UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 8-K

 

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): May 19, 2020

 

SCOUTCAM INC.

(Exact name of registrant as specified in its charter)

 

Nevada

(State or other jurisdiction of incorporation)

 

333-188920   847-4257143
(Commission
File Number)
  (I.R.S. Employer
Identification No.)

 

Suite 7A, Industrial Park

P.O. Box 3030, Omer, Israel 8496500

(Address of principal executive offices) (Zip Code)

 

Tel: +972 72 260-2200

(Registrant’s telephone number, including area code)

 

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
N/A   N/A   N/A

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

 

 

 

 

 

Item 3.02 Unregistered Sale of Equity Securities

 

On May 18, 2020 (the “Closing Date”), ScoutCam Inc. (the “Company”) entered into and consummated a securities purchase agreement (the “Purchase Agreement”) with M. Arkin (1999) Ltd. (“Arkin”) in connection with the sale and issuance of 2,066,116 units (“Units”), at a purchase price of US$0.968 per Unit, and for an aggregate purchase price of US$2,000,000 . Each Unit consists of: (i) two shares of the Company’s common stock par value US$0.001 per share (the “Common Stock”) and (ii) (a) one warrant to purchase one share of Common Stock with an exercise price of US$0.595 (“Warrant A”) and (b) two warrants, each to purchase one share of Common Stock with an exercise price of US$0.893 (“Warrant B”, and together with Warrant A, the “Warrants”). In connection with the Purchase Agreement, the Company issued to Arkin 4,132,232 shares of Common Stock, Warrant A to purchase 2,066,116 shares of Common Stock and Warrant B to purchase 4,132,232 shares of Common Stock. The shares of Common Stock and Warrants were issued to Arkin pursuant to Regulation S of the Securities Act of 1933, as amended.

 

In connection with the execution of the Purchase Agreement, the Company undertook to file with the U.S. Securities and Exchange Commission, within ninety (90) days of the Closing Date, a registration statement on Form S-1 (or such other form of registration then available to effect a registration for the resale of the securities contemplated and issued therein) covering the resale of the shares of Common Stock issued pursuant to the Purchase Agreement, the shares of Common Stock underlying the Warrants, and any other securities issued or issuable with respect to or in exchange for the foregoing.

 

Item 5.02 Departure of Directors or Certain Officers; Appointment of Certain Officers

 

On the Closing Date, and as a condition to the consummation of the Purchase Agreement, the Company’s board of directors (the “Board”) appointed Ms. Irit Yaniv, a designee of Arkin, as a director of the Company. In connection with the appointment of Ms. Yaniv to the Board, the Company, Arkin and Medigus Ltd., a controlling stockholder of the Company (“Medigus”), entered into a certain voting agreement, dated May 18, 2020 (the “Voting Agreement”), whereby Arkin and Medigus each agreed to vote their respective shares of Common Stock in favor of the election of the opposite party’s designated representative(s), as applicable, to the Board. The Voting Agreement is contingent upon, inter alia, each of Arkin and Medigus maintaining a certain beneficial ownership threshold in the Company, as defined therein.

 

The bio for Ms. Yaniv is as follows:

 

Dr. Irit Yaniv is an experienced and accomplished senior executive in the Medtech industry. She played a significant role in leading Accelmed’s ventures portfolio companies, since 2012. Dr. Yaniv was the co-founder of two of Accelmed’s portfolio companies, each in the field of metabolic disorders (e.g. diabetes and obesity). Currently, she serves as either the chairperson or as an active board member for the aforementioned Israeli portfolio companies. Dr. Yaniv holds an MD from the Ben-Gurion University in Beer Sheva, Israel, and an MBA from the Recanati Business School at Tel Aviv University.

 

Item 8.01. Other Events.

  

On May 19, 2020, the Company issued a press release announcing the consummation of the Purchase Agreement and related information, a copy of which is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

 

Item 9.01 Exhibits.

 

(d) Exhibits.

 

Exhibit
No.
  Description
     
10.1   Securities Purchase Agreement, dated May 18, 2020, by and between ScoutCam Inc. and M. Arkin (1999) Ltd.
10.2   Registration Rights Agreement, dated May 18, 2020, by and between ScoutCam Inc. and  M. Arkin (1999) Ltd.
10.3   Voting Agreement, dated May 18, 2020, by and among ScoutCam Inc. Medigus Ltd. and M. Arkin (1999) Ltd.
10.4   Letter Agreement, dated May 18, 2020, by and among ScoutCam Inc., ScoutCam Ltd., Medigus Ltd. and M. Arkin (1999) Ltd.
10.5   Form of Warrant A by and between ScoutCam Inc. and M. Arkin (1999) Ltd.
10.6   Form of Warrant B by and between ScoutCam Inc. and M. Arkin (1999) Ltd.
99.1   Press Release, dated May 19, 2020

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  SCOUTCAM INC.
     
  By: /s/ Tanya Yosef
  Name: Tanya Yosef
  Title: Chief Financial Officer
     
Date: May 19, 2020    

 

 

 

 

 

Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made as of May 18, 2020, by and between ScoutCam Inc., a Nevada corporation (the “Company”) and the entity listed in Exhibit A attached hereto (the “Investor”).

 

WHEREAS, the Company desires to issue and sell to the Investor, and the Investor desires to purchase from the Company, upon the terms and conditions stated in this Agreement, for an aggregate purchase price of US$2.0 million (the “Purchase Price”), 2,066,116 units (the “Units”), each Unit consists of (i) two shares of the Company’s common stock, par value US$0.001 per share (the “Common Stock” and the “Purchased Shares”, respectively); and (ii) (a) one warrant to purchase one share of Common Stock with an exercise price of $0.595 (“Warrant A”), and (b) two warrants, each to purchase one share of Common Stock with an exercise price of $0.893 (“Warrant B”), in the forms attached hereto as Appendixes A and B, respectively (collectively the “Warrants”, and together with the Purchased Shares, the “Purchased Securities”), on the terms and conditions set forth in the Warrants;

 

WHEREAS, as a condition to the consummation of the transactions contemplated by this Agreement, the parties have agreed to the appointment of a representative of the Investor to the board of directors of the Company (the “Board”);

 

WHEREAS, the Company and the Investor desire to enter into a Registration Rights Agreement, substantially in the form of Appendix C annexed hereto and made a part hereof (the “Registration Rights Agreement”), pursuant to which, among other things, the Company will agree to provide certain registration rights to the Investor with respect to the Purchased Securities issued under the Securities Act of 1933, as amended (the “Securities Act”) and the rules and regulations promulgated thereunder, and applicable state securities laws;

 

WHEREAS, the Company, the Investor and Medigus Ltd., an Israeli company (“Medigus”), desire to enter into a Voting Agreement, substantially in the form of Appendix D annexed hereto and made a part hereof (the “Voting Agreement”), pursuant to which, among other things, the Investor and Medigus have agreed to vote their respective shares of Common Stock, subject to certain limitations described therein, in favor of the election of the opposite party’s designated representative(s), as applicable, to the Board; and

 

WHEREAS, the Investor desires to purchase and the Company desires to issue and sell to the Investor the Purchased Securities pursuant to the terms and conditions more fully set forth in this Agreement.

 

NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

 

1. PURCHASE AND SALE OF SECURITIES.

 

1.1 Sale and Issuance of Securities. Subject to the satisfaction of certain closing conditions set forth in Sections 4 and 5 hereof at the Closing (as defined below), the Company shall issue and sell to the Investor, and the Investor shall purchase from the Company an aggregate of 2,066,116 Units, at a purchase price of US$0.968 per each Unit, consisting of the Purchased Shares and Warrants listed in Exhibit A attached hereto.

 

1.2 The capitalization table of the Company, reflecting the issued and outstanding share capital of the Company on a fully diluted basis, (i) immediately prior to the Closing and (ii) immediately following the Closing, assuming the investment of the Purchase Price, is annexed hereto as Appendix E (the “Capitalization Table”).

 

1.3 Closing. The consummation of the transactions contemplated hereby, including the purchase and sale of the Purchased Securities (the “Closing”) shall take place remotely via the exchange of documents and signatures, on May 18, 2020, or at such other time and place as the Company and the Investor mutually agree upon (such designated time and place, the “Closing Date”). The Closing shall be subject to the conditions of Section 4 and 5 below, which conditions shall be deemed to take place simultaneously and no transaction described in such sections shall be deemed to have been completed or any document delivered until all such transactions have been completed and all such required documents delivered.

 

1.4 Closing Deliverables.

 

(a) At the Closing, the Company shall deliver to the Investor:

 

 

 

 

(i) True and correct copies of written resolutions, or minutes of a meeting, of the Board, approving and adopting in all respects the execution, delivery and performance by the Company of this Agreement and the transactions contemplated hereby, including, among others, (a) authorizing the issuance and sale of the Purchased Securities against payment of the Purchase Price therefor; (b) approving the appointment of that certain representative of the Investor to the Board pursuant to Section 4.4 below; and (c) approving the execution, delivery and performance by the Company of all agreements contemplated herein to which the Company is party and any agreements, instruments or documents ancillary thereto;

 

(ii) Duly executed stock certificates or book-entry confirmations representing the Purchased Shares issued to the Investor at the Closing, in the name of the Investor;

 

(iii) The Warrants issued to the Investor at the Closing in the name of the Investor, duly executed by the Company; and

 

(iv) A certificate duly executed by an executive officer of the Company as of the Closing stating that the conditions specified in Section 4 have been satisfied, in the form attached hereto as Schedule 1.4(a)(iv).

 

1.5 Purchase Price. At the Closing, the Investor shall transfer to the Company the Purchase Price by wire transfer of immediately available funds according to the wire instructions attached hereto as Schedule 1.5.

 

2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company hereby represents and warrants to the Investor that the following representations are true, correct and complete as of the date hereof and as of the Closing (as if made on the Closing Date); except, in each case, as to such representations and warranties that address matters as of a particular date, which are true, correct and complete only as of such date.

 

2.1 Subsidiary. The Company wholly-owns ScoutCam Ltd., an Israeli company (the “Subsidiary”), and as of the date of the Agreement, the Subsidiary is the only direct or indirect subsidiary of the Company. The Company owns, directly or indirectly, all of the capital stock or other equity interests of the Subsidiary free and clear of any lien, charge, claim, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction, and all of the issued and outstanding share capital of the Subsidiary is validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.

 

2.2 Organization. The Company and the Subsidiary are each an entity duly incorporated or otherwise organized, validly existing and in good standing (if applicable in such jurisdiction) under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted or proposed to be conducted in the SEC Reports. Neither the Company nor the Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiary is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects, properties or condition (financial or otherwise) of the Company and the Subsidiary, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”), and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

2.3 Capitalization.

 

(a) The authorized share capital of the Company will consists of 75,000,000 on or immediately prior to the Closing, as set forth in the Company’s Articles of Incorporation (the “Articles”), and 32,976,657 shares of Common Stock, as set forth in the Capitalization Table, shall be (immediately following the Closing) issued and outstanding. There are no other shares of any other class or series of capital stock of the Company authorized, issued or outstanding.

 

 

 

 

(b) The Company has no capital stock reserved for issuance, except that, the Board has reserved (i) 5,804,895 shares of Common Stock for issuance of, and grant of options or other equity awards exercisable into, Common Stock to directors, officers, employees, consultants and service providers of the Company or the Subsidiary, under the 2020 Stock Incentive Plan of the Company, (ii) immediately following the Closing, 19,377,546 shares of Common Stock for issuance upon exercise of outstanding warrants listed in the Capitalization Table and (iii) 2,688,492 shares of Common Stock issuable to Medigus upon the achievement of certain earnout targets, pursuant to that certain Securities Exchange Agreement by and between the Company and Medigus, dated September 16, 2019.

 

(c) The issued and outstanding shares of the Company are duly and validly authorized and issued, fully paid and non-assessable, and were offered and issued in compliance with the provisions of the Articles as in effect at the time of each such issuance and in compliance with all applicable corporate and securities laws.

 

(d) Immediately prior to the Closing, no shares, options, warrants, rights (including conversion, preemptive rights, rights of first refusal or similar rights), commitments, agreements, understandings or arrangements, relating to the issued or unissued capital stock of the Company or any securities convertible into or exchangeable for stock or equity interest of the Company, including rights to subscribe for or purchase from the Company of any of its share capital or other equity interest, or any securities convertible into or exchangeable for stock of the Company or other equity interest, shall be outstanding or otherwise existing, other than as set forth in the Capitalization Table, or that could require or obligate the Company to issue, sell, transfer, redeem, purchase, repurchase, acquire or otherwise cause to be outstanding, any of the Company’s share capital or equity interest or securities convertible or exercisable into shares or equity interest thereof, or obligations of the Company to grant, extend or enter into any such option, warrant, right, commitment or agreement. Except as disclosed in the SEC Reports, there are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

 

(e) Immediately prior to the Closing, no option, security or other equity award convertible or exercisable into stock of the Company shall contain a provision for acceleration of vesting (or lapse of a repurchase right) or other changes in the vesting provisions or other terms of such option, security or other equity award upon the occurrence of any event or combination of events, except as disclosed in the SEC Reports. No share, option, security or other equity award convertible or exercisable into shares of the Company is subject to repurchase or redemption (contingent or otherwise) by the Company, and the Company has not repurchased or redeemed any of the Company’s shares of stock, options, security or other equity awards.

 

(f) No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. The issue and sale of the Securities will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities.

 

(g) The Company has not declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its share capital.

 

2.4 Authorization. The Company has all requisite corporate power and authority, and has taken all requisite corporate action on the part of the Company, its directors and stockholders, necessary for the authorization, execution and delivery of this Agreement and the other agreements, instruments or documents entered into in connection with this Agreement and to which the Company is a party, including the Warrants (collectively, the “Transaction Documents”) and for the performance of all obligations of the Company under the Transaction Documents in accordance with their terms has been taken or will be taken prior to the Closing. The Transaction Documents, when executed and delivered by the Company, and assuming the due authorization, execution and delivery by the other parties hereto and thereto, constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

 

 

 

 

2.5 Valid Issuance. The Purchased Securities being or that may be issued to the Investor, have been duly authorized and when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, shall be duly and validly issued, fully paid, and non-assessable, issued in compliance with all applicable securities laws, and free and clear of liens, pledges, charges, encumbrances or other restrictions on transfer of any kind (including, without limitation, preemptive rights), other than restrictions on transfer under this Agreement, the Articles, the Company’s currently effective Bylaws (the “Bylaws”) and under applicable securities laws and other than liens or encumbrances created by or imposed by the Investor. The shares of Common Stock underlying the Warrants have been duly authorized and, upon exercise of the Warrants in accordance with their terms, will be validly issued, fully paid and nonassessable. The rights, privileges and preferences of the Purchased Securities are as stated in the Articles and Bylaws, as may be amended from time to time in accordance with their terms. Assuming the accuracy of the representations made by the Investor in Section 3, the offer and issuance by the Company of the Purchased Securities is exempt from registration under the Securities Act.

 

2.6 No Conflict; Consents. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party, the issuance and sale of the Purchased Securities and the consummation by it of the transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Articles, Bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction, upon any of the properties or assets of the Company, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound or affected, or (iii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state, or local governmental authority on the part of the Company or the Subsidiary is required in connection with the consummation of the transactions contemplated by the Transaction Documents.

 

2.7 SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”) for the one-year period preceding the date hereof (collectively, the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports (the “Financial Statements”) comply in all material respects with applicable accounting requirements and the rules and regulations of the Securities and Exchange Commission (the “Commission”) with respect thereto as in effect at the time of filing. Such Financial Statements have been prepared in accordance with Generally Accepted Accounting Principles in the U.S. (“US GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by US GAAP, and fairly present in all material respects the consolidated financial condition and position of the Company and the Subsidiary, as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

 

 

 

2.8 Material Changes. Since December 31, 2019 there has been no event, occurrence or development that has had or that would reasonably be expected to result in a Material Adverse Effect.

 

2.9 Continued Quotation. The Company is currently quoted on the OTC Markets, Pink Tier, and it is and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such quotation and maintenance requirements of the “Pink Sheets” published and maintained by OTC Markets Group, Inc., and shall make commercial best efforts to maintain such compliance.

 

2.10 Financial Statements; No Undisclosed Liabilities.

 

(a) The Company and the Subsidiary has no liabilities or obligations, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business, which, individually and in the aggregate, do not exceed US$300,000; (ii) debt of the Subsidiary to Medigus Ltd. in the principal amount of US$380,000; and (iii) liabilities and obligations of a type or nature not required under GAAP to be reflected in its financial statements, which, individually and in the aggregate do not exceed US$100,000.

 

(b) The Company and the Subsidiary are not guarantors or indemnitors of any debt or obligation of another, nor has the Company or the Subsidiary given any loan, security or otherwise agreed to become liable for any obligation of any person. No person has given any guarantee of, or security for, any obligation of the Company or the Subsidiary. The Company and the Subsidiary did not extend any loans or advances to any person, other than advances for expenses to its employees in the ordinary course of business.

 

2.11 Assets and Properties. Both the Company and the Subsidiary have good and marketable title to all of the tangible or personal properties and assets owned by the Company and the Subsidiary, which are material to the business of the Company or the Subsidiary as currently conducted as now conducted and as proposed in the SEC Reports to be conducted, and such properties and assets are free and clear of all mortgages, deeds of trust, liens, pledges, charges, security interests, conditional sale agreement, loans and encumbrances, except for statutory liens for the payment of current taxes that are not yet delinquent and encumbrances and liens that arise in the ordinary course of business and do not materially impair the Company’s or the Subsidiary’s ownership or use of such property or assets. With respect to the tangible property and assets it leases, the Company and the Subsidiary are in compliance in all material respects with such leases and, to the Company’s knowledge, holds a valid leasehold or license interest free of any liens, pledges, charges, security interest, claims or encumbrances, other than those of the lessors of such property or assets. The Company and the Subsidiary do not own any real property.

 

2.12 Intellectual Property. The Company and the Subsidiary own, or have rights to use, all patents, patent applications, trademarks, trademark applications, trade and service mark registrations, service marks, trade names, trade secrets, inventions, copyrights, technology, know-how, licenses and other intellectual property rights, proprietary rights and similar rights in connection with their respective businesses and which the failure to so have could or reasonably be expected to have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). Neither the Company nor the Subsidiary have received a notice (written or otherwise) that any of, the material Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement. Neither the Company nor the Subsidiary have received, since Jan 1, 2019, a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe (and will not infringe) the rights of any Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company and the Subsidiary have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as disclosed to the Investor in writing, the Company has no knowledge of any facts that would preclude it or the Subsidiary from having valid license rights or clear title to the Intellectual Property Rights. There is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the validity or scope of any Company Intellectual Property or the Company’s Intellectual Property Rights. The Company and the Subsidiary own or have rights or licenses to use all Intellectual Property Rights that are necessary to conduct its business as now conducted and as proposed in the SEC Reports to be conducted. For purposes of this Section, “knowledge”, including the phrase “to the Company’s knowledge” (or similar phrases), when used in this Section 2.11 (Intellectual Property) shall mean the actual knowledge of the Company, without conducting any patent search, freedom to operate, infringement, or any similar search.

 

 

 

 

2.13 Labor Matters.

 

(a) The Company and the Subsidiary have complied, in all material respects, with all applicable employment laws, policies, procedures and agreements relating to employment, and terms and conditions of employment. The Company and the Subsidiary have paid in full to all of its respective employees and consultants all wages, salaries, commissions, bonuses, benefits and other compensation due and payable to such employees or consultants on or prior to the date of this Agreement. The Company and the Subsidiary have complied in all material respects with the applicable laws relating to the proper withholding and remittance to the proper tax and other authorities of all sums required to be withheld from employees or persons deemed to be employees under applicable laws. To the Company’s knowledge, all persons classified by the Company or the Subsidiary as consultants or contractors thereof are correctly classified as such and not as employees for any purpose. The Company’s and the Subsidiary’s liability for any obligations to pay any amount of severance payment, pension, accrued vacation, and other social benefits and contributions, under applicable law or contract, or any other payment of substantially the same nature, is fully funded by deposit of funds in severance funds, pension funds, managers insurance policies or provident funds (and if not required to be so funded) adequate provisions have been made in the Company’s Financial Statements.

 

(b) Neither the Company nor the Subsidiary is a party to, bound by or subject to, and no employee of the Company or the Subsidiary benefits from, any collective bargaining agreement, collective labor agreement, extension orders (tzavei harchava) (other than extension orders that apply to all employees in Israel generally), or other contract or arrangement with a labor union, trade union or other organization or body, to provide benefits or working conditions beyond the minimum benefits and working conditions required by applicable law. No labor union has requested or has sought to represent any of the employees, representatives or agents of the Company or the Subsidiary, nor is the Company or the Subsidiary aware of any labor organization activity involving its employees. There is no strike or other labor dispute involving the Company or the Subsidiary pending or, to the Company’s knowledge, threatened.

 

2.14 Taxes. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and the Subsidiary each (i) except as disclosed to the Investor in writing, has made or filed all United States federal, state and local income and foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. Except as disclosed in SEC Reports, there are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and neither the officers of the Company nor the Subsidiary know of no basis for any such claim.

 

2.15 Governmental Grants. Neither the Company nor the Subsidiary have applied, obtained or received any grant, loan, incentives, benefits (including tax benefits), subsidies or other assistance from any governmental or regulatory authority or any agency, or any international or bilateral fund, institute or organization or public entities or authorities.

 

2.16 Litigation. There is no claim, action, suit, proceeding, arbitration, complaint, charge or, to the Company’s knowledge, investigation pending, or, to the Company’s knowledge, currently threatened in writing against the Company or the Subsidiary, any of its properties, or any officer, director or employee of the Company or the Subsidiary, including, without limitation, arising out of their employment or board relationship with the Company or the Subsidiary or in their capacity as such, or that questions the validity of the Transaction Documents or the right of the Company to enter into them, or to consummate the transactions contemplated by the Transaction Documents.

 

 

 

 

2.17 Insurance. The Company and the Subsidiary are covered by insurance with respect to its properties and business.

 

2.18 Compliance. Neither the Company nor the Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or the Subsidiary under), nor has the Company or the Subsidiary received written notice of a claim that it is in default under, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is in violation of any law, rule or regulation of any governmental authority, except in each case as would not have a Material Adverse Effect.

 

2.19 Permits. The Company and the Subsidiary possess all licenses, certificates, permits and other authorizations issued by all applicable authorities necessary to conduct their respective businesses, and neither the Company nor the Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a Material Adverse Effect.

 

2.20 Certain Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company or the Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement.

 

2.21 Disclosure. No representation or warranty of the Company contained in this Agreement and no certificate furnished or to be furnished to the Investor at the Closing contains any untrue statement of a material fact or, to the Company’s knowledge, omits to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances under which they were made.

 

3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.

 

The Investor hereby represents and warrants that the following representations are true, correct and complete as of the date hereof and as of the Closing (as if made on the Closing Date); except, in each case, as to such representations and warranties that address matters as of a particular date, which are given only as of such date:

 

3.1 Authorization; Organization. The Investor is duly organized, validly existing and, if applicable, in good standing under the laws of the jurisdiction in which it has been incorporated and has full power and authority to enter into the Transaction Documents to which the Investor is a party. The Transaction Documents to which the Investor is a party, when executed and delivered by the Investor, and assuming the due authorization, execution and delivery by the other parties hereto and thereto, constitute valid and binding obligations of the Investor, enforceable against the Investor in accordance with their respective terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, and (iii) to the extent the indemnification provisions contained in the Rights Agreement, as may be limited by applicable securities laws.

 

3.2 No Conflict; Consents. The execution, delivery and performance by the Investor of the Transaction Documents to which it is a party and the consummation of the transactions contemplated by such Transaction Documents do not and will not (a) result in any conflict with, or a breach or violation, with or without the passage of time and giving of notice, of any of the terms, conditions or provisions of, or give rise to rights to others (including rights of termination, cancellation or acceleration) under: (i) the governing documents of the Investor; (ii) any judgment, injunction, order, writ, decree or ruling of any court or governmental authority, domestic or foreign, to which the Investor is subject; (iii) any material contract or agreement, lease, license or commitment to which the Investor is a party or by which it is bound; (iv) any applicable law; or (b) require the consent, approval or authorization of, registration, qualification or filing with, or notice to any person or any federal, state, local or foreign governmental authority or regulatory authority or agency, in each case, by the Investor, which has not heretofore been obtained or made or will be obtained or made prior to Closing.

 

 

 

 

3.3 Purchase Entirely for Own Account. The Purchased Securities will be acquired for investment for the Investor’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and the Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. The Investor does not presently have any contract, undertaking, agreement or arrangement to sell, transfer or grant participation rights to any person with respect to any of the Purchased Securities. The Investor has not been formed for the specific purpose of acquiring the Purchased Securities.

 

3.4 Disclosure of Information. The Investor has had an opportunity to discuss the Company’s business, operations, properties, prospects, technology, plans, management, financial affairs and the terms and conditions of the offering of the Purchased Securities with the Company’s management and has had an opportunity to review the Company’s facilities. The foregoing, however, does not limit, modify or qualify the representations and warranties of the Company in Section ‎2 of this Agreement or the right of the Investor to rely thereon. The Investor acknowledges that any projections provided (if any) by the Company are uncertain in nature, and that some or all of the assumptions underlying such projections may not materialize or will vary significantly from actual results.

 

3.5 Investment Experience; Accredited Investor; Non-U.S. Person. The Investor is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating and understanding the merits and risks of the investment in the Purchased Securities. The Investor is either (i) an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act or (ii) a Non U.S. Person as defined under Regulation S promulgated under the Securities Act. To the extent that the Investor is a non U.S. Person, the Investor (x) is not acquiring Purchased Securities for the account or benefit of any U.S. Person, (y) is not, at the time of execution of this Agreement, and will not be, at the time of the Closing, in the United States and (z) is not a “distributor” (as defined in Regulation S promulgated under the Securities Act).

 

3.6 Restricted Securities. The Purchased Securities have not been and will not be registered under the Securities Act or any state securities laws and, therefore, cannot be resold unless they are registered under the Securities Act and applicable state securities laws or unless an exemption from such registration requirements is available. The Investor is aware that, except as set forth in the Registration Rights Agreement, the Company is under no obligation to effect any such registration or to file for or comply with any exemption from registration. The sale and issuance of the Purchased Securities have not been registered under the Securities Act by reason of a specific exemption from registration which depends upon, among other things, the accuracy of the Investor’s representations as expressed herein.

 

3.7 Legends. The Purchased Securities, and (if applicable) any securities issued in respect of or exchange for the foregoing may be notated with the following or a similar legend as well as other legends as may be required by applicable securities laws: “THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO TRANSFER OF SUCH SHARES MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”

 

 

 

 

4. CONDITIONS OF INVESTOR’S OBLIGATIONS AT CLOSING.

 

The obligation of the Investor to purchase the Purchased Securities at the Closing are subject to the fulfillment on or before the Closing of each of the following conditions, unless otherwise waived in writing by the Investor:

 

4.1 Representations and Warranties. The representations and warranties of the Company in Section 2 of this Agreement shall have been true in all respects on and as if made as of the Closing.

 

4.2 Performance. The Company shall have performed and complied, in all respects, with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing.

 

4.3 Delivery of Documents. All of the documents to be delivered by the Company pursuant to Section ‎1.4, shall have been in a form as attached to this Agreement, or, if not attached, in a form and substance satisfactory to the Investor and shall have been delivered to the Investor.

 

4.4 Appointment of Investor Representative to the Board. Effective immediately following the Closing, the Company shall cause a representative selected exclusively by the Investor to be appointed to the Board.

 

4.5 Registration Rights Agreement. The Company and the Investor shall have executed and delivered the Registration Rights Agreement.

 

4.6 Voting Agreement. The Company, the Investor and Medigus shall have executed and delivered the Voting Agreement.

 

5. CONDITIONS OF THE COMPANY’S OBLIGATIONS AT CLOSING.

 

The obligations of the Company to the Investor under this Agreement are subject to the fulfillment on or before the Closing, of each of the following conditions, unless otherwise waived in writing by the Company:

 

5.1 Representations and Warranties. The representations and warranties contained in Section ‎3 shall have been true in all respects on and as if made as of the Closing.

 

5.2 Performance. The Investor shall have performed and complied, in all respects, with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing.

 

6. AFFIRMATIVE COVENANTS BY THE COMPANY.

 

6.1 Use of Proceeds. The Company will use the Purchase Price for general working capital purposes.

 

6.2 Conduct of the Business between Signing and Closing. Except as otherwise expressly provided by this Agreement or with the prior written consent of the Investor, the Company shall (i) conduct its business in the ordinary course of business, consistent with prior practice; (ii) comply with legal requirements applicable to the operation of its business and pay applicable taxes as due; (iii) maintain its books, accounts and records in the ordinary course of business; and (iv) not take any other action that would result in a breach of any of the representations, warranties or covenants made by the Company in this Agreement or that would adversely affect its ability to consummate the transactions contemplated by this Agreement.

 

7. INDEMNIFICATION.

 

7.1 Effectiveness; Survival.

 

(a) The Investor has the right to fully rely upon all representations, warranties and covenants of the Company, for which the Company shall be held responsible (the “Indemnitor”), contained in or made pursuant to this Agreement and in the schedules attached hereto. The representations and warranties of the Company contained in or made pursuant to this Agreement shall in no way be affected by any investigation or knowledge of the subject matter thereof made by or on behalf of the Investor.

 

 

 

 

(b) The representations and warranties of the Company contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing, until (1) in case of Section 2.11 (Intellectual Property), until the 30th months anniversary of the Closing Date; (2) in case of Sections 2.2 (Organization), 2.4 (Authorization) and 2.6 (No Conflict; Consents), until the expiration of the applicable statute of limitation period; and (3) other than as set forth in clause (1) above, the 24th months anniversary of the Closing Date; in each case, with respect to any theretofore un-asserted claims as set forth in clause (d) below;

 

(c) In respect to Section 7.1(b) above, no limitation shall apply to breach of any representation or warranty, which constitutes or otherwise involves fraud or willful misrepresentation or breach by the Company (“Fraud”). The applicable survival period shall be referred to, as applicable, as the “Claims Period”.

 

(d) Except for Fraud, the Company shall have any liability with respect to any breach of representation and warranty, unless a claim is made hereunder prior to the expiration of the Claims Period for such representation and warranty, in which case such representation and warranty shall survive as to that claim until the claim has been finally resolved.

 

(e) It is the intention of the parties hereto that the Claims Periods supersede any statute of limitations applicable to the representations and warranties, and this Section 7.1 constitutes a separate written legally binding agreement among the parties hereto in accordance with the provisions of Section 19 of the Israeli Limitation Law, 1958.

 

7.2 Indemnification.

 

(a) Indemnifiable Losses. The Indemnitor shall indemnify the Investor (including its shareholders, limited and general partners directors and officers) (each, an “Indemnitee”) against, and hold each Indemnitee harmless from all claims, actions, suits, settlements, damages, expenses (including, reasonable legal costs and expenses), losses, or costs sustained or incurred by such Indemnitees (collectively, “Losses”) resulting from, or arising out of, a breach or misrepresentations of any the Indemnitor’s representations, warranties or covenants made in this Agreement, subject to the limitations in this Section 7.

 

(b) Limitations. The Indemnitee’s right for indemnification hereunder is subject to the following conditions and limitations, notwithstanding anything to the contrary in this Agreement, but in addition to any other limitation or condition contained herein; provided, however, no limitation shall apply to Fraud:

 

(i) Other than in respect of the Fundamental Representations, no Indemnitor shall be liable for any Loss, unless and until the aggregate of Losses equal or exceeds US$100,000, in which case indemnification shall be made from the first dollar amount.

 

(ii) The Indemnitor’s liability shall be limited to the Purchase Price.

 

(c) Claims Notice; Third Party Claims. In the event that an Indemnitee wishes to assert a claim for indemnification hereunder it shall give the Indemnitor a prompt written notice thereof (a “Claims Notice”), which shall describe in reasonable detail the facts and circumstances upon which the asserted claim for indemnification is based and thereafter keep the Indemnitor informed, in all material respects, with respect thereto. In the event that such Claims Notice results from a third party claim against the Indemnitee, such Indemnitee shall promptly upon becoming aware of the commencement of proceedings by such third party provide the Indemnitor with the Claims Notice and the Indemnitor shall have the right to assume the defense thereof (at Indemnitor’s expense) with counsel mutually satisfactory to the parties; provided, however, that the Indemnitees shall have the right to retain their own counsel, at the reasonable expense of the Indemnitor, and within the indemnification limitations herein, if representation of all parties by the counsel retained by the Indemnitor would be inappropriate due to actual or potential differing interests between the parties in such proceeding. Failure of the Indemnitees to give prompt notice or to keep it informed, as provided herein, shall not relieve the Indemnitor of any of its obligations hereunder, except to the extent that the Indemnitor is actually and materially prejudiced by such failure. The Indemnitor shall not be liable nor shall it be required to indemnify or hold harmless the Indemnitee in connection with any settlement effected without its consent in writing, which shall not be unreasonably withheld or delayed.

 

 

 

 

(d) Sole Remedy. The indemnification provided by the Indemnitor hereunder and the enforcement of such indemnification shall be the exclusive remedy available to the Indemnitees under this Agreement, other than with respect to Fraud; provided that this provision does not limit the right to seek specific performance, a restraining order or injunctive or other equitable relief with respect to any provision of this Agreement.

 

8. MISCELLANEOUS.

 

8.1 Further Assurances. Each of the parties hereto shall perform such further acts and execute such further documents as may reasonably be necessary to carry out and give full effect to the provisions of this Agreement and the intentions of the parties as reflected thereby.

 

8.2 Entire Agreement. This Agreement (including the exhibits and schedules hereto) and the other Transaction Documents constitute the full and entire understanding and agreement between the parties with respect to the subject matter hereof, and supersede all prior agreements and understandings, both written and oral, among any of the parties hereto, with respect to the subject matter hereof (with no concession being made as to the existence of any such prior agreements or understandings).

 

8.3 Amendment; Waiver. Except as explicitly set forth herein, any term of this Agreement may be amended only with the written consent of both the Company and the Investor. The observance of any term hereof may be waived (either prospectively or retroactively and either generally or in a particular instance) only by the prior written consent of the party against which enforcement of such waiver shall be sought. Any amendment or waiver effected in accordance with this Section ‎8.3 shall be binding upon the Investor and each transferee of the Purchased Securities, each future holder of all such securities and the Company.

 

8.4 Assignment; Successors and Assigns. None of the rights, privileges or obligations set forth in, arising under, or created by this Agreement may be assigned or transferred by either party, without the prior written consent of the other party. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

8.5 Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with to the laws of the State of Israel, disregarding its conflict of laws rules. Any dispute arising under or in relation to this Agreement shall be resolved exclusively in the competent court located in Tel Aviv-Jaffa, Israel and each of the parties hereby irrevocably submits to the exclusive jurisdiction of such court. Each of the parties hereto (i) consents to submit itself to the exclusive jurisdiction of the abovementioned courts in the event any dispute arises out of this Agreement or the transactions contemplated by this Agreement, (ii) agrees that it shall not attempt to deny or defeat such jurisdiction by motion or other request for leave from the abovementioned court, (iii) agrees that it shall not bring any action relating to this Agreement or the transactions contemplated by this Agreement in any court other than the abovementioned court, and (iv) irrevocably consents to service of process in the manner provided by Section ‎8.6 or as otherwise provided by applicable law.

 

8.6 Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt, or (i) when delivered, if sent by personal delivery to the party to be notified, (ii) when sent, if sent by electronic mail or facsimile (with electronic conformation of delivery) on a business day and during normal business hours of the recipient, and otherwise on the first business day in the place of recipient, (iii) five (5) business days after having been sent, if sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) business day after deposit with an internationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written confirmation of receipt. All communications shall be sent to the respective parties at their address or contact details as set forth below, or to such address or contact details as subsequently modified by written notice given in accordance with this Section 8.6 or, in the case of the Investor, as used for purposes of sending shareholders’ notices by the Company.

 

 

 

 

If to the Company:

7A Industrial Park, P.O. Box 3030, Omer, 8496500, Israel

Attention: Yaron Silberman

Telephone: +972-72-260-2200

E-mail: yaron.silberman@scoutcam.com

   
  with a mandatory copy to (which shall not constitute a notice):
   
 

Meitar | Law Offices

16 Abba Hillel St., Ramat-Gan, Israel

Attention: Dr. Shachar Hadar, Adv.

Telephone: +972-3-6103961

E-mail: shacharh@meitar.com

   
If to the Investor: as set forth on the signature page hereto/Exhibit A

 

8.7 Delays or Omissions. Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any party to this Agreement upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default therefore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party to this Agreement, shall be cumulative and not alternative.

 

8.8 Interpretation. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. Unless the context requires otherwise, the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety, and not to any particular provision hereof, and all references herein to Sections shall be construed to refer to Sections to this Agreement. Reference to “governmental authorities” (or similar terms) shall include any: (a) nation, principality, state, commonwealth, territory, county, municipality, district or other jurisdiction of any nature, (b) federal, state, local, municipal, foreign or other government, (c) governmental, quasi-governmental or regulatory body of any nature, including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, board, instrumentality, organization, unit, or body, or (d) court, public or private arbitrator or other public tribunal. Reference to a “person” shall mean any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, estate, unincorporated organization, governmental authority or other entity, including, any party to this Agreement. Any reference to a “day” or a number of days (without explicit reference to “business days”) shall be interpreted as a reference to a calendar day or number of calendar days, and if any action is to be taken or given on or by a particular calendar day, and such calendar day is not a business day, then such action may be deferred until the first business day thereafter (where “business day” shall mean any day on which banking institutions in Tel-Aviv-Jaffa, Israel are generally open to the public for conducting business and are not required by law to close).

 

8.9 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be enforceable in accordance with its terms and interpreted so as to give effect, to the fullest extent consistent with and permitted by applicable law, to the meaning and intention of the excluded provision.

 

8.10 Counterparts. This Agreement and any Transaction Document may be executed in one or more counterparts, all of which together shall constitute one and the same instrument, binding and enforceable against the parties so executing the same; it being understood that all parties need not sign the same counterpart. Counterparts may also be delivered by facsimile or email transmission (in pdf format or the like, or signed with docusign, e-sign or any similar form of signature by electronic means) and any counterpart so delivered shall be sufficient to bind the parties to this Agreement or any other Transaction Document, as an original.

 

- Signature Pages Follow -

 

 

 

 

IN WITNESS WHEREOF, the parties have executed this SECURITIES PURCHASE AGREEMENT to be executed as of the date first written above.

 

  COMPANY:
   
  SCOUTCAM INC.
   
  By: /s/ Yaron Silberman
  Name: Yaron Silberman
  Title: Chief Executive Officer

 

  By: /s/ Tanya Yosef
  Name: Tanya Yosef
  Title: Chief Financial Officer

 

[Company Signature Page to Securities Purchase Agreement]

 

 

 

 

IN WITNESS WHEREOF, the parties have executed this SECURITIES PURCHASE AGREEMENT as of the date first written above.

 

INVESTOR:

 

M. Arkin (1999) Ltd.

 

By: /s/ Mori Arkin  
Name: Mori Arkin  
Title: Director  
Address: 6 Hachoshlim Street, Building C, 6th Floor, Herzliya, Israel 4672406

 

[Company Signature Page to Securities Purchase Agreement]

 

 

 

 

Exhibit List

 

Exhibit A - Investor and Purchased Securities at the Closing

 

Appendix List

 

Appendix A – Form Warrant A

 

Appendix B – Form Warrant B

 

Appendix C – Registration Rights Agreement

 

Appendix D – Voting Agreement

 

Appendix E – Capitalization Table

 

 

 

 

Exhibit A

 

Investor and Purchased Securities at the Closing

 

Name of Investor   Investment
Amount
  Purchased Shares     Shares
Underlying
Purchased
Warrant A
    Shares
Underlying Purchased
Warrant B
 
M. Arkin (1999) Ltd.   US$2,000,000     4,132,232       2,066,116       4,132,232  

 

 

 

 

Exhibit 10.2

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (the “Agreement”) is made and entered into as of this 18th day of May, 2020 by and among ScoutCam Inc., a Nevada corporation (the “Company”) and the Investor (as defined below). Capitalized terms used herein have the respective meanings ascribed thereto in that certain Securities Purchase Agreement by and between the Company and the Investor, dated May 18, 2020 (the “Purchase Agreement”) unless otherwise defined herein.

 

The parties hereby agree as follows:

 

1. Certain Definitions.

 

As used in this Agreement, the following terms shall have the following meanings:

 

Investor” means M. Arkin (1999) Ltd. and any of its Affiliates or permitted transferees who is a subsequent holder of any Registrable Securities.

 

Prospectus” means (i) any prospectus (preliminary or final) included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus, and (ii) any “free writing prospectus” as defined in Rule 405 under the Securities Act.

 

Register,” “registered” and “registration” refer to a registration made by preparing and filing a Registration Statement or similar document in compliance with the Securities Act (as defined below), and the declaration or ordering of effectiveness of such Registration Statement or document.

 

Registrable Securities” means (i) the shares of Common Stock issued to the Investor under the Purchase Agreement, (ii) the shares of Common Stock underline the Warrants issued to the Investor under the Purchase Agreement, and (iii) any other securities issued or issuable with respect to or in exchange for such shares of Common Stock or the shares of Common Stock underline such Warrants, whether by merger, charter amendment, or otherwise; provided, that, a security shall cease to be a Registrable Security (and the Company shall not be required to maintain the effectiveness of any, or file another, Registration Statement hereunder with respect thereto) for so long as (a) a Registration Statement with respect to the sale of such Registrable Securities is declared effective by the SEC under the Securities Act, (b) such Registrable Securities have been previously sold in accordance with Rule 144, or (c) such securities become eligible for resale without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 as set forth in a written opinion letter to such effect, addressed, delivered and acceptable to the Transfer Agent and the affected holders, as reasonably determined by the Company, upon the advice of counsel to the Company and the Transfer Agent has issued certificates for such Registrable Securities to the holder thereof, or as such holder may direct, without any restrictive legend.

 

Registration Statement” means any registration statement of the Company filed under the Securities Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement.

 

2. Registration.

 

(a) Registration Statement. Promptly following the closing of the purchase and sale of the securities contemplated by the Purchase Agreement (the “Closing Date”), the Company shall use commercially reasonable efforts to prepare and file with the SEC, within ninety (90) days after the Closing Date, one Registration Statement on Form S-1 (or such other form of registration is then available to effect a registration for resale of the Registrable Securities), covering the resale of the Registrable Securities. The Investor shall not be named as an “underwriter” in the Registration Statement without the Investor’s prior written consent. Such Registration Statement also shall cover, to the extent allowable under the Securities Act and the rules promulgated thereunder (including Rule 416), such indeterminate number of additional shares of Common Stock resulting from stock splits, stock dividends or similar transactions with respect to the Registrable Securities. Such Registration Statement shall not include any shares of Common Stock or other securities for the account of any other holder without the prior written consent of the Investor, except if the Registrable Securities are included in the Company’s Registration Statement on Form S-1 (File No. 333-237470) filed with the SEC on March 30, 2020, as amended from time to time. The Registration Statement (and each amendment or supplement thereto, and each request for acceleration of effectiveness thereof) shall be provided in accordance with Section 3(c) to the Investor and its counsel prior to its filing or other submission.

 

 

 

 

(b) Expenses. The Company will pay all expenses associated with effecting the registration of the Registrable Securities, including filing and printing fees, the Company’s counsel and accounting fees and expenses, costs associated with clearing the Registrable Securities for sale under applicable state securities laws, and listing fees, but excluding discounts, commissions, fees of underwriters, selling brokers, dealer managers or similar securities industry professionals with respect to the Registrable Securities being sold or any fees or any of the Investor’s counsel.

 

(c) Effectiveness.

 

(i) The Company shall use commercially reasonable efforts to have any Registration Statement declared effective as soon as practicable. The Company shall notify the Investor by facsimile or e-mail as promptly as practicable, and in any event, within twenty-four (24) hours, after any Registration Statement is declared effective and shall simultaneously provide the Investor with copies of any related Prospectus to be used in connection with the sale or other disposition of the securities covered thereby.

 

(ii) For not more than thirty (30) consecutive days or for a total of not more than sixty (60) days in any twelve (12) month period, the Company may suspend the use of any Prospectus included in any Registration Statement contemplated by this Section in the event that the Company determines in good faith that such suspension is necessary to (A) delay the disclosure of material non-public information concerning the Company, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company or (B) amend or supplement the affected Registration Statement or the related Prospectus so that such Registration Statement or Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the case of the Prospectus in light of the circumstances under which they were made, not misleading (an “Allowed Delay”); provided, that the Company shall promptly (a) notify the Investor in writing of the commencement of an Allowed Delay, but shall not (without the prior written consent of the Investor) disclose to the Investor any material non-public information giving rise to an Allowed Delay, (b) advise the Investor in writing to cease all sales under the Registration Statement until the end of the Allowed Delay and (c) use commercially reasonable efforts to terminate an Allowed Delay as promptly as practicable.

 

(d) Rule 415; Cutback To the extent applicable, if at any time the SEC takes the position that the offering of some or all of the Registrable Securities in a Registration Statement is not eligible to be made on a delayed or continuous basis under the provisions of Rule 415 under the Securities Act or requires the Investor to be named as an “underwriter”, the Company shall use its best efforts to persuade the SEC that the offering contemplated by a Registration Statement is a bona fide secondary offering and not an offering “by or on behalf of the issuer” as defined in Rule 415 and that the Investor is not an “underwriter”. The Investor shall have the right to participate or have its counsel participate in any meetings or discussions with the SEC regarding the SEC’s position and to comment or have its counsel comment on any written submission made to the SEC with respect thereto. No such written submission shall be made to the SEC to which the Investor’s counsel reasonably objects. In the event that, despite the Company’s best efforts and compliance with the terms of this Section 2(d), the SEC refuses to alter its position, the Company shall (i) remove from the Registration Statement such portion of the Registrable Securities (the “Cut Back Shares”) and/or (ii) agree to such restrictions and limitations on the registration and resale of the Registrable Securities as the SEC may require to assure the Company’s compliance with the requirements of Rule 415 (collectively, the “SEC Restrictions”); provided, however, that the Company shall not agree to name the Investor as an “underwriter” in such Registration Statement without the prior written consent of the Investor. Any cut-back imposed on the Investor pursuant to this Section 2(d) shall be allocated among the Investor and any other stockholders of the Company included in such Registration Statement, if any, on a pro rata basis, unless the SEC Restrictions otherwise require or provide or the Investor otherwise agree; provided, however, that no cut-back shall be imposed on the Investor by virtue of shares included in the Registration Statement to be sold on behalf of the Company. No liquidated damages shall accrue as to any Cut Back Shares until such date on which the Company is able to effect the registration of such Cut Back Shares in accordance with any SEC Restrictions (such date, the “Restriction Termination Date” of such Cut Back Shares). From and after the Restriction Termination Date applicable to any Cut Back Shares, all of the provisions of this Section 2 shall again be applicable to such Cut Back Shares.

 

 

 

 

3. Company Obligations. The Company will use commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the terms hereof, and pursuant thereto the Company will, as expeditiously as possible:

 

(a) use commercially reasonable efforts to cause such Registration Statement to become effective and to remain continuously effective for a period that will terminate upon the earlier of (i) the date on which all Registrable Securities covered by such Registration Statement as amended from time to time, have been sold or otherwise disposed of pursuant to the Registration Statement or in a transaction in which the transferee receives freely tradable shares, (ii) the date on which the Registrable Securities no longer constitute “Registrable Securities” pursuant to the definition thereof, and (iii) the third anniversary of the closing date of the Purchase Agreement (the “Effectiveness Period”) and advise the Investor in writing when the Effectiveness Period has expired;

 

(b) prepare and file with the SEC such amendments and post-effective amendments to the Registration Statement and the Prospectus as may be necessary to keep the Registration Statement effective for the Effectiveness Period and to comply with the provisions of the Securities Act and the Exchange Act with respect to the distribution of all of the Registrable Securities covered thereby;

 

(c) provide copies to and permit counsel designated by the Investor to review each Registration Statement and all amendments and supplements thereto no fewer than seven (7) days prior to their filing with the SEC and not file any document to which such counsel reasonably objects;

 

(d) furnish to the Investor and its legal counsel (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company (but not later than two (2) Business Days after the filing date, receipt date or sending date, as the case may be) one (1) copy of any Registration Statement and any amendment thereto, each preliminary prospectus and Prospectus and each amendment or supplement thereto, and each letter written by or on behalf of the Company to the SEC or the staff of the SEC, and each item of correspondence from the SEC or the staff of the SEC, in each case relating to such Registration Statement (other than any portion thereof which contains information for which the Company has sought confidential treatment), and (ii) such number of copies of a Prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other documents as the Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by the Investor that are covered by the related Registration Statement;

 

(e) use commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness and, (ii) if such order is issued, obtain the withdrawal of any such order at the earliest possible moment;

 

(f) prior to any public offering of Registrable Securities, use commercially reasonable efforts to register or qualify or cooperate with the Investor and its counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions requested by the Investor and do any and all other commercially reasonable acts or things necessary or advisable to enable the distribution in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(f), (ii) subject itself to general taxation in any jurisdiction where it would not otherwise be so subject but for this Section 3(f), or (iii) file a general consent to service of process in any such jurisdiction;

 

(g) use commercially reasonable efforts to cause all Registrable Securities covered by a Registration Statement to be listed on each securities exchange, interdealer quotation system or other market on which similar securities issued by the Company are then listed;

 

(h) immediately notify the Investor, at any time prior to the end of the Effectiveness Period, upon discovery that, or upon the happening of any event as a result of which, the Prospectus includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and promptly prepare, file with the SEC and furnish to such holder a supplement to or an amendment of such Prospectus as may be necessary so that such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

 

 

 

 

(i) otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC under the Securities Act and the Exchange Act; and

 

(j) with a view to making available to the Investor the benefits of Rule 144 (or its successor rule) and any other rule or regulation of the SEC that may at any time permit the Investor to sell shares of Common Stock to the public without registration, the Company covenants and agrees to: (i) make and keep public information available, as those terms are understood and defined in Rule 144, until the earlier of (A) six months after such date as all of the Registrable Securities may be sold without restriction by the holders thereof pursuant to Rule 144 or any other rule of similar effect or (B) such date as all of the Registrable Securities shall have been resold pursuant to a Registration Statement, Rule 144 or otherwise in a transaction in which the transferee receives freely tradable shares; (ii) file with the SEC in a timely manner all reports and other documents required of the Company under the Exchange Act; and (iii) furnish to the Investor upon request, as long as the Investor owns any Registrable Securities, (A) a written statement by the Company that it has complied with the reporting requirements of the Exchange Act, (B) a copy of the Company’s most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such other information as may be reasonably requested in order to avail the Investor of any rule or regulation of the SEC that permits the selling of any such Registrable Securities without registration.

 

4. Obligations of the Investor.

 

(a) The Investor shall furnish in writing to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request. At least five (5) Business Days prior to the first anticipated filing date of any Registration Statement, the Company shall notify the Investor of the information the Company requires from the Investor if the Investor elects to have any of the Registrable Securities included in the Registration Statement. The Investor shall provide such information to the Company at least two (2) Business Days prior to the first anticipated filing date of such Registration Statement if the Investor elects to have any of the Registrable Securities included in the Registration Statement.

 

(b) The Investor, by its acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of a Registration Statement hereunder, unless the Investor has notified the Company in writing of its election to exclude all of its Registrable Securities from such Registration Statement.

 

(c) The Investor agrees that, upon receipt of any notice from the Company of either (i) the commencement of an Allowed Delay pursuant to Section 2(c)(ii) or (ii) the happening of an event pursuant to Section 3(h) hereof, the Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities, until the Investor is advised by the Company that such dispositions may again be made.

 

(d) The Investor agrees that it will not sell, dispose or otherwise transfer its Registrable Securities other than (i) pursuant to the Plan of Distribution contained in the Registration Statement covering such Registrable Securities, (ii) in accordance with the requirements of Rule 144 or (iii) in a transaction exempt from the registration requirements of the Securities Act and as to which the Company has received an opinion of counsel reasonably satisfactory to it that such transfer may lawfully be made without registration under the Securities Act.

 

 

 

 

5. Indemnification.

 

(a) Indemnification by the Company. The Company will indemnify and hold harmless the Investor and its officers, directors, members, managers, partners, trustees, employees and agents and other representatives, successors and assigns, and each other person, if any, who controls the Investor within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement or omission or alleged omission of any material fact contained in any registration statement, any prospectus, or any amendment or supplement thereof; (ii) any blue sky application or other document executed by the Company specifically for that purpose or based upon written information furnished by the Company filed in any state or other jurisdiction in order to qualify any or all of the Registrable Securities under the securities laws thereof (any such application, document or information herein called a “Blue Sky Application”); (iii) the omission or alleged omission to state in a Blue Sky Application a material fact required to be stated therein or necessary to make the statements therein not misleading; (iv) any violation by the Company or its agents of any rule or regulation promulgated under the Securities Act applicable to the Company or its agents and relating to action or inaction required of the Company in connection with such registration; or (v) any failure to register or qualify the Registrable Securities included in any such Registration Statement in any state where the Company or its agents has affirmatively undertaken or agreed in writing that the Company will undertake such registration or qualification on an Investor’s behalf and will reimburse the Investor, and its officers, directors or members and its controlling persons for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by the Investor or any of its controlling persons in writing specifically for use in such registration statement or prospectus.

 

(b) Indemnification by the Investor. The Investor agrees to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors, officers, employees, stockholders and each person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expense (including reasonable attorney fees) resulting from any untrue statement of a material fact or any omission of a material fact required to be stated in the Registration Statement or Prospectus or amendment or supplement thereto or necessary to make the statements therein not misleading, to the extent, but only to the extent that such untrue statement or omission is contained in any information furnished in writing by the Investor to the Company specifically for inclusion in such Registration Statement or Prospectus or amendment or supplement thereto. In no event shall the liability of the Investor be greater in amount than the dollar amount of the proceeds (net of all expenses paid by the Investor in connection with any claim relating to this Section 6 and the amount of any damages the Investor has otherwise been required to pay by reason of such untrue statement or omission) received by the Investor upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation.

 

(c) Conduct of Indemnification Proceedings. Any person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (a) the indemnifying party has agreed to pay such fees or expenses, or (b) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or (c) in the reasonable judgment of any such person, based upon written advice of its counsel, a conflict of interest exists between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person); and provided, further, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any such claim or litigation. It is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified parties. No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that 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 of such claim or litigation.

 

 

 

 

(d) Contribution. If for any reason the indemnification provided for in the preceding paragraphs (a) and (b) is unavailable to an indemnified party or insufficient to hold it harmless, other than as expressly specified therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations. No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any person not guilty of such fraudulent misrepresentation. In no event shall the contribution obligation of a holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such holder in connection with any claim relating to this Section 6 and the amount of any damages such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.

 

6. Miscellaneous.

 

(a) Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Investor.

 

(b) Notices. All notices and other communications provided for or permitted hereunder shall be made as set forth in Section 9.4 of the Purchase Agreement.

 

(c) Assignments and Transfers by Investor. The provisions of this Agreement shall be binding upon and inure to the benefit of the Investor and its respective successors and assigns. The Investor may transfer or assign, in whole or from time to time in part, to one or more persons its rights hereunder in connection with the transfer of Registrable Securities by the Investor to such person, provided that the Investor complies with all laws applicable thereto and provides written notice of assignment to the Company promptly after such assignment is effected.

 

(d) Assignments and Transfers by the Company. This Agreement may not be assigned by the Company (whether by operation of law or otherwise) without the prior written consent of the Investor; provided, however, that in the event that the Company is a party to a merger, consolidation, share exchange or similar business combination transaction in which the Common Stock is converted into the equity securities of another Person, from and after the effective time of such transaction, such Person shall, by virtue of such transaction, be deemed to have assumed the obligations of the Company hereunder, the term “Company” shall be deemed to refer to such Person and the term “Registrable Securities” shall be deemed to include the securities received by the Investor in connection with such transaction unless such securities are otherwise freely tradable by the Investor after giving effect to such transaction.

 

(e) Benefits of the Agreement. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

(f) Counterparts; Faxes. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may be delivered via facsimile or other form of electronic communication, which shall be deemed an original.

 

(g) Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

(h) Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provisions hereof prohibited or unenforceable in any respect.

 

 

 

 

(i) Further Assurances. The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

 

(j) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

 

(k) Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York without regard to the choice of law principles thereof. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of the date first above written.

 

The Company: ScoutCam Inc.
     
  By: /s/ Tanya Yosef                     /s/ Yaron Silberman
  Name:  Tanya Yosef                       Yaron Silberman
  Title: Chief Financial Officer       Chief Executive Officer
     
Investor: M. Arkin (1999) Ltd.
     
  By: /s/ Mori Arkin
  Name: Mori Arkin
  Title: Director

 

 

 

Exhibit 10.3

 

VOTING AGREEMENT

 

THIS VOTING AGREEMENT (this “Agreement”), is made and entered into as of this 18th day of May, 2020, by and among ScoutCam Inc., a Nevada corporation (the “Company”), M. Arkin (1999) Ltd. (“Arkin”) and Medigus Ltd. (“Medigus”) (together with Arkin, the “Stockholders”, and each individually a “Stockholder”).

 

RECITALS

 

Concurrently with the execution of this Agreement, the Company and Arkin are entering into a Securities Purchase Agreement providing for the sale of shares of common stock of the Company, par value $0.001 per share (“Common Stock”), and in connection with such agreement, the Company agreed to provide Arkin with the right to designate a representative to the board of directors of the Company (the “Board”).

 

NOW, THEREFORE, the parties agree as follows:

 

1. Voting Provisions Regarding Board of Directors.

 

1.1 Designation of Stockholder Board Member. Each Stockholder agrees to vote, or cause to be voted, all Shares owned by such Stockholder, or over which such Stockholder has voting control, from time to time and at all times, and to take such other actions required pursuant to the organizational documents of the Company or otherwise, in whatever manner as shall be necessary to ensure that (A) at each annual or special meeting of stockholders at which an election of directors is held or pursuant to any written consent of the stockholders, (a) one (1) person designated by Arkin shall be elected to the Board, for so long as Arkin, together with its Affiliates, continues to own beneficially at least eight (8%) of the issued and outstanding capital stock of the Company (“Arkin Director”), which individual shall initially be Irit Yaniv, unless otherwise provided by Arkin, and (b) (i) three (3) persons designated by Medigus shall be elected to the Board, for so long as Medigus, together with its Affiliates, continues to own beneficially at least thirty five (35%) of the issued and outstanding capital stock of the Company, or (ii) two (2) persons designated by Medigus for so long as Medigus, together with its Affiliates, continues to own beneficially less than thirty five (35%) and more than twenty (20%) of the issued and outstanding capital stock of the Company, or (iii) one (1) person designated by Medigus for so long as Medigus, together with its Affiliates, continues to own beneficially less than twenty (20%) and more than eight (8%) of the issued and outstanding capital stock of the Company (the “Medigus Directors”, and together with the Arkin Director, the “Stockholders Directors” and each individually a “Stockholder Director”), which individuals shall initially be Ronen Rosenbloom, Lior Amit and Issac Zilberman, unless otherwise provided by Medigus; and (B) the size of the Board shall be set and remain at a number that allows for the election of the Stockholders Directors.

 

For purposes of this Agreement, the term “Shares” shall mean and include any securities of the Company the holders of which are entitled to vote for members of the Board, including without limitation, all shares of Common Stock, by whatever name called, now owned or subsequently acquired by a Stockholder, however acquired, whether through stock splits, stock dividends, reclassifications, recapitalizations, similar events or otherwise. The term “Affiliate” means, with respect to any specified Stockholder, any other entity who, directly or indirectly, controls, is controlled by, or is under common control with such Stockholder, including without limitation any general partner, managing member, officer or director of such Stockholder or any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Stockholder.

 

 

 

 

1.2 Failure to Designate a Board Member. In the absence of any designation from Arkin or Medigus, the directors previously designated by either Arkin or Medigus, as applicable, and then serving shall be reelected if still eligible to serve as provided herein.

 

1.3 Removal of Board Members. Each Stockholder also agrees to vote, or cause to be voted, all Shares owned by such Stockholder, or over which such Stockholder has voting control, from time to time and at all times, in whatever manner as shall be necessary to ensure that: (i) the Stockholders Directors may not be removed from office unless such removal is directed or approved by the affirmative vote of Arkin in connection with the Arkin Director or Medigus in connection with the Medigus Directors, (ii) any vacancies created by the resignation, removal or death of a director elected by either Arkin or Medigus shall be filled pursuant to the provisions of Section ‎1.1, and (iii) upon the written request of Arkin to remove the Arkin Director or Medigus to remove the Medigus Directors, such director shall be removed.

 

Each Stockholder agrees to execute any written consents required to perform the obligations of this Agreement, and the Company agrees at the request of any party entitled to designate directors to call a special meeting of stockholders for the purpose of electing directors.

 

2. Covenants of the Company.

 

The Company agrees to use its best efforts, within the requirements of applicable law, to ensure that the rights granted under this Agreement are effective and to cause the nomination and election of the Stockholders Directors as provided in this Agreement.

 

3. Miscellaneous.

 

3.1 Transfers. The terms of this Agreement shall immediately terminate upon the transfer, sale or disposition of any Shares subject to this Agreement, with respect to such Shares.

 

3.2 Governing Law. This Agreement shall be governed by and construed in accordance with to the laws of the State of Israel, disregarding its conflict of laws rules. Any dispute arising under or in relation to this Agreement shall be resolved exclusively in the competent court located in Tel Aviv-Jaffa, Israel and each of the parties hereby irrevocably submits to the exclusive jurisdiction of such court.

 

3.3 Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or (a) personal delivery to the party to be notified, (b) when sent, if sent by electronic mail during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next business day (unless sender receives a delivery failure notice, in which case notice shall not be deemed to be effective), (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) two (2) business days after the deposit with an internationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their address as set forth below.

 

3.4 Amendment and Waiver; Termination. This Agreement may be amended and the observance of any term hereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument executed by (i) Arkin and (ii) Medigus. This Agreement shall automatically terminate and be of no further force or effect upon the earlier of (a) the Stockholders mutually agreeing in writing to terminate this Agreement, or (b) such time that each of Medigus and Arkin, together with such Stockholder’s Affiliates, holds less than eight (8%) of the issued and outstanding capital stock of the Company, without requiring any further action on the part of the parties.

 

 

 

 

3.5 Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default previously or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

3.6 Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

 

3.7 Entire Agreement. This Agreement and the Company’s charter documents constitute the full and entire understanding and agreement between the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled.

 

3.8 Further Assurances. At any time or from time to time after the date hereof, the parties agree to cooperate with each other, and at the request of any other party, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby and to otherwise carry out the intent of the parties hereunder.

 

3.9 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

[Signature Page Follows]

 

 

 

 

IN WITNESS WHEREOF, the parties have executed this Voting Agreement as of the date first written above.

 

  COMPANY
   
  SCOUTCAM INC.
   
  By: /s/ Yaron Silberman
  Name: Yaron Silberman
  Title: Chief Executive Officer 
     
  By: /s/ Tanya Yosef
  Name: Tanya Yosef 
  Title: Chief Financial Officer 
     
  Address: Suite 7A, Industrial Park, P.O. Box 3030 Omer, Israel 8496500
     
  STOCKHOLDERS:
   
  M. Arkin (1999) Ltd.
     
  By: /s/ Mori Arkin
  Name: Mori Arkin 
  Title: Director 
     
  Address: Hachoshlim 6, Herzliya, Israel
     
  Medigus Ltd.
     
  By: /s/ Liron Carmel
  Name: Liron Carmel 
  Title: Chief Executive Officer
     
  Address: Omer Industrial Park, No. 7A, P.O. Box 3030, Omer 8496500, Israel

 

 

 

 

 

Exhibit 10.4

 

May 18, 2020

 

To: M. Arkin (1999) Ltd. (“Arkin”)

 

Re: Agreements as Conditions to Financing

 

Ladies and Gentlemen:

 

This letter agreement (this “Letter Agreement”) confirms certain understandings relating to the Spinoff Agreements (as defined below), which the undersigned, ScoutCam Inc. (the “Company”) and Medigus Ltd. (“Medigus”) have undertaken to you as condition to your investment in the Company. Reference is made to certain Amended and Restated Asset Transfer Agreement (the “Asset Agreement”) and that certain Patent License Agreement (the “License Agreement”, and collectively, the “Spinoff Agreements”), each entered into by and between Medigus and ScoutCam Ltd., a wholly owned subsidiary of the Company (the “Subsidiary”), dated December 1, 2019. Capitalized terms not otherwise defined herein shall have the meaning ascribed in the Spinoff Agreements.

 

The Company and Medigus will take such actions as are reasonably necessary to cause a duly executed amendment of the Spinoff Agreements to be entered into effect as soon as reasonably practicable and no later than sixty (60) days after the closing of Arkin’s investment, subject only to obtaining the approval of the Israeli Innovation Authority and Magnet management to the extent legally necessary with respect to the IIA funded patent assets (and absent any additional contingencies). Such amendment shall have the effect (without payment of additional consideration) of (i) clarifying and/or supplementing Section 2.1 of the Asset Agreement, such that the know-how and other intellectual property rights, used or necessary for use in connection with the Transferred Business shall have been duly transferred to the Subsidiary; and (ii) transferring the patent assets set forth in Appendix A, and all rights and obligations attached thereto, as Transferred Assets; provided, however, that if the Company decides to neglect any of the patent assets set forth in Appendix A, the Company shall transfer back ownership of those patent assets to Medigus, and such transfer shall consist of no additional consideration and absent any additional contingencies. In the event that the IIA approval and Magnet management cannot be reasonably obtained with respect to the applicable patent, the amendment shall have the effect of achieving the closest possible result to transfer of exclusive ownership.

 

Each of the Company and Medigus represents that it has all requisite corporate power and authority to execute and deliver this Letter Agreement and to carry out and perform its obligations hereunder. This Letter Agreement may not be modified or amended and the rights of either party hereunder may not be waived unless such modification, amendment, or waiver is effected by a written instrument signed by the Company, Medigus and Arkin.

 

[Signature page to follow]

 

 

 

 

IN WITNESS WHEREOF, the parties have executed this Letter Agreement to be executed as of the date first written above.

 

  MEDIGUS:
     
    /s/ Liron Carmel
    MEDIGUS LTD.
     
  Name: Liron Carmel
  Title: Chief Executive Officer

 

[Medigus Signature Page to the Letter Agreement]

 

 

 

 

IN WITNESS WHEREOF, the parties have executed this Letter Agreement to be executed as of the date first written above.

 

 

THE COMPANY:

   
  SCOUTCAM INC.
   
  By: /s/ Yaron Silberman           /s/ Tanya Yosef
  Name: Yaron Silberman              Tanya Yosef
  Title: Chief Executive Officer   Chief Financial Officer
     
 

THE SUBSIDIARY

   
  SCOUTCAM LTD.
   
  By: /s/ Yaron Silberman          /s/ Tanya Yosef
  Name: Yaron Silberman              Tanya Yosef
  Title: Chief Executive Officer   Chief Financial Officer

 

[Company and the Subsidiary Signature Page to the Letter Agreement]

 

 

 

 

IN WITNESS WHEREOF, the parties have executed this Letter Agreement to be executed as of the date first written above.

 

 

M. ARKIN (1999) LTD.

   
  By: /s/ Mori Arkin
  Name: Mori Arkin
  Title: Director

 

[Arkin Signature Page to the Letter Agreement]

 

 

 

 

Appendix A

 

1. Family 34802

2. Family 11777

3. Family 24994

 

 

 

 

Exhibit 10.5

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED BY HOLDER IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

WARRANT TO PURCHASE SHARES OF COMMON STOCK

OF

SCOUTCAM INC.

(the “Corporation”)

 

Number of Shares of Common Stock of the Corporation, par value $0.001 each (the “Common Stock”): 2,066,116.

Issue Date: May 18, 2020.

Initial Exercise Date: May 18, 2020

 

This warrant to purchase shares of Common Stock (the “Warrant”) certifies that, for value received, M. Arkin (1999) Ltd. (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after May 18, 2020 (the “Initial Exercise Date”), and on or prior to the close of business eighteen (18) months following the Issue Date (the “Termination Date”), provided that, if such date is not a Trading Day, the Termination Date should be the immediate following Trading Day but not thereafter, to subscribe for and purchase from the Corporation, up to 2,066,116 shares of Common Stock (the “Warrant Shares”). The purchase price of one Warrant Share shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated May 18, 2020, among the Corporation and the Holder. In addition to the foregoing, the following terms shall have the meanings indicated in this Section 1:

 

Trading Day” means a day on which the principal Trading Market is open for business.

 

Trading Market” means any of the markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question, including the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the OTCQB, OTCQX or the OTC Pink Sheets (or any successors to any of the foregoing).

 

 

 

 

Section 2. Exercise.

 

a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Corporation (or such other office or agency that the Corporation may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Corporation) of a duly executed facsimile copy or PDF copy submitted by electronic mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Corporation until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Corporation for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Corporation. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Corporation shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Holder, by acceptance of this Warrant, acknowledges and agrees that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

In no event will the Corporation be required to net cash settle a Warrant exercise.

 

b) Exercise Price. The exercise price per Share under this Warrant shall be $0.595, subject to adjustment hereunder (the “Exercise Price”).

 

c) Mechanics of Exercise.

 

i. Delivery of Warrant Shares Upon Exercise. The Corporation shall cause its transfer agent (the “Transfer Agent”) to register the Warrant Shares, and credit the account of the Holder with The Depository Trust Company (or another established clearing corporation performing similar functions) through its Deposit/Withdrawal At Custodian system (“DWAC”) if the Transfer Agent is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and otherwise by physical delivery of a certificate, registered in the name of the Holder, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise, by the date that is the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Corporation of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Corporation’s primary Trading Market with respect to the Shares as in effect on the date of delivery of the Notice of Exercise.

 

 

 

 

ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Corporation shall, at the request of the Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii. Rescission Rights. If the Corporation fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(c)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

iv. No Fractional Warrant Shares or Scrip. No fractional Warrant Shares shall be issued upon the exercise of this Warrant. As to any fraction of a Share that the Holder would otherwise be entitled to purchase upon such exercise, the Corporation shall be entitled to round down such to the next whole Share.

 

v. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of Warrant Shares, all of which taxes and expenses shall be paid by the Corporation, and such Warrant Shares shall be issued in the name of the Holder. The Corporation shall pay all applicable fees and expenses of the Transfer Agent in connection with the issuance of the Warrant Shares hereunder.

 

Each of the Corporation and the Holder is aware and agree that it shall be exclusively responsible for its own tax liability arising from the grant or exercise of any Warrant, from the payment for Warrant Shares covered thereby or from any other event or act hereunder. The Company and/or its Affiliates shall withhold taxes according to the requirements under the applicable laws, rules, and regulations, including withholding taxes at source, if required under applicable law (unless the Holder provides a tax certificate, stating that no withholding, or reduced withholding, of tax is required). .

 

 

 

 

The Holder will not be entitled to receive from the Corporation any Warrant Shares allocated or issued upon the exercise of the Warrant prior to the full payments of any tax liabilities arising from the exercise of the Warrant, which are required to be paid by the Holder, if any, prior to the issuance of such Warrant Shares issued upon the exercise of the Warrant. For the avoidance of doubt, the Corporation shall not be required to release any share to the Holder until all such payments required to be made by the Holder have been fully satisfied.

 

vi. Closing of Books. The Corporation will not close its shareholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

Section 3. Certain Adjustments.

 

a) Share Dividends and Splits. If the Corporation, at any time while this Warrant is outstanding: (i) pays a share dividend or otherwise makes a distribution or distributions on its shares of capital stock (“Shares”) or any other equity or equity equivalent securities payable in Shares or other securities of the Corporation, as applicable, (ii) subdivides outstanding Shares into a larger number of Shares, as applicable, (iii) combines (including by way of reverse share split) outstanding Shares into a smaller number of Shares, as applicable, or (iv) issues by reclassification of Shares, or any shares of capital stock of the Corporation, as applicable, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Shares, (excluding treasury shares, if any) outstanding immediately before such event and the denominator of which shall be the number of Shares, outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately increased in the case of share dividend or a subdivision, or proportionately decreased in the case of a combination, such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution or immediately after the effective date in the case of a subdivision, combination or re-classification.

 

 

 

 

b) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Corporation, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Corporation with or into another Person, (ii) the Corporation, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Corporation or another Person) is completed pursuant to which holders of Shares are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Shares, (iv) the Corporation, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Shares or any compulsory share exchange pursuant to which the Shares are effectively converted into or exchanged for other securities, cash or property, or (v) the Corporation, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding Shares (not including Shares held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the number of shares of capital stock of the successor or acquiring corporation or of the Corporation, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the same type and number of Shares for which this Warrant is exercisable immediately prior to such Fundamental Transaction. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one Share, in such Fundamental Transaction, and the Corporation shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration, provided the aggregate Exercise Price shall remain the same. If holders of Shares are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Corporation shall cause any successor entity in a Fundamental Transaction in which the Corporation is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Corporation under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(b) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction, and as a condition thereof, and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the Shares represented by each Warrant Share acquirable and receivable upon exercise of this Warrant prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the Shares pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Corporation” shall refer instead to the Successor Entity), and may exercise every right and power of the Corporation and shall assume all of the obligations of the Corporation under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Corporation herein.

 

 

 

 

c) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a Share, as the case may be. For purposes of this Section 3, the number of Shares deemed to be issued and outstanding as of a given date shall be the sum of the number of Shares (excluding treasury shares, if any) issued and outstanding.

 

d) Notice to Holder. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Corporation shall deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

Section 4. Transfer of Warrant.

 

a) Transferability. This Warrant and all rights hereunder (including, without limitation, any registration rights) are non-transferable.

 

b) Warrant Register. The Corporation shall register this Warrant, upon records to be maintained by the Corporation for that purpose (the “Warrant Register”), in the name of the record Holder hereof.

 

c) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

 

Section 5. Miscellaneous.

 

a) No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a shareholder of the Corporation prior to the exercise hereof as set forth in Section 2(c)(i).

 

b) Loss, Theft, Destruction or Mutilation of Warrant. The Corporation covenants that upon receipt by the Corporation of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Corporation will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

 

 

 

c) Fridays, Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

d) Authorized Shares. The Corporation covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Shares a sufficient number of shares to provide for the issuance of the Warrant Shares and underlying Shares upon the exercise of any purchase rights under this Warrant. The Corporation further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the Warrant Shares needed for the Transfer Agent to issue the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Corporation will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the applicable Trading Market upon which the Shares may be listed. The Corporation covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Corporation in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

 

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

 

g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Corporation willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Corporation shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder, without limiting such other rights and remedies as may be available to the Holder at law or in equity.

 

h) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Corporation shall be delivered in accordance with the notice provisions of the Purchase Agreement.

 

 

 

 

i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Shares or as a shareholder of the Corporation, whether such liability is asserted by the Corporation or by creditors of the Corporation.

 

j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Corporation agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k) Successors. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Corporation and the successors of Holder.

 

l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Corporation and the Holder.

 

m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

 

(Signature Page Follows)

 

 

 

 

IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

  SCOUTCAM INC.
     
  By:
  Name:
  Title:          

 

 

 

 

NOTICE OF EXERCISE

 

To: SCOUTCAM INC.

 

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Corporation pursuant to the terms of the attached Warrant (to be attached only if exercised in full), and tenders herewith payment of the exercise price in full in form of United States currency; or

 

(2) Please register and issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

   

 

(3) The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

 

(4) If applicable pursuant to Section 2(c)(i) of the Warrant, the Warrant Shares shall be delivered to the following DWAC Account Number:

 

     
     
     
     
     

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity:
 
Signature of Authorized Signatory of Investing Entity:
 
Name of Authorized Signatory:
 
Title of Authorized Signatory:
 
Date:        

 

 

 

 

 

 

 

 

Exhibit 10.6

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED BY HOLDER IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

WARRANT TO PURCHASE SHARES OF COMMON STOCK

OF

SCOUTCAM INC.

(the “Corporation”)

 

Number of Shares of Common Stock of the Corporation, par value $0.001 each (the “Common Stock”): 4,132,232.

Issue Date: May 18, 2020.

Initial Exercise Date: May 18, 2020.

 

This warrant to purchase shares of Common Stock (the “Warrant”) certifies that, for value received, M. Arkin (1999) Ltd. (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after May 18, 2020 (the “Initial Exercise Date”), and on or prior to the close of business twenty-four (24) months following the Issue Date (the “Termination Date”), provided that, if such date is not a Trading Day, the Termination Date should be the immediate following Trading Day but not thereafter, to subscribe for and purchase from the Corporation, up to 4,132,232 shares of Common Stock (the “Warrant Shares”). The purchase price of one Warrant Share shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated May 18, 2020, among the Corporation and the Holder. In addition to the foregoing, the following terms shall have the meanings indicated in this Section 1:

 

Trading Day” means a day on which the principal Trading Market is open for business.

 

Trading Market” means any of the markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question, including the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the OTCQB, OTCQX or the OTC Pink Sheets (or any successors to any of the foregoing).

 

Section 2. Exercise.

 

a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Corporation (or such other office or agency that the Corporation may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Corporation) of a duly executed facsimile copy or PDF copy submitted by electronic mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Corporation until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Corporation for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Corporation. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Corporation shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Holder, by acceptance of this Warrant, acknowledges and agrees that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

 

 

 

In no event will the Corporation be required to net cash settle a Warrant exercise.

 

b) Exercise Price. The exercise price per Share under this Warrant shall be $0.893, subject to adjustment hereunder (the “Exercise Price”).

 

c) Mechanics of Exercise.

 

i. Delivery of Warrant Shares Upon Exercise. The Corporation shall cause its transfer agent (the “Transfer Agent”) to register the Warrant Shares, and credit the account of the Holder with The Depository Trust Company (or another established clearing corporation performing similar functions) through its Deposit/Withdrawal At Custodian system (“DWAC”) if the Transfer Agent is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and otherwise by physical delivery of a certificate, registered in the name of the Holder, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise, by the date that is the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Corporation of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Corporation’s primary Trading Market with respect to the Shares as in effect on the date of delivery of the Notice of Exercise.

 

 

 

 

ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Corporation shall, at the request of the Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii. Rescission Rights. If the Corporation fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(c)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

iv. No Fractional Warrant Shares or Scrip. No fractional Warrant Shares shall be issued upon the exercise of this Warrant. As to any fraction of a Share that the Holder would otherwise be entitled to purchase upon such exercise, the Corporation shall be entitled to round down such to the next whole Share.

 

v. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of Warrant Shares, all of which taxes and expenses shall be paid by the Corporation, and such Warrant Shares shall be issued in the name of the Holder. The Corporation shall pay all applicable fees and expenses of the Transfer Agent in connection with the issuance of the Warrant Shares hereunder.

 

Each of the Corporation and the Holder is aware and agree that it shall be exclusively responsible for its own tax liability arising from the grant or exercise of any Warrant, from the payment for Warrant Shares covered thereby or from any other event or act hereunder. The Company and/or its Affiliates shall withhold taxes according to the requirements under the applicable laws, rules, and regulations, including withholding taxes at source, if required under applicable law (unless the Holder provides a tax certificate, stating that no withholding, or reduced withholding, of tax is required).

 

 

 

 

The Holder will not be entitled to receive from the Corporation any Warrant Shares allocated or issued upon the exercise of the Warrant prior to the full payments of any tax liabilities arising from the exercise of the Warrant, which are required to be paid by the Holder, if any, prior to the issuance of such Warrant Shares issued upon the exercise of the Warrant. For the avoidance of doubt, the Corporation shall not be required to release any share to the Holder until all such payments required to be made by the Holder have been fully satisfied.

 

vi. Closing of Books. The Corporation will not close its shareholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

Section 3. Certain Adjustments.

 

a) Share Dividends and Splits. If the Corporation, at any time while this Warrant is outstanding: (i) pays a share dividend or otherwise makes a distribution or distributions on its shares of capital stock (“Shares”) or any other equity or equity equivalent securities payable in Shares or other securities of the Corporation, as applicable, (ii) subdivides outstanding Shares into a larger number of Shares, as applicable, (iii) combines (including by way of reverse share split) outstanding Shares into a smaller number of Shares, as applicable, or (iv) issues by reclassification of Shares, or any shares of capital stock of the Corporation, as applicable, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Shares, (excluding treasury shares, if any) outstanding immediately before such event and the denominator of which shall be the number of Shares, outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately increased in the case of share dividend or a subdivision, or proportionately decreased in the case of a combination, such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution or immediately after the effective date in the case of a subdivision, combination or re-classification.

 

 

 

 

b) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Corporation, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Corporation with or into another Person, (ii) the Corporation, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Corporation or another Person) is completed pursuant to which holders of Shares are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Shares, (iv) the Corporation, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Shares or any compulsory share exchange pursuant to which the Shares are effectively converted into or exchanged for other securities, cash or property, or (v) the Corporation, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding Shares (not including Shares held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the number of shares of capital stock of the successor or acquiring corporation or of the Corporation, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the same type and number of Shares for which this Warrant is exercisable immediately prior to such Fundamental Transaction. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one Share, in such Fundamental Transaction, and the Corporation shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration, provided the aggregate Exercise Price shall remain the same. If holders of Shares are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Corporation shall cause any successor entity in a Fundamental Transaction in which the Corporation is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Corporation under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(b) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction, and as a condition thereof, and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the Shares represented by each Warrant Share acquirable and receivable upon exercise of this Warrant prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the Shares pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Corporation” shall refer instead to the Successor Entity), and may exercise every right and power of the Corporation and shall assume all of the obligations of the Corporation under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Corporation herein.

 

 

 

 

c) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a Share, as the case may be. For purposes of this Section 3, the number of Shares deemed to be issued and outstanding as of a given date shall be the sum of the number of Shares (excluding treasury shares, if any) issued and outstanding.

 

d) Notice to Holder. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Corporation shall deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

Section 4. Transfer of Warrant.

 

a) Transferability. This Warrant and all rights hereunder (including, without limitation, any registration rights) are non-transferable.

 

b) Warrant Register. The Corporation shall register this Warrant, upon records to be maintained by the Corporation for that purpose (the “Warrant Register”), in the name of the record Holder hereof.

 

c) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

 

Section 5. Miscellaneous.

 

a) No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a shareholder of the Corporation prior to the exercise hereof as set forth in Section 2(c)(i).

 

b) Loss, Theft, Destruction or Mutilation of Warrant. The Corporation covenants that upon receipt by the Corporation of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Corporation will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

 

 

 

c) Fridays, Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

d) Authorized Shares. The Corporation covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Shares a sufficient number of shares to provide for the issuance of the Warrant Shares and underlying Shares upon the exercise of any purchase rights under this Warrant. The Corporation further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the Warrant Shares needed for the Transfer Agent to issue the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Corporation will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the applicable Trading Market upon which the Shares may be listed. The Corporation covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Corporation in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

 

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

 

g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Corporation willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Corporation shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder, without limiting such other rights and remedies as may be available to the Holder at law or in equity.

 

h) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Corporation shall be delivered in accordance with the notice provisions of the Purchase Agreement.

 

 

 

 

i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Shares or as a shareholder of the Corporation, whether such liability is asserted by the Corporation or by creditors of the Corporation.

 

j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Corporation agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k) Successors. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Corporation and the successors of Holder.

 

l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Corporation and the Holder.

 

m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

 

(Signature Page Follows)

 

 

 

 

IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

  SCOUTCAM INC.
     
  By:
  Name:
  Title:         

 

 

 

 

NOTICE OF EXERCISE

 

To: SCOUTCAM INC.

 

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Corporation pursuant to the terms of the attached Warrant (to be attached only if exercised in full), and tenders herewith payment of the exercise price in full in form of United States currency; or

 

(2) Please register and issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

   

 

(3) The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

 

(4) If applicable pursuant to Section 2(c)(i) of the Warrant, the Warrant Shares shall be delivered to the following DWAC Account Number:

 

   

 

   

 

   

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity: ________________________________________________________________________

 

Signature of Authorized Signatory of Investing Entity: _________________________________________________

 

Name of Authorized Signatory: ___________________________________________________________________

 

Title of Authorized Signatory: ____________________________________________________________________

 

Date: ________________________________________________________________________________________

 

 

 

 

Exhibit 99.1

 

SCOUTCAM LOGO

 

ScoutCam receives $2 million investment from Mori Arkin, a leading life science and pharmaceutical entrepreneur

 

OMER, Israel, May 19, 2020 – ScoutCam Inc. (OTC: SCTC), a company developing and manufacturing customized visual solutions for organizations by offering the world’s smallest cameras and supplementary technologies, today announced it had entered into and consummated a securities purchase agreement with M. Arkin (1999) Ltd. in connection with an investment of $2,000,000.

 

Founder and Chairman of Arkin Holdings, Moshe “Mori” Arkin, is one of Israel’s most successful life sciences and pharmaceutical entrepreneurs. A renowned industrialist and generic drug specialist, he founded Arkin Holdings, which owns a healthcare portfolio of $1 billion through four investment arms, with holdings in some 20 Israeli companies developing pharmaceutical drugs and medical equipment, such as UroGen Pharma (Nasdaq: URGN), Keros Therapeutics (Nasdaq: KROS) and Novolog (TASE: NVLG). Mori previously grew Agis into a leading dermatological company in the U.S., which led to its acquisition by Perrigo in 2005 for $818 million.

 

ScoutCam develops and manufactures customized visual solutions for organizations across a variety of industries in the form of highly resistant micro cameras and supplementary technologies. With the smallest cameras produced in the world, which are down to 1mm diameter including illumination, the high resolution technology has unique properties that have been authenticated by customers, such as NASA, in the strictest environmental conditions, including extreme temperatures, vibrations, and radiation. ScoutCam devices have been used across the medical, aerospace, industrial, research and defense industries.

 

“We are proud to have received Mr. Mori Arkin’s vote of confidence by having him make a substantial investment in ScoutCam Inc. Mr. Arkin’s contribution will go beyond a financial investment as he requested and ScoutCam gladly accepted to appoint a director to the company’s board of directors.” said Professor Benad Goldwasser, chairman of ScoutCam’s board of directors.

 

Dr. Irit Yaniv, an experienced and accomplished senior executive in the MedTech industry, will join ScoutCam’s board of directors, as Mori Arkin’s representative.

 

As part of the agreement and in exchange for the investment of $2,000,000, ScoutCam issued to Arkin 4,132,232 shares of common stock, 2,066,116 warrants to purchase common stock at an exercise price of $0.595 and 4,132,232 warrants to purchase common stock at an exercise price of $0.893.

 

About ScoutCam

 

ScoutCam is a leading provider of customized visual solutions for organizations across a variety of industries in the form of highly resistant micro cameras and supplementary technologies. ScoutCam devices are used across the medical, aerospace, industrial, research and defense industries. For more information please visit: https://www.scoutcam.com

 

Cautionary Note Regarding Forward Looking Statements

 

Information set forth in this news release contains forward-looking statements that are based on the Company’s expectations, beliefs, assumptions and intentions regarding, among other things, its product-development efforts, business, financial condition, results of operations, strategies or prospects, as of the date of this news release. They are not guarantees of future performance. Forward-looking statements can be identified by the use of forward-looking words such as “believe,” “expect,” “intend,” “plan,” “may,” “should” or “anticipate” or their negatives or other variations of these words or other comparable words or by the fact that these statements do not relate strictly to historical or current matters. The Company cautions that all forward-looking statements are inherently uncertain and that actual performance may be affected by a number of material factors, many of which are beyond the Company’s control. Such factors include, among other things: risks and uncertainties relating to, inter alia, the spread of COVID-19, including any resultant restrictions on our business operations and/or its negative impact on our financial condition; the Company’s reliance on third-party suppliers; market acceptance of our products by prospect markets and industries; the Company’s ability to raise sufficient funding in order to meet the Company’s business and financial goals; and certain other factors summarized in the Company’s filings with the SEC. Accordingly, actual and future events, conditions and results may differ materially from the estimates, beliefs, intentions and expectations expressed or implied in the forward looking information. Except as required under applicable securities legislation, the Company undertakes no obligation to publicly update or revise forward-looking information.

 

Contact

 

Yaron Silberman

Chief Executive Officer

yaron.silberman@scoutcam.com