5.16. Trademarks, Patents, Etc. Schedule 5.16 (1) hereto sets forth a complete and accurate list of all of the Sellers’ (i) trademarks, trade names, designs and patents; and (ii) the Software products of Sellers (except to the extent that they are third party’s off-the-shelf software), which are necessary for the operation of the Businesses as currently conducted (hereinafter collectively:“Seller’s I.P”). Except to the extent set forth inSchedule 5.16 (1), the Sellers own or have the sole, exclusive, unlimited and perpetual (subject to applicable law) right to use all Seller’s I.P., and have the right, without restrictions, to use all Seller’s I.P., used, and/or necessary for conducting the Business as presently conducted, and the consummation of the transactions contemplated hereby will not alter or impair any such right. Except as set forth inSchedule 5.16 (2), to their knowledge and without conducting any patent search, Sellers have not misappropriated any intellectual property of any third party, no claims have been asserted, and no claims are pending, by any person regarding the use of any Seller’s I.P. or challenging or questioning the validity or effectiveness of the Seller’s I.P. or any part thereof, and, to the knowledge of the Sellers (without conducting any patent search), there is no basis for such claim. The use of the Seller’s I.P. by the Sellers (and after the Cut-Off Date by the Buyer) in the ordinary course of the Business (as currently conducted) does not, and will not, to their best knowledge (without conducting any patent search), infringe on the rights of any person or third party. With respect to each item of Seller’s I.P. that the Sellers uses pursuant to a license, sublicense, franchise, agreement, or permission: (i) the license, sublicense, agreement, or permission covering the item is legal, valid, binding, enforceable, and in full force and effect; (ii) the license, sublicense, agreement, or permission will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the Closing, all subject to assignment thereof pursuant to the provisions of this Agreement; (iii) to Sellers’ knowledge, no party to the license, sublicense, agreement, or permission is in material breach or default, and no event has occurred which with notice or lapse of time would constitute a material breach or default or permit termination, modification, or acceleration thereunder; (iv) no party to the license, sublicense, agreement, or permission has repudiated any provision thereof; (v) the underlying item of Seller’s I.P. is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge against the Sellers; and (vi) no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or, to the knowledge of Sellers is threatened which challenges the legality, validity, or enforceability of the underlying item of Seller’s I.P. The Sellers did not grant any sublicense or similar right with respect to any such license, sublicense, agreement, or permission, other than in the ordinary course of business.
5.17. Suppliers and Customers.Schedule 5.17 hereto sets forth the suppliers and customers of the Business as of the date hereof. Except as set forth onSchedule 5.17, during the last twelve (12) months no Material Supplier, as detailed inSchedule 5.17 or Customer of Material Importance to the Business (i.e. any customer whose business with Sellers in 2006 or in 2007 amounted to no less than NIS 500,000, excluding VAT) has cancelled or otherwise terminated, or threatened to cancel, decrease or otherwise to terminate, its relationship with the Sellers.Schedule 5.17 sets forth the volume of sales to each Customer of Material Importance in 2006 and 2007. The Sellers have no knowledge that any such Material Supplier or Customer of Material Importance intends to cancel or otherwise substantially modify its relationship with the Sellers or to decrease materially or limit its services, supplies or materials supplied to the Sellers, or its usage or purchase of the Sellers’ services or products, and the Sellers have not received any formal notice that the consummation of the transactions contemplated hereby will adversely affect the relationship with any such Customer of Material Importance.
5.18. Acquired Assets Complete. Except as set forth inSchedule 5.18, the Acquired Assets, when utilized with a labor force substantially similar to that currently employed by the Sellers who are engaged in the Business, are adequate and sufficient to conduct the Business as currently conducted by Sellers.
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The Acquired Assets, constitute, collectively, in all material respects, all of the assets and rights used by the Sellers in the conduct of the Business, as well as all of the material rights and assets needed in order to conduct the Business in the manner conducted to date.
5.19. No Undisclosed Liabilities. Except to the extent (a) incurred in the ordinary course of business, or (b) described on any Schedule hereto, the Sellers have no material liabilities or obligations of any nature, whether accrued, absolute, contingent or otherwise (including as guarantor or otherwise with respect to obligations of others) related to, or in connection with, the Business or the Acquired Assets.
5.20. Taxes. The Sellers have duly filed with the appropriate government agencies all of the income, sales, use, employment and other Tax returns and reports required to be filed by them, to the extent that they are connected with the Business or any of the Acquired Assets. No waiver of any statute of limitations relating to Taxes relating to, or in connection with, the Business or any of the Acquired Assets has been executed or given by the Sellers. All Taxes, assessments, fees and other governmental charges upon any of the Acquired Assets, revenues, income and franchises in relation thereto with respect to any period ending on or before the Cut-Off Date have been paid, other than those currently payable without penalty or interest, except where failure to do so, would have a material adverse effect on the Sellers. The Sellers have withheld and paid all Taxes required to be withheld or paid in relation to, or connection with, the Business and/or the Acquired Assets, except where failure to do so, would not have a material adverse effect on the Sellers. To the Sellers’ knowledge, neither the Income Tax Authority of the State of Israel nor any other taxing authority is now asserting or threatening to assert against the Sellers any deficiency or claim for additional Taxes or interest thereon or penalties in relation thereto, or in connection therewith, or any adjustment that would have an adverse effect on the Business.
5.21. Broker. The Seller has not retained, utilized or been represented by any broker, agent, finder or intermediary in relation to, or connection with, the negotiation or consummation of the transactions contemplated by this Agreement.
5.22. Potential Conflicts of Interest. To the Sellers’ knowledge, no officer, director or shareholder of each Seller or of DH (a) engage, anywhere in the world, in any business organization that is engaged or becomes engaged in activities which are directly competitive with the Business or is an officer, director, employee or consultant of any Person which is a competitor, lessor, lessee, customer or supplier of the Seller; (b) owns, directly or indirectly, in whole or in part, any tangible or intangible property which the Sellers are using or the use of which is necessary for the Business; or (c) has any cause of action or other claim whatsoever against, or owes any amount to, the Sellers.
5.23. and 5.24 intentionally reserved.
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5.25. Disclosure. No representation or warranty by the Sellers in this Agreement or in any exhibit, schedule, written statement, certificate or other document delivered or to be delivered to the Buyer pursuant hereto or in connection with the consummation of the transactions contemplated hereby contains or will contain any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements contained therein, not misleading or necessary in order to provide the Buyer with proper and complete information as to the identity and usability of the Acquired Assets. The Sellers have provided the Buyer with all material information requested by the Buyer and true and complete answers to those questions and inquiries raised by the Buyer.
5.26. Government Grant Programs. Subject to the provisions of Section 11.4 below and other than as set forth inSchedule 5.26, the Buyer does not purchase and does not assume any liability whatsoever, if any, which each Seller has, or shall have as a result of the implementation of the Transactions hereunder, including those due to any pending or outstanding grants, tax benefits, incentives and subsidies from the Government of the State of Israel or any agency thereof related or not, or connected or not with, the Business or the Acquired Assets.
5.27 Schedules. The parties agree that any and all schedules called for under this Agreement and not provided on the date of execution hereof shall be provided until the Closing Date, which schedules shall reflect substantially the same information previously provided to the Buyer, with the required updates resulting from the ordinary course of business.
6. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and warrants to the Seller as follows:
6.1. Organization of Buyer; Authority. The Buyer is a corporation duly incorporated and validly existing under the laws of the State of Israel. The Buyer has all requisite power and authority to execute and deliver the Transaction Documents to which it is a party and to carry out all of the actions required of it pursuant to the terms of such Transaction Documents.
6.2. Corporate Approval; Binding Effect. The Buyer has obtained all necessary authorizations and approvals from its Board of Directors required for the execution and delivery of the Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby. Each of the Transaction Documents to which the Buyer is a party has been duly executed and delivered by the Buyer and constitutes the legal, valid and binding obligation of the Buyer, enforceable against the Buyer in accordance with its terms, except as enforceability thereof may be limited by any applicable bankruptcy, reorganization, insolvency or other laws affecting creditors’ rights generally or by general principles of equity.
6.3. Non-Contravention. The execution and delivery by the Buyer of the Transaction Documents to which it is a party and the consummation by the Buyer of the transactions contemplated hereby and thereby will not (a) violate or conflict with any provisions of the Memorandum and Articles of Association of the Buyer, each as amended to date; or to the Buyer’s knowledge (b) constitute a material violation of, or be in conflict with, constitute or create a default under, or result in the creation or imposition of any lien upon any property of the Buyer pursuant to (i) any material agreement or instrument to which the Buyer is a party or by which the Buyer or any of its properties is bound or to which the Buyer or any of its properties is subject, or (ii) to its knowledge, any statute, judgment, decree, order, regulation or rule of any court or governmental authority to which the Buyer is subject, other than any such violations, conflicts, defaults or rights that individually or in the aggregate have not had and would not be expected to prevents the parties from consummating the transaction under this Agreement.
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6.4. Governmental Consents. Other than as specified inSchedule 6.4 hereunder, no consent, approval or authorization of, or registration, qualification or filing with, any governmental agency or authority is required for the execution and delivery by the Buyer of the Transaction Documents to which it is a party or for the consummation by the Buyer of the transactions contemplated hereby or thereby and the Buyer undertakes to receive all such consent, approvals and authorizations or to make such filings as specified in such Schedule.
6.5. Broker. The Buyer has retained a broker, agent, finder or other intermediary in relation to, or in connection with, the negotiation or consummation of the transactions contemplated by this Agreement. Buyer shall pay said Broker’s fees at Buyer’s sole responsibility and expense.
6.6 Information and Experience. Buyer confirms that it has reviewed and inspected such data provided to it by the Sellers regarding the Sellers as it deemed appropriate, and has been afforded the opportunity to ask questions and receive answers, information, documents and data regarding the Sellers and their business and is acquiring the Acquired Assets following such inspection. In addition, Buyer confirms that it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the purchase of the Acquired Assets contemplated hereunder. The foregoing, however, does not derogate from the representations and warranties made under Section 5 to this Agreement.
6.7 Disclosure. No representation or warranty by the Buyer in this Agreement or in any exhibit, schedule, written statement, certificate or other document delivered or to be delivered to the Sellers by Buyer pursuant hereto or in connection with the consummation of the transactions contemplated hereby contains or will contain any untrue statement of a material fact or omits to state a material fact required to be stated therein and necessary to make the statements contained therein not misleading.
6.8 SEC Reports. Since January 1, 2006, the Buyer has filed all reports, schedules, forms, statements and other documents required to be filed by the Buyer as a foreign private issuer under the Securities Act and the Exchange Act (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis. As of their respective dates, and subject to any amendments or supplements in later filings, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The audited consolidated financial statements of the Buyer included in the SEC Reports as amended fairly present in all material respects the financial position of the Buyer and its consolidated subsidiaries as of and for the dates thereof and for the periods then ended.
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6.9 Securities Act Exemption. Assuming the accuracy of Sellers’ representations and warranties herein, the offer and sale of the Consideration Shares are exempt from registration under the Securities Act and other applicable securities laws.
7. REPRESENTATIONS AND UNDERTAKINGS REGARDING THE CONSIDERATION SHARES
7.1 Information and Advice. Each Seller confirms that it has received or has had access to the information it considers necessary or appropriate to make an informed decision with respect to this Agreement and the Consideration Shares received by it hereunder. The Sellers further confirm that each has had an opportunity to ask questions and receive answers from the Buyer regarding the Buyer’s business, management and financial affairs and to obtain additional information (to the extent the Buyer possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to the Sellers or to which the Sellers had access.
7.2 Availability of Exemptions. The Buyer hereby represents to the Sellers that the Consideration Shares are being offered pursuant to an exemption or exemptions from registration requirements of Israeli and U.S. Federal and state securities laws. The Sellers understand that the Buyer is relying upon the truth and accuracy of each Seller’s representations, warranties, agreements, acknowledgments and understandings set forth herein in order to determine the applicability of such exemptions and the suitability of such Seller to receive the Shares.
7.3 Legends. The Sellers acknowledges and agrees that certificates representing the Consideration Shares will contain one or more legends to the effect that transfer of such securitiesis prohibited except pursuant to registration under the Securities Act or pursuant to an available exemption from registration:
| | “THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THESE SHARES UNDER THE SECURITIES ACT OF 1933 OR PURSUANT TO ANY OTHER AVAILABLE EXCEPTION FROM SUCH REGISTRATION UNDER SAID ACT. IN ADDITION, THESE SHARES ARE SUBJECT TO A NO SALE COMMITMENT AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, BEFORE [6 months following the Closing Date] WITHOUT THE PRIOR WRITTEN CONSENT OF B.O.S. BETTER ON-LINE SOLUTIONS LTD. ANY PURPORTED SALE OR DISPOSITION IN CONTRIVANCE OF THE ABOVE SHALL BE DEEMED VOID AND HAVE NO EFFECT “ |
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7.4 Restrictions on Transferability and Hedging.
| 7.4.1 Each Seller understands that (i) the Consideration Shares have not been registered under the Securities Act, or under the laws of any other jurisdiction; (ii) such Consideration Shares are deemed to be “restricted securities” as defined in Rule 144 promulgated under the Securities Act, and cannot be sold, transferred or otherwise disposed of unless they are registered under the Securities Act and, where required, under the laws of other jurisdictions or unless an exemption from registration is then available; (iii) there is no registration statement on file with the SEC with respect to the Consideration Shares to be received by such Seller. |
| 7.4.2 Each Seller acknowledges that the Buyer will not register any transfer of Consideration Shares not made pursuant to registration under the Securities Act, or pursuant to an available exemption from registration. |
| 7.4.3 Each Seller acknowledges, agrees and covenants not to engage in hedging transactions with regard to the Consideration Shares offered pursuant to this Agreement. |
7.5 Offshore Transaction. Each Seller is not a “U.S. Person”, as such term is defined in Regulation S under the Securities Act, its principal address is outside the United States and it has no present intention of becoming a resident of (or moving its principal place of business to) the United States. Each Seller was located outside the United States at the time any offer to sell and any other action in connection with such offer and sale was made to it and at the time that the buy order was originated by the Sellers. The Consideration Shares are being acquired solely for such Seller’s own account, and in no event and without derogating from the foregoing, for the account or the benefit of a U.S. person.
7.6 Investment Purposes. The Consideration Shares are being acquired for investment purposes. The Consideration Shares are not being purchased with a view to, or for sale in connection with, any distribution or other disposition thereof. Each Seller has no present plans to enter into any contract, undertaking, agreement or arrangement for any such resale, distribution or other disposition and it will not divide its interest in the Consideration Shares with others, resell or otherwise distribute the Consideration Shares in violation of U.S. federal or state securities laws or the Israeli securities Laws.
7.9 No solicitation. At no time was the Seller presented with or solicited by any leaflet, public promotional meeting, newspaper or magazine article, radio or television advertisement or any other form of general advertising or general solicitation in connection with the Consideration Shares and the transaction contemplated hereby.
7.10 Broker-Dealer. The Seller is not a broker-dealer, nor is it an affiliate of any broker-dealer.
7.11 Disclosure. The representations and warranties of the Sellers contained in this Section 7 as of the date hereof and as of the Closing, do not contain any untrue statement of a material fact or omit to state a material fact required to be stated herein or necessary to make the statements herein, not misleading. Each Seller understands and confirms that the Buyer will rely on the foregoing representations in effecting the issuance of the Consideration Shares hereunder.
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8. CONDUCT OF BUSINESS AFTER CUT OFF DATE.
Commencing on the Cut Off Date Buyer shall conduct the Business acquired hereunder. Therefore Seller covenants and agrees that from the Cut Off Date, except as otherwise specifically consented to or approved by the Buyer in writing:
8.1. Full Access. The Buyer shall have full access to all properties, books, records, licenses and sub-licenses, research and development agreements, vendor contracts and consulting agreements, contracts and documents of the Sellers relating to, or in connection with, the Business and/or the Acquired Assets, and the Sellers shall furnish or cause to be furnished to the Buyer and its authorized representatives all assistance and information with respect to the Acquired Assets and/or the Business as may be reasonably requested.
8.2. Carry on in Regular Course. From the Cut-Off Date and until the Closing Date each Seller shall assist Buyer to operate the Business and to carry on the Business diligently and substantially in the same manner as heretofore, in the ordinary course consistent with past practice and to maintain the Acquired Assets and Inventory in good operating condition and repair, and make all necessary renewals, additions and replacements thereto. The aforesaid does not derogate from the provisions of Section 1.4(c) above. Buyer shall bear all costs and expenses related to the Business and shall receive all payments (including accounts receivables accrued prior to Cut-Off Date) to the account specified inSchedule 8.2 herein, and shall be entitled to hold those amounts which belong to Buyer in accordance with the provisions of Section 1.1. Buyer shall be entitled to use any of Sellers’ trade names (including Dimex) as shall be determined between the parties. Upon Buyer’s request each Seller shall give its consent and approval to any Authority or Registrar in order to enable Buyer to register a company, or trade name, as the case may be, using the name Dimex or any similar name.
8.3 Employees.
Schedule 8.3 states the period of the advance notice that each of Sellers’ employees is entitled to receive pursuant to their employment terms with the relevant Seller. Seller represents that on Cut-Off Date Seller gave all their employees an advance notice notifying them that their employment with the Sellers shall terminate at the end of each employee’s respective advanced notice period and instructing them to work and to fulfill all their duties and obligations as Sellers’ employees during the advance notice period at the disposal and under supervision of Buyer.
Buyer hereby represents that it is interested in employing the employees listed onSchedule 8.3A; those who have accepted its offer for employment engagement are referred to herein as the “Hired Personnel”. Buyer may elect to engage the consultant listed on Schedule 5.15.
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Each Seller undertakes to retain all Hired Personnel until the lapse of each Hired Personnel’s advance notice period (the “Recruiting Date”), on which date such Hired Personnel employment with Sellers shall be terminated by the respective Seller and begin to be employed or retained by Buyer on terms to be agreed (but not less than similar to the terms enjoyed by such persons prior to the Cut Off Date (except with respect to options to purchase shares of the Buyer which, unless provided otherwise in the employment agreements of the particular Hired Personnel, shall not bind the Buyer and shall not be issued). Notwithstanding, Buyer is aware that one of Sellers’ employees is currently on maternity leave and can only be dismissed in accordance with applicable law.
It is expressly agreed that the Sellers, jointly and severally, alone shall be liable for and shall pay to each of their respective Hired Personnel, on or before the Recruiting Date, any and all payments due to them with respect to the period up to the Recruiting Date (including, without limitation, payment of salary or consultancy fees, any advance notice payment (if applicable under the law or by any agreement), redemption of unused vacation days, any commission or bonus payments and any other liability, existing or contingent, to the extent applicable to such employee or consultant). The Sellers, jointly and severally shall fully indemnify and hold Buyer harmless, from and against any demand or claim brought against Buyer by any employee (including the Hired Personnel) with respect to its engagement by any Seller prior to the Recruiting Date, including by way of claiming for accumulation of rights based on alleged continuation of employment of any of the Hired Personnel by Buyer and Sellers together; provided, however, that Sellers’ liability under this Section 8.3 shall be limited in any case to such rights or amounts arising in connection with or as a result of such Hired Personnel’s employment with the Sellers on or prior to the Recruiting Date. Sellers shall notify the Hired Personnel of the transfer of the Acquired Assets to the Buyer and reasonably cooperate with Buyer in all respects relating to any actions to be taken pursuant to this section and in achieving an orderly transition.
The Buyer shall fully indemnify and hold Sellers harmless, from and against any demand or claim brought against any Seller by any Hired Personnel with respect to its engagement by Buyer after the Recruiting Date, including by way of claiming for accumulation of rights based on alleged continuation of employment of any of the Hired Personnel by Buyer and Seller together; provided, however, that Buyer’s liability under this Section 8.3 shall be limited in any case to such rights or amounts arising in connection with or as a result of such Hired Personnel’s employment with the Buyer after the Recruiting Date.
Seller will not take any action that is intended to interfere with Buyer’s efforts to retain any of the Hired Personnel.
During the 36-months period following the Closing, neither Seller, DH nor any affiliate controlled by or under the control of any of them (“First Party”), shall directly or indirectly solicit or encourage or employ any officer, employee or consultant of Buyer (including Hired Personnel) or any of its Affiliates or subsidiaries (“Second Party”) to leave its employment/engagement for employment/engagement by or with such First Party or any competitor of the Second Party.
Sellers shall not, at any time during the three -year period immediately following the Cut-Off Date, directly or indirectly, own, manage, control or participate in the ownership, management or control of, any business which competes with the Buyer’s business as conducted as of Closing.
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8.4. Insurance. With respect to the Acquired Assets and Real Property and until the Closing Date the Sellers shall not terminate the insurance policies described on Schedule 5.13.
8.5. No Default. The Parties shall not do any act or omit to do any act, or permit any act or omission to act, which will cause a material breach of any contract, commitment or obligation of the Sellers or Buyer with respect to the Acquired Assets, or otherwise related to, or in connection with, the Business and the Sellers shall use their best commercial efforts to assist Buyer with the assignment of all the Assumed Contracts from Sellers to Buyer, in accordance with the provisions of Section 1.
8.6. Consents of Third Parties. The Sellers will employ their best commercial efforts to secure the consents, in form and substance reasonably satisfactory to the Buyer to the consummation of the transactions contemplated by this Agreement by each party to any of the Assumed Contracts and any governmental authority described in Schedule 5.4. Sellers shall not be liable for failure to obtain such consents and approvals by the Closing, provided they have complied with their obligation in this Section 8.6.
9.CONDITIONS PRECEDENT TO BUYER’S OBLIGATIONS. The obligation of the Buyer to consummate the Closing shall be subject to the satisfaction at or prior to the Closing of each of the following conditions (to the extent noncompliance is not waived in writing by the Buyer):
9.1. Representations and Warranties True at Cut-Off Date and Closing. The representations and warranties made by the Seller in or pursuant to this Agreement shall be true and correct at and as of the Cut-Off Date and Closing Date (subject to normal adjustments as a result of conducting the ordinary course of business until the Closing) with the same effect as though such representations and warranties had been made or given at and as of the Cut-Off Date and the Closing Date.
9.2. Compliance with Agreement. The Sellers shall have performed and complied with all of their obligations and covenants under this Agreement to be performed or complied with by each on or prior to the Closing Date.
9.3. Approvals. Buyer’s Board of Directors has approved the number of the Consideration Shares contemplated hereunder (in excess of the number of Consideration Shares previously approved by the Board) and Buyer has obtained all applicable regulatory approvals in connection with the issuance of the Consideration Shares (including, without any limitations, Tel-Aviv Stock Exchange, NASDAQ and Investment Center). Buyer undertakes to use best commercial efforts to obtain such required regulatory approvals by the Closing Date.
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All corporate and other approvals in relation to, or connection with, the transactions contemplated by this Agreement and the form and substance of all certificates and other documents delivered hereunder shall be reasonably satisfactory in form and substance to the Buyer and its counsel and Sellers shall deliver to Buyer a true and correct copy of a resolution of the Board of Directors of each Seller, approving this Agreement and the transactions contemplated hereby.
9.4. No Litigation. No restraining order or injunction shall prevent the transactions contemplated by this Agreement and no action, suit or proceeding shall be pending or threatened before any court or administrative body: (a) in which it will be or is sought to restrain or prohibit or obtain damages or other relief relating to, or in connection with, this Agreement or the consummation of the transactions contemplated hereby or (b) relating to, or in connection with, any claim for damages against the Sellers which would have a material adverse implications on the transactions contemplated hereby.
9.5 Consents of Third Parties. The Seller shall have obtained the consent, in form and substance satisfactory to the Buyer and the Buyer’s counsel, as required under Section 4.2.1(e) and (h) hereto.
9.6. Proceedings and Documents Satisfactory. All proceedings relating to, or in connection with, the transactions contemplated by this Agreement and all certificates and documents delivered to the Buyer which relate to, or are in connection with, the transactions contemplated by this Agreement shall be to the reasonable satisfaction in all respects to the Buyer and the Buyer’s counsel, and the Buyer shall have received the originals or certified or other copies of all such records and documents as the Buyer may reasonably request.
9.7 Employment Agreement with Yuval Viner. Buyer shall enter into an employment agreement with Yuval Viner in a form to Buyer’s reasonable satisfaction.
10.CONDITIONS PRECEDENT TO SELLER’S OBLIGATIONS. The obligation of the Sellers to consummate the Closing shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions (to the extent noncompliance is not waived in writing by the Seller):
10.1. Compliance with Agreement. The Buyer shall have performed and complied with all of its obligations and covenants under this Agreement that are to be performed or complied with by it at or prior to the Closing.
10.2 Approvals. Buyer’s Board of Directors has approved the transactions contemplated hereunder. Buyer has obtained all applicable regulatory approvals (including, without any limitations, Tel-Aviv Stock Exchange, NASDAQ). All corporate and other approvals in relation to, or connection with, the transactions contemplated by this Agreement and the form and substance of all certificates and other documents delivered hereunder shall be reasonably satisfactory in substance to the Seller and its counsel and Buyer shall deliver to Seller a true and correct copy of a resolution of the Board of Directors of the Buyer, approving this Agreement and the transactions contemplated hereby.
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10.3 Proceedings and Documents Satisfactory. All proceedings relating to, or in connection with, the transactions contemplated by this Agreement and all certificates and documents delivered to the Sellers which relate to, or are in connection with, the transactions contemplated by this Agreement shall be to the reasonable satisfaction in all respects to the Sellers and the Sellers’ counsel, and the Sellers shall have received the originals or certified or other copies of all such records and documents as the Sellers may reasonably request.
10.4. No Litigation. No restraining order or injunction shall prevent the transactions contemplated by this Agreement and no action, suit or proceeding shall be pending or threatened before any court or administrative body: (a) in which it will be or is sought to restrain or prohibit or obtain damages or other relief relating to, or in connection with, this Agreement or the consummation of the transactions contemplated hereby or (b) relating to, or in connection with, any claim for damages against the Buyer which would have a material adverse implications on the transactions contemplated hereby.
11. CERTAIN COVENANTS AND ARRANGEMENTS.
11.1. Confidential Information. Subject to the occurrence of the Closing, each Seller and each of their respective officers, directors and shareholders hereby agree to keep in strict confidence any and all information of a confidential nature which is related to, or connected with, the Business and/or any of the Acquired Assets (“Confidential Information”), including, without limitation, financial information, customers, suppliers, sales representatives. Each Seller agrees and covenants not to use any Confidential Information for any purpose whatsoever, and not to disclose any Confidential Information to any third party, other than to the extent that such use or disclose are necessary in order to comply with the provisions of this Agreement. Notwithstanding the aforesaid, no provision of this Agreement shall be construed to preclude such disclosure of Confidential Information as may be required by court order or applicable law, provided that: (i) prior notice of such contemplated disclosure (including reasonable details relating thereto) is provided to the Buyer as early as practicably possible; and (ii) such disclosure is effected only to the minimum extent required. To the extent the Closing has not occurred, the above obligations regarding confidentiality shall apply, mutatis mutandis, to Buyer and to Sellers with respect to Buyer’s confidential information.
11.2. Non-Competition. Each Seller shall not: (i) engage, anywhere in the world, in any business organization that is engaged or becomes engaged in activities which are directly competitive with the Business, or (ii) divert to any competitor of the Buyer, BOScom or a subsidiary thereof any customer of the Buyer BOScom or a subsidiary thereof. This Section 11.2 shall apply during the period commencing upon the Closing Date and terminating upon the expiration of 60 months from the Closing Date.
As used herein the following terms not otherwise defined have the following respective meanings:
“Affiliate”: As applied to any Person (as defined in this Section 14), any Person controlling, controlled by or under common control with such Person.
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“Control”: With respect to any Person, the direct or indirect ownership of more than 50% of the voting or income interest in such Person or the possession otherwise, directly or indirectly, of the power to direct the management or policies of such Person.
“Person”: A corporation, an association, a partnership, a limited liability company, an organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
11.3. Enforceability. If at any time the provisions of Section 11.1 or Section 11.2 shall be determined to be invalid or unenforceable, by reason of being vague, unreasonable as to area, duration or scope of activity or similar reasons, the applicable Section shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter; and it is hereby agreed that such Section as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included therein.
11.4 Investment Center. DHG hereby warrants that it is an “Approved Enterprise” under the Law for Encouragement of Capital Investments, 1959, with respect to the following approved investment plans and corresponding certificate of approval: investment plan no. 99-1506-0-10553, and is in material compliance with the terms and provisions of such plan. As the Buyer is interested in assuming the rights and obligations of DHG under this plan as part of the transactions contemplated under this Agreement, the parties shall cooperate in order to receive any approvals required to be received from the Investment Center of the Israeli Ministry of Trade & Industry (“Investment Center”) for such transfer and assignment, to the extent possible (“Investment Center Approval”). Sellers shall bear all costs and expenses related to the assignment of its Approved Enterprise to the Buyer. Notwithstanding the aforesaid, DS and/or DHG shall be responsible for any breach by them of the terms and conditions of the aforementioned plan, including as a result of the transactions contemplated hereunder. It is hereby clarified that failure to obtain such approval shall not be deemed as a breach of this Agreement by DHG or by any Seller and shall not entitle Buyer to any remedies whatsoever.
12.INDEMNIFICATION AND SET OFF RIGHTS.
12.1. Indemnity by the Sellers. Without derogating from any section herein imposing upon Seller a specific duty to indemnify Buyer which indemnity shall be subject to the provisions of this Section 12, the Sellers, jointly and severally, hereby agree to indemnify and hold the Buyer harmless from and with respect to any and all claims, liabilities, losses, damages, costs and expenses, including the reasonable fees and disbursements of counsel (collectively, the “Losses”), resulting from or arising out of any of the following:
| | (a) | any breach by the Sellers, or any of them, of this Agreement (including the Schedules and Exhibits hereto); |
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| | (b) | any claim, liability, obligation or damage to Buyer with respect to the Excluded Liabilities. |
| | (c) | any falsity or inaccuracy of any of the representations and warranties of the Sellers, or any of them, contained in this Agreement, or in any of the Transaction Documents. |
| | (d) | any third party’s claim against Buyer of any nature whatsoever with respect to the Acquired Assets that occurred or accrued prior to the Cut-Off Date; |
| | (e) | any claim by a former employee of Sellers, or any of them, related to its employment with Sellers, or any of them. |
Indemnity by the Buyer. Without derogating from any section herein imposing upon Buyer a specific duty to indemnify Sellers which indemnity shall be subject to the provisions of this Section 12, the Buyer hereby agrees to indemnify and hold the Sellers harmless from and with respect to any and all Losses, resulting from or arising out of any of the following:
| | (a) | any breach by the Buyer of this Agreement (including the Schedules and Exhibits hereto); |
| | (b) | any claim, liability, obligation or damage to Sellers with respect to the Acquired Assets; |
| | (c) | any falsity or inaccuracy of any of the representations and warranties of the Buyer contained in this Agreement, or in any of the Transaction Documents; |
| | (d) | any claim by a former employee of Sellers, or any of them, related to its employment with Buyer or any of its subsidiaries. |
12.2. Claims.
| (a) Notice. A party seeking indemnification from the other party hereunder (the “Indemnified Party”) shall promptly notify the other party in writing (the “Indemnifying Party”) of any action, suit, proceeding, demand or breach (a “Claim”) with respect to which the Indemnified Party claims indemnification hereunder,provided that failure of the Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations under this Section 12 except to the extent, if at all, that such Indemnifying Party shall have been prejudiced thereby. |
| (b) Third Party Claims. If such Claim relates to, or is in connection with, any action, suit, proceeding or demand instituted against the Indemnified Party by a third party (a “Third Party Claim”), the Indemnifying Party shall be entitled to participate in the defense of such Third Party Claim. Within thirty (30) days after receipt of notice of a particular matter from the Indemnified Party, the Indemnifying Party may elect to assume the defense of such Third Party Claim, in which case only the Indemnifying Party shall have the authority to negotiate, compromise and settle such Third Party Claim, if and only if the following conditions are satisfied: |
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| (i) there exist no conflict of interest which makes separate representation by the Indemnified Party’s own counsel advisable; and |
| (ii) such Third Party Claim does not seek an injunction or other similar equitable relief against the Indemnified Party that if granted would adversely affect the Indemnified Party or any of its Affiliates. |
| (c) The Indemnified Party shall retain the right to employ its own counsel and to participate in the defense of any Third Party Claim, the defense of which has been assumed by the Indemnifying Party pursuant hereto, but the Indemnified Party shall bear and shall be solely responsible for its own costs and expenses relating to, or in connection with, such participation. |
| (d) Where the Indemnifying Party has assumed the defense of the claim in accordance with the above, the Indemnified Party shall not be entitled to settle or compromise such claim without the consent of the Indemnifying Party. |
| (e) No claim shall be settled or compromised by the Indemnifying Party without the written consent of the Indemnified Party (which consent shall not be unreasonably withheld), if such settlement or compromise requires the Indemnified Party to make any payment (other than the payment of money which the Indemnifying Party undertakes to pay in full) or to take or refrain from taking any action or enjoins the Indemnified Party or subjects it to other equitable relief that adversely affects the Indemnified Party, or subjects it to any potential criminal law, claim or liability. |
12.3 Limitation of Liability
| (a) Notwithstanding anything to the contrary herein and except for fraud or intentional misrepresentation: (i) all representations and warranties of the Sellers hereunder and under any Transaction Document, shall remain in full force and effect for a period of eighteen (18) months from the Closing Date, whereupon such representations and warranties and the Sellers’ liabilities with respect thereto, under this Agreement and any law, whether in contracts, torts, restitution or otherwise, shall expire and be of no further force and effect; and (ii) the aggregate liability of the Sellers , jointly and severally, towards Buyer, or otherwise in connection with this Agreement and/or under any law, whether in contracts, torts, restitution or otherwise, in connection with a breach of any representation or warranty hereunder and under any Transaction Documents: (x) shall arise only for sums which exceed US $50,000, at which point claims may be made back to the first dollar of Losses; and (y) shall not exceed, in the aggregate, the Purchase Price paid, or to be paid to the Sellers hereunder; and (iii) in no event shall the Sellers, or the Buyer be liable for any punitive, indirect or consequential damages regardless of the form of action through which such damages are sought. |
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| (b) To the extent applicable, the provisions of this Section 12.3 shall also be deemed to constitute a separate written legally binding agreement among the parties for the purpose of Section 19 of the Israeli Limitation Law 5718-1958. |
| (c) (i) All representations and warranties of the Buyer pursuant to Sections 6.7 and 6.8 above , shall remain in full force and effect for a period of eighteen (18) months from the Closing Date, whereupon such representations and warranties and the Buyer’s liabilities with respect thereto, under this Agreement and any law, whether in contracts, torts, restitution or otherwise, shall expire and be of no further force and effect; (ii) the aggregate liability of the Buyer towards Seller, or otherwise in connection with this Agreement and/or under any law, whether in contracts, torts, restitution or otherwise in connection with a breach of any representation or warranty hereunder and under any Transaction Documents: (x) shall arise only for sums which exceed US $50,000, at which point claims may be made back to the first dollar of Losses; and (y) shall not exceed, in the aggregate, the Purchase Price paid, or to be paid to the Sellers hereunder, provided however that with respect to any Losses in connection with the Consideration Shares such amount shall not exceed the amount of NIS 3,829,000. |
12.4 Set Off
| (a) The obligation of the Buyer to pay the Instalment payments on account of the Purchase Price shall not be subject to set-off, other than specifically provided in this Section 12.4. |
| (b) Without derogating from the aforesaid, subject to the limitations set forth in Section 12.3 and only in accordance with the procedure set forth in this Section 12.4, if the Buyer is entitled to claim Losses or is otherwise entitled to any amounts from Sellers hereunder, it shall be entitled to reduce such amounts and Losses from the last Instalment, but not more than NIS 3,000,000, which amount shall be held in accordance with the provisions hereof, provided that such amount reduced shall in no event be more than the aggregate amounts for which indemnification may be sought hereunder. The aforementioned set-off limitation shall not be deemed to limit the Buyer’s right to indemnity hereunder. |
| (c) If the Buyer desires to reduce the last Instalment by the amount of any amounts or Losses as provided above, Buyer shall so notify the Seller in writing to this effect, stating in such notice its claims for Losses, the basis for such claim and the amount it desires to reduce and shall pay the balance of the respective Instalment to the Seller. |
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| (d) Buyer will have to pay to Sellers the amount so reduced, only upon reaching an agreement with Sellers to both parties satisfaction or upon final decision of any competent court (and subject to such decision). |
12.5 Notwithstanding anything to the contrary hereunder, all remedies whatsoever sought by an Indemnified Party against an Indemnifying Party under this Agreement (whether under this Section 12 or under any other section herein), any Transaction Document and under any law, whether in contracts, torts, restitution or otherwise, shall be subject to the limitations in this Section 12, from and after the Closing, provided however that the Indemnified Party shall be entitled (i) to seek injunctive relief to enjoin the breach, or threatened breach, of any provision of this Agreement and (ii) to seek specific performance of the provisions of this Agreement.
13. The Seller and the Buyer will use their reasonable best efforts to effect the Closing and to receive all consents and approvals required therefor.
Unless otherwise agreed in writing by the parties, this Agreement may be terminated if one or more of the conditions required to effect the Closing hereunder is not met by March 31st, 2008, or any other later date to be agreed by the parties, provided that a party that caused the closing condition not to be met shall not be entitled to effect such termination.
14. (Left blank intentionally)
15. GENERAL.
15.1 Whenever a representation is made “to the Seller’s knowledge” or is qualified by any similar expression, reference is made to the knowledge of the Seller, and the following Officers of Seller: Gabi Jacobs, Yuval Viner, Uzi Prizat, Oded Engel and Oshrit Dinor and each of them shall be deemed: to have made due and careful inquiries about the facts stated in such Representation, with the assistance (as the case may be) of any knowledgeable person within the Seller, before making such a representation.
A legal entity (including any of the Parties as applicable) shall be deemed to have knowledge of a particular fact if any of the directors, executive officers or other executives or officers of the legal entity has knowledge or should reasonably have knowledge of that fact.
15.2. Expenses.Each party shall bear its legal fees and any other fees incurred by it in connection with the transaction hereunder, including in connection with the negotiations, due diligence and preparation of this Agreement.
15.3. Notices. All notices, demands and other communications hereunder shall be in writing or by written telecommunication, and shall be deemed to have been duly given if delivered personally or if mailed by certified or registered mail, return receipt requested, postage prepaid, or if sent by overnight courier, or sent by written telecommunication, as follows:If to the Buyer, to:
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B.O.S. Better Online Solutions Ltd.
20 Freiman Street
Rishon Lezion POB 198 75101, Israel
Attention: Chief Financial Officer
Facsimile: (972) 3 954-1000
with a copy to:
Amit, Pollak, Matalon & Co.
NITSBA Tower, 17 Yitzhak Sadeh Street,
19thFloor
Tel Aviv 67775
Attention: Shlomo Landress, Adv.
Facsimile: (972) 3 568-9001
If to the Seller, to:
Dimex Systems (1998) Ltd
Ha'kidma 63, Hertzliya
Facsimile: (972) 9-9571714
Attn: Gabi Jacobs
With a copy to:
Gabi Jacobs
Ha'kidma 63, Hertzliya
Facsimile: (972) 9-9571714
and to;
Shibolet & Co.
Museum Tower, 4 Berkowitz St.
Tel-Aviv, 64238 Israel
T: +972-3- 777-8290
F: +972-3- 777-8444
Attention: Ofer Manor, Adv.
Any such notice shall be effective (a) if delivered personally, when received, (b) if sent by reputable courier, the date of delivery by such courier, and (c) if sent by facsimile, when transmitted with written confirmation of transmission having been received.
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15.4. Entire Agreement. This Agreement contains the entire understanding of the parties, supersedes all prior agreements and understandings relating to the subject matter hereof and shall not be amended except by a written instrument hereafter signed by both of the parties hereto.
15.5. Governing Law. The validity and construction of this Agreement shall be governed by and construed in accordance with the laws of the State of Israel. Any dispute arising under or in relation to this Agreement shall be resolved in the competent court of Tel Aviv-Jaffa district only, and each of the parties hereby submits irrevocably to the exclusive jurisdiction of such court.
15.6. Sections and Section Headings. The headings of sections and subsections are for reference only and shall not limit or control the meaning thereof.
15.7. Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. Neither this Agreement nor the obligations of any party hereunder shall be assignable or transferable by such party without the prior written consent of the other party hereto; provided, however, that nothing contained in this Section 15.7 shall prevent the Buyer, without the consent of the Sellers from: (i) transferring any of the Acquired Assets held by it, or by any of its subsidiaries, to an Affiliate of the Buyer, as long as such Affiliate undertakes towards Sellers in writing to guarantee Buyer’s obligations hereunder; and (ii) assigning all of its rights and liabilities hereunder in the framework of a merger or a transaction for the sale of all or substantially all of Buyer’s assets, provided that the surviving or purchasing entity assumes in writing all of Buyer’s obligations hereunder and provides Sellers with reasonably sufficient assurances for the payment of the outstanding Purchase Price to Sellers.
15.8. Severability. In the event that any covenant, condition, or other provision herein contained is held to be invalid, void, or illegal by any court of competent jurisdiction, the same shall be deemed to be severable from the remainder of this Agreement and shall in no way affect, impair, or invalidate any other covenant, condition, or other provision contained herein.
15.9. Further Assurances. The parties agree, without any additional consideration, to take such reasonable steps and execute such other and further documents as may be necessary or appropriate to cause the terms and conditions contained herein to be carried into effect.
15.10. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
15.11. Best efforts to Satisfy Closing Conditions. The Seller and the Buyer will use their best efforts to effect the Closing, as set forth herein. In no event will either party bear any liability whatsoever (whether vis-à-vis the other party or any third parties) in the event that it will elect not to consummate the transactions contemplated herein if one or more of the conditions to effect the Closing hereunder is not fully satisfied in a timely manner.
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15.12. Publicity.Except as is necessary for governmental notification purposes or to comply with applicable laws and regulations or to enforce its rights under this Agreement, and except as otherwise agreed to by the parties hereto in writing, the Sellers shall (a) keep the material terms of this Agreement confidential and (b) until the Closing the parties will coordinate together any public announcement relating to the transactions contemplated by this Agreement, including the text and the exact timing of any such announcement.
The Sellers acknowledges that the Buyer is a public company traded on NASDAQ and on the TASE and is subject to strict reporting requirements. On request, Seller shall fully and timely provide the Buyer (in addition to the financial statements specified in Section 4.2.1(l)) with all information in their possession or control required by the Buyer to meet all reporting requirements, including without limitation any and all financial information and financial statements.
15.13 Interpretation. Words such as “herein”, “hereinafter”, “hereof” and “hereunder” refer to this Agreement as a whole and not merely to a section or paragraph in which such words appear, unless the context otherwise requires. The singular shall include the plural, unless the context otherwise requires. Whenever the word “include”, “includes” or “including”appears in this Agreement, it shall be deemed in each instance to be followed by the words “without limitation.”
15.14 Rules of Construction. The parties agree that they have participated equally in the formation of this Agreement and that the language and terms of this Agreement shall not be construed against any party by reason of the extent to which such party or its professional advisors participated in the preparation of this Agreement.
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IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused this Agreement to be duly executed and delivered as of the date and year first above written.
B.O.S BETTER ONLINE SOLUTIONS LTD.
By:
——————————————
Name:
Title: | DIMEX SYSTEMS (1988) LTD.
By:
——————————————
Name:
Title: |
| | DIMEX HAGALIL LTD.
By:
——————————————
Name:
Title: |
Intermec (Dimex Group) Ltd. hereby represents that pursuant to a merger agreement with DS, all of its rights, assets and activities in connection with the Business or the Acquired Assets have been transferred to DS, and hereby agrees to guarantee all of Sellers’ undertakings and obligations hereunder, and to the extent required to take any action in order to allow Sellers to comply with their obligations herein and effect the aforementioned transactions.
——————————————
By: ____________
Title: ____________ |
BOScom Ltd. and Dimex Hagalil Projects (2008) Ltd. (jointly and severally) agree to guarantee all of Buyer’s undertakings and obligations hereunder, and to the extent required to take any action in order to allow Buyer to comply with its obligations herein and effect the aforementioned transactions.
——————————————
By: ____________
Title: ____________ |
——————————————
By: ____________
Title: ____________ |
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Dimex Holdings (1998) Ltd agrees to guarantee all of Sellers’ undertakings and obligations hereunder up to 87% of the Purchase Price actually received by the Sellers under this Agreement.
——————————————
By: ____________
Title: ____________ |
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