499 (25) 606
- ------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Balance at Charged to costs Deductions Balance at
December 31, 1996 and expenses December 31, 1997
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Allowance for 606 448 (514) 540
doubtful accounts
- ------------------------------------------------------------------------------------------------------
Allowance for -- -- -- --
returns
- ------------------------------------------------------------------------------------------------------
Allowance for price -- -- -- --
protection
- ------------------------------------------------------------------------------------------------------
Total 606 448 (514) 540
- ------------------------------------------------------------------------------------------------------
</TABLE>
II-3
<PAGE>
Item 17. Undertakings
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 foregoing provisions, 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, unacceptable. 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 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.
The undersigned Registrant hereby undertakes that:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act. Financial statements and information otherwise
required by Section 10(a)(3) of the Securities Act need not be
furnished, however, provided, that the registrant includes in the
prospectus, by means of a post-effective amendment, financial
statements required pursuant to paragraph (4) below and other
information necessary to ensure that all other information in the
prospectus is at least as current as the date of those financial
statements.
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more
than a 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
(4) To file a post-effective amendment to the registration statement to
include any financial statements required by Rule 3-19 of Regulation S-X
promulgated under the Securities Act, as interpreted by the Securities and
Exchange Commission, at the start of any delayed offering or throughout a
continuous offering.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 amended
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in The State of Israel, on February 23, 1999.
NUR MACROPRINTERS LTD.
By: /s/ Erez Shachar
-----------------------------
Erez Shachar
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title of Capacities Date
--------- ------------------- ----
<S> <C> <C>
* Chairman of the Board of February 23, 1999
- ---------------------------------------- Directors
Dan Purjes
* President and Chief Executive February 23, 1999
- ---------------------------------------- Officer and Director
Erez Shachar
/s/ Hilel Kremer Chief Financial Officer and February 23, 1999
- ---------------------------------------- Secretary
Hilel Kremer
* Director February 23, 1999
- ----------------------------------------
Roni Ferber
* Director February 23, 1999
- ----------------------------------------
Yoram Ben-Porat
* Director February 23, 1999
- ----------------------------------------
Robert L. Berenson
* Director February 23, 1999
- ----------------------------------------
Robert Hussey
</TABLE>
* By: /s/ Erez Shachar
------------------------------
Erez Shachar, Attorney-in-Fact
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
3.1 Memorandum of Association of the Registrant, in Hebrew with a
translation to English.(1)
3.2 Articles of Association of the Registrant.(1)
3.3 Certificate of Name Change.(2)
4.1 Specimen Certificate for Ordinary Shares.(1)
4.2 Representative's Warrant Agreement dated October 12, 1995.(1)
4.3 Form of Representative's Warrant Certificate.(1)
4.4 Forms of Placement Agent's Warrant Agreement and Certificate
4.5 Forms of Qualified Independent Underwriter's Warrant Agreement and Certificate.
5.1 Opinion of Shimonov Barnea & Co.
10.1 1995 Stock Option / Stock Purchase Plan.(1)
10.2 Amendment to the 1995 Stock Option / Stock Purchase Plan.
10.3 1997 Stock Option Plan.(3)
10.4 1998 Non-Employee Director Share Option Plan.(4)
10.5 Lease Agreement between the Registrant and Mr. Moshe Nur dated October
4, 1993, as amended on May 29, 1995, in Hebrew with a translation to
English.(1)
10.6 Lease Agreement for office space in Brussels, Belgium between
Nivellease, S.A. and the Registrant dated November 25, 1996.
10.7 Lease Agreement for office space in Newton Centre, Massachusetts
between WHTR Real Estate Limited Partnership and the Registrant dated
July 10, 1998.
10.8 Qualified Independent Underwriting Agreement.
10.9 Distribution Agreement between Imaje S.A. and the Registrant dated
June 26, 1995.(1)
10.10 Settlement Agreements relating to Moshe Nur and his affiliated
companies.
10.11 Bank BBL credit line(s).(5) (P)
10.12 Banque Artesia credit line(s).(5) (P)
10.13 Fleet National Bank credit line.(5) (P)
10.14 Bank Hapoalim credit line.(5) (P)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
10.15 Bank Clali credit line.(5) (P)
10.16 Bank Hapoalim revolving loan agreement.(5) (P)
10.17 Agreement between I.T.S. Machinery Development Ltd. and the Registrant dated
February 10, 1997.
10.18 Form of confidentiality agreement.
10.19 Agreement dated September 13, 1998 between "Meital" Electronic
Technology Ltd. and Markowitz Yaakov and Nur Macroprinters Ltd.
21 List of Subsidiaries of the Registrant.(6)
23.1 Consent of Krost Forer & Gabbay.
23.2 Consent of Willy Knyrim.
23.3 Consent of Shimonov Barnea & Co. (included in Exhibit 5.1).
24. Power of Attorney.(7)
27.1 Financial Data Schedule as of and for the year ended December 31, 1995.(3)
27.2 Financial Data Schedule as of and for the year ended December 31, 1996.(3)
27.3 Financial Data Schedule as of and for the year ended December 31, 1997.(3)
27.4 Financial Data Schedule as of and for the nine months ended September
30, 1997.
27.5 Financial Data Schedule as of and for the nine months ended
September 30, 1998.
</TABLE>
- -------------------
1/ Previously filed with the Company's Registration Statement (File No.
33-93160) on Form F-1 and incorporated by reference herein.
2/ Previously filed with the Company's Form 6-K dated January 7, 1998 and
incorporated by reference herein.
3/ Previously filed with the Company's Form 20-F for the year ended December
31, 1997 and incorporated by reference herein.
4/ Previously filed with the Company's Form 6-K dated November 13, 1998 and
incorporated by reference herein.
5/ Filed in summary form. Original filed in paper format pursuant to Form SE.
6/ Previously filed with the Company's Form 20-F for the year ended December
31, 1997 and incorporated by reference herein.
7/ Previously filed with the Company's Form F-1 (File No. 333-66103) on
October 26, 1998
- --------------------------------------------------------------------------------
---------------------------------------------------------
NUR MACROPRINTERS LTD.
AND
JOSEPHTHAL & CO. INC.
---------------------------------------------------------
PLACEMENT AGENT WARRANT AGREEMENT
Dated February 18, 1999, to be effective as of December 24, 1997
---------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PLACEMENT AGENT WARRANT AGREEMENT dated February 18, 1999 to be
effective as of December 24, 1997 between NUR MACROPRINTERS LTD., an Israeli
corporation (the "Company"), and JOSEPHTHAL & CO. INC. (hereinafter referred to
variously as the "Holder" or "Josephthal").
W I T N E S S E T H:
WHEREAS, Josephthal has acted pursuant to that certain Placement Agent
Agreement dated September 29, 1997 (the "Placement Agency Agreement") as
exclusive placement agent to effect a private offering of four million
(4,000,000) Ordinary Shares, nominal value NIS 1.00 per share, of the Company
("Ordinary Shares"), the final closing of which was December 24, 1997; and
WHEREAS, the Company has agreed pursuant to the Placement Agency
Agreement to issue to Josephthal warrants (the "Warrants") to purchase up to
400,000 Ordinary Shares;
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued by the Company to Josephthal in partial consideration for Josephthal
acting as exclusive placement agent pursuant to the Placement Agency Agreement;
2
<PAGE>
NOW, THEREFORE, in consideration of the premises made herein, the
agreements herein set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Grant. The Holder (as defined in Section 3 hereof) is hereby
granted the right to purchase, at any time from December 24, 1997 until 5:30
P.M., New York time, on December 23, 2002 up to 400,000 Ordinary Shares (subject
to adjustment as provided in Article 8 hereof) at an initial exercise price of
US$1.00 per Ordinary Share subject to the terms and conditions of this
Agreement.
2. Warrant Certificates. The warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in Exhibit A attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
3. Exercise of Warrant.
3.1 Method of Exercise. The Warrants initially are exercisable at an
initial exercise price (subject to adjustment as provided in Section 8 hereof)
per Ordinary Share set forth in Section 6 hereof, payable by certified or
official bank check in
3
<PAGE>
New York Clearing House funds. Upon surrender of a Warrant Certificate with the
annexed Form of Election to Purchase duly executed, together with payment of the
Purchase Price (as hereinafter defined) for the Ordinary Shares purchased at the
Company's principal offices (presently located at 5 David Navon Street, Moshav
Magshimim, Israel, 56910) the registered holder of a Warrant Certificate
("Holder" or "Holders") shall be entitled to receive a certificate or
certificates for the Ordinary Shares so purchased. The purchase rights
represented by each Warrant Certificate are exercisable at the option of the
Holder thereof, in whole or in part (but not as to fractional Ordinary Shares
underlying the Warrants). Warrants may be exercised to purchase all or part of
the total number of Ordinary Shares requested thereby. In the case of the
purchase of less than all the Ordinary Shares purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Ordinary Shares purchasable thereunder.
3.2 (intentionally omitted).
3.3 Definition of Market Price. As used herein (but subject to Section
3.2 above), the phrase "Market Price" at any
4
<PAGE>
date shall be deemed to be the last reported sale price, or, in case no such
reported sale takes place on such day, the average of the last reported sale
prices for the last three (3) trading days, in either case as officially
reported by the principal securities exchange on which the Ordinary Shares are
listed or admitted to trading, or, if the Ordinary Shares are not listed or
admitted to trading on any national securities exchange, the average closing bid
price as furnished by the NASD through NASDAQ or similar organization if NASDAQ
is no longer reporting such information, or if the Ordinary Shares are not
quoted on NASDAQ, as determined in good faith by resolution of the Board of
Directors of the Company, based on the best information available to it.
4. Issuance of Certificates. Upon the exercise of the Warrants, the
issuance of certificates for Ordinary Shares or other securities, properties or
rights underlying such Warrants, shall be made forthwith (and in any event
within five (5) business days thereafter) without charge to the Holder thereof
including, without limitation, any tax which may be payable in respect of the
issuance thereof, and such certificates shall (subject to the provisions of
Sections 5 and 7 hereof) be issued in the name of, or in such names as may be
directed by, the Holder thereof; provided, however, that the Company shall not
be required to pay
5
<PAGE>
any tax which may be payable in respect of any transfer involved in the issuance
and delivery of any such certificates in a name other than that of the Holder
and the Company shall not be required to issue or deliver such certificates
unless or until the person or persons requesting the issuance thereof shall have
paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Ordinary
Shares (and/or other securities, property or rights issuable upon the exercise
of the Warrants) shall be executed on behalf of the Company by the manual or
facsimile signature of the then present Chairman or Vice Chairman of the Board
of Directors or President or Vice President of the Company under its corporate
seal reproduced thereon, attested to by the manual or facsimile signature of the
then present Secretary or Assistant Secretary of the Company. Warrant
Certificates shall be dated the date of execution by the Company upon initial
issuance, division, exchange, substitution or transfer.
5. Restriction on Transfer of Warrants. The Holder of a Warrant
Certificate, by its acceptance thereof, covenants and agrees that the Warrants
described therein are being acquired as an investment and not with a view to the
distribution thereof.
6
<PAGE>
6. Exercise Price.
6.1 Initial and Adjusted Exercise Price. Except as otherwise provided
in Section 8 hereof, the initial exercise price of each Warrant shall be US$1.00
per Ordinary Share. The adjusted exercise price of each Warrant shall be the
price which shall result from time to time from any and all adjustments of the
initial exercise price in accordance with the provisions of Section 8 hereof.
6.2 Exercise Price. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price, depending upon the
context.
7. Registration Rights.
7.1 Registration Under the Securities Act of 1933.
(a) The Warrants, and the Ordinary Shares issuable upon exercise of the
Warrants, have not been registered under the Securities Act of 1933, as amended
(the "Act"). Upon exercise, in part or in whole, of the Warrant certificates
representing the Ordinary Shares and any other securities issuable upon exercise
of the Warrants shall bear the following legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act"), and
may not be offered or sold except pursuant to (i) an effective
7
<PAGE>
registration statement under the Act, (ii) to the extent applicable,
Rule 144 under the Act (or any similar rule under such Act relating
to the disposition of securities), or (iii) an opinion of counsel,
if such opinion shall be reasonably satisfactory to counsel to the
issuer, that an exemption from registration under such Act is
available.
(b) Holders of the Ordinary Shares shall be entitled to all of the rights and
privileges relating to registration rights afforded to investors in the private
placement carried out prusuant to the Placement Agency Agreement as set forth in
Annex A to the related Subscription Agreement, which is incorporated herein by
reference and expressly made a part hereof.
8. Adjustments to Exercise Price and Number of Securities.
8.1 Subdivision and Combination. In case the Company shall at any
time subdivide or combine the outstanding Ordinary Shares, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
8.2 Stock Dividends and Distributions. In case the Company shall pay
a dividend on, or make a distribution of, Ordinary Shares or of the Company's
capital stock convertible into Ordinary Shares, the Exercise Price shall
forthwith be proportionately decreased. An adjustment made pursuant to
8
<PAGE>
this Section 8.2 shall be made as of the record date for the subject stock
dividend or distribution.
8.3 Adjustment in Number of Securities. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 8, the number of
Ordinary Shares issuable upon the exercise of each Warrant shall be adjusted to
the nearest full amount by multiplying a number equal to the Exercise Price in
effect immediately prior to such adjustment by the number of Ordinary Shares
issuable upon exercise of the Warrants immediately prior to such adjustment and
dividing the product so obtained by the adjusted Exercise Price.
8.4 Definition of Ordinary Shares. For the purpose of this
Agreement, the term "Ordinary Shares" shall mean (i) the class of stock
designated as Ordinary Shares in the Memorandum of Association of the Company as
may be amended as of the date hereof, or (ii) any other class of stock resulting
from successive changes or reclassifications of such Ordinary Shares consisting
solely of changes in nominal value, or from nominal value to no nominal value,
or from no nominal value to nominal value. In the event that the Company shall
after the date hereof issue securities with greater or superior voting rights
than the Ordinary Shares outstanding as of the date hereof, the Holder, at
9
<PAGE>
its option, may receive upon exercise of any Warrant either Ordinary Shares or a
like number of such securities with greater or superior voting rights.
8.5 Merger or Consolidation. In case of any consolidation of the
Company with, or merger of the Company with, or merger of the Company into, or
sale by the Company of all or substantially all of its assets to another
corporation (other than a consolidation or merger which does not result in any
reclassification or change of the outstanding Ordinary Shares), the corporation
formed by such consolidation or merger or acquiror of such assets shall execute
and deliver to the Holder a supplemental warrant agreement providing that the
Holder of each Warrant then outstanding or to be outstanding shall have the
right thereafter (until the expiration of such Warrant) to receive, upon
exercise of such Warrant, the kind and amount of shares of stock and other
securities and property receivable upon such consolidation or merger, by a
holder of the number of Ordinary Shares of the Company for which such Warrant
might have been exercised immediately prior to such consolidation, merger, sale
or transfer. Such supplemental warrant agreement shall provide for adjustments
which shall be identical to the adjustments provided in Section 8. The above
provision of this Subsection shall
10
<PAGE>
similarly apply to successive consolidations or mergers.
8.6 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall be made:
(a) Upon the issuance or sale of the Warrants or the Ordinary Shares
issuable upon the exercise of the Warrants, or the options, rights
and Warrants issued and outstanding on the date hereof; or
(b) If the amount of said adjustment shall be less than 2 cents
($.02) per Ordinary Share, provided, however, that in such case any
adjustment that would otherwise be required then to be made shall be
carried forward and shall be made at the time of and together with
the next subsequent adjustment which, together with any adjustment
so carried forward, shall amount to at least 2 cents ($.02) per
Ordinary Share.
8.7 Dividends and Other Distributions. In the event that the Company
shall at any time prior to the exercise of all Warrants declare a dividend
(other than a dividend consisting solely of Ordinary Shares) or otherwise
distribute to its stockholders any assets, property, rights, evidences of
indebtedness, securities (other than Ordinary Shares), whether issued by the
Company or by another, or any other thing of value,
11
<PAGE>
the Holders of the unexercised Warrants shall thereafter be entitled, in
addition to the Ordinary Shares or other securities and property receivable
under the exercise thereof, to receive, upon the exercise of such Warrants, the
same property, assets, rights, evidences of indebtedness, securities or any
other thing of value that they would have been entitled to receive at the time
of such dividend or distribution as if the Warrants had been exercised
immediately prior to such dividend or distribution. At the time of any such
dividend or distribution, the Company shall make appropriate reserves to ensure
the timely performance of the provisions of this Subsection 8.7.
9. Exchange and Replacement of Warrant Certificates. Each Warrant
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Ordinary Shares in such denominations as
shall be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to
it of the loss, theft, destruction or mutilation of any Warrant Certificate,
and, in case of loss, theft or
12
<PAGE>
destruction, of indemnity or security reasonably satisfactory to it, and
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of the Warrants, if mutilated, the Company will
make and deliver a new Warrant Certificate of like tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of Ordinary Shares upon
the exercise of the Warrants, nor shall it be required to issue scrip or pay
cash in lieu of fractional interests, it being the intent of the parties that
all fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of Ordinary Shares, or other securities, properties or
rights.
11. Reservation and Listing of Securities. The Company shall at all
times reserve and keep available out of its authorized Ordinary Shares, solely
for the purpose of issuance upon the exercise of the Warrants, such number of
Ordinary Shares or other securities, properties or rights as shall be issuable
upon the exercise thereof. The Company covenants and agrees that, upon exercise
of the Warrants and payment of the Exercise Price therefor, all Ordinary Shares
and other securities issuable upon such exercise shall be duly and validly
issued, full paid, non-
13
<PAGE>
assessable and not subject to the preemptive rights of any stockholder. As long
as the Warrants shall be outstanding, the Company shall use its best efforts to
cause all Ordinary Shares issuable upon the exercise of the Warrants to be
listed (subject to official notice of issuance) on all securities exchanges, if
any, on which the Ordinary Shares issued to the public in connection herewith
may then be listed and/or quoted on NASDAQ.
12. Notices to Warrant Holders. Nothing contained in this Agreement
shall be construed as conferring upon the Holders the right to vote or to
consent or to receive notice as a stockholder in respect of any meetings of
stockholders for the election of directors or any other matter, or as having any
rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the following
events shall occur:
(a) the Company shall take a record of the holders of its
Ordinary Shares for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
14
<PAGE>
(b) the Company shall offer to all the holders of its
Ordinary Shares any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of capital stock of the
Company, or any option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall be
proposed; then, in any one or more of said events, the Company shall give
written notice of such event at least fifteen (15) days prior to the date fixed
as a record date or the date of closing the transfer books for the determination
of the stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale.
13. (intentionally omitted).
14. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
duly made when delivered, or mailed by registered or certified mail, return
receipt requested:
15
<PAGE>
(a) If to the registered Holder of the Warrants, to the address of
such Holder as shown on the books of the Company; or
(b) If to the Company, at P.O. Box 8440, Moshav Magshimim, Israel,
56910 or to such other address as the Company may designate by notice to the
Holders.
15. Supplements and Amendments. The Company and Josephthal may from
time to time supplement or amend this Agreement without the approval of any
Holders of Warrant Certificates (other than Josephthal) in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any provisions herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
and Josephthal may deem necessary or desirable and which the Company and
Josephthal deem shall not adversely affect the interests of the Holders of
Warrant Certificates.
16. Successors. All the covenants and provisions of this Agreement
shall be binding upon and inure to the benefit of the Company, the Holders and
their respective successors and assigns hereunder.
17. Termination. This Agreement shall terminate at the close of
business on December 23, 2002. Notwithstanding the
16
<PAGE>
foregoing, the indemnification provisions of Section 7 hereof shall survive such
termination until the close of business on December 23, 2008.
18. Governing Law; Submission to Jurisdiction. This Agreement and
each Warrant Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of New York and for all purposes shall be construed
in accordance with the laws of said State, without giving effect to the rules of
said State governing the conflicts of laws.
The Company, Josephthal and the Holders hereby agree that any
action, proceeding or claim against it arising out of, or relating in any way
to, this Agreement shall be brought and enforced in the courts of the State of
New York or of the United States of America for the Southern District of New
York, and irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. The Company, Josephthal and the Holders hereby irrevocably waive any
objection to such exclusive jurisdiction or inconvenient forum. Any such process
or summons to be served upon any of the Company, Josephthal and the Holders (at
the option of the party bringing such action, proceeding or claim) may be served
by transmitting a copy thereof, by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the
17
<PAGE>
address set forth in Section 14 hereof. Such mailing shall be deemed personal
service and shall be legal and binding upon the party so served in any action,
proceeding or claim. The Company, Josephthal and the Holders agree that the
prevailing party(ies) in any such action or proceeding shall be entitled to
recover from the other party(ies) all of its/their reasonable legal costs and
expenses relating to such action or proceeding and/or incurred in connection
with the preparation therefor.
19. Entire Agreement; Modification. This Agreement (including the
Placement Agency Agreement to the extent portions thereof are referred to
herein) contains the entire understanding between the parties hereto with
respect to the subject matter hereof and may not be modified or amended except
by a writing duly signed by the party against whom enforcement of the
modification or amendment is sought.
20. Severability. If any provision of this Agreement shall be held to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Agreement.
21. Captions. The caption headings of the Sections of this Agreement
are for convenience of reference only and are not intended, nor should they be
construed as, a part of this
18
<PAGE>
Agreement and shall be given no substantive effect.
22. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and
Josephthal and any other registered Holder(s) of the Warrant Certificates or
Ordinary Shares any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit of the
Company and Josephthal any other Holder(s) of the Warrant Certificates or
Ordinary Shares.
23. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
[SEAL] NUR MACROPRINTERS LTD.
By:
- ----------------------------------
Attest: Name:
Title:
19
<PAGE>
- ----------------------------------
, Secretary
JOSEPHTHAL & CO. INC.
By:
------------------------------------
Name:
Title:
20
<PAGE>
EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE HEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY
SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii)
AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M. NEW YORK TIME, DECEMBER 23, 2002
NO. W-
-------- ---------
Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that Josephthal & Co. Inc., or
registered assigns, is the registered holder of _______ Warrants to purchase
initially at any time from December 24, 1997 until 5:30 p.m. New York time on
December 23, 2002 (the "Expiration Date"), up to ______ fully-paid and
non-assessable Ordinary Shares, NIS 1.0 nominal value per share ("Ordinary
Shares") of Nur Macroprinters Ltd., an Israeli corporation (the "Company"), at
the initial exercise price, subject to adjustment in certain events (the
"Exercise Price"), of US$1.00 per Ordinary Share; upon surrender of this Warrant
Certificate and payment of the applicable Exercise Price at an office or agency
of the Company, but subject to the conditions set forth herein and in the
Placement Agent Warrant Agreement dated as of February 18, 1999 effective as of
December 24, 1997 between the Company and Josephthal & Co. Inc. (the "Warrant
Agreement"). Payment of the applicable Exercise Price shall be made by certified
or official bank check in New York Clearing House funds payable to the order of
the Company.
21
<PAGE>
No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants issued pursuant to the Warrant Agreement,
which Warrant Agreement is hereby incorporated by reference herein and made a
part of this instrument and is hereby referred to for a description of the
rights, limitation of rights, obligations, duties and immunities thereunder of
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events, the then applicable Exercise Price and the type and/or number of the
Company's securities issuable thereupon may, subject to certain conditions, be
adjusted. In such event, the Company will, at the request of the holder, issue a
new Warrant Certificate evidencing the adjustment in the then applicable
Exercise Price and the number and/or type of securities issuable upon the
exercise of the Warrants; provided, however, that the failure of the Company to
issue such new Warrant Certificates shall not in any way change, alter, or
otherwise impair, the rights of the holder as set forth in the Warrant
Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as
the absolute owner(s) of this Warrant Certificate (notwithstanding any notation
of ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of
22
<PAGE>
any distribution to the holder(s) hereof, and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
23
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be duly executed under its corporate seal.
Dated February 18, 1999 effective as of December 24, 1997
NUR MACROPRINTERS LTD.
[SEAL] By:
-------------------------
Name:
Title:
Attest:
- -------------------------------
, Secretary
24
<PAGE>
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase:
CHECK APPROPRIATE BOX
and herewith tenders in payment for such securities a certified or official bank
check payable in New York Clearing House Funds to the order of NUR MACROPRINTERS
LTD. in the amount of $ , all in accordance with the terms hereof. The
undersigned requests that a certificate for such securities be registered in the
name of whose address is and
that such Certificate be delivered to whose address
is .
Dated:
Signature
----------------------------------------
(Signature must conform in all respects to name of holder
as specified on the face of the Warrant Certificate.)
(Insert Social Security or Other
Identifying Number of Holder)
25
<PAGE>
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder desires to transfer
the Warrant Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and hereby irrevocably constitutes and appoints Attorney,
to transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated:
Signature:
------------------------------------
(Signature must confirm in all respects to name of holder as
specified on the face of the Warrant Certificate.)
(Insert Social Security or Other Identifying Number of Assignee).
26
WARRANT AGREEMENT
This Warrant Agreement (this "Agreement") dated as of February ___, 1999
is by and between Nur Macroprinters Ltd., an Israeli corporation (the "Company")
and Cruttenden Roth Incorporated ("Cruttenden").
WHEREAS, Cruttenden has agreed pursuant to a Qualified Independent
Underwriting Agreement dated February ___, 1999 (the "QIU Agreement") to act as
qualified independent underwriter in the shelf registration of 9,119,483 of the
Company's Ordinary Shares, NIS 1.00 nominal value (the "Ordinary Shares") (the
"Shelf Registration"); and
WHEREAS, the Company has agreed to issue warrants (the "Warrants") to
Cruttenden to purchase, at a price of $4.50 per warrant, an aggregate of 25,000
(hereinafter, and as the number thereof may be adjusted hereto, the "Warrant
Shares") Ordinary Shares, each Warrant initially entitling the holder thereof to
purchase one Ordinary Share.
.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein and in the QIU Agreement set forth and for other good and
valuable consideration, the parties hereto agree as follows:
1. Issuance of Warrants; Form of Warrant. The Company will issue and
deliver to Cruttenden, Warrants to purchase 25,000 Warrant Shares on the
Effective Date referred to in the QIU Agreement, in consideration for, and as
part of Cruttenden's compensation in connection with, its acting as Qualified
Independent Underwriter in the Shelf Registration. The text of the Warrants and
of the form of election to purchase Warrants Shares shall be substantially as
set forth in Exhibit A attached hereto. The Warrants shall be executed on behalf
of the Company by the manual or facsimile signature of the present or any future
Chairman of the Board, President or Vice President of the Company, under its
corporate seal, affixed or in facsimile, attested by the manual or facsimile
signature of the Secretary or an Assistant Secretary of the Company.
Warrants bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any one of them shall have ceased to
hold such offices prior to the delivery of such Warrants or did not hold such
offices on the date of this Agreement. Warrants shall be dated as of the date of
execution thereof by the Company either upon initial issuance or upon division,
exchange, substitution or transfer.
2. Registration. The Warrants shall be numbered and registered on the
books of the Company (the "Warrant Register") as they are issued. The Company
shall be entitled to treat the registered holder of any Warrant on the Warrant
Register (the "Holder") as the owner in fact therefor for all purposes and shall
not be bound to recognize any equitable or other claim to or interest in such
Warrant on the part of any other person, and shall not be liable for any
registration or transfer of Warrants which are registered or are to be
registered in the name of a fiduciary or the nominee of a fiduciary unless made
with the actual knowledge that a fiduciary or nominee is committing a breach of
trust in requesting such registration or transfer, or with the knowledge of such
facts that its participation therein amounts to bad faith. The Warrants shall be
registered initially in the name of "Cruttenden
<PAGE>
Roth Incorporated" or in such other denominations as Cruttenden may request in
writing to the Company.
3. Exchange of Warrant Certificates. Subject to any restriction upon
transfer set forth in this Agreement, each Warrant certificate may be exchanged
for another certificate or certificates entitling the Holder thereof to purchase
a like aggregate number of Warrant Shares as the certificate or certificates
surrendered then entitled such Holder to purchase. Any Holder desiring to
exchange a Warrant certificate or certificates shall make such request in
writing delivered to the Company, and shall surrender, properly endorsed, the
certificate or certificates to be so exchanged. Thereupon, the Company shall
execute and deliver to the person entitled thereto a new Warrant certificate or
certificates, as the case may be, as so requested.
4. Transfer of Warrants. Until February __, 2000, the Warrants will not
be sold, transferred, assigned or hypothecated except to (i) other brokers or
dealers participating in the offering; (ii) one or more bona fide officers
and/or partners of Cruttenden; (iii) a successor to the transferring Holder in
merger or consolidation; (iv) a purchaser of all or substantially all of the
transferring Holder's assets; or (v) any person receiving the Warrants from one
or more of the persons listed in this Section 4 at such person's or persons'
death pursuant to will, trust or the laws of intestate succession, each of whom
agrees in writing to be bound by the terms hereof. The Warrants shall be
transferable only in compliance with Sections 13 and 14 hereof and on the
Warrant Register upon delivery thereof duly endorsed by the Holder or by the
Holder's duly authorized attorney or representative, or accompanied by proper
evidence of succession, assignment or authority to transfer. In all cases of
transfer by an attorney, the original power of attorney, duly approved, or an
official copy thereof, duly certified, shall be deposited with the Company. In
case of transfer by executors, administrators, guardians or other legal
representatives, duly authenticated evidence of their authority shall be
produced and may be required to be deposited with the Company in its discretion.
Upon any registration of transfer, the Company shall deliver a new Warrant or
Warrants to the person entitled thereto.
5. Term of Warrants; Exercise of Warrants.
5.1 Each Warrant entitles the registered owner thereof to
purchase one share of Ordinary Shares at any time from 10:00 a.m., Pacific time,
on February __, 2000 (the "Initiation Date") until 6:00 p.m., Pacific time, on
February __, 2004 (the "Expiration Date") at a purchase price of $4.50 subject
to adjustment (the "Warrant Price").
5.2 The Warrant Price and the number of Warrant Shares issuable
upon exercise of each Warrant are subject to adjustment upon the occurrence of
certain events, pursuant to the provisions of Section 11 of this Agreement.
Subject to the provisions of this Agreement, each Holder of Warrants shall have
the right, which may be exercised as expressed in the Warrant Certificate, to
purchase from the Company (and the Company shall issue and sell to such Holder
of Warrants) the number of fully paid and nonassessable Warrant Shares specified
in such Warrant Certificate, upon surrender to the Company, or its duly
authorized agent, of such Warrant Certificate, with the form of election to
purchase on the reverse thereof duly filled in and signed, and upon payment to
the Company of the Warrant Price, as adjusted in accordance with the provisions
of Section 11 of this Agreement, for the number of Warrant Shares in respect of
which such Warrants are then exercised. Payment of such Warrant Price shall be
made in cash, by wire transfer or by certified or official bank check, or any
combination thereof. No adjustment shall be made for any dividends on any
Warrant Shares of stock issuable upon exercise of a Warrant.
-2-
<PAGE>
5.3 Upon such surrender of Warrants, and payment of the Warrant
Price as aforesaid, the Company shall issue and cause to be delivered with all
reasonable dispatch to or upon the written order of the Holder of such Warrants
and in such name or names as such registered Holder may designate, a certificate
or certificates for the number of full Warrant Shares so purchased upon the
exercise of such Warrants, together with cash, as provided in Section 12 of this
Agreement, in respect of any fraction of a share otherwise issuable upon such
surrender and, if the number of Warrants represented by a Warrant certificate
shall not be exercised in full, a new Warrant certificate, executed by the
Company for the balance of the number of whole Warrant Shares.
5.4 In addition to the method of payment set forth in Section 5.2
and in lieu of any cash payment required thereunder, the Holder of the Warrants
shall have the right at any time and from time to time to exercise the Warrants
in full or in part by surrendering the Warrant Certificate in the manner
specified in Section 5.2 in exchange for the number of shares of Ordinary Shares
of the Company equal to: (A) the number of shares of Ordinary Shares as to which
the Warrants are being exercised multiplied by (B) a fraction, (1) the numerator
of which is the difference between the Closing Price for the Ordinary Shares and
the Warrant Price and (2) the denominator of which is the Closing Price for the
Ordinary Shares. Solely for the purposes of this paragraph, Closing Price shall
be calculated either (i) on the date which the form of election to purchase on
the reverse of the Warrant Certificate is deemed to have been sent to the
Company ("Notice Date") or (ii) as the average of the Closing Prices for each of
the 20 trading days preceding the Notice Date, whichever of (i) or (ii) is
greater.
5.5 If permitted by applicable law, such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
shares as of the date of the surrender of such Warrants and payment of the
Warrant Price as aforesaid. The rights of purchase represented by the Warrants
shall be exercisable, at the election of the registered Holders thereof, either
as an entirety or from time to time for only part of the shares specified
therein.
6. Compliance with Government Regulations. The Company covenants that if
any shares of Ordinary Shares required to be reserved for purposes of exercise
or conversion of Warrants require, under any Federal or state law or applicable
governing rule or regulation of any national securities exchange, registration
with or approval of any governmental authority, or listing on any such national
securities exchange before such shares may be issued upon exercise, the Company
will use its best efforts to cause such shares to be duly registered, approved
or listed on the relevant national securities exchange, as the case may be;
provided, however, that (except to the extent legally permissible with respect
to any Warrant of which Cruttenden is the Holder) in no event shall such shares
of Ordinary Shares be issued, and the Company is hereby authorized to suspend
the exercise of all Warrants, for the period during which such registration,
approval or listing is required but not in effect.
7. Payment of Taxes. The Company will pay all documentary stamp taxes,
if any, attributable to the initial issuance of the Warrants or the securities
comprising the Warrant Shares upon the exercise of Warrants; provided, however,
that the Company shall not be required to pay any tax or taxes which may be
payable in respect of any transfer involved in the issue or delivery of any
warrants or certificate for Warrant Shares in a name other than that of the
registered Holder of such warrants.
-3-
<PAGE>
8. Mutilated or Missing Warrants. In case any of the Warrants shall be
mutilated, lost, stolen or destroyed, the Company shall issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and representing an equivalent right or interest; but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction of such Warrant and, if requested, indemnity or bond also
reasonably satisfactory to the Company. An applicant for such substitute
Warrants shall also comply with such other reasonable regulations and pay such
other reasonable charges as the Company may prescribe.
9. Reservation of Warrant Shares. There has been reserved out of the
authorized and unissued shares of Ordinary Shares a number of shares sufficient
to provide for the exercise of the Warrants, and the transfer agent for the
Ordinary Shares ("Transfer Agent") and every subsequent Transfer Agent for any
shares of the Company's capital stock issuable upon the exercise of any of the
rights of purchase aforesaid are hereby irrevocably authorized and directed at
all times until the Expiration Date to reserve such number of authorized and
unissued shares as shall be required for such purpose. The Company will keep a
copy of this Agreement on file with the Transfer Agent and with every subsequent
Transfer Agent for any shares of the Company's capital stock issuable upon the
exercise of the rights of purchase represented by the Warrants. The Company will
supply such Transfer Agent with duly executed stock certificates for such
purposes and will itself provide or otherwise make available any cash which may
be issuable as provided in Section 12 of this Agreement. The Company will
furnish to such Transfer Agent a copy of all notices of adjustments, and
certificates related thereto, transmitted to each Holder pursuant to Section
11.2 of this Agreement. All Warrants surrendered in the exercise of the rights
thereby evidenced shall be cancelled.
10. Obtaining Stock Exchange Listings. The Company will use its best
efforts to time take all action which may be necessary so that the Warrant
Shares, immediately upon their issuance upon the exercise of Warrants, will be
listed on the securities exchanges and stock markets within the United States of
America, if any, on which other shares of Ordinary Shares are then listed.
11. Adjustment of Warrant Price and Number of Warrant Shares. The number
and kind of securities purchasable upon the exercise of each Warrant and the
Warrant Price shall be subject to adjustment from time to time upon the
happening of certain events as hereinafter defined. For purposes of this Section
11, "Ordinary Shares" means shares now or hereafter authorized of any class of
Ordinary Shares of the Company and any other stock of the Company, however
designated, that has the right (subject to any prior rights of any class or
series of preferred stock) to participate in any distribution of the assets or
earnings of the Company without limit as to per share amount.
11.1 Mechanical Adjustments. The number of Warrant Shares
purchasable upon the exercise of each Warrant and the Warrant Price shall be
subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares
of Ordinary Shares, (ii) subdivide its outstanding shares of Ordinary Shares,
(iii) combine its outstanding shares of Ordinary Shares or (iv) issue by
reclassification of its shares of Ordinary Shares other securities of the
Company (including any such reclassification in connection with a consolidation
or merger in which the Company is the surviving corporation), the number of
Warrant Shares purchasable upon exercise of each warrant immediately prior
thereto shall be adjusted so that the Holder of each Warrant shall be entitled
to receive the kind and number of Warrant Shares or other securities of the
Company which he would have owned or would have been entitled to receive after
the happening of any of the events
-4-
<PAGE>
described above, had such Warrants been exercised immediately prior to the
happening of such event or any record date with respect thereto. An adjustment
made pursuant to this paragraph (a) shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such
event. Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) In case the Company shall distribute to all holders of
its shares of Ordinary Shares (including any such distribution made in
connection with a consolidation or merger in which the Company is the surviving
corporation) evidences of its indebtedness or assets (excluding cash dividends
or distributions payable out of consolidated earnings or earned surplus and
dividends or distributions referred to in paragraph (a) above or in the
paragraph immediately following this paragraph) or rights, options or warrants,
or convertible or exchangeable securities containing the right to subscribe for
or purchase shares of Ordinary Shares, then in each case the number of Warrant
Shares thereafter purchasable upon the exercise of each Warrant shall be
determined by multiplying the number of Warrant Shares theretofore purchasable
upon the exercise of each Warrant by a fraction, the numerator of which shall be
the then current market price per share of Ordinary Shares (as defined in
paragraph (c) below) on the date of such distribution, and the denominator of
which shall be the then current market price per share of Ordinary Shares, less
the then fair value (as reasonably determined by the Board of Directors of the
Company) of the portion of the assets or evidences of indebtedness so
distributed or of such subscription rights, options or warrants, or of such
convertible or exchangeable securities applicable to one share of Ordinary
Shares. Such adjustment shall be made whenever any such distribution is made and
shall become effective on the date of distribution retroactive to the record
date for the determination of stockholders entitled to receive such
distribution.
(c) For the purpose of any computation under paragraph (b)
of this Section, the current market price per share of Ordinary Shares at any
date shall be the average of the average of the closing bid and asked prices for
20 consecutive trading days commencing 30 trading days before the date of such
computation. The selling price for each day (the "Closing Price") shall be the
last such reported sales price regular way or, in case no such reported sale
takes place on such day, the average of the closing bid and asked prices regular
way for such day, in each on the principal national securities exchange on which
the shares of Ordinary Shares are listed or admitted to trading or, if not
listed or admitted to trading, the average of the closing bid and asked prices
of the Ordinary Shares in the over-the counter market as reported by the Nasdaq
National Market System or Nasdaq SmallCap System or if not approved for
quotation on the Nasdaq National Market System or Nasdaq SmallCap System, the
average of the closing bid and asked prices as furnished by two members of the
National Association of Securities Dealers, Inc. selected from time to time by
the Company for that purpose.
(d) No adjustment in the number of Warrant Shares
purchasable hereunder shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the number of Warrant
Shares purchasable upon the exercise of each Warrant; provided, however, that
any adjustments which by reason of this paragraph (d) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations shall be made to the nearest one-thousandth of a
share.
(e) Whenever the number of Warrant Shares purchasable upon
the exercise of each Warrant is adjusted, as herein provided, the Warrant Price
payable upon exercise of each Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment by a fraction, the numerator
of which shall be the number of Warrant Shares purchasable upon the exercise
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<PAGE>
of each Warrant immediately prior to such adjustment, and the denominator of
which shall be the number of Warrant Shares purchasable immediately thereafter.
(f) No adjustment in the number of Warrant Shares
purchasable upon the exercise of each Warrant need be made under paragraph (b)
if the Company issues or distributes to each Holder of Warrants upon the
exercise thereof the rights, options, warrants or convertible or exchangeable
securities, or evidences of indebtedness or assets referred to in those
paragraphs which each Holder of Warrants would have been entitled to receive had
the Warrants been exercised prior to the happening of such event or the record
date with respect thereto. No adjustment need be made for a change in the par
value of the Warrant Shares.
(g) In the event that at any time, as a result of an
adjustment made pursuant to paragraph (a) above, the Holders shall become
entitled to purchase any securities of the Company other than shares of Ordinary
Shares, thereafter the number of such other shares so purchasable upon exercise
of each Warrant and the Warrant Price of such shares shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares contained in
this Section 11, and the other provisions of this Agreement, with respect to the
Warrant and Warrant Shares, shall apply as nearly equivalent as practicable on
like terms to such other securities.
(h) Upon the expiration of any rights, options, warrants or
conversion or exchange privileges for which an adjustment was made hereunder, if
any thereof shall not have been exercised, the Warrant Price and the number of
shares of Ordinary Shares purchasable upon the exercise of each Warrant shall,
upon such expiration, be readjusted and shall thereafter be such as it would
have been had it been originally adjusted (or had the original adjustment not
been required, as the case may be) as if (i) the only shares of Ordinary Shares
so issued were the shares of Ordinary Shares, if any, actually issued or sold
upon the exercise of such rights, options, warrants or conversion or exchange
rights and (ii) such shares of Ordinary Shares, if any, were issued or sold for
the consideration actually received by the Company upon such exercise plus the
aggregate consideration, if any, actually received by the Company for the
issuance, sale or grant of all such rights, options, warrants or conversion or
exchange rights whether or not exercised; provided, however, that no such
readjustment shall have the effect of increasing the Warrant Price or decreasing
the number of shares of Ordinary Shares purchasable upon the exercise of each
Warrant by an amount in excess of the amount of the adjustment initially made in
respect to the issuance, sale or grant of such rights, options, warrants or
conversion or exchange rights.
11.2 Notice of Adjustment. Whenever the number of Warrant Shares
purchasable upon the exercise of each Warrant or the Warrant Price of such
Warrant Shares is adjusted, as herein provided, the Company shall promptly mail
by first class, postage prepaid, to each Holder notice of such adjustment or
adjustments and a certificate of a firm of independent public accountants
selected by the Board of Directors of the Company (who may be the regular
accountants employed by the Company) setting forth the number of Warrant Shares
purchasable upon the exercise of each Warrant and the Warrant Price of such
Warrant Shares after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth the computation by which such
adjustment was made.
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11.3 No Adjustment for Dividends. Except as provided in Section
11.1, no adjustments in respect of any dividends shall be made during the term
of a Warrant or upon the exercise of a Warrant.
11.4 Preservation of Purchase Rights Upon Merger, Consolidation
etc. In case of any consolidation of the Company with or merger of the Company
into another corporation or in case of any sale, transfer or lease to another
corporation of all or substantially all the property of the Company, the Company
or such successor or purchasing corporation, as the case may be, shall execute
with each Holder an agreement that each Holder shall have the right thereafter
upon payment of the Warrant Price in effect immediately prior to such action to
purchase upon exercise of each Warrant the kind and amount of shares and other
securities, cash and property which he would have owned or would have been
entitled to receive after the happening of such consolidation, merger, sale,
transfer or lease had such Warrant been exercised immediately prior to such
action; provided, however, that no adjustment in respect of dividends, interest
or other income on or from such shares or other securities, cash and property
shall be made during the term of a Warrant or upon the exercise of a Warrant.
Such agreement shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
11. The provisions of this Section 11.4 shall similarly apply to successive
consolidations, mergers, sales transfer or leases.
11.5 Statements on Warrants. Irrespective of any adjustments in
the Warrant Price or the number or kind of shares purchasable upon the exercise
of the Warrants, Warrants theretofore or thereafter issued may continue to
express the same price and number and kind of shares as are stated in the
Warrants initially issuable pursuant to this Agreement.
12. Fractional Interests. The Company shall not be required to issue
fractional Warrant Shares on the exercise of Warrants. If more than one Warrant
shall be presented for exercise in full at the same time by the same holder, the
number of full Warrant Shares which shall be issuable upon the exercise thereon
shall be computed on the basis of the aggregate number of Warrant Shares
purchasable on exercise of the Warrants so presented. If any fraction of a
Warrant Share would, except for the provisions of this Section 12 be issuable on
the exercise of any Warrant (or specified portion thereof), the Company shall
round to the nearest whole share.
13. Registration Under the Securities Act of 1933. Cruttenden represents
and warrants to the Company that it will not dispose of the Warrants or the
Warrant Shares except pursuant to (i) an effective registration statement under
the Securities Act of 1933, as amended (the "Act"), including a post-effective
amendment to the Registration Statement, (ii) Rule 144 under the Act (or any
similar rule under the Act relating to the disposition of securities), or (iii)
an opinion of counsel, reasonably satisfactory to counsel of the Company, that
an exemption from such registration is available.
14. Certificates to Bear Legends. The Warrant, the Warrant Shares or
other securities issued upon exercise of the Warrant shall be subject to a
stop-transfer order and the certificate or certificates therefore shall bear the
following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAW. SAID SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT.
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15. Registration Rights.
15.1 Demand Registration Rights. The Company covenants and agrees
with Cruttenden and any subsequent Holders of the Warrants and/or Warrant Shares
that, on one occasion, within 60 days after receipt of a written request from
Holders of more than 50% in interest of the aggregate of Warrants and/or Warrant
Shares issued pursuant to this Agreement that such Holders of the Warrants
and/or Warrant Shares desire and intend to transfer more than 50% in interest of
the aggregate number of the Warrants and/or Warrant Shares under such
circumstances that a public offering, within the meaning of the Act, will be
involved, the Company shall, on that one occasion, file a registration statement
(and use its best efforts to cause such registration statement to become
effective under the Act at the Holder's expense) with respect to the offering
and sale or other disposition of the Warrant Shares (the "Offered Warrant
Shares"); provided, however, that the Company shall have no obligation to comply
with the foregoing provisions of this Section 15.1 if in the opinion of counsel
to the Company reasonably acceptable to the Holder or Holders, from whom such
written requests have been received, registration under the Act is not required
for the transfer of the Offered Warrant Shares in the manner proposed by such
person or persons or that a post-effective amendment to an existing registration
statement would be legally sufficient for such transfer (in which latter event
the Company shall promptly file such post-effective amendment (and use its best
efforts to cause such amendment to become effective under the Act)).
Notwithstanding the foregoing, the Company shall not be obligated to file a
registration statement with respect to the Offered Warrant Shares on more than
one occasion.
The Company may defer the preparation and filing of a registration
statement for up to 90 days after the request for registration is made if the
Board of Directors determines in good faith that such registration or
post-effective amendment would materially adversely affect or otherwise
materially interfere with a proposed or pending transaction by the Company,
including without limitation a material financing or a corporate reorganization,
or during any period of time in which the Company is in possession of material
inside information concerning the Company or its securities, which information
the Company determines in good faith is not ripe for disclosure.
The Company shall not honor any request to register Warrant Shares
pursuant to this Section 15.1 received later than five (5) years from the
effective date of the Company's Registration Statement on Form F-1 (File No.
333-66103) (the "Effective Date"). The Company shall not be required (i) to
maintain the effectiveness of the registration statement beyond the earlier to
occur of 90 days after the effective date of the registration statement or the
date on which all of the Offered Warrant Shares have been sold (the "Termination
Date"); provided, however, that if at the Termination Date the Offered Warrant
Shares are covered by a registration statement which also covers other
securities and which is required to remain in effect beyond the Termination
Date, the Company shall maintain in effect such registration statement as it
relates to Offered Warrant Shares for so long as such registration statement (or
any substitute registration statement) remains or is required to remain in
effect for any such other securities, or (ii) to cause any registration
statement with respect to the Warrant Shares to become effective prior to the
Initiation Date. All Company expenses of registration pursuant to this Section
15.1 shall be borne by the Holders.
The Company shall be obligated pursuant to this Section 15.1 to include
in the registration statement Warrant Shares that have not yet been purchased by
a Holder of Warrants so long as such Holder of Warrants submits an undertaking
to the Company that such Holder intends to exercise Warrants representing the
number of Warrant Shares to be included in such registration statement prior
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<PAGE>
to the consummation of the public offering with respect to such Warrant Shares.
In addition, such Holder of Warrants is permitted to pay the Company the Warrant
Price for such Warrant Shares upon the consummation of the public offering with
respect to such Warrant Shares.
15.2 Piggy-back Registration Rights. The Company covenants and
agrees with the Holders and any subsequent Holders of the Warrants and/or
Warrant Shares that in the event the Company proposes to file a registration
statement under the Act with respect to any class of security (other than in
connection with a merger an exchange offer, a non-cash offer or a registration
statement on Form S-8, S-4 or other unsuitable registration statement form)
which becomes or which the Company believes will become effective at any time
after the Initiation Date then the Company shall in each case give written
notice of such proposed filing to the Holders of Warrants and Warrant Shares at
least 20 days before the proposed filing date and such notice shall offer to
such Holders the opportunity to include in such registration statement such
number of Warrant Shares as they may request, unless, in the opinion of counsel
to the Company reasonably acceptable to any such Holder of Warrants or Warrant
Shares who wishes to have Warrant Shares included in such registration
statement, registration under the Act is not required for the transfer of such
Warrants and/or Warrant Shares in the manner proposed by such Holders. The
Company shall not honor any such request to register any such Warrant Shares if
the request is received later than five (5) years from the Effective Date, and
the Company shall not be required to honor any request (a) to register any such
Warrant Shares if the Company is not notified in writing of any such request
pursuant to this Section 15.2 within at least 10 days after the Company has
given notice to the Holders of the filing, or (b) to register Warrant Shares
that represent in the aggregate fewer than 25% of the aggregate number of
Warrant Shares. The Company shall permit, or shall cause the managing
underwriter of a proposed offering to permit, the Holders of Warrant Shares
requested to be included in the registration (the "Piggy-back Shares") to
include such Piggy-back Shares in the proposed offering on the same terms and
conditions as applicable to securities of the Company included therein or as
applicable to securities of any person other than the Company and the Holders of
Piggy-back Shares if the securities of any such person are included therein.
Notwithstanding the foregoing, if any such managing underwriter shall advise the
Company in writing that it believes that the distribution of all or a portion of
the Piggy-back Shares requested to be included in the registration statement
concurrently with the securities being registered by the Company would
materially adversely affect the distribution of such securities by the Company
for its own account, then the Holders of such Piggy-back Shares shall delay
their offering and sale of Piggyback Shares (or the portion thereof so
designated by such managing underwriter) for such period, not to exceed 180
days, as the managing underwriter shall request provided that no such delay
shall be required as to Piggy-back Shares if any securities of the Company are
included in such registration statement for the account of any person other than
the Company and the Holders of Piggy-back Shares. In the event of such delay,
the Company shall file such supplements, post-effective amendments or separate
registration statement, and take any such other steps as may be necessary to
permit such Holders to make their proposed offering and sale for a period of 90
days immediately following the end of such period of delay ("Piggy-back
Termination Date"); provided, however, that if at the Piggy-back Termination
Date the Piggyback Shares are covered by a registration statement which is, or
is required to remain, in effect beyond the Piggy-back Termination Date, the
Company shall maintain in effect the registration statement as it relates to the
Piggy-back Shares for so long as such registration statement remains or is
required to remain in effect for any of such other securities. All expenses of
registration pursuant to this Section 15.2 shall be borne by the Company, except
that underwriting commissions and expenses attributable to the Piggy-back Shares
and fees and disbursements of counsel (if any) to the Holders requesting that
such Piggy-back Shares be offered will be borne by such Holders.
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The Company shall be obligated pursuant to this Section 15.2 to include
in the Piggy-back Offering, Warrant Shares that have not yet been purchased by a
holder of Warrants so long as such Holder of Warrants submits an undertaking to
the Company that such Holder intends to exercise Warrants representing the
number of Warrant Shares to be included in such Piggy-back Offering prior to the
consummation of such Piggy-back Offering. In addition, such Holder of Warrants
is permitted to pay the Company the Warrant Price for such Warrant Shares upon
the consummation of the Piggy-back Offering.
If the Company decides not to proceed with a Piggy-back Offering, the
Company has no obligation to proceed with the offering of the Piggy-back Shares,
unless the Holders of the Warrants and/or Warrant Shares otherwise comply with
the provisions of Section 15.1 hereof (without regard to the 60 days' written
request required thereby).
15.3 In connection with the registration of Warrant Shares in
accordance with Section 15.1 and 15.2 above, the Company agrees to:
(a) Use its best efforts to register or qualify the
Warrant Shares for offer or sale under the state securities or Blue Sky
laws of such states which the Holders of such Warrant Shares shall
reasonably designate, until the dates specified in Section 15.1 and 15.2
above in connection with registration under the Act; provided, however,
that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take
any action which would subject it to general service of process in any
jurisdiction where it is not now so subject or to register or get a
license as a broker or dealer in securities in any jurisdiction where it
is not so registered or licensed or to register or qualify the Warrant
Shares for offer or sale under the state securities or Blue Sky laws of
any state other than the states in which some or all of the shares
offered or sold in the Public Offering were registered or qualified for
offer and sale.
(b) (i) In the event of any post-effective amendment or
other registration with respect to any Warrant Shares pursuant to
Section 15.1 or 15.2 above, the Company will indemnify and hold harmless
any Holder whose Warrant Shares are being so registered, and each
person, if any, who controls such Holder within the meaning of the Act,
against any losses, claims, damages or liabilities, joint or several, to
which such Holder or such controlling person may be subject, under the
Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained, on the effective date thereof, in any such registration
statement, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading; and will reimburse each such Holder and each
such controlling person for any legal or other expenses reasonably
incurred by such Holder or such controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in such
case to the extent that any such loss, claim, damage or liability arises
out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in any such registration statement,
any preliminary prospectus or final prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with written
information furnished by such Holder expressly for use in the
preparation thereof. The Company will not be liable to a claimant to the
extent of any misstatement corrected or remedied in any amended
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prospectus if the Company timely delivers a copy of such amended
prospectus to such indemnified person and such indemnified person does
not timely furnish such amended prospectus to such claimant. The Company
shall not be required to indemnify any Holder or controlling person for
any payment made to any claimant in settlement of any suit or claim
unless such payment is approved by the Company.
(ii) Each Holder of Warrants and/or Warrant Shares who
participates in a registration pursuant to Section 15.1 or 15.2 will
indemnify and hold harmless the Company, each of its directors, each of
its officers who have signed any such registration statement, and each
person, if any, who controls the Company within the meaning of the Act,
against any losses, claims, damages or liabilities to which the Company,
or any such director, officer or controlling person may become subject
under the Act, or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue or alleged untrue statement or any material fact
contained in any such registration statement, any preliminary prospectus
or final prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, 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 made in any such
registration statement, any preliminary prospectus or final prospectus,
or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished by such Holder expressly
for use in the preparation thereof; and will reimburse any legal or
other expenses reasonably incurred by the Company, or any such director,
officer or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this subparagraph
(ii) shall not apply to amounts paid to any claimant in settlement of
any suit or claim unless such payment is first approved by such Holder.
(iii) In order to provide for just and equitable
contribution in any action in which a claim for indemnification is made
pursuant to this clause (b) of Section 15.3 but is judicially determined
(by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in
such case notwithstanding the fact that this clause (b) of Section 15.3
provides for indemnification in such case, all the parties hereto shall
contribute to the aggregate losses, claims, damages or liabilities to
which they may be subject (after contribution from others) in such
proportion so that each Holder whose Warrant Shares are being registered
is responsible pro rata for the portion represented by the public
offering price received by such Holder from the sale of such Holder's
Warrant Shares, and the Company is responsible for the remaining
portion; provided, however, that (i) no Holder shall be required to
contribute any amount in excess of the public offering price received by
such Holder from the sale of such Holder's Warrant Shares and (ii) no
person guilty of a fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation. This
subsection (b)(iii) shall not be operative as to any Holder of Warrant
Shares to the extent that the Company has received indemnity under this
clause (b) of Section 15.3.
16. No Rights as Stockholder; Notices to Holders. Nothing contained in
this Agreement or in any of the Warrants shall be construed as conferring upon
the Holders or their transferee(s) the
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right to vote or to receive dividends or to consent to or receive notice as
stockholders in respect of any meeting of stockholders for the election of
directors of the Company or any other matter or any rights whatsoever as
stockholders of the Company. If, however, at any time prior to the expiration of
the Warrants and prior to their exercise, any of the following events occur:
(a) the Company shall declare any dividend payable in any
securities upon its shares of Ordinary Shares or make any distribution
(other than a cash dividend) to the holders of its shares of Ordinary
Shares: or
(b) the Company shall offer to the holders of its shares
of Ordinary Shares any additional shares of Ordinary Shares or
securities convertible into or exchangeable for shares of Ordinary
Shares or any right to subscribe to or purchase any thereof; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation, merger, sale,
transfer or lease of all or substantially all of its property, assets
and business as an entirety) shall be proposed,
then in any one or more of said events the Company shall (i) give notice in
writing of such event to the Holders, as provided in Section 17 hereof and (ii)
if there are more than 100 Holders, cause notice of such event to be published
once in The Wall Street Journal (national edition), such giving of notice and
publication to be completed at least 20 days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution or subscription rights, or
for the determination of stockholders entitled to vote on such proposed
dissolution, liquidation or winding up. Such notice shall specify such record
date or the date of closing the transfer books, as the case may be. Failure to
publish, mail or receive such notice or any defect therein or in the publication
or mailing thereof shall not affect the validity of any action taken in
connection with such dividend, distribution or subscription rights, or such
proposed dissolution, liquidation or winding up.
17. Notices. Any notice pursuant to this Agreement to be given or made
by the registered Holder of any Warrant to the Company shall be sufficiently
given or made if sent by first-class mail or express overnight courier to:
NUR Macroprinters Ltd.
P.O. Box 8440
Moshav Magshimim 56910
Attn: Chief Executive Officer
Notices or demands authorized by this Agreement to be given or made by the
Company to the registered Holder of any Warrant shall be sufficiently given or
made (except as otherwise provided in this Agreement) if sent by first-class
mail to such Holder at the address of such Holder as shown on the Warrant
Register.
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without giving effect to
principles of conflicts of laws.
19. Supplements and Amendments. The Company and Cruttenden may from time
to time supplement or amend this Agreement in order to cure any ambiguity or to
correct or supplement
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any provision contained herein, or to make any other provisions in regard to
matters or questions arising hereunder which the Company and Cruttenden may deem
necessary or desirable and which shall not be inconsistent with the provisions
of the Warrants and which shall not adversely affect the interests of the
Holders. This Agreement may also be supplemented or amended from time to time by
a writing executed by or on behalf of the Company and a majority in interest of
the Holders (assuming the exercise of all Warrants).
20. Successor. All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Holders shall bind and inure to the
benefit of their respective successors and assigns hereunder. Assignments by the
Holders of their rights hereunder shall be made in accordance with Section 4
hereof.
21. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Holders, any legal or equitable right, remedy or claim under this Agreement, but
this Agreement shall be for the sole and exclusive benefit of the Company any
the Holders of the Warrants and Warrant Shares.
22. Captions. The captions of the sections and subsections of this
Agreement have been reserved for convenience only and shall have no substantive
effect.
23. Counterparts. This Agreement may be executed in any number of
counterparts each of which when so executed shall be deemed to be an original;
but such counterparts together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day, month and year first above written.
CRUTTENDEN ROTH INCORPORATED
Attest:
____________________________ ____________________________
Byron Roth
Chairman and Chief Executive Officer
NUR MACROPRINTERS LTD.
Attest:
____________________________ ____________________________
Erez Shachar
Chief Executive Officer
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EXHIBIT A
[Form of Warrant Certificate]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW. SAID
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN EXEMPTION THEREFROM UNDER SAID ACT
WARRANT CERTIFICATE
OF
NUR MACROPRINTERS LTD.
EXERCISABLE ON OR BEFORE FEBRUARY __, 2004
No. 1 25,000 Warrants
This Warrant Certificate certifies that the registered holder hereof or
its registered assigns, is the registered holder of Warrants expiring February
___, 2004 (the "Warrants") to purchase Ordinary Shares, NIS 1.00 nominal value
(the "Ordinary Shares"), of NUR Macroprinters Ltd., a [ ] corporation (the
"Company"). Each Warrant entitles the holder upon exercise to receive from the
Company from 10:00 a.m., Pacific time, on February ___, 2000 through and until
6:00 p.m., Pacific time, on February ___, 2004, one fully paid and nonassessable
Ordinary Share (a "Warrant Share") at the initial exercise price (the "Warrant
Price") of $4.50 payable in lawful money of the United States of America upon
surrender of this Warrant Certificate and payment of the Warrant Price at the
conditions set forth herein and in the Warrant Agreement referred to herein. The
Warrant Price and number of Warrant Shares issuable upon exercise of the
Warrants are subject to adjustment upon the occurrence of certain events set
forth in the Warrant Agreement.
No Warrant may be exercised after 6:00 p.m., Pacific Time, on February
__, 2004 (the "Expiration Date").
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this price.
This Warrant Certificate shall not be valid unless countersigned by the
Company.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring February ___, 2004 entitling the holder on
exercise to receive shares of Ordinary Shares, no par value, of the Company (the
"Ordinary Shares"), and are issued or to be issued pursuant to a Warrant
Agreement, dated as of February ___, 1999 (the "Warrant Agreement"), duly
executed and delivered by the Company, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and the holders (the words
"holders" or
-15-
<PAGE>
"holder" meaning the registered holders or registered holder) of the Warrants. A
copy of the Warrant Agreement may be obtained by the holder hereof upon written
request to the Company.
The Warrants may be exercised at any time on or before February ___,
2004. The holder of Warrants evidenced by this Warrant Certificate may exercise
them by surrendering this Warrant Certificate, with the form of election to
purchase set forth hereon properly completed and executed, together with payment
of the Warrant Price at the office of the Company designated for such purpose.
In the event that upon any exercise of Warrants evidenced hereby the number of
Warrants exercised shall be less than the total number of Warrants evidenced
hereby, there shall be issued to the holder hereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised. No adjustment shall
be made for any dividends on any Ordinary Shares issuable upon exercise of this
Warrant.
The holders of the Warrants are entitled to certain registration rights
with respect to the Ordinary Shares purchasable upon exercise thereof. Said
registration rights are set forth in full in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Company by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant certificate or Warrant certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Company, a new Warrant certificate or Warrant
certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to other transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company.
IN WITNESS WHEREOF, NUR Macroprinters Ltd. has caused this Warrant
Certificate to be signed by its Chief Executive Officer and by its Secretary.
Dated: February ___, 1999 NUR Macroprinters Ltd.
____________________________
Erez Shachar
Chief Executive Officer
-16-
<PAGE>
____________________________
Hilel Kremer
Secretary
-17-
<PAGE>
(Form of Election to Purchase)
(To be Executed upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive ____________ shares of
Ordinary Shares and herewith tenders payment for such shares in accordance with
the terms of the Warrant Agreement. The undersigned requests that a certificate
for such shares be registered in the name of _____________________________,
whose address is ______________________________________ and that such shares be
delivered to _______________________ whose address is
________________________________________. If said number of shares is less than
all of the shares of Ordinary Shares purchasable hereunder, the undersigned
requests that a new Warrant Certificate representing the remaining balance of
such shares be registered in the name of ________________________, whose address
is _______________________, and that such Warrant Certificate be delivered to
_______________________, whose address is
- ---------------------------------.
Signature:
Date:
Signature Guaranteed:
-18-
<PAGE>
(Form of Assignment)
(To be Executed upon Assignment of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
(Name and Address of Assignee Must Be Printed or Typewritten)
-----------------------------------
-----------------------------------
-----------------------------------
the within Warrants, hereby irrevocably constituting and appointing
________________ Attorney to transfer said Warrants on the books of the Company,
with full power of substitution in the premises.
Dated: ___________________ ___________________________________
Signature of Registered Holder
Note: The signature on this assignment must correspond with the name as it
appears upon the face of the within Warrant Certificate in every particular,
without alteration or enlargement or any change whatever.
Signature Guaranteed: __________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)
-19-
[Letterhead of]
SHIMONOV, BARNEA & Co.
ADVOCATES
===============================================================================
February 22, 1999
Nur Macroprinters Ltd.
5 David Navon Street
Magsimim
Israel
Re: Nur Macroprinters Ltd. - Registration Statement on Form F-1
Dear Sirs;
We have acted as special Israeli counsel for Nur Macroprinters Ltd., an Israeli
company (the "Corporation"), in connection with the preparation and filing under
the United States Securities Act of 1993, as amended (the "Act"), of a
registration statement on Form F-1 (the "Registration Statement") with the
Securities and Exchange Commission in connection with:
1. Up to 6,759,444 Ordinary Shares par value NIS 1.0 each of the
Corporation, comprising part of the existing issued share capital of
the Corporation, which are to be sold by shareholders of the
Corporation, as detailed in the Registration Statement (the "Selling
Shareholders Shares").
2. Up to 1,805,039 Ordinary Shares par value NIS 1.0 each of the
Corporation issuable upon exercise of options issued by the Corporation
to past and present employees, consultants and directors of the
Corporation pursuant to the Corporation's 1995, 1997 and 1998 Stock
Option Plans, as amended (the "Option Shares").
<PAGE>
3. 555,000 Ordinary Shares par value NIS 1.0 each of the Corporation
issuable upon exercise of Warrants initially granted by the Corporation
to Josephthal & Co. (the "Warrant Shares").
As such special counsel, we have examined originals and copies, certified or
otherwise identified to our satisfaction, of all such agreements, certificates
and other statements of the Corporation's officers and other representatives,
and other documents as we have deemed necessary as a basis for this opinion. In
our examination we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
with the originals of all documents submitted to us as copies. We have, when
relevant facts material to our opinion were not independently established by us,
relied, to the extent we deemed such reliance proper, upon written or oral
statements of officers and other representatives of the Corporation.
In giving the opinion expressed herein, no opinion is expressed as to the laws
of any jurisdiction other than the State of Israel.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Selling Shareholders Shares have been duly and validly authorized
and are validly issued, fully paid and non-assessable.
2. The Option Shares have been duly authorized for issuance by the
Corporation, and upon issuance and delivery against payment therefor,
will be validly issued, fully paid and non-assessable.
3. The Warrant Shares have been duly authorized for issuance by the
Corporation, and upon issuance and delivery against payment therefor,
will be validly issued, fully paid and non-assessable.
We consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement and to the references to
our name under the headings "Legal Matters" in the Registration Statement. This
consent is not to be construed as an admission that we are a party whose consent
is required to be filed with the Registration Statement under the provisions of
the Act.
Very truly yours,
/s/ Shimonov Barnea & Co.
Shimonov Barnea & Co.
Amendment to the 1995 Israel Stock Option Plan
----------------------------------------------
This is an amendment (the "Amendment") to the 1995 Israel Stock Option Plan (the
"Plan") of NUR Advanced Technologies Ltd. (the "Company"), which has been
adopted and approved by the Board of Directors of the Company (the "Board") in
1998.
1. After Sub-section 2(c) of the Plan the following new Sub-section 2(d)
will be inserted as follows:
"(d) The Committee shall entitle each Israeli Employees (as defined
below), who is an eligible individuals (as detailed in paragraph 4,
below), within ten (10) days from the date of its decision to grant the
option to him, but prior to the execution of the Share Option Agreement,
to elect, by signing a statement in the form of Appendix A (the "Election
Notice"), to have the Options granted to him to be subject to either of
(i) a plan pursuant to Section 102 of the Income Tax Ordinance (New
Version) (the "Income Tax Ordinance") or (ii) a plan pursuant to Section
3 of the Income Tax Ordinance."
2. Sub-section 2(d), (e), (f) will become Sub-section 2(e), (f), (g)
respectively.
3. Sub-section 6(a) of the Plan will be substitute by the following new
version:
"The effective date of the grant of an Option (the "Date of Grant") shall
be the date specified by the Committee in its determination relating to
the award of such Option. The Committee shall promptly give the employee
written notice (the "Notice of Grant") of the grant of an Option and a
written share Option agreement (the "Share Option Agreement") shall
promptly be executed and delivered by and on behalf of the Company and the
employee (The Share Option Agreement shall be exercised immediately
following the receipt of the Election Notice). The terms of such Share
Option Agreement shall be determined by the Committee, subject to the
terms of the Plan."
4. Sub-section 6(e), (g), (h) will become Sub-section (c), (d), (e)
respectively.
5. The new Sub-section 6(c) will be substitute by the following new version:
"To the extent that any dividend is payable on the Stock under applicable
law, or the Articles of Association of the Company or under the Master
Plan, all Stock issued upon the exercise of Options (whether or not held
in the Trust (as hereinafter defined)) shall entitle the Beneficial
Employee thereof to receive dividends with respect thereto. For so long as
such Shares are held in the Trust (as hereinafter defined), any and all
dividends received by the Trustee (as hereinafter defined) on such Shares
shall be paid by the Trustee to the Beneficial Employee thereof, subject
to any required withholding of tax in respect thereof."
<PAGE>
6. The new Sub-section 6(d) shall be substitute by the following new version:
"Promptly following each Notice of Grant, the Company and the employee
shall sign the Stock Option Agreement, and the grant shall become
effective only when the Stock Option Agreement has been so signed. Each of
the Company and the employee shall receive and retain a copy of the Stock
Option Agreement. The Stock Option Agreement shall contain such terms and
provisions, not inconsistent with the Plan, as may be determined by the
Committee."
7. Sub-section 6(c) will become Sub-section 6(g) and the following changes
will be inserted:
a) Sub-section (d) will become a part of Sub-section (g).
b) The new Sub-section 6(g) will be substitute by the following version:
"Option Subject to Section 102: Anything herein to the contrary
notwithstanding, the Date of Grant of Options and elected to have their
Options issued under a plan pursuant to Section 102 to the Income Tax
Ordinance (the "102 Plan"), shall not be earlier than the date at which
the Trustee (as hereinafter defined) was approved by the Israeli
Commissioner of Income Tax.
All Options granted under the 102 Plan to Israeli Employees shall be
granted (and a copy of the Share Option Agreement shall be given) to a
trustee designated by the Board (the "Trustee") and approved by the
Israeli Commissioner of Income Tax and the Trustee shall hold each such
Option and the Shares issued upon exercise thereof in trust (the "Trust")
for the benefit of the employee in respect of whom such Option was granted
(the "Beneficial Employee"). By agreement with the Trustee, the Company
shall cause the Trustee (subject to the vesting provisions of paragraph
7(c) hereof) to exercise such Options by countersigning and delivering to
the Company a notice of exercise (the "Notice of Exercise"), upon receipt
of written instructions from the Beneficial Employee thereof, provided the
Beneficial Employee has made appropriate arrangements for the payment of
the exercise price of the Shares issuable upon such exercise.
Anything herein to the contrary notwithstanding, no Options or Stocks
granted to the Trustee pursuant to this sub-section (g) above shall be
released from the Trust until the later of (a) two (2) years after the
Date of Grant, or (b) the vesting of such Options pursuant to paragraph
7(c) hereof (such later date being hereinafter referred to as the "Release
Date"). Subject to the terms hereof, at any time after the Release Date
with respect to any Options or Shares, the following shall apply:
(i) Options granted, and/or Shares issued, to the Trustee shall continue
to be held by the Trustee, on behalf of the Beneficial Employee.
From and after the Release Date, upon the written
<PAGE>
request of any Beneficial Employee, the Trustee shall release from
the Trust the Options granted, and/or the Shares issued, on behalf
of such Beneficial Employee, by executing and delivering to the
Company such instrument(s) as the Company may require, giving due
notice of such release to such Beneficial Employee, provided,
however, that the Trustee shall not so release any such Options
and/or Shares to such Beneficial Employee unless the latter, prior
to, or concurrently with, such release, provides the Trustee with
evidence, satisfactory in form and substance to the Trustee, that
all taxes, if any, required to be paid upon such release have, in
fact, been paid.
(ii) Alternatively, from and after the Release Date, upon the written
instructions of the Beneficial Employee to sell any Shares issued
upon exercise of Options, the Trustee shall take such steps as may
be required to effect such sale and shall transfer such Shares to
the purchaser concurrently with the receipt, or after having made
suitable arrangements to secure the payment of the proceeds of the
purchase price in such transaction. The Trustee shall withhold from
such proceeds any and all taxes required to be paid in respect of
such sale, shall remit the amount so withheld to the appropriate tax
authorities and shall pay the balance thereof directly to the
Beneficial Employee, reporting to such Beneficial Employee and to
the Company the amount so withheld and paid to said tax
authorities."
8. After Sub-section 6(g) of the Plan the following new Sub-section 6(h) will
be inserted as follows:
"(h) Option Subject to Section 30: All Options granted under the Plan
to Israeli employees, who elected to have their Options issued under
a Plan pursuant to Section 3 to the Income Tax Ordinance (the "3
Plan") shall be granted (and a copy of the Share Option Agreement
shall be given) by the Company to a trustee designated by the Board
(who may be the Trustee), the Trustee shall hold each such Option in
trust (the "Trust") for the Beneficial Employee, and no Options
shall be released from the Trust until the vesting of such Option
pursuant to Section 7(c) hereof (the "Release Date"). From and after
the Release Date, upon the written request of any Beneficial
Employee, the Trustee shall release from the Trust the Options
granted and exercise them on behalf of such Beneficial Employee, by
executing and delivering to the Company such instrument(s) as the
Company may require, giving due notice of such release to such
Beneficial Employee, provided, however, that the Trustee shall not
so release and exercise any such Options on behalf of the Beneficial
Employee unless the latter, prior to, or concurrently with, such
release and exercise, provides the Trustee with evidence,
satisfactory in form and substance to the Trustee, that all taxes
and/or compulsory payments, if any, required to be paid upon such
release and exercise have, in fact, been paid."
The following exhibit constitutes a fair and accurate English translation of
the original copy of this document.
/s/ Erez Shachar
--------------------------
Erez Shacher
President and Chief Executive Officer
<PAGE>
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. Leasing Agreement
CONFIDENTIAL
Property Leasing Agreement
Between:
NIVELLEASE S.A., with registered offices at Ry Angon in 1490
Court-Saint-Etienne, set up by a deed executed and authenticated by the notary
Hourdeau in Wavre, on October 16, 1987, published in the appendices of the
Moniteur belge of November 6, 1987. Registered in the Register of Commerce at
Nivelles under the number 58.222 and with the VAT authorities under the number
432.218.835.
Represented here in compliance with the provisions of Article 15 of its statutes
by:
Mr. Philippe Remy, Executive Director, and
Mr. Bernard Fierens Gevaert, Chairman of the Executive Committee
of the first part,
and
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A., with registered offices at Waterloo
Office Park, Building E-F, Dreve Richelle no. 161 at 1410 Waterloo, registered
in the Register of Commerce at Nivelles.
Represented her in compliance with its statutes by
Mr. Yoram Ben Porat, Director, residing at 1180 UCCLE, Avenue Circulaire no.
108, and Mr. Carlos Sasson, Director, residing at 16 Kineret St., Kfar Saba,
Israel,
of the second part,
the following is set forth:
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A., specialized in the European
distribution and maintenance of large-format digital printers, wishes to expand
its activities.
NIVELLEASE S.A. intends to encourage investments with a view to promoting
employment, and generally, the economy of Walloon (French-speaking Belgian]
Brabant.
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. has requested that NIVELLEASE assist in
the development of its activities by participating in its financing by means of
granting a property lease.
Notwithstanding its position as landlord and lessor, the intervention of
NIVELLEASE is on an exclusively financial basis. Consequently, it is expressly
agreed that NIVELLEASE S.A. shall assume no liability nor obligation other than
financial, particularly in the areas of construction, delivery and use of the
buildings and of the guarantee, even with respect to hidden flaws.
The parties intend to use this agreement to settle the terms and conditions of
this property lease.
<PAGE>
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. Leasing Agreement
As a result, the spirit in which this agreement has been concluded and shall be
executed shall place supreme importance on good faith and on the industrial and
commercial partnership.
The clauses of this agreement should be interpreted in as reasonable and
constructive a light as should prevail in this type of relationship.
The following is agreed:
Article 1 - Preliminary Conditions
This agreement for the granting of a property lease shall take effect under a
suspensive condition:
- Ratification by the SOWAGEP of the resolution of the Board of
Directors of NIVELLEASE passed on October 9, 1996;
- Signature of the sale agreement between NIVELLEASE S.A. and U.M.
Engineering S.A. of building located at 8, rue du Bosquet, 1348
Louvain-la-Neuve (600m(2)) and a plot of 4,000 M(2), whose price has
been set at BF 18 million, excluding taxes.
Prior to the intervention of NIVELLEASE and the implementation of the provisions
of this agreement, the following conditions must be fulfilled by the company by
December 31, 1996 at the latest:
Commitment from the company to comply with the following comprehensive financial
package:
- Capital (subscribed and paid-up by NUR ADVANCED 30 million
TECHNOLOGIES LTD. Israel)
- Convertible subordinate loan NUR ADVANCED 30 million
TECHNOLOGIES LTD. (with no interest for five years, half
released in 1997 and the remaining half in 1998, non-
reimbursable before NIVELINVEST has been fully paid)
- NIVELINVEST investment credit 20 million
- NIVELLEASE property lease (purchase of the U.M. Engineering 23 million
building in Louvain-la-Neuve plus various expenses
Should these conditions not be met within the above-mentioned timetable,
NIVELLEASE shall be released from any obligation deriving from this agreement,
which shall be considered as null and void.
Article 2 - Description of the Property
2.1 In compliance with Article 18, paragraph 2 of the Value Added Tax Code
and Royal Decree no. 30 of December 29, 1992, NIVELLEASE undertakes and
grants to S.A. NUR ADVANCED TECHNOLOGIES (EUROPE) S.A., on whose behalf
its representative accepts and commits himself, the lease to the
following property:
District of Ottignies - Louvain-la-Neuve
A property located at Louvain-la-Neuve, 8 rue du Bosquet, 600 m(2) of
offices on a plot of land of approximately 4,000 m(2). This building,
which NIVELLEASE has purchased for
2
<PAGE>
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. Leasing Agreement
18 million, excluding legal and conversion expenses, whose cost is
estimated respectively at 2.25 million and 2.75 million (amounts which may
not be exceeded), is immediately leased by NUR ADVANCED TECHNOLOGIES
(EUROPE) S.A., which declares that it is perfectly acquainted with the
premises which constitute the object of this agreement, and does not
require provision of more ample information herein.
2.2 Appendices
The architectural plans shall be deposited by the parties as part of the
minutes of the notary DEKEYSER, in order to complete the above-mentioned
information.
2.3 Purpose
This property is intended primarily for use as administrative offices, a
demonstration, training and maintenance center.
2.4 Origin of the Property
The company NIVELLEASE is the owner of the aforesaid property, since it
has purchased it following a sale agreement signed on ..............at
Wavre.
2.5 Mortgage Clause
Throughout the duration of the lease, NIVELLEASE undertakes that the
above-mentioned property shall be free of all burdens of debts,
registrations, liens and mortgages.
Article 3 - Mandate
During the conversion of the building, in compliance with the estimates and
tenders submitted by the contractors selected by joint agreement, NUR ADVANCED
TECHNOLOGIES (EUROPE) S.A. shall assume - without prejudice to the legal and/or
contractual liability of the contractors - the duties and privileges of
Contracting Authority. It shall represent NIVELLEASE as its special authorized
agent vis-a-vis third parties. Consequently, without being able to appeal
against NIVELLEASE on account of bad workmanship, performance delays, fault of a
trade association, an order to suspend work, or any other cause, even force
majeure, NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. shall carry out, on its own
responsibility:
o Selection of the contractor(s), verification of their registration
and approval of status reports on the site and the work;
o Approval of payment of invoices issued by various suppliers;
o Monitoring and coordination of work, and all the measures relevant
to or required for the successful conclusion of the conversion, and
the respect of the agreed deadlines, prices and expenses.
The liability of NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. vis-a-vis NIVELLEASE
for the fulfillment of its mandate shall be that set forth in ordinary law with
respect to a mandate for which it has been remunerated, in all matters unless
otherwise set forth in this contract.
3
<PAGE>
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. Leasing Agreement
However, NIVELLEASE retains the right to intervene and take the initiative in
relations between the contracting authority and the trade association, on the
occasion of any decision or deed which would suspend, modify, complement or
amend previous contractual decisions, and in general, on any occasion on which
its intervention concerns the cost of the conversion, owner's responsibility,
performance schedules, the security or stability of the building.
For all jobs which have to date not been the object of a firm order, NUR
ADVANCED TECHNOLOGIES (EUROPE) S.A. undertakes to submit to NIVELLEASE or its
representative for signature all documents containing any kind of commitments
whatsoever on the part of the contracting authority. Copies of all bids, tenders
and estimates received by NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. shall
immediately be transferred by it to NIVELLEASE. Supplier invoices shall be drawn
up in the name of NIVELLEASE, owner of the industrial building which is the
object of the lease. NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. undertakes to
arrange with the suppliers involved in the construction of the building for
invoices to be paid at the latest 30 days from the end of the month. Should a
contractor or subcontractor default, NUR ADVANCED TECHNOLOGIES (EUROPE) S.A.
shall be able to entrust jobs to another contractor, who has proved that he
possesses the required capacities, is certified and has a good reputation, after
consultation with NIVELLEASE.
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. shall vouch to third parties for the
liability which may be assumed by NIVELLEASE in its capacity of contracting
authority for the jobs which are the object of this contract and their
continuation.
In order to cover this liability, NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. shall
take out, with a company proposed by NIVELLEASE, a policy covering the risks of
construction, including civil liability vis-a-vis third parties, whose scope and
methods shall have been approved by the parties, and shall provide NIVELLEASE
with proof of payment of premiums and of implementation of all measures
resulting therefrom.
Should NUR ADVANCED TECHNOLOGIES (EUROPE) S.A., in the execution of the
provisions of the preceding paragraph, be obliged to vouch to a third party for
the liability which may be assumed by NIVELLEASE, the latter shall immediately
subrogate NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. in the rights and lawsuits
that it may or could assert as a result or on the occasion of its liability
being called into question, with respect to the contractors.
This agreement expressly excludes all work, equipment, material, objects used to
decorate or convert the premises, all the more so if they are buildings by
nature, incorporation or purpose, which shall have been converted by NUR
ADVANCED TECHNOLOGIES (EUROPE) S.A. at its expense, in addition to the
description in Article 1, and which shall therefore remain the property of NUR
ADVANCED TECHNOLOGIES (EUROPE) S.A.
Notwithstanding this stipulation, said work, items of equipment, materials,
objects used in the decoration or conversion of premises, installed by NUR
ADVANCED TECHNOLOGIES (EUROPE) S.A. in the leased property, which are not
removed upon termination of the lease, shall be acquired by NIVELLEASE, without
compensation or expense, without prejudice to the right to demand the removal
thereof, with restoration of the premises to their original condition if it has
not expressly approved them.
4
<PAGE>
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. Leasing Agreement
Article 4 - Condition of Premises
A report on the condition of the premises shall be drawn up by both parties, at
their joint expense, in the month preceding the leasing of the above-mentioned
property.
Article 5
The building described in Article 2 is leased to NUR ADVANCED TECHNOLOGIES
(EUROPE) S.A. for the aforesaid purpose, with the express exclusion of:
o Any activity whose effect is to subject this lease to legislation
concerning commercial leases;
o Any activity requiring administrative authorization which has not
been obtained in advance;
o Any activity liable to affect the good condition of the premises and
their environment, the preservation of the building or of its
equipment, or to increase the maintenance expenses thereof, or, in a
general manner, to threaten its stability or reduce the market or
rental value thereof.
Article 6 - Rental - Duration - Option
6.1 The property lease contract is concluded for a non-reducible period of
FIFTEEN years which shall take effect on the first day of the month which
follows the signature of the sale agreement drawn up by a notary, as
described in Article 2, provided that this date is no later than March 31,
1997.
Upon expiration of this period, and for as long as NUR ADVANCED
TECHNOLOGIES (EUROPE) S.A. is in good order with respect to payment of the
quarterly property lease fees and expenses incumbent thereupon by virtue
of this agreement, NIVELLEASE grants it a purchase option as defined
below.
6.2 Purchase Option
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. shall have the option of
purchasing, on its own or by means of any person it shall designate, but
for whom it shall stand joint surety, the building and all the accessories
which are the object of this agreement, at a price of ten percent of the
investment, excluding VAT, to which NIVELLEASE has committed itself, i.e.,
on the basis of the estimate set forth in Article 2, BF 2,300,000 (two
million three hundred thousand Belgian francs).
The option price shall be readjusted:
a) In keeping with the real cost of expenses and work financed by
NIVELLEASE, according to a detailed account which shall be drawn up
no later than March 31, 1997;
b) Up to fifteen percent of the principal amount indicated in a)
above, in proportion to the change in the Consumer Price Index
(Sante index) in relation to the reference index (month of taking
possession, at the latest, March thirty-first, nineteen hundred and
ninety-seven).
For this readjustment the index of the month preceding the date of exercise of
option shall be taken into account.
5
<PAGE>
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. Leasing Agreement
Unless otherwise agreed by the parties, the exercise of the purchase option
shall take effect only upon expiration of the term of this lease.
It shall have to be exercised in accordance with the following procedure, on
penalty of foreclosure:
o NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. shall indicate to NIVELLEASE
its wish to exercise the option, by registered mail, addressed to
the registered office of NIVELLEASE between the twelfth and the
ninth month preceding the expiration of the lease.
o The option exercise letter shall be signed by a person authorized to
bind NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. in the purchase of a
property.
o NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. shall pay an advance payment
equal to twenty percent of the option price for the exercise of the
option. The balance of the option price and the fees for the sale
agreement drawn up by a notary shall be paid in cash upon signature
of the agreement, at the latest upon termination of this lease, by
the notary DEKEYSER (or his successor), if the parties do not agree
otherwise, at the expense of the purchaser.
6.3 Preferential right to continue the occupation of the premises by the
conclusion of a lease
Should NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. fail to exercise the purchase
option upon termination of the lease, it shall be able, provided that the
request to do so shall have been made at least six months before the end of this
lease, to obtain from NIVELLEASE, under no other condition, the finalization of
a lease, for a (renewable) term of three years. Unless otherwise agreed by the
parties, the lease shall be finalized in return for a rent corresponding to the
normal rental value of the property, set by an expert designated by the district
Justice of the Peace if the parties have failed to reach an amicable agreement,
all other provisions of this contract remaining applicable, with the exception
of the purchase option stipulated in Article 6 above.
The foreclosure which sanctions the default of the exercise of the option within
the above-mentioned timetable, shall however proceed only after NIVELLEASE sends
to NUR ADVANCED TECHNOLOGIES (EUROPE) S.A., by registered mail, or against
signed receipt, a reminder granting it one month to exercise said option, and
stating that foreclosure shall take place if it fails to fulfill the condition
within this period or in accordance with the stipulated procedures.
Article 7 - Quarterly Lease Fee - Index Linkage - Penalty Interest
7.1 This property lease is agreed and accepted in return for:
A. During the period of conversion of the leased premises, NUR ADVANCED
TECHNOLOGIES (EUROPE) S.A. shall pay to NIVELLEASE, on the eighth
day of each month from December 31, 1996, an interim fee, calculated
at the annual rate of 6.3% of the amounts disbursed by NIVELLEASE
for the cost, excluding VAT, of the purchase of the building, the
expenses and the conversion. Details of the amounts paid as well as
the details of the interim fees shall be communicated by NIVELLEASE
to NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. within the fifteen days
which follow each monthly expiration date.
6
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NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. Leasing Agreement
In the event of non-payment of the interim interest within eight
days after NIVELLEASE has sent a detailed account thereof, a penalty
interest of 9% shall be calculated on the amount of the detailed
account and shall be payable by right. This interim fee shall cease
on the first day of the month following the date upon which the
premises were made available, latest March 31, 1997.
B. After the premises are made available, NUR ADVANCED TECHNOLOGIES
(EUROPE) S.A. shall pay to NIVELLEASE by standing bank order, in
favor of account no. 271-0726713-21 of NIVELLEASE - or to any other
account which it shall subsequently indicate - every quarter - i.e.,
in principle, for the first time on June 30, 1997, a quarterly fee
corresponding to 2.487% of the amounts, excluding VAT, invested by
NIVELLEASE in the properties which are the object of this agreement,
since this investment was intended to include expenses for deeds,
fees of architects, experts, research departments, on-site
supervision, connections, supplier and contractor invoices,
insurance premiums, and generally, all amounts disbursed by
NIVELLEASE, including taxes or fees to public services, for the
construction, conversion and making available of the premises, with
the sole exception of those which shall have been recovered (inter
alia, VAT). The final amount of this quarterly fee shall be notified
by NIVELLEASE as soon as the accounts therefor have been drawn up.
In the event of a dispute between the parties, the quarterly fee
shall be temporarily set and payable on the basis of the above
projected estimate, adjusted in accordance with all documentary
evidence. On the basis of the projected estimate of the cost of the
investment (without either prejudicial commitment or acknowledgment
in the event of an overrun) this quarterly fee shall be set at BF
572,075 per quarter during the lease period.
7.2 Index Linkage of the Quarterly Fee
The quarterly fee thus determined shall be readjusted by right every
January 1, and for the first time on January 1, 2000, up to a limit of
fifteen percent of its amount (the balance of eighty-five percent
remaining unchanged), in proportion to the changes in the Consumer Price
Index (Sante index) published in the Moniteur belge, in accordance with
the following formula:
85% basic quarterly fee + 15% base x (new index / basic index)
in which the basic index is points (month of taking possession, latest
December 31, 1997) and the new index is that of the previous December.
In addition to this quarterly fee, NUR ADVANCED TECHNOLOGIES (EUROPE) S.A.
undertakes to pay throughout the period of this lease, the following
charges:
o Value Added Tax, as well as any other taxes whatsoever which are
payable owing to the above quarterly fee, or leasing charges:
o Taxes and fees due to company, municipal authorities or utilities,
such as water, gas, electricity, telephone, etc.
o The property estimate, its supplements, as well as all other taxes
relating to the leased property, its equipment or the activity which
takes place therein.
7
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NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. Leasing Agreement
Should NIVELLEASE have been subjected to or required to pay the above-mentioned
charges, or new ones, NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. shall be required
to reimburse NIVELLEASE in respect thereof upon its first demand.
7.3 Penalty Interest
For each arrears of more than fifteen days in payment of the
above-mentioned quarterly fee, penalty interest at an annual rate of 9%
shall be calculated, starting from the date of expiration of the quarterly
fee(s) in arrears.
Article 8 - Purpose of the Premises, Liability, Encumbrances
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. shall possess the property in accordance
with its aforesaid purpose. It shall not be able to modify it, nor pursue in
these premises any activity liable to decrease the value of the property, nor
threaten its stability or security. It shall be liable vis-a-vis third parties
for any damage caused by its action or that of the persons for which it is
responsible, inter alia, the occupants of the leased premises, invited third
parties or visitors, by the existence of the building, and, more generally, for
any circumstance which, owing to the leased property, could involve the
liability of NIVELLEASE.
This liability shall be covered by policies taken out with a company proposed by
NIVELLEASE, to which NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. shall prove payment
of the premiums.
Should NUR ADVANCED TECHNOLOGIES (EUROPE) S.A., in the course of implementing
the provisions of the preceding paragraph, stand surety vis-a-vis a third party
for the liability of NIVELLEASE, the latter shall immediately subrogate, without
guarantee, NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. in the rights and lawsuits
which it could assert owing to or upon such questioning of its liability, with
respect to contractors, architects, supervisory offices, etc.
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. shall be able to profit from any
encumbrances whatsoever which would benefit the leased property, as it shall
suffer, without recourse to NIVELLEASE, all those with which it is burdened.
This provision may not have the effect of conferring on any person whatsoever
more rights than would be justified by virtue of use, by the law or other normal
unstipulated rights. NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. may not confer upon
any person whatsoever any title whatsoever, which would burden the leased
property, without the agreement of NIVELLEASE.
Upon termination of the lease, NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. is
obliged, unless it exercises the purchase or rental option as described in
Article 6.3, to return the premises, free of any subletting agreement, charges
or collateral. It shall pay to NIVELLEASE all court or non-court costs, fines,
compensation or other, which could be claimed by any party whatsoever owing to
the leased property or this lease.
Article 9 - Maintenance - Repairs
Throughout the lease period, NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. undertakes
to support and carry out, without recourse to NIVELLEASE, any maintenance work
to the property, including repairs which, according to ordinary law, are for the
account
8
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NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. Leasing Agreement
of the lessor. This particular stipulation also includes repairs which are
necessary owing to the age of the buildings, or of the equipment therein, cases
of force majeure or accidents, as well as all other conversions which would be
required under the Regulations governing work premises and their safety.
It would not be able to demand, under this item, neither compensation, nor the
intervention of NIVELLEASE, nor a reduction in the quarterly fee.
Should it fail to perform any one of these operations, within three months from
formal notice sent to it by NIVELLEASE or its officer in charge, by simple
registered mail, or with signed receipt, NIVELLEASE would be entitled to have
the repairs carried out by a professional entity of its choice, and to
immediately recover the costs thereof from the defaulting party. To this end,
NIVELLEASE shall at any time be able to perform, either itself or by means of an
expert, an inspection of the premises. These visits shall be announced
approximately one week in advance, for the convenience of NUR ADVANCED
TECHNOLOGIES (EUROPE) S.A.
Article 10 - Modifications to the Building
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. shall be able to undertake
modifications, alterations or conversions, at the leased premises, with the
prior written consent of NIVELLEASE. The latter shall refuse its consent only
for reasons which are justified and objective.
Furthermore, it undertakes to countersign any request for an administrative
permit required insofar as the proposed modifications:
o Comply with the administrative regulations or have been authorized
by the competent authorities (building permit, commodo et incommodo,
inspection of work premises, etc.)
o Do not affect the stability or security of the building.
o Do not include any modification to the purpose or allocation of the
premises, and do not increase its liability as the owner of the
building.
No authorization is required from NIVELLEASE for interior conversions whose cost
is less than five hundred thousand francs (or if performed in phases, this
amount each quarter).
Article 11 - Extensions to the Building
Any construction which would increased its areas built on the ground by at least
thirty-three percent in relation to that indicated in the current plans is
considered an extension to the building.
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. shall be able to undertake similar
extensions under the conditions specified above in Article 10 for alterations
and modifications.
Should these extensions involve NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. in
recourse to external financing, in any form whatsoever, with a tangible security
on all or part of the leased property, NIVELLEASE retains the rights to
guarantee the finance of such work, by a leasing contract under usual market
conditions (rate, duration, method, etc.) in an agreement separate from this
one.
9
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NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. Leasing Agreement
This priority right shall be exercised as follows:
o NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. shall deposit with
NIVELLEASE all documents and estimates, and proof thereof,
pertaining to the projected extensions and their cost, its own means
of financing which it proposes to employ for this purpose, the
methods of financing which have been proposed to it, and the
amortization plan,
o NIVELLEASE shall benefit from a period of three months, from deposit
of said documents and proof, in order to exercise its preferential
right, itself or though any other company in which it might have a
holding or links of affiliation.
o Should NIVELLEASE not exercise its preferential rights, it shall
grant to NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. or to the
organization which is assuming the financing, a right over the area
whose duration shall be up to the termination of the lease, in
addition to the transferability of the purchase option.
These methods shall not be able to reduce the rights of NIVELLEASE
resulting from this document, and in addition, it shall have,
failing the exercise of the purchase option, the option to buy back
the extensions for which it shall have waived the right of access;
at their market value without being able to exceed their cost price
less amortization recognized by the tax authorities. In the event of
a difference of opinion with respect to this value, it shall be set
by an expert certified by the courts, chosen by the parties, or
failing this, by the president of the commercial court within the
jurisdiction of the leased premises.
Any amount which may be due for this item by NIVELLEASE to NUR
ADVANCED TECHNOLOGIES (EUROPE) S.A. shall automatically be offset
against any amounts which it would owe to NIVELLEASE by virtue of
any of the provisions of this contract, and its subsequent
amendments.
Article 12 - Subletting - Transfer of Lease
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. is forbidden to sublet all or part of
the leased premises, or to transfer its lease, other than with the prior written
consent of NIVELLEASE, which shall only refuse its consent for justified and
objective reasons.
In return for the joint liability of NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. and
its sublessor or transferee, for all commitments resulting from this contract,
NIVELLEASE shall accept the subletting or transfer of the lease at the
initiative of NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. insofar as it itself
continues to occupy and utilize at least fifty-one percent of the built-up area
of the leased premises, including, all extensions. The subletting or transfer
(partial) of the lease may not result in modifying the purpose or allocation of
the premises.
In the event of a merger or takeover of NUR ADVANCED TECHNOLOGIES (EUROPE) S.A.,
the new company, or the company which is taking over, shall, in compliance with
ordinary law, be subrogated to the rights and obligations of the company which
has been merged or taken over, with the exception of the right of NIVELLEASE to
demand separation of assets.
10
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NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. Leasing Agreement
Article 13 - Insurance - Destruction of Buildings
Throughout the duration of this contract, the leased premises are, as expressly
agreed by the parties, entirely at the risk of NUR ADVANCED TECHNOLOGIES
(EUROPE) S.A. which stands surety vis-a-vis NIVELLEASE for their loss,
deterioration, deprivation of possession (including that which results from
flaws in construction), partial or total destruction, whatever the cause, even
if it is the result of an accident or force majeure.
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. therefore undertakes to maintain a
permanent insurance policy, "for the account of NIVELLEASE", which covers the
leased premises for civil liability with respect to buildings, against risks of
fire, lightning, explosions, implosions, tempests, falling aircraft, water
damage, broken glass and related risks, for the costs of reconstruction, claims
from neighbors, preservation, fire department and clearing, and closure of the
property for at least one year.
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. shall, upon any demand, prove regular
payment of the premiums.
The policy shall stipulate that the company is prohibited from suspending its
effectiveness without having warned NIVELLEASE at least three months in
advance. An original copy of the policy and of its amendments shall be
transmitted to NIVELLEASE by the insurance company.
For its own property, NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. is obliged to take
out "waiver of appeal" insurance vis-a-vis NIVELLEASE.
These policies shall specify that in the event of disaster, the compensation,
insofar as it directly concerns the property and the execution of this
agreement, shall be directly acquired by NIVELLEASE which shall subsequently
allocate it, at the expense of NUR ADVANCED TECHNOLOGIES (EUROPE) S.A., to
necessary repairs, to the reconstruction of buildings, to the continuation of
payment of the quarterly fee, and to the settlement of all rental charges due,
according to their nature, from NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. to
NIVELLEASE by priority right, before any compensation for the damage it has
incurred from it, a subtenant, transferee or third party.
Article 14
In the event of disaster during the period of the lease of the property, the
rights and obligations between the parties shall be settled as follows:
o NIVELLEASE shall subrogate, without guarantee, NUR ADVANCED
TECHNOLOGIES (EUROPE) S.A. in all the rights and lawsuits which it
shall be able to assert, owing to or on the occasion of a disaster,
with respect to contractors, architects, supervisory offices, etc.
o NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. waives the right to appeal
against NIVELLEASE. This waiver of appeal also applies to any
occupant of the property.
o NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. assumes the burden, so that
NIVELLEASE is neither concerned by this matter nor pursued with
respect thereto, of any liability resulting from Article 1384, 1386
and 1721 of the Civil Code.
11
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NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. Leasing Agreement
o The quarterly fee and other charges pertaining to the building are
owed by NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. to NIVELLEASE,
irrespective of the period during which the property remains closed,
until it becomes fully functional.
o NIVELLEASE shall be bound to allocate the compensation it shall
receive to the above-mentioned purposes, so as to enable the leased
premises to be made available to NUR ADVANCED TECHNOLOGIES (EUROPE)
SA. within the shortest possible time.
o The compensation relating to the equipment, furniture, inventories
or other damages incurred by NUR ADVANCED TECHNOLOGIES (EUROPE) S.A.
shall be directly paid to it by the insurer.
Article 15 - Ten-Year Guarantee
In the matter of a ten-year guarantee, (Articles 1792 and 2270 of the Civil
Code), NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. shall warn NIVELLEASE of any
action liable to involve the liability of the architects and contractor, and
shall avoid any initiative which would reduce or suspend the application of this
legal guarantee. In the event of a construction flaw covered by said guarantee,
NIVELLEASE shall subrogate, without guarantee, NUR ADVANCED TECHNOLOGIES
(EUROPE) S.A. in all the rights and lawsuits which it could consequently assert
with respect to contractors, architects, supervisory offices, etc., on condition
that it allocates this compensation to the necessary repairs.
Article 16 - Expropriation
From the moment when one of the parties is informed that expropriation
proceedings, or more generally, any administrative decision liable to restrict
use or allocation of the leased property, is instituted, it is required to
advise its co-contracting party thereof, and to keep it informed of negotiations
in progress and proposals made.
In the event of expropriation for reasons of public interest, or any similar act
of a public authority which would assign the possession of the leased property,
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. shall have no appeal against NIVELLEASE,
and shall be obliged to claim compensation for the damage it has incurred
directly from the expropriating Authority. The compensation owing to it shall
not, however, reduce that which is due to NIVELLEASE. This provision in no way
prevents the parties from acting jointly against the expropriating party and
from agreeing, depending on circumstances, to divide the compensation to be
received.
Article 17 - Taxes and Charges
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. shall bear, instead of NIVELLEASE, all
taxes, costs or fees which usually pertain to a leased property. It shall also
bear Value Added Tax owed as a result of quarterly fee or fees for which it is
responsible vis-a-vis NIVELLEASE.
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. shall not be permitted to rescind any
contract for subscription to public services (water, electricity, gas,
telephone, telex, cable TV broadcasts, etc.) with which the leased property
shall be equipped, and shall be obliged to pay the charges and fees on every
due date.
12
<PAGE>
NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. Leasing Agreement
All subscriptions signed by NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. concerning
this property shall automatically be transferred to NIVELLEASE upon termination
of the lease, unless the property shall be repurchased by NUR ADVANCED
TECHNOLOGIES (EUROPE) S.A.
All charges, rights and fees relating to or resulting from the execution of this
agreement, such as charges for legal fees or costs, declaration of debt,
registration of pledge or lessor rights, shall be borne and paid for by NUR
ADVANCED TECHNOLOGIES (EUROPE) S.A. which expressly commits thereto, and may be
recovered therefrom, plus penalty interest at the lawful rate plus twenty
percent.
Article 18 - Bank Guarantee
A first-class bank shall issue, upon the demand and at the expense of NUR
ADVANCED TECHNOLOGIES (EUROPE) S.A. a bank guarantee payable upon first demand,
in favor of NIVELLEASE, for an amount equal to one quarterly fee payment.
This guarantee shall be provided within two weeks of temporary acceptance of the
buildings.
Article 19 - Early Rescission of the Property Leasing Contract
Should NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. default on any of its obligations
to NIVELLEASE, which result from this agreement or from its continuation, it
shall have the right to seek, at the expense of NUR ADVANCED TECHNOLOGIES
(EUROPE) S.A., a court-ordered rescission of the property leasing contract.
This shall especially be the case:
o If the information provided by NUR ADVANCED TECHNOLOGIES (EUROPE)
S.A. with a view to setting up this agreement is recognized as false
or inexact.
o If during the conversion of the building, NUR ADVANCED TECHNOLOGIES
(EUROPE) S.A. takes initiatives, or signs contracts containing
clauses which are opposed to the legitimate interests of NIVELLEASE
with contractors or subcontractors, or does not immediately inform
NIVELLEASE of agreements signed with these professional entities.
o If NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. is in arrears for more
than four quarterly fees, if its credit is undermined, or if it is
declared bankrupt or wound-up.
o If, with the exception of the merger or takeover of NUR ADVANCED
TECHNOLOGIES (EUROPE) S.A., it sells the goodwill of the business
conducted in the leased property without the prior consent of
NIVELLEASE; NIVELLEASE states that this goodwill is pledged.
In all instances whereby the property leasing contract is canceled through fault
of NUR ADVANCED TECHNOLOGIES (EUROPE) S.A., NIVELLEASE shall have the right to
compensation, especially covering charges for the re-letting and closure of the
property, which shall be calculated, pursuant to the following principle: number
of quarters that property remains vacant (where the maximum is the number of
quarters still to run until the conclusion of the agreement) multiplied by the
current quarterly fee linked to the index in accordance with Article 7 of this
contract.
13
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NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. Leasing Agreement
Should NUR ADVANCED TECHNOLOGIES (EUROPE) S.A., upon termination of the lease,
fail to carry out the maintenance and repairs required to restore the premises
to good condition, all failures to meet its contractual obligations shall result
in compensation to be paid by them for the amount of the repairs to be carried
out and the period that the premises remain closed as a result thereof.
Article 20 - Preferential right in case of sale of the property
Should NIVELLEASE sells the leased property, within the duration of the lease to
be concluded in compliance with Article 6.3, NUR ADVANCED TECHNOLOGIES (EUROPE)
S.A. shall have a preferential right to purchase the property under the same
conditions and for the same fees as those agreed with a third party.
In order to exercise this right, the parties agree to consult the provisions of
the law with respect to preemptive rights in favor of buyers of rural
properties, including the right to exercise the preemption by a third party to
be chosen by NUR ADVANCED TECHNOLOGIES (EUROPE) S.A.
In law, the sale of the property neither concludes nor suspends any of the
provisions of this agreement, since the purchaser, on the assumption that NUR
ADVANCED TECHNOLOGIES (EUROPE) S.A. has not preempted, is purely or simply
subrogated to the seller vis-a-vis NUR ADVANCED TECHNOLOGIES (EUROPE) S.A.
Article 21 - Competent Jurisdiction
Any dispute arising from this contract, from its interpretation or its
execution, shall fall within the competence of the courts and tribunals of the
district in which the leased property is located.
Article 22
For execution of this contract, the parties elect domicile: for NIVELLEASE - its
registered offices, and NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. - the leased
property.
The parties may however use the real headquarters of the other party in order to
serve notice or communicate legitimately.
Automatic Exemption from Registration
Provided that contractual registration is made, in order to guarantee the
obligations stipulated for NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. up to the
amount of BF 5,000,000, a registration which would only be valid on the date of
the contract, NIVELLEASE exempts the registrar of mortgages concerned from
automatically registering this agreement.
Issued at Court-Saint-Etienne, November 25, 1996 in two copies, of which one for
each party.
For NIVELLEASE S.A. For NUR ADVANCED TECHNOLOGIES
Signatory of the first part (EUROPE) S.A.
Signatory of the second part
Ph. Remy Yoram Ben-Porat
Executive Director Director
B. Fierens Gevaert Carlos Sasson
President of the Executive Committee Director
14
LEASE AGREEMENT BETWEEN
WHTR REAL ESTATE LIMITED PARTNERSHIP, AS LANDLORD, AND
NUR AMERICA, INC., AS TENANT
DATED AS OF JULY 10, 1998
<PAGE>
TABLE OF CONTENTS
Page
1. LEASE GRANT .........................................................1
2. TERM ................................................................1
3. RENT ................................................................1
4. DELINQUENT PAYMENT; HANDLING CHARGES ................................4
5. SECURITY DEPOSIT ....................................................4
6. LANDLORD'S OBLIGATIONS; UTILITIES ...................................4
7. IMPROVEMENTS; ALTERATIONS; REPAIRS; MAINTENANCE .....................6
8. USE .................................................................7
9. ASSIGNMENT AND SUBLETTING ...........................................7
10. INSURANCE; WAIVERS; SUBROGATION; INDEMNITY ..........................8
11. SUBORDINATION; ATTORNMENT; NOTICE TO LANDLORD'S MORTGAGEE ...........9
12. RULES AND REGULATIONS...............................................10
13. CONDEMNATION........................................................10
14. FIRE OR OTHER CASUALTY..............................................11
15. PERSONAL PROPERTY TAXES.............................................11
16. EVENTS OF DEFAULT...................................................12
17. REMEDIES............................................................12
18. PAYMENT BY TENANT; NON-WAIVER.......................................13
19. ENVIRONMENTAL PROTECTION............................................14
20. SURRENDER OF PREMISES...............................................15
21. HOLDING OVER........................................................15
22. CERTAIN RIGHTS RESERVED BY LANDLORD.................................16
23. SIGNS...............................................................16
24. PARKING; TRAILER....................................................16
25. MISCELLANEOUS.......................................................17
26. OTHER PROVISIONS....................................................20
EXHIBIT A - LEGAL DESCRIPTION OF THE LAND...............................23
EXHIBIT B - RULES AND REGULATIONS.......................................24
EXHIBIT C - TENANT FINISH WORK..........................................26
EXHIBIT D - RENEWAL OPTION..............................................28
EXHIBIT E - SITE PLAN...................................................29
-i-
<PAGE>
LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Lease") is hereby entered into as of July
10, 1998 by and between WHTR REAL ESTATE LIMITED PARTNERSHIP, a Delaware limited
partnership ("Landlord"), and NUR AMERICA, INC., a Delaware corporation
("Tenant).
1. Lease Grant. Subject to the terms and provisions of this Lease,
Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the
entire building known as and located at 33 Needham Street, Newton, Massachusetts
(the "Premises" or the "Building"). The parcel of land on which the Building is
located (the "Land") is described on Exhibit A. Also located on the Land is a
building known as and located at 19-31 Needham Street, Newton, Massachusetts
(the "19-31 Building"). The term "Buildings" as used herein shall mean
collectively the Building and the 19-31 Building. The term "Property" as used
herein shall mean collectively the Buildings, the Land and all other
improvements now or hereafter located on the Land.
2. Term. The term of this Lease shall be one hundred twenty-three
(123) months commencing on August 1, 1998 (the "Commencement Date") and expiring
at 5:00 p.m., on October 31, 2008 (the "Term", which definition shall include
all renewals or extensions of the initial Term), unless earlier terminated
pursuant to the provisions of this Lease.
3. Rent
(a) Basic Rent. "Basic Rent" (herein so called) shall be the following
amounts for the following periods of time:
<TABLE>
<CAPTION>
Time Period Monthly Basic Rent Annual Basic Rent
----------- ------------------ -----------------
<S> <C> <C>
August 1, 1998 - October 31, 2001 $2,800.00 $33,600.00
November 1, 2001 - October 31, 2003 $3,150.00 $37,800.00
November 1, 2003 - October 31, 2005 $3,500.00 $42,000.00
November 1, 2005 - October 31, 2008 $3,850.00 $46,200.00
</TABLE>
(b) Payment. Tenant shall timely pay to Landlord Basic Rent and all
additional sums to be paid by Tenant to Landlord under this Lease (collectively,
the "Rent"), without deduction or set off, at Landlord's address provided for in
this Lease or as otherwise specified by Landlord. Basic Rent, adjusted as herein
provided, shall be payable monthly in advance, and shall be accompanied by all
applicable state and local sales or use taxes. The monthly installment of Basic
Rent for the fourth month of the Term shall be payable contemporaneously with
the execution of this Lease; thereafter, Basic Rent shall be payable on the
first day of each month beginning on the first day of the fifth full calendar
month of the Term. Basic Rent shall conditionally abate during the first three
(3) months of the Term. Notwithstanding such abatement of Basic Rent (i) all
other sums due under this Lease, including Additional Rent (as defined in
Section 3(c) below), shall be payable as provided in this Lease, and (ii) any
increases in Basic Rent set forth in this
<PAGE>
Lease shall occur on the dates scheduled therefor. The abatement of Basic Rent
provided for in this Section 3(b) is conditioned upon Tenant's full and timely
performance of all of Tenant's obligations under this Lease. If at any time
during the Term an Event of Default (as defined in Section 16 below) occurs,
then the abatement of Basic Rent provided for in this Section 3(c) shall
immediately become void, and Tenant shall pay to Landlord upon demand, in
addition to all other amounts due to Landlord under this Lease, the full amount
of all Basic Rent herein abated.
(c) Additional Rent.
(1) Tenant shall pay, as additional rent (the "Additional Rent"), for
each calendar year or partial calendar year during the Term, an amount equal to
the sum of (i) Tenant's Proportionate Share (defined below) of the total
Operating Costs (defined below) (other than Building Operating Costs or 19-31
Building Operating Costs, each as defined below) for the calendar year in
question plus (ii) 100% of the Building Operating Costs for the calendar year in
question plus (iii) Tenant's Proportionate Share of the total Taxes (defined
below) for the calendar year in question. Landlord may collect such amount in a
lump sum, which shall be due within 30 days after Landlord furnishes to Tenant
the Operating Costs and Tax Statement (defined below). Alternatively, Landlord
may make a good faith estimate of the Additional Rent to be due by Tenant for
any calendar year or part thereof during the Term, and Tenant shall pay to
Landlord, on the Commencement Date and on the first day of each calendar month
thereafter, an amount equal to the estimated Additional Rent for such calendar
year or part thereof divided by the number of months therein. From time to time,
Landlord may estimate and re-estimate the Additional Rent to be due by Tenant
and deliver a copy of the estimate or re-estimate to Tenant. Thereafter, the
monthly installments of Additional Rent payable by Tenant shall be appropriately
adjusted in accordance with the estimations so that, by the end of the calendar
year in question, Tenant shall have paid all of the Additional Rent as estimated
by Landlord. Any amounts paid based on such an estimate shall be subject to
adjustment as herein provided when actual Operating Costs are available for each
calendar year.
(2) The phrase "Operating Costs" shall mean all expenses and
disbursements (subject to the limitations set forth below) that Landlord incurs
in connection with the ownership, operation, management, maintenance, repair and
replacement of the Property, determined in accordance with sound accounting
principles consistently applied, including, but not limited to, the following
costs: (A) wages and salaries (including management fees) of all employees
engaged in the operation, maintenance, and security of the Property, including
taxes, insurance and benefits relating thereto; (B) all supplies and materials
used in the operation, maintenance, repair, replacement, and security of the
Property; (C) costs for improvements made to the Property which, although
capital in nature, are expected to reduce the normal operating costs of the
Property, as well as capital improvements made in order to comply with any law
hereafter promulgated by any governmental authority, as amortized over the
useful economic life of such improvements as determined by Landlord in its
reasonable discretion; (D) cost of all utilities, except the cost of utilities
reimbursable to Landlord by the Property's tenants other than pursuant to a
provision similar to this Section 3.(d); (E) insurance expenses; (F) repairs,
replacements, and general maintenance of the Property; and (G) service or
maintenance contracts with independent contractors for the operation,
maintenance, repair, replacement, or security of
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the Property (including, without limitation, alarm service, window cleaning, and
elevator maintenance).
Operating Costs shall not include costs for (i) capital improvements
made to the Property, other than capital improvements described in Section
3.(d)(2)(C) and except for items which are generally considered maintenance and
repair items, such as painting of common areas, replacement of carpet in
elevator lobbies, and the like; (ii) repair, replacements and general
maintenance paid by proceeds of insurance or by Tenant or other third parties;
(iii) interest, amortization or other payments on loans to Landlord; (iv)
depreciation; (v) leasing commissions; (vi) legal expenses for services, other
than those that benefit the Property's tenants generally (e.g., tax disputes);
(vii) renovating or otherwise improving space for occupants of the Buildings or
vacant space in the Buildings; (viii) Taxes (defined below), and (ix) federal
income taxes imposed on or measured by the income of Landlord from the operation
of the Property.
The phrase "Building Operating Costs" shall mean Operating Costs
attributable exclusively to the ownership, operation, management, maintenance,
repair and replacement of the Building.
The phrase "19-31 Building Operating Costs" shall mean Operating Costs
attributable exclusively to the ownership, operation, management, maintenance,
repair and replacement of the 19-31 Building.
(3) The term "Taxes" shall mean taxes, assessments, and governmental
charges whether federal, state, county or municipal, and whether they be by
taxing districts or authorities presently taxing or by others, subsequently
created or otherwise, and any other taxes and assessments attributable to the
Property (or its operation), excluding, however, penalties and interest thereon
and federal and state taxes on income (if the present method of taxation changes
so that in lieu of the whole or any part of any Taxes, there is levied on
Landlord a capital tax directly on the rents received therefrom or a franchise
tax, assessment, or charge based, in whole or in part, upon such rents for the
Property, then all such taxes, assessments, or charges, or the part thereof so
based, shall be deemed to be included within the term "Taxes" for purposes
hereof). Taxes shall include the costs of consultants retained in an effort to
lower taxes and all costs incurred in disputing any taxes or in seeking to lower
the tax valuation of the Property.
(4) By April 1 of each calendar year, or as soon thereafter as
practicable, Landlord shall furnish to Tenant a statement of Operating Costs and
Taxes for the previous calendar year (the "Operating Costs and Tax Statement").
If the Operating Costs and Tax Statement reveals that Tenant paid more for
Additional Rent than the actual amount due for the calendar year for which such
statement was prepared, then Landlord shall promptly credit (or reimburse if the
Lease has terminated and Tenant is not then in default hereunder) Tenant for
such excess; likewise, if Tenant paid less than the actual amount due, then
Tenant shall promptly pay Landlord such deficiency.
(5) As used herein, Tenant's "Proportionate Share" shall be 6.56%,
which is the percentage obtained by dividing the rentable square feet of floor
area in the Premises,
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which is stipulated to be 4,200 rentable square feet, by the total number of
square feet of floor area in the Buildings, which is stipulated to be 64,010
rentable square feet.
(6) If this Lease commences or ends on a day other than the first day
or last day of a calendar year, respectively, the Additional Rent for the
calendar year during which this Lease commences or ends shall be prorated.
4. Delinquent Payment; Handling Charges. All past due payments
required of Tenant hereunder shall bear interest from the date due until paid at
lesser of eighteen percent (18%) per annum (the "Interest Rate") or the maximum
lawful rate of interest; additionally, Landlord may charge Tenant a fee equal to
5% of the delinquent payment to reimburse Landlord for its cost and
inconvenience incurred as a consequence of Tenant's delinquency. In no event,
however, shall the charges permitted under this Section 4 or elsewhere in this
Lease, to the extent they are considered to be interest under law, exceed the
maximum lawful rate of interest.
5. Security Deposit. Contemporaneously with the execution of this
Lease, Tenant shall pay to Landlord $8,400.00 (the "Security Deposit"), which
shall be held by Landlord to secure Tenant's performance of its obligations
under this Lease. The Security Deposit is not an advance payment of Rent or a
measure or limit of Landlord's damages upon an Event of Default (defined in
Section 16). Landlord may, from time to time and without prejudice to any other
remedy, use all or a part of the Security Deposit to perform any obligation
Tenant fails to perform hereunder. Following any such application of the
Security Deposit, Tenant shall pay to Landlord on demand the amount so applied
in order to restore the Security Deposit to its original amount. Provided that
Tenant has performed all of its obligations hereunder, Landlord shall, within 30
days after the Term ends, return to Tenant the portion of the Security Deposit
which was not applied to satisfy Tenant's obligations. The Security Deposit may
be commingled with other funds, and no interest shall be paid thereon. If
Landlord transfers its interest in the Premises and the transferee assumes
Landlord's obligations under this Lease, then Landlord may assign the Security
Deposit to the transferee and Landlord thereafter shall have no further
liability for the return of the Security Deposit.
6. Landlord's Obligations; Utilities.
(a) Landlord's Maintenance Obligations. Landlord shall provide
janitorial services to the Premises on weekdays, other than holidays, for
Building-standard installations. Landlord shall maintain the common areas and
facilities of the Property in reasonably good order and condition, except for
damage caused by Tenant, or its employees, agents or invitees.
(b) Electricity. Electricity shall be distributed to the Premises by
the electric utility company servicing the Building; and Landlord shall permit
Landlord's wires and conduits, to the extent available, suitable and safely
capable, to be used for such distribution. Tenant at its cost shall make all
necessary arrangements with the electric utility company for metering and paying
for electric current furnished to the Premises.
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<PAGE>
(c) Heat and Air Conditioning. Heat and air conditioning to the
Premises shall be provided by the gas and electric utility companies servicing
the Premises, and Landlord shall permit the heat and air conditioning units
within and/or on the roof of the Building which are dedicated to servicing the
Premises to be used for providing such heat and air conditioning. Tenant shall
make all arrangements with the gas and electric utility companies for the
furnishing of heat and air conditioning to the Premises and for metering and
paying for such service.
(d) Water and Sewer. Landlord shall provide to the Premises cold water
at a temperature supplied by the City of Newton water mains for lavatory, toilet
and other approved purposes and hot water for lavatory purposes only from
regular Building supply at prevailing temperatures; provided, however, if Tenant
requires, uses or consumes water for any purpose (e.g., kitchen purposes, shower
facilities, etc.) other than lavatory and toilet purposes, Landlord may, at
Tenant's sole cost and expense, install a meter or meters to measure the water
so supplied, in which case Tenant shall, upon Landlord's request, reimburse
Landlord for the cost of the water (including heating and cooling thereof)
consumed in such areas and the sewer use charges resulting therefrom. All costs
and expenses incurred by Landlord in connection with furnishing water and sewer
service to the Premises shall be included as part of Operating Costs pursuant to
Section 3 above except for the cost of furnishing such services to the Premises
which are paid for directly by Tenant to Landlord pursuant to the preceding
sentence.
(e) Excess Utility Use. Landlord shall not be required to furnish
electrical current for equipment that requires more than 220 volts or other
equipment whose electrical energy consumption exceeds normal office usage.
Tenant shall not install any electrical equipment requiring special wiring or
requiring voltage in excess of 220 volts or otherwise exceeding Building
capacity unless approved in advance by Landlord. The use of electricity in the
Premises shall not exceed the capacity of existing feeders and risers to or
wiring in the Premises. Any risers or wiring required to meet Tenant's excess
electrical requirements shall, upon Tenant's written request, be installed by
Landlord, at Tenant's cost, if, in Landlord's judgment, the same are necessary
and shall not cause permanent damage to the Building or the Premises, cause or
create a dangerous or hazardous condition, entail excessive or unreasonable
alterations, repairs, or expenses, or interfere with or disturb other tenants of
the Buildings. If Tenant uses machines or equipment in the Premises which affect
the temperature otherwise maintained by the air conditioning system or otherwise
overload any utility, Landlord may install supplemental air conditioning units
or other supplemental equipment in the Premises, and the cost thereof, including
the cost of installation, operation, use, and maintenance, shall be paid by
Tenant to Landlord within ten days after Landlord has delivered to Tenant an
invoice therefor.
(f) Restoration of Services. Landlord shall use reasonable efforts to
restore any service required of it that becomes unavailable; however, such
unavailability shall not render Landlord liable for any damages caused thereby,
be a constructive eviction of Tenant, constitute a breach of any implied
warranty, or entitle Tenant to any abatement of Tenant's obligations hereunder.
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<PAGE>
7. Improvements; Alterations; Repairs; Maintenance.
(a) Improvements; Alterations. Improvements to the Premises shall be
installed at Tenant's expense only in accordance with plans and specifications
which have been previously submitted to and approved in writing by Landlord. No
alterations or physical additions in or to the Premises may be made without
Landlord's prior written consent, which shall not be unreasonably withheld or
delayed; however, Landlord may withhold its consent to any alteration or
addition that would affect the Building's structure or its HVAC, plumbing,
electrical, or mechanical systems. Tenant shall not paint or install lighting or
decorations, signs, window or door lettering, or advertising media of any type
on or about the Premises without the prior written consent of Landlord, which
shall not be unreasonably withheld or delayed; however, Landlord may withhold
its consent to any such painting or installation which would affect the
appearance of the exterior of the Building or of any common areas of the
Property. All alterations, additions, or improvements made in or upon the
Premises shall, at Landlord's option, either be removed by Tenant prior to the
end of the Term (and Tenant shall repair all damage caused thereby), or shall
remain on the Premises at the end of the Term without compensation to Tenant.
All alterations, additions, and improvements shall be constructed, maintained,
and used by Tenant, at its risk and expense, in accordance with all Laws (as
defined in Section 24(s) below); Landlord's approval of the plans and
specifications therefor shall not be a representation by Landlord that such
alterations, additions, or improvements comply with any Law.
(b) Repairs, Maintenance. Tenant shall maintain the Premises in a good
and clean, safe and operable condition, and shall make all necessary repairs and
replacements of or to the Premises and shall not permit or allow to remain any
waste or damage to any portion of the Premises. Tenant shall repair or replace,
subject to Landlord's direction and supervision, any damage to the Property
caused by a Tenant Party (as defined in Section 25(s) below). If Tenant fails to
make such repairs or replacements within 15 days after the occurrence of such
damage, then Landlord may make the same at Tenant's cost. If any such damage
occurs outside of the Premises, then Landlord may elect to repair such damage at
Tenant's expense, rather than having Tenant repair such damage. The cost of all
repair or replacement work performed by Landlord under this Section 7 shall be
paid by Tenant to Landlord within 10 days after Landlord has invoiced Tenant
therefor.
(c) Performance of Work. All work described in this Section 7 shall be
performed only by Landlord or by contractors and subcontractors approved in
writing by Landlord. Tenant shall cause all contractors and subcontractors to
procure and maintain insurance coverage naming Landlord as an additional insured
against such risks, in such amounts, and with such companies as Landlord may
reasonably require. All such work shall be performed in accordance with all Laws
and in a good and workmanlike manner so as not to damage the Premises, the
Property, or the components thereof. Tenant shall provide sworn statements,
including the names, addresses and copies of contracts for all contractors, and
upon completion of any work shall promptly furnish Landlord with sworn owner's
and contractor's statements and full and final waivers of lien covering all
labors and materials included in the work in question.
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(d) Mechanic's Liens. Tenant shall not permit any mechanic's liens to
be filed against the Premises or the Property for any work performed, materials
furnished, or obligation incurred by or at the request of Tenant. If such a lien
is filed, then Tenant shall, within 10 days after Landlord has delivered notice
of the filing thereof to Tenant, either pay the amount of the lien or diligently
contest such lien and deliver to Landlord a bond or other security reasonably
satisfactory to Landlord. If Tenant fails to timely take either such action,
then Landlord may pay the lien claim, and any amounts so paid, including
expenses and interest, shall be paid by Tenant to Landlord within 10 days after
Landlord has invoiced Tenant therefor.
8. Use. Tenant shall continuously occupy and use the Premises only for
sales, administration and as a demonstration facility for wide format digital
printers and, subject to the provisions of Section 19 below, for the storage of
materials (including, without limitation, parts, inks, solvents and substrates)
and equipment in connection therewith (the "Permitted Use") and for no other use
or purpose and shall comply with all Laws relating to the use, condition, access
to, and occupancy of the Premises. The Premises shall not be used for any use
which is disreputable, creates extraordinary fire hazards, or results in an
increased rate of insurance on the Building or its contents. If, because of a
Tenant Party's acts, the rate of insurance on the Building or its contents
increases, then Tenant shall pay to Landlord the amount of such increase on
demand. Tenant shall conduct its business and control each other Tenant Party so
as not to create any nuisance or unreasonably interfere with other tenants or
Landlord in its management of the Property.
9. Assignment and Subletting.
(a) Transfers; Consent. Tenant shall not, without the prior written
consent of Landlord, (1) assign, transfer, or encumber this Lease or any estate
or interest herein, whether directly or by operation of law, (2) permit any
other entity to become Tenant hereunder by merger, consolidation, or other
reorganization, (3) if Tenant is an entity other than a corporation whose stock
is publicly traded, permit the transfer of an ownership interest in Tenant so as
to result in a change in the current control of Tenant, (4) sublet any portion
of the Premises, (5) grant any license, concession, or other right of occupancy
of any portion of the Premises, or (6) permit the use of the Premises by any
parties other than Tenant (any of the events listed in Section 9.(a)(1) through
9.(a)(6) being a "Transfer"). If Tenant requests Landlord's consent to a
Transfer, then Tenant shall provide Landlord with a written description of all
terms and conditions of the proposed Transfer, copies of the proposed
documentation, and the following information about the proposed transferee: name
and address; reasonably satisfactory information about its business and business
history; its proposed use of the Premises; banking, financial, and other credit
information; and general references sufficient to enable Landlord to determine
the proposed transferee's creditworthiness and character. Landlord shall not
unreasonably withhold its consent to any assignment or subletting of the
Premises, provided that the proposed transferee (A) is creditworthy, (B) has a
good reputation in the business community, (C) does not engage in business
similar to those of other tenants in the Buildings, and (D) is not another
occupant of the Buildings or person or entity with whom Landlord is negotiating
to lease space in the Buildings; otherwise, Landlord may withhold its consent in
its sole discretion. Concurrently with Tenant's notice of any request for
consent to a Transfer, Tenant shall pay to Landlord a fee of $500.00 to defray
Landlord's expenses in reviewing such request,
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and Tenant shall also reimburse Landlord immediately upon request for its
attorneys' fees incurred in connection with considering any request for consent
to a Transfer. If Landlord consents to a proposed Transfer, then the proposed
transferee shall deliver to Landlord a written agreement whereby it expressly
assumes Tenant's obligations hereunder; however, any transferee of less than all
of the space in the Premises shall be liable only for obligations under this
Lease that are properly allocable to the space subject to the Transfer for the
period of the Transfer. No Transfer shall release Tenant from its obligations
under this Lease, but rather Tenant and its transferee shall be jointly and
severally liable therefor. Landlord's consent to any Transfer shall not waive
Landlord's rights as to any subsequent Transfers. If an Event of Default occurs
while the Premises or any part thereof are subject to a Transfer, then Landlord,
in addition to its other remedies, may collect directly from such transferee all
rents becoming due to Tenant and apply such rents against Rent. Tenant
authorizes its transferees to make payments of rent directly to Landlord upon
receipt of notice from Landlord to do so. Tenant shall pay for the cost of any
demising walls or other improvements necessitated by a proposed subletting or
assignment.
(b) Cancellation. Landlord may, within 30 days after submission of
Tenant's written request for Landlord's consent to an assignment or subletting,
cancel this Lease as to the portion of the Premises proposed to be sublet or
assigned as of the date the proposed Transfer is to be effective. If Landlord
cancels this Lease as to any portion of the Premises, then this Lease shall
cease for such portion of the Premises and Tenant shall pay to Landlord all Rent
accrued through the cancellation date relating to the portion of the Premises
covered by the proposed Transfer. Thereafter, Landlord may lease such portion of
the Premises to the prospective transferee (or to any other person) without
liability to Tenant. Notwithstanding anything in this Section 9(b) to the
contrary, Tenant shall have a one-time right to sublease all or any part of the
Premises for a term not to exceed 12 months without Landlord having the right to
terminate this Lease pursuant to this Section 9(b); however, the provisions of
Section 9(a) and 9(c) shall apply to such sublease.
(c) Additional Compensation. Tenant shall pay to Landlord, immediately
upon receipt thereof, the excess of (1) all compensation received by Tenant for
a Transfer less the costs reasonably incurred by Tenant with unaffiliated third
parties in connection with such Transfer (i.e., brokerage commissions, tenant
finish work, and the like) over (2) the Rent allocable to the portion of the
Premises covered thereby.
10. Insurance; Waivers; Subrogation; Indemnity.
(a) Insurance. Tenant shall maintain throughout the Term the following
insurance policies: (1) commercial general liability insurance (in one or more
separate policies, including an umbrella liability policy) in amounts of
$2,000,000 per occurrence with $3,000,000 in the aggregate or such other amounts
as Landlord may from time to time reasonably require, insuring Tenant, Landlord,
Landlord's agents and their respective affiliates against all liability for
injury to or death of a person or persons or damage to property arising from the
use and occupancy of the Premises, (2) insurance covering the full value of
Tenant's property and improvements, and other property (including property of
others) in the Premises, (3) contractual liability insurance sufficient to cover
Tenant's indemnity obligations hereunder and (4) worker's compensation
insurance, containing a
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waiver of subrogation endorsement acceptable to Landlord. Tenant's insurance
shall provide primary coverage to Landlord when any policy issued to Landlord
provides duplicate or similar coverage, and in such circumstance Landlord's
policy will be excess over Tenant's policy. Tenant shall furnish to Landlord
certificates of such insurance and such other evidence satisfactory to Landlord
of the maintenance of all insurance coverages required hereunder, and Tenant
shall obtain a written obligation on the part of each insurance company to
notify Landlord at least 30 days before cancellation or a material change of any
such insurance policies. All such insurance policies shall be in form, and
issued by companies, reasonably satisfactory to Landlord.
(b) Waiver of Negligence; No Subrogation. Landlord and Tenant each
waives any claim it might have against the other for any injury to or death of
any person or persons or damage to or theft, destruction, loss, or loss of use
of any property (a "Loss"), to the extent the same is insured against under any
insurance policy that covers the Property, the Premises, Landlord's or Tenant's
fixtures, personal property, leasehold improvements, or business, or, in the
case of Tenant's waiver, is required to be insured against under the terms
hereof, regardless of whether the negligence of the other party caused such
Loss; however, Landlord's waiver shall not include any deductible amounts on
insurance policies carried by Landlord or to any coinsurance penalty which
Landlord may sustain. Each party shall cause its insurance carrier to endorse
all applicable policies waiving the carrier's rights of recovery under
subrogation or otherwise against the other party.
(c) Indemnity. Subject to Section 10.(b), Tenant shall defend,
indemnify, and hold harmless Landlord and its representatives and agents from
and against all claims, demands, liabilities, causes of action, suits,
judgments, damages, and expenses (including attorneys' fees) arising from (1)
any Loss arising from any occurrence on the Premises or (2) Tenant's failure to
perform its obligations under this Lease, except to the extent caused by the
negligence or willful misconduct of Landlord. This indemnity provision shall
survive termination or expiration of this Lease. If any proceeding is filed for
which indemnity is required hereunder, Tenant agrees, upon request therefor, to
defend the indemnified party in such proceeding at its sole cost utilizing
counsel satisfactory to the indemnified party.
11. Subordination; Attornment; Notice to Landlord's Mortgagee.
(a) Subordination. This Lease shall be subordinate to any deed of
trust, mortgage, or other security instrument, or any ground lease, master
lease, or primary lease, that now or hereafter covers all or any part of the
Premises (the mortgagee under any such mortgage or the lessor under any such
lease is referred to herein as a "Landlord's Mortgagee"). Any Landlord's
Mortgagee may elect, at any time, unilaterally, to make this Lease superior to
its mortgage, ground lease, or other interest in the Premises by so notifying
Tenant in writing.
(b) Attornment. Tenant shall attorn to any party succeeding to
Landlord's interest in the Premises, whether by purchase, foreclosure, deed in
lieu of foreclosure, power of sale, termination of lease, or otherwise, upon
such party's request, and shall execute such agreements confirming such
attornment as such party may reasonably request.
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(c) Notice to Landlord's Mortgagee. Tenant shall not seek to enforce
any remedy it may have for any default on the part of Landlord without first
giving written notice by certified mail, return receipt requested, specifying
the default in reasonable detail, to any Landlord's Mortgagee whose address has
been given to Tenant, and affording such Landlord's Mortgagee a reasonable
opportunity to perform Landlord's obligations hereunder.
12. Rules and Regulations. Tenant shall comply with the rules and
regulations of the Property which are attached hereto as Exhibit C. Landlord
may, from time to time, change such rules and regulations for the safety, care,
or cleanliness of the Property and related facilities, provided that such
changes will not unreasonably interfere with Tenant's use of the Premises.
Tenant shall be responsible for the compliance with such rules and regulations
by each Tenant Party. In the case of any conflict between the provisions of this
Lease and any such rules and regulations, the provisions of this Lease shall
control.
13. Condemnation.
(a) Total Taking. If the entire Property or Premises are taken by
right of eminent domain or conveyed in lieu thereof (a "Taking"), this Lease
shall terminate as of the date of the Taking.
(b) Partial Taking - Tenant's Rights. If any part of the Building
becomes subject to a Taking and such Taking will prevent Tenant from conducting
its business in the Premises in a manner reasonably comparable to that conducted
immediately before such Taking for a period of more than 120 days, then Tenant
may terminate this Lease as of the date of such Taking by giving written notice
to Landlord within 30 days after the Taking, and Rent shall be apportioned as of
the date of such Taking. If Tenant does not terminate this Lease, then Rent
shall be abated on a reasonable basis as to that portion of the Premises
rendered untenantable by the Taking.
(c) Partial Taking - Landlord's Rights. If any material portion, but
less than all, of the Property becomes subject to a Taking, or if Landlord is
required to pay any of the proceeds received for a Taking to a Landlord's
Mortgagee, then Landlord may terminate this Lease by delivering written notice
thereof to Tenant within 30 days after such Taking, and Rent shall be
apportioned as of the date of such Taking. If Landlord does not so terminate
this Lease, then this Lease will continue, but if any portion of the Premises
has been taken, Rent shall abate as provided in the last sentence of Section
13.(b).
(d) Award. If any Taking occurs, then Landlord shall receive the entire
award or other compensation for the Property or the portion thereof taken, and
Tenant may separately pursue a claim (to the extent it will not reduce
Landlord's award) against the condemnor for the value of Tenant's personal
property which Tenant is entitled to remove under this Lease, the unamortized
cost of the Work (as defined in Exhibit D attached hereto) to the extent paid
for by Tenant, moving costs, loss of business, and other claims it may have.
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14. Fire or Other Casualty
(a) Repair Estimate. If the Premises or the Building are damaged by
fire or other casualty (a "Casualty ), Landlord shall, within 60 days after such
Casualty, deliver to Tenant a good faith estimate (the "Damage Notice") of the
time needed to repair the damage caused by such Casualty.
(b) Landlord's and Tenant's Rights. If a material portion of the
Premises or the Building is damaged by Casualty such that Tenant is prevented
from conducting its business in the Premises in a manner reasonably comparable
to that conducted immediately before such Casualty and Landlord estimates that
the damage caused thereby cannot be repaired within 180 days after the Casualty,
then Tenant may terminate this Lease by delivering written notice to Landlord of
its election to terminate within 30 days after the Damage Notice has been
delivered to Tenant. If Tenant does not so timely terminate this Lease, then
(subject to Section 14.(c)) Landlord shall repair the Building or the Premises,
as the case may be, as provided below, and Rent for the portion of the Premises
rendered untenantable by the damage shall be abated on a reasonable basis from
the date of damage until the completion of the repair.
(c) Landlord's Rights. If a Casualty damages a material portion of the
Building, and Landlord makes a good faith determination that restoring the
Premises would be uneconomical, or if Landlord is required to pay any insurance
proceeds arising out of the casualty to a Landlord's Mortgagee, then Landlord
may terminate this Lease by giving written notice of its election to terminate
within 30 days after the Damage Notice has been delivered to Tenant, and Basic
Rent and Additional Rent shall be abated as of the date of the Casualty.
(d) Repair Obligation. If neither party elects to terminate this Lease
following a Casualty, then Landlord shall, within a reasonable time after such
Casualty, begin to repair the Building and the Premises and shall proceed with
reasonable diligence to restore the Building and Premises to substantially the
same condition as they existed immediately before such Casualty; however,
Landlord shall not be required to repair or replace any of the furniture,
equipment, fixtures, and other improvements which may have been placed by, or at
the request of, Tenant or other occupants in the Building or the Premises, and
Landlord's obligation to repair or restore the Building or Premises shall be
limited to the extent of the insurance proceeds actually received by Landlord
for the Casualty in question.
15. Personal Property Taxes. Tenant shall be liable for all taxes
levied or assessed against personal property, furniture, or fixtures placed by
Tenant in the Premises. If any taxes for which Tenant is liable are levied or
assessed against Landlord or Landlord's property and Landlord elects to pay the
same, or if the assessed value of Landlord's property is increased by inclusion
of such personal property, furniture or fixtures and Landlord elects to pay the
taxes based on such increase, then Tenant shall pay to Landlord, upon demand,
the part of such taxes for which Tenant is primarily liable hereunder; however,
Landlord shall not pay such amount if Tenant notifies Landlord that it will
contest the validity or amount of such taxes before Landlord makes such payment,
and thereafter diligently proceeds with such contest in accordance with law and
if the non-
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payment thereof does not pose a threat of loss or seizure of the Property or
interest of Landlord therein or impose any fee or penalty against Landlord.
16. Events of Default. Each of the following occurrences shall be an
"Event of Default":
(a) Tenant's failure to pay Rent within 5 days after Landlord has
delivered notice to Tenant that the same is due; however, an Event of Default
shall occur hereunder without any obligation of Landlord to give any notice if
Landlord has given Tenant written notice under this Section 16.(a) on more than
two occasions during the 12 month interval preceding such failure by Tenant;
(b) Tenant abandons the Premises or any substantial portion thereof;
(c) Tenant fails to provide any estoppel certificate as called for in
this Lease and such failure shall continue for 10 days after written notice
thereof from Landlord to Tenant;
(d) Tenant's failure to perform, comply with, or observe any other
agreement or obligation of Tenant under this Lease and the continuance of such
failure for a period of more than 30 days after Landlord has delivered to Tenant
written notice thereof; and
(e) The filing of a petition by or against Tenant (the term "Tenant"
shall include, for the purpose of this Section 16.(e), any guarantor of Tenant's
obligations hereunder) (1) in any bankruptcy or other insolvency proceeding; (2)
seeking any relief under any state or federal debtor relief law; (3) for the
appointment of a liquidator or receiver for all or substantially all of Tenant's
property or for Tenant's interest in this Lease; or (4) for the reorganization
or modification of Tenant's capital structure; however, if such a petition is
filed against Tenant, then such filing shall not be an Event of Default unless
Tenant fails to have the proceedings initiated by such petition dismissed within
90 days after the filing thereof.
11. Remedies. Upon an Event of Default, Landlord may, in addition to
all other rights and remedies afforded Landlord hereunder, take any of the
following actions:
(a) Terminate this Lease by giving Tenant written notice thereof, in
which event Tenant shall immediately surrender and vacate the Premises and
deliver possession thereof to Landlord and shall pay to Landlord the sum of (1)
all Rent accrued hereunder through the date of termination, (2) all amounts
dues under Section 18.(a), and (3) an amount equal to (A) the total Rent that
Tenant would have been required to pay for the remainder of the Term plus
Landlord's estimate of aggregate expenses of reletting to the Premises, minus
(B) the then present fair rental rate value of the Premises for such period; or
(b) Terminate Tenant's right to possess the Premises without
terminating this Lease by giving written notice thereof to Tenant, in which
event Tenant shall immediately surrender and vacate the Premises and deliver
possession thereof to Landlord and shall pay to Landlord (1) all Rent and other
amounts accrued hereunder to the date of
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termination of possession (2) all amounts due from time to time under Section
18.(a), and (3) all Rent and other net sums required hereunder to be paid by
Tenant during the remainder of the Term, diminished by any net sums thereafter
received by Landlord through reletting the Premises during such period, after
deducting all costs incurred by Landlord in reletting the Premises. Landlord
shall use reasonable efforts to relet the Premises on such terms as Landlord in
its sole discretion may determine (including a term different from the Term,
rental concessions, and alterations to, and improvement of, the Premises);
however, Landlord shall not be obligated to relet the Premises before leasing of
the portions of the Buildings. Landlord shall not be liable for, nor shall
Tenant's obligations hereunder be diminished because of, Landlord's failure to
relet the Premises or to collect rent due for such reletting. Tenant shall not
be entitled to the excess of any consideration obtained by reletting over the
Rent due hereunder. Reentry by Landlord in the Premises shall not affect
Tenant's obligations hereunder for the unexpired Term; rather, Landlord may,
from time to time, bring an action against Tenant to collect amounts due by
Tenant, without the necessity of Landlord's waiting until the expiration of the
Term. Unless Landlord delivers written notice to Tenant expressly stating that
it has elected to terminate this Lease, all actions taken by Landlord to
dispossess or exclude Tenant from the Premises shall be deemed to be taken under
this Section 17.(b). If Landlord elects to proceed under this Section 17.(b) it
may at any time elect to terminate this Lease under Section 17.(a).
Any and all remedies set forth in this Lease: (i) shall be in addition
to any and all other remedies Landlord may have at law or in equity; (ii) shall
be cumulative; and (iii) may be pursued successively or concurrently as Landlord
may elect. The exercise of any remedy by Landlord shall not be deemed an
election of remedies or preclude Landlord from exercising any other remedies in
the future. Notwithstanding the foregoing, Landlord shall only recover its
damages allowed hereunder once.
18. Payment by Tenant; Non-Waiver
(a) Payment by Tenant. Upon any Event of Default, Tenant shall pay to
Landlord all costs incurred by Landlord (including court costs and reasonable
attorneys' fees and expenses) in (1) obtaining possession of the Premises, (2)
removing and storing Tenant's or any other occupant's property, (3) repairing,
restoring, altering, remodeling, or otherwise putting the Premises into good
repair and condition, (4) reletting all or any part of the Premises (including
brokerage commissions), (5) performing Tenant's obligations which Tenant failed
to perform, and (6) enforcing, or advising Landlord of, its rights, remedies,
and recourses arising out of the Event of Default. To the full extent permitted
by law, Landlord and Tenant agree the federal and state courts of Massachusetts
shall have exclusive jurisdiction over any matter relating to or arising from
this Lease and the parties' rights and obligations under this Lease.
(b) No Waiver. Landlord's acceptance of Rent following an Event of
Default shall not waive Landlord's rights regarding such Event of Default. No
waiver by Landlord of any violation or breach of any of the terms contained
herein shall waive Landlord's rights regarding any future violation of such
term. Landlord's acceptance of any partial payment of Rent shall not waive
Landlord's rights with regard to the remaining portion of the Rent that is due,
regardless of any endorsement or other statement on any instrument
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delivered in payment of Rent or any writing delivered in connection therewith;
accordingly, Landlord's acceptance of a partial payment of Rent shall not
constitute an accord and satisfaction of the full amount of the Rent that is
due.
19. Environmental Protection. Notwithstanding anything in this Lease
to the contrary, Tenant shall not cause or permit any Hazardous Substances (as
defined below) to be used, stored, handled, generated, transported,
manufactured, produced, released, discharged or disposed of in, on, under, or
about the Premises except for such Hazardous Substances as are normally utilized
in the operation of Tenant's Permitted Uses and are necessary to Tenant's
business thereof. Notwithstanding anything in this Lease to the contrary, any
such Hazardous Substances permitted on the Premises pursuant to the preceding
sentence, and all containers therefor, shall be used, kept, stored, transported
and disposed of in compliance with all Environmental Laws (as defined below).
Upon Landlord's request from time to time, Tenant shall provide Landlord with a
written list of all Hazardous Substances which Tenant has brought upon the
Premises, the approximate quantities of such Hazardous Substances and a detailed
written description of the methods by which Tenant stores, uses and disposes of
such Hazardous Substances. Landlord's right of access to the Premises under
Section 22 of this Lease shall include, without limitation, the right to make
inspections (without, however, any obligation to do so) to determine whether or
not Tenant is complying with the requirements of this Section 19.
Tenant shall indemnify, protect, hold harmless and defend (with
counsel selected by Tenant, but subject to Landlord's prior written approval,
which approval shall not be unreasonably withheld or delayed), Landlord and its
subsidiary corporations and investment entities (and each of their subsidiary
corporations and investment entities), predecessors and successors in interest,
assigns, officers, directors, employees, managers, agents, contractors and
servants, and each of them in all capacities including individually
(collectively, the "Landlord's Parties"), from and against all claims, costs,
damages (but not including consequential damages) (including, without
limitation, any and all amounts paid for settlement of claims, attorneys' fees
and consultant and expert fees), fines, judgments, penalties, losses,
liabilities and expenses suffered or incurred by Landlord's Parties, or any of
them, arising directly or indirectly out of the actual or suspected use,
storage, handling, generation, transportation, manufacture, production, release,
discharge or disposal of Hazardous Substances on, in, under or about the
Premises by Tenant and its successors in interest, assigns, subtenants,
officers, directors, employees, managers, agents and servants, or any of them.
The provisions of this paragraph shall survive the expiration or earlier
termination of the Term.
As used herein, "Hazardous Substances" shall mean any chemical,
compound, material, mixture or substance that is now or hereafter defined or
listed in, or otherwise classified pursuant to, any Environmental Laws as a
"hazardous substance", "hazardous material", "hazardous waste", "extremely
hazardous waste", "infectious waste", "toxic substance", "toxic pollutant" or
any other formulation intended to define, list, or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity or toxicity, including any petroleum or petroleum products,
polychlorinated biphenyls, chlorofluorocarbons, asbestos, radon, natural gas,
natural gas liquids, liquefied natural gas or synthetic gas usable for fuel (or
mixtures of a natural gas and such synthetic gas). As used herein,
"Environmental Laws" means any and all present and future,
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federal, state and local laws, rules and regulations, requirements under permits
issued with respect thereto, and any other requirements of any federal, state
or local governmental authority relating to the environment, or to any Hazardous
Substance or to any activity involving Hazardous Substances, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. 9601 et. seq., as amended, the Resource Conservation and Recovery
Act, 42 U.S.C. 6901 et. seq., as amended, the Clean Water Act, 33 U.S.C. 1251
et. seq., as amended, the Clean Air Act, 42 U.S.C. 7401 et. seq., as amended,
the Toxic Substance Control Act, 15 U.S.C. 2601 et. seq., as amended, the Safe
Drinking Water Act, 42 U.S.C. 300 f-j, as amended, and Massachusetts General
Laws Chapter 21E.
20. Surrender of Premises. No act by Landlord shall be deemed an
acceptance of a surrender of the Premises, and no agreement to accept a
surrender of the Premises shall be valid unless it is in writing and signed by
Landlord. At the expiration or termination of this Lease, Tenant shall deliver
to Landlord the Premises with all improvements located therein in good repair
and condition, broom-clean, reasonable wear and tear (and condemnation and
Casualty damage not caused by Tenant, as to which Sections 13 and 14 shall
control) excepted, and shall deliver to Landlord all keys to the Premises.
Provided that Tenant has performed all of its obligations hereunder, Tenant may
remove all unattached trade fixtures, furniture, and personal property placed in
the Premises by Tenant and any telephone switch, alarm system, exhaust system
and racking system installed by Tenant at its cost, and shall remove such
alterations, additions, improvements, trade fixtures, personal property,
equipment, wiring, and furniture as Landlord may request. Tenant shall repair
all damage caused by such removal. All items not so removed shall be deemed to
have been abandoned by Tenant and may be appropriated, sold, stored, destroyed,
or otherwise disposed of by Landlord without notice to Tenant and without any
obligation to account for such items. The provisions of this Section 20 shall
survive the end of the Term.
21. Holding Over. If Tenant fails to vacate the Premises at the end of
the Term, then Tenant shall be a tenant-at-sufferance and, in addition to all
other damages and remedies to which Landlord may be entitled for such holding
over, Tenant shall pay for use and occupancy of the Premises, in addition to the
other Rent, a daily Basic Rent equal to the greater of (a) 200% of the daily
Basic Rent payable during the last month of the Term, or (b) 200% of the
prevailing rental rate in the Building for similar space. The provisions of this
Section 21 shall not be deemed to limit or constitute a waiver of any other
rights or remedies of Landlord provided herein or at law. If Tenant fails to
surrender the Premises upon the termination or expiration of this Lease, in
addition to any other liabilities to Landlord accruing therefrom, Tenant shall
protect, defend, indemnify and hold Landlord harmless from all loss, costs
(including reasonable attorneys' fees) and liability resulting from such
failure, including, without limiting the generality of the foregoing, any claims
made by any succeeding tenant founded upon such failure to surrender, and any
lost profits to Landlord resulting therefrom.
22. Certain Rights Reserved by Landlord. Provided that the exercise of
such rights does not unreasonably interfere with Tenant's occupancy of the
Premises, Landlord shall have the following rights:
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(a) To decorate and to make inspections, repairs, alterations,
additions, changes, or improvements, whether structural or otherwise, in and
about the Property, or any part thereof; at reasonable times after reasonable
prior oral or written notice to Tenant (except in the event of an emergency), to
enter upon the Premises and, during the continuance of any such work, to
temporarily close doors, entryways, public space, and corridors in the Property;
to interrupt or temporarily suspend Building services and facilities; to change
the name of the Building or the Property; and to change the arrangement and
location of entrances or passageways, doors, and doorways, corridors, elevators,
stairs, restrooms, or other public parts of the Property;
(b) To take such reasonable measures as Landlord deems advisable for
the security of the Property and its occupants; evacuating the Property for
cause, suspected cause, or for drill purposes; temporarily denying access to the
Property; and closing the Buildings after normal business hours and on Sundays
and holidays, subject, however, to Tenant's right to enter the Building when the
Building is closed after normal business hours under such reasonable regulations
as Landlord may prescribe from time to time; and
(c) After reasonable prior oral or written notice to Tenant, to enter
the Premises at reasonable hours to show the Premises to prospective purchasers,
lenders, or, during the last 6 months of the Term, tenants.
23. Signs. Except for signs which are located wholly within the
interior of the Premises and which are not visible from the exterior of the
Premises, no signs shall be placed, erected, maintained or painted by Tenant at
any place upon the Premises or the Property. Notwithstanding the foregoing,
subject to Landlord's approval as to the design, size and location thereof,
Tenant may erect 1 sign on the exterior of the Building.
24. Parking; Trailer. Subject to reasonable rules and regulations from
time to time made by Landlord but without charge to Tenant, Tenant shall have
the exclusive right to use for parking for its customers and invitees only those
parking spaces identified as the "Customer Parking Spaces" on the site plan
attached hereto as Exhibit E and incorporated herein by this reference (the
"Site Plan") and the exclusive right to use for parking for its employees and
officers only that area identified as the "Employee Parking Area" on the Site
Plan. Notwithstanding any other provisions of this Lease to the contrary, Tenant
shall have no right to park in any parking spaces located on the Land other than
the "Customer Parking Spaces" and other than those parking spaces within the
"Employee Parking Area".
Landlord hereby grants to Tenant the right throughout the Term to
maintain a trailer in the approximate location shown on the Site Plan. Tenant
shall have sole responsibility for the maintenance and repair of such trailer
and agrees to maintain such trailer in a good, clean and safe condition
throughout the Term. Tenant acknowledges and agrees that all of the terms and
provisions of this Lease applicable to Tenant's obligations with respect to the
Premises shall apply as well to such trailer including, without limitation, the
provisions of Section 10 of this Lease with respect to insurance and indemnity,
the provisions of Section 7 of this Lease with respect to the maintenance and
repair of such trailer, the provisions of Section 8 of this Lease with respect
to the permitted use of such trailer, the provisions of Section 19 of this Lease
with respect to Hazardous
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Substances used, stored, handled, generated, transported, manufactured,
produced, released, discharged or disposed of in, on, under or about such
trailer, and the provisions of Section 22 of this Lease with regard to the
reserved rights of Landlord. As provided in Section 20 of this Lease, at the
expiration or earlier termination of this Lease, Tenant shall remove such
trailer and restore the Property to its condition prior to the locating of such
trailer on the Property.
25. Miscellaneous.
(a) Landlord Transfer. Landlord may transfer any portion of the
Property and any of its rights under this Lease. If Landlord assigns its rights
under this Lease, then Landlord shall thereby be released from any further
obligations hereunder, provided that the assignee assumes Landlord's obligations
hereunder in writing.
(b) Landlord's Liability. The liability of Landlord to Tenant for any
default by Landlord under the terms of this Lease shall be limited to Tenant's
actual direct, but not consequential, damages therefor and shall be recoverable
only from the equity of Landlord in the Property, and Landlord shall not be
personally liable for any deficiency.
(c) Force Majeure. Other than for Tenant's obligations under this
Lease that can be performed by the payment of money (e.g., payment of Rent and
maintenance of insurance), whenever a period of time is herein prescribed for
action to be taken by either party hereto, such party shall not be liable or
responsible for, and there shall be excluded from the computation of any such
period of time, any delays due to strikes, riots, acts of God, shortages of
labor or materials, war, governmental laws, regulations, or restrictions, or any
other causes of any kind whatsoever which are beyond the control of such party.
(d) Brokerage. Neither Landlord nor Tenant has dealt with any broker
or agent in connection with the negotiation or execution of this Lease, other
than Fallon Hines & O'Connor Inc. and Casler and Company (the "Brokers"). Tenant
and Landlord shall each indemnify the other against all costs, expenses,
attorneys' fees, and other liability for commissions or other compensation
claimed by any broker or agent claiming the same by, through, or under the
indemnifying party. Landlord shall be responsible for the payment of a brokerage
commission to the Brokers pursuant to a separate agreement or agreements between
Landlord and the Brokers.
(e) Estoppel Certificates. From time to time, Tenant shall furnish to
any party designated by Landlord, within 10 days after Landlord has made a
request therefor, a certificate signed by Tenant confirming and containing such
factual certifications and representations as to this Lease as Landlord may
reasonably request.
(f) Notices. All notices and other communications given pursuant to
this Lease shall be in writing and shall be (1) mailed by first class, United
States Mail, postage prepaid, certified, with return receipt requested, and
addressed to the parties hereto at the address specified next to their signature
block, (2) hand delivered to the intended address, or (3) sent by prepaid
telegram, cable, facsimile transmission, or telex followed by a confirmatory
letter. All notices shall be effective upon delivery to the address of the
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addressee. The parties hereto may change their addresses by giving notice
thereof to the other in conformity with this provision.
(g) Separability. If any clause or provision of this Lease is illegal,
invalid, or unenforceable under present or future laws, then the remainder of
this Lease shall not be affected thereby and in lieu of such clause or
provision, there shall be added as a part of this Lease a clause or provision as
similar in terms to such illegal, invalid, or unenforceable clause or provision
as may be possible and be legal, valid, and enforceable.
(h) Amendments; and Binding Effect. This Lease may not be amended
except by instrument in writing signed by Landlord and Tenant. No provision of
this Lease shall be deemed to have been waived by Landlord unless such waiver is
in writing signed by Landlord, and no custom or practice which may evolve
between the parties in the administration of the terms hereof shall waive or
diminish the right of Landlord to insist upon the performance by Tenant in
strict accordance with the terms hereof. The terms and conditions contained in
this Lease shall inure to the benefit of and be binding upon the parties hereto,
and upon their respective successors in interest and legal representatives,
except as otherwise herein expressly provided. This Lease is for the sole
benefit of Landlord and Tenant, and, other than Landlord's Mortgagee, no third
party shall be deemed a third party beneficiary hereof.
(i) Quiet Enjoyment. Provided Tenant has performed all of its
obligations hereunder, Tenant shall peaceably and quietly hold and enjoy the
Premises for the Term, without hindrance from Landlord or any party claiming by,
through, or under Landlord, but not otherwise, subject to the terms and
conditions of this Lease.
(j) No Merger. There shall be no merger of the leasehold estate hereby
created with the fee estate in the Premises or any part thereof if the same
person acquires or holds, directly or indirectly, this Lease or any interest in
this Lease and the fee estate in the leasehold Premises or any interest in such
fee estate.
(k) No Offer. The submission of this Lease to Tenant shall not be
construed as an offer, and Tenant shall not have any rights under this Lease
unless Landlord executes a copy of this Lease and delivers it to Tenant.
(l) Entire Agreement. This Lease constitutes the entire agreement
between Landlord and Tenant regarding the subject matter hereof and supersedes
all oral statements and prior writings relating thereto. Except for those set
forth in this Lease, no representations, warranties, or agreements have been
made by Landlord or Tenant to the other with respect to this Lease or the
obligations of Landlord or Tenant in connection therewith. The normal rule of
construction that any ambiguities be resolved against the drafting party shall
not apply to the interpretation of this Lease or any exhibits or amendments
hereto.
(m) Waiver of Jury Trial. To the maximum extent permitted by law,
Landlord and Tenant each waive right to trial by jury in any litigation arising
out of or with respect to this Lease.
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(n) Governing Law. This Lease shall be governed by and construed in
accordance with the laws of the State in which the Premises are located.
(o) Joint and Several Liability. If Tenant is comprised of more than
one party, each such party shall be jointly and severally liable for Tenant's
obligations under this Lease.
(p) Financial Reports. Within 15 days after Landlord's request, Tenant
will furnish Tenant's most recent audited financial statements (including any
notes to them) to Landlord, or, if no such audited statements have been
prepared, such other financial statements (and notes to them) as may have been
prepared by an independent certified, public accountant or, failing those,
Tenant's internally prepared financial statements. Tenant will discuss its
financial statements with Landlord and will give Landlord access to Tenant's
books and records in order to enable Landlord to verify the financial
statements. Landlord will not disclose any aspect of Tenant's financial
statements that Tenant designates to Landlord as confidential except (1) to
Landlord's lenders or prospective purchasers of the Building or Property, (2) in
litigation between Landlord and Tenant, and (3) if required by court order.
(q) Landlord's Fees. Whenever Tenant requests Landlord to take any
action or give any consent required or permitted under this Lease, Tenant will
reimburse Landlord for Landlord's reasonable costs incurred in reviewing the
proposed action or consent, including without limitation reasonable attorneys',
engineers' or architects' fees, within 10 days after Landlord's delivery to
Tenant of a statement of such costs. Tenant will be obligated to make such
reimbursement without regard to whether Landlord consents to any such proposed
action.
(r) Telecommunications. Tenant and its telecommunications companies,
including but not limited to local exchange telecommunications companies and
alternative access vendor services companies shall have no right of access to
and within the Building or Property, for the installation and operation of
telecommunications systems including but not limited to voice, video, data, and
any other telecommunications services provided over wire, fiber optic,
microwave, wireless, and any other transmission systems, for part or all of
Tenant's telecommunications within the Building and from the Building to any
other location without Landlord's prior written consent, which consent shall not
be unreasonably withheld or delayed.
(s) General Definitions. The following terms shall have the following
meanings: "Laws" means all federal, state, and local laws, rules and
regulations, all court orders, all governmental directives and governmental
orders, and all restrictive covenants affecting the Property, and "Law" means
any of the foregoing; "Affiliate" means any person or entity which, directly or
indirectly, controls, is controlled by, or is under common control with the
party in question; "Tenant Party" shall include Tenant, any assignees claiming
by, through, or under Tenant, any subtenants claiming by, through, or under
Tenant, and any agents, contractors, employees, invitees of the foregoing
parties; and "including" means including, without limitation.
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(t) Confidentiality. Tenant acknowledges that the terms and conditions
of this Lease are to remain confidential for Landlord's benefit, and may not be
disclosed by Tenant to anyone, by any manner or means, directly or indirectly,
without Landlord's prior written consent. The consent by Landlord to any
disclosures shall not be deemed to be a waiver on the part of Landlord of any
prohibition against any future disclosure.
(u) Notice of Lease. Tenant agrees not to record this Lease and to
keep the terms of this Lease confidential, but each party hereto agrees, at the
request of the others to execute a so-called Notice of Lease in recordable form
complying with applicable law and reasonably satisfactory to Landlord's
attorneys. In no event shall such document set forth the Rent or other charges
payable by Tenant hereunder.
(v) List of Exhibits. All exhibits and attachments attached hereto are
incorporated herein by this reference.
Exhibit A - Legal Description of the Land
Exhibit B - Rules and Regulations
Exhibit C - Tenant Finish-Work
Exhibit D - Renewal Option
Exhibit E - Site Plan
26. Other Provisions. LANDLORD AND TENANT EXPRESSLY DISCLAIM ANY
IMPLIED WARRANTY THAT THE PREMISES ARE SUITABLE FOR TENANT'S INTENDED COMMERCIAL
PURPOSE, AND TENANT'S OBLIGATION TO PAY RENT HEREUNDER IS NOT DEPENDENT UPON THE
CONDITION OF THE PREMISES OR THE PERFORMANCE BY LANDLORD OF ITS OBLIGATIONS
HEREUNDER, AND, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, TENANT SHALL
CONTINUE TO PAY THE RENT, WITHOUT ABATEMENT, SETOFF OR DEDUCTION,
NOTWITHSTANDING ANY BREACH BY LANDLORD OF ITS DUTIES OR OBLIGATIONS HEREUNDER,
WHETHER EXPRESS OR IMPLIED.
27. Tenant's Right to Terminate. Tenant shall have the right
("Tenant's Termination Option") to terminate this Lease as of the last day of
the sixty-third month of the Term (the "Early Termination Date") pursuant to the
provisions of this Section 27. Tenant's Termination Option shall be exercised by
Tenant by written notice (the "Termination Notice") to Landlord at least twelve
(12) months prior to the Early Termination Date and by payment to Landlord of an
amount equal to the sum of (i) any past due Rent or other charges payable by
Tenant to Landlord hereunder as of the date of delivery of the Termination
Notice, plus (ii) $5,000.00, plus (iii) the unamortized portion (as of the Early
Termination Date) of the Excess Allowance (collectively, the "Termination
Payment"). As used herein, the phrase "Excess Allowance" shall mean $16,800.00.
In determining the amount for subparagraph (iii) above, such $16,800.00 shall be
amortized on a straight-line basis, with interest, at the annual rate of ten
percent (10%), over the period from the Commencement Date through and including
August 31, 2008. The Termination Payment shall be paid to Landlord
simultaneously with the giving of the Termination Notice. If Tenant fails timely
to give the Termination Notice, then Tenant shall have no further right to
terminate this Lease, time being of the essence with respect to exercise of
Tenant's Termination Option. Furthermore, if Tenant fails to pay to
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Landlord the Termination Payment simultaneously with the giving of the
Termination Notice, the Termination Notice shall not be effective and this Lease
shall continue in full force and effect. If Tenant properly exercises Tenant's
Termination Option by giving Landlord timely notice and paying Landlord the
Termination Payment simultaneously with the giving of the Termination Notice,
then this Lease shall expire on the Early Termination Date, unless terminated
earlier pursuant to the terms and provisions of this Lease.
IN WITNESS WHEREOF, and in consideration of the mutual entry into this
Lease and for other good and valuable consideration, and intending to be legally
bound, each party hereto as caused this Lease to be duly executed as a
Massachusetts instrument under seal as of the day and year first above written.
TENANT:
NUR AMERICA, INC.
By: /s/ Nathan Berkowitz
Name: Nathan Berkowitz
Title: VP Finance + CFO
Address: 335 Boylston Street
Newton, Massachusetts 02159
Telecopy: __________________________________
LANDLORD:
WHTR REAL ESTATE LIMITED
PARTNERSHIP
By: WHTR INVESTORS, INC.,
General Partner
By: /s/ Stephen Abelman
Name: Stephen Abelman
Title: Asst. Vice President
Address: c/o Archon Group, L.P.
1275 K Street, N.W., Suite 900
Washington, D.C. 20005
Attention:___________________________________
Telecopy:___________________________________
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With a copy to:
The Archon Group, L.P.
600 Las Colinas Boulevard,
Suite 1900
Irving, Texas 75039
Attention: Asset Manager
Telecopy:___________________________________
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EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
That certain parcel of land situated in Newton, Middlesex County,
Massachusetts more particularly bounded and described as follows:
SOUTHEASTERLY: by Needham Street one hundred sixty-eight and 23/100 (168.23)
feet;
SOUTHERLY: by lands now or formerly of William P. Coppinger and of
New England Concrete Pipe Corp., four hundred fifty-seven
and 96/100 (457.96) feet;
NORTHWESTERLY: by land now or formerly of The New York, New Haven
and Hartford Railroad Company, four hundred and
thirty-eight (438.0) feet;
NORTHEASTERLY: by land now or formerly of John J. Kaitz et al, Trustees,
seventy-seven and 53/100 (77.53) feet;
EASTERLY: by the end of East Street, forty-seven and 78/100
(47.78) feet;
NORTHEASTERLY: by said East Street, two hundred eighty-five and
26/100 (285.26) feet.
All of said boundaries are determined by the Land Court to be located
as shown on a plan, as modified and approved by the Court, filed in the Land
Registration Office, a copy of a portion of which is filed with Middlesex South
Registry District of the Land Court in Registration Book 736, Page 186, with
Certificate 121336. Said plan is Plan No. 30536A.
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EXHIBIT B
RULES AND REGULATIONS
The following rules and regulations shall apply to the Premises and
the Property:
1. Sidewalks, doorways, vestibules, halls, stairways, and other
similar areas shall not be obstructed by tenants or used by any tenant for
purposes other than ingress and egress to and from their respective leased
premises and for going from one to another part of the Building.
2. Plumbing, fixtures and appliances shall be used only for the
purposes for which designed, and no sweepings, rubbish, rags or other unsuitable
material shall be thrown or deposited therein. Damage resulting to any such
fixtures or appliances from misuse by a tenant or its agents, employees or
invitees, shall be paid by such tenant.
3. No signs, advertisements or notices shall be painted or affixed on
or to any windows or doors or other part of the Building without the prior
written consent of Landlord. No nails, hooks or screws shall be driven or
inserted in any part of the Building except by Building maintenance personnel.
No curtains or other window treatments shall be placed between the glass and the
Building standard window treatments.
4. Landlord shall provide all door locks in each tenant's leased
premises, at the cost of such tenant, and no tenant shall place any additional
door locks in its leased premises without Landlord's prior written consent.
Landlord shall furnish to each tenant a reasonable number of keys to such
tenant's leased premises, at such tenant's cost, and no tenant shall make a
duplicate thereof.
5. Movement in or out of the Building of furniture or office
equipment, or dispatch or receipt by tenants of any bulky material, merchandise
or materials which require use of elevators or stairways, or movement through
the Building entrances or lobby shall be conducted under Landlord's supervision
at such times and in such a manner as Landlord may reasonably require. Each
tenant assumes all risks of and shall be liable for all damage to articles moved
and injury to persons or public engaged or not engaged in such movement,
including equipment, property and personnel of Landlord if damaged or injured as
a result of acts in connection with carrying out this service for such tenant.
6. Landlord may prescribe weight limitations and determine the
locations for safes and other heavy equipment or items, which shall in all cases
be placed in the Building so as to distribute weight in a manner acceptable to
Landlord which may include the use of such supporting devices as Landlord may
require. All damages to the Building caused by the installation or removal of
any property of a tenant, or done by a tenant's property while in the Building,
shall be repaired at the expense of such tenant.
7. Corridor doors, when not in use, shall be kept closed. Nothing
shall be swept or thrown into the corridors, halls, elevator shafts or
stairways. No birds or animals shall be brought into or kept in, on or about any
tenant's leased premises. No portion of any
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tenant's leased premises shall at any time be used or occupied as sleeping or
lodging quarters.
8. To ensure orderly operation of the Building, no ice, mineral or
other water, towels, newspapers, etc. shall be delivered to any leased area
except by persons approved by Landlord.
9. Tenant shall not make or permit any vibration or improper,
objectionable or unpleasant noises or odors in the Building or otherwise
interfere in any way with other tenants or persons having business with them.
10. No machinery of any kind (other than normal office equipment)
shall be operated by any tenant on its leased area without Landlord's prior
written consent, nor shall any tenant use or keep in the Building any flammable
or explosive fluid or substance.
11. Landlord will not be responsible for lost or stolen personal
property, money or jewelry from tenant's leased premises or public or common
areas regardless of whether such loss occurs when the area is locked against
entry or not.
12. No vending or dispensing machines of any kind may be maintained in
any leased premises without the prior written permission of Landlord.
13. Tenant shall not conduct any activity on or about the Premises or
Property which will draw pickets, demonstrators, or the like.
14. All vehicles are to be currently licensed, in good operating
condition, parked for business purposes having to do with Tenant's business
operated in the Premises, parked within designated parking spaces, one vehicle
to each space. No vehicle shall be parked as a "billboard" vehicle in the
parking lot. Any vehicle parked improperly may be towed away. Tenant, Tenant's
agents, employees, vendors and customers who do not operate or park their
vehicles as required shall subject the vehicle to being towed at the expense of
the owner or driver. Landlord may place a "boot" on the vehicle to immobilize it
and may levy a charge of $50.00 to remove the "boot". Tenant shall indemnify,
hold and save harmless Landlord of any liability arising from the towing or
booting of any vehicles belonging to a Tenant Party.
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EXHIBIT C
TENANT FINISH-WORK
1. Tenant hereby accepts the Premises in their "AS-IS" condition, and
Landlord shall have no obligation to perform any work therein (including,
without limitation, demolition of any improvements existing therein or
construction of any tenant finish-work or other improvements therein), and shall
not be obligated to reimburse Tenant or provide an allowance for any costs
related to the demolition or construction of improvements therein, except as
provided below in this Exhibit C.
2. Tenant shall provide to Landlord for its approval final working
drawings, prepared by an architect that has been approved by Landlord (which
approval shall not unreasonably be withheld), of all improvements that Tenant
proposes to install in the Premises; such working drawings shall include the
partition layout, ceiling plan, electrical outlets and switches, telephone
outlets, drawings for any modifications to the mechanical and plumbing systems
of the Building, and detailed plans and specifications for the construction of
the improvements called for under this Exhibit in accordance with all applicable
governmental laws, codes, rules, and regulations. If any of Tenant's proposed
construction work will affect the Building's HVAC, electrical, mechanical, or
plumbing systems, then the working drawings pertaining thereto must be approved
by the Building's engineer of record. Landlord's approval of such working
drawings shall not be unreasonably withheld, provided that (a) they comply with
all laws, rules, and regulations, (b) such working drawings are sufficiently
detailed to allow construction of the improvements in a good and workmanlike
manner, and (c) the improvements depicted thereon conform to the rules and
regulations promulgated from time to time by Landlord for the construction of
tenant improvements (a copy of which has been delivered to Tenant). As used
herein, "Working Drawings" shall mean the final working drawings approved by
Landlord, as amended from time to time by any approved changes thereto, and
"Work" shall mean all improvements to be constructed in accordance with and as
indicated on the Working Drawings. Landlord's approval of the Working Drawings
shall not be a representation or warranty of Landlord that such drawings are
adequate for any use or comply with any law, but shall merely be the consent of
Landlord thereto. Tenant shall, at Landlord's request, sign the Working Drawings
to evidence its review and approval thereof. All changes in the Work must
receive the prior written approval of Landlord, and in the event of any such
approved change Tenant shall, upon completion of the Work, furnish Landlord with
an accurate, reproducible "as-built" plan of the improvements as constructed.
3. The Work shall be performed only by contractors and subcontractors
approved in writing by Landlord, which approval shall not be unreasonably
withheld. Notwithstanding anything herein to the contrary, Landlord agrees that
the general contractor for the construction of the Work may be Allendale
Associates having an address at 145 Rosemarie Street, Needham Heights,
Massachusetts. All contractors and subcontractors shall be required to procure
and maintain insurance against such risks, in such amounts, and with such
companies as Landlord may reasonably require. Certificates of such insurance,
with paid receipts therefor, must be received by Landlord before the
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Work is commenced. The Work shall be performed in a good and workmanlike manner
free of defects, shall conform strictly with the Working Drawings, and shall be
performed in such a manner and at such times as and not to interfere with or
delay Landlord's other contractors, the operation of the Building, and the
occupancy thereof by other tenants. All contractors and subcontractors shall
contact Landlord and schedule time periods during which they may use Building
facilities in connection with the Work (e.g., elevators, excess electricity,
etc.).
4. The entire cost of performing the Work (including, without
limitation, design of the Work and preparation of the Working Drawings, costs of
construction labor and materials, electrical usage during construction,
additional janitorial services, general tenant signage, related taxes and
insurance costs, all of which costs are herein collectively called the "Total
Construction Costs") in excess of the Construction Allowance (hereinafter
defined) shall be paid by Tenant. Landlord shall provide to Tenant a
construction allowance (the "Construction Allowance") equal to the lesser of (a)
$11.00 per rentable square foot in the Premises or (b) the Total Construction
Costs. Landlord shall pay to Tenant the Construction Allowance within thirty
(30) days after the Work has been substantially completed and Tenant has caused
to be delivered to Landlord (1) all invoices from contractors, subcontractors,
and suppliers evidencing the cost of performing the Work, together with lien
waivers from such parties, and a consent of the surety to the finished Work (if
applicable) and (2) a certificate of occupancy from the appropriate governmental
authority, if applicable to the Work, or evidence of governmental inspection and
approval of the Work.
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EXHIBIT D
RENEWAL OPTION
Provided no Event of Default exists and Tenant is occupying the entire
Premises at the time of such election, Tenant may renew this Lease for 1
additional period of 5 years, by delivering written notice of the exercise
thereof to Landlord not later than 12 months before the expiration of the Term.
On or before the commencement date of the extended Term, Landlord and Tenant
shall execute an amendment to this Lease extending the Term on the same terms
provided in this Lease, except as follows:
(a) The Basic Rent payable for each month during the extended
Term shall be the prevailing rental rate, at the commencement of such extended
Term, for space of equivalent quality, size, utility and location, with the
length of the extended Term and the credit standing of Tenant to be taken into
account, as determined by Landlord;
(b) Tenant shall have no further renewal options unless
expressly granted by Landlord in writing; and
(c) Landlord shall lease to Tenant the Premises in their
then-current condition, and Landlord shall not provide to Tenant any allowances
(e.g., moving allowance, construction allowance, and the like) or other tenant
inducements.
Tenant's rights under this Exhibit D shall terminate if (1) this Lease
or Tenant's right to possession of the Premises is terminated, (2) Tenant
assigns any of its interest in this Lease or sublets any portion of the Premises
or (3) Tenant fails to timely exercise its option under this Exhibit D, time
being of the essence with respect to Tenant's exercise thereof.
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EXHIBIT E
SITE PLAN
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NUR MACROPRINTERS LTD.
QUALIFIED INDEPENDENT UNDERWRITER AGREEMENT
The undersigned, Nur Macroprinters Ltd., an Israeli corporation (the
"Company"), and Cruttenden Roth Incorporated ("CRI") hereby agree as follows:
1. Introduction. The Company proposes to register under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (collectively, the "Act"), approximately 6,583,819 Ordinary Shares
(the "Shares") of the Company, NIS 1.0 nominal value per share, for resale by
certain selling security holders of the Company (the "Offering"). Pursuant to
Rule 2720 ("Rule 2720") of the National Association of Securities Dealers, Inc.
(the "NASD") Conduct Rules, Josephthal & Co. Inc., as an affiliate of the
Company, may participate in the distribution of the Offering only if a
"Qualified Independent Underwriter" (as such phrase is defined by Rule
2720(b)(15)) participates in the preparation of the registration statement and
prospectus relating to the Offering and exercises customary standards of due
diligence with respect thereto.
As used herein, the term "Registration Statement" means the
registration statement on Form F-1 (No. 333-66103) (including the related
prospectus, financial statements, exhibits and all other documents to be filed
as a part thereof or incorporated therein) for the registration of the offer and
sale of the Shares under the Act filed with the Securities and Exchange
Commission (the "Commission"), and any amendments thereto, and the term
"Prospectus" means the prospectus including any preliminary or final prospectus
(including the form of final prospectus as filed with the Commission) pursuant
to Rule 424(b) under the Act and any amendments or supplements thereto, to be
used in connection with the Offering.
2. Rule 2720 Requirement. CRI represents to the Company that it
satisfies the requirements applicable to a Qualified Independent Underwriter
with respect to the Offering, as set forth in Rule 2720(b)(15), and agrees in
acting as Qualified Independent Underwriter with respect to the Offering to
undertake the legal responsibilities and liabilities of an underwriter under the
Act, specifically including those inherent in Section 11 of the Act.
3. Effectiveness of Registration Statement and Pricing
Recommendation.
(a) The Company will not allow the Registration Statement to
become effective if it contains any reference to CRI unless, before the
Registration Statement becomes effective, the Company has obtained the prior
consent of CRI.
(b) As a condition to CRI's delivery of its pricing
recommendation, the Company will cause to be delivered to CRI, for reliance
thereupon by CRI in its capacity as Qualified Independent Underwriter with
respect to the Offering, the following:
<PAGE>
(i) a letter dated the date of effectiveness of the
Registration Statement from Kost Forer & Gabbay, Independent Auditors ("Kost"),
addressed to CRI, in form and substance reasonably satisfactory to CRI, (A)
representing that they are independent certified public accountants with respect
to the Company within the meaning of the Act and the rules thereunder (the
"Rules"), (B) setting forth their opinion with respect to their examination of
the balance sheet of the Company as of December 31, 1997 and related statements
of operations, equity and cash flows for the twelve (12) months ended December
31, 1997, (C) stating that Kost has performed the procedures set out in
Statement of Accounting Standards No. 71 ("SAS 71") for a review of interim
financial information and providing the report of Kost as described in SAS 71 on
the financial statements of the Company for the nine-month period ended
September 30, 1998 (the "Interim Statements"), (D) stating that in the course of
such review, nothing came to their attention that leads them to believe that any
material modifications need to be made to any of the Interim Statements in order
for them to be in compliance with generally accepted accounting principles in
Israel and the United States of America consistently applied across the periods
presented, (E) stating that nothing came to their attention that caused them to
believe that the financial statements included in the Registration Statement and
Prospectus do not comply as to form in all material respects with the applicable
accounting requirements of the Rules and that any adjustments thereto have not
been properly applied to the historical amounts in the compilation of such
statements, (F) stating that there were not any material increases in the
current liabilities and long-term liabilities of the Company or any material
decreases in net income or in working capital or the stockholders' equity in the
Company, as compared with the amounts shown on the Company's audited balance
sheet for the fiscal year ended December 31, 1997 and the nine months ended
September 30, 1998 included in the Registration Statement; (G) stating that they
have performed certain procedures agreed upon with CRI as a result of which they
determined that certain information of an accounting, financial or statistical
nature (which is limited to accounting, financial or statistical information
derived from the general accounting records of the Company) set forth in the
Registration Statement and the Prospectus and reasonably specified by CRI agrees
with the accounting records of the Company; and (H) addressing other matters
agreed upon by Kost and CRI. In addition, such letter shall not disclose any
change in the condition (financial or otherwise), earnings, operations,
properties, assets, business or prospects of the Company from that set forth in
the Registration Statement or Prospectus, which, in CRI's sole judgment, is
material and adverse and that makes it, in CRI's sole judgment, impracticable or
inadvisable to proceed with the public offering of the Shares as contemplated by
the Prospectus. In addition, CRI shall have received from the Company a letter
from Kost addressed to the Company stating that its review of the Company's
system of internal accounting controls, to the extent it deemed necessary in
establishing the scope of its examination of the Company's financial statements
as of December 31, 1997, did not disclose any weaknesses in internal controls
that it considered to be material weaknesses; and
(ii) an opinion of Orrick, Herrington & Sutcliffe
LLP, counsel to the Company, in form satisfactory to CRI, to the effect that
this Agreement is enforceable against the Company, except that such opinion need
not address the indemnity obligations of the Company set forth in this Agreement
to the extent that such indemnity obligations are not enforceable as a matter of
public policy. In addition, such counsel's opinion letter shall state that such
counsel has acted as outside U.S. securities counsel to the Company and
participated in
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conferences with officers and other representatives of the Company,
representatives of CRI and representatives of the independent certified public
accountants of the Company, at which conferences the contents of the
Registration Statement and the Prospectus and related matters were discussed
and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus, on the basis of the
foregoing, no facts have come to the attention of such counsel which lead such
counsel to believe that the Registration Statement (except with respect to the
financial statements and notes and schedules thereto and other financial and
statistical data included therein or excluded therefrom, as to which such
counsel need express no belief) at the time such counsel's opinion is delivered
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 as amended or supplemented (except with
respect to the financial statements and notes and schedules thereto and other
financial and statistical data included therein or excluded therefrom, as to
which such counsel need make no statement) on the date thereof contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(c) Subject to compliance by the Company with this
Agreement in all material respects, the accuracy in all material respects of the
Company's representations in this Agreement, and satisfaction by CRI in its
discretion with the results of its due diligence investigation of the Company
and the contents of the Registration Statement and Prospectus, following
delivery by the Company to the Commission of the Company's request for
acceleration of the effectiveness of the Registration Statement and one business
day before effectiveness of the Registration Statement, CRI will deliver its
pricing recommendation letter to the Company, substantially in the form of
Exhibit A hereto.
4. Prospectus Disclosure and Use.
(a) CRI's role as the "Qualified Independent Underwriter"
with respect to the Offering and the material terms and conditions of its
service as such shall be disclosed in the Registration Statement and Prospectus
in a manner to be agreed upon in advance by the Company and CRI. The Company
will not refer to CRI or its role as Qualified Independent Underwriter in any
other filing, report, document, release or other communication prepared, issued
or transmitted by the Company or any corporation controlling, controlled by or
under common control with the Company, or by any director, officer, employee,
representative or agent of any thereof, without CRI's prior written consent
thereto with respect to form and substance.
(b) While CRI continues to serve as Qualified Independent
Underwriter with respect to the Offering, the Company shall amend the
Registration Statement and Prospectus from time to time as determined by CRI or
the Company as necessary or appropriate to ensure the accuracy and completeness,
in all material respects, of the disclosure included or incorporated by
reference therein, including disclosure regarding CRI and its service as
Qualified Independent Underwriter, as well as disclosure about the Company, the
Offering, and related risks, provided that the form and substance of any
amendment to the Registration Statement or Prospectus must be approved in
advance by the Company and CRI.
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(c) While CRI continues to serve as Qualified Independent
Underwriter with respect to the Offering, if the Company makes any public
disclosure of material information, and CRI has not, before such disclosure, had
an opportunity to review the information and approve any final, effective
amendment or supplement to the Registration Statement or Prospectus prepared in
light of such information pursuant to Section 4(b), then the Company will not
further distribute or permit use of the Prospectus until CRI and the Company
have had an adequate opportunity cooperatively to review the information
disclosed and determine whether the Prospectus should be amended or supplemented
in light of such information, and to effect any such an amendment or supplement.
(d) The Company may furnish to selling security holders
that are so entitled, or their agents, such number of copies of the Prospectus
as such holders, or their agents, may reasonably request to facilitate the
public sale or other disposition of the Shares, but will not otherwise
distribute copies of the Prospectus except as required by applicable law.
(e) Upon any withdrawal of CRI under Section 6, the
Company shall amend the Registration Statement and Prospectus to remove
reference to CRI, effect any recirculation that may be appropriate under
applicable securities laws, and refrain from using, and instruct and use its
best effort to cause selling security holders not to use, any form of Prospectus
referencing CRI.
5. Due Diligence.
(a) In order to comply with the requirements the NASD
has imposed in the context of the Offering under Rule 2720, CRI in its capacity
as Qualified Independent Underwriter with respect to the Offering will: (a)
participate in the preparation of the registration statement and prospectus, and
exercise the usual standards of "due diligence" in respect thereto; (b) make a
pricing recommendation before the effectiveness of the registration statement,
consistent with Rule 2720 and the standard activities of a qualified independent
underwriter, as further described in Section 3(c); and (c) unless and until CRI
withdraws as Qualified Independent Underwriter with respect to the Offering
pursuant to Section 6, maintain its due diligence review of the Company by (i)
reviewing all of the Company's filings under the Securities Exchange Act of
1934, as amended, and all other public disclosures made available by the Company
to CRI; (ii) initiating and participating in conversations with the Chief
Executive Officer and Chief Financial Officer of the Company at least monthly to
discuss the status of the Company and its business; (iii) reviewing all
information and disclosure provided by the Company pursuant to Section 5(b); and
(iv) making such further inquiries and analysis as it may deem appropriate. The
Company shall cooperate in all respects with these due diligence activities of
CRI.
(b) At any time and from time to time from the date hereof
until CRI ceases to act as Qualified Independent Underwriter with respect to the
Offering, the Company shall:
(i) provide CRI, at the Company's expense, all
information and documentation with respect to the Company's business, financial
condition and other matters
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as CRI may reasonably request, including, without limitation, copies of all
correspondence with the Commission, certificates of its officers, opinions of
its counsel and comfort letters from its auditors which relate to or may affect
the Offering;
(ii) promptly advise CRI of (and, if applicable,
provide copies of) all telephone conversations and correspondence with the
Commission which relate to or may affect the Offering;
(iii) make reasonably available to CRI, its auditors,
counsel, and officers and directors to discuss with CRI any aspect of the
Company or its business which CRI may reasonably deem relevant;
(iv) provide to CRI at least 48 hours advance notice
of material public disclosures, and copies of filings under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and other written public
disclosures of material information at least 48 hours before filing or public
dissemination thereof, or, if 48 hours advance notice or delivery is not
practicable, as much advance notice or delivery as is practicable under the
circumstances, provided that such disclosure may be made to CRI concurrently
with public disclosure if the Company follows the procedures set forth in
Section 4(c);
(v) inform CRI promptly of any material developments
in the business or condition of the Company not disclosed pursuant to Section
5(b)(iv); and
(vi) promptly advise CRI if any of the
representations made by the Company in this Agreement is or becomes inaccurate
in any material respect.
(c) The Company represents and covenants to CRI that the
Company has responded and will hereafter respond fully to all requests by CRI
for documents and information about the Company, and all information provided
and to be provided to CRI by the Company is and will be correct and complete in
all material respects.
6. Withdrawal. CRI may withdraw as Qualified Independent
Underwriter with respect to the Offering without penalty or further obligation
upon written notice to the Company on or at any time after July 31, 1999, and,
if earlier, if any of the following events occurs and, if susceptible of cure,
is not cured by the Company within 15 days of its occurrence.
(a) CRI, in its discretion, at any time does not
believe that it has been able to make a reasonable investigation of the Company
and its business, or does not believe it has a reasonable ground to believe, or
does not believe, that the statements in the Registration Statement and
Prospectus are then true in all material respects and that there is then no
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
(b) The Company at any time commits a material
breach of this Agreement.
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(c) Any of the Company's representations set forth
in this Agreement is inaccurate in any material respect.
(d) Any order preventing or suspending the
effectiveness of the Registration Statement or the use of the Prospectus or the
qualification of the Shares for sale in any jurisdiction shall have been or
shall be in effect, or any proceedings for such purpose shall be pending before
or threatened by the Commission or any state regulatory agency.
(e) There is any change in the condition (financial or
otherwise), earnings, operations, properties, assets, business or prospects of
the Company from that set forth in the Registration Statement or Prospectus,
which, in CRI's judgment, is material and adverse to the Company and that makes
it, in CRI's sole judgment, impracticable or inadvisable for the Offering to
continue, or for CRI to continue to act as Qualified Independent Underwriter
with respect thereto.
(f) Any of the representations made by the Company to
the NASD in connection with the Offering shall prove to have been, or shall
become, inaccurate in any material respect, or the Company breaches in any
material respect any of the covenants made to the NASD in connection with the
Offering.
(g) The Shares cease to trade on the Nasdaq National
Market or begin to trade on any foreign market or exchange.
In case of any occurrence of a type described in items (b) through (g) of this
Section 6, the Company will immediately notify CRI. In addition, in case of any
occurrence of a type described in items (b) through (g) of this Section 6, or if
CRI notifies the Company of an occurrence of the type described in item (a) of
this Section 6, the Company will not further distribute or permit use of the
Prospectus until CRI and the Company have had an adequate opportunity
cooperatively to review the information disclosed and determine whether the
Prospectus should be amended or supplemented in light of such occurrence, and to
effect such an amendment or supplement if deemed appropriate by either of them.
7. Fees and Expenses. In consideration for CRI acting as
Qualified Independent Underwriter for the Offering, the Company hereby agrees to
pay CRI, in addition to the nonrefundable fee of $25,000 paid by the Company to
CRI pursuant to their letter agreement dated December 18, 1998 (the "Letter
Agreement"), as follows:
(a) an additional nonrefundable fee of $25,000 upon execution
and delivery of this Agreement by the Company and CRI; and
(b) an additional nonrefundable fee of $25,000 when and if the
Registration Statement, referencing CRI as Qualified Independent Underwriter
with respect to the Offering, becomes effective under the Act; and
6
<PAGE>
(c) a warrant to purchase 25,000 Shares at an exercise price
of $4.50 per share exerciseable for four years commencing one year from the
Effective Date of the Registration Statement; and
(d) reimbursement in full, within a reasonable period of
demand and submission to the Company of appropriate documentation, of all
reasonable costs and expenses (including without limitation the fees and
expenses of CRI's counsel) incurred in connection with CRI's service as
Qualified Independent Underwriter.
Such payments are not to be duplicative of payments under the Letter Agreement
which is hereby terminated.
8. Certain Representations and Warranties. As of the date of this
Agreement, and as of the date the Registration Statement becomes effective
under the Act, and for the duration of CRI's service as QIU with respect to the
Offering, the Company hereby represents and warrants to CRI as set forth in
Schedule I.
9. Indemnification.
(a) The Company shall indemnify and hold harmless CRI in its
capacity as Qualified Independent Underwriter and each person controlling,
controlled by or under common control with CRI within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, or the rules and regulations
thereunder (individually, an "Indemnified Person") from and against any and all
loss, claim, damage, liability or expense whatsoever (including, but not limited
to, any and all reasonable legal fees and other expenses reasonably incurred in
connection with investigating, preparing to defend or defending any action, suit
or proceeding, including any inquiry or investigation, commenced or threatened,
or any claim whatsoever to which such Indemnified Person may become subject
under the Act, the Exchange Act, or other federal or state statutory law or
regulation at common law or otherwise arising out of or based upon (i) the
breach by the Company of any covenant or the inaccuracy of any representation or
warranty made by the Company in this Agreement, (ii) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof or supplement thereto, 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, or (iii) any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus or any amendment thereof or supplement thereto, or any omission or
alleged omission to state therein a 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. The Company's indemnity obligations herein
shall include the obligation to pay or promptly to reimburse as incurred any
costs incurred by an Indemnified Person that are subject to the Company's
indemnity herein. This indemnity agreement will be in addition to any liability
which the Company may otherwise have. Notwithstanding the foregoing, however,
the Company will not be obligated to provide indemnity or reimbursement of
expenses for losses that are due to the gross negligence or willful misconduct
of CRI.
7
<PAGE>
(b) Promptly after receipt by an Indemnified Person under
paragraph (a) above of notice of the commencement of any action, such
Indemnified Person will, if a claim in respect thereof is to be made against the
Company under paragraph (a), notify the Company in writing of the commencement
thereof; but the failure to so notify the Company will not relieve the Company
from any liability which it may have to any Indemnified Person under this
Section 9, except to the extent that it has been prejudiced in any material
respect by such failure or from any liability which it may have otherwise. In
case any such action is brought against any Indemnified Person, and such
Indemnified Person notifies the Company of the commencement thereof, the Company
will be entitled to participate therein and, to the extent that it may elect by
written notice delivered to the Indemnified Person promptly after receiving the
aforesaid notice from such Indemnified Person, to assume the defense thereof
with counsel reasonably satisfactory to such Indemnified Person; provided,
however, that if the defendants in any such action include both the Indemnified
Person and the Company or any corporation controlling, controlled by or under
common control with the Company, or any director, officer, employee,
representative or agent of any thereof, and the Indemnified Person shall have
reasonably concluded that there may be legal defenses available to it which are
different from or additional to those available to such other defendant, the
Indemnified Person shall have the right to select separate counsel to represent
it. Upon receipt by the Indemnified Person of notice from the Company setting
forth the Company's irrevocable election to assume the defense of such action
with counsel reasonably satisfactory to the Indemnified Person, the Company will
not be liable to such Indemnified Person under this Section 9 for any fees of
counsel subsequently incurred by such Indemnified Person in connection with the
defense thereof, unless (x) the Indemnified Person shall have employed separate
counsel in accordance with the provision of the next preceding sentences, (y)
the Company, within a reasonable time after notice of commencement of the
action, shall not have employed counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person, or (z) the Company shall
have authorized in writing the employment of counsel for the Indemnified Person
at the expense of the Company, and except that, if clause (x) or (z) is
applicable, such liability shall be only in respect of the counsel referred to
in such clause (x) or (z).
(c) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) of this
Section 9 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company to CRI on grounds of policy or
otherwise, the Company and CRI shall contribute to the aggregate losses, claims,
damages and liabilities (including reasonable legal or other expenses reasonably
incurred in connection with investigation or defending of same) within the scope
of the indemnity provided under Section 9 in such proportion so that CRI is
responsible for that portion represented by the percentage that its fee under
this Agreement bears to the aggregate public offering price appearing on the
cover page of the Prospectus and the Company is responsible for the balance,
except as the Company may otherwise agree to reallocate a portion of such
liability with respect to such balance with any other person; provided, however,
that no person guilty of fraudulent misrepresentation within the meaning of
Section 11(f) of the Act shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of this
paragraph (c), any person controlling, controlled by or under common control
with CRI shall have the same rights to contribution as CRI and each
8
<PAGE>
person who controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company. Notwithstanding anything herein
to the contrary, in no case will CRI be liable or responsible for any amount in
excess of the amount of its fees received under this Agreement and the Letter
Agreement (excluding expense reimbursements). Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against the other party under this paragraph (c), notify such party from
whom contribution may be sought, but the omission to so notify such party shall
not relieve the party from whom contribution may be sought from any other
obligation it or they may have hereunder or otherwise than under this paragraph
(c). The indemnity and contribution agreements contained in this Section 9 shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any Indemnified Person or any termination of this
Agreement.
10. Further Assurance. The Company will not take or assist in any
action that could materially increase the risk of liability to, or impair the
rights or defenses of, CRI hereunder and/or in its role as Qualified Independent
Underwriter with respect to the Offering.
11. Notice. Whenever notice is required to be given pursuant to
this Agreement, such notice shall be in writing and shall be mailed by first
class mail, postage prepaid, certified or registered mail, return receipt
requested, or by reputable overnight courier, addresses (a) if to CRI, at 18301
Von Karman, Irvine, California 92715, Attention: David Walters and (b) if to the
Company, at P.O. Box 8440, Moshav Magshimim, 56910, Israel, Attention: Erez
Shachar.
12. Governing Law. This Agreement shall be construed (both as to
validity and performance) and enforced in accordance with and governed by the
laws of the State of New York applicable to agreements made and to be performed
wholly within such jurisdiction.
13. Parties. This Agreement shall inure solely to the benefit of
and shall be binding upon, CRI and the Company and the controlling persons,
directors and officers referred to in paragraph 7 hereof, and their respective
successors, legal representative and assigns, and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained.
In witness whereof, CRI and the Company hereby enter into this
Agreement as of the date first above set forth.
9
<PAGE>
NUR MACROPRINTERS LTD. CRUTTENDEN ROTH INCORPORATED
By: By:
---------------------------- ------------------------------
Name: Name:
Title: Title:
Date: Date:
10
<PAGE>
Exhibit A
Recommendation Letter
February 23, 1999
Josephthal & Co., Inc.
200 Park Avenue
New York, New York 10166
Nur Macroprinters
P.O. Box 8440
Moshav Magshimim 56910
Israel
Ladies and Gentlemen:
We have agreed to serve as a "qualified independent underwriter" within
the meaning of Rule 2720 ("Rule 2720") of the Conduct Rules of the National
Association of Securities Dealers, Inc. in connection with the registration
under the Securities Act of 1933, as amended, by Nur Macroprinters Ltd., an
Israeli corporation (the "Company") on Form F-1, registration No. 333-66103 (the
"Registration Statement"), of approximately 6,583,819 Ordinary Shares, and the
offering and sale of those shares by certain selling security holders (the
"Offering"). We consent to the description in the Registration Statement and
related Prospectus relating to the Offering of ourselves and our role as
"qualified independent underwriter" of the Offering as such description appeared
in the form of Registration Statement that was declared effective by the SEC.
In our capacity as qualified independent underwriter, we participated in
the preparation of the Registration Statement and Prospectus relating to the
Offering and have exercised the usual standards of "due diligence" with respect
thereto. In the course of our due diligence, we have relied upon and assumed,
without independent verification, the accuracy and completeness of all documents
concerning the Company provided to us by the Company and its representatives and
all statements made to us by the Company and its representatives regarding the
Company and its business. Our recommendation is based on economic, market,
financial and other conditions as they exist and can be evaluated on the date
hereof, and also on the terms of the Offering and the
11
<PAGE>
conditions and circumstances of the Company as described in the Registration
Statement at the time it was declared effective by the SEC. Changes in the terms
of the Offering or the condition and circumstances of the Company or the market
for its stock, as well as events occurring after the date hereof, including
changes in the markets in which the Company operates, could materially affect
our recommendation. As such, our recommendation speaks only as of the date
hereof and we shall not be obligated or required hereafter to reaffirm or revise
our recommendation or otherwise to comment upon any events occurring after the
date hereof or upon any changes in the terms of the Offering or the condition or
circumstances of the Company or the market price of the Company's stock that may
occur during the time that the Registration Statement remains effective. We
understand that, pursuant to agreement with the NASD, the terms and arrangements
relating to any sales of the Company's Ordinary Shares made under the
Registration Statement through Josephthal & Co. Inc. at a price higher than 110%
of the closing bid price of the Ordinary Shares as reported by Nasdaq for the
trading day immediately preceding the day of the sale at issue are subject to
prior approval of the NASD's Corporate Financing Department.
Based upon the foregoing, we recommend that the Shares be distributed to
the public initially at a price no higher than $ per share. The foregoing
recommendation should in no way be relied upon as an indication of the value of
the Company's stock or an assessment of future market prices therefor. This
recommendation is addressed only to you for purposes of compliance with Rule
2720 in the context of the Offering, and in the manner applied to the Offering
by the NASD as indicated in correspondence with the NASD related to the
Offering; this recommendation may not be used or relied upon by you for any
other purpose or by any other party in any context.
Sincerely,
CRUTTENDEN ROTH INCORPORATED
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
12
<PAGE>
Schedule I to
Qualified Independent Underwriter Agreement
(a) The Registration Statement complies, and on the date of the
Prospectus, on the date the Registration Statement and any
post-effective amendment to the Registration Statement shall become
effective, and on the date any supplement or amendment to the Prospectus
is filed with the Commission, the Registration Statement and the
Prospectus (and any amendment thereof or supplement thereto) will
comply, in all material respects, with the applicable provisions of the
Securities Act and the Rules and the Exchange Act, and the rules and
regulations of the Commission thereunder; the Registration Statement
will not, as of its effective date, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading; and on
the other dates referred to above neither the Registration Statement nor
the Prospectus, nor any amendment thereof or supplement thereto, will
contain any untrue statement of a material fact or will omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein not misleading.
(b) All contracts and other documents required to be filed as
exhibits to the Registration Statement have been filed with the
Commission as exhibits to the Registration Statement.
(c) The financial statements of the Company (including all notes
and schedules thereto) included in the Registration Statement and
Prospectus present fairly in all material respects the financial
position, the results of operations and cash flows and the stockholders'
equity and the other information purported to be shown therein of the
Company at the respective dates and for the respective periods to which
they apply; and such financial statements have been prepared in
conformity in all material respects with generally accepted accounting
principles, consistently applied throughout the periods involved, and
all adjustments necessary for a fair presentation of the results for
such periods have been made. The selected and summary financial data
included in the Registration Statement present fairly in all material
respects the information shown therein and have been compiled on a basis
consistent with the audited financial statements presented therein.
(d) Kost Forer & Gabbay, whose reports are filed with the
Commission as a part of the Registration Statement, are and, during the
periods covered by their reports, were independent public accountants as
required by the Securities Act and the Rules.
(e) Other than Nur Media Solutions S.A., Nur America Inc., Nur
Advanced Technologies (Europe) S.A., Nur Marketing and Communications
GmbH, Nur Hungaria KFT, Good-Lux S.A., M.B.T. (Nur) Industries Ltd., Nur
Print Technologies (1993) Ltd., and N.A.T. Holdings and Investments
(1997) Ltd., the Company has no subsidiary or subsidiaries and does not
control, directly or indirectly, any corporation, partnership, joint
venture, association or other business organization. The Company is duly
qualified and in good standing as a foreign corporation in each
jurisdiction in which the character or
13
<PAGE>
location of its assets or properties (owned, leased or licensed) or
the nature of its business makes such qualification necessary except
for such jurisdictions where the failure to so qualify would not
have a material adverse effect on the assets or properties,
business, results of operations or financial condition of the
Company. The Company has all requisite corporate power and
authority, and has and is in material compliance with the
requirements and conditions of, all necessary authorizations,
approvals, consents, orders, licenses, certificates and permits of
and from all governmental or regulatory bodies or any other person
or entity, to own, lease and license its assets and properties and
conduct its businesses as now being conducted and as described in
the Registration Statement and the Prospectus except for such
authorizations, approvals, consents, orders, material licenses,
certificates and permits the failure to so obtain would not have a
material adverse effect upon the assets or properties, business,
results of operations, prospects or condition (financial or
otherwise) of the Company; no such authorization, approval, consent,
order, license, certificate or permit contains a materially
burdensome restriction other than as disclosed in the Registration
Statement and the Prospectus; and the Company has all such corporate
power and authority, and such authorizations, approvals, consents,
orders, licenses, certificates and permits to enter into, deliver
and perform this Agreement.
(f) To the Company's knowledge, the Company owns or possesses
exclusive rights to use all patents, patent rights, inventions, trade
secrets, know-how, trademarks, service marks, trade names and copyrights
that are necessary to conduct its business as now conducted and as
described in the Registration Statement and Prospectus; except as set
forth in the Registration Statement and the Prospectus, the expiration
of any patents, patent rights, licenses, trade secrets, trademarks,
service marks, trade names or copyrights would not have a material
adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company; 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 patent, patent rights, licenses, inventions,
trade secrets, know-how, trademarks, service marks, trade names or
copyrights; and the Company has not received any notice of, and has no
knowledge of, any infringement of or conflict with asserted rights of
others by the Company with respect to any patent, patent rights,
licenses, inventions, trade secrets, know-how, trademarks, service
marks, trade names or copyrights which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would have a
material adverse effect on the condition (financial or otherwise),
earnings, operations, or business of the Company.
(g) The Company has good title to each of the items of personal
property that are reflected in the financial statements referred to in
Section (c) or are referred to in the Registration Statement and the
Prospectus as being owned by it and valid and enforceable leasehold
interests in each of the items of real and personal property that are
referred to in the Registration Statement and the Prospectus as being
leased by it, in each case free and clear of all liens, encumbrances,
claims, security interests and defects, other than those described in
the Registration Statement and the Prospectus and those which do not and
will not have a material adverse effect upon the assets or properties,
business, results of operations or financial condition of the Company.
14
<PAGE>
(h) Except as set forth in the Registration Statement and
Prospectus, there is no litigation or other dispute resolution
proceeding or governmental or other proceeding or investigation pending
or, to the Company's knowledge, threatened (and the Company does not
know of any basis therefor) against the Company, or involving the
assets, properties or business of, the Company which would materially
adversely affect the value or the operation of any such assets or
properties or the business, results of operations, or condition
(financial or otherwise) of the Company.
(i) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
described therein, (i) there has not been any material adverse change in
the assets or properties, business, results of operations, prospects or
condition (financial or otherwise), of the Company, whether or not
arising from transactions in the ordinary course of business; (ii) the
Company has not sustained any material loss or interference with its
assets, businesses or properties (whether owned or leased) from fire,
explosion, earthquake, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or any court or legislative or
other governmental action, order or decree; and (iii) since the date of
the latest balance sheet included in the Registration Statement and the
Prospectus, except as reflected therein, the Company has not (a) issued
any securities other than pursuant to the exercise of stock options,
which complied with applicable law in all material respects, or incurred
any liability or obligation, direct or contingent, for borrowed money,
except such liabilities or obligations incurred in the ordinary course
of business, (b) entered into any material transaction not in the
ordinary course of business or (c) declared or paid any dividend or made
any distribution on any shares of its stock or redeemed, purchased or
otherwise acquired or agreed to redeem, purchase or otherwise acquire
any shares of its capital stock.
(j) There is no document or contract of a character required to
be described in the Registration Statement or Prospectus which is not
described as required. Neither the Company, nor to the Company's
knowledge, any other party is in default in the observance or
performance of any term or obligation to be performed by it under any
such agreement, and no event has occurred which with notice or lapse of
time or both would constitute such a default, in any such case which
default or event would have a material adverse effect on the assets or
properties, business, results of operations, or condition (financial or
otherwise) of the Company. No default exists, and, to the Company's
knowledge, no event has occurred which with notice or lapse of time or
both would constitute a default, in the due performance and observance
of any term, covenant or condition, by the Company of any other
agreement or instrument to which the Company is a party or by which it
or its properties or business may be bound or affected which default or
event would have a material adverse effect on the assets or properties,
business, results of operations, or condition (financial or otherwise)
of the Company.
(k) The Company is not in violation of any term or provision of
its charter or by-laws or any judgment or decree binding upon the
Company or, to the best of its knowledge, of any franchise, license,
permit, statute, law, rule or regulation, where the consequences of such
violation would have a material adverse effect on the assets or
15
<PAGE>
properties, business, results of operations, or condition (financial or
otherwise) of the Company.
(1) Neither the execution, delivery and performance of this
Agreement by the Company nor the effectiveness of, or sale of the Shares
pursuant to, the Registration Statement, will give rise to a right to
terminate or accelerate the due date of any material payment due under,
or conflict with or result in the breach of any material term or
provision of, or constitute a default (or an event which with notice or
lapse of time or both would constitute a default) under, or require any
consent or waiver under, or result in the execution or imposition of any
lien, charge or encumbrance upon any properties or assets of the Company
pursuant to the terms of, any material indenture, mortgage, deed of
trust or other material agreement or instrument to which the Company is
a party or by which it or any of its properties or businesses is bound,
or any material franchise, license, permit, judgment, decree, order,
statute, rule or regulation applicable to the Company or violate any
provision of the charter or by-laws of the Company, except for such
consents or waivers which have already been obtained and are in full
force and effect.
(m) The Company has authorized and outstanding capital stock as
set forth in the Prospectus as of the date stated therein. All of the
outstanding Company's Ordinary Shares, NIS 1.0 nominal value per share
(the "Ordinary Shares") have been duly and validly issued and are fully
paid and nonassessable and none of them was issued in violation of, or
is subject to, any preemptive, co-sale, first refusal, or other similar
right. The certificates for the Shares are in due and proper form and
the holders of the Shares will not be subject to personal liability by
reason of being such holders. Except as disclosed in the Registration
Statement and the Prospectus, there is no outstanding option, warrant or
other right calling for the issuance of, and there is no commitment,
plan or arrangement to issue, any share of stock of the Company or any
security convertible into, or exercisable or exchangeable for, such
stock. The Ordinary Shares conform in all material respects to all
statements in relation thereto contained in the Registration Statement
and the Prospectus.
(n) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except (A) as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles and (B) to the extent that rights to indemnity or
contribution under this Agreement may be limited by Federal and state
securities laws or the public policy underlying such laws.
(o) The Company is not involved in any labor dispute and, to the
knowledge of the Company, no such dispute is threatened, which dispute
would have a material adverse effect on the assets or properties,
business, results of operations, prospects or condition (financial or
otherwise) of the Company.
16
<PAGE>
(p) No material transaction has occurred between or among the
Company and any of its officers or directors or any affiliate or
affiliates of any such officer or director that is required to be
described in and is not described in the Registration Statement and the
Prospectus.
(q) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected
to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation
of the price of the Ordinary Shares to facilitate the sale or resale of
any of the Shares.
(r) The Company has filed all federal, state, local and foreign
tax returns which are required to be filed through the date hereof, or
has received extensions thereof, and has paid all taxes shown on such
returns and all assessments received by it to the extent that the same
are material and have become due except for tax obligations that are
contested in good faith and for which appropriate reserves have been
taken.
(s) The Company maintains insurance with insurers of recognized
financial responsibility of the types and in the amounts generally
deemed prudent for its business and consistent with insurance coverage
maintained by similar companies in similar businesses, including, but
not limited to, insurance covering real and personal property owned or
leased by the Company against theft, damage, destruction, acts of
vandalism, products liability for clinical trials, errors and omissions,
and all other risks customarily insured against, all of which insurance
is in full force and effect; the Company has not been refused any
insurance coverage sought or applied for; and the Company does not have
any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not materially and adversely affect
the condition (financial or otherwise), earnings, operations, or
business of the Company.
(t) The Ordinary Shares are registered pursuant to Section 12(g)
of the Exchange Act, and are approved for inclusion in the Nasdaq
National Market, and the Company has taken no action designed to, or
likely to have the effect of, terminating the registration of the
Ordinary Shares under the Exchange Act or the inclusion of the Ordinary
Shares in the Nasdaq National Market, nor has the Company received any
notification that the Commission or the Nasdaq National Market is
contemplating terminating such registration or approval.
(u) Concerning the Investment Company Act of 1940, as amended
(the "1940 Act"), and the rules and regulations thereunder, the Company
has in the past conducted, and the Company intends in the future to
conduct, its affairs in such a manner as to ensure that it is not and
will not become an "investment company" or a company "controlled" by an
"investment company" within the meaning of the 1940 Act and such rules
and regulations.
(v) The Company has not distributed and will not distribute any
offering material in connection with the offering and sale of the Shares
other than any Preliminary
17
<PAGE>
Prospectuses, the Prospectus, the Registration Statement and other
materials, if any, permitted by the Act.
(w) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets, (iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
18
The following exhibit constitutes a fair and accurate English translation of
the original copy of this document.
/s/ Erez Shachar
--------------------------
Erez Shacher
President and Chief Executive Officer
<PAGE>
AGREEMENT
Drawn up and signed in Tel-Aviv,
On July 11, 1998
BETWEEN
Moshe Nuri
I.D. No. 0464755775
(hereinafter: "the Debtor")
through the Special Administrator
Advocate Ishay Bet-On
(hereinafter: "the Special Administrator")
of the one part
AND BETWEEN:
Henia Nuri
I.D. No. 54074794
(hereinafter: "Henia")
of the second part
AND BETWEEN:
Yoel Zvi Kraus
I.D. No. 03093419-4
and Rachel Kraus
I.D. No. 04144853-1
(hereinafter: "Kraus")
of the third part
AND BETWEEN:
Nur Macroprinters Ltd.
Public Company No. 52-003986-8
by attorney - Adv. Amir Ivtzan
(hereinafter: "Macroprinters")
of the fourth part
WHEREAS: On April 14, 1997, Advocate Ishay Bet On was appointed
by the District Court in Tel-Aviv as Temporary Receiver
of the Debtor in the framework of bankruptcy file
217/97, (hereinafter: "The Bankruptcy File");
<PAGE>
AND WHEREAS On November 9, 1997, in the framework of the bankruptcy
file the Debtor was given a permanent receiving order
in the framework of which Advocate Ishay Bet-On was
appointed by the District Court in Tel-Aviv as the
Special Administrator to the Debtor on behalf of the
Official Receiver;
AND WHEREAS In the context of the bankruptcy file, the Special
Administrator is making every effort to achieve a total
arrangement of creditors of the Debtor and a discharge
of the Debtor prior to the Debtor being declared
bankrupt, which includes giving a discharge to
Macroprinters of the claims connected with the Debtor
and Henia by them and/or on their behalf and by third
parties;
AND WHEREAS Macroprinters has an alleged claim against the
Debtor, for the tremendous amount of about NIS
26,039,372.00 (twenty six million, thirty nine
thousand, three hundred and seventy two shekels);
AND WHEREAS Macroprinters supports all the actions of the
Special Administrator and all the procedures which the
Special Administrator takes in the context of the
bankruptcy file and supports the continued functioning
and activities of Advocate Ishay Bet-On in his
functions in connection with the Debtor and with the
matters in the companies connected with the Debtor;
AND WHEREAS The Special Administrator has claims against
Macroprinters with regard to rent debts of the estate
of the Debtor and his wife (hereinafter: "the Rent"),
and with regard to the shares which the Debtor had
owned;
AND WHEREAS Macroprinters has various claims regarding the
bankruptcy file and against the Debtor and against his
wife and against various companies in which the Debtor
and his wife are and/or were shareholders in them;
AND WHEREAS In the context of Macroprinters' waiving receipt of
cash and/or other rights from the receivership fund of
the Debtor, from the Debtor and from anyone on his
behalf, it is possible to discharge all the total
various requests submitted by Macroprinters and the
Special Administrator in the context of the bankruptcy
file;
AND WHEREAS The Parties are interest to arrange a comprise
between them in the framework of this Agreement and
subject to the approval by the Bankruptcy Court in the
bankruptcy file;
<PAGE>
IT IS THEREFORE DECLARED, AGREED AND CONDITIONED
BETWEEN THE PARTIES AS FOLLOWS:
1. The preamble to this Agreement is an integral part thereof.
2. Macroprinters waives its right to receive a dividend and/or any funds
and/or other rights, whether in the present or in the future, from the
receivership fund of the Debtor, from the Debtor, or from Henia Nuri.
3. Macroprinters hereby waives its right according to its alleged proof of
debt, in a total amount of about NIS 26,039,372.00 (twenty six million,
thirty nine thousand, three hundred and seventy two shekels).
4. a. Macroprinters supports all the actions of the Special
Administrator and all the procedures which the Special
Administrator takes in favor of the creditors and for the benefit
of the receivership in the context of the bankruptcy file against
any factor whatsoever, regarding the existence of this Agreement.
b. Macroprinters also undertakes to support the continued appointment of
Advocate Bet-On whether as a Special Administrator for the Debtor or
whether as a Trustee for the Debtor, should it be necessary.
5. a. The Special Administrator confirms, that against the waiver of
the alleged claim of Macroprinters, the Special Administrator waives
his claims in Applications No. 573/98, No. 823/95 and No. 1630/98
and that he has no claim and/or suit and/or demand whatsoever from
Macroprinters and/or anyone on its behalf including regarding the
rent fees from Macroprinters for the rental of the buildings in the
estate of the Debtor and for the assignment of the rights by way of
pledge by Otsar Ha'Chayal Ltd. and the shares.
b. Nur Macroprinters waives any claim and/or suit of any type
whatsoever against the Debtor and/or the Special Administrator.
Among other things, for the buildings which Macroprinters rents in
the Debtor's estate.
c. The Debtor, Henia and Kraus hereby certify that Macroprinters paid
the rent up to July 1, 2000 and therefore it is the tenant up to
that date, in accordance with the rental agreement of July, 4,
1993 and May 29, 1995.
d. The Special Administrator agrees that Macroprinters is entitled to
continue renting the buildings in the Debtor's estate up to July
1, 200 without any additional payment.
e. Macroprinters hereby agrees to a give discharge to the Debtor
provided that this discharge will also include the discharge to
the third parties subject of the discharge.
6. On the approval of this comprise Agreement, the claims and/or
applications of the Special Administrator and/or of Macroprinters which
were submitted in the context of the bankruptcy file numbers 1630/93 and
1547/95 and 579/98 and 1801/98, 523/98, 1684/98 are hereby rejected,
unless the Court will not approve this Agreement and/or the accompanying
compromise agreements.
<PAGE>
7. The Debtor himself and through his Special Administrator on behalf of
the Official Receiver - Advocate Ishay Ben-On, Henia Nuri, Yoel Tzvi
Kraus and Rachel Kraus certify that they have no and will not have any
claim and/or demand and/or suit, both in the present and in the future
against Macroprinters and/or anyone on its behalf, apart from the
implementation of this Agreement.
8. To avoid doubt, the Parties to this Agreement hereby declare that with
approval of this Agreement they hereby waive any claim and/or demand
and/or suit and/or request, whether directly or indirectly, whether if
in the past they have received any expression in the framework of an
existing request and/or agreement or not.
9. This Agreement is subject to the approval of the Bankruptcy Court in
bankruptcy file 217/97
IN WITNESS THEREOF THE PARTIES HEREBY SIGN
( - ) ( - )
- -------------------------- ----------------------
Amir Ivtzan, Advocate Ishay Bet-On, Advocate
Attorney for Macroprinters I. Bet-On
Special
Administrator on
the assets of
Moshe Nuri on
behalf of the
Official Receiver
and according to
the decision of
the District
Court in Tel-Aviv
( - ) ( - )
------------------------ ----------------------
Moshe Nuri Henia Nuri
( - ) ( - )
------------------------ ----------------------
Kraus Yoel Tzvi Kraus Rachel
<PAGE>
Advocate Yishai Bet-On 13 June, 1998
Bet Agish Revid
13 Noah Mozes Street
Tel Aviv, 67442
Dear Sir:
Re: T.P. 231/97 - HM 3129/97 - Credit Arrangement
Nur Outdoor Advertising (Manufacturing and Production) Ltd.
Under Temporary Operating Liquidation
(hereinafter: "the Company under Liquidation"
In the name of my client, Nur Macroprinters; Ltd, and in the name of the
Company in Liquidation I would like to put in writing the following agreement
made:
1. The Company in Liquidation has a debt to my client totaling at least
NIS 3,000,000 (three million new shekels).
2. My client hereby gives notice that it supports the creditors settlement
offered by you relating to this matter, whether in this context or in an
amended context.
3. My client hereby also gives notice of its agreement to set its share in
the debt at a total amount of 0 (zero).
4. My client support of the settlement and setting its share of the debt as
mentioned above in clauses 2 and 3 at zero, is subject that the
discharge to the Company in Liquidation will also include a general and
irrevocable waiver of the Company in Liquidation on any claims and/or
demands and/or suits to third parties including a waiver of any claims
and/or demands against Macroprinters and/or anyone on its behalf
relating to the distribution agreement dated 12.5.94, a copy of which is
attached hereto as Appendix A, and parties to this document hereby
declare that they waive any claim or application and/or demand one
against the other, whether directly or indirectly, whether expressed in
the context of an existing application and/or agreement or not.
5. I request that in the context of the creditors arrangement to give
expression to the contents of this letter.
6. Should the creditors arrangement in which these principles appear not be
approved, we will re-discuss the matter and these agreements will no
longer be valid.
Your sincerely,
( _ )
Adv. Amir Ivtzen
on behalf of Macroprinters
( - )
----------------------------
Liquidater and Administrator
Adv. Yishai Bet-On
I Agree
<PAGE>
Moshe & Henia Nuri
13.7.98
Dear sir/madam,
Re: General and Irrevocable Waiver
We hereby confirm to you that in addition to the compromise agreements and the
performance of your obligations to us we hereby waive under a general and
irrevocable waiver, any debt you owe us, and we do not and will not have any
claim and/or demand and/or reason for one against you.
As long as you are guarantors for us, we will see to releasing you immediately
after receipt of your written demand.
Should you prepare a creditors arrangement, we will support it and agree not to
receive any payment in the context of our agreement to the creditors
arrangement.
Moreover we will support the appointment of Adv. Ishai Beit-On as Trustee
and/or your Special Administrator.
Nur Macroprinters will occupy the premises rented by it, on the estate on
Moshav Magshimim, until 1.7.2000 and will pay all current payments applying to
it pursuant to the rental agreement, apart from the rent which has been fully
paid up to 1.7.2000. At the time of vacating the premises in due time, as
mentioned above, or at any other postponed time mutually agreed between the
parties, against continued payment of rent, Nur Macroprinters will leave all the
permanent attachments, including:
a. Electric system (wires, plugs, electric boards etc.).
b. Plumbing systems (pipes, taps, waters meters etc.).
c. Air conditioning system.
Yours sincerely,
( - )
---------------------
Nur Macroprinters Ltd.
by attorney Adv. Amir Ivtzen
<PAGE>
13.7.98
Mr. Moshe Nuri
Dear Sir:
Re: Private Company Controlled by You
We hereby confirm to you that, as long as no claims and/or demands and/or suits
have been submitted, directly and/or indirectly, against Nur Macroprinters Ltd.
by one of the private companies owned by you, and/or which were owned by you,
including by officers who are appointed and/or will be appointed by the Court,
Nur Macroprinters will not submit any claims and/or demands and/or suits against
any of the above-mentioned companies.
Notwithstanding the aforesaid, as long as this relates to companies which are in
the process of a procedure which require submission of proof of a debt at
certain times, Macroprinters will submit such proof of a debt as mentioned as
far as exists, but as long as the terms mentioned in the previous paragraph
shall exist, Macroprinters will not demand its implementation.
In addition, Macroprinters will act in order to release the above companies from
guarantees they gave in favor of Macroprinters' accounts with the banks,
according to a list which will be submitted to us.
If by 31.12.99 a creditors arrangement will be prepared with one of the
above-mentioned companies, we will support it as long as it does not harm
Macroprinters or any of its shareholders and will agree not to receive any
payment in the context of our support in the arrangement. We will also support
the appointment of Adv. Yishai Bet-On as the trustee and/or as special
administrator and/or temporary or permanent liquidator of the above-mentioned
companies.
The aforementioned is in addition to the approval of the compromise agreements
between us, and the performance of all your undertakings to us
Yours sincerely,
( - )
---------------------
Nur Macroprinters, Ltd.
by attorney Adv. Amir Ivtzen
<PAGE>
Messers: 13.7.98
Nur Macroprinters Ltd.
Re: General and Irrevocable Waiver
We hereby certify to you that subject to the approval of the compromise
agreements and the performance of your obligations to us we have no claims
and/or demands and/or suits against you of any type whatsoever, including but
without any exceptions regarding the following matters (respectively):
1. We hereby certify that during 1996 we received all the rent in advance
with regard to the period ending 1.7.2000. Therefore we do not and will
not have any claims regarding your occupation of the buildings up to the
said date.
2. Up to the 1.7.2000 the rental agreements signed between us, with the
necessary changes, will continue to apply. In the event that the rights in
the estate will be transferred from us, we undertake that the new owners
of the rights will be a party to the above-mentioned rental agreements,
and the transfer of the rights will not harm any of your rights.
3. We hereby certify that we do not and will not have any claims regarding
the use of the rented property, and that your use of the rented property
does not cause any disturbance.
4. We hereby undertake to take any action required with any Authority in
order to ensure that there will not be any impediment in continuing to
occupy the buildings up to 1.7.2000
5. We certify that no funds are due to us from you with regard to anything
whatsoever, and apart from the rental agreements none of us have any
contractual engagements, whether in writing or verbal, and should there be
any such engagement as mentioned, it will be null and void for all intents
and purposes.
Yours sincerely,
( - ) ( - ) ( - ) ( - )
- ------------- ------------ --------------- -------------
Henia Nuri Moshe Nuri Yoel Zvi Kraus Rachel Kraus
( - )
- -------------------------------------------------------
In their name and the name of any Company owned by them
Nur Focus Properties and Investments Ltd.
CERTIFICATE
I hereby certify that this letter was signed before me by Henia Nuri, Moshe
Nuri, Yael Zvi Kraus and Moshe Nuri in the name of Nur Focus Properties and
Investments Ltd., on their own free will without any undue force or pressure and
after I have explained to them the legal consequences of an irrevocable general
waiver.
_________________________________
Signed
<PAGE>
13.7.98
Messers:
Nur Macroprinters Ltd.
Dear Sirs:
Re: The Nuri Family
In the name of my client Bank Otzar Hachayal Ltd. and in my capacity as the
Receiver of the estate on Magshamim block 6290, part of parcels 30, 33
(hereinafter: "the Receivership") I hereby certify to you as follows:
1. Disputes were in existence between the various parties connected with the
"Moshe Nuri" affair.
2. The Bank and the Receiver had various claims against Macroprinters
including the matter of assignment of rights by way of a pledge given by
Nur Focus Properties and Investments Ltd. to the Bank, and the right to
receive rent from Macroprinters with regard to the buildings in the estate
of Moshe Nuri (hereinafter: "the buildings") on the basis of a first deed
of mortgage on the estate of Moshe Nuri.
3. The Bank and the Receiver certify that they have no claim and/or demands
and/or suits against Macroprinters relating to the Nuri Affair, including
the occupation of the buildings by Macroprinters and regarding the rent,
both regarding the past and regarding the future up to 1.7.2000.
4. In the footnote to the letter you are requested to approve that
Macroprinters have been informed by Moshe Nur, the Special Administrator,
the Bank and Receiver, that all the rent for the buildings regarding the
period starting 1.7.2000 are pledged to the Bank and should be transferred
directly to the Bank. Therefore, should Macroprinters be interested in
engaging in a rental agreement with regard to the buildings with the
owners of the buildings, for the period as of 1.7.2000, there will be a
need to receive the approval of the Bank to the terms of the rental
agreement.
Moreover, please certify in the footnote to our letter that Macroprinters
has not or will not have any demands against the Receiver and/or the Bank
regarding the occupation of the buildings.
5. The Bank and the Receiver certify that they do not transfer and not
convert and not grant in any other way any right of the rights against
Macroprinters with regard to any matter whatsoever connected with Moshe
Nuri, including the matter of the Deed of Assignment, the buildings and
the rental to any third party.
6. The Receiver will inform the Execution Office regarding file 01-31326-97
that it no longer demands the Evacuation Order against Macroprinters
and/or does not demand any rent for the buildings.
<PAGE>
7. Should the Bank and/or the Receiver continue in realizing the estate, the
estate will be realized in a way that will not harm the rights of
Macroprinters to occupy the building without payment of additional rent up
to 1.7.2000 in accordance with the terms of the rental agreement.
Yours sincerely,
( - ) ( - )
- ----------------------- ------------
Bank Otzar Hachayil Ltd. The Receiver
by Adv. R. Boblil
We hereby certify the aforementioned in clause 4 to this letter.
( - )
----------------------------
Nur Macroprinters Ltd.
by attorney Adv. Amir Ivtzen.
[NUR MACROPRINTERS LETTERHEAD]
Summary of BBL Bank--credit line
Borrower: NMS
Amount: FB 15,000,000
Interest Rate:
Facility Fee:
Maturity: Revolving
Availability: up to max C/L
Subordination: None
Guarantee: parent company guarantee
Collateral: None
OTHER TERMS:
Payment: interest monthly; the bank is authorized to debit any
account maintained by Nur Europe for the payment of
interest, principal and fees when due.
Financial covenants: None
Reporting: None
<PAGE>
[NUR MACROPRINTERS LETTERHEAD]
Summary of BBL Bank--credit line
Borrower: Nur Europe
Amount: FB 20,000,000
Interest Rate:
Facility Fee:
Maturity: Revolving
Availability: up to max C/L
Subordination: None
Guarantee: parent company guarantee
Collateral: None
OTHER TERMS:
Payment: interest monthly; the bank is authorized to debit any
account maintained by Nur Europe for the payment of
interest, principal and fees when due.
Financial covenants: Cancellation of credit line of 10,000,000 BEF with
General Le Bank
Reporting: None
[NUR MACROPRINTERS LETTERHEAD]
Summary of Artesia Bank--credit line
Borrower: NMS
Amount: FEB 15,000,000
Interest Rate:
Facility Fee: 10,000 BEF
Maturity: Revolving
Subordination:
Guarantee: parent company guarantee
Collateral: None
OTHER TERMS:
Payment: interest monthly; the bank is authorized to debit any
account maintained by Nur Europe for the payment of
interest, principal and fees when due.
Financial covenants: These covenants are likely to be measured yearly.
1. the total equity of NMS should increase to BEF 16,000,000
Reporting: None
<PAGE>
[NUR MACROPRINTERS LETTERHEAD]
Summary of Artesia Bank -- credit line
Borrower: Nur Europe
Amount: FEB 15,000,000
Interest Rate:
Facility Fee:
Maturity: Revolving
Subordination:
Guarantee: parent company guarantee
Collateral: None
OTHER TERMS:
Payment: interest monthly; the bank is authorized to debit any
account maintained by Nur Europe for the payment of
interest, principal and fees when due.
Financial covenants: These covenants are to be measured yearly.
1. the total shareholders equity of NUR MACROPRINTERS Ltd. Must be at all time
of minimum USD 4.500.000
2. the total equity of NUR ADVANCED TECHNOLOGIES (EUROPE) S.A. must be at all
time of minimum BEF 25.000.000
Reporting: None
[NUR MACROPRINTERS LETTERHEAD]
Summary of Fleet Bank Credit Line
Borrower: Nur America, Inc.
Amount: $1,000,000
Interest Rate: fleet national bank's prime rate +1/2% or libor
+ 2-1/2%
Facility Fee: 1/2% per annum facility fee payable quarterly, in
advance
Maturity: 5/31/99
Availability: borrowings is limited to 80% of domestic and acceptable
credit insurance backed or l/c backed international
accounts receivable within 90 days of invoice and 50%
of domestic ink inventory with a cap of $250,000. The
bank may also at its discretion issue letters of credit
under the facility. Availability will be reduced by the
amount of such letters of credit
Subordination: A minimum of $1,000,000 of intercompany payable will be
subordinated to the bank.
Guarantee: parent company guarantee
Collateral: A perfected first lien on all U.S. corporate assets.
OTHER TERMS:
Payment: interest monthly; the bank is authorized to debit any
account maintained by Nur America for the payment of
interest, principal and fees when due.
Financial covenants: These covenants are to be measured quarterly on a
consolidated basis, unless otherwise stated.
Minimum tangible capital base (TCB): Defined as total
shareholders' equity plus subordinated debt (debt
expressly subordinated to bank debt) less intangible
assets. Test not to be reduced by losses.
Not to be less than $1,500,000 plus 50% of net income
earned and 75% of new equity raised after 12/31/97.
Maximum leverage ratio: Defined as total liabilities
less subordinated debt divided by tangible capital
base, the leverage ratio cannot exceed 1.50:1.00 for
each quarter.
<PAGE>
NUR America, Inc.
June 8th, 1998
(For Discussion Purposes Only)
REVOLVING CREDIT FACILITY
Borrower: NUR America, Inc. (the "Borrower")
Amount: $1,000,000.
Interest Rate: Fleet National Bank's Prime rate + 1/2% or
Libor + 2-1/2%.
Facility Fee: 1/2% per annum facility fee payable quarterly, in
advance.
Maturity: 6/31/99
Availability: Borrowings shall be limited to 80% of domestic and
pre-approved or L/C backed international accounts
receivable within 90 days of invoice and 50% of domestic
ink inventory with a cap of $250,000. The Bank may also
at its discretion issue letters of credit under the
facility. Availability will be reduced by the amount of
such letters of credit.
Subordination: A minimum of $1,000,000 of intercompany payable will be
subordinated to the Bank.
Guarantee: Parent company guarantee; conditions for reducing the
amount of the guarantee to be determined.
Collateral: A perfected first lien on all U.S. corporate assets.
OTHER TERMS:
Payment: Interest monthly; the Bank shall be authorized to debit
any account maintained by the Borrower for the payment
of interest, principal and fees when due.
Other Fees: The Borrower is responsible for any and all
out-of-pocket expenses, including but not limited to
legal fees incurred by the Bank in connection with the
arrangement, documentation and closing of this
transaction, whether or not the transaction closes, or
any loan is made. Maximum legal fees will not exceed
$6,000, and will be payable at closing.
<PAGE>
Financial Covenants: These covenants are to be measured quarterly on a
consolidated basis, unless otherwise stated.
Minimum Tangible Capital Base (TCB): Defined as Total
Shareholders' Equity plus Subordinated Debt (debt
expressly subordinated to Bank Debt) less Intangible
Assets. Test not to be reduced by losses.
Not to be less than $1,600,000 plus 50% of Net Income
earned and 75% of new equity raised after 12/31/97.
Maximum Leverage Ratio: Defined as Total Liabilities
less Subordinated Debt divided by Tangible Capital Base,
the Leverage Ratio cannot exceed 1.50:1.00 for each
quarter.
Minimum Liquidity Ratio: Defined as the sum Cash and
Cash Equivalents, Accounts Receivable and Inventory
divided by Current Liabilities excluding Deferred
Revenues and Subordinated Debt, the Liquidity Ratio must
be at least 1.25:1.00 for each quarter.
Profitability: Quarterly losses cannot exceed $60,000;
no two consecutive quarterly losses, and profitability
of at least $100,000 for two trailing quarters.
Reporting: Receipt of monthly financial statements internally
prepared in accordance with GAAP, within 30 days of
month-end. Receipt of audited financial statements as of
the end of the current fiscal year prepared by an
outside CPA firm acceptable to us, within 90 days of
fiscal year-end.
Restrictions: Limits on additional outside indebtedness except for
permitted lease financing (amount to be determined),
guarantees, investments; no merger or acquisition,
dividends, or changes in capital structure. The Borrower
will use Fleet National Bank as its primary operating
bank.
[NUR MACROPRINTERS LETTERHEAD]
Summary of Bank Hapoalim c/l
Borrower: NUR Corporation
Amount: NIS 1,500,000
Interest Rate: Prime+3%
Facility Fee: None
Maturity: Revolving
Availability: up to max c/l
Subordination: None
Guarantee: None
Collateral: A perfected first lien 70% no grantee on all NUR
corporate assets.
OTHER TERMS:
Payment: interest monthly; the bank is authorized to debit any
account maintained by Nur Corp. for the payment of
interest, principal and fees when due.
Financial covenants: None
Reporting: None
[NUR MACROPRINTERS LETTERHEAD]
Summary of Bank Clali--credit line
Borrower: NUR Corporation
Amount: $600,000
Interest Rate: Prime+1.5%
Maturity: Revolving
Availability: up to credit limited
Subordination: None
Guarantee: None
Collateral: A perfected first lien of 30% on NUR corporate assets.
OTHER TERMS:
Payment: interest monthly; the bank is authorized to debit any
account maintained by Nur Corporate for the payment of
interest, principal and fees when due.
Financial covenants: None
Reporting: None
[NUR MACROPRINTERS LETTERHEAD]
Summary of Bank Hapoalim--Loan
Borrower: Nur Corporate
Amount: $400,000
Interest Rate: Prime+1.5%
Facility Fee:
Maturity: Revolving
Subordination:
Guarantee: parent company guarantee
Collateral: none
OTHER TERMS:
Payment: interest monthly; the bank is authorized to debit any
account maintained by Nur Corporate for the payment of
interest, principal and fees when due.
Financial covenants: None.
Reporting: None
AGREEMENT
Drawn up and signed in Petach Tikva, on 10.2.1997
Between : Nur Advanced Technologies Ltd.
of 5 David Navon
Magshmim
(hereinafter: "Nur")
of the one part
----------------
and between : I.T.S. Machinery Development Ltd.
of 7 Hasadna Street
Petach Tikva
(hereinafter: "I.T.S.")
Of the second part
------------------
Whereas : Nur is engaged among other things in research,
development and production of unique (digital) computerized
printing systems, which are designated for color printing
in large formats and which use various ink-jet
technologies;
and whereas : In the context of its operations Nur initiated
the development of a printing systems known as Blueboard,
which prints in various widths of up to 16 ft., including
using the use of water-based ink, and which is meant by Nur
for sale in various countries throughout the world
(hereinafter: "the BB printer");
and whereas : In the context of developing the BB printer Nur is assisted
by I.T.S. which carries out the mechanical development of
the BB printer (hereinafter: "development work") for Nur,
and this in accordance with the main technical
specifications attached to this agreement as Appendix A
(hereinafter: "the specifications");
and whereas : Nur is interested, subject to completing development of the
BB printer, to give to an external source, who will act as
an independent contractor, the manufacture of the
mechanical components and the assembling of the BB series
of printers, based on the conditions detailed in the this
agreement (hereinafter: "the production work");
and whereas : I.T.S. is interested to carry out the production work for
Nur, and Nur agrees to give I.T.S. the execution of the
production work, including granting I.T.S.,
in consideration for I.T.S.'s contribution to the
successful execution of the engineering design work
included in the development work, certain rights with
regard to the production work, and all in accordance with
the terms detailed in this agreement;
<PAGE>
and whereas: The parties wish to base their agreement in relating to the
development work and the conditions for carrying out the
production work in writing,
it is hereby agreed and conditioned among the parties as follows:
1. Preamble and interpretation
---------------------------
1.1. The preamble and the Appendices to this agreement are an integral
part thereof. The parties hereby agree that they will cooperate in
order to complete those Appendices which at the time of signing the
agreement have not yet been prepared, and the said Appendices will
be attached to the agreement not later than sixty (60) days from the
date of this agreement.
1.2. The headings to the paragraphs in this agreement are intended for
reference only and should not used for interpreting this agreement.
2. I.T.S.'s presentations
----------------------
I.T.S. declares, certifies and undertakes as follows:
2.1 That the specifications of the BB printer were presented to it and that
they were fully satisfied with them.
2.2 That it knows that as the development work advances during the
execution of the production work there are likely to be changes in the
specifications and the plans of the BB printer.
2.3 That it has the know-how, experience and ability required to carry out
the development and production work in the conditions detailed in this
agreement.
2.4 That the B.B. Printer and all the rights, existing and future, in the
B.B. Printer, in the future developments of the B.B. Printer and the
know-how included in the B.B. Printer, including the rights for
intellectual property included in the B.B. Printer, in the plans for
the B.B. Printer developed by Nur, in the commercial secrets and the
production file, as defined below, belong to Nur and that apart from
the rights it specifically grants in this agreement, it has not and
will not have any claim, demand or contention with regard to the
ownership of the B.B. Printer and the rights in the B.B. Printer and
that it waives all such claims, demands or contentions.
2.5 That all know-how connected with the B.B. Printer is the property of
Nur, and that it does not have and will not have any claims, demands or
contentions to the know-how rights as mentioned, and that it will
transfer it to Nur at Nur's demand. Regarding this agreement: any
"know-how" or information given to I.T.S. or to someone on its behalf
by Nur and/or by others on behalf of Nur and/or know-how or information
which will accumulate at I.T.S., during and as a result of carrying out
the development and/or production work, including the production file,
plans, drawing, blueprints, specifications, engineering plans,
<PAGE>
computer software, methods of work and production, copyrights in
patents, lists of suppliers, business plans, price lists etc., and all
these were in writing, verbally, whether in a computer, whether the
original or a copy and whether in any other form.
2.6 As long as this agreement is in effect, and after the termination of
this agreement, I.T.S. will assist Nur to the best of its ability
including in the field of any paperwork required for the purpose of
registering the patents discovered during and with regard to the
development and/or production work in the name of Nur, and in
consideration will be entitled to a refund of the expenses which are
related to the said assistance.
2.7 It is hereby agreed that the declarations and obligations of I.T.S.
pursuant to clauses 2.4 and 2.5 above will be in effect in all cases on
the termination of this agreement including as a result of its
cancellation.
3. Development work
----------------
3.1 The parties certify that Nur gave I.T.S. and I.T.S. received from Nur
the execution of the development work and all the terms detailed in
this agreement.
3.2. I.T.S. carried out and is carrying out the development work in
accordance with the stages and the timetables detailed in the work
program attached to this agreement as Appendix B and which include
among other things the production and assembly of a prototype of the
B.B. Printer according to the specifications (hereinafter: "the Alpha
Printer"), the production and the assembly of two printers (Beta site
series) (hereinafter: the "Beta Printers") and preparation for the
regular production including preparing the production file as
mentioned in clause 5 below.
3.3 It is hereby clarified that the execution of the development work by
I.T.S. is part of the development process of the B.B. Printer which is
carried out by Nur and that the development work will be carried out by
I.T.S. in coordination with Nur. In accordance with the aforesaid, Nur
will supply I.T.S. on Nur's account, the electronic components and
software and the ink-jet head which will be combined in the Alpha
Printer and the Beta Printers, and all as detailed in Appendix A to
this agreement.
3.4. It is hereby agreed that the Alpha Printer and Beta Printer will be
produced and assembled by I.T.S. only after receiving the approval of
Nur to the Alpha Printer and they will be manufactured while
applying the changes, adjustments and additions required by Nur to
the Alpha Printer. To avoid doubt, it is hereby clarified that the
changes, adjustments and additions as mentioned are part of the
development work and will be carried out by I.T.S.
3.5 Should Nur during the execution of the development work carry out
significant changes in the specifications and/or the B.B. Printers
plans, then notwithstanding the aforesaid in clause 3.2 above, these
will be coordinated
<PAGE>
between Nur and I.T.S. These changes required in the timetables
detailed in Appendix B to this agreement.
3.6 Notwithstanding the aforesaid in clause 3 above, should the Alpha
Printer not be in accordance with the specifications, Nur will be
entitled within 30 days from the date of supplying the Alpha Printer to
terminate this agreement with a notice in writing to I.T.S. In the
event of a notice for termination as said, I.T.S. will not be entitled
to any payment of any type whatsoever, apart from the payment as
mentioned in clause 4.1 below.
3.7 In the context of carrying out the development work I.T.S. will be
obligated to add and carry out all the changes, adjustments and
additions required by Nur in the Beta Printer, and this until the
completion of the regular production model of the B.B. Printer. For
this purpose it is agreed that the regular production model of the B.B.
Printer will include multi-roller printing system and fitting for a
forklift. In the context of the contents of this clause 3.7 above,
I.T.S. will carry out all the changes and adjustments required in order
to ensure B.B. Printers compliance with the standards applying to B.B.
Printers and this both in Israel and in any country in the world.
4. Consideration for the development work
--------------------------------------
4.1 In consideration for carrying out the development work connected with
the Alpha Printer including the production and assembly of the Alpha
Printer, I.T.S. will be entitled to receive a one time payment in NIS
equal to one hundred and forty-five thousand three hundred and ninety
(145,390) US dollars (hereinafter: "the Alpha consideration"). The
Alpha consideration will be paid to I.T.S. within 60 days of the date
of delivery of the Alpha Printer to Nur with Nur's full satisfaction.
4.2 In consideration for executing the development work connected with each
of the Beta Printers, including the production work and the assembly of
each printer, I.T.S. will be entitled to a onetime payment of NIS equal
to one hundred thousand (100,000) US dollars (hereinafter: "the Beta
consideration"). The payment for consideration for each of the Beta
Printers will be carried out in accordance detailed in clause 8.4
below.
4.3 I.T.S. will be entitled, in addition to the Alpha consideration and the
Beta consideration to a refund of its costs for work hours (excluding
planning hours) connected with carrying out changes, adjustment and
additions as mentioned in Clause 3.4 and/or 3.7 above, which will be
required by Nur after the date of this agreement and the raw materials
required to carry out those changes, adjustments and additions, which
will be calculated in accordance with the tables attached to this
agreement as Appendix C (hereinafter: "consideration for additional
work").
I.T.S. undertakes that prior to carrying out the work as detailed in
clause 4.3 above, for which consideration for the additional work will
exceed $1,000 it
<PAGE>
will give a prior written notice of this to Nur and will not carry out
any work until after receiving Nur's written approval.
In consideration for the additional work I.T.S. will be paid within 30
days of the end of the calendar month in which I.T.S. submits a
detailed account to Nur, which will include details of the work hours
which entitle them to consideration for the additional work and raw
materials purchased, as mentioned in this clause 4.3 above, and the
consideration for additional work which is due.
4.4. Apart from the payment of the Alpha consideration, the Beta
consideration and the consideration for additional work, I.T.S. will
not be entitled to any additional considerations for carrying out the
development work and I.T.S. hereby certifies that it will not be
entitled to any additional payment for carrying out the development
work, including work of preparing the production file, as defined in
5.1 below and preparations for regular production.
4.5 All payments which I.T.S. will be entitled to from Nur as mentioned in
this clause 4 will be paid to I.T.S. according to the representative
rate of the dollar at the actual time of the payment and against a tax
invoice prepared according to law.
4.6. It is hereby clarified that in addition to the payments detailed in
this clause 4 above, Nur will bear various expenses with regard to the
development of the B.B. Printer including for payments to external
designers and consultants which I.T.S. requires during the development
work and for whose their employment they will receive Nur's prior
approval for the development of the computer software for the B.B.
Printer.
5. Production file
---------------
5.1 Until the completion of the development work and in every case not
later than 90 days from the date of supplying the second Beta Printer,
I.T.S. will prepare for Nur and will hand it a production file of the
B.B. Printer (hereinafter: "production file").
5.2 In addition to the aforesaid in clause 5.1 above I.T.S. will prepare at
every stage of the stages of development as detailed in Appendix B a
partial production file (hereinafter: "the partial production file").
The partial production file for each of the development stages will be
handed to Nur as soon as possible, but in any case not later than 30
days from the end of that stage.
5.3 The production file and/or the partial production file will be prepared
and include details of the components, the raw materials and processes
required in order to prepare and start production of the B.B. Printer,
and all this as detailed in Appendix D to this agreement, and all the
know-how required in order to continue the development work,
preparation and start of production of the
<PAGE>
B.B. Printer by Nur and/or by anyone on Nur's behalf which has the
know-how to carry out mechanical production work.
5.4 In addition to the aforesaid in this clause 5 above, and after
completion of the development work, and as long as I.T.S. carries out
the production work for Nur, I.T.S. will update the production file in
every case where there is a change in its details, and this not later
than 21 days from the date of carrying out each such change.
5.5. Without derogating from the aforesaid in clauses 2.4 and 2.5 above, the
production file and/or the partial production file will be owned solely
by Nur and will be kept by it. Nur's right to receive the production
file and/or the partial production file will be in effect also after
the termination of this agreement and this for any reason including due
to its cancellation.
5.6 Without derogating from the aforesaid I.T.S. will supply Nur all the
drawings and explanations required by Nur in order to prepare the
literature and documentation for the B.B. Printer.
6. Production work
---------------
6.1 Subject to the completion of production work as mentioned in clause 3
above, Nur hereby gives I.T.S. and I.T.S. hereby receives from Nur the
execution of the production work, and all this under the terms detailed
in this agreement.
6.2 I.T.S. will complete the preparation for the regular production of the
B.B. Printer by January 31, 1997.
6.3 Within six (6) months of the date of this agreement I.T.S. will
allocate an area to be used as a production hall for the assembly which
complies with standards which are acceptable in industry for assembling
high-tech systems, and which will be designated solely for carrying out
the production work (hereinafter: "the production hall").
Should during the period of a calendar year (from 1997 and thereafter)
the number of B.B. Printers actually ordered by Nur from I.T.S. be less
than 36 B.B. Printers, I.T.S. will be entitled to make use of the
production hall for other uses of a similar character, which will not
interfere in any way with executing the production work, apart from the
production work, and this up to the time where the number of B.B.
Printers ordered by Nur will be not less than the number mentioned
above.
6.4 In the context of executing the production work, I.T.S. will be
responsible for the production and supply of all the mechanical parts
of the B.B. Printer and its mechanical assembly and the equipping of
the B.B. Printer and all this in accordance with the production file as
mentioned in clause 5.1 above.
In accordance with the aforesaid, Nur will supply I.T.S. on Nur's
account the electronic components and software (including the
electronic casing) and the
6
<PAGE>
ink-jet heads, which will be incorporated into the B.B. Printer and
all this as detailed in Appendix A to this agreement and subject to
the changes mutually determined in the production file. In addition
Nur will be responsible to carry out the integration work of the B.B.
Printers.
It is hereby agreed that Nur will be entitled to transfer the execution
of the wiring work of the B.B. Printer (which are included in the
production work carried out I.T.S.). In the event of such a transfer,
the provisions of clause 8.3 below will apply.
Any other change in the volume of production work, carried out by
I.T.S. and this whether by transfer to Nur of the execution of certain
operations included in the production work, and by way of adding the
execution of certain operations in the context of the production work,
will be carried out by agreement between the parties.
6.5 I.T.S. will carry out the production work with high standards of work
while complying with the standards stipulated by Nur.
6.6. On the supply dates as defined in clause 7.3 below, I.T.S. will add a
product file to every B.B. Printer (hereinafter: "the machine file"),
which will include all the quality control and receipt reports of the
various printer components, including process control. Moreover, I.T.S.
will mark every component of the printer with a serial number which
will enable its identification and the date of production. The serial
numbers as mentioned and details will be included in the machine file.
6.7 I.T.S. will assist Nur in renting a suitable area, close to the
production hall, and this whether by sub-rental from I.T.S. or by
separate rental by Nur (hereinafter: "Nur's area"). Nur will use Nur's
area for purposes connected with the B.B. Printer, including carrying
out operations connected with the production of the B.B. Printers,
which will be carried out by Nur after initial delivery as defined in
clause 7.3a below, the storage of components of the B.B. Printer which
will be supplied through Nur, the accompaniment and supervision of the
production work, as mentioned in clause 12 below, the execution and
checking of receipt of the B.B. Printers, to store B.B. Printers before
their delivery and packaging and the delivery of the printers. Nur will
solely bear all the expenses resulting from renting the Nur area and
its use. Until the date of completion of the development, Nur and
I.T.S. will finalize the terms of the rental and the use of the Nur
area.
7. Orders and delivery
-------------------
7.1 Nur will give I.T.S. written orders in which it will specify the
volume of production it orders, and this for every quarter of the
calendar year (hereinafter: "the orders"). In the orders they will
state the volume of production work by specifying the number of B.B.
Printers which Nur orders for production, and will state in the order
the requested date of completion of
<PAGE>
the production work with regard to each of the B.B. Printer and
their delivery to Nur. The orders for the first quarter of each year
will be given not later than the 20 December of the previous year,
and for the second quarter - not later than 20 March, for the third
quarter - not later than 20 June and for the fourth quarter - 20
September.
7.2 In addition to the aforesaid in clause 7.1 above, together with the
order, Nur will submit to I.T.S. a forecast of the number of printers
which will be required for production for the quarter after the quarter
to which the order relates (hereinafter: "the forecast"). The forecast
will be used by I.T.S. to estimate the production of printers in the
number determined in the forecast, but in each case it will not
obligate Nur and will not be construed as an order for B.B. Printers.
Notwithstanding the aforesaid in clause 7.2 above, in every order Nur
will be able to increase or decrease the number of printers included in
that order, by not more than fifty percent (50%) of the number of
printers included in the forecast for that quarter.
7.3 Supply of all the B.B. Printers will be according to the
following stages:
a. After completion of the production work with regard to each B.B.
Printer an initial delivery will be carried out for that printer
by I.T.S. to Nur (hereinafter: "initial delivery"). I.T.S. will
inform Nur at least ten (10) days in advance of the date of the
initial delivery of every B.B. Printer.
b. After completion of the integration of every B.B. Printer and
final acceptance tests, as defined in clause 7.8 below, the final
supply will be carried out on that printer by I.T.S. to Nur
(hereinafter: "the final supply").
It is hereby agreed that the time period between the date of the
initial delivery and the date of final delivery will not exceed fifteen
(15) days, but in this period of time the period required to carry out
repairs and adjustments discovered during the initial and final
acceptance tests as defined in clause 7.8 below will not be included.
7.4 Immediately after receipt of every order the parties will adjust the
initial date of delivery and final supply (hereinafter together: "date
of supply") of the B.B. Printers included in the order, but it is
agreed that in each case I.T.S. will carry out the initial delivery of
the printers on a current basis during the period starting not later
than the end of fifty (50) days from the date of the order, and that it
will be completed by the end of seventy (70) days from the date of the
order, but in every case the final and last date of order of those
printers will not be more than fifteen (15) days before the termination
of that quarter.
Should I.T.S. not be able to supply the B.B. Printers by the date of
supply, and this due to the existence of one of the circumstances
detailed in this clause
<PAGE>
below, the date of supply will be delayed respectively over the period
in which the following circumstances existed.
a. Force-majeur. For the purpose of this clause it is agreed that
force-majeur will include among others a general strike in the
Israeli economy or in a certain sector of the economy or a
general mobilization for active reserve duty, provided that as a
result of the strike or mobilization, most of I.T.S.'s workers
will be absent from their work.
b. A delay in carrying out those actions connected with the
production of the printer which are said to be carried out by/or
on the responsibility of Nur, as mentioned in clause 6.4 above,
concurrently with carrying out the production work.
c. Nur's objection to approve the replacement of the components, raw
materials, suppliers or sub-contractors as mentioned in clause
10.2 below, after the end of 14 days from the date on which
I.T.S. informed Nur in writing that without such replacement
(which is not for reasons of economic feasibility) it is not
possible to continue carrying out the production work.
d. Nur not being present at the time stipulated for the start for
the initial delivery, after notice was given to Nur in accordance
with clause 7.3a above.
7.6 In addition to the aforesaid in clause 7.5 above, should the number of
printers included in the order exceed more than fifty percent (50%) of
the number of orders stated in the forecast for that quarter, and will
exceed 12 printers (hereinafter: "the excess printers"), I.T.S. will be
entitled, without this being a violation of its obligations according
to this agreement, to inform Nur that it will not supply the surplus
printers by the delivery date.
In the event that such notice was given by I.T.S., I.T.S. undertakes to
organize itself by the end of the current quarter to carry out the
production work in the total volume of the volume of forecast for that
quarter, plus the surplus printers (hereinafter together: "the volume
of the increased work"). Should I.T.S. inform Nur that it is not able
to organize itself within one quarter to carry out the production of
the volume of increased work, Nur will be entitled, at its sole
discretion, to approach a third parties and/or to produce the surplus
printers itself.
7.7 Should I.T.S. not supply Nur the B.B. Printers by the date of supply
(including delays in accordance with clause 7.5 above) I.T.S. will pay
Nur, a pre-agreed compensation, an amount equal to one fifth of a
percent (0.2%) of the proceeds of the production, as defined in clause
8.1 below, for every day of delay in the said supply, as of the date of
final supply stipulated for that printer (hereinafter: "the agreed
compensation"). The parties hereby declare that the agreed compensation
is determined as a reasonable ratio to the damage caused to the Company
as a result of the delay in the final date of supply by I.T.S.
<PAGE>
Notwithstanding the aforesaid in this clause, a delay in the final
supply not exceeding seven days from the date of final supply, Nur will
not be entitled to such compensation, but in the case of a delay
exceeding seven days, the agreed compensation will be considered as of
the date of the final supply. It is agreed that the agreed amount of
compensation will not exceed the production profit as defined in clause
8.1(d) below. Nur will be entitled to set-off the agreed amount of
compensation from any payment to which I.T.S. is entitled to receive
from it.
7.8 A condition for executing the initial delivery is that the B.B. Printer
will be available for initial acceptance testing as detailed in
Appendix E1 to this agreement (hereinafter: "initial acceptance
testing").
The terms of carrying out the execution of the final supply is that the
B.B. Printer will be available for final acceptance testing, as
detailed in Appendix E2 to this agreement (hereinafter: "final
acceptance tests").
I.T.S. undertakes that should, in the framework of the initial
acceptance test and/or the final acceptance tests, it be found that
repairs and/or adjustments to the B.B. Printers are required, it will
act continuously and to the best of its ability to complete the repairs
and adjustments as mentioned as soon as possible.
7.9 The supply of the printer, after completing the production work and the
final acceptance tests, will be at Nur's area. It is hereby clarified
that the packaging and delivery of the printers will be carried out by
Nur and on its account.
7.10 Should after the date of the order, as mentioned in clause 7.1 above,
Nur deliver to I.T.S. an order to execute additional production works,
whose required date of supply is in that quarter, I.T.S. will act to
the best of its ability to complete that work by the date of supply.
It is hereby clarified with regard to additional orders as
mentioned, the provisions of clause 7.4 - 7.8 above will not apply.
8. Consideration for the production work
-------------------------------------
8.1 It is hereby agreed that in consideration for carrying out all I.T.S.'s
obligations with regard to executing the production work for each of
the B.B. Printers supplied by I.T.S. to Nur, in accordance with the
provisions of clause 7 above, I.T.S. will be entitled to a payment
which will be specified as the aggregate of the following components
(hereinafter: "production consideration"):
a. Total actual costs of I.T.S. for the components and raw materials
used in the production work (hereinafter: "cost in materials").
The method of calculating the cost of materials is stated in
clause 1 to Appendix F of this agreement.
<PAGE>
b. I.T.S.'s total actual costs for the employing the personnel to
carry out the production work (hereinafter: "cost of labor"). The
method of calculating the cost of labor is stated in clause 2 to
Appendix F.
C. Participation in half of the rent paid by I.T.S. The production
hall and this as long as it is used solely for carrying out the
production work (hereinafter: "participation in rent").
d. Fixed payment for indirect variable costs and overhead costs of
I.T.S. with regard to the execution of the production work for
every printer (hereinafter: "indirect expenses). The amount of
indirect expenses will be fixed for each printer and will
decrease in accordance with the number of printers ordered in
each quarter, as determined in clause 3 to Appendix F.
e. I.T.S. profit for the execution of the production work for every
printer (hereinafter: "the production profit"). The amount of
production profit will be fixed for every printer and will
decrease in accordance with the total accumulated number of B.B.
Printers ordered by Nur, as determined in clause 4 to A Appendix
F.
8.2 At the end of each of the first two quarters of regular production of
B.B. Printers and thereafter at the end of every two successive
quarters, a check of the costs in materials and the cost of labor which
I.T.S. bore, for the execution of the production work for every B.B.
Printer will be carried out (hereinafter: "a check of costs"). The
check of costs will be carried out jointly by the parties according to
I.T.S.'s books and in accordance with the methods of calculation
specified in Appendix F. As a result of the costs check, the
elements of the costs of materials and costs of labor for the printers
to be ordered will be determined, up to the date of the next check of
costs
8.3 The parties will act to the best of their ability and on a current
basis in order to bring down the cost of materials and cost of labor.
At the time of checking the costs, the parties will check the cost of
materials and cost of labor and update them when necessary (by way of
adding or deducting).
Moreover it is agreed that should there be changes in the volume of
production work, as mentioned in clause 6.4 above, or in the event that
I.T.S. will use the production hall for other uses, as mentioned in
clause 6.3 above, the parties will carry out the necessary adjustments
in the indirect expenses (by way of addition or reduction). It is
agreed that for every saving and cost in materials and/or the cost of
labor, I.T.S. will be entitled to an additional production profit equal
to ten percent (10%) of the amount of said savings.
8.4 In consideration for the production of every B.B. Printer I.T.S.
will be paid as follows:
a 35% of the proceeds from the production will be paid to I.T.S. on
the date of the delivery of the order to I.T.S. for the number of
printers included in that order.
<PAGE>
b. 35% of the proceeds of the production will be paid to I.T.S. on
the date of final supply of each B.B. Printer. Should there be a
delay of over 14 days from the date of final supply due to
reasons mentioned in clause 7.5(b) above, I.T.S. will be entitled
to immediately receive from Nur, part of the proceeds of the
production pursuant to this clause.
c. 30% of the proceeds of the production will be paid to I.T.S. not
later than 75 days from the date of final supply.
8.5 Not withstanding clause 8.4 above, Nur will pay I.T.S. its share of the
proceeds of production for LLI, as defined in clause 10.8 below
according to those, (including dates and amounts) which I.T.S. will pay
the suppliers of LLI (hereinafter: "the consideration for LLI"). In
accordance with the aforesaid, from the payments of the proceeds of
production as mentioned in clause 8.4 above, a proportional amount will
be deducted from the LLI consideration paid by Nur for those printers.
8.6 All payment of the consideration for production which I.T.S. will be
entitled from Nur as mentioned in this clause 8, will be paid to I.T.S.
according to the representative rate of the dollar at the time of
actual payment and in consideration for a tax invoice properly
prepared. Should Nur be in arrears in paying the consideration for
production, I.T.S. will be entitled to receive from Nur, as from the
7th day of delay, interest for the amount in arrears at a rate equal
to the rate of exceptional debit interest on overdraft accounts as
will be in force at that time at Bank Hapoalim B.M.
8.7 It is hereby declared that apart from the production considerations
I.T.S. will not be entitled to any additional payment for the execution
of the production work.
9. Employees
---------
9.1 I.T.S. undertakes to carry out development and production work and it
will only employ workers with the know-how, ability and experience
required in order to execute the development and production work.
9.2 Without derogating from the generality of the aforesaid in clause 9.1
above, I.T.S. undertakes to allocate to the development and production
work specific personnel among its employees, and to appoint a
production manager among its employees who will be responsible for the
production work. Should Nur request I.T.S. to replace the production
manager by another person, I.T.S. will not refuse Nur's request, unless
for reasonable cause.
9.3 To avoid doubt it is hereby agreed and declared that I.T.S. is an
independent contractor for the purpose of executing the development
work and there will be no employee/employer relations and/or agency
relations between Nur and I.T.S. and/or I.T.S.'s employees and/or
anyone employed by it and/or through it in executing the development or
production work. I.T.S. will be responsible for carrying out all the
provisions and deductions which much be carried out
<PAGE>
according to law with regard to its employees and it alone has the
responsibility for this.
Moreover, it is agreed that I.T.S. will not be responsible for Nur's
employees and/or the responsible person as defined in clause 12 below
and there will be no employee/employer relations and/or agency
relations between I.T.S. and any of them.
10. Components, raw materials and sub-contractors
10.1 In order to execute the production work Nur will supply I.T.S. with the
electronic components of software and the ink-jet heads which will be
incorporated into the B.B. Printers and all this as detailed in
Appendix B to this agreement.
10.2 In executing the development and/or production work I.T.S. will be
entitled, in addition to the components supplied to it by Nur, as
mentioned in clauses 3.3. and 10.1 above, to use only those components
and raw materials of the highest quality, and on the condition that it
received Nur's prior written approval; moreover I.T.S. will be entitled
to contact only those suppliers and sub-contractors which for which it
received prior approval from Nur.
Should I.T.S. request to replace components or raw materials used in
carrying out the development and/or production work, or any of the
supplier and/or sub-contractors, I.T.S. will deliver notice of this to
Nur in which it will state the effects of such changes on the cost of
the materials. I.T.S. will not be entitled to replace the components,
raw material, suppliers or sub-contractors without receiving Nur's
prior written approval.
10.3 In order to obtain the approvals, as mentioned in clause 10.2 above,
I.T.S. will give Nur a written notice in which it will detail the
identity of the manufacturer, identity of the supplier, specifications
of the components and raw materials which it requests to use, or
details of the sub-contractor and any other detail demanded by Nur,
whichever relevant.
10.4 Nur will inform I.T.S. within 30 days of the date of receipt of the
notice of I.T.S. as mentioned in clause 10.2 above, of its agreement or
objection to the use of components or raw materials, fully or partly,
or the engagement with a supplier or sub-contractor, or its demand to
receive additional details with regard to those materials or
components.
It is hereby agreed that during the production of the Beta Printer, the
parties will determine a list of alternative suppliers, which will be
approved in advance by Nur, and which in the case of the purchase of
components from those suppliers, I.T.S. will be obligated to inform Nur
only and the obligation to receive Nur's approval will not apply.
10.5 In addition to the aforesaid in clause 10 above, it is agreed that all
changes in the terms of engagement of I.T.S. with one of the
sub-contractors or suppliers
<PAGE>
and/or a change in the components or raw materials will be carried out
subject to receiving the prior written approval of Nur. In order to
receive the approval as mentioned I.T.S. undertakes to give Nur, at
least 30 days in advance a written notice which will detail the
character of the change and the reason for the change (hereinafter:
"notice of change"), and within 7 days of the date of receipt of the
notice of change, Nur will inform, at its sole discretion, I.T.S. of
its approval or objection to the change.
10.6 I.T.S. undertakes that the components and raw materials which it will
use will go through acceptance quality control testing in accordance
with usual practice in high-tech industry, and in accordance with the
procedures determined by Nur and I.T.S. during the execution of the
development work. The tests and checking as mentioned will be carried
out by I.T.S. through a qualified tester on its behalf and these will
be detailed in the production file as mentioned in clause 5.1 above.
It is hereby clarified that I.T.S. will not be entitled to use
components and/or raw materials which deviate from the specifications
included in the production file, and this without the prior written
approval of Nur.
10.7 In every case where in order to carry out a production work I.T.S. will
require special tools, of any type whatsoever, I.T.S. will purchase or
manufacture the tools as mentioned on its account. It is agreed that if
the production work for any reason whatsoever will be terminated, Nur
will be entitled, at its sole discretion, to demand from I.T.S. that it
sells it the said tools, fully or partly, at a price to be agreed upon
between the parties or in the event of dispute regarding the price, it
will be determined by an assessor to be appointed in the procedure as
mentioned in clause 20 below.
10.8 I.T.S. will maintain an inventory of components and raw materials used
for the production work and this in a volume and quantities as
determined by the parties on completion of the Beta Printers, in order
to supply Nur all the components and raw materials rapidly and
regularly.
Up to the date specified in clause 6.2 above, Nur and I.T.S. will
together decide a list of components and raw materials used for the
production work and for which their equipping requires the handing of
orders to suppliers a fairly long time prior to the supply date (long
lead items), I.T.S. will order and maintain the inventory of LLI
required to perform the production work of the B.B. Printers in
quantities stated in the forecast given to it by Nur in accordance with
clause 7.2 above.
I.T.S. will maintain an inventory of spare parts manufactured by it
for the printer for a period not less than the last date by which
I.T.S. will supply Nur with B.B. Printers.
10.9 Nur will purchase from I.T.S. components as mentioned in clause 10.8
above as spare parts for the printers, and this for a consideration to
be calculated as detailed in Appendix G attached hereto to the
Agreement. It is hereby agreed
<PAGE>
that Nur will not be obligated to purchase from I.T.S. those parts
purchased from third parties and not manufactured by I.T.S. and Nur
will supply and install in the B.B. Printers only those components
approved in accordance with the provisions of clause 10 above.
11. Training and support
--------------------
11.1 I.T.S. will train and teach Nur's employees as decided by Nur, for
handling and supporting for all purposes the mechanical aspects of the
B.B. Printers, and this through I.T.S.'s employees who have suitable
qualifications ("training services").
Training services include the process of assembling the printers and
accompanying the operation of the mechanical system of the printers at
a level which will enable Nur's technicians to give independent service
and support to the printers.
11.2 After supplying the Beta Printers I.T.S. undertakes, in the framework
of the development work, to supply Nur the training services of up to
200 labor hours, in the context of up to 3 courses to service
engineers.
11.3 In addition to the aforesaid in clause 11.1 above, as long as I.T.S.
carries out the production work for Nur it will supply Nur at Nur's
request, the training services and in consideration will receive $1,500
per course for service engineers (about 60 hours). Such a course will
be carried out in the production hall.
11.4 After the completion of the period of warranty, I.T.S. undertakes in
every case where there is a breakdown and/or mechanical problem which
Nur technicians are unable to repair, to put repair services at Nur's
disposal through its employees, and this in consideration for the
amount as determined in the agreement by the parties.
12. Supervision
-----------
12.1 Nur will be entitled, at its absolute discretion, to appoint on its
behalf one or more persons who will be responsible on Nur's behalf for
the supervision, coordination and direction of the development and
production work carried out by I.T.S., pursuant to this agreement,
including sub-contractors who will be employed by I.T.S. in carrying
out development work or production work (hereinafter: "the
Supervisor").
12.2 The supervisor will be engaged by Nur and on its account. Nur will
inform I.T.S. of the identity of the supervisor and/or the supervisors
and in the case of their replacement Nur will give I.T.S. notice of
this.
12.3 In the context of carrying out his functions, the supervisor will be
entitled and qualified, among other things to follow up and check the
method of carrying out the work by I.T.S., I.T.S.'s compliance with
planned timetables for
<PAGE>
carrying out the development and production work, the quality of the
work carried out by I.T.S. and the raw materials and components used in
carrying out the development of the production work, and the
safeguarding of confidentiality of know-how and rights of Nur in the
know-how, and be involved and integrated in all the stages of the
planning and execution of the development and production work
(hereinafter: "the Inspection").
12.4 In order to carry out the inspection the supervisor will be entitled to
enter I.T.S.'s plants or any other place in which the development or
production work is carried out, and to receive all information,
documents and data required to carry out the inspection and this during
regular working hours.
12.5 Should the supervisor during the performance of the inspection find
that there were defects in carrying out I.T.S.'s obligations under this
agreement and including I.T.S. not complying with timetables for
carrying out the development or production work, the supervisor will be
entitled to warn I. T.S. and, at his discretion, also to instruct
I.T.S. to amend the defects found and/or to take steps in order to
ensure compliance with the timetables. Should I.T.S. receive a warning
and/or such an instruction, it will take all the steps required in
order to repair the defect found or to take necessary steps, and this
within a reasonable time, as to be determined by the supervisor.
12.6 It is hereby declared that subject to clause 12.7 below, the
appointment of the supervisor and/or the giving of any instruction,
directive and/or recommendation by him, will not derogate from I.T.S.'s
obligations in accordance with this agreement.
12.7 Should the supervisor give I.T.S. an instruction or directive, I.T.S.
will be entitled to inform Nur in writing within 7 days, that that
instruction or directive is, in its opinion, a mistake. Should I.T.S.
give such notice to Nur, I.T.S. will not be responsible for the defect
and/or fault discovered in the B.B. Printers, where the main direct
factor is the performance of that instruction or directive given by the
supervisor.
13. Warranty
--------
13.1 I.T.S. will give every B.B. Printer supplied to Nur a warranty for the
production work including the mechanical operations of the printer, the
precondition of all the printer's components, apart from components
supplied by Nur as mentioned in clause 10.1 above, and the assembly of
the printer (hereinafter: "the warranty"), and this for a period of 18
months from the date of supply of every printer but not later than 1
year after the assembly of the printer at the final customer
(hereinafter: "the warranty period").
13.2 In the framework of the warranty I.T.S. will be obligated during the
period of the warranty as follows:
a. To replace, on its account any component of the B.B. Printer
excluding components supplied by Nur in accordance with clause
10.1 above,
<PAGE>
which will be found to be defective or not in order (hereinafter:
"the defective component").
b. immediately on receipt of the notice from Nur regarding a
defective component, I.T.S. will supply Nur an alternative
component to replace the defective component (hereinafter: "the
alternative component"), and this even if the defective component
itself has not been given to it. Nur will give I.T.S. the
defective component, unless it finds that the component was not
defective and in such a case will credit I.T.S. with the cost of
the replacement component.
c. Should the service and maintenance system for the B.B. Printers
operated by Nur or someone on its behalf, not be able to repair a
breakdown and/or defect in the assembly of the printer caused
and/or discovered in one of the B.B. Printers, I.T.S. will supply
a specialist on its behalf to correct the breakdown and/or defect
as mentioned. I.T.S. will bear all the expenses of this expert,
but I.T.S. and Nur will bear in equal shares the transport and
the board and lodging expenses outside Israel of such a
specialist.
d. Should a breakdown or defect be found in a regular B.B. Printer
(i.e. the breakdown or defect was discovered in circumstances
similar to a number of B.B. Printers, I.T.S. will participate in
half of expenses of Nur or someone on its behalf, in correcting
the said defect.
13.3 The warranty will not apply for the repair of breakdowns caused as a
result of one of the following reasons:
a. The use of the B.B. Printer contrary to Nur's instructions.
b. Carrying out a repair or change in the printer or in any element
of the printer, not by Nur or I.T.S.
c. Damages caused by an external cause not by Nur or I.T.S. or on
their responsibility which include damage due to fire, water,
lightening, power failures, mechanical breakdown of the
equipment, the effects of chemical materials, war and terror
actions.
d. Intentionally caused the breakdown.
14. Insurance
---------
14.1 I.T.S. declares that it has a valid professional liability insurance
policy which covers the performance of the machinery design work, in an
amount of up to five hundred (500) thousand dollars per event and for
the period, and it undertakes that this policy will remain in effect in
an amount which will not be less than the said amount for a period up
to the end of two years from the date
<PAGE>
of completing the development work. I.T.S. will submit a copy of this
policy to Nur.
14.2 I.T.S. undertakes that in every case where a demand and/or claim is
submitted to it which is covered by the insurance policy mentioned in
clause 14.1 above, it will gave notice to Nur of this and on Nur's
first demand will increase the amount of the policy.
14.3 I.T.S. will purchase and keep valid during the whole period of this
agreement up to an agreed date after its termination of the production
work by it, a product warranty insurance which will apply in Israel on
B.B. Printers manufactured by it in the framework of the production
work.
15. Exclusivity
-----------
15.1 Subject to the successful completion of the development work Nur will
give I.T.S. exclusivity in performing the production work of the B.B.
Printers and this up to the supply of 85 B.B. Printers by I.T.S. or at
the end of 24 months from the date of completion of the development
work, whichever later (hereinafter: "the exclusivity period").
15.2 After the end of the exclusivity period Nur will be entitled to itself
produce the B.B. Printers including making unlimited use of the
production file.
15.3 Should Nur request to carry out the production work, fully or partly,
through a third party (hereinafter: "additional manufacturing work"),
and subject to the performance of its obligations to I.T.S., pursuant
to this agreement, the following provisions will apply:
a. Nur will give written notice to I.T.S. of its intention to
supply additional work to be carried out.
b. Within 14 days of the date of Nur's notice as mentioned in
sub-clause(a) above, I.T.S. will be entitled to submit to Nur a
price offer for carrying out the additional production work
(hereinafter in clause 15: "I.T.S.'s offer").
c. Should Nur receive an offer by a third party to carry out the
additional production work which includes terms which are
superior to I.T.S.'s offer (hereinafter in clause 15: "the third
party offer"), I.T.S. will be given an opportunity to offer to
Nur, within 14 days, an additional offer to carry out the
additional production work on the same terms as the offer of
the third party or at better terms the terms (hereinafter in
clause 15: "additional offer").
d. To avoid any doubt it is hereby clarified that Nur will be
entitled to negotiate with I.T.S., and/or with third parties with
regard to carrying out the additional production work, provided
that the provisions of sub clause (c) will apply with the
necessary changes to such negotiations.
<PAGE>
e. Nur will give I.T.S. the performance of the additional production
work and this unless the offer of the third party included
significantly better terms than the terms offered by I.T.S., (or
the additional offer if submitted by I.T.S.). Without derogating
from the generality of the aforesaid, it is hereby clarified that
a price lower by 10% or more than the price offered to Nur in
I.T.S.'s offer (or in the additional offer if submitted by I.T.S.)
while safeguarding the similar level of quality (price
performance), will be considered as significantly better terms.
To avoid doubt it is hereby clarified that in such an event Nur
will not be obligated to accept the offer if it thinks that the
terms are not identical or preferable to those of the preferable
offer.
f. Should Nur decide to give the additional production work to
I.T.S., the parties will negotiate in good faith and in the
regular way in order to engage in a detailed agreement with
everything connected with carrying out the additional production
work, including the terms of the order for the additional
production work and the supply of the additional production work
by I.T.S.
15.4 Should during the exclusivity period Nur develop a printer in the
format similar to the B.B. Printers, which will not be based on the
technical design of the B.B. Printers, then the contents of clause 15.1
will not apply to such printers. Should Nur request to give the
development and mechanical and/or production work of that printer to a
third party the provisions of clause 15.3 above will apply.
15.5. I.T.S. undertakes that as long as it carries out the production work
and for an additional period of 24 months it will not carry out any the
development and/or production work of digital printing system, but only
for Nur, and all this whether directly or indirectly, whether working
for itself or for others. I.T.S. undertakes to obtain an identical
obligation also from its shareholders. I.T.S.'s obligations under this
paragraph will be in effect even after termination of this agreement,
and this for any reason including due to its cancellation.
16. Additional development work
---------------------------
16.1 Should at any time during the exclusivity period Nur decide to carry
out changes which are not significant in the mechanical design of the
B.B. Printer, it will give notice of this to I.T.S.. I.T.S. will be
obliged to carry out on its account the changes in the design as
mentioned, and will be entitled to a refund of the direct expenses
which it bears to third parties with regard to the performance of these
changes. The performance of these changes will be a condition for
protecting I.T.S.'s exclusivity rights as mentioned in clause 15 above.
16.2 Should at any time during the exclusivity period Nur decide to carry
out significant changes in the mechanical design of the B.B. Printer
(hereinafter:
<PAGE>
"additional development work"), it will give written notice to I.T.S.
and the notice will detail the significance of the additional
development work required.
16.3 Within 14 days of the date of Nur's written notice, I.T.S. will be
entitled to inform Nur that it is interested to carry out the
additional development work. Should U.S. inform Nur that it is not
interested to carry out the additional development work, the
exclusivity rights of I.T.S. as mentioned in sub-clause 15 will come to
an end.
16.4 Subject to the performance of I.T.S.'s obligations under this
agreement, should I.T.S. give Nur such notice as mentioned in clause
16.3 above, according to which it is interested to carry out the
additional development work, Nur undertakes to give the additional
development work to I.T.S. For the execution of the additional
development work the provisions of clauses 2, 4 and 5 will apply
with the necessary changes.
16.5 After the end of the exclusivity period the provisions of this clause
16 will not apply to the parties.
17. Confidentiality
---------------
17.1 I.T.S. hereby undertakes to keep all the know-how secret, not to
disclose or to transfer to others the know-how, fully or partly, or to
enable others to have access to the know-how and/or to copy the
know-how, all this apart from the use of the know-how by its employees
as far as necessary in order to perform the production work.
17.2. I.T.S. will receive from its employees or others on its account who
will be employed in carrying out the production work, an obligation of
confidentiality and non-competition as mentioned in this clause 17.
17.3 The provision of this clause 17 will be in effect in every case of the
termination of this agreement including due to its cancellation.
18. Period of the agreement
-----------------------
18.1 The period of this agreement is as from the date of its signature.
18.2 As of the date of the end of the exclusivity period each of the parties
is entitled to terminate this agreement with a written notice given to
the other party at least 6 months in advance.
18.3 Notwithstanding the provisions of this clause 18, Nur will be entitled
to terminate this agreement immediately on the occurrence of a basic
violation of the this agreement by I.T.S., including each of the
following occurrences:
a. The violation of the undertakings of I.T.S. to safeguard
confidentiality and non-competition as mentioned in clause 17
above.
<PAGE>
b. The transfer of I.T.S.'s rights and/or liabilities contrary to
the provisions of clause 19 below.
c. Appointment of a receiver or liquidator for I.T.S., provided that
this appointment is not canceled within 45 days.
For every case of the termination of the agreement in accordance
with the provisions of this clause 18.3, I.T.S. undertakes to
complete the production work of the B.B. Printers for which it
received orders up to the date of such notice. It is hereby
clarified that the provisions of this clause will be in effect
even after termination of this agreement.
18.4 Unless otherwise specifically specified in this agreement after the
date of termination of the agreement, the provisions of this agreement
will not obligate and/or entitle the parties to it.
19. Prohibition of transfer
-----------------------
19.1 I.T.S. will not be entitled to endorse and/or transfer its obligations
and/or rights under this agreement or the performance of the
development work and/or production work to any third party, and this
unless it receives Nur's prior written agreement.
19.2. Nur will be entitled to endorse and transfer to a third party its
obligations and rights under this agreement (hereinafter: "the
transferee") provided that the transferee will give I.T.S. a written
notice in which it undertakes all the undertakings of Nur according to
this agreement and should I.T.S. inform Nur in writing, within 15 days
from the date of receiving the notice of transfer, of its objection to
the endorsement and transfer to the transferee, provided such
objections will be for reasonable reasons relating to the identity of
the transferee, Nur will guarantee to I.T.S. the performance of the
obligations of the transferee pursuant to clauses 15 and 16 to this
agreement. To avoid doubt it hereby declared that the assignment and
transfer by Nur does not reduce the obligations and rights of the
parties which applied before the said endorsement and transfer.
20. Arbitration
-----------
20.1 Any dispute between the parties regarding the development and/or
production work and/or the reasonability of the instructions of the
supervisor and/or relating to the additional production work and/or
additional development work will be transferred to the decision of
Engineer Amir Ziv-Av. Provided that on the date of the transfer of the
dispute for his decision there will be no conflict of interest
resulting from his relations with one of the parties. Should there be a
conflict of interest as mentioned, Amir Ziv-Av will determine at his
discretion an alternative engineer who will decide on the dispute
(hereinafter: "the professional arbitrator"). The professional
arbitrator will not be subject to the procedures, the laws of evidence
or the substantive law, but he will have to explain his decision.
<PAGE>
20.2 Any dispute between the parties with regard to the execution or the
interpretation of this agreement which does not fall within clause 21
above, will be brought for the decision of the arbitrator whose
identity will be determined by an agreement between the parties, and in
the absence of such an agreement, by the head of the Tel Aviv District
bar Association (hereinafter: "the arbitrator"). The arbitrator will
not be subject to legal procedures or the laws of evidence, but will be
subject to the substantive law and he will have to explain his
decision.
20.3 The provisions of this clause 20 will be considered as an arbitration
agreement between the parties which will obligate the parties for all
purposes resulting from the provisions of this agreement even after the
end of the period of the agreement.
21. General
-------
21.1 The addresses of the parties as are detailed in the preamble to this
agreement and notices sent by registered post to one of the parties to
that address will be considered as if received within 7 days from the
date of its dispatch, unless proved that it arrived earlier to the
other party.
21.2 The terms of this agreement include fully the conditions and agreements
between the parties with regard to the performance of the development
and production work and they supersede any engagement, agreement,
presentation, obligation prior to the signature on this agreement which
was carried out between the parties, whether in writing or verbally,
but they do not derogate from the effect of the confidentiality
agreement signed between the parties on December 26, 1994.
21.3 The parties will take all additional steps including the signature on
additional documents required in order to apply and carry out this
agreement according to its wording and spirit.
21.4 The laws of the State of Israel will apply to this agreement and the
sole jurisdiction regarding it will be the competent court in Tel
Aviv-Jaffa.
2.15 Any change or cancellation of the provisions of this agreement will be
carried out only in a written document which will be signed by the
parties.
In witness whereof the parties hereby sign
- ------------------------------ ---------------------------------
Nur Advanced Technologies Ltd. I.T.S. Machinery Development Ltd.
<PAGE>
Appendix A
Specifications of B.B. Printers
Will be completed as mentioned in 1.1 above
<PAGE>
Appendix B
Development Work Plan
Will be completed as mentioned in clause 1.1 above
<PAGE>
Appendix C
Proceeds for Additional Work
1. Cost of materials
-----------------
The cost of materials will be determined according to the actual cost
of the components and materials used in the production work, where to
the cost of the materials will be added an amount equal to 25% for
depreciation.
2. Cost of labor
-------------
The cost of labor will be determined according to the number of labor
hours actually performed by I.T.S.'s employees and on the basis of
price per hours (in NIS) as detailed in the following table:
<TABLE>
<CAPTION>
Type of work Price in dollars per labor hour
------------ -------------------------------
<S> <C>
Technician/assembler 26
Engineer 40
Cutter 34
Engraver 30
</TABLE>
The prices per labor hour detailed in the table above will be updated
in accordance with the rate of cost of living allowance paid to all
employees in Israel.
<PAGE>
Appendix D
Contents of Production File
1. Bill of materials
2. Drawings - Items
- Marking
- Assembly
3. Specifications of materials.
4. Instructions and work processes.
5. Assembly instructions.
6. Special manufacturing instructions.
7. Gauges and tools.
8. Testing specifications (QA/QC).
9. List of suppliers and sub-contractors in those cases where there is a
unique requirement.
10. Exceptions reports.
11. Specifications of acceptance tests.
12. Quantity specifications.
<PAGE>
Appendix E1
Specification of Initial Acceptance Tests
To be completed as mentioned in clause 1.1 above
<PAGE>
Appendix E2
Specifications of Final Acceptance Tests
To be completed as mentioned in clause 1.1 above
<PAGE>
Appendix F
Consideration for Production
1. Cost of materials
-----------------
The cost of materials will be determined according to the actual costs
of the components and materials used in the production work and 3% will
be added to the cost of the materials for depreciation.
2. Labor costs
-----------
The cost of labor will be determined according to the number of actual
labor hours performed by I.T.S.'s employees on the basis of actual cost
of the employer of I.T.S. for those employees
3. Indirect costs and participation in rent
----------------------------------------
The amount of indirect costs and participation in rent for each B.B.
Printer in every quarter will be determined (in dollars) according to
the following table, where the amount is determined according to the
total number of printers ordered for that quarter:
<TABLE>
<CAPTION>
Number of total printers ordered in the quarter
------------------------------------------------------------
12 14 16 18 20 22 24
----- ------ ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Variable indirect expenses 4,250 4,150 3,830 3,540 3,190 2,900 2,660
Overhead expenses 8,850 7,590 6,640 5,900 5,310 4,830 4,430
Participation in rent
----- ------ ----- ----- ----- ----- -----
Total
===== ====== ===== ===== ===== ===== =====
</TABLE>
For a number of printers exceeding 12 which are not stated in the above
table the amount of indirect costs will be calculated proportionally.
For the number of printers in the quarter exceeding 24 no indirect cost
will be paid.
It is agreed that even that if the number of printers ordered will be
less than twelve (12) in the quarter the amount of indirect expenses
and participation in them will be determined on the basis of the fixed
amounts for 12 printers. But, should as from the beginning of 1997 in
two consecutive quarters there be less than 12 printers be ordered,
then as of the third quarter the amounts of indirect expenses in
participation in rent will be determined according to the following
table:
<TABLE>
<CAPTION>
Number of total printers ordered in the quarter
----------------------------------------------------
4 6 8 10
----- ------ ------ ------
<S> <C> <C> <C> <C>
Variable indirect expenses 10,440 7,500 6,380 5,100
Overhead expenses 26,550 14,000 13,280 10,620
Participation in rent
----- ------ ------ ------
Total
===== =====- ====== ======
</TABLE>
<PAGE>
Appendix F (Cont.)
4. Production Profit
-----------------
The amount of production profit for every printer (in dollars) will be
determined according to the following table taking into account the
total accrued amount of B.B. Printers ordered by Nur.
<TABLE>
<CAPTION>
Accumulated number of printers
ordered Production profit per printer
------------------------------ -----------------------------
<S> <C>
UP to 25 (inclusive) 16,000
Between 26 and 50 (inclusive) 15,000
Between 51 and 75 (inclusive) 14,000
Between 67 and 100 (inclusive) 13,000
From 101 and above 12,500
</TABLE>
<PAGE>
Appendix G
Costing of Spare Parts
[LETTERHEAD OF NUR MACROPRINTERS]
CONFIDENTIALITY AGREEMENT
Confidentiality Agreement (hereinafter: the "Agreement"), dated as of, _______
entered between
Nur Macroprinters Ltd.
P.O. Box 8440
Moshav Magshimim 56910
Israel
of the first part;
______________________
______________________
______________________
______________________
______________________
of the second part;
WHEREAS The parties are considering entering into a mutual
agreement and/or are negotiating such an agreement.
WHEREAS The parties wish to protect certain proprietary
Confidential information, as defined hereinafter which
shall be disclosed between them, against unauthorized
disclosure;
WHEREAS Each party (hereinafter; the "Recipient") agrees to
protect the confidential information disclosed to him by
the other party (hereinafter: the "Disclosing Party")
against unauthorized disclosure.
NOW THEREFORE, it has been declared, stipulated and agreed between the parties
as follows:
1. The preamble to the Agreement constitute an integral part thereof.
2. In this Agreement the term "Confidential Information" shall be
construed as all information, including but not limited to, plans,
drawings, technical specifications, computer software, patents or
other intellectual property rights, in tangible (paper, disk or
other) or non-tangible (oral) form relating to Nur machines, inks,
and substrats which shall be disclosed by the disclosing party to
the recipient, and excluding information that:
a. was in the Recipient's possession prior to its disclosure;
b. became a matter of public knowledge by way other than through the
Recipient;
c. was disclosed by operation of law;
d. the Disclosing party gave a prior written consent for its
disclosure;
e. is rightfully received by the Recipient from a third party without
a duty of confidentiality;
<PAGE>
[LETTERHEAD OF NUR MACROPRINTERS]
f. is disclosed by the Discloser to a third party without a duty of
confidenti0ality on the third party;
g. is independently developed by the Recipient;
3. A Recipient shall protect the confidential information against
unauthorized disclosure using the same degree of care, as the
Recipient uses to protect its own confidential information of a like
nature.
4. The Recipient shall protect the Confidential Information against
unauthorized disclosure, and shall refrain from disclosing the
Confidential Information, from passing it to others and from allowing
others access to it.
5. The Recipient's obligation to protect the confidentiality of the
Confidential Information shall be unconditional, and shall be
maintained by him until waived by the disclosing party by way of a
prior written approval specifying the permitted scope of its
disclosure.
6. This Agreement shall only cover Confidential Information which shall be
disclosed during a one (1) year period, commencing from the _______ day
of ___________ 1998 (hereinafter: the "Effective Date").
7. Each Recipient's obligations regarding the Confidential Information
disclosed under this Agreement shall expire on ______ of ________
(up to five years after Effective Date).
8. Each party warrants that it has the right to make the disclosures under
this Agreement and all such disclosures are at the sole discretion
of the Discloser.
9. Neither party acquires any intellectual property rights under this
Agreement to purchase any service or item from the other party, or
to deal exclusively with the other party in any field; and neither
party has an obligation under this Agreement to offer for sale
products using or incorporating the Confidential Information. The
Discloser may, at its sole discretion, offer such products for sale
and may modify them or discontinue sale at any time.
10. The Disclosing Party shall not be entitled to any additional
consideration for his obligations under this Agreement and he shall
be bound by his obligations irrespective of any breach and or
cancellation of any other agreement entered between him and the
Recipient
11. Any failure or delay be any party to the Agreement to execute and/or
implement any of his rights set in the terms of the Agreement or by
law, shall not be construed as a waiver of those rights and the
party shall be entitled to execute and/or implement these rights at
any later date. The other party to the Agreement shall not claim a
delay or waiver of the said right.
12. The terms of the Agreement include in full, all that has been
stipulated and agreed between the parties regarding the Confidential
Information, and they supersede, unless otherwise stated in the
Agreement, any engagement, consent, presentation and obligation that
preceded the signing of the Agreement, whether made in writing or
verbally.
<PAGE>
[LETTERHEAD OF NUR MACROPRINTERS]
13. Any amendment and/or cancellation of any of the instructions of the
Agreement shall be made in writing only, signed by both of the parties.
14. Any notice sent by one of the parties to the other by registered mail,
shall be deemed to have been received by the other party 72 hours
after having been sent as stated. The addresses for the parties for
the purposes of the Agreement are as detailed in the preamble to the
Agreement.
15. The Agreement shall be governed by and construed in accordance with
the laws of the state of Israel.
In witness whereof the parties have signed:
_______________________ _______________________
Ref. SHIMONOV/MEITAL/SM/14/10/98
[TRANSLATED FROM THE HEBREW]
AGREEMENT
Dated 13th September 1998
BETWEEN
"MEITAL" ELECTRONIC TECHNOLOGY LTD
AND MARKOWITZ YAAKOV
AND
NUR MACROPRINTERS LTD
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AGREEMENT
Made and signed in Magshimim on 13th September 1998
BETWEEN: 1. MEITAL ELECTRONIC TECHNOLOGY LTD
Private Company 51-212217-7
of 2 Bregman Street, Unit 214, Rabin Science Park, Rehovot
(hereinafter referred to as "Meital")
2. MARKOWITZ YAAKOV
Identity No. 052412335
of 15 Hashomrim Street, Rehovot
(hereinafter referred to as "Kobi")
of the one part
AND: NUR MACROPRINTERS LTD
Public Company 52-003986-8
of 5 David Navon Street, Magshimim
(hereinafter referred to as "Nur")
of the other part
WHEREAS Meital has developed and is developing a technology which applies
InkJet print technology known as "drop on demand" (hereinafter
referred to as "the DOD technology") which is designed for
application in wide format co1our digital print systems using the
transversal method, the specifications whereof are described in
appendix "A" hereto (hereinafter referred to as "the Meital
technology"):
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AND WHEREAS Kobi is Meital's promoter, and acts as Meital's sole manager
and director, and together with his wife holds all Meital's
issued and paid up share capital;
AND WHEREAS Nur engages in the research, development, manufacture,
marketing, sale and maintenance of digital printers which
operate with various InkJet technologies, which are designed
for wide format colour printing, and in such context it has
also commenced engaging in research in respect of the
possibility of applying the DOD technology within the
framework of its printer line;
AND WHEREAS Meital wishes, with Kobi's consent, to transfer and sell all
its rights in the Meital technology to Nur, and Nur wishes to
accept and purchase all Meital's rights in the Meital
technology from Meital, in order to integrate parts thereof,
with the necessary changes, in Nur's wide format printer line;
AND WHEREAS the parties wish to regulate and anchor in writing everything
agreed between them in connection with the purchase of the
Meital technology by Nur, and all as provided below,
ACCORDINGLY, IT IS AGREED, WARRANTED AND PROVIDED BETWEEN THE PARTIES AS
FOLLOWS:
1. Recitals and Interpretation
1.1 The recitals and appendices hereto constitute an integral part
hereof.
1.2 The clause headings herein are for convenience purposes only and
shall not be used in the interpretation hereof.
1.3 In this agreement, above and below, the following expressions shall
bear the meanings set forth alongside them:
(a) "dollar" - an amount in shekels equal to the one US dollar, at
the representative rate of the US dollar last published by the
Bank of Israel prior to effecting any payment pursuant hereto;
(b) "the date of the agreement" - the date of this agreement as
appearing in the recitals hereto;
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(c) "wide formats" - printing on substrates of a width of 90 cm
and more.
2. Meital's and Kobi's Warranties
2.1 Meital and Kobi hereby warrant, confirm and undertake as follows:
(a) that Meital is the owner of the Meital technology and that
save for the charge currently existing over Meital's assets in
Nur's favour (hereinafter referred to as "the existing
charge"), Meital's rights in the Meital technology are free of
any charge, attachment, lien or other third party right;
(b) that without derogating from the generality of the provisions
of clause 2.1(a) above, Meital is the owner of all the
copyrights included in the Meital technology and/or is the
owner of all the licenses to use the patents, trademarks,
copyrights and/or other intellectual property rights
(hereinafter jointly referred to as "intellectual property
rights") used in the Meital technology;
(c) that it or he is authorised to enter into this agreement and
to perform all its or his obligations pursuant hereto, and
that there is no impediment pursuant to any law, contract,
order, judgment and/or other legal provision prohibiting it or
him from entering into this agreement and performing its or
his obligations pursuant hereto;
(d) that the employees engaged by Meital in connection with the
development of the Meital technology are specified in the list
annexed hereto as appendix 2.1(d) (hereinafter referred to as
"Meital's employees");
(e) that the sub-contractors who were and/or are engaged by Meital
in connection with the development of the Meital technology
are specified in the list annexed hereto as appendix 2.1(e),
which also includes an itemisation of the works executed by
each of the said sub-contractors in connection with the
development of the Meital technology;
(f) that all the valid agreements executed between Meital and/or
Kobi and any third party, including any of the sub-contractors
mentioned in sub-clause (e) above, in connection with the
Meital technology are specified in the list annexed hereto as
appendix 2.1(f) (hereinafter referred to as "the technology
agreements");
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(g) that all Meital's obligations correct as at the date hereof,
whether monetary or otherwise, including details of the third
party to whom the obligation exists, details of the amount of
the obligation or a description of the nature thereof and the
date for the payment or performance thereof, as the case may
be, are specified in the list annexed hereto as appendix
2.1(g) (hereinafter referred to as "Meital's obligations");
(h) that it or he is aware that Nur is entering into this
agreement in reliance on its or his representations as
mentioned in this clause 2.1.
2.2 It is agreed that Meital's and Kobi's warranties, which are
specified in clause 2.1 above, do not apply to any present or future
claim or plea of Idanit Technologies Ltd (hereinafter referred to as
"Idanit"), or anyone on its behalf, in connection with Idanit's
prima facie rights, according to it, in the Meital technology in
consequence of the past engagement of Kobi and any of Meital's other
employees by Idanit, including as specified in claims
14/1632/Nun-Zayin and 3/3823/Nun-Zayin, and in appeals that have
been and/or shall be filed in respect thereof (hereinafter referred
to as "Idanit's claims"). In accordance therewith, if in the future
any judicial instance holds that Idanit or anyone on its behalf has
any rights in the Meital technology, such shall not be deemed a
breach by Meital and/or Kobi of their representations as specified
in clause 2.1 above.
Without derogating from the provisions of this clause 2.2, Meital
and Kobi hereby confirm that to the best of their knowledge Idanit
does not have any right in the Meital technology.
3. Nur's Warranties
Nur hereby warrants, confirms and undertakes as follows:
(a) that it is authorised to enter into this agreement and to perform
all its obligations pursuant hereto, and that there is no impediment
pursuant to any law, contract, order, judgment and/or other legal
provision prohibiting it from entering into this agreement and
performing its obligations pursuant hereto;
(b) that save for the representations specified in clause 2.1 above
(subject to the proviso specified in clause 2.2 above), it is
purchasing the Meital technology on an "as is" basis, having carried
out comprehensive due diligence examinations and found them to be to
its satisfaction, and that it
5
<PAGE>
is aware that the Meital technology is merely in the development
stages, and in such context it shall not have any pleas or claims in
respect of the quality of the Meital technology;
(c) that it is familiar with all the details of Idanit's claims and an
appeal filed by Meital with the National Labour Court in connection
with Meital's claims;
(d) that it is aware that Meital and Kobi are entering into this
agreement in reliance upon its representations as mentioned in this
clause 3.
4. The Purchase and Transfer of the Meital Technology
4.1 In executing this agreement, and subject to the delivery being
effected as provided in clause 4.5 below, Meital is hereby selling
and transferring to Nur, and Nur is hereby purchasing and receiving
from Meital, all the rights in the Meital technology, including the
intellectual property rights included in the Meital technology, with
them being free of any charge, attachment, lien or other third party
right.
It is expressed that the above provisions of clause 4.1 do not
derogate from the provisions of clause 2.2 above.
4.2 Upon the purchase and receipt of the Meital technology, Nur will
become the owner of the Meital technology, and in such context Nur
shall be entitled to act qua owner in respect of the Meital
technology, in its absolute discretion, but subject to the rights of
Meital and Kobi which have been expressly specified herein. In
addition, from the date of the agreement any further or future
development of the Meital technology shall be exclusively owned by
Nur.
4.3 From the date mentioned in clause 4.5 below, Meital shall deliver
the Meital technology to Nur at Meital's premises, as provided below
in this clause 4.3 (hereinafter referred to as "the delivery").
Within the framework of the delivery Meital shall deliver to Nur all
the documents, equipment, tools, computer software and any other
item connected with the Meital technology which is in its
possession, as specified in the list annexed hereto as appendix 4.3
(hereinafter referred to as "the technology list"). Within the
framework of the items included in the technology list, Meital shall
deliver to Nur all the documents and other documentation in its
possession relating to the Meital technology which is reasonably
required for the continued development and application of the Meital
technology (hereinafter referred to as "the technology
documentation"). The technology documentation which Meital delivers
to Nur shall include, inter alia, all the computer software,
drawings, plans, lists of suppliers and sub-
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<PAGE>
contractors and the like including the Meital technology which is
in its possession. Within the framework of the delivery, Meital
shall transfer to Nur's possession and ownership every application
of the Meital technology, and in such context the prototype within
the framework whereof, to prove technological possibility, Meital
applied the Meital technology (hereinafter referred to as "Meital's
machine").
4.4 In addition, and without derogating from the generality of the
aforegoing, with effect from the determining date, as defined in
clause 4.5 below, Meital shall provide Nur, through Kobi, with
development and consultancy services, as provided and on the terms
and conditions specified in the development agreement which is
annexed hereto as appendix 4.4, which shall be executed by the
parties concurrently with their execution hereof (hereinafter
referred to as "the development agreement"). In the event of any
contradiction between the development agreement and this agreement,
the provisions of this agreement shall prevail.
4.5 Within seven business days of the execution hereof, but not prior to
receipt of the trustees' confirmation regarding receipt of the
royalties advance in the trust account, as provided in clause 4.7
below, Nur's representatives shall present themselves at Meital's
premises for the delivery to be effected, within the framework
whereof all the items included in the technology list shall be
delivered to Nur, as mentioned in clause 4.3 above. After Nur's
representatives ascertain the receipt of all the items included in
the technology list, they shall sign a copy of the technology list
and send it to Meital's representatives (hereinafter referred to as
"confirmation of receipt"). The delivery shall only be deemed to
have been effected upon furnishing of the confirmation of receipt as
aforesaid, and the date of furnishing the confirmation receipt shall
hereinabove and hereinbelow be referred to as "the determining
date".
4.6 Immediately after the execution hereof, the parties' attorneys, Adv.
Yaakov Kahn and/or Adv. Yigal Shapira on behalf of Meital and Kobi
(hereinafter referred to as "Meital's trustees"), and Adv. Michael
Barnea and /or Israel Shimonov on behalf of Nur (hereinafter
referred to as "Nur`s trustees"), shall open a bank account at
United Mizrahi Bank, Diamond Branch (hereinafter referred to as "the
trust account"). Each of Meital's trustees and Nur's trustees
(hereinafter jointly referred to as "the trustees") shall be
authorized to effect operations in the account, provided that for
the purpose of effecting any operation in the trust account the
signature of at least one of Meital's trustees together with the
signature of at least one of Nur's trustees shall be required. The
trustees shall only effect operations in the account pursuant to the
provisions hereof.
7
<PAGE>
Within three business days of the date of this agreement, Nur shall
deposit the amount of the royalties advance, as defined in clause
7.5 below, in the trust account, and the trustees shall invest the
said amount in a daily interest-bearing deposit, pursuant to
Meital's guidelines. Upon the delivery being effected and against
the furnishing of a copy of the confirmation of receipt, the
trustees shall transfer the royalties advance, together with the
income accruing thereon, to such bank account as Meital instructs
them in writing.
If on the date mentioned in clause 4.5 above Nur's representatives
believe that not all the items included in the technology list are
at Meital's premises, the delivery shall not be effected on such
date, and Nur's representatives shall give Meital's representatives
notice of the missing items, and the latter shall act to supplement
those items. After three business days have elapsed from such date,
Nur's representatives shall return to Meital's premises in order to
effect the delivery (hereinafter referred to as "the postponed
delivery"). If confirmation of receipt is not furnished by Nur's
representatives on the postponed delivery date, the validity of this
agreement shall lapse, without either party having any claim or plea
vis-a-vis the opposing party, and in such context the trustees shall
refund the royalties advance to Nur, together with the income
accruing thereon.
5. Meital's Employees and the Technology Agreements
5.1 Immediately after the determining date, Meital shall terminate the
employment of Meital's employees whom Nur wishes to employ in its
framework in connection with the Meital technology. Meital shall be
exclusively liable for making all the payments due to such employees
in respect of the period of their employment by Meital and in
respect of the termination of their employment by Meital.
5.2 Nur may conduct negotiations with each of Meital's employees in
respect of his employment with Nur, and enter into an agreement with
him for his employment by Nur. Meital and Kobi shall assist to the
best of their ability in the said negotiations and in the absorption
of Meital's employees by Nur. Without derogating from their
obligation to assist to the best of their ability in the absorption
of Meital's employees by Nur, neither Kobi nor Meital shall bear any
liability in the event that any of Meital's employees elects, for
his own considerations, not to be employed by Nur.
5.3 Commencing from the determining date, the parties shall act to the
best of their ability for the assignment of all or some of the
technology
8
<PAGE>
agreements, which in the parties' opinion shall be necessary for the
application of the Meital technology by Nur, as provided in clause 6
below.
5.4 Both Meital and Kobi hereby acknowledge that the employment of
Meital's employees by Nur, and the assignment of the technology
agreements, as mentioned in clause 5.3 above, are essential for the
absorption of the Meital technology by Nur and the successful
application thereof within the framework of the integrated product,
as provided in clause 6 below.
6. The Application of the Meital Technology by Nur
6.1 Nur hereby warrants that it intends acting to complete the
development of the Meital technology and to develop a product the
definitions whereof shall be characterised in due course and which
shall apply the Meital technology, including components of Meital's
machine insofar as they are found to be suitable, in combination
with Nur's hardware, software and/or mechanical systems (hereinafter
referred to as "the integrated product").
6.2 After completion of the integrated product's development, Nur
intends acting to promote, market and sell the integrated product,
both through its sales set-up and through others, and all as shall
be decided by it at such time.
6.3 In addition to the aforegoing, Nur shall examine the possibility of
integrating the Meital technology, in whole or in part, as part of a
process of upgrading Nur's existing digital printing systems to DOD
technology.
7. Consideration and Royalties
7.1 In consideration for the performance of all Meital's and Kobi's
obligations pursuant hereto, including the transfer of all the
rights in the Metail technology, effecting the delivery, assistance
in the absorption of Meital's employees by Nur, assignment of the
technology agreements, Kobi's and Meital's non-competition
undertakings, as provided below, and for Meital's and Kobi's
willingness to enter into this agreement instead of other business
opportunities, Nur shall pay Meital a one-time payment as provided
in clause 7.2 below (hereinafter referred to as "the consideration")
and royalties as provided in clauses 7.3 to 7.9 below (hereinafter
referred to as "the royalties"). VAT at its statutory rate on the
date of any payment shall be added to the consideration and royalty
payments specified in this clause 7. The parties shall apply to the
VAT authorities to transfer to Nur the VAT payment burden in respect
of the payments due to Meital pursuant hereto, in accordance with
section 20 of the Value Added Tax Law, 5735-1975.
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7.2 The consideration shall be in an amount of $800,000 (eight hundred
thousand dollars). The consideration shall be paid to Meital in two
instalments as follows:
(a) an amount of $400,000 (four hundred thousand dollars) shall be
paid to Meital on the determining date, and immediately upon
the receipt thereof it shall be used by Meital to repay the
principal loan and the additional loan, as provided in clause
13.1 below;
(b) the balance of the consideration, in an amount of $400,000
(four hundred thousand dollars), including an amount of
approx. $193,000 (one hundred and ninety three thousand
dollars) in respect of advances from customers (Omni, Abudi
and Lawson), shall be paid to Meital by way of the assumption
of Meital's obligations by Nur, as provided in clause 7.11
below.
7.3 Meital shall be entitled to royalties from the sale of the
integrated product and/or any other system manufactured by Nur (or
pursuant to Nur's license, such as the OEM agreement) which includes
the Meital technology (hereinafter jointly referred to as "the
technology products"). It is agreed that for the purpose of
determining Meital's right to royalties, every system manufactured
by Nur which integrates the DOD technology using the transversal
method shall be deemed to include the Meital technology.
The royalties shall be paid to Meital from the consideration (net)
actually received by Nur from sales of the technology products
(hereinafter referred to as "Nur's income"), and such being in
accordance with the higher of:
(a) 10% (ten percent) of Nur's income; or
(b) an amount of $30,000 (thirty thousand dollars), from Nur's
income.
For the purpose of this clause 7.3, the consideration (net) actually
received by Nur means the consideration actually received less
payments to distributors and/or agents and less taxes deducted at
source which may not be set off against other tax obligations.
It is expressed that if Nur's income from one of the technology
products is received by it in payments, Meital's shall be entitled
to royalties at a rate of 10% (ten percent) of each amount received,
and upon receipt of the last payment for such product Meital shall
be entitled to supplementation of the
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royalties amount to $30,000 (thirty thousand dollars), if the
royalties amount received by it, including pursuant to the last
payment, is lower than such amount.
If Nur offers upgrade kits for Nur's existing printers which include
the Meital technology, or any other assembly that does not
constitute an independent product, Meital shall be entitled to
royalties from Nur's income from such kit or assembly at the rate
prescribed in sub-clause (a) above.
7.4 The royalties, as provided in clause 7.3 above, shall be paid to
Meital in respect of Nur's income in each calendar quarter, within
45 days of the end of such quarter, by a bank transfer to such bank
account as Meital directs Nur. Together with payment of the
royalties, Nur shall furnish Meital with confirmation of the amount
of Nur's income in such quarter. In addition, Meital shall be
entitled, pursuant to its demand, to receive confirmation from Nur's
auditor within 90 days of the end of each calendar year regarding
Nur's income in such calendar year.
7.5 On account of Meital's entitlement to the royalties, Nur shall pay
Meital an amount of $750,000 (seven hundred and fifty thousand
dollars) (hereinafter referred to as "the royalties advance"). The
royalties advance shall be paid to Meital on the determining date,
against the delivery being effected, as provided in clause 4.6
above. The royalties advance shall be attributed to Kobi's
entitlement to royalties as provided in clause 7.3 above.
7.6 If by the end of one year from the determining date (hereinafter
referred to as "the first year") Nur pays Meital royalties pursuant
to clause 7.3 above in a cumulative amount of less than $450,000
(four hundred and fifty thousand dollars), and such being in
addition to the royalties advance (that is to say, royalties in a
cumulative amount of $1,200,000) (hereinafter referred to as "the
minimum royalties for the first year"), Meital shall be entitled to
notify Nur, within 30 days of the end of such year, that it is
exercising its right to repurchase the Meital technology, in
accordance with the provisions of clause 8 below (hereinafter
referred to as "Meital's option"). In such a case, Meital shall be
entitled to exercise Meital's option unless within 30 days of
receiving Meital's notice as aforesaid Nur pays Meital an amount
equal to the difference between the royalties actually paid by it
pursuant to clause 7.3 above together with the royalties advance,
and the minimum royalties for the first year (hereinafter referred
to as "the royalties difference for the first year"). If Nur pays
Meital the amount of the royalties difference for the first year,
Meital shall not be entitled to exercise Meital's option in respect
of such year.
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If by the end of two years from the determining date (hereinafter
referred to as "the first two years") Nur pays Meital royalties
pursuant to clause 7.3 above in a cumulative amount of less than
$900,000 (nine hundred thousand), and such being in addition to the
amount of the royalties advance (that is to say, royalties in a
cumulative amount of $1,650,000) (hereinafter referred to as "the
minimum royalties for the second year"), Meital shall be entitled to
notify Nur, within 30 days of the end of such year, that it is
exercising Meital's option. In such a case, Meital shall be entitled
to exercise Meital's option unless within 30 days of receiving
Meital's notice as aforesaid Nur pays Meital an amount equal to the
difference between the royalties actually paid by it pursuant to
clause 7.3 above together with the royalties advance and the
royalties difference for the first year (if paid), and the minimum
royalties for the second year (hereinafter referred to as "the
royalties difference for the second year"). If Nur pays Meital the
royalties difference for the second year, Meital shall not be
entitled to exercise Meital's option in respect of such year.
The minimum royalties for the first year and the minimum royalties
for the second year shall hereinafter jointly be referred to as "the
minimum royalties").
For example, if the amount of the royalties paid to Meital in the
first year pursuant to clause 7.3 above comes to $200,000 the amount
of the royalties difference for the first year shall be $250,000. If
thereafter the amount of the royalties paid to Meital in the first
two years pursuant to clause 7.3 above comes to $500,000, the amount
of the royalties difference for the second year shall be $150,000.
7.7 For the purposes of this clause 7.7, "the acceptance condition"
shall be deemed receipt by Nur of confirmations of installation
(COI) in respect of ten (10) of the technology products. In such
regard, confirmation of installation shall be deemed to have been
received in respect of a technology product even if confirmation as
aforesaid has not actually been received, where the product has been
installed at the customer and within two months of its installation
it is not returned by the customer, or taken back by Nur.
Furthermore, for the purposes of this clause 7.7, "the acceptance
date" shall be deemed the date on which the acceptance condition is
fulfilled.
If by the end of one year from the acceptance date (hereinafter
referred to as "the success year"), Nur pays Meital royalties
pursuant to clause 7.3 above, in a cumulative amount that is less
than $425,000 (four hundred and twenty five thousand dollars), and
such being in addition to the
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royalties advance and the minimum royalties to which it was entitled
until such date (that is to say, on the assumption that the success
year ended prior to the end of the second year, as defined in clause
7.6 above, royalties in a cumulative amount of less than one million
six hundred and twenty five thousand dollars) (hereinafter referred
to as "the minimum royalties for the success year"), Meital shall be
entitled to notify Nur, within 30 days of the end of such year, that
it is exercising Meital's option. In such a case, Meital shall be
entitled to exercise Meital's option unless within 30 days of
receiving Meital's notice as aforesaid Nur pays Meital an amount
equal to the difference between the royalties actually paid by it
pursuant to clause 7.3 above together with the royalties advance and
the royalties difference for the first year, if paid, and the
minimum royalties for the success year (hereinafter referred to as
"the royalties difference for the success year"). If Nur pays Meital
the royalties difference for the success year, Meital shall not be
entitled to exercise Meital's option in respect of such year. It is
expressed that if the success year falls prior to the end of the
second year, royalties paid in the success year pursuant to clause
7.3 above, and included for the purpose of determining the royalties
difference for the success year, shall not be deemed to have been
paid to Meital for the purpose of determining the royalties
difference for the second year, as provided in clause 7.6 above.
If by the end of a period of two years from the acceptance date
(hereinafter referred to as "the two success years"), Nur pays
Meital royalties pursuant to clause 7.3 above, in a cumulative
amount that is less than $850,000 (eight hundred and fifty thousand
dollars), and such being in addition to the royalties advance and
the minimum royalties (that is to say, royalties in a cumulative
amount of less than two and a half million dollars) (hereinafter
referred to as "the minimum royalties for the two success years"),
Meital shall be entitled to notify Nur, within 30 days of the end of
the two success years, that it is exercising Meital's option. In
such a case, Meital shall be entitled to exercise Meital's option
unless within 30 days of receiving Meital's notice as aforesaid Nur
pays Meital an amount equal to the difference between the royalties
actually paid by it pursuant to clause 7.3 above together with the
royalties advance and the royalties difference for the first year
and the royalties difference for the second year, if paid, and the
minimum royalties for the two success years (hereinafter referred to
as "the royalties difference for the two success years"). If Nur
pays Meital the royalties difference for the two success years,
Meital shall no longer be entitled to exercise Meital's option.
The minimum royalties for the success year and the minimum royalties
for the two success years shall hereinafter jointly be referred to
as "the success royalties".
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For example, on the assumption that the success year ended prior to
the end of the second year, as defined in clause 7.6 above, and that
the royalties that shall be paid to Meital in the success year
pursuant to clause 7.3 above come to one hundred and fifty thousand
dollars (not including royalties paid and taken into account for the
purpose of determining the royalties difference for the first year),
the royalties difference for the success year shall be two hundred
and seventy five thousand dollars. If subsequently the royalties
that shall be paid to Meital in the two success years pursuant to
clause 7.3 above (not including royalties paid and taken into
account for the purpose of determining the royalties difference for
the first year and/or the royalties difference for the second year)
come to five hundred thousand dollars, the royalties difference for
the two success years shall be seventy five thousand dollars.
7.8 For the avoidance of doubt, it is hereby expressed that the
provisions of clauses 7.6 and 7.7 above, with regard to the minimum
royalties and the success royalties, shall only apply where the
actual royalties payments to Meital, pursuant to clause 7.3 above,
in respect of the relevant periods are lower than the amounts to
which Meital shall be entitled in respect of such periods pursuant
to clauses 7.6 or 7.7 above.
7.9 Meital's entitlement to receive the royalties shall lapse upon the
payment of royalties, including the royalties advance, royalties
paid pursuant to cause 7.3 and payments of royalties differences, if
paid, pursuant to clauses 7.6 or 7.7 above, in a cumulative amount
of $2,500,000 (two million five hundred thousand dollars)
(hereinafter referred to as "the royalties ceiling"). That is to
say, after the payment of royalties in a cumulative amount equal to
the royalties ceiling, Meital shall no longer be entitled to any
payment in respect of its right to royalties as provided in this
clause 7. Furthermore, Meital's entitlement to receive the royalties
shall lapse in the event that Meital ceases to provide Nur, through
Kobi, with the development services pursuant to the development
agreement on Meital's and/or Kobi's initiative, and provided that
cessation of the services' provision as aforesaid does not derive
from a fundamental breach of the development agreement by Nur and/or
from force majeure.
7.10 In any case in which Nur is late in actually making any payment in
accordance with the provisions of this clause 7, such payment shall
bear, commencing from the third day of delay and without derogating
from the provisions of clause 10 below, interest at the rate of
LIBOR + 2.5%.
7.11 From the delivery date, Nur assumes all Meital's obligations, as
defined in clause 2.1(g) above, and it shall be exclusively liable
for the payment or
14
<PAGE>
performance of all Meital's obligations. Subject to the provisions
of clause 8.2 below, Nur undertakes to indemnify Meital and/or Kobi
in respect of any expenses which they actually bear which are
included in the framework of Meital's obligations, within seven days
of the date on which Meital and/or Kobi bear the expense as
aforesaid, but not prior to the date indicated in respect of such
obligation in appendix 2.1(g).
8. Meital's Option
8.1 As provided in clauses 7.6 and 7.7 above, Meital has an option
("Meital's option"), pursuant whereto it shall be entitled to
repurchase the rights in the Meital technology. In the event that
Nur does not comply with the minimum royalties payments in respect
of the first year or the first two years, or the success royalties
in respect of the success year or the two success years.
8.2 In the conditions are fulfilled for exercise of Meital's option and
Meital elects to exercise Meital's option (subject to Nur's right to
pay the royalties differences as provided in the said clauses), the
following provisions shall apply:
(a) If by the end of the 30 day period Nur does not pay Meital the
royalties difference in respect of such year, on such date Nur
shall sell to Meital, and Meital shall purchase from Nur,
title to the Meital technology, including the rights to use
the intellectual property rights purchased by Nur as part of
the Meital technology or which arose in connection with the
Meital technology after the purchase thereof by Nur, and in
such context Meital shall be entitled to act qua owner in
respect of the Meital technology, in its absolute discretion,
but subject to Nur's rights which have been expressly
determined in this agreement.
(b) The development agreement shall come to an end and the
non-competition provisions in this agreement and in the
service agreement, as in the employment agreements of any of
Meital's employees who elect to leave their employment with
Nur and return to their employment with Meital, shall be
cancelled insofar as they relate to the development,
manufacture, marketing and sale of systems or technologies for
the wide format digital printing applying the DOD technology
using the transversal method.
(c) Meital shall be entitled to take possession, including by way
of exercising the charge to Meital, as defined in clause 10
below, of all
15
<PAGE>
the documents deposited with the trustees, as provided in the
said clause.
(d) For a period of two years from the date on which Meital's
option is exercised, Nur may not engage in any application
(including research, development or manufacture) of systems or
technologies for wide format digital printing applying the DOD
technology using the transversal method in Israel or abroad,
directly or indirectly, for consideration or otherwise. Nur
shall assign its employees' non-competition undertaking to
Meital, insofar as it relates to the Meital technology, and
shall act to the best of its ability to enforce the said
non-competition undertaking on its employees.
(e) Nur shall not be liable for any further payment to Meital
pursuant hereto.
8.3 In consideration for the purchase of all the rights in the Meital
technology by Meital, in the event that Meital's option is
exercised, Meital shall remit to Nur an amount equal to all the
royalties paid by Nur to Meital pursuant hereto, including advances
on account of royalties, and a sum of $10 (ten dollars) shall be
paid by Meital to Nur upon the technology's return to Meital's
ownership, whilst the balance of the payments refunds shall be paid
to Nur:
(a) If Meital itself engages in the manufacture of wide format
digital printer systems applying the Meital technology (for
such purpose any such system which applies the DOD technology
using the transversal method shall be deemed to apply the
Meital technology) - by way of royalties at the rates and
times prescribed in clauses 7.3 and 7.4 above;
(b) If Meital and/or Kobi wish to execute any disposition
(transfer, sale, assignment and the like) with the Meital
technology, in whole or in part, to any third party (for such
purpose any disposition of know-how or systems connected with
the application of the DOD technology using the transversal
method shall be deemed a disposition of the Meital technology)
- immediately and as a condition for the disposition's
execution.
8.4 In addition to the aforegoing, in the event that this agreement is
terminated in consequence of a judicial order, and Meital and/or
Kobi wish to make any commercial use of the Meital technology and/or
to execute any disposition with the Meital technology, in whole or
in part, Meital shall be liable to refund to Nur all the amounts
paid by Nur to Meital pursuant
16
<PAGE>
hereto, including the consideration and the royalties or advances on
account of royalties, together with interest at LIBOR + 2.5% on such
terms and conditions and at such times as provided in sub-clauses
8.3(a) and (b) above. For the avoidance of doubt, it is hereby
expressed that on the occurrence of an event specified in clause
8.4, and if Meital does not make use of the technologies, it shall
not be under any obligation to refund any amount.
8.5 To secure the performance of Meital's obligation to effect payments
to Nur as provided in clauses 8.3 or 8.4 above, immediately after
the determining date Meital shall execute a first-ranking fixed
charge in Nur's favour over all its rights in connection with the
Meital technology, including its future rights, but save for its
rights to receive payments from Nur pursuant hereto (hereinafter
referred to as "the charge to Nur"). At the earliest possible
opportunity and no later than 21 days from the determining date, the
trustees shall act to register the charge to Nur with the Registrar
of Companies.
The charge to Nur shall be removed on the later between: (1) the
deadline for exercising Meital's option or (2) three years from the
date of this agreement. To secure the removal of the charge to Nur,
on the execution hereof Nur shall sign a charge discharge instrument
in which it agrees to the cancellation of the charge to Nur. The
discharge instrument shall be deposited with the trustees and
delivered by them to Meital on the later of three years from the
date of this agreement, or upon receipt of documents proving that
the deadline for exercising Meital's option has passed.
Nur may take any action and adopt any measures to realise the charge
to Nur in each of the following cases:
(a) Meital does not pay any of the payments refunds for which it
is liable pursuant hereto in full and on time, and such being
within at least 30 (thirty) days of receiving written notice
from Nur;
(b) a provisional or permanent liquidator is appointed for Meital
or a receiver is appointed for all or most of its assets, and
the said appointment is not cancelled within 60 (sixty) days.
9. Idanit's Claims
9.1 From the date of the agreement and thenceforth, and subject to the
delivery being effected, Nur assumes the financing of the existing
or future legal proceedings in connection with ldanit's claims, and
in such context the proceedings involved in the appeal filed by
Meital with the National
17
<PAGE>
Labour Court any legal proceedings commenced by Idanit in connection
with Meital's claims, against Meital, Kobi, any of Meital's
employees and/or Ms Iris Einhorn (hereinafter jointly referred to as
"the indemnity entitlees"). Furthermore, and in addition to the
provisions of clause 2.2 above, if within the scope of the
proceedings as aforesaid any of the indemnity entitlees are ordered
by a judicial instance to make any payment in respect of Idanit's
claims, Nur shall indemnify them for the full amount of the payment
within seven days of the date prescribed in the judicial decision
for payment as aforesaid.
9.2 Nur's financing and indemnity obligations as provided in clause 9.1
above are conditional upon the fulfilment of the following
conditions:
(a) Within seven days of receiving any demand or claim from Idanit
by any of the indemnity entitlees, the party receiving the
claim or demand sends written notice thereof to Nur.
(b) Nur shall have the right to elect the legal representation for
these proceeds and to exclusively instruct the attorneys who
are elected as aforesaid.
(c) The indemnity entitlees shall assist to the best of their
ability in defending Idanit claims (not including financial
assistance).
(d) The indemnity entitlees shall refrain from sending any notice
to Idanit or from conducting negotiations or reaching a
settlement with Idanit, without Nur's prior written consent.
It is expressed that a breach of any of the conditions specified
above in this clause 9.2 by any of the indemnity entitlees shall not
result in the cancellation of Nur's indemnity obligation pursuant
hereto vis-a-vis the remaining indemnity entitlees (however, for
such purpose Kobi and Meital shall be deemed to be one indemnity
entitlee), provided that Meital and Kobi have notified the remaining
indemnity entitlees of the provisions of clause 9.1 and have acted
reasonably in order to secure that such employees comply with the
provisions of this clause.
10. Charge to Secure Nur's Obligations
10.1 To secure all Nur's obligations pursuant hereto, and in such context
its obligation to pay the consideration and the royalties, subject
to the delivery being effected, Nur shall execute a first-ranking
fixed charge in favour of Meital over its rights in the Meital
technology (hereinafter referred to as "the charge to Meital").
18
<PAGE>
10.2 To secure the charge, no later than three business days from the
delivery date, Nur shall deposit copies of the technology
documentation with the trustees which shall actually be kept at the
offices of Shimonov, Barnea & Co., and once every three months Nur
shall update the documentation deposited with the trustees such that
it shall include full documentation in respect of the Meital
technology (hereinafter jointly referred to as "the documents").
10.3 Without derogating from the provisions of clause 10.2 above, at the
earliest possible opportunity and no later than 21 days from the
determining date, the trustees shall act to register the charge to
Meital with the Registrar of Companies.
10.4 The trustees shall undertake, by signing at the foot hereof, that
they will keep the documents in favour of Meital until receipt of
written notice from Meital or Nur, together with documents to prove
its notice, that:
(a) the consideration and the royalties have been fully paid to
Meital, subject to the provisions of clause 10.7 below;
(b) one of the conditions specified in clause 10.5 below have been
fulfilled.
If the trustees receive notice as provided in clause 10.4(a) above,
they shall transfer the documents to Nur within three business days.
If the trustees receive notice as provided in clause 10.4(b) above,
they shall transfer the documents to Meital within three business
days. Once the trustees have transferred the documents to either of
the parties, their trusteeship pursuant hereto shall come to an end.
On the execution hereof, Meital shall sign a discharge instrument in
respect of the charge to Meital, in which it agrees to the
cancellation of the charge to Meital. The discharge instrument shall
be deposited with the trustees and shall be delivered by them to Nur
only in the event that the documents are transferred to Nur, in
accordance with the above provisions of this clause 10.4.
10.5 Meital may take any action and adopt any measure to realise the
charge in each of the following cases:
(a) Nur does not make any payment in respect of the consideration
or royalties for which it is liable pursuant hereto in full
and on time,
19
<PAGE>
and such being within at least 30 (thirty) days of receiving
written demand from Meital;
(b) a provisional or permanent liquidator is appointed for Meital
or a receiver is appointed for all or most of its assets, and
the said appointment is not cancelled within 60 (sixty) days.
10.6 The taking of any action by the trustees in accordance with the
provisions of clauses 4.6 and/or 8.5 and/or 10.4 above shall require
the consent of one of Meital's trustees and one of Nur's trustees.
In any event, none of the trustees shall bear liability vis-a-vis
the parties in respect of this agreement, provided that he acts in
good faith and without malice.
10.7 If on the date of granting notice to the trustees, as provided in
clause 10.4(a) above, any legal proceedings are pending in respect
of Idanit's claims, or if the said notice is sent prior to the end
of three years from the date of this agreement and no legal
proceedings are pending as aforesaid, as a condition for the removal
of the charge to Meital Nur shall be liable to furnish Meital with
alternative collateral, to Meital's satisfaction, in order to secure
Nur's indemnity obligation as provided in clause 9 above, in respect
of such legal proceedings, or, if the notice is given prior to the
end of three years, to secure the indemnity, in respect of legal
proceedings which might be filed, and the amount which must be
secured shall be determined in a legal opinion which shall be
prepared by an attorney to be determined by the parties with
consent.
11. Non-Competition
11.1 In consideration for Nur's obligations pursuant hereto, Meital and
Kobi hereby undertake that commencing from the date of the agreement
it or he shall cease any activity in the field of wide format
digital printing and/or any other application of the DOD technology
in Israel or abroad, directly or indirectly, for consideration or
otherwise, as employee, consultant, partner or shareholder. Meital
shall assign to Nur the non-competition undertaking of Meital's
employees as shall be from time to time, insofar as it relates to
activity in the wide format digital printing field and/or any other
application of the DOD technology, and it shall act to the best of
its ability to enforce the said non-competition undertaking on its
employees.
11.2 Meital's obligations pursuant to clause 11.1 above shall remain
valid for an unlimited period.
11.3 Kobi's obligations pursuant to 11.1 above shall remain valid until
the end of two years from the later between:
20
<PAGE>
(a) the date of the agreement;
(b) the termination of the development agreement, for any
reason;
(c) payment of the last royalties by Nur to Meital.
12. Transfer of Rights and Obligations
12.1 Nur may assign all its rights and obligations pursuant hereto to a
corporation under its control, provided that such corporation
assumes vis-a-vis Meital and Kobi all Nur's obligations to them
pursuant hereto, subject that Nur shall be a guarantor for the
performance of such corporation's obligations pursuant hereto.
Furthermore, in the case of a transfer of all or most of Nur's
activity in the wide format digital printing field to another
corporation, it shall also be entitled, within the scope of the said
transfer, to transfer its rights and obligations pursuant hereto,
provided that such corporation assumes vis-a-vis Meital and Kobi all
Nur's obligations to them pursuant hereto and that Nur guarantees
the performance of such corporation's obligations pursuant hereto,
12.2 Meital shall be entitled to assign its rights to payments pursuant
hereto, subject to the terms and conditions hereof, to any third
party. Meital shall not be entitled to assign its obligations
pursuant hereto to any third party without Nur's prior written
consent.
13. The Previous Agreement
13.1 Together with and against payment of the first part of the
consideration, as provided in clause 7.2 above, Meital shall pay
Nur a sum of $400,000 (four hundred thousand dollars) in full and
final repayment of the loan of $300,000 provided by Nur to Meital
pursuant to the general terms sheet dated 11th December 1997 which
was drawn up between them (hereinafter referred to as "the term
sheet"), and of the loan of $100,000 provided by Nur to Meital
pursuant to the addendum to the term sheet dated 9th June 1998
(hereinafter referred to as "the addendum"). Nur may set off the
amount of the loans' repayment as aforesaid from payment of the
consideration. Upon repayment of the loans as aforesaid they shall
be deemed as fully repaid, the personal guarantee of Kobi pursuant
to the terms sheet and the addendum (hereinafter jointly referred to
as "the previous agreements") shall expire, the existing charge
shall be removed, and subject to the provisions of clause 13.2 below
the validity of all the previous agreements shall come to an and.
21
<PAGE>
13.2 If at any time prior to the end of three years from the date of the
agreement Nur becomes entitled to the payments refunds, as provided
in clause 8.4 above, then, without derogating from any right
available to the parties in such a case, Nur shall be entitled, at
any time within three months of the date on which it becomes
entitled to the payments refunds, to reduce the amount of the
payments refunds by $300,000 (together with the relevant interest)
and to convert the said amount to 26% of Meital's shares, in
accordance with the provisions of appendix 13.2 hereto.
14. Miscellaneous
14.1 Any modification and/or cancellation of any of the provisions
hereof may only be effected in a written document, which shall be
signed by all the parties.
14.2 In the event that any of the parties does not exercise any of the
rights conferred upon him or it pursuant hereto or at law, such
shall not be deemed a waiver on its or his part of such right, and
he or it may later exercise such rights. A plea of laches or waiver
shall not be available to the breaching party.
14.3 The laws of the State of Israel shall apply hereto, and sole
jurisdiction in respect hereof shall rest with the competent courts
in the District of Tel Aviv.
14.4 The terms and conditions hereof fully embrace everything provided
and agreed between the parties in respect of the Meital technology,
and they prevail over any contract, agreement, representation or
undertaking in such matter that preceded the execution hereof made
in writing or orally, unless otherwise expressly prescribed in this
agreement.
14.5 Any notice sent by registered mail by one of the parties to another
pursuant to the addresses appearing in the recitals hereto shall be
deemed to have been received by such party after 72 hours have
elapsed from the time of its dispatch as aforesaid, if sent by fax
- within 24 hours of its transmission, and if sent by hand - upon
the delivery thereof.
22
<PAGE>
AS WITNESS THE HANDS OF THE PARTIES:
___________________ ________________
"Meital" Electronic Technology Ltd Nur Macroprinters Ltd
__________________
Yaakov Markowitz
We hereby agree to serve as trustees in accordance with the provisions of this
agreement:
Meital's trustees Nur's trustees
_______________________ _______________________
Yaakov Kahn, Adv. Michael Barnea, Adv.
_______________________ _______________________
Yigal Shapira, Adv. Israel Shimonov, Adv.
23
<PAGE>
LIST OF APPENDICES
Appendix "A" Specifications of the Meital technology
Appendix 2.1 (d) Meital's employees
Appendix 2.1 (e) Sub-contractors (included in appendix 2.1(g))
Appendix 2.1 (f) The technology agreements
Appendix 2.1 (g) Meital's obligations
Appendix 4.3 The technology list
Appendix 4.4 Development and consultancy agreement
Appendix 13.2 Loan conversion
24
<PAGE>
APPENDIX A
----------
Specification of Meital Technology
<PAGE>
[Meital letterhead]
DigiSWIFT
Meital introduces new standards to Super-Wide-Format digital imaging. Sturdy and
reliable equipment, top quality imaging, outstanding print production speed,
substrate and application versatility and outdoor durability at unmatched
cost-performance ratios:
o 4 color imaging - simultaneous application of CMYK inks
o Mass production capacity - 90 m(2) per hour - standard mode
o 3 imaging modes selections: (arrow) Standard mode
(arrow) Enhanced mode
(arrow) Double density mode (back-lit
applications)
o High imaging quality - 300 dpi imaging resolution
o Roll-to-roll imaging - unit widths selections:
digiSWIFT 1.8 - 183 cm width (6')
digiSWIFT 3.2 - 320 cm width (10'6")
o Solvent based pigmented ink (arrow) exceptional adhesion to substrates
(arrow) 3-5 years outdoor durability -
without lamination
(arrow) extra-vibrant pigments
The digiSWIFT winning combination of features is accompanied with numerous
production benefits to enhance users competitive edge:
o The unit robust construction combined with a highly accurate and powerful
media delivery system insure product reliability, longevity and industrial
performance.
o Meital's specialty inks are developed for imaging reliability, consistency
and vibrancy. Superb adhesion combined with exceptional pigment selection
enable direct imaging on to the widest selection of substrates available
on the market in addition to 3-5 years outdoor durable and UV resistancy
product without lamination.
o Highly effective consumable cost performance ration enable users to compete
effectively.
o Sharp text, photo-realistic images and size versatility provide users the
option to produce a wide range of applications for both remote and close
proximity viewing distances: POP displays, posters, signs, street
advertisements, backlit signs, bus-shelters, fleet graphics, billboards,
banners, flags, etc.
o Semi-automatic color correction system for users substrate qualification
needs enables achievement of optimal results on a wide range of substrates
selection and use of user's choice of substrates.
o Integral on-line drying ensure image drying and solvent evaporation prior
to media roll take-up.
o A parallel media cutter is optional.
o Flexible data processing and multiple roll feed option allow imaging of
multiple images simultaneously, on the full width of the media or onto a
number of parallel loaded rolls.
Meital Technologies Ltd. CONFIDENTIAL Subject to change
PRELIMINARY without notice
<PAGE>
o Piezo-Electric inkjet technology provide users with reliable imaging and
consistent coloring. The modular-inkjet head assembly is designed for
simple approach and is supplemented by an automatic self-maintenance
station for long and reliable production and shutdown protection.
o An automatic head calibration mechanism has developed for efficient
maintenance.
o Open architecture and Fast Ethernet network connectivity allows users
efficient work flow and utilization of existing software and hardware
packages that are in common use in the graphics industry.
- --------------------------------------------------------------------------------
Specifications
================================================================================
digiSWIFT 1.8
- --------------------------------------------------------------------------------
Max substrate width 183 cm 72"
- --------------------------------------------------------------------------------
digiSWIFT 3.2
- --------------------------------------------------------------------------------
Max substrate width 320 cm 126"
================================================================================
Printing technology Drop-on-demand Multiple Piezo Electric inkjet
assembly
- --------------------------------------------------------------------------------
Resolution 300 dpi
- --------------------------------------------------------------------------------
Drop shape consistent, no satellite formations
- --------------------------------------------------------------------------------
Maximum substrate length limited by roll length
- --------------------------------------------------------------------------------
Roll diameter 50 cm 20"
- --------------------------------------------------------------------------------
Ink o solvent based pigmented (CMYK)
o 5 liter ink containers
- --------------------------------------------------------------------------------
Printing throughput 90 sq. m/hour 970 sq. ft/hour
- --------------------------------------------------------------------------------
Printed media paper, vinyl, banner, PVC, textile, panaflex,
canvas, mesh
- --------------------------------------------------------------------------------
File acceptance TIFF (CMYK), CT, BMP, JPG, PostScript
Level 2, EPS and other common file formats
- --------------------------------------------------------------------------------
Interface Open Architecture, Fast Ethernet,
- --------------------------------------------------------------------------------
Operating environment: temperature: humidity:
20 [degrees]C - 30 [degrees]C 30%-60%
68 [degrees]F - 86 [degrees]F
- --------------------------------------------------------------------------------
Dimensions 1.8 - 160cm H x 350cm W x 140cm D
63" H x 138" W x 55" D
3.2 - 160cm H x 500cm W x 140cm D
63" H x 199" W x 55" D
- --------------------------------------------------------------------------------
Meital Technologies Ltd. CONFIDENTIAL Subject to change
PRELIMINARY without notice
<PAGE>
APPENDIX 2.1(f)
---------------
Technology Agreements
<PAGE>
[LYSON letterhead]
FAX TRANSMISSION
================
For the Attention of: Company: Department:
Mr. Kobi Markowitz MEITAL TECHNOLOGIES LTD.
Managing Director
From: Date: Fax Number:
Tony Martin 25th November, 1997 00972 8 9366134
Reference: Time: Total Pages including this one:
ap\fax\meital\jd 2
Dear Kobi,
The following is our suggestion for a document of understanding between our two
companies. It is not a supply contract but simply lays out the way in which we
do business together.
DOCUMENT OF UNDERSTANDING BETWEEN
MEITAL TECHNOLOGIES LTD., ISRAEL, AND LYSON LTD., ENGLAND
The purpose of this document is to formalise the terms of co-operation between
Meital Technologies Ltd. (the Buyer) and Lyson Ltd. (the Supplier) over the
supply of inks for wide format and grand format graphics ink jet printers.
1. The Supplier manufactures inks to strict quality control procedures
which are then purchased by the Buyer for resale to the Buyer's
customers and distributors.
2. The technical specification of the inks is to be mutually agreed
between the Supplier and the Buyer. This specification is subject to
change but only with the written consent of the Buyer and the Supplier.
3. All formulations and intellectual rights remain the property of the
Supplier.
4. The inks covered by this document are known as MEITAL P128 PIGMENTED
INKS (CMYK) for use on Meital Wide and Grand Format Ink Jet Printers.
5. The Supplier agrees to not knowingly supply this ink directly or
indirectly to the Buyer's customers and distributors without the
written consent of the Buyer.
6. Other inks may be purchased in the future by the Buyer for use on
similar printers and, with written mutual agreement in each case, these
inks will be supplied under the broad terms of supply of this document.
7. The Supplier will supply ink packages in suitable bottles which are
labelled in accordance with the Buyer's instructions. The Supplier will
also provide packaging and documentation in accordance with
International Safety & Transport Standards (UN approved).
<PAGE>
8. The price of MEITAL P128 PIGMENTED INKS is currently $27.10 per litre
supplied in 5 litre UN approved bottles ex-works, Stockport, England.
Transport and Insurance is the responsibility of the Buyer. However,
the supplier is happy to arrange this on the Buyer's behalf and will
invoice charges at cost.
9. The price of ink will normally be reviewed on a twelve monthly basis
starting from the date of this document. However, the Supplier reserves
the right to increase or decrease prices if there is a + or - 10%
increase in raw material costs. A price change cannot be implemented
without 60 days written notice to the Buyer.
10. Payment to the Supplier will be made 30 days from the date of the
Supplier's invoice.
11. The Supplier agrees to replace or credit any product that does not meet
the agreed technical specification.
12. Shipment will normally be 5-10 working days from receipt of the Buyer's
purchase order. Minimum order quantity will be 50 litres.
13. Within six months of the date of this document, the Supplier will also
be able to supply the same ink from the Supplier's site in Chicago,
USA, under the same terms of supply.
14. This document of understanding will normally be reviewed on a yearly
basis.
15. Both the Supplier and the Buyer are allowed to cancel this document at
any time with three months notice in writing.
Please let me know your comments on the above. If you are happy with this then I
will arrange for two signed copies to be sent to you for signing by yourselves.
Kind regards,
/s/ Tony Martin
Tony Martin
<PAGE>
PRINTHEAD
---------
PURCHASE AGREEMENT
------------------
This agreement (the "Agreement"), dated 29 October 1997 (the "Effective
Date"), among Meital Technologies, Ltd. a Israel company ("Purchaser"), and
Modular Ink Technology i Stockholm AB, Inc., a Swedish corporation ("MIT").
A. MIT produces Printheads (as hereafter defined);
B. Purchaser has developed, or is developing a printing application
into which it wishes to incorporate the Printhead; and
C. MIT desires to sell the Printheads to Purchaser and Purchaser
desires to purchase the Printheads from MIT;
NOW, THEREFORE, the parties hereto agree as follows:
Article I
Definitions
1.1. Definitions: As used herein, the following terms shall have the
following meanings:
Ink: means any material suitable to be transferred by a Printhead on to paper or
other material to produce a visual image.
Printhead: means an inkjet printhead meeting the specifications in Annex 1.
Article II
Product Purchase
2.1. Purchase Commitment. Purchaser agrees to purchase the Printheads, at
the prices set forth on Annex II attached hereto.
2.2. Delivery, Payment.
2.2.1. All Printheads purchased by Purchaser will be delivered Ex Works
(INCOTERMS 1990) place of manufacture.
2.2.2. All deliveries of the Printheads will be accompanied by an invoice
issued by MIT which will state the amount owed by Purchaser (including all
sales, value-added or other taxes) in local currency of the point of origin of
the Printheads. Payment will be due within 30 days of receipt of such invoice.
Amounts outstanding after such 30 days period shall bear interest at the lower
of 10% per annum and the maximum legal rate.
2.3. Warranties and Remedies.
2.3.1. MIT warrants that the Products will be free of defects in materials
and workmanship on the date of shipment by MIT. MIT's warranty obligations is
limited, at MIT's option, to repair and replacement of defective parts and
materials or refund of the purchase price. If MIT finds that a Product is
defective, it will reimburse Purchaser or Purchaser's customer for the cost of
shipping the Product to MIT. Except for the foregoing, MIT shall have no
liability whatsoever for any warranty, whether express or implied, made by
Purchaser to any of its customers
2
<PAGE>
2.3.2. EXCEPT FOR THE EXPRESS WARRANTY SET FORTH IN THIS SECTION 2.3. THERE
ARE NO WARRANTIES EXPRESS OR IMPLIED WITH RESPECT TO THE PRODUCTS, INCLUDING,
BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
2.3.3. MIT's liability for damages and costs under this Agreement and for the
sale of any Products shall not under any circumstances exceed the aggregate
amounts paid to MIT for the Product. MIT shall not be liable to Purchaser or
any other person for any incidental, consequential or punitive damages or for
any compensation for lost profits arising out of or in connection with this
Agreement or the sale of Products. If Purchaser's use or sale of any Product or
any part hereof be enjoined, or in the event that MIT desires to minimize any
liability it may have hereunder, MIT may, at its option, either (a) substitute
equivalent non-infringing Products for the infringing item, (b) modify the
infringing item so that it no longer infringes but remains equivalent, or (c)
obtain for Purchaser the right to continue using such item.
Article III
Patents and Licenses
3.1. Inventions and Discoveries. All patents for inventions or discoveries
used or embodied in the Printhead, or for any method of manufacturing the
Printhead, conceived or made heretofore or during the term of this Agreement,
shall be assigned to and owned by MIT.
Article IV
Term and Termination
4.1. Term. Unless earlier terminated in accordance with Section 4.2., this
Agreement shall terminate Three (_3_) years from the date first set forth above.
Payment in full for all Printheads, described in Annex II shall be due and
payable upon termination of this agreement if payment has not previously been
received by MIT.
4.2. Termination.
4.2.1. In the event of a material breach of this Agreement by either MIT or
Purchaser not cured within forty-five (45) days following written notice thereof
given by the party not in default to the party in default, then, and in addition
to all other rights and remedies a party may have at law or in equity the party
not in default may at its option terminate this Agreement and such termination
shall become effective forty-five (45) days following the date of such notice;
provided, however, that if such default involves a technical problem with the
Printhead, then MIT shall have ninety (90) days from the receipt of written
notice to cure the default before this Agreement may be terminated and such
termination will be effective forty-five (45) days after the notice.
4.2.2. MIT or Purchaser shall have the right to terminate this Agreement by
written notice of termination to the other, effective upon receipt of such
notice by the other, in the event of any one of the following: (a) liquidation
of the other, (b) insolvency or bankruptcy of the other, whether voluntary or
involuntary, (c) failure of a party to satisfy any judgment against it.
4.2.3. Termination of this Agreement for any cause whatsoever shall not
relieve Purchaser of the obligation to pay MIT any amount then owed by Purchaser
to MIT.
3
<PAGE>
Article V
Miscellaneous
5.1. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Sweden (regardless of the laws that might otherwise
govern under applicable principles of conflicts of law).
5.2. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties hereto; provided, however, that this Agreement may not be assigned by
any party without the prior written consent of the others, which consent will
not be unreasonably withheld, except for assignment in the event of an
acquisition or purchase of substantially all of the assets of a party.
5.3. Severability. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to the
extent possible. In any event, all other provisions of this Agreement shall be
deemed valid and enforceable to the full extent possible.
5.4. Entire Agreement. This Agreement, including the Annexes hereto
constitute the entire Agreement by the parties relating to the subject matter
herein and supersedes all other prior and contemporaneous Agreements,
negotiations, correspondence, undertakings and communications of the parties,
oral or written, with respect to the subject matter hereof.
5.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument.
5.6. Notices. Any notice or other communication required or permitted under
this Agreement shall be in writing and shall be deemed sufficiently given when
delivered in person, or transmitted by telegram or telecopier (confirmed by
mail) addressed as follows:
if to MIT, at: 200 Beasley Drive
P.O. Box 3000
Franklin, Tn. 37064
Attn: Vice President-MIT
if to Purchaser, at: 2 Bergman St.
Suite 244
Rabin Science Park
Rehovot 76100
ISRAEL
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
5.7. No Joint Venture, etc. The parties hereto are independent contractors
and this Agreement does not constitute the parties having entered into a joint
venture nor shall it constitute any party the agent or legal representative of
the other party for any purposes whatsoever.
5.8. Waiver, Modification. The waiver by party hereto of a breach on any
provision of this Agreement shall not operate as or be construed as a waiver of
any preceeding or succeeding breach and no failure by either party to exercise
any right or privilege thereunder shall be deemed a waiver of such party's
rights or privileges thereunder or shall be deemed a waiver of such party's
rights to exercise the same at any subsequent time or times thereunder. The
terms and conditions contained herein can only be modified, amended, revised or
supplemented by a written agreement signed by both parties. The terms of this
Agreement shall not be varied by the terms of any purchase order form used by
Purchaser.
3
<PAGE>
5.9 Force Majeure. Except for the payment of monies owed, no party shall
be responsible or liable to the others for, nor shall this Agreement be
terminated as a result of, any delay or failure to perform any of its
obligations thereunder, if such delay or failure results from circumstances
beyond the control of such party, including but not limited to requisition by
any government authority or any other governmental order or regulation,
earthquake, failure of public utilities or common carriers, fire, flood,
explosion, acts of God, epidemics, strikes, lockouts, riots or other civil
commotion, wars or enemy action.
5.10. Legal Expenses. The prevailing party in any legal action brought by
one party against the other and arising out of this agreement shall be entitled,
in addition to any other rights and remedies it may have, to reimbursement for
its expenses, including court costs and reasonable attorney's fees.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the day first above written.
MIT
By
-------------------------------------
Name:
Title:
PURCHASER:
By /s/ Markowitz Kobi
-------------------------------------
Name:
Title:
<PAGE>
ANNEX I
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
P 64 / 200 dpi P 128 / 200 dpi P 64/360 dpi P 128/360 dpi
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Technology Piezo Piezo Piezo Piezo
- ---------------------------------------------------------------------------------------------------------------
Channels 64 128 64 128
- ---------------------------------------------------------------------------------------------------------------
Resolution 200 dpi 200 dpi 360 dpi 360 dpi
- ---------------------------------------------------------------------------------------------------------------
Firing frequency 4.25 kHz 4.25 kHz 5.0 kHz 5.0 Khz
- ---------------------------------------------------------------------------------------------------------------
Power requirements 35 volts 35 volts 35 volts 35 volts
- ---------------------------------------------------------------------------------------------------------------
Power consumption 3 watts peak 6 watts peak 3 watts peak 6 watts peak
- ---------------------------------------------------------------------------------------------------------------
Firing distance 1 mm 1 mm 1 mm 1 mm
- ---------------------------------------------------------------------------------------------------------------
Interface Serial Serial Serial Serial
- ---------------------------------------------------------------------------------------------------------------
Rated Life 2 billion drops 2 billion drops 2 billion drops 2 billion drops
per channel per channel per channel per channel
- ---------------------------------------------------------------------------------------------------------------
Operating temperature +10 to +40C +10 to +40C +10 to +40C +10 to +40C
- ---------------------------------------------------------------------------------------------------------------
Humidity 10% - 80% 10% - 80% 10% - 80% 10% - 80%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
ANNEX II
PURCHASE COMMITMENT
Printheads Purchase Commitment:
Purchaser commits to purchase the following number of Printheads:*
Delivery Date(s) Quantity Price (Swedish Krona)
- ----------------------------------------------------------------------
12 month volume >1.000 2.500 SKR for 128 channel head
* Prices are subject to increase on 30 days written notice from MIT.
<PAGE>
[LETTERHEAD FOR MIT INKJET]
November 30, 1997
Kobi Markowitz
Iris Keren
Meital Technologies, Ltd.
2 Bergman St., Suit 214
Rabin Science Park
Rehovot 76100
Israel
Dear Kobi,
Dear Iris,
Attached please the signed original of the contract between your and our
company.
We thank you very much for your confidence and wish you fast progress in this
project and you and us great success.
My plan is to visit Israel togehter with a technical engineer in
January/February next year.
I enjoy to see you than.
Best regards
/s/ Hubertus Hanke
Hubertus Hanke
<PAGE>
APPENDIX 4.4
Summary of consulting and development agreement with Meital.
This contract specifies the relationships between Kobi Markowitz, the founder of
Meital and Nur Macroprinters ("Nur"). Under this agreement, Mr. Markowitz is
obliged to provide development and consulting services to Nur for a period of
one year from the signing of the contract at a capacity equal to full time
employment, and for a second year form the signing of the contract at a capacity
not less than 50% of full time employment. Meital, which is owned by Mr.
Markowitz will receive a monthly compensation of NIS 30,000 per month for these
services and an option to acquire 100,000 shares of Nur at $1.00 at the end of
the first anniversary of this contract.
<PAGE>
APPENDIX 13.2
-------------
Conversion of loan
<PAGE>
Conversion of Loan
The provisions set forth below refer to the terms and conditions upon
which Nur Macroprinters Ltd. (the "Investor") may convert the amount of Three
Hundred United States Dollars ($300.000) (the "Payment Returns") into Series A
Preferred Shares, par value NIS 1.00 each (the "Preferred Shares"), which
represent, following their issuance, 26% of the issued and outstanding share
capital of "Meital" Electronic Technology Ltd. (the "Company") at the date of
issuance on a fully diluted basis (i.e. ;including all shares, securities
convertible into shares and/or any undertaking by the Company to issue shares,
or such other securities), in accordance with Section 123.2 of the Agreement
dated September 13, 1998 between the Company and the Investor (the "Agreement").
Conversion of the In the event that under Section 8.4 to the Agreement,
Payment Returns the Investor during the period of three years from the
date of the Agreement will be entitled to Payment
Returns (as defined in Section 8.4 of the Agreement),
then during the three months period from the first date
when the Investor becomes entitled to Payment Returns,
the Investor may, at its sole discretion, convert the
Payment Returns into Preferred Shares.
The Preferred Shares, when issued, will have been
validly issued, fully paid and non-assesable, and will
be free of any liens or encumbrances.
Conversion of the The Preferred Shares will be convertible (the "Share
Preferred Shares Conversion") on a one-to-one basis (subject to
adjustment) at the option of the Investor, into Ordinary
Shares of the Company, par value NIS 1.00 each (the
"Ordinary Shares"). The Preferred Shares will
automatically convert on a one-to-one basis (subject to
adjustment) into Ordinary Shares in the event of an IPO
yielding at least $7.5 million net to the Company at a
price per share (as adjusted) which is at least fifteen
times the purchase price of the Preferred Shares
(reflected by the conversion of the Payment Returns into
Preferred Shares) (the "IPO"). The Ordinary Shares, when
issued, will have been validly issued, fully paid and
non-assesable, and will be free of any liens or
encumbrances.
Anti dilution The Share Conversion ratio will be adjusted in the event
Protections of stock splits, reclassifications, etc., and will also
be adjusted by standard full-ratchet anti-dilution in
the event that equity securities, securities convertible
into equity or options to purchase equity securities
(other than employee options) of the Company are
subsequently issued at a price per share which reflects
a Company valuation at the date the Preferred Shares are
issued to the Investor.
Liquidation The Preferred Shares will be senior to all other equity
Preference securities of the Company in the event of a sale,
merger, liquidation, bankruptcy, or reorganization of
the Company. The merger of the Company, the sale of all
or substantially all of its assets, the sale of all or
substantially all of the shares in the Company, or a
change in control, will be deemed to be a liquidation.
In an actual or deemed liquidation, the Investor shall
be entitled to receive an amount equal to the full
purchase price paid for the Preferred Shares (reflected
by the conversion of the Payment Returns into Preferred
Shares) and interest at the rate of LIBOR + 4% from the
date of the issuance of the Preferred Shares and until
the date of the actual or deemed liquidation, prior to
any payments to the holders of Ordinary Shares (the
"Preference"). After the Preference is paid, the
remaining assets (if any) shall be distributed to the
holders of Preferred and Ordinary Shares pro rata (on an
as converted basis).
Dividend Preference The Preferred Shares shall be entitled to dividends, as
and when declared by the Company's Board of Directors,
at a rate of 25% per year, prior an in preference to
any dividends on shares of any other class.
1
<PAGE>
Registration Rights The Registration Rights granted to the Investor are as
set forth in Appendix A attached hereto.
Voting Rights Except as provided by the Restrictive Provisions below
or by law, the Preferred Shares vote with the Ordinary
Shares on an as-converted basis (i.e. as if the
Preferred Shares have been converted into Ordinary
Shares).
Restrictive The Company's Articles of Association will contain
Provisions restrictions prohibiting the Company from taking certain
actions without: (i) during a period of one year from
the date hereof, the consent of the Investor, or the
consent of the observer designated by the Investor, as
the case may be; and (ii) after a period of one year
from the date hereof, the consent of a 75% majority of
the holders of Preferred Shares, or the consent of one
of the Directors appointed by the holders of the
Preferred Share, as the case may be. Such actions
include: (1) amending the Memorandum or Articles of
Association or other action which would have the affect
of amending the rights, preferences or privileges of the
Preferred Shares; (2) the issuance of any further
debentures or other securities (except for the issuance
of securities to employees of the Company) (3) the
issuance of any further Preferred Shares or other
securities with rights equal to or superior to the
rights of the Preferred Shares; (4) the merger of the
Company or sale of substantially all the Company's
assets; (5) increase in the number of the Company's
Directors above 5; (6) declaration or payment of any
dividend or other distribution of cash, shares, or other
assets; (7) interested party transactions; (8) making
any loans or advances to employees other than in
ordinary course of business as travel advances; (9)
making any guarantee; (10) mortgage, pledge or create a
security interest in all or substantially all of the
assets of the Company or a subsidiary; (11) making any
expense of an amount in excess of $10,000; and (12)
formation of or investment in any entity which is not
wholly owned by the Company.
Pre-emptive Rights Prior to an IPO, holders of the Preferred Shares will
have the right to maintain their percentage ownership in
the Company (on an as converted basis) by purchasing a
pro rata portion of any further issuance of securities
by the Company at the offering price. Each holder of
Preferred Shares shall also be entitled to purchase the
pro rata portion of any other shareholder that does not
exercise such right.
Right of Prior to an IPO of the Ordinary Shares, the holders of
First Refusal the Preferred Shares will have a right of first refusal
to purchase any Preferred or other shares of the Company
offered for sale by any shareholder to any person or
entity, subject to standard exceptions for transfer to
affiliates and family members.
Tag Along Prior to an IPO of the Ordinary Shares, in the event
that any shareholder other than the Investor, sells or
desires to sell any of its shares in the Company to any
third party, the Investor will be entitled to sell, to
the same third party and on the same terms and
conditions, shares held by the Investor; the number of
such shares to be determined by multiplying the
aggregate number of shares to be sold to the third party
by the Investor's percentage shareholding of the
Company's issued and outstanding share capital at the
time.
Board of Directors The composition of the Board is based on the recognition
that: (1) the primary function of the Board is to
provide guidance and support to the Company's executives
in the conduct of its business; (2) each member of the
Board acts in such capacity as a representative of the
Company rather than of the shareholders; (3) the Board
should be limited in size for efficient functioning; and
(4) there are ample provisions for the protection of
shareholder's rights, making it unnecessary for the
Board composition to reflect directly the distribution
of share ownership or control. Accordingly, the Board of
2
<PAGE>
Directors consists of a total of seven (7) members, of
whom two(2) shall be designated by the Investor. If the
Investor's aggregate shareholding in the Company is
reduced to less than 13% of the issued and outstanding
share capital of the Company, on a fully diluted basis,
then the Investor will only be entitled to designate one
(1) director to the Board of Directors of the Company.
The Company will agree to maintain customary indemnity
insurance policy covering the directors. For as long as
the Company owes the Investor any amount of money, the
Investor will be entitled to designate an observer to
the Board of Directors of the Company. The observer will
be entitled to receive all materials distributed to
directors and participate at all meetings of the Board
of Directors, but will not be entitled to vote. Prior to
participating at the first Board Meeting, the observer
will sign a standard confidentiality and non-disclosure
agreement with the Company.
Information Rights The Investor shall be entitled to receive from the
Company: (1) audited financial statements within 60 days
after the end of each fiscal year. (2) un-audited,
reviewed quarterly financial statements within 45 days
after the end of each quarter, (3) monthly reports in a
form agreed by the Board of Directors, within 30 days
after the end of each month, and (4) immediate reports
signed by the Chief Financial Officer of the Company
upon the occurrence of any event which has or may have
any adverse on the Company, its business or the
Technology.
The Investor will have the right to inspect the
properties and records of the Company and to consult
with management of the Company at reasonable times and
upon reasonable notice. In addition, the Company's
management will submit to the Investor and to the Board
for approval, an annual operating plan and budget at
least 60 days prior to the first day of the year covered
by such plan.
3
<PAGE>
SCHEDULE A
----------
REGISTRATION RIGHTS
-------------------
1. Definitions.
As used herein, the following terms have the following meaning:
1.1 "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 of
transactions not involving any registered offering.
1.2 "Commission" -- refers to the Securities and Exchange Commission.
1.3 "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.
1.4 "Registrable Shares" -- means all Ordinary Shares issued upon
conversion of the Issued Preferred Shares and the Additional Preferred Shares,
if any, all Ordinary Shares issued by the Company in respect of such shares, and
all Ordinary Shares that the Investors may hereafter purchase, pursuant to their
pre-emptive rights or otherwise, or Ordinary Shares issued on the conversion or
exercise of other securities so purchased by the Investors.
2. Incidental Registration.
2.1 If the Company at any time proposes to register any of its
securities, other than in a demand registration under Section 3 or 5 below, on
any form (other than a Registration Statement on Form S-8 or Form S-4 or their
successors, or any other form for a similar limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation, or any successor form for
securities to be offered to employees of the Company pursuant to any employee
benefit plan), for its own account or for the account of any other person,
including in the initial public offering of the Company's securities (the
"IPO"), it shall give notice to the Holders of such intention.
2.2 Upon the written request of any Holder given within twenty (20) days
after receipt of any such notice, the Company shall include in such registration
all of the Registrable Shares indicated in such request, so as to permit the
disposition of the shares so registered in the manner requested by such Holder
or Holders.
2.3 Notwithstanding the provisions of Sections 2.1 or 2.2, with respect
to an underwritten public offering by the Company, if the managing underwriter
advises the Company in writing that marketing or other factors require a
limitation of the
<PAGE>
number of shares to be underwritten, and the aggregate number of Registrable
Shares requested to be included in such registration pursuant to Section 2.2
above (the "Requested Shares"), shall exceed the number of shares indicated by
the underwriter, then first, there shall be excluded from such registration and
underwriting to the extent necessary to satisfy such limitation, shares held by
shareholders other than the Holders, and second, there shall be excluded from
such underwriting (but not from such registration) pro rata, shares held by the
Holders to the extent necessary to satisfy such limitation. To the extent
Registrable Securities are excluded from such underwriting, the Holders shall
agree not to sell their Registrable Shares included in the registration
statement for such period, not to exceed 180 days, as may be required by the
managing underwriter, and the Company shall keep effective and current such
registration statement for such period as may be required to enable the Holders
to complete the distribution and resale of their Registrable Shares.
2.4 Notwithstanding Section 2.3 above, should the Company provide the
Holders with a letter from the managing underwriter of the IPO stating that the
exercise of the Holders' rights pursuant to this Section 2 would have an adverse
effect on the IPO, and should Holders holding at least 80% of the Issued
Preferred Shares and the Additional Preferred Shares, if any, agree in writing
not to exercise their rights under this Section 2 at the IPO and for an
additional 180 days following the IPO (as may be required by the managing
underwriter), then such agreement will be binding upon all the Holders and the
Holders shall not be entitled to exercise their rights under this Section 2
until the end of such period; provided, however, that all other shareholders in
the Company similarly shall not exercise any similar right that they may have
until the end of such period.
3. Demand Registration.
3.1. On two separate occasions, commencing as soon as legally permissible
after the closing of the IPO, any Holder or Holders are entitled to request in
writing that all or part of their Registrable Shares shall be registered under
the Securities Act. Any such demand must request the registration of shares in a
minimum of 1.5 Million United States Dollars ($1,500,000).
3.2 Within 20 days after receipt of any such request, the Company shall
give written notice of such request to the other Holders and shall include in
such registration all Registrable Shares held by all such Holders who wish to
participate in such demand registration and provide the Company with written
requests for inclusion therein within 15 days after the receipt of the Company's
notice.
3.3 The Company shall effect the registration of all Registrable Shares
as to which it has received requests for registration as promptly as
practicable; provided, however, that the Company shall not be required to effect
any registration under this Section 3 within a period of one hundred and eighty
(180) days, (but shall be required to prepare and file the registration
statement within such period), following the effective date of a previous
registration (a) initiated by the Holders, pursuant to this Section 3, or (b) in
which the Holders had the right to participate pursuant to Section
2
<PAGE>
2. Should the lock-up in accordance with Section 12 below be for a period
shorter than 180 days, then the 180 period of the preceding sentence shall be
shortened accordingly.
3.4 The Company shall register neither securities for sale for its own
account nor securities held by holders permitted to do so by the written consent
of Holders who hold at least sixty-six and two thirds percent (66 and 2/3%) of
the Registrable Shares as to which registration has been requested. The Company
may not cause any other registration of securities (a) for sale for its own
account (other than a registration effected solely to implement an employee
benefit plan) or (b) for the account of others, to be initiated after a
registration requested pursuant to Section 3 and to become effective less than
120 days after the effective date of any registration statement filed pursuant
to Section 3.
3.5 The Company shall not be required to effect more than two (2)
registrations under this Section 3.
4. Delay of Registration.
The Company may delay the filing or effectiveness of any registration
statement prepared pursuant to Section 3 for a period of up to 90 days (and, if
the Company makes a good faith determination that further delay is necessary,
for up to an additional 30 days) after the date of a request for registration
pursuant to sEction 3, if the Company determines in good faith that (a) it is in
possession of material, non-public information concerning an acquisition,
merger, recapitalization, consolidation, reorganization, or other material
transaction by or of the Company, and (b) disclosure of such information would
jeopardize any such transaction or otherwise materially harm the Company;
provided, however, that the Company may exercise such right to delay the filing
of a registration statement only once and that such delay period will not delay
the effectiveness of a registration statement demanded under Section 3 beyond a
period of 180 days following the effective date of a previous registration.
5. Shelf Registration.
Commencing as soon as legally permissible after the closing of the IPO, in
case the Company shall receive from any Holder or Holders a written request or
requests that the Company effect a registration on Form S-3 or F-3, or any
successor form for securities to be offered in a transaction of a type referred
to in Rule 415 under the Securities Act, and in related qualification or
compliance, with respect to registrable Shares where the aggregate net proceeds
from the sale of such Registrable Shares equals to at least one and a half
million United States Dollars (US$1,500,000), the Company will within twenty
(20) days after receipt of any such request give written notice of the proposed
registration and any related qualification or compliance, to all other Holders,
and include in such Registration all Registrable Shares held by all such Holders
who wish to participate in such Registration and provide the Company with
written requests for inclusion therein within 15 days after the receipt of the
Company's
3
<PAGE>
notice. Thereupon, the Company shall effect such registration and all such
qualifications and compliances as may be requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holder's Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining such request as are specified in a written request given within fifteen
(15) days after receipt of such written notice from the Company; provided,
however, that the Company shall not be obligated to effect such registration,
qualification, or compliance, pursuant to this Section 5 if the Company, within
twelve (12) months period preceding the date of such request, already effected
two (2) registrations for the Holders pursuant to this Section 5. The Company
shall not be required to effect more than six (6) registrations requested under
this Section 5.
6. Designation of Underwriter.
6.1 In the case of any registration effected pursuant to Section 3 or 5,
the Initiating Holders that submitted the request for registration shall have
the right to designate the managing underwriter(s) in any underwritten offering.
6.2 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.
7. Expenses.
All expenses incurred in connection with any registration under Section 2,
Section 3 or Section 5, shall be borne by the Company; provided, however, that
each of the Holders participating in such registration shall pay its pro rata
portion of the discounts payable to any underwriter.
8. Indemnities.
In the event of any registered offering of Ordinary Shares pursuant to
this Agreement:
8.1 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 are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
registration statement or included in the prospectus, as amended or
supplemented, or (ii) the omission or alleged omission to state therein a
material fact
4
<PAGE>
required to be started therein or necessary to make the statement 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, promptly upon demand, for any
reasonable legal or any other expenses incurred by them in connection with
investigating, preparing to defend, or defending against, or appearing as a
third-party witness in connection with such loss, claim, damage, liability,
action, or proceeding; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, damage, liability, cost, or
expense arises solely out of or is based solely upon an untrue statement or
alleged untrue statement, or omission or alleged omission, so made in conformity
with information furnished to the Company in writing by a Holder, such
underwriter, or such controlling persons in writing specifically for inclusion
therein; provided, further, that this indemnity shall not be deemed to relieve
any underwriter of any of its due diligence obligations; and provided, further,
that the indemnity agreement contained in this Section 8.1 shall not apply to
amounts paid in settlement of any such claim, loss, damage, liability, or action
if such settlement is effected without the consent of the Company, which consent
shall not be unreasonably withheld. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the selling
Holder, the underwriter, or any controlling person of the selling Holder or the
underwriter, and regardless of any sale in connection with such offering by the
selling Holder. Such indemnity shall survive the transfer of securities by a
selling Holder.
8.2 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
amount paid in any settlement effected with the selling Holder'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 started
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
conformity with written information furnished in a certificate by such Holder
specifically for inclusion therein. The foregoing indemnity agreement is subject
to the condition that, insofar as it relates to any such untrue statement (or
alleged untrue statement), or omission (or alleged omission) made in the
preliminary prospectus but eliminated or remedied in the amended prospectus at
the time the registration statement becomes effective in the Final Prospectus,
such
5
<PAGE>
indemnity agreement shall not inure to the benefit of (i) the Company and (ii)
any underwriter, if a copy of the Final Prospectus was not furnished to the
person or entity asserting the loss, liability, claim, or damage at or prior to
the time such furnishing is required by the Security Act; provided, further,
that this indemnity shall not be deemed to relive any underwriter of any of its
due diligence obligations; provided, further, that the indemnity agreement
contained in this Section 8.2 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.
8.3 Promptly after receipt by an indemnified party pursuant to the
provisions of Section 8.1 or Section 8.2 of notice of the commencement of any
action involving the subject matter of the foregoing indemnity provisions, such
indemnified party will, if a claim thereof is to made against the indemnifying
party pursuant to the provisions of said Section 8.1 or 8.2 promptly notify the
indemnifying party of the commencement thereof; but the omission to notify the
indemnifying party shall only relieve it from any liability which it may have to
any indemnified party to the extent that such indemnifying party has been
damaged by such omission to notify 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 if in the reasonable judgment of the indemnified party there are
separate defenses that are available to the indemnified party or there is a
conflict of interest which would prevent counsel at the expense to the Company.
After notice from the indemnifying party from also representing the indemnified
party, the indemnified party or parties shall have the right to select, at the
such action on behalf of such indemnified party or parties; provided, further,
however, that if the Holders are the indemnified party, such Holders as a group
shall be entitled to once separate counsel at the expense of the Company. 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 Section 8.1 or 8.2 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 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
litigation.
6
<PAGE>
8.4 If recovery is not available under the foregoing indemnification
provisions, for any reason than as specified therein, the parties entitled to
indemnification by the terms thereof shall be entitled to contribution to
liabilities and expenses. 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
was asserted, the opportunity to correct and prevent any statement or omission,
and any other equitable consideration appropriate under the circumstances. In no
event shall any party that is found liable for fraudulent misrepresentation
within the meaning of Section 11(f) of the Securities Act be entitled to
contribution hereunder form any party not found so liable, and in no event shall
any contribution form any Holder be more than the gross proceeds from the
offering received by such Holder.
9. Obligations of the Company.
Whenever required under this Agreement to effect the registration of any
Registrable Shares, the Company shall, as expeditiously as possible:
9.1 Prepare and file with the Commission a registration statement with
respect to such Registrable Shares and use its best efforts to cause such
registration statement to become effective, and, upon the request of the holders
of a majority of the Registrable Shares registered thereunder, keep such
registration statement effective for a period of up to 180 days, or, if sooner,
until the distribution contemplated in the Registration Statement has been
completed.
9.2 Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Shares covered by such registration statement.
9.3 Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirement of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Shares owned by them.
9.4 In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such agreement.
9.5 Notify each holder of Registrable Shares covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated
7
<PAGE>
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing, and promptly amend such prospectus by filing
a post effective amendment or supplement so that such prospectus does not
contain an untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and deliver copies
thereof to the Holders.
9.6 Cause all Registrable Shares registered pursuant hereunder to be
listed on each securities exchange or NASDAQ on which similar securities issued
by the Company are then listed.
9.7 Provide a transfer agent and registrar for all Registrable Shares
registered pursuant hereunder and a CUSIP number for all such Registrable
Shares, in each case not later than the effective date of such registration.
9.8 Furnish, at the request of any Holders requesting registration of
the Registrable Shares pursuant to this agreement, on the date that such
Registrable Shares are delivered to the underwriters for sale in connection with
a registration pursuant to this agreement, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the Counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of the Registrable Shares, and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified accountants to
underwriters in an underwritten public offering addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Shares.
9. Conditions to Registration.
The Company shall not be obligated to effect the registration of the
Registrable Shares pursuant to this Agreement unless the Holders participating
therein consent to customary conditions of a reasonable nature that are imposed
by the Company, including, but not limited to, the following:
(a) conditions prohibiting the sale of Registrable Shares by such
Holders from 30 days before the filing of the registration statement until the
registration statement becomes effective;
(b) conditions requiring such Holders to comply with all
applicable provisions of the Securities Act and the United States Securities
Exchange Act of 1934, as amended, (the "Exchange Act"), including, but not
limited to, the prospectus delivery requirements, and to furnish to the Company
information about sales made in such public offering; and
8
<PAGE>
(c) conditions prohibiting such Holders, upon receipt of written
notice from the Company that it is required by law to correct or update the
registration statement or prospectus, from effecting sales of the Registrable
Shares until the Company has completed the necessary correction or updating.
10. Assignment of Registration Rights.
Any of the Holders may assign its rights to cause the Company to register
Shares pursuant to this Agreement to a transferee of all or any part of its
Registrable Shares. The transferor shall, within twenty (20) days after such
transfer, furnish the Company with written notice of the name and address of
such transferee and the securities with respect to which such registration
rights are being assigned, and the transferee's written agreement to be bound by
this Agreement.
11. Rights that may be granted to Subsequent Investors.
11.1 Within the limitation prescribed by this section 11.1, but not
otherwise, the Company may grant to subsequent investors in the Company rights
of incidental registration (such as those provided in Section 2). Such rights
may only pertain to Ordinary Shares, including Ordinary Shares into which any
other securities may be converted. Such rights may be granted with respect to
(i) registrations actually requested by Holders pursuant to Section 3, but only
subject to the approval of the Holders as required therein and only in respect
of the available portion of any such registration as remains after inclusion of
all Registrable Shares requested by Holders, and (ii) registrations initiated by
the Company, but only in respect of the available portion of such registration
as remains after inclusion of all Registrable Shares. With respect to
registrations which are for underwritten public offerings, "available portion"
shall mean the portion of the underwritten shares that is available as specified
in clauses (i) and (ii) of the third sentence of this Section 11.1. Shares not
included in such underwriting shall not be registered.
11.2 The Company may not grant to subsequent investors in the Company
rights of registration upon request (such as those provided in Section 3) unless
(i) such rights are limited to shares of Ordinary Shares, (ii) all Holders are
given enforceable contractual rights to participate in registration requested by
such subsequent investors, such participation to be on a pro-rata basis, and
subject to the limitations, described in the final three sentences of Section
11.1, (iii) such rights shall not become effective prior to 120 days after the
effective date of the first registration pursuant to Section 3, and (iv) such
rights shall not be equal to nor more favorable than those granted to the
Holders.
12. Lock-Up.
In any registration of the Company's shares, all Holders acknowledge that
any sales of Registrable Shares may be subject to a "lock-up" period restricting
such sales
9
<PAGE>
beginning thirty (30) days prior to, and for up to one hundred and eighty (180)
days following, the effective date of such registration, and all Holders will
agree to abide by such customary "lock-up" period as is required by the
underwriter in such registration.
13. Customary Arrangements.
No Holder may participate in any underwritten offering pursuant to a
registration filed hereunder unless such person (a) agrees to sell such person's
securities on the basis provided in any customary underwriting arrangements, and
(b) provides any relevant information and completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements, and
other documents required under the terms of such underwriting arrangements;
provided, however, that all Holders participating in the underwritten
registration may appoint one legal or other representative to negotiate the
underwriting arrangements.
14. Public Information.
At any time and from time to time after the earlier of the close of
business on such date as (a) a registration statement filed by the Company under
the Securities Act becomes effective, or (b) the Company registers a class of
securities under Section 12 of the Exchange Act, the Company shall undertake to
make publicly available and available to the Investors adequate current public
information within the meaning of, and as required pursuant to, Rule 144.
15. Non-United States Offering.
In the event of a public offering of securities of the Company outside of
the United States, the Company will afford the Holders registration rights in
accordance with applicable law and comparable in substance to the foregoing
registration rights.
10
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated March 9, 1998, Except as to comprehensive income data
included in the statements of changes in shareholders' equity as to which the
date is October 20, 1998 with respect to the financial statements and schedules
of Nur Macroprinters Ltd. in the Registration Statements Form F-1 and related
Prospectus for the registration of 9,119,483 shares of its common stock
(underlying 6,759,444 common shares, 1,805,039 stock options and 555,000
warrants).
Tel Aviv, Israel
February 22, 1999
Yours truly,
/s/ Kost, Forer and Gabbay
KOST, FORER AND GABBAY
Certified Public Accountants (Israel)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report of M.NUR Marketing & Communication GmbH dated 30, June 1998,
in the Registration Statements Form F-1 and related Prospectus of NUR
Macroprinters Ltd. For the registrations of shares.
Kassel, Germany
February 22, 1999
[SEAL OF WILLY KNYRIM]
HUMBOLDTSTR. 37 34117 KASSEL
Tel. (0561) 70989-0 Fax (0561) 102573
Yours truly
/s/ Willy Knyrim
--------------------
Certified Public Accountants
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 1,673
<SECURITIES> 0
<RECEIVABLES> 6,452
<ALLOWANCES> 679
<INVENTORY> 1,956
<CURRENT-ASSETS> 9,402
<PP&E> 2,160
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<CURRENT-LIABILITIES> 6,927
<BONDS> 0
0
0
<COMMON> 1,872
<OTHER-SE> 1,084
<TOTAL-LIABILITY-AND-EQUITY> 11,862
<SALES> 14,831
<TOTAL-REVENUES> 14,831
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<TOTAL-COSTS> 6,031
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<LOSS-PROVISION> 679
<INTEREST-EXPENSE> 207
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<TABLE> <S> <C>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE COMPANY'S FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED
AS A PART OF THIS FORM F-1.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> $
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
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