Brainsway(BWAY) - 2024 Q3 - Quarterly Report

Securities Purchase Agreement Overview This agreement, dated September 29, 2024, details the sale of securities by BrainsWay Ltd. to Valor BrainsWay Holdings, LLC under a registration exemption - This Securities Purchase Agreement is dated September 29, 2024, between BrainsWay Ltd. (the "Company") and Valor BrainsWay Holdings, LLC (the "Purchaser")[3] - The Company agrees to issue and sell securities to the Purchaser, and the Purchaser agrees to purchase them, under an exemption from registration requirements of Section 5 of the Securities Act[4] 1. Definitions This section defines key terms like ADSs, Securities, and Warrants, specifying their purchase price and exercise terms - This section defines key terms used throughout the agreement, including "ADSs" (American Depositary Shares), "Securities" (ADSs, Warrants, and Warrant ADSs), and "Warrants" (warrants to purchase up to 3,000,000 Ordinary Shares represented by 1,500,000 ADSs)[6][7][61][68] - The Per ADS Purchase Price is established at US$9.50686, subject to adjustments[45] - The Warrants are exercisable immediately upon issuance and have a term of eighteen (18) months[68] 2. Purchase and Sale This section outlines the core transaction details, including the purchase and sale of securities, closing procedures, and conditions Closing of the Transaction This section outlines the core transaction for the sale of US$20 million in ADSs and Warrants, detailing the electronic closing process Transaction Details | Item | Details | | :--- | :--- | | Total Purchase Amount | US$20,000,009.19 | | ADSs Purchased | 2,103,745 | | Warrants | To purchase 3,000,000 Ordinary Shares (represented by 1,500,000 ADSs) | | Per ADS Purchase Price | US$9.50686 | - At closing, the Company will issue the ADSs to the Purchaser and deliver the Warrants, free and clear of liens, other than those arising under securities laws[72] Deliveries at Closing This section specifies required documents and actions from both parties at closing, such as executed warrants, legal opinions, and subscription payments - Company's Deliverables: - Executed Warrants - Amended and Restated Articles of Association - Board and Shareholder resolutions authorizing the transaction - Executed Registration Rights Agreement - Legal opinions from U.S. and Israeli counsel[74] - Purchaser's Deliverables: - The Subscription Amount via wire transfer - The executed Registration Rights Agreement[75][76] Closing Conditions This section details closing conditions, including accuracy of representations, covenant performance, required approvals, and absence of material adverse effects - The Purchaser's obligation to close is conditional upon the accuracy of the Company's representations and warranties[77] - A key condition is that immediately following the Closing, the Board of Directors shall be comprised of eight members, with one designated by the Purchaser[77] - The closing is contingent on no Material Adverse Effect occurring since the agreement date and no suspension of trading in the Company's ADSs or Ordinary Shares[77] 3. Representations and Warranties This section details assurances from both parties regarding their legal status, financial condition, and compliance with applicable laws Representations and Warranties of the Company The Company provides extensive representations and warranties covering its corporate structure, financials, legal compliance, and operational matters - The Company represents that its SEC and TASE Reports are accurate, filed on time, and do not contain any untrue statements of a material fact[92] - The Company confirms that the issuance of the Securities is duly authorized and, once paid for, will be validly issued, fully paid, and non-assessable[89] - The Company asserts it is in compliance with all applicable laws, including the Foreign Corrupt Practices Act (FCPA), International Trade Laws, and Sanctions[103][137] - The Company represents it has taken all necessary actions to render anti-takeover provisions inapplicable to the Purchaser as a result of this transaction[130] Representations and Warranties of the Purchaser The Purchaser represents its legal status, authority, and investment intent, confirming its status as an accredited investor or qualified institutional buyer - The Purchaser confirms it is an "accredited investor" or "qualified institutional buyer" and is acquiring the securities for its own account, not with a view to resale in violation of securities laws[155][157] - The Purchaser acknowledges that the securities are "restricted securities" and have not been registered under the Securities Act[155] - The Purchaser represents it is not an Enemy of Israel and is not acting on behalf of one[158] 4. Other Agreements of the Parties This section outlines additional agreements, covering shareholder consent, board representation, transfer restrictions, indemnification, and ongoing covenants Shareholder Consent and Special Meeting The Company must promptly call a shareholder meeting to seek transaction approval, with specific timelines for notice and meeting - The Company must take all necessary action to convene a shareholder meeting to seek the required "Shareholders' Approval" as soon as practicable[167] - The Company agrees to use reasonable efforts to solicit proxies in favor of the transaction but does not guarantee that shareholder approval will be obtained[168] Board Representation and Corporate Governance This section grants the Purchaser board designation rights based on ownership, and the Company agrees to amend its Articles of Association - The Purchaser has the right to designate one board member as long as it beneficially owns at least 10% of the Company's voting rights[171] - The Purchaser's right increases to two board members if its beneficial ownership reaches at least 20% of the Company's voting rights[171] - The Company agrees to amend and restate its Articles of Association, subject to shareholder approval, in the form attached as Exhibit D[176] Transfer Restrictions and Legend Removal This section details restrictions on transferring unregistered securities, specifying the restrictive legend and conditions for its removal - The securities will bear a restrictive legend indicating they are not registered under the Securities Act and can only be sold pursuant to an effective registration or an available exemption[178] - The Company must remove the restrictive legend from ADSs and Warrant ADSs when they are covered by an effective resale registration statement, sold under Rule 144, or if the legend is otherwise not required[181] - The Company agrees to deliver legend-free certificates or book-entry positions within one trading day (or the standard settlement period) after the conditions for removal are met[181] Indemnification of Purchaser The Company agrees to indemnify the Purchaser against losses from breaches, with specified survival periods, a liability cap, and a deductible - Most of the Company's representations and warranties survive for 12 months post-closing. Certain warranties, such as those related to compliance, IP, and taxes, survive for 36 months or the full statute of limitations[190] - The Company's aggregate liability for indemnification due to a breach of warranty is capped at the Subscription Amount (approx. $20M)[192] - The Company is only liable for damages if the cumulative amount exceeds a deductible of US$400,000, at which point it becomes liable from the first dollar. These limitations do not apply in cases of fraud or willful misconduct[192] Other Covenants and Agreements This section outlines ongoing obligations, including public information, stock listing maintenance, share reservation for warrants, and tax-related information - The Company must timely file all required SEC reports. Failure to maintain current public information (a "Public Information Failure") will result in liquidated damages payable to the Purchaser, equal to 2.0% of the aggregate warrant exercise price per month[182][183] - The Company must publicly disclose the transaction via a press release and a Form 6-K filing, after which all confidentiality obligations terminate[186] - The Company must reserve a sufficient number of ADSs and Ordinary Shares for the potential exercise of all Warrants[194] - Upon request, the Company must determine if it is a Passive Foreign Investment Company (PFIC) or Controlled Foreign Corporation (CFC) and provide the Purchaser with necessary information for tax filings[206] 5. Termination This section specifies conditions for agreement termination prior to closing, including mutual consent, closing deadline failure, or material breach Termination Conditions This section outlines circumstances for agreement termination prior to closing, including mutual consent, closing deadline failure, or uncured material breach - The agreement can be terminated by mutual written consent of the Company and the Purchaser[208] - Either party may terminate if the closing has not occurred by the "Termination Date" of December 31, 2024, provided the terminating party is not the cause of the delay[208] - Termination is also possible if there is a material breach of covenants or warranties by one party, and it is not cured within 30 days of receiving written notice[210] 6. Miscellaneous This section covers general legal and administrative provisions, including fees, governing law, jurisdiction, and other standard contractual clauses Fees and Expenses This section specifies transaction cost allocation, with each party generally paying its own expenses, but the Purchaser covering specific audit fees up to $25,000 - Each party is responsible for its own adviser, counsel, and expert fees[212] - The Purchaser will pay the Company's auditor fees for Q1 and Q2 2024 financial disclosures, up to a maximum of $25,000[212] - The Company is responsible for all Depositary Fees, stamp taxes, and other duties related to the delivery of the Securities to the Purchaser[212] Governing Law and Jurisdiction This clause establishes the agreement is governed by Israeli law, with exclusive jurisdiction for disputes in Tel Aviv, Israel - The agreement and any related claims are governed by and construed under the laws of the State of Israel[220] - The parties irrevocably submit to the exclusive jurisdiction of the courts located in Tel Aviv, Israel for any disputes[220] Other Miscellaneous Provisions This section contains standard legal clauses addressing administrative and procedural aspects, including notices, amendments, and specific performance remedies - The Transaction Documents constitute the entire agreement, superseding all prior understandings[213] - Amendments to the agreement require a written instrument signed by both the Company and the Purchaser[216] - In addition to damages, both parties are entitled to seek specific performance to enforce the agreement, as monetary damages may be inadequate[227] - The normal rule of construction that ambiguities are resolved against the drafting party shall not be employed in interpreting the agreement[232]