PTCP Petrocorp Inc (PK)

 

As filed with the Securities and Exchange Commission on July 14, 2023

 

Registration No. 333-_______________

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

MOTOMOVA INC.

(Exact name of registrant as specified in its charter)

 

Delaware		3590		20-5134664
(State or other jurisdiction of		(Primary Standard Industrial		(I.R.S. Employer
incorporation or organization)		Classification Code Number)		Identification Number)

 

MOTOMOVA Inc.

353 West 48th St.
4th Floor, Unit #292
New York, NY 10036

Email: menny@motomova.com

(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)

 

Corporation Service Company

2711 Centerville Road

Suite 400

Wilmington, Delaware19808

302-636-5400

(Name, address, including zip code, and telephone number,

including area code, of agent for service)

 

Copies to:

 

Mark E. Crone, Esq.

Patrice N. Malcolm, Esq.

The Crone Law Group, PC

420 Lexington Avenue, Suite 2446

New York, NY 10170

(646) 861-7891

 

 

Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement.

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
		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 7(a)(2)(B) of the Securities Act. ☒

 

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

 

 

 

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION, DATED JULY 14, 2023

 

PRELIMINARY PROSPECTUS

MOTOMOVA INC.

 

Offer of up to 44,160,114 shares of common stock offered by the Company

 

and up to 83,831,209 shares offered by Selling Stockholders

 

We are offering to sell up to 44,160,114 shares of common stock in a self-underwritten primary offering at a fixed price of $___ (the “Direct Offering”). The total proceeds from the Direct Offering will not be escrowed or segregated but will be available to us immediately. There is no minimum number of shares required to be purchased, and, therefore, investors who purchase shares will bear the risk that the Direct Offering will not be fully subscribed and the Company cannot be assured of raising any minimum amount of proceeds from the Direct Offering. The total proceeds received by the Company may not be sufficient to fully implement its business plan or sustain continued operations. No commission or other compensation related to the sale of the shares will be paid.

 

This prospectus also relates to the offer and sale of up to 83,831,209 shares of common stock by the holders identified in this prospectus or their assigns (each a “Selling Stockholder” and, collectively, the “Selling Stockholders”), which includes (i) 51,874,436 shares issued and outstanding held by existing shareholders and (ii) 31,956,773 shares of common stock issuable upon the conversion of 183,018 Series A Preferred Stock issued and outstanding. The Company will realize no proceeds from sales of common stock by the Selling Stockholders.

 

The Selling Stockholders may offer all or part of the shares for resale from time to time through public or private transactions, at $ per share, which is the fixed price at which the Selling Stockholders may sell their shares unless and until our common stock is quoted on the OTCQX or OTCQB tiers of OTC Markets, at which time the shares may be sold at prevailing market prices or privately negotiated prices. We provide additional information about how the selling stockholder may sell its shares of common stock in the section entitled “Plan of Distribution” in this prospectus.

 

The Selling Stockholders are deemed statutory “underwriters” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), in connection with the resale or other disposition of the shares of common stock covered by this prospectus.

 

The Company intends to maintain the current status and accuracy of this prospectus and to allow the Company to offer and sell the shares for a period of up to two years, unless earlier completely sold or terminated by the Company, pursuant to Rule 415 of the General Rules and Regulations of the Securities and Exchange Commission (the “SEC”).

 

All costs incurred in the registration of the shares offered pursuant to this prospectus, including all registration, listing, and qualification fees, printing and legal fees, are being borne by the Company.

 

The Company does not have any current arrangements nor entered into any agreements with any underwriters, broker-dealers or selling agents for the sale of the shares in the Direct Offering. If the Company can locate and enter into any such arrangement(s), the shares will be sold through such licensed underwriter(s), broker-dealer(s) and/or selling agent(s).

 

The Company will offer the shares in its Direct Offering directly without payment to any officer or director of any commission or compensation for the sale of the shares.

 

 

Our common stock is currently quoted on the OTC Pink Marketplace under the symbol “MTMV”. On July 14, 2023, the last reported sale price for our common stock was $2.50 per share. We intend to apply to have our common stock quoted on the OTCQB tier of OTC Markets following the effectiveness of this Registration Statement.

 

INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CONSIDER CAREFULLY THE SECTION ENTITLED “RISK FACTORS” IN THIS PROSPECTUS BEGINNING ON PAGE 7.

 

We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read the entire prospectus and any amendments or supplements carefully before you make your investment decision.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

The date of this prospectus is July 14, 2023

 

 

TABLE OF CONTENTS

 

		Page
Explanatory Note		ii
Prospectus Summary		1
Direct Offering		5
Risk Factors		7
Special Note Regarding Forward-Looking Statements		16
Market and Industry Data		17
Use of Proceeds		18
Dilution		19
Description of Business		21
Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Management		31
Executive Compensation		33
Principal Stockholders		37
Certain Relationships and Related Transactions, and Corporate Governance		39
Plan of Distribution		45
Determination of Offering Price		48
Description of Capital Stock		49
Material U.S. Federal Income Tax Consequences to Non-U.S. Holders of Our Common Stock		51
Disclosure of Commission Position on Indemnification for Securities Act Liabilities		55
Legal Matters		55
Experts		55
Additional Information		55
Financial Statements		F-1

 

 

You should rely only on the information contained in this prospectus, and any supplement or amendment to this prospectus. We have not authorized anyone to provide you with additional or different information. We do not take responsibility for, nor can provide any assurance as to the reliability of, any other information that others may give you. We are not making an offer to sell these securities in any jurisdiction where an offer or sale is not permitted. You should assume that the information contained in this prospectus is accurate only as of the date of this prospectus.

 

No action is being taken in any jurisdiction outside the United States to permit a public offering of our shares or possession or distribution of this prospectus in any such jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to the Offering and the distribution of this prospectus applicable to that jurisdiction.

 

 

EXPLANATORY NOTE

 

This Prospectus relates to two separate offerings. The first is a public offering of up to 44,160,114 shares of our common stock to be offered and sold directly by the Company at a fixed price of $___ per share (the “Direct Offering”). The second is an offering by certain stockholders (the “Selling Stockholders Offering”) of an aggregate of up to 83,831,209 shares of our common stock, consisting of (i) 51,874,436 shares issued and outstanding held by existing shareholders and (ii) 31,956,773 shares of common stock issuable upon the conversion of 183,018 issued and outstanding shares of Series A Preferred Stock held by the Selling Stockholders. Certain sections and disclosure in the prospectus relate specifically to either the Direct Offering or the Selling Stockholders Offering, as indicated in the prospectus.

 

Investors should rely only on the information contained in this prospectus or contained in any prospectus supplement or free-writing prospectus to be filed with the Securities and Exchange Commission (the “SEC”). The Company has not authorized anyone to provide you with additional information or information different from that contained in this prospectus filed with the SEC. The information contained in this prospectus is accurate only as of its date, regardless of the date of delivery of this prospectus or of any sale of our common stock. Our business, financial condition, results of operations, and prospects may have changed since that date.

 

As used in this prospectus, unless otherwise designated, the terms “we,” “us,” “our,” the “Company,” “Motomova”, and “our company” refer to Motomova Inc., formerly known as Petrocorp Inc., a Delaware corporation, and its subsidiary, M.E.A. Testing Systems Ltd., a company formed under the laws of the State of Israel (“MEA”), as well as Petrocorp Israel Ltd., a company formed under the laws of the State of Israel which is wholly owned by MEA.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RISK FACTORS

 

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below together with all of the other information contained in this prospectus, including our financial statements and the related notes appearing at the end of this prospectus. Our business, operating results and financial condition could be seriously harmed due to any of the following risks. The risks described below may not be all of the risks facing our company. Additional risks not presently known to us or that we currently consider immaterial may also impair our business operations. You could lose all or part of your investment due to any of these risks.

 

Risks Relating to our Present Business and our Present Industry

 

The current uncertain economic environment and inflationary conditions may adversely affect global vehicle production and demand for our solutions.

 

Our business depends on, and is directly affected by, the global automobile industry. Economic conditions in North America, Europe and Asia can have a large impact on the production volume of new vehicles, and, accordingly, have an impact on our revenue. Automotive production and sales are highly cyclical and depend on general economic conditions and other factors, including consumer spending and preferences, changes in interest rate levels and credit availability, consumer confidence and purchasing power, energy and fuel costs, fuel availability, environmental impact, governmental incentives, regulatory requirements, and political volatility, especially in energy-producing countries and growth markets. In addition, automotive production and sales can be affected by our customers’ ability to continue operating in response to challenging economic conditions, such as those caused by the COVID-19 pandemic, and in response to labor relations issues and shortages, supply chain disruptions, regulatory requirements, trade agreements and other factors. Moreover, automakers continue to face supply chain shortages, and we expect that global vehicle production will not fully recover from the impact of supply chain constraints in 2022 and 2023. Furthermore, current uncertain economic conditions and inflation may contribute to a reduction in consumer demand, which may reduce vehicle production over at least the next several quarters.

 

In addition to these general economic factors, uncertainties in specific markets may further contribute to lower vehicle production. For example, the disruption by Russia of gas supplies to Western Europe could significantly impact industrial production, including vehicle production, in significant markets such as Germany. We cannot predict when the impact of these factors on global vehicle production will substantially diminish. We believe that the expected continued constraint on global automotive production resulting from supply chain shortages and the effect of economic uncertainty will limit our ability to sustain or increase our revenue. More generally, the volume of automotive production in North America, Europe, China, and the rest of the world has fluctuated, sometimes significantly, from year to year, for many reasons, and such fluctuations give rise to fluctuations in the demand for our solutions. As a result, in addition to the impact of the current uncertainties that we anticipate to impact automotive production in the near term, adverse changes in economic or market conditions or other factors, including, but not limited to, general economic conditions, the bankruptcy of any of our customers or the closure of OEM manufacturing facilities may result in a reduction in automotive sales and production, and could have an adverse effect on our business, results of operations, and financial condition.

 

We are subject to risks related to trade policies, sanctions, and import and export controls.

 

Trade policies and international disputes at times result in increased tariffs, trade barriers and other restrictions, which can increase our manufacturing costs, make our solutions less competitive, reduce demand for our solutions, limit our ability to sell to certain customers, limit our ability to procure components or raw materials or impede or slow the movement of our goods across borders. Increasing protectionism and economic nationalism may lead to further changes in trade policies and regulations, domestic sourcing initiatives, or other formal and informal measures.

 

Likewise, national security and foreign policy concerns may prompt governments to impose trade or other restrictions, which could make it more difficult to sell our solutions in, or restrict our access to, certain markets. In this regard, our business activities are subject to various trade and economic sanctions laws and regulations, including, without limitation, the U.S. Department of the Treasury’s Office of Foreign Assets Control’s sanctions programs and the Export Administration Regulations issued by the U.S. Department of Commerce. These rules may prohibit or restrict our ability to, directly or indirectly, conduct activities or dealings in or with certain countries or involving certain persons, or otherwise affect our business. While we believe that current U.S. sanctions do not materially impede our ability to conduct our current business, new sanctions imposed by the United States, the European Union or other countries may restrict certain of our operations and negatively affect our revenue and profitability in the future. Although we take steps to comply with applicable laws and regulations, our failure to successfully comply with applicable sanctions or export control rules may expose us to negative legal and business consequences, including civil or criminal penalties and government investigations.

 

 

In particular, in response to Russia’s recent invasion of Ukraine, the United States, the European Union, and several other countries are imposing far-reaching sanctions and export control restrictions on Russian entities and individuals. See “— The current conflict between Ukraine and Russia has exacerbated market instability and disrupted the global economy.”

 

Additionally, tensions between the United States and China have led to increased tariffs and trade restrictions, including tariffs applicable to some of our solutions, and have affected customer ordering patterns. In addition to imposing economic sanctions on certain Chinese individuals and entities, the United States has imposed restrictions on the export of U.S.-regulated products and technology to certain Chinese technology companies, including certain of our customers. Future restrictions could adversely affect our financial performance, result in reputational harm to us due to our relationship with such companies or lead such companies to develop or adopt technologies that compete with our solutions. It is difficult to predict what further trade-related actions governments may take, which may include trade restrictions and additional or increased tariffs and export controls imposed on short notice, and we may be unable to quickly and effectively react to or mitigate such actions.

 

Trade disputes and protectionist measures, or continued uncertainty about such matters, could result in declining consumer confidence and slowing economic growth or recession, and could cause our customers to reduce, cancel, or alter the timing of their purchases with us. Sustained geopolitical tensions could lead to long-term changes in global trade and technology supply chains, and decoupling of global trade networks, which could adversely affect our business, results of operations, and financial condition.

 

Given our international supply chain and distribution, we are subject to import and export laws of multiple countries. Failure to comply with the requirements of such laws may lead to the imposition of additional taxes or duties on imports or exports, fines, or penalties.

 

If we are unable to protect our proprietary information or other intellectual property, Motomova’s business could be adversely affected. 

 

We have no copyright, trademark or other intellectual property protection. We also do not have contractual restrictions, including through confidentiality, non-disclosure and assignment of copyright or invention assignment agreements with our employees to establish, maintain and protect Motomova’s proprietary information and other intellectual property. Motomova may not be able to efficiently detect and prevent all misappropriation, unauthorized use or reverse engineering its proprietary information and other intellectual property. Even if we have such protection, for example, contractual restrictions, such provisions may be breached, and we may not succeed in enforcing its rights or have adequate remedies for any breach of laws or contractual restrictions. Moreover, Motomova’s trade secrets may be disclosed to or otherwise become known or be independently developed by competitors, and in these situations we may have no or limited rights to stop others’ use of its information. Furthermore, to the extent that the employees or other third parties with whom we do business use intellectual property owned by others in their work for Motomova, disputes may arise as to the rights to such intellectual property. If, for any of the above reasons, our intellectual property is disclosed or misappropriated, it would have an adverse effect on Motomova’s business, financial condition and results of operations.

 

The current conflict between Ukraine and Russia has exacerbated market instability and disrupted the global economy.

 

The current conflict between Ukraine and Russia has caused uncertainty about economic and political stability, increasing volatility in the credit and financial markets and disrupting the global economy. The United States, the European Union, and several other countries are imposing far-reaching sanctions and export control restrictions on Russian entities and individuals. These measures could constrain our ability to work with Russian companies or individuals in connection with the development of our solutions in the future. These sanctions and export controls may also contribute to higher oil and gas prices and inflation, which could reduce demand in the global automotive sector and therefore reduce demand for our solutions. There is also a risk that Russia, as a retaliatory action to sanctions, may launch cyberattacks against the United States, the European Union, or other countries or their infrastructures and businesses. Additional consequences of the conflict may include diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, and various shortages and supply chain disruptions. While we do not currently directly rely on goods or services sourced in Russia or Ukraine and thus have not experienced any direct disruptions, we may experience indirect disruptions in our supply chain. Any of the foregoing factors, including developments or effects that we cannot yet predict, may adversely affect our business, results of operations, and financial condition.

 

 

Risks Relating to Our Israel Operations

 

Our offices are headquartered in Israel and, therefore, our results may be adversely affected by economic restrictions imposed on, and political and military instability in, Israel.

 

Our offices, which house substantially all of our research and development team, including engineers, machinists, researchers as well as the facility of our manufacturing and assembly are located in Israel. Our employees, directors and officers are residents of Israel. Accordingly, political, economic and military conditions in Israel and the surrounding region may directly affect our business. Any hostilities involving Israel or the interruption or curtailment of trade within Israel or between Israel and its trading partners could materially and adversely affect our business, financial condition and results of operations and could make it more difficult for us to raise capital. An extended interruption could materially and adversely affect our business, financial condition and results of operations.

 

Recent political uprisings, social unrest and violence in various countries in the Middle East and North Africa, including Israel’s neighbors Egypt and Syria, are affecting the political stability of those countries. This instability may lead to deterioration of the political relationships, if any, that exist between Israel and these countries and has raised concerns regarding security in the region and the potential for armed conflict. Our commercial insurance does not cover losses that may occur as a result of an event associated with the security situation in the Middle East. Any losses or damages incurred by us could have a material adverse effect on our business. In addition, Iran has threatened to attack Israel and is widely believed to be developing nuclear weapons. Iran is also believed to have a strong influence among parties hostile to Israel in areas that neighbor Israel, such as the Syrian government, Hamas in Gaza and Hezbollah in Lebanon. Any armed conflicts, terrorist activities or political instability in the region could materially and adversely affect our business, financial condition and results of operations.

 

The legislative power of the State of Israel resides in the Knesset, a unicameral parliament that consists of 120 members elected by nationwide voting under a system of proportional representation. Israel has held six general elections in the last five years (on April 9, 2019, September 17, 2019, March 2, 2020, March 23, 2021, November 1, 2022, and March 2, 2023) due to the difficulty of forming a stable government under the conditions of Israel’s parliamentary system. The uncertainty surrounding future elections and/or the results of such elections in Israel may continue and the political situation in Israel may further deteriorate. Actual or perceived political instability in Israel or any negative changes in the political environment, may individually or in the aggregate adversely affect the Israeli economy and, in turn, our business, financial condition, results of operations and prospects.

 

Furthermore, the Israeli government has recently been pursuing legislative changes which, if adopted, will alter the current state of separation of powers among the three branches of government and, as a result, have sparked a considerable political debate. Many individuals, organizations and institutions, within and outside of Israel, have voiced concerns over the potential negative impacts of such changes and the controversy surrounding them on the business and financial environment in Israel. Such negative impacts may include, among others, a downgrade in Israel’s sovereign credit rating, increased interest rates, currency fluctuations, inflation, civil unrest and volatility in securities markets, which could adversely affect the conditions in which we operate and potentially deter foreign investors and organizations from investing or transacting business in Israel. If any of the foregoing risks were to materialize, it may have an adverse effect on our business, our results of operations and our ability to raise additional funds.

 

Our operations may be disrupted as a result of the obligation of Israeli citizens to perform military service.

 

Many Israeli citizens are obligated to perform one month, and in some cases more, of annual military reserve duty until they reach the age of 45 (or older, for reservists with certain occupations) and, in the event of a military conflict, may be called to active duty. In response to terrorist activity, there have been periods of significant call-ups of military reservists. It is possible that there will be additional military reserve duty call-ups in the future in connection with this conflict or otherwise. Some of our employees, consultants and employees of the manufacturer of our products, are required to perform annual military reserve duty in Israel and may be called to active duty at any time under emergency circumstances. Our operations could be disrupted by such call-ups.

 

 

Our sales may be adversely affected by boycotts of Israel.

 

Several countries, principally in the Middle East, restrict doing business with Israel and Israeli companies, and additional countries may impose restrictions on doing business with Israel and Israeli companies whether as a result of hostilities in the region or otherwise. In addition, there have been increased efforts by activists to cause companies and consumers to boycott Israeli goods based on Israeli government policies. Such actions, particularly if they become more widespread, may adversely impact our ability to sell our products.

 

We are subject to material risks related to foreign currency exchange rate fluctuations.

 

Currently, our revenues from Israeli customers are collected in NIS. Most of our customers are based outside of Israeli and they pay us mostly in USD and EUR. Some of our overhead expenses are paid in NIS and some are paid in USD and EUR. Cost of row materials purchased and used by us is paid in NIS, USD and EUR. We face foreign currency rate translation risks when our results are translated to U.S. dollars or to Euros.

 

The exchange rate between NIS and USD, and between NIS and EUR, has recently experience fluctuations as a result of political and economic developments in both Israel and internationally. As of December 31, 2022, the NIS was approximately 3.52 to the US$1.00 and approximately 3.66 to the EUR €3.66 after having been stronger over a period of several years, which has materially and adversely affected our revenues in NIS. There can be no assurance that such exchange rate will stabilize in the future amongst the volatility of currencies, globalization and the unstable economies in recent years. Since our revenues and net income are denominated in NIS, any decrease in the value of NIS against U.S. dollars and/or the Euro would adversely affect our revenues.

 

Risks Related to this Offering and Ownership of Our Common Stock

 

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

 

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business, which research and reports are not and would not be subject to our control. We currently do not have and may never obtain research coverage by securities analysts, and industry analysts that currently cover us may cease to do so. If no securities analysts commence coverage of our company, or if industry analysts cease coverage of our company, the trading price for our stock could be materially and adversely impacted. In the event we obtain securities analyst coverage, if one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price may be materially and adversely impacted. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.

 

An active, liquid trading market for our common stock may not develop or be sustained. If and when an active market develops, the price of our common stock may be volatile.

 

Presently, our common stock is traded on the OTC Pink Marketplace under the symbol “MTMV”. There is limited trading in our stock and, in the absence of an active trading market, investors may have difficulty buying and selling or obtaining market quotations, market visibility for shares of our common stock may be limited, and a lack of visibility for shares of our common stock may have a depressive effect on the market price for shares of our common stock.

 

The lack of an active market impairs your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair market value of your shares. An inactive market may also impair our ability to raise capital to continue to fund operations by selling shares. Holders of our common stock may, therefore, have difficulty selling their common stock, should they decide to do so. In addition, there can be no assurances that such markets will continue or that any shares of common stock will be able to be sold without incurring a loss. Any such market price of the common stock may not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value, and may not be indicative of the market price for the common stock in the future. Further, the market price for the common stock may be volatile depending on a number of factors, including business performance, industry dynamics, news announcements or changes in general.

 

 

Although we intend to apply to have our common stock quoted on the OTCQB tier of OTC Markets, there can be no assurances that such application will be approved. Further, even if such application is approved, there may be no active market in our common stock. Trading in stocks quoted on the OTCQB is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects. The securities market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of shares of our common stock. Moreover, the OTCQB is not a stock exchange, and trading of securities is often more sporadic than the trading of securities listed on a quotation system like Nasdaq or a national stock exchange like the NYSE. Accordingly, even if our common stock is quoted on the OTCQB, stockholders may have difficulty reselling any shares of common stock.

 

The trading price of our common stock is likely to be volatile, which could result in substantial losses to investors.

 

The trading price of our common stock is likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, including the performance and fluctuation of the market prices of other companies with business operations located outside of the United States. In addition to market and industry factors, the price and trading volume for our common stock may be highly volatile for factors specific to our own operations, including the following:

 

	●	variations in our revenues, earnings and cash flow;
	●	announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;
	●	announcements of new offerings, solutions and expansions by us or our competitors;
	●	changes in financial estimates by securities analysts;
	●	detrimental adverse publicity about us, our brand, our services or our industry;
	●	additions or departures of key personnel;
	●	sales of additional equity securities; and
	●	potential litigation or regulatory investigations.

 

Any of these factors may result in large and sudden changes in the volume and price at which our common stock will trade.

 

In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

 

If you purchase our securities in this offering, you will incur immediate and substantial dilution in the book value of your shares. You will experience further dilution if we issue additional equity or equity-linked securities in the future.

 

The public offering price per share of our common stock will be substantially higher than the net tangible book value per share of our common stock immediately prior to the offering. After giving effect to the sale of 44,160,114 shares of our common stock in this offering, at the assumed public offering price of $_____ per share, which is the last reported sale price of our common stock on the OTC Pink Marketplace on July __, 2023, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, purchasers of our common stock in this offering will incur immediate dilution of $_____ per share in the net tangible book value of the common stock they acquire. For a further description of the dilution that investors in this offering may experience, see “Dilution.”

 

 

We have various outstanding convertible notes which are convertible into shares of our common stock at a discount to market.

 

As of the date of this prospectus, we owed approximately $621,461.19 under various convertible promissory notes, which are convertible at a 40% discount to our public offering price in any NASDAQ uplisting which we may undertake. As a result, any conversion of the convertible notes and sale of shares of common stock issuable in connection with the conversion thereof may cause the value of our common stock to decline in value, as described in greater detail under the Risk Factors below. Notwithstanding the above, we hope to repay the convertible notes in full before any conversions take place.

 

The issuance and sale of common stock upon conversion of the convertible notes may depress the market price of our common stock.

 

If sequential conversions of the convertible notes and sales of such converted shares take place, the price of our common stock may decline, and as a result, the holders of the convertible notes will be entitled to receive an increasing number of shares in connection with conversions, which shares could then be sold in the market, triggering further price declines and conversions for even larger numbers of shares, to the detriment of our investors. The shares of common stock which the convertible notes are convertible into may be sold without restriction pursuant to Rule 144. As a result, the sale of these shares may adversely affect the market price, if any, of our common stock.

 

In addition, the common stock issuable upon conversion of the convertible notes may represent overhang that may also adversely affect the market price of our common stock. Overhang occurs when there is a greater supply of a company’s stock in the market than there is demand for that stock. When this happens the price of the company’s stock will decrease, and any additional shares which shareholders attempt to sell in the market will only further decrease the share price. The convertible notes will be convertible into shares of our common stock at a discount to market as described above, and such discount to market provides the holders with the ability to sell their common stock at or below market and still make a profit. In the event of such overhang, the note holders will have an incentive to sell their common stock as quickly as possible. If the share volume of our common stock cannot absorb the discounted shares, then the value of our common stock will likely decrease. Notwithstanding the above, we hope to repay the convertible notes in full before any conversions take place.

 

A decline in the price of our common stock could affect our ability to raise any required working capital and adversely impact our operations.

 

A decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise any required capital for our operations. Because we intend to fund the Company in the future primarily through the sale of equity securities, a decline in the price of our common stock could have an adverse effect upon our liquidity and our continued operations. A reduction in our ability to raise equity capital in the future may have a material adverse effect upon our business plan and operations. If our stock price declines, we may not be able to raise additional capital or generate funds from operations sufficient to meet our obligations.

 

The large number of shares eligible for immediate and future sales may depress the price of our stock.

 

As of the date of this Prospectus we have 76,347,992 shares of common stock outstanding, of which 3,280,000 shares are “free trading” and may serve to overhang the market and depress the price of our common stock. In addition, we have 610,061 shares of Preferred Stock issued and outstanding, which are convertible to 106,522,751 shares of common stock.

 

“Penny Stock” rules may make buying or selling our common stock difficult. Limitations upon Broker-Dealers Effecting Transactions in “Penny Stocks”

 

Trading in our common stock is subject to material limitations as a consequence of regulations which limit the activities of broker-dealers effecting transactions in “penny stocks.” Pursuant to Rule 3a51-1 under the Exchange Act, our common stock is a “penny stock” because it (i) is not listed on any national securities exchange or The NASDAQ Stock Market™, (ii) has a market price of less than $5.00 per share, and (iii) its issuer (the Company) has net tangible assets less than $2,000,000 (if the issuer has been in business for at least three (3) years) or $5,000,000 (if the issuer has been in business for less than three (3) years).

 

 

Rule 15g-9 promulgated under the Exchange Act imposes limitations upon trading activities on “penny stocks”, which makes selling our common stock more difficult compared to selling securities which are not “penny stocks.” Rule 15a-9 restricts the solicitation of sales of “penny stocks” by broker-dealers unless the broker first (i) obtains from the purchaser information concerning his financial situation, investment experience and investment objectives, (ii) reasonably determines that the purchaser has sufficient knowledge and experience in financial matters that the person is capable of evaluating the risks of investing in “penny stocks”, and (iii) delivers and receives back from the purchaser a manually signed written statement acknowledging the purchaser’s investment experience and financial sophistication.

 

Rules 15g-2 through 15g-6 promulgated under the Exchange Act require broker-dealers who engage in transactions in “penny stocks” first to provide their customers with a series of disclosures and documents, including (i) a standardized risk disclosure document identifying the risks inherent in investing in “penny stocks”, (ii) all compensation received by the broker-dealer in connection with the transaction, (iii) current quotation prices and other relevant market data, and (iv) monthly account statements reflecting the fair market value of the securities.

 

There can be no assurance that any broker-dealer which initiates quotations for the Common Stock will continue to do so, and the loss of any such broker-dealer likely would have a material adverse effect on the market price of our common stock.

 

FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.

 

In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

 

Because our common stock is deemed a low-priced “penny stock,” it will be cumbersome for brokers and dealers to trade in our common stock, making the market for our common stock less liquid and negatively affect the price of our stock.

 

We will be subject to certain provisions of the Securities Exchange Act of 1934 (the “Exchange Act”), commonly referred to as the “penny stock” rules as defined in Rule 3a51-1. A penny stock is generally defined to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Since our stock is deemed to be a penny stock, trading is subject to additional sales practice requirements of broker-dealers. These require a broker-dealer to:

 

	●	Deliver to the customer, and obtain a written receipts for, a disclosure document;
	●	Disclose certain price information about the stock;
	●	Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;
	●	Send monthly statements to customers with market and price information about the penny stock; and
	●	In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.

 

Consequently, penny stock rules and FINRA rules may restrict the ability or willingness of broker-dealers to trade and/or maintain a market in our common stock. Also, prospective investors may not want to get involved with the additional administrative requirements, which may have a material adverse effect on the trading of our shares.

 

 

We have paid no dividends and have no plans to do so.

 

We never have paid any dividends on our common stock and we do not intend to pay any dividends in the foreseeable future. Consequently, you may receive little or no return on your investment.

 

The ownership by our officers and directors of Series A Preferred Stock provides them with majority voting power over the Company.

 

Through their ownership of Optima and their control of other entities, Doron Yom-Tov, Menachem Shalom, and Amir Adibi, beneficially have current voting control of approximately 67.57% of the Company. This percentage includes the 488,038 shares of Series A Preferred Stock beneficially owned by Messrs. Yom-Tov, Shalom, and Adibi. The vote of each share of the Series A Voting Preferred Stock is equal to and counted as 174.61 shares of our common stock Accordingly, our officers and directors exercise control in determining the outcome of all corporate transactions or other matters, including the election of directors, mergers, consolidations, the sale of all or substantially all of our assets, the power to prevent or cause a change in control and to determine the outcome of most matters submitted to a vote of our shareholders. The interests of Messrs. Yom_Tov, Shalom, and Adibi may differ from the interests of the other shareholders and thus result in corporate decisions that are adverse to other shareholders. This preferred share structure severely restricts other shareholders’ ability to influence corporate matters and Messrs. Shalom and Adibi may take actions that some of our shareholders do not view as beneficial, each of which could reduce the market price of our securities.

 

Our Series A Preferred Stock is convertible into shares of our common stock, which shares may cause substantial dilution to our existing shareholders.

 

As of the date of this prospectus, we have 610,061 shares of our Series A Preferred Stock issued and outstanding, which are convertible into 106,522,751 shares of our common stock (representing 58.25% of the issued and outstanding shares of our common stock immediately following such conversion).

 

We have the right to issue shares of preferred stock. If we were to issue preferred stock, it is likely to have rights, preferences and privileges that may adversely affect the common stock.

 

We are authorized to issue 1,000,000 shares of “blank check” preferred stock, with such rights, preferences and privileges as may be determined from time-to-time by our board of directors. We currently have 610,061 shares of Series A Preferred Stock outstanding, which are convertible to 106,522,751 shares of common stock and vote at the rate of 174.61 per share. Accordingly, our board of directors is empowered, without shareholder approval, to issue an additional 389,939 shares of preferred stock in one or more series, and to fix for any series the dividend rights, dissolution or liquidation preferences, redemption prices, conversion rights, voting rights, and other rights, preferences and privileges for the preferred stock. The issuance of shares of preferred stock, depending on the rights, preferences and privileges attributable to the preferred stock, could adversely reduce the voting rights and powers of the common stock and the portion of the Company’s assets allocated for distribution to common stockholders in a liquidation event, and could also result in dilution in the book value per share of the common stock we are offering. The preferred stock could also be utilized, under certain circumstances, as a method for raising additional capital or discouraging, delaying or preventing a change in control of the Company, to the detriment of the investors in the common stock offered hereby. We cannot assure you that the Company will not, under certain circumstances, issue shares of its preferred stock.

 

We may allocate the net proceeds from this offering in ways which differ from our estimates based on our current plans and assumptions discussed in the section titled “Use of Proceeds” and with which you may not agree.

 

The allocation of net proceeds of the offering set forth in the “Use of Proceeds” section below represents our estimates based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend on numerous factors, including market conditions, cash generated by our operations, business developments and related rate of growth. We may find it necessary or advisable to use portions of the proceeds from this offering for other purposes. Circumstances that may give rise to a change in the use of proceeds and the alternate purposes for which the proceeds may be used are discussed in the section entitled “Use of Proceeds” below. You may not have an opportunity to evaluate the economic, financial or other information on which we base our decisions on how to use our proceeds. As a result, you and other shareholders may not agree with our decisions. See “Use of Proceeds” for additional information.

 

 

Management will have substantial discretion over the use of the proceeds of this Offering and may not choose to use it effectively.

 

We plan to use the proceeds from this Offering as set forth in the section entitled “Use of Proceeds.” Our management will have significant flexibility in applying the net proceeds of this Offering and may apply the proceeds in ways with which you do not agree. The failure of our management to apply these funds effectively could materially harm our business.

 

It may be difficult to enforce a U.S. judgment against us, our officers and directors and the foreign persons named in this registration statement in the United States or in foreign countries, or to assert U.S. securities laws claims in foreign countries or serve process on our officers and directors and these experts.

 

While we are incorporated in the State of Delaware, currently all of our directors and executive officers are not residents of the United States and are located outside of the United States. The majority of our assets are located outside the United States. Therefore, it may be difficult for an investor, or any other person or entity, to enforce a U.S. court judgment based upon the civil liability provisions of the U.S. federal securities laws against us or any of these persons in a U.S. or foreign court, or to effect service of process upon these persons in the United States. Additionally, it may be difficult for an investor, or any other person or entity, to assert U.S. securities law claims in original actions instituted in foreign countries. Foreign courts may refuse to hear a claim based on a violation of U.S. securities laws on the grounds that foreign countries are not necessary the most appropriate forum in which to bring such a claim. Even if a foreign court agrees to hear a claim, it may determine that foreign law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by foreign countries law. There is little binding case law in foreign countries addressing the matters described above.

 

We have not adopted various corporate governance measures, and as a result, stockholders may have limited protections against interested director transactions, conflicts of interest and similar matters.

 

Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of corporate management and the securities markets. Because our securities are not yet listed on a national securities exchange, we are not required to adopt these corporate governance measures and have not done so voluntarily in order to avoid incurring the additional costs associated with such measures. Furthermore, the absence of the governance measures referred to above with respect to our Company may leave our stockholders with more limited protection in connection with interested director transactions, conflicts of interest and similar matters.

 

Limitations on director and officer liability and indemnification of our officers and directors by us may discourage stockholders from bringing suit against a director.

 

Our Amended and Restated Articles of Incorporation and Bylaws provide, with certain exceptions as permitted by governing state law, that a director or officer shall not be personally liable to us or our stockholders for breach of fiduciary duty as a director. This may limit stockholders from bringing a suit against a director and increase the risk of an investment in our company.

 

Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern.

 

Our historical financial statements have been prepared under the assumption that we will continue as a going concern. Our independent registered public accounting firm has issued a report on our financial statements for the years ended December 31, 2022 and 2021, that included an explanatory paragraph referring to our recurring operating losses and expressing substantial doubt in our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to obtain additional equity financing or other capital, attain further operating efficiencies, reduce expenditures, and, ultimately, generate revenue. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. However, if adequate funds are not available to us when we need it, we will be required to curtail our operations which would, in turn, further raise substantial doubt about our ability to continue as a going concern. The doubt regarding our potential ability to continue as a going concern may adversely affect our ability to obtain new financing on reasonable terms or at all. Additionally, if we are unable to continue as a going concern, our stockholders may lose some or all of their investment in the Company.

 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus contains “forward-looking statements”. Forward-looking statements reflect the current view about future events. When used in this prospectus, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions, as they relate to us or our management, identify forward-looking statements. Such statements, include, but are not limited to, statements contained in this prospectus relating to our business strategy, our future operating results and liquidity and capital resources outlook. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward–looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, a continued decline in general economic conditions nationally and internationally; market acceptance of our products; our ability to protect our intellectual property rights; the impact of any infringement actions or other litigation brought against us; competition from other providers and products; our ability to develop and commercialize new and improved products; our ability to raise capital to fund continuing operations; changes in government regulation; our ability to complete customer transactions and capital raising transactions; and other factors (including the risks contained in the section of this prospectus entitled “Risk Factors”) relating to our industry, our operations and results of operations and any businesses that may be acquired by us. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

 

Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

 

MARKET AND INDUSTRY DATA

 

This prospectus contains estimates, projections and other information concerning our industry, our business and the markets for our products, including data regarding the estimated size of such markets. We obtained the industry, market and similar data set forth in this prospectus from our internal estimates and research and from industry research, publications, surveys and studies conducted by third parties. In some cases, we do not expressly refer to the sources from which this data is derived. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. While we believe our internal research is reliable, such research has not been verified by any third party. You are cautioned not to give undue weight to any such information, projections and estimates.

 

 

USE OF PROCEEDS

 

We estimate that the net proceeds of this offering will be $44,090,114 from the sale of our common stock in this Offering assuming a public offering price of $1.00 per share of common stock, after deducting the estimated fees and estimated offering expenses payable by us in the amount of $70,000. These amounts below assumes the sale of all of the shares being offered hereunder at $1.00 per share, of which there is no guarantee. The table below depicts how we plan to utilize the net proceeds in the event that 25%, 50%, 75%, and 100% of the shares in this Offering are sold, after deducting estimated offering expenses of $70,000 payable by us.

 

Use of Proceeds		100%				75%				50%				25%
Marketing and sales		$	7,703,520			$	5,777,640			$	3,851,760			$	1,925,880
Additional products		$	6,603,017			$	4,952,263			$	3,301,509			$	1,650,755
Expansion of Manufacturing Capabilities		$	4,402,011			$	3,301,508			$	2,201,006			$	1,100,503
General Corporate Purposes		$	3,301,509			$	2,476,131			$	1,650,755			$	825,377
Total:		$	22,010,057			$	16,507,542			$	11,005,028			$	5,502,515

 

We intend to use the net proceeds from this offering for marketing and sales (approximately 35% of said proceeds), create additional products (30%), expand our current manufacturing capabilities (20%) and general corporate purposes (15%), including working capital. This expected use of our net proceeds from this Offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including any unforeseen cash needs.

 

As a result, our management will retain broad discretion over the allocation of the net proceeds from this Offering, and investors will be relying on the judgment of our management regarding the application of the net proceeds from this offering. The timing and amount of our actual expenditures will be based on many factors, including cash flows from operations and the anticipated growth of our business.

 

Any funds we raise in this offering will be immediately available for our use and will not be returned to investors. We will not maintain an escrow, trust, or similar account for the receipt of proceeds from the sale of our shares.

 

 

DILUTION

 

If you purchase shares of common stock in this Offering, your interest will be diluted to the extent of the difference between the public offering price per share and the net tangible book value per share of our common stock after this Offering. Our net tangible book value (deficit) as of June 30, 2022 was $(902,793), or $(0.005) per share of common stock (based upon 76,347,992 outstanding shares of common stock as of June 30, 2023, and the full conversion of all 610,061 Preferred A shares into 106,522,751 common shares). “Net tangible book value (deficit)” is total assets minus the sum of liabilities and intangible assets. “Net tangible book value (deficit) per share” is net tangible book value (deficit) divided by the total number of shares of common stock outstanding.

 

After giving effect to the sale by us in this offering of 44,160,114 shares at a public offering price of $1.00 and after deducting the estimated offering costs payable by us, our net tangible book value as of December 31, 2022, would have been ($1,560,011), or $ USD (0.022) per share of common stock. This amount represents an immediate increase in net tangible book value of $       per share to existing stockholders and an immediate dilution of $      per share to purchasers in this offering.

 

The following tables illustrate the per share dilution to new investors discussed above, assuming the sale of, respectively, 100%, 75%, 50%, and 25% of the shares offered for sale in this Offering (after our estimated maximum offering expenses of up to $70,000:

 

Funding Level		$	11,040,029			$	22,080,057			$	33,120,086			$	44,160,114
Offering Price		$	1.00			$	1.00			$	1.00			$	1.00
Pro forma net tangible book value before the Offering		$	(1,248,023	)			(1,248,023	)			(1,248,023	)			(1,248,023	)
Pro forma net tangible book value before the Offering per share (a)		$	-0.006	)			-0.01	)			-0.01	)			-0.01
Adjusted shares (a)		$	197,810,743				197,810,743				197,810,743				197,810,743
Assumed shares sold in the Offering			11,040,029				22,080,057				33,120,086				44,160,114
Adjusted book value per share prior to the Offering		$	-0.01	)			-0.01	)			-0.01	)			-0.01	)
Offering expenses		$	70,000				60,000				60,000				60,000
Net funding after expenses		$	10,970,029				22,020,057				33,060,086				44,100,114
Proforma net tangible book value per common shares after the offering		$	9,922,005				20,772,034				31,812,062				42,852,091
Number of Shares after the Offering			208,850,772				219,890,800				230,930,829				241,970,858
Book value per share after the offering		$	0.05				0.09				0.14				0.18
Increase in per ordinary share attributable to investors in this Offering		$	0.05				0.10				0.14				0.18
Dilution to investors		$	0.90				0.86				0.81				0.77
Offering price		$	0.95				0.95				0.95				0.95
Dilution as a percent of Offering Price		%	95	%			90	%			85	%			81	%

 

The above table is based on 76,287,992 shares of common stock outstanding as of June 30, 2023.

 

 

The following table set forth, assuming the sale of, respectively, 100%, 75%, 50%, and 25% of the shares offered for sale in this Offering, the percentage of issued and outstanding shares to existing and new Stockholders.

 

		Shares Purchased								Total Consideration
		Number				Percentage				Amount				Percentage
Assuming 100% of common stock shares are sold
Existing Stockholders			197,810,743				82	%		$	(11,350,907	)			35	%
New Investors			44,160,114				18	%		$	44,090,114				135	%
Total			241,970,858				100.00	%			32,739,207				100.00	%

 

		Shares Purchased								Total Consideration
		Number				Percentage				Amount				Percentage
Assuming 75% of Shares Sold:
Existing Stockholders			197,810,743				86	%		$	(11,350,907	)			52	%
New Investors			33,120,086				14	%		$	33,050,086				152	%
Total			230,930,829				100.00	%			21,699,179				100.00	%

 

		Shares Purchased								Total Consideration
		Number				Percentage				Amount				Percentage
Assuming 50% of Shares Sold:
Existing Stockholders			197,810,743				90	%		$	(11,350,907	)			106	%
New Investors			22,080,057				10	%		$	22,010,057				206	%
Total			219,890,800				100.00	%			10,659,150				100.00	%

 

		Shares Purchased								Total Consideration
		Number				Percentage				Amount				Percentage
Assuming 25% of Shares Sold:
Existing Stockholders			197,810,743				95	%		$	(11,350,907	)			2980	%
New Investors			11,040,029				5	%		$	10,970,029				-2880	%
Total			208,850,772				100.00	%			(380,879	)			100.00	%

 

 

OUR BUSINESS

 

Overview

 

The Company develops, manufactures and supplies an extensive array of solutions and instruments for testing the power of motors for various markets, such as electric vehicles and their components, transportation and home appliance industries. We offer unique combined solutions and simulations that integrate our special unique dynamic and static capabilities with traditional dynamometer methods that measure force or power. Dynamometers are testing benches used to test the physical parameters of the motor-like speed, torque, efficiency and power of the motor. For the years ended December 31, 2022 and December 31, 2021, we had sales of $989,879 and $930,849, respectively. For the quarter ended March 31, 2023, we had sales of $41,198.

 

We manufacture two types of dynamometers, a classic industry product as well as one we developed. The Regenerative Dynamometer System (RDS) is the classic industry product, in which a motor is used in order to load the motor being tested. The loading motor is used to bring the tested motor to full speed and then forces are applied on the tested motor to test the power, speed, torque and efficiency of the motor. During the application of those forces, the parameters and indicators of the tested motor are measured and used to evaluate its condition and performance.

 

The second dynamometer we developed is the proprietary Inertial Dynamometer System (IDS). This product allows a motor to be tested without a loading motor; this saves time, money and resources. The IDS provides similar testing performance capabilities as the RDS by “calculating” the performance indicators of the tested engine based on parameters measured during the acceleration and declaration phases of the motor. The IDS can be used to test any electric motor, but it saves the need of a loading motor. Clients mainly request the IDS to test “special” motors – very small or very large motors or motors that are very strong or very fast – where loading motors are unavailable.

 

In addition, the Company develops and offers additional testing solutions for additional components or parts that connect to the motor like batteries (power supply) and gear.

 

Our products can be used to test all types of electric motors, both in the transportation market and for industrial applications. In addition, they can be used in the design and planning phase of a motor (in the lab) for R&D purposes or in production mode, known as End of Line testing (EOL). Some of the Company products are used by Official Standards Institutes and Educational Institutes.

 

The Company’s customers have been vehicle or motor manufacturers or businesses that use motors in their ongoing daily operations, such as Hero MotoCorp Ltd. and Napino Auto and Electronics Limited.

 

The Company has no current patents or other intellectual protection on its products or designs.

 

 

Competition

 

The global automotive dyno market reached a value of US$ 857 Million in 2021 and is expected to reach US$ 988 Million by 2027, exhibiting at a CAGR of 2.2% during 2022-2027 according to IMARC. We compete with not only those in the automotive and transportation industries, but with manufacturers and suppliers of dynamometers used in all markets.

 

Manufacturing

 

The Company manufactures its products in Netanya, Israel. The Company purchases the different parts and hardware used for the dynamometers from suppliers around the world and assembles them in their shop. In addition, the Company’s proprietary software is installed in the dynamometer and is used to manage the operation of the dynamometers and as an interface for the operator who can use it for different test cycles, configuration and test output.

 

Our headquarters and principal executive office are located at 353 W. 48^th Street, New York, New York, under an online virtual office agreement on a month-to-month basis. This is provided to us at no cost by one of the directors of the Company.

 

Since July 3, 2013, MEA has occupied a two-floor facility located at 4c Hagavish St., P.O.B. 8745, Poleg Industrial Zone, Netanya 4250704, Israel, consisting of approximately 642.65 square meters (including 162.74 square meters of warehouse space and 479.91 square meters of office space), under a lease with the Israel Land Development Co. Ltd. at a current monthly rent of approximately $5,918.37 at present conversion rates. MEA’s lease was renewed as of April 1, 2023, and it will expire as of August 31, 2028, and includes an option to extend for an additional 60 months terminating as of August 31, 2033 for a 5% rental increase plus CPI adjustments and Israel value added tax. In the recent renewal MEA leased an additional office space of 45 square meters. In the first two years there will be no charge for that additional office space, following which such space will be charged at the same rate per square meter as the original leased space. We are currently considering expanding our production capacity, including establishing a subsidiary in India and outsourcing some of our production activity to third parties.

 

We neither own any real property, nor own or have any mortgages on these or any other facilities. We believe that the above properties are sufficient for our current business. 

 

Sales and Distribution

 

The Company sells its products in two main ways:

 

	1.	Direct sales to customers occur in Israel, parts of the US, and all countries in Europe, Asia and the Far East. In these countries, the Company interacts directly with prospects clients and sells them its products.
	2.	Distributors and agents – in India, China, Turkey, parts of the US, South Korea, Italy, Vietnam, Czech Republic and Brazil, the Company has appointed distributors who represent it in the local market. Those distributors solicit and locate prospective clients and then Company personnel assist with providing details specification of the solutions sought. The Company approves all price quotes offered to those customers. The distributors are compensated through monthly retainers and/or commission on the sales generated in their respective territory.

 

Employees

 

MEA currently engages 14 employees, of which 4 are part-time. Of these employees, 10 are engaged in product research and development and in product designing, configuration and assembly and the remainder in various fields of administrative, management and marketing.

 

 

Legal Proceedings

 

We are not presently a party to any legal proceedings. We may from time to time be involved in various claims and legal proceedings of a nature we believe are normal and incidental to an industrial business. These matters may include product liability, intellectual property, employment and other general claims. We accrue for contingent liabilities when it is probable that a liability has been incurred and the amount can be reasonably estimated. Regardless of outcome, litigation can have an adverse impact on us because defense and settlement costs, diversion of management resources and other factors.

 

Government Regulations

 

The Company is not subject to any specific government regulations.

 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

 

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this report. The information and financial data discussed below is only a summary and should be read in conjunction with the historical financial statements and related notes herein. The financial statements fully represent the Company’s financial condition and operations; however, they are not indicative of the Company’s future performance. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this prospectus.

 

Cautionary Notice Regarding Forward Looking Statements

 

The information contained in this section contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this report. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

 

This filing contains a number of forward-looking statements which reflect management’s current views and expectations with respect to our business, strategies, products, future results and events, and financial performance. All statements made in this filing other than statements of historical fact, including statements addressing operating performance, events, or developments which management expects or anticipates will or may occur in the future, including statements related to distributor channels, volume growth, revenues, profitability, new products, adequacy of funds from operations, statements expressing general optimism about future operating results, and non-historical information, are forward looking statements. In particular, the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements, and their absence does not mean that the statement is not forward-looking. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially from historical results as well as those expressed in, anticipated, or implied by these forward-looking statements. We do not undertake any obligation to revise these forward-looking statements to reflect any future events or circumstances.

 

Readers should not place undue reliance on these forward-looking statements, which are based on management’s current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below), and apply only as of the date of this filing. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, the risks discussed in prior filings, in press releases and in other communications to shareholders issued by us from time to time which attempt to advise interested parties of the risks and factors which may affect our business. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

 

Critical Accounting Policies and Estimates

 

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).

 

Financial statements in U.S. dollars

 

The functional currency of the company is the NIS (Israeli Shekel). Translation adjustments resulting from remeasuring the foreign currency denominated financial statements into U.S. dollars are included in the Company’s statements of comprehensive Income.

 

 

Use of estimates

 

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.

 

The following are the hierarchical levels of inputs to measure fair value:

 

	- Level 1:	Quoted prices in active markets for identical instruments;
	- Level 2:	Other significant observable inputs (including quoted prices in active markets for similar instruments);
	- Level 3:	Significant unobservable inputs (including assumptions in determining the fair value of certain investments).

 

The carrying values for cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued liabilities, and deferred revenue approximate their fair value due to their short maturities.

 

Cash and cash equivalents

 

Cash and cash equivalents are comprised of highly liquid investments, including deposits in banks with original maturities of three months or less.

 

Property and equipment

 

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated by the straight-line method over the estimated useful lives of the assets at the following annual rates:

 

		%
Office furniture and equipment		7 - 15
Computers and peripheral equipment		33
Leasehold improvements		Over the term of the lease or the life of the asset, whichever is shorter

 

Long-lived assets of the Company are reviewed for impairment in accordance with Accounting Standard Codification (“ASC”) 360, “Property, Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future discounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. During the year 2021 and 2022, no impairment losses were recorded.

 

Income taxes

 

The Company accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”). ASC 740 prescribes the use of the liability method whereby deferred tax assets and liability account balances are determined based on differences between the financial reporting and the tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value, and if it is more likely than not that a portion or all of the deferred tax assets will not be realized.

 

 

Revenue recognition

 

Significant management judgments and estimates must be made and used in connection with the recognition of revenue in any accounting period. Material differences in the amount of revenue in any given period may result if these judgments or estimates prove to be incorrect or if management’s estimates change on the basis of development of business or market conditions.

 

We have decided to follow the provisions of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). The guidance provides a unified model to determine how revenue is recognized.

 

Revenues are recognized when control of the promised goods or services are transferred to the customers in an amount that reflects the consideration that we expect to receive in exchange for those goods or services.

 

We determine revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, we satisfy a performance obligation.

 

Key Financial Terms and Metrics

 

The following discussion summarizes the key factors our management believes are necessary for an understanding of our consolidated financial statements.

 

Research and Development Expenses

 

The process of researching and developing our product candidates is lengthy, unpredictable, and subject to many risks. We expect to continue incurring substantial expenses for the next several years as we continue to develop our product candidates. We are unable, with any certainty, to estimate either the costs or the timelines in which those expenses will be incurred. The design and development of our devices will consume a large proportion of our current, as well as projected, resources.

 

Our research and development costs include costs are comprised of internal recurring costs, such as personnel-related costs (salaries, employee benefits, equity compensation and other costs), materials and supplies, facilities and maintenance costs attributable to research and development functions.

 

Marketing

 

Marketing expenses consist primarily of salaries, employee benefits, equity compensation, and other personnel-related costs associated with executive and other support staff. Other significant marketing expenses include the costs associated with professional fees to develop our marketing strategy and fees associated with exhibitions and shops, marketing promotions and digital marketing.

 

General and Administrative Expenses

 

General and administrative expenses consist primarily of salaries, employee benefits, equity compensation, and other personnel-related costs associated with executive, administrative and other support staff. Other significant general and administrative expenses include the costs associated with professional fees for accounting, auditing, insurance costs, consulting and legal services, along with facility and maintenance costs attributable to general and administrative functions.

 

Financial Expenses

 

Financial expenses consist primarily impact of exchange rate derived from re-measurement of monetary balance sheet items denominated in non-dollar currencies. Other financial expenses include bank’s fees and interest on long term loans.

 

 

Results of Operations for the Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022

 

Summary of Results of Operations

 

		Three Months Ended
		March 31, 2023				March 31, 2022
Income from sales			41,198				201,341
Cost of sales			30,899				190,292
Gross profit			10,299				11,049
Operating Expenses
Research and Development			71,071				75,828
General and Administrative			71,766				102,447
Sales and Marketing			160,104				87,516
Total operating expenses			302,941				265,790
Financial expenses			1,067				1,070
Net loss			293,709				255,811

 

Revenues. Income from sales decreased from $201,341 for the three months ended March 31, 2022 to $41,198 for the three months ended March 31, 2023, a decrease of approximately 89%. This decrease was due primarily to a lack of systems deliveries to clients and seasonality of client orders.

 

Research and Development Expenses. Research and development expenses decreased from $75,828 for the three months ended March 31, 2022 to $71,071 for the three months ended March 31, 2023, a nominal insignificant decrease.

 

General and Administrative Expenses. General and administrative expenses decreased $30,681 from $102,447 for the three months ended March 31, 2022 to $71,766 for the three months ended March 31, 2023. This decrease was due primarily to a decrease in legal and other fees relating to the change of control that occurred in the end of 2022, beginning of 2023.

 

Gross Profit. As a result of the above factors, gross profit for the three months ended March 31, 2023 was $10,299 as compared to $11,049 for the three months ended March 31, 2022.

 

 

Results of Operations Year Ended December 31, 2022, Compared to The Year Ended December 31, 2021

 

Summary of Results of Operations

 

		Year Ended
		December 31, 2022				December 31, 2021
Income from sales			989,879				930,849
Cost of sales			641,239				604,729
Gross profit			348,640				326,120
Operating Expenses
Research and Development			376,525				267,439
General and Administrative			440,214				147,750
Sales and Marketing			368,684				167,788
Total operating expenses			1,185,424				582,978
Financial expenses			10,469				90,364
Net loss			826,315				347,221

 

Revenues. Income from sales increased from $930,849 for the year ended December 31, 2021 to $989,879 for the year ended December 31, 2022. This 6.3% increase was a combination of our enhanced marketing and sales activities as well as a growth in the market subsequent to COVID19 lockdowns.

 

Research and Development Expenses. Research and development expenses increased from $267,439 to $376,525 during the years ended December 31, 2021 and 2022, respectively. The increase in research and development expenses is primarily related to compensation paid to our employees.

 

General and Administrative Expenses. General and administrative expenses increased from $147,750 to $440,214 during the years ended December 31, 2021 and 2022, respectively. The 298% increase was primarily due to the merger with MEA and our marketing expenses.

 

Gross Profit. As a result of the above factors, gross profit for the year ended December 31, 2022 was $348,640 as compared to $326,120 for the year ended December 31, 2021.

 

 

Liquidity and Capital Resources

 

From inception and through the date of the acquisition, we have funded our operations from funds raised from our shareholders. In addition, given unexpected growth in our sales, we have received several loans from shareholders, banks and investors.

 

As of December 31, 2022, we had a total of $334,759 in cash and approximately $2,354,447 of liabilities, consisting of $1,020,981 of current liabilities from operations and $1,333,466 of loans from related parties and shareholders. The balance of the liabilities were comprised of suppliers and service providers ($79,035) and payable and credit balances of $941,946.

 

The Company has experienced operating losses since its inception and had a total accumulated deficit of $11,909,462 as of December 31, 2022. The company expects to incur additional costs and require additional capital. We have incurred losses in nearly every year since inception and in the year ended December 31, 2022. These losses have resulted in significant cash used in operations. We do not have sufficient funds for the next twelve months.

 

Our accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these consolidated financial statements. However, the Company has incurred substantial losses. Our current liabilities exceed our current assets and available cash is not sufficient to fund the expected future operations. The Company is raising additional capital through debt and equity securities in order to continue the funding of its operations. However, there is no assurance that the Company can raise enough funds or generate sufficient revenues to pay its obligations as they become due, which raises substantial doubt about our ability to continue as a going concern. To reduce the risk of not being able to continue as a going concern, management has implemented its business plan to generate revenues from sales and has engaged an investment banker to raise additional capital. Although, uncertainty exists as to whether the Company will be able generate enough cash from operations to fund the Company’s working capital needs or raise sufficient capital to meet the Company’s obligations as they become due, no adjustments have been made to the carrying value of assets or liabilities as a result of this uncertainty.

 

We cannot be sure that future funding will be available to us on acceptable terms, or at all. Due to often volatile nature of the financial markets, equity and debt financing may be difficult to obtain.

 

We will seek to raise any necessary additional capital through a combination of private or public equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. To the extent that we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights, future revenue streams, or product candidates or to grant licenses on terms that may not be favorable to us. If we raise additional capital through private or public equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

 

Our cash is maintained in money market accounts and, to a lesser extent, in CDs at major financial institutions. Due to the current low interest rates available for these instruments, we are earning limited interest income. Our investment portfolio has not been adversely impacted by the problems in the credit markets that have existed over the last several years, but there can be no assurance.

 

 

Going Concern

 

Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. Our report from our independent registered public accounting firm for the fiscal year ended December 31, 2022 includes an explanatory paragraph stating the Company has recurring losses and limited operations which raise substantial doubt about its ability to continue as a going concern. If the Company is unable to obtain adequate capital, the Company may be required to reduce the scope, delay, or eliminate some or all of its planned operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements.

 

 

MANAGEMENT

 

The following table sets forth the names, ages, and positions of our current board members and executive officers, including that of MEA:

 

Name		Age		Position
Doron Yom Tov		48		Chairman
Menachem Shalom		47		Chief Executive Officer, Secretary, and Director Chief Executive Officer and member of the board of directors of MEA
Amir Adibi		48		President and Director
Haim Ratzabi		51		Chief Financial Officer
Menachem Cohen		55		Chief Operating Officer of MEA
Hanan Malka		61		Member of the board of directors of MEA
Michael Yosef Sharan		76		Member of the board of directors of MEA
Igal Chemerinsky		58		Member of the board of directors of MEA

 

Business Experience

 

Doron Yom Tov has been the Chairman of the Board of Motomova since March 2022 and was the sole officer from that date through December 1, 2022. Doron is licensed as a CPA in Israel. He is the owner and CEO of MLB – an Israeli company providing payroll and social benefits supervision services to Israeli municipalities. The Board believes that Mr. Yom Tov’s wide-ranging international business experience, management and financial expertise qualify him to serve on our Board.

 

Menachem Shalom has been a director, Chief Executive Officer of Motomova since December 1, 2022, and its Secretary since May 24,2023. Mr. Shalom was the Co-Chief Executive Officer, and a member of the board of directors of MEA since January 2022. Since 2017, Mr. Shalom has also served as CEO of Hold Me Ltd., a digital platform for mobile wallet and payments founded by Mr. Shalom. Mr. Shalom is the principal executive and financial officer and sole director of Hold Me Ltd., a company registered with the Securities and Exchange Commission. Prior to his tenure with the Company, Mr. Shalom founded and served as CEO of Wayzer Solutions, Ltd., a digital platform for correspondent banking and wires’ routing optimization, between 2014 and 2017 and as Vice President of Business Development, Sales and Marketing at Dsnr Media Group Ltd., an international cross-platform digital advertising company. Mr. Shalom also founded and served as CEO of Mipso Ltd., a software-as-a-service provider in the fashion and retail industry, between 2010 and 2013; yoga studio Ltd., an industrial design incubator, between 2007 and 2010; and Medifreeze Ltd., a startup in the area of stem cell cryopreservation, between 2004 and 2009. Mr. Shalom received his MBA at the Hebrew University of Jerusalem in 2003 after receiving an LLM in corporate law at Columbia University School of Law in 2000. The Board believes that Mr. Shalom’s wide-ranging international business experience and service as an executive officer of a public company qualify him to serve on our Board.

 

Amir Adibi has been a director and the President of Motomova since December 1, 2022, and was the owner, CEO and chief investment officer of Gold Asset Management, an Israeli portfolio management company, since 2012 until December 2022. The Board believes that Mr. Adibi’s wide ranging international business experience qualifies him to serve on our Board.

 

Haim Ratzabi is serving as our Chief Financial Officer of Motomova since February 1, 2023. Mr. Ratzabi brings over 13 years of experience in managerial financial positions in publicly traded companies in the fields of telecommunication and commercial center industries. From May 2021 until May 2022, he served as the Chief Financial Officer of Jeffs’ Brands Ltd., a global e-commerce company. From August 2016 until February 2020, he served as the global finance manager, treasury in infrastructure solutions and services to global cellular operators of Ceragon Networks Ltd. (Nasdaq: CRNT). From 2006 until May 2015, he served as a senior controller - finance manager of commercial center industries for Elbit Imaging Ltd. (Nasdaq, TLSE: EMITF). Mr. Ratzabi is a certified public accountant in Israel and holds a Master of Business Administration and Bachelor of Business, in Accounting both from The College of Management, Israel.

 

 

Menachem Cohen is a founder of MEA and served as Co-Chief Executive Officer of MEA from 2002 until May 2023. Mr. Cohen was a member of the board of directors of MEA from 2005 until May 2023. Currently, he serves as COO of MEA. Mr. Cohen received a master’s degree in electrical engineering from Tel Aviv University in Electrical Engineering. The Board believes that Mr. Cohen’s extensive experience in the industry, his long-standing involvement with MEA and with the industry, and his knowledge of our product candidates ideally situates him to serve on our Board.

 

Michael Yosef Sharan, 76, is the chief executive officer and a director of Dagon Granaries Ltd – an Israeli company importing grains.

 

Hanan Malka, 61, is the principal of a law firm in Israel.

 

Igal Chemerinsky, 58, has been a director of Hold Me Ltd., a software Israeli company offering a well-rounded platform that supports a wide range of digital payment services integrating into mobile apps, since July 2021. Since Nov 2022 Igal served as VP of Regional Sales of Polytex Technologies – offering automated kiosk clothing for healthcare professionals. Jam 2021 until Aug 2022, Mr. Chemerinsky has been the chief revenue officer of Parknav Ltd., a startup developing real-time on-street parking with a highly accurate and scalable solution. From Jan 2019 to Feb 2020 2020, Mr. Chemerinsky served as the EVP of Global Sales of Enably Ltd.- a SaaS platform that utilizes Artificial Intelligence, Natural Language Processing (NLP) and advanced algorithms for Online Training, e-Learning, knowledge delivery, compliance, regulations, and content delivery. From Jan 2017 to Dec 2018, he served as the VP of EMEA Sales of Votiro Cybersec Ltd., a global leader in Email & File secure gateways & end-point solutions protecting organizations against zero-day exploits and other ongoing cyber threats.

 

Code of Ethics

 

We do not have a code of ethics that applies to our officers, employees, and directors.

 

Role in Risk Oversight

 

Our board is primarily responsible for overseeing our risk management processes. The board receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding our company’s assessment of risks. The board focuses on the most significant risks facing our company and our company’s general risk management strategy, and also ensures that risks undertaken by our company are consistent with the board’s appetite for risk. While the board oversees our company’s risk management, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing our company and that our board leadership structure supports this approach.

 

Each executive officer serves at the pleasure of the Board.

 

Family relationships

 

There are no family relationships among any of our officers or directors.

 

Director Independence

 

We do not currently have any independent directors. Although our common stock is not currently listed on a national securities exchange, we have used the definition of “independence” of the NASDAQ Stock Market to make this determination. NASDAQ Listing Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the company or any other individual having a relationship which, in the opinion of the Company’s Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

 

Involvement in legal proceedings

 

There are no legal proceedings that have occurred within the past ten years concerning our directors, or control persons which involved a criminal conviction, a criminal proceeding, an administrative or civil proceeding limiting one’s participation in the securities or banking industries, or a finding of securities or commodities law violations.

 

 

EXECUTIVE COMPENSATION

 

The following table summarizes the compensation earned in each of our fiscal years ended December 31, 2022 and 2021 by Menachem Shalom, the Named Officer, and Menachem Cohen, the chief executive officer of MEA. The following table includes compensation earned by Mr. Cohen for services performed to MEA prior to MEA becoming our subsidiary.

 

Summary Compensation Table

 

Name and Principal Position		Year			Salary (1)				Bonus ($)				Option Awards ($)(2)				All other compensation ($)				Total
Menachem Shalom		2022			$	101,568				-				-				-			$	101,568
Menachem Cohen, CEO		2021			$	144,201															$	144,201
		2022			$	209,349				-				-				-			$	155,461

 

Amounts were converted to USD based on 3.5177 NIS to USD – which was the rate as of December 31, 2022.

 

Employment Agreements

 

As of December 1, 2022 Menachem Shalom, through wholly owned company Billio Ltd, executed a consulting agreement with the Company pursuant to which Mr. Shalom would be engaged as the Chief Executive Officer at a current monthly salary of $10,000 plus VAT. If the Company closes a capital raise in excess of $500,000, the monthly base compensation increases to $15,000 per month; if such raise shall be in excess of $2,000,000, the compensation increases to $25,000 per month. If the Company is successful in uplisting to Nasdaq, the compensation increases to $35,000 per month. If Mr. Shalom is terminated by the Company for other than good cause, he shall be entitled to a severance payment equal to 6 months of his currently monthly compensation. Mr. Shalom agreed to a 5 year non-compete provision after the consulting agreement is terminated.

 

As of December 1, 2022, Amir Adibi, through a wholly owned company Adibi Holdings Ltd, executed a consulting agreement with the Company pursuant to which Mr. Adibi would be engaged as the Executive Vice President-Business Development at a current monthly salary of $10,000 plus VAT. If the Company closes a capital raise in excess of $500,000, the monthly base compensation increases to $15,000 per month; if such raise shall be in excess of $2,000,000, the compensation increases to $25,000 per month. If the Company is successful in uplisting to Nasdaq, the compensation increases to $35,000 per month. If Mr. Adibi is terminated by the Company for other than good cause, he shall be entitled to a severance payment equal to 6 months of his current monthly compensation. Mr. Adibi agreed to a 5-year non-compete provision after the consulting agreement is terminated.

 

Menachem Cohen is a party to an employment agreement with MEA dated August 1, 2020, pursuant to which he is employed at a current salary of NIS25,000 per month. Mr. Cohen also receives the use of a car and is entitled to all benefits which Israeli law provides to employees. Either party has the right to terminate by providing 6 months prior notice, but if MEA terminates and does not provide 6 months’ advance notice, they still must pay his salary for 6 months. MEA has the right to terminate Mr. Cohen for cause. Mr. Cohen also agreed to customary confidentiality provisions, and a non-compete for two years after the termination of his employment with MEA.

 

As of January 15, 2023, the Company entered into an Employment Agreement with Haim Ratzabi, according to which Mr. Ratzabi will serve as the Company’s Chief Financial Officer commencing February 1, 2023, at a salary of NIS25,000 per month and an additional NIS 5,000 per month for 30 hours of overtime per month. Mr. Ratzabi’s compensation is based on 50% of employment but shall increase to 100% immediately after the Company accumulates fund raise of $2,000,000. The Company will allocate an amount equal to 6% of Mr. Ratzabi’s salary to a fund for severance pay, and an additional 6.5% of his salary will be allocated to a provident fund. Mr. Ratzabi agreed to a 12-month non-compete provision after the employment agreement is terminated.

 

 

2023 Equity Incentive Plan

 

General

 

On January 1, 2023, our Board, and a majority of our shareholders approved our 2023 Equity Incentive Plan (the “Plan”), which reserves a total of 15,000,000 shares of common stock for incentive awards. Incentive awards generally may be issued to officers, key employees, consultants and directors and include the grant of nonqualified stock options, incentive stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), performance shares and performance units.

 

Administration

 

The Compensation Committee, or the Board in the absence of such a committee, will administer the Plan. Subject to the terms of the Plan, the Compensation Committee, or the Board in the absence of such a committee, has complete authority and discretion to determine the terms of awards under the Plan.

 

Adjustment for Awards and Payouts

 

Unless determined otherwise by the Compensation Committee or the Board in absence of such a committee, the following awards and payouts will reduce, on a one-for-one basis, the number of shares available for issuance under the Plan:

 

	1.	An award of an option;
	2.	An award of a SAR;
	3.	An award of restricted stock;
	4.	A payout of a performance share award in shares; and
	5.	A payout of a performance units award in shares.

 

Unless determined otherwise by the Compensation Committee or the Board in the absence of such a committee, unless a participant has received a benefit of ownership such as dividend or voting rights with respect to the incentive award, the following transactions will restore, on a one-for-one basis, the number of shares available for issuance under the Plan:

 

	1.	A payout of a SAR or a tandem SAR in cash;
	2.	A cancellation, termination, expiration, forfeiture or lapse for any reason (with the exception of the termination of a tandem SAR upon exercise of the related options, or the termination of a related option upon exercise of the corresponding tandem SAR) of any award payable in shares;
	3.	Shares tendered in payment of the exercise price of an option;
	4.	Shares withheld for payment of federal, state or local taxes;
	5.	Shares repurchased by us with proceeds collected in connection with the exercise of outstanding options; and
	6.	The net shares issued in connection with the exercise of SARs (as opposed to the full number of shares underlying the exercised portion of the SAR).

 

In addition, the number of shares of common stock subject to the Plan, any number of shares subject to any numerical limit in the Plan, and the number of shares and terms of any incentive award are expected to be adjusted in the event of any change in the outstanding shares of common stock by reason of any stock dividend, spin-off, split-up, stock split, reverse stock split, recapitalization, reclassification, merger, consolidation, liquidation, business combination or exchange of shares or similar transaction.

 

 

Grants

 

The Plan authorizes the grant of nonqualified stock options, incentive stock options, restricted stock awards, restricted RSUs, performance units and performance shares (which may be designed to comply with Section 162(m) of the Internal Revenue Code (as amended, the “Code”)) and SARs, as described below:

 

Options granted entitle the grantee, upon exercise, to purchase a specified number of shares at a specified exercise price per share. The exercise price for shares of our common stock covered by an option cannot be less than the fair market value of our common stock on the date of grant. In addition, in the case of an incentive stock option granted to an employee who, at the time the incentive stock option is granted, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any parent or subsidiary, the per share exercise price will be no less than 110% of the fair market value of our common stock on the date of grant. Options expire at such time as the Compensation Committee or the Board in the absence of such a committee, shall determine provided that no option shall be exercisable later than the tenth anniversary of the date of its grant and provided further that no incentive stock option shall be exercisable later than the fifth anniversary following the date of its grant to a grantee, who at the time of such grant owns more than 10% of the total combined voting power of all classes of stock of the Company.

 

Restricted stock awards and RSUs may be awarded on terms established by the Compensation Committee, or the Board in the absence of such a committee, which may include time-based and performance-based conditions for restricted stock awards and the lapse of restrictions on the achievement of one or more performance goals for restricted stock units.

 

A performance share award and/or a performance unit award may be granted to participants. Each performance unit will have an initial value that is established by the Compensation Committee, or the Board in the absence of such a committee, at the time of grant. Each performance share will have an initial value equal to the fair market value of one share of common stock on the date of grant. Such awards may be earned based upon satisfaction of certain specified performance criteria, subject to such other terms as the compensation committee, or the Board in the absence of such a committee, deems appropriate.

 

SARs entitle the participant to receive a distribution in an amount not to exceed the number of shares of our common stock subject to the portion of the SAR exercised multiplied by the difference between the market price of a share of our common stock on the date of exercise of the SAR and the market price of a share of our common stock on the date of grant of the SAR. An option and a SAR may be granted “in tandem” with each other. An option and a SAR are considered to be in tandem with each other because the exercise of the option aspect of the tandem unit automatically cancels the right to exercise the SAR aspect of the tandem unit, and vice versa. The option may be an incentive stock option or a nonqualified stock option.

 

Change in Control

 

Generally, upon the occurrence of a change in control, as such term is defined in the Plan:

 

1.

all options and SARs granted shall become fully vested and immediately exercisable;

 

2.

any restrictions imposed on Restricted Stock or RSUs which are not intended to qualify for the means the performance-based exception from the tax deductibility limitations of Section 162(m) of the Internal Revenue Code (the “Code”) shall lapse; and

 

3.

any award intended to qualify for the performance-based exception from the tax deductibility limitations of Section 162(m) of the Code shall be earned in accordance with the applicable award agreement.

 

Notwithstanding the foregoing, with respect to any incentive award subject to Internal Revenue Code Section 409A, a “change in control” of the Company is defined in a manner to ensure compliance with Section 409A.

 

 

Duration, Amendment, and Termination

 

The Board upon recommendation of the Compensation Committee has the power to amend, suspend or terminate the Plan without shareholder approval or ratification at any time or from time to time. No change may be made that increases the total number of shares of common stock reserved for issuance pursuant to incentive awards, materially increase the benefits accruing to participants or materially modify the requirements for participation in the Plan, unless such change is authorized by shareholders. Unless sooner terminated, the Plan will terminate ten years after it is adopted.

 

Outstanding Equity Awards at December 31, 2022

 

The Company’s Named Executive Officers had no outstanding equity awards on December 31, 2022.

 

Outstanding Equity Awards

 

As of December 31, 2022, there were no outstanding equity awards made to the Named Executive Officer or any other officer.

 

Change-in-Control Agreements

 

There is no change of control or other similar arrangements.

 

Compensation of Directors

 

As of December 31, 2022, our three board members, Messrs. Yom Tov, Shalom and Adibi are each entitled to receive $2,500, representing the compensation paid to our directors in consideration for their services rendered in their capacities as directors. The Company intends to pay each of its three directors $2,500 per month as long as the individuals serve in such capacity, which amount has been accrued and unpaid since December 1, 2022.

 

 

PRINCIPAL STOCKHOLDERS

 

The following table sets forth, as of July 13, 2023, the number of shares of common stock beneficially owned by (i) each person, entity, or group (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) known to the Company to be the beneficial owner of more than 5% of its outstanding shares of Common Stock; (ii) each of the Company’s directors; (iii) each Named Executive Officer and (iv) all of the Company’s executive officers and directors as a group. The information relating to beneficial ownership of Common Stock by our principal stockholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the SEC. Under these rules, a person is deemed to be a beneficial owner of a security if that person directly or indirectly has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to dispose or direct the disposition of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the SEC rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary interest. Unless otherwise indicated below, each person has sole voting and investment power with respect to the shares beneficially owned and each stockholder’s address is c/o MEA Testing Systems Ltd., 4c Hagavish St., P.O.B. 8745, Poleg Industrial Zone, Netanya 4250704, Israel.

 

The percentages below are calculated based on issued and outstanding shares of common stock outstanding as of July 13, 2023.

 

Each share of the Series A Preferred Stock is authorized to vote with the Common Stock in all stockholder meetings that the Common Stock may vote and each share has voting power equal to 174.61 votes per share. Each share of the Series A Preferred Stock is convertible at a rate of 174.61 shares of common stock for each share of Series A Preferred Stock. As of July 13, 2023, there are 610,061 shares of Series A Preferred Stock issued and outstanding. There is a 6% annual dividend on the Series A Preferred Stock.

 

The table below also does not include (i) the monthly issuance of 0.25% of shares on a fully-diluted then-outstanding share capital to each of Messrs. Adibi and Shalom for each calendar month that the loan each individual made to the Company remains outstanding; (ii) the monthly issuance of 0.25% shares on a fully diluted then-outstanding share capital to each of Messrs. Adibi, Malka, Yom Tov and Shalom and to Hold Me Ltd for each calendar month that the loan each individual made to the Company remains outstanding; the directors; and (iii) the issuance to Messrs. Shalom, Adibi and Yom Tov, per month, the number of shares equal to approximately 0.05% of the outstanding shares of the Company on a fully diluted basis, for every NIS 100,000 guaranteed by any of them, per month.

 

Name of Beneficial Owner		Common Stock				% of Class (Common Stock)				Series A Preferred Stock				% of Class (Series A Preferred Stock)*
Officers and Directors
Menachem Cohen			4,556,119	(1)			6.5	%			0				0
Menachem Shalom			36,326,144	(2)			20.57	%			183,702	(3)			30.11	%
Amir Adibi			36,326,144	(4)			20.57	%			183,702	(5)			30.11	%
Doron Yom Tov			27,714,809	(6)(7)			15.69	%			120,634	(7)			19.77	%
Haim Ratzabi			0				0				0				0
Officers and Directors as a group (4 individuals)			100,367,098	(1)(2)(4)(6)			56.82	%			488,038	(3)(5)(7)			80.00	%(8)
5% or Greater Stockholders
Optima Fintech Management Ltd. (9)			17,000,000				24.24	%			0				0
Elchanan Fass			10,054,550				14.34	%			0				0
Benjamin Kahn			9,797,261				13.97	%			0				0
Beheshet Ventures, LP			19,196,973	(10)			21.87	%			109,942	(10)			18.02	%
Full Finance Israel, LP			82,484,140	(11)			46.70	%			472391	(12)			77.43	%
Star 26, LP			4,841,638	(13)			2.74	%			27,728	(13)			4.55	%

 

(1)	Includes 3,608,591 shares of common stock held by ESOP Management and Trust Services Ltd., of which Mr. Cohen has sole voting and dispositive power. Mr. Cohen has beneficial ownership of these shares.

 

 

(2)	Includes 4,250,000 shares of common stock of the shares held by Optima Fintech Management Ltd. (“Optima”) and 183,702 shares of Series A Preferred Stock which are convertible to 32,076,144 shares of common stock. Mr. Shalom, one of the directors of Optima, disclaims beneficial ownership of the other shares of common stock held by Optima.
(3)	Includes (i) 177,147 shares of Series A Preferred Stock held by Full Finance Israel, LP (“Full Finance”) which are convertible to 30,931,553 shares of common stock; (ii) 2,750 shares of Series A Preferred Stock held by Beheshet Ventures, LP (“Beheshet”) which are convertible to 480,164 shares of common stock; and (iii) 3,805 shares of Series A Preferred Stock held by Gold Finance Ltd. (“Gold Finance”), a limited partner in Beheshet, which are convertible to 664,427 shares of common stock. Mr. Shalom disclaims beneficial ownership of the other securities held by Star, Full Finance, Beheshet, and Gold Finance.
(4)	Includes 4,250,000 shares of common stock of the shares held by Optima and 183,702 shares of Series A Preferred Stock which are convertible to 32,076,144 shares of common stock. Mr. Adibi, one of the directors of Optima, disclaims beneficial ownership of the other shares of common stock held by Optima.
(5)	Includes (i) 177,147 shares of Series A Preferred Stock held by Full Finance Israel, LP (“Full Finance”) which are convertible to 30,931,553 shares of common stock; (ii) 2,750 shares of Series A Preferred Stock held by Beheshet Ventures, LP (“Beheshet”) which are convertible to 480,164 shares of common stock; and (iii) 3,805 shares of Series A Preferred Stock held by Gold Finance Ltd. (“Gold Finance”), a limited partner in Beheshet, which are convertible to 664,427 shares of common stock. Mr. Adibi disclaims beneficial ownership of the other securities held by Star, Full Finance, Beheshet and Gold Finance.
(6)	Includes 4,250,000 shares of common stock of the shares held by Optima and 120,634 shares of Series A Preferred Stock which are convertible to 21,063,987 shares of common stock. Mr. Yom Tov, one of the directors of Optima, disclaims beneficial ownership of the other shares of common stock held by Optima.
(7)	Includes (i) 118,098 shares of Series A Preferred Stock held by Full Finance which are convertible to 20,621,035 shares of common stock; (ii) 2,537 shares of Series A Preferred Stock held by Gold, which is a limited partner of Beheshet which are convertible to 442,952 shares of common stock and (iii) 13,750 shares of Series A Preferred Stock held by Malab Ltd which are convertible to 2,400,822 shares of common stock. Mr. Yom Tov disclaims beneficial ownership of the other securities held by Star, Full Finance, Gold, and Beheshet.
(8)	Percentage shown reflects the 610,061 shares of Series A Preferred Stock issued and outstanding.
(9)	Hanan Malka and Messrs. Shalom, Adibi and Yom Tov share dispositive and voting power on these shares.
(10)	Represents 109,942 shares of Series A Preferred Stock which are convertible to 19,196,973 shares of common stock, of which Messrs. Shalom and Abidi share sole voting and dispositive power.
(11)	Represents 474,319 shares of Series A Preferred Stock which are convertible to 82,820,841 shares of common stock, of which Messrs. Shalom and Abidi share voting and dispositive power.
(12)	Represents 25,800 shares of Series A Preferred Stock which are convertible to 4,504,938 shares of common stock. Messrs. Shalom and Abidi share voting and dispositive power on these securities.

 

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 

Certain Relationships and Related Transactions

 

Each of Petrocorp Israel Ltd., a wholly-owned subsidiary of MEA, and MEA, issued a revolving credit note to the Company on February 10, 2023. Pursuant to the note, upon the request of Petrocorp Israel and MEA, the Company will advance funds to its subsidiaries, up to an aggregate of $2,000,000. Interest accrues on the outstanding balances at the annual rate of 6% and the balance is due on December 31, 2023.

 

Menachem Cohen, the Co-chief executive officer and member of the board of directors of MEA, is a party to an employment agreement with MEA dated August 1, 2020, pursuant to which he is employed at a current salary of NIS25,000 (US$7,040) per month. Mr. Cohen also receives the use of a car and is entitled to all benefits which Israeli law provides to employees. Either party has the right to terminate by providing 6 months prior notice, but if MEA terminates and does not provide 6 months’ advance notice they still must pay his salary for 6 months. MEA has the right to terminate Mr. Cohen for cause. Mr. Cohen also agreed to customary confidentiality provisions, and a non-compete for two years after the termination of his employment with MEA.

 

Mr. Cohen has equity interest in 4,556,119 shares of the Company’s common stock, which includes 3,608,591 shares of common stock held by ESOP Management and Trust Services Ltd., of which Mr. Cohen has sole voting and dispositive power. Mr. Cohen has beneficial ownership of these shares.

 

Amir Adibi, through a wholly owned company of his, charges MEA NIS10,000 plus VAT, a month – as agreed in the Option agreement signed with MEA in October 2021.

 

Menachem Shalom, acts as MEA co-CEO and he received 75% of Menachem Cohen compensation cost, per month, about NIS 37,500.

 

In addition, Menachem Shalom, a director of the Company, executed a consulting agreement with the Company pursuant to which Mr. Shalom would be engaged as the Co-Chief Executive Officer at a current monthly salary of $10,000 plus VAT. If the Company closes a capital raise in excess of $500,000, the monthly base compensation increases to $15,000 per month; if such raise shall be in excess of $2,000,000, the compensation increases to $25,000 per month. If the Company is successful in uplisting to Nasdaq, the compensation increases to $35,000 per month. If Mr. Shalom is terminated by the Company for other than good cause, he shall be entitled to a severance payment equal to 6 months of his currently monthly compensation. Mr. Shalom agreed to a 5-year non-compete provision after the consulting agreement is terminated.

 

Menachem Shalom is the indirect beneficial holder of 36,326,144 shares of common stock, which includes 4,250,000 shares of common stock of the shares held by Optima and 183,702 shares of Series A Preferred Stock which are convertible to 32,076,144 shares of common stock. Mr. Shalom, one of the directors of Optima, disclaims beneficial ownership of the other shares of common stock held by Optima. The 183,702 shares of Series A Preferred Stock includes (i) 177,147 shares of Series A Preferred Stock held by Full Finance which are convertible to 30,931,553 shares of common stock; (ii) 2,750 shares of Series A Preferred Stock held by Beheshet which are convertible to 480,164 shares of common stock; and (iii) 3,805 shares of Series A Preferred Stock held by Gold Finance, a limited partner in Beheshet, which are convertible to 664,427 shares of common stock. Mr. Shalom disclaims beneficial ownership of the other securities held by Star, Full Finance, Beheshet and Gold Finance.

 

Amir Adibi, a director and President of the Company, executed a consulting agreement with the Company pursuant to which Mr. Adibi would be engaged as the Executive Vice President-Business Development at a current monthly salary of $10,000 plus VAT. If the Company closes a capital raise in excess of $500,000, the monthly base compensation increases to $15,000 per month; if such raise shall be in excess of $2,000,000, the compensation increases to $25,000 per month. If the Company is successful in uplisting to Nasdaq, the compensation increases to $35,000 per month. If Mr. Adibi is terminated by the Company for other than good cause, he shall be entitled to a severance payment equal to 6 months of his current monthly compensation. Mr. Adibi agreed to a 5-year non-compete provision after the consulting agreement is terminated.

 

 

Amir Adibi is the indirect beneficial holder of 36,326,144 shares of common stock, which includes 4,250,000 shares of common stock of the shares held by Optima and 183,702 shares of Series A Preferred Stock which are convertible to 32,076,144 shares of common stock. Mr. Adibi, one of the directors of Optima, disclaims beneficial ownership of the other shares of common stock held by Optima. The 183,702 shares of Series A Preferred Stock includes (i) 177,147 shares of Series A Preferred Stock held by Full Finance which are convertible to 30,931,553 shares of common stock; (ii) 2,750 shares of Series A Preferred Stock held by Beheshet which are convertible to 480,164 shares of common stock; and (iii) 3,805 shares of Series A Preferred Stock held by Gold Finance, a limited partner in Beheshet, which are convertible to 664,427 shares of common stock. Mr. Adibi disclaims beneficial ownership of the other securities held by Star, Full Finance, Beheshet and Gold Finance.

 

Doron Yom Tov is the Chairman of the board of directors of the Company. Mr. Yom Tov is the indirect beneficial holder of 27,714,809 shares, which includes 4,250,000 shares of common stock of the shares held by Optima and 120,634 shares of Series A Preferred Stock which are convertible to 21,063,987 shares of common stock. Mr. Yom Tov, one of the directors of Optima, disclaims beneficial ownership of the other shares of common stock held by Optima. The 120,634 shares of Series A Preferred Stock includes (i) 118,098 shares of Series A Preferred Stock held by Full Finance which are convertible to 20,621,035 shares of common stock; (ii) 2,537 shares of Series A Preferred Stock held by Gold, which is a limited partner of Beheshet which are convertible to 442,952 shares of common stock and (iii) 13,750 shares of Series A Preferred Stock held by Malab Ltd which are convertible to 2,400,822 shares of common stock. Mr. Yom Tov disclaims beneficial ownership of the other securities held by Full Finance, Gold, and Beheshet.

 

Optima Fintech Management Ltd. is the holder of 17,000,000 shares of the Company’s common stock. Hanan Malka and Messrs. Shalom, Adibi and Yom Tov share dispositive and voting power on these shares.

 

Beheshet Ventures, LP is the holder of 109,942 shares of Series A Preferred Stock which are convertible to 19,196,973 shares of common stock, of which Messrs. Shalom and Abidi have shared voting and dispositive power.

 

Full Finance Israel, LP holds 472,391 shares of Series A Preferred Stock, which are convertible to 82,484,140 shares of common stock, of which Mr. Shalom and Abidi have shared voting and dispositive power.

 

Star 26, LP holds 27,728 shares of Series A Preferred Stock which are convertible to 4,841,638 shares of common stock. Messrs. Shalom and Abidi have shared voting and dispositive power on these securities.

 

Commencing as of December 1, 2022, our three board members, Messrs. Yom Tov, Shalom and Adibi each is entitled to receive $2,500 per month, representing the compensation paid to our directors in consideration for their services rendered in their capacities as directors. To date, such salaries have continued to accrue but has not been paid to such directors. The Company intends to pay each of its three directors $2,500 per month at such time as it deems it prudent and appropriate to do so, and will continue to pay such as long as the individuals serve in such capacity.

 

On June 19, 2023, the Company, together with its Israeli subsidiary, M.E.A. Testing Systems Ltd., (“MEA”) entered into a convertible loan agreement with four of its shareholders, Hold Me Ltd., MLB, Amir Adibi, and Menachem Marchov. Pursuant to the convertible loan agreement, three of the Company’s shareholders agreed to lend to MEA NIS 80,000 each (NIS 240,000 in the aggregate) and one of the Company’s shareholders agreed to lend $5,000, for aggregate loan proceeds to MEA of approximately $71,461.19 according to the exchange rates in effect as of the date of this prospectus. The loan will bear interest at a rate of 1% per annum until it is repaid, in addition to which the Company agreed to issue a number of shares equal to approximately 0.25% of its fully-diluted then-outstanding share capital to each of the four shareholders each calendar month that the loan remains outstanding. In the event that the Company’s common stock is uplisted to the NASDAQ Capital Market within one year and one day after origination of the loan, the shareholders have the right to convert the outstanding loan, together with accrued interest, into shares of the Company’s common stock at a 40% discount to the public offering price, subject to certain limitations. If the Company fails to achieve an uplisting of its common stock within the initial repayment period, the interest rate on the loan will increase to 2% per annum and must be repaid on or before one year and one day following the expiration of the initial repayment period.

 

 

On July 3, 2023, each of Amir Adibi and Menachem Shalom, officers and directors of the Company, lend the Company $32,500. The Company received an aggregate of $48,750 as a result of the 25% original discount on the loans. The loans bear interest at a rate of 1% per month. In addition, the Company agreed to issue a number of shares equal to approximately 0.25% of its fully-diluted then-outstanding share capital to each of Messrs. Adibi and Shalom for each calendar month that the loan remains outstanding. If the Company’s common stock is listed on the NASDAQ Capital Market before July 4, 2024, the lenders have the right to convert the outstanding loan and accrued interest, into shares of the Company’s common stock at a 40% discount to the public offering price, subject to certain limitations, provided, however that the Company’s effective value to each lender shall not exceed $60,000,000. If the Company is not listed on Nasdaq by such date, the interest rate on the loan increases to 2% per annum and the loan is due on July 4, 2025.

 

Since the Company’s directors (Menachem Shalom, Amir Adibi and Doron Yom Tov) were required to sign an unlimited personal guarantee to secure the loan from Bank Hapoalim and to secure all other, existing and future, loans and credit provided to the Company and/or to MEA, the Company agreed to issue to each director or his designee, per month, the number of shares equal to approximately 0.05% of the outstanding shares of the Company on a fully diluted basis, per each NIS100,000 of debt secured by that director.

 

 

SELLING STOCKHOLDERS

 

This prospectus also covers the resale by the Selling Stockholders of an aggregate of 83,831,209 shares of common stock, consisting of (i) 51,874,436 shares of common stock issued and outstanding held by existing shareholders, including 5,100,000 held by Optima and (ii) 31,956,773 shares of common stock issuable upon the conversion of 183,018 Series A Preferred Stock issued and outstanding. The Selling Stockholders, may, from time to time, offer and sell pursuant to this prospectus any or all of the shares referred to above. The Selling Stockholders may also sell, transfer or otherwise dispose of all or a portion of their shares in transactions exempt from the registration requirements of the Securities Act. We may from time to time include additional selling shareholders in supplements or amendments to this prospectus. After the date of effectiveness, the Selling Stockholders may have sold or transferred, in transactions covered by this prospectus or in transactions exempt from the registration requirements of the Securities Act, some or all of their shares of common stock. The Selling Stockholders may sell some, all or none of its shares. We do not know how long the Selling Stockholders will hold the shares before selling them, and we currently have no agreements, arrangements or understandings with the Selling Stockholders regarding the sale of any of the shares.

 

The following table sets forth the shares beneficially owned, as of July 13, 2023 by the Selling Stockholders prior to the offering contemplated by this prospectus, the number of shares that the Selling Stockholders may offer and sell from time to time under this prospectus and the number of shares which the Selling Stockholders would own beneficially if all such offered shares are sold.

 

Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the SEC under the Exchange Act. The percentage of shares beneficially owned prior to the offering is based on 76,347,992 shares of our common stock outstanding as of July 13, 2023.

 

None of the Selling Stockholders are a registered broker-dealer or an affiliate of a registered broker-dealer. None of the Selling Stockholders or any of their respective affiliates have held a position or office or had any other material relationship with us or any of our predecessors or affiliates within the past three years.

 

 

Name of Selling Stockholder		Shares of Common Stock Owned Prior to Offering				Shares of Common Stock to be Offered for the Selling Stockholder’s Account				Shares of Common Stock Owned by the Selling Stockholder After the Offering (1)				Percent of Common Stock to be Owned by the Selling Stockholder After the Offering (1)
Optima Fintech Management Ltd.			17,000,000	(2)			5,100,000				11,900,000				5.05	%
Menachem Cohen			4,556,119	(3)			3,892,850				663,270				*
A.M.S (Holdings and Investments) Ltd.			412,075	(4)			412,075				0				*
Dan Yardeni and Co.			527,631	(5)			17,461				0				*
Ofer Gabay			17,461				17,461				0				*
Hashavshevet (Manufacturing) (1988) Ltd			24,934	(6)			24,934				0				*
Spark Enterprise Managing (1999) Ltd			149,639	(7)			149,639				0				*
Elchanan Fass			10,054,550				10,054,550				0				*
E.N Shoham Business Ltd.			300,326	(8)			300,326				0				*
IBI (Kazach)			565,975	(9)			565,975				0				*
NETSER & CO. (T.R.) - TRUST			255,417	(10)			255,417				0				*
Dan Mazin			222,136				222,136				0				*
Miran Meir			66,351				66,351				0				*
Sapir Corp Ltd			282,237	(11)			282,237				0				*
Reut Gotman Brazovsky			1,170,643				1,170,643				0				*
Zachi Iztach Brazovsky			4,827,216				4,827,216				0				*
Noah Brazovsky			4,973,188				4,973,188				0				*
Esther Erlich			191,440				191,440				0				*
Benjamin Kahn			9,797,261				9,797,261				0				*
Zafrira Ben Zvi			120,619				120,619				0				*
Serg Fass			488,309				488,309				0				*
Doron Artal			369,541				369,541				0				*
Mark Rot			369,541				369,541				0				*
Akiva Mozes			461,838				461,838				0				*
Aharon Fogel			461,943				461,943				0				*
SDG Co-operation U.A.			1,811,711	(12)			1,811,711				0				*
Miryam Eitan			4,679,917				4,679,917				0				*
Beheshet Ventures, LP			19,196,973	(13)			5,759,092				13,437,881	(14)			5.7	%
Full Finance Israel, LP			82,484,140	(15)			24,745,242				57,738,898	(16)			24.49	%
Star 26, LP			4,841,638	(17)			1,452,492				3,389,147	(18)			1.44	%

 

*

Represents less than 1%

 

 

(1)	Assumes that the selling stockholder disposes of all of the shares of common stock covered by this prospectus and does not acquire beneficial ownership of any additional shares of common stock. The registration of these shares of common stock does not necessarily mean that the selling stockholder will sell all or any portion of the shares of common stock covered by this prospectus, or as applicable, convert the Series A Preferred Stock held by the selling stockholder to shares of common stock.
(2)	Hanan Malka and Messrs. Shalom, Adibi and Yom Tov share dispositive and voting power on these shares.
(3)	Includes 3,608,591 shares of common stock held by ESOP Management and Trust Services Ltd., of which Mr. Cohen has sole voting and dispositive power.
(4)	Elchanan Fass has sole dispositive and voting power on these shares.
(5)	Dan Yardeni has sole dispositive and voting power on these shares.
(6)	Rechel Leha Meidan and Avraham Meidan have dispositive and voting power on these shares.
(7)	Eitan Metuki has sole dispositive and voting power on these shares.
(8)	Eli Nadoam and Eitan Maimon have dispositive and voting power on these shares.
(9)	David Luboski have dispositive and voting power on these shares.
(10)	Moshe Rotchild has sole dispositive and voting power on these shares.
(11)	Sharon Raz has sole dispositive and voting power on these shares.
(12)	Mark Ruth has sole dispositive and voting power on these shares.
(13)	Represents 109,942 shares of Series A Preferred Stock which are convertible to 19,196,973 shares of common stock, of which Messrs. Shalom and Abidi have voting and dispositive power.
(14)	Represents 76,959 shares of Series A Preferred Stock which are convertible to 13,437,880 shares of common stock.
(15)	Represents 474,319 shares of Series A Preferred Stock which are convertible to 82,820,841 shares of common stock, of which Messrs. Shalom and Abidi have sole voting and dispositive power.
(16)	Represents 332,023 shares of Series A Preferred Stock which are convertible to 57,974,588 shares of common stock.
(17)	Represents 25,800 shares of Series A Preferred Stock which are convertible to 4,504,938 shares of common stock. Messrs. Shalom and Abidi have sole voting and dispositive power on these securities.
(18)	Represents 18,060 shares of Series A Preferred Stock which are convertible to 3,153,457 shares of common stock.

 

 

PLAN OF DISTRIBUTION

 

Our shares of common stock subject to the Direct Offering will be sold through our management, who may be considered an underwriter as that term is defined in Section 2(a)(11) of the Securities Act. Our management will not receive any commission in connection with the sale of shares, although we may reimburse them for direct expenses incurred by them in connection with the offer and sale of the shares. We estimate our total offering registration costs, including our legal, accounting, miscellaneous and related fees will be a total expense to the Company of $70,000 relating to the registration. There is no minimum number of shares that must be sold by us for the Direct Offering to proceed. We will retain any proceeds from the Direct Offering.

 

Our management will be relying on, and complying with, Rule 3a4-1(a)(4)(ii) of the Exchange Act as a “safe harbor” from registration as a broker-dealer in connection with the offer and sale of the shares. In order to rely on such “safe harbor” provisions provided by Rule 3a4-1(a) (4) (ii), each must be in compliance with all of the following:

 

	●	an individual must not be subject to a statutory disqualification;
	●	an individual must not be compensated in connection with such selling participation by payment of commissions or other payments based either directly or indirectly on such transactions;
	●	an individual must not be an associated person of a broker-dealer;
	●	An individual must primarily perform, or is intended primarily to perform at the end of the Direct Offering, substantial duties for or on behalf of the Company otherwise than in connection with transactions in securities; and
	●	an individual must perform substantial duties for the Company after the close of the Direct Offering not connected with transactions in securities, and not have been an associated person of a broker or dealer for the preceding 12 months, and not participate in selling an offering of securities for any issuer more than once every 12 months.

 

Each member of our management will comply with the guidelines enumerated in Rule 3a4-1(a) (4) (ii). Neither our management nor any of their affiliates will be purchasing shares in the Direct Offering.

 

You may purchase shares by completing and manually executing a subscription agreement and delivering it with your payment in full for all shares you wish to purchase to our offices. A copy of the form of that subscription agreement is attached as an exhibit to our registration statement of which this prospectus is a part. Your subscription will not become effective until accepted by us and approved by our counsel. Our subscription process is as follows:

 

	●	this prospectus, with subscription agreement, is delivered by the Company to each offeree;
	●	the subscription is completed by the offeree, and submitted with check back to the Company where the subscription and a copy of the check is emailed to counsel for review;
	●	each subscription is reviewed by counsel for the Company to confirm the subscribing party completed the form, and to confirm the state of acceptance;
	●	once approved by counsel, the subscription is accepted by management and the funds will be deposited within four days of acceptance;
	●	subscriptions not accepted are returned with all funds sent with the subscription within three business days of the Company’s receipt of the subscription, without interest or deduction of any kind.

 

We will pay all of the expenses incident to the registration, offering, and sale of the shares to the public other than commissions or discounts of underwriters, broker-dealers, or agents.

 

We will be subject to applicable provisions of the Exchange Act and the rules and regulations under it, including, without limitation, Rule 10b-5.

 

 

The Selling Stockholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act, as permitted by that rule, or Section 4(a)(1) under the Securities Act, if available, rather than under this prospectus, provided that they meet the criteria and conform to the requirements of those provisions, including the requirements of Rule 144(i) applicable to former “shell companies.”

 

Broker-dealers engaged by the Selling Stockholders may arrange for other broker-dealers to participate in sales. If the selling stockholders effect such transactions by selling shares of common stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling stockholders or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal. Such commissions will be in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction will not be in excess of a customary brokerage commission in compliance with FINRA Rule 5110.

 

In connection with sales of the shares of common stock or otherwise, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the shares of common stock in the course of hedging in positions they assume. The Selling Stockholders may also sell shares of common stock short and if such short sale shall take place after the date that this registration statement is declared effective by the SEC, the Selling Stockholders may deliver shares of common stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The selling stockholders may also loan or pledge shares of common stock to broker-dealers that in turn may sell such shares, to the extent permitted by applicable law. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). Notwithstanding the foregoing, the Selling Stockholders have been advised that they may not use shares registered pursuant to this registration statement to cover short sales of our common stock made prior to the date the registration statement of which this prospectus forms a part is declared effective by the SEC.

 

The Selling Stockholders may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act, amending, if necessary, the list of Selling Stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The Selling Stockholders also may transfer and donate the shares of common stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

 

The Selling Stockholders and any broker-dealer or agents participating in the distribution of the shares of common stock offered hereby may be deemed to be “underwriters” within the meaning of Section 2(11) of the Securities Act in connection with such sales. In such event, any commissions paid, or any discounts or concessions allowed to, any such broker-dealer or agent and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Selling Stockholders who are “underwriters” within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act and may be subject to certain statutory liabilities of, including but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Exchange Act.

 

Each Selling Stockholder has informed us that it is not a registered broker-dealer and does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the common stock. Upon us being notified in writing by a selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of common stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker-dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such Selling Stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such the shares of common stock were sold, (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and (vi) other facts material to the transaction. In no event shall any broker-dealer receive fees, commissions and markups, which, in the aggregate, would exceed eight percent (8%).

 

 

Under the securities laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with in all respects.

 

Any Selling Stockholder may sell some, all or none of the shares of common stock to be registered pursuant to the registration statement of which this prospectus forms a part.

 

Each Selling Stockholder and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of common stock by the Selling Stockholder and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the shares of common stock to engage in market-making activities with respect to the shares of common stock. All of the foregoing may affect the marketability of the shares of common stock and the ability of any person or entity to engage in market-making activities with respect to the shares of common stock.

 

We will pay all expenses of the registration of the shares of common stock, including, without limitation, SEC filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, that each Selling Stockholder will pay all underwriting discounts and selling commissions, if any, and any legal expenses incurred by it.

 

Penny Stock Rules

 

The SEC has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined) of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “institutional accredited investors.” The term “institutional accredited investor” refers generally to those accredited investors who are not natural persons and fall into one of the categories of accredited investor specified in subparagraphs (1), (2), (3), (7) or (8) of Rule 501 of Regulation D promulgated under the Securities Act, including institutions with assets in excess of $5,000,000.

 

The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form required by the SEC, and impose a waiting period of two business days before effecting the transaction. The risk disclosure document provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account.

 

The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction.

 

These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

 

 

DETERMINATION OF OFFERING PRICE

 

The Selling Stockholders will offer their respective shares at a fixed price of $___ per share until our shares of common stock are quoted on the OTCQB tier of the OTC Markets Group, Inc. or listed on an exchange, and thereafter the Selling Stockholders will determine at what price they may sell the shares of common stock offered by this prospectus, and such sales may be made at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices.

 

 

DESCRIPTION OF CAPITAL STOCK

 

General

 

The following description of our capital stock is intended as a summary only. We refer you to our articles of incorporation and bylaws which have been filed as exhibits to the registration statement of which this prospectus is a part, and to the applicable provisions of the Delaware corporation law.

 

Our authorized capital stock consists of 500,000,000 shares of common stock par value $0.0001 per share and 1,000,000 shares of preferred stock, par value $0.0001 per share (“Series A Preferred Stock”). As of July 13, 2023, there were 76,347,992 shares of our common stock and 610,061 shares of our Series A Preferred Stock issued and outstanding.

 

Common Stock

 

Each holder of shares of our common stock is entitled to one vote for each share held of record on all matters submitted to the vote of stockholders, including the election of directors. The holders of shares of common stock have no preemptive, conversion, subscription or cumulative voting rights. There is no provision in our articles of incorporation or bylaws that would delay, defer or prevent a change in control of our company.

 
Preferred Stock

 

On September 28, 2022, the Company filed an Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, authorizing 1,000,000 shares of ‘blank check’ preferred stock and other corporate changes. The amended and restated certificate also authorized the creation of 800,000 shares of Series A Preferred Stock. The Series A Preferred Stock is authorized to vote with the Common Stock in all stockholder meetings that the Common Stock may vote and each share has voting power equal to 174.61 votes per share. Each share of Series A Preferred Stock is convertible at a rate of 174.61 shares of common stock to each share of Series A Preferred Stock. There is a 6% annual dividend payable on the outstanding Series A Preferred Stock. In addition to our Series A Preferred Stock, 200,000 shares of ‘blank check’ preferred stock remain authorized and unissued.

 

On October 6, 2022, the Company consummated the transactions contemplated by the Share Exchange Agreement dated July 26, 2022, with M.E.A. Testing Systems Ltd., a company formed under the laws of the State of Israel (“MEA”), and shareholders representing 89% of the issued and outstanding shares of MEA (the “MEA Shareholders”), pursuant to which the MEA Shareholders agreed to exchange all of their shares in MEA for newly issued shares of the Company. In accordance with the Share Exchange Agreement, each outstanding ordinary share of MEA was exchanged for 34.92 shares of common stock, par value $0.0001 per share, of the Company, and every 5 outstanding preferred shares of MEA was exchanged for 1 newly issued share of Series A Preferred Stock of the Company. Each preferred share of MEA is convertible to 174.61 shares of common stock of MEA and has the other rights and designations identical to those held by the preferred shareholders of MEA immediately prior to the Closing. At the closing, all the outstanding warrants issued by MEA exercisable for an aggregate of 305,848 were exchanged for an identical number of warrants exercisable for the identical number of preferred shares of Motomova, all of which warrants have since been exercised. As a result of the transactions contemplated by the Share Exchange Agreement, MEA became a subsidiary of the Company.

 

On November 7, 2022, the Company filed an Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, changing the voting and conversion rates of the 6% Convertible Series A Preferred Stock (“Series A Preferred Stock”) to be in accordance with the voting and conversion rates of the preferred shares of MEA which were exchanged for preferred shares of the Company. Each share of Series A Preferred Stock votes 174.61 shares of common stock and is convertible to 174.61 shares of common stock of the Company.

 

 

On December 23, 2022, the Company filed an Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware, changing the total number of its authorized capital stock to 501,000,000, which includes 500,000,000 shares of common stock, par value $0.0001 par value per share, and 1,000,000 shares of preferred stock, $0.0001 par value per share.

 

A warrant to purchase an aggregate of 304,878 shares of Series A Preferred Stock for an exercise price of $1,000,000 was issued to Full Finance and Star. The warrant was exercised in full during the last quarter of 2022 and the balance during January 2023. The Company received $180,000 on November 14, 2022, $50,000 on December 5, 2022, $75,000 on December 12, 2022 and $695,000 on January 25, 2023.

 

There are currently 610,061 shares of Series A Preferred Stock issued and outstanding.

 

Transfer Agent

 

The transfer agent and registrar for our common stock is VStock Transfer, LLC, with an address of 18 Lafayette Place, Woodmere, New York 11598, and its telephone number is (212) 828-8436.

 

Delaware Anti-Takeover Statute

 

We are subject to Section 203 of the Delaware General Corporation Law, which prohibits a person deemed an “interested stockholder” from engaging in a “business combination” with a publicly held Delaware corporation for three years following the date such person becomes an interested stockholder unless the business combination is, or the transaction in which the person became an interested stockholder was, approved in a prescribed manner or another prescribed exception applies. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns, or within three years prior to the determination of interested stockholder status did own, 15% or more of a corporation’s voting stock. Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. The existence of this provision may have an anti-takeover effect with respect to transactions not approved in advance by the board of directors, such as discouraging takeover attempts that might result in a premium over the price of our common stock.

 

Undesignated Preferred Stock

 

The ability to authorize undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of the company. These and other provisions may have the effect of deterring hostile takeovers or delaying changes in control or management of the company.

 

Special Stockholder Meetings

 

Our certificate of incorporation and bylaws provide that a special meeting of stockholders may be called only by a majority of our board of directors.

 

Requirements for Advance Notification of Stockholder Nominations and Proposals

 

Our certificate of incorporation and bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board of directors or a committee of the board of directors.

 

The provisions of the Delaware General Corporation Law, our certificate of incorporation and our bylaws could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they may also inhibit temporary fluctuations in the price of our common stock that often result from actual or rumored hostile takeover attempts. These provisions may also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.

 

 

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO
NON-U.S. HOLDERS OF OUR COMMON STOCK

 

The following is a summary of the material U.S. federal income tax consequences to non-U.S. holders (as defined below) of the ownership and disposition of our common stock but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the Internal Revenue Code Treasury regulations promulgated thereunder, administrative rulings and judicial decisions, all as of the date hereof. These authorities may be changed, possibly retroactively, so as to result in U.S. federal income tax consequences different from those set forth below. No ruling on the U.S. federal, state, or local tax considerations relevant to our operations or to the purchase, ownership or disposition of our common stock, has been requested from the Internal Revenue Service (“IRS”) or other tax authority. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below.

 

This summary also does not address the tax considerations arising under the laws of any non-U.S., state or local jurisdiction, or under U.S. federal gift and estate tax laws. In addition, this discussion does not address tax considerations applicable to an investor’s particular circumstances or to investors that may be subject to special tax rules, including, without limitation:

 

	●	banks, insurance companies or other financial institutions, regulated investment companies or real estate investment trusts;
	●	persons subject to the alternative minimum tax or Medicare contribution tax on net investment income;
	●	tax-exempt organizations or governmental organizations;
	●	controlled foreign corporations, passive foreign investment companies and corporations that accumulate earnings to avoid U.S. federal income tax;
	●	brokers or dealers in securities or currencies;
	●	traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;
	●	persons that own, or are deemed to own, more than five percent of our capital stock (except to the extent specifically set forth below)
	●	U.S. expatriates and certain former citizens or long-term residents of the U.S.;
	●	partnerships or entities classified as partnerships for U.S. federal income tax purposes or other pass-through entities (and investors therein);
	●	persons who hold our common stock as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction or integrated investment;
	●	persons who hold or receive our common stock pursuant to the exercise of any employee stock option or otherwise as compensation;
	●	persons who do not hold our common stock as a capital asset within the meaning of Section 1221 of the Internal Revenue Code; or
	●	persons deemed to sell our common stock under the constructive sale provisions of the Internal Revenue Code.

 

Non-U.S. Holders are urged to consult their own tax advisors with respect to the application of the U.S. federal income tax laws to their particular situation, as well as any tax consequences of the purchase, ownership and disposition of our common stock arising under the U.S. federal estate or gift tax rules or under the laws of any state, local, non-U.S., or other taxing jurisdiction or under any applicable tax treaty.

 

 

Non-U.S. Holder Defined

 

For purposes of this discussion, a non-U.S. holder (other than a partnership) is any holder of our common stock other than:

 

	●	an individual citizen or resident of the U.S. (for U.S. federal income tax purposes);
	●	a corporation or other entity taxable as a corporation created or organized in the U.S. or under the laws of the U.S., any state thereof, or the District of Columbia, or other entity treated as such for U.S. federal income tax purposes;
	●	an estate whose income is subject to U.S. federal income tax regardless of its source; or
	●	a trust (x) whose administration is subject to the primary supervision of a U.S. court and which has one or more “U.S. persons” (within the meaning of Section 7701(a)(30) of the Internal Revenue Code) who have the authority to control all substantial decisions of the trust or (y) which has made a valid election to be treated as a U.S. person.

 

In addition, if a partnership or entity classified as a partnership for U.S. federal income tax purposes holds our common stock, the tax treatment of a partner generally will depend on the status of the partner and upon the activities of the partnership. Accordingly, partnerships that hold our common stock, and partners in such partnerships, should consult their tax advisors.

 

Distributions

 

As described in “Dividend Policy,” we have never declared or paid cash dividends on our common stock and do not anticipate paying any dividends on our common stock in the foreseeable future. However, if we do make distributions on our common stock, those payments will constitute dividends for U.S. tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those distributions exceed both our current and our accumulated earnings and profits, they will constitute a non-taxable return of capital and will first reduce a non-U.S. holder’s basis in our common stock, but not below zero, and then will be treated as gain from the sale of stock as described below under “Gain on Disposition of Common Stock.”

 

Subject to the discussion below on effectively connected income, backup withholding and foreign accounts, any dividend paid to a non-U.S. holder generally will be subject to U.S. withholding tax either at a rate of 30% of the gross amount of the dividend or at such lower rate as may be specified by an applicable income tax treaty. In order to receive a reduced treaty rate, a non-U.S. holder must provide us (or the applicable withholding agent) with an IRS Form W-8BEN, IRS Form W-8BEN-E or other appropriate version of IRS Form W-8 certifying qualification for the reduced rate. A non-U.S. holder of shares of our common stock eligible for a reduced rate of U.S. withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. If the non-U.S. holder holds the stock through a financial institution or other agent acting on the non-U.S. holder’s behalf, the non-U.S. holder will be required to provide appropriate documentation to the agent, which then will be required to provide certification to us or our paying agent, either directly or through other intermediaries.

 

Dividends received by a non-U.S. holder that are effectively connected with the non-U.S. holder’s conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, attributable to a permanent establishment maintained by the non-U.S. holder in the U.S.) are generally exempt from such withholding tax. In order to obtain this exemption, the non-U.S. holder must provide us with an IRS Form W-8ECI or other applicable IRS Form W-8 properly certifying such exemption. Such effectively connected dividends, although not subject to withholding tax, are taxed at the same graduated rates applicable to U.S. persons, net of certain deductions and credits. In addition, dividends received by a non-U.S. holder that is a corporation that are effectively connected with such non-U.S. holder’s conduct of a U.S. trade or business may also be subject to a branch profits tax at a rate of 30% or at such lower rate as may be specified by an applicable income tax treaty. Non-U.S. holders should consult their own tax advisors regarding any applicable tax treaties that may provide for different rules.

 

 

Gain on Disposition of Common Stock

 

Subject to the discussion below regarding backup withholding and foreign accounts, a non-U.S. holder generally will not be required to pay U.S. federal income tax on any gain realized upon the sale or other disposition of our common stock unless:

 

	●	the gain is effectively connected with the non-U.S. holder’s conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, the gain is attributable to a permanent establishment maintained by the non-U.S. holder in the U.S.);
	●	the non-U.S. holder is a non-resident alien individual who is present in the U.S. for a period or periods aggregating 183 days or more during the taxable year in which the sale or disposition occurs and certain other conditions are met; or
	●	our common stock constitutes a U.S. real property interest by reason of our status as a “U.S. real property holding corporation,” (“USRPHC”), for U.S. federal income tax purposes at any time within the shorter of (i) the five-year period preceding the non-U.S. holder’s disposition of our common stock, or (ii) the non-U.S. holder’s holding period for our common stock.

 

Generally, a corporation is a USRPHC if the fair market value of its U.S. real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business. We believe that we are not currently and will not become a USRPHC for U.S. federal income tax purposes, and the remainder of this discussion so assumes. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property relative to the fair market value of our other business assets, there can be no assurance that we will not become a USRPHC in the future. Even if we become a USRPHC, however, a non-U.S. holder would not be subject to U.S. federal income tax on a sale, exchange or other taxable disposition of shares of our common stock by reason of our status as a USRPHC so long as (i) our common stock is regularly traded on an established securities market during the calendar year in which such sale, exchange or other taxable disposition of shares of our common stock occurs and (ii) such non-U.S. holder does not own and is not deemed to own (directly, indirectly or constructively) more than 5% of our common stock at any time during the relevant period.

 

Non-U.S. holders described in the first bullet above will be required to pay tax on the net gain derived from the sale under regular graduated U.S. federal income tax rates, and a corporate non-U.S. holder described in the first bullet above also may be subject to the branch profits tax at a 30% rate, or such lower rate as may be specified by an applicable income tax treaty. Non-U.S. holders described in the second bullet above, will be required to pay a flat 30% tax (or such lower rate specified by an applicable income tax treaty) on the gain derived from the sale, which gain may generally be offset by U.S. source capital losses for the year (provided such non-U.S. holders have timely filed U.S. federal income tax returns with respect to such losses). Non-U.S. holders should consult their own tax advisors with respect to the application of the foregoing rules to their ownership and disposition of our common stock.

 

Backup Withholding and Information Reporting

 

Generally, we must report annually to the IRS the amount of dividends paid to non-U.S. holders, their names and addresses and the amount of tax withheld, if any. A similar report will be sent to non-U.S. holders. Pursuant to applicable income tax treaties or other agreements, the IRS may make these reports available to tax authorities in a non-U.S. holder’s country of residence.

 

Payments of dividends or of proceeds on the disposition of stock made to non-U.S. holders may be subject to information reporting and backup withholding at a current rate of 28% unless such non-U.S. holders establish an exemption, for example, by properly certifying their non-U.S. status on an IRS Form W-8BEN, IRS Form W-8BEN-E or another appropriate version of IRS Form W-8.

 

Backup withholding is not an additional tax; rather, the U.S. federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund or credit may generally be obtained from the IRS, provided that the required information is furnished to the IRS in a timely manner.

 

 

Foreign Account Tax Compliance

 

The Foreign Account Tax Compliance Act (“FATCA”) imposes withholding tax at a rate of 30% on dividends on and gross proceeds from the sale or other disposition of our common stock paid to “foreign financial institutions” (as specially defined under these rules), unless such institution enters into an agreement with the U.S. government to withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding the U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners) or otherwise establishes an exemption. FATCA also generally imposes a U.S. federal withholding tax of 30% on dividends on and gross proceeds from the sale or other disposition of our common stock paid to a “non-financial foreign entity” (as specially defined for purposes of these rules) unless such entity provides the withholding agent with a certification identifying certain substantial direct and indirect U.S. owners of the entity, certifies that there are none or otherwise establishes an exemption. An intergovernmental agreement between the U.S. and an applicable foreign country may modify the requirements described in this paragraph. Non-U.S. holders should consult their tax advisors regarding the possible implications of this legislation on their investment in our common stock.

 

Each prospective investor should consult its tax advisor regarding the particular U.S. federal, state and local and non-U.S. tax consequences of purchasing, holding and disposing of our common stock, including the consequences of any proposed change in applicable laws.

 

 

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES

 

In the opinion of the Securities and Exchange Commission, indemnification for liabilities arising under the Securities Act is against public policy as expressed in the Securities Act and is, therefore, unenforceable. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

 

LEGAL MATTERS

 

Crone Law Group, P.C. has opined on the validity of the shares being offered hereby.

 

EXPERTS

 

The financial statements included in this prospectus and in the registration statement for the fiscal years ended December 31, 2022 and December 31, 2021 have been audited by Elkana Amitai CPA, an independent registered public accounting firm and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.

 

ADDITIONAL INFORMATION

 

We have filed with the SEC this registration statement on Form S-1 under the Securities Act with respect to the common stock being offered by this prospectus. This prospectus, which constitutes a part of this registration statement, does not contain all of the information in this registration statement and its exhibits. For further information with respect to us and the common stock offered by this prospectus, you should refer to this registration statement and the exhibits filed as part of that document. Statements contained in this prospectus as to the contents of any contract or any other document referred to are not necessarily complete, and in each instance, we refer you to the copy of the contract or other document filed as an exhibit to this registration statement. Each of these statements is qualified in all respects by this reference.

 

Upon effectiveness of this registration statement, we will become subject to the information and periodic reporting requirements of the Exchange Act and, in accordance therewith, we will file periodic reports, proxy statements and other information with the SEC. Such periodic reports, proxy statements, and other information will be available for inspection and copying at the public reference room and website of the SEC referred to above.

 

 

MOTOMOVA INC.

(Previously: PETROCORP INC.)

 

CONSOLIDATED FINANCIAL STATEMENTS

 

AS OF DECEMBER 31, 2022

 

U.S. DOLLARS

 

INDEX

 

		Page
Report of Independent Auditors		F-2
Consolidated Balance Sheet		F-4 – F-5
Consolidated Statements of Income		F-6
Consolidated Statement of Changes in Shareholders’ Equity (Deficit)		F-7
Consolidated Statement of Cash Flows		F-8
Notes to Financial Statements		F-9 – F-23

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders of Motomova Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying the balance sheets of Motomova Inc. (“the Company”) as of December 31, 2022 and the related statements of operations, changes in stockholders’ deficit and cash flows, for the year then ended, and the related notes and schedules (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with generally accepted accounting principles in the United States of America.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

Going Concern

 

Critical Audit Matters

 

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

 

Going concern- refer to note 1 of the financial statements

 

Critical audit matter description

 

The Company raised substantial doubt about the entity’s ability to continue as a going concern for a reasonable period of time. The financial statements for the years under audit have been prepared to assume that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. See the explanatory paragraph of the opinion paragraph.

 

 

We identified the going concern as a critical audit matter, as (i) the assumptions utilized in the model to asses going concern situation required judgment, and the model is inherently complex. (ii) the magnitude of the liabilities and losses that will impact due to the estimation process.

 

How the Critical Audit Matter was addressed in our Audit

 

The primary procedures we performed to address this critical audit matter included the following: (i) We evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern for a reasonable period of time. (ii) We obtained information about management’s plans that are intended to mitigate the effect of such conditions or events and assess the likelihood that such plans can be effectively implemented. (iii) We added an explanatory paragraph to the audit report.

 

/s/ Elkana Amitai CPA

 

We have served as the Company’s auditor since 2023.

 

Mitzpe Netofa, Israel

 

July 14, 2023

 

 

MOTOMOVA INC.

 

CONSOLIDATED BALANCE SHEET

U.S. dollars

 

										*
					December 31,				December 31,
		Note			2022				2021*)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents					$	334,759			$	482,403
Trade and accounts receivable		3				203,779				40,683
Operating lease right-of-use assets						44,948				126,870
Inventory		4				204,253				188,758
Total current assets						787,739				838,714
Property and equipment, net		5				6,697				26,968
Total assets					$	794,436			$	865,682

 

*)

Proforma

 

The accompanying notes are an integral part of the financial statements.

 

 

MOTOMOVA INC.

 

CONSOLIDATED BALANCE SHEET

U.S. dollars (except share and per share data)

 

					December 31,				December 31,
		Note			2022				2021*)
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES:
Trade payables					$	79,035			$	88,148
Accounts payable and accrued expenses		6				1,201,998				1,348,391
Short term loan from related parties						35,729				-
Shareholders’ loan		8				992,737				1,379,067
Operating lease liabilities						44,948				126,870
Total current liabilities						2,354,447				2,942,476
SHAREHOLDERS’ EQUITY		10
Ordinary shares of $0.0001 par value - 500,000,000 shares authorized on December 31, 2022 and December 31, 2021; 22,680,000 and 70,117,705 shares issued and outstanding on December 31, 2021 and December 31, 2022, respectively.						7,012				2,268
Preferred shares of $0.0001 par value - 1,000,000 shares authorized, on December 31, 2022 and December 31, 2021; 0 (zero) and 305,183 shares issued and outstanding on December 31, 2022 and December 31, 2022, respectively.						31				-
Additional paid-in capital						10,205,070				9,061,497
Other comprehensive income						181,222				125,659
Accumulated deficit						(11,909,462	)			(11,156,056	)
Total Equity (Deficit) attributable to controlling shareholders						(1,516,127	)			(1,966,632	)
Non-controlling interests						(43,884	)			(110,162	)
Total shareholders' equity (Deficit)						(1,560,011	)			(2,076,794	)
Total liabilities and shareholders’ equity (Deficit)					$	794,436			$	865,682

 

*)

Proforma

 

The accompanying notes are an integral part of the financial statements.

 

July 14, 2023
Date of approval of the	Menny Shalom		Haim Ratzabi
financial statements	Chief Executive Officer		Chief Financial Officer

 

 

 

MOTOMOVA INC.

 

CONSOLIDATED STATEMENTS OF INCOME

U.S. dollars

 

										*
					Year ended December 31,				Year ended December 31,
		Note			2022				2021*)
Sales						989,879				930,849
Cost of sales		11				641,239				604,729
Gross profit						348,640				326,120
Research and development		12a				376,525				267,439
Sales and marketing		12b				368,684				167,788
General and administrative		12c				440,214				147,750
Operating expenses						1,185,423				582,977
Operating loss						(836,783	)			(256,857	)
Financial (Income) expenses		13				(10,468	)			90,363
Loss before taxes						(826,315	)			(347,220	)
Tax expenses						-				-
Net loss						(826,315	)			(347,220	)
Other comprehensive income						(62,012	)			(30,952	)
Total loss and other comprehensive income						(888,327	)			(378,172	)
Net profit (loss) for the period is attributable to:
Controlling shareholders						(753,407	)			(318,733	)
Non-controlling interests						(72,908	)			(28,487	)
Net Profit Loss						(826,315	)			(347,220	)
Earning (loss) per ordinary share						(0.02	)			(0.02	)
Weighted average number of ordinary shares used in computing basic and diluted loss per share						33,857,103				22,680,000

 

*)

Proforma

 

The accompanying notes are an integral part of the financial statements.

 

 

MOTOMOVA INC.

 

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

U.S. dollars

 

		Ordinary shares								Preferred shares								Additional paid-in				Other comprehensive				Accumulated								Non- controlling				Total shareholders’ equity
		Number				Amount				Number				Amount				capital				income				deficit				Total				interests				(Deficit)
Balance at December 31, 2020 *)			22,680,000				2,268				-				-				9,061,497				97,926				(10,837,323	)			(1,675,632	)			(84,893	)			(1,760,525	)
Other comprehensive income			-				-				-				-				-				27,733				-				27,733				3,219				30,952
Net loss			-				-				-				-				-				-				(318,733	)			(318,733	)			(28,488	)			(347,221	)
Balance at December 31, 2021 *)			22,680,000				2,268				-				-				9,061,497				125,659				(11,156,056	)			(1,966,632	)			(110,162	)			(2,076,794	)
Issue of shares			47,437,705				4,744				-				-				-				-				-				4,744				-				4,744
Investment from shareholders			-				-				305,183				31				841,466				-				-				841,497				97,672				939,169
Conversion of shareholders loans			-				-				-								302,107												302,107				35,066				337,173
Other comprehensive income			-				-				-				-				-				55,563				-				55,563				6,449				62,012
Net loss			-				-				-				-				-				-				(753,406	)			(753,406	)			(72,909	)			(826,315	)
Balance at December 31, 2022			70,117,705				7,012				305,183				31				10,205,070				181,222				(11,909,462	)			(1,516,127	)			(43,884	)			(1,560,011	)

 

*)

Proforma

 

The accompanying notes are an integral part of the financial statements.

 

 

MOTOMOVA INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars

 

		Year ended December 31,				Year ended December 31,
		2022				2021
Cash flows from operating activities:
Net loss		$	(826,315	)		$	(347,221	)
Adjustments to reconcile net loss to net cash used in operating activities:
Increase in trade and income receivables			(53,185	)			99,608
Increase in advance from suppliers			(101,270	)			-
Increase in government institutions			(8,642	)			6,145
Change in inventory			(15,495	)			11,763
Depreciation			20,270				7,443
Decrease in accounts payables and credit balances			(155,504	)			74,878
Decrease in related parties			(350,601	)			73,252
Decrease in liabilities due to severance pay			-				(54,122	)
Increase in other comprehensive income			62,012				30,952
Net cash used in operating activities			(1,428,730	)			(97,302	)
Cash flows used in Investing activities:
Purchase of property and equipment			-				(21,477	)
Net cash used in investment activities			-				(21,477	)
Cash flows from financing activities:
Proceeds from issuance of shares			4,743				-
Proceeds from converted shareholders loans			1,276,342				455,434
Net cash provided by financing activities			1,281,085				455,434
Increase (Decrease) in cash and cash equivalents			(147,644	)			336,655
Cash and cash equivalents at the beginning of the period			482,403				145,748
Cash and cash equivalents at the end of the period		$	334,759			$	482,403
Supplemental disclosures of non- cash flow information:
Conversion of shareholders loans			337,173				-

 

The accompanying notes are an integral part of the financial statements.

 

 

MOTOMOVA INC.

 

NOTES TO FINANCIAL STATEMENTS

U.S. dollars

 

NOTE 1:-

GENERAL

 

a.

Motomova Inc. (the “Company”) a corporation orgenized and existing under and by virtue of the provisions of General Corporation Law of the state of Delaware was incorporated in July 2006. On June 12th, 2023 the Company has changed its name from PETROCORP Inc to MOTOMOVA Inc.

 

b.

Originally, when incorporated, the company was engaged in the oil and gas business. The Copmany has stopped its gas and oil activities in June 2020.

 

c.

On March 15, 2022, Optima Fintech Management Ltd., a company formed under the laws of the State of Israel (“Optima”), purchased 17,000,000 shares of common stock from James Fitzsimons, former CEO of the Company, pursuant to the terms and conditions of the Stock Purchase Agreement dated February 23, 2022, among Optima, the seller and the Company. As a result of the purchase, Optima became, at that time, the controlling shareholder and the owner of the majority of the power of the Company’s outstanding voting securities.

 

d.

On October 6, 2022, the Company consummated the transactions contemplated by the Share Exchange Agreement dated July 26, 2022, with M.E.A. Testing Systems Ltd., a company formed under the laws of the State of Israel (“MEA”), and shareholders representing 89.6% of the issued and outstanding shares of MEA (the “MEA Shareholders”), pursuant to which the MEA Shareholders agreed to exchange all of their shares in MEA for newly issued shares of the Company. In accordance with the Share Exchange Agreement, each outstanding ordinary share of MEA was exchanged for 34.92 shares of common stock, par value $0.0001 per share, of the Company, and every 5 outstanding preferred shares of MEA was exchanged for 1 newly issued preferred share of the Company. Each preferred share of MEA is convertible to 174.61 shares of common stock of MEA and has the other rights and designations identical to those held by the preferred shareholders of MEA immediately prior to the Closing. At the closing, all the outstanding warrants issued by MEA exercisable for an aggregate of 305,848 where exchanged for an identical number of warrants exercisable for the identical number of preferred shares of Motomova. As a result of the transactions contemplated by the Share Exchange Agreement, MEA became a subsidiary of the Company.

 

e.

In October 2022 the share exchange agreement was closed and 89.6% of MEA shares were transferred to Petrocorp, which, in return issued 47,437,706 ordinary shares to the transferring MEA shareholders. In addition 305,183 preferred shares were issued to preferred-shares MEA shareholders. In addition a warrant was issued – according to which – Full Finance Israel, Limited Partnership, that previously had a warrant to invest up to $1,000,000 in MEA in return to preferred shares, received a warrant to invest up to $1,000,000 in return to 304,878 prefered shares of the Company.

 

f.

Today, the merged company develops, manufactures, and supplies an extensive array of testing solutions and instruments relating to the power of motors for various markets, including electric vehicles and their components, transportation, and the home appliance industries.

 

The Company incurred an accumulated deficit of $11,943,458. The Company will need funds to continue its operations until profitability is achieved or until additional funding is raised. The Company’s management intention is to raise funds from existing and new shareholders or from foreign funds.

 

 

MOTOMOVA INC.

 

NOTES TO FINANCIAL STATEMENTS

U.S. dollars

 

NOTE 2:-

SIGNIFICANT ACCOUNTING POLICIES

 

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).

 

a.

Financial statements in U.S. dollars:

 

The functional currency of the Company is the USD.The functional currency of MEA is the NIS (Israeli Shekel). Translation adjustments resulting from remeasuring the foreign currency denominated financial statements into U.S. dollars are included in the Company’s statements of comprehensive Income.

 

b.

Use of estimates:

 

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.

 

The following are the hierarchical levels of inputs to measure fair value:

 

	- Level 1:	Quoted prices in active markets for identical instruments;
	- Level 2:	Other significant observable inputs (including quoted prices in active markets for similar instruments);
	- Level 3:	Significant unobservable inputs (including assumptions in determining the fair value of certain investments).

 

The carrying values for cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued liabilities, and deferred revenue approximate their fair value due to their short maturities.

 

c.

Principle of Consolidation:

 

The consolidated financial statements include the financial statements of the Company and its subsidiaries. Intercompany transactions and balances have been eliminated upon consolidation.

 

d.

Cash and cash equivalents:

 

Cash and cash equivalents are comprised of highly liquid investments, including deposits in banks with original maturities of three months or less.

 

 

MOTOMOVA INC.

 

NOTES TO FINANCIAL STATEMENTS

U.S. dollars

 

e.

Property and equipment:

 

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated by the straight-line method over the estimated useful lives of the assets at the following annual rates:

 

Schedule of property and equipment annual rates
		%
Office furniture and equipment		7 - 15
Computers and peripheral equipment		33
Vehicles		15

 

Long-lived assets of the Company are reviewed for impairment in accordance with Accounting Standard Codification (“ASC”) 360, “Property, Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future discounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. During the year 2021 and 2022 no impairment losses were recorded.

 

f.

Income taxes:

 

The Company is required to account for income taxes in accordance with the provisions of ASC 740, Income Taxes (“ASC 740) by recognizing the amount of tax payable for the current year and recognizing the amount of deferred tax asset or liability for the future consequence of events that have been reflected in the Company’s consolidated financial statements or tax returns.

 

Deferred tax assets or liabilities are based on temporary differences between the basis of financial reporting amounts and the basis of income tax reporting amounts. These deferred tax assets and liabilities are measured using the enacted tax rates and laws that will be in effect when such amounts are expected to reverse or be utilized. Valuation allowances are recorded to reduce deferred tax assets to amounts that are more likely than not to be ultimately realized. In determining the recognition of uncertain tax positions, the Company applies a more-likely-than-not recognition threshold and determines the measurement of uncertain tax positions by considering the amounts and probabilities of the outcomes that could be realized upon ultimate settlement with taxing authorities.

 

As of December 31, 2022 and 2021, the Company had no material unrecognized tax benefits and no adjustments to liabilities were recorded.

 

g.

Revenue recognition:

 

Significant management judgments and estimates must be made and used in connection with the recognition of revenue in any accounting period. Material differences in the amount of revenue in any given period may result if these judgments or estimates prove to be incorrect or if management’s estimates change on the basis of development of business or market conditions.

 

 

MOTOMOVA INC.

 

NOTES TO FINANCIAL STATEMENTS

U.S. dollars

 

We have decided to follow the provisions of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). The guidance provides a unified model to determine how revenue is recognized.

 

Revenues are recognized when control of the promised goods or services are transferred to the customers in an amount that reflects the consideration that we expect to receive in exchange for those goods or services.

 

We determine revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, we satisfy a performance obligation.

 

h.

Going concern:

 

The accompanying financial statements have been prepared in conformity with GAAP, which contemplates continuation of the Company as a going concern.

 

The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

i.

Pro forma presentation

 

The pro forma financial statements of the Company are based on the historical financial statements of the Company and M.E.A. Testing Systems Ltd.

 

The pro forma presentation is due to the acquision of M.E.A. Testing Systems Ltd as disrobed in note 1.

 

j.

Leases

 

In February 2016, the FASB established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02. The guidance establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. The Group determines if an arrangement is or contains a lease at contract inception.

 

The Group is a lessee in an operating lease for a research facility. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities in our consolidated balance sheets.

 

 

MOTOMOVA INC.

 

NOTES TO FINANCIAL STATEMENTS

U.S. dollars

 

ROU assets represent Company’s right to use an underlying asset for the lease term and lease liabilities represent Group’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As our lease does not provide an implicit rate, the Company generally uses the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

 

The Group monitors for events or changes in circumstances that require a reassessment of one of its leases. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in statement of comprehensive loss.

 

k.

Liability for employee rights upon retirement

 

MEA testing systems’s liability for severance pay is pursuant to Section 14 of the Severance Compensation Act, 1963 (“Section 14”), pursuant to which all the Company’s employees are included under Section 14, and are entitled only to monthly deposits. Under Israeli employment law, payments in accordance with Section 14 release the Company from any future severance payments in respect of those employees. The fund is made available to the employee at the time the employer-employee relationship is terminated, regardless of cause of termination. The severance pay liabilities and deposits under Section 14 are not reflected in the consolidated balance sheets as the severance pay risks have been irrevocably transferred to the severance funds.

 

l.

Research and development expenses

 

Research and development costs are charged to the consolidated statement of operations as incurred.

 

m.

Commitments and Contingencies

 

The Company records accruals for loss contingencies arising from claims, litigation and other sources when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted periodically as assessments change or additional information becomes available. Legal costs incurred in connection with loss contingencies are expensed as incurred.

 

n.

Basic and diluted net loss per share

 

Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of Ordinary shares outstanding during the period.

 

Diluted net loss per share is computed by giving effect to all potential shares of Ordinary shares, to the extent dilutive, all in accordance with ASC No. 260, “Earning Per Share”.

 

 

MOTOMOVA INC.

 

NOTES TO FINANCIAL STATEMENTS

U.S. dollars

 

Recent Accounting Pronouncements

 

Business Combination

 

On October 28, 2021, the FASB issued ASU 2021-08, which amends ASC 805 to “require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.” Under current GAAP, an acquirer generally recognizes such items at fair value on the acquisition date. According to the FASB, this Update is intended “to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the following:

 

●

Recognition of an acquired contract liability

 

●

Payment terms and their effect on subsequent revenue recognized by the acquirer.

 

ASU 2021-08 06 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

 

Income taxes

 

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes, eliminates certain exceptions to the general principles in Topic 740 and clarifies certain aspects of the current guidance to improve consistent application among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021 and interim periods within annual periods beginning after December 15, 2022, though early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. The Company is currently evaluating the effect the adoption of ASU 2019-12 will have on its consolidated financial statements.

 

NOTE 3:-

TRADE AND ACCOUNTS RECEIVABLE

 

Schedule of trade and accounts receivable
		December 31,				December 31,
		2022				2021
Trade receivables		$	23,107			$	-
Governmental institutions			26,198				17,556
Advances for suppliers			101,270				-
Income receivables			53,204				23,127
		$	203,779			$	40,683

 

NOTE 4:-

INVENTORY

 

Schedule of inventory
		December 31,				December 31,
		2022				*)2021
Systems - In process goods		$	143,635			$	129,068
Components			60,618				59,690
		$	204,253			$	188,758

 

*)

As of December 31, 2021 the inventory amount was assessed by the company’s management, and no inventory count was performed by the company’s current auditor as he was appointed on during 2022.

 

 

MOTOMOVA INC.

 

NOTES TO FINANCIAL STATEMENTS

U.S. dollars

 

NOTE 5:-

PROPERTY AND EQUIPMENT, NET

 

Composition of assets and the accumulated depreciation thereon, grouped by major classification and changes therein in 2022 and 2021 are as follows:

 

Schedule of property and equipment net
		December 31,												December 31,
		2022												2021
		Cost				Accumulated Depreciation				Property and equipment, Net				Property and equipment, Net
Computers and peripheral equipment			18,708				17,580				1,128				2,450
Office furniture and equipment			40,753				38,295				2,458				3,037
Vehicles			51,542				48,431				3,111				21,481
Total		$	111,003			$	104,306			$	6,697			$	26,968

 

NOTE 6:-

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 

Schedule of accounts payable and accrued expenses
		December 31,				December 31,
		2022				2021
Employees and payroll accruals		$	69,175			$	62,894
Provision for vacation			226,774				315,207
Creditors on account of equity rights			305,000				455,434
Deffered income			501,125				467,988
Accounts payable and accrued expenses			99,924				46,868
Total accounts payable and accrued expenses		$	1,201,998			$	1,348,391

 

NOTE 7:-

RELATED PARTIES

 

Schedule of related parties
		December 31,				December 31,
		2022				2021
Short term loans		$	35,729			$	325,524
Accrued interest			-				58,593
Total related party debt		$	35,729			$	384,117

 

a.

Transactions with interested and related parties:

 

Schedule of transactions with interested and related parties
		December 31,				December 31,
		2022				2021
Consulting fees		$	106,000			$	-
Directors’ fees			7,500				-
Salaries and Management fees			277,029				144,201
Related parties transactions		$	390,529			$	144,201

 

 

MOTOMOVA INC.

 

NOTES TO FINANCIAL STATEMENTS

U.S. dollars

 

b.

Balances with interested and related parties:

 

Schedule of balances with interested and related parties
		December 31,				December 31,
		2022				2021
Assets:			-				-
Liabilities
Short term loans		$	35,729			$	384,117
Vendors			1,000				-
Creditors on account of equity rights			305,000				455,434
Sharholders Loan			992,737				994,950
Total related party liabilities		$	1,334,466			$	1,834,501

 

1.

As of December 31, 2022, our three board members, Messrs. Yom Tov, Shalom and Adibi are each entitled to receive $2,500, representing the compensation paid to our directors in consideration for their services rendered in their capacities as directors. The Company intends to pay each of its three directors $2,500 per month as long as the individuals serve in such capacity, which amount has been accrued and unpaid since December 1, 2022.

 

2.

As of December 1, 2022 Menachem Shalom, through wholly owned company Billio Ltd, executed a consulting agreement with the Company pursuant to which Mr. Shalom would be engaged as the Chief Executive Officer at a current monthly salary of $10,000 plus VAT. If the Company closes a capital raise in excess of $500,000, the monthly base compensation increases to $15,000 per month; if such raise shall be in excess of $2,000,000, the compensation increases to $25,000 per month. If the Company is successful in uplisting to Nasdaq, the compensation increases to $35,000 per month. If Mr. Shalom is terminated by the Company for other than good cause, he shall be entitled to a severance payment equal to 6 months of his currently monthly compensation. Mr. Shalom agreed to a 5 year non-compete provision after the consulting agreement is terminated.

 

3.

As of December 1, 2022, Amir Adibi, through a wholly owned company Adibi Holdings Ltd, executed a consulting agreement with the Company pursuant to which Mr. Adibi would be engaged as the Executive Vice President-Business Development at a current monthly salary of $10,000 plus VAT. If the Company closes a capital raise in excess of $500,000, the monthly base compensation increases to $15,000 per month; if such raise shall be in excess of $2,000,000, the compensation increases to $25,000 per month. If the Company is successful in uplisting to Nasdaq, the compensation increases to $35,000 per month. If Mr. Adibi is terminated by the Company for other than good cause, he shall be entitled to a severance payment equal to 6 months of his current monthly compensation. Mr. Adibi agreed to a 5-year non-compete provision after the consulting agreement is terminated.

 

4.

Menachem Cohen is a party to an employment agreement with MEA dated August 1, 2020, pursuant to which he is employed at a current salary of NIS25,000 per month. Mr. Cohen also receives the use of a car and is entitled to all benefits which Israeli law provides to employees. Either party has the right to terminate by providing 6 months prior notice, but if MEA terminates and does not provide 6 months’ advance notice, they still must pay his salary for 6 months. MEA has the right to terminate Mr. Cohen for cause. Mr. Cohen also agreed to customary confidentiality provisions, and a non-compete for two years after the termination of his employment with MEA.

 

5.

On April 1st 2022, the Company has signed a promissory note with Optima Fintach Management Ltd. By December 31, 2022 the balance of the note inclufing accrued interest is $992,737.

 

 

MOTOMOVA INC.

 

NOTES TO FINANCIAL STATEMENTS

U.S. dollars

 

6.

During 2022 MEA has paid consulting fees to Menachem Shalom (through payments to Billio Ltd) in the amount of $101,568 and $23,200 were paid to Amir Adibi (through Amir Adibi Holdings Ltd).

 

7.

Optima Fintech Management Ltd, a shareholder of the Company, has made some payments to the Company’s suppliers on behalf of the Company and its entitled to receive those amounts back. The balance of those payments as of December 31, 2022 is $22,259.

 

8.

Billio Ltd, a company wholly owned by Menachem Shalom, has made some payments to the Company’s suppliers on behalf of the Company and its entitled to receive those amounts back. The balance of those payments as of December 31, 2022 is $6,000.

 

9.

Full Finance Israel, LP and Star 26, LP, two partnerships affiliated with the Company, have invested in the Company by exercising warrants granted to them.

 

10.

As of January 15, 2023, the Company entered into an Employment Agreement with Haim Ratzabi, according to which Mr. Ratzabi will serve as the Company’s Chief Financial Officer commencing February 1, 2023, at a salary of NIS25,000 per month and an additional NIS 5,000 per month for 30 hours of overtime per month. Mr. Ratzabi’s compensation is based on 50% of employment but shall increase to 100% immediately after the Company accumulates fund raise of $2,000,000. The Company will allocate an amount equal to 6% of Mr. Ratzabi’s salary to a fund for severance pay, and an additional 6.5% of his salary will be allocated to a provident fund. Mr. Ratzabi agreed to a 12-month non-compete provision after the employment agreement is terminated.

 

11.

On July 3, 2023, each of Amir Adibi and Menachem Shalom, officers and directors of the Company, lend the Company $32,500. The Company received an aggregate of $48,750 as a result of the 25% original discount on the loans. The loans bear interest at a rate of 1% per month. In addition, the Company agreed to issue a number of shares equal to approximately 0.25% of its fully-diluted then-outstanding share capital to each of Messrs. Adibi and Shalom for each calendar month that the loan remains outstanding. If the Company’s common stock is listed on the NASDAQ Capital Market before July 4, 2024, the lenders have the right to convert the outstanding loan and accrued interest, into shares of the Company’s common stock at a 40% discount to the public offering price, subject to certain limitations, provided, however that the Company’s effective value to each lender shall not exceed $60,000,000. If the Company is not listed on Nasdaq by such date, the interest rate on the loan increases to 2% per annum and the loan is due on July 4, 2025.

 

12.

On June 19, 2023, the Company and MEA entered into a convertible loan agreement with five shareholders and/or affiliates – Menachem Shalom, Amir Adibi, Doron Yom Tov, Hanan Malka and Hold Me Ltd - a company controlled by Menachem Shalom. Pursuant to the convertible loan agreement, the shareholders lend an aggregate of approximately $93,889. The loans bear interest at a rate of 1% per month. In addition, the Company agreed to issue a number of shares equal to approximately 0.25% of its fully-diluted then-outstanding share capital to each of the lending shareholder for each calendar month that the loan remains outstanding. If the Company’s common stock is listed on the NASDAQ Capital Market before June 20, 2024, the shareholders have the right to convert the outstanding loan and accrued interest, into shares of the Company’s common stock at a 40% discount to the public offering price, subject to certain limitations. If the Company is not listed on Nasdaq by such date, the interest rate on the loan increases to 2% per annum and the loan is due on June 20, 2025.

 

 

MOTOMOVA INC.

 

NOTES TO FINANCIAL STATEMENTS

U.S. dollars

 

13.

On June 15, 2023, MEA entered into a credit agreement with Bank Hapoalim, an Israeli bank, pursuant to which MEA received a 6-month loan of NIS 500,000. Interest on the line of credit accrued at the Israel Bank’s Prime Rate (currently 6.25%) plus 2.25% per annum. The credit agreement is secured by a lien on all of MEA’s assets and by unlimited personal guarantees of each of the Company’s directors.

 

Since the Company’s directors (Menachem Shalom, Amir Adibi and Doron Yom Tov) were required to sign an unlimited personal guarantee to secure the loan from Bank Hapoalim and to secure all other, existing and future, loans and credit provided to the Company and/or to MEA, the Company agreed to issue to each director or his designee, per month, the number of shares equal to approximately 0.05% of the outstanding shares of the Company on a fully diluted basis, per each NIS100,000 of debt secured by that director. That applies to the debt provided by Grazaini Industries as mentioned above.

 

NOTE 8:-

SHAREHOLDERS’ LOAN

 

Schedule of shareholders’ loan
		December 31,				December 31,
		2022				2021
Loan		$	949,950			$	1,275,474
Accrued interest			42,787				103,593
Shareholders’ loan		$	992,737			$	1,379,067

 

The Company received shareholders’ loan in an aggregate amount of $949,950 from December 2008 through May 2011. Following the company’s change of control, occurred in March 15, 2022, the loan and interest was assigned to the new controlling shareholders.

 

NOTE 9:-

INCOME TAXES

 

The Company’s subsidiaries are separately taxed under the domestic tax laws of the jurisdiction of incorporation of each entity.

 

a.

Corporate tax rates in U.S.:

 

The Company is subject to U.S. income tax laws. The corporate tax rates applicable to Motomova, Inc. for the years ended December 31, 2022 and 2021 were 21% for federal income taxes and a blended rate of 8% for state income taxes. There are no significant provisions for U.S. federal, state or other taxes for any period.

 

b.

Corporate tax rates in Israel:

 

The Israeli statutory corporate tax rates the years ended December 31, 2022 and 2021 was 23%.

 

The provision/benefit for income taxes for the year ended December 31, 2022 differs from the amount which would be expected as a result of applying the statutory tax rates to the losses before income taxes due primarily to changes in the valuation allowance to fully reserve net deferred tax assets.

 

 

MOTOMOVA INC.

 

NOTES TO FINANCIAL STATEMENTS

U.S. dollars

 

Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carry-forwards are expected to be available to reduce taxable income.

 

Schedule of deferred tax assets
		December 31,				December 31,
		2022				2021
		USD				USD
Deferred tax assets:
Pre-tax profit/(loss) as reported			(8,600,652	)			(7,899,611	)
Israeli statutory tax rate			23	%			23	%
Expected tax expense (benefit)			(1,978,150	)			(1,816,910	)
Total deferred tax assets			1,978,150				1,816,910
Less: Valuation allowance			(1,978,150	)			(1,816,910	)
Net deferred tax assets			-				-

 

The Company has provided a valuation allowance against the full amount of the deferred tax asset due to management’s uncertainty about its realization. As of December 31, 2022, the Company had approximately NIS 28,889,443 in tax loss carryforwards that can be utilized in future periods to reduce taxable income.

 

NOTE 10:-

SHAREHOLDERS’ EQUITY

 

a.

Composition of share capital:

 

Schedule of composition of share capital
		December 31, 2022
		Authorized				Issued and outstanding
		Number of shares
Ordinary shares of $0.0001 par value each			500,000,000				70,117,705
Preferred shares of $0.0001 par value each			1,000,000				305,183

 

b.

The Ordinary shares confer upon their holders the right to participate and vote in the shareholders’ meetings of the Company and the right to participate in any distribution of dividends.

 

c.

Issuance of share

 

●

On March 15, 2022, Optima Fintech Management Ltd., a company formed under the laws of the State of Israel (“Optima”), purchased 17,000,000 shares of common stock from James Fitzsimons, former CEO of the Company, pursuant to the terms and conditions of the Stock Purchase Agreement dated February 23, 2022, among Optima, the seller and the Company. As a result of the purchase, Optima controls the majority of the power of the Company’s outstanding voting securities.

 

 

MOTOMOVA INC.

 

NOTES TO FINANCIAL STATEMENTS

U.S. dollars

 

●

On September 28, 2022, the Company filed an Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, authorizing 1,000,000 shares of ‘blank check’ preferred stock and other corporate changes. The amended and restated certificate also authorized the issuance of 800,000 shares of 6% Convertible Series A Preferred Stock.

 

●

On October 6, 2022, the Company consummated the transactions contemplated by the Share Exchange Agreement dated July 26, 2022, with M.E.A. Testing Systems Ltd., a company formed under the laws of the State of Israel (“MEA”), and shareholders representing 89.6% of the issued and outstanding shares of MEA (the “MEA Shareholders”), pursuant to which the MEA Shareholders agreed to exchange all of their shares in MEA for newly issued shares of the Company. In accordance with the Share Exchange Agreement, each outstanding ordinary share of MEA was exchanged for 34.92 shares of common stock, par value $0.0001 per share, of the Company, and every 5 outstanding preferred shares of MEA was exchanged for 1 newly issued preferred share of the Company. Each preferred share of MEA is convertible to 174.61 shares of common stock of MEA and has the other rights and designations identical to those held by the preferred shareholders of MEA immediately prior to the Closing. At the closing, all the outstanding warrants issued by MEA exercisable for an aggregate of 305,848 where exchanged for an identical number of warrants exercisable for the identical number of preferred shares of Motomova. As a result of the transactions contemplated by the Share Exchange Agreement, MEA became a subsidiary of the Company.

 

●

On November 7, 2022, the Company filed an amendment with the Secretary of State of the State of Delaware, changing the voting and conversion rates of the 6% Convertible Series A Preferred Stock to be in accordance with the voting and conversion rates of the preferred shares of M.E.A Testing Systems Ltd. (“MEA”) which were exchanged for preferred shares of the Company. Each share of Series A Preferred Stock votes 174.61 shares of common stock and is convertible to 174.61 shares of common stock of the Company.

 

●

On December 23, 2022, the Company filed an amendment with the Secretary of State of Delaware, changing the total number of its authorized capital stock to 501,000,000, which includes 500,000,000 shares of common stock, par value $0.0001 par value per share, and 1,000,000 shares of preferred stock, $0.0001 par value per share.

 

NOTE 11:-

COST OF SALES

 

Schedule of cost of sales
		December 31,				December 31,
		2022				2021
Salaries and related expenses		$	210,407			$	152,975
Overhead costs			80,984				69,666
Consumable materials and equipment			349,848				382,088
Cost of sales		$	641,239			$	604,729

 

 

MOTOMOVA INC.

 

NOTES TO FINANCIAL STATEMENTS

U.S. dollars

 

NOTE 12:-

OPERATING EXPENSES

 

a.

Research and development:

 

Schedule of research and development
		December 31,				December 31,
		2022				2021
Salaries and related expenses		$	317,365			$	182,001
Overhead costs			35,993				71,892
Other expenses			23,167				13,546
Research and development		$	376,525			$	267,439

 

b.

Sales and marketing:

 

Schedule of sales and marketing
		December 31,				December 31,
		2022				2021
Salaries and related expenses		$	138,907			$	150,509
Overhead costs			13,497				15,550
Consulting and marketing expenses			216,280				1,729
Sales and marketing		$	368,684			$	167,788

 

c.

General and administrative:

 

Schedule of general and administrative
		December 31,				December 31,
		2022				2021
Salaries and related expenses		$	119,814			$	110,081
Professional services			102,434				3,353
Management fees			73,815				-
Office and maintenance expenses			69,120				3,220
Rent and utilities			28,825				17,638
Depreciation			20,270				7,443
Others			25,936				6,015
General and administrative		$	440,214			$	147,750

 

NOTE 13:-

FINANCIAL EXPENSES

 

Schedule of financial expenses
		December 31,				December 31,
		2022				2021
Interest on loan		$	42,787			$	59,697
Exchange differences			(16,278	)			10,996
Gain from loan replacement			(40,257	)			-
Others and banks fees			3,280				19,671
Financial expenses		$	(10,468	)		$	90,364

 

 

MOTOMOVA INC.

 

NOTES TO FINANCIAL STATEMENTS

U.S. dollars

 

NOTE 14:-

SUBSEQUENT EVENTS

 

●

On January 1, 2023 the Company adopted the 2022 Petrocorp Inc. Stock Incentive Plan (“Plan”),which has been presented to and reviewed by the Board and the holders of the majority of the issued and outstanding shares of the Corporation. According to the Plan the Company has reserved 15,000,000 shares of common stock for issuance to employees, officers, consultants and agents of the Company.

 

●

On February 2023, the Company has signed a Revolving Credit Line Agreement with MEA and a Revolving Credit Line Agreement with Petrocorp Israel Ltd – a wholly owned Israeli subsidiary of the Company. Those agreements enable the company to fund the operations of those two companies.

 

●

On March 2023 an amount of 304,878 warrants that were issued and outstanding as of December 31, 2022 were exercise for a nuumber of 304,878 preferred shares of the company. Accordingly, the company has an aggregate of 610,061 shares of preferred stock issued and outstanding which are convertible to an aggregate of 106,522,751 shares of common stock of the Company.

 

●

On May 2023, Gad Zohar and Menachem Cohen, left the board of directors of MEA. Hanan Malka was appointed as a new board member of MEA.

 

●

On May 16, 2023 the Company issued and amount of 6,170,286 shares of Common Stock, for their par value, and that upon such issuance, such shares shall be deemed to be duly authorized, fully paid and non-assessable.

 

●

On June 12th, 2023 the Company has changed its name from PETROCORP Inc to MOTOMOVA Inc.

 

●

On June 15, 2023, MEA entered into a credit agreement with Bank Hapoalim, an Israeli bank, pursuant to which MEA received a 6-month loan of NIS 500,000. Interest on the line of credit accrued at the Israel Bank’s Prime Rate (currently 6.25%) plus 2.25% per annum. The credit agreement is secured by a lien on all of MEA’s assets and by unlimited personal guarantees of each of the Company’s directors.

 

●

On June 19, 2023, the Company and MEA entered into a convertible loan agreement with five shareholders and/or affiliates. Pursuant to the convertible loan agreement, the shareholders lend an aggregate of approximately $93,889. The loans bear interest at a rate of 1% per month. In addition, the Company agreed to issue a number of shares equal to approximately 0.25% of its fully-diluted then-outstanding share capital to each of the lending shareholder for each calendar month that the loan remains outstanding. If the Company’s common stock is listed on the NASDAQ Capital Market before June 20, 2024, the shareholders have the right to convert the outstanding loan and accrued interest, into shares of the Company’s common stock at a 40% discount to the public offering price, subject to certain limitations. If the Company is not listed on Nasdaq by such date, the interest rate on the loan increases to 2% per annum and the loan is due on June 20, 2025.

 

●

On June 20, 2023, The Financial Industry Regulatory Authority notified the Company that the name change of the Company took effect on the over-the-counter market as of June 21, 2023, at which time, the ticker symbol for the Company’s common stock officially changed to “MTMV”.

 

 

MOTOMOVA INC.

 

NOTES TO FINANCIAL STATEMENTS

U.S. dollars

 

●

On July 3, 2023, the Company entered into a convertible loan agreement with Graziani Industries 1992 Ltd. (“Lender”), pursuant to which Lender agreed to lend $200,000 to the Company with interest at the rate of 8% a year. In the event of an uplist of the Company’s common stock to NASDAQ Capital Market prior to July 4, 2024, Lender has the right to convert the outstanding loan balance into shares of the Company’s common stock at a 40% discount to the public offering price, subject to certain limitations. If the Company fails to achieve an uplisting of its common stock before such date, the loan will bear interest at 8% per annum and must be repaid on or before July 4, 2025. If the loan is not converted to shares, the debt of the Company to Lender is then personally guaranteed by Messrs. Shalom and Adibi, two directors of the Company.

 

●

On July 3, 2023, each of Amir Adibi and Menachem Shalom, officers and directors of the Company, lend the Company $32,500. The Company received an aggregate of $48,750 as a result of the 25% original discount on the loans. The loans bear interest at a rate of 1% per month. In addition, the Company agreed to issue a number of shares equal to approximately 0.25% of its fully-diluted then-outstanding share capital to each of Messrs. Adibi and Shalom for each calendar month that the loan remains outstanding. If the Company’s common stock is listed on the NASDAQ Capital Market before July 4, 2024, the lenders have the right to convert the outstanding loan and accrued interest, into shares of the Company’s common stock at a 40% discount to the public offering price, subject to certain limitations, provided, however that the Company’s effective value to each lender shall not exceed $60,000,000. If the Company is not listed on Nasdaq by such date, the interest rate on the loan increases to 2% per annum and the loan is due on July 4, 2025.

 

●

Since the Company’s directors (Menachem Shalom, Amir Adibi and Doron Yom Tov) were required to sign an unlimited personal guarantee to secure the loan from Bank Hapoalim and to secure all other, existing and future, loans and credit provided to the Company and/or to MEA, the Company agreed to issue to each director or his designee, per month, the number of shares equal to approximately 0.05% of the outstanding shares of the Company on a fully diluted basis, per each NIS100,000 of debt secured by that director. That applies to the debt provided by Grazaini Industries and by Bank Hapoalim as mentioned above.

 

 

 

PART II

 

INFORMATION NOT REQUIRED IN PROSPECTUS

 

Item 13. Other Expenses of Issuance and Distribution

 

The following table sets forth the costs and expenses payable by the registrant in connection with the sale of common stock being registered. All amounts are estimates except for the SEC registration fee filing fee.

 

		Amount to be
Item		Paid
SEC registration fee		$	1,410
Legal fees and expenses		$	30,000	*
Accounting fees and expenses		$	30,000	*
Miscellaneous expenses			10,000	*
Total		$	71,410

 

●

Estimated

 

Item 14. Indemnification of Directors and Officers

 

Our certificate of incorporation contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for:

 

	●	any breach of the director’s duty of loyalty to us or our stockholders;
	●	any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; or
	●	unlawful payments of dividends in violation of the Delaware General Corporation Law.

 

Our certificate of incorporation and bylaws provide that we are required to indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law and provide for the advancement of expenses incurred by a director or officer in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any director or officer for any liability arising out of his, her or its actions in that capacity.

 

We believe these provisions in our certificate of incorporation and bylaws are necessary to attract and retain qualified persons as directors and officers.

 

The limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit us and our stockholders. A stockholder’s investment may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

 

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

 

There is no pending litigation or proceeding naming any of our directors, officers or employees as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification by any director, officer or employee.

 

 

Item 15. Recent Sales of Unregistered Securities

 

The following list sets forth information as to all securities we have sold during the last three years which were not registered under the Securities Act.

 

On October 6, 2022, the Company issued an aggregate of 47,437,706 shares of common stock to the former shareholders of MEA pursuant to the terms and conditions of the Share Exchange Agreement.

 

On October 6, 2022, the Company issued an aggregate of 305,183 shares of Series A Preferred Stock to the former preferred shareholders of MEA pursuant to the terms and conditions of the Share Exchange Agreement.

 

On October 6, 2022, the Company issued warrants to purchase an aggregate of 304,878 shares of Series A Preferred Stock to the former warrant holders of MEA pursuant to the terms and conditions of the Share Exchange Agreement.

 

On November 14, 2022, the Company issued 12,140 shares of Series A Preferred Stock for an exercise price of $180,000 upon the exercise of outstanding warrants.

 

On December 5, 2022, the Company issued 3,372 shares of Series A Preferred Stock for an exercise price of $50,000 upon the exercise of outstanding warrants.

 

On December 12, 2022, the Company issued 5,058 shares of Series A Preferred Stock for an exercise price of $75,000 upon the exercise of outstanding warrants.

 

On January 25, 2023, the Company issued 7,158 shares of Series A Preferred Stock for an exercise price of $106,139 upon the exercise of outstanding warrants.

 

On January 25, 2023, the Company issued 277,150 shares of Series A Preferred Stock.

 

On May 16, 2023, the Company issued 6,170286 shares of common stock to two consultants for a purchase price of $618.

 

None of the above issuances involved any underwriters, underwriting discounts or commissions, or any public offering and we believe are exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof and/or Regulation D or Regulation S promulgated thereunder. All purchasers of securities in transactions exempt from registration pursuant to Regulation D represented to us that they were accredited investors and were acquiring the shares for investment purposes only and not with a view to, or for sale in connection with, any distribution thereof and that they could bear the risks of the investment.

 

 

Item 16. Exhibits and Financial Statement Schedules

 

3.1		Certificate of Amendment to Amended and Restated Articles of Incorporation of the Company as filed with the Delaware Secretary of State as of June 12, 2023.
3.2		Certificate of Amendment to Amended and Restated Articles of Incorporation of the Company as filed with the Delaware Secretary of State as of December 23, 2022.
3.3		Certificate of Amendment to Amended and Restated Articles of Incorporation of the Company as filed with the Delaware Secretary of State as of November 7, 2022.
3.4		Amended and Restated Articles of Incorporation of the Company as filed with the Delaware Secretary of State as of September 28, 2022.
3.5		Bylaws of the Company
4.1		Specimen of Stock Certificate
4.2		Description of Securities
4.3		Warrant Agreement dated as of July 26, 2022, by and between Petrocorp Inc., and Full Finance Israel, LP.
4.4		Revolving Credit Note dated February 10, 2023, made by Petrocorp Israel Ltd, in favor of the Company.
4.5		Revolving Credit Note dated February 10, 2023, made by M.E.A. Testing Systems Ltd. in favor of the Company.
5.1		Opinion of The Crone Law Group, P.C., as to the legality of securities being registered*
10.1		Share Exchange Agreement dated as of July 26, 2022, by and among Petrocorp Inc., MEA Testing Systems Ltd., and certain shareholders of MEA Testing Systems Ltd.
10.2		First Amendment to Share Exchange Agreement dated as of September 12, 2022, by and among Petrocorp Inc., MEA Testing Systems Ltd., and certain shareholders of MEA Testing Systems Ltd.
10.3		Form of Leak Out and Resale Restriction Agreement by and among Petrocorp Inc., MEA Testing Systems Ltd., and certain shareholders of MEA Testing Systems Ltd.
10.4		Consulting Agreement dated December 1, 2022, by and between Petrocorp Inc. and Billio Ltd.
10.5		Consulting Agreement dated December 1, 2022, by and between Petrocorp Inc. and Adibi Holdings Ltd.
10.6		Employment Agreement dated January 15, 2023, by and between Petrocorp Inc. and Haim Ratzabi.
10.7		Employment Agreement dated August 1, 2020, from MEA Testing Ltd. and Menachem Cohen.
10.8		Convertible Loan Agreement dated June 20, 2023, from MEA Testing Systems Ltd. to Hold Me Ltd., MLB, Amir Adibi, and Menachem Marchov.

 

 

10.9		Agreement dated July 3, 2023, by and between Graziani Industries 1992 Ltd. and Motomova Inc.
10.10		Convertible Loan Agreement dated July 3, 2023, by and between Amir Adibi and Menachem Shalom as Lenders and Motomova Inc.
10.11		Credit Agreement dated June 15, 2023, between the Company and Bank Hapoalim.
10.12		2022 Stock Incentive Plan
21.1		List of Subsidiaries
23.1		Consent of Elkana Amitai CPA
23.2		Consent of Crone Law Group, PC (included as part of Exhibit 5.1)
107		Filing Fee Table

 

*

to be filed by amendment

 

 

Item 17. Undertakings

 

The registrant hereby undertakes:

 

(1)

To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

	(i)	To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
	(ii)	To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.
	(iii)	To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

 

	(2)	That, for the purpose of determining any liability under the Securities Act of 1933, each such post- effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
	(3)	To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
	(4)	That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
	(5)	That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; (ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and (iv) any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

 

 

(6)

The undersigned registrant hereby undertakes that:

 

	(1)	For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
	(2)	For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fi de offering thereof.

 

	The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
		(i)	Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
		(ii)	Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
		(iii)	The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
		(iv)	Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

 

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

 

 

Signatures

 

Pursuant to the requirements of the Securities Act of 1933 the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the State of Israel on July 14, 2023.

 

	MOTOMOVA INC.
Date: July 14, 2023	By:	/s/ Menachem Shalom
		Name:	Menachem Shalom
		Title:	Chief Executive Officer and Secretary (principal executive officer)

 

Date: July 14, 2023	By:	/s/ Haim Ratzabi
		Name:	Haim Ratzabi
		Title:	Chief Financial Officer (principal financial and accounting officer)

 

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

 

Signature		Title		Date
/s/ Doron Yom Tov		Director		July 14, 2023
/s/ Amir Adibi		Director		July 14, 2023
/s/ Menachem Shalom		Director		July 14, 2023

 

 

Exhibit 3.1

 

STATE OF DELAWARE

 

CERTIFICATE OF AMENDMENT
OF

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF

PETROCORP INC.

 

The corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware does hereby certify:

 

FIRST: The Board of Directors and the majority of the holders of the outstanding (i) 6% Convertible Series A Preferred Stock and (ii) common stock of the Corporation adopted resolutions in lieu of a meeting pursuant to the General Corporation Law of the State of Delaware on April 11, 2023, setting forth the proposed amendment to the Amended and Restated Certificate of Incorporation as follows:

 

1. The amended and restated certificate of incorporation of the corporation is hereby amended by striking out Article First in its entirety and by substituting in lieu of said Article First the following new Article First:

 

First: The name of the corporation is MOTOMOVA INC.

 

2. The amendment of the certificate of incorporation herein certified has been duly adopted and written consent has been given in accordance with the provisions of Sections 228 and 242 of the General Corporation Law of the State of Delaware.

 

IN WITNESS WHEREOF, said the corporation has caused this certificate to be signed this 11^th day of April 2023.

 

	By:	/s/ Doron Yom Tov
		Doron Yom Tov, Chairman of the Board

 

 

Exhibit 3.2

 

STATE OF DELAWARE

 

CERTIFICATE OF AMENDMENT
OF

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF
PETROCORP INC.

 

Petrocorp Inc. (the “Corporation”), organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify:

 

FIRST: That by joint written consent of the Board of Directors and the holders of the majority of the issued and outstanding shares of Petrocorp Inc., was duly adopted setting forth the proposed amendment of the Amended and Restated Certificate of Incorporation, as amended to date (the “Certificate of Incorporation”) of the Corporation, declaring said amendment to be advisable. The resolution setting forth the proposed amendment is as follows:

 

RESOLVED, that paragraph Fourth of the Amended and Restated Certificate of Incorporation of the Corporation be amended by deleting the first sentence thereof in its entirety and replacing said sentence with the following:

 

“FOURTH: The total number of shares of all classes of stock which the Corporation shall have authority to issue is (i) 500,000,000 shares of Common Stock, $0.0001 par value per share (the “Common Stock”) and 1,000,000 shares of preferred stock, $0.0001 par value per share (the “Preferred Stock”) (collectively, Common Stock and Preferred Stock are referred to herein as “Capital Stock”).

 

SECOND: That thereafter, pursuant to the joint resolution of its Board of Directors and stockholders of said corporation holding the necessary number of shares as required by statute consented to the said amendment in writing, in lieu of a meeting, in accordance with Section 228 of the General Corporation Law of the State of Delaware.

 

THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

 

IN WITNESS WHEREOF, said the corporation has caused this certificate to be signed this 30^th day of November 2022.

 

	By:	/s/ Doron Yom Tov
		Title:	Chairman of the Board

 

 

Exhibit 3.3

 

State of Delaware Secretary of State Division of Corporations Delivered 02:36 PM 11/07/2022 FILED 02:36 PM 11/07/2022 SR 20223957595 - File Number 4162736

STATE OF DELAWARE

 

CERTIFICATE OF AMENDMENT
OF

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF
PETROCORP INC.

 

The corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware does hereby certify:

 

FIRST: The Board of Directors and the majority of the holders of the outstanding (i) 6% Convertible Series A Preferred Stock and (ii) common stock of the Corporation adopted resolutions in lieu of a meeting pursuant to the General Corporation Law of the State of Delaware on November 1, 2022 setting forth the proposed amendments to the Amended and Restated Certificate of Incorporation as follows:

 

Article Fourth, B, Section 3(a) of the Amended and Restated Certificate of Incorporation is hereby deleted in its entirety and replaced with the following:

 

“3. Voting Rights.

 

“(a) Except as otherwise provided in this Amended and Restated Certificate (the “Certificate of Incorporation”) of the Corporation, as expressly required by law or as provided herein, each holder of Series A Preferred Stock shall entitle the holder thereof to 174.61 votes for each share of Series A Preferred Stock, as of the record date for the determination of stockholders entitled to vote and to notice of any stockholders’ meeting in accordance with the By-laws.”

 

Article Fourth, B, Section 4(a) of the Amended and Restated Certificate of Incorporation is hereby deleted in its entirety and replaced with the following:

 

“4. Conversion.

 

“(a) The holder of any shares of Series A Preferred Stock shall have the right, at such holder’s option, at any time or from time to time, to convert such shares into Common Stock, at a conversion rate (the “Conversion Rate”) equal to 174.61 shares of common stock for each share of Series A Preferred Stock.”

 

IN WITNESS WHEREOF, said corporation has caused this certificate to be signed this 1^th day of November, 2022.

 

	By:	/s/ Doron Yom │ Tov
	Name:	Doron Yom │ Tov
	Title:	Chairman of the Board

 

 

Exhibit 3.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 3.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 4.1

 

 

 

 

 

Exhibit 4.2

 

MOTOMOVA INC.

DESCRIPTION OF SECURITIES

 

The following description of the capital stock of Motomova Inc. (“our,” “we” or the “Company”) summarizes the material terms and provisions of the common stock and the preferred stock. For the complete terms of our common stock and preferred stock, please refer to our amended and restated certificate of incorporation, as amended, which we refer to as our charter, and our bylaws, that are incorporated herein by reference. The summary below is qualified in its entirety by reference to our charter and bylaws. The terms of these securities may also be affected by the General Corporation Law of the State of Delaware.

 

General

 

Our authorized capital stock consists of 500,000,000 shares of common stock par value $0.0001 per share and 1,000,000 shares of preferred stock, par value $0.0001 per share (“Preferred Stock”) of which 800,000 shares are designated Series A Preferred Stock (the “Series A Preferred Stock”). As of July 13, 2023, there were 76,347,992 shares of our common stock and 610,061 shares of the Series A Preferred Stock issued and outstanding.

 

Common Stock

 

Each holder of shares of our common stock is entitled to one vote for each share held of record on all matters submitted to the vote of stockholders, including the election of directors. The holders of shares of common stock have no preemptive, conversion, subscription or cumulative voting rights. There is no provision in the charter or bylaws that would delay, defer or prevent a change in control of our company.

 

Preferred Stock

 

 

On September 28, 2022, we filed the amended and restated certificate of incorporation with the Secretary of State of the State of Delaware, authorizing 1,000,000 shares of ‘blank check’ preferred stock and other corporate changes. The charter provides that shares of Preferred Stock may be issued from time to time in one or more series. Our board of directors will be able to authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional, or other special rights and any qualifications, limitations, and restrictions thereof, applicable to the shares of each series. Our board of directors will be able to, without stockholder approval, issue preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the common stock and could have anti-takeover effects. The ability of our board of directors to issue Preferred Stock without stockholder approval could have the effect of delaying, deferring, or preventing a change of control of us or the removal of existing management.

 

The charter authorized the creation of 800,000 shares of Series A Preferred Stock. The Series A Preferred Stock is authorized to vote with the Common Stock in all stockholder meetings that the Common Stock may vote and each share has voting power equal to 174.61 votes per share. Each share of Series A Preferred Stock is convertible at a rate of 174.61 shares of common stock to each share of Series A Preferred Stock. There is a 6% annual dividend payable on the outstanding Series A Preferred Stock. In addition to our Series A Preferred Stock, 200,000 shares of ‘blank check’ Preferred Stock remain authorized and unissued.

 

 

Delaware Anti-Takeover Statute

 

We are subject to Section 203 of the Delaware General Corporation Law, which prohibits a person deemed an “interested stockholder” from engaging in a “business combination” with a publicly held Delaware corporation for three years following the date such person becomes an interested stockholder unless the business combination is, or the transaction in which the person became an interested stockholder was, approved in a prescribed manner or another prescribed exception applies. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns, or within three years prior to the determination of interested stockholder, status did own, 15% or more of a corporation’s voting stock. Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. The existence of this provision may have an anti-takeover effect with respect to transactions not approved in advance by the board of directors, such as discouraging takeover attempts that might result in a premium over the price of our common stock.

 

Undesignated Preferred Stock

 

The ability to authorize undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of the company. These and other provisions may have the effect of deterring hostile takeovers or delaying changes in control or management of the company.

 

Special Stockholder Meetings

 

Our charter and bylaws provide that a special meeting of stockholders may be called only by a majority of our board of directors.

 

Requirements for Advance Notification of Stockholder Nominations and Proposals

 

Our charter and bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board of directors or a committee of the board of directors.

 

The provisions of the Delaware General Corporation Law, our charter, and our bylaws could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they may also inhibit temporary fluctuations in the price of our common stock that often result from actual or rumored hostile takeover attempts. These provisions may also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.

 

Transfer Agent

 

The transfer agent and registrar for our common stock is VStock Transfer, LLC, with an address of 18 Lafayette Place, Woodmere, New York 11598, and its telephone number is (212) 828-8436.

 

Listing

 

Our shares of Common Stock are quoted on the OTC Pink tier of the OTC Markets Group Inc. under the symbol “MTMV”.

 

 

 

Exhibit 4.3

 

WARRANT AGREEMENT

 

WARRANT AGREEMENT (“Agreement”), dated as of July 26, 2022, by and between Petrocorp Inc., a Delaware corporation (the “Company”), and Full Finance Israel, LP, a limited partnership established in the State of Israel (“Warrantholder”).

 

In consideration of the mutual terms, conditions, representations, warranties and agreements herein set forth, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

Section 1.

Definitions.

 

Unless the context otherwise requires, the terms defined in this Section 1, whenever used in this Agreement shall have the respective meanings hereinafter specified and words in the singular or in the plural shall each include the singular and the plural and the use of any gender shall include all genders.

 

“Business Day” shall mean any day on which banking institutions are generally open for business in Delaware.

 

“Preferred Stock” means the Preferred stock of the Company.

 

“Exercise Price” shall be One Million Dollars ($1,000,000), which represents the price of US $3.28 per Warrant Share at which Warrantholder is entitled to purchase Warrant Shares upon exercise of the Warrant in accordance with Section 8 and subject to adjustment as provided in Section 9 hereof.

 

“Person” shall mean any corporation, association, partnership, limited liability company, joint venture, trust, organization, business, individual, government or political subdivision thereof or governmental body.

 

“Securities Act” shall mean the Securities Act of 1933, as amended, or any similar federal statute as at the time in effect, and any reference to a particular section of such Act shall include a reference to the comparable section, if any, of such successor federal statute.

 

“Warrant” has the meaning set forth in Section 2 hereof.

 

“Warrant Certificates” has the meaning set forth in Section 3 hereof.

 

“Warrant Commencement Date” shall mean the date of this agreement.

 

“Warrant Expiration Date” shall mean Oct 3, 2023.

 

“Warrant Share” has the meaning set forth in Section 2 hereof.

 

Section 2.

Issuance of Warrants.

 

The Company hereby issues and grants to Warrantholder the right to purchase 304,878 (three hundred and four thousand, eight hundred seventy eight) shares of Series A Preferred Stock of the Company (the “Preferred Stock”) (hereinafter referred to as the “Warrant”). Commencing on the Warrant Commencement Date, and terminating on the Warrant Expiration Date, the holder shall have the right, subject to the satisfaction of the conditions to exercise set forth in Section 8 of this Agreement, to exercise the Warrant (the shares of Preferred Stock issuable upon exercise of the Warrants being collectively referred to herein as the “Warrant Shares”) at the Exercise Price. The number of Warrant Shares issuable on exercise of the Warrant and the Exercise Price are all subject to adjustment pursuant to Section 9 of this Agreement.

 

 

Section 3.

Form of Warrant Certificates.

 

Promptly after the execution and delivery of this Agreement by the parties hereto, the Company may, in its sole and absolute discretion, cause to be executed and delivered to Warrantholder one or more certificates evidencing the Warrants (the “Warrant Certificates”). Each Warrant Certificate delivered hereunder shall be substantially in the form set forth in Exhibit 1 – Warrant Form attached hereto and may have such letters, numbers or other identification marks and legends, summaries or endorsements printed thereon as the Company may deem appropriate and that are not inconsistent with the terms of this Agreement or as may be required by applicable law, rule or regulation. Each Warrant Certificate shall be dated the date of execution by the Company.

 

Section 4.

Execution of Warrant Certificates.

 

Each Warrant Certificate delivered hereunder shall be signed on behalf of the Company by at least one of the following: its Chief Executive Officer, President, Vice President, Secretary or Assistant Secretary. Each such signature may be in the form of a facsimile thereof and may be imprinted or otherwise reproduced on the Warrant Certificates.

 

If any officer of the Company who signed any Warrant Certificate ceases to be an officer of the Company before the Warrant Certificate so signed shall have been delivered by the Company, such Warrant Certificate nevertheless may be delivered as though such person had not ceased to be such officer of the Company.

 

Section 5.

Registration of Ownership and Transfer.

 

Warrant Certificates shall be issued in registered form only. The Company will keep or cause to be kept books for registration of ownership and transfer of each Warrant Certificate issued pursuant to this Agreement. Each Warrant Certificate issued pursuant to this Agreement shall be numbered by the Company and shall be registered by the Company in the name of the holder thereof (initially the Warrantholder). The Company may deem and treat the registered holder of any Warrant Certificate as the absolute owner thereof (notwithstanding any notation of ownership or other writing thereon made by anyone) for the purpose of any exercise thereof and for all other purposes, and the Company shall not be affected by any notice to the contrary.

 

Section 6.

Transfers.

 

The Company agrees and acknowledges that this Warrant may be sold, pledged, hypothecated, assigned, conveyed, transferred or otherwise disposed of without the agreement of the Company, provided that the Holder and the transferee comply with all applicable securities laws in connection therewith.

 

Section 7.

Mutilated or Missing Warrant Certificates.

 

If any Warrant Certificate is mutilated, lost, stolen or destroyed, the Company shall issue, upon surrender and cancellation of any mutilated Warrant Certificate, or in lieu of and substitution for any lost, stolen or destroyed Warrant Certificate, a new Warrant Certificate of like tenor and representing an equal number of Warrants. In the case of a lost, stolen or destroyed Warrant Certificate, a new Warrant Certificate shall be issued by the Company only upon the Company’s receipt of reasonably satisfactory evidence of such loss, theft or destruction and, if requested, an indemnity or bond reasonably satisfactory to the Company.

 

 

Section 8.

Exercise of Warrants.

 

A. Exercise. Subject to the terms and conditions set forth in this Section 8, the Warrant may be exercised at any time or from time to time on and after the Warrant Commencement Date and on or prior to 5:00 p.m., Eastern time, on the Warrant Expiration Date. The Warrantholder agrees and acknowledges that the Warrant cannot be exercised on different dates during the term of the Warrant but can only be exercised oncein its entirety.

 

In order to exercise the Warrant, Warrantholder shall deliver to the Company at its office referred to in Section 14 the following: (i) a written notice in the form of the Election to Purchase appearing at the end of the form of Warrant Certificate attached as Exhibit 2 – Form of Election to Purchase hereto of such Warrantholder’s election to exercise the Warrants,; (ii) the Warrant Certificate or Warrant Certificates, if any, evidencing the Warrants being exercised; and (iii) payment of the aggregate Exercise Price.

 

All rights of Warrantholder with respect to any Warrant that has not been exercised, on or prior to 5:00 p.m., Eastern time, on the Warrant Expiration Date shall immediately cease and such Warrants shall be automatically cancelled and void.

 

B. Payment of Exercise Price. Payment of the Exercise Price with respect to Warrants being exercised hereunder shall be made by the payment to the Company, in cash, by check or wire transfer, of an amount equal to the Exercise Price.

 

C. Payment of Taxes. The Company shall be responsible for paying any and all issue, documentary, stamp or other taxes that may be payable in respect of any issuance or delivery of Warrant Shares on exercise of a Warrant. Notwithstanding anything contained herein to the contrary, the Warrantholder shall be responsible for all taxes that may be due and payable by the Warrantholder as a result of the issuance of this Warrant to the Warrantholder or as a result of the issuance of the Warrant Shares upon due exercise hereof.

 

(a) Delivery of Warrant Shares. Upon receipt of the items referred to in Section 8A, the Company shall, as promptly as practicable, execute and deliver or cause to be executed and delivered, to or upon the written order of Warrantholder, and in the name of Warrantholder or Warrantholder’s designee, a stock certificate or stock certificates representing the number of Warrant Shares to be issued on exercise of the Warrant(s). If the Warrant Shares shall in accordance with the terms thereof have become automatically convertible into shares of the Company’s Preferred Stock prior to the time a Warrant is exercised, the Company shall in lieu of issuing shares of Preferred Stock, issue to the Warrantholder or its designee on exercise of such Warrant, a stock certificate or stock certificates representing the number of shares of Preferred Stock into which the Warrant Shares issuable on exercise of such Warrant are convertible. The certificates issued to Warrantholder or its designee shall bear any restrictive legend required under applicable law, rule or regulation. The stock certificate or certificates so delivered shall be registered in the name of Warrantholder or such other name as shall be designated in said notice. A Warrant shall be deemed to have been exercised and such stock certificate or stock certificates shall be deemed to have been issued, and such holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date that such notice, together with payment of the aggregate Exercise Price and the Warrant Certificate or Warrant Certificates evidencing the Warrants to be exercised, is received by the Company as aforesaid. If the Warrants evidenced by any Warrant Certificate are exercised in part, the Company shall, at the time of delivery of the stock certificates, deliver to the holder thereof a new Warrant Certificate evidencing the Warrants that were not exercised or surrendered, which shall in all respects (other than as to the number of Warrants evidenced thereby) be identical to the Warrant Certificate being exercised. Any Warrant Certificates surrendered upon exercise of Warrants shall be canceled by the Company.

 

 

Section 9.

Adjustment of Number of Warrant Shares Issuable Upon Exercise of a Warrant and Adjustment of Exercise Price.

 

A. Adjustment for Stock Splits, Stock Dividends, Recapitalizations. The number of Warrant Shares issuable upon exercise of each Warrant and the Exercise Price shall each be proportionately adjusted to reflect any stock dividend, stock split, reverse stock split, recapitalization or the like affecting the number of outstanding shares of Preferred Stock that occurs after the date hereof.

 

B. Adjustments for Reorganization, Consolidation, Merger. If after the date hereof, the Company (or any other entity, the stock or other securities of which are at the time receivable on the exercise of the Warrants), consolidates with or merges into another entity or conveys all or substantially all of its assets to another entity, then, in each such case, Warrantholder, upon any permitted exercise of a Warrant (as provided in Section 8), at any time after the consummation of such reorganization, consolidation, merger or conveyance, shall be entitled to receive, in lieu of the stock or other securities and property receivable upon the exercise of the Warrant prior to such consummation, the stock or other securities or property to which such Warrantholder would have been entitled upon the consummation of such reorganization, consolidation, merger or conveyance if such Warrantholder had exercised the Warrant immediately prior thereto, all subject to further adjustment as provided in this Section 9. The successor or purchasing entity in any such reorganization, consolidation, merger or conveyance (if other than the Company) shall duly execute and deliver to Warrantholder a written acknowledgment of such entity’s obligations under the Warrants and this Agreement.

 

C. Notice of Certain Events.

 

Upon the occurrence of any event resulting in an adjustment in the number of Warrant Shares (or other stock or securities or property) receivable upon the exercise of the Warrants or the Exercise Price, the Company shall promptly thereafter (i) compute such adjustment in accordance with the terms of the Warrants, (ii) prepare a certificate setting forth such adjustment and showing in detail the facts upon which such adjustment is based, and (iii) mail copies of such certificate to Warrantholder.

 

Section 10.

Reservation of Shares.

 

The Company shall at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued Preferred Stock, or its authorized and issued Preferred Stock held in its treasury, the aggregate number of the Warrant Shares deliverable upon the exercise of all outstanding Warrants, for the purpose of enabling it to satisfy any obligation to issue the Warrant Shares upon the due and punctual exercise of the Warrants, through 5:00 p.m., Eastern time, on the Warrant Expiration Date.

 

 

Section 11.

No Impairment.

 

The Company shall not, by amendment of its certificate of incorporation or bylaws, or through reorganization, consolidation, merger, dissolution, issuance or sale of securities, sale of assets or any other voluntary action, willfully avoid or seek to avoid the observance or performance of any of the terms of the Warrants or this Agreement, and shall at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of Warrantholder under the Warrants and this Agreement against wrongful impairment. Without limiting the generality of the foregoing, the Company: (i) shall not set or increase the par value of any Warrant Shares above the amount payable therefor upon exercise, and (ii) shall take all actions that are necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of the Warrants.

 

Section 12.

Representations and Warranties of Warrantholder.

 

Warrantholder represents and warrants to the Company that, on the date hereof and on the date the Warrantholder exercises the Warrant pursuant to the terms of this Agreement:

 

A. Warrantholder understands that the Warrants and the Warrant Shares have not been registered under the Securities Act and acknowledges that the Warrants and the Warrant Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration becomes available.

 

B. Warrantholder is acquiring the Warrants for Warrantholder’s own account for investment and not with a view to, or for sale in connection with, any distribution thereof.

 

C. Warrantholder understands that the Warrants and the Warrant Shares are being offered and sold in reliance on an exemption from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Warrantholder set forth herein in order to determine the applicability of such exemptions and the suitability of the Warrantholder to acquire the Warrants and Warrant Shares. In this regard, Warrantholder represents, warrants and agrees that:

 

(1) Warrantholder is not a U.S. Person (as defined in the Securities Act) and is not an affiliate (as defined in Rule 501(b) under the Securities Act) of the Company and is not acquiring the Warrants and Warrant Shares for the account or benefit of a U.S. Person.

 

(2) At the time of the origination of contact concerning this Agreement and the date of the execution and delivery of this Agreement, Warrantholder was outside of the United States.

 

(3) Warrantholder will not, during the period commencing on the date of issuance of the Warrants and Warrant Shares and ending on the first anniversary of such date, or such shorter period as may be permitted by Regulation S or other applicable securities law (the “Restricted Period”), offer, sell, pledge or otherwise transfer the Warrants and Warrant Shares in the United States, or to a U.S. Person for the account or for the benefit of a U.S. Person, or otherwise in a manner that is not in compliance with Regulation S.

 

(4) Warrantholder will, after expiration of the Restricted Period, offer, sell, pledge or otherwise transfer the Warrants and Warrant Shares only pursuant to registration under the Securities Act or an available exemption therefrom and, in accordance with all applicable state and foreign securities laws and this Agreement.

 

(5) Warrantholder was not in the United States, engaged in, and prior to the expiration of the Restricted Period will not engage in, any short selling of or any hedging transaction with respect to the Warrants and Warrant Shares, including without limitation, any put, call or other option transaction, option writing or equity swap.

 

 

(6) Neither Warrantholder nor or any person acting on Warrantholder’s behalf has engaged, nor will engage, in any directed selling efforts to a U.S. Person with respect to the Warrants and Warrant Shares and the Warrantholder and any person acting on Warrantholder’s behalf have complied and will comply with the “offering restrictions” requirements of Regulation S under the Securities Act.

 

(7) The transactions contemplated by this Agreement have not been pre- arranged with a buyer located in the United States or with a U.S. Person, and are not part of a plan or scheme to evade the registration requirements of the Securities Act.

 

(8) Neither Warrantholder nor any person acting on Warrantholder’s behalf has undertaken or carried out any activity for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States, its territories or possessions, for any of the Warrants and Warrant Shares. Warrantholder agrees not to cause any advertisement of the Warrants and Warrant Shares to be published in any newspaper or periodical or posted in any public place and not to issue any circular relating to the Warrants and Warrant Shares, except such advertisements that include the statements required by Regulation S under the Securities Act, and only offshore and not in the U.S. or its territories, and only in compliance with any local applicable securities laws.

 

(9) Each certificate representing the Warrants and Warrant Shares shall be endorsed with the following legends, in addition to any other legend required to be placed thereon by applicable federal or state securities laws:

 

(A) “THE SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE SECURITIES ACT.”

 

(B) “TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”

 

(10) Warrantholder consents to the Company making a notation on its records or giving instructions to any transfer agent of the Company in order to implement the restrictions on transfer of the Warrants and Warrant Shares set forth in this Section 12.

 

Section 13.

No Rights or Liabilities as Stockholder.

 

No holder, as such, of any Warrant Certificate shall be entitled to vote, receive dividends or be deemed the holder of Preferred Stock which may at any time be issuable on the exercise of the Warrants represented thereby for any purpose whatever, nor shall anything contained herein or in any Warrant Certificate be construed to confer upon the holder of any Warrant Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance or otherwise), or to receive notice of meetings or other actions affecting stockholders or to receive dividend or subscription rights, or otherwise, until such Warrant Certificate shall have been exercised in accordance with the provisions hereof and the receipt and collection of the Exercise Price and any other amounts payable upon such exercise by the Company. No provision hereof, in the absence of affirmative action by Warrantholder to purchase Warrant Shares shall give rise to any liability of such holder for the Exercise Price or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

 

Section 14.

Registrable Securities.

 

For purposes of this Agreement, “Registrable Securities” means (i) the Warrant Shares; (ii) securities issued or issuable upon any stock split, stock dividend, recapitalization or similar event with respect to the Warrant Shares; and (iii) any other security issued as a dividend or other distribution with respect to, in exchange for, in replacement or redemption of, or in reduction of the liquidation value of, any of the securities referred to in the preceding clauses. Notwithstanding the foregoing, Registrable Securities shall cease to be Registrable Securities when such securities have been sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction or when such securities may be sold pursuant to Rule 144 as determined by the counsel to the Company.

 

Section 15.

Piggy-Back Registration Rights.

 

If at any time when there is not an effective Registration Statement covering all of the Registrable Securities, the Company determines to prepare and file with the Securities and Exchange Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities (other than on Form S-4 or Form S-8 or its then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans), the Company shall send to each holder of Registrable Securities (a “Holder”) written notice of such determination and, if within seven (7) business days after receipt of such notice, any such Holder shall so request in writing (which request shall specify the Registrable Securities intended to be disposed of by the Holder), the Company will cause the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register by the Holder, to the extent required to permit the disposition of the Registrable Securities so to be registered. The Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered. In the case of an underwritten public offering, if the managing underwriter(s) or underwriter(s) should reasonably object to the inclusion of the Registrable Securities in such registration statement, then if the Company after consultation with the managing underwriter should reasonably determine that the inclusion of such Registrable Securities, would materially adversely affect the offering contemplated in such registration statement, and based on such determination recommends inclusion in such registration statement of fewer or none of the Registrable Securities of the Holder, then (x) the number of Registrable Securities of the Holder included in such registration statement shall be reduced, if the Company after consultation with the underwriter(s) recommends the inclusion of fewer Registrable Securities, or (y) none of the Registrable Securities of the Holder shall be included in such registration statement, if the Company after consultation with the underwriter(s) recommends the inclusion of none of such Registrable Securities; provided, however, that if securities are being offered for the account of other persons or entities as well as the Company, such reduction shall not represent a greater fraction of the number of Registrable Securities intended to be offered by the Holder than the fraction of similar reductions imposed on such other persons or entities (other than the Company).

 

 

Section 16.

Fees and Expenses Incident to Registration.

 

All fees and expenses incident to the inclusion of the Registrable Securities on a registration statement pursuant to Section 15 hereof shall be borne by the Company whether or not the registration statement is filed or becomes effective and whether or not any Registrable Securities are sold pursuant to the registration statement.

 

Section 17.

Fractional Interests.

 

The Company shall not be required to issue fractional shares of Preferred Stock upon exercise of the Warrants or to distribute certificates that evidence fractional shares of Preferred Stock. If any fraction of a Warrant Share would, except for the provisions of this Section 14, be issuable on the exercise of a Warrant, the number of Warrant Shares to be issued by the Company shall be rounded to the nearest whole number, with one-half or greater being rounded up.

 

Section 18.

Notices.

 

All notices, consents, requests, waivers or other communications required or permitted under this Agreement (each a “Notice”) shall be in writing and shall be sufficiently given (a) if hand delivered, (b) if sent by nationally recognized overnight courier, or (c) if sent by registered or certified mail, postage prepaid, return receipt requested, to the last known address of the recipient, or such other address as shall be furnished by any of the parties hereto in a Notice. Any Notice shall be deemed given upon receipt.

 

Section 19.

Supplements, Amendments and Waivers.

 

This Agreement may be supplemented or amended only by a subsequent writing signed by each of the parties hereto (or their successors or permitted assigns), and any provision hereof may be waived only by a written instrument signed by the party charged therewith.

 

Section 20.

Successors and Assigns.

 

Except as otherwise provided herein, the provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the successors and permitted assigns of the parties hereto. Warrants issued under this Agreement may be assigned by Warrantholder only to the extent such assignment satisfies the restrictions on transfer set forth in this Agreement; any attempted assignment of Warrants in violation of the terms hereof shall be void ab initio.

 

Section 21.

Termination.

 

This Agreement (other than Sections 8C, 12, and Sections 15 through 29, inclusive, and all related definitions, all of which shall survive such termination) shall terminate on the earlier of (i) the Warrant Expiration Date and (ii) the date on which all Warrants have been exercised by the Warrantholder.

 

Section 22.

Governing Law; Jurisdiction.

 

A. Governing Law. This Agreement and each Warrant Certificate issued hereunder shall be governed by and construed in accordance with the laws of the State of Delaware and the federal laws of the United States applicable herein.

 

 

B. Submission to Jurisdiction. Each party to this Agreement hereby irrevocably and unconditionally submits, for itself and its property, to the jurisdiction of the State of Delaware, and any appellate court from any thereof, in respect of actions brought against it as a defendant, in any action, suit or proceeding arising out of or relating to this Agreement or the Warrant Certificates and Warrants to be issued pursuant hereto, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action, suit or proceeding may be heard and determined in such courts. Each of the parties hereto agrees that a final judgment in any such action, suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

 

C. Venue. Each party hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any action, suit or proceeding arising out of or relating to this Agreement, or the Warrant Certificates and Warrants to be issued pursuant hereto, in any court referred to in this Subsection B. Each of the parties hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action, suit proceeding in any such court and waives any other right to which it may be entitled on account of its place of residence or domicile.

 

Section 23.

Third Party Beneficiaries.

 

Each party intends that this Agreement shall not benefit or create any right or cause of action in or on behalf of any Person other than the parties hereto and their successors and permitted assigns.

 

Section 24.

Headings.

 

The headings in this Agreement are for convenience only and shall not affect the construction or interpretation of this Agreement.

 

Section 25.

Entire Agreement.

 

This Agreement, together with the Warrant Certificates and Exhibits, and the Subscription Agreement, dated of even date herewith, by and between the Company and the Warrantholder, constitute the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and shall supersede any prior agreements and understandings between the parties hereto with respect to such subject matter.

 

Section 26.

Expenses.

 

Each of the parties hereto shall pay its own expenses and costs incurred or to be incurred in negotiating, closing and carrying out this Agreement and in consummating the transactions contemplated herein, except as otherwise expressly provided for herein.

 

Section 27.

Neutral Construction.

 

The parties to this Agreement agree that this Agreement was negotiated fairly between them at arm’s length and that the final terms of this Agreement are the product of the parties’ negotiations. Each party represents and warrants that it has sought and received legal counsel of its own choosing with regard to the contents of this Agreement and the rights and obligations affected hereby. The parties agree that this Agreement shall be deemed to have been jointly and equally drafting by them, and that the provisions of this Agreement therefore should not be construed against a party or parties on the grounds that such party or parties drafted or was more responsible for the drafting of any such provision(s).

 

 

Section 28.

Representations and Warranties.

 

The Company hereby represents and warrants to the Warrantholder that:

 

(a) the Company has all requisite corporate power and authority to (i) execute and deliver this Agreement and (ii) issue and sell the Preferred Stock upon the conversion thereof and carry out provisions of this Agreement. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement, the performance of all obligations of the Company hereunder, and the authorization (or reservation for issuance), sale and issuance of the Preferred Stock to be sold hereunder has been taken or will be taken prior to the date hereof;

 

(b) this Agreement constitutes a valid and legally binding obligation of the Company, enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws relating to application affecting enforcement of creditor’s rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief of other equitable remedies;

 

(c) the Preferred Stock issuable upon the conversion thereof that is being purchased hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable and will be free of restrictions on transfer, other than restrictions on transfer under applicable state and federal securities laws;

 

(d) subject in part to the truth and accuracy of Warrantholder’s representations set forth in Section 12 of this Agreement, the offer, sale and issuance of the Preferred Stock issuable upon the conversion thereof as contemplated by this Agreement are exempt from the registration requirements of the Securities Act and the qualification or registration requirements of any state securities or other applicable blue sky laws; and

 

(e) the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not result in any such violation, or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision or an event that results in creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture or nonremoval of any material permit, license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties.

 

Section 29.

Counterparts.

 

This Agreement may be executed in counterparts and by facsimile or other electronic transmission, and each such counterpart shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

 

	THE COMPANY:
	PETROCORP INC.
	By:
		Name:
		Title:

 

	WARRANTHOLDER:
	FULL FINANCE ISRAEL, LP
	By:
		Name:
		Title:

 

 

EXHIBIT 1

 

WARRANT FORM

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH SUCH ACT AND LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF, AND MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH, A CLASS A WARRANT AGREEMENT BETWEEN STARGOLD MINES, INC. AND THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE COMPANY.

 

NO. _____

_____ WARRANTS

 

FORM OF

 

Warrant Certificate

 

PETROCORP INC.

 

This Warrant Certificate certifies that Full Finance Israel, L.P. (the “Warrantholder”), is the registered holder of 304,878 Warrants (the “Warrants”) to purchase shares (the “Warrant Shares”) of Preferred Stock of Petrocorp Inc. (the “Company”). Each Warrant entitles the holder, subject to the satisfaction of the conditions to exercise set forth in Section 8 of the Warrant Agreement referred to below, to purchase from the Company at any time or from time to time on and after the date of the Warrant Agreement and terminate on or prior to 5:00 p.m., Eastern time, on Oct 3rd, 2024 (the “Warrant Expiration Date”) one fully paid and nonassessable Warrant Share at the Exercise Price set forth in the Warrant Agreement. The number of Warrant Shares for which each Warrant is exercisable and the Exercise Price are subject to adjustment as provided in the Warrant Agreement.

 

The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants to purchase Warrant Shares and are issued pursuant to a Warrant Agreement, dated as of June 19th, 2022 (the “Warrant Agreement”), between the Company and the Warrantholder, which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Company and Warrantholder.

 

Warrantholder may exercise the Warrants by surrendering this Warrant Certificate, with the Election to Purchase attached hereto properly completed and executed, together with payment of the aggregate Exercise Price, at the offices of the Company specified in Section 15 of the Warrant Agreement. If upon any exercise of Warrants evidenced hereby the number of Warrants exercised shall be less than the total number of Warrants evidenced hereby, there shall be issued to the holder hereof or its assignee a new Warrant Certificate evidencing the number of Warrants not exercised.

 

 

This Warrant Certificate, when surrendered at the offices of the Company specified in Section 15 of the Warrant Agreement, by the registered holder thereof in person, by legal representative or by attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, for one or more other Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants.

 

The Company may deem and treat the registered holder hereof as the absolute owner of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof and for all other purposes, and the Company shall not be affected by any notice to the contrary.

 

WITNESS the signatures of the duly authorized officers of the Company.

 

Dated: __________, 2022

 

	PETROCORP INC.
	By:
		Name:
		Title:

 

 

Exhibit 2

 

Form of Election to Purchase

 

The undersigned hereby irrevocably elects to exercise __________of the Warrants evidenced by the attached Warrant Certificate to purchase Warrant Shares, and herewith tenders (or is concurrently tendering) payment for such Warrant Shares in an amount determined in accordance with the terms of the Warrant Agreement. The undersigned requests that a certificate representing such Warrant Shares be registered in the name of ___________,whose address is _________________ and that such certificate be delivered to ___________, whose address is __________________. If said number of Warrants is less than the number of Warrants evidenced by the Warrant Certificate (as calculated pursuant to the Warrant Agreement), the undersigned requests that a new Warrant Certificate evidencing the number of Warrants evidenced by this Warrant Certificate that are not being exercised be registered in the name of __________________, whose address is ___________________ and that such Warrant Certificate be delivered to ___________, whose address is_________________.

 

	Dated: __________________, ____________
	Name of holder of Warrant Certificate:
	(Please Print)
	Address:
	Federal Tax ID No.:
	Signature:
	Note:	The above signature must correspond with the name as written in the first sentence of the attached Warrant Certificate in every particular, without alteration or enlargement or any change whatever, and if the certificate evidencing the Warrant Shares or any Warrant Certificate representing Warrants not exercised is to be registered in a name other than that in which this Warrant Certificate is registered, the signature above must be guaranteed.

Dated: ____________, ______

 

 

Exhibit 4.4

 

REVOLVING CREDIT NOTE

 

February 10, 2023

 

Petrocorp Israel LTD., a company established in the State of Israel (“Maker”), hereby promises to pay to the order of PETROCORP INC., a Delaware company (“Holder”), at the address listed below, or such address as Holder may from time to time designate in writing to Maker, the principal sum of up to Two Million USD ($2,000,000, “Stated Principal Balance”), or such other amount as may be reflected from time to time on the books and records of the Holder, evidencing the aggregate of the Advance(s) (as defined herein) requested by and made to Maker (the “Outstanding Principal Balance”), in such currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, in accordance with the terms and conditions of this promissory note (“Note”). Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day that is a Business Day (as defined herein). 

 

1. Maturity Date; Interest. The Outstanding Principal Balance and all accrued interest thereon shall be due and payable on or before December 31^st, 2023 (the “Maturity Date”) or any date thereafter as to be agreed or extended by the parties. All sums advanced pursuant to this Note shall bear interest from the date of each Advance is made until paid in full at the rate of six percent (6%) per annum. Maker shall pay accrued interest on the Outstanding Principal Balance on a annual basis commencing on 31.12.2023 and continuing on the last Business Day of each year thereafter.

 

2. Advances. Maker may give Holder written notice (each, a “Written Request”) requesting an advance (each, an “Advance” and, collectively, the “Advances”), by delivering to Holder not later than 11:00 a.m. (New York City time) at least three (3) Business Days before the proposed borrowing date (in each case, the “Borrowing Date”) of such requested Advance, which Written Request shall specify (i) the principal amount of such requested Advance; (ii) the purpose to which the funds from the proposed Advance will be used; (iii) the party or parties to whom funds will be paid on behalf of Maker; and (iv) the proposed Borrowing Date of such Advance, which shall be a Business Day. As used herein, “Business Day” shall mean any day other than a Saturday, Sunday, Good Friday or other a day on which the Federal Reserve is closed. Holder shall notify Maker in writing if Holder declines to fund the requested Advance; provided, however, that requests for Advances will not be unreasonably withheld and will be timely granted. On each Borrowing Date, Maker authorizes Holder to disburse the proceeds of the requested Advance to the designated payee(s), as set forth in the applicable Written Request. It is understood and agreed that Holder shall have no responsibility for the application of proceeds except to disburse proceeds to the designated payee(s) and such proceeds so disbursed shall be deemed to have been disbursed to the Maker. The outstanding amount of all Advances made by the Holder to the Maker under this Note shall not exceed the Stated Principal Amount.

 

 

3. Affirmative Covenants. Maker covenants and agrees that at all times prior to the Maturity Date, Maker shall:

 

3.1. Use of Loan Proceeds. Use all proceeds of Advances only for its working capital and ordinary business expenses and in accordance with the Written Request.

 

3.2. Compliance with Laws. Comply in all respects with all rules applicable to Maker and its business.

 

3.3. Business Records. Keep adequate records and books of account with respect to Maker’s business activities in accordance with sound bookkeeping practices reflecting all transactions of Maker, and permit Holder at any time to copy and inspect such books and records and make copies thereof.

 

3.4. Notice. Provide Holder with immediate telephonic notice (followed by notice in an email or letter) after becoming aware of any of the following:

 

(a) the happening of any event, occurrence or condition, or series of events, occurrences or conditions, that would cause any representation contained in this Note, t to be untrue, inaccurate or misleading;

 

(b) the existence of a default or an event of default hereunder or under any agreement to which Maker is a party;

 

(c) the happening of any event, occurrence or condition, or series of events, occurrences or conditions, that has resulted in, or that may reasonably be expected to result in, a material adverse change in the business of the Maker;

 

(d) any dispute that may arise between Maker and any governmental unit, including without limitation any violation or alleged violation of any governmental rule; and

 

(e) the commencement of any proceeding by a governmental unit or litigation, suit, action or proceeding, at law or in equity against Maker as defendant, co-defendant, third party defendant or otherwise, or by Maker as plaintiff, as counter-claimant or otherwise.

 

4. Negative Covenants. Maker covenants and agrees that at all times prior to the Maturity Date, Maker shall not, directly or indirectly:

 

4.1. Indebtedness. Create, incur, assume or suffer to exist, voluntarily or involuntarily, any indebtedness or liability, other than trade indebtedness not in excess of $100,000.

 

4.2. Mergers; Consolidations; Acquisitions. Enter into any transaction or series of transactions that directly or indirectly would constitute a merger, consolidation, reorganization or recapitalization; take any action in contemplation of dissolution or liquidation; conduct any part of its business through any affiliate or other person; or acquire the equity interests or assets of any person, whether by merger, consolidation, purchase of equity interests or otherwise.

 

 

4.3. Change of Management; Change of Control. (a) Allow a change in the ownership structure of Maker, whether by the issuance, sale, transfer, exchange, assignment or other direct or indirect hypothecation of its equity interests, or by the issuance of subscriptions, warrants, options, convertible securities, or other rights (fixed, contingent or otherwise) to purchase or otherwise acquire equity interests, or (b) permit any person other than the current officers to hold their respective offices, in each case unless a replacement reasonably acceptable to Holder is appointed.

 

4.4. Sale or Disposition. Sell or otherwise dispose of all or any asset or other property or grant any person an option to acquire any asset of Maker or other property.

 

4.5. Liens and Encumbrances. Grant, permit or suffer to exist the imposition of any lien, mortgage, hypothecation, encumbrance or any other adverse claim or interest on any asset of the Maker, the Maker or any part of its business.

 

4.6. Dividends. Pay any dividends or profits, make any distribution or return of capital, directly or indirectly purchase, retire or redeem any of its equity interests, or take any action which would have an effect equivalent to any of the foregoing.

 

4.7. Guaranties. Assume, guarantee, endorse, contingently agree to purchase, assume or otherwise become liable for the indebtedness of any person.

 

4.8. Loan or Advances. Make any loans or advances to any person, or make any payments or pay any liabilities, costs or expenses, of or on behalf of any other person.

 

4.9. Investments. Make any investment in any person, whether in the form of equity interests (including, but not limited to, subscriptions, warrants, options or other rights convertible into equity interests), indebtedness (including indebtedness that is convertible into equity interests), any combination of equity interests and indebtedness, or otherwise.

 

4.10. Bank Accounts. Open or maintain any deposit, checking, operating or other bank account, or similar money handling account, with any bank or other financial institution except for those accounts previously approved by Holder.

 

4.11. Compensation. Pay compensation to its officers, directors, employees, agents and all others, including salaries, withdrawals, fees, bonuses, commissions, drawing accounts and other payments, whether directly or indirectly, in money or otherwise, without the prior written approval of Holder.

 

4.12. Transactions with Affiliates. Make, enter into or otherwise undertake any transaction with any affiliate, unless such transaction has been approved or otherwise consented to pursuant to the applicable terms of Maker’s charter documents and is at least as favorable to Maker as a similar transaction entered into at arms’ length with an unrelated third party.

 

 

5. Holder’s Investment Representations.

 

(a) The Holder is acquiring this Note for investment for its own account and not with the view to, or for resale in connection with, any distribution thereof. The Holder understands and acknowledges that the Note has not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state or foreign securities laws, by reason of a specific exemption from the registration provisions of the Securities Act and applicable state and foreign securities laws, which depends upon, among other things, the bona fide nature of the investment intent as expressed herein. The Holder further represents that it does not have any contract, undertaking, agreement or arrangement with any person or entity to sell, transfer or grant participation to any third person with respect to the Note.

 

(b) The Holder understands that an active public market for the Maker’s securities may not now exist and that there will never be an active public market for the Note.

 

(c) The Holder is an “accredited investor” as defined in Rule 501 of Regulation D as promulgated by the Securities and Exchange Commission under the Securities Act and shall submit to the Maker such further assurances of such status as may be reasonably requested by the Maker.

 

(d) Neither the Holder nor, to its knowledge, any person or entity controlling, controlled by or under common control with it, nor any person or entity having a beneficial interest in it, nor any person on whose behalf the Holder is acting: (i) is a person listed in the Annex to Executive Order No. 13224 (2001) issued by the President of the United States (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism); (ii) is named on the List of Specially Designated Nationals and Blocked Persons maintained by the U.S. Office of Foreign Assets Control; (iii) is a non-U.S. shell bank or is providing banking services indirectly to a non-U.S. shell bank; (iv) is a senior non-U.S. political figure or an immediate family member or close associate of such figure; or (v) is otherwise prohibited from investing in the Maker pursuant to applicable U.S. anti-money laundering, anti-terrorist and asset control laws, regulations, rules or orders (categories (i) through (v), each a “Prohibited Seller”). The Holder agrees to provide the Maker, promptly upon request, all information that is reasonably necessary or appropriate to comply with applicable U.S. anti-money laundering, anti-terrorist and asset control laws, regulations, rules and orders. The Holder consents to the disclosure to U.S. regulators and law enforcement authorities by the Maker and its affiliates and agents of such information about such member as is reasonably necessary or appropriate to comply with applicable U.S. anti-money-laundering, anti-terrorist and asset control laws, regulations, rules and orders. The Holder acknowledges that if, following its investment in the Note, the Maker reasonably believes that such member is a Prohibited Seller or is otherwise engaged in suspicious activity or refuses to promptly provide information that the Maker requests, the Maker has the right or may be obligated to prohibit additional investments, segregate the assets constituting the investment in accordance with applicable regulations or immediately require such member to transfer the Note. The Holder further acknowledges that such member will have no claim against the Maker or any of its affiliates or agents for any form of damages as a result of any of the foregoing actions.

 

 

(e) The Holder or its duly authorized representative realizes that because of the inherently speculative nature of business activities of the kind contemplated by the Holder, the Holder’s financial position and results of operations may be expected to fluctuate from period to period and will, generally, involve a high degree of financial and market risk that can result in substantial or, at times, even total loss of the value of the Note.

 

5A. Events of Default. In case one or more of the following events (each, an “Event of Default”) (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body) shall have occurred and be continuing:

 

a. Default in the payment, when due or declared due, of the Outstanding Principal Amount and accrued interest on the Maturity Date;

 

b. Default in the payment, when due or declared due, of accrued interest hereunder;

 

c. Any representation or warranty made by Maker in this Note or in connection with any borrowing or request for an Advance hereunder is untrue in any material respect at the time when made; or

 

d. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Maker and, in the case of involuntary proceedings, have not been dismissed within 61 days,

 

then, in each case where an Event of Default occurs, Holder, by notice in writing to Maker shall inform Maker of such Event of Default and if such default is not cured within five business days from the date such notice is received by Maker, then Holder, may, at its option, declare the Outstanding Principal Amount and all accrued interest due thereon to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable. Following the occurrence and during the continuance of an Event of Default, which, if susceptible to cure is not cured as provided above, otherwise then from the first date of such occurrence, the annual interest rate on this Note shall be the higher of fifteen percent (15%) or the highest rate permitted by law.

 

6. Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Maker, which is absolute and unconditional, to pay the Outstanding Principal Balance of this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Maker.

 

 

7. Costs of Collection. Maker and Holder agree that if, and as often as, this Note is placed in the hands of an attorney for collection, or to defend or enforce any of Holder’s rights hereunder, or under any instrument securing payment of this Note, Maker shall pay to Holder its attorney’s fees and all court costs and other expenses incurred in connection therewith, regardless of whether a lawsuit is ever commenced or whether, if commenced, the same proceeds to judgement or not. Such costs and expenses shall include, without limitation, all costs, reasonable attorneys’ fees and expenses incurred by Holder in connection with any insolvency, bankruptcy, reorganization, foreclosure, deed in lieu of foreclosure or similar proceeding involving Maker or which in any way affect the exercise by Holder of its rights and remedies under this Note, or any other document or instrument securing, evidencing or relating to the indebtedness evidenced by this Note.

 

8. Non-Waiver. No delay or omission on the part of Holder in exercising any of the rights or remedies hereunder shall operate as a waiver of such right or of any other right or remedy under this Note. A waiver of any one or more occasions shall not be construed as a bar to or waiver of any such right and/or remedy on any future occasion.

 

9. Purpose of Loan. Maker certifies that the loan evidenced by this Note is obtained for business or commercial purposes and that the proceeds thereof will not be used primarily for personal, family, household or agricultural purposes.

 

10. Waiver of Presentment. Maker and the endorsers, sureties, guarantors and all persons who may become liable for all or any part of this obligation shall be jointly and severally liable for such obligation and hereby jointly and severally waive presentment and demand for payment, notice of dishonor, protest and notice of protest, and any and all lack of diligence or delays in collection or enforcement hereof. Said parties consent to any modification or extension of time (whether one or more) of payment hereof, the release of all or any part of security for the payment hereof, and the release of any party liable for payment of this obligation. Any modification, extension, or release may be without notice to any such party and shall not discharge said party’s liability hereunder.

 

11. Partial Enforcement. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note.

 

12. Notice. All notices, consents, waivers, and other communications under this Note must be in writing and will be deemed given to a party when (a) delivered to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid); (b) sent by facsimile or e-mail with confirmation of transmission by the transmitting equipment; (c) received or rejected by the addressee, if sent by certified mail, return receipt requested, if to the registered Holder hereof; or (d) seven days after the placement of the notice into the mails (first class postage prepaid), to the Holder at:

 

Patrocorp Inc 353 West 48th St, #292 New York, NY, USA

 

 

or, if to the Maker, to it at:

 

Petrocorp Israel Ltd 30 Golomb St Ness Ziyona, Israel

 

(or to such other address, facsimile number, or e-mail address as the Holder or the Maker as a party may designate by notice to the other party in accordance with this Section 12).

 

13. Governing Law. The parties agree that the loan evidenced by this Note is made in the State of New York and the provisions hereof will be construed in accordance with the laws of the State New York. The parties further agree that in the event of default, this Note may be enforced in any court of competent jurisdiction in the State of New York, and they do hereby submit to the jurisdiction of such court regardless of their residence or where this Note.

 

14. Severability. Invalidation of any of the provisions of this Note or of any section, paragraph, sentence, clause, phrase, or word herein, or the application thereof in any given circumstance, shall not affect the validity of the remainder of this Note.

 

15. Amendment. This may not be amended, modified, or changed, except only by an instrument in writing, signed by both the parties.

 

16. Time of the Essence. Time is of the essence for the performance of each and every obligation of Maker hereunder.

 

17. Complete Agreement. This Note is a complete statement of the agreement between the parties and supersedes and merges all prior proposals, understandings, all other agreements, oral and written, including oral representations and warranties, between the parties relating to this Note.

 

18. Independent Representation. The Maker hereto acknowledges and agrees that it has received or has had the opportunity to receive independent legal counsel of its own choice and that it has been sufficiently apprised of its rights and responsibilities with regard to the substance of this Note, particularly in light of the fact that an affiliate of Holder is the principal of Maker’s counsel and therefore not independent. This Note shall be construed to effectuate the mutual intent of the parties. The parties and their counsel have cooperated in the drafting and preparation of this Note, and this Note therefore shall not be construed against any party by virtue of its role as the drafter thereof. No drafts of this Note shall be offered by any party, nor shall any draft be admissible in any proceeding, to explain or construe this Note.

 

19. Electronic and Counterpart Signatures. All parties (a) agree that each may use electronic signatures, (b) by doing so, agree to being subject to the provisions of the U.S. E-SIGN Act (i.e., the Electronic Signatures in Global and National Commerce Act (enacted June 30, 2000, and codified at 15 U.S.C. § 7001 et seq.)) and (c) agree that an electronic or facsimile copy of the executed Note or counterpart shall be deemed, and shall have the same legal force and effect as, an original document.

 

 

IN WITNESS WHEREOF, the Maker and Holder have duly executed and delivered this Note, or caused this Note to be duly executed and delivered, all as of the date first written above.

 

	Petrocorp Israel LTD.
	By:	/s/ Menny Shalom
	Name:	Menny Shalom
	Title:	CEO
	PETROCORP INC.
	By:	/s/ Doron Yom Tov
	Name:	Doron Yom Tov
	Title:	Chairman

 

 

Exhibit 4.5

 

REVOLVING CREDIT NOTE

 

February 10, 2023

 

M.E.A. TESTING SYSTEMS LTD., a company established in the State of Israel (“Maker”), hereby promises to pay to the order of PETROCORP INC., a Delaware company (“Holder”), at the address listed below, or such address as Holder may from time to time designate in writing to Maker, the principal sum of up to Two Million USD ($2,000,000, “Stated Principal Balance”), or such other amount as may be reflected from time to time on the books and records of the Holder, evidencing the aggregate of the Advance(s) (as defined herein) requested by and made to Maker (the “Outstanding Principal Balance”), in such currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, in accordance with the terms and conditions of this promissory note (“Note”). Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day that is a Business Day (as defined herein). 

 

1. Maturity Date; Interest. The Outstanding Principal Balance and all accrued interest thereon shall be due and payable on or before December 31^st, 2023 (the “Maturity Date”) or any date thereafter as to be agreed or extended by the parties. All sums advanced pursuant to this Note shall bear interest from the date of each Advance is made until paid in full at the rate of six percent (6%) per annum. Maker shall pay accrued interest on the Outstanding Principal Balance on a annual basis commencing on 31.12.2023 and continuing on the last Business Day of each year thereafter.

 

2. Advances. Maker may give Holder written notice (each, a “Written Request”) requesting an advance (each, an “Advance” and, collectively, the “Advances”), by delivering to Holder not later than 11:00 a.m. (New York City time) at least three (3) Business Days before the proposed borrowing date (in each case, the “Borrowing Date”) of such requested Advance, which Written Request shall specify (i) the principal amount of such requested Advance; (ii) the purpose to which the funds from the proposed Advance will be used; (iii) the party or parties to whom funds will be paid on behalf of Maker; and (iv) the proposed Borrowing Date of such Advance, which shall be a Business Day. As used herein, “Business Day” shall mean any day other than a Saturday, Sunday, Good Friday or other a day on which the Federal Reserve is closed. Holder shall notify Maker in writing if Holder declines to fund the requested Advance; provided, however, that requests for Advances will not be unreasonably withheld and will be timely granted. On each Borrowing Date, Maker authorizes Holder to disburse the proceeds of the requested Advance to the designated payee(s), as set forth in the applicable Written Request. It is understood and agreed that Holder shall have no responsibility for the application of proceeds except to disburse proceeds to the designated payee(s) and such proceeds so disbursed shall be deemed to have been disbursed to the Maker. The outstanding amount of all Advances made by the Holder to the Maker under this Note shall not exceed the Stated Principal Amount.

 

 

3. Affirmative Covenants. Maker covenants and agrees that at all times prior to the Maturity Date, Maker shall:

 

3.1. Use of Loan Proceeds. Use all proceeds of Advances only for its working capital and ordinary business expenses and in accordance with the Written Request.

 

3.2. Compliance with Laws. Comply in all respects with all rules applicable to Maker and its business.

 

3.3. Business Records. Keep adequate records and books of account with respect to Maker’s business activities in accordance with sound bookkeeping practices reflecting all transactions of Maker, and permit Holder at any time to copy and inspect such books and records and make copies thereof.

 

3.4. Notice. Provide Holder with immediate telephonic notice (followed by notice in an email or letter) after becoming aware of any of the following:

 

(a) the happening of any event, occurrence or condition, or series of events, occurrences or conditions, that would cause any representation contained in this Note, t to be untrue, inaccurate or misleading;

 

(b) the existence of a default or an event of default hereunder or under any agreement to which Maker is a party;

 

(c) the happening of any event, occurrence or condition, or series of events, occurrences or conditions, that has resulted in, or that may reasonably be expected to result in, a material adverse change in the business of the Maker;

 

(d) any dispute that may arise between Maker and any governmental unit, including without limitation any violation or alleged violation of any governmental rule; and

 

(e) the commencement of any proceeding by a governmental unit or litigation, suit, action or proceeding, at law or in equity against Maker as defendant, co-defendant, third party defendant or otherwise, or by Maker as plaintiff, as counter-claimant or otherwise.

 

4. Negative Covenants. Maker covenants and agrees that at all times prior to the Maturity Date, Maker shall not, directly or indirectly:

 

4.1. Indebtedness. Create, incur, assume or suffer to exist, voluntarily or involuntarily, any indebtedness or liability, other than trade indebtedness not in excess of $100,000.

 

4.2. Mergers; Consolidations; Acquisitions. Enter into any transaction or series of transactions that directly or indirectly would constitute a merger, consolidation, reorganization or recapitalization; take any action in contemplation of dissolution or liquidation; conduct any part of its business through any affiliate or other person; or acquire the equity interests or assets of any person, whether by merger, consolidation, purchase of equity interests or otherwise.

 

 

4.3. Change of Management; Change of Control. (a) Allow a change in the ownership structure of Maker, whether by the issuance, sale, transfer, exchange, assignment or other direct or indirect hypothecation of its equity interests, or by the issuance of subscriptions, warrants, options, convertible securities, or other rights (fixed, contingent or otherwise) to purchase or otherwise acquire equity interests, or (b) permit any person other than the current officers to hold their respective offices, in each case unless a replacement reasonably acceptable to Holder is appointed.

 

4.4. Sale or Disposition. Sell or otherwise dispose of all or any asset or other property or grant any person an option to acquire any asset of Maker or other property.

 

4.5. Liens and Encumbrances. Grant, permit or suffer to exist the imposition of any lien, mortgage, hypothecation, encumbrance or any other adverse claim or interest on any asset of the Maker, the Maker or any part of its business.

 

4.6. Dividends. Pay any dividends or profits, make any distribution or return of capital, directly or indirectly purchase, retire or redeem any of its equity interests, or take any action which would have an effect equivalent to any of the foregoing.

 

4.7. Guaranties. Assume, guarantee, endorse, contingently agree to purchase, assume or otherwise become liable for the indebtedness of any person.

 

4.8. Loan or Advances. Make any loans or advances to any person, or make any payments or pay any liabilities, costs or expenses, of or on behalf of any other person.

 

4.9. Investments. Make any investment in any person, whether in the form of equity interests (including, but not limited to, subscriptions, warrants, options or other rights convertible into equity interests), indebtedness (including indebtedness that is convertible into equity interests), any combination of equity interests and indebtedness, or otherwise.

 

4.10. Bank Accounts. Open or maintain any deposit, checking, operating or other bank account, or similar money handling account, with any bank or other financial institution except for those accounts previously approved by Holder.

 

4.11. Compensation. Pay compensation to its officers, directors, employees, agents and all others, including salaries, withdrawals, fees, bonuses, commissions, drawing accounts and other payments, whether directly or indirectly, in money or otherwise, without the prior written approval of Holder.

 

4.12. Transactions with Affiliates. Make, enter into or otherwise undertake any transaction with any affiliate, unless such transaction has been approved or otherwise consented to pursuant to the applicable terms of Maker’s charter documents and is at least as favorable to Maker as a similar transaction entered into at arms’ length with an unrelated third party.

 

 

5. Holder’s Investment Representations.

 

(a) The Holder is acquiring this Note for investment for its own account and not with the view to, or for resale in connection with, any distribution thereof. The Holder understands and acknowledges that the Note has not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state or foreign securities laws, by reason of a specific exemption from the registration provisions of the Securities Act and applicable state and foreign securities laws, which depends upon, among other things, the bona fide nature of the investment intent as expressed herein. The Holder further represents that it does not have any contract, undertaking, agreement or arrangement with any person or entity to sell, transfer or grant participation to any third person with respect to the Note.

 

(b) The Holder understands that an active public market for the Maker’s securities may not now exist and that there will never be an active public market for the Note.

 

(c) The Holder is an “accredited investor” as defined in Rule 501 of Regulation D as promulgated by the Securities and Exchange Commission under the Securities Act and shall submit to the Maker such further assurances of such status as may be reasonably requested by the Maker.

 

(d) Neither the Holder nor, to its knowledge, any person or entity controlling, controlled by or under common control with it, nor any person or entity having a beneficial interest in it, nor any person on whose behalf the Holder is acting: (i) is a person listed in the Annex to Executive Order No. 13224 (2001) issued by the President of the United States (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism); (ii) is named on the List of Specially Designated Nationals and Blocked Persons maintained by the U.S. Office of Foreign Assets Control; (iii) is a non-U.S. shell bank or is providing banking services indirectly to a non-U.S. shell bank; (iv) is a senior non-U.S. political figure or an immediate family member or close associate of such figure; or (v) is otherwise prohibited from investing in the Maker pursuant to applicable U.S. anti-money laundering, anti-terrorist and asset control laws, regulations, rules or orders (categories (i) through (v), each a “Prohibited Seller”). The Holder agrees to provide the Maker, promptly upon request, all information that is reasonably necessary or appropriate to comply with applicable U.S. anti-money laundering, anti-terrorist and asset control laws, regulations, rules and orders. The Holder consents to the disclosure to U.S. regulators and law enforcement authorities by the Maker and its affiliates and agents of such information about such member as is reasonably necessary or appropriate to comply with applicable U.S. anti-money-laundering, anti-terrorist and asset control laws, regulations, rules and orders. The Holder acknowledges that if, following its investment in the Note, the Maker reasonably believes that such member is a Prohibited Seller or is otherwise engaged in suspicious activity or refuses to promptly provide information that the Maker requests, the Maker has the right or may be obligated to prohibit additional investments, segregate the assets constituting the investment in accordance with applicable regulations or immediately require such member to transfer the Note. The Holder further acknowledges that such member will have no claim against the Maker or any of its affiliates or agents for any form of damages as a result of any of the foregoing actions.

 

 

(e) The Holder or its duly authorized representative realizes that because of the inherently speculative nature of business activities of the kind contemplated by the Holder, the Holder’s financial position and results of operations may be expected to fluctuate from period to period and will, generally, involve a high degree of financial and market risk that can result in substantial or, at times, even total loss of the value of the Note.

 

5A. Events of Default. In case one or more of the following events (each, an “Event of Default”) (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body) shall have occurred and be continuing:

 

a. Default in the payment, when due or declared due, of the Outstanding Principal Amount and accrued interest on the Maturity Date;

 

b. Default in the payment, when due or declared due, of accrued interest hereunder;

 

c. Any representation or warranty made by Maker in this Note or in connection with any borrowing or request for an Advance hereunder is untrue in any material respect at the time when made; or

 

d. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Maker and, in the case of involuntary proceedings, have not been dismissed within 61 days,

 

then, in each case where an Event of Default occurs, Holder, by notice in writing to Maker shall inform Maker of such Event of Default and if such default is not cured within five business days from the date such notice is received by Maker, then Holder, may, at its option, declare the Outstanding Principal Amount and all accrued interest due thereon to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable. Following the occurrence and during the continuance of an Event of Default, which, if susceptible to cure is not cured as provided above, otherwise then from the first date of such occurrence, the annual interest rate on this Note shall be the higher of fifteen percent (15%) or the highest rate permitted by law.

 

6. Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Maker, which is absolute and unconditional, to pay the Outstanding Principal Balance of this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Maker.

 

 

7. Costs of Collection. Maker and Holder agree that if, and as often as, this Note is placed in the hands of an attorney for collection, or to defend or enforce any of Holder’s rights hereunder, or under any instrument securing payment of this Note, Maker shall pay to Holder its attorney’s fees and all court costs and other expenses incurred in connection therewith, regardless of whether a lawsuit is ever commenced or whether, if commenced, the same proceeds to judgement or not. Such costs and expenses shall include, without limitation, all costs, reasonable attorneys’ fees and expenses incurred by Holder in connection with any insolvency, bankruptcy, reorganization, foreclosure, deed in lieu of foreclosure or similar proceeding involving Maker or which in any way affect the exercise by Holder of its rights and remedies under this Note, or any other document or instrument securing, evidencing or relating to the indebtedness evidenced by this Note.

 

8. Non-Waiver. No delay or omission on the part of Holder in exercising any of the rights or remedies hereunder shall operate as a waiver of such right or of any other right or remedy under this Note. A waiver of any one or more occasions shall not be construed as a bar to or waiver of any such right and/or remedy on any future occasion.

 

9. Purpose of Loan. Maker certifies that the loan evidenced by this Note is obtained for business or commercial purposes and that the proceeds thereof will not be used primarily for personal, family, household or agricultural purposes.

 

10. Waiver of Presentment. Maker and the endorsers, sureties, guarantors and all persons who may become liable for all or any part of this obligation shall be jointly and severally liable for such obligation and hereby jointly and severally waive presentment and demand for payment, notice of dishonor, protest and notice of protest, and any and all lack of diligence or delays in collection or enforcement hereof. Said parties consent to any modification or extension of time (whether one or more) of payment hereof, the release of all or any part of security for the payment hereof, and the release of any party liable for payment of this obligation. Any modification, extension, or release may be without notice to any such party and shall not discharge said party’s liability hereunder.

 

11. Partial Enforcement. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note.

 

12. Notice. All notices, consents, waivers, and other communications under this Note must be in writing and will be deemed given to a party when (a) delivered to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid); (b) sent by facsimile or e-mail with confirmation of transmission by the transmitting equipment; (c) received or rejected by the addressee, if sent by certified mail, return receipt requested, if to the registered Holder hereof; or (d) seven days after the placement of the notice into the mails (first class postage prepaid), to the Holder at:

 

Patrocorp Inc 353 West 48th St, #292 New York, NY, USA

 

 

or, if to the Maker, to it at:

 

MEA testing Systems Ltd 4 HaGavish St Natanya, Israel

 

(or to such other address, facsimile number, or e-mail address as the Holder or the Maker as a party may designate by notice to the other party in accordance with this Section 12).

 

13. Governing Law. The parties agree that the loan evidenced by this Note is made in the State of New York and the provisions hereof will be construed in accordance with the laws of the State New York. The parties further agree that in the event of default, this Note may be enforced in any court of competent jurisdiction in the State of New York, and they do hereby submit to the jurisdiction of such court regardless of their residence or where this Note.

 

14. Severability. Invalidation of any of the provisions of this Note or of any section, paragraph, sentence, clause, phrase, or word herein, or the application thereof in any given circumstance, shall not affect the validity of the remainder of this Note.

 

15. Amendment. This may not be amended, modified, or changed, except only by an instrument in writing, signed by both the parties.

 

16. Time of the Essence. Time is of the essence for the performance of each and every obligation of Maker hereunder.

 

17. Complete Agreement. This Note is a complete statement of the agreement between the parties and supersedes and merges all prior proposals, understandings, all other agreements, oral and written, including oral representations and warranties, between the parties relating to this Note.

 

18. Independent Representation. The Maker hereto acknowledges and agrees that it has received or has had the opportunity to receive independent legal counsel of its own choice and that it has been sufficiently apprised of its rights and responsibilities with regard to the substance of this Note, particularly in light of the fact that an affiliate of Holder is the principal of Maker’s counsel and therefore not independent. This Note shall be construed to effectuate the mutual intent of the parties. The parties and their counsel have cooperated in the drafting and preparation of this Note, and this Note therefore shall not be construed against any party by virtue of its role as the drafter thereof. No drafts of this Note shall be offered by any party, nor shall any draft be admissible in any proceeding, to explain or construe this Note.

 

19. Electronic and Counterpart Signatures. All parties (a) agree that each may use electronic signatures, (b) by doing so, agree to being subject to the provisions of the U.S. E-SIGN Act (i.e., the Electronic Signatures in Global and National Commerce Act (enacted June 30, 2000, and codified at 15 U.S.C. § 7001 et seq.)) and (c) agree that an electronic or facsimile copy of the executed Note or counterpart shall be deemed, and shall have the same legal force and effect as, an original document.

 

 

IN WITNESS WHEREOF, the Maker and Holder have duly executed and delivered this Note, or caused this Note to be duly executed and delivered, all as of the date first written above.

 

	M.E.A. TESTING SYSTEMS LTD.
	By:	/s/ Menny Shalom
	Name:	Menny Shalom
	Title:	CEO
	PETROCORP INC.
	By:	/s/ Doron Yom Tov
	Name:	Doron Yom Tov
	Title:	Chairman

 

 

Exhibit 10.1

 

 

 

 

 

 

 

 

 

 

SHARE EXCHANGE AGREEMENT

 

among

 

PETROCORP INC.,

 

MEA TESTING SYSTEMS LTD.

 

and

 

THE SHAREHOLDERS OF MEA TESTING SYSTEMS LTD.

 

 

 

July 26, 2022

 

 

 

 

 

 

 

 

 

 

 

SHARE EXCHANGE AGREEMENT

 

SHARE EXCHANGE AGREEMENT, dated as of July 26, 2022 (this “Agreement”), by and among Petrocorp Inc., a Delaware corporation (the “Parent”), MEA Testing Systems Ltd., a corporation established in the State of Israel (the “Company”), and certain shareholders of the Company (each, a “Shareholder” and collectively the “Shareholders”) The Parent, the Company and each of the Shareholders is individually referred to herein as a “Party” and collectively as the “Parties.”

 

WHEREAS, as of the date of this Agreement, the Company has issued and outstanding 1,589,819 ordinary shares, par value NIS0.01 per share, and another 130,000 ordinary shares issued following the exercise of options held by employees of the Company, which shares are held by a trustee, for the benefit of such employees, and 1,525,915 preferred shares, par value NIS0.01 per share (together, the “Company Shares”), all of which are held by the Shareholders and other shareholders of the Company, in the names and amounts as indicated on Exhibit A attached hereto; and

 

WHEREAS, the Company has an option plan for its employees pursuant to which options to purchase an aggregate of 185,530 ordinary shares of the Company are currently exercisable (the “Company Options”) by the holders thereof; and

 

WHEREAS, the Company is a party to an investment agreement (the “Investment Agreement”) pursuant to which a preferred stockholder in the Company has an option to invest an amount of $1,000,000 in the Company in return for 1,524,390 preferred shares of the Company and other rights and preferences provided for therein (the “Original Warrant”); and

 

WHEREAS, the respective Boards of Directors of each of the Parent and the Company has determined that it is in the best interests of the Parent and the Company and its respective shareholders that the Company become a majority owned subsidiary of the Parent; and

 

WHEREAS, the Shareholders have agreed to transfer all of their Shares in exchange for newly issued shares of the Parent (“Parent Shares”) at an exchange rate of (the “Exchange Ratio”) (a) 1 ordinary share for 34.92 shares of common stock, par value $0.0001 per share, of Parent, and (b) every 5 preferred shares of the Company for 1 newly issued preferred share of Parent – each preferred share of the Parent will be convertible to 174.61 shares of common stock of the Parent and with other rights and designations identical to those held by the preferred shareholders of the Company immediately prior to the Closing; it is hereby clarified, acknowledged and agreed among the Parties that the Exchange Ratios stated above (as well as the ratio set for the exchange rate between the Company Options and the Parent Options set forth below) assumes the sale of all (100%) of the Company’s share capital (on a fully diluted basis) in which the Company’s share capital will be exchanged for shares and options to purchase shares 88.41% of the share capital of the Parent (on a fully diluted basis) – if not all of the Company’s share capital are transferred to the Parent by the Shareholders, such Exchange Rates will be adjusted respectively; and

 

 

WHEREAS, the Parties further agree that the Parent Shares to be received by the Shareholders, and the Company Shares to be obtained by Parent, shall be held in escrow as described herein; and

 

WHEREAS, in accordance with the Company’s employee stock option plan, the Company Options shall be assumed by the Parent and substituted with options to purchase common stock of the Parent (“Parent Options”), at the same Exchange Rate of the Company’s Ordinary Shares, with rights substantially similar to the rights vested in the Company Options; and

 

WHEREAS, the Parent Options will be issued in accordance with an employee stock option plan to be adopted by the Parent at the Closing, to include an Israeli Appendix enabling the issuance of the Parent Options to residents of the State of Israel pursuant to Section 102(b) of the Israeli Tax Ordinance (capital gain route) (the “Parent ESOP”) and held in trust by a trustee for the benefit of the holders thereof.

 

NOW, THEREFORE, in consideration of the representations, warranties and covenants herein contained, and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the Parties hereto, intending legally to be bound, agree as follows:

 

ARTICLE I

EXCHANGE OF SHARES

 

1.1 Actions at the Closing. At the Closing (as defined in Section 1.2):

 

1.1.1 The Shareholders shall sell, transfer, convey, assign and deliver to the Parent all of the issued and outstanding Company Shares held by them, free and clear of all liens, security interests, pledges, claims of any kind, voting trusts, shareholder agreements and any other encumbrances (collectively, “Liens”) in exchange for the Parent Shares at the Exchange Ratio, as set forth in the amounts and to the Shareholders as indicated on Exhibit A attached hereto. No fractional shares shall be issued upon exchange of the Company Shares to the Parent Shares, and the number of Parent Shares to be issued shall be rounded to the nearest whole number.

 

1.1.2 Full Finance Israel, LP, the holder of the Original Warrant, shall exchange the Original Warrant for a warrant to purchase preferred shares of the Parent (“Full Finance Warrant”) to be issued by the Parent to it in the form attached hereto as Exhibit B. However, should the Original Warrant be exercised prior to the Closing, all preferred shares issued upon exercise thereof, will be deemed as Company Shares to be exchanged for Parent Shares at the Closing pursuant to the provisions of Section 1.1.1 above and all references in this Agreement regarding the exchange of the Original Warrant with the Full Finance Warrant, shall be deem null and void.

 

1.1.3 The Parent shall adopt the Parent ESOP.

 

 

1.2 Closing. The consummation of the transactions (the “Transactions”) contemplated by this Agreement (the “Closing”) shall take place on such date, time and at such location to be determined by the Company and Parent, commencing upon the satisfaction or waiver of all conditions and obligations of the Parties to consummate the Transactions contemplated hereby (other than conditions and obligations with respect to the actions that the respective Parties will take at Closing) or such other date and time as the Parties may mutually determine (the “Closing Date”). Notwithstanding anything provided in this Agreement to the contrary, the Parties agree that there will be no Closing until and unless no less than 80% of the share capital of the Company have executed this Agreement and agreed to exchange their Company Shares for Parent Shares. Upon a Closing of less than 100% of the share capital of the Company being exchanged for Parent Shares, the Exchange Ratio will be adjusted proportionally and pro ratably based on the amount of Company Shares being exchanged.

 

1.3 Escrow. In order to ensure compliance with the pre-tax ruling issued by the Israel Tax Authority and the compliance of all Shareholders with the terms of the Leak Out Agreement, the Parties will appoint an escrow agent (the “Escrow Agent”) in connection with the Transactions and shall execute and deliver an escrow agreement (the “Escrow Agreement”). The Escrow Agent and the terms of the Escrow Agreement will be agreed upon between the Parties prior to Closing. At the Closing, the Escrow Agent shall hold in escrow pursuant to the terms of the Escrow Agreement (i) the Parent Shares to be received by the Shareholders in exchange for their Company Shares; and (ii) the Company Shares to be received by Parent in consideration for the issuance of the Parent Shares.

 

1.4 102 Trust. In order to ensure compliance of the Parent ESOP with the provisions of Section 102 of the Israeli Tax Ordinance, the Parent will appoint a trustee (the “102 Trustee”) in connection with the Parent ESOP and the Parent Options to be issued pursuant thereto and shall execute and deliver all required documents and agreements required or requested in connection therewith. All Parent Options, following the issuance thereof, shall be held by the Trustee in accordance with the provision of the aforesaid Section 102.

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS

 

(A) As an inducement to the Parent to enter into this Agreement and to consummate the transactions contemplated herein, except as set forth in the Company’s disclosure schedules attached hereto (the “Company Disclosure Schedules”) (it being agreed that any matter disclosed in any Section of the Company Disclosure Schedules will be deemed to apply to and qualify the Section of this Article II to which it corresponds in number and each other Section of this Article II to the extent that it is reasonably apparent on its face that such information is applicable to such other Section),the Company represents and warrants to the Parent, as of the date hereof and as of the Closing Date, as follows:

 

 

2.1 Organization, Qualification and Corporate Power. The Company is a corporation duly organized and validly existing under the laws of the State of Israel. The Company is duly qualified to conduct business and is in good standing under the laws of each jurisdiction in which the nature of its businesses or the ownership or leasing of its properties requires such qualification, except where the failure to be so qualified or in good standing, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect (as defined below). The Company has all requisite corporate power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it. The Company has furnished or made available to the Parent complete and accurate copies of its memorandum and articles of association. The Company is not in default under or in violation of any provision of its certificate of incorporation, as amended to date, its bylaws, as amended to date, or any mortgage, indenture, lease, license or any other agreement or instrument except where such default or violation would not be reasonably expected to have a Company Material Adverse Effect. For purposes of this Agreement, “Company Material Adverse Effect” means a material adverse effect on the assets, business, financial condition, or results of operations of the Company taken as a whole; provided, that, in no event shall any effects (whether alone or in combination) resulting from or arising in connection with any of the following be deemed to constitute, nor shall any of the following be taken into account in determining whether there has occurred, a Company Material Adverse Effect: (a) conditions generally affecting the industries in which the Company participates or the global economy or capital markets as a whole; (b) any failure by the Company to meet internal projections or forecasts or revenue or earnings predictions; (c) the execution, delivery, announcement or performance of the obligations under this Agreement or the announcement, pendency or anticipated consummation of the Transactions; (d) any natural disaster or any acts of terrorism, sabotage, military action or war or any escalation or worsening thereof; (e) any changes (after the date of this Agreement) in GAAP (as defined in Section 2.7 below), other applicable accounting rules or applicable Law (as defined in Section 2.4 below), or changes or developments in political, regulatory or legislative conditions, or (f) the taking of any action required by this Agreement.

 

2.2 Capitalization. The authorized share capital of the Company consists of 10,000,000 shares, of which 5,000,000 have been designated as ordinary shares (“Company Ordinary Shares”) and 5,000,000 have been designated as preferred shares (“Company Preferred Shares”). As of the date of this Agreement, and as of immediately prior to the consummation of the Transactions, 1,719,819 Company Ordinary Shares, and 1,525,915 Company Preferred Shares are issued and outstanding. No other shares of the Company are issued and outstanding, and no shares of the Company are held in the treasury of the Company. Schedule 2.2 of the Company Disclosure Schedule sets forth a complete and accurate list of all of the shareholders of the Company together with the number and class of shares of the Company each holds. All of the issued and outstanding shares of the Company are duly authorized, validly issued, fully paid, nonassessable and, free of all preemptive rights, and have been or will be issued in accordance with applicable Laws, including, without limitation, the Israeli securities Laws. Other than as set forth on Schedule 2.2 of the Company Disclosure Schedule, there are no outstanding or authorized options, warrants, securities, rights, agreements or commitments to which the Company is a party or which are binding upon the Company providing for the issuance or redemption of any of the shares of the Company or pursuant to which any outstanding Company Share is subject to vesting. There are no outstanding or authorized share appreciation, phantom stock or similar rights with respect to the Company. Other than as listed in Schedule 2.2 of the Company Disclosure Schedule, there are no agreements to which the Company is a party or by which it is bound with respect to the voting (including, without limitation, voting trusts or proxies), registration under the Securities Act of 1933, as amended (the “Securities Act”) or Israeli securities Laws, or sale or transfer (including, without limitation, agreements relating to pre-emptive rights, rights of first refusal, co-sale rights or “drag-along” rights) of any securities of the Company. The Company is not aware of any agreements to which the Company is not a party and by which it is not bound, with respect to the voting (including, without limitation, voting trusts or proxies) or sale or transfer (including, without limitation, agreements relating to rights of first refusal, co-sale rights or “drag-along” rights) of any securities of the Company. All of the issued and outstanding shares of the Company were issued in compliance in all material respects with applicable securities laws.

 

 

2.3 Authorization of Transaction. The Company has all requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery by the Company of this Agreement and, subject to the adoption of this Agreement and (a) the approval of the Transactions as required by Israeli law, and (b) the approvals and waivers set forth in Schedule 2.3 of the Company Disclosure Schedule (collectively, the “Company Consents”), the consummation by the Company of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of the Company. Without limiting the generality of the foregoing, the board of directors of the Company (i) determined that the Transaction is fair and in the best interests of the Company and (ii) approved this Agreement, subject to the applicable provisions of Israeli law. This Agreement has been duly and validly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited under applicable bankruptcy, insolvency and similar laws, rules or regulations affecting creditors’ rights and remedies generally and to general principles of equity, whether applied in a court of law or a court of equity.

 

2.4 Non-contravention. Subject to the receipt of tax ruling from the Israeli Tax Authorities with respect to the Transactions and the receipt of the Company Consents, neither the execution and delivery by the Company of this Agreement nor the consummation by the Company of the Transactions will (a) materially conflict with or materially violate any provision of the articles of association of the Company, as amended to date, (b) require on the part of the Company any permit, authorization, consent or approval of, any court, arbitrational tribunal, administrative agency or commission or other governmental or regulatory authority or agency (a “Governmental Entity”), (c) materially conflict with, result in a material breach of, constitute (with or without due notice or lapse of time or both) a material default under, result in the acceleration of obligations under, create in any party the right to terminate, modify or cancel, or require any notice, consent or waiver under, any material contract or instrument to which the Company is a party or by which the Company is bound, which would not reasonably be expected to have a Company Material Adverse Effect and would not reasonably be expected to adversely affect the consummation of the transactions contemplated hereby (d) result in the imposition of any Security Interest (as defined below) upon any material assets of the Company, or (e) violate any Israeli, federal, state, local, municipal, foreign, international, multinational, Governmental Entity or other constitution, law, statute, ordinance, principle of common law, rule, regulation, code, governmental determination, order, writ, injunction, decree, treaty, convention, governmental certification requirement or other public limitation, U.S. or non-U.S., including Tax and U.S. antitrust laws (each, a “Law” and, collectively, “Laws”) applicable to the Company, except for any violation which would not reasonably be expected to have a Company Material Adverse Effect. For purposes of this Agreement: “Security Interest” means any mortgage, pledge, security interest, encumbrance, charge or other lien (whether arising by contract or by operation of law), other than (i) mechanic’s, materialmen’s and similar Security Interests, (ii) Security Interests arising under worker’s compensation, unemployment insurance, social security, retirement and similar legislation, or (iii) Security Interests on goods in transit incurred pursuant to documentary letters of credit, in each case arising in the Ordinary Course of Business (as defined below) of the Company and not material to the Company; and “Ordinary Course of Business” means the ordinary course of the Company’s business, consistent with past custom and practice (including with respect to frequency and amount).

 

 

2.5 Subsidiaries. The Company does not own, directly or indirectly, any capital stock, membership interest, partnership interest, joint venture interest or other equity interest in any person.

 

2.6 Compliance with Laws.

 

(a) the conduct and operations of the Company’s business, are in compliance with each Law applicable to the Company, or any of its properties or assets, except for any violations or defaults that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect;

 

(b) has complied with all applicable securities laws and regulations, except for any violations or defaults that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect;

 

(c) has not been the subject of any voluntary or involuntary bankruptcy proceeding, nor has it been, within the past two years a party to any material litigation or the subject of any written threat of material litigation; and

 

(d) is not and has not, and it is not aware that the past and present officers, directors and Affiliates (as defined in Section 2.14(vii) below) are not and have not, been the subject of, any civil, criminal or administrative investigation or proceeding brought by any federal or state agency having regulatory authority over such entity or person, relating to the Company of its business.

 

2.7 Financial Statements. At or prior to Closing, the Company shall have provided or made available to the Parent the audited consolidated balance sheet of the Company (the “Company Balance Sheet”) at December 31, 2020 and 2021 (the “Company Balance Sheet Date”), and the related audited consolidated statements of operations and cash flows for the years ended December 31, 2020 and 2021 (collectively, the “Company Year-End Financial Statements” or the “Company Financial Statements”). The Company Financial Statements have been prepared in accordance with IFRS. It is agreed that following the Closing, the Company will commence the preparation of its financial statements in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods covered thereby. The Company Financial Statements fairly present in all material respects the financial condition, results of operations and cash flows of the Company on a consolidated basis as of the respective dates thereof and for the periods referred to therein, and are consistent in all material respects with the books and records of the Company.

 

 

2.8 Absence of Certain Changes. Since the Company Balance Sheet Date, and except as set forth in Schedule 2.8 of the Company Disclosure Schedule, to the knowledge of the Company, there has occurred no event or development which, individually or in the aggregate, has had, or could reasonably be expected to have in the future, a Company Material Adverse Effect.

 

2.9 Undisclosed Liabilities. To the knowledge of the Company, except as set forth in all Disclosure Schedules (including but not limited to Schedule 2.9 of the Company Disclosure Schedule), the Company has not had any liability (whether absolute or contingent, whether liquidated or unliquidated and whether due or to become due), except for (a) liabilities shown on the Company Year-End Financial Statements, (b) liabilities not exceeding $5,000 in the aggregate that have arisen since the Company Balance Sheet Date in the Ordinary Course of Business, or (c) contractual and other liabilities incurred in the Ordinary Course of Business which are not required by IFRS to be reflected on a balance sheet.

 

2.10 Tax Matters.

 

(a) For purposes of this Agreement, the following terms shall have the following meanings:

 

(i) “Taxes” means all taxes, charges, fees, levies or other similar assessments or liabilities, including, without limitation, income, gross receipts, ad valorem, premium, value-added, excise, real property, personal property, sales, use, transfer, withholding, employment, unemployment insurance, social security, business license, business organization, environmental, workers compensation, payroll, profits, license, lease, service, service use, severance, stamp, occupation, windfall profits, customs, duties, franchise and other taxes imposed by the State of Israel or the United States of America or any state, local or foreign government, or any agency thereof, or other political subdivision of the State of Israel or the United States or any such government, and any interest, fines, penalties, assessments or additions to tax resulting from, attributable to or incurred in connection with any tax or any contest or dispute thereof.

 

(ii) “Tax Returns” means all Israel, United States of America, state, local or foreign government reports, returns, declarations, statements or other information required to be supplied to a taxing authority in connection with the Taxes.

 

(b) Except as set forth in Schedule 2.10 of the Company Disclosure Schedule, the Company has filed on a timely basis (taking into account any valid extensions) all material Tax Returns that it was required to file, and all such Tax Returns were complete and accurate in all material respects. The Company is not now and has never been a member of a group of corporations with which it has filed (or been required to file) consolidated, combined or unitary Tax Returns. The Company has paid on a timely basis all material Taxes that were due and payable in accordance with the Tax Returns. The Company believes that unpaid Taxes of the Company for tax periods through the Company Balance Sheet Date do not exceed the accruals and reserves for Taxes (excluding accruals and reserves for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the Company Balance Sheet. The Company does not have any actual or potential liability for any Tax obligation of any taxpayer other than the Company. To the best knowledge of the Company, all Taxes that the Company is or was required by law to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper Governmental Entity.

 

 

(c) Except as set forth in Schedule 2.10 of the Company Disclosure Schedule, the Company has delivered or made available to the Parent complete and accurate copies of last 2 years income Tax Returns, examination reports and statements of deficiencies assessed against or agreed to by the Company since the date of the Company’s incorporation (the “Organization Date”). To the knowledge of the Company, no examination or audit of any Tax Return of the Company by any Governmental Entity is currently in progress or threatened or contemplated. The Company has not been informed in writing by any jurisdiction that the jurisdiction believes that the Company was required to file any Tax Return that was not filed. The Company has not waived any statute of limitations with respect to Taxes, or agreed to an extension of time with respect to a Tax assessment or deficiency, which waiver or extension is still in effect.

 

(d) No “net operating loss” of the Company determined as of the Closing Date is subject to limitation on its use pursuant to applicable laws. However, the Company cannot assure or guarantee that would not be change due to the transactions contemplated hereby.

 

2.11 Assets. The Company owns or leases all tangible assets reasonably necessary for the conduct of its businesses as presently conducted. Except as set forth in Schedule 2.10(d) of the Company Disclosure Schedule, each such tangible asset is free from any Security Interest and any material defects, has been maintained in accordance with normal industry practice, is in good operating condition and repair (subject to normal wear and tear) and is suitable for the purposes for which it presently is used. Except as set forth in Schedule 2.10(d) of the Company Disclosure Schedule, no material amount of assets of the Company (tangible or intangible) (including, without limitation, any shares or other equity interests in or securities of any corporation, partnership, association or other business organization or division thereof) is subject to any Security Interest.

 

2.12 Owned Real Property. The Company does not own any real property.

 

2.13 Real Property Leases. Schedule 2.13 of the Company Disclosure Schedule lists all real property leased or subleased to or by the Company. The Company has delivered or made available to the Parent complete and accurate copies of the leases and subleases listed in Schedule 2.13 of the Company Disclosure Schedule. With respect to each lease and sublease listed in Schedule 2.13 of the Company Disclosure Schedule:

 

(a) the lease or sublease is a legal, valid, binding and enforceable obligation of the Company and is in full force and effect, except as such enforceability may be limited under applicable bankruptcy, insolvency and similar laws, rules or regulations affecting creditors’ rights and remedies generally and to general principles of equity, whether applied in a court of law or a court of equity;

 

 

(b) the lease or sublease will not, as a result of the execution and delivery by the Company of this Agreement or the Transaction Documentation or the consummation by the Company of the transactions contemplated hereby or thereby, cease to be legal, valid, binding, enforceable and in full force and effect immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing, and the Closing will not, after the giving of notice, with lapse of time, or otherwise, result in a breach or default by the Company or, to the knowledge of the Company, any other party under such lease or sublease;

 

(c) to the knowledge of the Company, neither the Company, nor any other party, is in breach or violation of, or default under, any such lease or sublease, and no event has occurred, is pending or, to the knowledge of the Company, is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute a breach or default by the Company or, to the knowledge of the Company, any other party under such lease or sublease, except for any breach, violation or default that has not had and would not reasonably be anticipated to have a Company Material Adverse Effect; and

 

(d) the Company has not assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in the leasehold or subleasehold.

 

2.14 Contracts.

 

(a) Schedule 2.14 of the Company Disclosure Schedule lists all agreements to which the Company is a party, under which the consequences of a default or termination would reasonably be expected to have a Company Material Adverse Effect.

 

(b) With respect to each agreement so listed, and except as set forth in Schedule 2.14 of the Company Disclosure Schedule: (i) the agreement is a legal, valid, binding and enforceable obligation of the Company and in full force and effect, except as such enforceability may be limited under applicable bankruptcy, insolvency and similar laws, rules or regulations affecting creditors’ rights and remedies generally and to general principles of equity whether applied in a court of law or a court of equity; (ii) the agreement will not, as a result of the execution and delivery by the Company of this Agreement or the Transaction Documentation, or the consummation by the Company of the transactions contemplated hereby or thereby, cease to be a legal, valid, binding and enforceable obligation of the Company, except as such enforceability may be limited under applicable bankruptcy, insolvency and similar laws, rules or regulations affecting creditors’ rights and remedies generally and to general principles of equity, whether applied in a court of law or a court of equity and will, or to be in full force and effect in accordance with the terms thereof as in effect immediately prior to the Closing; and (iii) to the knowledge of the Company, neither the Company, nor any other party, is in breach or violation of, or default under, any such agreement, and no event has occurred, is pending or, to the knowledge of the Company, is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute a breach or default by the Company or, to the knowledge of the Company, any other party under such contract, except for any breach, violation or default that has not had and would not reasonably be anticipated to have a Company Material Adverse Effect.

 

 

2.15 Accounts Receivable. To the Company’s knowledge, all accounts receivable of the Company reflected on the Company Balance Sheet are valid receivables subject to no setoffs or counterclaims and are current and collectible (within 90 days after the date on which it first became due and payable), net of the applicable reserve for bad debts on the Company Balance Sheet. To the Company’s knowledge, all accounts receivable reflected in the financial or accounting records of the Company that have arisen since the Company Balance Sheet Date are valid receivables subject to no setoffs or counterclaims and are collectible (within 90 days after the date on which it first became due and payable), net of a reserve for bad debts in an amount proportionate to the reserve shown on the Company Balance Sheet.

 

2.16 Powers of Attorney. Except as set forth in Schedule 2.16 of the Company Disclosure Schedule, there are no outstanding powers of attorney executed on behalf of the Company.

 

2.17 Insurance. Schedule 2.16 of the Company Disclosure Schedule lists each insurance policy (including fire, theft, casualty, general liability, workers compensation, business interruption, environmental, product liability and automobile insurance policies and bond and surety arrangements) to which the Company is a party. Such insurance policies are of the type and in amounts customarily carried by organizations conducting businesses or owning assets similar to those of the Company. There is no material claim pending under any such policy as to which coverage has been questioned, denied or disputed by the underwriter of such policy. All premiums due and payable under all such policies have been paid. The Company has no knowledge of any threatened termination of, or material premium increase with respect to, any such policy.

 

2.18 Warranties. No product or service sold or delivered by the Company is subject to any guaranty, warranty, right of credit or other indemnity other than the applicable standard terms and conditions of sale of the Company.

 

2.19 Litigation. Except as set forth in Schedule 2.19 of the Company Disclosure Schedule, as of the date of this Agreement, there is no action, suit, proceeding, claim, arbitration or investigation before any Governmental Entity or before any arbitrator (a “Legal Proceeding”) which, to the Company’s knowledge, is pending or threatened against the Company, which (a) if determined adversely to the Company, would have or be reasonably anticipated to have, individually or in the aggregate, a Company Material Adverse Effect, or (b) in any manner challenges or seeks to prevent, enjoin, alter or delay the transactions contemplated by this Agreement.

 

2.20 Employees.

 

(a) Schedule 2.20 of the Company Disclosure Schedule contains a list of all current employees of the Company, along with the position of each such person. Each such person is a party to a non-disclosure and assignment of inventions agreement with the Company. To the knowledge of the Company, no key employee or group of employees acting in concert has given written notice of any plans to terminate employment with the Company.

 

 

(b) The Company has complied in all material respects with all applicable employment laws, policies, procedures and agreements relating to employment, terms and conditions of employment and to the proper withholding and remission to the proper tax and other authorities of all sums required to be withheld from employees under applicable laws respecting such withholding.

 

(c) The accruals for vacation, sickness and disability expenses are accounted for on the Company Balance Sheet and are adequate and materially reflect the expenses associated therewith in accordance with IFRS.

 

2.21 Certain Business Relationships with Affiliates. Except as listed in Schedule 2.21 of the Company Disclosure Schedule, to the knowledge of the Company, no Affiliate of the Company (a) owns any material property or right, tangible or intangible, which is used in and material to the business of the Company, (b) has any claim or cause of action against the Company, or (c) owes any money to, or is owed any money by, the Company. Schedule 2.21 of the Company Disclosure Schedule describes any transactions involving the receipt or payment in excess of $5,000 in any fiscal year between the Company and any Affiliate of the Company which have occurred or existed, other than employment agreements or other compensation arrangements.

 

2.22 Brokers’ Fees. Except as listed in Schedule 2.22 of the Company Disclosure Schedule, the Company does not have any liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.

 

2.23 Books and Records. The minute books and other similar records of the Company made available to the Parent contain, in all material respects, complete and accurate records in all material respects of all actions taken at any meetings of the Company’s stockholders, board of directors or any committees thereof and of all written consents executed in lieu of the holding of any such meetings, during the last two years.

 

2.24 Intellectual Property.

 

(a) The Company owns, is licensed or otherwise possesses legally enforceable rights to use, license and exploit all issued patents, copyrights, trademarks, service marks, trade names, trade secrets, and registered domain names and all applications for registration therefor (collectively, the “Intellectual Property Rights”) and all computer programs and other computer software, databases, know-how, proprietary technology, formulae, and development tools, together with all goodwill related to any of the foregoing (collectively, the “Intellectual Property”), in each case as is necessary to conduct its businesses as presently conducted, the absence of which would be considered reasonably likely to result in a Company Material Adverse Effect.

 

(b) Schedule 2.24(b) of the Company Disclosure Schedule sets forth, with respect to all issued patents and all registered copyrights, trademarks, service marks and domain names registered with any Governmental Entity by the Company or for which an application for registration has been filed with any Governmental Entity by the Company, (i) the registration or application number, the date filed and the title, if applicable, of the registration or application and (ii) the names of the jurisdictions covered by the applicable registration or application. Schedule 2.28(b) of the Company Disclosure Schedule identifies each agreement currently in effect containing any ongoing royalty or payment obligations of the Company in excess of $5,000 per annum with respect to Intellectual Property Rights and Intellectual Property that are licensed or otherwise made available to the Company.

 

 

(c) Except as set forth on Schedule 2.24(c) of the Company Disclosure Schedule, all Intellectual Property Rights of the Company that have been registered by it with any Governmental Entity are valid and subsisting, except as would not reasonably be expected to have a Company Material Adverse Effect. As of the Effective Date, in connection with such registered Intellectual Property Rights, all necessary registration, maintenance and renewal fees will have been paid and all necessary documents and certificates will have been filed with the relevant Governmental Entities.

 

(d) The Company is not currently, nor as a result of the consummation of the Transactions contemplated by this Agreement will it be, in breach in any material respect of any license, sublicense or other agreement relating to the Intellectual Property Rights of the Company, or any licenses, sublicenses or other agreements as to which the Company is a party and pursuant to which the Company uses any patents, copyrights (including software), trademarks or other intellectual property rights of or owned by third parties (the “Third Party Intellectual Property Rights”), the breach of which would be reasonably likely to result in a Company Material Adverse Effect.

 

Except as set forth on Schedule 2.24(e) of the Company Disclosure Schedule, to the Company’s knowledge, the Company has not been named as a defendant in any suit, action or proceeding which involves a claim of infringement or misappropriation of any Third Party Intellectual Property Right, and the Company has not received any written notice of any actual or alleged infringement, misappropriation or unlawful or unauthorized use of any Third Party Intellectual Property Right. With respect to its product candidates and products in research or development, after the same are marketed, the Company will not, to its knowledge, infringe any Third Party Intellectual Property Rights in any material manner.

 

To the knowledge of the Company, except as set forth on Schedule 2.24(f) of the Company Disclosure Schedule, no other person is infringing, misappropriating or making any unlawful or unauthorized use of any Intellectual Property Rights of the Company in a manner that has a material impact on the business of the Company, except for such infringement, misappropriation or unlawful or unauthorized use as would not be reasonably expected to have a Company Material Adverse Effect.

 

2.25 Disclosure. None of: (a) the representations and warranties by the Company contained in this Agreement, (b) the Company Disclosure Schedule, or (c) any other document, certificate or other instrument delivered or to be delivered by or on behalf of the Company pursuant to this Agreement, contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary in order to make the statements made herein or therein, in light of the circumstances under which they were or will be made, not misleading.

 

(B) As an inducement to the Parent to enter into this Agreement and to consummate the transactions contemplated herein, each Shareholder individually hereby represents and warrants to the Parent as of the date hereof and as of the Closing Date as follows:

 

 

2.26 Good Title. The Shareholder is the record and beneficial owner, and has good and marketable title to, its Company Shares as indicated on Exhibit A attached hereto, with the right and authority to sell and deliver such Company Shares to Parent as provided herein. There are no proxies, voting rights, shareholders’ agreements or other agreements or understandings, to which such Shareholder is a party or by which such Shareholder is bound, with respect to the voting or transfer of any of such Shareholder’s Company Shares other than this Agreement, the Company’s Articles of Association or as indicated in the Disclosure Schedule.

 

2.27 Power and Authority. The Shareholder has all requisite power, authority and legal right and capacity to execute and deliver this Agreement and each agreement, certificate, and instrument in connection with or pursuant to this Agreement (collectively, the “Ancillary Documents”) to which it is party, to perform such Shareholder’s obligations hereunder and thereunder and to consummate the Transactions contemplated hereby and thereby. All acts required to be taken by the Shareholder to enter into this Agreement and each Ancillary Document and to carry out the Transactions have been properly taken. Each of this Agreement and Ancillary Documents constitutes a legal, valid and binding obligation of the Shareholder, enforceable against such Shareholder in accordance with the terms hereof and thereof.

 

2.28 No Conflicts. The execution and delivery of this Agreement and each Ancillary Document to which it is party, or otherwise bound, by the Shareholder and the performance by the Shareholder of its obligations hereunder and thereunder in accordance with the terms hereof and thereof: (i) will not require the consent of any third party or any federal, state, local or foreign government or any court of competent jurisdiction, administrative agency or commission or other Governmental Entity under any Laws; (ii) will not violate any Laws applicable to such Shareholder; and (iii) will not materially violate or materially breach any contractual obligation to which such Shareholder is a party or the Shareholder or its properties, or assets are otherwise bound.

 

2.29 No Finder’s Fee. The Shareholder has not created any obligation for any finder’s, investment banker or broker’s fee in connection with the Transactions that the Company or the Parent will be responsible for.

 

2.30 Purchase Entirely for Own Account. The Parent Shares proposed to be acquired by the Shareholder hereunder will be acquired for investment for his own account, and not with a view to the resale or distribution of any part thereof, and the Shareholder has no present intention of selling or otherwise distributing the Parent Shares, except in compliance with applicable securities laws.

 

2.31 Available Information. Without derogating from any representation made by the Parent in this Agreement or in connection herewith, the Shareholder has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in the Parent.

 

Each Shareholder further expressly agrees and acknowledges that certain officers, directors and Affiliates of the Company and certain of the Shareholders, are or will be officers, directors and Affiliates of Parent or shareholders thereof. Each Shareholder waives any claim that such Shareholder may have against the Company, the Parent or any of its respective Affiliates or the other Shareholders as a result of this Transaction being an interested party transaction.

 

 

2.32 Release of Claims. In consideration of the Parent Shares and other good and valuable consideration, each Shareholder hereby irrevocably and unconditionally releases, and forever discharges each of the Company, the Parent, the other Shareholders and its respective employees, stockholders, officers, directors, agents, representatives and affiliates and their respective successors and assigns, and all persons, firms, corporations, and organizations acting on their behalf (collectively referred to as the “Related Entities”) of and from any and all actions, causes of actions, suits, debts, charges, demands, complaints, claims, administrative proceedings, liabilities, obligations, promises, agreements, controversies, damages and expenses (including but not limited to compensatory, punitive or liquidated damages, attorney’s fees and other costs and expenses incurred), of any kind or nature whatsoever, whether presently known or unknown, which the undersigned may have or claim to have against any of the Related Entities as of the date of this Release (collectively, the “Claims”), provided, however, that this release shall not and shall not be deemed to release or discharge (i) any obligations of the Parent or the Company, as the case may be, under this Agreement, (ii) any obligation of the Company to the Shareholder which arose prior to the date of this Agreement, all of which are provided for on Schedule 2.36 of the Company Disclosure Schedule and (iii) any claim a Shareholder has against an illegal act made by another Shareholder. The Shareholder expressly acknowledge that this release is intended to include in its effect, without limitation, all Claims which have arisen and of which it knows, does not know, should have known, had reason to know, suspects to exist or might exist in his favor at the time of the signing, and that this release extinguishes any such Claim or Claims. This release shall be binding upon the Shareholder and his employees, agents, representatives, personal representatives, heirs, assigns, successors and affiliates, and shall inure to the benefit of each of the Related Entities.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE PARENT

 

As an inducement to the Company and the Shareholders to enter into this Agreement and to consummate the transactions contemplated herein, except as set forth in the Parent’s disclosure schedules attached hereto (the “Parent Disclosure Schedules”) (it being agreed that any matter disclosed in any Section of the Parent Disclosure Schedules will be deemed to apply to and qualify the Section of this Article III to which it corresponds in number and each other Section of this Article III to the extent that it is reasonably apparent on its face that such information is applicable to such other Section) the Parent represents and warrants to the Company as follows:

 

3.1 Organization, Qualification and Corporate Power. The Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. The Parent is duly qualified to conduct business and is in good standing under the laws of each jurisdiction in which the nature of its businesses or the ownership or leasing of its properties requires such qualification, except where the failure to be so qualified or in good standing, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect (as defined below). The Parent has all requisite corporate power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it. The Parent has furnished or made available to the Company complete and accurate copies of its articles of incorporation and bylaws. The Parent is not in default under or in violation of any provision of its articles of incorporation, as amended to date, its bylaws, as amended to date, or any mortgage, indenture, lease, license or any other agreement or instrument except where such default or violation would not reasonably be expected to have a Parent Material Adverse Effect. For purposes of this Agreement, “Parent Material Adverse Effect” means a material adverse effect on the assets, business, financial condition, or results of operations of the Parent and its subsidiaries, taken as a whole, provided that in no event shall any effects (whether alone or in combination) resulting from or arising in connection with any of the following be deemed to constitute, nor shall any of the following be taken into account in determining whether there has occurred, a Parent Material Adverse Effect: (a) conditions generally affecting the industries in which the Parent or its subsidiaries participate or the U.S. or global economy or capital markets as a whole; (b) any failure by the Parent to meet internal projections or forecasts or revenue or earnings predictions; (c) the execution, delivery, announcement or performance of the obligations under this Agreement or the announcement, pendency or anticipated consummation of the Transactions; (d) any natural disaster or any acts of terrorism, sabotage, military action or war or any escalation or worsening thereof; (e) any changes (after the date of this Agreement) in GAAP, other applicable accounting rules or applicable Law, or changes or developments in political, regulatory or legislative conditions, or (f) the taking of any action required by this Agreement.

 

 

3.2 Capitalization. As of immediately prior to the Closing Date, but prior to giving effect to the issuance of the Parent Shares, the authorized capital stock of the Parent will consist of 100,000,000 shares of common stock, $0.0001 par value per share (“Parent Common Stock”), of which 22,680,000 shares are issued and outstanding. No other shares of Parent Stock Company Stock are issued and outstanding, and no shares of Company Stock are held in the treasury of the Company The Parent Common Stock is presently eligible for quotation and trading on the OTC Pink tier of the OTC Markets Group Inc. (“OTC Markets”) and is not subject to any notice of suspension or delisting, nor, to the Parent’s knowledge, is there any basis for such suspension or deletion. All of the issued and outstanding shares of Parent Common Stock are duly authorized, validly issued, fully paid, nonassessable and free of all preemptive rights and have been issued in accordance with applicable laws, including, without limitation, the Securities Act. All of the issued and outstanding shares of Parent Common Stock were issued in compliance in all material respects with applicable federal and state securities laws. The Parent Shares to be issued at the Closing pursuant to the terms and provisions of this Agreement, when issued and delivered in accordance with the terms hereof, shall be duly and validly issued, fully paid and nonassessable and free of all preemptive rights and will be issued in compliance with applicable federal and state securities laws. Other than as set forth on Schedule 3.2 of the Parent Disclosure Schedule, there are no outstanding or authorized options, warrants, securities, rights, agreements or commitments to which the Parent is a party or which are binding upon the Parent providing for the issuance or redemption of any of Parent Stock or pursuant to which any outstanding Company Stock is subject to vesting. There are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to the Parent. Other than as listed in Schedule 3.2 of the Parent Disclosure Schedule, there are no agreements to which the Parent is a party or by which it is bound with respect to the voting (including, without limitation, voting trusts or proxies), registration under the Securities Act, or sale or transfer (including, without limitation, agreements relating to pre-emptive rights, rights of first refusal, co-sale rights or “drag-along” rights) of any securities of the Parent. There are no agreements to which the Parent is not a party and by which it is not bound, with respect to the voting (including, without limitation, voting trusts or proxies) or sale or transfer (including, without limitation, agreements relating to rights of first refusal, co-sale rights or “drag-along” rights) of any securities of the Parent.

 

Upon issue to the Shareholders, the Parent Shares will be duly and validly issued, fully paid and non-assessable common shares in the capital of the Parent.

 

3.3 Authorization of Transaction. The Parent has all requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery by the Parent of this Agreement, and the consummation by the Parent of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of the Parent. The Agreement has been duly and validly executed and delivered by the Parent and constitutes a valid and binding obligation of the Parent, enforceable against it in accordance with its terms, except as such enforceability may be limited under applicable bankruptcy, insolvency and similar laws, rules or regulations affecting creditors’ rights and remedies generally and to general principles of equity, whether applied in a court of law or a court of equity.

 

3.4 Noncontravention. Neither the execution and delivery by the Parent of this Agreement nor the consummation by the Parent, of the transactions contemplated hereby, will (a) conflict with or violate any provision of the organizational documents or bylaws of the Parent, (b) require on the part of the Parent, any filing with, or permit, authorization, consent or approval of, any Governmental Entity, other than required notification to the Financial Industry Regulatory Authority (“FINRA”), (c) conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party any right to terminate, modify or cancel, or require any notice, consent or waiver under, any contract or instrument to which the Parent, is a party or by which either is bound or to which any of its assets are subject, except for (i) any conflict, breach, default, acceleration, termination, modification or cancellation which would not reasonably be expected to have a Parent Material Adverse Effect and would not reasonably be expected to adversely affect the consummation of the transactions contemplated hereby or (ii) any notice, consent or waiver the absence of which would not reasonably be expected to have a Parent Material Adverse Effect and would not reasonably be expected to adversely affect the consummation of the transactions contemplated hereby, (d) result in the imposition of any Security Interest upon any assets of the Parent or (e) violate any Laws applicable to the Parent or any of its properties or assets.

 

 

3.5 Subsidiaries. The Parent does not own, directly or indirectly, any capital stock, membership interest, partnership interest, joint venture interest or other equity interest in any person.

 

3.6 Compliance with Laws. The Parent:

 

(a) the conduct and operations of its businesses is in compliance with each Law applicable to the Parent, or any of its properties or assets, except for any violations or defaults that, individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect;

 

(b) has complied with all applicable federal and state securities laws and regulations, including being current in all of its reporting obligations under such federal and state securities laws and regulations, except for any violations or defaults that, individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect, and all prior issuances of its securities have been either registered under the Securities Act or exempt from registration;

 

(c) has not been the subject of any voluntary or involuntary bankruptcy proceeding, nor has it been, within the last two years, a party to any material litigation or subject of any written threat of material litigation;

 

(d) is not and has not, and it is not aware that the past and present officers, directors and Affiliates of the Parent are not and have not, been the subject of any civil, criminal or administrative investigation or proceeding brought by any federal or state agency having regulatory authority over such entity or person, relating to the Parent or to its business; and

 

(e) does not and will not on the Closing Date, other than as disclosed in the Parent Disclosure Schedule, have any liabilities (whether absolute or contingent, whether liquidated or unliquidated and whether due or to become due), including, without limitation, to notes payable and accounts payable, exclusive of professional fees and expenses related to the Transactions, including, without limitation, brokers’ fees, in an aggregate amount not to exceed USD $10,000, and is not a party to any executory agreements.

 

3.7 Assets. Parent owns or leases all tangible assets necessary for the conduct of its business as presently conducted and as presently proposed to be conducted. Each such tangible asset is free from material defects, has been maintained in accordance with normal industry practice, is in good operating condition and repair (subject to normal wear and tear) and is suitable for the purposes for which it presently is used. No asset of the Parent or the Parent Subsidiaries (tangible or intangible) is subject to any Security Interest. The liabilities of the Parent is listed on Schedule 3.7 of the Parent Disclosure Schedule.

 

3.8 Financial Statements. The Parent has provided or made available to the Company the unaudited consolidated balance sheet of the Parent (the “Parent Balance Sheet”) for March 31, 2022 (the “Parent Balance Sheet Date”), and the related unaudited consolidated statements of operations and cash flows for the year ended December 31, 2021 (collectively, the “Parent Year-End Financial Statements”. The Parent Year-End Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby. The Parent Year-End Financial Statements fairly present in all material respects the financial condition, results of operations and cash flows of the Parent on a consolidated basis as of the respective dates thereof and for the periods referred to therein, and are consistent in all material respects with the books and records of the Parent.

 

 

3.9 Absence of Certain Changes. Since the Parent Balance Sheet Date (a) there has occurred no event or development which, individually or in the aggregate, has had, or could reasonably be expected to have in the future, a Parent Material Adverse Effect.

 

3.10 Contracts. The Parent is not a party to any agreement (written or oral), other than the Transaction Documents and those listed on Schedule 3.10 of the Parent Disclosure Schedule

 

3.11 Litigation. As of the date of this Agreement, there is no action, suit, proceeding, claim, arbitration or investigation before any Governmental Entity or before any arbitrator (a “Legal Proceeding”) which, to the Parent’s knowledge, is pending or threatened against the Parent, which (a) if determined adversely to the Parent, would have or be reasonably anticipated to have, individually or in the aggregate, a Parent Material Adverse Effect, or (b) in any manner challenges or seeks to prevent, enjoin, alter or delay the transactions contemplated by this Agreement.

 

3.12 Employees. The Parent has no employees and no Employee Benefit Plans. Parent has fully paid any and all amounts due, under any applicable law, to former employees of the Parent.

 

3.13 Certain Business Relationships with Affiliates. Except as listed in Schedule 3.13 of the Parent Disclosure Schedule, no Affiliate of the Parent (a) has any claim or cause of action against the Parent, or (b) owes any money to, or is owed any money by, the Parent. The Parent is not a party to any transactions involving the receipt or payment between the Parent and any Affiliate of the Parent which have occurred or existed.

 

3.14 Brokers’ Fees. None of the Parent, the Parent Subsidiaries, nor any of their Affiliates has any liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.

 

3.15 Compliance. The Company is current with its reporting obligations to OTC Markets and has not received any notice from OTC, FINRA or any other regulatory agency regarding the Company. Parent is not, on the date hereof, in possession of any material non- public information with respect to Parent or its shares and all reports and other documents filed by Parent in accordance with such reporting obligation, when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents) do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.

 

3.16 Disclosure. No representation or warranty by the Parent contained in this Agreement (including in the Parent Disclosure Schedule), and no statement contained in any document, certificate or other instrument delivered or to be delivered by or on behalf of the Parent pursuant to this Agreement, contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading. The Parent has disclosed to the Company all material information relating to the business of the Parent or the transactions contemplated by this Agreement.

 

 

3.17 Liability for Warranties and Representations.

 

Notwithstanding anything contained in this Agreement or in the Law to the contrary:

 

(a) No Shareholder shall be liable to Parent for any breaches by the Company of any representations, warranties or covenants made by the Company herein.

 

(b) In no event shall the Company or the Shareholders be liable towards the Parent for any consequential, indirect, special or punitive damages sustained or incurred by the Parent in connection with representations, warranties or covenants made by Company or the Shareholders.

 

(c) Each representation and warranty made by the Company or the Shareholders herein is deemed to be made as of the Closing and shall survive the Closing and remain in full force and effect for a period of twelve (12) months thereafter.

 

(d) No claim for indemnification against a Shareholder or the Company shall be brought unless the aggregate amount of all claims made hereunder exceed US$100,000, provided that once such aggregate amount has been reached, the liability shall be for the full amount of such claims, including the aforesaid threshold amount.

 

(e) Each Shareholder’s liability hereunder will be limited to the actual damage for which is indemnification is sought, provided that if there is liability of multiple Shareholders, each such Shareholder’s liability shall be multiplied by such Shareholder’s shareholding percentage in the Company immediately prior to the Closing (the “Limited Liability Amount”).

 

(f) The sole source for collecting the Limited Liability Amount or any other indemnification or liability from any Shareholder, shall be receipt of Parent Shares held by the Shareholder, which shall be based on a price per share equal to the fair market value of such shares at the time of the calculation (as determined by a mutually acceptable reputable independent appraisal or valuation firm if the Shareholder and Parent cannot mutually determine the value after sixty days of notification thereof).

 

Notwithstanding the foregoing, sub-sections (c)-(e) above will not apply in case of breach of the representations made by a Shareholder in Sections 2.26 through 2.28 above)

 

 

ARTICLE IV
COVENANTS

 

4.1 Closing Efforts. Each of the Parties shall use its best efforts, to the extent commercially reasonable in light of the circumstances (“Reasonable Best Efforts”), to take all actions and to do all things necessary, proper or advisable to consummate the transactions contemplated by this Agreement, including, without limitation, using its Reasonable Best Efforts to ensure that (i) its representations and warranties remain true and correct in all material respects through the Closing Date, and (ii) the conditions to the obligations of the other Parties to consummate the Transactions are satisfied.

 

4.2 Governmental and Third-Party Notices and Consents.

 

(a) Each Party shall use its Reasonable Best Efforts to obtain, at its expense, all waivers, permits, consents, approvals or other authorizations from Governmental Entities, and to effect all registrations, filings and notices with or to Governmental Entities, as may be required for such Party to consummate the transactions contemplated by this Agreement and to otherwise comply with all applicable Laws in connection with the consummation of the transactions contemplated by this Agreement. The Company shall apply for an obtain the written authorization from the Israeli tax authorities to consummate the Transactions (the “Pre-Tax Ruling”).

 

(b) The Company shall use its Reasonable Best Efforts to obtain, at its expense, all such waivers, consents or approvals from third parties, and to give all such notices to third parties, as are required to be listed in Section 2.4 of the Company Disclosure Schedule, including without limitation, the Pre-Tax Ruling.

 

4.3 Operation of the Parties’ Business. Except as contemplated by this Agreement, during the period from the date of this Agreement to the Closing, neither the Company nor the Parent shall conduct its operations in the Ordinary Course of Business and in material compliance with all Laws applicable to the it or to any of their properties or assets and, to the extent consistent therewith, use its commercially reasonable efforts to preserve intact its current business organization, keep its physical assets in good working condition, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it to the end that its goodwill and ongoing business shall not be impaired in any material respect. Without limiting the generality of the foregoing, prior to the Closing, neither the Company nor the Parent, shall, without the written consent of the Company or Parent, as applicable (which shall not be unreasonably withheld or delayed) and except as contemplated specifically by this Agreement:

 

(a) issue or sell, or redeem or repurchase, any stock or other securities of such entity, or any warrants, options or other rights to acquire any such stock or other securities;

 

(b) split, combine or reclassify any shares of its capital stock; declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock;

 

 

(c) create, incur or assume any indebtedness for borrowed money (including obligations in respect of capital leases) except for the Company in the Ordinary Course of Business or by any of such entities in connection with the transactions contemplated by this Agreement; assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person or entity; or make any loans, advances or capital contributions to, or investments in, any other person or entity;

 

(d) enter into, adopt or amend any Employee Benefit Plan or any employment or severance agreement or arrangement or (except for normal increases by the Company in the Ordinary Course of Business for employees who are not Affiliates) increase in any manner the compensation or fringe benefits of, or materially modify the employment terms of, its directors, officers or employees, generally or individually, or pay any bonus or other benefit to its directors, officers or employees;

 

(e) acquire, sell, lease, license or dispose of any assets or property, other than purchases and sales of assets by the Company in the Ordinary Course of Business;

 

(f) mortgage or pledge any of its property or assets, or subject any such property or assets to any Security Interest;

 

(g) discharge or satisfy any Security Interest or pay any obligation or liability other than by the Company in the Ordinary Course of Business;

 

(h) amend its certificate of incorporation, by-laws or other organizational documents;

 

(i) change in any material respect its accounting methods, principles or practices, except insofar as may be required by a generally applicable change in its current accounting principles;

 

(j) enter into, amend, terminate, take or omit to take any action that would constitute a violation of or default under, or waive any rights under, any material contract or agreement;

 

(k) institute or settle any Legal Proceeding;

 

(l) take any action or fail to take any action permitted by this Agreement with the knowledge that such action or failure to take action would result in (i) any of the representations and warranties of the Company or the Parent, as the case may be, set forth in this Agreement becoming untrue in any material respect or (ii) any of the conditions to the Transactions set forth in Article VI not being satisfied; or

 

(m) agree in writing or otherwise to take any of the foregoing actions.

 

 

4.4 Parent ESOP and Parent Options. Following the Closing, the Parent shall instruct the Trustee to file the Parent ESOP with the Israeli Tax Authorities and as soon as practicable thereafter, the Parent shall issue the Parent Options.

 

4.5 Access to Information.

 

(a) During the period from the date of this Agreement to the earlier to the Closing or the termination of this Agreement in accordance with the terms hereof, the Company shall permit representatives of the Parent to have reasonable access (at all reasonable times, and in a manner so as not to interfere with the normal business operations of the Company) to all premises, properties, financial and accounting records, contracts, other records and documents, and personnel, of or pertaining to the Company; and, the Parent shall permit representatives of the Company to have reasonable access (at all reasonable times, and in a manner so as not to interfere with the normal business operations of the Parent) to all premises, properties, financial and accounting records, contracts, other records and documents, and personnel, of or pertaining to the Parent.

 

(b) The Parent (i) shall treat and hold as confidential any Company Confidential Information (as defined below), (ii) shall not use any of the Company Confidential Information except in connection with this Agreement, and (iii) if this Agreement is terminated for any reason whatsoever, shall return to the Company all tangible embodiments (and all copies) thereof which are in its possession. For purposes of this Agreement, “Company Confidential Information” means any information of the Company that is furnished to the Parent by the Company in connection with this Agreement; provided, however, that it shall not include any information (A) which, at the time of disclosure, is available publicly other than as a result of non-permitted disclosure by the Parent or its directors, officers, or employees, (B) which, after disclosure, becomes available publicly through no fault of the Parent or its directors, officers, or employees, (C) which the Parent knew prior to disclosure, provided that the source of such information was not bound by a confidentiality obligation to the Company, or (D) which the Parent rightfully obtains from a source other than the Company, provided that the source of such information is not bound by a confidentiality obligation to the Company.

 

4.6 Expenses. The costs and expenses of the Parent and the Company (including legal fees and expenses of the Parent and the Company) incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs and expenses.

 

4.7 Company Audit and Financial Statements. A mutually agreed upon Public Company Accounting Oversight Board (PCAOB) registered accounting firm, has been, or, immediately following the Closing will be, engaged to prepare and deliver audited and interim unaudited financial statements of the Company, and pro forma financial statements reflecting the effects of the Transactions, all compliant with applicable SEC regulations for inclusion in a registration statement to be filed by the Parent. For the avoidance of doubt, this will include audited financial statements of the Company for the years ending December 31, 2021 and 2020 and no less than the first two fiscal quarters for the year 2022.

 

 

4.8 OTC Markets Quotation. Subsequent to the Closing, the Parent will use its best efforts to migrate the quotation of the Parent Common Stock from the OTC Markets Pink tier to the OTCQB tier or OTCQX tier of the OTC Markets.

 

4.9 Registration Statement. Within ninety (90) calendar days following the Closing, the Parent will file a Form S-1 registration statement (the “Registration Statement”) to register all the shares of Parent Shares, including additional shares to be used to raise funds from the public. The Parent shall use its commercially reasonable efforts to ensure that such Registration Statement is declared effective within sixty (60) calendar days of filing with the SEC.

 

The Shareholders shall execute and deliver to the Parent the Leak Out Agreement attached hereto as Exhibit D.

 

4.10 Articles and Bylaws. Within thirty (30) days after the Closing Date, the articles of incorporation and bylaws of the Parent shall be amended in the forms of Exhibit E and Exhibit F, respectively.

 

4.11 Information Provided to Shareholders. The Company shall prepare, with the cooperation of the Parent, information to be sent to the Shareholders in connection with receiving their approval of this Agreement, and related transactions. The Parent and the Company shall each use Reasonable Best Efforts to cause information provided to the Shareholders to comply with applicable federal and state securities laws requirements. Each of the Parent and the Company agrees to provide promptly to the other such information concerning its business and financial statements and affairs as, in the reasonable judgment of the providing party or its counsel, may be required or appropriate for inclusion in the information sent, or in any amendments or supplements thereto, and to cause its counsel and auditors to cooperate with the other’s counsel and auditors in the preparation of the information to be sent to the Shareholders. The Company will promptly advise the Parent, and the Parent will promptly advise the Company, in writing if at any time either the Company or the Parent shall obtain knowledge of any facts that might make it necessary or appropriate to amend or supplement the information sent in order to make the statements contained or incorporated by reference therein not misleading or to comply with applicable Law. The information sent to the Shareholders shall contain the recommendation of the Board of Directors of the Company that the holders of shares of Company Preferred Stock approve the Agreement and the conclusion of the Board of Directors of the Company that the terms and conditions of the Transactions are advisable and fair and in the best interests of the Company and such holders. Anything to the contrary contained herein notwithstanding, the Company shall not include in the information sent to the Shareholders any information with respect to the Parent, the Parent Subsidiaries, or its affiliates or associates, the form and content of which information shall not have been approved by such party in its reasonable discretion prior to such inclusion.

 

4.12 Purchase of Additional Company Shares. Notwithstanding anything contained in this Agreement to the contrary, the Parties agree that prior to the filing of the Registration Statement by the Parent, the Board of Directors of each of the Company and the Parent can effectuate a further Closing and issue Parent Shares to additional shareholders of the Company in exchange for Company Shares in order to increase the percentage of shares of the Company to be owned by Parent.

 

 

ARTICLE V
DELIVERIES

 

5.1 Deliveries by the Shareholders.

 

(a) Concurrently herewith each of the Shareholders is delivering to the Parent this Agreement duly executed by each Shareholder.

 

(b) At or prior to the Closing, each of the Shareholders shall deliver to the Parent and to the Escrow Agent:

 

(i)

duly executed share transfer powers for transfer by the Shareholder of its Company Shares to the Parent (which Agreement shall constitute a limited power of attorney in the Company or any officer thereof to effectuate any Share transfers as may be required under applicable Law, including, without limitation, recording such transfer in the share registry maintained by the Company for such purpose);

 

(ii)

the Leak Out Agreement, duly executed by the Shareholder; and if applicable, the Regulation S Representation Letter completed and executed by the Shareholder.

 

(iii)

the Escrow Agreement, duly executed by the Shareholders;

 

5.2 Deliveries by the Parent.

 

(a)

Concurrently herewith, the Parent is delivering to the Shareholders and to the Company, a copy of this Agreement duly executed by the Parent;

 

(b)

Promptly following the Closing, the Parent shall deliver to the Escrow Agent, to be held by the Escrow Agent pursuant to the terms and provisions of the Escrow Agreement certificates representing the Parent Shares issued to the Shareholders set forth on Exhibit A, or in the alternative, book entry account statements prepared the Parent’s transfer agency reflecting the Shareholders’ ownership of the Parent Shares as set forth on Exhibit A.

 

(c)

a copy of the resolution of the Parent approving the Parent ESOP shall be delivered to the Company.

 

(d)

The Full Finance Warrant, duly executed by the Parent to be delivered to Full Finance.

 

 

(e)

the Escrow Agreement and the Trust Agreement, duly executed by the Parent and the Escrow Agent or the Trustee, as applicable;

 

(f)

an executed undertaking to the Israel Innovation Authority, as required by the provisions of the Encouragement of Research, Development and Technological Innovation in the Industry Law 5744-1984.

 

5.3 Deliveries by the Company.

 

(a) Concurrently herewith, the Company is delivering to the Parent this Agreement executed by the Company.

 

ARTICLE VI
CONDITIONS TO CLOSING

 

6.1 Conditions to Obligations of the Parent. The obligation of the Parent to consummate the Transactions is subject to the satisfaction (or waiver by the Parent) of the following additional conditions:

 

(a) the Parent shall have completed all necessary legal due diligence to their reasonable satisfaction;

 

(b) the Parent shall have obtained all of the deliverables set forth in (i) Section 5.1 from the Shareholders and (ii) Section 5.3 from the Company, in form and substance reasonably satisfactory to the Parent;

 

(c) the Company shall have obtained (and shall have provided copies thereof to the Parent) all other waivers, permits, consents, approvals or other authorizations, and effected all of the registrations, filings and notices, which are required on the part of the Company, except such waivers, permits, consents, approvals or other authorizations the failure of which to obtain or effect does not, individually or in the aggregate, have a Company Material Adverse Effect or a material adverse effect on the ability of the Parties to consummate the transactions contemplated by this Agreement;

 

(d) the representations and warranties of the Company set forth in this Agreement shall be true and correct as of the date of this Agreement and shall be true and correct as of the Closing Date (provided, however, that to the extent such representation and warranty expressly relates to an earlier date, such representation and warranty shall be true and correct as of such earlier date), except for any untrue or incorrect representations and warranties that, individually or in the aggregate, do not have a Company Material Adverse Effect or a material adverse effect on the ability of the Parties to consummate the transactions contemplated by this Agreement;

 

(e) the Company shall have performed or complied with its agreements and covenants required to be performed or complied with under this Agreement as of or prior to the Closing Date, except for such non-performance or non-compliance as does not have a Company Material Adverse Effect or a material adverse effect on the ability of the Parties to consummate the transactions contemplated by this Agreement;

 

 

(f) no Legal Proceeding shall be pending wherein an unfavorable judgment, order, decree, stipulation or injunction would (i) prevent consummation of any of the transactions contemplated by this Agreement or (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation, and no such judgment, order, decree, stipulation or injunction shall be in effect;

 

(g) the Company shall have delivered to the Parent a certificate (the “Company Certificate”) to the effect that each of the conditions specified in clauses (d) through (f) (insofar as clause (f) relates to Legal Proceedings involving the Company) of this Section 6.1 is satisfied in all respects; and

 

(h) the Company shall have delivered to the Parent a certificate, validly executed by an officer of the Company, certifying as to (i) true, correct and complete copies of the articles of association of the Company; (ii) the valid adoption of resolutions of the board of directors and Shareholders (whereby this Agreement and the Transactions were unanimously approved by the board of directors and the requisite vote of the Shareholders) and covering such other matters as the Parent shall reasonably request; (iii) the pre-ruling from the Israeli Tax Authorities; and (iv) incumbency and signatures of the officers of the Company executing this Agreement or any other agreement contemplated by this Agreement.

 

6.2 Conditions to Obligations of the Company. The obligation of the Company to consummate the Transaction is subject to the satisfaction of the following additional conditions:

 

(a)

the Company shall have completed all necessary legal due diligence to its reasonable satisfaction;

 

(b)

the Company shall have obtained all of the deliverables set forth in Section 5.2, in form and substance reasonably satisfactory to the Company;

 

(c)

the Parent shall have obtained (and shall have provided copies thereof to the Company) all of the other waivers, permits, consents, approvals or other authorizations, and effected all of the registrations, filings and notices which are required on the part of the Parent or any of its Subsidiaries, except for waivers, permits, consents, approvals or other authorizations the failure of which to obtain or effect does not, individually or in the aggregate, have a Parent Material Adverse Effect or a material adverse effect on the ability of the Parties to consummate the transactions contemplated by this Agreement; the representations and warranties of the Parent set forth in this Agreement (when read without regard to any qualification as to materiality or Parent Material Adverse Effect contained therein) shall be true and correct as of the date of this Agreement and shall be true and correct as of the Effective Time as though made as of the Closing Date (provided, however, that to the extent such representation and warranty expressly relates to an earlier date, such representation and warranty shall be true and correct as of such earlier date), except for any untrue or incorrect representations and warranties that, individually or in the aggregate, do not have a Parent Material Adverse Effect or a material adverse effect on the ability of the Parties to consummate the transactions contemplated by this Agreement;

 

 

(d)

the Parent shall have performed or complied with its agreements and covenants required to be performed or complied with under this Agreement as of or prior to the Closing Date, except for such non-performance or non-compliance as does not have a Parent Material Adverse Effect or a material adverse effect on the ability of the Parties to consummate the transactions contemplated by this Agreement;

 

(e)

no Legal Proceeding shall be pending wherein an unfavorable judgment, order, decree, stipulation or injunction would (i) prevent consummation of any of the transactions contemplated by this Agreement or (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation, and no such judgment, order, decree, stipulation or injunction shall be in effect;

 

(f)

the Parent shall have delivered to the Company a certificate (the “Parent Certificate”) to the effect that each of the conditions specified in clauses (d) through (f) (insofar as clause (f) relates to Legal Proceedings involving the Parent) of this Section 6.2 is satisfied in all respects; and

 

(g)

The Parent shall have delivered to the Company a certificate, validly executed by Secretary of the Parent certifying as to (i) true, correct and complete copies of its articles and bylaws; (ii) the valid adoption of resolutions of the board of directors of the Parent and the shareholders of the parent (whereby this Agreement and the Transactions were unanimously approved by the board of directors and the requisite vote of the Shareholders) and covering such other matters as the Company reasonably request; (iii) a good standing certificate from the Secretary of State of the State of Delaware dated within five (5) Business Days prior to the Closing Date; and (iv) incumbency and signatures of the officers of the Parent executing this Agreement or any other agreement contemplated by this Agreement.

 

Notwithstanding anything contained in this Agreement to the contrary, the Parties agree that, prior to the filing of the Registration Statement by the Parent, the Board of Directors of each of the Company and the Parent can effectuate a further Closing and issue Parent Shares to a Shareholder in exchange for Company Shares in order to increase the percentage of shares of the Company to be owned by Parent.

 

 

ARTICLE VII
MISCELLANEOUS

 

7.1 Press Releases and Announcements. No Party shall issue any press release or public announcement relating to the subject matter of this Agreement without the prior written approval of the other Parties; provided, however, that any Party may make any public disclosure it believes in good faith is required by applicable Law or stock market rule (in which case the disclosing Party shall use reasonable efforts to advise the other Parties and provide them with a copy of the proposed disclosure prior to making the disclosure).

 

7.2 No Third-Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any person other than the Parties and their respective successors and permitted assigns.

 

7.3 Entire Agreement. This Agreement (including the documents referred to herein) constitutes the entire agreement among the Parties and supersedes any prior or contemporaneous understandings, agreements or representations by or among the Parties, written or oral, with respect to the subject matter hereof.

 

7.4 Termination. This Agreement may be terminated prior to Closing:

 

(a) by written agreement of the Company and the Parent;

 

(b) by either the Parent or the Company if a material breach of any provision of this Agreement has been committed by another Party and such breach has not been waived or rectified within thirty (30) days after the breach; or

 

(c) by the Company or the Parent upon written notice to the other, with a copy to each of the Shareholders, if the Closing shall not have taken place by August 31, 2022; provided, that the right to terminate this Agreement under this Section shall not be available to any party whose failure to comply with its obligations under this Agreement has been the cause of or resulted in the failure of the Closing to occur on or before such time.

 

7.5 Succession and Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of the other Parties.

 

7.6 Counterparts and Facsimile Signature. 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. Facsimile signatures delivered by fax and/or e-mail/.pdf transmission shall be sufficient and binding as if they were originals and such delivery shall constitute valid delivery of this Agreement.

 

7.7 Headings. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

 

7.8 Notices. All notices or other communications required or permitted hereunder shall be in writing. Any notice, request, demand, claim or other communication hereunder shall be deemed duly given (a) if by personal delivery or electronic transmission, when so delivered, (b) if mailed, three (3) business days after having been sent by registered or certified mail, return receipt requested, postage prepaid and addressed to the intended recipient as set forth below, or (c) if sent through an overnight delivery service in circumstances to which such service guarantees next day delivery, the day following being so sent:

 

 

(a)

If to Parent:

 

Petrocorp Inc

353 West 48^th St

4^th Fl, #292

New York, NY, USA

 

(b)

If to the Company:

 

4 HaGavish St

Natanya, Israel

 

(c)

If to a Shareholder, to the address indicated on Exhibit A attached hereto.

 

Any party may change the address to which notices and other communications hereunder are to be delivered by giving the other parties notice in the manner herein set forth.

 

7.9 Governing Law. Any and all disputes among the Parties relating to (i) the interpretation of the provisions of this Agreement or any other matters not provided for in (ii) shall be brought either in the courts located in the State of Israel or in the United States and (ii)corporate and securities matters relating to the Agreement and the Transaction shall be brought exclusively in the courts of the United States. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of laws of any jurisdictions other than those of the State of New York, except that the provisions of the laws of the State of Delaware shall apply with respect to the rights and duties of the Board of Directors of the Parent and where such provisions are otherwise mandatorily applicable.

 

7.10 Amendments and Waivers. The Parties may mutually amend any provision of this Agreement at any time prior to the Effective Time. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by all of the Parties. No waiver of any right or remedy hereunder shall be valid unless the same shall be in writing and signed by the Party giving such waiver. No waiver by any Party with respect to any default, misrepresentation or breach of warranty or covenant hereunder shall be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

 

7.11 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Shareholders, Parent and the Company will be entitled to specific performance under this Agreement. The Parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

 

 

7.12 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the Parties agree that the court making the determination of invalidity or unenforceability shall have the power to limit the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified.

 

7.13 Submission to Jurisdiction. Each of the Parties (a) submits to the jurisdiction of any state or federal court sitting in the County of New York in the State of New York in any action or proceeding arising out of or relating to this Agreement, (b) agrees that all claims in respect of such action or proceeding may be heard and determined in any such court, and (c) agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other court. Each of the Parties waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of any other Party with respect thereto. Any Party may make service on another Party by sending or delivering a copy of the process to the Party to be served at the address and in the manner provided for the giving of notices in Section 7.8. Nothing in this Section 7.13, however, shall affect the right of any Party to serve legal process in any other manner permitted by law.

 

7.14 WAIVER OF JURY TRIAL. EACH OF THE PARTIES IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BETWEEN THE PARTIES ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

 

[REMAINDER OF PAGE INTENTIONALLY OMITTED: SIGNATURE PAGES FOLLOW]

 

 

IN WITNESS WHEREOF, the Parties have executed this Share Exchange Agreement as of the date first above written.

 

	MEA TESTING SYSTEMS LTD.
	By:	/s/ Menachem Cohen
	Name:	Menachem Cohen
	Title:	Co-Chief Executive Officer

 

	PETROCORP INC.
	By:	/s/ Doron Yom Tov
	Name:	Doron Yom Tov
	Title:	Chief Executive Officer
	SHAREHOLDER:

 

[Signature Page to Share Exchange Agreement]

 

 

EXHIBIT A

 

Shareholders of MEA Testing Systems Ltd

 

 

EXHIBIT C

 

 

Exhibit 10.2

 

FIRST AMENDMENT TO SHARE EXCHANGE AGREEMENT

 

THIS FIRST AMENDMENT TO SHARE EXCHANGE AGREEMENT is made and entered into as of September 12, 2022 (this “Amendment”), Petrocorp Inc., a Delaware corporation, MEA Testing Systems Ltd., a corporation established in the State of Israel (the “Company”), and certain shareholders of the Company.

 

W I T N E S S E T H:

 

WHEREAS, Petrocorp Inc., the Company and certain shareholders of the Company are parties to a certain Share Exchange Agreement, dated as of July 26, 2022 (as at any time amended, restated, supplemented or otherwise modified, the “Exchange Agreement”; capitalized terms used herein not otherwise defined shall have the meanings ascribed to such terms in the Exchange Agreement), pursuant to which, among others, certain shareholders of the Company will be exchanging their shares in the Company for newly issued shares of the Parent so that the Company becomes a majority stockholder of the Parent; and

 

WHEREAS, the Parties desire to amend the Exchange Agreement on the terms and subject to the conditions as hereinafter set forth.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby severally acknowledged, the Parties hereto, intending to be legally bound hereby, agree as follows:

 

1. Amendment to Purchase Agreement. The Exchange Agreement is hereby amended as follows:

 

(a) All references to the “Exchange Ratio” in the Exchange Agreement are amended to be 1 ordinary share for 18.96 shares of common stock, par value $0.0001 per share, of Parent and (b) every 5 preferred shares of the Company for 1 newly issued preferred share of Parent - each preferred share of the Parent will be convertible to 93.20 shares of common stock of the Parent and with other rights and designations identical to those held by the preferred shareholders of the Company immediately prior to the Closing.

 

2. Ratification and Reaffirmation. Except as otherwise expressly provided in this Amendment, the Exchange Agreement shall remain in full force and effect and is hereby ratified and reaffirmed in all respects.

 

3. Reference to Purchase Agreement. Upon the effectiveness of this Amendment, each reference in the Exchange Agreement to “this Agreement,” “hereunder,” or words of like import shall mean and be a reference to the Exchange Agreement, as amended by this Amendment.

 

4. Further Assurances. Each Party agrees to take such further actions as the other Parties shall reasonably request from time to time in connection herewith to evidence or give effect to the amendments set forth herein or any of the transactions contemplated hereby.

 

 

5. Counterparts; Facsimile Signatures. This Amendment may be executed in any number of counterparts and by different Parties to this Amendment on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. Any signature delivered by a Party by facsimile or other electronic transmission shall be deemed to be an original signature hereto.

 

6. Headings. The section headings herein are for convenience only and shall not affect the construction hereof.

 

7. Governing Law. Any and all disputes among the Parties relating to (i) the interpretation of the provisions of this Amendment or any other matters not provided for in (ii) shall be brought either in the courts located in the State of Israel or in the United States and (ii) corporate and securities matters relating to this Amendment and the Transaction shall be brought exclusively in the courts of the United States. This Amendment shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of laws of any jurisdictions other than those of the State of New York, except that the provisions of the laws of the State of Delaware shall apply with respect to the rights and duties of the Board of Directors of the Parent and where such provisions are otherwise mandatorily applicable.

 

8. Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and assigns.

 

[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]

 

 

IN WITNESS WHEREOF, the Parties hereto have caused this First Amendment to Share Exchange Agreement to be duly executed as of the day and year first above written.

 

	MEA TESTING SYSTEMS LTD.
	By:	/s/ Menachem Shalom
	Name:	Menachem Shalom
	Title:	CEO
	PETROCORP INC.
	By:	/s/ Doron Yom Tov
	Name:	Doron Yom Tov
	Title:	CEO

 

 

Exhibit 10.3

 

LEAK OUT AND RESALE RESTRICTION AGREEMENT

 

THIS LEAK OUT AND RESALE RESTRICTION AGREEMENT is made and entered into the ____ day of __________, 2022, by and between PetroCorp. Inc. a Delaware corporation (the “Company”), and the undersigned shareholder (“Holder”).

 

RECITALS

 

WHEREAS, the Holder is the owner of a total of __________ shares of common stock of the Company (the “Shares), some of which will be registered and included as part of a registration statement (the “Registration Statement”) to be filed by the Company with the United States Securities and Exchange Commission (the “SEC”) after the date hereof.

 

NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Holder agrees as follows:

 

The Holder shall not transfer, sell, contract to sell, devise, gift, assign, pledge, hypothecate, distribute, or grant any option to purchase or otherwise dispose of, directly or indirectly (“Sell”) any or all of the Shares other than in accordance with the following:

 

a.

Commencing on the 270th trading day after the Registration Statement is declared effective by the SEC until 6 months thereafter, the Holder shall be entitled to Sell up to 3% of the Shares per thirty-day period on a non-cumulative basis. This period of time shall hereinafter be referred to as the “Trickle Out Period.”

 

b.

Commencing with the termination of the Trickle Out Period until 6 months thereafter, the Holder shall be entitled to Sell up to 6% of the Shares per thirty-day period on a non-cumulative basis.

 

c.

In any event the Holder will not Sell more than 75% of its Shares during a period of 24 months commencing the date of the Closing of the Share Exchange between MEA Testing Systesm Ltd, its shareholders and Petrocorp. Inc

 

The Holder agrees that if the Israeli Tax Authority may impose additional restrictions of the amount of the Shares that the Holder can Sell, the length of the lock-up period or any other restrictions, such further limitations and restrictions on the Sale of the Shares will automatically, without any further action on the part of the Holder, apply on the Shares and the Holder.

 

Any attempted Sale, transfer or other disposition in violation of this Agreement shall be null and void.

 

The Holder further agrees that the Company (i) may instruct its transfer agent not to transfer or otherwise Sell the Shares other than in accordance with the terms and provisions of this Agreement, (ii) may provide a copy of this Agreement to the Company’s transfer agent for the purpose of instructing the Company’s transfer agent to place a legend on the certificate(s) evidencing the securities subject hereto and disclosing that any Sale is subject to the terms of this Agreement and (iii) may issue stop-transfer instructions to its transfer agent for the period contemplated by this Agreement for such securities.

 

 

This Agreement shall be binding upon the Holder, its agents, heirs, successors, assigns and beneficiaries.

 

Any waiver by the Company of any of the terms and conditions of this Agreement in any instance must be in writing and must be duly executed by the Company and the Holder and shall not be deemed or construed to be a waiver of such term or condition for the future, or of any subsequent breach thereof.

 

The Holder agrees that any breach of this Agreement will cause the Company and the third- party beneficiary’s irreparable damage for which there is no adequate remedy at law. If there is a breach or threatened breach of this Agreement by the Holder, the Holder hereby agrees that the Company and the third-party beneficiaries shall be entitled to the issuance of an immediate injunction without notice to restrain the breach or threatened breach. The Holder also agrees that the Company and all third-party beneficiaries shall be entitled to pursue any other remedies for such a breach or threatened breach, including a claim for money damages.

 

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Agreement as of the day and year first above written.

 

By:
	Name:
	Title:
	Holder (Name + Signature)

 

 

Exhibit 10.4

 

CONSULTING AGREEMENT

 

(this “Agreement”), between Billio Ltd, a company incorporated under the laws of the State of Israel, #515180669 with an address at 6 Hadassah St, Tel Aviv, Israel (the “Consultant”), and Petrocorp Inc., a Delaware corporation (the “Company”).

 

W I T N E S S E T H:

 

WHEREAS, the Company wishes to obtain consulting services from the Consultant to be provided by Menachem Shalom Israeli I.D. number 031912595 (the “Executive”) and the Consultant wishes to provide the Company with consulting services through the Executive as an external consultant to the Company and pursuant to the terms and conditions of this Agreement;

 

NOW, THEREFORE, in consideration of the mutual agreements and covenants set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1. Consultancy. During the Term (as defined below), the Consultant through the Executive (and only the Executive), act as a consultant and render his assistance and participation as the [Chief Executive Officer] of the Company and the Company’s subsidiaries (for purposes of this Agreement the Company and its subsidiaries shall be referred to as the Company), giving, on a full time basis the full benefit of his knowledge, expertise, technical skill and ingenuity, in all matters involved in or relating to the business thereof. For the avoidance of doubt, it is hereby clarified that in the event the Consultant ceases to provide the consulting services described herein through the Executive exclusively, the Company shall have the right to terminate this Agreement immediately upon notification of such termination, without any further notice. In his capacity as [Chief Executive Officer], the Executive shall be the [senior executive officer of the Company with principal responsibility for operations of the Company and shall perform such other duties for the Company as are consistent with his position, including, without limitation, product offerings (including pricing decisions); opening and maintaining new offices, closing offices and establishing new subsidiaries; establishing joint ventures and strategic alliances and having the sole authority to approve any contract or arrangement with a third party involving the expenditure or commitment of Company funds].

 

2. Term. This Agreement shall begin (the “Term”) on December 1^st, 2022 and shall remain in effect until terminated pursuant to the terms of this Agreement.

 

3. Duties; Non-Exclusive.

 

(a) Duties. During the Term, the Consultant and the Executive shall perform such duties as are customarily performed by such executive officer, all under and subject to the direction and control of the Board of Directors of the Company (the “Board”). As part of his consultancy duties, the Executive (a) shall devote his utmost knowledge and best skill to the performance of his duties and (b) shall devote most of his business time to the rendition of such services, subject to absences for holidays, customary vacations and for temporary illness, with the exception that the Executive may personally trade in stock, bonds, securities, commodities or real estate investments for investment only without active participation. [In addition, the Executive shall be the senior executive with principal responsibility for implementing the strategic business policies and controlling the operations of the Company and shall perform such duties for the Company as are consistent with the foregoing, including, without limitation, hiring and terminating executives and other employees, preparing and obtaining approval from the Board of the Company’s annual budget, cash management activities (including banking arrangements and investments), and contracting with accountants, attorneys, suppliers, customers and other third parties, including strategic partners in the ordinary course of business].

 

 

(b) Non-Exclusive. The Company agrees and acknowledges that during the Term the Consultant and the Executive shall be entitled to accept other work and/or enter into any contract or understanding or accept any obligation with another party to provide services, provided that such work is not inconsistent with or incompatible with the Consultant’s and/or the Executive’s obligations under this Agreement or the scope of the consulting services to be provided hereunder; and provided further that such services are not provided to any company or person which is in competition, directly or indirectly, with the Company. Each of the Consultant and the Executive warrants that there is no other existing contract or duty on the Consultant’s and/or the Executive’s part inconsistent with any of the terms or provisions of this Agreement.

 

4. Non-Competition; Non-Solicitation.

 

(a) Non-Competition. Each of the Consultant and the Executive agrees and acknowledges that it and he is and will become familiar with trade secrets and other Confidential Information (as defined below) relating to the Company and its business. Accordingly, each of the Consultant and the Executive agrees that for a period of five years from the expiration or termination of the Term (the “Non-Compete Period”), not to, directly or indirectly, individually or through another entity, own, manage, control, participate in, consult with, render services for, or in any other manner engage in any business, or as an investor in or lender to any business (in each case including, without limitation, on its own behalf or on behalf of another person or entity) which competes either directly or indirectly with the Company, in any market in which the Company is then operating or proposing to operate, at any time during the Non-Compete Period or as of the end of the Non-Compete Period. Nothing in this Section will be deemed to prohibit either the Consultant and/or the Executive from being a passive owner of less than 5% (either separately or together) of the outstanding stock of a corporation engaged in a competing business as described above of any class which is publicly traded, so long as it or he, as the case may be, has no direct or indirect participation in the business of such corporation.

 

(b) Non-Solicitation. Neither the Consultant nor the Executive will, for a period of five years from the expiration or termination of the Term, directly or indirectly, individually or through another entity or affiliate (y) solicit or assist any other person or entity to solicit, whether directly or indirectly, individually or through another entity or affiliate, any business (other than for the Company) from any entity, engage in any business with, or provide advice or services to, any person or entity which directly or indirectly competes with the Company and (z)(i) induce or attempt to induce any employee, consultant or independent contractor of the Company to leave the employ or consulting or contracting relationship with, or in any way interfere with the relationship between the Company and any employee, consultant or independent contractor thereof, (ii) solicit for employment or as a consultant or an independent contractor any person who was an employee, consultant or independent contractor of the Company at any time during the Non-Compete Period, or (iii) induce or attempt to induce any customer, supplier, distributor or other business relation of the Company to cease doing business with the Company or in any way interfere with the relationship between any such customer, supplier, distributor or other business relation and the Company.

 

 

5. Confidentiality and Developments.

 

(a) Maintenance of Confidentiality. The Consultant and the Executive shall hold in strict confidence and shall not at any time during or after the Term with the Company, directly or indirectly, (i) reveal, report, publicize, disclose, or transfer any Confidential Information (as defined below) or any part thereof to any person or entity, (ii) use any of the Confidential Information or any part thereof for any purpose other than in the course of his duties on behalf of the Company hereunder, (iii) assist any person or entity other than the Company to secure any benefit from the Confidential Information or any part thereof. All Confidential Information (regardless of the medium retained) and all abstracts, summaries or writings based upon or reflecting any Confidential Information in either the Consultant’s or Executive’s possession shall be delivered to the Company upon request therefor by the Company or automatically upon the expiration of the term or termination of this Agreement, and neither the Consultant nor the Executive shall not retain any copies of any Confidential Information.

 

(b) Confidential Information. For purposes of this Agreement, “Confidential Information” shall mean any information relating to the business, operations, affairs, assets or conditions (financial or otherwise) of the Company which is not generally known by non-Company personnel, or is proprietary or in any way constitutes a trade secret (regardless of the medium in which information is maintained) which either the Consultant or the Executive develops or obtains knowledge or access through or as a result of their respective relationship with the Company (including, without limitation, such information conceived, originated, discovered, or developed in whole or in part by the Executive). Confidential Information specifically includes, without limitation, all technical and business information concerning the business or proposed business of the Company, investors, prospective investors and strategic partners, business plans, partners, joint venturers, potential acquisition targets. Confidential Information shall not include any information that is generally publicly available or otherwise in the public domain other than as a result of a breach by the Executive of his obligations hereunder. For purposes of this Agreement, information shall not be deemed Confidential Information if (1) such information is available in full from public sources, or (2) such information is received from a third party not under an obligation to keep such information confidential.

 

(c) Developments. Each of the Consultant and the Executive agrees that any developments, inventions, ideas, original works or authorship or any other work product (collectively, “Developments”) relating to the business of the Company, in whole or in part conceived or made by him, shall belong exclusively to the Company and shall be deemed part of the Confidential Information for purposes of this Agreement whether or not fixed in a tangible medium of expression. Without limiting the foregoing, each of the Consultant and the Executive agree that any such Developments shall be deemed to be “work made for hire”, and that the Company shall be deemed the author thereof under the U.S. Copyright Act, provided that in the event and to the extent such works are determined not to constitute “work made for hire” as a matter of law. Each of the Consultant and the Executive hereby irrevocably assigns and transfers to the Company all right, title and interest in and to such works, including but not limited to all copyright interests therein. In this regard, each of the Consultant and the Executive hereby appoints the Company as his attorney-in-fact, with full power and authority in the place and stead of themselves and in their respective name or otherwise, to take any action and to execute any instruments which the Company, in its sole and absolute discretion, may deem necessary or appropriate in order to vest ownership of all such Developments in the Company.

 

For purposes of Sections 4 hereof, the term “the Company” shall include the Company and any and all of its subsidiaries, joint venturers and partnerships.

 

 

6. Consultancy Compensation.

 

(a) Base Compensation. Commencing on the Closing and during the Term, the Company shall pay the Consultant in consideration for the performance of the consulting services described herein, a gross monthly amount of USD 10,000 + VAT (if applicable), subject to the receipt by the Company of an invoice from the Consultant. (“Base Compensation”). If determined by the Board, the Consultant may also be entitled to a bonus on achieving defined milestones as specified by the Board.

 

(b) Increase in Base Compensation. During the Term, if the Company shall consummate a capital raise in excess of $500,000, the Base Compensation shall increase to USD 15,000 per month + VAT; if such raise shall be in excess of $2,000,000, the Base Compensation shall increase to USD 25,000 + VAT. Moreover, if the Company is successful in uplisting to Nasdaq, the Base Compensation shall increase to USD 35,000 + VAT. For purposes herein, a capital raise shall include a debt financing convertible to equity but shall exclude bank loans and lines of credit.

 

(c) Vacation and Holidays. During each 12-month period of the Term, the Consultant shall be entitled to thirty (30) business days of vacation per year of employment, which shall accrue ratably over the period earned. Use of all such vacation days is subject to the Company’s policies and procedures, and shall be scheduled in such a way as to provide adequate coverage of job responsibilities and staffing requirements. During the Term, the Consultant shall be entitled to the same paid holidays provided to the full-time, regular employees of the Company.

 

(d) Withholding Taxes. The Company shall be responsible for and may withhold from any compensation and benefits payable under this Agreement all U.S. federal, state, city or other taxes as shall be required pursuant to any U.S. law or governmental regulation or ruling. The Consultant agrees that it shall be solely responsible for all Israel, VAT and any other taxes payable as a result of providing the consulting services to the Company that are due to the State of Israel. Notwithstanding, the Company shall have the right to withhold any amounts from payments to the Consultant under this Agreement to the extend necessary to comply with any tax law and any other laws of the Unites States or the State of Israel.

 

(e) Hours Worked. The Executive is a managerial employee. As such, the hours she works may vary considerably. As an exempt employee, the Executive shall not be entitled to additional compensation for hours worked in excess of 40 hours per week. The Company agrees and acknowledges that Friday and Saturday are considered days that the Executive shall not be required to work.

 

 

(f) Expenses. The Company shall reimburse the Consultant for travel and office expenses that are pre-approved in writing by the Company, provided that:

 

(i) Each such item is of a type that qualifies it as a proper item for deduction or capitalization by the Company for federal or state income tax purposes, or, with respect to business meals, the item qualifies as a partial deduction; and

 

(ii) The Consultant furnishes the Company with such records and other documentary evidence as are customarily sufficient to satisfy the requirement for substantiation of such expenditures as an income tax deduction (or capitalization) pursuant to applicable federal and state statutes and/or regulations.

 

7. Termination. This Agreement and the consultancy services provided hereunder shall terminate under the following conditions:

 

(a) The death of the Executive;

 

(b) The permanent disability of the Executive (permanent disability shall exist when the Executive suffers from a condition of mind or body that indefinitely prevents him from further performance of his essential job duties with or without reasonable accommodation); or

 

(c) Upon receipt by the Consultant of written notice from the Company that the Consultant is being discharged for “good cause.” The Company has “good cause” to discharge the Consultant, without liability, for the reasons listed below:

 

(i) The Executive fails or refuses to faithfully and diligently perform the usual and customary duties of his consultancy to the Consultant and the Company, which failure or refusal is not cured after 10-day written notice thereof is given to the Consultant and the Executive; or

 

(ii) It is determined that the Executive has conducted himself in an unprofessional, unethical, illegal or fraudulent manner, or has acted in a manner detrimental to the reputation, character or standing of the Company; including, but not limited to, theft or misappropriation of the Company’s assets, engaging in unlawful discriminatory or harassing conduct, working while under the influence of alcohol or illegal drugs, the filing of false expense or related reports, or being convicted of a felony; or

 

(iii) Either the Consultant or the Executive violates any term or condition of this Agreement, which violation is not cured after 10-day written notice thereof is given.

 

(d) Upon receipt by the Consultant of written notice from the Company that the consultancy is being terminated for “other than good cause.”

 

(e) Upon receipt by the Company of written notice from the Consultant that that the Executive is resigning and/or will no longer be affiliated with the Consultant. This written notice shall be provided to the Company at least three (3) months in advance of such resignation. In the event that such written notice is provided, the Company’s obligations hereunder shall terminate after paying the Consultant any consultancy fee owed pursuant to this Agreement.

 

 

8. Compensation Upon Termination.

 

(a) For Good Cause. In the event the Consultant is discharged for good cause pursuant to Section 7(c), the Consultant shall receive notice that the consultancy is terminated immediately (subject to the time provisions provided in Section 7(c)(i) and (iii)), and shall receive be paid at the then Base Salary up to the date of such termination. The Consultant is entitled to no other compensation when terminated for good cause as defined in Section 7(c).

 

(b) For Other Than Good Cause. In the event the Consultant is terminated for other than good cause pursuant to Section 7(d), the Consultant shall receive severance of the accrued Base Compensation up to the date of termination plus an additional six (6) months of the Base Compensation.

 

(c) Death or Permanent Disability. In the event the Executive dies or becomes permanently disabled as defined in this Agreement pursuant to Section 7(a) or 7(b), the Company’s obligations hereunder shall terminate after paying the Consultant any Base Compensation owed through the last day he consulted for the Company. Neither the Executive nor his estate or representative is entitled to any other compensation when he dies or becomes permanently disabled.

 

(d) Resignation. In the event the Executive resigns pursuant to Section 7(e) or is no longer affiliated with the Consultant, the Consultant shall receive the Base Compensation following such resignation through the last day he performed consultancy services for the Company.

 

9. Enforcement. Each of the Consultant and the Executive acknowledges that the Company will suffer substantial and irreparable damages not readily ascertainable or compensable in the event of the breach of any of the Consultant’s and the Executive’s obligations under this Agreement, particularly Sections 4 and 5 hereof. Each of the Company and the Consultant therefore agree that the provisions of this Agreement, particularly Sections 4 and 5 shall be construed as an agreement independent of the other provisions of this Agreement and that the Company, in addition to any other remedies (including damages) provided by law, shall have the right to pursue the remedy to have such provisions specifically enforced by any court having equity jurisdiction thereof. Accordingly, in addition to all of the Company’s rights and remedies under this Agreement, including but not limited to, the right to the recovery of monetary damages from the Consultant and the Executive, the Company shall be entitled, and each of the Consultant and the Executive hereby consent, to seek the issuance by any court of competent jurisdiction of temporary, preliminary and permanent injunctions, without bond, enjoining any such breach or threatened breach by the Consultant and the Executive.

 

The rights and remedies set forth in this Section 9 shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or equity.

 

If at any time any of the provisions of this Agreement shall be determined to be invalid or unenforceable, by reason of being vague or unreasonable as to area, duration or scope of activity, the provisions hereof shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter, and each of the Consultant and the Executive agree that such provisions, as so amended, shall be valid and binding as though any invalid or unenforceable provision had not been included herein.

 

 

10. Independent Consultant Relationship. Each of the Consultant and the Executive hereby declares and undertakes, that its relationship with the Company will be that of an independent consultant and nothing in this Agreement should be construed to create a partnership, joint venture, or employer-employee relationship between the Company and the Consultant and/or the Executive. Each of the Consultant and the Executive agrees, that it/he will not be entitled to any of the benefits that the Company may make available to its employees, such as group insurance, profit sharing or retirement benefits, unless otherwise expressly provided to the Consultant. Furthermore, each of the Consultant and the Executive agrees that no title that the Consultant and/or the Executive shall carry while acting in the capacity of a consultant of the Company, nor any conduct by the Company or the Consultant, shall derogate from this Section 10.

 

The Consultant will be solely responsible for all tax returns and payments required to be filed with or made to any tax authority with respect to the Consultant’s performance of the consulting services and receipt of fees under this Agreement. Because the Consultant is an independent contractor, the Company will not withhold or make payments for National Insurance Institute; make unemployment insurance or disability insurance contributions; or obtain worker’s compensation insurance on the Consultant’s behalf.

 

Furthermore, each of the Consultant and the Executive hereby declares, that the Consultant is the sole employer of the Executive and therefore the Consultant has the sole and complete liability for the Executive’s employment in any aspect whatsoever including, inter alia, obligations such as payment of taxes, National Insurance, disability, severance pay and other contributions based on fees paid to the Executive. The Consultant hereby agrees to indemnify and defend the Company against any and all such taxes or contributions, including penalties and interest, and the Company shall be entitled to require the Consultant to produce evidence of effecting the payments as aforesaid.

 

11. Ventures. If, during the Term, either the Consultant or the Executive is engaged in or associated with the planning or implementing of any project, program or venture involving the Company and a third party or parties, all rights in the project, program or venture shall belong to the Company and shall constitute a corporate opportunity belonging exclusively to the Company. Except as expressly approved in writing by the Company, neither the Consultant nor the Executive shall be entitled to any interest in such project, program or venture or to any commission, finder’s fee or other compensation in connection therewith, other than the compensation to be paid to the Consultant as provided in this Agreement.

 

12. Successors and Assigns. The rights and obligations of the Company under this Agreement shall enure to the benefit of and shall be binding upon the successors and assigns of the Company. Neither the Consultant nor the Executive shall be entitled to assign any of its or his rights or obligations under this Agreement without the prior written consent of the Company.

 

 

13. Governing Law. This Agreement shall be interpreted, construed, governed and enforced in accordance with the laws of the State of Delaware.

 

14. Amendments. No amendment or modification of the terms or conditions of this Agreement shall be valid unless in writing and signed by the parties hereto.

 

15. Counterparts. This Agreement may be executed in counterparts and, if so executed, each such counterpart shall have the force and effect of an original. A facsimile or other electronic signature shall have the same force and effect as an original signature.

 

16. Separate Terms/Severability. Each term, condition, covenant or provision of this Agreement shall be viewed as separate and distinct, and in the event that any such term, covenant or provision shall be held by a court or arbitrator of competent jurisdiction to be invalid, unenforceable or void, the remaining provisions shall continue in full force and effect.

 

17. Waiver. A waiver by either party of a breach of provision or provisions of this Agreement shall not constitute a general waiver, or prejudice the other party’s right otherwise to demand strict compliance with that provision or any other provisions in this Agreement.

 

18. Notices. Any notice required or permitted to be given under this Agreement shall be sufficient, if in writing, sent by mail to the last known address of the Consultant in the case of the Consultant or the Executive.

 

19. Entire Agreement. The Consultant and the Executive each acknowledges receipt of this Agreement and agrees that this Agreement represents the entire agreement with the Company concerning this consultancy employment, and supersedes any previous oral or written communications, representations, understandings or agreements with the Company or any agent thereof. The Consultant and the Executive understands that no representative of the Company has been authorized to enter into any agreement or commitment which is inconsistent in any way with the terms of this Agreement. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

 

Each party further agrees that they were represented, or had the opportunity to be represented, by counsel of their own choosing in the negotiation of the terms of this Agreement.

 

Remainder of Page Intentionally Omitted; Signature Pages to Follow

 

 

IN WITNESS HEREOF, the parties have executed this Consulting Agreement to be effective of the Closing (as defined herein).

 

	Billio Ltd
Dated: December 1st, 2022	By:	/s/ Menachem Shalom
	Name:	Menachem Shalom
	Title:	CEO
	Petrocorp Inc.
Dated: December 1st, 2022	By:	/s/ Menachem Shalom
	Name:	Menachem Shalom
	Title:	CEO

 

I, Menachem Shalom, hereby confirm that I have read this Agreement, understood its terms and agree to be personally bound by all its terms and provisions.

 

Signature:
Dated:	December 1st, 2022

 

 

Exhibit 10.5

 

CONSULTING AGREEMENT

 

(this “Agreement”), between Amir Adibi Holdings Ltd, a company incorporated under the laws of the State of Israel, #515125433 with an address at 18 Kfar Charuv St, Rishon LeZiyon, Israel (the “Consultant”), and Petrocorp Inc., a Delaware corporation (the “Company”).

 

W I T N E S S E T H:

 

WHEREAS, the Company wishes to obtain consulting services from the Consultant to be provided by Amir Adibi Israeli I.D. number 025775529 (the “Executive”) and the Consultant wishes to provide the Company with consulting services through the Executive as an external consultant to the Company and pursuant to the terms and conditions of this Agreement;

 

NOW, THEREFORE, in consideration of the mutual agreements and covenants set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1. Consultancy. During the Term (as defined below), the Consultant through the Executive (and only the Executive), act as a consultant and render his assistance and participation as the [Chief Executive Officer] of the Company and the Company’s subsidiaries (for purposes of this Agreement the Company and its subsidiaries shall be referred to as the Company), giving, on a full time basis the full benefit of his knowledge, expertise, technical skill and ingenuity, in all matters involved in or relating to the business thereof. For the avoidance of doubt, it is hereby clarified that in the event the Consultant ceases to provide the consulting services described herein through the Executive exclusively, the Company shall have the right to terminate this Agreement immediately upon notification of such termination, without any further notice. In his capacity as [Chief Executive Officer], the Executive shall be the [senior executive officer of the Company with principal responsibility for operations of the Company and shall perform such other duties for the Company as are consistent with his position, including, without limitation, product offerings (including pricing decisions); opening and maintaining new offices, closing offices and establishing new subsidiaries; establishing joint ventures and strategic alliances and having the sole authority to approve any contract or arrangement with a third party involving the expenditure or commitment of Company funds].

 

2. Term. This Agreement shall begin (the “Term”) on December 1^st, 2022 and shall remain in effect until terminated pursuant to the terms of this Agreement.

 

3. Duties; Non-Exclusive.

 

(a) Duties. During the Term, the Consultant and the Executive shall perform such duties as are customarily performed by such executive officer, all under and subject to the direction and control of the Board of Directors of the Company (the “Board”). As part of his consultancy duties, the Executive (a) shall devote his utmost knowledge and best skill to the performance of his duties and (b) shall devote most of his business time to the rendition of such services, subject to absences for holidays, customary vacations and for temporary illness, with the exception that the Executive may personally trade in stock, bonds, securities, commodities or real estate investments for investment only without active participation. [In addition, the Executive shall be the senior executive with principal responsibility for implementing the strategic business policies and controlling the operations of the Company and shall perform such duties for the Company as are consistent with the foregoing, including, without limitation, hiring and terminating executives and other employees, preparing and obtaining approval from the Board of the Company’s annual budget, cash management activities (including banking arrangements and investments), and contracting with accountants, attorneys, suppliers, customers and other third parties, including strategic partners in the ordinary course of business].

 

 

(b) Non-Exclusive. The Company agrees and acknowledges that during the Term the Consultant and the Executive shall be entitled to accept other work and/or enter into any contract or understanding or accept any obligation with another party to provide services, provided that such work is not inconsistent with or incompatible with the Consultant’s and/or the Executive’s obligations under this Agreement or the scope of the consulting services to be provided hereunder; and provided further that such services are not provided to any company or person which is in competition, directly or indirectly, with the Company. Each of the Consultant and the Executive warrants that there is no other existing contract or duty on the Consultant’s and/or the Executive’s part inconsistent with any of the terms or provisions of this Agreement.

 

4. Non-Competition; Non-Solicitation.

 

(a) Non-Competition. Each of the Consultant and the Executive agrees and acknowledges that it and he is and will become familiar with trade secrets and other Confidential Information (as defined below) relating to the Company and its business. Accordingly, each of the Consultant and the Executive agrees that for a period of five years from the expiration or termination of the Term (the “Non-Compete Period”), not to, directly or indirectly, individually or through another entity, own, manage, control, participate in, consult with, render services for, or in any other manner engage in any business, or as an investor in or lender to any business (in each case including, without limitation, on its own behalf or on behalf of another person or entity) which competes either directly or indirectly with the Company, in any market in which the Company is then operating or proposing to operate, at any time during the Non-Compete Period or as of the end of the Non-Compete Period. Nothing in this Section will be deemed to prohibit either the Consultant and/or the Executive from being a passive owner of less than 5% (either separately or together) of the outstanding stock of a corporation engaged in a competing business as described above of any class which is publicly traded, so long as it or he, as the case may be, has no direct or indirect participation in the business of such corporation.

 

(b) Non-Solicitation. Neither the Consultant nor the Executive will, for a period of five years from the expiration or termination of the Term, directly or indirectly, individually or through another entity or affiliate (y) solicit or assist any other person or entity to solicit, whether directly or indirectly, individually or through another entity or affiliate, any business (other than for the Company) from any entity, engage in any business with, or provide advice or services to, any person or entity which directly or indirectly competes with the Company and (z)(i) induce or attempt to induce any employee, consultant or independent contractor of the Company to leave the employ or consulting or contracting relationship with, or in any way interfere with the relationship between the Company and any employee, consultant or independent contractor thereof, (ii) solicit for employment or as a consultant or an independent contractor any person who was an employee, consultant or independent contractor of the Company at any time during the Non-Compete Period, or (iii) induce or attempt to induce any customer, supplier, distributor or other business relation of the Company to cease doing business with the Company or in any way interfere with the relationship between any such customer, supplier, distributor or other business relation and the Company.

 

 

5. Confidentiality and Developments.

 

(a) Maintenance of Confidentiality. The Consultant and the Executive shall hold in strict confidence and shall not at any time during or after the Term with the Company, directly or indirectly, (i) reveal, report, publicize, disclose, or transfer any Confidential Information (as defined below) or any part thereof to any person or entity, (ii) use any of the Confidential Information or any part thereof for any purpose other than in the course of his duties on behalf of the Company hereunder, (iii) assist any person or entity other than the Company to secure any benefit from the Confidential Information or any part thereof. All Confidential Information (regardless of the medium retained) and all abstracts, summaries or writings based upon or reflecting any Confidential Information in either the Consultant’s or Executive’s possession shall be delivered to the Company upon request therefor by the Company or automatically upon the expiration of the term or termination of this Agreement, and neither the Consultant nor the Executive shall not retain any copies of any Confidential Information.

 

(b) Confidential Information. For purposes of this Agreement, “Confidential Information” shall mean any information relating to the business, operations, affairs, assets or conditions (financial or otherwise) of the Company which is not generally known by non-Company personnel, or is proprietary or in any way constitutes a trade secret (regardless of the medium in which information is maintained) which either the Consultant or the Executive develops or obtains knowledge or access through or as a result of their respective relationship with the Company (including, without limitation, such information conceived, originated, discovered, or developed in whole or in part by the Executive). Confidential Information specifically includes, without limitation, all technical and business information concerning the business or proposed business of the Company, investors, prospective investors and strategic partners, business plans, partners, joint venturers, potential acquisition targets. Confidential Information shall not include any information that is generally publicly available or otherwise in the public domain other than as a result of a breach by the Executive of his obligations hereunder. For purposes of this Agreement, information shall not be deemed Confidential Information if (1) such information is available in full from public sources, or (2) such information is received from a third party not under an obligation to keep such information confidential.

 

(c) Developments. Each of the Consultant and the Executive agrees that any developments, inventions, ideas, original works or authorship or any other work product (collectively, “Developments”) relating to the business of the Company, in whole or in part conceived or made by him, shall belong exclusively to the Company and shall be deemed part of the Confidential Information for purposes of this Agreement whether or not fixed in a tangible medium of expression. Without limiting the foregoing, each of the Consultant and the Executive agree that any such Developments shall be deemed to be “work made for hire”, and that the Company shall be deemed the author thereof under the U.S. Copyright Act, provided that in the event and to the extent such works are determined not to constitute “work made for hire” as a matter of law. Each of the Consultant and the Executive hereby irrevocably assigns and transfers to the Company all right, title and interest in and to such works, including but not limited to all copyright interests therein. In this regard, each of the Consultant and the Executive hereby appoints the Company as his attorney-in-fact, with full power and authority in the place and stead of themselves and in their respective name or otherwise, to take any action and to execute any instruments which the Company, in its sole and absolute discretion, may deem necessary or appropriate in order to vest ownership of all such Developments in the Company.

 

For purposes of Sections 4 hereof, the term “the Company” shall include the Company and any and all of its subsidiaries, joint venturers and partnerships.

 

 

6. Consultancy Compensation.

 

(a) Base Compensation. Commencing on the Closing and during the Term, the Company shall pay the Consultant in consideration for the performance of the consulting services described herein, a gross monthly amount of USD 10,000 + VAT (if applicable), subject to the receipt by the Company of an invoice from the Consultant. (“Base Compensation”). If determined by the Board, the Consultant may also be entitled to a bonus on achieving defined milestones as specified by the Board.

 

(b) Increase in Base Compensation. During the Term, if the Company shall consummate a capital raise in excess of $500,000, the Base Compensation shall increase to USD 15,000 per month + VAT; if such raise shall be in excess of $2,000,000, the Base Compensation shall increase to USD 25,000 + VAT. Moreover, if the Company is successful in uplisting to Nasdaq, the Base Compensation shall increase to USD 35,000 + VAT. For purposes herein, a capital raise shall include a debt financing convertible to equity but shall exclude bank loans and lines of credit.

 

(c) Vacation and Holidays. During each 12-month period of the Term, the Consultant shall be entitled to thirty (30) business days of vacation per year of employment, which shall accrue ratably over the period earned. Use of all such vacation days is subject to the Company’s policies and procedures, and shall be scheduled in such a way as to provide adequate coverage of job responsibilities and staffing requirements. During the Term, the Consultant shall be entitled to the same paid holidays provided to the full-time, regular employees of the Company.

 

(d) Withholding Taxes. The Company shall be responsible for and may withhold from any compensation and benefits payable under this Agreement all U.S. federal, state, city or other taxes as shall be required pursuant to any U.S. law or governmental regulation or ruling. The Consultant agrees that it shall be solely responsible for all Israel, VAT and any other taxes payable as a result of providing the consulting services to the Company that are due to the State of Israel. Notwithstanding, the Company shall have the right to withhold any amounts from payments to the Consultant under this Agreement to the extend necessary to comply with any tax law and any other laws of the Unites States or the State of Israel.

 

(e) Hours Worked. The Executive is a managerial employee. As such, the hours she works may vary considerably. As an exempt employee, the Executive shall not be entitled to additional compensation for hours worked in excess of 40 hours per week. The Company agrees and acknowledges that Friday and Saturday are considered days that the Executive shall not be required to work.

 

 

(f) Expenses. The Company shall reimburse the Consultant for travel and office expenses that are pre-approved in writing by the Company, provided that:

 

(i) Each such item is of a type that qualifies it as a proper item for deduction or capitalization by the Company for federal or state income tax purposes, or, with respect to business meals, the item qualifies as a partial deduction; and

 

(ii) The Consultant furnishes the Company with such records and other documentary evidence as are customarily sufficient to satisfy the requirement for substantiation of such expenditures as an income tax deduction (or capitalization) pursuant to applicable federal and state statutes and/or regulations.

 

7. Termination. This Agreement and the consultancy services provided hereunder shall terminate under the following conditions:

 

(a) The death of the Executive;

 

(b) The permanent disability of the Executive (permanent disability shall exist when the Executive suffers from a condition of mind or body that indefinitely prevents him from further performance of his essential job duties with or without reasonable accommodation); or

 

(c) Upon receipt by the Consultant of written notice from the Company that the Consultant is being discharged for “good cause.” The Company has “good cause” to discharge the Consultant, without liability, for the reasons listed below:

 

(i) The Executive fails or refuses to faithfully and diligently perform the usual and customary duties of his consultancy to the Consultant and the Company, which failure or refusal is not cured after 10-day written notice thereof is given to the Consultant and the Executive; or

 

(ii) It is determined that the Executive has conducted himself in an unprofessional, unethical, illegal or fraudulent manner, or has acted in a manner detrimental to the reputation, character or standing of the Company; including, but not limited to, theft or misappropriation of the Company’s assets, engaging in unlawful discriminatory or harassing conduct, working while under the influence of alcohol or illegal drugs, the filing of false expense or related reports, or being convicted of a felony; or

 

(iii) Either the Consultant or the Executive violates any term or condition of this Agreement, which violation is not cured after 10-day written notice thereof is given.

 

(d) Upon receipt by the Consultant of written notice from the Company that the consultancy is being terminated for “other than good cause.”

 

(e) Upon receipt by the Company of written notice from the Consultant that that the Executive is resigning and/or will no longer be affiliated with the Consultant. This written notice shall be provided to the Company at least three (3) months in advance of such resignation. In the event that such written notice is provided, the Company’s obligations hereunder shall terminate after paying the Consultant any consultancy fee owed pursuant to this Agreement.

 

 

8. Compensation Upon Termination.

 

(a) For Good Cause. In the event the Consultant is discharged for good cause pursuant to Section 7(c), the Consultant shall receive notice that the consultancy is terminated immediately (subject to the time provisions provided in Section 7(c)(i) and (iii)), and shall receive be paid at the then Base Salary up to the date of such termination. The Consultant is entitled to no other compensation when terminated for good cause as defined in Section 7(c).

 

(b) For Other Than Good Cause. In the event the Consultant is terminated for other than good cause pursuant to Section 7(d), the Consultant shall receive severance of the accrued Base Compensation up to the date of termination plus an additional six (6) months of the Base Compensation.

 

(c) Death or Permanent Disability. In the event the Executive dies or becomes permanently disabled as defined in this Agreement pursuant to Section 7(a) or 7(b), the Company’s obligations hereunder shall terminate after paying the Consultant any Base Compensation owed through the last day he consulted for the Company. Neither the Executive nor his estate or representative is entitled to any other compensation when he dies or becomes permanently disabled.

 

(d) Resignation. In the event the Executive resigns pursuant to Section 7(e) or is no longer affiliated with the Consultant, the Consultant shall receive the Base Compensation following such resignation through the last day he performed consultancy services for the Company.

 

9. Enforcement. Each of the Consultant and the Executive acknowledges that the Company will suffer substantial and irreparable damages not readily ascertainable or compensable in the event of the breach of any of the Consultant’s and the Executive’s obligations under this Agreement, particularly Sections 4 and 5 hereof. Each of the Company and the Consultant therefore agree that the provisions of this Agreement, particularly Sections 4 and 5 shall be construed as an agreement independent of the other provisions of this Agreement and that the Company, in addition to any other remedies (including damages) provided by law, shall have the right to pursue the remedy to have such provisions specifically enforced by any court having equity jurisdiction thereof. Accordingly, in addition to all of the Company’s rights and remedies under this Agreement, including but not limited to, the right to the recovery of monetary damages from the Consultant and the Executive, the Company shall be entitled, and each of the Consultant and the Executive hereby consent, to seek the issuance by any court of competent jurisdiction of temporary, preliminary and permanent injunctions, without bond, enjoining any such breach or threatened breach by the Consultant and the Executive.

 

The rights and remedies set forth in this Section 9 shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or equity.

 

If at any time any of the provisions of this Agreement shall be determined to be invalid or unenforceable, by reason of being vague or unreasonable as to area, duration or scope of activity, the provisions hereof shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter, and each of the Consultant and the Executive agree that such provisions, as so amended, shall be valid and binding as though any invalid or unenforceable provision had not been included herein.

 

 

10. Independent Consultant Relationship. Each of the Consultant and the Executive hereby declares and undertakes, that its relationship with the Company will be that of an independent consultant and nothing in this Agreement should be construed to create a partnership, joint venture, or employer-employee relationship between the Company and the Consultant and/or the Executive. Each of the Consultant and the Executive agrees, that it/he will not be entitled to any of the benefits that the Company may make available to its employees, such as group insurance, profit sharing or retirement benefits, unless otherwise expressly provided to the Consultant. Furthermore, each of the Consultant and the Executive agrees that no title that the Consultant and/or the Executive shall carry while acting in the capacity of a consultant of the Company, nor any conduct by the Company or the Consultant, shall derogate from this Section 10.

 

The Consultant will be solely responsible for all tax returns and payments required to be filed with or made to any tax authority with respect to the Consultant’s performance of the consulting services and receipt of fees under this Agreement. Because the Consultant is an independent contractor, the Company will not withhold or make payments for National Insurance Institute; make unemployment insurance or disability insurance contributions; or obtain worker’s compensation insurance on the Consultant’s behalf.

 

Furthermore, each of the Consultant and the Executive hereby declares, that the Consultant is the sole employer of the Executive and therefore the Consultant has the sole and complete liability for the Executive’s employment in any aspect whatsoever including, inter alia, obligations such as payment of taxes, National Insurance, disability, severance pay and other contributions based on fees paid to the Executive. The Consultant hereby agrees to indemnify and defend the Company against any and all such taxes or contributions, including penalties and interest, and the Company shall be entitled to require the Consultant to produce evidence of effecting the payments as aforesaid.

 

11. Ventures. If, during the Term, either the Consultant or the Executive is engaged in or associated with the planning or implementing of any project, program or venture involving the Company and a third party or parties, all rights in the project, program or venture shall belong to the Company and shall constitute a corporate opportunity belonging exclusively to the Company. Except as expressly approved in writing by the Company, neither the Consultant nor the Executive shall be entitled to any interest in such project, program or venture or to any commission, finder’s fee or other compensation in connection therewith, other than the compensation to be paid to the Consultant as provided in this Agreement.

 

12. Successors and Assigns. The rights and obligations of the Company under this Agreement shall enure to the benefit of and shall be binding upon the successors and assigns of the Company. Neither the Consultant nor the Executive shall be entitled to assign any of its or his rights or obligations under this Agreement without the prior written consent of the Company.

 

 

13. Governing Law. This Agreement shall be interpreted, construed, governed and enforced in accordance with the laws of the State of Delaware.

 

14. Amendments. No amendment or modification of the terms or conditions of this Agreement shall be valid unless in writing and signed by the parties hereto.

 

15. Counterparts. This Agreement may be executed in counterparts and, if so executed, each such counterpart shall have the force and effect of an original. A facsimile or other electronic signature shall have the same force and effect as an original signature.

 

16. Separate Terms/Severability. Each term, condition, covenant or provision of this Agreement shall be viewed as separate and distinct, and in the event that any such term, covenant or provision shall be held by a court or arbitrator of competent jurisdiction to be invalid, unenforceable or void, the remaining provisions shall continue in full force and effect.

 

17. Waiver. A waiver by either party of a breach of provision or provisions of this Agreement shall not constitute a general waiver, or prejudice the other party’s right otherwise to demand strict compliance with that provision or any other provisions in this Agreement.

 

18. Notices. Any notice required or permitted to be given under this Agreement shall be sufficient, if in writing, sent by mail to the last known address of the Consultant in the case of the Consultant or the Executive.

 

19. Entire Agreement. The Consultant and the Executive each acknowledges receipt of this Agreement and agrees that this Agreement represents the entire agreement with the Company concerning this consultancy employment, and supersedes any previous oral or written communications, representations, understandings or agreements with the Company or any agent thereof. The Consultant and the Executive understands that no representative of the Company has been authorized to enter into any agreement or commitment which is inconsistent in any way with the terms of this Agreement. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

 

Each party further agrees that they were represented, or had the opportunity to be represented, by counsel of their own choosing in the negotiation of the terms of this Agreement.

 

Remainder of Page Intentionally Omitted; Signature Pages to Follow

 

 

IN WITNESS HEREOF, the parties have executed this Consulting Agreement to be effective of the Closing (as defined herein).

 

	Amir Adibi Holdings Ltd
Dated: December 1st, 2022	By:	/s/ Amir Adibi
	Name:	Amir Adibi
	Title:	CEO
	Petrocorp Inc.
Dated: December 1st, 2022	By:	/s/ Menachem Shalom
	Name:	Menachem Shalom
	Title:	CEO

 

I, Amir Adibi, hereby confirm that I have read this Agreement, understood its terms and agree to be personally bound by all its terms and provisions.

 

Signature:
Dated:	December 1st, 2022

 

 

Exhibit 10.6

 

Employment Agreement

 

This Employment Agreement (this “Agreement”) is dated as of January 15^th, 2023, by and between Petrocorp Israel Ltd., a company organized under the laws of the State of Israel with registration number __________, having its principal place of business at HaGavish 4, Netanya (the “Company”), and Haim Ratzabi, ID #028915817 (the “Employee”).

 

WHEREAS,

the Company wishes to employ the Employee, and the Employee wishes to be employed by the Company, as of the Commencement Date (as such term is defined hereunder); and

 

WHEREAS,

the parties desire to state the terms and conditions of the Employee’s employment by the Company, as set forth below.

 

NOW, THEREFORE, in consideration of the mutual premises, covenants and other agreements contained herein, the parties hereby agree as follows:

 

1.	Position, Scope, Representations and Undertakings

 

1.1.

Position. The Employee shall serve in the position described in Schedule A. In such position the Employee shall report regularly and shall be subject to the direction and control of the person stated in Schedule A (the “Supervisor”). The Employee shall perform his duties diligently, conscientiously and in furtherance of the Company’s best interests. The Employee agrees and undertakes to inform the Company in writing, immediately after becoming aware of any matter that may in any way raise a conflict of interest between the Employee and the Company. During his employment by the Company, the Employee shall not receive any payment, compensation or benefit from any third party in connection, directly or indirectly, with his position in the Company.

 

1.2.

Scope of Employment. The Employee shall devote his entire business time and attention to the business of the Company and shall not undertake or accept any other paid or unpaid employment or occupation or engage in any other business activity, except with the prior written consent of the Company.

 

1.2.1.

The Employee shall be employed on a half-time basis (regularly, 91 hours per month, Sunday through Thursday.

 

Once approved by the Parties, The Employee shall be employed on a full-time basis (regularly, 182 hours per month, Sunday through Thursday.

 

At times, the Employee may also be required by the Company to work outside of regular working hours and outside of regular working days. In light of the Company’s anticipation that the Employee will be working overtime hours, the Employee will be entitled to the Overtime Payment for 30 overtime hours per month (the “Monthly Overtime Quota”). The Employee must obtain the Company’s prior written approval for work in excess of the Monthly Overtime Quota. As the compensation specified below, the employee’s position and managerial role all assume any additional overtime work as part of the work.

 

1.2.2.

Saturday shall be the weekly day of rest of the Employee.

 

1.3.

Location. The Employee shall perform his or her duties hereunder at the Company’s facilities in Israel, but understands and agrees that the position may involve domestic and international travel. Notwithstanding the foregoing, the employee shall be allowed from time to time to work from his home following the approval of his manager in advance.

 

 

1.4.

Employee’s Representations and Warranties. The Employee represents and warrants to the Company as follows: (a) all the information supplied on the Employee’s employment application or resume or other documents furnished by the Employee is true and complete; and (b) the execution and delivery of this Agreement and the fulfillment of its terms: (i) does not and will not constitute a default under or conflict with any agreement or other instrument to which he is a party or by which he is bound; and (ii) do not require the consent of any person or entity. Further, with respect to any past engagement of the Employee with third parties and with respect to any permitted engagement of the Employee with any third party during the term of his engagement with the Company (for purposes hereof, such third parties shall be referred to as “Other Employers”), the Employee represents, warrants and undertakes that: (a) his engagement with the Company is not now, and will not in the future be, in breach of any of his undertakings toward Other Employers, including, without limitation, any non-competition or confidentiality undertakings; and (b) he will not disclose to the Company, nor use, in provision of any services to the Company, any proprietary or confidential information belonging to any Other Employer.

 

2.	Compensation and other Benefits and Rights Schedule B specifies the compensation and other benefits and rights due to the Employee, as well as related rights and obligations.

 

3.	Term and Termination of Employment

 

3.1.

Term. The Employee’s employment by the Company shall commence on the date set forth in Schedule A (the “Commencement Date”), and shall then, unless terminated in accordance with the terms of this Agreement, automatically continue until it is terminated pursuant to the terms set forth herein.

 

3.2.

Termination at Will. Either party may terminate the employment relationship hereunder at any time by giving the other party a prior written notice as set forth in Schedule A (the “Notice Period”); provided that, in the event the Company ceases to carry on business according to a resolution of the Company’s Board of Directors and terminates all or substantially all of its employees or in case of liquidation of the Company, the Notice Period shall only be in accordance with applicable law.

 

3.3.

Termination for Cause. The Company may immediately terminate the employment relationship for Cause, and such termination shall be effective as of the time of notice of the same and the Employee will not be entitled to any payment on account of the Notice Period or in lieu of it. “Cause” means (a) a material breach of this Agreement; (b) any willful failure to perform or willful failure to perform competently any of the Company’s instructions or any of the Employee’s fundamental functions or duties hereunder; (c) engagement in willful misconduct or acting in bad faith with respect to the Company; (d) conviction of a felony involving moral turpitude; or (e) any cause justifying termination or dismissal in circumstances in which an employer can deny the employee severance payment under applicable law (in whole or in part).

 

3.4.

Notice Period. During the Notice Period and unless otherwise determined by the Company in a written notice to the Employee, the employment relationship hereunder shall remain in full force and effect, the Employee shall be obligated to continue to discharge and perform all of his duties and obligations with the Company, and the Employee shall cooperate with the Company and assist the Company with the integration into the Company of the person who will assume the Employee’s responsibilities. Notwithstanding the aforesaid, the Company is entitled to waive the Notice Period applicable upon termination of this Agreement, or to terminate this Agreement and the employment relationship with immediate effect, upon a written notice to the Employee and payment to the Employee of a one time amount equal to the salary to which the Employee would have been entitled during the Notice Period (without any of the additional benefits granted pursuant to this Agreement) (the “Notice Period Payment”), in lieu of such prior notice. Should the Company terminate the Employee’s employment for Cause, the Company shall not have to pay the Notice Period Payment.

 

 

3.5.

Equipment. In any event of the termination of this Agreement, or upon the Company’s request, the Employee shall immediately return all Company and customers’ property, equipment, materials and documents without keeping any copy of it, and the Employee shall cooperate with the Company and use the Employee’s best efforts to assist with the transition of work and integration into the Company’s organization of the person or persons who will assume Employee’s responsibilities. At the option of the Company, the Employee shall during such period either continue with Employee’s duties or remain absent from the premises of the Company. Under no circumstances will the Employee have a lien over any property provided by or belonging to the Company or customer of the Company.

 

4.	Additional Covenants

 

4.1.

Proprietary Information; Assignment of Inventions and Non-Competition. By executing this Agreement the Employee confirms and agrees to the provisions of the Company’s Proprietary Information, Assignment of Inventions and Non-Competition Agreement attached as Schedule C hereto. The Employee further confirms and agrees that his Salary (as defined in Schedule B hereto) has been calculated to include special consideration for his commitments under Schedule C, and he will not be entitled to any further consideration for such commitments, expressly including no entitlement to royalties for any Service Inventions as defined in Section 132 of the Patent Law, 1967 (the “Patent Law”). This clause constitutes an express agreement between the employee and the Company for the purposes of Section 134 of the Patent Law. In the event that the Employee leaves the employ of the Company, the Employee hereby consents to the notification of his new employer of his rights and obligations under this Agreement and specifically under Schedule C.

 

4.2.

Company Rules and Policies; Specific Agreements. The Employee shall adhere and comply with the rules and policies of the Company, as specified below and as may be further published by the Company from time to time.

 

4.3.

Prevention of Sexual Harassment. The Company sees violations of the Law for Prevention of Sexual Harassment (in this Section, the “Law”) in a severe light. The Employee acknowledges being informed of the Company’s policy regarding sexual harassment, including the existence of Company guidelines for the prevention of sexual harassment that may be received at any time from the employee in charge of enforcing the Law in the Company.

 

4.4.

Data and Privacy.

 

4.4.1.

The use of the Company’s devices and equipment, including computers, e-mail accounts, phones, and so on, is intended for professional use and for executing the Employee’s duties in the Company, only. The Company hereby notifies the Employee that it conducts inspections within the Company’s offices and on the Company’s equipment, including computers, cellular phones, and other devices, including and without derogating, inspections of electronic mail transmissions, internet usage and inspections of their content, inspections of phone usage and cellular company’s bills and reports. For the avoidance of any doubt, it is hereby clarified that any such examination’s findings shall be the Company’s sole property, and is presented by the Company to third parties. The Employee is deemed to have consented to any reasonable use, transfer and disclosure of all messages and data contained or sent via the Company’s computer and communications systems, including electronic mail. The Employee shall fully comply with the Company’s policies regarding computer and network, as may be in effect from time to time

 

 

4.4.2.

The Employee grants consent to the Company and its affiliates, and its/their employees, wherever they may be located, to utilize and process the Employee’s personal information, including data collected by the Company for purposes related to the Employee’s employment. This may include transfer of the Employee’s personnel records outside of Israel and further transfers thereafter. All personnel records are considered confidential and access will be limited and restricted to individuals with need to know or process that information for purposes relating to the Employee only, such as management teams and human resource personnel. The Company may share personnel records as needed solely for such purposes with third parties assisting human resources administration.

 

5.	Miscellaneous

 

5.1.

The preface and schedules to this Agreement constitute an integral and indivisible part hereof. This Agreement constitutes the entire understanding and agreement between the parties hereto, supersedes any and all prior discussions, agreements and correspondence with regard to the subject matter hereof, and may not be amended, modified or supplemented in any respect, except by a subsequent writing executed by both parties hereto.

 

5.2.

This Agreement is a personal and specific employment agreement, which formalizes the relations between the Company and the Employee, and which sets forth, in an exclusive and exhaustive manner, the Employee’s terms of employment by the Company. The provisions of this Agreement are in lieu of the provisions of any collective bargaining agreement or expansion order and therefore, no collective bargaining agreement or expansion order shall apply with respect to the relationship between the parties hereto (subject to the applicable provisions of law).

 

5.3.

The Employee affirms that in the framework of this Employment Agreement he is awarded preferential rights, and the parties therefore affirm that no customs, conventions, norms, agreements or other arrangements, if and when applicable, shall apply to the Employee. It is clarified that the Employee shall not be entitled to any payment, right or benefit which were not explicitly detailed in this Agreement, including any payments, benefits or rights to which other employees of the Company are entitled to (if any) or any benefits the Employee received from any former employer.

 

5.4.

No failure, delay of forbearance of either party in exercising any power or right hereunder shall in any way restrict or diminish such party’s rights and powers under this Agreement, or operate as a waiver of any breach or nonperformance by either party of any terms of conditions hereof.

 

5.5.

The laws of the State of Israel shall apply to this Agreement and the sole and exclusive place of jurisdiction in any matter arising out of or in connection with this Agreement shall be the Tel Aviv Regional Labor Court.

 

 

5.6.

In the event it shall be determined under any applicable law that a certain provision set forth in this Agreement is invalid or unenforceable, such determination shall not affect the remaining provisions of this Agreement unless the business purpose of this Agreement is substantially frustrated thereby.

 

5.7.

The Employee acknowledges and confirms that all terms of the Employee’s employment are personal and confidential, and undertake to keep such terms in confidence and refrain from disclosing such terms to any third party.

 

5.8.

This Agreement and its schedules and exhibits constitute notice to the Employee pursuant to the Notice to Employee (Employment Terms) Law-2002.

 

IN WITNESS WHEREOF the parties have signed this Agreement as of the date first hereinabove set forth.

 

			/s/ Haim Ratzabi
Petrocorp Israel Ltd.			Employee
By:
Title:	CEO

 

 

Schedule A

To the Employment Agreement by and between Petrocorp Israel Ltd. and Employee

 

Employment Terms

 

Details:

 

1. Name:	Haim Ratzabi
2. ID No.:	028915817
3. Address:	Amir Drori 5, Holon, Israel

 

Position, Term and Termination:

 

4. Position:	CFO
4a. Responsibilities	The Employees would be in charge of all the financial and reporting needs of the Company, the Parent Company, its subsidiaries and affiliated companies as introduced by the CEO from time to time.
5. Under the Direction of:	CEO
6. Commencement Date:	February 1st, 2023
7. Notice Period:	During the 1st year - according to the applicable Israeli law. During the 2nd year of employment onwards - 30 days.

 

 

Schedule B

To the Employment Agreement by and between Petrocorp Israel Ltd. and Employee

 

Compensation and other Benefits and Rights

 

The following terms and provisions apply with respect to the Employee’s engagement with the Company as of the date of the Employment Agreement to which this Schedule is attached (the “Agreement”). Capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement.

 

1.

Salary.

 

1.1.

The Company agrees to pay or cause to be paid to the Employee during the term of this Agreement a gross salary of NIS 25,000 (Twenty five thousand New Israeli Shekels) per full calendar month (the “Base Salary”).

 

Because the Employee may be required to work outside of regular working hours and outside of regular working days as set above, the Company agrees to pay to the Employee during the term of this Agreement a gross payment of NIS 5000 (five thousand New Israeli Shekels) per month (the “Overtime Payment”) on account of 30 overtime hours. As a gesture of good will and without derogating from the nature of the Overtime Payment, the Base Salary and the Overtime Payment together shall constitute the “Salary” for purposes of this Agreement.

 

1.2.

The salary shall be according to percentage of employment and shall start at 50% (“scope”). Immediately upon an accumulated fund raise of any kind, as of commencement date, of $2M, the scope shall be 100%.

 

1.3.

The Salary will be paid no later than the 10th day of each month, one month in arrears, after deduction of any and all taxes and charges applicable to Employee as may be in effect or which may hereafter be enacted or required by law. Employee shall notify the Company of any change which may affect Employee’s tax liability.

 

1.4.

Except as specifically set forth herein, the Salary includes any and all payments to which the Employee is entitled from the Company hereunder and under any applicable law, regulation or agreement.

 

1.5.

To the extent that the Employee shall be paid any additional payments, which are conditioned on terms, such as bonuses, commissions, grants, etc., the same shall not be deemed part of the Salary for any purpose whatsoever.

 

2.	Manager’s Insurance / Pension Fund.

 

2.1

After three months retroactive to the first day of employment, the Company will allocate to a managers’ insurance policy or a pension fund (individually and collectively in this clause referred to as the “Policy”), or a combination of both (whereby each will apply partially), the following:

 

2.1.1

An amount equal to 6.0% of the Salary which shall be allocated to a fund for severance pay, and an additional amount equal to 6.5% of the Salary which shall be allocated to a provident fund including disability insurance and life/survivors insurance.

 

2.1.2

In addition, the Company will deduct from the Salary an amount equal to 6% of the Salary, which shall constitute Employee’s contribution to the provident fund (the “Employee Participation”).

 

 

2.2

It is hereby clarified, that the payments made by the Company, pursuant to the allocations set forth above, are intended to comply with applicable law, including the obligation to allocate funds for disability and survivors insurance. The Company advises the Employee to receive professional advice on the election of a pension plan. In case the Employee elects to be insured under a plan which does not include a disability and survivors insurance component, the Employee hereby releases and discharges the Company from any responsibility or liability arising of his said election.

 

2.2.1

If the Employee does not notify the company of his choice of a pension fund or managers insurance policy within 30 days of the Commencement Date, the Company will insure Employee in a default Policy and the Employee will not have any claim about it.

 

2.2.2

The Employee agrees that the Company shall deduct from the Salary the amount specified as Employee Participation as set above.

 

2.2.3

In the event the Employee elects to be insured under a combination of the Policy and Pension Plan, the Employee may determine the allocation between the two, provided that, in any event the Company’s contributions will not exceed the maximum amounts set forth above.

 

2.3

The Company and Employee agree and acknowledge that the Company’s severance contribution to the Policy in accordance with Section ‎2.1.1 above, shall, provided contribution is made in full, be instead of severance payment to which the Employee (or his or her beneficiaries) is entitled with respect to the Salary upon which such contributions were made and for the period in which they were made (the “Exempt Salary”), pursuant to Section 14 of the Severance Pay Law 5723-1963 (the “Severance Pay Law”). The parties hereby adopt the General Approval of the Minister of Labor and Welfare, which is attached hereto as Appendix I. The Company hereby forfeits any right it may have in the reimbursement of sums paid by the Company into the Policy or Pension Plan, except: (i) in the event that Employee withdraws such sums from the Policy or Pension Plan, other than in the event of death, disability or retirement at the age of 60 or more; or (ii) upon the occurrence of any of the events provided for in Sections 16 and 17 of the Severance Pay Law. Nothing in this Agreement shall derogate from the Employee’s rights to severance payment in accordance with the Severance Pay Law or agreement or expansion order in connection with remuneration other than the Salary.

 

3.

Advanced Study Fund (Keren Hishtalmut). At the earliest of, capital raise of $5M or After 6 months of employment as of the Commencement Date, Company will contribute to a recognized educational fund an amount equal to 7.5% of the Salary and will deduct from each monthly payment and contribute to such education fund an additional amount equal to 2.5% of the Salary.

 

4.	Recuperation Pay. The Employee shall be entitled to the payment of recuperation pay (“Dmei Havra’a”) to which the Employee may be entitled under any applicable law, collective bargaining agreements or orders, to the extent any apply.

 

5.	Expenses. The Employee shall be reimbursed for business expenses borne by the Employee only if and to the extent that such expenses were approved in advance and in writing by the Company, and against valid invoices furnished by the Employee to the Company.

 

In Addition, the employee shall be entitled, to up to 500 NIS payment per month for food purchase via Sibus Card or similar.

 

 

6.

Vacation. The Employee shall be entitled to the number of paid vacation days during each year as set forth hereinbelow, but in any event not less than the minimum number of days required by applicable law, to be taken at times subject to prior coordination with the Company, or when required by the Company. Subject to applicable law, the Employee may accrue vacation days for up to the Maximum carry-forward of 2 years, all according to the Company’s policy as may be amended from time to time. Accrued vacation days beyond this limit will be automatically deleted. The Employee shall not receive payment in lieu of any unused vacation days, unless so required pursuant to applicable law. If the Employee’s employment commences or terminates part way through any year, the Employee’s entitlement to vacation days during that year will be assessed on a pro rata basis and deductions from final Salary due to the Employee on termination of employment will be made in respect of vacation days taken in excess of entitlement. Subject to the provision of due and reasonable prior notice, the Company may require the Employee to take vacation leave in accordance with applicable law.

 

●

During the first 4 months – according to the applicable law.

 

●

Starting the 5th month of employment 18 days per year.

 

7.

Sick Leave. The Employee shall be entitled to days of paid sick leave per year pursuant to applicable law, with unused days to be accumulated up to the limit set pursuant to applicable law. It is hereby clarified, that to the extent the Employee is entitled to payments under the Employee’s Insurance Scheme or Ovdan Kosher Avoda Insurance, such payments will be in lieu of the payment of sick leave payments the Company will be entitled to pay under applicable law.

 

8.	Travel Expenses. In addition to the Salary, the Employee shall be entitled to a monthly amount of NIS 1,500 for all of the Employee’s daily travel costs to and from the Employee’s workplace.

 

9.

Laptop. The Company shall provide the Employee with a laptop computer to be used in relation to the employment, as described in this Agreement. Immediately upon the termination of the Agreement for any reason whatsoever or upon the Company’s first request, the Employee shall return the laptop computer to the Company. Employee will be obligated to compensate the Company for damage caused to the computer only if due to the Employee’s negligence or intentional acts. It is hereby agreed that the Company will in no way be responsible or liable for any violations of any applicable law by the Employee through the Employee’s use of such laptop computer.

 

Share Options Grant.

 

The management of the Company shall recommend to the Board of Directors of the Company (the “Board”), to grant to the Employee options to purchase Ordinary Shares of the Company, in the amount of 0.5% of the company fully diluted shares post merger with MEA Testing systems (the “Ordinary Shares”), in accordance with the terms of the Company’s Global Share Incentive Plan (2020), as may be amended from time to time at the Board’s sole discretion (the “Share Option Plan”). The options shall vest over a period of two years as of commencement date.

 

10.

No Lien, Etc. It is specifically agreed and stated that the Employee has no right of lien over any equipment or properties which may be provided to the Employee (including, without limitation, car and mobile phone, to the extent provided), and under no circumstances may the Employee refrain from immediate release and return of any of the same back to the Company.

 

Petrocorp Israel Ltd.			Employee
By:
Title:	CEO

 

 

Appendix I

To the Employment Agreement by and between Petrocorp Israel Ltd and Employee

 

Notice to Insurance Company/Pension Fund

 

GENERAL APPROVAL REGARDING PAYMENTS BY EMPLOYERS TO A PENSION FUND AND INSURANCE FUND IN LIEU OF SEVERANCE PAY

אישור כללי (נוסח משולב) בדבר תשלומי מעבידים לקרן פנסיה ולקופת ביטוח במקום פיצויי פיטורים לפי חוק פיצויי פיטורים, התשכ”ג - 1963

By virtue of my power under section 14 of the Severance Pay Law, 5723-1963 (hereinafter: the “Law”), I certify that payments made by an employer commencing from the date of the publication of this approval for his employee to a comprehensive pension benefit fund that is not an insurance fund within the meaning thereof in the Income Tax Rules for the Approval and Conduct of Benefit Funds) Regulations, 5724-1964 (hereinafter: the “Pension Fund”) or to managers insurance including the possibility to receive annuity payment under an insurance fund as aforesaid (hereinafter: the “Insurance Fund”), including payments made by the employer by a combination of payments to a Pension Fund and an Insurance Fund (hereinafter: “Employer’s Payments”), shall be made in lieu of the severance pay due to the said employee in respect of the salary from which the said payments were made and for the period they were paid (hereinafter: the “Exempt Salary”), provided that all the following conditions are fulfilled:   (1) The Employer’s Payments –   (a) to the Pension Fund are not less than 14 1/3% of the Exempt Salary or 12% of the Exempt Salary if the employer pays for his employee’s benefit in addition thereto payments to supplement severance pay to a benefit fund for severance pay or to an Insurance Fund in the employee’s name in an amount of 2 1/3 % of the Exempt Salary. In the event the employer has not paid the above 2 1/3% in addition to the said 12%, his payments shall be only in lieu of 72% of the employee’s severance pay;   (b) to the Insurance Fund are not less than one of the following:   (1) 13 1/3% of the Exempt Salary, if the employer pays for the employee in addition thereto payments to secure monthly income in the event of disability, in a plan approved by the Commissioner of the Capital Market, Insurance and Savings Department of the Ministry of Finance, in an amount required to secure at least 75% of the Exempt Salary or in an amount of 2 1/2% of the Exempt Salary, the lower of the two (hereinafter: “Disability Insurance”);   (2) 11% of the Exempt Salary, if the employer paid, in addition, a payment to the Disability Insurance, and in such case the Employer’s Payments shall be only in lieu of 72% of the Employee’s severance pay.   In the event the employer has made payments in addition to the foregoing payments to supplement severance pay to a benefit fund for severance pay or to an Insurance Fund in the employee’s name in an amount of 2 1/3% of the Exempt Salary, the Employer’s Payments shall replace 100% of the employee’s severance pay.

בתוקף סמכותי לפי סעיף 14 לחוק פיצויי פיטורים, התשכ”ג – 1963 1 (להלן - החוק), אני מאשר כי תשלומים ששילם מעביד החל ביום פרסומו של אישור זה, בעד עובדו לפנסיה מקיפה בקופת גמל לקיצבה שאינה קופת ביטוח כמשמעותה בתקנות מס הכנסה (כללים לאישור ולניהול קופות גמל), התשכ”ד - 21964 (להלן - קרן פנסיה), או לביטוח מנהלים הכולל אפשרות לקיצבה או שילוב של תשלומים לתכנית קיצבה ולתוכנית שאינה לקיצבה בקופת ביטוח כאמור (להלן - קופת ביטוח), לרבות תשלומים ששילם תוך שילוב של תשלומים לקרן פנסיה ולקופת ביטוח, בין אם יש בקופת הביטוח תכנית לקיצבה ובין אם לאו (להלן - תשלומי המעביד), יבואו במקום פיצויי הפיטורים המגיעים לעובד האמור בגין השכר שממנו שולמו התשלומים האמורים ולתקופה ששולמו (להלן - השכר המופטר), ובלבד שנתקיימו כל אלה:   (1) תשלומי המעביד -   (א) לקרן פנסיה אינם פחותים מ-% 1/3 14 מן השכר המופטר או 12% מן השכר המופטר אם משלם המעביד בעד עובדו בנוסף לכך גם תשלומים להשלמת פיצויי פיטורים לקופת גמל לפיצויים או לקופת ביטוח על שם העובד בשיעור של % 1/3 2 מן השכר המופטר. לא שילם המעביד בנוסף ל-12% גם % 1/3 2 כאמור, יבואו תשלומיו במקום 72% מפיצויי הפיטורים של העובד, בלבד;   (ב) לקופת ביטוח אינם פחותים מאחד מאלה:   (1) % 1/3 13 מן השכר המופטר, אם משלם המעביד בעד עובדו בנוסף לכך גם תשלומים להבטחת הכנסה חודשית במקרה אבדן כושר עבודה, בתכנית שאישר הממונה על שוק ההון ביטוח וחסכון במשרד האוצר, בשיעור הדרוש להבטחת 75% מן השכר המופטר לפחות או בשיעור של % ½ 2 מן השכר המופטר, לפי הנמוך מביניהם (להלן - תשלום לביטוח אבדן כושר עבודה);   (2) 11% מן השכר המופטר, אם שילם המעביד בנוסף גם תשלום לביטוח אבדן כושר עבודה, ובמקרה זה יבואו תשלומי המעביד במקום 72% מפיצויי הפיטורים של העובד, בלבד; שילם המעביד בנוסף לאלה גם תשלומים להשלמת פיצויי פיטורים לקופת גמל לפיצויים או לקופת ביטוח על שם העובד בשיעור של % 1/3 2 מן השכר המופטר, יבואו תשלומי המעביד במקום 100% פיצויי הפיטורים של העובד.

 

1

ס“ח התשכ”ג, עמ’ 136

2

ק“ת התשכ”ד, עמ’ 1302

3

תיקון: י“פ 4803, התש”ס (19.9.99)

 

 

(2) No later than three months from the commencement of the Employer’s Payment, a written agreement was executed between the employer and the employee which included:   (a) the employee’s consent to an arrangement pursuant to this Approval in a text specifying the Employer’s Payments, the Pension Fund and Insurance Fund, as the case may be; the said agreement shall also include the text of this Approval;   (b) an advance waiver by the employer of any right which he may have to refund of monies from its payments, except in cases in which the employee’s right to severance pay was denied by a final judgment pursuant to section 17 of the Law and/or in cases in which, if such severance pay was denied, the employee has withdrawn monies from the Pension Fund or Insurance Fund other than by reason of an entitling event; for these purposes “Entitling Event” means death, disability or retirement at or after the age of 60.   (3) This Approval is not such as to derogate from the employee’s right to severance pay pursuant to any law, collective agreement, extension order or employment agreement, in respect of salary over and above the Exempt Salary.   15th Sivan 5758 (9th June 1998).

(2) לא יאוחר משלושה חודשים מתחילת ביצוע תשלומי המעביד נערך הסכם בכתב בין המעביד לבין העובד ובו:   (א) הסכמת העובד להסדר לפי אישור זה בנוסח המפרט את תשלומי המעביד ואת קרן הפנסיה וקופת הביטוח, לפי העניין; בהסכם האמור ייכלל גם נוסחו של אישור זה;   (ב)3 ויתור המעביד מראש על כל זכות שיכולה להיות לו להחזר כספים מתוך תשלומיו, אלא אם כן נשללה זכות העובד לפיצויי פיטורים בפסק דין מכח סעיפים 16 או 17 לחוק ובמידה שנשללה או שהעובד משך כספים מקרן הפנסיה או מקופת הביטוח שלא בשל אירוע מזכה; לענין זה, “אירוע מזכה” - מות, נכות או פרישה בגיל ששים או יותר.   (ג) אין באישור זה כדי לגרוע מזכותו של עובד לפיצויי פיטורים לפי החוק, הסכם קיבוצי, צו הרחבה או חוזה עבודה, בגין שכר שמעבר לשכר המופטר.   אליהו ישי שר העבודה והרווחה

The English version is brought as a translation for convenience, but the binding version is the Hebrew one.

 

Company:			Employee:
Petrocorp Inc.			Name:
Signature:			Signature:

 

 

Schedule C

To the Employment Agreement by and between Petrocorp Israel Ltd. and Employee

 

Proprietary Information, Assignment of Inventions and Non-Competition Agreement

 

1.

General

 

Capitalized terms herein shall have the meanings ascribed to them in the Agreement to which this Schedule is attached (the “Agreement”). For purposes of any undertaking of the Employee toward the Company, the term Company shall include any parent company of the Company as well as any subsidiaries and affiliates of the Company, to the extent applicable. The Employee’s obligations and representations and the Company’s rights under this Schedule shall apply as of the Commencement Date, commencement of the Employee’s services to the Company (including without limitation prior to incorporation of the Company), regardless of the date of execution of the Agreement.

 

2.	Confidentiality; Proprietary Information

 

2.1.

“Proprietary Information” means confidential and proprietary information concerning the business and financial activities of the Company, including patents, patent applications, trademarks, trademark applications, copyrights and other intellectual property, and information relating to the same, technologies and products (actual or planned), know how, inventions, research and development activities, inventions, trade secrets and industrial secrets, and also confidential commercial information such as investments, investors, employees, customers, suppliers, marketing plans, etc., all the above - whether documentary, written, oral or computer generated. Proprietary Information shall also include information of the same nature which the Company may obtain or receive from third parties.

 

2.2.

Proprietary Information shall be deemed to include any and all proprietary information disclosed by or on behalf of the Company and irrespective of form but excluding information that (i) was known to the Employee prior to the Employee’s association with the Company, as evidenced by written records; or (ii) is or shall become part of the public knowledge except as a result of the breach of the Agreement or this Schedule by the Employee.

 

2.3.

The Employee recognizes that the Company received and will receive confidential or proprietary information from third parties, subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. In connection with such duties, such information shall be deemed Proprietary Information hereunder, mutatis mutandis.

 

2.4.

The Employee agrees that all Proprietary Information, and patents, trademarks, copyrights and other intellectual property and ownership rights in connection therewith shall be the sole property of the Company and its assigns. At all times, both during the employment relationship and after the termination of the engagement between the parties, the Employee will keep in confidence and trust all Proprietary Information, and will not use or disclose any Proprietary Information or anything relating to it without the written consent of the Company, except as may be necessary in the ordinary course of performing the Employee’s duties under the Agreement.

 

2.5.

Upon termination of the Employee’s engagement with the Company, the Employee will promptly deliver to the Company all documents and materials of any nature pertaining to the Employee’s engagement with the Company, and will not take with him any documents or materials or copies thereof containing any Proprietary Information.

 

2.6.

The Employee’s undertakings set forth in this Section 2 shall remain in full force and effect after termination of the Agreement or any renewal thereof, so long as any portion of the Proprietary Information shall constitute proprietary or confidential information of the Company.

 

 

3.	Disclosure and Assignment of Inventions

 

3.1.

“Inventions” means any and all inventions, discoveries, improvements, designs, concepts, techniques, methods, systems, content, processes, derivative works, domain names, formulae, specifications, know how, computer software programs, databases, mask works, logos and trade secrets, whether or not patentable, copyrightable or protectible as trade secrets, as well as business plans, file layouts, manufacturing information and distributor lists.

 

“Company Inventions” means any Inventions that are made or conceived or first reduced to practice or created by the Employee, whether alone or jointly with others, during the period of the Employee’s engagement with the Company, and which are: (i) developed using equipment, supplies, facilities or Proprietary Information of the Company, (ii) result from work performed by the Employee for the Company, or (iii) related to the field of business of the Company, or to current or anticipated research and development.

 

3.2.

The Employee represents and warrants that except as specifically set forth in Appendix 1, as of the day of the Employee’s first engagement with the Company, the Employee has not, in any time in the past made, alone or jointly with others, conceived, reduced to practice or created any Inventions related in any way, directly or indirectly, to the field of business of the Company, or to current or anticipated research and development, and has no rights, as co-inventor or otherwise, in any such Inventions. The Employee undertakes and covenants that he will promptly disclose in confidence to the Company all Inventions deemed as Company Inventions, including Service Inventions (as defined in Section 132 of the Patent Law). The Employee agrees and undertakes not to disclose to the Company any confidential information of any third party and, in the framework of his employment by the Company, not to make any use of any intellectual property rights of any third party.

 

3.3.

The Employee hereby irrevocably transfers and assigns to the Company all worldwide patents, patent applications, copyrights, mask works, trade secrets and other intellectual property rights in any Company Invention, and any and all moral rights that he may have in or with respect to any Company Invention.

 

3.4.

The Employee acknowledges that all original works of authorship which are made by him/her (solely or jointly with others) within the scope of his/her employment and which are protectable by copyright are works for hire and are the sole property of the Company pursuant to applicable copyright law.

 

3.5.

Any assignment of copyright hereunder (and any ownership of a copyright as a work made for hire) includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as “moral rights” (collectively, “Moral Rights”). To the extent such Moral Rights cannot be assigned under applicable law and to the extent the following is allowed by the laws in the various countries where Moral Rights exist, the Employee hereby waives such Moral Rights and consents to any action of the Company that would violate such Moral Rights in the absence of such consent.

 

3.6.

The Employee agrees to assist the Company, at the Company’s expense, in every proper way to obtain for the Company and enforce patents, copyrights, mask work rights, and other legal protections for the Company Inventions in any and all countries. The Employee will execute any documents that the Company may reasonably request for use in obtaining or enforcing such patents, copyrights, mask work rights, trade secrets and other legal protections. Such obligation shall continue beyond the termination of the Employee’s engagement with the Company. The Employee hereby irrevocably designates and appoints the Company and its authorized officers and agents as the Employee’s agent and attorney in fact, coupled with an interest to act for and on the Employee’s behalf and in the Employee’s stead to execute and file any document needed to apply for or prosecute any patent, copyright, trademark, trade secret, any applications regarding same or any other right or protection relating to any Proprietary Information (including Company Inventions), and to do all other lawfully permitted acts to further the prosecution and issuance of patents, copyrights, trademarks, trade secrets or any other right or protection relating to any Proprietary Information (including Company Inventions), with the same legal force and effect as if executed by the Employee himself.

 

 

3.7.

For the removal of any doubt, it is hereby clarified that the provisions contained in this Section 3 will apply also to any “Service Inventions” as defined in the Israeli Patent Law, 1967 (the “Patent Law”). However, in no event will such Service Invention become the property of the Employee and the provisions contained in Section 132(b) of the Patent Law shall not apply unless the Company provides in writing otherwise. The Employee will not be entitled to royalties or other payment with regard to any Company Inventions, Service Inventions or any of the intellectual property rights set forth above, including any commercialization of such Company Inventions, Service Inventions or other intellectual property rights and the Employee hereby explicitly, irrevocably and unconditionally waives the right to receive any such additional royalties, consideration or other payments. Without derogating from the aforesaid, it is hereby clarified that the level of Employee’s compensation and consideration has been established based upon the aforementioned waiver of rights to receive any such additional royalties, consideration or other payments, and that the Employee’s compensation as an employee of the Company includes the full and final compensation and consideration to which the Employee may be entitled under law with respect to any Company Inventions, Service Inventions, or other intellectual property rights. This clause constitutes an express waiver of Employee’s rights under Section 132 of the Patent Law.

 

3.8.

Without derogating from the provisions of this Section 3, it is clarified that the Employee conclusively and irrevocably agrees that under no circumstances shall the Employee be entitled to take any measures whatsoever against the Company, directly or indirectly, alone or through a representative, whether legal or otherwise, where the remedy sought, whether as the principal remedy or as a secondary remedy, is a restraining order and/or an injunction and/or a specific performance order and/or any other remedy which entails placing a limitation on the use by the Company or anyone on its behalf of the Inventions (hereinafter – “Operative Orders”). It is clarified that the Employee shall not under any circumstances be entitled to obtain Operative Orders, whether all or some, against the Company or anyone on its behalf, in an action or any other proceeding initiated by the Employee or someone on his behalf against the Company, the foregoing whether it is alleged (contrary to this Proprietary Information, Assignment of Inventions and Non-Competition Agreement and in breach of it) that the Employee supposedly has rights in the Inventions, or whether it is alleged that there is an entitlement to remedies based on other grounds.

 

4.	Non-Competition; Non-Solicitation

 

4.1.

In consideration of the Employee’s terms of employment hereunder, which include special compensation for the Employee’s undertakings under this Section 4.1 and the following Section 4.2, and in order to enable the Company to effectively protect its Proprietary Information, the Employee agrees and undertakes that he will not, so long as the Agreement is in effect and for a period of twelve (12) months following termination or expiration of the Agreement, for any reason whatsoever, directly or indirectly, in any capacity whatsoever, engage in, become financially interested in, be employed by, or have any connection with any business or venture that is engaged in any activities competing with the activities of the Company.

 

 

4.2.

The Employee agrees and undertakes that during the employment relationship and for a period of twelve (12) months following termination or expiration of this engagement for whatever reason, the Employee will not, directly or indirectly, including personally or in any business in which the Employee may be an officer, director or shareholder, solicit for employment any person who is employed by the Company, or any person retained by the Company as a consultant, supplier, advisor or the like who is subject to an undertaking towards the Company to refrain from engagement in activities competing with the activities of the Company (for purposes hereof, a “Consultant”), or was retained as an employee or a Consultant during the six months preceding termination of the Employee’s employment with the Company.

 

5.	Reasonableness of Protective Covenants

 

Insofar as the protective covenants set forth in this Schedule are concerned, the Employee specifically acknowledges, stipulates and agrees as follows: (i) the protective covenants are reasonable and necessary to protect the goodwill, property and Proprietary Information of the Company, and the operations and business of the Company; and (ii) the time duration of the protective covenants is reasonable and necessary to protect the goodwill and the operations and business of Company, and does not impose a greater restrain than is necessary to protect the goodwill or other business interests of the Company. Nevertheless, if any of the restrictions set forth in this Schedule is found by a court having jurisdiction to be unreasonable or overly-broad as to geographic area, scope or time or to be otherwise unenforceable, the parties hereto intend for the restrictions set forth in this Schedule to be reformed, modified and redefined by such court so as to be reasonable and enforceable and, as so modified by such court, to be fully enforced.

 

6.	Remedies for Breach

 

The Employee acknowledges that the legal remedies for breach of the provisions of this Schedule may be found inadequate and therefore agrees that, in addition to all of the remedies available to the Company in the event of a breach or a threatened breach of any of such provisions, the Company may also, in addition to any other remedies which may be available under applicable law, obtain temporary, preliminary and permanent injunctions against any and all such actions.

 

7.	Intent of Parties

 

The Employee recognizes and agrees: (i) that this Schedule is necessary and essential to protect the business of the Company and to realize and derive all the benefits, rights and expectations of conducting Company’s business; (ii) that the area and duration of the protective covenants contained herein are in all things reasonable; (iii) that good and valuable consideration exists under the Agreement, for the Employee’s agreement to be bound by the provisions of this Schedule; and (iv) that the terms of this Schedule are in addition to, and do not derogate from, any obligation to which the Employee may be subject under applicable law or any other agreement or Company’s policy.

 

Petrocorp Israel Ltd.			Employee
By:
Title:	CEO

 

 

Appendix 1

 

Current/Prior Inventions

 

I, the undersigned, represent and warrant that except as specifically set forth herein below, as of the day of my first engagement with the Company, I have not, in any time in the past made, alone or jointly with others, conceived, reduced to practice or created any Inventions related in any way, directly or indirectly, to the field of business of the Company, or to current or anticipated research and development, and have no rights, as co-inventor or otherwise, in any such Inventions:

 

☒

THERE ARE NONE.

 

	☐	THERE ARE THE FOLLOWING (STATE ANY AND ALL INVENTIONS):

 

IF THE UNDERSIGNED EXECUTES THIS APPENDIX BUT REFRAINS FROM MARKING EITHER OF THE BOXES ABOVE, THE UNDERSIGNED SHALL BE DEEMED TO HAVE MARKED THE BOX LABELLED “THERE ARE NONE”, THUS ACKNOWLEDGING THAT THE UNDERSIGNED HAS NOT MADE, CONCEIVED, REDUCED TO PRACTICE OR CREATED ANY INVENTIONS AS DESCRIBED ABOVE.

 

To the extent that any inventions are listed above, as well as with respect to any future and related developments and improvements thereto, whether or not patentable or registrable, copyrightable or protectible as trade secrets (collectively, “Employee Inventions”) -

 

(a) I shall not use any Employee Inventions in the performance of any tasks as an employee of the Company, and I shall not disclose any proprietary information related to the Employee Inventions to any Company personnel (managers, employees, consultants, etc.).

 

(b) Notwithstanding the aforesaid, to the extent that any Employee Inventions are found to have been incorporated into, included in or otherwise used in conjunction or in connection with any Company intellectual property, and specifically any Company Inventions, or to the extent that any Company intellectual property, and specifically any Company Inventions, are found to be based or relying on any Employee Inventions or making use thereof in any manner, I hereby irrevocably grant the Company and its assignees a worldwide, irrevocable, transferable, free of any charge or royalties, license and right to use the Employee Inventions to such extent, and I hereby agree and undertake not to raise any claims against the Company or its assignees with respect to any such use of Employee Inventions, entitlement to any compensation or consideration, or any “Moral Rights” in such Employee Inventions (“Moral Rights” mean any rights of paternity or integrity, any right to claim authorship of an invention, to object to any distortion, mutilation or other modification of, or other derogatory action in relation to, any invention, whether or not such would be prejudicial to my honor or reputation, and any similar right, existing under judicial or statutory law of any country in the world, or under any treaty, regardless of whether or not such right is denominated or generally referred to as a “moral right”).

 

	Signature:
	Name:	Employee

 

 

Exhibit 10.7

 

Personal Employment Contract

Drawn up and signed in Netanya on August 1, 2000

 

Between:

M.E.A. Engine Control Ltd. (Co. No. 512558669)

Poleg Industrial Park - Netanya South

1 HaOmanut St., Kiryat Nordau Industrial Zone, Netanya

(hereinafter - the “Company”)

Of the First Part

 

A n d:

Cohen Menahem

I.D. No. 059183673

(hereinafter - the “Employee”)

Of the Second Part

 

WHEREAS

the Company desires to employee the Employee in the Company in the capacity of           General Manager         , or in any other capacity suited for his skills (hereinafter - the “Function”); and

 

WHEREAS

the Employee declares that:

 

(a)

he is ready and willing to undertake the Function;

 

(b)

he possesses the skills, the knowhow, experience and ability to perform the Function on a high standard and successfully;

 

(c)

he has never committed a shameful offense;

 

(d)

as far as he knows, he suffers from no health deficiency, his physical fitness is good, which enables him to perform the Function, and he is willing to undergo medical examinations, if requested to do so, the results of which will be sent directly to the Company;

 

(e)

his personal and professional particulars are as set forth in the Employee’s Particulars form, attached hereto as Appendix A, and he will notify the Company in writing as soon as there is any change in these particulars;

 

(f)

he has made full and appropriate disclosure of all facts and representations required in the process of his candidacy and recruitment by the Company, and he is aware that the Company relies on his declarations and undertakings in order to employ him; and

 

WHEREAS

the Employee has expressed his desire to work in the Company and perform the Function, on the terms set forth in this Contract below; and

 

WHEREAS

the Company, in reliance on the Employee’s declarations, desires to employ the Employee to perform the Function, on the terms set forth in this Contract below; and

 

WHEREAS

it is agreed between the parties that the Employee will be employed by the Company to perform the Function, on the terms set forth in this Contract below:

 

 

THEREFORE it is agreed, declared and stipulated between the parties as follows:

 

1.

General

 

1.1

The preamble and the Appendices to this Contract constitute an integral part hereof.

 

1.2

The headings hereof are intended for convenience only and they may not be used to construe this Contract.

 

1.3

On the basis of the Employee’s declarations as set forth above and below, the Company declares that in consideration therefor, and on the conditions set forth herein, it is willing and undertakes to employ the Employee to perform the Function as of the date stipulated in Appendix B “Employment Terms” (hereinafter - the “Contract Period”).

 

1.4

In consideration therefor, and on the conditions set forth herein, the Employee is willing and undertakes to be employed by the Company to perform the Function throughout the Contract Period. This undertaking is a principal and fundamental condition hereof.

 

1.5

For the removal of any doubt, the parties agree and declare that, unless stated expressly otherwise herein, upon termination of the Contract Period, this Contract shall be finally terminated and the relationship between the parties as set forth herein shall come to an end, excluding the provisions hereinafter regarding confidentiality, non-competition and intellectual property, unless the parties agree between them otherwise in writing, and on condition that they agree.

 

1.6

This Contract exhausts the legal relationship between the parties regarding the subject hereof, and it replaces and cancels any negotiations, understanding, presentation, accord and/or promise that existed, if any, whether in writing or orally, whether explicitly or inferred, between the parties hereto prior to signature hereof. It is expressly clarified [that this refers to] any employment agreement that was in force prior to signature hereof.

 

2.

The Employee’s Undertaking

 

2.1

The Employee declares that he is aware that the Function is a senior one requiring a special measure of personal loyalty.

 

2.2

The Employee undertakes to perform the Function diligently, loyally, devotedly, on a high standard, efficiently and skilfully, and to do to the best of his ability for the benefit of the Company and to promote its affairs.

 

2.3

The Employee shall follow the instructions and guidelines of the Company concerning the manner of performing the work, the work order, discipline, conduct and the like, pursuant to his Function and the powers conferred on him, to the Company’s full satisfaction.

 

2.4

The Employee undertakes not to put himself in any way in a position of conflict of interests with the Company, and in any event where he encounters such a situation or if there is a reasonable concern that such a situation might occur - he shall report it immediately to his superiors.

 

 

2.5

The Employee undertakes not make any use of the property and/or knowhow of the Company for his personal benefit, or for the benefit of others, except with the consent of the Company.

 

2.6

In the course of the Agreement Period, the Employee shall devote his full energy and skills to performing the Function and shall not engage in any additional occupation, whether or not for a consideration, unless he receives the Company’s consent therefor.

 

2.7

The Employee shall follow and comply with all instructions, guidelines and procedures of the places and organizations in which the Company operates, as they may be from time to time.

 

2.8

The Employee undertakes not to accept from any other person or entity, throughout the period of his work with the Company, any benefit, direct or indirect, in connection with his work with the Company, and to report to his superiors as soon as any such benefit is offered to him.

 

2.9

To maintain in absolute confidence the affairs of the Company, and to refrain from competing with it in any way whatsoever, as set forth below in this Contract.

 

2.10

The Employee confirms and declares that his work in the Company does not violate any third party right, nor does it contravene any of his undertakings to any third party (such as a previous employer or partner), and does not obligate or require the disclosure of secrets belonging to a third party.

 

2.11

The aforesaid provisions do not detract from the Employee’s fiduciary duties vis-a-vis the Company under any binding law.

 

3.

Working Conditions

 

3.1

In consideration for performing his work hereunder, the Company shall pay the Employee a salary in the amount and on the terms set forth in Appendix B “Employment Terms”, attached hereto (hereinafter - the “Employment Terms”).

 

3.2

For the removal of all doubt, the Employee shall not be entitled to any payment and/or social right and/or benefit of any kind or sort whatsoever, which have not been set forth expressly in this contract and in the Employment Terms.

 

3.3

It is hereby agreed and clarified that the character of the Company’s operation may require removal of its place of operation to another place in Israel and/or to send the Employee, as a Company Employee, to another place in Israel, whether permanently or temporarily. The Employee declares that the aforesaid is clear and known to him, and that whenever the aforesaid occurs, it will not constitute a deterioration in the terms of his work, and he shall not be entitled to any compensation due to the removal of the place of the Company’s operations to another place in Israel and/or his being sent as a Company Employee elsewhere in Israel.

 

3.4

The Employee undertakes to work as required by the Company in order to perform his function, including overtime and on days of rest,* It is agreed that, since the Function requires a special measure of personal trust, it is clear to the Employee that the terms and circumstances of his work do not enable the Company to supervise his work, and therefore the provisions of the Hours of Work and Rest Law 5711 - 1951 shall not apply to this Employment Agreement. For the removal of doubt, it is expressly clarified that the Employee shall not be entitled to any additional consideration for overtime or work on religious holidays or on days of rest. (*Delete as necessary.)

 

 

3.5

The Employee shall work for 5 (five) days a week, each work day consisting of 8.6 hours, including a break for meals of 30 minutes at the Employee’s expense.

 

3.6

The Employee shall be subordinate to the active Chairman of the Board concerning taking vacation.

 

3.7

The Employee shall coordinate his vacation with the active Chairman of the Board.

 

4.

Salary

 

4.1

In consideration for his work, the Employee shall receive from the Company a gross salary as set forth in the Employment Terms (hereinafter - the “Salary”).

 

4.2

It is clarified and agreed that, as aforesaid, the Employee is not entitled to overtime pay.

 

4.3

The Salary shall be linked to the Consumer Price Index, as published from time to time. The Salary shall be updated once every three months.

 

4.4

The Employee shall be entitled to recuperation pay for a number of days and at a rate as provided in the Expansion Order concerning recuperation pay.

 

4.5

The Employee shall be entitled to annual vacation according to the law.

 

4.6

The Employee shall be entitled to sick leave according to the law. The days of sick leave are not redeemable.

 

4.7

The Employee shall be entitled to his full Salary during military reserve duty, against lawful confirmation of that service entitling the Company to refund from the National Insurance for the Employee’s military reserve duty.

 

4.8

The Company shall insure the Employee under manager’s insurance from the first full month of his work, subject to the insurance company’s consent to insure him.

 

4.8.1

The parties shall bear the payments as set forth in the Employment Terms.

 

4.8.2

The Company shall deduct the Employee’s share in the payments from his Salary and shall remit them as required.

 

4.8.3

The ownership of the policies shall be the Company’s.

 

4.8.4

It is expressly agreed and declared, that the Company’s provisions for severance pay, as set forth in the Employment Terms, are on account of severance pay.

 

 

4.9

The Company shall insure the Employee under collective loss of work capacity as of commencement of his work in the Company. The insurance shall be at the Company’s expense as set forth in the Employment Terms.

 

4,10

The Employee shall be included in the Education Fund from the commencement of his work in the Company. The payments by the Company and the Employee shall be as set forth in the Employment Terms up to the ceiling rate recognized as exempt from income tax. The Employee’s payments shall be deducted from his Salary by the Company and shall be remitted each month, together with the Company’s payments, to the Education Fund.

 

4.11

Vehicle and Travel

 

4.11.1

The Company shall place at the Employee’s disposal a vehicle to serve him for his work and for his personal needs.

 

4.11.2

The Company shall bear the maintenance costs of the vehicle made available to the Employee.

 

4.11.2.1

The Company shall gross-up the value of the use of the car provided to the Employee in his Salary, pursuant to any law.

 

4.11.3

Should no vehicle be provided to the Employee for any reason, he shall be entitled to reimbursement of travel expenses / vehicle expenses * as set forth in Appendix D hereof, for travel to work and back, and for travel to perform his duties. The Company’s participation in the vehicle expenses is conditional upon the Employee having a private car registered in his name and a driving license valid in Israel. The Employee shall notify the Company of any change that may occur in one of the above particulars. (*Delete as necessary)

 

4.12

The Employee shall be entitled to the Company’s participation in subsistence expenses abroad, as they may be from time to time. It is clarified expressly that the company’s participation is conditional upon presentation of tax invoices or receipts - or parallel documents abroad, as customary and as the case may be - recognized as the Company’s expenses under any law.

 

4.13

It is expressly clarified that if the Company gives the Employee a grant or incentive, as the case may be, they shall not be considered part of the Salary, under any law.

 

4.14

Any tax or compulsory payments (hereinafter - the “Tax”) applicable to amounts paid to the Employee, whether hereunder or otherwise, pursuant to any law, if any, shall be borne by the Employee alone, and the Company shall deduct the Tax, as the case may be, at source, unless the Employee furnishes a valid exemption from deduction at source prior to the payment, as the case may be.

 

 

5.

Conclusion of the Contract and Prior Notice

 

5.1

This Contract is in effect from the date of commencement of work as set forth in the Employment Terms.

 

5.2

Either party is entitled to terminate this Contract and to conclude the employee-employer relationship by a prior notice in writing as set forth below:

 

5.2.1

The Employee shall give a prior notice of 6 (six) months.

 

5.2.2

The Company shall give the Employee a prior notice of 6 (six) months.

 

5.3

Notwithstanding the aforesaid, the Company shall be entitled at all times, at its exclusive discretion and without having to give the grounds for its decision, to dismiss the Employee immediately, and to discontinue the Employee-Employer relationship. Should the Company do so, the following provisions shall apply:

 

The Company shall pay the Employee a prior notice amount pro rata to the Salary, as it would have been paid to him if he had been employed in the prior notice period. The Company shall make a vehicle available to the Employee for 6 months.

 

5.4

The Employee undertakes that, upon conclusion of his work, whether he has been dismissed or has resigned, and whether or not a prior notice has been given:

 

5.4.1

He shall transfer his Function fully and in orderly fashion to whomever the Company shall direct.

 

5.4.2

He shall return to the Company all equipment, property and documents of the Company, including the documents prepared by the Employee for the Company, and in this matter he shall have no right of withholding or lien of any kind or sort.

 

5.5

Upon the occurrence of one or more of the cases set forth above, the Company shall be entitled to dismiss the Employee immediately with no prior notice and with no prior notice payment, and the Employee shall not be entitled to severance compensation or any other payment for the Company’s termination of his employment:

 

5.5.1

The Employee committed a criminal offense.

 

5.5.2

The Employee is declared bankrupt or a receivership order is issued against him.

 

5.5.3

He committed a serious disciplinary offense.

 

5.5.4

He committed a serious safety offense.

 

5.5.5

He did not obey the Company’s instructions.

 

 

5.5.6

He performed any action which was or might be detrimental to the Company’s reputation or business.

 

5.5.7

He committed a fundamental breach of this Agreement.

 

It is agreed by the parties that the right to dismiss the Employee as set forth in this Clause shall not detract from the Company’s right to any further right and/or relief available to the Company hereunder and/or pursuant to any law.

 

6.

The Employee’s Obligations

 

6.1

The Employee is forbidden to sign and/or undertake in the Company’s name any agreement, undertaking, declaration or any document whatsoever, unless he receives explicit authority to do so from the Company.

 

6.2

Should the Employee breach the provisions of Clause 6.1 above, he shall be liable for all expenses charged to the Company as a consequence, and he shall compensate and indemnify the Company for all such losses and damages, whether direct or indirect, including, but without derogating from the generality of the foregoing, legal costs actually expended.

 

6.3

Any grant and/or benefit and/or right from any third party - whether a public or a private entity - received by the Employee and/or given to him in connection with the know-how and/or the subject of his work in the Company and/or due to his work and his occupation in the Company, shall be the exclusive property of the Company, and the Employee hereby undertakes to irrevocably transfer and assign to the Company any grant and/or benefit and/or right received by him as aforesaid.

 

6.4

The Employee undertakes to maintain in confidence and not to disclose the terms of his work in the Company as set forth in this Contract.

 

6.5

All the rules and guidelines existing in the Company, or those that may be issued from time to time concerning the Company’s employees in general, shall also apply to the Employee, in addition to the foregoing, and shall be considered to have been included in this personal Contract.

 

7.

Intellectual Property

 

7.1

In this Contract: “Information” means any information and/or data, whether written or oral, and on any other information storage medium, relating to the Company and/or its business and/or its work methods and/or its developments and/or inventions including, but without derogating from the generality of the foregoing, processes, methods, technologies, commercial secrets, trademarks, inventions, service inventions, patents, discoveries, disclosures, ideas, software, programs, diagrams, drawings, specifications, models, patterns, algorithm software, business plans, customer lists.

 

7.2

All rights, including physical and intellectual property rights, deriving from and connected with the Information, developed by the Employee and/or in which the Employee engaged and/or to the development of which he contributed, whether by himself and/or together with another/others, and/or acquired by the Company and connected, whether directly or indirectly, with the execution/development of the product and/or the specifications and/or the project plan and/or the Company’s operations and the achievement of its purposes, shall be in the exclusive and sole ownership of the Company, and the Employee shall not have the right, at any time at all, to hold and/or utilize the Information other than in the framework of the Company, in any case and/or manner, without exception.

 

 

7.3

Without derogating from the aforesaid, the Employee hereby waives fully, absolutely and irrevocably, any claim and/or demand against the Company due to the breach of his moral right in the Information, if any, and he hereby declares that he has no right to prevent the Company from publishing the Information, in any way, at its exclusive discretion, including, but without derogating from the generality of the foregoing, publishing other than in a newspaper, magazine or periodical.

 

7.4

Applications for patents and/or patterns and/or trademarks regarding processes and products to be developed in connection with the Information and/or the Company’s activities and achievement of its purposes, are and shall be in the exclusive ownership of the Company, and shall be submitted for registration in its name wherever it so directs, in Israel and worldwide. The Company shall decide, at its exclusive discretion, concerning the submission of such applications.

 

7.5

The Employee undertakes to assist the Company and to do everything required, without exception, in order to register the patents and/or patterns and/or to protect patents and/or other rights of the Company as aforesaid, wherever in the world the Company shall decide to register or protect them, and in any way or form it may deem appropriate. If, for reasons beyond the parties’ control, it will be necessary to record the Employee as the inventor of such patents, then the Company shall be registered as owner of the above patents, and all rights, without exception, for the utilization, use or disposition thereof, shall be exclusively conferred on the Company with no additional consideration and no limit in time.

 

7.6

For the removal of doubt, it is hereby declared that the Company alone shall have the right, unlimited by venue or time, to make any use it deems fit, at its absolute discretion, of the Information and/or development products and/or patents, including granting exclusive licenses and/or sub-licenses and/or any disposition of any kind or sort to utilize the Information and/or the product and/or the patent in Israel and worldwide; and the Employee - subject to the provisions of the Contract - shall not be entitled to any royalties and/or consideration and/or any right and/or demand or claim in that regard.

 

7.7

Without derogating from the aforesaid, should any invention and/or patent reach the possession of the Employee and/or should he submit an application for a patent, he shall immediately notify the Company thereof, no later than 3 (three) days after the occurrence of one of the above, as aforesaid.

 

7.8

Without derogating from the above, should the Employee make any invention and/or any application for patent, and/or if any patent is registered in his name and/or should any property rights of any kind or sort be established for the Employee in connection with the Information, whether directly or indirectly, within 12 months after conclusion of his work with the Company, it is to be supposed that this would be the invention of a service and/or rights reaching the Employee due to his service and the period of his service, and the provisions of Clause 7 - and all sub-clauses thereof - shall also apply in such case.

 

 

8.

Confidentiality

 

8.1

The Employee declares and confirms that he is aware that, pursuant to his employment hereunder, he will be given Information relating to the Company and/or its business and/or work methods and/or developments and/or inventions of any type or sort whatsoever, and/or the technical, commercial, marketing and/or other Information of the Company, including the names of suppliers and customers (hereinafter - the “Confidential Information”).

 

8.2

The Employee declares that he is aware that the Company possesses a great deal of information and technology, and that the Confidential Information constitutes its principal resource, that it is not known publicly, and that any disclosure of the Confidential Information will constitute serious and unprecedented damage to the Company.

 

8.3

The Employee hereby undertakes to maintain in absolute confidence all or any part of the Confidential Information that may reach or be his possession, and he undertakes to refrain from delivering and/or disclosing it to others and/or publishing and/or distributing and/or using and/or utilizing it in any form whatsoever, whether directly or indirectly, by action or omission, by himself or by means of anyone on his behalf or with another/others - except for the needs of the Company - as set forth in this Agreement. The Employee further undertakes not to allow another/others to use it.

 

8.4

The Employee undertakes not to copy, photograph or reproduce, including transfer by means of computer communication, any material and/or Information and/or document or other documentation, whether in writing or on any other information storage medium, connected with the Confidential Information and/or the Company and/or its business and/or its customers and/or its customers’ business, unless mandatory for the performance of his Function pursuant to his work with the Company. For the removal of any doubt whatsoever, it is hereby clarified that the Employee shall not make any use of the Confidential Information, whether during or after the Period of the Contract, but only use required for performing his Function pursuant to his work with the Company.

 

8.5

The Employee undertakes that, upon concluding the work relationship between him and the Company - for any reason, and regardless of the circumstances of the conclusion thereof - he shall immediately deliver to the Company any documentation and/or document, whether in writing or other information storage medium (hereinafter - the “Document”), connected with and/or concerning and/or including Confidential Information which reached him in the course of and for the purpose of his work, and he shall not keep any copy of the Document/s in his possession and/or in the possession of any other entity and/or person. Without derogating from the aforesaid, should the Document be stored on an information storage medium, the Document shall be deleted irretrievably.

 

8.6

Notwithstanding the contents of Clause 9 below, the Employee’s undertakings in this Clause shall remain in effect even after conclusion of his work with the Company for any reason whatsoever for an unlimited period.

 

 

9.

Non-Competition

 

9.1

Without derogating from the above, during his work with the Company and for a period of two years after the end thereof, the Employee undertakes not to perform, whether directly or indirectly, any action or omission which might compete with the Company or assist another to do so, including not to engage or provide consulting, directly or indirectly, by himself or through another, on developing products of the type in which the Company engages.

 

9.2

The parties agree that the Salary paid to the Employee, as set forth in the Employment Terms Appendix, includes consideration for the Employee’s non-competition undertaking, and that his undertaking pursuant to this Clause is a condition for his employment by the Company.

 

9.3

The Employee undertakes not to engage outside the framework of the Company in anything connected, whether directly or indirectly, to information or business identical or similar in substance to the Company’s occupations, whether by himself or through others, whether as self-employed or on salary, including by means of a partnership or a holding, by himself or through others, in shares or management rights in any corporations, so long as he owns securities and/or is an employee of the Company, and for a period of two years thereafter.

 

9.4

The Employee undertakes not to compete in anything directly or indirectly connected with any project and/or product developed in the Company, or as a result thereof, and/or the Company’s business, whether by himself or by means of others, whether as self-employed or on salary, including by means of a partnership or a holding, by himself or through others, in shares or management rights in any corporations, so long as he owns securities and/or is an employee of the Company, and for a period of two years thereafter.

 

9.5

Without derogating from the aforesaid, the Employee undertakes that, in the course of his work in the Company, as well as for a period of two years after the end of his work in the Company, he will not directly or indirectly perform any action or omission that might compete with the Company or assist another to compete with it, including not to make contact or sell directly or indirectly, by himself or by means of a corporation, whether as self-employed or as an interested party, to Company customers any products or services competing with or supplementary to (fully or partly) those of the Company.

 

9.6

The “Company’s customers” in this Clause refers to: entities all over Israel and the world who have purchased (whether directly from the Company or through a third party - including: broker, distributor, agent) products and services marketed and/or manufactured and/or developed by the Company at the date of conclusion of the Employee’s work with the Company, as well as such entities who have commenced any negotiations in connection with the said products up to the date of conclusion of the Employee’s work with the Company.

 

 

10.

Miscellaneous

 

10.1

It is hereby agreed that should the scope or period of one or more of the Employee’s undertakings hereunder be determined to exceed the scope and/or period permitted by law - such undertaking shall be considered to have been stipulated in the maximum scope and/or period permitted by law.

 

10.2

In this Contract, the Company’s consent means the prior written consent of the Company’s management.

 

10.3

In this Contract, the Company includes subsidiaries and related companies as they shall be from time to time.

 

10.4

Any change and/or cancellation of any of the provisions hereof, shall be made in writing and signed by both parties, otherwise they shall be of no validity whatsoever.

 

10.5

Any waiver by one party of any breach of or non-compliance with any of the provisions hereof, or if any such breach or non-compliance is ignored, shall not prevent subsequent enforcement of such term or provision or claim pursuant thereto, shall not be considered a waiver of other breaches and shall not constitute a binding precedent regarding other cases in any way or form.

 

10.6

The addresses of the parties hereto are as set forth in the preamble. Any notice sent by registered mail by one party to another to the said address or to another address as notified in writing by one party to the other, shall be considered to have been received by the addressee three days after dispatch by registered mail in Israel, and if delivered by hand - at the time of delivery, and if by facsimile - on the first business day after dispatch, provided there is a transmission report confirming full and complete transmission of the notice.

 

IN WITNESS WHEREOF the parties have hereby signed:

 

	/s/ Menachem Shalom -Co CEO		/s/ Menahem Cohen
	The Company		The Employee

 

 

Appendix A

 

Employee’s Particulars

 

Surname:			Bank:
First Name:			Branch No.
I.D. No.			A/c No.
Date of Birth:
Address:
Tel. No.
Family Status:			Spouse’s Name:
No. of Children:			I.D. No.
Health Clinic:			Working:
			Tel.No.
Managers Insurance			No.
Pension Fund:			No.
Education Fund:			No.
Personal Prov.Fund:			No.

 

Children:

 

Name			Date of Birth		I.D. No.
1.
2.
3.

 

Degrees and Diplomas:

 

	Degree / Faculty		University		Graduation Year		Average/Final Grade
1.
2.
3.

 

 

 

Date: __________________     Signature: __________________

 

 

Appendix B

 

Employment Terms

 

Name: __________________

 

Date of Commencement of Work: __________________

 

Terms

 

Overtime Pay	:	None
Vacation	:	26 days	Education Fund:	Yes
Managers Insurance	:	Yes
Loss of Work Capacity	:	Yes
Index Linkage	:	Yes

 

Salary Structure

 

Gross Salary

:

20,000

(A)

 

Employee’s Deductions

 

Prov. Fund (5%)	:		(A 0.05)
Education Fund (2.5%)	:		(A 0.025) (Ceiling: 385)

 

Employer’s Payments

 

Gross Salary	:		(A)
Grossed-up Vehicle in Salary	:
National Ins. Employer	:		(A 0.049) (Ceiling: 1176)
Compensation (8 1/3%)	:		(A 0.0833)
Prov.Fund (5%)	:		(A 0.05)
Loss of Work Capacity (2.5%)	:		(A 0.25)
Education Fund (7.5%)	:		(A0.075) (Ceiling: 1115)
Cost of Salary - Total	:

 

 

Appendix B

 

Employment Terms (Revision A)

 

Name: __________________

 

Date of Commencement of Work: __________________

 

Terms

 

Overtime Pay	:	None
Vacation	:	26 days	Education Fund:	Yes
Managers Insurance	:	Yes
Loss of Work Capacity	:	Yes
Index Linkage	:	Yes

 

Salary Structure

 

Gross Salary

:

25,000

(A)

 

Employee’s Deductions

 

Prov. Fund (5%)	:		(A 0.05)
Education Fund (2.5%)	:		(A 0.025) (Ceiling: 385)

 

Employer’s Payments

 

Gross Salary	:		(A)
Grossed-up Vehicle in Salary	:
National Ins. Employer	:		(A 0.049) (Ceiling: 1176)
Compensation (8 1/3%)	:		(A 0.0833)
Prov.Fund (5%)	:		(A 0.05)
Loss of Work Capacity (2.5%)	:		(A 0.25)
Education Fund (7.5%)	:		(A0.075) (Ceiling: 1115)
Cost of Salary - Total	:

 

 

Appendix B

 

Employment Terms - Revision B - Sep. 22, 2010

 

Name: Cohen Menahem

 

Terms

 

Overtime Pay	:	None
Vacation	:	26 days	Education Fund:	Yes
Managers Insurance	:	Yes
Loss of Work Capacity	:	Yes
Index Linkage	:	Yes

 

Salary Structure

 

Gross Salary

:

25,000

(A)

 

Employee’s Deductions

 

Prov. Fund (5%)	:		(A 0.05)
Education Fund (2.5%)	:		(A 0.025) (Ceiling: 385)

 

Employer’s Payments

 

Gross Salary	:		(A)
Grossed-up Vehicle in Salary	:
National Ins. Employer	:		(A 0.049) (Ceiling: 1176)
Compensation (8 1/3%)	:		(A 0.0833)
Prov.Fund (5%)	:		(A 0.05)
Loss of Work Capacity (2.5%)	:		(A 0.25)
Education Fund (7.5%)	:		(A0.075) (Ceiling: 1115)
Cost of Salary - Total	:

 

In addition to his salary, Mr. Menahem Cohen shall receive each year, as of 2010, on a cumulative annual basis, 4% of the Company’s annual net profit, according to its audited financial statements, but without capital and special items. These 4%, constituting a bonus to Mr. Cohen, shall be paid only if he works in a full 100% position at MEA Testing Systems Ltd., throughout the calendar year for which the bonus is to be paid. Should his work be terminated for any reason prior to the end of the calendar year, he shall not be entitled to any bonus for that year.

 

Signed:

 

Elhanan Pas, Director: ____________________

 

 

Appendix C

 

To:

M.E.A. Engines Control Ltd.

 

Maintenance of Vehicle Made Available to Me by the Company

 

I the undersigned, declare and confirm as follows:

 

1.

Vehicle License No. ____________________ has been made available to me.

 

2.

Accessories:

 

	2.1	Radio-Tape	Yes/No	Serviceable/Unserviceable
	2.2	Air-conditioner	Yes/No	Serviceable/Unserviceable
	2.3		Yes/No	Serviceable/Unserviceable
	2.4		Yes/No	Serviceable/Unserviceable

 

3.

The Company shall bear the following maintenance costs of the vehicle:

 

3.1

Insurance:

3.1.1

Compulsory Ins., Third Party, Comprehensive and Towing Service

3.1.2

Excess Charge

3.2

Fuel

3.3

Regular Service

3.4

Repairs - subject to Clause 4.11.2.3 of the Contract.

 

4.

I hereby declare that the gross-up of the value of the use of the vehicle and the Company’s participation in the vehicle maintenance costs do not constitute a part of my Salary in any way or form.

 

	Yours sincerely,
	Name:
	Signature:

 

 

Appendix D

 

To: M.E.A. Engines Control Ltd.

 

Participation in Vehicle Expenses

 

I the undersigned hereby declare and confirm as follows:

 

11.

I own a vehicle No. ____________________

 

12.

I hold a driving license valid in Israel, No. ____________________

 

13.

I undertake to notify you immediately of any change that may occur in the above.

 

14.

I declare that you participate in the expenses of maintaining my vehicle and my travel to work and back, as agreed between us.

 

15.

I declare that the above payment does not constitute part of my Salary in way or form.

 

16.

IN WITNESS WHEREOF I have hereby signed on this date: ____________________.

 

	Yours sincerely,
	Name:
	Signature:

 

 

Appendix E

 

M.E.A. Engines Control Ltd.

 

Participation in Telephone Expenses

 

I the undersigned hereby declare and confirm as follows:

 

1.

I hold telephone No. ____________________

 

2.

I undertake to notify you immediately upon any change that may occur in Clause 1 above.

 

3.

I declare that you participate in my telephone expenses in accordance with the agreement between us.

 

4.

I declare that the above payment does not constitute a part of my Salary in any way or form.

 

5.

IN WITNESS WHEREOF I have hereby signed on this date: ____________________.

 

	Yours sincerely,
	Name:
	Signature:

 

 

Exhibit 10.8

 

AGREEMENT

Signed on June 20, 2023

 

Between:
	i.		Hold Me Ltd., 513933218
	ii.		Doron Yom Tov
	iii.		Amir Adibi
	iv.		Hanan Malka
	v.		Menachem Shalom
	(The “Lender”)
A n d:	M.E.A. Testing Systems Ltd., Priv.Co. 512558669
	4 HaGavish Street, Netanya
	(the “Borrower”)
A n d:	Motomova Inc. (formerly - Petrocorp Inc.) (a U.S. company)
	353 West 48th St.,
	New York, NY 10036
	(the “Parent Company”)

 

WHEREAS

Each of the Lender is a shareholder of the Parent Company;

 

WHEREAS

the Parent Company is the parent company of M.E.A. Testing Systems Ltd., Priv.Co. No. 512558669 (the “Borrower”), engaged in the development and manufacturing of testing equipment for electrical motors; and

 

WHEREAS

M.E.A. has received a number of orders and it requires financing to complete them; and

 

WHEREAS

the Lender is willing to give the Borrower a loan on the terms set forth below:

 

THEREFORE, it is agreed between the parties as follows:

 

1.

The preamble to this Agreement constitutes an integral part hereof.

 

2.

Each individual of the Lender shall remit to the Borrower its share in the loan as follows:

 

	A.	Hold Me	NIS 80,000
	B.	Doron Yom Tov	NIS 80,000
	C.	Amir Adibi	NIS 80,000
	D.	Hanan Malka	NIS 80,000
	D.	Menachem Shalom	USD 5,000

 

3.

The loan shall bear interest at 1% per month or part thereof.

 

 

4.

In addition, for extending the loan to the Company, the Parent Company shall allot and issue some of its shares to each of the Lenders, constituting 0.25% of the Company’s issued capital (in full dilution and after conceptual conversion of the preference shares to ordinary shares) for each calendar month or part thereof, during which the loan has not been repaid, for every NIS 80,000.

 

5.

Should the Company issue its shares within one year and one day after the date of signature hereof, and be registered for trade on the NASDAQ in the U.S., then each individual Lender shall have the right to convert the loan, plus accumulated interest, to the purchase of shares - at a discount of 40% off the share price offered to the public as part of the issue. It is agreed that, in any event, the Company’s effective value to the investor (after the discount) shall not exceed 60 million dollars.

 

6.

It is agreed that, to the extent the loan is converted to shares as aforesaid, then:

 

(a)

The Company shall no longer owe the amount of the loan to the Lender, and the shares it allots to the Lender shall be the final and complete consideration instead of the said loan.

 

(b)

The Lender shall receive ordinary shares of the Company, conferring equal rights to the shares allotted to the public pursuant to the issue.

 

7.

To the extent the Company does not issue its shares by the end of the aforesaid period, then:

 

(a)

From the end of the conversion period onwards, the interest on the loan shall be increased to 2% per month.

 

(b)

The loan shall be repaid to the Lender, plus accumulated interest, within and by the end of one year and one day after the date it becomes an ordinary loan.

 

(c)

It is agreed that the Lender would be entitled to receive the shares mentioned in clause 4 above – until the complete repayment of the loan.

 

8.

General

 

(a)

The parties undertake to act in good faith and mutual cooperation in order to execute the provisions of this Agreement, including - taking any action, signing any document and obtaining any permit required for the appropriate execution of the provisions hereof.

 

(b)

The contents of this Agreement fully exhaust everything agreed between the parties, and any presentation, undertaking, understanding or accord preceding this Agreement are hereby made null and void.

 

(c)

Either party’s abstention from realizing and/or using the rights conferred on it hereunder or pursuant to any law shall not be considered a waiver and/or admission and/or prevention by that party to exercise its rights at a later date, and no analogy shall be inferred therefrom, unless it was done expressly and in writing.

 

(d)

Any change or amendment hereto shall be valid solely if made in writing and signed by the parties hereto.

 

 

IN WITNESS WHEREOF the parties have hereby signed:

 

The Lender		The Company

 

 

Exhibit 10.9

 

AGREEMENT

Signed on July 03, 2023

 

Between:	Graziani Industries 1992 Ltd, Co. No. 511673485
	Address: Naaman Compound (the “Investor”)

 

A n d :	Motomova Inc. (formerly Petrocorp Inc.) (a U.S. company)
	353 West 48th Street, New York, NY 10036 (the “Company”)

 

●

Amir Adibi, ID 025775529

 

	●	Menachem Shalom, ID 031912595
		(the “Guarantors”)

 

WHEREAS

the Company is the parent company of M.E.A. Testing Systems Ltd., Priv.Co. No. 512558669, of 4 HaGavish Street, Netanya, Israel, engaged in the development and manufacture of testing systems for electrical motors; and

 

WHEREAS

the American company is acting to issue its shares and to be registered for trade on the NASDAQ in the U.S.; and

 

WHEREAS

M.E.A. has obtained a number of orders and it requires financing in order to complete them; and

 

WHEREAS

the Investor is willing to give the American company a convertible loan on the terms set forth below:

 

THEREFORE, it is agreed between the parties as follows:

 

1.

The preamble to this Agreement constitutes an integral part hereof.

 

2.

The Investor shall remit to the Company the amount of 200,000 (two hundred thousand) dollars, as a convertible loan. It is clarified that the loan is based in USD – the loan amount and its repayment (in case the loan will not be converted to stocks as part of the public offering) shall be done in USD.

 

3.

To the extent that the Company issues its shares within one year and one day from the date of signature hereof, and is registered for trade on the NASDAQ in the U.S., then the Investor will have the right to convert the full amount of the loan to the purchase of shares, at a discount of 40% off the share price offered to the public pursuant to the issue.

 

 

4.

It is agreed that in any case, the effective company valuation for the Investor (after discount) shall not exceed 60 million dollars.

 

5.

It is agreed that, to the extent the loan is converted into shares as aforesaid, then:

 

(a)

The Company shall no longer owe the amount of the loan to the Investor, and the shares it allots to the Investor shall be the final and complete consideration instead of the said loan.

 

(b)

The Investor shall receive ordinary shares of the Company, conferring equal rights to the shares allotted to the public pursuant to the issue.

 

6.

To the extent the Company does not issue its shares by the end of the said period, then:

 

(a)

The convertible loan shall become an ordinary loan, bearing 8% per annum as of the date the loan is remitted to the Company, until full repayment thereof.

 

(b)

The loan shall be repaid to the Investor, plus accumulated interest, within and by the end of one year and one day after the date it becomes an ordinary loan.

 

7.

General

 

(a)

The parties undertake to act in good faith and mutual cooperation in order to execute the provisions of this Agreement, including - taking any action, signing any document and obtaining any permit required for the appropriate execution of the provisions hereof.

 

(b)

The contents of this Agreement fully exhaust everything agreed between the parties, and any presentation, undertaking, understanding or accord preceding this Agreement are hereby made null and void.

 

(c)

Either party’s abstention from realizing and/or using the rights conferred on it hereunder or pursuant to any law shall not be considered a waiver and/or admission and/or prevention by that party to exercise its rights at a later date, and no analogy shall be inferred therefrom, unless it was done expressly and in writing.

 

(d)

Any change or amendment hereto shall be valid solely if made in writing and signed by the parties hereto.

 

8.

Guarantees

 

To the extent the loan is not converted to shares, then, to secure the repayment of the loan to the Investor, the Guarantors (Menachem Shalom and Amir Adibi) shall sign a personal promissory note for the benefit of the Investor.

 

 

IN WITNESS WHEREOF the parties have hereby signed:

 

The Investor		The Company

	The Guarantors

 

 

Exhibit 10.10

 

AGREEMENT

 

Signed on July 3, 2023

 

Between:

 

i.

Amir Adibi

ii.

Menachem Shalom

(The “Lender”)

 

A n d:

Motomova Inc. (formerly - Petrocorp Inc.) (a U.S. company)

353 West 48^th St.,

New York, NY 10036

(the “Borrower” or the “Company”)

 

WHEREAS

Each of the Lender is a shareholder and a director of the Parent Company;

 

WHEREAS

the Borrower is the parent company of M.E.A. Testing Systems Ltd., Priv.Co. No. 512558669 (the “Borrower”), engaged in the development and manufacturing of testing equipment for electrical motors; and

 

WHEREAS

M.E.A. has received a number of orders and it requires financing to complete them; and

 

WHEREAS

the Lender is willing to give the Borrower a loan on the terms set forth below:

 

THEREFORE, it is agreed between the parties as follows:

 

1.

The preamble to this Agreement constitutes an integral part hereof.

 

2.

Each individual of the Lender shall lend to the Borrower its share in the loan as follows:

 

A.

Amir Adibi

USD 32,500

B.

Menachem Shalom

USD 32,500

 

3.

The loan shall bear interest as follows:

 

a.

OID (Original Issue Discount) of 25%. As a result - Each individual of the Lender shall remit to the Borrower the net/discounted amounts as follows:

 

●

Amir Adibi

USD 24,375

●

Menachem Shalom

USD 24,375

 

b.

1% per month or part thereof.

 

4.

In addition, for extending the loan to the Borrower, it shall allot and issue some of its shares to each of the Lenders, constituting 0.25% of the Company’s issued capital (in full dilution and after conceptual conversion of the preference shares to ordinary shares) for each calendar month or part thereof, during which the loan has not been repaid, for every NIS 32,500.

 

 

5.

Should the Company issue its shares within one year and one day after the date of signature hereof, and be registered for trade on the NASDAQ in the U.S., then each individual Lender shall have the right to convert the loan, plus accumulated interest, to the purchase of shares - at a discount of 40% off the share price offered to the public as part of the issue. It is agreed that, in any event, the Company’s effective value to the investor (after the discount) shall not exceed 60 million dollars.

 

6.

It is agreed that, to the extent the loan is converted to shares as aforesaid, then:

 

(a)

The Company shall no longer owe the amount of the loan to the Lender, and the shares it allots to the Lender shall be the final and complete consideration instead of the said loan.

 

(b)

The Lender shall receive ordinary shares of the Company, conferring equal rights to the shares allotted to the public pursuant to the issue.

 

7.

To the extent the Company does not issue its shares by the end of the aforesaid period, then:

 

(a)

From the end of the conversion period onwards, the interest on the loan shall be increased to 2% per month.

 

(b)

The loan shall be repaid to the Lender, plus accumulated interest, within and by the end of one year and one day after the date it becomes an ordinary loan.

 

(c)

It is agreed that the Lender would be entitled to receive the shares mentioned in clause 4 above – until the complete repayment of the loan.

 

8.

General

 

(a)

The parties undertake to act in good faith and mutual cooperation in order to execute the provisions of this Agreement, including - taking any action, signing any document and obtaining any permit required for the appropriate execution of the provisions hereof.

 

(b)

The contents of this Agreement fully exhaust everything agreed between the parties, and any presentation, undertaking, understanding or accord preceding this Agreement are hereby made null and void.

 

(c)

Either party’s abstention from realizing and/or using the rights conferred on it hereunder or pursuant to any law shall not be considered a waiver and/or admission and/or prevention by that party to exercise its rights at a later date, and no analogy shall be inferred therefrom, unless it was done expressly and in writing.

 

(d)

Any change or amendment hereto shall be valid solely if made in writing and signed by the parties hereto.

 

 

IN WITNESS WHEREOF the parties have hereby signed:

 

The Lender		The Company

 

 

Exhibit 10.11

 

		Serial number of the security (For internal use)

 

Debenture

 

Made and signed on _____ of _____, _____at __________

 

In favor of Bank Hapoalim B.M.

 

By:

 

Name:	ID no:	Address:
Name:	ID no:	Address:

 

(hereinafter jointly and severally: The “Pledgor”)

 

The obligor for purpose of the Debenture is (choose one or more of the following) (hereinafter: the “ Obligor”) :

 

☐

The Pledgor.

 

☐

Any other person (or persons) as set forth below (hereinafter jointly and severally: the “Guaranteed Party”):

 

	Name:	ID no:	Address:
	Name:	ID no:	Address:

 

1.

Secured amounts

 

The Charge that the Pledgor created in favor of the bank under the Debenture is to secure full and accurate repayment of (choose one of the following):

 

1.1

☐

All obligations - unlimited in amount

 

1.1.1

All the amounts due or to be due to the bank from the Obligor: In connection with the provisions of banking services to the Obligor, or in connection with other obligations of the Obligor towards the bank (including in connection with obligations in respect of third party guarantees) or otherwise; whether such amounts are due or shall be due by the Obligor itself or jointly with others, whether the Obligor undertook to pay them, and whether it shall undertake to pay them in the future, in the capacity as obligor, guarantor, assignor, or otherwise; which are due for repayment prior to realizing the Charge or the Charged Assets (as defined in Section 2 below) or thereafter; which are owed in absolute or conditional terms, directly or indirectly, including principal amounts, interest of any kind (including default interest), fees and expenses of any kind, realization costs, attorney’s fee, indemnity fees, insurance fees, stamping, and including linkage differentials and exchange rate differentials of any kind that are due or shall be due by the Obligor to the bank in any manner and way for the foregoing amounts; and-

 

1.1.2

Any other amount due or shall be due to the bank by the Pledgor under the Debenture.

 

And all - unlimited in amount.

 

 

1.2

☐

Certain banking services

 

1.2.1

All the amounts due or to be due to the bank by the Obligor: In connection with credit under a document titled           dated           at a principal amount of           1 that the Obligor received or shall receive, whether such amounts are due or shall be due by the Obligor itself or jointly with others, whether the Obligor undertook to pay them, and whether it shall undertake to pay them in the future, in the capacity as obligor, guarantor, assignor, or otherwise; which are due for repayment prior to realizing the Charge or the Charged Assets, or thereafter; which are due in absolute or conditional terms, directly or indirectly, including principal amounts, interest of any kind (including default interest), fees and expenses of any kind, realization costs, attorney’s fee, indemnity fees, insurance fees, stamping, and including linkage differentials and exchange rate differentials of any kind due or shall be due by the Obligor to the bank in any manner and way for the foregoing amounts; and-

 

1.2.2

Any other amount due or shall be due to the bank by the Pledgor under the Debenture;

 

And all - unlimited in amount.

 

1.3

☐

All obligations limited in amount - as set forth in Schedule “1” to the Debenture.

 

(hereinafter, all or part thereof: the “Secured Amounts”)

 

2.

The charge

 

For securing full and accurate repayment of the Secured Amounts, the pledgor pledges and charges in favor of the:

 

2.1

By way of a first ranking/           2 floating charge, all the assets, funds, property, and rights of any kind whatsoever without exception, that the Pledgor may own now or in the future at any time in any manner or way, including their proceeds, redemption amounts, revenues and income deriving or arising from any of them (hereinafter: the “Property Charged by Floating Charge”).

 

2.2

By way of first ranking fixed charge of the Pledgor’s registered share capital that has not yet been required or that was required and has not yet been repaid, and his goodwill (hereinafter: the “Property Charged by Fixed Charge”).

 

(The Property Charged by Floating Charge and the Property Charged by Fixed Charge shall hereinafter jointly or partially be referred to as: the “Charged Property”).

 

2.3

By way of a first ranking fixed charged, all of the Pledgor’s rights towards any third parties, including:

 

2.3.1

any of the Pledgor’s rights for compensation or indemnity and any other right it may have towards third parties, including due to loss, damage, or expropriation of the Charged Property, including such rights arising from securing the Charged Property and such rights under the Property Tax and Compensation Fund Law, 5721-1961, or under any other law (hereinafter: the “Indemnity Rights”).

 

2.3.2

All of the Pledgor’s rights: (a) To exemptions, easements, discounts, setting-off and deductions, which could reduce or decrease the Pledgor’s tax rate or tax liability, insofar as the Pledgor shall be entitled to such on the date the Charge or Charged Property are realized, if realized; and (2) to make use of losses or to set-off losses, including the Pledgor’s right to make use of or set-off losses arising from realizing the Charge or Charged Property; and (c) to a choice whether to utilize an exemption or easement or discount or setting-off or deduction as foregoing; all - whether or not such arise from selling the Charged Property, or whether by virtue of the Income Tax Ordinance [New Version], Real Estate Taxation (Betterment and Acquisition) Law, 5723-1963, Value Added Tax Law, 5736-1975, or any other law (hereinafter: the “Easements and Rights”).

 

1

The credit principal amount and credit currency type must be completed (for example: ILS 500, USD 100).

2

Complete the missing and delete the superfluous.

 

 

☐

Check the appropriate square

1 Complete the missing and delete the superfluous           1. To branch          2. To the appropriate registrar 3. To the customer (debenture for creating a floating charge only by a corporation that is a company or co operative society)

 

(The Charged Property, Indemnity Rights, and Easements and Rights shall hereinafter jointly and severally be referred to as: The “Charged Assets”).

 

3.

Pledgor’s representations

 

The Pledgor hereby represents that:

 

3.1

The Charged Assets are owned by the Pledgor, and in the sole possession of the Pledgor or under the bank’s possession and control.

 

3.2

The Charged Assets are free on any debt, charge, pledge, mortgage, assignment of right, foreclosure, expropriation, lien, lock- up, retention of ownership clause, trust, preemptive right, right of first refusal, tag along right, option or any other third-party right, except:          .

 

3.3

It is entitled to pledge and charge the Charged Assets under the Debenture.

 

3.4

There is no restriction or preclusion obstacle, under law (including any injunction, provision, or guideline of any competent authority or entity that apply to the Pledgor), and according to the Pledgor’s documents of incorporation, any agreement or otherwise, to its engagement under the Debenture or performance therefore (including on the creation of the Charge, exercise of the rights and remedies granted to the bank under the Debenture or thereunder, or transfer of the Charged Assets), and no approvals, consents, or permits are required from any entity, nor is there a requirement for any other actions by any entity for this purpose.

 

3.5

Any charge or undertaking under the Debenture is lawful, valid, and fully binding and enforceable in accordance with their terms.

 

3.6

None of the events set forth in Section 6.1 below have occurred (without taking into account grace periods, waiting or prior notice periods, if any), and it is not aware of any such events being expected to occur.

 

3.7

To the best of its knowledge, upon executing the Debenture, there are no environmental hazards in the Charged Assets, and there are no demands, claims, or injunctions by any authority competent to deal with environmental hazard originating in the Charged Assets.

 

3.8

To the best of its knowledge, there are no unpaid tax liabilities for the Charged Assets.

 

3.9

The copies of the Pledgor’s incorporation documents, as delivered to the bank, are complete and up to date, as of the execution date of the Debenture.

 

4.

Undertakings of the Pledgor   The Pledgor hereby undertakes:   Actions with the Charged Assets

 

4.1

Not to charge, pledge, or assign by way of charge, in any manner or way, the Charged Assets, with rights equal or superior to the rights of the bank (including in events where a charge is removed that is superior or ranks equal to the Charge, and the Pledgor shall want to create another charge in its stead) without the bank’s prior written approval.

 

 

4.2

Not to charge, pledge, or assign by way of charge, in any manner or way, the Charged Assets under any charge that is subordinate to the Charge (any such charge shall hereinafter be referred to as: the “Subordinated Charge”), without obtaining the bank’s prior written approval for creating the Subordinated Charge, and according to the bank’s foregoing terms of approval, if granted. The bank shall not refuse to grant such approval on unreasonable grounds, however it may stipulate its approval on reasonable conditions, as the bank shall determine from time to time, all subject to relevant law. The Pledgor’s request to obtain such bank approval shall only be made in writing.

 

4.3

Not to sell, transfer, assign, lend, deliver, or remove the Charged Assets from its possession (or its rights in connection therewith) no allow another person to use the Charged Assets in any way or to grant a different person a power of attorney or any other permission, or any right or benefit with respect to the Charged Assets; not to forgive or waive, in whole or in part, the Charged Assets or any right or claim available or to become available to the Pledgor, from time to time, directly or indirectly, with respect to the Charged Assets, and all - without the bank’s prior written approval, and except if any of the actions stated in this section above are transactions that are only conducted with respect to charged assets that are part of the Property Charged by Floating Charge, in the Pledgor’s ordinary course of business and for consideration.

 

4.4

To make timely payment under any relevant law of all taxes, property taxes, levies and other mandatory payments, to all the governmental, municipal, and other entities, which are imposed on the Charged Assets, on their trading, or on the revenues arising therefrom, and to deliver to the bank upon its first request all the approvals, receipts, and references with respect to making such payments. The bank may, subject to providing a 15-day prior notice to the Pledgor, except in cases where failure to immediately pay could cause substantive damage to the bank, make any of the foregoing payments on the Pledgor’s account, which were not paid by the Pledgor on time, and the Pledgor undertakes to pay the bank any amount paid as foregoing, including the bank’s expenses in connection therewith.

 

4.5

To be liable towards the bank for any defect in the Pledgor’s property right in the Charged Assets and for the integrity, validity, and accuracy of all signatures, assignments, and details of notes, documents, and securities, insofar as these constitute part of the Charged Assets.

 

4.6

To use and treat the Charged Property, which is a tangible asset, with care, and to keep such Charged Property in good condition. To repair any malfunction, damage, defect, or deficiency (that are not negligible) to be formed in the Charged Property as foregoing, due to use or for any other reason. Should the Pledgor not perform the required repairs in the Charged Property as foregoing, within a reasonable time from the day the damage or deficiency occurred, considering the type and nature of the damage or deficiency, then the bank may, subject to providing reasonable prior notice to the Pledgor, perform the repairs at its discretion, at the Pledgor’s expense, and the Pledgor undertakes to pay the bank any amount paid by the bank for purpose of such repairs.

 

4.7

To grant the bank or anyone on its behalf access to the Charged Property that is real property, in order to examine its condition and allow them to visit and examine the condition of the remaining Charged Property wherever located.

 

4.8

To provide the bank, upon its first request and at the Pledgor’s expense, an up-to-date estimate of an appraiser, whose identity is acceptable to the bank, with respect to the value of all or part of the Charged Property, at the bank’s discretion, including the possibility of there being an environmental hazard (such request may be directed at the Pledgor from time to time, provided six (6) or more months have passed from the date when the bank’s previous request was made to the Pledgor). If the Pledgor failed to fulfill the bank’s request, as foregoing, the bank may conduct a valuation by an appraiser on its behalf, subject to providing a 10 day prior notice to the Pledgor, and any expenses in connection with such shall apply to the Pledgor and be paid by the Pledgor. In addition, the bank may itself, at any time and at its expense, conduct an updated evaluation as set forth above, and the Pledgor undertakes to cooperate with the bank for this purpose.

 

4.9

To take all the required steps under law in order to prevent environmental hazards in connection with the Charged Property, and to such end be in compliance with applicable law at all times.

 

 

Pledgor’s actions

 

4.10

To manage proper books of accounts and to allow the bank or representative on its behalf to examine such books of accounts. The Pledgor undertakes to assist the bank or its counsel and to deliver to them, upon their first request, any balance sheet, financial statements, ledger, card or log, tape, books, references, and other documents, and any information that they shall require, including explanations in connection with the Pledgor’s financial and operational condition and its business.

 

4.11

To provide the bank with financial statements of the Pledgor, at the Pledgor’s expense, at a frequency as the bank shall instruct from time to time, and in case the Pledgor is the Obligor - at a frequency as it shall agree with the bank in the framework of the documents relevant to the Secured Amounts. In addition, in case the Pledgor is the Obligor, a prerequisite condition for the bank providing banking services to an Obligor, or continuing to provide such banking services, is the provision of financial statements to the bank, as required in accordance with the directives of the Bank of Israel or according to the instructions of any competent authority or under the provisions of any relevant law.

 

4.12

That there shall be no Structural Changes with respect to the Pledgor, compared to the situation on the date of executing the Debenture, without the bank’s prior written consent.

 

Notices and reports

 

4.13

To inform the bank, as soon as possible, of any event a lien is imposed on all or part of the Charged Assets, and of any case a claim is made for any right in connection with the Charged Assets, where execution proceedings, a restraining order, an injunction, or similar other proceedings are initiated, in connection with the Charged Assets; and to inform the party with the right of lien, the person claiming the right or who initiated proceedings as foregoing, at the earliest possible opportunity, of the existence of the Charge, and to immediately, at its expense, take any measure in order to remove the lien, the claim of the right, or the proceedings set forth above.

 

4.14

To inform the bank in writing at the earliest possible opportunity (and in case of an event unrelated to it - as soon as it became aware thereof):

 

4.14.1

Of the occurrence of one of the events set forth in Section 6.1 below (without taking into account grace periods, waiting or prior notice periods, if any).

 

4.14.2

Of a change to its name, address, and ID number;

 

4.14.3

Of receiving refunds from the tax authorities for tax payments made in connection with the Charged Assets.

 

4.15

The Pledgor and Guaranteed Party undertake to inform the bank in writing of any contest or objection that either of them shall have, if any, in connection with any account, account summary, approval, or any notice that either of them shall receive from the bank in connection with the Debenture through any communication channel, including receiving information by mail, automated device, or computer terminal.

 

5.

Insurance

 

5.1

The Pledgor undertakes:

 

5.1.1

That the Charged Property shall at all times be insured for its full value against accepted risks and against any other risk (all risks insurance), which the bank shall note from time to time, at an insurance company and through an insurance policy that shall be in a form under terms and for a period to the bank’s satisfaction (hereinafter respectively: the “Insurance Company” and “Policy”);

 

 

5.1.2

To transfer to the bank the rights arising from the Policy, within the limit of the Secured Amounts;

 

5.1.3

To pay the insurance fees in connection with the Policy in full and on time;

 

5.1.4

To provide the bank with the Policy and receipts in connection with the payment of the insurance fees therefor.

 

5.1.5

To order the Insurance Company:

 

5.1.5.1

To include a statement in the Policy whereby the bank is the sole irrevocable beneficiary under the Policy, without the bank being required to pay insurance fees or any other payments; and -

 

5.1.5.2

To include an irrevocable provision in the Policy whereby insurance payments for the Charged Property, any time the Insurance Company is required to issue such payments under the Policy, or under applicable law, shall be made directly to the bank; and -

 

5.1.5.3

To provide the bank with a copy of the Policy, after the provisions set forth in this Section 5.1.5 above were added thereto.

 

5.1.6

To provide the bank with confirmation from the Insurance Company, in a form acceptable to the bank, regarding the insurance and its terms, which shall include an undertaking by the Insurance Company to act as set forth in Section 5.1.5 above, not to set-off any amount from the insurance payments to be issued to the bank for the Charged Property, except for the balance of insurance fees outstanding for insuring the Charged Property for the current insurance year only, and if the Policy also applies to other property, in addition to the Charged Property, the confirmation shall also include the Insurance Company’s consent to first attribute the insurance fees received in connection with the Policy to towards the insurance fees owed for insuring the Charged Property. The Insurance Company shall undertake to inform the bank, in any case the Policy is terminated or expires, at least 30 (thirty) days before such termination or expiration - notwithstanding and despite any other provision in the Insurance Contract Law, 5741-1981, while such notice of the Insurance Company shall, under the terms of the Policy, constitute a prerequisite for its termination or expiration.

 

5.1.7

Not to terminate or change any of the Policy’s terms, without the bank’s prior written approval.

 

5.1.8

That the Charged Property is not and shall not be, directly or indirectly, secured under double insurance. The foregoing does not derogate from the Pledgor’s rights to secure the Charged Property with an additional layer of insurance beyond the foregoing insurance layer, provided the bank’s rights under the Policy are not harmed. The Pledgor undertakes to transfer in advance for the bank’s examination any additional insurance policy as foregoing.

 

5.2

Without prejudice to the bank’s rights under the Debenture, in each of the cases set forth below, the bank may, at its discretion, secure the Charged Property on behalf of the Pledgor or the bank, and charge the Pledgor with expenses and insurance fees. The Pledgor undertakes to pay the bank any amount that the bank paid or was required to pay in connection with the insurance, including the bank’s expenses in connection therewith. And these are the cases:

 

5.2.1

If the Charged Property is not secured by the Pledgor as set forth in this Section 5;

 

5.2.2

If the Pledgor does not provide the bank with the Policy within 10 days from the day the Debenture is executed;

 

 

5.2.3

If 30 days before the end of the Policy’s term the Pledgor fails to provide the bank with a suitable policy, with terms and for a period fully acceptable to the bank;

 

5.2.4

If the bank requires to make any amendments to the Policy, and any such amendments are not made within 30 days from the date of such requirement, to the bank’s satisfaction.

 

5.3

The bank may transfer a copy of the Policy that it was issued to any professional advisor on behalf of the bank, at the bank’s discretion, for purpose of examining the Policy and the provisions thereof.

 

5.4

The bank shall not be liable for any instance where the Insurance Company fails to issue any payments under the Policy, for any reason, except in instances where such failure to issue payment is the result of the bank’s negligence.

 

5.5

Upon the occurrence of an insurance event according to the Policy, the Pledgor undertakes to act for the exercise of the rights under the Policy, including to execute any document required for this purpose. In addition, upon the occurrence of an insurance event according to the Policy, and provided that the bank has a right to accelerate the Secured Amounts to immediate repayment as set forth in Section 6 below, the bank may file claims in connection with securing the Charged Property, conducting negotiations in the name of the Pledgor, settling, waiving, and receiving funds from the Insurance Company in connection with such claims. Nothing stated above shall derogate from the Pledgor’s liability with respect to securing the Charged Property and the filing of claims in connection with securing the Pledged Property.

 

5.6

The bank may credit the amounts received from the Insurance Company towards settling the Secured Amounts.

 

6.

Immediate repayment

 

6.1

Without prejudice to any of the bank’s other rights, the bank, upon the occurrence of any of the events set forth in this Section 6.1 below, whether occurring in Israel or outside of Israel, may accelerate all or part of the Secured Amounts to immediate repayment, and require the Obligor to pay them to the bank. Prior to the bank taking such action, the bank shall provide a prior notice to the Pledgor and Guaranteed Party, if and insofar as it shall be required under law, including a prior notice of 21 business day, as required under Section 5.A.1 of the Banking Law (Customer Service), 5741-1981 (in cases where the bank is required to provide such notice), or a different required period as shall apply from time to time under the provision of said law, subject and according to reservations and clarifications set forth in such provision of law:

 

6.1.1

If the Pledgor or Guaranteed Party shall violate or fail to fulfill any condition in the Debenture or any of its other obligations towards the bank under any other document that either of them executed or shall execute with the bank;

 

6.1.2

If it transpires that any of the Pledgor’s representations in the Debenture or any other representation that the Pledgor or Guaranteed Party made or shall make to the bank in a different document that either of them executed or shall execute with the bank, is incorrect or inaccurate or incomplete;

 

6.1.3

If the Pledgor or Guaranteed Party intends to make a Structural Change with respect to any of them or if the Pledgor or Guaranteed Party shall adopt a resolution with respect to their Structural Change, or if there is a Structural Change of the Pledgor or Guaranteed Party;

 

6.1.4

If the Pledgor or Guaranteed Party decide to enter voluntary liquidation; if a motion is filed against the Pledgor or Guaranteed Party, to liquidate or to initiate insolvency proceeding of any kind (bankruptcy/insolvency) including a motion for an order to initiate proceedings, or if a liquidation or insolvency order of any kind is issued against the Pledgor or Guaranteed Party, including an order to initiate proceedings of any kind, or temporary relief of any kind following such motion; of a liquidator, special manager, trustee or other functionary is appointed for the Pledgor or Guaranteed Party, in connection with any of the cases set forth in this section above, in a temporary or fixed appointment;

 

 

6.1.5

If the Pledgor or Guaranteed Party represent that they intend to hold negotiations, or if negotiations are held for purpose of formulating an arrangement between the Pledgor or Guaranteed Party (as applicable) and their creditors or members or shareholders, or between them and any thereof, or between them and a certain class thereof, with respect to (inter alia) the debt of the Pledgor or Guaranteed Party (as applicable) towards any of the creditors, members, or shareholders as foregoing; if a motion for an arrangement as foregoing was filed to the court with respect to the Pledgor or Guaranteed Party, or if an arrangement is approved by such creditors or members or shareholders, or by the court; or if a motion to appoint an expert was filed to the court, for examining an arrangement with respect to the Pledgor or Guaranteed Party, or if such expert or other functionary was appointed in connection with any of the cases set forth in this section above, in a temporary or fixed appointment;

 

6.1.6

If a motion is filed for receivership over all of the assets of the Pledgor or Guaranteed Party, or over an asset or assets owned by them, which are substantive in nature or scope, or if an order is issued for such receivership, or if a functionary is appointed for purpose of realizing such assets, by temporary or permanent appointment (including receivership or trusteeship);

 

6.1.7

If a motion for lien is filed or if a lien is imposed, or if a similar execution action is taken, or if any other collection proceeding is taken over all assets of the Pledgor or Guaranteed Party, or over an asset or assets owned by any of them, which are substantive in their nature or scope;

 

6.1.8

If a motion is filed for receivership or lien over the Charged Assets, or over any assets that are deposited in the bank, or over any security granted or to be granted to the bank to secure all or part of the Obligor’s obligations, or if a similar execution action is taken against such assets, or if an order for receivership or lien is issued as foregoing, of if a fixed or temporary official receiver is appointed over such assets;

 

6.1.9

If the Pledgor or Guaranteed Party is a public company (as defined in the Companies Law), or a public limited partnership (as defined in the Partnerships Ordinance, 5735-1975) or a different corporation whose capital rights (meaning, the rights similar in nature to the bundle of rights that constitute a share of the Company) are listed on a stock exchange or held by the public (in Israel or abroad) - and it seems to the bank that there is a change in the control over the Pledgor or Guaranteed Party compared to the situation on the execution date of the Debenture; or - if the Pledgor or Guaranteed Party is a different corporation, and it shall seem to the bank, at its discretion, that there are changes to the ownership over the Pledgor or Guaranteed Party, or to the control of the Pledgor or Guaranteed Party, compared to the situation on the execution date of the Debenture (and in case of a partnership that is not a public limited partnership as foregoing - such change applies to the general partner or to the limited partners);

 

6.1.10

If either the Pledgor or Guaranteed Party announced that they cannot or shall be unable to timely repay all or part of their debts, or if either of them ceased repaying all or part of their debts, or to manage their business;

 

6.1.11

If work or a considerable part thereof at the Pledgor or Guaranteed Party is halted for 30 days or more; or if at the bank’s sole discretion any of the following shall apply, insofar as such constitutes a material change to most of the business of the Pledgor or Guaranteed Party: (a) Material changes to the area of activity of the Pledgor or Guaranteed Party; (b) changes to the mix of activity of the Pledgor or Guaranteed Party, whereby the main part of the activity became higher risk; (c) material changes to the geographic area of the activity of the Pledgor or Guaranteed Party (such as commencing substantive activity abroad that had not existed on the engagement date with the bank, or commencing activity in high-risk countries);

 

 

6.1.12

If an event occurred or there were changes (or a series of events or changes) which have or may have a Material Adverse Effect. In this respect, the term “Material Adverse Effect” means: Any cause or circumstance that have, or almost certain to have, a material adverse effect on the Pledgor or Guaranteed Party, including on their business activity, financial condition, business performance, assets, property, ability to perform and fulfill any of their obligations under the Debenture, or other obligations that either of them undertook towards the bank in connection with the Secured Amounts or in connection with security interests provided to secure them, or on the validity of such documents, or any thereof, and the ability to enforce them or enforce any of the bank’s rights under them;

 

6.1.13

If the Pledgor or Guaranteed Party fall behind in paying any portion of the Secured Amounts, or in paying any other amount that either of them owes to the bank, with more than 7 days delay;

 

6.1.14

If any of the Charged Assets that are tangible assets (in whole or in part) are destroyed, burnt, lost, or suffer any other material harm;

 

6.1.15

In case one or more of the following events applies to the Guaranteed Party (if it is an individual): death; legal incompetence; was issued an insolvency order of any kind (insolvency/bankruptcy) including an order to initiate proceedings under the Insolvency Law; arrest; imprisonment; left Israel;

 

6.1.16

If any of the right holders to the Subordinated Charge, if any (hereinafter: the “Additional Creditor”) violates any of its obligations towards the bank in connection with the Subordinated Charge or its realization, or if the Additional Creditor announces or declares that it intends to realize the Subordinated Charge, or if the Additional Creditor approaches the bank with a request to obtain the bank’s approval for realizing the Subordinated Charge, or if the Additional Creditor takes any steps for purpose of realizing the Subordinated Charge, without having obtained the bank’s prior written approval, including the filing of a motion to the court or to the execution office for realizing the Subordinated Charge or for appointing a (temporary or fixed) functionary in connection with the Subordinated Charge, or if an order is issued for the realization of the Subordinated Charge or for appointing a (temporary or fixed) functionary in connection with the Subordinated Charge by the court or by the execution office.

 

6.1.17

If according to the bank’s discretion and according to its assessment there is an adverse change to the security interests provided or to be provided for securing repayment of all or part of the Secured Amounts, including with respect to their value, validity, legality, or enforceability, or to the rights conferred thereby compared to the condition on the date they were created;

 

6.1.18

If the Pledgor or Guaranteed Party are required to repay all or part of any debts or obligations, which the Pledgor or Guaranteed Party owe or shall owe to other creditors, by early repayment or other repayment not according to the original amortization schedule of such debts or obligations;

 

6.1.19

If a license or concession that is material to the activity of the Pledgor or Guaranteed Party expires;

 

6.1.20

If the Pledgor or Guaranteed Party violate their obligation to provide the bank with financial statements, books of accounts, valuations, including appraisals, approval of an external accountant, references, or other documents in connection with the condition of its business, assets, obligations, or if the Pledgor or Guaranteed Party is in violation of a law, requirement, guideline, or any other provision of a competent authority that requires it to issue or publish reports or various documents;

 

 

6.1.21

If an Illegality Event occurred and the bank informed the Obligor of such in writing and requested full repayment of the Secured Amounts on the date set forth by the bank in a notice by the bank, and the Obligor failed to repay the bank the full amounts requested up to such date;

 

6.1.22

If the name of the Pledgor or Guaranteed Party is about to be erased from any registered being maintained in accordance with applicable law, or if with respect to any thereof a warning is about to be registered with a register maintained by the Registrar of Companies regarding the intention to register any of them as an infringing company (as set forth in Section 362A(a) of the Companies Law) or if anyone of them is registered in such registry as an infringing company;

 

6.1.23

Upon the occurrence of one or more of the events set forth in any of the subsections of this Section 6.1 above, mutatis mutandis, to any guarantor of the Guaranteed Party’s obligations towards the bank, or if the Guaranteed Party are a partnership, to a partner therein that is not a limited partner;

 

6.1.24

Upon the occurrence of one or more of the events set forth in any of the other documents that the Pledgor or Guaranteed Party (or any other guarantor on behalf of either) executed or shall execute towards the bank, for which the bank has cause to accelerate any Indebtedness of either of them to immediate repayment.

 

6.2

The Obligor undertakes to pay the bank, upon the bank’s request, all the amounts repayment of which is being required by the bank, as set forth in Section 6.1 above, together with all amounts owed to the bank under any of the other documents that were or shall be executed in favor of the bank by the Pledgor or Guaranteed Party or on behalf of either of them, for and in connection with the Secured Amounts (including fees for early repayment prior to the original date scheduled for their repayment).

 

6.3

In addition to the foregoing, should the bank have a right to accelerate the Secured Amounts as set forth in Section 6.1 above, the bank may remove the Charged Property from the Pledgor’s possession and hold it or transfer it for safeguarding on its behalf at the Pledgor’s expense.

 

6.4

It is sufficient for one of the events set forth in any of the subsections of Section 6.1 above to occur for purpose of exercising the bank’s various rights under this Section 6 or Section 7 below, and the bank may exercise either right separately and independent of the other.

 

7.

Realizing the Charge

 

7.1

Should the bank have a right to accelerate the Secured Amounts to immediate repayment as set forth in Section 6 above, the bank may take all measures as it deems fit to collect the Secured Amounts, including to formulate the floating charge on the Property Charged by Floating Charge and to realize all or part of the Charge, and to realize the Secured Amounts, in any way permissible under law, and to use the realization proceeds for purpose of settling the Secured Amounts or any part thereof, and all without the need to obtain the consent of the Additional Creditor, if any.

 

7.2

In the event the Charge is realized, or if the Charged Assets are realized as foregoing, and subject to applicable law, the bank is entitled to sell all or part of the Charged Assets, by public auction or otherwise, by itself or through others, in cash or in installments or otherwise, at a price and under terms at the bank’s discretion. Such realization can be carried out by the bank itself or by the court or by the execution office, inter alia by appointing a functionary (upon the bank’s request). For purpose of doing so, the bank or such functionary, as applicable, may:

 

7.2.1

Take possession of all the Charged Assets or part thereof;

 

7.2.2

Manage the Charged Assets;

 

 

7.2.3

Sell or agree to sell the Charged Assets in whole or in part, transfer them or agree to transfer them in any other manner, or take any other action with respect to all or part of the Charged Assets, under terms that it shall deem fit;

 

7.2.4

Take action and do anything required in order to request and obtain tax exemptions, easements and discounts with respect to the Charged Assets, or with respect to other assets that would have been transferred to the Pledgor had it conducted a transaction therein, including a sale transaction.

 

7.2.5

Receive information from the tax authorities in connection with the Charged Assets, tax reports that were submitted by the Pledgor, assessments, orders, accrued losses, losses arising from realizing the Charge or Charged Assets, or determinations that were issued to the Pledgor by the income tax authorities, the customs and VAT department, or any other government entity; all whether directly or indirectly related to the Charged Assets;

 

7.2.6

Execute any statement or document in connection with anything set forth in this Section 7;

 

7.2.7

Act in connection with the Charged Assets in any government, municipal, public, or other office, and to execute documents of any kind whatsoever in connection with the Charged Assets.

 

7.3

Advance notice of three days with respect to the bank’s intention to realize the Charge with respect to the Charged Assets that are securities, notes, or other tradable instruments, shall be considered a reasonable period for purpose of the provisions in Section 19(b) of the Pledge Law, 5727-1967, or any legal provision to replace it. Should realization of the Charge or of the Charged Assets as set forth in this Section 7 be made by the bank by way of sale on TASE, the bank shall be entitled to perform the sale as foregoing, at any price that may be received for them on TASE at such time.

 

7.4

If upon a realization as set forth in this Section 7 the repayment date of any Secured Amounts has not yet come due, or if such amounts are conditionally due to the bank (hereinafter in this section: the “Future Repayment Amounts”), the bank shall continue with the realization proceedings, and it may retain from the sale proceeds and from anything received under this Section 7 above an amount sufficient for covering the Future Repayment Amounts, and the amount to be collected and not yet credited for the settlement of the Secured Amounts shall continue to be charged to the bank (as an alternative to a pledge) as a security for settling any Future Repayment Amounts, and it shall remain with the bank until settled in full.

 

7.5

Should the bank have a right to accelerate the Secured Amounts to immediate repayment as set forth in Section 6 above, both the Pledgor and Guaranteed Party undertake to cooperate for purpose of exercising the bank’s rights under the Debenture, including to act in accordance with the bank’s request, in order to receive an exemption from paying any tax or any other payment under applicable law, and to use its right to set-off losses, its right to apply losses or to set-off losses deriving from realizing the Charge or Charged Assets, and to execute any statement or document in connection with all the foregoing. In addition, and without derogating from the undertakings of the Pledgor or Guaranteed Party as set forth above, if the Charge or Charged Assets are realized, the bank or its counsel, jointly and severally, may act and take any action as set forth above in the name and on behalf of the Pledgor and use any such rights, and act in the name of the Pledgor vis-à-vis the tax authorities and vis-à-vis any relevant third party, and to execute any statement of document in the name and on behalf of the Pledgor in connection therewith. For this purpose, the Pledgor appoints the bank as its attorney.

 

7.6

Nothing stated in the Debenture or in the creation of the Charge shall derogate from the Obligor’s obligations towards the bank to repay the Secured Amounts in full and on time, according to any of the other documents pursuant to which any of the Secured Amounts were provided, including in any instance where the amounts that the bank requested the Obligor to pay, as set forth in Section 6.1 above, or the amounts that the bank shall receive in a final and irrevocable manner, in case the charge or Charged Assets are realized, if any, shall be lower than the total amount of the Secured Amounts, as such shall be at any relevant date.

 

7.7

In case the bank only formulates or realizes part of the Charge or part of the Charged Assets, the Charge shall remain in full effect with respect to the other parts that have not yet been formulated or realized.

 

 

8.

Default Interest

 

8.1

The Secured Amounts referred to in Sections 1.1.1 or 1.2.1 above, as applicable, shall bear default interest at a rate that was or shall be agreed in writing between the bank and the Obligor.

 

8.2

The Secured Amounts referred to in Sections 1.1.2 or 1.2.2 above, as applicable, shall bear default interest at the maximum interest rate.

 

9.

The bank’s rights

 

In addition to the statements set forth in the Debenture, the bank has rights of holdback, lien, set-off, and charge, over any monies, notes, securities, tradable, assignable and other notes, deposits, collaterals, gold, currencies, Foreign Currencies, documents, rights, and other assets that are credited to or on behalf of the Pledgor at the bank in any manner or way, including those transferred to the bank for collection, safekeeping, as collateral (including under the Debenture) or in another manner, all as set forth in all the documents that were or shall be executed in favor of the bank by the Pledgor. The bank may use any of its right as set forth above, for purpose of repaying the Secured Amounts or for securing their repayment. It is clarified that nothing stated above shall derogate from any right of the bank under applicable law.

 

10.

The nature of the Charge and its validity

 

10.1

The Charge is of continuous nature and shall remain in effect until the bank confirms the termination of the Debenture in writing.

 

10.2

If the bank was provided or shall be provided with security interests for repayment of the Secured Amounts, all security interests shall be independent of each other.

 

10.3

The Debenture, the Charge, its validity, the rights, and powers and the reliefs granted under the Debenture to the bank, and all obligations of the Pledgor and Guaranteed Party towards the bank thereunder:

 

10.3.1

Shall not be dependent on the validity or legality of any other security interests that the bank is or shall be entitled to, in connection with repayment of the Secured Amounts, they shall be neither affected nor harmed by them, and they shall be neither affected nor harmed in case of any defect in the creation or registration of other security interests as foregoing; and -

 

10.3.2

Shall not be dependent on the validity or legality of any other documents; and -

 

10.3.3

Shall in no way be affected, their validity shall not be diminished, they shall not be limited or changed, and they shall not be deemed as having been waived in any way, including due to any of the actions, omissions, circumstances, matters or other things set forth below:

 

10.3.3.1

Legal incompetence or lack of authority of the Guaranteed Party or of any other guarantor with respect to the Secured Amounts;

 

10.3.3.2

Change in ownership, control, activity, partners in a partnership, or the standing of the Pledgor, Guaranteed Party, or any other guarantor with respect to the Secured Amounts (including due to a merger or other Structural Change);

 

10.3.3.3

Absence of enforceability, illegality, or invalidity, of any obligation of the Guaranteed Party, Pledgor, or any guarantor, with respect to the Secured Amount, or any party to the agreements included in the Charged Assets, according to any relevant document;

 

10.3.3.4

Failure of the Pledgor to fulfill any of the obligations under any relevant document with respect to the Charged Assets;

 

 

10.3.3.5

Insolvency proceedings, debt arrangement, rehabilitation, bankruptcy, liquidation, or death (as applicable) of the Pledgor or Guaranteed Party or of any other guarantor of the Secured Amounts, a settlement or arrangement by the court, or a settlement or other arrangement of the Pledgor or Guaranteed Party (and in such cases the bank, as a creditor, may make a claim for all or part of the Secured Amounts, or agree to any payment in a settlement and receive such, without taking into account any payment made or to be made to the bank under the Debenture);

 

10.3.3.6

Any settlement or granting of extension or easement to the Pledgor, changes to any of the Pledgor’s obligations in connection with the Secured Amounts, or any other document to be executed by the Pledgor;

 

10.3.3.7

A waiver to be granted by the bank to any party to the deed that the bank shall hold for securing repayment of any amount from the Secured Amounts, or to any third party that is owed rights that are included in the Charged Assets;

 

10.3.3.8

Delay in submitting demands against the Pledgor or Guaranteed Party under the Debenture, or laches in submitting them, without such being deemed a precedent, waiver, prescription, expiration of rights, or negligence on the bank’s part.

 

11.

Charge created to secure the Guaranteed Party’s obligations

 

Without derogating from the other provisions of the Debenture, it is clarified that if and insofar as a portion of the Secured Amounts is for or in connection with obligations of the Guaranteed Party towards the bank (hereinafter in Sections 11 and 12: The “Guaranteed Amounts”), the provisions of this section below shall also apply with respect to the Guaranteed Amounts:

 

11.1

Demand of the Guaranteed Party

 

The bank shall not be required, prior to exercising its rights under the Debenture or under applicable law, including its right to realize the Charge or Charged Assets, to first demand of the Guaranteed Party (or from another person) payment of the Guaranteed Amounts, or to first take steps against the Guaranteed Party (or against another person) or to realize (or act to realize) any other security interest granted for securing the Guaranteed Amounts. The Pledgor waives any right, if available to it under law (that can be stipulated against), to require the bank to take any of the actions set forth above as a condition for exercising the bank’s rights.

 

11.2

Validity of the Charge

 

The validity of the Charge shall not be diminished or changed, its amount shall not be reduced, all of the Pledgor’s obligations shall remain unchanged, and the Guaranteed Amounts shall be considered, for purpose of the Debenture, as valid, non- defective, in full effect, and unassailable or contestable, even if any of the following actions are taken of if any of the following circumstances are fulfilled (and even if the Pledgor sustains any damage due to such), provided the bank acted in good faith and not with an objective to harm the Pledgor, or that such actions occurred under circumstances that were not within the bank’s control:

 

11.2.1

Cessation, change, reduction, increase, or renewal of the Guaranteed Amounts, or of credit or any other banking services to the Guaranteed Party, or any other engagement with the Guaranteed Party;

 

11.2.2

Providing an extension or various easements to the Guaranteed Party or to any other guarantor of the Secured Amounts;

 

 

11.2.3

Replacement, renewal, amendment, termination, release, waiver, expropriation, realization, or avoiding realizing security interests that the bank received or shall receive for securing the repayment of the Secured Amounts from the Pledgor or Guaranteed Party or from any other guarantor of the Secured Amounts;

 

11.2.4

Receiving or avoiding receiving any security interest from the Pledgor or Guaranteed Party or from any other guarantor on behalf of any of them for securing the repayment of any of the Guaranteed Amounts, or registration or avoiding to duly register such a security;

 

11.2.5

Settlement, waiver, or any arrangement with the Guaranteed Party or with any other guarantor of the Secured Amounts;

 

11.2.6

Causing non-fulfillment of or change to any obligation imposed on the Guaranteed Party in connection with the banking services, or non-fulfillment or change to any obligation that the Pledgor or any other guarantor of the Guaranteed Amounts guaranteed on its behalf;

 

11.2.7

In the event an obligation of the Guaranteed Party or any other guarantor of the Guaranteed Amounts towards the bank is defective or invalid for any reason, including if it had no validity or authority to engage to receive the banking services or to undertake to repay the Guaranteed Amounts, or if it is found that any of the Guaranteed Party’s obligations towards the bank are nullified, or that arguments are raised against the bank with respect to the indebtedness of the Guaranteed Party, including arguments of defects as foregoing, and except in cases where the bank knew or should have known of the defect by way of reasonable means available to it, whereas the Pledgor was not aware of the defect;

 

11.2.8

Even in cases where the bank’s right to bring action against the Guaranteed Party for paying the Guaranteed Amounts expired or shall expire, or if the Guaranteed Party shall deny its indebtedness towards the bank, or if it shall have any arguments against the bank.

 

For the avoidance of doubt, the bank may from time to time perform any of the actions set forth in this section above, without being required to provide prior notice.

 

The performance of any of the actions, or the occurrence of any of the events set forth in Sections 10.3 and 11.2 above shall not grant the Pledgor any right of choice or right to terminate its guarantee of the Guaranteed Amount under the Debenture, or any of the other rights set forth in the Guarantee Law, or any provision of law that shall replace the Guarantee Law, and the Pledgor waives any such right.

 

11.3

Subrogation rights and security interests

 

The Pledgor represents that it did not receive any security interest from the Guaranteed Party in connection with the guarantee under the Debenture and undertakes that it shall receive no such security interest without obtaining the bank’s prior written consent. The Pledgor shall not be entitled, by virtue of realizing the Charge or the Charged Assets, payment made, security interest realized, or monies received, or on the account, of any person’s obligation:

 

11.3.1

To a subrogation right or to receive any other benefit, for a right, security interest, or amounts received or to be received, by the bank under any document among the documents that were or shall be executed between the bank and the Obligor, or to a right of participation or indemnity.

 

11.3.2

To receive, claim, or hold any benefit whatsoever, in any payment, distribution, security interest, from any person or on account of any person, or to use any right to set-off against any person, or to hold any other benefit, with respect to a payment, distribution, or security interest as foregoing.

 

11.3.3

The Pledgor hereby waives any such right, undertakes not to act to attain such, and it shall hold in trust for the bank and immediately pay or transfer to the bank any payment, distribution, benefit, or security interest, that it received in violation of the above provisions (and for such purpose the Debenture constitutes a trust agreement in connection with the foregoing), without derogating from the bank’s rights to any other or additional remedy or relief in connection with such violation. If use is made of any right to set-off in violation of the foregoing, the bank shall immediately be paid an amount equivalent to the amount that was set-off as foregoing.

 

 

11.4

Competition between rights

 

If any amount granted or to be granted to the bank, including by the Pledgor (and including in case of redeeming the charge by the Pledgor), was used to repay any of the Guaranteed Amounts, or if the Pledgor was required to pay any of the Guaranteed Amounts to the bank or may be required to pay them, the Pledgor undertakes:

 

11.4.1

Not to claim any amount from the bank that was or shall be granted as foregoing;

 

11.4.2

Not to take action in competition with the bank against the Guaranteed Party or any third party that made a guarantee towards the bank for any of the Guaranteed Party’s obligations to the bank, including to any of the Guaranteed Amounts;

 

11.4.3

Not to claim or prove in bankruptcy, liquidation, settlement, or any other payment arrangement, in connection with the Guaranteed Party or in connection with any third party that provided a guarantee towards the bank for any of the Guaranteed Party’s obligations towards the bank, including any of the Guaranteed Amounts, except for purpose of maintaining the right to claim its debt, provided any payment, distribution, or benefit to be received by virtue of such claim or in connection with such claim shall be immediately paid or transferred to the bank, and as long as no such payment or transfer was made, they shall be held in trust by the Pledgor for the bank (and for this purpose the Debenture constitutes a trust agreement in connection with the foregoing).

 

And this shall be the case until the bank receives all of the amounts owed or to be owed by the Guaranteed Party, including amounts that are not part of the Guaranteed Amounts, and all the amounts that are or shall be owed to the bank by any third party that guaranteed any of the Guaranteed Party’s obligations towards the bank as foregoing.

 

11.5

Delivery of information and use thereof

 

Information that the bank requested or shall request from the Pledgor from time to time, as set forth in this Debenture, and that shall be transferred by the Pledgor to the bank, shall also be attached to the information that the bank shall receive from others. The terms that shall apply, subject to applicable law, with respect to any such information, and the use thereof, are set forth below:

 

11.5.1

Unless noted otherwise in this Debenture, no legal obligation applied to the Pledgor to transfer information that was requested thereof, and the transfer of information depends on its will and consent. Nonetheless, should the bank not receive all the requested details, which are required for the purposes set forth below, the bank may not provide banking services to the Pledgor and Guaranteed Party. There may be details that the Pledgor must provide, or that the bank must receive, under the provisions of law or directives of the Bank of Israel. The statements above and below constitute a notice from the bank according to Section 11 of the Privacy Protection Law, 5741-1981.

 

11.5.2

Together with the information about the Pledgor received from the Pledgor, information shall also be collected when providing the banking services that the Pledgor or Guaranteed Party are party to, and in addition, information shall be received from third parties such as authorities, license holders under the Credit Data Service Law, 5762-2002, from external databases and open sources.

 

11.5.3

All of the details provided or to be provided by the Pledgor to the bank, or that shall be available to the bank (including information about accounts of the Pledgor with the bank), shall serve the bank for purpose of its ongoing work and shall be stored according to the bank’s purposes in the databases of the bank or another party on its behalf, or in the databases of whoever shall from time to time provide the bank with computer services, data processing services, or information security services, or any other service for purpose of providing banking services or for purpose of managing the relationship between the Pledgor or Guaranteed Party and the bank.

 

 

11.5.4

The bank shall use the information about the Pledgor for purpose of its ongoing work. As part of such use, the bank shall use the information collected from all activity in all accounts of the Pledgor and Guaranteed Party with the bank.

 

11.5.5

In the framework of its ongoing work, the bank shall collect, process, and use information about the Pledgor, inter alia for the following purposes:

 

11.5.5.1

Examining requests to receive banking services and making decisions in connection with the banking services to the Pledgor or Guaranteed Party, their scope and the manner they are provided.

 

11.5.5.2

Managing credit risks, including analyzing and rating credit risk, and managing other risks, such as locating and preventing fraud or preventing abuse of the services, monitoring actions under law, including under foreign law etc.

 

11.5.5.3

Improving the service for customers of the bank, also including developing new products and services and offering them to the bank’s customers.

 

11.5.5.4

Analyzing the information, segmentation, characterizing the habits in using the services and the consumption habits, and targeting advertising information.

 

11.5.5.5

Marketing and advertising through various means, in accordance with applicable law.

 

11.5.6

The bank shall continuously or from time to time transfer information about the Pledgor, as may be required in order to realize the purposes of using the foregoing information, to entities in Israel and abroad, which are among the following:

 

11.5.6.1

To third parties that provide the bank with services, also including computer services, operating services, and communication services, for purpose of receiving the services (hereinafter: the “Service Providers”).

 

11.5.6.2

To whomever according to law, including under foreign law and the directives of the Bank of Israel, the bank is required to provide the information, including to third parties with whom the Guaranteed Party shall from time to time execute requests and other documents in connection with credit that is or may be, in full or in part, a portion of the Guaranteed Amounts.

 

11.5.6.3

To clearing systems of payment methods, financial assets, and information.

 

11.5.6.4

To counterparties to activity or transactions, whether they are an intermediate party or end party.

 

11.5.6.5

To a new or other corporation, if the bank or any other company of the bank group shall organize its activity in a different corporate framework, and in case it shall merge with another entity or if it shall merge its activity with the activity of a third party.

 

11.5.6.6

To assigned entities - in case of assignment or charge by the bank or for purpose of making such assignment or charge.

 

11.5.6.7

In addition, the bank, with respect to foreign securities, shall provide any information that it is required to provide under foreign law to the authority in charge under such foreign law.

 

11.5.7

The Service Providers may hold the information, store it, and use it for purpose of providing the services.

 

 

12.

Indemnity

 

12.1

The Pledgor’s undertakings under the Debenture also constitute a guarantee of the Pledgor in favor of the bank for full and accurate repayment of all the Guaranteed Amounts, and an indemnity undertaking provided by the Pledgor to the bank in connection thereto, and the Pledgor hereby undertakes to indemnify or compensate the bank for any damage, expenses, and financial loss that the bank shall sustain from the Guaranteed Amounts or in connection with such, and all according to the terms for the Debenture, mutatis mutandis.

 

12.2

For the avoidance of doubt it is hereby clarified that the Pledgor’s liability, as a guarantor for the repayment of the Guaranteed Amounts according to the terms of the Debenture, is broader than the ordinary scope of liability of a guarantor under the Guarantee Law.

 

13.

Registration and deposit

 

The bank may register the Charge with any competent authority under applicable law, or with any public registry. The Pledgor hereby undertakes, upon the bank’s initial request, to execute any certificates and documents required for purpose of creating the Charge, validating it, and performing all of the Pledgor’s obligations under the Debenture.

 

14.

Redeeming the Charge

 

The Pledgor, Guaranteed Party, Additional Creditor, if any, or any other person whose right may be prejudiced by granting the Debenture or by its realization, or anyone on their behalf, shall not have any right under Section 13(b) of the Pledge Law, 5727- 1967, or any provision of law to replace it, and they may not redeem the Charge, in whole or in part, by way of repaying the Secured Amounts or any part thereof prior to the arrival of the agreed repayment date. Such early redemption shall be subject to the provisions set forth in the documents that were or shall be executed by the Obligor in connection with the Secured Amounts.

 

15.

Transfer and disclosure of information

 

15.1

In this Section 15 the following terms shall have the meanings set forth beside them:

 

15.1.1

“Transfer” - Sale, endorsement, assignment, or any other means of transfer, in whole or in part, directly or through a special purpose company, in full or through the sale of participation rights and in any other manner which the bank shall deem fit. Transfer can be made to a single transferee or to a number of transferees, on the same date or on various dates.

 

15.1.2

“Information” - Information currently in the possession of the bank or that shall be in its possession in the future (including information transferred to the bank by the Pledgor or Guaranteed Party or information thereon, which at the bank’s discretion is necessary or desired to be sent in connection with the transfer of the rights and obligations in connection with the Debenture), including information about the pledge and information about the Charged Assets;

 

15.1.3

“Transferee” - Any person or corporation, whether in Israel or abroad;

 

15.1.4

“Rights and Obligations in Connection with the Debenture” - Rights and obligations of the bank in connection with the Charge and Charged Assets and according to the Debenture;

 

15.1.5

“Prospective Counter-party” - A Transferee with whom the bank is conducting or may conduct negotiations for purpose of transferring the Rights and Obligations in Connection with the Deed of Pledge to such Transferee;

 

 

15.1.6

“Advisors” - advisors on behalf of the bank or on behalf of any Prospective Counter-party, and companies dealing with credit rating that shall be employed for purpose of rating the bank’s rights and obligations in connection with the Secured Amounts, and the rights and obligations in connection with the Debenture and an evaluating company on which entities may rely, that are supervised by the capital market, insurance, and savings department of the Ministry of Finance, for purpose of quoting the prices of their non-tradable debt assets;

 

15.2

The bank is entitled at any time, at its discretion and without being required to obtain the consent of the Pledgor or Guaranteed Party (subject to applicable law), transfer all or part of the rights and obligations in connection with the Debenture (provided the Pledgor or Guaranteed Party shall not bear any expense or cost arising from the transfer or in connection therewith, and which is known on the transfer date):

 

15.2.1

To any Transferee that is one of the following entities: A mutual fund, as defined in the Joint Investment Trust Law, 5754-1994, or a company that manages such fund; a provident fund or management company as such are defined in the Control of Financial Services (Provident Funds) Law, 5765-2005; an insurer as defined in the Control of Financial Services (Insurance) Law, 5741-1981; a banking corporation and auxiliary corporation as defined in the Banking (Licensing) Law, 5741-1981, and a corporation from the companies group to which such Israeli banking corporation belongs; an investment fund, as defined in the Control of Financial Services (Provident Funds) (Direct Costs Due to Transactions) Law, 5768-2008, or any corporation under the control of the entities set forth above, and to entities abroad that are comparable to the entities set forth above (that are supervised by the relevant authority in their country of incorporation or in countries where they are active); or -

 

15.2.2

In the framework of a securitization transaction (or similar transaction in the framework of which the rights and obligations in connection with the Debenture are transferred to a designated issuing corporation) or in the framework of any other transaction for transferring risk or exposure or hedging thereof; or -

 

15.2.3

To any person (even if not among the Transferees set forth above), at the bank’s discretion and without limitation (except if and insofar such limitation is set forth in law) - if an event occurred that grants the bank a right to accelerate the Secured Amounts to immediate payment, as set forth in Section 6 above.

 

15.2.4

For the avoidance of doubt, in case of transferring rights and obligations in connection with the Deed of Pledge, the bank shall not be precluded from serving as facility agent, security agent, or any other role with respect to the rights and obligations in connection with the Deed of Pledge as foregoing.

 

15.3

Both the Guaranteed Party and Pledgor undertake to cooperate for purpose of transferring the rights and obligations in connection with the Deed of Pledge as foregoing, including to execute any document that shall be required in this respect, and to take any action to be required by the bank, for purpose of transferring the rights and obligations in connection with the Debenture (if relevant), provided it shall not be required to bear costs for such purpose.

 

15.4

The bank may at any time disclose information to any Prospective Counter-party, to a Transferee to whom a transfer was performed, to Advisors, or relevant parties. In addition, the bank may at any time disclose information to Advisors or relevant parties, for purpose of a potential engagement under a securitization transaction (or similar transaction in the framework of which the rights and obligations in connection with the Debenture are transferred to a designated issuing corporation) or in any other transaction for transferring risk or exposure or hedging or for purpose of performance thereof. Disclosure of such information shall be made subject to the recipients of information executing letters of undertaking to maintain confidentiality, in form acceptable to the bank, unless such recipients of information have a legal duty to maintain confidentiality.

 

15.5

The Pledgor and Guaranteed Party undertake not to transfer any of their rights or obligations in connection with the Charge or under the Debenture, without obtaining the bank’s prior written approval.

 

 

16.

Fees, expenses and costs

 

16.1

The Pledgor shall pay bank fees, expenses and costs related to the Debenture or thereunder, including in connection with the creation of the Charge or its ongoing operation, the amendment to its terms, actions for maintaining its validity, and the removal of its registration or any registration with respect thereto with any relevant registrar or for the creation of the Subordinated Charge or its ongoing operation, and the actions for maintaining its validity.

 

16.2

In addition, the Pledgor shall bear any fees and any reasonable costs and expenses in connection with collecting the amounts owed or to be owed to the bank under the Debenture, and in connection with the realization of the Charge and Charged Assets as set forth in the Debenture, and which the bank could not have avoided with reasonable measures (including fees for functionaries and their costs and reasonable attorney’s fee). The Pledgor shall also bear any expense, payment, fee, or cost as foregoing, in connection with early repayment of a deposit for a period or of a savings plan, the sale of securities, and storage fees for the Charged Assets.

 

16.3

Costs and expenses related to legal proceeding shall be collected subject to the provisions of applicable law. The attorney’s fee amount shall be as determined in the decisions of the court or execution office, and in the absence of such, as shall be agreed with the Pledgor in writing. Notwithstanding the foregoing, in execution proceedings, if no such attorney’s fee was determined, the bank shall be entitled to charge the Pledgor with the minimum attorney’s fee set forth under Section 81 of the Bar Association Law, 5721-1961.

 

16.4

Costs and expenses that do not appear in the Debenture or the amounts of which were not set forth in the Debenture, shall be paid by the Pledgor in their real amounts.

 

16.5

All the foregoing costs and expenses shall be paid by the Pledgor to the bank upon its initial written request, however with respect to an action or act that the Pledgor is required to do, indebtedness shall materialize upon the bank’s request or when the action or act is performed, according to the earlier.

 

16.6

Without derogating from any of the bank’s rights under the Debenture, the Pledgor shall repay all of its Indebtedness towards the bank for the foregoing fees expenses or costs, together with interest at the maximum interest rate, from the date it was created or from the date it was requested, as applicable, until full settlement in practice, all as set forth in the Debenture.

 

16.7

All fees expenses and costs, together with interest at the maximum interest rate, as set forth in this Section 16 above, shall constitute a portion of the Secured Amounts and shall be secured by the Charge.

 

16.8

The statements in the Debenture with respect to fees expenses and costs shall apply, unless agreed or to be agreed otherwise in writing between the bank and Pledgor

 

17.

Bank books and information

 

17.1

The bank’s books and accounts shall serve as admissible evidence for proving the truth of matters asserted therein including all details thereof, inter alia with respect to calculating the Secured Amounts balance, the details of the notes and security interests granted for securing the Secured Amounts, and any other matter related to the Debenture or to the Secured Amounts or to documents to be executed later on or in connection with any thereof. Copies of the bank’s books or any part thereof or from the last page of the bank’s books, which shall be approved by the bank’s clerk on them or on a separate document, shall serve as admissible evidence for proving the truth of matters asserted therein and for the accuracy of all the details set forth therein.

 

17.2

All of the details that the Pledgor transferred or shall transfer to the bank, shall serve the bank for its ongoing work, as customary and subject to applicable law, and shall be stored in accordance with the provisions of law, according to the bank’s purposes in the databases of the bank or anyone on its behalf, or in the databases of whoever shall from time to time provide the bank with computer services, data processing services, or information security services, or any other service for purpose of providing banking services.

 

 

18.

Pledgor’s liability

 

18.1

In case the Pledgor is comprised of two or more entities, all individuals of the Pledgor shall be jointly and severally liable for fulfilling all of the Pledgor’s obligations under the Debenture. If any of the individuals of the Pledgor is declared legally incompetent or was otherwise released from its responsibility to fulfill any obligation as foregoing, the responsibility of the other individuals of the Pledgor shall not be prejudiced. The foregoing shall also apply to a Guaranteed Party that is comprised of two or more entities, with respect to the fulfillment of any of the Guaranteed Party’s obligations under the Debenture.

 

18.2

If the Pledgor or Guaranteed Party constitute a legal entity, incorporated or not incorporated, or a trustee or estate manager or joint account holder at the bank, or an organization or any entity that constitutes a combination of entities, the obligations of the Pledgor or Guaranteed Party (as applicable) under the Debenture shall not be prejudiced by any name change, Structural Change, or change to the composition of the Pledgor or Guaranteed Party.

 

19.

Notices and warnings

 

19.1

The bank shall send notices to the Pledgor and Guaranteed Party with respect to the Debenture, only insofar as such are required according to law or under an explicit and written agreement between the bank and Pledgor or Guaranteed Party, as applicable.

 

19.2

Any notice to be sent via mail by the bank to the Pledgor or Guaranteed Party, as applicable, by registered or ordinary letter to the most recent address appearing on the Debenture or on the documents for opening a bank account, or to any address appearing in the population registry or to the registered offices of the Pledgor or Guaranteed Party, as applicable, or to any other address which the Pledgor or Guaranteed Party, as applicable, shall inform the bank in writing, shall be deemed lawful notice received by the Pledgor or Guaranteed Party, as applicable, within 72 hours from the time the letter that includes the notice was sent.

 

19.3

Written confirmation from the bank or anyone on its behalf regarding delivery of any notice as set forth in this Section 19 above and regarding the date of delivery, shall serve as prima facie evidence with respect to delivery by the bank and the date thereof, all as set forth in the confirmation.

 

20.

Governing law and jurisdiction

 

20.1

The Debenture shall be interpreted under and in accordance with the laws of the State of Israel.

 

20.2

Exclusive jurisdiction for purpose of the Debenture is hereby set as follows: At the competent court that is nearest to the place where the Debenture was executed or at the competent court in one of the following cities: Jerusalem, Tel Aviv-Yafo, Haifa, Beer Sheva, Lod, or Nazareth.

 

21.

General

 

21.1

All statements, representations, undertakings, provisions, and permissions of the Pledgor and Guaranteed Party as set forth in the Debenture are irrevocable, and are in addition to and without derogating from any other statement, representation, undertaking, provision, or permission of any of them towards the bank under the Debenture or under any of the documents that were or shall be executed by them, and the bank engaged or shall engage with the Pledgor or Guaranteed Party in agreements for providing banking services subject of the Secured Amounts and with security interests for securing them, inter alia based on all the statements, representations, undertakings, provisions, and permissions as foregoing.

 

 

21.2

Any termination or change of the obligations of the Pledgor or Guaranteed Party towards the bank under the Debenture, including a waiver or settlement, requires obtaining the bank’s prior written approval. Any waiver, time extension, easement, silence or failure to take action by either party with respect to non-fulfillment or partial or incorrect fulfillment of any of the other party’s undertaking under the Debenture, or any undertaking of the Guaranteed Party, shall not be deemed as a waiver by such party of any right but only as consent limited to the particular occasion on which it was granted.

 

21.3

The bank may charge any bank account held for the Pledgor (whether by itself or together with others), at the bank’s discretion, for any amount that the Pledgor is required to pay under the provisions of the Debenture, and which has not been paid as foregoing, all except if explicitly agreed otherwise between the bank and the Pledgor. It is clarified that nothing set forth in this section shall derogate from the Pledgor’s obligation to pay the bank all amounts that the Pledgor is required to pay to the bank under the Debenture according to its terms. Without derogating from the bank’s rights, including under the Debenture and in addition thereto, the Pledgor grants the bank irrevocable instructions and authorization to charge its accounts as set forth in this section above.

 

21.4

The bank’s rights under the Debenture are independent of each other and are further and in addition to and without derogating from any right that the bank has or shall have under law or under any other documents that was or shall be executed by the Pledgor or Guaranteed Party or for any thereof in favor of the bank, including documents concerning the opening and managing of bank accounts (hereinafter: the “Additional Documents”). Nothing set forth in the Debenture shall release the Pledgor or any other guarantor of the Secured Amounts, from any indebtedness towards the bank. The bank is entitled to assert its rights and take any measures against such parties as conferred to the bank under the Debenture, Additional Documents, and under appliable law.

 

21.5

The provisions of the Debenture and the provisions of the Additional Documents are supplementary, however in any event of contradiction between the provisions of the Debenture and the provisions of the Additional Documents, in respect of matters discussed in the Debenture, the provisions of the Debenture shall prevail.

 

21.6

Without derogating from the generality of Sections 10 and 11 above, it is clarified that realizing the Subordinated Charge, if any, shall not prejudice or reduce the validity of the Charge or any of the bank’s rights thereunder. Should the Subordinated Charge be realized, and as long as the bank did not choose otherwise, the Charge shall continue to apply to the Charged Assets in full force.

 

21.7

Subject to applicable law, nothing set forth in the Debenture shall create rights in favor of any third party.

 

21.8

In any event where the bank is entitled to take action according to the Debenture, it shall not be deemed obligated to do so.

 

21.9

In any event where the bank is entitled to take action according to the Debenture without prior notice - such right of the bank shall be subject to the provisions of applicable law that cannot be stipulated against.

 

22.

Interpretation and definitions

 

22.1

The preamble to the Debenture and its Schedules forms an integral part thereof and one of its terms. Section headers serve only as reference and should not be used for interpreting the Debenture.

 

22.2

Singular form includes plural form, and vice versa.

 

22.3

Unless explicitly stated otherwise, when referring to any statue in the Debenture, the intention is to the form of the statute as in effect from time to time on any relevant date.

 

 

22.4

Any mention of the Pledgor or Guaranteed Party, as applicable, the intention is to the Pledgor or Guaranteed Party, as applicable, including their successors, estate, will executor, guardians, liquidator, trustees, and anyone taking their place.

 

22.5

Unless explicitly stated otherwise, the terms included in the Debenture shall have the meaning set forth next to them:

 

22.5.1

“Debenture” – This Debenture.

 

22.5.2

“Illegality Event” - Any of the following events:

 

22.5.2.1

Should the bank be unable to finance itself in currency that is relevant to all or part of the Secured Amounts, for reasons deriving from changes in the international financial market, or should the bank be unable to set the interest rate that applies to all or part of the Secured Amounts, for any reason, or should the continued provision of all or part of the Secured Amounts, under their current terms, become impossible for any reason;

 

22.5.2.2

As result of legislative amendments, or as result of changes in the Guaranteed Party or its business, the continued provision of all or part of the Secured Amounts by the bank, under their terms, as in effect on any relevant date, or granting effect to obligations or use of the bank’s rights according to any of the documents that were or shall be executed in favor of the bank or by the Pledgor or Guaranteed Party or on its behalf, in connection with the Secured Amounts, shall become illegal or constitute a violation of law on the part of the bank (including a violation of a regulation, rule, provision, guideline, or order). It is clarified that a deviation of the bank from the restrictions set forth in the directives of the Bank of Israel, including in the Proper Conduct of Banking Business Directive 313 concerning the indebtedness of a “single borrower” or “group of borrowers”, shall constitute a violation of law as foregoing.

 

22.5.3

“Security Interests” - Guarantees, charges, pledges and other security interests of any kind whatsoever.

 

22.5.4

“Functionary” - Official receiver, liquidator, trustee, special administrator, assets receiver, or other similar functionary.

 

22.5.5

“Financial Statements” - Periodic financial statements, prepared in accordance with applicable law and accepted accounting principles, which the Pledgor or any subsidiary of the Pledgor are or shall be required to prepare under applicable law.

 

22.5.6

“Law” - As defined in the Interpretation Law, 5741-1981.

 

22.5.7

“TASE” - The Tel Aviv Stock Exchange Ltd. and any other stock exchange trading securities that constitute part of the Charged Assets.

 

22.5.8

“Bank” - Bank Hapoalim B.M. including all branches or offices thereof in Israel, and anyone in its place or on its behalf and any transferee thereof.

 

22.5.9

“Collection Procedure” - A procedure under the Execution Law, 5727-1967; under the Center for Collecting Fines, Fees, and Expenses Law, 5755-1995; under the Tax Ordinance (Collection), or under any other law granting collection powers equivalent to the powers granted in such procedures.

 

22.5.10

“Arrangement” - Arrangement, debt arrangement, or settlement proposal.

 

22.5.11

“Charge” - The charge, the pledge, and the assignment by way of charge under the Debenture.

 

 

22.5.12

“Scale of Charges” or “Bank Scale of charges” - Price list of the bank, presented at the branch, on the bank’s website, or in the bank’s mobile app, through automatic devices or in any other way that the bank may present it, about the fees and their rates, and other payments and amounts related to the banking services, updating and manner of charging such, and all as such scale of charges shall be customary and accepted at the bank from time to time, and subject to applicable law.

 

22.5.13

“Indebtedness” - A debt, undertaking or liability towards the bank, of any kind whatsoever (current and future, direct or indirect, contingent or non-contingent, including of any person or corporation as a guarantor towards the bank) for any grounds whatsoever, as they shall be from time to time, including any such indebtedness towards the bank on any account, even if such account is an account under joint ownership.

 

22.5.14

“Liabilities for Third Party Guarantees” - Any current or future indebtedness that the Pledgor or Guaranteed Party shall have towards the bank in connection with or for a guarantee that the Pledgor or Guaranteed Party provided or shall provide to the bank, for securing the indebtedness of any third parties towards the bank, including a guarantee that the Pledgor provided or shall provide to the bank for securing the indebtedness of the Guaranteed Party, or a guarantee that the Guaranteed Party provided or shall provide to the bank for securing an indebtedness of the Pledgor.

 

22.5.15

“The “Companies Law” - The Companies Law, 5759-1999.

 

22.5.16

“Guarantee Law” - The Guarantee Law, 5727-1967.

 

22.5.17

“Insolvency Law” - The Insolvency and Economic Rehabilitation Law, 5778-2018.

 

22.5.18

“Foreign Currency” - Any foreign currency that can be converted freely.

 

22.5.19

“Tax” - All taxes, levies, fees and other mandatory payments, of any kind or form whatsoever, including for income, capital gains, or profits, VAT, withholdings and withholdings at source which, are either by definition or which are paid on account of taxes, fees, levies or said mandatory payments, including, interest and penalties in connection with taxes, levies, fees and mandatory payments as foregoing, and including stamp tax (if any).

 

22.5.20

“Environmental Hazard” - As such term is defined in Section 1 of the Environmental Hazard Prevention (Civil Claims) Law, 5752-1992.

 

22.5.21

“Securities” - Securities as such term is defined in the Securities Law, 5728-1968, including bonds and government-issued securities, and participation certificates of a joint investment trust fund and any other security, whether included in the definition of Section 1 in the Securities Law, 5728-1968, or whether not included in such definition, and “index products” as defined in the Consulting Law, even if the bank does not own or physically maintain the security certificates or index products in the framework of managing the account, of any type, including bonds and any certificates issued in the series by a company, cooperative society, partnership or any other corporation, and certificates issued by the Israeli government or any foreign government or any public authority or any other authority that acts pursuant to law, and which grant a right of membership or to participate with the issue or claim thereof, and also held rights and chose in action, including the right to receive all the certificates from any third parties, including from any clearing system, and including participation certificates of a joint investment fund and any other mutual fund, whether or not it has a legal personality, and certificates granting a right to purchase securities as foregoing, and all - whether such are included or not included in the definition of Section 1 in the Securities Law, 5728-1968, whether dealing with certificates or rights issued or created in Israel or abroad, whether to the bearer or registered, whether paid in Israeli currency or Foreign Currency, whether such exist in writing or whether they can be recovered or proved by electronic or other means.

 

 

22.5.22

“Bank Books” - Including bank records and any book, leger, logbook account statement, contract, letter of undertaking, deed signed by the Pledgor or Guaranteed Party (as applicable), worksheet of the bank or that was issued by the bank, bank records tape, copies thereof approved by bank or submitted by it as part of its books, and anything that can be extracted therefrom through data storage or retrieval, electronic imaging and other technologies, that were made during the bank’s ordinary course of business.

 

22.5.23

“Maximum Interest Rate” - With respect to Israeli currency - the maximum interest as shall be from time to time, which applies in the bank to the debit balances of the current account in Israeli currency that has no valid current framework. With respect to Foreign Currency - The maximum interest as shall be from time to time, which applies in the bank to the debit balances of the current account in Foreign Currency that has not valid current framework.

 

22.5.24

“Records” - Any record or copy thereof that preserve the information on bank account transactions or the data of bank accounts and its details, whether it was recorded or copied by way of printing, replication, electronic imaging, photography (including microfilm), and whether it was recorded or copied through any mechanical, electrical, or electronic device or any technology that preserves the information on bank account transactions or in connection therewith, including output, computer material that is information, and an electronic message that includes data on a bank account, or bank notices in connection with a bank account, which were created by recording on the bank’s computers, as the terms “output”, “computer material” (information), and “computer” are defined in the Computers Law, 5755-1995, and the printing of the contents of a computer file on paper, or any record of the bank by any other means, or the presentation of words or numbers or any other symbols that the bank customarily uses or makes use of in its records.

 

22.5.25

“Note” or “Notes” - Any promissory note, bill of exchange, check, undertaking, security, assignment, bill of lading, deposit note, withdrawal, payment order, and any tradable document of any kind whatsoever.

 

22.5.26

“Change of Law” - Application of a new law, new legislation or change of current law or in a manner of applications or implementation thereof that were made after the execution date of the Debenture, including: Change to the interpretation of current law; new requirement directed at the bank by the Bank of Israel, including a new undertaking under an agreement between banks in Israel and the Bank of Israel, or change to banking customs opposite the Bank of Israel; new requirement directed at the bank by any other competent authority in any relevant jurisdiction; all - even if such law, change, requirement, undertaking, or custom do not bind the bank, but banks or other financial institutions generally comply with them, and in any relevant jurisdiction. In this respect “Law” - As defined in this section above, and any regulation, rule, provision, guideline, order, or undertaking opposite the Bank of Israel or custom as foregoing.

 

22.5.27

“Structural Change” - Shall mean with respect to the legal entity or relevant legal entity, each of the following:

 

22.5.27.1

A merger or spinoff, as such terms are defined in Part E2 of the Income Tax Ordinance [New Version] or the Companies Law (including consolidation and reorganization, all – regardless of whether performed in accordance with Chapter VIII or Chapter IX of the Companies Law or in any other manner) or any other act which has a similar outcome with respect to a partnership or corporate entity outside of Israel;

 

22.5.27.2

An act which has the result of acquisition, transfer or receipt of assets which are material to the legal entity due to their scope or nature or acquisition or receipt of a material liability, as foregoing;

 

 

22.5.27.3

Receiving assets in consideration for shares or other securities or other rights in the legal entity, in the event the assets relevant to such act as foregoing are material for the legal entity, in scope or in nature;

 

All - whether performed in a single transaction or in a series of transactions.

 

22.5.28

“Banking Services” - All of the services that the bank customarily provides to its customers, according to what is acceptable at the bank from time to time.

 

22.5.29

“Control” - As defined in the Securities Law, 5728-1968, and with respect to a corporation to which this law does not apply - mutatis mutandis.

 

23.

Additional terms _________

 

Signature of the pledgors

 

Each of us undersigned confirm that the bank has informed us of the facts set forth in the Debenture in connection with the Secured Amounts prior to signing the Debenture. In addition, each of us confirm that we have been afforded a reasonable opportunity to review the Debenture prior to signing, and that we received a signed copy of the Debenture.

 

In witness hereof we have signed:

 

Name of Pledgor 1			Name of signatory 1 on behalf of Pledgor 1:	Name of signatory 2 on behalf of Pledgor 1:
Signature of Pledgor 1
			Role of signatory 1 on behalf of Pledgor 1:	Role of signatory 2 on behalf of Pledgor 1:

 

Name of Pledgor 2			Name of signatory 1 on behalf of Pledgor 2:	Name of signatory 2 on behalf of Pledgor 2:
Signature of Pledgor 2
			Role of signatory 1 on behalf of Pledgor 2:	Role of signatory 2 on behalf of Pledgor 2:

 

 

 

Branch	Account No.	Loan Serial No.	Type of Credit (for internal use)	Type of Document (for internal use)
				MS10 Short

 

Name of Customer		Identification Number
Name of Customer		Identification Number

 

To Bank Hapoalim Ltd

 

APPLICATION Dated               FOR A LOAN IN NEW SHEKELS

 

1.

General

 

1.1

The Loan Application - We the undersigned hereby apply to the bank to make a loan account available to us for the sum of ________ NIS (hereinafter: “the capital fund” or “the loan capital fund”) pursuant to the conditions detailed in the opening of the account documents and in the general conditions letter pertaining to loans signed by us in connection with the account, in as far as it was signed, (hereinafter together: “the general conditions”) and hereunder in this application. Nothing by virtue of our signature of this application and its delivery by us to the bank shall be construed as obligating the bank the make the loan to us requested as aforesaid, and the bank shall have discretion as to whether to accede, wholly or partially, to our application for the grant a loan as aforesaid upon such conditions as shall be prescribed by it, or to reject it.

 

1.2

Making the loan - if the bank accedes to our application herein for a loan, the making of the loan will be conditional upon us meeting, to the bank’s satisfaction, the terms and conditions that have been agreed or will be agreed upon in the future between us and the bank and including upon us providing the relevant securities. If the bank approves our application for a loan as aforesaid, the bank will credit the amount of the loan capital fund to a current account in new Shekels (hereinafter: “the current account”). Only the actual crediting of the current account with the loan capital fund will constitute the bank’s agreement to accede to our application for the loan, as stated in this application. Commencing from the date of the grant of the loan, all the conditions and provisions of the loan documents (above and hereinafter: “the loan”) will apply to the loan, including to the calculation of interest respect of and in connection with the Loan.

 

2.

Purpose of the Loan

 

We are applying for the loan for the following purpose: ________. We undertake to use the loan solely for such purpose.

 

3.

The Account to be charged

 

We undertake to repay all amounts of the loan on the agreed repayment dates as specified in the payments table and in accordance with the other terms and conditions specified in the loan documents. (Choose one of the following):

 

☐

Instruction to charge the current account

 

We hereby give the bank an instruction to charge the current account with all the loan amounts (hereinafter respectively: “the Charge Account” and “the Charging Instruction”)

 

 

☐

Instruction to charge an account in the bank that is not the current account

 

We hereby give the bank an instruction to charge all the amounts of the loan, except for the handling commission, to Account No.________ kept in New Shekels in ________ branch of the Bank, and the handling commission to the current account (hereinafter respectively: “the Charge Account” and “the Charging Instruction”)

 

☐

Instruction to charge an account in another bank

 

We hereby give the bank an instruction to charge all the amounts of the loan, except for the handling commission, to Account No.________ kept in New Shekels in ________ branch of ________ Bank, and the handling commission to the current account (hereinafter respectively: “the Charge Account” and “the Charging Instruction”)

 

☐

Undertaking for direct payment

 

We undertake to pay all the aforesaid amounts of the loan direct to the loan account.

 

4.

Repayment of the Capital Fund (choose one of the following):

 

☐

We undertake to repay the loan capital fund in ________ consecutive payments commencing on the ________ of ________ and ending on the date of expiration of the loan period - as will be detailed in the repayment table

 

☐

We undertake to repay the loan capital fund in one payment the payment date of which is on the ________ day of ________

 

☐

We undertake to repay the loan capital fund as detailed hereunder: ________.

 

5.

The Interest

 

The loan capital fund will bear interest according to the bank’s calculations, which will be charged commencing from the date of the grant of the loan, as provided hereunder in this application, on such dates as are specified in the repayments table. The interest on the capital fund is as detailed hereunder (hereinafter: “the interest”). Unless otherwise expressly stated, the data shown below are correct as at the date of preparation of this Application.

 

5.1

The annual nominal interest rate - ________%

 

5.2

The annual adjusted interest rate - ________ %

 

5.3

Type of interest (choose one of the following):

 

☐

Fixed

 

☐

Variable, as detailed hereunder:1

 

○

the base interest - prime - which is ________ % on an annual calculation

 

○

Risk increment - ________ percentage point

 

1

Details must be completed in this section when the loan being requested is at variable interest

 

 

○

the rate of interest formula - prime with the addition of the risk increment, as stated above and calculated on an annual basis

 

○

the initial rate of interest - the initial rate of interest will be determined according to prime as it shall be on the date of the grant of the loan

 

○

the dates of updating of interest - the interest will be updated from time to time in so far as any change occurs in prime, including prior to the date of the grant of the Loan.

 

○

Interest at a negative rate - in any case in which the interest, which is to be calculated by the bank in respect of any period, is at a negative rate, no payment will be paid to us in respect of any of the loan amounts in relation to which interest was calculated at a negative rate as aforesaid.

 

6.

Period of calculation of the interest

 

The interest calculation period - in this application “the interest calculation period” means (choose one of the following):

 

☐

Identification of calculation period - a period of: ________ months. The initial interest calculation period will end on ________ (not inclusive) the initial or the last periods of calculation of the interest are likely to be shorter or longer and all as detailed in the repayments table.

 

☐

One calculation period - any period of the Loan - a period that commences on the date of the grant of the loan and ending on the last agreed repayment date on account of the loan amounts (but not including such date).

 

☐

Various calculation periods as detailed hereunder:

 

○

Up to ________ day of ________ (not inclusive) - a period of ________ months duration

 

○

Commencing from the ________ day of ________ - a period of ________ months duration

 

The initial interest calculation period will end ________ the day of ________ (not inclusive). The first or last interest calculation periods are likely to be shorter or longer and all as detailed in the repayments table.

 

7.

Calculation of the interest and manner of its payment (choose one of the following):

 

☐

Payment at the end of each interest calculation period - at a variable rate of interest or at a fixed rate of interest with the Periods or the amounts payable being irregular.

 

We undertake to pay the interest in ________ payments, at the end of each interest calculation period. The interest will be calculated at the end of each interest calculation period by multiplying the unpaid balance of the loan capital fund, as it shall be from time to time at any such date, at the rate of interest as detailed above in this application under the section entitled “the Interest” - and in respect of a loan at variable interest, taking into consideration the interest rates that apply in that interest calculation period, as the case may be, by the exact number of days in the period applicable from the commencement of the relevant interest calculation period (including such date) and up to its expiration (not including that date), as detailed in the repayments table, divided by the complete number of days in the calendar year in which the entire relevant interest calculation period occurred (365 or 366 as the case may be) and in a case of an interest calculation period occurring over more than one calendar year, divided by the number of days to be calculated on a weighted average daily basis.

 

 

☐

Payment at the end of each interest calculation period - at a fixed rate of interest with the Periods and the amounts payable being uniform.2

 

We undertake to pay the interest in ________ payments, at the end of every interest calculation period, multiplying the unpaid balance of the loan capital fund, as it shall be from time to time at any such date, at the rate of interest as detailed above in this Application under the section entitled “the Interest”, by the number of months in the relevant interest calculation, as detailed in the repayments table, divided by 12. In so far as the initial or last interest calculation period is shorter or longer than the other interest calculation periods, as detailed in the repayments table, the interest will be calculated in terms of that same interest calculation period, at the end of the said interest calculation period, and this by multiplying the unpaid balance of the loan capital fund as it shall be at that date at the interest rate as detailed above in this Application under the section entitled “the Interest”, by the exact number of days in the period applicable from the commencement of the relevant interest calculation period (including such date) and up to its expiration (not including that date), as detailed in the repayments table, divided by the complete number of days in the calendar year in which the entire relevant interest calculation period occurred (365 or 366 as the case may be) and in a case of an interest calculation period occurring over more than one calendar year, divided by the number of days to be calculated on a weighted average daily basis.

 

☐

Payment of interest in advance (by one payment to be made on the date of the grant of the loan)

 

We undertake to pay the interest in one payment on the date of the grant of the loan. The interest will be calculated by multiplying the amount of the loan capital sum, at the interest rate as detailed above in this Application under the section entitled “the Interest”, and by the exact number of days in the period commencing on the date of the grant of the loan (including that date) and up to the date of the end of the loan period (not including that date), as detailed in the repayments table, divided by the complete number of days in the calendar year in which the entire relevant interest calculation period occurred (365 or 366 as the case may be) and in a case of an interest calculation period occurring over more than one calendar year, divided by the number of days to be calculated on a weighted average daily basis.

 

☐

Payment of interest at the end of the loan period (by one payment to be made at the end of the loan period)

 

We undertake to pay the interest in one payment on the loan period expiration date. The interest will be calculated by multiplying the amount of the loan capital sum, at the interest rate as detailed above in this Application under the section entitled “the Interest”, and in the case of a loan at a variable interest rate, having regard to the interest rates applicable during the loan period as the case may be, by the exact number of days in the period commencing on the date of the grant of the loan (including that date) and up to the date of the end of the loan period (not including that date), as detailed in the repayments table, divided by the complete number of days in the calendar year in which the entire relevant interest calculation period occurred (365 or 366 as the case may be) and in a case of an interest calculation period occurring over more than one calendar year, divided by the number of days to be calculated on a weighted average daily basis.

 

☐

Accrual of interest to the fund throughout the loan period and payment of the interest at the end of the loan period.

 

We undertake to pay the interest in one payment on the loan period expiration date. The interest will be calculated at the end of every interest calculation period multiplying the unpaid balance of the loan capital fund, as it shall be from time to time at any such date, at the rate of interest as detailed above in this application under the section entitled “the Interest”, - and in the case of as loan at variable interest, having regard to the interest rates applicable during the loan period as the case may be, by the exact number of days commencing from the start of the relevant interest calculation (including that date) and up to its end (not including that date), as detailed in the repayments table, divided by the complete number of days in the calendar year in which the entire relevant interest calculation period occurred (365 or 366 as the case may be) and in a case of an interest calculation period occurring over more than one calendar year, divided by the number of days to be calculated on a weighted average daily basis. Manner of accrual of interest - At the end of every interest calculation period, the interest calculated as above shall also bear interest at the interest rate and will also be calculated in the same manner in which the interest is calculated with respect to the loan capital fund, as stated above, and this up to the said interest payment date at the end of the loan period, as detailed in the repayments table.

 

2

The first or the last Interest Calculation Period are liable to be shorter or longer and accordingly, the amounts of interest calculated on account thereof are liable to be lower or higher – all as set forth in the Repayment Schedule.

 

 

☐

Accrual of interest to the fund for part of the loan period and payment at the end of each interest calculation period.

 

The interest will be calculated at the end of every interest calculation period multiplying the unpaid balance of the loan capital fund, as it shall be from time to time at any such date, at the rate of interest as detailed above in this application under the section entitled “the Interest”, - and in the case of as loan at variable interest, having regard to the interest rates applicable during the loan period as the case may be, by the exact number of days commencing from the start of the relevant interest calculation (including that date) and up to its end (not including that date), as detailed in the repayments table, divided by the complete number of days in the calendar year in which the entire relevant interest calculation period occurred (365 or 366 as the case may be) and in a case of an interest calculation period occurring over more than one calendar year, divided by the number of days to be calculated on a weighted average daily basis.

 

Manner of accrual of interest - At the end of every interest calculation period that applies from the date of the grant of the loan and up to the ________ day of ________ (not including that day) (hereinafter: “the accrual period”), the interest calculated as above shall also bear interest at the interest rate and will also be calculated in the same manner in which the interest is calculated with respect to the loan capital fund, as stated above, and this up to the said interest payment date at the end of the accrual period and up to the end of the loan period, this in ________ payments, to be made at the end of each interest calculation period that occurs after the accrual period and which shall be calculated as aforesaid.

 

8.

Late Payment Interest

 

8.1

Subject to any law and notwithstanding what is provided in the general conditions in in the matter of the late payment interest rate, it is agreed that if for any reason, and including owing to non- execution of the charging instruction, any of the loan amounts has not been paid on one of the following dates: on its agreed payment date, or - if no payment date was prescribed for the payment of such amount - on the date upon which its payment was demanded (hereinafter respectively: “the default commencement date” and “ the amount in arrear”), the amount in arrear will bear interest (hereinafter: “late payment interest”), in respect of the period from the default commencement date and until the date of payment thereof. The late payment interest will be paid by us in new shekels. Unless explicitly stated otherwise, the data shown below are correct as at the date of the making of this application.

 

8.2

The late payment interest rate and manner of its calculation

 

8.2.1

The late payment interest rate in respect of a non-linked loan

 

The late payment interest rate in respect of a loan, pursuant to what is provided hereunder in Section 9, which is a “non-linked loan” - will be a variable rate which will be revised from time to time and will be calculated as detailed hereunder:

 

8.2.1.1

Base late payment interest - Bank of Israel interest: % per annum.

 

8.2.1.2

The additional interest component in respect of lateness in the payment of the amounts in arrear - interest at a nominal rate (in percentage points) equivalent to the difference between the annual nominal late payment interest rate as stated hereunder in this section, and the annual nominal rate of interest as stated above in Section 5.1(hereinafter: “the late payment interest component”) .

 

8.2.1.3

Formula for calculating the late payment interest rate - the interest, as stated in Section 5.1 above, with the addition of the interest component in respect of the arrears, calculated on an annual basis.

 

 

8.2.1.4

The nominal annual rate of late payment interest - ________% (this rate is equivalent to the late payment base interest rate as stated above with the addition of 14 percentage points, with the result of the said calculation being multiplied by 1.2).

 

8.2.1.5

The adjusted annual rate of late payment interest - ________%

 

8.2.1.6

The late payment interest revision dates - the aforesaid late payment interest rate will be updated from time to time in so far as any change occurs in the Bank of Israel interest rate.

 

8.2.2

The late payment interest rate in respect of an index-linked loan

 

The late payment interest rate in respect of a loan which, pursuant to Section 9 hereunder is a “linked loan” - will be a fixed rate as detailed hereunder:

 

8.2.2.1

The additional interest component in respect of the late payment of the amounts in arrear: interest at a nominal rate (in percentage points) equivalent to the difference between the annual nominal rate of late payment interest as stated hereunder in this section, and the nominal rate of interest as stated in Section 5.1 above (hereinafter: “the late payment interest component”).

 

8.2.2.2

Formula for calculating the late payment interest rate - the interest, as stated in Section 5.1 above, with the addition of the interest component in respect of the arrears, calculated on an annual basis.

 

8.2.2.3

The nominal annual late payment interest rate - 17%

 

8.2.2.4

The adjusted annual rate of late payment interest - 18.114%

 

8.3

Manner of calculation of the late payment interest - the daily amount of late payment interest will be calculated by the bank by doubling the daily balance of the whole amount in default at its annual late payment interest rate commencing from the same date, divided by the complete number of days in that year (365 or 366 as the case may be). The amounts of such daily late payment interest will be added as per the bank’s calculations and will be debited to the loan account at the end of each quarterly period, on the first day of the subsequent quarter. The amounts of the daily late payment interest accumulated as aforesaid, will also bear interest at the late payment interest rate, which will also be calculated in the same way in which the late payment interest is calculated in relation to the capital sum which is in arrear, as aforesaid, and this up to the date of full and final payment of the amounts in arrear. The periods, the first or the last, in which the late payment interest will be debited to the loan account - might be shorter than the other periods in which the late payment interest will be debited to the loan account as aforesaid.

 

8.4

Reduced late payment interest - The bank may calculate interest in respect of any of the amounts in arrear at a rate that is lower than the late payment interest rate as stated above in this section, this in respect of some or all of the period of default in payment of all the amounts in arrear or some of them, and all at the bank’s discretion (hereinafter: “reduced late payment interest”). It is clarified that nothing by virtue of the calculation of reduced late payment interest in respect of any amount and any period shall obligate the bank to continue with calculation of reduced late payment interest in respect of any additional amount or any additional period and the bank may at any time recalculate interest in respect of any of the amounts in arrear at the late payment interest rate as stated above in this section, and at its discretion, for any reason and without being required to notify us of this in advance.

 

 

9.

Linkage differentials (choose one of the following):

 

☐

Non-linked loan - amounts of the loan capital fund, the amount in arrear and interest of any kind will be non-linked in their entirety.

 

☐

Linked loan - amounts of the loan capital fund, the amount in arrear and interest of any kind will be index-linked in their entirety (hereinafter respectively: “the index-linked amounts” and “the linkage differentials”). We undertake to pay the bank the linkage differentials that are calculated as detailed hereunder:

 

9.1

If it becomes evident that the new index has increased or decreased as compared to the base index, we will pay the bank the index-linked amounts multiplied by the new index and divided by the base index.

 

9.2

If it becomes evident that the new index has neither increased nor decreased as compared to the base index, we will pay the index-linked amounts without any linkage.

 

9.3

If prior to the relevant payment date, a new index which should have been published prior to the said date is not published, in that event for the purpose of calculating the aforesaid linkage differentials, the “new index” will be the index last published prior to the said payment date (hereinafter: “the provisional index”). The provisional index will serve for the purpose of calculating the aforesaid linkage differentials until a new index is published (hereinafter: “the late published index”),

 

9.4

If it becomes evident that the late published index has increased or decreased as compared to the provisional index, we shall be debited or credited by the Bank with the requisite differentials as applicable.

 

9.5

If it becomes evident that the late published index has neither increased nor decreased as compared to the base index, we shall pay the index-linked amounts without any linkage.

 

9.6

For the purpose of calculating the linkage differentials as aforesaid, in respect of the amount in arrear and in respect of the late payment interest, the base index will be the last known index on the agreed payment date in respect of the amount in arrear, or - if no date was prescribed for its payment, then the last known index on the date upon which payment was demanded from us of any such amount in arrear (hereinafter: “the base index for the amount in arrear”). The linkage differentials will be calculated in respect of the amount in arrear and in respect of the late payment interest as aforesaid, and this from the agreed payment date of the amount in arrear, or - where no date for its payment was prescribed - from the date upon which payment was demanded from us of any such amount in arrear and until the date of actual payment of such amount. If it becomes evident that the new index has neither increased or decreased as compared to the base index for the amount in arrear, linkage differentials will not be paid on the amount in arrear, and on the relevant late payment interest in respect of the period of default in payment thereof.

 

10.

Commissions and Expenses

 

In connection with the loan we undertake to pay the bank commissions and expenses according to the bank’s price list and as has been agreed or shall in the future be agreed (if at all) between us and the Bank, and all subject to any law and instructions of the Bank of Israel and as detailed hereunder (unless otherwise explicitly stated, the data shown in this section herein are correct as at the date of the making of this application) (choose one or more of the following):

 

 

☐

Commission for handling credit and securities for non-housing loans (small business)/handling charge for credit and securities- preparation of documents (large business).

 

○

the service in respect of which the commission was collected - dealing with the placement of the loan

 

○

Amount of the commission - ________ NIS

 

○

Rate of commission and manner of its calculation - ________% of the capital sum (choose one of the following):

 

☐

As prescribed in the Bank’s price list, as it is on the date of the grant of the loan. It is clarified that in any event the amount of the handling commission shown above will not be less than the minimum amount specified in the bank’s price list, if existing, and shall not exceed the maximum amount specified in the bank’s price list, if existing. The amount of the handling commission shown above may change if and in so far as a change occurs in the bank’s price list after the date of preparation of this application and up to the date of grant of the loan.

 

☐

As agreed between us and the Bank

 

○

Date of collection of the commission - on the date of grant of the loan

 

☐

Collection fees for periodic loan repayments not for the purchase of a residential apartment (large business)

 

○

the service for which the commission is collected - collection of any payment on account of the capital sum or the interest thereon.

 

○

Amount of the commission - ________ NIS. For any payment on account of the capital sum or the interest thereon as prescribed in the bank’s price list. The aforesaid collection fees may change from time to time, after the date of this application, and if and in so far as any change occurs in the bank’s price list

 

○

Date of collection of the commission - on the agreed payment date of any payment on account of the loan capital sum or the interest thereon. If on the agreed date for any payment on account of capital or the interest thereon (hereinafter: “the amount payable”) payment of the amount payable has not been made, the amount of the collection fee will be added to the amount payable not paid on the due date as aforesaid and interest will apply in respect of the collection fee specified in this application in relation to late payment interest and in relation to linkage differentials in respect of arrears - in so far as the loan is an index-linked loan, and all mutatis mutandis.

 

☐

Statutory fees payable for registrations/to authorities etc.

 

○

the service for which the commission is collected - payment of mortgage registration fee in the Register of Pledges

 

○

Amount of the commission - ________ NIS. The said amount of commission prescribed according to the actual charge, as specified in the bank’s price list. This amount may change from time to after the date of this application, if and in so far as any change occurs in the bank’s price list.

 

○

Date of collection of the commission - on the date of remission of the payment to the Registrar of Pledges.

 

☐

Other Commissions and Expenses:

 

 

11.

Change of Dates

 

Subject to any law, if the agreed payment date of any of the loan amounts falls on a day that is not a banking business day in Israel, the agreed payment of such amount will be deferred to the next banking business day in Israel after it and the said amount will also continue to bear interest at the interest rate in respect of the period in which the said payment date was so deferred. The date of addition of interest to the capital sum will not be deferred and will be brought forward even in a case in which as aforesaid, it falls on a day that is not a banking business in Israel.

 

12.

Providing Financial Statements

 

We undertake to deliver financial statements to the bank, and at our own expense, as regularly and as frequently as we are directed to do so by the bank from time to time. The furnishing of financial statements to the bank is a precondition for the granting of the loan and its continued availability, inter alia as required in accordance with the instructions of the Bank of Israel or other competent authority or in accordance with any law; we further undertake, upon the bank’s demand from time to time, to make available to the bank or to its representative for scrutiny during normal working hours, any financial statement, account books card/s or ledgers, tape, books, documentary evidence and other documents and any information in connection with our financial and operational status or the state of our business as may be requested by the bank from time to time.

 

13.

Failure to pay on time

 

In a case of non-payment on time of any of the amounts which we owe the bank under the loan documents, the bank will be entitled to take any such measures against us as it is empowered to take pursuant to the provisions of the loan documents and by law, and including to demand the exercise of any of the remedies to which it is entitled under the Contracts (Remedies for Breach of Contract) Law, 5731-1970 and any other law, Israeli or foreign, which may replace it or add to it and which will confer any rights on the bank in the event of a breach of a contract signed between the bank and any counter- party, as the case may be.

 

14.

Attribution of Payments

 

Subject to any law, on the date of payment of any amount to be paid to the bank in repayment of any of the loan amounts, then for the purposes of repayment such aforesaid amount will be credited according to the following order of attribution detailed hereunder:

 

14.1

Firstly, subject to what is provided in the general conditions under the section headed “Commissions and Expenses”, in relation to payment of expenses connected with legal proceedings, in payment of any sum pertaining to collection of the loan amounts and including expenses of any official and his remuneration, if any, as shall be determined by the bank or by the court or by the execution office, as the case may be.

 

14.2

Thereafter, in payment of all interest component amounts, if any, in respect of late payment and the index-linkage differentials or exchange rate differentials, in respect of them, if any, and.

 

14.3

Thereafter, in payment of any amount in relation to the bank’s commissions, if any, including commissions for early repayment of any of the loan amounts.

 

14.4

Thereafter, in payment of any balance of the amounts in arrear, if any, (including balance of amounts of the late payment interest) not in respect of the interest component for late payment, and the index-linkage differentials or exchange rate differentials, if any, in relation to them.

 

14.5

Thereafter, in payment of any balance of the amounts of interest in connection with the loan amounts (not being amounts in arrear) and the index-linkage differentials or exchange rate differentials, if any, in relation to them.

 

 

14.6

Thereafter, in discharge of any other payment not specified above or hereunder in this section, and which we have now undertaken to make or shall undertake to make in the future to the bank in respect of or in connection with the loan pursuant to the loan documents or under any other document that we have signed or shall sign in the future, or under any law.

 

14.7

And finally, in payment of the loan capital sums (not being amounts in arrear) and the index- linkage differentials or exchange rate differentials, if any, in relation to them.

 

15.

Interpretation and Definitions

 

15.1

The section headings in this application have been inserted for the purposes of convenience only and they shall not be used for the purposes of interpretation of this application.

 

15.2

In this application - the male gender includes the female and vice versa and the plural includes the singular and vice versa.

 

15.3

Unless explicitly stated otherwise, wherever any law is referred to in this application, it means the text of the law as it shall be from time to time on any relevant date.

 

15.4

The provisions relating to early repayment of the loan detailed in the general conditions shall also apply in this application to a case in which the bank calls for immediate repayment of some or all of the loan amounts, pursuant to the provisions specified in detail in the general conditions.

 

15.5

Save where explicitly stated otherwise, the terms included and used in this application shall have the meanings assigned to them in the general conditions and the following terms shall have the meanings set forth alongside them hereunder:

 

15.5.1

“weighted average daily basis” - a daily basis for calculating the annual interest (where the interest calculation period is spread over two (2) calendar years containing a different number of days (365 or 366) in each of such years) calculated in the following manner: the number of days in the relevant interest calculation period, applicable in a year of 365 days duration multiplied by 365 and a further number of days out of the said interest calculation period applicable in a year of 366 days duration multiplied by 366 - with the result of the of the said calculation being divided by the total number of days in the said interest calculation period.

 

15.5.2

“this application” - this loan application as it shall be amended from time to time.

 

15.5.3

“financial statements” - periodic financial statements, prepared in such format and at such times as are prescribed by law and in accordance with usually accepted accounting principles, which either we or any of our subsidiaries or any guarantor of the payment of any of the loan amounts, is now obligated to or will in the future be obligated to prepare in accordance with any law.

 

15.5.4

‘the bank” - Bank Hapoalim Ltd or any of its branches or offices in Israel, and any party replacing it or empowered by it and any transferee from it.

 

15.5.5

“the account” - the bank account the number of which is quoted at the head of this application and under any other number as shall be prescribed by the bank from time to time, and that is maintained or shall in the future by maintained for us by the bank in the account branch.

 

 

15.5.6

“the index” or - “the consumer prices index” - the consumer prices index (also known as the cost of living index) including fruit and vegetables and published by the Central Bureau of Statistics (hereinafter: “the bureau”) including that index even though it is in the future published by any other governmental institution and including any official index that replaces it, irrespective of whether, or not, it is structured on the existing index. The bureau shall determine the relationship between them, and if it does not do so for a period of six months from publication of the other index, the bank will determine it in consultation with expert economists.

 

15.5.7

“the new index” - means the last known index on the date of actual payment.

 

15.5.8

“the base index” - means the last known index on the date of grant of the loan.

 

15.5.9

“signature” - signature of a document in writing and, subject to approval of the bank, the grant of consent or approval in any manner, including by any means of communication and the act of “signing” a draft thereof - shall be so interpreted.

 

15.5.10

“the loan account” - the sub-loan account maintained within the account.

 

15.5.11

“date of grant of the loan” - the date in respect of which the current account will be credited with the loan capital fund.

 

15.5.12

“the loan documents” - this application, the general conditions, the securities documents and any other document signed or that will in the future be signed between us and the bank in connection with the loan.

 

15.5.13

“the loan amounts” - any amount that we owe to or shall in the future owe the bank under the loan documents, and including the amount of the loan capital fund, the interest, late payment interest, the commissions, expenses, linkage and the additional amounts.

 

15.5.14

“prime” - or “prime interest” - the interest defined by the bank as its prime interest rate and which is updated by the bank from time to time.

 

15.5.15

“quarter” - a period of three calendar months, with the first quarter commencing on the first day of the following calendar month after the date of the grant of the loan and the other quarters commencing respectively on the first day of the calendar month next following the end of the previous quarter.

 

15.5.16

“Bank of Israel Interest” - the interest rate, as it shall be from time to time, at which the Bank of Israel lends money to the banking corporations or borrows money from them, Such interest is fixed by the Bank of Israel Monetary Committee and is published by it.

 

15.5.17

“the loan period” - a period, as specified in the payments table beginning on the date of grant of the loan and ending on the last agreed repayment date on account of the loan amounts.

 

15.5.18

“sub-account” - a current account or deposit account or savings account or loan account or other account now being maintained in the bank or which shall in the future be maintained in the bank under that same account.

 

15.6

This application and the general conditions will supplement each other and will be interpreted as being mutually supplemental. In any case of conflict or incompatibility between the terms and provisions of this application and the terms and provisions of the general conditions, in respect of any of the matters governed by this application, and save where expressly prescribed otherwise, the terms of this application will prevail, as agreed upon between us and the bank.

 

 

16.

Payments Table

 

Details regarding the loan period, amounts of the payments to redeem the loan and the repayment dates of the loan capital fund and interest, will be included in the payments table which will be sent to us by the bank shortly after the said date of grant of the loan (above and hereinafter: “the payments table”). The payments table will constitute an integral part of this application. If we do not receive the payments table within 30 days from the date of grant of the loan, we undertake to notify the bank of this in writing.

 

17.

Additional conditions:

 

Signatures

 

We the undersigned, confirm that the bank has furnished us with a copy of this application and afforded us a reasonable opportunity of scrutinizing it before we signed this application

 

Name of Signatory	Identification	Date	Signature

 

 

 

Branch	Account Number	Serial Number of the Loan	Type of Credit (for internal use)	Type of Document (for internal use)	Basis

 

Customer’s Name		Identifying Number
Customer’s Name		Identifying Number

 

To: Bank Hapoalim B.M.

 

APPLICATION FOR A LOAN IN NEW ISRAELI SHEKELS DATE ך יר את תנ זהל ן אכ ש קה וא ץח ל

 

1.

General

 

1.1

Application for a Loan - We, the undersigned, hereby apply to the Bank to grant us in the Account a loan in the sum of          NIS (hereinafter: “the Principal Amount” or “the Principal Amount of the Loan”) on the terms and conditions set forth in this Application. The signing by us of this Application and the delivery thereof by us to the Bank in no way obligate the Bank to grant us the Loan requested as aforesaid and it shall be at the discretion of the Bank whether to comply, in whole or in part, with our request to grant the Loan on the terms as may be determined by it, or to reject it.

 

1.2

Granting the Loan - If the Bank complies with our request to grant the Loan, the availability of the Loan will be contingent upon our compliance to the satisfaction of the Bank with the terms and conditions that have been or may be agreed upon between ourselves and the Bank and that includes the provision of the relevant Collaterals. Should the Bank approve our request to grant the Loan as aforesaid, the Bank will post the Principal Amount of the Loan to the credit of the current account maintained within the Account in New Israeli Shekels (hereinafter: “the Current Account”). Only the Actual Crediting of the Current Account with the Principal Amount of the Loan will constitute the Bank’s agreement to comply with our request to grant the Loan, as provided herein. Commencing from the Date on Which the Loan Is Granted there shall apply to the Loan, including to the calculation of interest on and in connection with the Loan, all of the terms and conditions of the Loan Documentation (hereinafter: “the Loan”).

 

2.

Purpose of the Loan

 

We request the Loan for the following purpose:           .We undertake to apply the Loan for such purpose only.

 

3.

The Account to Be Debited (choose one of the following):

 

We undertake to repay all of the Amounts of the Loan in the following manner (select one of the following):

 

☐

An Instruction to Debit the Current Account

 

We hereby instruct the Bank to debit the Current Account (hereinafter respectively: “the Account to be Debited” and “the Debit Instructions”) with all of the Amounts of the Loan.

 

 

☐

An Instruction to Debit an Account with the Bank Which Is Not the Current Account

 

We hereby instruct the Bank to debit Account Number           maintained in New Israeli Shekels at the           . Branch of the Bank with all of the Amounts of the Loan, except for the handling fee, and to debit the Current Account with the handling fee (hereinafter respectively: “the Account to be Debited” and “the Debit Instructions”)

 

☐

An Instruction to Debit an Account with Another Bank

 

We hereby instruct the Bank to debit Account Number          maintained in New Israeli Shekels at the           Branch of          Bank with all of the Amounts of the Loan, except for the handling fee, and to debit the Current Account with the handling fee (hereinafter respectively: “the Account to be Debited” and “the Debit Instructions”)

 

☐

Direct Payment Undertaking

 

We undertake to pay directly into the Loan Account all of the Amounts of the Loan on the Agreed Repayment Dates as set forth in the Repayment Schedule and in accordance with the rest of the terms and conditions set forth in the Loan Documentation

 

4.

Repayment of the Principal Amount (choose one of the following):

 

☐

We undertake to repay the Principal Amount of the Loan in          consecutive instalments commencing on          and ending on the date on which the Period of the Loan comes to an end – as set forth in the Repayment Schedule.

 

☐

We undertake to repay the Principal Amount of the Loan in one lump sum the date of payment of which is

 

☐

We undertake to repay the Principal Amount of the Loan as follows:

 

5.

The Interest

 

The Principal Amount of the Loan shall bear interest, according to the calculations of the Bank, which will be charged commencing from the Date on Which the Loan Is Granted, as provided herein below in the clause under the heading “Interest Calculation Period ” on the dates specified in the Repayment Schedule. The interest on the Principal Amount is as set forth below (hereinafter: ”the Interest”. Unless otherwise expressly provided, the data presented below is correct as of the date of preparation of this Application.

 

5.1

The nominal rate per annum of the Interest –          %

 

5.2

The adjusted rate per annum of the Interest –          %

 

5.3

The type of interest (choose one of the following):

 

☐

Fixed

 

☐

Variable, as set forth below:1

 

○

Interest based on – Prime – which is, on an annual basis:          %

 

1

The particulars for this clause are to be completed when the requested loan carries variable interest.

 

 

○

Addition for risk –          percentage points.

 

○

Rate of interest formula – Prime coupled with the addition for risk, as aforesaid, calculated annually.

 

○

The initial rate of interest – The initial rate of interest shall be determined according to Prime, as it may be on the Date on Which the Loan Is Granted.

 

○

Interest update dates – The Interest will be updated from time to time in as much as there is any change in the Prime, including before the Date on Which the Loan Is Granted.

 

○

Interest at a negative rate – Whenever the Interest which may be calculated by the Bank for any period is at a negative rate, no payment shall be made to us on account of any of the Amounts of the Loan in relation to which interest at a negative rate was calculated as aforesaid.

 

6.

Interest Calculation Period

 

Interest Calculation Period – In this Application “Interest Calculation Period” - means (choose one of the following):

 

☐

Identical Interest Calculation Periods – A period of          month /          months. The first Interest Calculation Period shall end on          (not inclusive). The first or last Interest Calculation Period are liable to be shorter or longer, all as set forth in the Repayment Schedule.

 

☐

One Interest Calculation Period – for the entire Period of the Loan. Any period commencing on the Date in Which the Loan Is Granted and ending on the last Agreed Repayment Date on account of the Amounts of the Loan (but not including such Date).

 

☐

Different Interest Calculation Periods as set forth below:

 

○

Until          (not inclusive). Any period of:           months

 

○

Commencing from           any period of:           months The first Interest Calculation Period shall end on           (not inclusive). The first or last Interest Calculation Period are liable to be shorter or longer, all as set forth in the Repayment Schedule.

 

7.

Calculation of the Interest and the Manner of Payment Thereof (Choose one of the Following):

 

☐

Payment at the end of each Interest Calculation Period – at a variable rate of interest or at a fixed rate of interest with the Periods or the amounts payable being irregular.

 

We undertake to pay the Interest in          installments at the end of each Interest Calculation Period. The Interest will be calculated at the end of each Interest Calculation Period by multiplying the unpaid balance of the Principal Amount of the Loan as it may be from time to time on any such date, by the rate of the Interest, as set forth in this Application above in the clause entitled “The Interest” - and where it concerns a Loan with variable interest, taking into account the rates of the Interest applicable to such Interest Calculation Period, as the case may be, by the exact number of days for the period commencing from the commencement of the respective Interest Calculation Period (including such day) and until the end thereof (not including such day) as set forth in the Repayment Schedule, divided by the full number of days in the calendar year in which the entire respective Interest Calculation Period applies (365 or 366, as the case may be) and in the event of an Interest Calculation Period which applies to more than one calendar year, divided by the number of days calculated on a Weighted Day Basis.

 

 

☐

Payment at the end of each Interest Calculation Period – at a fixed rate of interest with the Periods and the amounts payable being uniform.2

 

We undertake to pay the Interest in          installments at the end of each Interest Calculation Period. The Interest will be calculated at the end of each Interest Calculation Period by multiplying the unpaid balance of the Principal Amount of the Loan as it may be from time to time on any such date, by the rate of the Interest, as set forth in this Application above in the clause entitled “The Interest”, multiplied by the number of months in the respective Interest Calculation Period as set forth in the Repayment Schedule, divided by 12. If the first or last Interest Calculation Period is shorter or longer than the rest of the Interest calculation Periods, as set forth in the Repayment Schedule, the Interest in relation to that Interest Calculation Period shall be calculated at the end of the Interest Calculation Period as aforesaid, by multiplying the unpaid balance of the Principal Amount of the Loan, as it may be at such time, by the rate of the Interest as set forth in this Application above in the clause entitled “the Interest”, by the exact number of days for the period commencing from the commencement of the respective Interest Calculation Period (including such day) and until the end thereof (not including such day) as set forth in the Repayment Schedule, divided by the full number of days in the calendar year in which the entire respective Interest Calculation Period applies (365 or 366, as the case may be) and in the event of an Interest Calculation Period which applies to more than one calendar year, divided by the number of days calculated on a Weighted Day Basis.

 

☐

Payment of Interest in Advance (in one payment to be made on the Date of Granting the Loan)

 

We undertake to pay the Interest in one payment on the Date of Granting the Loan. The Interest shall be calculated by multiplying the Principal Amount of the Loan by the rate of the Interest as set forth in this Application above in the clause entitled “The Interest”, and by the exact number of days for the period commencing on the Date on Which the Loan Is Granted (including such day) and until the end of the Period of the Loan (not including such day) as set forth in the Repayment Schedule, divided by the full number of days in the calendar year in which the entire period applies as aforesaid (365 or 366, as the case may be) and in the event of an Interest Calculation Period which applies to more than one calendar year, divided by the number of days calculated on a Weighted Day Basis.

 

☐

Payment of Interest at the End of the Period of the Loan (in one payment to be made at the end of the Period of the Loan)

 

We undertake to pay the Interest in one payment on the day at the end of the Period of the Loan. The Interest shall be calculated by multiplying the Principal Amount of the Loan by the rate of the Interest as set forth in this Application above in the clause entitled “The Interest”, and by the exact number of days for the period commencing on the Date on Which the Loan Is Granted (including such day) and until the end of the Period of the Loan (not including such day) as set forth in the Repayment Schedule, divided by the full number of days in the calendar year in which the entire period applies as aforesaid (365 or 366, as the case may be) and in the event of an Interest Calculation Period which applies to more than one calendar year, divided by the number of days calculated on a Weighted Day Basis.

 

☐

Interest compounded with principal for the entire Period of the Loan and payment of the Interest at the end of the Period of the Loan.

 

We undertake to pay the Interest in one payment on the day at the end of the Period of the Loan. The Interest will be calculated at the end of each Interest Calculation Period by multiplying the unpaid balance of the Principal Amount of the Loan as it may be from time to time on any such date, by the rate of the Interest, as set forth in this Application above in the clause entitled “The Interest” - and where it concerns a Loan with variable interest, taking into account the rates of the Interest applicable to such Interest Calculation Period, as the case may be, by the exact number of days for the period commencing from the commencement of the respective Interest Calculation Period (including such day) and until the end thereof (not including such day) as set forth in the Repayment Schedule, divided by the full number of days in the calendar year in which the entire respective Interest Calculation Period applies (365 or 366, as the case may be) and in the event of an Interest Calculation Period which applies to more than one calendar year, divided by the number of days calculated on a Weighted Day Basis.

 

2

The first or the last Interest Calculation Period are liable to be shorter or longer and accordingly, the amounts of interest calculated on account thereof are liable to be lower or higher – all as set forth in the Repayment Schedule.

 

 

Manner of compounding the Interest – At the end of each Interest Calculation Period as aforesaid, the Interest so calculated shall also begin to bear interest, at the rate of the Interest, which shall be calculated in the same way as is calculated the Interest on the Principal Amount of the Loan, as aforesaid, until the date of payment of the Interest as aforesaid, at the end of the Period of the Loan, as set forth in the Repayment Schedule.

 

☐

Interest compounded with principal for part of the Period of the Loan and thereafter payment at the end of each Interest Calculation Period

 

The Interest will be calculated at the end of each Interest Calculation Period by multiplying the unpaid balance of the Principal Amount of the Loan as it may be from time to time on any such date, by the rate of the Interest, as set forth in this Application above in the clause entitled “The Interest” - and where it concerns a Loan with variable interest, taking into account the rates of the Interest applicable to such Interest Calculation Period, as the case may be, by the exact number of days for the period commencing from the commencement of the respective Interest Calculation Period (including such day) and until the end thereof (not including such day) as set forth in the Repayment Schedule, divided by the full number of days in the calendar year in which the entire respective Interest Calculation Period applies (365 or 366, as the case may be) and in the event of an Interest Calculation Period which applies to more than one calendar year, divided by the number of days calculated on a Weighted Day Basis.

 

Manner of compounding the Interest – At the end of each Interest Calculation Period which applies during the period commencing on the Date of Granting the Loan and until          (not including such day) (hereinafter: “the Compounding Period”), the Interest so calculated shall also begin to bear interest, at the rate of the Interest, which shall be calculated in the same way as is calculated the Interest on the Principal Amount of the Loan, as aforesaid, until the date of payment of the Interest as aforesaid at the end of the Compounding Period, as set forth in the Repayment Schedule. We undertake to pay the Interest calculated for the period following after the end of the Compounding Period and until the end of the Period of the Loan, in          payments to be made at the end of each Interest Calculation Period that applies after the end of the Compounding Period and calculated as aforesaid.

 

8.

Default Interest

 

8.1

Subject to any Law, if for any reason, including due to the Instruction to Debit not being executed, any of the Amounts of the Loan are not paid on one of the following dates: On its Agreed Repayment Date or– if no date has been fixed for the payment thereof – then on the date we are required to pay same (hereinafter, respectively: “the Arrears Commencement Date” and “the Amount in Arrears”), the Amount in Arrears shall bear, on account of the period from the Arrears Commencement Date until the Actual Repayment Date interest as set forth below (hereinafter: “Default Interest”). Default Interest shall be paid by us in New Israeli Shekels. Unless otherwise expressly provided, the data presented below is correct as of the date of preparation of this Application.

 

8.2

The Rate of Default Interest and the Manner of its Calculation

 

●

In as much as according to the provisions of Clause 9 below the Loan is an “Unlinked Loan” – the rate of the Default Interest will be a variable rate which will be updated from time to time and will be calculated as follows:

 

○

Basis of the Default Interest – Bank of Israel Interest: 0.25% per annum.

 

○

Addition for risk for the Amounts in Arrears – 14 percentage points.

 

○

Rate of Default Interest formula – Bank of Israel Interest plus an addition for risk for the Amounts in Arrears as aforesaid, the result of the calculation being multiplied by 1.2, calculated on an annual basis.

 

 

○

The nominal rate per annum of the Default Interest – 17.1%.

 

○

The adjusted rate per annum of the Default Interest – 18.228%

 

○

Dates for updating Default Interest – Default Interest will be updated from time to time whenever a change occurs in Bank of Israel Interest.

 

●

In as much as according to the provisions of Clause 9 below the Loan is a “Linked Loan” – the rate of the Default Interest will be a fixed rate as stated below

 

○

The nominal rate per annum of the Default Interest – 17%.

 

○

The adjusted rate per annum of the Default Interest – 18.114%

 

8.3

Manner of Calculating Default Interest – The daily amount of Default Interest shall be calculated by the Bank by multiplying the daily balance of any Amount in Arrears by the annual rate of the Default Interest, commencing from such date, divided by the full number of days in that year (365 or 366, as the case may be). The daily amounts of Default Interest as aforesaid will accrue according to the calculations of the Bank, and will be charged to the Loan Account at the end of every Quarter, on the first day of the succeeding Quarter. The daily amounts of Default Interest accumulated as aforesaid shall also bear interest at the rate of the Default Interest which shall also be calculated in the same way as is calculated the Default Interest on the principal of the Amount in Arrears, as aforesaid, until the date of the final and absolute payment in full of the Amounts in Arrears. The first and last periods – for which the Default Interest is charged to the Loan Account – may be shorter than the rest of the periods for which the Default Interest is charged to the Loan Account as aforesaid.

 

8.4

Reduced Default Interest – The Bank may calculate interest on any of the Amounts in Arrears at a rate which is lower than the rate of Default Interest as provided in this clause above, with respect to all or part of the period of arrears in the repayment of all or part of the Amounts in Arrears, all at the discretion of the Bank (hereinafter: “Reduced Default Interest”). It is clarified that the calculation of Reduced Default Interest with respect to any amount and for any period in no way obligates the Bank to continue with the calculation of Reduced Default Interest for any additional amount or for any additional period and the Bank may at any time resume calculating interest with respect to any of the Amounts in Arrears at the rate of Default Interest as provided in this clause above, at its discretion, for whatever reason and without being required to notify us thereof in advance.

 

9.

Linkage Differences (choose one of the following):

 

☐

Unlinked Loan – The Principal Amounts of the Loan, the Amount in Arrears and interest of any kind shall in their entirety be unlinked

 

☐

Linked Loan – The Principal Amounts of the Loan, the Amount in Arrears and interest of any kind shall in their entirety be linked to the Index (hereinafter respectively: “the Amounts Linked to the Index” and “Linkage Differences”). We undertake to pay the Bank the Linkage Differences to be calculated as follows:

 

9.1

If it transpires that the New Index has risen or fallen in comparison to the Base Index, we shall pay the Bank the Amounts Linked to the Index multiplied by the New Index and divided by the Base Index;

 

9.2

If it transpires that the New Index has not risen and has not fallen in comparison to the Base Index, we shall pay the Amounts Linked to the Index without any linkage;

 

 

9.3

If prior to any relevant repayment date a New Index which was to have been published prior to such date is not published, then for the purpose of calculating linkage differences as provided above, “the New Index” shall be the Index last published prior to the repayment date as aforesaid (hereinafter: “the Provisional Index”). The Provisional Index shall serve for calculating linkage differences as provided above until the publication of a New Index (hereinafter: “the Index Published Late”);

 

9.4

If it transpires that the Index Published Late has risen or fallen in comparison to the Provisional Index, we shall be debited or credited by the Bank with the resulting differences, as the case may be;

 

9.5

If it transpires that the Index Published Late did not rise or fall in comparison to the Base Index, we shall pay the Amount Linked to the Index without any linkage;

 

9.6

For the purpose of calculating Linkage Differences, as provided above, on account of the Amount in Arrears and on account of Default Interest, the Base Index shall be the last known Index on the Agreed Repayment Date of the Amount in Arrears, or – if no date has been fixed for the payment thereof, the last known Index on the date we are required to pay any Amount in Arrears as aforesaid (hereinafter: “the Base Index for the Amount in Arrears”). The Linkage Differences shall be calculated on the Amount in Arrears and on the Default Interest as provided above, from the Agreed Repayment Date of the Amount in Arrears, or – if no date has been fixed for the payment thereof – from the date we are required to pay any such Amount in Arrears and until the Actual Repayment Date of such amount. If it transpires that the New Index has not risen and has not fallen in comparison to the Base Index for the Amount in Arrears, no Linkage Differences shall be paid on the respective Amount in Arrears and on the respective Default Interest for the period of the arrears in the payment thereof.

 

10.

Fees and Expenses

 

10.1

We undertake to pay the Bank, in connection with the Loan, fees and expenses in accordance with the Scale of Charges or as has been agreed or may be agreed between ourselves and the Bank (in as much as may be agreed), all subject to any Law and Bank of Israel regulations and as set forth below. (Unless otherwise expressly provided, the data presented below in this clause is correct as of the date of preparation of this Application.) (Choose one or more of the following):

 

☐

Fee for handling credit and collateral securities for loans that are not for housing (small business) / Fee for handling credit and collateral securities – preparation of documents (large business)

 

○

The service for which the fee is charged – Handling the making of the Loan.

 

○

The amount of the fee –          NIS

 

○

The rate of the fee and its manner of calculation –          % of the amount of the Principal (choose one of the following):

 

☐

As determined in the Bank’s Scale of Charges, as it may be on the Date on Which the Loan Is Granted. It is clarified that in any case, the amount of the handling fee displayed above shall not be less than the minimum amount specified in the Bank’s Scale of Charges, if there is any, and shall not exceed the maximum amount specified in the Bank’s Scale of Charges, if there is any. The amount of the handling fee displayed above may vary if and in as much as there is any change in the Bank’s Scale of Charges after the date of preparation of this Application and until the Date on Which the Loan Is Granted.

 

☐

As agreed between us and the Bank.

 

○

The date of collection of the fee – On the Date on Which the Loan Is Granted.

 

 

☐

Collection fee on account of periodic repayment of loans which are not for the purchase of a residential apartment (large business)

 

○

The service for which the fee is charged – Collection of each payment on account of the Principal or the Interest thereon.

 

○

The amount of the fee –          NIS for each payment of the Principal or the Interest thereon as provided in the Bank’s Scale of Charges. The amount of the collection fee may vary from time to time, after the date of preparation of this Application, should there occur any change in the Bank’s Scale of Charges.

 

○

The date of collection of the fee – On the Agreed Repayment Date of each payment on account of the Principal Amount of the Loan or the Interest thereon. If on the Agreed Repayment Date of any payment on account of the Principal or the Interest thereon (hereinafter: “the Amount Payable”) the Amount Payable is not paid, the amount of the collection fee shall be added to the Amount Payable which was not paid when due as aforesaid, and there shall apply to the collection fee the provisions of this Application with regard to interest in arrears and with regard to Linkage Differences on arrears – in as much as the Loan is a loan linked to the Index, all of which with the necessary changes.

 

☐

Fees to Registrars/ Authorities etc.

 

○

The service for which the fee is charged – Payment of pledge registration fee to the Registrar of Pledges.

 

○

The amount of the fee – NIS. The amount of such fee is determined according to the actual charge, as provided in the Bank’s Scale of Charges. This amount may vary from time to time, after the date of preparation of this Application should there occur any change in the amount actually charged or in the Bank’s Scale of Charges.

 

○

The date of collection of the fee – On the date of transfer of the payment to the Registrar of Pledges.

 

☐

Additional Fees and Expenses:

 

10.2

Without derogating from the above provisions and in addition thereto, and subject to any Law and Bank of Israel regulations we shall also pay to the Bank other fees, commissions and charges and costs and expenses in connection with the Loan and the Amounts of the Load or the collection thereof, in amounts, on dates and in such manner as prescribed in the Bank’s Scale of Charges, or as agreed or may be agreed between ourselves and the Bank (in as much as agreed). Moreover, we shall pay all of the costs and expenses incurred by the Bank in connection with the granting of the Loan as aforesaid. Such costs and expenses shall be paid by us in amounts, on dates and in such manner as prescribed in the Bank’s Scale of Charges or as agreed or may be agreed between ourselves and the Bank (in as much as agreed). If any such costs and expenses (which are not costs and expenses in connection with legal proceedings) are not listed in the Bank’s Scale of Charges or in the Loan Documentation, or the amount thereof or the rate thereof is not prescribed in any of the Loan Documentation, we shall pay such costs and expenses according to their actual amount.

 

10.3

All of the fees, commissions, charges or costs and expenses a date for the payment of which has not been fixed as aforesaid, shall be paid by us to the Bank as follows: (1) If it concerns a fee, commission, charge or cost and expense in connection with an act or deed which we are obliged to perform (according to the provisions contained in the Loan Documentation or according to any Law) – the time appointed for performing the act or the deed as aforesaid, or at the time they are actually performed, whichever is the earlier; (2) In any other case – when the Bank makes its first written demand.

 

 

10.4

The Bank may change the tariffs for fees, commissions, charges and costs and expenses and their names or when they are charged, may establish new fees, commissions, charges or costs and expenses, or combine one with another and change the structure of the Bank’s Scale of Charges and its contents. Where a fee, commission or charge is determined according to the Bank’s Scale of Charges, the fee, commission or charge shall be determined according to the new paragraph of the Bank’s Scale of Charges and according to the chapter of the Bank’s Scale of Charges which are appropriate to the matter in hand, notwithstanding that such fee, commission or charge had previously been classified in the Bank’s Scale of Charges under another name in another chapter or in a different way.

 

10.5

Wherever in the Loan Documentation it is prescribed that we are obliged to pay any fee, commission, charge or cost and expense of any kind prescribed in the Bank’s Scale of Charges or the Bank’s Scale of Charges refers to it (without specifying its exact name, its rate or amount), we shall pay same accordingly, according to its rate or amount as prescribed in the Bank’s Scale of Charges.

 

10.6

Reasonable costs and expenses pertaining to legal proceedings will be reimbursed subject to any Law. The amount of any legal fees shall be as determined in the decisions of the court or the execution office, and if there aren’t any, as may be agreed with us in writing. Notwithstanding the foregoing, in execution proceedings, if a fee has not been determined as aforesaid, the Bank may charge us the minimum fee determined on the strength of Section 81 of the Chamber of Advocates Law, 5721-1961.

 

10.7

Without derogating from the generality of the provisions of this Application, any Indebtedness on account of fees, commissions, charges or costs and expenses shall be paid by us to the Bank on the date we were to have paid same, as aforesaid, coupled with Interest at the Maximum Rate in respect thereof from the aforesaid date and until the actual payment thereof in full.

 

10.8

Subject to any Law, the Bank may debit the Account, without any prior demand, with any Indebtedness on account of fees, commissions, charges or costs and expenses as aforesaid.

 

10.9

Nothing herein contained with respect to fees, commissions, charges and costs and expenses shall operate so as to derogate from the terms of any other document which we have signed or may sign with the Bank, with respect to fees, costs and expenses shall apply unless it was or may be otherwise agreed in writing between the Bank and ourselves.

 

11.

Adjustment of Dates

 

Subject to any Law, if the Agreed Repayment Date of any of the Amounts of the Loan falls on a day which is not a Banking Business Day in Israel, the Agreed Repayment Date of such amount shall be deferred to the first Banking Business Day in Israel next following thereafter and the aforesaid amount shall continue to bear interest at the rate of the Interest, even for the period for which such date of payment was deferred. The date on which interest is added to the Principal Amount of the Loan shall neither be deferred nor brought forward even if such date falls on a day which is not a Banking Business Day in Israel.

 

12.

Provision of Financial Statements

 

We undertake to provide the Bank with Financial Statements, at our own expense, with such dispatch and frequency as the Bank may instruct us from time to time. It is a condition precedent to the receipt of the Loan and to the continued provision thereof that Financial Statements be provided to the Bank, inter alia as required in accordance with regulations of the Bank of Israel or of any other competent authority or in accordance with any Law. Furthermore, we undertake, as required by the Bank from time to time, to make available to the Bank or a representative of the Bank for review during usual working hours, any Financial Statement, book of account, card/s or card index, tape, ledgers, other sources and materials and any information in relation to our financial and operational condition or the state of our affairs, as the Bank may request from time to time.

 

 

13.

Failure to Pay on Time

 

Whenever any of the amounts which we may owe the Bank in accordance with the Loan Documentation are not paid on time, the Bank may take all of the steps to which it is entitled pursuant to the provisions of the Loan Documentation and according to Law, and that includes to demand the exercise of any of the remedies to which it is entitled on the strength of the Contracts (Remedies for Breach of Contracts) Law, 5731-1970, and any other law, Israeli or foreign, which may replace it or be in addition thereto and which confers upon the Bank any rights whatsoever in case of breach of any contract signed between the Bank and any counterparty, as the case may be.

 

14.

Immediate Repayment

 

14.1

The Bank may, upon the occurrence of any of the events enumerated in this clause below, advance the date of payment of the Loan, in whole or in part, and render immediately payable the Amounts of the Loan, in whole or in part, and require us to pay same to the Bank. Before the Bank takes such action, the Bank shall give prior notice thereof if and in as much as it is required by Law to do so, subject to and in accordance with the reservations and the clarifications prescribed under the relevant provision of Law:

 

14.1.1

If we commit a breach of or fail to perform any of the terms and conditions of the Loan Documentation or any of our other obligations pursuant to any other document signed or which may be signed by us vis à vis the Bank;

 

14.1.2

If it transpires that any of our declarations in the Loan Documentation or any other declaration made or which may be made to the Bank by us in any other document signed or which may be signed by us vis à vis the Bank is incorrect or inaccurate or incomplete;

 

14.1.3

If we intend to make any Structural Change relative to us, or if we adopt any resolution with regard to any Structural Change relative to us, or if any Structural Change concerning us has been made;

 

14.1.4

If we adopt a voluntary winding-up resolution or if any winding-up petition or bankruptcy petition is filed against us or if any order for winding-up or bankruptcy is made against us; or if an application is filed for a freeze of proceedings with regard to us or an order freezing proceedings against us is given; or if a temporary or permanent liquidator, special manager or receiver in bankruptcy, trustee or other Appointee is appointed over us in connection with any of the events detailed in this sub-clause;

 

14.1.5

If we declare our intention to conduct negotiations or if negotiations are being conducted for the purpose of advancing an arrangement or compromise proposal between ourselves and our creditors or between ourselves and our members or our shareholders or between ourselves or a particular category of them pertaining (among other things) to our debt to the creditors, the members or the shareholders as aforesaid; or if an application is lodged with the court for an arrangement or compromise as aforesaid with respect to us or if any such arrangement or compromise proposal is approved by the creditors or members or shareholders as aforesaid or by the court; and if an application is lodged with the court for the appointment of an expert to examine our debt arrangement under Chapter Three of Part Nine of the Companies Law or if such an expert or other Appointee is appointed in connection with any of the events detailed in this clause above, under a permanent or temporary appointment;

 

14.1.6

If a petition is filed for the receivership over all of our property or over an asset or assets owned by us, which by their nature or extent are material, or over any Deposited Assets or over any of the rest of the Collateral Securities given or which may be given to the Bank by us or on our behalf as security for our Indebtedness, in whole or in part, or if a receiving order is given as aforesaid or if a temporary or permanent receiver is appointed over such assets;

 

14.1.7

If application is made for an attachment or if an attachment is levied or any similar act of execution is taken or any other collection proceeding is instituted over all of our property or over an asset or assets owned by us, which by their nature or extent are material, or over any Deposited Assets, or over any of the rest of the Collateral Securities given or which may be given to the Bank by us or on our behalf as security for our Indebtedness, in whole or in part.

 

 

14.1.8

If we are a public company (as defined in the Companies Law), a public limited partnership (as defined in the Partnerships Ordinance [New Version], 5735-1975) or other corporation the capital rights therein (namely, the rights which by their nature resemble the cluster of rights which constitute a share in a company) are registered for trade on the Stock Exchange or are held by the public (in Israel or abroad) and it appears to the Bank that there is a change of Control over us as against the way things were at the time this Letter was signed; or if we are another corporation, and it appears to the Bank, in its discretion, that there is a change in ownership of us or of Control over us as against the way things were at the time this Letter was signed (and in the case of a partnership that is not a public limited partnership as aforesaid – there is a change as aforesaid in the general partner or in the limited partners).

 

14.1.9

If we give notice that we are or will be unable to pay all or any of our debts as they mature or if we cease to pay all or any of our debts or to conduct our business;

 

14.1.10

If work at our business or a considerable part thereof ceases for 30 days or more, or if at the discretion of the Bank any of the following occurs: (a) a material change in our area of activity; (b) a change in the mix of our activity such that the main activity became more risky; (c) a material change in the geographical area of our activity (for example entering into material activity outside Israel which did not exist on the date of signature of this Letter) or entering into material activity in high risk countries;

 

14.1.11

If an occurrence has taken place or if there occurs a change (or a series of occurrences or changes) which is or are or is or are liable to have a material adverse effect. With reference thereto, the term “material adverse effect” means: any cause or circumstance which have, or probably have, a material adverse effect on us, including on our business activity, our financial condition, our business performance, our assets, our property, on our ability to carry out and perform any of our obligations pursuant to the Loan Documentation, or on the effectiveness of such documents or any of them, the ability to enforce them or to enforce any of the rights of the Bank pursuant thereto;

 

14.1.12

If we fall behind in the payment of any amount of the Amounts of the Loan or in the payment of any other amount owed by us to the Bank which is in arrears for more than 7 (seven) days;

 

14.1.13

If one or more of the following events happens to us: Death, legal incapacity; act of bankruptcy; held on remand; imprisonment; leaving the country;

 

14.1.14

If, in the discretion of the Bank and in its estimation, a deterioration has occurred in any of the Collateral Securities given or which may be given for securing the payment of the Amounts of the Loan, in whole or in part, including in their value, their validity, in their lawfulness, in their enforceability or in the rights that they confer as against the way they were on the day they were created;

 

14.1.15

If we shall be required to repay or discharge any of the debts or obligations, in whole or in part, which we owe or may owe to other creditors, by way of immediate repayment or by payment other than in accordance with the original schedule of repayment or discharge of such debts or obligations;

 

14.1.16

If any licence or concession which is material to our activity is revoked;

 

14.1.17

If we are in breach of our undertaking to furnish the Bank with Financial Statements, books of account or other authorities and materials in relation to the state of our affairs, or if we are in breach of any Law or requirement, directive or other instruction of any competent authority which obligates us to provide or to publish various reports or documents;

 

 

14.1.18

If our name is about to be struck off or is struck off any register kept by operation of Law, if there is recorded in any register kept with respect to us with the Registrar of Companies any warning of any intention to register us as an infringing company (as set forth in Section 362A (a) of the Companies Law) or if we are recorded in such register as an infringing company;

 

14.1.19

If any of the events enumerated in any of the above sub-clauses of this clause occurs, mutatis mutandis, in respect of any guarantor for the performance of any of our Indebtedness or, if we are a partnership, to a partner amongst us who is not a limited partner;

 

14.1.20

If there occurs one or more of the events enumerated in any of the Loan Documentation or in any other document signed or which may be signed by us or on our behalf vis à vis the Bank, and by virtue of their having occurred the Bank may render any Indebtedness immediately payable.

 

14.2

In addition to and without derogating from any of the rights of the Bank pursuant to the Account Opening Documentation, the Loan Documentation or pursuant to any Law, upon the occurrence of any of the events enumerated in this clause above, the Bank may refrain from providing (or refrain from continuing to provide) us with any credit which the Bank undertook to provide us (or to continue to provide).

 

14.3

We undertake to pay the Bank, upon its demand, all of the amounts the payment of which is required by the Bank as provided in this clause above (including fees for the Prepayment of the Loan).

 

14.4

In addition, upon the occurrence of any of the events enumerated in this clause above, the Bank may take whatever measures it deems fit for the collection of all of the amounts as provided in this clause above and realize its rights pursuant to any of the documents signed vis à vis the Bank by us or by any third party on our behalf and that includes debiting any account with the Bank maintained in our name with any of the amounts as provided in this clause above, in whole or in part, and realize any of the Collateral Securities, all at its discretion, by any means permitted by Law.

 

14.5

Suffice it for just one of the events set forth in any of the sub-clauses of this clause above to have occurred in order to enforce the various rights of the Bank pursuant to this this clause above, and the Bank may enforce each one of its rights as aforesaid separately and independently of any other.

 

15.

Retention, Lien and Set-Off

 

15.1

Definitions – In this clause, the following terms shall have the meanings as set out next to them:

 

15.1.1

“Anticipatory Breach” – in relation to any Indebtedness, if any one of us manifests his intention not to perform the Indebtedness in full as and when due or if it becomes likely in the circumstances that any one of us will be unable or unwilling to perform same, as set forth in Section 17 of the Contracts (Remedies for Breach of Contract) Law, 5731-1971.

 

15.1.2

“Assets” – all of the monies which we are entitled to receive from the Bank, subject to any Law, including any obligation of the Bank to us which has yet to mature, such as a cash deposit of any kind which according to the terms on which it was deposited with the Bank its maturity date has not yet fallen due, and all of our other rights and property, which we are entitled to receive from the Bank, including securities, negotiable and non-negotiable instruments, chattels, documents for goods, insurance policies, Bills, assignments and deposits which may be held by the Bank or under its control at any time to our credit or for us, including such as were delivered to the Bank for collection, as security, for safe-keeping or otherwise – irrespective of whether such assets were deposited (or we are entitled thereto) in the Account or in any other account of ours, and even if any other account as aforesaid is maintained in the name of any one of us, alone or together with others.

 

 

15.1.3

“Future Indebtedness” – any Indebtedness the maturity date of which is in the future in relation to which any of the obligations or representations of any one of us towards the Bank in connection therewith were breached by any one of us or that there occurred an Anticipatory Breach in connection therewith or that there is a reasonable concern of there being a breach thereof by us or by any one of us (even if such concern does not constitute an Anticipatory Breach).

 

15.1.4

“Existing Indebtedness” – any Indebtedness the maturity date of which has fallen due, including by reason of the rendering thereof immediately payable by the Bank.

 

15.2

The Bank’s Right of Retention

 

The Bank may defer the date on which we may withdraw or take into our hands any of the Assets until the fulfilment of all of our Indebtedness (both Existing Indebtedness and Future Indebtedness), subject to any Law. The Bank’s rights of retention as aforesaid are general rights and shall apply to the Assets in whole or in part, even if the Assets are not in the same currency in which any Indebtedness is denominated. If the Asset in relation to which the Bank exercises the right of retention is divisible, exercising the Bank’s right of retention shall be carried out while preserving a reasonable proportion between the value of the Asset as aforesaid and the extent of the respective Indebtedness. The Bank may retain the Assets as aforesaid until the aforesaid Indebtedness has been discharged or repaid in full, and until such time we shall not be entitled to take possession of the aforesaid Assets, dispose of them or to deal with them in any other way without the prior written consent of the Bank. The Bank shall notify us of the exercise of the right of retention after the exercise thereof by it.

 

15.3

The Bank’s Right of Lien

 

The Bank has the right of lien on any of the Assets, in whole or in part, which is capable of being exercised in relation thereto, in accordance with any Law or agreement – whether for the purpose of securing the payment of any Existing Indebtedness or for securing the payment of any Future Indebtedness. The Bank’s rights of lien as aforesaid are general rights and shall apply to the Assets in whole or in part, even if the Assets are not in the same currency in which any Indebtedness is denominated. If the Asset in relation to which the Bank exercises the right of lien is divisible, exercising the Bank’s right of lien shall be carried out while preserving a reasonable proportion between the value of the Asset as aforesaid and the extent of the respective Indebtedness. The Bank may retain possession of the Assets as aforesaid until the aforesaid Indebtedness has been discharged or repaid in full, and until such time we shall not be entitled to take possession of the aforesaid Assets, dispose of them or to deal with them in any other way without the prior written consent of the Bank. The Bank shall notify us of the exercise of the right of lien after the exercise thereof by it.

 

15.4

The Bank’s Right of Set-Off

 

15.4.1

The Bank has the right to set off the Assets or the proceeds thereof (as the case may be), in whole or in part, both against any Existing Indebtedness and against any Future Indebtedness (provided that with respect to Future Indebtedness, there is cause which entitles the Bank, pursuant to the Current Facility Documentation or pursuant to any other document signed or which may be signed by us or on our behalf vis à vis the Bank, to render the aforesaid Indebtedness immediately repayable). The Bank’s right of set-off is a general right and it shall apply to the Assets, in whole or in part, even if our rights in the Assets as aforesaid and the Existing Indebtedness or the Future Indebtedness (the payment of which the Bank wishes to effect by means of realizing the right of set-off as aforesaid), do not stem from one transaction, and even if the Assets are not denominated in the same currency as any of the Indebtedness.

 

15.4.2

For the purpose of realizing the right of set-off, the Bank may, among other things, sell the Assets or convert them into cash in any other way and apply the Assets or their proceeds (as the case may be) to the discharge of any Indebtedness as aforesaid, all of which at our expense. We hereby irrevocably authorize the Bank to take any action which may be required in order to exercise the right of set - off as aforesaid.

 

 

15.4.3

In the event of the exercise of the right of set-off of the Bank with reference to any of the Assets or the proceeds thereof (as the case may be), for the purpose of repaying any Future Indebtedness, such Indebtedness shall be deemed to be Indebtedness which has been rendered immediately payable by the Bank. Rendering the Indebtedness immediately payable as aforesaid shall be effected by effecting the set-off and for that purpose the provisions of the Current Facility Documentation and any other document signed or which may be signed by us or on our behalf vis à vis the Bank shall apply in connection with the collection of additional amounts when the Indebtedness is rendered immediately payable (interest, expenses and fees, commissions and charges, including prepayment fee).

 

15.4.4

Subject to any Law, in the event of exercising the right of set-off of the Bank, the Bank may debit the Account with any amount, irrespective of whether or not there was in the Account a Balance Available for Withdrawal. Where there is no Balance Available for Withdrawal, the Bank may debit any other Sub-Account and if any other account is maintained at the Bank on our behalf the Bank may debit any such other account (including any other account maintained at the Bank on our behalf together with others) with the amount required for the purpose of the set-off. The Bank shall notify us of the exercise of the right of set-off within a reasonable time and in accordance with any Law.

 

15.5

Damages and Costs Following the Realization of the Bank’s Right of Set-Off

 

Whenever the Bank utilizes its right of set-off for the purpose of repayment of any Future Indebtedness, we shall bear at our expense all of the damages and the costs liable to be incurred by us as a result (including our being charged with Prepayment fees following the Future Indebtedness being rendered immediately payable by the Bank). In addition, we shall pay the Bank all of the rest of the expenses, the fees, commissions, charges and payments which are current at the Bank at such time in connection with the exercise by the Bank of its right of set-off as aforesaid. If the Bank exercises its right of set-off as aforesaid by means of any Assets or their countervalue (as the case may be), with respect to which there is an obligation of the Bank towards us which has not yet matured, we shall also bear at our expense all of the damages and the costs liable to be incurred by us as a result of our rights in connection with the Assets or their countervalue (as the case may be) in relation to which the Bank realized its right of set-off as aforesaid, being liable to be affected (such as: a reduction of the principal amount deposited, the denial of our right to receive interest, linkage differences, exchange rate differences, bonuses or loans and exemption from or a reduction in income tax or deduction of tax at source).

 

15.6

Right of the Account Holder[s] to Receive Monies

 

Our right (or the right of any one of us) to receive from the Bank monies, rights or Assets of any kind which are due or which may become due to us from the Bank from time to time, in the Account or in any other account of ours or of any one of us, irrespective of whether any such other account is maintained in our name or in the name of any one of us alone or whether together with others, shall be conditional upon the performance of any Indebtedness of ours to the Bank and subject to the rights of retention, lien and set-off of the Bank, as set forth in this Clause 20 above. The Bank shall be at liberty to decide, at its discretion, to hand over to us monies, rights and Assets before the performance of any of our Indebtedness to the Bank, however the Bank’s decision as aforesaid shall in no way impose upon the Bank any obligation to continue doing so in the future, and any such decision shall be deemed a one-off agreement.

 

15.7

Rights of Retention, Lien and Set-Off by Reason of Indebtedness or Assets of Any One of Us

 

If the Account is a joint account of a number of Account Holders, the rights of retention, lien and set-off of the Bank, as provided in this clause above, shall apply to every Asset or Indebtedness of ours or of any one of us, to the Bank, including in any other account of ours or of any one of us (irrespective of whether any other account is in our name or in the name of any one of us alone, or whether together with others), provided that with respect to Assets which are rights to receive money from the Bank, the foregoing shall apply subject to any Law.

 

 

16.

Change in Law and Illegality

 

16.1

In case of any Change of Law as a result of which or in connection with which:

 

16.1.1

The Bank becomes obliged to hold liquid assets to any degree or in any currencies in connection with making the Loan available or the continued availability thereof; or –

 

16.1.2

The Bank is obliged to pay or make provision for any payments whatsoever to the State, to the Bank of Israel or to any other competent authority in connection with the availability of the Loan or the continued availability thereof; or

 

16.1.3

The amounts payable to the Bank according to the terms of the Loan are reduced or the return arising from or expressed to arise from the Loan is reduced as opposed to the terms of the Loan or the return which arose or was expressed to arise from the Loan at the time the Loan Documentation was signed. We shall pay the Bank additional amounts, in amounts and on dates as may be determined by the Bank, by notice in writing, which in the opinion of the Bank will indemnify or compensate the Bank for any increased cost of the Loan or for any expenses, provisions, reduction of payments or reduction of return as aforesaid (hereinafter respectively: “the Additional Amounts” and “the Notice from the Bank”).

 

16.2

Notwithstanding the provisions of this clause above, we shall not be obliged to pay the Bank the Additional Amounts in the event that all of the following conditions are cumulatively fulfilled:

 

16.2.1

We notify the Bank in writing, within 14 days of the date of the Notice from the Bank that we wish to effect Prepayment in full of the balance of the Amounts of the Loan (hereinafter: “Our Notice to the Bank”); and –

 

16.2.2

We actually pay in full the balance of the Amounts of the Loan as stated in Our Notice to the Bank (including fees with respect to the Prepayment of Amounts of the Loan prior to the original date fixed for the payment thereof), on a date which is not less than 7 days from the date of delivery of our Notice to the Bank and not more than 21 days from the date of delivery of Our Notice to the Bank.

 

16.3

Whenever there subsists an Event of Illegality, the Bank will notify us thereof in writing, may terminate the Loan and demand payment in full of the balance of the Amounts of the Loan as they may be when the Loan is terminated as aforesaid. We undertake to pay the Bank, according to its notice, the entire balance of the Amounts of the Loan the payment of which we were called upon by the Bank to pay as aforesaid on a date to be fixed by the Bank in the Notice from the Bank.

 

16.4

The provisions of this clause above shall apply even if the Bank institutes any proceedings, including legal proceedings, for the exercise of any of its rights under the Loan Documentation and that includes for the collection of the Amounts of the Loan.

 

17.

Payment of Amounts and Debiting Accounts

 

17.1

We shall pay to the Bank the Amounts of the Loan with respect to which an agreed payment date has been fixed, on the Agreed Payment Date as aforesaid. Any amount of the Amounts of the Loan for which no Agreed Payment Date has been fixed, shall be paid by us on the Bank’s first written demand, coupled with Interest at the Maximum Rate, commencing from the date of the demand or, if there is specified in the Bank’s demand a later date of payment, commencing from the date specified in the demand, and until the actual date of payment. Whenever we do not pay any amount of the Amounts of the Loan on the Agreed Repayment Date thereof, or on the date on which we were called upon to pay same as provided above, in so far as a demand was made of us, the Bank may debit the Account with the amount unpaid by us as aforesaid, and post any amount received from us or on our behalf to the credit of whichever account the Bank sees fit and may transfer any amount standing to our credit to any account as the Bank sees fit.

 

 

17.2

Whenever the Bank has the right to debit the Account (including the Current Account) with any of the Amounts of the Loan, the Bank may do so, subject to any Law, regardless of whether the Account shows a credit balance or a debit balance or would show a debit balance as a result of the Account being debited with such amount. Whenever there is no Balance Available for Withdrawal, the Bank may debit any other Sub-Account and if we also maintain another account with the Bank, the Bank may debit any other account as aforesaid (including another account maintained for us together with others) with the Bank with the required amount.

 

17.3

Furthermore, the Bank may purchase any amount in Foreign Currency which may be required in order to discharge loan amounts denominated in any Foreign Currency or sell any Foreign Currency which may be available to us at the Bank, and apply the proceeds of the sale in order to discharge loan amounts denominated in Israeli currency, or in order to purchase another Foreign Currency which may be required in order to discharge any of the Amounts of the Loan, at the discretion of the Bank. Any sale or purchase of Foreign Currency as aforesaid shall be effected at the Bank’s Customary Buying Rate or the Bank’s Customary Selling Rate (as the case may be), which is known at the time of sale or purchase. We hereby give the Bank irrevocable authorization in advance to act as provided in this clause above.

 

17.4

The Bank shall act according to the Debit Instruction which may be given to it, save in cases where the following two conditions are met on a cumulative basis: (1) We notify the Bank, in writing, at least three Banking Business Days in Israel prior to the Agreed Repayment Date of any of the Amounts of the Loan denominated in Israeli Shekels or at least three Business Days prior to the Agreed Repayment Date of any of the Amounts of the Loan denominated in Foreign Currency - that we are about to pay directly an amount due to the Bank at such time on account of the Amounts of the Loan (hereinafter: “the Amount for Direct Payment”); and – (2) We pay directly the Amount for Direct Payment on its Agreed Repayment Date. Once we have paid the Amount for Direct Payment as provided above, the Bank shall act according to the Debit Instruction save in relation to the Amount for Direct Payment actually paid by us as aforesaid.

 

17.5

In the event that the Account To Be Debited is a Current Account maintained with the Bank, if on the Agreed Repayment Date of any of the Amounts of the Loan (hereinafter: “the Amounts To Be Debited”), there is no Balance Available for Withdrawal in the Account To Be Debited to cover in full the Amounts To Be Debited (hereinafter: a “Balance Available for Payment”), the Bank may refrain from executing the Debit Instruction on the Agreed Repayment Date as aforesaid, in relation to any of the Amounts To Be Debited in whole or in part.

 

17.6

Without derogating from the above provisions, the Bank may execute the Debit Instruction on the Agreed Repayment Date or, from time to time, on any Banking Business Day in Israel following the Agreed Repayment Date on which there is in the Account To Be Debited a Balance Available for Withdrawal of any sum, by debiting the Account To Be Debited with the amount of the Balance Available for Withdrawal, in whole or in part, all at the discretion of the Bank and subject to any Law. If the Bank debits the Account To Be Debited with any of the Amounts To Be Debited in whole or in part, and it transpires that in the Account To Be Debited there is an insufficient Balance Available for Withdrawal of such amount, the Bank may cancel any such debit, in whole or in part, and treat any amount the debiting of which was cancelled as an unpaid amount on account of the Amounts of the Loan. Accordingly, the Bank may take any action as it deems appropriate under the Loan Documentation.

 

17.7

The Bank is not obliged to check whether on any of the dates of execution of the Debit Instruction there is in the Account To Be Debited a Balance Available for Withdrawal sufficient for executing the Debit Instruction and we shall bear any expenses liable to arise from the absence of any Balance Available for Withdrawal as aforesaid on such date, all of the foregoing being subject to any Law. In any case where the repayment of any of the Amounts of the Loan is effected by means of debiting the Account To Be Debited, it may be that the rate of the interest with which we may be charged on Debit Balances which may be incurred as a result thereof in the Account To Be Debited, will be higher than the rate of the Default Interest on the Amounts of the Loan. No provision of this Application operates so as to detract from any of the rights of the Bank, including its right to debit any Current Account with any of the Amounts of the Credit in case we do not pay any such amount on the Agreed Repayment Date therefor.

 

 

18.

Appropriation of Payments

 

18.1

Subject to any Law, on the date of payment of any amount payable to the Bank for the discharge of any of the Amounts of the Loan, such amount shall be appropriated for the purpose of paying same, in the following order of appropriation:

 

18.1.1

Firstly, subject to the provisions of this Application in the clause entitled “Fees and Expenses” above, with regard to the payment of expenses in connection with legal proceedings, to the discharge of any amount in connection with the costs and expenses of the Bank in connection with the collection of the Amounts of the Loan, which includes the costs and expenses of any Appointee and his remuneration, as may be determined by the Bank or by the court or by the execution office, as the case may be;

 

18.1.2

Thereafter, to the discharge of any of the Amounts of the Loan which was not repaid on the Agreed Repayment Date, including the amount of interest on account of arrears for the late repayment thereof and including any amount in connection with the linkage differences or the exchange rate differences, as the case may be, on account of all of the foregoing (hereinafter: “the Amounts of the Loan in Arrears”);

 

18.1.3

Thereafter, to the discharge of any amount in connection with the Bank’s fees for the Prepayment of any of the Amounts of the Loan not including the amounts of the fees of the Bank on account of Prepayment which form part of the Amounts of the Loan in Arrears;

 

18.1.4

Thereafter, to the discharge of any amount constituting the collection fee not including amounts of the collection fee which form part of the Amounts of the Loan in Arrears;

 

18.1.5

Thereafter, to the discharge of all of the amounts of the Interest in connection with the Amounts of the Loan (not including amounts of interest which form part of the Amounts of the Loan in Arrears) including any amount in connection with the linkage differences and the exchange rate differences, as the case may be, on account of all of the foregoing;

 

18.1.6

Thereafter, to the discharge of any other payment not specified in this clause above or below and which we have undertaken or may undertake towards the Bank on account of or in connection with the Loan pursuant to the Loan Documentation or pursuant to any other document signed or to be signed by us or under any Law;

 

18.1.7

Lastly, to the discharge of the Principal Amounts of the Loan (not including the Principal Amounts of the Loan which form part of the Amounts of the Loan in Arrears) including to the discharge of any amount in connection with the linkage differences or the exchange rate differences, as the case may be, on account of the Principal Amounts of the Loan.

 

19.

Prepayment

 

19.1

We may request the Bank to repay the Loan, in whole or in part, prior to the Agreed Repayment Dates or in accordance with the terms hereof (hereinafter in this clause: “Prepayment”), subject to the conditions that the Bank may determine in connection with the execution of the Prepayment, including payment to the Bank of prepayment fees and of whatever additional amounts, as may be determined by the Bank or the determination of minimum repayment instalments for the partial Prepayment of the Loan or the determination of advance notice dates for the Prepayment of the Loan or part thereof, all subject to the provisions of any Law.

 

19.2

If under the provisions of any Law the Bank may charge fees for Prepayment or any other payment as aforesaid according to different rates or amounts, the Bank shall charge whichever is the highest rate or amount.

 

19.3

Notwithstanding the provisions of this clause above, the Bank may refrain from allowing us to effect Prepayment on reasonable grounds.

 

 

19.4

The rights of the Bank to charge fees for Prepayment and Additional Amounts as aforesaid shall also apply where the Bank renders immediately payable the Amounts of the Loan, in whole or in part, in accordance with the provisions of the Loan Documentation and subject to any Law.

 

19.5

Prepayment of any amount of the Amounts of the Loan in Foreign Currency, if carried out, shall be carried out only on a day which is a Business Day.

 

20.

Securities and Collaterals

 

The Collateral Securities which we have delivered or may deliver to the Bank shall, among other things, serve as security for the performance of our Indebtedness pursuant to the Loan Documentation and for the full and timely payment of the Amounts of the Loan.

 

21.

Tax Obligations

 

21.1

Definitions – In this clause, the following terms shall have the meaning as set out next to them:

 

21.1.1

“Tax” – all of the taxes, levies, the fees and other compulsory payments, of any kind or category, including on account of income, capital gain, or profits, value added tax, deductions and deductions at source which are by their nature or are payable on account of taxes, levies, fees and compulsory payments as aforesaid including interest and fines in connection with taxes, levies, fees and compulsory payments as aforesaid (including stamp tax to the extent applicable), in connection with the Loan, and in connection with the Loan Documentation and any transaction which may be executed in accordance with or subject to them, and the term “taxation” shall be construed accordingly.

 

21.1.2

“the Deductible Amount” – any amount deductible on account of Tax.

 

21.1.3

“the Deduction Confirmations” – all of the receipts, the confirmations or other proofs that may be required by the Bank, in connection with the payment of the Deductible Amount to the relevant tax authority and which shall be to its complete satisfaction.

 

21.2

Any Tax that is payable in connection with the transactions and the operations pursuant to the Loan Documentation or on account of or in connection with the Loan (except for income tax to the tax authorities in Israel, on the income of the Bank from interest, fees, commissions and charges which we are obliged to pay the Bank pursuant to the Loan Documentation), shall be borne by us alone and shall be paid by us. The Bank may debit the Account with any Tax that is required to be deducted at source and remit same to the relevant tax authorities, unless we furnish the Bank in advance and to its satisfaction, an appropriate confirmation from the competent tax authorities as to exemption from deduction of Tax at source or the reduction thereof.

 

21.3

All payments that are payable by us to the Bank pursuant to the Loan Documentation or stemming therefrom, shall be paid to the Bank free and clear of any Tax and deduction, without set-off or counter-claim and without any deduction in respect of or on account of any set-off or counter-claim.

 

21.4

Any payment which is due to the Bank pursuant to the Loan Documentation (hereinafter: “the Agreed Amount”) which by any Law we may be required to deduct therefrom the relevant Deductible Amount, shall be paid by us to the Bank in a grossed up amount, so that after the deduction of the Deductible Amount as aforesaid, there shall be received by the Bank, on the due date for payment as aforesaid, a net sum equal to the Agreed Amount (hereinafter: “the Full Amount”). We shall indemnify the Bank for any loss or cost actually incurred by the Bank by reason of any failure or breach on our part in deducting the Deductible Amount or by reason of the Full Amount not being paid. We shall pay to the relevant tax authority in full the Deductible Amount, within the period of time specified therefor according to applicable Law and we shall promptly deliver to the Bank the Deduction Confirmations. If following payment of the Deductible Amount by us to the relevant tax authority, the Bank actually receives a refund of Tax or a Tax credit, then, subject to furnishing the Bank with the Deduction Confirmations, the Bank shall pay us the amount of the refund or the credit that it has received as aforesaid, up to the Deductible Amount paid by us to the tax authority as aforesaid. Nothing aforesaid operates so as to prevent the Bank from conducting its tax affairs at its discretion.

 

 

21.5

Without derogating from the rest of the provisions of the Loan Documentation, the execution of Transactions for the Account is conditional upon the Bank having determined at its discretion, that their execution meets the requirements of the Law and the directives issued by the competent authorities and that all of the provisions of Law have been fulfilled in so far as imposed upon the Bank in connection with payments of Tax. Nothing aforesaid operates so as to impose any duty on the Bank to act as aforesaid, or to impose any liability upon it with respect to any such Transaction or liability for not having acted as aforesaid.

 

21.6

We shall furnish the Bank, immediately upon its first demand, with any information, confirmation, document or exemption (and that includes any confirmation of the rate of deduction at source or exemption therefrom) as may be required in connection with the provisions of this clause above, and including documents connected with foreign law which may be required by the Bank, and we shall update the Bank as to any change that occurs from time to time in our tax status, and that includes in the countries of our citizenship or residency for tax purposes.

 

21.7

In order to implement the provisions of this clause above, the Bank may debit any account of ours with the Bank.

 

22.

Administration of the Loan

 

The Bank may administer the Loan or any part thereof by booking same, in whole or in part, with any branch of the Bank as the Bank may choose, either in Israel or abroad. In addition, the Bank may from time to time, at the sole discretion of the Bank and without any further consent being required from us, transfer the administration of the Loan or any part thereof from one branch of the Bank to another branch of the Bank, either in Israel or abroad.

 

23.

Liability of the Account Holders

 

23.1

Where the Account Holders are two or more, all of the Account Holders shall be liable to the Bank, jointly and severally, for the performance of any obligation pursuant to the Loan Documentation. Any reference to the singular shall be deemed for all intents and purposes to refer to and be binding on all of the Account Holders, jointly and severally.

 

23.2

If our name is changed, or – if we are a legal entity or a legal body, whether incorporated or unincorporated, - if there occurs any Structural Change with respect to us, or if there occurs any change in our composition, then in any of such events our liablity under the Loan Documentation shall not be affected thereby.

 

23.3

If any of the Account Holders is or becomes legally disqualified or is discharged or becomes discharged in any way of his liability under the Loan Documentation, the liability of the rest of the Account Holders under the Loan Documentation shall not be affected or diminished thereby.

 

23.4

Where any of the Account Holders is a trustee, administrator of an estate, trustee in bankruptcy, liquidator, special manager or any other Appointee acting by operation of Law, the obligations of the Account Holder to the Bank pursuant to the Loan Documentation or the obligations to the Bank pursuant to the Loan Documentation of the person on whose behalf the Account is administered shall not be affected following any change or substitution of such Appointee.

 

 

24.

Change, Waiver and Compromise

 

Any waiver, extension, concession, acquiescence or forbearance (hereinafter: “waiver”) on the part of one of the parties as to the non-performance or partial or incorrect performance of any of the obligations of any of the other parties pursuant to the Loan Documentation or on account of or in connection with the Loan, shall not be treated as a waiver on the part of that party of any right but as a limited consent given in respect of the specific instance. Any waiver granted by the Bank to any of our guarantors (including any person who has pledged property as security for any Indebtedness) or to any party to any Bill held by the Bank as security for the payment of any Indebtedness or to any other party relevant to any Collateral Security (each one of them to be called hereinafter: “the Relevant Party”), shall in no manner or way affect any of our Indebtedness or the obligations of any third party with the exception of the Relevant Party. Any change in our obligations pursuant to the Loan Documentation including any waiver or compromise requires that the prior written consent of the Bank be obtained. Without derogating from the foregoing, if the Bank acts otherwise than in accordance with the provisions of the Loan Documentation, it shall not be viewed as amending or changing any of them in that context.

 

The Bank shall not be bound to act in a similar fashion in the future.

 

25.

Notices on Behalf of the Bank

 

25.1

In this clause - “Notice” – including any warning and dispatch or delivery in any other way of any document of the Loan Documentation or in connection with the Loan.

 

25.2

The Bank will send us Notices howsoever connected to the Loan only in as much as they are required in accordance with Law and Bank of Israel regulations or by express written arrangement between the Bank and ourselves.

 

25.3

The address of the Account shall be as specified by us in the Account Opening Documentation, or, subject to the Bank’s approval, as may be changed in accordance with notice in writing to be delivered by us to the Bank from time to time. The address of the Account as aforesaid shall be deemed to be the common address of all of the Account Holders for delivery of Notices and legal process in any way connected to the Loan.

 

25.4

The personal address of each one of us shall be as specified in the Account Opening Documentation. The personal address is in addition to the address of the Account and it too shall serve as an address for delivery of notices and legal process to any of us, in any way connected to the Loan.

 

25.5

The Bank may send to us or to any of us to the address of the Account or to the personal address, any Notice howsoever connected to the Loan, including any warning and Notice pursuant to the Cheques Without Cover Law, or pursuant to the Credit Data Service Law, 5762-2002 as well as legal process (the foregoing in no way derogating from the right of the Bank to send us any Notice in any other way permitted by Law).

 

25.6

Sending or delivering legal process by messenger or by registered mail to the address of the Account will constitute service of legal process for all intents and purposes for the purpose of Israeli courts of law, including service of legal process outside the jurisdiction pursuant to the Rules of Civil Procedure, 5744-1984.

 

25.7

Any Notice sent by ordinary mail or by registered shall be deemed to have been received by the addressee specified below 72 hours after the time of its dispatch by the Bank by ordinary mail or after the time of delivery of the Notice by the Bank for dispatch by registered mail (unless there is presented a signed confirmation of the body qualified by Law to provide postal services, according to which the time of receipt of the Notice was otherwise):

 

25.7.1

If sent to the address of the Account, shall be deemed to have been received by all of the Account Holders;

 

25.7.2

If sent to the personal address, shall be deemed to have been received by the respective addressee from among the Account Holders.

 

 

25.8

Written confirmation by the Bank or anyone acting on its behalf as to the dispatch of any Notice and as to the time of the dispatch, shall serve as prima facie evidence as to such dispatch having been effected by the Bank and the time thereof, all as stated in the confirmation.

 

25.9

If we request the Bank to send us any Notices and documents with reference to the Account only by means of electronic mail or by display in our account on the website of the Bank, such dispatch shall be deemed delivered to the address of the Account. Such Notices and documents shall include, inter alia, agreements, undertakings, instructions, and confirmations as to the execution of transactions even if all of the foregoing were drawn up in our presence as well as reports on the state of the Account and periodic reports, information and documents tendered by operation of Law or in accordance with Bank of Israel regulations. Such Notices and documents will not include types of Notices and documents which by operation of Law or in accordance with Bank of Israel regulations cannot be sent by such means or are required to be sent by other means as well.

 

26.

Duty to Notify

 

We shall give the Bank notice in writing of any complaint or objection which we may have, if at all, in connection with the Account and the Loan and we shall give the Bank any other notice which we are obliged to give to the Bank by operation of Law or pursuant to any agreement, including pursuant to the Loan Documentation. We undertake to notify the Bank immediately and in writing of any of the events enumerated in this Application above in the clause entitled “Immediate Repayment” and of any event whereby making the Loan available or continuing to make it available would constitute a breach of any Law applicable to us.

 

27.

Transfer and Disclosure of Information

 

27.1

In this Clause 27, the following terms shall have the meaning as set out next to them:

 

27.1.1

“Transfer” – any sale, transfer, assignment or any other mode of transfer, in whole or in part, directly or by means of a special purpose company, in full or by means of the sale of rights to participate (participations) and in any other way which the Bank deems appropriate. The Transfer may be made to one or more Transferees, at the same time or from time to time.

 

27.1.2

“Information” – any information which is presently held by the Bank or which may be held by it in the future (including information communicated to the Bank by us or information about us, which in the discretion of the Bank it is necessary or desirable to communicate in connection with the Transfer of the Rights and Obligations in the Loan), including information about the Loan, as well as information about the Collateral Securities.

 

27.1.3

“Transferee” – any person or corporation, whether from Israel or outside Israel.

 

27.1.4

“Potential Transferee” – a Transferee with whom the Bank is conducting or may conduct negotiations for the purpose of the Transfer to him of the Rights and Obligations in the Loan;

 

27.1.5

“the Rights and Obligations in the Loan” – The rights and obligations of the Bank in connection with the Loan or the Amounts of the Loan and under the Account Opening Documentation and the Loan Documentation and the rights of the Bank in connection with the Collateral Securities and pursuant to the Collateral Securities Documentation.

 

27.1.6

“Advisers” – advisers on behalf of the Bank or on behalf of any Potential Transferee and companies engaging in credit rating who may be employed for the purpose of rating the Rights and Obligations in the Loan and a revaluing company on which may rely bodies under the supervision of the Capital Markets, Insurance and Savings Division of the Ministry of Finance for the purpose of quoting prices of their non-tradable debt assets.

 

 

27.2

The Bank may at any time, at its discretion and without having to obtain our consent thereto (subject to any Law), effect a Transfer of the Rights and Obligations in the Loan, in whole or in part (except that we shall not bear any cost or expense arising from the Transfer or in connection therewith and which is known at the time of the Transfer):

 

27.2.1

To any Transferee that is a body among the following bodies: A joint investment trust fund within the meaning thereof in the Joint Investment Trust Fund Law, 5754-1994, or a company that manages such a fund; a provident fund or a managing company as defined in the Supervision of Financial Services (Provident Funds) Law, 5765- 2005; an insurer within the meaning thereof in the Supervision of Financial Services (Insurance) Law, 5741-1981; a banking corporation and an auxiliary corporation within the meaning thereof in the Banking (Licensing) Law, 5741-1981 and a corporation from the group of companies to which a banking corporation belongs as aforesaid: an investment fund, as defined in the Supervision of Financial Services (Provident Funds) (Direct Expenses on Account of the Execution of Transactions) Regulations, 5768-2008 or any corporation under the Control of the bodies specified above, and to bodies outside Israel that correspond to the bodies specified above (that are supervised by the relevant authority in the country of their incorporation or in the countries where they operate); or –

 

27.2.2

As part of a securitization transaction (or a similar transaction as part of which the Rights and Obligations in the Loan are transferred to a designated issuing corporation) or as part of any other transaction of transferring risk or exposure or the hedging thereof; or –

 

27.2.3

To any Transferee (even if not among the Transferees specified in this clause above), at the discretion of the Bank and without limitation (except if and in as much as such limitation is imposed by Law) – if an event occurs which confers upon the Bank the right to render the Loan immediately payable, as set forth in this Application above in the clause entitled “Immediate Repayment”.

 

27.3

If the Loan Documentation includes associated rights and obligations against us that do not constitute credit (for example a right or a duty to grant us a Banking Service which accompanies credit or depositing assets, as part of the credit transaction), the Bank may also transfer the said rights and obligations, together with the Rights and Obligations in the Loan, pursuant to the conditions specified above, subject to any Law.

 

27.4

For the removal of any doubt, whenever the Rights and Obligations in the Loan are transferred, the Bank shall not be precluded from acting as credit manager, as trustee of collateral securities or in any other capacity in connection with the Rights and Obligations in the Loan as aforesaid.

 

27.5

We undertake to act in cooperation for the purpose of effecting a Transfer of the Rights and Obligations in the Loan as aforesaid, and this includes the signing of any document which may be required for that purpose and the performance of any action which may be required by the Bank, for the purpose of effecting a Transfer of the Rights and Obligations in the Loan (to the extent relevant) provided that we will not be required to bear any costs and expenses for such purpose.

 

27.6

The Bank may, at any time, disclose Information to any Potential Transferee, to any Transferee to whom a Transfer has been made, to any Advisers or relevant parties. Furthermore, the Bank may, at any time, disclose Information to Advisers or to relevant parties, for the purpose of entering into a potential securitization transaction (or similar transaction as part of which the Rights and Obligations in the Loan are transferred to a designated issuing corporation) or into any other transaction of transferring risk or exposure or the hedging thereof. The disclosure of such Information shall be subject to the recipients of the Information as aforesaid signing a letter of undertaking for the preservation of secrecy as shall be acceptable to the Bank, except if the recipients of the Information as aforesaid are bound by Law to the observance of secrecy.

 

27.7

We are not at liberty to effect a Transfer to anyone else of any of our rights or pursuant to the Loan Documentation or in connection with the Loan without first obtaining the written consent of the Bank.

 

 

28.

Law and Place of Jurisdiction

 

Any matter concerning the Account and the Loan, the administration thereof and the terms and conditions thereof or arising therefrom directly or indirectly shall be governed by the Laws of the State of Israel. The exclusive place of jurisdiction in any proceeding relative to the Loan is in the competent court of law nearest to where the place of the Branch of the Account is situated.

 

29.

General Provisions

 

29.1

All of the declarations, the representations, the obligations, the instructions and the authorizations of ours as provided in this Application are irrevocable and are in addition to and without derogating from any declaration, representation, obligation, instruction or other authorization of ours towards the Bank pursuant to any of the documents which were or may be signed by us, and the Bank has entered into or may enter into agreements with us for the provision of Banking Services which are the subject of the Loan Documentation, among other things, in reliance upon all of the declarations, the representations, the instructions and the authorizations as aforesaid.

 

29.2

Whenever the Bank may do something pursuant to this Application or any document in connection therewith – it is under no duty to do so.

 

29.3

Whenever the Bank may do something pursuant to this Application without any prior notice – the right of the Bank as aforesaid shall be subject to the provisions of any Law which may not be stipulated against.

 

29.4

The Books of the Bank and its accounts shall serve as admissible evidence for proving the truthfulness of their content in all their particulars. Copies from the Books of the Bank or any excerpt thereof or of the last page of the Books of the Bank, when certified by an officer of the Bank on the copy thereof or in a separate document, shall serve as admissible evidence for proving the truthfulness of their content and of the correctness of all of the particulars stated therein          .

 

29.5

Information that the Bank has requested or may request of us from time to time as set forth in the Loan Documentation, and communicated by us to the Bank may also become part of information that the Bank may receive from others. The conditions which shall apply, subject to any Law, with regard to any such information and the use thereof are as set forth in the Account Opening Documentation.

 

29.6

The rights of the Bank pursuant to this Application are autonomous and independent of one another, and are further and in addition to and without derogating from any existing or future right of the Bank under any Law or under any other document signed or which may be signed by us in favour of the Bank, including the Account Opening Documentation (hereinafter: “the Additional Documents”). Nothing contained in this Application shall serve to exempt us from any liability. The Bank may insist on its rights and take all of the measures against us which are conferred upon the Bank under this Application, the Additional Documents and under any Law.

 

30.

Interpretation and Definitions

 

30.1

Clause headings in this Application are inserted for ease of reference only and shall be ignored in the interpretation of this Application.

 

30.2

In this Application - the masculine gender includes the feminine gender and vice versa. The plural includes the singular and vice versa.

 

30.3

Unless otherwise expressly provided, wherever any Law is cited in this Application, what is meant is the version of the Law as it may be from time to time at any relevant time.          .

 

 

30.4

Unless otherwise expressly provided, the terms contained in this Application shall have meaning as set out next to them as follows:

 

30.4.1

“Event of Illegality” – any of the following events:

 

30.4.1.1

If the Bank is unable to determine the rate of the Interest applicable to the Loan, for any reason, or if the continued granting of the Loan, in whole or in part, on its existing terms and conditions becomes impracticable for any reason; or

 

30.4.1.2

As a result of any Change of Law or in view of any changes that occur with respect to us or our affairs, the continued provision of the Loan by the Bank, in whole or in part, on the terms thereof, as they may be at any relevant time, or giving effect to obligations or exercising the rights of the Bank pursuant to the Loan Documentation, become unlawful or constitute a breach of the Law on the part of the Bank (including a breach of any regulation, rule, instruction, directive or order). For the purpose of this clause, where the Bank exceeds the limitations imposed by Bank of Israel regulations, and in particular the Proper Conduct of Banking Business Directive 313 in the matter of the indebtedness of a single borrower or a group of borrowers, shall be a breach of the Law as aforesaid.

 

30.4.2

“Means of Communication” – including telephone, cellular phone, facsimile, internet, cellular applications, electronic mail, communication between computers, and any other means of communication presently existing or which may come into existence in the future and as to which the Bank shall announce from time to time the possibility of using same for the purpose of executing Transactions for the Account, receiving or passing information and messages from the Bank to its customers.

 

30.4.3

“Collateral Securities” – all of the sureties, the charges, the pledges and the other Collateral Securities for our Indebtedness, of any kind or category, which have been given or which may be given to the Bank by us or by any third party on our behalf, including a pledgor of property as security for our obligations, including all of the Deposited Assets.

 

30.4.4

“subject to any Law” – subject to any Law which may not be stipulated against.

 

30.4.5

“Weighted Day Basis” – Basis of days for calculating the Interest for one year (the Interest Calculation Period encompassing two (2) calendar years each one having a different number of days (365 and 366) in the respective years), being calculated in the following way: The number of days, out of the relevant Interest Calculation Period that apply a year of 365 days, multiplied by 365, and the number of days, out of the Interest Calculation Period as aforesaid, that apply to a year of 366 days, multiplied by 366 – the result of such calculation period being divided by the overall number of days in the Interest calculation period as aforesaid.

 

30.4.6

“Account Holder” – someone whose particulars appear in the Application to Open an Account and in the Appendices delivered to the Bank, at the time when the Account is opened, as to the identity of the Account Holder, all subject to such changes that may be made by operation of Law or with the consent of the Bank, in advance and in writing.

 

30.4.7

“Appointee” – a receiver, liquidator, trustee, special manager, receiver in bankruptcy or any other similar appointee.

 

30.4.8

“this Application” – an application for the receipt of a Loan, as may be amended from time to time.

 

30.4.9

“Financial Statements” – any periodic financial statements, prepared in the form prescribed by any Law and in accordance with generally accepted accounting principles which we or any subsidiary company of ours or any guarantor for the payment of any of the Amounts of the Loan are obliged or may be obliged to prepare under any Law.

 

30.4.10

“Law” – as defined in the Interpretations Law, 5741-1981. Unless otherwise expressly provided, whenever any provision of Law is cited in the Loan Documentation, what is meant is the provision of Law as it may be from time to time at any relevant time and any other provision of Law replacing or amending it.

 

 

30.4.11

“the Stock Exchange” – the Tel-Aviv Stock Exchange Ltd. and any other exchange that receives a licence under Section 45 of the Securities Law, 5728-1968.

 

30.4.12

“the Bank” – Bank Hapoalim B. M., comprising each one of the branches and offices in Israel, as well as any successor or any one acting on its behalf and any transferee of the Bank.

 

30.4.13

“the Account” – a bank account the number of which is stated at the top of this Application and according to any other number as may be determined by the Bank from time to time and which is or may be maintained on our behalf, by the Bank, at the Branch of the Account.

 

30.4.14

“the Index” or “the Consumer Price Index” – the consumer price index (also known as the cost of living index), including fruit and vegetables, published by the Central Bureau of Statistics (hereinafter: “the Bureau”) including that index even if published by any other governmental body and also including any official index in substitution therefor, whether based on the same data on which the existing index is based or not. If any other index replaces the existing one, the Bureau will determine the ratio between them, and, if the Bureau does not so determine within six months from the publication of the other index, it will be determined by the Bank in consultation with economic experts.

 

30.4.15

“the New Index” – means the last known Index on the Actual Date of Payment.

 

30.4.16

“the Base Index” – means the last known Index on the Date on Which the Loan Is Granted.

 

30.4.17

“the Deposited Assets” – All of the monies (whether in Israeli currency or in Foreign Currency), assets, negotiable instruments, non-negotiable instruments, deposits, savings plans, Collateral Securities, securities, chattels and other rights of any kind or category, as well as the proceeds of all of these, which at any time were delivered to the Bank for collection or for safekeeping or by way of collateral or were deposited with the Bank or with a bailee on its behalf.

 

30.4.18

“the Actual Crediting of the Current Account” – the final, absolute and irrevocable crediting of the Current Account which does not arise from a movement in the Account or from a balance in the Account which is defined by the Bank as being a movement or a balance which is only conditional.

 

30.4.19

“Indebtedness” – any debt, undertaking or obligation of ours to the Bank, of any kind (existing and future, direct or indirect, conditional and unconditional, including as guarantors to the Bank) on whatever grounds, all as they may be from time to time, including any such indebtedness of ours to the Bank in any other account, and even if any such other account is maintained solely on our behalf or on behalf of any one of us by ourselves or together with others.

 

30.4.20

“the Companies Law” – the Companies Law, 5759-1999.

 

30.4.21

“the Securities Law” – the Securities Law, 5728-1968.

 

30.4.22

“Signature” – any signature on a written document, as well as, subject to the approval of the Bank, conferring agreement to or approval of, in any way, and that includes by any Means of Communication, and the verb “to sign” in all of its conjugations, shall be construed accordingly.

 

30.4.23

“Loan Account” – Sub- account of the Loan maintained within the Account.

 

30.4.24

“Current Account” – in relation to any account maintained on our behalf (by ourselves or together with others) – a Sub-Account which enables the Account Holder to deposit funds, withdraw funds as well as give Debit Instructions, without any need for prior notice, all subject to the provisions of the Account Opening Documentation and any other document agreed upon or which may be agreed upon with the Bank. If the Account includes more than one Current Account (that is to say, a number of Current Accounts each one of which maintained in another currency), then what is meant is the Current Account maintained in the relevant currency.

 

 

30.4.25

“Banking Business Day in Israel” – every day except Saturday, public holidays, the two days of the Jewish New Year, the day before the Day of Atonement and the Day of Atonement, the first and eighth day of Succoth, Purim, the first and seventh day of Passover, Independence Day, Shavuot (Feast of Weeks) and the Ninth of Av, but not including any other day determined by the Supervisor of Banks or laid down by any Law as being a day which is not a banking business day in Israel.

 

30.4.26

“Balance Available for Withdrawal” – as of any relevant calculation date – any credit balance in Current Account which includes funds recorded to the credit of such Current Account, except for such funds with respect to which there is our obligation or that of the Bank for our account, or only conditionally recorded to the credit of such Current Account or which the Bank is obliged or is liable to be obliged to pay to any third party. Any such credit balance in Current Account does not include financial deposits, savings plans, securities, other financial rights and assets recorded to the credit of the Account in any other Sub-Account of the Account (which is not the Current Account as aforesaid) or recorded to the credit of any other account maintained in our name with the Bank, whether alone or together with others. If and in as much as there is allocated to us a Current Account Facility in Current Account as aforesaid, the Balance Available for Withdrawal shall also include any balance available for utilization on account of the Current Account Facility which may be allocated in such Current Account. Wherever a Balance Available for Withdrawal is mentioned in this Application, what is meant is the Balance Available for Withdrawal in the currency relevant to the requested transaction only.

 

30.4.27

“Balance in the Account” – the total of all the credits passed to the Current Account to the relevant date after deduction of the total of all the debits passed to the same Current Account to such date.

 

30.4.28

“Debit Balance” – a Balance in the Account that is negative amount.

 

30.4.29

“Board at the Branch” – a screen or board displayed at the branch of the Bank and also an information sheet placed on the counter at the branch of the Bank where the respective transactions are executed, and at an office of the Bank or at a branch of the Bank where there are no counter services, including voice mail.

 

30.4.30

“The Actual Repayment Date”– the Banking Business Day in Israel on which any amount of the Amounts of the Loan is actually repaid.

 

30.4.31

“The Agreed Repayment Date” – the date on which any of the Amounts of the Loan is expressed to be repaid, in accordance with the terms of the Loan Documentation, including by virtue of rendering any such Amounts immediate repayable as provided in this Application.

 

30.4.32

“the Date on Which the Loan Is Granted” – The date on which the Current Account is credited with the Principal Amount of the Loan.

 

30.4.33

“Foreign Currency” – any foreign currency which is freely convertible.

 

30.4.34

“Credit Facility” – any credit facility for a stated and limited amount and period which is allocated to us in the Account.

 

30.4.35

“Current Account Facility” – a Credit Facility allocated to us in Current Account (if allocated) and which enables us to continue to make withdrawals on account thereof of amounts which were repaid by us to the Bank, all in accordance with the terms of the Credit Facility as aforesaid.

 

30.4.36

“the Collateral Securities Documentation” – the agreements, deeds of pledge, debentures, letters of undertaking and letters of guarantee and any other document signed or which may be signed between ourselves and the Bank the subject of which is Collateral Securities or which regulate any matter having to do with Collateral Securities, which secure the Amounts of the Loan.

 

 

30.4.37

“the Loan Documentation” – this Application, the Collateral Securities Documentation and any other document signed or which may be signed between ourselves and the Bank in connection with the Loan.

 

30.4.38

“the Account Opening Documentation” – the document entitled “Application to Open an Account and General Conditions for Operating an Account” which we have signed in connection with the Account, any other document that serves to amend or replace the said Application or which expressly states therein that it constitutes part thereof, and all of the documents which include general conditions pertaining to the Areas of Activity or the Channels of Service (which also include such as are attached or which may be attached to such Application and which may be signed further thereto) and all of the documents which include authorizations for the Account (including powers of attorney), signature combinations, specimen signatures, the manner of receiving poll cards, position notices and confirmations of ownership or updates of any of them, which have been delivered to the Bank, received and approved by it at the time of signature of this Application as aforesaid or at any later time.

 

30.4.39

“the Amounts of the Loan” – any amount which we owe or may owe the Bank pursuant to the Loan Documentation and that includes the Principal Amounts of the Loan, the Interest, Default Interest, the fees, commissions and charges, the costs and expenses, Linkage Differences and the Additional Amounts.

 

30.4.40

“Branch of the Account” – the offices of the branch of the Bank where the Account is maintained.

 

30.4.41

“Books of the Bank” – including Records of the Bank and also any book, ledger, statement of account, contract, deed or undertaking, Bill bearing our signature, card index, sheet of the Bank or which have been produced by the Bank, any Bank Records spool, copies of all of the foregoing certified by the Bank or submitted by it as part of its books and whatever can be produced from all of the foregoing by means of data storage or retrieval, electronic simulation and other technology, made in the normal course of the Bank’s business.

 

30.4.42

“Channels of Service” – computerized or automated channels or Channels of Communication through which the Bank provides from time to time Banking Services, remits and receives information through which we have requested or may request the Bank to remit information, instructions or requests and to receive through them from the Bank information and Banking Services and which have been or will be approved by the Bank from time to time, at its discretion.

 

30.4.43

“Transactions for the Account” – executing a Debit Instruction (including by means of Cheques drawn on the Account or by means of a debit card as defined in the Debit Cards Law, 5746-1986) or executing a conversion instruction or any other transaction or instruction in connection with assets posted to the Account or to the credit thereof or in connection with our rights in connection with the Account.

 

30.4.44

“Prime” or “Prime Interest” – the interest defined by the Bank as its prime rate of interest and which is updated by the Bank from time to time.

 

30.4.45

“Quarter” - any period of three calendar months, with the first Quarter commencing on the first day of the calendar month next following the Date on Which the Loan Is Granted and the rest of the Quarters commence accordingly on the first day of the calendar month next following the end of the previous Quarter.

 

30.4.46

“Bank of Israel Interest” – the rate of interest, as it may be from time to time, at which the Bank of Israel lends money to banking corporations or borrows money from them. Such interest is determined by the Monetary Committee of the Bank of Israel and published by it.

 

30.4.47

“Interest at the Maximum Rate” – the maximum interest as it may be from time to time, applied by the Bank to Debit Balances in Current Account in Israeli currency or in the relevant Foreign Currency, as the case may be, for which there is no valid Current Account Facility.

 

 

30.4.48

“Records” – any entry or copy of an entry which preserve the information regarding the Transactions for the Account or data pertaining to the Account and its particulars whether recorded or copied by printing, duplication, electronic simulation, photocopying (including microfilm) or recorded or copied by any mechanical, electrical or electronic means or any technology which preserves the information regarding the Transactions for the Account or in connection therewith, as well as any output, computer material being information and electronic messages which include data pertaining to the Account or notices of the Bank relative to the Account, formed by means of recording by the Bank’s computers, within the meaning of “output”, “computer material” (which is information) and “computer” in the Computers Law, 5755-1995 and also the print-out on paper of the contents of a computer file, or any record of the Bank retained by any other means or representation of words or numerals or other signs or symbols which the Bank generally uses or employs in its records.

 

30.4.49

“Bill” or “Bills” – any promissory note, bill of exchange, Cheque, undertaking, guarantee, Collateral Security, assignment, bill of lading, certificate of deposit, draft, payment order and any negotiable instrument of any kind.

 

30.4.50

“Change of Law” – the application of new Law, new legislation or change in existing Law or in the way it is applied or implemented which are introduced after the date of signature of the Loan Documentation, including: any change in the interpretation of existing Law; any new requirement addressed to the Bank by the Bank of Israel, including any new obligation pursuant to any agreement that banks in Israel have entered into with the Bank of Israel or any change in the common banking practice relative to the Bank of Israel; any new requirement addressed to the Bank by any other competent authority in any relevant jurisdiction; all of which – even if such Law, change or requirement or obligation or practice are not mandatory with respect to the Bank but banks or other financial institutions usually adhere to them, and in any relevant jurisdiction. For the purpose hereof “Law” – as defined in this Application and any regulation, rule, instruction, directive, order or obligation relative to the Bank of Israel or practice as aforesaid.

 

30.4.51

“Structural Change” – means with respect to the relevant legal entity or legal body any one of the following:

 

30.4.51.1

Merger or split, within the meaning of these terms in Part 5 “B” of the Income Tax Ordinance [New Version] or in the Companies Law (including any consolidation and reorganization, all of which – irrespective of whether effected pursuant to Part Eight or Part Nine of the Companies Law or in any other way) or any action the result of which is similar with reference to a partnership or incorporation outside Israel; or

 

30.4.51.2

Any action the result of which is the acquisition, disposition or receipt of assets which are material for the legal entity or legal body in their extent or nature or the acquisition or receipt of material undertakings as aforesaid; or

 

30.4.51.3

Receipt of assets in return for shares or other securities or other rights in the legal entity or in the legal body, when the assets relevant to the action as aforesaid are material for the legal entity or the legal body, in their extent or nature; all of which - whether in one transaction or in a series of transactions.

 

30.4.52

“Cheque” – as defined in Section 73 of the Bills of Exchange Ordinance [New Version].

 

30.4.53

“Banking Services” – the range of services that the Bank is accustomed to give to its customers in the usual way which is current at the Bank.

 

30.4.54

“Control” – as defined in the Securities Law, and with respect to a corporation to which the Securities Law does not apply – with the necessary changes.

 

30.4.55

“the Bank’s Customary Buying Rate” – the rate of exchange “Transfers / Drafts – Bank Buys” posted from time to time by the Bank on the Board at the Branch and which relates, as the case may be, to the sale of the respective Foreign Currency by us to the Bank at any relevant time; and net of any conversion fee, tax, levy, compulsory or other payments and the like.

 

 

30.4.56

“the Areas of Activity” – areas in the framework of which we have requested or may request the Bank to receive Banking Services and which were or may be approved by the Bank from time to time, at its discretion.

 

30.4.57

“the Bank’s Scale of Charges” – a scale of charges of the Bank displayed at the branch or on the web site or on cellular applications of the Bank, by means of automated machines or by any other method by which the Bank is permitted to display same, which includes information concerning amounts of fees, commissions and charges or their rates, and other payments and amounts in relation to Banking Services, and that includes Banking Services for the Account.

 

30.4.58

“Period of the Loan” – any period, as specified in the Repayment Schedule, commencing on the Date on Which the Loan Is Granted and terminating on the last Agreed Repayment Date on account of the Amounts of the Loan.

 

30.4.59

“Sub-Account” – a Current Account or a deposit account or a savings account or a loan account or any other account which is maintained or which may be maintained with the Bank under such Account.

 

31.

Repayment Schedule

 

Particulars regarding the Period of the Loan, the amount of the payments for the repayment of the Loan, and the repayment dates of the Principal Amount of the Loan and the Interest will be contained in a repayment schedule which will be sent to us by the Bank shortly after the Date on Which the Loan Is Granted as aforesaid (herein above and below: “the Repayment Schedule“). The Repayment Schedule will constitute an integral part of this Application. If the Repayment Schedule does not reach us within 30 days of the Date on Which the Loan Is Granted, we undertake to notify the Bank accordingly in writing.

 

32.

Further Conditions:

 

Signatures:

 

We the undersigned confirm that the Bank gave us a copy of this Application and afforded us a reasonable opportunity to review it before signing this Application.

 

Name	Identifying Number	Date	Signature
			_______________
			_______________

 

 

Exhibit 10.12

 

Petrocorp Inc.

2022 Stock Incentive Plan

 

1. Purposes of the Plan. The purposes of this Plan are to attract and retain the best available personnel, to provide additional incentives to Employees, Directors and Consultants and to promote the success of the Company’s business.

 

2. Definitions. The following definitions shall apply as used herein and in the individual Award Agreements except as defined otherwise in an individual Award Agreement. In the event a term is separately defined in an individual Award Agreement, such definition shall supersede the definition contained in this Section 2.

 

(a) “3(i) Option” means an Award (other than Restricted Stock) granted under Section 3(i).

 

(b) “102 Option” means an Award (other than a SAR, a RSU or any other Award settled in cash) granted under Section 102.

 

(c) “Administrator” means the Board or any of the Committees appointed to administer the Plan.

 

(d) “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.

 

(e) “Applicable Laws” means the legal requirements relating to the Plan and the Awards under applicable provisions of U.S. federal securities laws, state corporate and securities laws, the Code, U.S. state and local tax laws, the rules of any applicable stock exchange or national market system, applicable laws of Israel, and the rules of any non-U.S. jurisdiction applicable to Awards granted to residents therein.

 

(f) “Award” means the grant of an Option, SAR, Restricted Stock, RSU or other right or benefit under the Plan.

 

(g) “Award Agreement” means the written agreement evidencing the grant of an Award executed by the Company and the Grantee, including any amendments thereto.

 

(h) “Board” means the Board of Directors of the Company.

 

(i) “Cause” means, with respect to the termination by the Company or a Related Entity of the Grantee’s Continuous Service, that such termination is for “Cause” as such term (or word of like import) is expressly defined in a then-effective written agreement between the Grantee and the Company or such Related Entity or, in the absence of such then effective written agreement and definition, in the determination of the Administrator, the Grantee’s: (i) conviction of any felony involving moral turpitude or affecting the Company or a Related Entity; (ii) any refusal to carry out a reasonable directive of the chief executive officer, the Board or the Grantee’s direct supervisor that involves the business of the Company or a Related Entity and was capable of being lawfully performed; (iii) embezzlement of funds of the Company or a Related Entity; (iv) any breach of the Grantee’s fiduciary duties or duties of care of the Company or a Related Entity, including without limitation disclosure of confidential information of the Company or a Related Entity; and (v) any conduct (other than conduct in good faith) reasonably determined by the Board to be materially detrimental to the Company or a Related Entity.

 

(j) “Change in Control” means the sale or disposition, in one or a series of related transactions, of all or substantially all of the assets, or stock, or over fifty percent (50%) of the voting stock to any “person” or “group” (as such terms are defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), or any person or group is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than fifty percent (50%) of the total voting power of the voting stock of the Company, including by way of merger, consolidation or otherwise.

 

(k) “Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

 

(l) “Committee” means any committee composed of members of the Board appointed by the Board to administer the Plan.

 

(m) “Common Stock” means the common stock of the Company.

 

(n) “Company” means Petrocorp Inc., a Delaware corporation, or any successor entity that adopts the Plan in connection with a merger, consolidation or similar transaction.

 

(o) “Consultant” means any person (other than an Employee or a Director, solely with respect to rendering services in such person’s capacity as a Director) who is engaged by the Company or any Related Entity to render consulting or advisory services to the Company or such Related Entity.

 

(p) “Continuing Directors” means members of the Board who either (i) have been Board members continuously for a period of at least twelve (12) months or (ii) have been Board members for less than twelve (12) months and were elected or nominated for election as Board members by at least a majority of the Board members described in clause (i) who were still in office at the time such election or nomination was approved by the Board.

 

(q) “Continuous Service” means that the provision of services to the Company or a Related Entity in any capacity of Employee, Director or Consultant is not interrupted or terminated. In jurisdictions requiring notice in advance of an effective termination as an Employee, Director or Consultant, Continuous Service shall be deemed terminated upon the actual cessation of providing services to the Company or a Related Entity notwithstanding any required notice period that must be fulfilled before a termination as an Employee, Director or Consultant can be effective under Applicable Laws, unless otherwise affirmatively required under Applicable Laws. A Grantee’s Continuous Service shall be deemed to have terminated either upon an actual termination of Continuous Service or upon the entity for which the Grantee provides services ceasing to be a Related Entity. Continuous Service shall not be considered interrupted in the case of (i) any approved leave of absence, (ii) transfers among the Company, any Related Entity or any successor in any capacity of Employee, Director or Consultant or (iii) any change in status as long as the individual remains in the service of the Company or a Related Entity in any capacity of Employee, Director or Consultant (except as otherwise provided in the Award Agreement). An approved leave of absence shall include sick leave, military leave or any other authorized personal leave. For purposes of each Incentive Stock Option granted under the Plan, if such leave exceeds three (3) months, and reemployment upon expiration of such leave is not guaranteed by statute or contract, then the Incentive Stock Option shall be treated as a Non-qualified Stock Option on the day three (3) months and one (1) day following the expiration of such three (3) month period.

 

(r) “Director” means a member of the Board or the board of directors of any Related Entity.

 

(s) “Disability” means as defined under the long-term disability policy of the Company or the Related Entity to which the Grantee provides services regardless of whether the Grantee is covered by such policy. If the Company or the Related Entity to which the Grantee provides service does not have a long-term disability policy in place, “Disability” means that a Grantee is unable to carry out the responsibilities and functions of the position held by the Grantee by reason of any medically determinable physical or mental impairment for a period of not less than ninety (90) consecutive days. A Grantee will not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the Administrator in its discretion.

 

(t) “Employee” means any person, including an Officer or Director, who is in the employ of the Company or any Related Entity, subject to the control and direction of the Company or any Related Entity as to both the work to be performed and the manner and method of performance. The payment of a Director’s fee by the Company or a Related Entity shall not be sufficient to constitute “employment” by the Company.

 

(u) “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

 

 

(v) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

 

(i) If the Common Stock is listed on one or more established stock exchanges or a national market system, including without limitation the New York Stock Exchange, NYSE American and Nasdaq Stock Market, the Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on the principal exchange or system on which the Common Stock is listed (as determined by the Administrator) on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported), as reported in the Wall Street Journal or such other source as the Administrator deems reliable;

 

(ii) If the Common Stock is regularly quoted on an automated quotation system (including, without limitation, the OTC Bulletin Board) or by a recognized securities dealer, its Fair Market Value shall be the closing sales price for such stock as quoted on such system or by such securities dealer on the date of determination, but if selling prices are not reported, the Fair Market Value of a share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as reported in the Wall Street Journal or such other source as the Administrator deems reliable; or

 

(iii) In the absence of an established market for the Common Stock of the type described in clauses (i) and (ii), above, the Fair Market Value thereof shall be determined by the Administrator in good faith.

 

(w) “Grantee” means an Employee, Director or Consultant who receives an Award under the Plan.

 

(x) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.

 

(y) “Israeli Employee” means Employees, office holders of the Company or a Related Company (“Nosei Misra” – as such term is defined in the Israeli Companies Law 1999), and Directors (excluding those who are considered a “Controlling Shareholder” pursuant to Section 32(9) of the Tax Ordinance or otherwise excluded by the Tax Ordinance).

 

(z) “Israeli Grantee” means Grantees who are residents of the State of Israel or those who are deemed to be residents of the State of Israel for the payment of tax (whether such Grantee is entitled to the tax benefits under Section 102 or not).

 

(aa) “ITA” means Israeli Tax Authorities.

 

(bb) “Non-Employee” means Consultants or any other person who is not an Israeli Employee.

 

(cc) “Non-qualified Stock Option” means an Option not intended to qualify as an Incentive Stock Option, a 3(i) Option or a 102 Option.

 

(dd) “Non-Trustee 102 Option” means a 102 Option granted pursuant to Section 102(c) of the Tax Ordinance and not held in trust by the Trustee.

 

(ee) “Officer” means a person who is an officer of the Company or a Related Entity within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

 

(ff) “Option” means an option to purchase Shares pursuant to an Award Agreement granted under the Plan.

 

(gg) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

 

(hh) “Performance-Based Compensation” means an Award that includes as a vesting condition the satisfaction of performance criteria established by the Administrator.

 

(ii) “Plan” means this 2022 Stock Incentive Plan, as amended and in effect from time to time.

 

 

(jj) “Related Entity” means any Parent or Subsidiary of the Company. With respect to Israeli Grantees of 102 Options, the definition shall further include any entity permitted under Section 102(a) of the Tax Ordinance.

 

(kk) “Restricted Stock” means Shares issued under the Plan to the Grantee for such consideration, if any, and subject to such restrictions on transfer, rights of first refusal, repurchase provisions, forfeiture provisions and other terms and conditions as established by the Administrator.

 

(ll) “Restricted Stock Units” or “RSUs” means an Award that may be earned in whole or in part upon the passage of time or the attainment of performance criteria established by the Administrator and which may be settled for cash, Shares, or other securities or a combination of cash, Shares or other securities as established by the Administrator.

 

(mm) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor thereto.

 

(nn) “SAR” means a stock appreciation right entitling the Grantee to Shares or cash compensation, as established by the Administrator, measured by appreciation in the value of Common Stock.

 

(oo) “Section 3(i)” means Section 3(i) of the Tax Ordinance, as may be amended from time to time.

 

(pp) “Section 102” means Section 102 of the Tax Ordinance, as may be amended from time to time.

 

(qq) “Share” means a share of the Common Stock.

 

(rr) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

 

(ss) “Tax Ordinance” means the Israeli Income Tax Ordinance [New Version], 1961 (including as amended pursuant to Amendment 132 thereto) and to the extent not specifically indicated hereunder also the rules, regulations and orders or procedures promulgated thereunder from time to time, as amended or replaced from time to time.

 

(tt) “Trustee” means any individual appointed by the Company to serve as trustee and approved by the ITA, in accordance with the provisions of Section 102(a) of the Tax Ordinance and the regulations promulgated thereunder.

 

(uu) “Trustee 102 Option” means a 102 Option granted pursuant to Section 102(b) of the Tax Ordinance and held in trust by the Trustee for the benefit of an Israeli Grantee.

 

3. Stock Subject to the Plan.

 

(a) Subject to the provisions of Section 12 below, the maximum aggregate number of Shares that may be issued pursuant to all Awards (including Incentive Stock Options) under the Plan is 3,000,000 Shares. The Shares to be issued pursuant to Awards may be authorized, but unissued, or reacquired Common Stock. Notwithstanding Section 3(b), Incentive Stock Options on no more than 3,000,000 Shares, adjusted pursuant to the provisions of Section 12 below, may be granted.

 

(b) Any Shares covered by an Award (or portion of an Award) that is forfeited, canceled or expires (whether voluntarily or involuntarily) shall be deemed not to have been issued for purposes of determining the maximum aggregate number of Shares that may be issued under the Plan. Shares that actually have been issued under the Plan pursuant to an Award shall not be returned to the Plan and shall not become available for future issuance under the Plan, except that if unvested Shares are forfeited, or repurchased by the Company at the lower of their original purchase price or their Fair Market Value at the time of repurchase, such Shares shall become available for future grant under the Plan. To the extent not prohibited by the listing requirements of the principal established stock exchange or national market system on which the Common Stock is traded and Applicable Law, any Shares covered by an Award that are surrendered (i) in payment of the Award exercise or purchase price (including pursuant to the “net exercise” of an option pursuant to Section 7(b)(v)) or (ii) in satisfaction of tax withholding obligations incident to the exercise of an Award shall be deemed not to have been issued for purposes of determining the maximum number of Shares that may be issued pursuant to all Awards under the Plan, unless otherwise determined by the Administrator.

 

 

4. Administration of the Plan.

 

(a) Plan Administrator.

 

(i) General. With respect to grants of Awards to Directors, Employees or Consultants, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws. Any such Committee shall be constituted to permit such grants and related transactions to be exempt from Section 16(b) of the Exchange Act in accordance with Rule 16b-3. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. Further, with respect to Consultants and Employees (who are neither Directors or Officers), the Board may authorize one or more Officers to grant Awards to such persons and may limit such authority as the Board determines from time to time.

 

(ii) Administration With Respect to Directors who are not Employees. Notwithstanding the above, with respect to grants of Awards to Directors who are not Employees, the Board shall have the exclusive power to select such Directors to participate in the Plan and to determine the number of Non-qualified Stock Options, SARs or shares of Restricted Stock or Restricted Stock Units or other benefits under the Plan to be so awarded. If the Board appoints a Committee to administer the Plan, it may delegate to the Committee administration of all other aspects of the Awards made to such Directors who are not Employees.

 

(iii) Administration With Respect to Israeli Grantees. With respect to grants of Awards to Israeli Grantees, the Plan shall be administered by (A) the Board or (B) a Committee or one or more Officers designated by the Board, which Committee or Officers shall be constituted or appointed in such a manner as to satisfy the ITA and the Applicable Laws applicable to Awards for Israeli Grantees. Once appointed, such Committee or Officer shall continue to serve until otherwise directed by the Board.

 

(iv) Administration Errors. In the event an Award is granted in a manner inconsistent with the provisions of this subsection (a), such Award shall be presumptively valid as of its grant date to the extent permitted by the Applicable Laws.

 

(b) Powers of the Administrator. Subject to Applicable Laws and the provisions of the Plan (including any other powers given to the Administrator hereunder), and except as otherwise provided by the Board, the Administrator shall have the authority, in its discretion:

 

(i) to select the Employees, Directors and Consultants to whom Awards may be granted from time to time hereunder;

 

(ii) to determine whether and to what extent Awards are granted hereunder;

 

(iii) to determine the number of Shares or the amount of other consideration to be covered by each Award granted hereunder, the exercise price or purchase price of each Option or other Award, the duration of each Award and the times at which each Award shall become exercisable;

 

(iv) to approve forms of Award Agreements for use under the Plan;

 

(v) to determine the terms and conditions of any Award granted hereunder, including but not limited to: the exercise price, the time or times when Options may be exercised or other Awards vest (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions and any restriction or limitation regarding any Award or Shares related thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

 

 

(vi) to amend the terms of any outstanding Award granted under the Plan, provided that any amendment that would adversely affect the Grantee’s rights under an outstanding Award shall not be made without the Grantee’s written consent; provided, however, that an amendment or modification that may cause an Incentive Stock Option to become a Non-qualified Stock Option shall not be treated as adversely affecting the rights of the Grantee. The reduction of the exercise price of any Option awarded under the Plan and the base appreciation amount of any SAR awarded under the Plan shall not be subject to stockholder approval and canceling an Option or SAR at a time when its exercise price or base appreciation amount (as applicable) exceeds the Fair Market Value of the underlying Shares, in exchange for another Option, SAR, Restricted Stock, or other Award shall not be subject to stockholder approval and shall be at the discretion of the Administrator;;

 

(vii) to construe and interpret the terms of the Plan and Awards, including without limitation, any notice of award or Award Agreement, granted pursuant to the Plan;

 

(viii) to grant Awards to Employees, Directors and Consultants employed outside the U.S. on such terms and conditions different from those specified in the Plan as may, in the judgment of the Administrator, be necessary or desirable to further the purpose of the Plan;

 

(ix) to designate Awards as Incentive Stock Options or Non-qualified Stock Options, or as 102 Options (whether through a trustee or not) or 3(i) Options subject to the limitations under the ITA or any other Applicable Law and to determine the type and route of the Trustee 102 Options;

 

(x) to determine the Fair Market Value of the Shares in accordance with the provisions of the Plan; and

 

(xi) to take all such other action and make all such other determinations and interpretations, not inconsistent with the terms of the Plan, as the Administrator deems appropriate.

 

(c) Extent and Effect of Administrator’s Determinations. The express grant in the Plan of any specific power to the Administrator shall not be construed as limiting any power or authority of the Administrator; provided, however, that the Administrator may not exercise any right or power reserved to the Board. Any decision made, or action taken, by the Administrator or in connection with the administration of this Plan shall be final, conclusive and binding on all persons having an interest in the Plan.

 

(d) Indemnification. In addition to such other rights of indemnification as they may have as members of the Board or as Officers or Employees of the Company or a Related Entity, the Administrator shall be defended and indemnified by the Company to the extent permitted by law against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any claim, investigation, action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any Award granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by the Company) or paid by them in satisfaction of a judgment in any such claim, investigation, action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such claim, investigation, action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct; provided, however, that within fifteen (15) days after the institution of such claim, investigation, action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at the Company’s expense to defend the same.

 

5. Eligibility. Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants. Incentive Stock Options may be granted only to Employees of the Company or a Parent or a Subsidiary of the Company. An Employee, Director or Consultant who has been granted an Award may, if otherwise eligible, be granted additional Awards. Awards may be granted to such Employees, Directors or Consultants who are residing in non-U.S. jurisdictions as the Administrator may determine from time to time; provided, however, that Awards to Israeli Grantees under Section 102 or Section 3(i) of the Tax Ordinance shall be subject to Section 22 below.

 

 

6. Types, Terms, Conditions and Limitations of Awards.

 

(a) Types of Awards. The Administrator is authorized under the Plan to award any type of arrangement to an Employee, Director or Consultant that is not inconsistent with the provisions of the Plan and that by its terms involves or might involve the issuance of (i) Shares, (ii) cash or (iii) an Option, a SAR or similar right with a fixed or variable price related to the Fair Market Value of the Shares and with an exercise or conversion privilege related to the passage of time, the occurrence of one or more events or the satisfaction of performance criteria or other conditions. Such awards include, without limitation, Options, SARs, and sales or bonuses of Restricted Stock or Restricted Stock Units, and an Award may consist of one such security or benefit or two (2) or more of them in any combination or alternative.

 

(b) Designation of Award. Each Award shall be designated in the Award Agreement. In the case of an Option, the Option shall be designated as either an Incentive Stock Option or a Non-qualified Stock Option and with respect to Israeli Grantees may be further designated as 102 Options or 3(i) Options under the Tax Ordinance subject to the qualifications described in Section 22 below. However, notwithstanding such designation, an Option will qualify as an Incentive Stock Option under the Code only to the extent the $100,000 dollar limitation of Section 422(d) of the Code is not exceeded. The $100,000 limitation of Section 422(d) of the Code is calculated based on the aggregate Fair Market Value of the Shares subject to Options designated as Incentive Stock Options that become exercisable for the first time by a Grantee during any calendar year (under all plans of the Company or any Parent or Subsidiary of the Company). For purposes of this calculation, Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the grant date of the relevant Option.

 

(c) Conditions of Award. Subject to the terms of the Plan, the Administrator shall determine the provisions, terms and conditions of each Award including, but not limited to, the Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form of payment (cash, Shares or other consideration) upon settlement of the Award, payment contingencies and satisfaction of any performance criteria.

 

(d) Additional Conditions for Performance-Based Awards. The performance criteria established by the Administrator may be based on any one of, or combination of, the following: (i) increase in share price, (ii) earnings per share, (iii) total stockholder return, (iv) operating margin, (v) gross margin, (vi) return on equity, (vii) return on assets, (viii) return on investment, (ix) operating income, (x) net operating income, (xi) pre-tax profit, (xii) cash flow, (xiii) revenue, (xiv) expenses, (xv) earnings before interest, taxes and depreciation, (xvi) economic value added, (xvii) market share, (xviii) satisfactory completion of clinical trials or scientific benchmarks and (xix) receipt of regulatory approvals. Such criteria shall be established before twenty-five percent (25%) of the applicable performance period has elapsed (or within ninety (90) days of a grant date, if earlier). The performance criteria may be applicable to the Company, Related Entities, and/or any individual business units of the Company or any Related Entity.

 

The extent to which performance criteria are met will be determined solely and in writing by the Administrator and partial achievement of the specified criteria may result in a payment or vesting corresponding to the degree of achievement as specified in the Award Agreement.

 

The Administrator shall make adjustments as necessary to eliminate the effect on the stated performance criteria of unplanned acquisitions or dispositions, changes in foreign exchange rates, discrete tax items identified by the Administrator, changes in accounting standards and variances to planned annual incentive compensation expense.

 

(e) Date of Grant. The date of grant of an Award shall be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Grantee within a reasonable time after the date of such grant. Notwithstanding anything in the Plan to the contrary, if any Award under this Plan is made to a person subject to taxation in the U.S., the date of grant of such Award shall be the date when the Company completes the corporate action necessary to create the legally binding right constituting the Award.

 

(f) Individual Limitations on Awards.

 

 

(i) Individual Limit for Options and SARs. The maximum number of Shares with respect to which Options and SARs may be granted to any Grantee in any calendar year shall be 400,000 Shares. The foregoing limitations shall be adjusted proportionately in connection with any change in the Company’s capitalization pursuant to Section 12 below. To the extent required by Section 162(m) of the Code or the regulations thereunder, in applying the foregoing limitations with respect to a Grantee, if any Option or SAR is canceled, the canceled Option or SAR shall continue to count against the maximum number of Shares with respect to which Options and SARs may be granted to the Grantee. For this purpose, the repricing of an Option (or in the case of a SAR, the base appreciation amount on which the stock appreciation is calculated is reduced to reflect a reduction in the Fair Market Value of the Common Stock) shall be treated as the cancellation of the existing Option or SAR and the grant of a new Option or SAR.

 

(ii) Individual Limit for Restricted Stock and Restricted Stock Units. For awards of Restricted Stock and Restricted Stock Units that are intended to be Performance-Based Compensation, the maximum number of Shares with respect to which such Awards may be granted to any Grantee in any calendar year shall be 400,000 Shares. The foregoing limitation shall be adjusted proportionately in connection with any change in the Company’s capitalization pursuant to Section 12 below.

 

(iii) Deferral. If the vesting or receipt of Shares under an Award is deferred to a later date, any amount (whether denominated in Shares or cash) paid in addition to the original number of Shares subject to such Award will not be treated as an increase in the number of Shares subject to the Award if the additional amount is based either on a reasonable rate of interest or on one or more predetermined actual investments such that the amount payable by the Company at the later date will be based on the actual rate of return of a specific investment (including any decrease as well as any increase in the value of an investment).

 

(g) Early Exercise. The Award Agreement may, but need not, include a provision whereby the Grantee may elect at any time while an Employee, Director or Consultant to exercise any part or all of the Award prior to full vesting of the Award. Any unvested Shares received pursuant to such exercise may be subject to a repurchase right in favor of the Company or a Related Entity or to any other restriction the Administrator determines to be appropriate.

 

(h) Term of Award. The term of each Award shall be the term stated in the Award Agreement; provided, however, that the term of an Incentive Stock Option shall be no more than ten (10) years from the date of grant thereof. However, in the case of an Incentive Stock Option granted to a Grantee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary of the Company, the term of the Incentive Stock Option shall be five (5) years from the date of grant thereof or such shorter term as may be provided in the Award Agreement.

 

(i) Transferability of Awards. Incentive Stock Options or Awards to Israeli Grantees may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Grantee, only by the Grantee. Other Awards shall be transferable (i) by will and by the laws of descent and distribution and (ii) during the lifetime of the Grantee, to the extent and in the manner authorized by the Administrator. Notwithstanding the foregoing, the Grantee (other than an Israeli Grantee) may designate one or more beneficiaries of the Grantee’s Award in the event of the Grantee’s death on a beneficiary designation form provided by the Administrator.

 

7. Award Exercise Price, Base Appreciation Amount or Purchase Price, Consideration and Taxes.

 

(a) Exercise Price, Base Appreciation Amount or Purchase Price. The exercise price, base appreciation amount or purchase price, if any and as applicable, for an Award shall be as follows:

 

(i) In the case of an Incentive Stock Option

 

(1) granted to an Employee who, at the time of the grant of such Incentive Stock Option owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary of the Company, the per Share exercise price shall be not less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant or

 

 

(2) granted to any Employee other than an Employee described in the preceding clause (i)(1), the per Share exercise price shall be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

 

(ii) In the case of Options, SARs and any other Award intended to deliver as a benefit appreciation in the value per Share over the value per Share on the date of grant, the exercise price, base appreciation amount or such similar amount shall be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

 

(iii) In the case of any other Award, such price as is determined by the Administrator.

 

(b) Consideration. Subject to Applicable Laws, the consideration to be paid for the Shares to be issued upon exercise, purchase or settlement of an Award (including the method of payment) shall be determined by the Administrator. In addition to any other types of consideration the Administrator may determine, the Administrator is authorized to accept as consideration for Shares issued under the Plan the following:

 

(i) cash;

 

(ii) check;

 

(iii) surrender of Shares or delivery of a properly executed form of attestation of ownership of Shares as the Administrator may require that have a Fair Market Value on the date of surrender or attestation equal to the aggregate exercise price of the Shares as to which said Award shall be exercised;

 

(iv) with respect to Options, payment through a broker-dealer sale and remittance procedure pursuant to which the Grantee (1) shall provide written instructions to a Company designated brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the Company sufficient funds to cover the aggregate exercise price payable for the purchased Shares and any required withholding provided in Section 7(c) below and (2) shall provide written directives to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale transaction;

 

(v) with respect to Non-qualified Stock Options, payment through a “net exercise” such that, without the payment of any funds, the Grantee may exercise the Option and receive the net number of Shares equal to (1) the number of Shares as to which the Option is being exercised multiplied by (2) a fraction, the numerator of which is the Fair Market Value per Share (on such date as is determined by the Administrator) less the exercise price per Share, and the denominator of which is such Fair Market Value per Share (the number of net Shares to be received shall be rounded down to the nearest whole number of Shares) and, at the election of the Grantee, less (3) such number of Shares as is equal to the withholding obligation (if any) provided in Section 7(c) below; or

 

(vi) any combination of the foregoing methods of payment.

 

The Administrator may at any time or from time to time, by adoption of or by amendment to the standard forms of Award Agreement described in Section 4(b), or by other means, grant Awards that do not permit all of the foregoing forms of consideration to be used in payment for the Shares or that otherwise restrict one or more forms of consideration.

 

(c) Taxes. No Shares shall be delivered under the Plan to any Grantee or other person until such Grantee or other person has made arrangements acceptable to the Administrator for the satisfaction of any non-U.S., federal, state or local income and employment tax withholding obligations, including, without limitation, obligations incident to the receipt of Shares. Upon exercise or vesting of an Award the Company shall withhold or collect from the Grantee an amount sufficient to satisfy such tax obligations, including, but not limited to, by surrender of the whole number of Shares covered by the Award sufficient to satisfy the applicable tax withholding obligations incident to the exercise or vesting of an Award.

 

 

8. Exercise of Award.

 

(a) Procedure for Exercise; Rights as a Stockholder.

 

(i) Any Award granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator under the terms of the Plan and specified in the Award Agreement; provided, however, that the standard vesting schedule for Israeli Grantees shall be as set forth in Section 22.

 

(ii) An Award shall be deemed to be exercised when written notice of such exercise has been given to the Company (or its delegee) in accordance with the terms of the Award by the person entitled to exercise the Award and full payment for the Shares with respect to which the Award is exercised has been made, including, to the extent selected, use of the broker-dealer sale and remittance procedure to pay the purchase price as provided in Section 7(b).

 

(b) No Rights as Stockholder. The holder of an Option shall have none of the rights of a stockholder with respect to the Shares subject to the Option until such Shares are transferred to the holder (or the Trustee, if applicable) upon the exercise of the Option.

 

(c) Conditions Upon Issuance of Shares.

 

(i) Legal Compliance. Shares shall not be issued pursuant to the exercise of an Award unless the exercise of the Award or the issuance and delivery of such Shares or consideration in lieu of Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance. If at any time the Administrator determines that the delivery of Shares pursuant to the exercise, vesting or any other provision of an Award is or may be unlawful under Applicable Laws, the vesting or right to exercise an Award or to otherwise receive Shares pursuant to the terms of an Award shall be suspended until the Administrator determines that such delivery is lawful and shall be further subject to the approval of counsel for the Company with respect to such compliance. The Company shall have no obligation to effect any registration or qualification of the Shares under federal or state laws or other Applicable Laws.

 

(ii) Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to make such representations and warranties that, in the opinion of the Company, are required to ensure that such exercise, or a subsequent sale or disposition of any Shares obtained upon such exercise, does not contravene any Applicable Law, including inter alia, representations and warranties at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any Applicable Laws.

 

(iii) Restrictions. Unless otherwise set forth in an Award Agreement, Shares issued to a Grantee or the Trustee, as applicable, shall be subject to such restrictions as required by the appropriate securities law and in the event that the Company’s Shares shall be registered for trading in any public market, Grantee’s rights to sell the Shares may be subject to certain limitations (including a lock-up period) as will be requested by the Company or its underwriters, and the Grantee by executing an Award Agreement unconditionally agrees and accepts any such limitations and undertakes to further execute any agreement as may be requested by the Company or its underwriters from time to time.

 

(d) No Fractional Shares. Only whole Shares may be issued pursuant to the exercise of an Option or other Award, and to the extent that an Option or other Award covers less than one (1) Share, it is non exercisable.

 

9. Termination, Death, Disability of Grantee.

 

(a) Exercise of Award Following Termination of Continuous Service. In the event of termination of a Grantee’s Continuous Service for any reason other than Cause, Disability or death, such Grantee may, but only within three (3) months from the date of such termination (or such longer or shorter period as specified in the Award Agreement but in no event later than the expiration date of the term of such Award as set forth in the Award Agreement), exercise the portion of the Grantee’s Award that was vested at the date of such termination or such other portion of the Grantee’s Award as may be determined by the Administrator. To the extent that the Grantee’s Award was unvested at the date of termination, or if Grantee does not exercise the vested portion of the Grantee’s Award within the time specified herein, the Award shall terminate.

 

 

(b) Termination of Continuous Service for Cause. In the event of termination of a Grantee’s Continuous Service for Cause, the unvested portion of the Grantee’s Award and, to the extent not previously exercised, the vested portion of the Grantee’s Award, shall terminate.

 

(c) Disability of Grantee. In the event of termination of a Grantee’s Continuous Service as a result of his or her Disability, such Grantee may, but only within twelve (12) months from the date of such termination (or such longer or shorter period as specified in the Award Agreement but in no event later than the expiration date of the term of such Award as set forth in the Award Agreement), exercise the portion of the Grantee’s Award that was vested at the date of such termination or such other portion of the Grantee’s Award as may be determined by the Administrator. To the extent that the Grantee’s Award was unvested at the date of termination, or if Grantee does not exercise the vested portion of the Grantee’s Award within the time specified herein, the Award shall terminate.

 

(d) Death of Grantee. In the event of a termination of the Grantee’s Continuous Service as a result of his or her death, or in the event of the death of the Grantee during the post-termination exercise periods following the Grantee’s termination of Continuous Service specified in this Section 9 the Grantee’s estate or a person who acquired the right to exercise the Award by bequest or inheritance may exercise the portion of the Grantee’s Award that was vested as of the date of termination or such other portion of the Grantee’s Award as may be determined by the Administrator, within twelve (12) months from the date of death (or such longer or shorter period as specified in the Award Agreement but in no event later than the expiration of the term of such Award as set forth in the Award Agreement). To the extent that, at the time of death, the Grantee’s Award was unvested, or if the Grantee’s estate or a person who acquired the right to exercise the Award by bequest or inheritance does not exercise the vested portion of the Grantee’s Award within the time specified herein, the Award shall terminate.

 

10. Restricted Stock.

 

(a) General. Restricted Stock Awards may be granted upon such terms and conditions as the Administrator shall determine, including with no restrictions.

 

(b) Purchase Price. No monetary payment (other than payments made for applicable taxes) shall be required as a condition of receiving Shares pursuant to a grant of Restricted Stock. Notwithstanding the foregoing, the Grantee shall furnish consideration in the form of cash having a value not less than the par value of the Shares subject to an award of Restricted Stock. The Board, in its sole discretion, shall determine procedures from time to time for payment of such par value by the Grantee or for collection of such amount from the Grantee by the Company. However, the Company shall have the full authority in its discretion to determine at any time that said par value shall not be paid and that the Company shall take any action to ensure that it meets any requirement of Applicable Laws regarding issuance of Shares for consideration that is lower than the par value of such Shares.

 

(c) Vesting and Restrictions on Transfer. Shares issued pursuant to any Restricted Stock Award may (but need not) be made subject to exercise conditions as described herein, as shall be established by the Administrator and set forth in the applicable Award Agreement evidencing such Award. During any restriction period in which Shares acquired pursuant to an award of Restricted Stock remain subject to exercise conditions, such Shares may not be sold, exchanged, transferred, pledged, assigned or otherwise disposed of unless otherwise provided in the Plan or any Award Agreement. Upon request by the Company, each Grantee shall execute any agreement evidencing such transfer restrictions prior to the receipt of Shares hereunder and the Company may place appropriate legends evidencing any such transfer restrictions on the relevant share certificates.

 

(d) Voting Rights; Dividends and Distributions. Except as provided in this Section 10 and in any Award Agreement, during any restriction period applicable to Shares subject to an award of Restricted Stock, the Grantee shall have all of the rights of a shareholder of the Company holding Shares, including the right to receive all dividends and other distributions paid with respect to such Shares. However, in the event of a dividend or distribution paid in Shares or other property or any other adjustment made upon a change in the capital structure of the Company as described in Sections 12 and 13 below, any and all new, substituted or additional securities or other property (other than normal cash dividends) to which the Grantee is entitled by reason of the Grantee’s award of Restricted Stock shall be immediately subject to the same exercise conditions as the Shares subject to the award of Restricted Stock with respect to which such dividends or distributions were paid or adjustments were made.

 

 

(e) Termination of Continuous Service. Unless otherwise provided by the Administrator, in the event of termination of Continuous Service of a Grantee for any reason, whether voluntary or involuntary (including the Grantee’s death or disability), the Grantee shall forfeit to the Company any Shares acquired by the Grantee pursuant to an Award of Restricted Stock that remain subject to exercise or transfer conditions as of the date of such termination.

 

11. Restricted Stock Units.

 

(a) General. Subject to the sole and absolute discretion and determination of the Administrator, the Administrator may decide to grant under the Plan Restricted Stock Units. A RSU is a right to receive a Share of the Company, under certain terms and conditions, for a consideration of no more than the underlying Share’s par value. Upon the lapse of any applicable conditions (for example, a vesting period) of a RSU, such RSU shall automatically vest into a Share of the Company (subject to adjustments under Sections 12 and 13 herein) and the Grantee shall pay to the Company its par value. The Board, in its sole discretion, shall determine procedures from time to time for payment of such par value by the Grantee or for collection of such amount from the Grantee by the Company. However, the Company shall have the full authority in its discretion to determine at any time that said nominal value shall not be paid and that the Company shall capitalize applicable profits or take any other action to ensure that it meets any requirement of applicable laws regarding issuance of Shares for consideration that is lower than the nominal value of such Shares.

 

(b) Termination of Continuous Service. Unless determined otherwise by the Administrator, in the event of termination of Continuous Service of a Grantee, all RSUs theretofore granted to such Grantee that are not vested on the termination date shall terminate immediately and have no legal effect.

 

12. Adjustments Upon Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number of Shares covered by each outstanding Award, and the number of Shares that have been authorized for issuance under the Plan but as to which no Awards have yet been granted or that have been returned to the Plan, the exercise price, base appreciation amount or purchase price of each such outstanding Award, the maximum number of Shares with respect to which Options and SARs may be granted to any Grantee in any calendar year, as well as any other terms that the Administrator determines require adjustment shall be proportionately adjusted for any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Shares or similar transaction affecting the Shares, or any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” In connection with the foregoing adjustments, the Administrator may, in its discretion, prohibit the exercise of Awards during certain periods of time. Except as the Administrator determines, no issuance by the Company of shares of any class, or securities convertible into shares of any class, shall affect, and no adjustment by reason hereof shall be made with respect to, the number or price of Shares subject to an Award. Adjustments shall be made by the Administrator, whose determination in that respect shall be final, conclusive and binding.

 

13. Adjustments Upon Change in Control.

 

(a) Unless otherwise set forth in the Award Agreement, in the event of a Change in Control after the effective date of the Plan, the Administrator or the Board may, in its sole discretion, provide for the (i) termination of an Award upon the consummation of the Change in Control, but only if such Award has vested and been paid out or the Grantee has been permitted to exercise the Option in full for a period of not less than thirty (30) days prior to the Change in Control, (ii) acceleration of all or any portion of an Award, (iii) payment of an amount (in cash or, in the discretion of the Administrator or the Board, in the form of consideration paid to shareholders of the Company in connection with such Change in Control) in exchange for the cancellation of an Award, which, in the case of Options and SARs, shall equal the excess, if any, of the Fair Market Value of the Shares subject to such Options or SARs over the aggregate exercise price or base appreciation amount of such Option or SAR, and/or (iv) issuance of substitute Awards that will substantially preserve the otherwise applicable terms of any affected Awards previously granted hereunder in a manner complying with Treasury Regulation Section 1.409A-1(b)(5)(v)(D), Treasury Regulation Section 1.424-1 or any applicable successor provisions.

 

 

(b) In the event of any adjustment in the number of Shares covered by any Award, any fractional Shares resulting from such adjustment shall be disregarded and each such Award shall cover only the number of full Shares resulting from such adjustment.

 

(c) All adjustments pursuant to this Section 13 shall be made by the Administrator, and its determination as to what adjustments shall be made, and the extent thereof, shall be final, binding and conclusive.

 

14. Effective Date and Term of Plan. The Plan shall become effective upon its adoption by the Board and shall continue in effect for a term of ten (10) years, or June 1, 2032, unless sooner terminated. Subject to Section 19 below, and Applicable Laws, Awards may be granted under the Plan upon its becoming effective. In the case of Israeli Grantees, 102 Options will be granted only after the lapse of at least thirty (30) days following the date in which the Plan and the relevant forms will be submitted to the tax authorities.

 

15. Amendment, Suspension or Termination of the Plan.

 

(a) The Board or the Administrator may from time to time amend, suspend or terminate in whole or in part, and if suspended or terminated, may reinstate, any or all of the provisions of the Plan; provided, however, that no amendment of the Plan shall be made without the approval of the Company’s stockholders to the extent such approval is required under Section 19 or if such amendment would lessen the stockholder approval requirements of Section 4(b).

 

(b) No Award may be granted during any suspension of the Plan or after termination of the Plan.

 

(c) No amendment, alteration, suspension or termination of the Plan (except as provided herein) shall adversely affect any rights under Awards already granted to a Grantee, unless mutually agreed otherwise between the Grantee and the Administrator, which agreement must be in writing or electronic format and signed by the Grantee and the Company.

 

(d) To the extent applicable, it is intended that the Plan and all Awards hereunder comply with the requirements of Section 409A of the Code, and the Plan and all Award Agreements shall be interpreted and applied by the Administrator in a manner consistent with this intent in order to avoid the imposition of any additional tax under Section 409A of the Code. In the event that any provision of the Plan or an Award Agreement is determined by the Administrator to not comply with the applicable requirements of Section 409A of the Code, the Administrator shall have the authority to take such actions and to make such changes to the Plan or an Award Agreement as the Administrator deems necessary to comply with such requirements, provided that no such action shall adversely affect any outstanding Award without the consent of the affected Grantee. Notwithstanding the foregoing or anything elsewhere in the Plan or an Award Agreement to the contrary, if a Grantee is a “specified employee” as defined in Section 409A of the Code at the time of termination of Continuous Service with respect to an Award, then solely to the extent necessary to avoid the imposition of any additional tax under Section 409A of the Code in respect of Awards that are deferred compensation for purposes of such Section 409A, the commencement of any payments or benefits under the Award shall be deferred until the date that is one day following six (6) months following the Grantee’s separation from service (or such other period as required to comply with Section 409A).

 

16. Reservation of Shares. The Company, during the term of the Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

 

 

17. Liability of the Company.

 

(a) Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

 

(b) Grants Exceeding Allotted Shares. If the Shares covered by an Award exceed, as of the date of grant, the number of Shares that may be issued under the Plan without additional shareholder approval, such Award shall be void with respect to such excess awarded Shares, unless shareholder approval of an amendment sufficiently increasing the number of Shares subject to the Plan is timely obtained in accordance with the Plan.

 

18. No Effect on Terms of Employment/Consulting Relationship or Retirement Plans.

 

(a) No Effect on Terms of Employment/Consulting Relationship. The Plan shall not confer upon any Grantee any right with respect to the Grantee’s Continuous Service, nor shall it interfere in any way with his or her right or the right of the Company or any Related Entity to terminate the Grantee’s Continuous Service at any time, with or without Cause, and with or without notice. The ability of the Company or any Related Entity to terminate the employment of a Grantee who is employed at will is in no way affected by its determination that the Grantee’s Continuous Service has been terminated for Cause for the purposes of this Plan.

 

(b) No Effect on Retirement and Other Benefit Plans. Except as specifically provided in a retirement or other benefit plan of the Company or a Related Entity, Awards shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company or a Related Entity, and shall not affect any benefits under any other benefit plan of any kind or any benefit plan subsequently instituted under which the availability or amount of benefits is related to level of compensation. The Plan is not a “Pension Plan” or “Welfare Plan” under the Employee Retirement Income Security Act of 1974, as amended.

 

19. Stockholder Approval.

 

(a) Incentive Stock Options. Awards of Incentive Stock Options shall only be made under the Plan if the stockholders of the Company approve the Plan within twelve (12) months before or after the date the Plan is adopted. Such stockholder approval shall be obtained in the degree and manner required under Applicable Laws. The Administrator may grant Incentive Stock Options under the Plan prior to approval by the stockholders, but until such approval is obtained, no such Incentive Stock Option shall be exercisable. In the event that stockholder approval is not obtained within the twelve (12) month period provided above, all Incentive Stock Options previously granted under the Plan shall be exercisable as Non-qualified Stock Options.

 

(b) Amendments. Without approval of the Company’s stockholders there shall be no: (i) increase in the number of shares to be issued under the Plan, except as permitted in Section 12; (ii) extension of the duration of the Plan; (iii) expansion of the class of Grantees eligible to participate in the Plan; (iv) expansion in the types of Awards provided under the Plan; or (v) other change in the Plan that requires stockholder approval under Applicable Law.

 

20. Unfunded Obligation. Grantees shall have the status of general unsecured creditors of the Company. Any amounts payable to Grantees pursuant to the Plan shall be unfunded and unsecured obligations for all purposes, including, without limitation, Title I of the Employee Retirement Income Security Act of 1974, as amended. Neither the Company nor any Related Entity shall be required to segregate any monies from its general funds, or to create any trusts, or establish any special accounts with respect to such obligations. The Company shall retain at all times beneficial ownership of any investments, including trust investments, that the Company may make to fulfill its payment obligations hereunder. Any investments or the creation or maintenance of any trust or any Grantee account shall not create or constitute a trust or fiduciary relationship between the Administrator, the Company or any Related Entity and a Grantee, or otherwise create any vested or beneficial interest in any Grantee or the Grantee’s creditors in any assets of the Company or a Related Entity. The Grantees shall have no claim against the Company or any Related Entity for any changes in the value of any assets that may be invested or reinvested by the Company with respect to the Plan.

 

 

21. Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

 

22. Israeli Grantees. This Section shall apply only to Israeli Grantees and is intended to enable the Company to grant Awards under the Plan pursuant and subject to Section 102 and Section 3(i) of the Tax Ordinance. Accordingly, the Plan is designated to comply with the Tax Ordinance and the rules, regulations and orders or procedures promulgated thereunder from time to time, as amended or replaced from time to time, and shall be submitted to the ITA as required thereunder.

 

In any case of contradiction, whether explicit or implied, between the provisions of this Section 22 and the Plan, the provisions set out in this Section 22 shall prevail unless the Administrator decides otherwise to ensure compliance with the Tax Ordinance and other Applicable Laws.

 

(a) Eligibility. 102 Options may be granted only to Israeli Employees. Non-Employees may only be granted 3(i) Options. The grant of an Award hereunder shall neither entitle the Grantee to participate nor disqualify the Israeli Grantee from participating in any other grant of Awards pursuant to the Plan or any other option or stock plan of the Company or any Related Company.

 

(b) Grant of Awards in Trust.

 

(i) Grants Made Under Section 102.

 

(1) The Company may designate 102 Options as Trustee 102 Options or Non-Trustee 102 Options. The designation of Non-Trustee 102 Options and Trustee 102 Options shall be subject to the terms and conditions set forth in Section 102 of the Tax Ordinance and the regulations promulgated thereunder.

 

(ii) Grant of Trustee 102 Options.

 

(1) The grant of the Trustee 102 Options shall be made under the Plan and shall be conditional upon the approval of the Plan by the ITA. Trustee 102 Options may be granted at any time after the passage of thirty (30) days following the delivery by the Company to the ITA of a notice pertaining to the appointment of the Trustee and the adoption of the Plan, unless otherwise determined by the ITA. 102 Options, which shall be granted pursuant to Section 102, and/or any Shares issued upon exercise or vesting of such Awards, as the case may be, and/or other Shares received subsequently following any realization of rights, shall be issued to the Trustee. Each Israeli Grantee in respect of whom a Trustee 102 Option is granted and held in trust by the Trustee shall be referred to as a “beneficial optionee” hereunder.

 

(2) Trustee 102 Options may either be classified as Capital Gain Options or Ordinary Income Options:

 

a. Trustee 102 Options elected and designated by the Company to qualify under the capital gain tax treatment in accordance with the provisions of Section 102(b)(2) shall be referred to herein as “Capital Gain Options” or “CGO.”

 

b. Trustee 102 Options elected and designated by the Company to qualify under the ordinary income tax treatment in accordance with the provisions of Section 102(b)(l) shall be referred to herein as “Ordinary Income Options” or “OIO.”

 

(3) The Company’s election of the type of Trustee 102 Options as CGO or OIO granted to Employees (the “Election”) shall be appropriately filed with the ITA thirty (30) days before the date of grant of a Trustee 102 Option, unless otherwise determined by the ITA. Such Election shall become effective beginning the first date of grant of a Trustee 102 Option under this Plan and shall remain in effect until the end of the year following the year during which the Company first granted Trustee 102 Options. The Election shall obligate the Company to grant only the type of Trustee 102 Option it has elected, and shall apply to all Israeli Grantees who were granted Trustee 102 Options during the period indicated herein or therein, all in accordance with the provisions of Section 102(g) of the Tax Ordinance. Notwithstanding, such Election shall not prevent the Company from granting Non-Trustee 102 Options simultaneously.

 

 

(4) All Trustee 102 Options must be held in trust by and issued on the name of the Trustee, as described below.

 

(5) With respect to Trustee 102 Options, the provisions of the Plan and/or an Award Agreement shall be subject to the provisions of Section 102 and the ITA’s permit, and the said provisions and permit shall be deemed an integral part of this Section 22 and of the Award Agreement for the respective Grantees thereof. Any provision of Section 102 and/or the said permit that is necessary in order to receive and/or to keep any tax benefit pursuant to Section 102, which is not expressly specified in the Plan or the Award Agreement, shall be considered binding upon the Company and the Israeli Grantee.

 

(iii) Issuance to Trustee.

 

(1) All Trustee 102 Options granted under the Plan and/or any Shares allocated or issued upon exercise or vesting of such Trustee 102 Options, as the case may be, and/or other and all rights deriving from or in connection therewith, including, without limitation, in accordance with Section 12 above or any bonus Shares or stock dividends issued in connection therewith shall be granted by the Company to the Trustee, and the Trustee shall hold each such Trustee 102 Option and the Shares issued upon exercise or vesting thereof, as the case may be, in trust for such period of time as required by Section 102 or any regulations, rules or orders or procedures promulgated thereunder (the “Holding Period”) for the benefit of the Grantees in respect of whom such Trustee 102 Option was granted. If applicable, all certificates representing Shares issued to the Trustee under the Plan shall be deposited with the Trustee, and shall be held by the Trustee until such time that such Shares are released from the Trust as herein provided.

 

(2) In the event the requirements for Trustee 102 Options are not met for any reason whatsoever, then the Trustee 102 Options may be treated as Non-Trustee 102 Options, all in accordance with the provisions of Section 102 and regulations promulgated thereunder.

 

(3) With respect to any Trustee 102 Option, subject to the provisions of Section 102 and any rules or regulations or orders or procedures promulgated thereunder, an Israeli Grantee shall not be entitled to sell or release from Trust the Trustee 102 Option, the Shares received upon the exercise or vesting of such Option, as the case may be, and/or any right deriving from or in connection therewith, including, without limitation, in accordance with Section 13 above or any bonus Shares or stock dividends issued in connection therewith, until the later of: (i) the lapse of the Holding Period required under Section 102 and (ii) the vesting of such 102 Options set forth in the respective Award Agreement (such later date being hereinafter referred to as the “Release Date”). Notwithstanding the foregoing, if such sale or release occurs during the Holding period, the provisions of Section 102 and the rules or regulations promulgated thereunder shall apply and any expenses and/or tax consequences therefrom shall be borne by the Israeli Grantee.

 

(4) Subject to the terms hereof, at any time after the Release Date with respect to any Trustee 102 Options or Shares the following shall apply:

 

a. Trustee 102 Options granted, and/or Shares or rights issued to the Trustee shall continue to be held by the Trustee, on behalf of the beneficial optionee. From and after the Release Date, upon the written request of any beneficial optionee, the Trustee shall release from the Trust the Trustee 102 Options granted, and/or the Shares or rights issued, on behalf of such beneficial optionee, by executing and delivering to the Company such instrument(s) as the Company may require, giving due notice of such release to such beneficial optionee; provided, however, that the Trustee shall not so release any such Trustee 102 Options and/or Shares and/or rights to such beneficial optionee unless the latter, prior to or concurrently with such release, provides the Trustee with evidence, satisfactory in form and substance to the Trustee, that all taxes, if any, required to be paid upon such release have, in fact, been paid.

 

 

b. Alternatively, from and after the Release Date, upon the written instructions of the beneficial optionee to sell any Shares and rights issued upon exercise of Trustee 102 Options, the Trustee or the Company, as the case may be, shall use its best efforts to effect such sale and shall transfer such Shares to the purchaser thereof concurrently with the receipt, or after having made suitable arrangements to secure the payment, of the purchase price in such transactions. The Trustee or the Company, as the case may be, shall withhold from such proceeds any and all taxes required to be paid in respect of such sale, shall remit the amount so withheld to the appropriate tax authorities and shall pay the balance thereof directly to the beneficial optionee, reporting to such beneficial optionee and to the Company the amount so withheld and paid to said authorities.

 

c. Notwithstanding the foregoing, in the event the underwriters of securities of the Company impose restrictions on the transferability of the Shares during a lock-up period, the beneficial optionee shall not be entitled to release from Trust the Trustee 102 Options granted and/or the Shares issued and/or to instruct the Trustee to effect a sale of same, for as long as the restrictions are in effect. In the event the Trustee 102 Options granted and/or the Shares issued have been released from trust the restrictions imposed on the transferability of same shall nevertheless apply to said optionee’s Trustee 102 Options held by the Grantee and/or Shares in the same manner. Consequently, the Israeli Grantee shall sign any documents required in order to effect the restrictions, for as long as the restrictions are in effect.

 

d. Upon receipt of the Award, the Israeli Grantee will sign an undertaking to release the Trustee from any liability in respect of any action or decision duly taken and bona fide executed in relation with the Plan, or any Award or Share or rights granted to same thereunder. The Trustee may establish additional terms and conditions in connection with Awards held in trust by the Trustee.

 

(iv) Grant of Non-Trustee 102 Options.

 

(1) Awards granted pursuant to this subsection are intended to constitute Non-Trustee 102 Options and shall be subject to the general terms and conditions of the Plan and this Section 22, except for provisions of the Plan applying to Trustee 102 Option or Awards under a different tax law or regulation.

 

(2) With respect to Non-Trustee 102 Options, if the Grantee ceases to be employed by or of service to the Company or a Related Company, the Grantee shall be required to extend to the Company a security or guarantee for the payment of tax due at the time of sale of Shares or other rights, all in accordance with the provisions of Section 102 and the rules, regulation or orders promulgated thereunder.

 

(v) Grants Made Under Section 3(i). Awards granted pursuant to this subsection are intended to constitute 3(i) Options and shall be subject to the general terms and conditions of the Plan and Section 22 thereof, except for said provisions of the Plan applying to Awards under a different tax law or regulation. The Administrator may choose to deposit the 3(i) Options granted pursuant to Section 3(i) of the Tax Ordinance with a trustee. In such event, said trustee shall hold such 3(i) Options in trust, until exercised by the Grantee, pursuant to the Company’s instructions from time to time. If determined by the Administrator, the trustee shall be responsible for withholding any taxes to which a Grantee become liable upon the exercise of such 3(i) Options.

 

(c) Award Agreement. Without derogating from the powers of the Administrator under the Plan, the Administrator shall adopt the form of Award Agreement for Israeli Grantees in form acceptable by the ITA and in compliance with the Tax Ordinance. The Award Agreement shall further indicate the type of Award (102, 3(i), Trustee, Non-Trustee etc.) granted thereunder.

 

(d) Vesting. Without derogating from the terms of any Award Agreement or the discretionary authority of the Administrator, the standard vesting for Awards to Israeli Grantees shall be as follows:

 

(i) Twenty five percent (25%) of the Awards granted under each Award Agreement shall vest on the end of the first year of Continuous Service following the vesting commencement date determined by the Administrator and if not specified the date of the grant of an Option (the “First Anniversary”); and

 

 

(ii) The remaining seventy five percent (75%) of the Awards shall vest on a quarterly basis over a period of three (3) years commencing as of the First Anniversary in twelve (12) equal portions subject to Continuous Service of the Grantee.

 

(e) With respect to all Shares (in contrast to unexercised Options) allocated or issued upon the exercise of Awards by the Israeli Grantee, the Grantee or the Trustee, as the case may be, shall be entitled to receive dividends in accordance with the quantity of such Shares, subject however to any applicable taxation on distribution of dividends.

 

(f) Without derogating from anything in the Plan, to the extent permitted by Applicable Laws, any tax consequences attributable to the Israeli Grantee arising from the grant, vesting or exercise of any Award, from the payment for Shares covered thereby or from any other event or act (of the Company, a Related Company, the Trustee or the Grantee) hereunder shall be borne solely by the Grantee. The Company and/or or a Related Company and/or the Trustee shall withhold taxes according to the requirements under the Applicable Laws, rules and regulations, including withholding taxes at the source. Furthermore, to the extent permitted by Applicable Law, the Grantee shall agree to indemnify the Company and/or a Related Company and/or the Trustee and hold them harmless against and from any and all liability for any such tax or interest or penalty thereon, including without limitation, liabilities relating to the necessity to withhold, or to have withheld, any such tax from any payment made to the Grantee. The Administrator and/or the Trustee shall not be required to release any Share certificate to a Grantee until all required payments have been fully made.

 

(g) The Plan, to the extent applicable to Israeli Grantees, shall be governed by and construed and enforced in accordance with the laws of the State of Israel applicable to contracts made and to be performed therein, without giving effect to the principles of conflict of laws. The competent courts of Tel-Aviv, Israel shall have sole jurisdiction in any matters pertaining to Israeli Grantees.

 

23. Prohibition on Repricing. The Administrator shall not, without the approval of the stockholders of the Company (i) reduce the exercise price, or cancel and reissue options so as to in effect reduce the exercise price or (ii) change the manner of determining the exercise price so that the exercise price is less than the Fair Market Value per share of Common Stock.

 

As adopted by the Board of Directors of Petrocorp Inc. as of June 1, 2022.

 

 

Exhibit 21.1

 

Subsidiary of the Registrant

 

M.E.A. Testing Systems Ltd., a company formed under the laws of the State of Israel. 89.6% of its ordinary shares are owned by the Registrant.

 

Petrocorp Israel Ltd. is a company formed under the laws of the State of Israel and is wholly owned by MEA Testing Systems Ltd.

 

 

Exhibit 23.1

 

 

 

Board of Directors

Motomova Inc

 

We consent to the incorporation by reference in this Registration Statement on Form S-1 and related Prospectus of Motomova Inc. of our report dated July 14, 2023, relating to the consolidated financial statements of Motomova Inc. for the year ended December 31, 2022 and December 31, 2021.

 

We also consent to the reference to our firm under the heading “Experts” in such Prospectus.

  

Sincerely,

 

/s/ Elkana Amitai CPA

July 14, 2023

 

 

 

 

Exhibit 107

 

CALCULATION OF FILING FEE TABLES

 

Form S-1

(Form Type)

 

Motomova Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Table 1: Newly Registered and Carry Forward Securities

 

		Security Type		Security Class Title		Fee Calculation or Carry Forward Rule		Amount Registered				Proposed Maximum Offering Price Per Unit				Maximum Aggregate Offering Price(1)				Fee Rate				Amount of Registration Fee				Carry Forward Form Type				Carry Forward File Number				Carry Forward Initial effective date				Filing Fee Previously Paid In Connection with Unsold Securities to be Carried Forward
Newly Registered Securities
Fees to Be Paid		Equity		Common stock, par value $0.0001 per share		Rule 457(o)			127,991,323			$	0.10			$	12,799,132.30				.00011020			$	1410.46
Total Offering Amounts																$	12,799,132.30							$	1410.46
Total Fees Previously Paid
Total Fee Offsets
Net Fee Due																								$	1410.46

 

(1)

Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended.

 

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