-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ip0OaS8TrjhxTIfXBrNnLLZqyHLd5Sa7JzHnzQPHz3fSkhaZSEUIzvcTpVxP6XLc hscaXwOT76N6FGGB5mZXlQ== /in/edgar/work/20000626/0000931763-00-001611/0000931763-00-001611.txt : 20000920 0000931763-00-001611.hdr.sgml : 20000920 ACCESSION NUMBER: 0000931763-00-001611 CONFORMED SUBMISSION TYPE: F-1/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20000626 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACCORD NETWORKS LTD CENTRAL INDEX KEY: 0001116152 STANDARD INDUSTRIAL CLASSIFICATION: [3576 ] FILING VALUES: FORM TYPE: F-1/A SEC ACT: SEC FILE NUMBER: 333-38804 FILM NUMBER: 661019 BUSINESS ADDRESS: STREET 1: 94 DERECH EM HAMASHAVOT STREET 2: P.O. BOX 3654 CITY: PETACH TIKVA STATE: L3 ZIP: 00000 BUSINESS PHONE: 97239251444 F-1/A 1 0001.txt AMENDMENT TWO TO FORM F-1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 26, 2000 REGISTRATION NO. 333-38804 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- AMENDMENT NO. 2 TO FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------------- ACCORD NETWORKS LTD. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) ISRAEL 3576 NOT APPLICABLE (STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER JURISDICTION OF INDUSTRIAL IDENTIFICATION NUMBER) INCORPORATION) CLASSIFICATION CODE NUMBER) ACCORD NETWORKS LTD. 94 DERECH EM HAMOSHAVOT P.O.B. 3654 PETACH-TIKVA 49130, ISRAEL TELEPHONE: 972-3-925-1444 FACSIMILE: 972-3-921-1571 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES AND AGENT FOR SERVICE) ACCORD NETWORKS, INC. ATTENTION: JULES L. DEVIGNE, CHAIRMAN AND CHIEF EXECUTIVE OFFICER 9040 ROSWELL ROAD, SUITE 450 ATLANTA, GEORGIA 30350-1877, USA TELEPHONE: 770-641-4400 FACSIMILE: 770-641-4499 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE OF PROCESS) COPIES TO: J. VAUGHAN CURTIS, ESQ. DAVID COHEN, ADV. DAVID C. CHAPIN, ESQ. BARRY LEVENFELD, ADV. ALSTON & BIRD LLP YUVAL HORN, ADV. ROPES & GRAY YIGAL ARNON & CO. ONE ATLANTIC CENTER DORON COHEN-DAVID COHEN ONE INTERNATIONAL PLACE 22 RIVLIN STREET 1201 WEST PEACHTREE STREET LAW OFFICES BOSTON, MASSACHUSETTS, USA 02110-2624 JERUSALEM, ISRAEL 91000 14 ABBA HILLEL SILVER ATLANTA, GEORGIA, USA 30309-3424 ROAD TELEPHONE: 617-951-7000 TELEPHONE: 972-2-623-9200 TELEPHONE: 404-881-7000 RAMAT-GAN, ISRAEL 52506 FACSIMILE: 617-951-7050 FACSIMILE: 972-2-623-9236 TELEPHONE: 972-3-753- FACSIMILE: 404-881-7777 1000 FACSIMILE: 923-3-753- 1001
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box: [_] If this Form is filed to register additional securities for any 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, 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(d) 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 delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box: [_] 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. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXPLANATORY NOTE This Amendment No. 2 to the Form F-1 Registration Statement is being filed for the sole purpose of filing exhibits. PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the expenses in connection with the offering described in the registration statement. All amounts are estimates except the SEC registration fee, the NASD fees and the Nasdaq listing fees: SEC registration fee............................................ $ 18,216 NASD fees....................................................... 7,400 Nasdaq listing fees............................................. 95,000 Israeli stamp tax............................................... 690,000 Blue sky fees and expenses...................................... 5,000 Printing and engraving expenses................................. 250,000 Legal fees and expenses......................................... 800,000 Accounting fees and expenses.................................... 600,000 Transfer agent fees............................................. 3,500 Miscellaneous expenses.......................................... 105,884 ---------- Total.......................................................... $2,575,000 ==========
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Companies Law, 1999, provides that a company may include in its articles of association provisions which allow it to: . enter into a contract to insure the liability of an office holder (as defined below) of the company by reason of acts or omissions committed in his capacity as an office holder of the company with respect to the following: (a) the breach of his duty of care to the company or any other person; (b) the breach of his fiduciary duty to the company to the extent he acted in good faith and had a reasonable basis to believe that the act would not prejudice the interests of the company; and (c) monetary liabilities or obligations which may be imposed upon him in favor of other persons. . indemnify an office holder of the company for: (a) monetary liabilities or obligations imposed upon him in favor of other persons pursuant to a court judgment, including a compromise judgment or an arbitrator's decision approved by a court, by reason of acts or omissions of such person in his capacity as an office holder of the company; and (b) reasonable litigation expenses, including attorney's fees, actually incurred by the office holder or imposed upon him by a court, in an action, suit or proceeding brought against him by or on behalf of the Company or by other persons, or in connection with a criminal action from which he was acquitted, or in connection with a criminal action which does not require proof of criminal intent in which he was convicted, in each case by reason of acts or omissions of the person in his capacity as an office holder. The Companies Law provides that a company's articles of association may provide for indemnification of an office holder post-factum and may also provide that a company may undertake to indemnify an office holder in advance, provided the undertaking is limited to types of occurrences, which, in the opinion of the company's board of directors, are, at the time of the undertaking, foreseeable and to an amount the board of directors has determined is reasonable in the circumstances. II-1 The Companies Law provides that a company may not indemnify, exempt or enter into an insurance contract which would provide coverage for the liability of, an office holder with respect to the following: . a breach of his fiduciary duty, except to the extent described above; . a breach of his duty of care, if the breach was done intentionally, recklessly or with disregard of the circumstances of the breach or its consequences; . an act or omission done with the intent to unlawfully realize personal gain; or . a fine or monetary settlement imposed upon him. The Companies Law defines "office holder" to include a director, managing director, general manager, chief executive officer, executive vice president, vice president, other managers directly subordinate to the managing director, and any other person fulfilling or assuming any of these positions or responsibilities without regard to the person's title. Indemnification of, and procurement of insurance coverage for, an office holder of a company requires, under the Companies Law, the approval of the company's audit committee and board of directors, and, in certain circumstances, including if the office holder is a director, the approval of the company's shareholders. We have agreed to indemnify each of our office holders subject to the above, and intend to purchase from a commercial carrier a directors' and officers' liability insurance policy insuring our office holders as permitted by the Companies Law and our articles of association, including coverage with respect to the offering of the ordinary shares described in this registration statement. In October 1999 and April 2000, our board of directors authorized us to enter into indemnification agreements with each of our office holders. Our shareholders approved these agreements in December 1999 and May 2000. The form of indemnification agreement provides among other things that subject to certain conditions and limitations, we will indemnify our office holders in respect of all amounts they may be obligated to pay, including reasonable legal expenses, in the event of legal proceedings or a judgment in respect of or due to any act or omission taken or made in their capacity as office holders, including in connection with this offering. ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES. Since February 1997, we have issued and sold the securities listed below without registering the securities under the Securities Act. None of these transactions involved any underwriters, underwriting discounts or commissions, or any public offering: (a) In September 1997, our board of directors approved the grant of an option to an executive search firm to acquire 6,696 of our ordinary shares for an aggregate of approximately $15.00 as partial consideration for the search of our chief executive officer. In December 1999, we issued 6,696 shares upon the exercise of this option. (b) In March, 1998, we issued an aggregate of 4,017,428 series B preferred shares to a total of 16 investors upon their conversion of the outstanding amounts of principal indebtedness under a loan agreement entered into in July 1997, an investment and loan agreement entered into in October 1997 and in consideration for additional cash investments made by some of them upon their exercise of pre-emptive rights or pursuant to a subscription agreement entered into in March 1998. The conversion price of the debt and purchase price of the other series B preferred shares was $2.24 per share and we received total consideration of approximately $9.0 million, including the converted II-2 debt. In connection with this conversion and purchase of shares, we issued warrants to purchase 1,205,228 shares of series B preferred shares at an exercise price of $2.24 per share. These warrants may be exercised by cash payment or net exercise. (c) In September 1998, we granted an option to a consultant to purchase 5,000 ordinary shares at an exercise price of $2.24 per share as consideration for services rendered to us. (d) In March 1999, we issued 397,673 series A preferred shares to VTEL Corporation in full and final satisfaction of the anti-dilution rights provided under a Subscription Agreement dated June 14, 1995. (e) In April 1999, we issued a warrant to a financial institution to purchase 137,061 ordinary shares at an exercise price of $3.648 per share in consideration for a $4,000,000 revolving line of credit with an interest rate of LIBOR, plus 1.5%. This warrant may be exercised by cash payment or net exercise. (f) In August 1999, we issued and sold for cash an aggregate of 1,425,439 series C preferred shares to a total of two investors at a purchase price of $4.56 per share. Of these shares, 733,614 were non-voting series C preferred shares and 691,825 were voting series C preferred shares. (g) During December 1999 and January 2000 we issued 583,705 series B preferred shares upon exercise of warrants issued in March 1996. The exercise price of these warrants was $2.24 per share. (h) We have granted options to certain of our employees, directors and consultants to purchase approximately 5,113,978 ordinary shares, of which 631,164 ordinary shares have been issued upon the exercise of these options since February 1997. The purchase price under the option grants ranges from $0.01 to $9.50 based on the fair market value of our ordinary shares as of the date of each grant as determined by our board of directors. We believe that the issuances described in Items 15(a), 15(b), 15(d), 15(e), 15(f) and 15(g) above were deemed exempt from registration under the Securities Act in reliance upon Section 4(2) thereof as transactions by an issuer not involving any public offering. We also believe that the issuances described in Item 15(c) and 15(h) were deemed exempt from registration under the Securities Act in reliance upon Rule 701 promulgated thereunder in that they were offered or sold under a written contract relating to compensation, as provided by Rule 701. In addition, we believe that these issuances were deemed to be exempt from registration under Section 4(2) of the Securities Act as transactions by an issuer not involving any public offering. The recipients of securities in the above transactions have represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Exhibits EXHIBIT NUMBER DESCRIPTION 1.1 Form of Underwriting Agreement. *3.1 Form of Articles of Association of Registrant. *3.2 Memorandum of Association of Registrant. 4.1 Specimen Ordinary Share Certificate. *4.2 Shareholders Rights Agreement dated as of June 22, 1999. II-3 EXHIBIT NUMBER DESCRIPTION *4.3 Amendment to Shareholders Rights Agreement dated as of July 19, 1999. *4.4 Second Amendment to Shareholders Rights Agreement dated as of May 25, 2000. *5.1 Opinion of Doron Cohen-David Cohen, Israeli counsel to the Registrant, as to certain legal matters with respect to the legality of the ordinary shares. *10.1 Registrant's 1995 Employee Share Ownership and Option Plan. *10.2 Registrant's Share Ownership and Option Plan (2000). *10.3 Registrant's 2000 Share Option Plan. *10.4 Registrant's 2000 Non-Employee Director Stock Option Plan. *10.5 Line of Credit Agreement with Bank Hapoalim B.M. dated April 28, 1999. *10.6 Form of Indemnification Agreement. *10.7 Lease Agreement dated July 21, 1997 by and between Accord Networks, Inc. and 500 Northridge Pointe, Inc. 10.8 Intentionally omitted. *10.9 Lease Agreement dated October 20, 1999 by and between Accord Networks (U.K.) Limited and The Virtualists Limited. *10.10 Sublease Agreement dated January 10, 2000 by and between Accord Networks, Inc. and Halis, Inc. *10.11 Lease Agreement dated January 10, 2000 by and between Accord Networks, Inc. and Affiliated Equities Real Estate L.P. *10.12 Distribution Agreement dated January 21, 2000 by and between the Registrant and PictureTel Corporation.+ *10.13 Warrant to Purchase Ordinary Shares dated effective as of April 28, 1999 granted to Hapoalim Nechasim (Menayot) Ltd. *10.14 Lease Agreement dated April 25, 1999 by and between Registrant and Nichzay Azorim. *10.15 Debenture with Bank Hapaolim B.M. dated April 28, 1999. *10.16 Letter Agreement dated January 26, 2000 amending Distribution Agreement dated January 21, 2000 by and between the Registrant and PictureTel Corporation. 10.17 Settlement Agreement by and between Ezenia! Inc., f/k/a VideoServer, Inc., Accord Networks, Inc., f/k/a Accord Telecommunications, Inc., f/k/a/ Accord Video Telecommunications, Inc., and Accord Networks Ltd., f/k/a Accord Telecommunications Ltd. effective June 16, 2000. *21.1 Subsidiaries of the Registrant. *23.1 Consent of Kesselman & Kesselman, a member of PricewaterhouseCoopers International Limited, independent certified public accountants in Israel. *23.2 Consent of Doron Cohen-David Cohen, counsel to the Registrant (included in Exhibit 5.1). *24.1 Power of Attorney. 99.1 Consent of Credit Suisse First Boston. *99.2 Consent of University of Notre Dame. *99.3 Consent of Deutsche Telekom AG.
II-4 99.4 Consent of France Telecom. *99.5 Letter of Kesselman & Kesselman, a member of PricewaterhouseCoopers International Limited, independent certified public accountants in Israel, to the Securities and Exchange Commission regarding Israeli generally accepted auditing standards. - ------------------ * Previously filed. + Accord has requested confidential treatment of portions of this agreement. As a result, portions of this agreement will be omitted when filed and will be filed separately with the Securities and Exchange Commission. (b) Financial Schedules None. ITEM 17. UNDERTAKINGS. Accord hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Accord pursuant to the foregoing provisions, or otherwise, Accord has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Accord of expenses incurred or paid by a director, officer or controlling person of Accord 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, Accord 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. Accord 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 Accord 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 fide offering thereof. II-5 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM F-1 AND HAS DULY CAUSED THIS AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ATLANTA, STATE OF GEORGIA, ON JUNE 26, 2000. Accord Networks Ltd. /s/ Jules L. DeVigne By: _________________________________ JULES L. DEVIGNE CHAIRMAN AND CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT NO. 2 HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES LISTED AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE --------- ----- ---- /s/ Jules L. DeVigne Chairman, Chief Executive Officer June 26, 2000 _________________________________ and Director (Principal JULES L. DEVIGNE Executive Officer) /s/ Jeffrey B. Bradley Chief Financial Officer June 26, 2000 _________________________________ (Principal Financial and JEFFREY B. BRADLEY Accounting Officer) * Controller June 26, 2000 _________________________________ ORI SHACHAR * Chief Technology Officer and June 26, 2000 _________________________________ Director SIGI GAVISH * Director June 26, 2000 _________________________________ MATTY KARP * Director June 26, 2000 _________________________________ JOS C. HENKENS
Authorized Representative in the United States: Accord Networks, Inc. /s/ Jules L. DeVigne By: __________________________ June 26, 2000 Name: Jules L. DeVigne Title: Chairman and Chief Executive Officer /s/ Jules L. DeVigne *By: _________________________ June 26, 2000 Name: Jules L. DeVigne (Attorney in Fact)
II-6 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 1.1 Form of Underwriting Agreement. *3.1 Form of Articles of Association of Registrant. *3.2 Memorandum of Association of Registrant. 4.1 Specimen Ordinary Share Certificate. *4.2 Shareholders Rights Agreement dated as of June 22, 1999. *4.3 Amendment to Shareholders Rights Agreement dated as of July 19, 1999. *4.4 Second Amendment to Shareholders Rights Agreement dated as of May 25, 2000. *5.1 Opinion of Doron Cohen-David Cohen, Israeli counsel to the Registrant, as to certain legal matters with respect to the legality of the ordinary shares. *10.1 Registrant's 1995 Employee Share Ownership and Option Plan. *10.2 Registrant's Share Ownership and Option Plan (2000). *10.3 Registrant's 2000 Share Option Plan. *10.4 Registrant's 2000 Non-Employee Director Stock Option Plan. *10.5 Line of Credit Agreement with Bank Hapoalim B.M. dated April 28, 1999. *10.6 Form of Indemnification Agreement. *10.7 Lease Agreement dated July 21, 1997 by and between Accord Networks, Inc. and 500 Northridge Pointe, Inc. 10.8 Intentionally omitted. *10.9 Lease Agreement dated October 20, 1999 by and between Accord Networks (U.K.) Limited and The Virtualists Limited. *10.10 Sublease Agreement dated January 10, 2000 by and between Accord Networks, Inc. and Halis, Inc. *10.11 Lease Agreement dated January 10, 2000 by and between Accord Networks, Inc. and Affiliated Equities Real Estate L.P. *10.12 Distribution Agreement dated January 21, 2000 by and between the Registrant and PictureTel Corporation.+ *10.13 Warrant to Purchase Ordinary Shares dated effective as of April 28, 1999 granted to Hapoalim Nechasim (Menayot) Ltd. *10.14 Lease Agreement dated April 25, 1999 by and between Registrant and Nichzay Azorim. *10.15 Debenture with Bank Hapaolim B.M. dated April 28, 1999. *10.16 Letter Agreement dated January 26, 2000 amending Distribution Agreement dated January 21, 2000 by and between the Registrant and PictureTel Corporation.
10.17 Settlement Agreement by and between Ezenia! Inc., f/k/a VideoServer, Inc., Accord Networks, Inc., f/k/a Accord Telecommunications, Inc., f/k/a Accord Video Telecommunications, Inc., and Accord Networks Ltd., f/k/a Accord Telecommunications Ltd. effective June 16, 2000. *21.1 Subsidiaries of the Registrant. *23.1 Consent of Kesselman & Kesselman, a member of PricewaterhouseCoopers International Limited, independent certified public accountants in Israel. *23.2 Consent of Doron Cohen-David Cohen, counsel to the Registrant (included in Exhibit 5.1). *24.1 Power of Attorney. 99.1 Consent of Credit Suisse First Boston. *99.2 Consent of University of Notre Dame. *99.3 Consent of Deutsche Telekom AG. 99.4 Consent of France Telecom. *99.5 Letter of Kesselman & Kesselman, a member of PricewaterhouseCoopers International Limited, independent certified public accountants in Israel, to the Securities and Exchange Commission regarding Israeli generally accepted auditing standards.
- ------------------ * Previously filed. + Accord has requested confidential treatment of portions of this agreement. As a result, portions of this agreement will be omitted when filed and will be filed separately with the Securities and Exchange Commission. EX-1.1 2 0002.txt FORM OF UNDERWRITING AGREEMENT EXHIBIT 1.1 5,750,000 Shares ACCORD NETWORKS LTD. Ordinary Shares UNDERWRITING AGREEMENT ---------------------- June , 2000 CIBC World Markets Corp. Dain Rauscher Incorporated U.S. Bancorp Piper Jaffray, Inc. c/o CIBC World Markets Corp. 425 Lexington Avenue New York, New York 10017 On behalf of the Several Underwriters named on Schedule I attached hereto. Ladies and Gentlemen: Accord Networks Ltd., an Israeli corporation (the "Company") and Gil and Michal Rosenfeld (each a "Selling Shareholder" and together the "Selling Shareholders"), propose, subject to the terms and conditions contained herein, to sell to you and the other underwriters named on Schedule I to this Agreement (the "Underwriters"), for whom you are acting as Representatives (the "Representatives"), an aggregate of 5,000,000 shares (the "Firm Shares") of the Company's Ordinary Shares, NIS 0.01 nominal value (the "Ordinary Shares"). Of the 5,000,000 Firm Shares, 5,000,000 are to be issued and sold by the Company and none are to be sold by the Selling Shareholders. The respective amounts of the Firm Shares to be purchased by each of the several Underwriters are set forth opposite their names on Schedule I hereto. In addition, the Company and the Selling Shareholders propose to grant to the Underwriters an option to purchase up to an additional 750,000 shares (the "Option Shares") of Ordinary Shares from it for the purpose of covering over-allotments in connection with the sale of the Firm Shares. Of the 750,000 Option Shares, 97,000 are to be sold by the Selling Shareholders (48,500 from each Selling Shareholder) and 653,000 are to be issued and sold by the Company. The Firm Shares and the Option Shares are together called the "Shares." As part of the offering contemplated by this Agreement, the Representatives have agreed to reserve out of the Firm Shares purchased by them up to 250,000 shares (the "Directed Shares") for sale to the Company's directors, officers, employees and other parties associated with the Company (each, individually a "Participant" and collectively, the "Participants") under the terms -1- of the friends and family directed sales program (the "Friends and Family Program"). Shares to be sold pursuant to the Friends and Family Program shall be sold pursuant to this Agreement at the public offering price. Any Directed Shares not orally confirmed for purchase by a Participant by 5:00 p.m. New York time on the date of this Agreement will be offered to the public by the Representatives as set forth in the Prospectus (as such term is hereinafter defined). 1. Sale and Purchase of the Shares. ------------------------------- On the basis of the representations, warranties and agreements contained in, and subject to the terms and conditions of, this Agreement: (a) The Company agrees to sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at a price of $[ ] per share (the "Initial Price"), the number of Firm Shares set forth opposite the name of such Underwriter under the column "Number of Firm Shares to be Purchased from the Company" on Schedule I to this Agreement, subject to adjustment in accordance with Section 11 hereof. (b) The Company and the Selling Shareholders grant to the several Underwriters an option to purchase, severally and not jointly, all or any part of the Option Shares at the Initial Price. Such Option Shares shall be purchased first from the Selling Stockholders in equal amounts until all of such Selling Stockholders' Option Shares have been purchased, and then from the Company. The number of Option Shares to be purchased by each Underwriter shall be the same percentage (adjusted by the Representatives to eliminate fractions) of the total number of Option Shares to be purchased by the Underwriters as such Underwriter is purchasing of the Firm Shares. Such option may be exercised only to cover over-allotments in the sales of the Firm Shares by the Underwriters and may be exercised in whole or in part at any time on or before 12:00 noon, New York City time, on the business day before the Firm Shares Closing Date (as defined below), and from time to time thereafter within 30 days after the date of this Agreement, in each case upon written, facsimile or telegraphic notice, or verbal or telephonic notice confirmed by written, facsimile or telegraphic notice, by the Representatives to the Company no later than 12:00 noon, New York City time, on the business day before the Firm Shares Closing Date or at least two business days before the Option Shares Closing Date (as defined below), as the case may be, setting forth the number of Option Shares to be purchased and the time and date (if other than the Firm Shares Closing Date) of such purchase. Upon receiving such notice from the Representatives, the Company shall promptly communicate such notice to the Selling Shareholders. 2. Delivery and Payment. Delivery by the Company of the Firm Shares -------------------- to the Representatives for the respective accounts of the Underwriters, and payment of the purchase price by certified or official bank check or checks payable in New York Clearing House (same day) funds drawn to the order of the Company for the shares purchased from the Company, against delivery of the respective certificates therefor to the Representatives, shall take place at the offices -2- of CIBC World Markets Corp., One World Financial Center, New York, New York 10281, at 10:00 a.m., New York City time, on the third business day following the date of this Agreement, or at such time on such other date, not later than 10 business days after the date of this Agreement, as shall be agreed upon by the Company and the Representatives (such time and date of delivery and payment are called the "Firm Shares Closing Date"). In the event the option with respect to the Option Shares is exercised in whole or in part on one or more occasions, delivery by the Company and the Selling Shareholders of the Option Shares to the Representatives for the respective accounts of the Underwriters and payment of the purchase price thereof in immediately available funds by wire transfer or by certified or official bank check or checks payable in New York Clearing House (same day) funds to the Company and the Selling Shareholders shall take place at the offices of CIBC World Markets Corp. specified above at the time and on the date (which may be the same date as, but in no event shall be earlier than, the Firm Shares Closing Date) specified in the notice referred to in Section 1(b) (such time and date of delivery and payment are called the "Option Shares Closing Date"). The Firm Shares Closing Date and the Option Shares Closing Date are called, individually, a "Closing Date" and, together, the "Closing Dates." Certificates evidencing the Shares shall be registered in such names and shall be in such denominations as the Representatives shall request at least two full business days before the Firm Shares Closing Date or, in the case of Option Shares, on the day of notice of exercise of the option as described in Section l(b) and shall be made available to the Representatives for checking and packaging, at such place as is designated by the Representatives, on the full business day before the Firm Shares Closing Date (or the Option Shares Closing Date in the case of the Option Shares). 3. Registration Statement and Prospectus; Public Offering. The ------------------------------------------------------ Company has prepared and filed in conformity with the requirements of the Securities Act of 1933, as amended (the "Securities Act"), and the published rules and regulations thereunder (the "Rules") adopted by the Securities and Exchange Commission (the "Commission") a Registration Statement (as hereinafter defined) on Form F-1 (No. 333-38804), including a preliminary prospectus relating to the Shares, and such amendments thereof as may have been required to the date of this Agreement. Copies of such Registration Statement (including all amendments thereof) and of the related Preliminary Prospectus (as hereinafter defined) have heretofore been delivered by the Company to you. The term "Preliminary Prospectus" means any preliminary prospectus (as described in Rule 430 of the Rules) included at any time as a part of the Registration Statement or filed with the Commission by the Company with the consent of the Representatives pursuant to Rule 424(a) of the Rules. The term "Registration Statement" as used in this Agreement means the initial registration statement (including all exhibits, financial schedules and information deemed to be a part of the Registration Statement through incorporation by reference or otherwise), as amended at the time and on the date it becomes effective (the "Effective Date") including the information (if any) deemed to be part thereof at the time of effectiveness pursuant to Rule 430A of the Rules. If the Company has filed an abbreviated registration statement to register additional Shares pursuant to Rule 462(b) under the Rules (the "462(b) Registration Statement") then any reference herein to the Registration Statement shall also be deemed to include such 462(b) Registration Statement. The term "Prospectus" as used in this Agreement means the prospectus in the form included in the Registration -3- Statement at the time of effectiveness or, if Rule 430A of the Rules is relied on, the term Prospectus shall also include the final prospectus filed with the Commission pursuant to Rule 424(b) of the Rules. The Company and the Selling Shareholders understand that the Underwriters propose to make a public offering of the Shares, as set forth in and pursuant to the Prospectus, as soon after the Effective Date and the date of this Agreement as the Representatives deem advisable. The Company and the Selling Shareholders hereby confirm that the Underwriters and dealers have been authorized to distribute or cause to be distributed each Preliminary Prospectus and are authorized to distribute the Prospectus (as from time to time amended or supplemented if the Company furnishes amendments or supplements thereto to the Underwriters). 4. Representations and Warranties of the Company and the U.S. ---------------------------------------------------------- Subsidiary. The Company and Accord Networks, Inc., a Georgia corporation, and - ---------- wholly-owned subsidiary of the Company (the "U.S. Subsidiary"), hereby, jointly and severally, represent and warrant to each Underwriter as follows: (a) On the Effective Date, the Registration Statement complied, and on the date of the Prospectus, the date any post-effective amendment to the Registration Statement becomes effective, the date any supplement or amendment to the Prospectus is filed with the Commission and each Closing Date, the Registration Statement and the Prospectus (and any amendment thereof or supplement thereto) will comply, in all material respects, with the applicable provisions of the Securities Act and the Rules. The Registration Statement did not, as of the Effective Date, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading; and on the Effective Date and the other dates referred to above neither the Registration Statement nor any amendment thereof or supplement thereto, will contain any untrue statement of a material fact or will omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading. The Prospectus does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. When any related preliminary prospectus was first filed with the Commission (whether filed as part of the Registration Statement or any amendment thereto or pursuant to Rule 424(a) of the Rules) and when any amendment thereof or supplement thereto was first filed with the Commission, such preliminary prospectus as amended or supplemented complied in all material respects with the applicable provisions of the Securities Act and the Rules and did not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, none of the representations and warranties in this paragraph 4(a) shall apply to statements in, or omissions from, the Registration Statement or the Prospectus made in reliance upon, and in conformity with, information herein or otherwise furnished in writing by the Representatives on behalf of the several Underwriters for use in the Registration Statement or the Prospectus. With -4- respect to the preceding sentence, the Company acknowledges that the only information furnished in writing by the Representatives on behalf of the several Underwriters for use in the Registration Statement or the Prospectus is the paragraph with respect to stabilization on the inside front cover page of the Prospectus and the statements contained under the caption "Underwriting" in the Prospectus. (b) The Registration Statement is effective under the Securities Act and no stop order preventing or suspending the effectiveness of the Registration Statement or suspending or preventing the use of the Prospectus has been issued and no proceedings for that purpose have been instituted or are overtly threatened under the Securities Act. Any required filing of the Prospectus and any supplement thereto pursuant to Rule 424(b) of the Rules has been or will be made in the manner and within the time period required by such Rule 424(b). (c) The financial statements of the Company (including all notes and schedules thereto) included in the Registration Statement and Prospectus present fairly the financial position, the results of operations, the statements of cash flows and the statements of stockholders' equity and the other information purported to be shown therein of the Company at the respective dates and for the respective periods to which they apply; and such financial statements and related schedules and notes have been prepared in conformity with generally accepted accounting principles, consistently applied throughout the periods involved, and all adjustments necessary for a fair presentation of the results for such periods have been made. The financial data included in the sections of the Prospectus entitled "Prospectus Summary--Summary Consolidated Financial Data" and "Selected Consolidated Financial Data" present fairly the information shown therein as of the respective dates and for the respective periods specified therein and such summary and selected financial data have been presented on a basis consistent with the consolidated financial statements so set forth in the Prospectus and other financial information. (d) Kesselman & Kesselman, a member firm of PricewaterhouseCoopers International Limited, whose report is filed with the Commission as a part of the Registration Statement, are and, during the periods covered by their reports, were independent public accountants as required by the Securities Act and the Rules. (e) The Company is a corporation duly organized and validly existing, and each of its subsidiaries included on Exhibit 21.1 to the Registration Statement (each a "Significant Subsidiary") is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. The Company and each Significant Subsidiary is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted by it or location of the assets or properties owned, leased or licensed by it requires such qualification, except for such jurisdictions where the failure to so qualify would not reasonably be likely to have a material adverse effect on the assets or properties, business, results of operations or financial condition of the Company (a "Material Adverse Effect"). -5- The Company and each of its subsidiaries or other entity controlled directly or indirectly by the Company (collectively, "Subsidiaries") have all requisite corporate power and authority, and all necessary authorizations, approvals, consents, orders, licenses, certificates and permits of and from all governmental or regulatory bodies or any other person or entity (collectively, the "Permits"), to own, lease and license its assets and properties and conduct its business, all of which are valid and in full force and effect, as described in the Registration Statement and the Prospectus, except where the lack of such Permits, individually or in the aggregate, would not have a Material Adverse Effect. The Company and each of its Subsidiaries have fulfilled and performed in all material respects all of its material obligations with respect to such Permits and no event has occurred that allows, or after notice or lapse of time would allow, revocation or termination thereof or results in any other impairment of the rights of the Company or its Subsidiaries thereunder, except where such revocation, termination or other impairment would not reasonably be likely to have a Material Adverse Effect. Except as may be required under the Securities Act and state and foreign Blue Sky laws, no other Permits are required to enter into, deliver and perform this Agreement and to issue and sell the Shares, except for such Permits as have already been obtained. (f) The Company and each of its Subsidiaries owns or possesses adequate and enforceable rights to use all trademarks, trademark applications, trade names, service marks, patent rights, copyrights, patent applications, copyright applications, licenses, know-how, trade secrets, and other similar rights and proprietary knowledge (collectively, "Intangibles") reasonably necessary to conduct their business as it is now conducted or described in the Prospectus as being owned by it. Except as disclosed in the Prospectus, neither the Company nor any of its Subsidiaries has received any notice of, or is aware of, any infringement of or conflict with asserted rights of others with respect to any Intangibles. (g) The Company and each of its Subsidiaries has good and marketable title in fee simple to all items of real property and good and marketable title to all personal property described in the Prospectuses as being owned by it. Any real property and buildings described in the Prospectuses as being held under lease by the Company and each of its Subsidiaries is held by it under valid, existing and enforceable leases, free and clear of all liens, encumbrances, claims, security interests and defects, except such as are described in the Registration Statement and the Prospectus or would not be reasonably likely to have a Material Adverse Effect. (h) Other than as described in the Registration Statement and the Prospectus, there are no litigation or governmental proceedings to which the Company or its Subsidiaries is subject or which is pending or, to the knowledge of the Company or the U.S. Subsidiary, overtly threatened, against the Company or any of its Subsidiaries, which, individually or in the aggregate, might have a Material Adverse Effect, affect the consummation of this Agreement or which is required to be disclosed in the Registration Statement and the Prospectus that is not so disclosed. -6- (i) Subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, except as described therein, (a) there has not been any material adverse change with regard to the assets or properties, business, results of operations or financial condition of the Company and its Subsidiaries taken as a whole; (b) neither the Company nor its Subsidiaries have sustained any loss or interference with its assets, businesses or properties (whether owned or leased) from fire, explosion, earthquake, flood or other calamity, whether or not covered by insurance, or from any labor dispute or any court or legislative or other governmental action, order or decree which would reasonably be likely to have a Material Adverse Effect; and (c) since the date of the latest balance sheet included in the Registration Statement and the Prospectus, except as reflected therein, neither the Company nor its Subsidiaries have (i) issued any securities (except option grants under the Company's stock option plans described in the Prospectus and exercises of options granted thereunder) or incurred any liability or obligation, direct or contingent, for borrowed money, except such liabilities or obligations incurred in the ordinary course of business, (ii) entered into any transaction not in the ordinary course of business, or (iii) declared or paid any dividend or made any distribution on any shares of its stock or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or otherwise acquire any shares of its stock. (j) There is no document, contract or other agreement of a character required to be described in the Registration Statement or Prospectus or to be filed as an exhibit to the Registration Statement which is not described or filed as required by the Securities Act or Rules. Each description of a contract, document or other agreement in the Registration Statement and the Prospectus accurately reflects in all material respects the terms of the underlying document, contract or agreement. Each agreement described in the Registration Statement and Prospectus or listed in the Exhibits to the Registration Statement is in full force and effect and is valid and enforceable by and against the Company or the Subsidiary, as the case may be, in accordance with its terms, except (1) where enforceability may be limited by bankruptcy and other creditors rights laws and general principles of equity, including the availability of the equitable remedy of specific performance, and (2) as described in the Prospectus. Neither the Company, any of its Subsidiaries nor, to the Company's or the U.S. Subsidiary's knowledge, any other party is in default in the observance or performance of any material term or obligation to be performed by it under any such agreement, and no event has occurred which with notice or lapse of time or both would constitute a default by the Company or any of its Subsidiaries, or to the Company's or the U.S. Subsidiary's knowledge, by any other party, in any such case which default or event, individually or in the aggregate, would have a Material Adverse Effect. No default exists, and no event has occurred which with notice or lapse of time or both would constitute a default, in the due performance and observance of any term, covenant or condition, by the Company or the Subsidiary, if the Subsidiary is a party thereto, of any other agreement or instrument to which the Company or the Subsidiary is a party or by which it or its the Company, the Subsidiary or their properties or business may be bound or affected which default or event, individually or in the aggregate, would have a Material Adverse Effect. -7- (k) Neither the Company nor any of its Subsidiaries is in violation of any term or provision of its articles of association, charter, by- laws, or similar governing documents, or of any franchise, license, Permit, judgment, decree, order, statute, rule or regulation, where the consequences of such violation, individually or in the aggregate, would have a Material Adverse Effect. (l) Neither the execution, delivery and performance of this Agreement by each of the Company and the U.S. Subsidiary nor the consummation of any of the transactions contemplated hereby (including, without limitation, the issuance and sale by the Company of the Shares) will (A) give rise to a right to terminate or accelerate the due date of any payment due under, or conflict with or result in the breach of any term or provision of, or constitute a default (or an event which with notice or lapse of time or both would constitute a default) under, or require any consent or waiver under (except for such consents or waivers as may required under the securities or Blue Sky laws of the various states or such consents or waivers as have already been obtained and are in full force and effect), or result in the execution or imposition of any lien, charge or encumbrance upon any properties or assets of the Company or any of its Subsidiaries pursuant to the terms of, (i) any indenture, mortgage, deed of trust or other material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which either the Company or any of its Subsidiaries or any of its their properties or businesses is bound, or (ii) any franchise, license, permit, judgment, decree, order, statute, rule or regulation applicable to the Company or any of its Subsidiaries or (B) violate any provision of the articles of associations, charter or by-laws of the Company or any of its Subsidiaries. (m) The Company has authorized and outstanding capital stock as set forth under the caption "Capitalization" in the Prospectus. The certificates evidencing the Shares are in due and proper legal form and have been duly authorized for issuance by the Company. All of the issued and outstanding shares of Ordinary Shares have been duly and validly issued and are fully paid and nonassessable and have been issued in compliance with Israeli securities laws. There are no preemptive or other similar rights to subscribe for or to purchase or acquire any shares of Ordinary Shares of the Company or its Subsidiaries pursuant to any statute or the Company's Articles of Association, by-laws, or similar governing documents, or any agreement or instrument to or by which the Company or any of its Subsidiaries is a party or bound. The Shares to be issued and sold by the Company when issued and delivered to the Underwriter against payment therefor pursuant to this Agreement, will be duly and validly issued, fully paid and nonassessable and none of them will be issued in violation of any preemptive or other similar right. Except as disclosed in the Registration Statement and the Prospectus, there is no outstanding option, warrant or other right calling for the issuance of, and there is no commitment, plan or arrangement to issue, any share of stock of the Company or its Subsidiaries or any security convertible into, or exercisable or exchangeable for, such stock. The Ordinary Shares and the Shares conform in all material respects to all statements in relation thereto contained in the Registration Statement and the Prospectus. All outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued, and are fully paid and nonassessable and are owned directly by the -8- Company or by another wholly-owned subsidiary of the Company free and clear of any security interests, liens, encumbrances, equities or claims, other than those described in the Prospectus. (n) All dividends and other distributions declared and payable on the Shares may under the current laws and regulations of the State of Israel be paid in U.S. dollars or in Israeli currency that may be converted into foreign currency that may be freely transferred out of the State of Israel, and, except as described in the Prospectus, all such dividends and other distributions will not be subject to withholding or other taxes under the laws and regulations of the State of Israel and are otherwise free and clear of any other tax, withholding or deduction in the State of Israel and without the necessity of obtaining any governmental authorization in the State of Israel. There are no restrictions on subsequent transfers of the Shares under the laws of the State of Israel and of the United States, except as set forth in the Prospectus. No subsidiary of the Company is currently prohibited, directly or indirectly, from paying any dividends to the Company, from making any other distribution on such subsidiary's capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary's property or assets to the Company or any other subsidiary of the Company, except as described in or contemplated by the Prospectus. (o) Except as described in the Prospectus, no holder of any security of the Company has the right to have any security owned by such holder included in the Registration Statement or to demand registration of any security owned by such holder during the period ending 180 days after the date of this Agreement. Each director and executive officer of the Company and each beneficial owner of Ordinary Shares identified in Schedule II hereto has delivered to the Representatives his enforceable written lock-up agreement in the form attached to this Agreement ("Lock- Up Agreement"). (p) All necessary corporate action has been duly and validly taken by each of the Company and the U.S. Subsidiary to authorize the execution, delivery and performance of this Agreement and the issuance and sale of the Shares by the Company. This Agreement has been duly and validly authorized, executed and delivered by the Company and the U.S. Subsidiary and constitutes legal, valid and binding obligations of the Company enforceable against the Company and the U.S. Subsidiary in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and by general equitable principles. (q) Neither the Company nor any of its Subsidiaries are involved in any labor dispute nor, to the knowledge of the Company and the U.S. Subsidiary, is any such dispute threatened, which dispute would have a Material Adverse Effect. The Company is not aware of any existing or imminent labor disturbance by the employees of any of its principal suppliers or contractors which would have a Material Adverse Effect. The Company is not aware of any threatened or pending litigation between the Company or its Subsidiaries and any of its executive officers which, if adversely determined, could -9- have a Material Adverse Effect and has no reason to believe that such officers will not remain in the employment of the Company. (r) No transaction has occurred between or among the Company and any of its officers or directors or five percent shareholders or any affiliate or affiliates of any such officer or director or five percent shareholders that is required to be described in and is not described in the Registration Statement and the Prospectus. (s) The Company has not taken, nor will it take, directly or indirectly, any action designed to or which might reasonably be expected to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of the Ordinary Shares to facilitate the sale or resale of any of the Shares. (t) The Company and each of its Subsidiaries has filed all Israeli, U.S. federal, state, local and foreign tax returns which are required to be filed through the date hereof, other than those filings being contested in good faith or for which extensions have been received, and has paid all taxes shown on such returns and all assessments received by it to the extent that the same are material and have become due, other than those filings being contested in good faith or for which extensions have been received. There are no tax audits or investigations pending, which if adversely determined would have a Material Adverse Effect; nor, to the best of the Company's knowledge, are there any material proposed additional tax assessments against the Company and any of its Subsidiaries. (u) The Shares have been duly authorized for quotation on the National Association of Securities Dealers Automated Quotation ("Nasdaq") National Market System, subject to official Notice of Issuance. A registration statement has been filed on Form 8-A pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which registration statement complies in all material respects with the Exchange Act. (v) [Intentionally Omitted] (w) The books, records and accounts of the Company and its Subsidiaries accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, the Company and its Subsidiaries. The Company and each of its Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. -10- (x) The Company and its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are customary in the businesses in which they are engaged or propose to engage after giving effect to the transactions described in the Prospectus; all policies of insurance and fidelity or surety bonds insuring the Company or any of its subsidiaries or the Company's or its subsidiaries' respective businesses, assets, employees, officers and directors are in full force and effect; the Company and each of its subsidiaries are in compliance with the terms of such policies and instruments in all material respects; and neither the Company nor any Subsidiary of the Company has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. Neither the Company nor any Subsidiary has been denied any insurance coverage which it has sought or for which it has applied. (y) Each approval, consent, order, authorization, designation, declaration or filing of, by or with any regulatory, administrative or other governmental body necessary in connection with the execution and delivery by the Company and the U.S. Subsidiary of this Agreement and the consummation of the transactions herein contemplated required to be obtained or performed by the Company and the U.S. Subsidiary (except such additional steps as may be required by the National Association of Securities Dealers, Inc. (the "NASD") or may be necessary to qualify the Shares for public offering by the Underwriters under the state securities or Blue Sky laws) has been obtained or made and is in full force and effect, except for such approvals, consents, orders, authorizations, designations, declarations or filings, the failure of which to obtain is not reasonably likely to have a Material Adverse Effect. (z) There are no affiliations with the NASD among the Company's or the U.S. Subsidiary's officers, directors or, to the best of the knowledge of the Company and the U.S. Subsidiary, any five percent or greater stockholder of the Company, except as set forth in the Registration Statement or otherwise disclosed in writing to the Representatives. (aa) (i) Each of the Company and its Subsidiaries are in compliance in all material respects with all rules, laws and regulation relating to the use, treatment, storage and disposal of toxic substances and protection of health or the environment ("Environmental Law") which are applicable to their business; (ii) neither the Company nor its Subsidiaries has received any notice from any governmental authority or third party of an asserted claim under Environmental Laws; (iii) each of the Company and its Subsidiaries has received all permits, licenses or other approvals required of it under applicable Environmental Laws to conduct its business and is in compliance with all terms and conditions of any such permit, license or approval; (iv) to the Company's and the U.S. Subsidiary's knowledge, no facts currently exist that will require the Company or its Subsidiaries to make future material capital expenditures to comply with Environmental Laws; and (v) no property which is or has been owned, leased or occupied by the -11- Company or its Subsidiaries has been designated as a Superfund site pursuant to the Comprehensive Environmental Response, Compensation of Liability Act of 1980, as amended (42 U.S.C. Section 9601, et. seq.) or otherwise designated as a contaminated site under applicable state or local law. Neither the Company nor any of its Subsidiaries have been named as a "potentially responsible party" under the CER, CLA 1980. (bb) The Company is not aware of any costs and liabilities or potential costs and liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws, or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) which would, singly or in the aggregate, have a Material Adverse Effect. (cc) The Company is not and, after giving effect to the offering and sale of the Shares and the application of proceeds thereof as described in the Prospectus, will not be an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "Investment Company Act"). (dd) Neither the Company, its Subsidiaries nor any director, officer, agent or employee of the Company or its Subsidiaries, nor any other person acting with the Company's knowledge, has, directly or indirectly, while acting on behalf of the Company or its Subsidiaries, (i) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; (ii) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate funds; (iii) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any other unlawful payment. (ee) The Company has reviewed its operations and that of its Subsidiaries to evaluate the extent to which the business or operations of the Company or any of its subsidiaries have been or will be affected by the Year 2000 Problem (that is, any significant risk that computer hardware or software applications used by the Company and its subsidiaries will not, in the case of dates or time periods occurring after December 31, 1999, function at least as effectively as in the case of dates or time periods occurring prior to January 1, 2000); as a result of such review, (i) the Company has no reason to believe, and does not believe, that (A) there are any issues related to the Year 2000 Problem that are of a character required to be described or referred to in the Registration Statement or Prospectus which have not been accurately described in the Registration Statement or Prospectus and (B) the Year 2000 Problem has had or will have a Material Adverse Effect, or has resulted or will result in any material loss or interference with the business or operations of the Company and its subsidiaries, taken as a whole; (ii) the Company reasonably believes, after due inquiry, that the suppliers, vendors or other material third parties used by the Company and its Subsidiaries have addressed the Year 2000 Problem prior to December 31, 1999, except to the extent that a failure to address the Year 2000 by a supplier, vendor or material third party would not be reasonably likely to have a -12- Material Adverse Effect; and (iii) the Company has not expended and does not anticipate expending any material amount of funds as a result of or related to the evaluation and remediation of any Year 2000 Problems. (ff) Neither the Company nor any other person associated with or acting on behalf of the Company including, without limitation, any director, officer, agent or employee of the Company has offered or caused the Underwriters to offer any of the Shares to any person pursuant to the Friends and Family Program with the specific intent to unlawfully influence (i) a customer or supplier of the Company to alter the customer's or supplier's level or type of business with the Company or (ii) a trade journalist or publication to write or publish favorable information about the Company or its products. (gg) Except for Israeli stamp duty, which will be paid by the Company, no stamp or other issuance or transfer taxes or duties and, assuming that the Underwriters are not otherwise subject to taxation in Israel, no capital gains, income, withholding or other taxes are payable by or on behalf of the Underwriters to the State of Israel or any political subdivision or taxing authority thereof or therein in connection with the sale and delivery by the Company of the Shares to or for the respective accounts of the Underwriters. (hh) The statements set forth in the Prospectus under the caption "Description of Share Capital", insofar as they purport to constitute a summary of the terms of the Shares and under the captions "Risk Factors-- We are incorporated in Israel and have important facilities and resources located in Israel", --We rely upon tax benefits and other funding from the State of Israel" and "--Israeli courts might not enforce judgments rendered outside of Israel" and "United States Federal Income Tax Consideration", "Israeli Taxation and Investment Programs", "Conditions in Israel" and "Underwriting", insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate summaries of and descriptions of such terms and provisions in all material respects. (ii) The Company is not, at the time of its receipt of payment for the Shares, a Passive Foreign Investment Company ("PFIC") within the meaning of Section 1296 of the United States Internal Revenue Code of 1986, as amended, and, to the Company's or the U.S. Subsidiary's knowledge, is not likely to become a PFIC. (jj) The Company is in material compliance with all terms and conditions of the laws and regulations regarding all "Approved Enterprise" designations under the Law for Encouragement of Capital Investments, 1959, of the State of Israel, as amended (the "Investment Act"). The Company qualifies as an "Industrial Company" within the definition of the Law for the Encouragement of Industry (Taxes), 1969, of the State of Israel (the "Industry Act"). Except as described in the Prospectus, the Company is not in material violation of any conditions or requirements stipulated by the instruments of approval granted to it by the Office of Chief Scientist of the Ministry of Industry & Trade and any applicable laws and regulations, with respect to any research and development grants given to it by such office, which violation, individually or in the aggregate, could -13- have a Material Adverse Effect. All information supplied by the Company with respect to such applications was true, correct and complete in all material respects when supplied to the appropriate authorities. (kk) The Company has received an exemption from the Israel Securities Authority from the obligation to publish a prospectus under Israeli securities law, which exemption was in full force and effect on the date hereof and which shall be in full force and effect on the date of the Prospectus, on the date that any post-effective amendment to the Registration Statement shall become effective, when any supplement or amendment to the Prospectus is filed with the Commission, and at the Closing Date, assuming compliance by the Underwriters with the limitation set forth in Section 3 above. 5. Representations and Warranties of the Selling Shareholders. Each ---------------------------------------------------------- of the Selling Shareholders, severally, but not jointly, hereby represents and warrants to each Underwriter as follows: (a) The Selling Shareholders has caused certificates for the number of Shares to be sold by such Selling Shareholders, severally, but not jointly, hereunder to be delivered to the American Stock Transfer & Trust Company (the "Custodian"), endorsed in blank or with blank stock powers duly executed, with a signature appropriately guaranteed, such certificates to be held in custody by the Custodian for delivery, pursuant to the provisions of this Agreement and an agreement dated June [ ], 2000 among the Custodian and the Selling Shareholders (the "Custody Agreement"). (b) The Selling Shareholders has granted an irrevocable power of attorney (the "Power of Attorney") to the person named therein, on behalf of the Selling Shareholders, to execute and deliver this Agreement and any other document necessary or desirable in connection with the transactions contemplated hereby and to deliver the shares to be sold by the Selling Shareholders pursuant hereto. (c) This Agreement, the Custody Agreement, the Power of Attorney and the Lock-Up Agreement have each been duly authorized, executed and delivered by or on behalf of the Selling Shareholders and, assuming due authorization, execution and delivery by the other parties hereto, constitutes the valid and legally binding agreement of the Selling Shareholders, enforceable against the Selling Shareholders in accordance with its terms. (d) The execution and delivery by the Selling Shareholders of this Agreement and the performance by the Selling Shareholders of its obligations under this Agreement (i) will not contravene any provision of applicable law, statute, regulation or filing or any agreement or other instrument binding upon the Selling Shareholder or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Selling Shareholder, (ii) does not require any consent, approval, authorization or order of or registration or filing with any court or governmental agency or body having jurisdiction over it, except such as may be required by the Blue Sky laws of the various states in -14- connection with the offer and sale of the Shares which have been or will be effected in accordance with this Agreement, except for such consents, approvals, authorizations, orders, registrations or filings, which have already been obtained or made, (iii) does not and will not violate any statute, law, regulation or filing or judgment, injunction, order or decree applicable to the Selling Shareholder or (iv) will not result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Selling Shareholder pursuant to the terms of any agreement or instrument to which the Selling Shareholder is a party or by which the Selling Shareholder may be bound or to which any of the property or assets of the Selling Shareholders is subject. (e) The Selling Shareholder has, and on the Option Shares Closing Date will have (provided, however, that with respect to any of the Shares which will result from the exercise of warrants or options, the foregoing is as of the Option Shares Closing Date only) valid and marketable title to the Shares to be sold by the Selling Shareholder free and clear of any lien, claim, security interest or other encumbrance, including, without limitation, any restriction on transfer, except as otherwise described in the Registration Statement and Prospectus. (f) The Selling Shareholder has, and on the Option Shares Closing Date will have (provided, however, that with respect to any of the Shares which will result from the exercise of warrants or options, the foregoing is as of the Option Shares Closing Date only), full legal right, power and authorization, and any approval required by law, to sell, assign, transfer and deliver the Shares to be sold by the Selling Shareholders in the manner provided by this Agreement. (g) Upon delivery of and payment for the Shares to be sold by the Selling Shareholder pursuant to this Agreement, the several Underwriters will receive valid and marketable title to such Shares free and clear of any lien, claim, security interest or other encumbrance. (h) All information relating to the Selling Shareholder furnished in writing by the Selling Shareholder expressly for use in the Registration Statement and Prospectus is, and on the Option Shares Closing Date will be, true, correct, and complete, and does not, and on the Option Shares Closing Date will not, contain any untrue statement of a material fact or omit to state any material fact necessary to make such information not misleading. (i) The sales of Shares by the Selling Shareholder pursuant to this Agreement are not prompted by the Selling Shareholder's knowledge of any material information concerning the Company or its Subsidiaries which is not set forth in the Prospectus. (j) The Selling Shareholder has not taken and will not take, directly or indirectly, any action designed to or that might reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares. -15- (k) The representations and warranties of the Selling Shareholder in the Custody Agreement are and on the Option Shares Closing Date will be, true and correct. (l) Neither the Selling Shareholder nor any other person associated with or acting on behalf of the Selling Shareholder has offered or caused the Underwriters to offer any of the Shares to any person pursuant to the Friends and Family Program with the specific intent to unlawfully influence (i) a customer or supplier of the Company to alter the customer's or supplier's level or type of business with the Company or (ii) a trade journalist or publication to write or publish favorable information about the Company or its products. 6. Conditions of the Underwriters' Obligations. The obligations of ------------------------------------------- the Underwriters under this Agreement are several and not joint. The respective obligations of the Underwriters to purchase the Shares are subject to each of the following terms and conditions: (a) Notification from the Commission that the Registration Statement has become effective shall have been received by the Representatives and the Prospectus shall have been timely filed with the Commission in accordance with Section 7(a) of this Agreement. (b) No order preventing or suspending the use of any preliminary prospectus or the Prospectus shall have been or shall be in effect and no order suspending the effectiveness of the Registration Statement shall be in effect and no proceedings for such purpose shall be pending before or threatened by the Commission, and any requests for additional information on the part of the Commission (to be included in the Registration Statement or the Prospectus or otherwise) shall have been complied with to the satisfaction of the Commission and the Representatives. (c) The representations and warranties of the Company, the U.S. Subsidiary and the Selling Shareholders contained in this Agreement and in the certificates delivered pursuant to Section 6(d) shall be true and correct when made and on and as of each Closing Date as if made on such date. The Company and the Selling Shareholders shall have performed all covenants and agreements and satisfied all the conditions contained in this Agreement required to be performed or satisfied by them at or before such Closing Date. (d) The Representatives shall have received on each Closing Date a certificate, addressed to the Representatives and dated such Closing Date, of the chief executive or chief operating officer and the chief financial officer or chief accounting officer of the Company to the effect that (i) the signers of such certificate have carefully examined the Registration Statement, the Prospectus and this Agreement and that the representations and warranties of the Company in this Agreement are true and correct on and as of such Closing Date with the same effect as if made on such Closing Date and the Company has performed all covenants and agreements and satisfied all conditions contained in this -16- Agreement required to be performed or satisfied by it at or prior to such Closing Date, and (ii) no stop order suspending the effectiveness of the Registration Statement has been issued and, to the best of their knowledge, no proceedings for that purpose have been instituted or are pending under the Securities Act. (e) The Representatives shall have received on the Option Shares Closing Date a certificate, addressed to the Representatives and dated such Closing Date, of each Selling Shareholder, to the effect that such Selling Shareholder has carefully examined the Registration Statement, the Prospectus and this Agreement and that the representations and warranties of the Selling Shareholder in this Agreement are true and correct on and as of such Closing Date with the same effect as if made on such Closing Date and the Selling Shareholder has performed all covenants and agreements and satisfied all conditions contained in this Agreement required to be performed or satisfied by it at or prior to such Closing Date. (f) The Representatives shall have received, at the time this Agreement is executed and on each Closing Date a signed letter from Kesselman & Kesselman, a member firm of PricewaterhouseCoopers International Limited, addressed to the Representatives and dated, respectively, the date of this Agreement and each such Closing Date, in form and substance reasonably satisfactory to the Representatives, confirming that they are independent accountants within the meaning of the Securities Act and the Rules, that the response to Item 10 of the Registration Statement is correct insofar as it relates to them and stating in effect that: (i) in their opinion the audited financial statements and financial statement schedules included or incorporated by reference in the Registration Statement and the Prospectus and reported on by them comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the Rules; (ii) on the basis of a reading of the amounts included in the Registration Statement and the Prospectus under the headings "Summary Consolidated Financial Data" and "Selected Consolidated Financial Data," carrying out certain procedures (but not an examination in accordance with generally accepted auditing standards) which would not necessarily reveal matters of significance with respect to the comments set forth in such letter, a reading of the minutes of the meetings of the stockholders and directors of the Company, and inquiries of certain officials of the Company who have responsibility for financial and accounting matters of the Company as to transactions and events subsequent to the date of the latest audited financial statements, except as disclosed in the Registration Statement and the Prospectus, nothing came to their attention which caused them to believe that: (A) the amounts in "Summary Consolidated Financial Data," and "Selected Consolidated Financial Data" included in the Registration -17- Statement and the Prospectus do not agree with the corresponding amounts in the audited and unaudited financial statements from which such amounts were derived; or (B) with respect to the Company, there were, at a specified date not more than three business days prior to the date of the letter, any increases in the current liabilities and long-term liabilities of the Company or any decreases in net income or in working capital or the stockholders' equity in the Company, as compared with the amounts shown on the Company's audited balance sheet for the fiscal year ended 1999 and the three months ended March 31, 1999 included in the Registration Statement; (iii) they have performed certain other procedures as may be permitted under Generally Acceptable Auditing Standards as a result of which they determined that certain information of an accounting, financial or statistical nature (which is limited to accounting, financial or statistical information derived from the general accounting records of the Company) set forth in the Registration Statement and the Prospectus and reasonably specified by the Representatives agrees with the accounting records of the Company; and (iv) based upon the procedures set forth in clauses (ii) and (iii) above and a reading of the amounts included in the Registration Statement under the headings "Summary Consolidated Financial Data" and "Selected Consolidated Financial Data" included in the Registration Statement and Prospectus and a reading of the financial statements from which certain of such data were derived, nothing has come to their attention that gives them reason to believe that the "Summary Consolidated Financial and Other Data" and "Selected Consolidated Financial Data" included in the Registration Statement and Prospectus do not comply as to the form in all material respects with the applicable accounting requirements of the Securities Act and the Rules or that the information set forth therein is not fairly stated in relation to the financial statements included in the Registration Statement or Prospectus from which certain of such data were derived are not in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements included in the Registration Statement and Prospectus. References to the Registration Statement and the Prospectus in this paragraph (f) are to such documents as amended and supplemented at the date of the letter. (g) The Representatives shall have received on each Closing Date from Alston & Bird, counsel for the Company, an opinion, addressed to the Representatives and dated such Closing Date, the form of which is attached as Exhibit A. --------- -18- (h) The Representatives shall have received on each Closing Date from Doron Cohen-David Cohen, Law Offices, Israeli counsel for the Company, an opinion, addressed to the Representatives and dated such Closing Date, the form of which is attached as Exhibit B. --------- (i) [Intentionally Omitted] (j) The Representatives shall have received on the Option Shares Closing Date from Doron Cohen-David Cohen, Law Offices, counsel for the Selling Shareholders, an opinion, addressed to the Representatives and dated such Closing Date, the form of which is attached as Exhibit C. --------- (k) All proceedings taken in connection with the sale of the Firm Shares and the Option Shares as herein contemplated shall be reasonably satisfactory in form and substance to the Representatives, and their counsel and the Underwriters shall have received from Ropes & Gray, counsel to the Underwriters, a favorable opinion, addressed to the Representatives and dated such Closing Date, with respect to the Registration Statement and the Prospectus, and such other related matters, as the Representatives may reasonably request, and the Company shall have furnished to Ropes & Gray such documents as they may reasonably request for the purpose of enabling them to pass upon such matters. (l) The Representatives shall have received from Yigal Arnon & Co., Israeli counsel to the Underwriters, a favorable opinion addressed to the Representatives and dated such Closing Date, with respect to the validity of the Shares. (m) The Representatives shall have received copies of the Lock-up Agreements executed by each entity or person described in Section 4(p). (n) The Company and the Selling Shareholders shall have furnished or caused to be furnished to the Representatives such further certificates or documents as the Representatives shall have reasonably requested. 7. Covenants of the Company. ------------------------ (a) The Company covenants and agrees as follows: (i) The Company will use its best efforts to cause the Registration Statement, if not effective at the time of execution of this Agreement, and any amendments thereto, to become effective as promptly as possible. The Company shall prepare the Prospectus in a form approved by the Representatives and file such Prospectus pursuant to Rule 424(b) under the Securities Act not later than the Commission's close of business on the second business day following the execution and delivery of this Agreement, or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Securities Act. -19- (ii) The Company shall promptly advise the Representatives in writing (i) when any amendment to the Registration Statement shall have become effective, (ii) of any request by the Commission for any amendment of the Registration Statement or the Prospectus or for any additional information, (iii) of the prevention or suspension of the use of any Preliminary Prospectus or the Prospectus or of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any proceeding for that purpose and (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Company shall not file any amendment of the Registration Statement or supplement to the Prospectus unless the Company has furnished the Representatives a copy for its review prior to filing and shall not file any such proposed amendment or supplement to which the Representatives reasonably object. The Company shall use its best efforts to prevent the issuance of any such stop order and, if issued, to obtain as soon as possible the withdrawal thereof. (iii) If, at any time when a prospectus relating to the Shares is required to be delivered under the Securities Act and the Rules, any event occurs as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, or if it shall be necessary to amend or supplement the Prospectus to comply with the Securities Act or the Rules, the Company promptly shall prepare and file with the Commission, subject to the second sentence of paragraph (ii) of this Section 7(a), an amendment or supplement which shall correct such statement or omission or an amendment which shall effect such compliance. (iv) The Company shall make generally available to its security holders and to the Representatives as soon as practicable, but not later than 45 days after the end of the 12-month period beginning at the end of the fiscal quarter of the Company during which the Effective Date occurs (or 90 days if such 12-month period coincides with the Company's fiscal year), an earning statement (which need not be audited) of the Company, covering such 12-month period, which shall satisfy the provisions of Section 11(a) of the Securities Act or Rule 158 of the Rules. (v) The Company agrees to comply with the reporting requirements of the Securities Exchange Act of 1934, which reports shall be prepared (i) in conformity with generally accepted accounting principles in the State of Israel ("Israel GAAP") which as of the date hereof is identical in all material respects as applied to the company to generally accepted accounting principles in the U.S. ("U.S. GAAP") or (ii) in conformity with U.S. GAAP. -20- (vi) The Company shall furnish to the Representatives and counsel for the Underwriters, without charge, as many signed (or conformed) copies of the Registration Statement (including all exhibits thereto and amendments thereof) as the Representatives may reasonably request, and to each other Underwriter a conformed copy of the Registration Statement (without exhibits thereto) and all amendments thereof and, so long as delivery of a prospectus by an Underwriter or dealer may be required by the Securities Act or the Rules, as many copies of the Prospectus and any amendments thereof and supplements thereto as the Representatives may reasonably request. (vii) The Company shall cooperate with the Representatives and their counsel in endeavoring to qualify the Shares for offer and sale in connection with the offering under the laws of such jurisdictions as the Representatives may designate and shall maintain such qualifications in effect so long as required for the distribution of the Shares; provided, however, that the Company shall not be required in connection therewith, as a condition thereof, to qualify as a foreign corporation or to execute a general consent to service of process in any jurisdiction or subject itself to taxation as doing business in any jurisdiction. (viii) Without the prior written consent of CIBC World Markets Corp., for a period of 180 days after the date of this Agreement, the Company and each of its individual directors and executive officers shall not issue, sell or register with the Commission (other than on Form S-8 or on any successor form), or otherwise dispose of, directly or indirectly, any equity securities of the Company (or any securities convertible into, exercisable for or exchangeable for equity securities of the Company), except for the issuance of the Shares pursuant to the Registration Statement and the issuance of stock options and/or shares pursuant to the Company's existing stock option plans or bonus plan as described in the Registration Statement and the Prospectus. In the event that during this period, (i) any stock options are issued pursuant to the Company's existing stock option plans or bonus plan that are exercisable during such 180 day period or (ii) any registration is effected on Form S-8 or on any successor form relating to shares issuable upon the exercise of stock options that are exercisable during such 180 period, the Company shall obtain the written agreement of such grantee or purchaser or holder of such registered securities that, for a period of 180 days after the date of this Agreement, such person will not, without the prior written consent of CIBC World Markets Corp., offer for sale, sell, distribute, grant any option for the sale of, or otherwise dispose of, directly or indirectly, or exercise any registration rights with respect to, any shares of Ordinary Shares (or any securities convertible into, exercisable for, or exchangeable for any shares of Ordinary Shares) owned by such person. Notwithstanding the foregoing, during such period the Company may issue shares of Ordinary Shares in connection with acquisitions of other businesses, products or technologies, provided, that, the recipient of the Ordinary Shares in any such acquisition shall agree in writing to -21- be bound by all of the restrictions and other provisions applicable to the Company under this Section 7(a)(viii). (ix) On or before completion of this offering, the Company shall make all filings required under applicable securities laws and by the Nasdaq National Market (including any required registration under the Exchange Act). (x) The Company will apply the net proceeds from the offering of the Shares in the manner set forth under "Use of Proceeds" in the Prospectus. (xi) The Company will comply with all applicable securities laws and other applicable laws, rules and regulations in each foreign jurisdiction in which the Directed Shares are offered in connection with the Friends and Family Program. (xii) The Company will ensure that the Directed Shares will be restricted, to the extent required by the NASD or the NASD rules, from sale, transfer, assignment, pledge or hypothecation for a period of three months following the date of the effectiveness of the Registration Statement. The Representatives will notify the Company as to which Participants, if any, will need to be so restricted. The Company shall direct the transfer agent to place stop transfer restrictions upon such securities for such period of time. (b) The Company and the U.S. Subsidiary each agrees to pay, or reimburse if paid by the Representatives, whether or not the transactions contemplated hereby are consummated or this Agreement is terminated, all costs and expenses incident to the performance of the obligations of the Company and the U.S. Subsidiary under this Agreement including those relating to: (i) the preparation, printing, filing and distribution of the Registration Statement including all exhibits thereto, each preliminary prospectus, the Prospectus, all amendments and supplements to the Registration Statement and the Prospectus, and the printing, filing and distribution of this Agreement; (ii) the preparation and delivery of certificates for the Shares to the Underwriters; (iii) the registration or qualification of the Shares for offer and sale under the securities or Blue Sky laws of the various jurisdictions referred to in Section 7(a)(vi), including the reasonable fees and disbursements of counsel for the Underwriters in connection with such registration and qualification and the preparation, printing, distribution and shipment of preliminary and supplementary Blue Sky memoranda; (iv) the furnishing (including costs of shipping and mailing) to the Representatives and to the Underwriters of copies of each preliminary prospectus, the Prospectus and all amendments or supplements to the Prospectus, and of the several documents required by this Section to be so furnished, as may be reasonably requested for use in connection with the offering and sale of the Shares by the Underwriters or by dealers to whom Shares may be sold; (v) the filing fees of the NASD in connection with its review of the terms of the public offering and reasonable fees and disbursements of counsel for the Underwriters in connection with such review; (vi) inclusion of the Shares for quotation on the Nasdaq -22- National Market; and (vii) all stamp duty and transfer taxes, if any, with respect to the issuance, sale and delivery of the Shares by the Company to the Underwriters (viii) payments to counsel for costs incurred by the Underwriters in connection with the Friends and Family Program and payment of any stamp duties, similar taxes or duties or other taxes, if any, incurred by the Underwriters in connection with the Friends and Family Program. Subject to the provisions of Section 10, the Underwriters agree to pay, whether or not the transactions contemplated hereby are consummated or this Agreement is terminated, all costs and expenses incident to the performance of the obligations of the Underwriters under this Agreement not payable by the Company pursuant to the preceding sentence, including, without limitation, the fees and disbursements of counsel for the Underwriters. 8. Indemnification. ---------------- (a) The Company, and the U.S. Subsidiary agree, jointly and severally, to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any and all losses, claims, damages and liabilities, joint or several (including any reasonable investigation, legal and other expenses incurred in connection with any action, suit or proceeding or any claim asserted), to which they, or any of them, may become subject under the Securities Act, the Exchange Act or other Federal or state law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Prospectus dated June 8, 2000, the Registration Statement or the Prospectus or any amendment thereof or supplement thereto, or in any Blue Sky application or other information or other documents executed by the Company and filed in any state or other jurisdiction to qualify any or all of the Shares under the securities laws thereof (any such application, document or information being hereinafter referred to as a "Blue Sky Application") or arise out of or are based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) in whole or in part upon any breach of the representations and warranties set forth in Section 4 hereof, or (iii) in whole or in part upon any failure of the Company to perform any of its obligations hereunder or under law; provided, however, that such indemnity shall not inure to the benefit of any Underwriter (or any person controlling such Underwriter) on account of any losses, claims, damages or liabilities if such untrue statement or omission or alleged untrue statement or omission was made in such Preliminary Prospectus, the Registration Statement or the Prospectus, or such amendment or supplement thereto, or in any Blue Sky Application in reliance upon and in conformity with information furnished in writing to the Company by the Representatives on behalf of any Underwriter specifically for use therein. This indemnity agreement will be in addition to any liability which the Company and the U.S. Subsidiary and Selling Shareholders may otherwise have. The indemnity agreement provided in this Section 8(a) with respect to any Preliminary Prospectus shall not inure to the benefit of any Underwriter who failed to timely deliver a Prospectus, as then amended or supplemented (a "Recirculated -23- Prospectus"), to the person asserting any losses, claims, damages or liabilities caused by any untrue statement or alleged untrue statement of a material fact contained in such Preliminary Prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such material misstatement or omission or alleged material misstatement or omission was cured in the Recirculated Prospectus and such Recirculated Prospectus was required by law to be delivered at or prior to the written confirmation of sale to such person, provided that, (i) the misstatement or omission cured in the Recirculated ------------- Prospectus had been brought to the attention of the Representatives and their counsel prior to the execution of this Agreement, and (ii) the Representatives have had an opportunity to notify the Underwriters of the need for recirculation of the Prospectus and the need to institute procedures demonstrating that a copy of the Recirculated Prospectus has been mailed to each purchaser with the written confirmation of sale. The Company and the U.S. Subsidiary each agrees to indemnify and hold harmless the Representatives and each person, if any, who controls any Representative within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any and all losses, claims, damages, expenses and liabilities (including any reasonable investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted) (i) arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any material prepared by or with the consent of the Company or the U.S. Subsidiary for distribution to Participants in connection with the Friends and Family Program or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) arising out of or based upon the failure of any Participant to pay for and accept delivery of Directed Shares otherwise reserved for such Participant pursuant to the Friends and Family Program, and (iii) related to arising out of, or in connection with the Friends and Family Program, other than losses, claims, damages or liabilities (or expenses relating thereto) that are finally judicially determined to have resulted from the bad faith or gross negligence of the Representatives. (b) Each Selling Shareholder agrees, severally, but not jointly, to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any and all losses, claims, damages and liabilities, joint or several (including any reasonable investigation, legal and other expenses incurred in connection with any action, suit or proceeding or any claim asserted), to which they, or any of them, may become subject under the Securities Act, the Exchange Act or other Federal or state law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Prospectus dated June 8, 2000, the Registration Statement or the Prospectus or any amendment thereof or supplement thereto, or in any Blue Sky application or other information or other documents executed -24- by the Company and filed in any state or other jurisdiction to qualify any or all of the Shares under the securities laws thereof (any such application document or information being hereinafter referred to as a "Blue Sky Application") or arise out of or are based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (ii) in whole or in part upon any breach of the representations and warranties set forth in Section 5 hereof, or (iii) in whole or in apart upon any failure of the Company to perform any of its obligations hereunder or under law; provided, however, that such indemnity shall not inure to the benefit of any Underwriter (or any person controlling such Underwriter) on account of any losses, claims, damages or liabilities if such untrue statement or omission or alleged untrue statement or omission was made in such Preliminary Prospectus, the Registration Statement or the Prospectus, or such amendment or supplement thereto, or in any blue Sky Application in reliance upon and in conformity with information furnished in writing to the Company by the Representatives on behalf of any Underwriter specifically for use therein. Notwithstanding the foregoing, a Selling Shareholder shall be liable hereunder only in respect of untrue statements or omissions or alleged untrue statement or omission was made in such preliminary Prospectus, the Registration Statement or the Prospectus or any amendment or supplement thereof or in any Blue Sky Application in reliance upon and in conformity with information furnished writing tot he Company by such Selling Shareholder specifically for use therein, and the liability of any Selling Shareholder pursuant to the provisions of Section 8(b) shall be limited to an amount equal to the aggregate net proceeds received by such Selling Shareholder form the sale of the Shares by the Selling Shareholders hereunder. This indemnity agreement will be in addition to any liability which the Company and the U.S. Subsidiary and Selling Shareholders may otherwise have. The indemnity agreement provided in this Section 8(b) with respect to any Preliminary Prospectus shall not inure to the benefit of any Underwriter who failed to timely deliver a Recirculated Prospectus to the person asserting any losses, claims, damages or liabilities caused by any untrue statement or alleged untrue statement of a material fact contained in such Preliminary Prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, fi such material misstatement or omission or alleged material misstatement or omission was cured in the Recirculated Prospectus and such Recirculated Prospectus was required by law to be delivered at or prior to the written confirmation of sale to such person, and provided that, (I) the -------- ---- misstatement or omission cured in the Recirculated Prospectus had been brought to the attention of the Representatives and their counsel prior to the execution of this Agreement, and (ii) the Representatives have had an opportunity to notify the Underwriters so the need for recirculation of the Prospectus and the need to institute procedures demonstrating that a copy of the Recirculated Prospectus has been mailed to each purchaser with the written confirmation of sale. (c) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, the Selling Shareholders and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, each director of the Company, and each officer of the Company, to the -25- same extent as the foregoing indemnity from the Company, the U.S. Subsidiary and the Selling Shareholders to each Underwriter, but only insofar as such losses, claims, damages or liabilities arise out of or are based upon any untrue statement or omission or alleged untrue statement or omission which was made in any Preliminary Prospectus, the Registration Statement or the Prospectus, or any amendment thereof or supplement thereto, contained in the (i) concession and reallowance figures appearing under the caption "Underwriting" and (ii) the stabilization information contained under the caption "Underwriting" in the Prospectus; provided, however, that the obligation of each Underwriter to indemnify the Company or the Selling Shareholders (including any controlling person, director or officer thereof) shall be limited to the net proceeds received by the Company from such Underwriter. (d) Any party that proposes to assert the right to be indemnified under this Section will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim is to be made against an indemnifying party or parties under this Section, notify each such indemnifying party of the commencement of such action, suit or proceeding, enclosing a copy of all papers served. No indemnification provided for in Section 8(a), 8(b) or 8(c) shall be available to any party who shall fail to give notice as provided in this Section 8(c) if the party to whom notice was not given was unaware of the proceeding to which such notice would have related and was prejudiced by the failure to give such notice. In case any such action, suit or proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in, and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof and the approval by the indemnified party of such counsel, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses, except as provided below and except for the reasonable costs of investigation subsequently incurred by such indemnified party in connection with the defense thereof. The indemnified party shall have the right to employ its counsel in any such action, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless one of the following three conditions are met, in which case the fees and expenses of counsel shall be at the expense of the indemnifying parties: (i) the employment of counsel by such indemnified party has been authorized in writing by the indemnifying parties, (ii) the indemnified party shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or in addition to those available to the indemnifying party (in which case the indemnifying parties shall not have the right to direct the defense of such action on behalf of the indemnified party) or (iii) the indemnifying parties shall not have employed counsel to assume the defense of such action within a reasonable time after notice of the commencement thereof, in which case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party, it being understood, however, -26- that the indemnifying party shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys at any time for all such indemnified parties, which firm shall be designated in writing by the Representatives, of the indemnified parties under this Section 8 consist of any Underwriter or any of their respective controlling persons, or by the Company, if the indemnified parties under this Section 8 consist of the Company or any of the Company's directors, officers or controlling persons (unless the indemnified party shall be advised by such counsel that the various indemnified parties may have one or more legal defenses available to it which are different from the other indemnified parties). Each indemnified party, as a condition of the indemnity agreements contained in Section 8(a), 8(b) and 8(c), shall use its best efforts to cooperate with the indemnifying party in the defense of any such action or claim (unless indemnified party shall be advised by such counsel that the various indemnified parties may have one or more legal defenses available to it which are different from the other indemnified parties (in which case the indemnifying parties may be liable for more than one separate firm of attorneys)). An indemnifying party shall not be liable for any settlement of any action, suit, proceeding or claim effected without its written consent, which consent shall not be unreasonably withheld or delayed. 9. Contribution. In order to provide for just and equitable ------------ contribution in circumstances in which the indemnification provided for in Section 8(a), 8(b) or 8(c) is due in accordance with its terms but for any reason is held to be unavailable to or insufficient to hold harmless an indemnified party under Section 8(a), 8(b) or 8(c), then each indemnifying party shall contribute to the aggregate losses, claims, damages and liabilities (including any investigation, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claims asserted, but after deducting any contribution received by any person entitled hereunder to contribution from any person who may be liable for contribution) to which the indemnified party may be subject in such proportion as is appropriate to reflect the relative benefits received by the Company, the U.S. Subsidiary and the Selling Shareholders on the one hand and the Underwriters on the other from the offering of the Shares or, if such allocation is not permitted by applicable law in such proportion as is appropriate to reflect not only the relative benefits referred to above, but also the relative fault of the Company, the U.S. Subsidiary and the Selling Shareholders on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, the U.S. Subsidiary, and the Selling Shareholders on the one hand and the Underwriters on the other hand shall be deemed to be in the same proportion as (x) the total proceeds from the offering (net of underwriting discounts and commissions but before deducting expenses) received by the Company or the Selling Shareholders (with amounts received by the Company deemed to be received by the U.S. Subsidiary), as set forth in the table on the cover page of the Prospectus, bear to (y) the underwriting discounts and commissions received by the Underwriters, as set forth in the table on the cover page of -27- the Prospectus. The relative fault of the Company, the U.S. Subsidiary and the Selling Shareholders, on the one hand, or the Underwriters, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact related to information supplied by the Company, the U.S. Subsidiary or the Selling Shareholders, on the one hand, or the Underwriters, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the U.S. Subsidiary, the Selling Shareholders and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this Section 9, (i) in no case shall any Underwriter (except as may be provided in the Agreement Among Underwriters) be liable or responsible for any amount in excess of the underwriting discount applicable to the Shares purchased by such Underwriter hereunder; (ii) the Company and the U.S. Subsidiary shall be liable and responsible for any amount in excess of such underwriting discount; and (iii) in no case shall the Selling Shareholders be liable and responsible for any amount in excess of the aggregate net proceeds of the sale of Shares received by the Selling Shareholders; provided, however, that no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 9, each person, if any, who controls an Underwriter within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act shall have the same rights to contribution as such Underwriter, and each person, if any, who controls the Company within the meaning of the Section 15 of the Securities Act or Section 20(a) of the Exchange Act, each officer of the Company and each director of the Company shall have the same rights to contribution as the Company, subject in each case to clauses (i) and (ii) in the immediately preceding sentence of this Section 9. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this Section, notify such party or parties from whom contribution may be sought, but the omission so to notify such party or parties from whom contribution may be sought shall not relieve the party or parties from whom contribution may be sought from any other obligation it or they may have hereunder or otherwise than under this Section. No party shall be liable for contribution with respect to any action, suit, proceeding or claim settled without its written consent. The Underwriter's obligations to contribute pursuant to this Section 9 are several in proportion to their respective underwriting commitments and not joint. The Selling Shareholders' obligations to contribute pursuant to this Section 9 are several in proportion to their respective obligations to sell Shares hereunder and not joint. 10. Termination. This Agreement may be terminated with respect to ----------- the -28- Shares to be purchased on a Closing Date by the Representatives by notifying the Company and the U.S. Subsidiary and the Selling Shareholders at any time: (a) in the absolute discretion of the Representatives at or before any Closing Date: (i) if on or prior to such date, any domestic or international event or act or occurrence has materially disrupted, or in the opinion of the Representatives will in the future materially disrupt, the securities markets; (ii) if there has occurred any new outbreak or material escalation of hostilities or other calamity or crisis the effect of which on the financial markets of the United States is such as to make it, in the judgment of the Representatives, inadvisable to proceed with the offering; (iii) if there shall be such a material adverse change in general financial, political or economic conditions or the effect of international conditions on the financial markets in the United States is such as to make it, in the judgment of the Representatives, inadvisable or impracticable to market the Shares; (iv) a change or development involving a prospective change in Israeli taxation affecting the Company, the Shares or the transfer thereof or the imposition of exchange controls by the United States or the State of Israel, if the effect of any such change or development specified in this clause (iv) in the judgment of the Representatives makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares being delivered at the Firm Shares Closing Date on the terms and in the manner contemplated; (v) if trading in the Shares has been suspended by the Commission or trading generally on the New York Stock Exchange, Inc., on the American Stock Exchange, Inc. or the Nasdaq National Market has been suspended or limited, or minimum or maximum ranges for prices for securities shall have been fixed, or maximum ranges for prices for securities have been required, by said exchanges or by order of the Commission, the National Association of Securities Dealers, Inc., or any other governmental or regulatory authority; or (vi) if a banking moratorium has been declared by any state or Federal authority; or (vii) if, in the judgment of the Representatives, there has occurred a Material Adverse Effect, or (b) at or before any Closing Date, that any of the conditions specified in Section 6 shall not have been fulfilled when and as required by this Agreement. If this Agreement is terminated pursuant to any of its provisions, neither the Company, the U.S. Subsidiary nor the Selling Shareholders shall be under any liability to any Underwriter, and no Underwriter shall be under any liability to the Company or the U.S. Subsidiary, except that (y) if this Agreement is terminated by the Representatives or the Underwriters because of any failure, refusal or inability on the part of the Company or the Selling Shareholders to comply with the terms or to fulfill any of the conditions of this Agreement, the Company and the U.S. Subsidiary will reimburse the Underwriters for all out-of-pocket expenses (including the reasonable fees and disbursements of their counsel) incurred by them in connection with the proposed purchase and sale of the Shares or in contemplation of performing their obligations hereunder and (z) no Underwriter who shall have failed or refused to purchase the Shares agreed to be purchased by it under this Agreement, without some reason sufficient hereunder to justify cancellation or termination of its obligations under this Agreement, shall be relieved of liability to the Company, the Selling Shareholders or to the other Underwriters for damages occasioned by its failure or refusal. -29- 11. Substitution of Underwriters. If one or more of the Underwriters ---------------------------- shall fail (other than for a reason sufficient to justify the cancellation or termination of this Agreement under Section 10) to purchase on any Closing Date the Shares agreed to be purchased on such Closing Date by such Underwriter or Underwriters, the Representatives may find one or more substitute underwriters to purchase such Shares or make such other arrangements as the Representatives may deem advisable or one or more of the remaining Underwriters may agree to purchase such Shares in such proportions as may be approved by the Representatives, in each case upon the terms set forth in this Agreement. If no such arrangements have been made by the close of business on the business day following such Closing Date, (a) if the number of Shares to be purchased by the defaulting Underwriters on such Closing Date shall not exceed 10% of the Shares that all the Underwriters are obligated to purchase on such Closing Date, then each of the nondefaulting Underwriters shall be obligated to purchase such Shares on the terms herein set forth in proportion to their respective obligations hereunder; provided, that in no event shall the maximum number of Shares that any Underwriter has agreed to purchase pursuant to Section 1 be increased pursuant to this Section 11 by more than one-ninth of such number of Shares without the written consent of such Underwriter, or (b) if the number of Shares to be purchased by the defaulting Underwriters on such Closing Date shall exceed 10% of the Shares that all the Underwriters are obligated to purchase on such Closing Date, then the Company shall be entitled to two additional business days within which it may, but is not obligated to, find one or more substitute underwriters reasonably satisfactory to the Representatives to purchase such Shares upon the terms set forth in this Agreement. In any such case, either the Representatives or the Company shall have the right to postpone the applicable Closing Date for a period of not more than five business days in order that necessary changes and arrangements (including any necessary amendments or supplements to the Registration Statement or Prospectus) may be effected by the Representatives and the Company. If the number of Shares to be purchased on such Closing Date by such defaulting Underwriter or Underwriters shall exceed 10% of the Shares that all the Underwriters are obligated to purchase on such Closing Date, and none of the nondefaulting Underwriters or the Company shall make arrangements pursuant to this Section within the period stated for the purchase of the Shares that the defaulting Underwriters agreed to purchase, this Agreement shall terminate with respect to the Shares to be purchased on such Closing Date without liability on the part of any nondefaulting Underwriter to the Company or the Selling Shareholders and without liability on the part of the Company, except in both cases as provided in Sections 7(b), 8, 9 and 10. The provisions of this Section shall not in any way affect the liability of any defaulting Underwriter to the Company or the nondefaulting Underwriters arising out of such default. A substitute underwriter hereunder shall become an Underwriter for all purposes of this Agreement. 12. Miscellaneous. The respective agreements, representations, ------------- warranties, indemnities and other statements of the Company and the U.S. Subsidiary or their officers, of the -30- Selling Shareholders and of the Underwriters set forth in or made pursuant to this Agreement shall remain in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or the Company or the Selling Shareholders or any of the officers, directors or controlling persons referred to in Sections 8 and 9 hereof, and shall survive delivery of and payment for the Shares. The provisions of Sections 7(b), 8, 9 and 10 shall survive the termination or cancellation of this Agreement. This Agreement has been and is made for the benefit of the Underwriters, the Company and the U.S. Subsidiary and the Selling Shareholders and their respective successors and assigns, and, to the extent expressed herein, for the benefit of persons controlling any of the Underwriters, or the Company and the U.S. Subsidiary, and the directors and officers of the Company and the U.S. Subsidiary, and their respective successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. The term "successors and assigns" shall not include any purchaser of Shares from any Underwriter merely because of such purchase. The Representatives undertake that the Underwriters shall (i) not offer shares of the Company to the public in Israel within the meaning of Section 15 of the Israeli Securities Law, 1968; (ii) not offer shares of the Company in Israel to more than 35 offerees, in the aggregate, (iii) deliver to the Company and the Israel Securities Authority the names and addresses of all offerees in Israel within seven (7) days of the closing of this offering; and (iv) obtain warranties from each offeree in Israel that it is purchasing shares for investment purposes only, and not for purposes of resale. All notices and communications hereunder shall be in writing and mailed or delivered or by telephone or telegraph if subsequently confirmed in writing, (a) if to the Representatives, c/o CIBC World Markets Corp., One World Financial Center, New York, New York 10281 Attention: Andrew Kaminsky, with a copy Jennifer Aranoff, Legal Department, CIBC World Markets, One Financial Center, 37th Floor, New York, NY 10281 and (b) if to the Company, the U.S. Subsidiary and to the Selling Shareholders, to the Company's agent for service as such agent's address appears on the cover page of the Registration Statement with a copy to Adam Vexler, Esq., Accord Networks Ltd., 9040 Roswell Road, Suite 450, Atlanta, GA 30350-1877. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflict of laws. Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby ("Related Proceedings") may be instituted in the federal courts of the United States of America located in New York City or the courts of the State of New York in each case located in New York City (collectively, the "Specified Courts"), and each party irrevocably submits to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a judgment of any such court (a "Related Judgment"), as to which such jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding. Service of any process, summons, notice or document by mail to such party's address set forth above shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties -31- irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or other proceeding in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such suit, action or other proceeding brought in any such court has been brought in an inconvenient forum. The Company hereby designates and appoints the U.S. Subsidiary, as its authorized agent (the "Authorized Agent") upon whom process may be served in any such action arising out of or based on this Agreement or the transactions contemplated hereby which may be instituted in any New York Court by any Underwriters or by any person who controls any Underwriter, expressly consents to the jurisdiction of any such court in respect of any such action, and waives any other requirements of or objections to personal jurisdiction with respect thereto. Such appointment shall be irrevocable unless and until a successor authorized agent acceptable to the Underwriters in their sole and absolute discretion shall have been appointed by the Company. The Company represents and warrants that the Authorized Agent has agreed to act as such agent for service at process and agrees to take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent and written notice of such service to the Company shall be deemed, in every respect, effective service of process upon the Company. In respect of any judgment or order given or made for any amount due hereunder that is expressed and paid in a currency (the "judgment currency") other than United States dollars, the Company and the U.S. Subsidiary will indemnify each Underwriter against any loss incurred by such underwriter as a result of any variation as between (i) the rate of exchange at which the United States dollar amount is converted into the Judgment currently for the purpose of such judgment or order and (ii) the rate of exchange at which such Underwriter on the date such judgment currently is actually received by the Underwriter is able to purchase United States dollars with the amount of the judgment currently so received by such Underwriter. The foregoing indemnity shall constitute a separate and independent obligation of the Company and the U.S. Subsidiary and shall continue in full force and effect notwithstanding any such judgment or order as aforesaid. The term "rate of exchange" shall include any premiums and costs of exchange payable in connection with the purchase of the conversion into United States dollars. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. -32- Please confirm that the foregoing correctly sets forth the agreement among us. Very truly yours, ACCORD NETWORKS LTD. By ---------------------------------- Title: ACCORD NETWORKS, INC. By ---------------------------------- Title: THE SELLING SHAREHOLDERS By ---------------------------------- Name: ------------------------------- Attorney-in-fact for the Selling Shareholders Confirmed: CIBC WORLD MARKETS CORP. - -------------------------------------- Acting severally on behalf of itself and as representative of the several Underwriters named in Schedule I annexed hereto. By CIBC WORLD MARKETS CORP. By ------------------------------------ Title: -33- SCHEDULE I Number of Firm Shares to Name Be Purchased ---- -------------- CIBC World Markets Corp. Dain Rauscher Incorporated U.S. Bancorp Piper Jaffray -------------- Total ============= -34- SCHEDULE II Name - ---- Directors and Officers - ---------------------- Shareholders - ------------ -35- EX-4.1 3 0003.txt SPECIMEN ORDINARY SHARE CERTIFICATE EXHIBIT 4.1 ORDINARY SHARES NUMBER SHARES CUSIP M01690 10 2 SEE REVERSE FOR CERTAIN DEFINITIONS ACCORD NETWORKS LTD. INCORPORATED UNDER THE LAWS OF THE STATE OF ISRAEL THIS CERTIFIES that is the Registered Holder of FULLY PAID AND NON-ASSESSABLE ORDINARY SHARES OF NIS 0.01 PAR VALUE EACH of ACCORD NETWORKS LTD. transferable on the books of the Company by the holder hereof in person or by duly authorized attorney upon surrender of this Certificate properly endorsed. This Certificate and the Company shares represented hereby are issued and shall be held subject to all the provisions of the Memorandum of Association and Articles of Association of the Company and all amendments thereto, to all of which the holder by acceptance hereof assents. This Certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar. IN WITNESS WHEREOF, the Company has caused this Certificate to be issued under the facsimile seal of the Company. Dated: ACCORD NETWORKS LTD. CORPORATE SEAL Chairman and Director ISRAEL Director ACCORD NETWORKS LTD. The Company shall furnish without charge to each shareholder who so requests a statement of the powers, designations, preferences and relative, participating, optional or other special rights of each class of shares of the Company or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Such requests shall be made to the Company's Secretary at the principal office of the Company. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM-- as tenants in common UNIF GIFT MIN ACT-- Custodian ------------ -------------- TEN ENT-- as tenants by the entireties (Cust) (Minor) JT TEN -- as joint tenants with right of under Uniform Gifts to Minor survivorship and not as Act tenants in common ---------------------------------- UNIF TRF MIN ACT -- Custodian (until age ) ---------- ------- (Cust) under Uniform Transfers --------------- (Minor) to Minors Act --------------------------- (Minor)
Additional abbreviations may also be used though not in the above list. FOR VALUE RECEIVED, ____________________ hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE - -------------------- | | | | | | - -------------------- - -------------------------------------------------------------------------------- (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Shares - -------------------------------------------------------------------------- of the ordinary shares represented by the within Certificate, and do hereby irrevocably constitute and appoint Attorney - ------------------------------------------------------------------------ to transfer the said shares on the books of the within named Company with full power of substitution in the premises. Dated ---------------- X ------------------------------------------ X ------------------------------------------ NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ANY ENLARGEMENT OR ANY CHANGE WHATEVER. Signature(s) Guaranteed By: ------------------------------------------------ THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS, NATIONAL SECURITIES EXCHANGES AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15. EX-10.17 4 0004.txt SETTLEMENT AGREEMENT EXHIBIT 10.17 SETTLEMENT AGREEMENT -------------------- THIS AGREEMENT, effective the sixteenth day of June, 2000, is by and between EZENIA! INC., f/k/a VIDEOSERVER, INC., a Delaware corporation having its principal place of business at 63 Third Avenue, Burlington, Massachusetts 01803 (hereinafter "Ezenia"), on the one hand, and ACCORD NETWORKS, INC., f/k/a ACCORD TELECOMMUNICATIONS, INC., f/k/a ACCORD VIDEO TELECOMMUNICATIONS, Inc., a Georgia corporation having its principal place of business at 9040 Roswell Road, Suite 450, Atlanta, Georgia 30350, and ACCORD NETWORKS LTD., f/k/a ACCORD TELECOMMUNICATIONS LTD., an Israeli corporation having its principal place of business at 94 Derech Em Hamoshavot, P.O.B. 3654, Petach-Tikva, Israel 49130 (collectively herein "Accord"). (a) Ezenia is the owner of United States Letters Patent Nos. 5,600,646 issued on February 4, 1997 (the "646 Patent"), 5,838,664 issued on November 17, 1998 (the "664 Patent"), 5,886,734 issued on March 23, 1999 (the "734 Patent"), and 5,990,933 issued on November 23, 1999 (the "933 Patent"); (b) Ezenia and Accord are currently engaged in a dispute and are parties litigant in a certain civil action pending in the United States District Court for the District of Massachusetts entitled Ezenia! Inc. v. Accord Networks, Inc., et al., Civil Action No. 98-12381-JLT (hereinafter "the pending lawsuit"); (c) In the pending lawsuit, Ezenia has charged that Accord is and has been infringing the '646, '664, '734 and '933 Patents; (d) In the pending lawsuit, Accord has denied infringement and has asserted affirmative defenses and a counterclaim against Ezenia; (e) The parties to this Settlement Agreement recognize the uncertainty of outcome of seriously disputed, complex litigation such as the pending lawsuit, and have independently concluded that their own self-interests would best be served by compromising and thereby terminating and concluding the pending lawsuit and all disputes between them; NOW, THEREFORE, the undersigned parties to this Settlement Agreement herewith mutually agree and contract with each other, for good and reciprocal consideration given and received, as follows: 1. Definitions. ----------- 1.1 "Contested Patents" shall mean the '646, '664, '734 and '933 Patents as well as all continuations, divisionals, reissues, and reexaminations thereof as well as all counterparts thereof in foreign countries. 1.2 "Covenant Period" shall mean the period from June 16, 2000 to June 16, 2003. 1.3 "Ezenia's Remaining Patents" shall mean all United States and foreign issued patents and all United States and foreign patents resulting from patent applications now owned or later filed or acquired by Ezenia during the Covenant Period other than the Contested Patents. 1.4 "Accord's Patents" shall mean all United States and foreign issued patents and all United States and foreign patents resulting from patent applications now owned or later filed or acquired by Accord during the Covenant Period. -2- 1.5 "Remaining Patents" shall mean Ezenia's Remaining Patents and Accord's Patents. 2. Payments. -------- Accord agrees to pay Ezenia $6,500,000 on the following terms: (a) Accord shall pay Ezenia $500,000.00 upon execution of this Settlement Agreement; and (b) Accord shall pay Ezenia the balance of $6,000,000.00 pursuant to the following provisions: (1) If at any time or prior to January 31, 2002, Accord receives from any Initial Public Offering or other financing net proceeds of more than $10,000,000.00 to the extent any balance of the $6,000,00.00 remains owing to Ezenia, Accord shall pay twelve percent (12%) of such proceeds to Ezenia. Accord shall pay Ezenia within seven days of Accord's receipt of such net proceeds. The term "net proceeds" as used herein means the amount received by Accord from such Initial Public Offering or other financing. (2) If by September 30, 2000, Accord has not paid the balance of the $6,000,000.00 owed to Ezenia under this Agreement, then Accord shall commence the following quarterly payment plan: Commencing on October 30, 2000, and thereafter on the 30th day following such successive calendar quarter, Accord shall make $1,000,000.00 quarterly payments to Ezenia until the unpaid balance of $6,000,000.00 has been paid. (c) It is specifically understood that Accord's payments under Paragraph 2(b)(1), whenever made, may result in a final quarterly payment under Paragraph 2(b)(2) of less than $1,000,000.00 and may result in less than six quarterly payments. It is also specifically understood that Accord's total payments under Paragraphs 2(b)(1) and 2(b)(2) shall not exceed $6,000,000.00. -3- 3. Agreement for Judgment. ---------------------- Upon the execution of this Settlement Agreement, Ezenia and Accord will execute and file with the United States District Court for the District of Massachusetts an Agreement for Judgment in the form attached hereto as Exhibit A, to be entered by the Court as a final judgment in the litigation, and joint motion for entry thereof. 4. Exchange of Mutual Releases. --------------------------- (a) Upon execution of this Settlement Agreement, Ezenia will execute and deliver to Accord a release in the form annexed as Exhibit B; and (b) Upon execution of this Settlement Agreement, Accord will execute and deliver to Ezenia a release in the form annexed as Exhibit C. 5. Confidentiality. --------------- The parties shall continue to be bound by and to comply with the terms of the "Stipulation and Protective Order" previously executed in the pending lawsuit, a copy of which is annexed hereto as Exhibit D. 6. Press Release. ------------- Upon execution of this Settlement Agreement, Ezenia and Accord will issue a joint press release in the form attached hereto as Exhibit E. Except as required by law, regulation of any governmental body, or any stock exchange, neither party shall thereafter publicly issue any written materials or press releases concerning the subject matter of this Settlement Agreement or the pending lawsuit. 7. Covenants Not to Sue. -------------------- (a) The Contested Patents. Ezenia hereby covenants not to sue Accord for --------------------- infringement of any of the Contested Patents. Ezenia further covenants not to sue any customer of -4- Accord or end user of Accord products for infringement of any of the Contested Patents to the extent that such infringement constitutes using, reselling, offering for resale, or importing a product that was originally sold by Accord. Ezenia further covenants not to sue any agents, suppliers, contractors or subcontractors of Accord for infringement of the Contested Patents to the extent that such infringement constitutes making products for sale to Accord, selling products to Accord, or importing products for sale to Accord. Ezenia further promises to impose the covenants of this paragraph on any third party to whom Ezenia may assign any of the Contested Patents. (b) Transferability of the Covenants Granted in Paragraph 7(a). The ---------------------------------------------------------- covenants not to sue granted in paragraph 7(a) shall remain non-transferable and personal to Accord until Accord pays to Ezenia the entire balance of the $6,500,000.00 as specified by Paragraph 2 herein. After the entire balance of the $6,500,000.00 has been paid to Ezenia, the covenants not to sue granted in Paragraph 7(a) may be transferred from Accord to its parent, subsidiary or affiliate (as long as affiliate is an entity which controls, is controlled by, or is under common control of Accord) or any purchaser of all or substantially all of the assets of Accord; however, the transferred covenant not to sue shall apply to the products of Accord sold or under development by Accord at the time of the transfer. (c) The Remaining Patents. --------------------- (i) Covenant Not to Sue. Neither Ezenia nor Accord will commence or ------------------- cause to be commenced against the other during the Covenant Period any suit or litigation based upon claims asserting infringement, invalidity, or unenforceability of any of the Remaining Patents. Neither Ezenia nor Accord will commence or cause to be commenced against the customers or end users of the other party during the Covenant Period any suit or litigation based upon claims asserting infringement of the Remaining Patents to the extent that such infringement constitutes using, -5- reselling, offering for resale, or importing a product that was originally sold by the other party. Neither Ezenia nor Accord will commence or cause to be commenced against the Agents, suppliers, contracts or subcontractors of the other party during the Covenant Period any suit or litigation based upon claims asserting infringement of the Remaining Patents to the extent that such infringement constitutes making products for sale to the other party, selling products to the other party, or importing products for sale to the other party. The provisions of this Paragraph 7(c) shall constitute a waiver, release and discharge from any alleged infringement of the Remaining Patents occurring or any damages for alleged infringement of the Remaining Patents accruing prior to June 16, 2003, and shall preclude either Ezenia or Accord from commencing an action after June 16, 2003, to recover damages accruing for any infringement of the Remaining patents occurring prior to June 16, 2003. However, in any future action for infringement of the Remaining Patents, Ezenia and Accord agree that the Covenant Period shall not be asserted against the party asserting infringement as a basis for any estoppel, waiver, laches, or implied license defense, and shall not be construed as prejudicial to subsequent efforts by either party to pursue preliminary relief. (ii) Third Party Transfers. In the event that either Ezenia or Accord --------------------- transfers rights to any of the Remaining Patents to a third party: (A) the provisions of Paragraph 7(c) shall bind the third party, as well as any subsequent purchasers or transferees of rights in such Remaining Patents; (B) the provisions of this paragraph shall not apply to any other United States or foreign patents of such third party not obtained from Ezenia or Accord; and (C) if any third party that has acquired any of the Remaining Patents from either Ezenia or Accord brings an infringement action against the other party, then the other party shall be released from the promises not to sue provided in Paragraph 7(c). The provisions of Paragraph 7(c) shall not limit either Ezenia's or Accord's right to take action against any third party for acts of the third party occurring prior to either -6- any asset sale by, any merger between, or any change of control transaction involving, either Ezenia or Accord and such third party. In the event that Ezenia or Accord is acquired by, acquires or merges with a third party that has a pending suit against Ezenia or Accord at the time of the acquisition or merger, nothing herein shall prevent the acquiring or merging party from maintaining and prosecuting such pending suit against Ezenia or Accord. (iii) Settlement Agreement. Nothing in Paragraphs 7(a), (b) or (c) -------------------- shall be construed, as limiting in any way either Ezenia's or Accord's right to commence an action to enforce or defend its rights under this Settlement Agreement. (d) Notice. Neither Ezenia nor Accord will commence or cause to be ------ commenced any suit or litigation against the other based upon claims asserting infringement, invalidity, or unenforceability of any United States or foreign patent without providing the other party sixty (60) days' prior written notice of its intention to commence suit or litigation. During the 60-day notice period, and any mutually agreeable extensions thereof, Ezenia and Accord agree to exercise their best efforts to negotiate an amicable resolution of any such claims. Ezenia and Accord agree that during the 60-day notice period, and any mutually agreeable extensions thereof, the party accused of infringement shall not commence a declaratory judgment action with respect to the patent that is subject of the notice, until after the earlier of (i) an action -7- alleging infringement of the patent is commenced or (ii) ninety days from the date of the notice. Further, Ezenia and Accord agree that the 60-day period, and any mutually agreeable extensions, shall not be asserted against the party asserting infringement as a basis for any estoppel, waiver or laches defense, and shall not be construed as prejudicial to subsequent efforts by either party to pursue preliminary relief in the event negotiations do not result in an amicable resolution. The rights granted in this paragraph 7(d) are non- transferable and personal to Accord and Ezenia. 8. Breach. ------ In the event that Accord shall have defaulted in any of its payment obligations hereunder, Ezenia may give Accord written notice of such default, and Accord shall cure such default within thirty (30) days from the date of receipt of such notice. In the event Accord fails to cure such default within thirty (30) days from receipt of notice provided hereunder, all payments provided by Paragraph 2 not yet paid shall immediately become due and payable. Miscellaneous - ------------- 9. This Settlement Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts. 10. The invalidity or unenforceability of any provision of this Settlement Agreement shall not affect the validity or enforceability of any other provision. 11. Ezenia and Accord have had all desired counsel, legal and otherwise, in entering into this Settlement Agreement, and do so in accordance with their own free acts and deeds. 12. Any and all notices, consents or demands permitted or required to be made or given under this Settlement Agreement shall be in writing, signed by the individual giving such -8- notice, consent, or demand and shall be delivered personally or sent by registered or certified mail, return receipt requested, to the other party at its address set forth below: If to Ezenia: Hale and Dorr LLP 60 State Street Boston, MA 02109 Att'n: Merriann M. Panarella, Esq. and Ezenia! Inc. 63 Third Avenue Burlington, MA 01803 Att'n: Mr. Stephen G. Bassett If to Accord: Troutman Sanders LLP Suite 5200 Bank of America Plaza 600 Peachtree Street, N.E. Atlanta, GA 30308 Att'n: Douglas D. Salyers, Esq. and Accord Networks, Inc. 9040 Roswell Road Suite 450 Atlanta, GA 30350 Att'n: Mr. Adam Vexler 13. Unless otherwise set forth herein, the provisions of this Settlement Agreement including all Exhibits hereto shall be binding on, and inure to the benefit of, the respective permitted successors and assigns or partial assigns hereto and, in any event, shall continue to be binding upon the parties. 14. Each party warrants and represents that it has not heretofore assigned, transferred, hypothecated, or purported to assign, transfer, or hypothecate to any person or entity not a party -9- hereto, the whole or any part or portion of its claims or rights which constitute matters released or discharged pursuant to this Settlement Agreement. 15. The parties to this Settlement Agreement intend that it take effect as a sealed instrument under the laws of the Commonwealth of Massachusetts. 16. This Settlement Agreement may be executed in separate counterparts, each of which shall be considered an original but all of which shall constitute one agreement, and signatures may be exchanged via facsimile. 17. Neither party shall be responsible to the other for any failure or delay in performing this Settlement Agreement if such failure is due to war, riot, strike, fire, sabotage, flood, or other natural disaster, accident, or other similar cause, or acts of any government outside the control of the affected party, provided that such party provides the other with prompt written notice of such condition and resumes its performance as soon as possible, but in no event in more than ninety (90) days. -10- IN WITNESS WHEREOF, each of the parties has caused two original copies of this Agreement to be executed on its behalf by its duly authorized officer as of the day and year aforesaid. EZENIA! INC. ACCORD NETWORKS, INC. By: /s/ Stephen G. Barrett By: /s/ Jules DeVigne ---------------------- ----------------- Duly Authorized Duly Authorized ACCORD NETWORKS LTD. By: /s/ Jules DeVigne ----------------- Duly Authorized -11- EXHIBIT A UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS - ------------------------------ EZENIA! INC., Plaintiff, v. Civil Action No. 98-12381-JLT ACCORD NETWORKS, INC. and ACCORD NETWORKS LTD., Defendants. - ------------------------------ AGREEMENT FOR JUDGMENT ---------------------- This cause coming before the Court on the Joint Motion for Entry of Agreement for Judgment of the plaintiff, Ezenia! Inc., ("Ezenia"), and the defendants, Accord Networks, Inc. and Accord Networks Ltd. ("Accord"), final judgment is entered as follows: IT IS HEREBY ADJUDGED AND DECREED: 1. This Court has jurisdiction over the parties and the subject matter pursuant to 35 U.S.C. (S) 1338. 2. Ezenia is the owner of United States Patent Nos. 5,600,646 (the "646 patent"), 5,838,664 (the "664 patent"), 5,886,734 (the "734 patent"), and 5,990,933 (the "933 patent"). 3. The '646, '664, '734 and '933 patents are valid and enforceable. 4. The claims and defenses in the Fourth Amendment Complaint, Answer and Counterclaim are dismissed with prejudice; the parties shall bear their own costs of this action, and all rights of appeal are waived. /s/ ---------------------------- United States District Judge Dated:____________, 2000 -2- The parties hereby agree to entry of the foregoing Judgment as a final judgment in this action. EZENIA! INC. ACCORD NETWOKS, INC. and ACCORD NETWORKS LTD. By its attorneys, By their attorneys, /s/ Merriann M. Panarella /s/ Douglas D. Salyers - ------------------------- ------------------------------ William F. Lee (BBO #291960) Douglas D. Salyers Merriann M. Panarella (BBO #388280) Troutman Sanders LLP Hale and Dorr LLP Suite 5200, Bank of America Plaza 60 State Street 600 Peachtree Street, N.E. Boston, MA 02109 Atlanta, GA 30308 (617) 526-6000 (404) 885-3000 OF COUNSEL: Joseph D. Steinfield (BBO #478680) Bruce E. Falby (BBO #544143) Hill & Barlow One International Place Boston, MA 02110 (617) 428-3000 -3- EXHIBIT B RELEASE ------- KNOW ALL MEN BY THESE PRESENTS that Ezenia! Inc. ("Ezenia!"), a Delaware corporation with its principal place of business at 63 Third Avenue, Burlington, Massachusetts 01803, for good and valuable consideration paid by Accord Networks, Inc., a Georgia corporation having its principal place of business at 9040 Roswell Road, Suite 450, Atlanta, Georgia 30350 and Accord Networks Ltd., an Israeli corporation having its principal place of business at 94 Derech Em Hamoshavot, Petach-Tikva 49130, Israel (collectively, "Accord"), the receipt and sufficiency of which is hereby acknowledged, hash remised, released, and forever discharged and does hereby and forever discharge Accord and its respective agents, employees, officers, directors, successors, assigns, heirs, executors and administrators, in their capacities as such, of and from all claims, debts, demands, actions, causes of action, suits, dues, sum and sums of money, accounts, reckonings, bonds, specialties, covenants, contracts, controversies, agreements, premises, doings, omissions, variances, damages, extents, executions, and liabilities whatsoever, whether known or unknown, suspected or unsuspected, claimed or unclaimed, asserted or unasserted, direct or indirect, derivative or otherwise, including but not limited to those which arise out of the subject matter alleged in a certain civil action commenced in the United States District Court for the District of Massachusetts entitled Ezenia! Inc. v. --------------- Accord Networks, Inc. and Accord Networks Ltd., Civil Action No. 98-12381-JLT, - ---------------------------------------------- which Ezenia! now has or ever had against Accord, from the beginning of the world to this date, provided that nothing herein shall constitute a release of the Settlement Agreement entered on this date. IN WITNESS WHEREOF, Ezenia! has hereunto set its hand and seal effective this sixteenth day of June, 2000. Signed And Sealed EZENIA! INC. in the presence of: /s/ Merriann M. Panarella By: /s/ Stephen G. Barrett - ------------------------- ---------------------- Duly Authorized EXHIBIT C RELEASE ------- KNOW ALL MEN BY THESE PRESENTS that Accord Networks, Inc., a Georgia corporation having its principal place of business at 9040 Roswell Road, Suite 450, Atlanta, Georgia 30350 and Accord Networks Ltd., an Israeli corporation having its principal place of business at 94 Derech Em Hamoshavot, Petach-Tikva 49130, Israel (collectively, "Accord"), for good and valuable consideration paid by Ezenia! Inc. ("Ezenia!"), a Delaware corporation with its principal place of business at 63 Third Avenue, Burlington, Massachusetts 01803, the receipt and sufficiency of which is hereby acknowledged, has remised, released and forever discharged and does hereby and forever discharge Ezenia! and its respective agents, employees, officers, directors, successors, assigns, heirs, executors and administrators, in their capacities as such, of and from all claims, debts, demands, actions, causes of actions, suits, dues, sum and sums of money, accounts, reckonings, bonds, specialties, covenants, contracts, controversies, agreements, premises, doings, omissions, variances, damages, extents, executions, and liabilities whatsoever, whether known or unknown, suspected or unsuspected, claimed or unclaimed, asserted or unasserted, direct or indirect, derivative or otherwise, including but not limited to those which arise out of the subject matter alleged in a certain civil action commenced in the United States District Court for the District of Massachusetts entitled Ezenia! Inc. v. --------------- Accord Networks, Inc. and Accord Networks Ltd., Civil Action No. 98-12381-JLT, - ---------------------------------------------- which Accord now has or ever had against Ezenia!, from the beginning of the world to this date, provided that nothing herein shall constitute a release of the Settlement Agreement entered on this date. IN WITNESS WHEREOF, Accord has hereunto set its hand and seal effective this sixteenth day of June, 2000. Signed And Sealed ACCORD NETWORKS, INC. in the presence of: By: /s/ Jules DeVigne - ------------------- ----------------- Duly authorized Signed And Sealed ACCORD NETWORKS LTD in the presence of: By: /s/ Jules DeVigne - ------------------- ----------------- Duly authorized EXHIBIT D STIPULATION AND PROTECTIVE ORDER -------------------------------- UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS - -------------------------------------- ) VIDEOSERVER, INC., ) ) Plaintiff, ) ) v. ) Civil Action No. ) 98-12381-JLT ACCORD TELECOMMUNICATIONS, ) INC., f/k/a ACCORD VIDEO ) TELECOMMUNICATIONS, INC. ) ) Defendant. ) ) - -------------------------------------- STIPULATION AND PROTECTIVE ORDER -------------------------------- Plaintiff VideoServer, Inc. ("VideoServer") and defendant Accord Telecommunications, Inc., f/k/a Accord Video Telecommunications, Inc. ("Accord") stipulate, pursuant to Rule 26(c) of the Federal Rules of Civil Procedure, that the following Protective Order may be entered by the Court: 1. Introduction and Scope. This Stipulation and Protective Order ("Protective Order") shall govern any designated record of information produced in this action, including all designated deposition testimony, all designated testimony taken at a hearing or other proceeding, interrogatory answers, documents and other discovery materials, whether produced informally or in response to interrogatories, requests for admissions, requests for production of documents or other formal method of discovery. This Protective Order shall also govern any designated record of information produced in this action pursuant to required disclosures under any federal procedural rule or Local Rule, and any supplementary disclosures thereto. This Protective Order shall apply to the categories of information listed in this paragraph in any related actions between the parties filed in this Court subsequent to the present action. 2. Designation. Each party shall have the right to designate as confidential and subject to this Protective Order any information, document or portion of any document produced by it in this litigation which contains trade secrets or other sensitive, confidential, or proprietary technical, business or financial information. This designation shall be made by stamping each page of the document containing confidential information (or, if the document is an electronic document, by stamping each printed page of such document and/or the media upon which the electronic document is recorded) with the legend CONFIDENTIAL prior to its production. If the document is inadvertently produced without such legend, the designation shall be made by promptly furnishing written notice to the receiving party that the information or document shall be CONFIDENTIAL under this Protective Order. With respect to all materials provided for inspection by a party's counsel, designation by stamping or labeling as CONFIDENTIAL need not be made until copies of the materials are requested after inspection and selection by counsel. Making documents and things available for inspection shall not constitute a waiver of any claim of confidentiality, and all materials provided for inspection by a party's counsel shall be treated as though designated as CONFIDENTIAL at the time of the inspection. 3. Limit On Use And Disclosure Of Designated Information. Each party and all persons bound by the terms of this Protective Order shall use any information or document governed by this Protective Order only for the purpose of prosecution or defense of this action. No party or other person shall disclose or release to any person not qualified under this Protective Order any information or document governed by this Protective Order for any purpose, or to any person qualified under this Protective Order for any purpose other than the prosecution or defense of this action. It is, however, understood that counsel for a party may give advice and opinions to his or her client based on his or her evaluation of information designated as CONFIDENTIAL produced by the opposing party provided that such rendering of advice and opinions shall not reveal the content of such information except by prior written agreement with opposing counsel. The attorneys of record for the parties and other persons receiving information governed by this Protective Order shall exercise reasonable care to insure that the information and documents governed by this Protective Order are (i) used only for the purposes specified herein, and (ii) disclosed only to authorized persons. 4. Confidential Material. CONFIDENTIAL documents and information shall be disclosed by the recipient thereof only to (a) the attorneys and counsel of record for the parties to this action who are not employees of the parties, foreign counsel associated with such attorneys and who are providing assistance in this matter, and their authorized secretarial and legal assistance staff, (b) the Court, Court reporters, and Court personnel as provided in Paragraph 12, (c) non-technical consultant experts retained by the parties or their attorneys for purposes of this litigation pursuant to paragraph 6 below, who are not employees of the parties and who first agree to be bound by this Protective Order; (d) technical consultant experts retained by the parties or their attorneys for purposes of this litigation pursuant to paragraph 6 below, who are not employees of the parties and who first agree to be bound by this Protective Order, (e) no more than one designated in-house attorney of each of the parties including his or her authorized secretarial and legal assistance staff; (f) computer forensics experts retained by the parties who first agree to be bound by this Protective Order, (g) jury consultants retained by the parties who first agree to be bound by this Protective Order, and (h) graphics and design-services consultants retained by the parties who first agree to be bound by this Protective Order. No documents or information designated as CONFIDENTIAL shall be disclosed to any person other than the foregoing except by written stipulation of the parties or by further Order of the Court. 5. Redaction. Counsel for a party producing documents may mask ("redact") material deemed exempt from discovery because of the attorney-client privilege or work product immunity afforded by Fed. R. Civ. P. 26(b), or irrelevant to the subject matter of this action and not reasonably calculated to lead to the discovery of admissible evidence, and may thus produce documents for inspection either in a masked or unmasked form. However, any document from which material is masked must identify in the masked area that masking or redaction has occurred. The reason for any such masking must be stated either on the document itself or in a privilege log which accompanies the produced documents. Counsel for the party receiving production of any document from which material has been masked for reasons other than privilege or immunity shall have the right on request to inspect the redacted material in the original document in the most convenient manner available to the parties. In the event of any dispute as to the propriety of the redaction, the party objecting to the redaction may submit the issue to the Court for review pursuant to the terms of Paragraph 15. 6. Identification Of Experts. If any party desires to give, show, make available, or communicate documents or information designated as CONFIDENTIAL to any expert consultant pursuant to paragraph 4(c) or 4(d) above, it must first identify in writing the expert consultants to whom it intends to give or disclose such documents or information to the attorneys for the other parties, who shall have ten (10) business days from receipt of such notice to object to disclosure to any of the experts so identified. Such identification shall include, at least, the full name and professional address and/or affiliation of the proposed expert, a statement of the expert's qualifications, and an up-to-date curriculum vitae of the expert identifying at least all other present and prior employments or consultancies of the expert in the field. The parties shall attempt to resolve any objections informally. If the objections cannot be resolved informally, the party seeking to disclose the CONFIDENTIAL information to the expert may move the court for an Order allowing the disclosure, in which case the party objecting to the disclosure of CONFIDENTIAL information shall have the burden of showing why that disclosure should not be permitted. In the event objections are made and not resolved informally, disclosure of CONFIDENTIAL documents and information to the expert shall not be made except by Order of the Court. The party objecting to disclosure of CONFIDENTIAL information to an expert or consultant to whom objection has been made may (but is not required to) move the Court for relief. 7. Agreement Of Confidentiality. In no event shall any material designated as CONFIDENTIAL be disclosed to any person, other than the Court, Court reporters, and Court personnel, or attorneys for the parties and their authorized secretarial and legal assistant staffs, until such person has executed a written Confidentiality Undertaking acknowledging and agreeing to be bound by the terms of this Protective Order in the form set forth in Exhibit A hereto. Except for consultants pursuant to paragraphs 4(f), 4(g) and 4(h), copies of such Confidentiality Undertakings shall be promptly served on the producing party. 8. Related Documents. Documents and information designated as CONFIDENTIAL shall include (a) all copies, extracts and complete or partial summaries prepared from such documents or information; (b) portions of deposition transcripts and exhibits thereto which contain or reflect the content of any such documents, copies, extracts, or summaries; (c) portions of briefs, memoranda or any other writing filed with the Court and exhibits thereto which contain or reflect the content of any such documents, copies, extracts, or summaries; (d) deposition testimony designated in accordance with paragraph 9 below; and (e) testimony taken at a hearing or other proceeding that is designated in accordance with paragraph 10 below. 9. Designation Of Deposition Transcripts. Deposition transcripts, or portions thereof, may be designated as CONFIDENTIAL either (1) at the time of such deposition, in which case the transcript of the designated testimony shall be bound in a separate volume and marked by the reporter as CONFIDENTIAL, or (2) within thirty (30) days following receipt of the deposition transcript by providing written notice to the reporter and all counsel of record, in which case all counsel receiving such notice shall mark the copies or portions of the designated transcript in their possession or under their control as CONFIDENTIAL. All deposition transcripts not previously designated shall be deemed to be, and shall be treated as, CONFIDENTIAL for a period of thirty (30) days after receipt of the transcript, and the transcript shall not be disclosed by a non-designating party to persons other than those persons named or approved according to paragraph 4 herein to review documents or materials designated CONFIDENTIAL on behalf of that non-designating party. The designating party shall have the right to exclude all persons from a deposition before the taking of testimony which the designating party designates as subject to this Protective Order other than those persons: (1) previously qualified to receive CONFIDENTIAL information pursuant to paragraph 4, above, and (2) who have executed a Confidentiality Undertaking in the form of Exhibit A hereto as required by paragraph 7, above. 10. Designation Of Hearing Testimony Or Argument. With respect to testimony elicited during hearings or other proceedings, whenever counsel for any party deems that any question or line of questioning calls for the disclosure of CONFIDENTIAL information, counsel may designate on the record prior to such disclosure that the disclosure is CONFIDENTIAL. Whenever matter designated as CONFIDENTIAL is to be discussed in a hearing or other proceeding, any party claiming such confidentiality may have excluded from the room any person who is not entitled under this Order to receive information designated as CONFIDENTIAL. 11. Disclosure To Author Or Recipient. Notwithstanding any other provisions of this Order, nothing herein shall prohibit counsel for a party from disclosing a document designated as CONFIDENTIAL to any person whom the document clearly identifies as an author, addressee, or recipient of such document; and regardless of such designation pursuant to this Protective Order, if a document or testimony makes reference to the actual or alleged conduct or statements of a person who is a potential witness, counsel may discuss such conduct or statements with such person without revealing any portion of the document or testimony other than that which specifically refers to such conduct or statement, and such discussion shall not constitute disclosure in violation of this Protective Order. 12. Designation Of Documents Under Seal. Any information or documents designated as CONFIDENTIAL, if filed with the Court, shall be filed with a Motion to Impound pursuant to Rule 7.2 of the Local Rules of the District of Massachusetts. The clerk of this Court is to maintain such information under seal and make it available only to the Court and to persons authorized by the terms of this Protective Order unless the Court denies the Motion to Impound, in which case the clerk will permit a party to retrieve the information prior to it being placed in the public file. The party filing any party which reflects, contains or includes any information or document subject to this Protective Order shall file such paper in a sealed envelope, or other appropriately sealed container, which indicates the title of the action, the party filing the materials, the nature of the materials filed, and the legend CONFIDENTIAL. At the conclusion of this case, any materials filed with the Court under seal shall be kept under seal or be returned to the party filing it for disposition as provided for in paragraph 20 below. 13. Confidentiality Of Party's Own Documents. No person may use or disclose, in public or private, any information or documents of another party designated as CONFIDENTIAL except as provided for in this Protective Order, but nothing herein shall affect the right of the designating party to disclose to its consultants or experts information or documents designated by it as CONFIDENTIAL. Such disclosure shall not waive the protections of this Protective Order and shall not entitle other parties or their attorneys to disclose such information or documents in violation of it. 14. Preparation. No party (or person designated by a party pursuant to paragraph 4 above) shall use any material designated by the other party hereunder as CONFIDENTIAL, or information derived from such information, for purposes other than this litigation, including without limitation for purposes of preparing, filing or prosecuting any patent application, continuation or divisional patent application, reissue patent application or reexamination patent application. Any party may mark any material designated hereunder as CONFIDENTIAL as an exhibit to a deposition, hearing, or other proceeding and examine any witness thereon qualified under the terms of this Protective Order to have access to such designated material, provided (i) the qualified witness previously has executed or stated under oath to be bound by a Confidentiality Undertaking in the form annexed hereto, and (ii) the exhibit and related transcript pages are treated as CONFIDENTIAL. 15. Other Protections; Challenge To Confidentiality Designation. This Protective Order shall not preclude any party from seeking and obtaining, on an appropriate showing, such additional protection with respect to the confidentiality of documents or other discovery material as that party may consider appropriate. Nor shall any party be precluded from (1) claiming that any matter designated CONFIDENTIAL hereunder is not entitled to the protections of this Protective Order, (2) applying to the Court for an Order permitting the disclosure or use of information or documents otherwise prohibited by this Protective Order, or (3) applying for a further Order modifying this Protective Order in any respect. No party shall be obligated to challenge the propriety of any confidentiality designation and failure to do so shall not preclude a subsequent challenge to the propriety of such designation. On any motion challenging the designation of any document or other record or information as CONFIDENTIAL, the burden of justifying the designation shall lie with the designating party. If a party (i) seeks declassification or removal of particular items designated as CONFIDENTIAL from this Protective Order on the ground that such confidentiality is not necessary to protect the interests of the party furnishing the document, information or other thing, or (ii) challenges the propriety of a redaction as provided in paragraph 5 above, the following procedure shall be utilized: a. The party seeking such relief shall give counsel of record for the other party written notice thereof by facsimile, with confirmation by mail, specifying the document, information or other thing as to which such removal is sought and the reasons for the request; b. If, after conferring, the parties cannot reach agreement concerning the matter within five (5) business days after the delivery by facsimile of the notice, then the party requesting the declassification or removal of particular items designated as CONFIDENTIAL from this Protective Order may file and serve a motion for a further Order of this Court directing that the document, information or other thing shall be so removed. Any such motion shall be set forth the earliest possible date on the Court's calendar, and shall not be continued without the consent of all parties. 16. Prior Or Public Knowledge. This Protective Order shall not apply to information that was, is, or becomes public knowledge not in violation of this Protective Order, or that is legitimately and independently acquired from a source not subject to this Protective Order. 17. Limitation of Protective Order. This Protective Order is not intended to fully address discovery objections to produce, answer, or respond on the grounds of attorney-client privilege or work product immunity, nor to preclude either party from seeking further relief or protective orders from the Court as may be appropriate under the Federal Rules of Civil Procedure. 18. Inadvertent Disclosure Of Work Product Or Privileged Information: Procedure And Waiver. Inadvertent production of documents subject to work product immunity or the attorney-client privilege shall not constitute a waiver of the immunity or privilege, provided that the producing party shall promptly notify the receiving party in writing of such inadvertent production after the producing party learns of such inadvertent production. If prompt notification is made and the producing party establishes the circumstances surrounding the document's inadvertent production, such inadvertently produced document and all copies thereof shall be returned to the producing party or destroyed, upon request. No use shall be made of such documents during deposition or at trial, nor shall they be shown to anyone who was not given access to them prior to the request to return or destroy them. If, after conferring, the parties are unable to reach a satisfactory agreement within five (5) business days of receipt of the request to return or destroy them, the producing party may move the Court regarding the matter within ten (10) business days after the non-producing party first received notification of the belated claim of immunity or privilege. The non- producing party shall not disclose the document for which the belated claim of immunity or privilege is being made to any person, other than those persons who have had it in their possession prior to receipt of notification from the producing party, until the expiration of this ten (10) day period or, if a motion to the Court is submitted, until disposition of that petition. Following expiration of the ten (10) day period, nothing in this Protective Order shall preclude either party from moving the Court for return or destruction of later disclosed, inadvertently produced work product immunity or attorney-client privileged documents. 19. Non-Party Material. The terms of this Protective Order are applicable to CONFIDENTIAL information submitted by a non-party, and such information produced by a non- party in connection with this litigation shall be protected by the remedies and relief provided by this Protective Order. 20. Return Of Designated Information. Upon final termination of this action, unless otherwise agreed to in writing by an attorney of record for the designating party, each party shall assemble and return all material designated as CONFIDENTIAL, including all copies, extracts and summaries thereof, to the party from whom the designated material was obtained, except that any documents or copies which contain or constitute, or which reflect, attorney's work product or attorney-client privileged communications may be retained by counsel or destroyed rather than returned. Additionally, outside counsel for the parties may retain for their files correspondence, notes, pleadings, briefs and exhibits, deposition transcripts and exhibits, and work product materials that contain material designated as CONFIDENTIAL. Outside counsel shall continue to be subject to the terms of this Protective Order with regard to any such retained CONFIDENTIAL material. 21. Waiver Or Termination of Order. No part of the restrictions imposed by this Protective Order may be waived or terminated, except by the written stipulation executed by counsel of record for each designating party, or by an Order of the Court for good cause shown. The restrictions provided for herein shall not terminate upon the conclusion of this lawsuit, but shall continue until further Order of this Court. 22. Modification Of Order. This Stipulation and Protective Order may be modified, and any matter related to it may be resolved, by written stipulation of the parties without further Order of the Court. 23. Term. This Protective Order shall remain in effect up to, but not including, the time of trial. At that time, the parties contemplate the agreement to and entry of a Protective Order to govern the use and disclosure of CONFIDENTIAL material at trial. 24. Paragraph Captions. The title captions for each paragraph of this Protective Order are for convenience only and are not intended to affect or alter the text of the paragraphs or the substance of the Order. VIDEOSERVER, INC. ACCORD TELECOMMUNICATIONS, INC. f/k/a ACCORD VIDEO TELECOMMUNICATIONS, INC. By its attorneys, By its attorneys, William F. Lee (BBO #291960) Douglas D. Salyers Wayne L. Stoner (BBO #548015) Lisa M. Arent Merriann M. Panarella (BBO #388280) TROUTMAN SANDERS LLP HALE AND DORR LLP Suite 5200 - NationsBank Plaza 60 State Street 600 Peachtree Street, N.E. Boston, MA 02109 Atlanta, GA 30308-2216 (617) 526-6000 (404) 885-3000 OF COUNSEL: Joseph D. Steinfield (BBO #478680) Bruce E. Falby (BBO # 544143) HILL & BARLOW One International Place Boston, MA 02110 (617) 428-3000 SO ORDERED, this ____ day of __________________, 1999. Joseph L. Tauro Chief Judge, District of Massachusetts EXHIBIT A UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS - -------------------------------------------- ) VIDEOSERVER, INC., ) ) Plaintiff, ) ) v. ) Civil Action No. ) 98-12381-JLT ACCORD TELECOMMUNICATIONS, ) INC., f/k/a ACCORD VIDEO ) TELECOMMUNICATIONS, INC. ) ) Defendant. ) ) - ------------------------------------------- CONFIDENTIALITY UNDERTAKING --------------------------- I certify that I have read the Stipulation and Protective Order in the above-captioned case and that I understand the terms of the Order. I recognize that I am bound by the terms of that Order, and I agree to comply with those terms. I hereby consent to the personal jurisdiction of the United States District Court, District of Massachusetts, for any proceedings involving the enforcement of that Order. EXECUTED this ___ day of _____________, 1999/200__, at ________________. ------------------------- Name ------------------------- Affiliation ------------------------- Business Address ------------------------- EXHIBIT E PRESS RELEASE ------------- Ezenia! Inc., Accord Networks, Inc. and Accord Networks Ltd. today announced the settlement of a lawsuit pending in the United States District Court for the District of Massachusetts. Under the terms of the written Settlement Agreement, Ezenia! and Accord agreed to dismiss all claims and counterclaims against each other and agreed to exchange mutual releases. As a part of the settlement, Ezenia! has entered into a covenant not to sue Accord for patent infringement of the four patents owned by Ezenia! which were the subject of the lawsuit. Ezenia! and Accord have also agreed that for a 3 year period neither will commence any patent litigation against the other on any other patents. Pursuant to the settlement agreement, Accord has agreed to pay Ezenia! $6,500,000. EX-99.1 5 0005.txt CONSENT OF CREDIT SUISSE FIRST BOSTON EXHIBIT 99.1 [LOGO OF ACCORD] June 1, 2000 Via Facsimile (770) 261-3636 Accord Networks, Ltd. This letter confirms that Credit Suisse First Boston consents to the use of the attached case study in a potential public disclosure or filing made by Accord. /s/ [illegible signature] - ------------------------------------ Signature Weinstein, Ira M. -- VP/Dept. Head - ------------------------------------ Printed Name & Title 6/26/00 Credit Suisse First Boston Credit Suisse First Boston is a global investment banking firm, with approximately 15,500 employees and operations in over 60 offices across more than 30 countries. Credit Suisse First Boston uses real-time interactive visual communications to conduct worldwide executive meetings, analyst briefings, corporate presentations, staff meetings and interviews. For several years, Credit Suisse First Boston worked with an outside service provider for management of its multi-point conferencing. As Credit Suisse First Boston's volume of use increased, it decided to purchase its own system. After an extensive evaluation process, Credit Suisse First Boston purchased an MGC-100 system in December 1998. Within one month, we had installed our system at Credit Suisse First Boston's Madison Avenue location in New York, we had trained Credit Suisse First Boston personnel, and Credit Suisse First Boston was using our system to manage visual communications. Credit Suisse First Boston also has deployed an additional MGC-100 system in Singapore. EX-99.4 6 0006.txt CONSENT OF FRANCE TELECOM EXHIBIT 99.4 June 1, 2000 Via Facsimile (770) 261-3636 Accord Networks, Ltd. This letter confirms that France Telecom consents to the use of the attached case study in a potential public disclosure or filing made by Accord. /s/ Marilyne Durand - ----------------------------- Marilyne Durand Product Communication Manager - ----------------------------- Printed Name & Title FRANCE TELECOM-Branche Enterprises Division Services Vocaux et Reseaux Services de Teleconference 18 bd Vauginard - 75745 Paris Cedex 15 France Telecom France Telecom, one of the world's leading telecommunications carriers, has chosen our system to support its on-demand visual communications service offerings. This service, which France Telecom began offering in the first quarter of 2000, will allow people to initiate and control their own on-demand sessions without the need of an operator and without reserving a session in advance. France Telecom believes that this service is the first step toward a variety of applications for businesses and consumers that will extend their visual communications service offerings beyond traditional videoconferencing. -----END PRIVACY-ENHANCED MESSAGE-----