Exhibit 4.12
SHARE PURCHASE AGREEMENT
------------------------
(the "Agreement")
Duly made and entered into as of the 2nd day of January 2001
by and among
Elscintec Systems Ltd.
an Israeli private company
number. 51-188508-9
(the "Company" or "Elscintec")
and
1. Y. Zuckerman Properties (1999) Ltd.
an Israeli private company
number. 51-2803404
("Zuckerman")
2. Tawton Ltd.
a company incorporated under the law of the
Isle of Man and registered under no. 099922C.
) "Tawton")
3. John A. Cowan
Isle of Man Passport No. MN045367
Victory House, Prospect Hill, Douglas, Isle of Man 1M1 1EQ.
("Cowan")
(jointly and severally, the "Sellers")
and
Mr. Yoav Zuckerman
Israeli ID # 006172449
("Yoav")
and
Aryt Industries Ltd.
Israeli public company number.
52-003335-8
(the "Purchaser")
WHEREAS, the Company is engaged in the development, manufacture and marketing
of mammography systems and related accessories; and
WHEREAS, 100% of the issued and outstanding share capital of the Company is
held by Zuckerman ; and
WHEREAS, 50% of issued and outstanding share capital of Zuckerman is held by
Yoav, and additional 50% of the issued and outstanding share capital of
Zuckerman is held by Tawton; and
WHEREAS, 100% of the issued and outstanding share capital of Tawton is held by
Cowan; and
WHEREAS, the Purchaser undertakes to purchase from Cowan, and Cowan
undertakes to sell to the Purchaser, all of the issued and outstanding
share capital of Tawton, so that after such Purchase, the Purchaser shall
become the holder, directly and indirectly, of 50% of the outstanding
share capital of the Company, on the terms and conditions and for the
consideration set forth in this Agreement;
NOW, THEREFORE, for and in consideration of the foregoing premises and
the mutual representations, warranties and covenants herein contained,
and for other good and valuable consideration, the parties hereto agree
as follows:
1. DEFINITIONS
-----------
As used in this Agreement, the following terms shall have the meaning set
out below:
1.1 "Affiliate" shall mean, with respect to any Person, any other Person
that, directly or indirectly, controls or is controlled by or is
under common control with such Person. As used in this definition of
"Affiliate" the term "control" and any derivatives thereof mean the
possession, directly or indirectly, of more than 50% of the voting
rights or the rights to appoint directors whether through ownership
of voting securities, by contract, or otherwise. With respect to the
Purchaser an Affiliate shall include any entity from Aryt's group of
Companies.
1.2 "Confidential Information" shall mean all trade secrets and other
confidential information concerning the Company including, without
limitation, information regarding the operations, future plans,
projected and historical sales, marketing, costs, production, growth
and distribution, any customer lists, customer information,
information relating to governmental relations, technical
information, Intellectual Property and information relating to the
products or services, whether patentable, or able to be copyrighted,
or not. Confidential Information shall not include information that
is publicly available, at the time of disclosure or subsequently
became publicly available information in the possession of the
receiving party prior to its disclosure by the disclosing party or
information that came to the knowledge of the receiving party
otherwise than through a breach by the receiving party of
obligations of confidentiality.
1.3 "Liens" shall mean liens, charges, claims, pledges, security
interests, third party interest, and encumbrances of any nature
whatsoever.
1.4 "Person" shall mean an individual, partnership, corporation, limited
liability company or joint venture.
2. SALE AND PURCHASE OF SHARES
---------------------------
2.1 Subject to the terms and conditions hereof, Cowan shall sell and
transfer to the Purchaser, and the Purchaser shall purchase from
Cowan one Ordinary Share, which constitutes 100% of the issued and
outstanding shares of Tawton (the "Purchased Shares"). As
consideration for the Purchased Shares, the Purchaser shall pay
Cowan a purchase price of one million two hundred and fifty thousand
U.S. Dollars (US$1,250,000) (the "Purchase Price"), representing a
price per share of US$1,250,000 for each of the Purchased Shares
(the "Price Per Share").
2.2 The Company, Yoav and the Sellers represent and warrant to the
Purchaser that immediately following the Closing, (i) the Purchased
Shares shall represent 100% of Tawton's issued and outstanding share
capital, including all issued shares, all outstanding warrants,
options and convertible securities and (ii) Tawton's holdings in
Zuckerman represent 50% of Zuckerman's issued and outstanding share
capital, including all issued shares, all outstanding options,
warrants and convertible securities, and (iii) Zuckerman's holding
in the Company represent 100% of the Company's issued and
outstanding share capital, including all issued shares, all
outstanding warrants, options and convertible securities.
2.3 The Company, Yoav and the Sellers represent and warrant to the
Purchaser that the Purchased Shares, when sold and delivered in
accordance with this Agreement, will be duly authorized, validly
issued, fully paid, non-assessable and free of preemptive or similar
rights; and such Purchased Shares will be free and clear of any
Liens, and duly registered in the name of the Purchaser in Tawton's
Shareholders Register.
2.4 The Purchaser shall pay $1,250,000 to Cowan, in U.S. dollars by
electronic wire transfer to a bank account designated by Cowan, or
by such other form of payment as is mutually agreed by Cowan and
Purchaser, on the date of the Closing of this Agreement and subject
to fulfillment of all closing conditions by the Company, Sellers and
Yoav.
3. GUARANTEES
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3.1 Upon the Closing and subject to fulfillment of all closing
conditions by the Company, Sellers and Yoav, for a period of
thirty-six (36) months, the Purchaser shall provide the Company with
the required guarantees for the Company to obtain credit lines in
the amount of one million two hundred fifty thousand U.S. Dollars
(US$1,250,000) (the "Guarantees Amount").
4. REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE COMPANY
---------------------------------------------------------
The Sellers ,Yoav and the Company hereby, as of the date hereof and as of
the Closing Date, jointly and severally, represent and warrant to the
Purchaser and acknowledge that the Purchaser is entering into this
Agreement in reliance on the said warranties as follows:
4.1 Good Standing. The Company, Zuckerman and Tawton are each duly
incorporated and validly existing under the laws of the state of
it's incorporation and has all the corporate powers and governmental
licenses, authorizations, consents and approvals required to carry
on its business as is now conducted or as proposed to be conducted,
and is in good standing with and before all governmental
authorities.
4.2 Validity of Agreement. This Agreement and all documents and
instruments referred to in this Agreement, have been duly,
authorized, executed and delivered by the Company, Zuckerman, Tawton
and Cowan, and all documents and instruments referred to or
contemplated by this Agreement will be the valid and legally binding
obligation of the Company, Zuckerman, Tawton and Cowan,
respectively, enforceable in accordance with their respective terms.
Neither the execution and delivery of this Agreement by the Company,
Zuckerman, Tawton and Cowan nor the compliance and performance by
the Company, Zuckerman, Tawton and Cowan with the terms and
provisions hereof, including the execution and delivery of all
documents, and instruments referred to or contemplated by this
Agreement will (a) conflict with or result in a breach by the
Company, Zuckerman, Tawton and Cowan of any of the terms and
provisions of (i) any law, rule, ordinance, regulation, permit,
order, judgment or decree of any court, arbitrator or governmental
instrumentality or (ii) any lien, lease, license, agreement, or
instrument to which the Company, Zuckerman, Tawton or Cowan or any
of their shareholders are a party or by which they or their
properties may be bound, or (b) create in any Person the right to
terminate, accelerate, modify, cancel or otherwise cause a adverse
change with respect to any such lien, lease, agreement, contract,
instrument or assets or (c) result in the creation of any lien,
charge, or other encumbrance on any property right or asset of the
Company, Zuckerman,or Cowan.
4.3 Share Capital, Capitalization. On the date hereof, the authorized
share capital of each of the following entities shall be as follows:
4.3.1 The Share Capital of the Company is NIS 22,900 divided into
22,900 Ordinary Shares, of which 21,158 Ordinary Shares are
issued and outstanding.
4.3.2 The Share Capital of Zuckerman is NIS 38,000 divided into
38,000 Ordinary Shares of which 100 Ordinary Shares are
issued and outstanding.
4.3.3 The Share Capital of Tawton is GBP2,000.00 divided into 2,000
Ordinary Shares of which 1 Ordinary Share is issued and
outstanding.
4.3.4 Exhibit 4.3.4 hereto contains a true and correct description
of the identity of each holder of shares or rights (vested or
contingent) to acquire shares in the Company, in Zuckerman
and in Tawton, including the number and class of such shares,
as of immediately prior to the Closing. Except as set forth
in Exhibit 4.3.4, there are no rights or agreements to
subscribe for, or to purchase, any shares or other securities
of the Company and/or of Zuckerman and/or Tawton nor are
there outstanding any warrants, options, convertible
instruments, or any other rights, agreements, undertakings,
promises or commitments, written or oral, to sell or acquire
shares from the Company and/or Zuckerman and/or Tawton and/or
the Shareholders thereof. Subsequent to the Closing, the
ownership of the share capital of the Company, of Zuckerman,
and of Tawton, both issued and outstanding shall be as set
forth in the Post-Closing Capitalization Table attached as
Exhibit 4.3.4(a) hereto.
4.3.5 All the outstanding share capital of the Company, Zuckerman
and Tawton as detailed in this Section 4.3, is duly
authorized, validly issued, fully paid, non-assessable, and,
except as stated in Exhibit 4.3.5 hereto, free and clear of
any Liens, security interests, encumbrances or adverse claims
of any kind and nature.
4.4. Subsidiaries. Except as described in the preamble hereto and as
detailed in Exhibit 4.4, the Company, Zuckerman and Tawton each has
no subsidiaries, Joint Venture Enterprises with other entities, or
any other capital holdings in other incorporated entities.
4.5. Board of Directors. The present members of each of the Board of
Directors of the Company of Zuckerman and of Tawton are as set forth
in Exhibit 4.5.
4.6 Compliance. Except as specified in Exhibit 4.6 hereto, there are no
defaults by the Company or by Zuckerman or by Tawton or another
party to any contract, agreement, license or similar document to
which the Company or Zuckerman or Tawton are a party. Each of the
Company, Zuckerman and Tawton is in compliance in all material
respects with all applicable laws, ordinances, permits, rules,
regulations, judgments, orders, decrees, rulings and governmental
requirements. Except as specified in Exhibit 4.6(a) hereto, each of
the Company, Zuckerman and Tawton has not incurred any indebtedness
for borrowed money as to which a creditor has a claim against the
assets of the Company, Zuckerman or Tawton.
4.7 Litigation. Except as specified in Exhibit 4.7, hereto, to the best
knowledge of the Company, Zuckerman, Tawton and Yoav there is no
action, suit, arbitration, litigation proceeding, investigation,
claim or inquiry (formal or informal) pending or threatened against
the Company ,Zuckerman and Tawton, and there are no acts or matters
which have occurred or to the best knowledge of the Company,
Zuckerman, Tawton and Yoav may occur, to give rise to the foregoing
which (a) questions the validity of this Agreement or the
transactions contemplated hereby, (b) if adversely determined would,
materially and adversely affect the Company's, Zuckerman's or
Tawton's performance hereof or the Company's, Zuckerman's or
Tawton's business, operations or assets, or (c) may subject the
Purchaser to any liability after the Closing Date.
4.8. Title to Property and Assets. Full and accurate details of the
Company's of Zuckerman's and of Tawton's property and assets are
contained in Exhibit 4.8 hereto. Such assets are owned by the
Company or Zuckerman or Tawton free and clear of all Liens, except
as set forth elsewhere in this Agreement, and are reflected in the
Financial Statements.
With respect to the property and assets that are leased, the Company
and/or Zuckerman and/or Tawton are in compliance with all material
provisions of such leases and holds a valid leasehold interest free
of any liens, claims, loans or encumbrances. All properties and
assets owned leased or licensed by the Company and/or Zuckerman are
free of material defects, maintained in good and usable operating
condition and are suitable for the purposes for which they are used.
4.9. Bank Accounts. Full and accurate details about all the Bank Accounts
of the Company and of Zuckerman and of Tawton are disclosed in
Exhibit 4.9 hereto. Confirmation of Bank Hapoalim B.M. regarding the
credit lines of the Company is attached as Exhibit 4.9A hereto.
4.10. Intellectual Property.
4.10.1.Exhibit 4.10.1 contains a complete and accurate list of all
United States, Israeli and foreign patents, trademarks (both
common law and registered), trade names, service marks,
copyrights and applications or registrations of any of the
foregoing (collectively, "Intellectual Property Rights") as
to which the Company is the owner or licensee (indicating
exclusive or non-exclusive). Exhibit 4.10.1, together with
all technology, information, ideas, know how and trade
secrets related thereto or otherwise owned by the Company,
whether protectable by registration or not, or in which the
Company has any interest, is collectively referred to as the
"Company Intellectual Property".
No Intellectual Property Rights of any kind other than the
Company Intellectual Property are necessary for the Company to
conduct its business as currently conducted.
4.10.2 Except as set forth in Exhibit 4.10.2, the Company
exclusively owns, free and clear of any Lien, or is
exclusively (unless otherwise indicated in Exhibit 4.10.2)
licensed under, the patents and patent applications in
Exhibit 4.10.1. Except to the extent specifically set forth
in Exhibit 4.10.2, no claim has been asserted or, to the best
knowledge of the Company ,the Sellers and Yoav, threatened by
any person, and, to the Company's, the Seller's and Yoav's
best knowledge, no basis for any claim exists, with respect
to the use of the Company Intellectual Property or
challenging or questioning the validity or effectiveness of
any license or agreement with respect thereto. To the best
knowledge of the Company, the Sellers and Yoav, the use of
the Company Intellectual Property by the Company in the
present conduct of its business does not infringe the
intellectual property rights of any person or entity.
4.10.3 Except to the extent specifically disclosed on Exhibit
4.10.3, no current or former shareholder, employee, officer,
director or consultant of the Company has any rights in or to
any of the Company Intellectual Property. To the best
knowledge of the Company, the Sellers and Yoav, all Company
Intellectual Property listed on Exhibit 4.10.1 has the status
indicated therein and except as expressly set forth in
Exhibit 4.10.3: (i) all patent applications are still pending
in good standing and have not been abandoned and (ii) all
patents are in good standing and have not lapsed. Except to
the extent specifically disclosed on Exhibit 4.10.1: (i) to
the best knowledge of the Company, the Sellers and Yoav, the
granted patents of the Company Intellectual Property are
valid and except with respect to the examination process to
which patent applications are subjected, the Company
Intellectual Property has not been challenged in any judicial
or administrative proceeding; (ii) the Company has made all
statutorily required filings, if any, to record its interest,
and taken reasonable actions to protect its rights, in the
Company Intellectual Property; (iii) to the knowledge of the
Company ,the Sellers and Yoav, no person or entity nor such
person's or entity's business or products has infringed,
misused or misappropriated the Company Intellectual Property
or currently is infringing, misusing or misappropriating the
Company Intellectual Property; and (iv) to the knowledge of
the Company, the Sellers and Yoav, no other person or entity
has any right to receive or any obligation to pay a royalty
with respect to any of the Company Intellectual Property or
any product or service of the Company or its subsidiaries.
4.10.4 Except as explicitly and specifically set forth in Exhibit
4.10.4, at no time during the conception of or reduction to
practice of any of the Intellectual Property Rights was any
developer, inventor or other contributor to such Intellectual
Property Rights operating under any grants from any
governmental entity or agency, performing research sponsored
by any governmental entity or agency or private source. The
Company, the Sellers and Yoav are not aware that at any time
during the conception of or reduction to practice of any of
the Intellectual Property Rights, any such developer,
inventor or other contributor was operating or subject to any
employment agreement, or invention assignment or
nondisclosure agreement, or other obligation with any third
party that could adversely affect the rights of the Company
in such Intellectual Property Rights.
4.10.5 Subject to Exhibit 4.10.5, The Company takes measures to
protect the confidentiality and value of all the Company
Intellectual Property, which measures under the circumstances
are reasonable and customary in the industry in which the
Company operates. Each of the key officers, employees and
consultants of the Company are bound by written agreements
assigning to the Company all rights to intellectual property
developed in the course of their employment with and/or
service to the Company.
4.10.6 Except as set forth in Exhibit 4.10.6 the Company has not
received any communications alleging that the Company has
violated or by conducting its business as proposed, would
violate, patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights of
other persons or entities, nor is the Company aware of any
similar violation of its Intellectual Property by others .
Exhibit 4.10.6 contains a legal opinion of the patent
attorney of the Company regarding the patent infringement
claim made by Turon AB, regarding the Company's U.S. Patent
no. 4,727,565.
4.11 Taxes.
4.11.1 Except as provided in Exhibit 4.11, the Company's and/or
Zuckerman's and/or Tawton's Financial Statements make full
provisions according to GAAP as defined in Section 4.13
hereto for all taxes for which the Company and/or Zuckerman
and/or Tawton were then or thereafter became or may hereafter
become liable or accountable in respect of or by reference to
any income, profit, receipt, gain, transaction, distribution
or event which was earned, accrued, received, or realized,
paid, made or accrued on or before September 30, 2000, and up
until September 30, 2000, the Company, Zuckerman and Tawton
have promptly paid or fully provided in their books of
account according to GAAP as defined in Section 4.13 hereto
for all Taxes for which they have or may hereafter become
liable or accountable in the period from the date of their
incorporation to the Closing Date.
4.11.2 The Company and/or Zuckerman and/or Tawton have at all times
and within the requisite time limits promptly, fully and
accurately observed, performed and complied with all material
obligations or conditions imposed on them, or to which any
claim, deduction, allowance or relief made, claimed by or
afforded to them was made subject, under any legislation
relating to taxes, except for such non compliance that, both
individually and in the aggregate with all other exceptions
to any of the representations in this Section 4.11.2 which
are not specified in the exhibits, would not have a Material
Adverse Effect on the Company and/or Zuckerman and/or Tawton
4.11.3 The Company and/or Zuckerman and/or Tawton are not
aware of any circumstances which will or may, whether by
lapse of time or the issue of any notice of assessment or
otherwise, give rise to any dispute with any relevant
government body in relation to its liability or
accountability for taxes, any claim made by it, any relief,
deduction, or allowance afforded to it, or in relation to the
status or character of the Company or any of its enterprises
under or for the purpose of any provision of any legislation
relating to taxes, except for such dispute or claim that,
both individually and in the aggregate with all other
exceptions to any of the representations in this Section 4
which are not specified on schedules hereto, would not have a
material adverse effect on the Company and/or Zuckerman
and/or Tawton.
4.12. Agreements. Exhibit 4.12 attached hereto contains a complete
list of all outstanding contractual undertakings of the
Company and/or Zuckerman and/or Tawton and all other
contracts, leases, licenses, debt instruments, loan
agreements, partnership or joint venture agreements,
confidentiality and non-competition agreements, lease
agreements, license agreements, merchandise commitments, and
all other material obligations of the Company and/or
Zuckerman and/or Tawton to date relating to the Company's
and/or Zuckerman's and/or Tawton's assets. With respect to
each such agreement: (a) the agreement is legal, valid,
binding, enforceable and in full force and effect without any
material default thereunder, (b) the agreement will continue
to be legal, valid, binding, enforceable and in full force
and effect on identical terms following the Closing, except
as disclosed in Exhibit 4.12 and elsewhere in this Agreement,
(c) to the best of the Company's ,the Sellers' and Yoav's
knowledge, no party is in breach or default, and no event has
occurred which with notice or lapse of time would constitute
a breach or default, or permit termination, modification or
acceleration under the agreement except as set forth in
Exhibit 4.12, and (d) no party has repudiated any provision
of the agreement. There are no outstanding powers of attorney
executed on behalf of the Company and/or Zuckerman and/or
Tawton.
4.13. Financial Statements. The Company, Zuckerman and Tawton have
delivered to the Purchaser, as reflected in Exhibits 4.13 , 4.13 A
and 4.13 B hereto, a true and correct copy of (a) the Company's and
Zuckerman's audited financial statements, as of December 31, 1999,
(b) the Company's, Zuckerman's unaudited reviewed financial
statements as of June 30, 2000, and (c) the Company's and
Zuckerman's Trial Balance Sheet as of September 30, 2000. The
documents referred to in this Section 4.13 are referred to as the
"Financial Statements".
The Financial Statements were prepared in accordance with Israel
generally accepted accounting principles applied on a consistent
basis ("GAAP").
Except as set forth (i) in the Financial Statements of the Company
and/or Zuckerman and/or Tawton, (ii) in Exhibit 4.13C hereto, (iii)
elsewhere in this Agreement, and (iv) in the Company's and/or
Zuckerman's and/or Tawton's normal guarantee and warranty
undertakings towards customers, to the best knowledge of the
Company, Zuckerman and Tawton, there are no fixed or contingent
liabilities, asserted or unasserted (and there is no current basis
for any present or future action, suit, proceeding, investigation,
charge, claim, or demand giving rise to any such liability),
including without limitation such liabilities arising out of any
injury to individuals or property as a result of the ownership,
possession or use of any product manufactured, sold, leased or
delivered by the Company and/or Zuckerman and/or Tawton with respect
to any claim for the breach of any express or implied product
warranty or any other similar claim with respect to any of such
products.
4.14. Interim Operations. Except as set forth in Exhibit 4.14, since
September 30, 2000 (a) there have not been any material adverse
changes in the financial condition, material assets or results of
operations of the Company and/or Zuckerman and/or Tawton , (b) there
has not been any increase in the payment of compensation to any
director or employee of the Company and/or Zuckerman and/or Tawton.
4.15. Employees. A list detailing the names and positions of all
employees of the Company and of Zuckerman, and of Tawton and a
summary of their material terms of employment, has been delivered to
the Purchaser in writing prior to the execution of this Agreement.
Exhibit 4.15 attached hereto lists all employment, non-competition
and confidentiality agreements between the Company and Zuckerman and
Tawton and their employees. The Company and/or Zuckerman and/or
Tawton are in compliance in all material respects with all
applicable laws, policies, procedures and agreements relating to
employment, terms and conditions of employment and to the proper
withholding and remission to the proper tax authorities of all sums
required to be withheld from employees or Persons deemed to be
employees, under applicable tax laws. Except as set forth in Exhibit
4.15, the Company and/or Zuckerman and/or Tawton have paid all of
their employees all wages, salaries, commissions, bonuses, benefits
and other compensation due and payable to such employees on or prior
to the date hereof, and has reserved sufficient funds for severance
payments for all of its employees. Yoav hereby represents and
warrants that he has no claim nor any basis for claim against the
Company or Zuckerman which relates to his employment or directorship
with any of them.
4.16 Insurance. Full and accurate details of the Company's and of
Zuckerman's and of Tawton insurance policies are contained in
Exhibit 4.16 hereto.
4.16.1 The Company and/or Zuckerman and/or Tawton have not done
anything or suffered any damage which has rendered or might
render any policies of insurance taken out by it void or
voidable or which might result in an increase in premiums and
the Company and/or Zuckerman and/or Tawton have complied with
all conditions attached to such policies.
4.16.2 There is no claim outstanding under any of such policies nor,
to the best of the Company's ,the Seller's and Yoav's
knowledge, are there any circumstances likely to give rise to
such a claim.
4.17 Related Party Transactions. Except as set forth in Exhibit 4.17: (a)
no Related Party has, and no Related Party has had any direct or
indirect interest in any asset used in or otherwise relating to the
business of the Company and/or Zuckerman and/or Tawton; (b) no
Related Party is or has been indebted to the Company and/or
Zuckerman and/or Tawton; (c) no Related Party has entered into, or
has had any direct or indirect financial interest in, any agreement,
transaction or business dealing involving the Company and/or
Zuckerman and/or Tawton; (d) no Related Party is known to have been
competing, or has competed, directly or indirectly, with the Company
and/or Zuckerman and/or Tawton; and (e) no Related Party has any
claim or right against the Company and/or Zuckerman and/or Tawton.
For purposes of this Section 4.17 each of the following shall be
deemed to be a "Related Party": (i) each of the Company and/or
Zuckerman and/or Tawton and their shareholders; (ii) each individual
who is, or who has been, an officer of the Company and/or Zuckerman
and/or Tawton; (iii) each member of the immediate family of each of
the individuals referred to in clauses "(i)" and "(ii)" above; and
(iv) any trust or other Entity (other than the Company and/or
Zuckerman) in which any one of the individuals referred to in
clauses "(i)", "(ii)" and "(iii)" above holds (or in which more than
one of such individuals collectively hold), beneficially or
otherwise, a material voting, proprietary or equity interest.)
4.18 Governmental Authorizations. The Company and/or Zuckerman and/or
Tawton have all material governmental authorizations, permits,
consents and approvals necessary to enable them to conduct their
business in the manner in which their business is currently being
conducted and as proposed to be conducted. The Company and/or
Zuckerman and/or Tawton are in substantial compliance with the terms
and requirements of such governmental authorizations and the Company
and/or Zuckerman and/or Tawton have not received any notice or other
communication from any governmental body regarding (a) any actual or
possible violation of or failure to comply with any term or
requirement of any governmental authorization, or (b) any actual or
possible revocation, withdrawal, suspension, cancellation,
termination or modification of any governmental authorization.
4.19 Consents and Approvals; No Violations. No consent, approval or other
authorization is required for the consummation by such Seller and/or
Yoav of the transactions contemplated by this Agreement, and the
consummation by such Seller and/or Yoav of the transactions
contemplated by this Agreement will not result in any material
violation or default under any provision of any law applicable to
such Seller or of the jurisdiction of organization of such Seller
and/or Yoav, any material agreement by which such Seller and/or Yoav
is bound or the certificate of incorporation or by-laws, or other
organizational instruments, of such Seller and/or Yoav.
4.20 Business Plan. The Business Plan of the Company, dated November
1999, attached hereto as Exhibit 4.20, had been prepared in good
faith and with reasonable care by the Company. As a result of the
following: (a) that orders for the Company's mammography systems by
Philips Medical Systems have not met expectations and in the future
will not likely meet expectations, and (b) that Philips Medical
Systems has informed the Company that it will not renew its current
agreement with the Company beyond November 10, 2001, the
contribution of transactions with Philips Medical Systems to the
Company's sales and revenues, as set forth in the Business Plan, has
materially changed. In addition, these changes have resulted in a
need (a) to find new distributors for the Company's systems, and (b)
for increased penetration efforts in the North American market.
Neither the Company nor the Sellers nor Yoav provides any guaranty
regarding the financial or other projections included in such
Business Plan which projections were only estimates.
4.21 Obligations and debts to Elsint Ltd. The aggregate amount of the
obligations and debts as of September 30, 2000, of the Company,
Zuckernan and Yoav to the Elscint Group as defined below (not
including any interest thereon) do not exceed the amount of two
million three hundred and fifty thousand US Dollars ($2,350,000).
Full and accurate details of such obligations and debts are
specified in Exhibit 4.21 attached hereto.
In this Section Elscint Group means any and all of the following
corporations and any related corporation thereof: "Elscint Ltd,
company No. 52-0029059; Elscint Industrial Solutions (1999) Ltd.,
company No.51-2834482; Elscint industrial research and development
formed by Elscint Ltd. company No. 52-003470-3".
4.22 Broker's or Finder's Fee. Except as detailed in Exhibit 4.22, no
person acting on behalf of the Company or the Sellers is or will be
entitled to any broker's or finder's fee or any other commission or
similar fee, directly or indirectly, in connection with the
transactions contemplated by this Agreement.
4.23 Disclosure. Neither this Agreement, nor the Financial Statements,
nor any statements or certificates or other documents made or
delivered in connection herewith contain any untrue statements of a
material fact or omit to state a material fact necessary to make the
statements herein or therein not misleading in light of the
circumstances under which they were made. The Company, the Sellers
and Yoav are not aware of any fact material to the Company's and/or
Zuckerman's and/or Tawton's assets, and the Purchased Shares that
has not been disclosed to the Purchaser and set forth in this
Agreement, including the exhibits hereto, or otherwise disclosed in
writing to the Purchaser.
4.24 Materiality. Each reference to any material adverse effect upon the
financial condition, operation, or prospects of the Company and/or
Zuckerman and/or Tawton or their Assets, or any other reference to a
material item or circumstance, shall be construed to include any
act, omission, event, or circumstances that would entail loss,
liability, damage, or expense to the Purchaser exceeding $30,000 in
any single instance, whether under one or more representations,
warranties, covenants, or agreements contained herein.
4A The Sellers and Yoav hereby represent and warrant that:
(i) except for its investment in Zuckerman, and the
liabilities arising therefrom, since its incorporation,
Tawton has not conducted any business nor incurred any
other material liability whatsoever. Tawton's
incorporation documents are attached as Exhibit 4A.1
hereto , and
(ii) except for its investment in the Company and the
liabilities arising therefrom, including obligations
arising pursuant to the ElscinTec Transaction Agreement
dated December 21, 1999, since its incorporation,
Zuckerman has not conducted any business nor incurred any
other material liability whatsoever. Zuckerman's
incorporation documents are attached as Exhibit 4A.1A
hereto.
4B.4B1. Yoav's Responsibility. Yoav represents and warrants to the
Purchaser that he is the sole director of the Company and of
Zuckerman and the holder of fifty percent (50%) of the
outstanding share capital of Zuckerman . As such sole director
and major shareholder Yoav represents that he has full and
accurate knowledge about the Company and Zuckerman , Yoav
further warrants and declares that all the representations and
warranties as made in Sections 4 and 4A, are made by him in his
personal capacity. The aforesaid shall in no way derogate from
the representations, warranties and obligations of the Company
and the Sellers as set out in this Agreement.
4.B2 As a guarantee to the accuracy of the representations and
warranties of regarding Zuckerman and Tawton as specified in
this Section 4 and to the fulfillment of all of Cowan's and
Tawton's and Zuckerman's obligations according to the
provisions of this Agreement, Yoav shall pledge all his shares
and holdings in Zuckerman (subject to the provisions of Section
6.11 below) in favor of the Purchaser for a period of three
years commencing the Closing of this agreement all according to
the terms and conditions of the pledge agreement attached as
Exhibit 4.B.2 hereto.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
----------------------------------------------
The Purchaser hereby represents and warrants, as of the date hereof and
as of the Closing, to the Company and the Sellers and acknowledges that
the Company and the Sellers are entering into this Agreement in reliance
on said warranties as follows:
5.1. Organization. The Purchaser is a public company duly organized,
validly existing and in good standing under the laws of Israel, with
corporate power to carry on its business as now being conducted.
5.2 Power and Authority; Enforceability. The Purchaser has all requisite
corporate power to enter into this Agreement and to perform its
obligations hereunder. This Agreement has been duly authorized,
executed and delivered on behalf of the Purchaser, and constitutes a
legal, valid and binding obligation of the Purchaser, enforceable in
accordance with its terms. Neither the execution and delivery of
this Agreement by the Purchaser nor the compliance and performance
by the Purchaser with the terms and provisions hereof, including the
execution and delivery of all documents, and instruments referred to
or contemplated by this Agreement will (a) conflict with or result
in a breach by the Purchaser of any of the terms and provisions of
(i) any law, rule, ordinance, regulation, permit, order, judgment or
decree of any court, arbitrator or governmental instrumentality or
(ii) any lien, lease, license, agreement, or instrument to which the
Purchaser or any of their shareholders are a party or by which they
or their properties may be bound, or (b) create in any Person the
right to terminate, accelerate, modify, cancel or otherwise cause a
adverse change with respect to any such lien, lease, agreement,
contract, instrument or assets or (c) result in the creation of any
lien, charge, or other encumbrance on any property right or asset of
the Purchaser.
5.3 Experience Purchaser has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and
risks relating to the purchase of the Purchased Shares and the entry
into this transaction. The aforesaid shall in no way derogate from
the representations and warranties of the Company and the Sellers as
set out in Section 4 above and reliance thereon by the Purchaser.
5.4 Receipt of Information Without derogating from the representations
and warranties set forth in Section 4 above or the Company's ,the
Sellers' and Yoav's liability therefor as predicated under this
Agreement, the Purchaser has been given access to information
regarding the Company and Zuckerman and Tawton, and the Purchased
Shares. The Purchaser further represents that it had an opportunity
to ask questions and receive answers from the Company's, Zuckerman's
and Tawton's representatives, concerning the Company, Zuckerman, and
Tawton and the Purchased Shares as well as regarding written
information that it received. The Purchaser has conducted a Due
Diligence examination of the Company and of Zuckerman .
5.5 Broker's or Finder's Fee. No person acting on behalf of the
Purchaser is or will be entitled to any broker's or finder's fees or
any other commission or similar fee, directly or indirectly, in
connection with the transactions contemplated by this Agreement.
5.6 Purchase for Purchaser's Own Account. The Purchaser is acquiring the
Purchased Shares for investment for its own account and/or its
Affiliate's account, not as a nominee or agent, and not with the
view to, or for resale in connection with, any distribution thereof.
The Purchaser understands that the Purchased Shares to be purchased
hereby, have not been, and will not be, registered under the
Securities Act by reason of a specific exemption from the
registration provisions of the Securities Act, the availability of
which depends upon, among other things, the bona fide nature of the
investment intent and the accuracy of the Purchaser's
representations as expressed herein.
6. MANAGEMENT OF THE COMPANY; COVENANTS OF THE PARTIES
----------------------------------------------------
6.1 Board of Directors and Shareholders Decisions. Until an IPO, each of
the Company's and Zuckerman's Board of Directors shall consist of up
to six (6) directors that shall be elected and operate as follows:
6.1.1 The Purchaser shall be entitled to appoint three (3)
directors, including the chairman, to the Board of Directors
of the Company and of Zuckerman, remove any of them from his
office and replace any director so appointed whenever his
place is vacated for any cause or reason.
The initial directors appointed by the Purchaser shall be:
Mr. Shmuel Bachar, Mr. Arie Geler and Mr. Yoav Bar-Ness.
6.1.2 Yoav shall be entitled to appoint three (3) directors to the
Board of Directors of the Company and of Zuckerman, remove
any of them from his office and replace any director so
appointed whenever his place is vacated for any cause or
reason. .
The Initial directors appointed by Yoav shall be: Yoav
Zuckerman, Yoel Margalith; and Dr. Limor Zuri.
6.1.3 Each of the directors of the Company shall be entitled to
receive from the Company, and each of the directors of
Zuckerman shall be entitled to receive from Zuckerman,
reasonable out-of-pocket expenses for attending meetings of
the Board of Directors.
6.1.4 Subject to Section 11.2 below, each of the directors
appointed by the Purchaser and by Yoav shall be entitled to
communicate to the Person who appointed him all information
received in his capacity as a member of the Board, and such
information may be used by each of the Purchaser and Yoav in
connection with its investment in the Company and in
Zuckerman, and in discussions with other shareholders in the
Company and in Zuckerman.
6.1.5 Subject to any applicable mandatory law, and to the
provisions of Section 6.1.6, Section 6.1.7, and Section 6.10
hereof, all resolutions and actions of the Board of Directors
and of the shareholders of the Company and of Zuckerman shall
be taken by an ordinary majority vote.
6.1.6 In the event of the failure of the Purchaser and Yoav to
agree regarding a material issue (which is not a Significant
Transaction (defined in Section 6.1.7 below) which deadlock
continues for more than thirty (30) days and which results in
a deadlock in the Board of Directors of the Company or of
Zuckerman, as the case may be, which continues for more than
one Board meeting, then the deadlock provisions of Section
6.10 below shall be triggered.
6.1.7 Until an IPO, no action may be taken by the Company or by
Zuckerman with regard to any of the issues referred to in
this Section 6.1.7 (the "Significant Transactions") without
the consent of the directors appointed by the Purchaser, or,
if the issue does not require Board consent, without the
consent of the Purchaser. The Significant Transactions shall
be the following:
(a) any action that reclassifies any outstanding shares
into shares, having preferences or priority over the
Ordinary Shares;
(b) issuance of shares, capital stock, rights, options or
warrants to purchase shares, capital stock, or other
securities convertible into capital stock;
(c) any amendment to the Company's or to Zuckerman's
Articles of Association;
(d) the sale of all or substantially all of the Company's
or all of Zuckerman's assets or shares;
(e) any liquidation event or deemed liquidation event,
including the liquidation or dissolution of the
Company, or a merger or consolidation of the Company
with one or more other corporations.
(f) a material change in the business of the Company or of
Zuckerman;
(g) the terms and conditions of an initial public offering;
(h) any transaction of the Company exceeding US $50,000 or
which is not in the Company's ordinary course of
business;
(i) any transaction or agreement with an Interested Party;
(j) an increase in the number of members of the Board of
Directors.
6.2 Accounts and Records. The Company and Zuckerman will keep true
records and books of account in which full, true and correct entries
will be made of all dealings or transactions in relation to its
business and affairs in accordance with generally accepted
principles applied on a consistent basis.
6.3 Access to Information. A representative of the Purchaser and a
representative of Yoav who have signed a non-disclosure agreement
shall have, upon reasonable notice, full access to all books and
records of the Company and of Zuckerman, shall be entitled to review
at its discretion, and shall be entitled to inspect the properties
of the Company and of Zuckerman, and consult with management of the
Company and of Zuckerman.
6.4 Information Rights. Prior to an IPO, each of the Company and
Zuckerman shall deliver to the Purchaser and to Yoav, (i) within 60
days after the end of each fiscal year, a consolidated balance sheet
of the company, as at the end of such fiscal year, and a
consolidated statement of income and a statement of cash flows of
the company, for such year, all prepared in accordance with GAAP and
setting forth in each case in comparative form the figures for the
previous fiscal year and to the company's operating plan then in
effect and approved by its Board of Directors, all in reasonable
detail. Such financial statements each shall be accompanied by a
report and opinion thereon by the independent public accountants of
the Company and of Zuckerman, respectively, (the "Accountants"),
(ii) within 45 days from the end of each quarter, a consolidated
balance sheet of the company, as of the end of each such quarterly
period, and consolidated statements of income and cash flows of the
company for such period and for the current fiscal year to date,
prepared in accordance with GAAP and setting forth in comparative
form the figures for the corresponding periods of the previous
fiscal year and to the company's operating plan then in effect and
approved by its Board of Directors, subject to changes resulting
from normal year-end audit adjustments, all in reasonable detail and
reviewed by the Accountants; and (iii) monthly management reports
(in a form mutually agreed) and unaudited monthly financial
statements within 30 days from the end of each month, and (iv) an
annual budget, within 30 days prior to the end of each fiscal year.
For the Purpose of this Section GAAP shall mean Israeli GAAP and
adjustment to US GAAP, provided that the Purchaser shall pay for the
expenses associated with the adjustment to US GAAP.
Notwithstanding anything herein, each of the Company and Zuckerman
shall deliver to the Purchaser any information which the Purchaser
is required to file pursuant to Israeli and USA securities laws or
any request of the securities authorities in these jurisdictions.
Such delivery by each of the Company and Zuckerman shall be made at
least 14 days before the date on which the Purchaser is required to
file such information, provided that each of the Company and
Zuckerman has such information and provided further that the
Purchaser has notified each of the Company and Zuckerman in due time
on such requests.
6.5 Internal Reporting Requirements. The Company's management shall
submit to the Board of Directors for its approval, annually, an
annual operating plan and budget, in such format as the directors
shall require, at least 30 days prior to the first day of the year
covered by such plan (provided, however, that the annual operating
plan and budget for the year 2001 may be delayed until after the
Closing of this transaction). In addition, the Company's management
shall submit to the Board of Directors monthly and other reports in
such format, and containing such information, as the directors shall
require.
6.6 Signatory Rights. As of Closing and until otherwise resolved by the
Board of Directors, the signatory rights on behalf of the Company
shall be as specified in Exhibit 6.6 attached hereto.
6.7 Preemptive Rights. If at any time prior to the IPO, either the
Company or Zuckerman proposes to issue and sell any capital stock of
the company, whether or not now authorized, rights, options or
warrants to purchase capital stock, or securities of any type
whatsoever that are, or may become, convertible into capital stock
(excluding securities (i) issued in an IPO, (ii) issued to
employees, officers, consultants or directors of the company
pursuant to stock option plans or agreements or other incentive
stock arrangements, approved by the Board of Directors or
(iii)issued in connection with the acquisition by the company of, or
business combination with, another company or entity by merger or
purchase of substantially all of its stock or assets) ("New
Securities")) it shall enable Yoav and the Purchaser to purchase
their Pro Rata share in the Company or in Zuckerman, as the case may
be, all according to the terms and conditions set forth in the
Amended Articles of the Company and/or Zuckerman. For the purpose of
Section 6.7, and Section 6.8 hereof, the term "Pro Rata" with regard
to the holdings of the Purchaser and Yoav in the Company shall mean
the rate of share holding of any of them in Zuckerman. By way of
illustration, immediately following the Closing of this transaction,
should the Company propose to issue and sell any capital stock of
the Company, the Purchaser would be entitled to purchase 50% of such
capital stock and Yoav would be entitled to purchase 50% of such
capital stock.
6.8 Right of First Refusal. Each of the Shareholders of the Company and
of Zuckerman, as the case may be, shall be entitled to a Pro-Rata
Right of First Refusal upon the transfer of shares by any other
Shareholder subject to certain permitted transfers to Affiliates,
according to the terms and conditions set forth in the respective
Amended Articles of the Company and of Zuckerman.
6.9 Co-Sale Rights. If the right of first refusal set forth in the
Section 6.8 above and in the Amended Articles is not exercised and
any of the Shareholders (the "Selling Shareholder") intends to sell
any shares, other than to an Affiliate, such Selling Shareholder
shall so notify the other Shareholders (the "Offerees"), describing
in such notification the material terms of such proposed sale. Upon
receipt of such notice, the Offerees shall have the right to
exercise the option contained in Section 6.9.1 below.
6.9.1 The Offerees shall have the option, exercisable by written
notice to the Selling Shareholder within fifteen (15)
business days after receipt of the notice described in
Section 6.9 above, to require the Selling Shareholder to
provide as part of his proposed sale that the Offeree shall
be given the right to participate in the sale pro rata in
proportion to the respective numbers of Shares owned by the
Offerees (directly or indirectly) and the Selling Shareholder
at such time, on the same terms and conditions as the Selling
Shareholder. If such option is exercised by the Offerees, the
Selling Shareholder shall not proceed with such sale unless
the Offerees are given the right to participate.
The rights of co-sale established by this Section 6. 9
shall not apply to, and shall terminate upon the effective
date of an IPO.
6.10 Deadlock Notice and Sale
6.10.1 In the event of a deadlock between the Purchaser and Yoav as
described in Section 6.1.6 above, then the Purchaser and Yoav
shall negotiate in good faith for a period of 30 (thirty)
days in an effort to resolve the deadlock. If such
negotiations are not successful, then either the Purchaser or
Yoav (the "Offeror") may at any time within the next
twenty-one (21) days give notice to the other (the "Offeree")
of its election to purchase the Offeree's entire interest in
Zuckerman (the "Offer"), pursuant to the terms and conditions
set forth in this Section 6.10.
6.10.2 The Offer shall specify the price at which the Offeror offers
to purchase the Offeree's entire interest in Zuckerman, (the
"Original Offer Price"), and shall contain a statement to the
effect that the Offeror has all requisite power and authority
and the financial resources to consummate the proposed
purchase. The Original Offer Price shall be no less than
one-half of five million dollars ($5,000,000) .
6.10.3 The Offeree shall have a period of 14 (fourteen) business
days after receipt of the Offer (the "Offer Period") to
either (i) accept the Offer by a written notice (the "Buyout
Acceptance Notice") delivered to the Offerer or (ii) deliver
a counter offer to the Offeror to purchase all the Offeror's
interest in Zuckerman (the "Offeree's Offer") for a price
which is higher by at least 5% of the Original Offer Price
(the "Increased Offer"). The Offeree's Offer shall include a
statement to the effect that the Offeree has all requisite
power and authority and the financial resources to consummate
the proposed purchase. If no Offeree's Offer is delivered
within the Offer Period, then the Offeror's Offer shall be
deemed accepted and the Offeror shall purchase the entire
security holdings of the Offeree in Zuckerman at the Original
Offer Price.
6.10.4 In the event an Offeree's Offer is delivered, the Offeror
shall within a period of seven (7) business days after
receipt thereof either (i) accept the offer by a Buyout
Acceptance Notice as set forth mutatis mutandis in Section
6.10.3 above or (ii) deliver a new counter offer to the
Offeree to purchase all the Offeree's security holdings in
Zuckerman for a price which is higher by at least 5% of the
Increased Offer.
6.10.5 The mechanism detailed in Sections 6.10.3 and 6.10.4 shall be
exercised until one party (Yoav or the Purchaser as the case
may be) has delivered or fails to deliver either a Buyout
Acceptance Notice or counter offer according to Section
6.10.4.
6.10.6 The closing of any transaction pursuant to this Section 6.10
shall take place at the principal office of the Company, or
any other location agreed between Yoav andthe Purchaser, no
later than 30 business days after a Buyout Acceptance Notice
was received or deemed received. At such closing, the
purchaser party shall pay the purchase price by wire transfer
of immediately available funds against delivery by the
selling party of appropriate instruments of assignment (i.e.,
a share transfer deed), reasonably satisfactory in form to
the purchasing party, evidencing the assignment to the
purchaser party of all the securities being sold, free and
clear of all liens, security interests, encumbrances, or
adverse claims of any kind and nature.
6.10.7 In the event any applicable regulatory or other governmental
approvals shall not have been timely obtained, the date of
the closing may be postponed until such approvals are
obtained. Each party shall use its best effort to cooperate
with the other party and file all documents to the
governmental authorities in obtaining any required regulatory
or other governmental approvals.
6.11 Yoav's Sales
Sale of Yoav's holdings in Zuckerman shall be limited as follows:
6.11.1 Until the earlier of five years following the Closing of this
Agreement or an IPO (the "No-Sale Period"), Yoav shall not
sell, transfer, assign, encumber, grant an option or
otherwise dispose of (hereinafter "Transfer") his shares in
Zuckerman so as to reduce Yoav's shareholding in Zuckerman to
less than 25% of Zuckerman's outstanding shares.
6.11.2 Notwithstanding the aforesaid in Section 6.11.1, during the
No-Sale Period, in the event that Yoav wishes to reduce his
shareholding in Zuckerman to less than 40% of Zuckerman's
outstanding shares, by the Transfer of up to an additional
fifteen percent (15%) of Zuckerman's outstanding shares (the
"Additional Shares"), then he may Transfer the Additional
Shares only if the Purchaser approves in writing the identity
of the potential buyer. In the event that the Purchaser does
not approve the potential buyer, the Purchaser shall reason
in writing such disapproval and Yoav may not Transfer any of
the Additional Shares to such buyer.
6.11.3 Notwithstanding Sections 6.11.1 and 6.11.2, Transfers to
immediate family members shall be exempt from the provisions
of this Section 6.11, provided that the shares so transferred
remain subject to this Section 6.11 and any other limitation
to which such shares are subject.
6.11.4 In the event of the death or permanent disability of Yoav,
the restrictions of this Section 6.11 shall be void and of no
further effect.
7. CERTAIN COVENANTS OF THE COMPANY
--------------------------------
From the date hereof through the Closing, and except as set forth herein,
each of the Company, Zuckerman and Tawton (a) will conduct its business
solely in the ordinary course as is conducted on the date hereof and in
such manner as to preserve, to the extent possible in the ordinary course
of business, the accuracy of the representations and warranties made
hereunder; (b) shall not declare or pay any dividends or make any other
distributions with respect to its share capital; (c) shall not issue any
shares nor grant any option, warrant, convertible debenture or any other
form of security exercisable into or convertible to shares of the
Company, Zuckerman and Tawton , as the case may be, (other than as
provided for herein); (d) shall not repay any indebtedness for which any
of the Company's, Zuckeman's and Tawton's shareholders are guarantors;
and (e) shall not enter into or renew any agreement with an Interested
Party (including an employment agreement with any employee or director),
or increase the remuneration of any employee or director.
8. ADDITIONAL COVENANTS OF THE PARTIES
-----------------------------------
8.1 Filings and Consents. In addition to the Parties undertakings
hereunder, as promptly as practicable after the execution of this
Agreement, each party to this Agreement (a) shall make all filings
(if any) and give all notices (if any) required to be made and given
by such party in connection with the transactions contemplated by
this Agreement, and (b) shall use all commercially reasonable
efforts to obtain all consents (if any) required to be obtained
(pursuant to any applicable legal requirement or contract, or
otherwise) by such party in connection with the transactions
contemplated by this Agreement. Each party to this Agreement shall
(upon request) promptly deliver to the other parties a copy of each
such filing made, each such notice given and each such consent
obtained by such party. Each party shall promptly provide the other
parties with copies of all filings made by the other party with any
state, federal or foreign governmental body in connection with this
Agreement and the transactions contemplated hereby. Each of the
parties hereto shall perform such further acts and execute such
additional documents as may be reasonably required to effectuate the
transactions contemplated hereby.
8.2 Tax Liability. Each party shall be responsible for all its
respective tax obligations deriving from the transactions
contemplated in this Agreement.
8.3 CFO. Upon the Closing, the Chief Financial Officer of the Purchaser
shall be appointed as the Chief Financial Officer of the Company,
according to the terms mutually agreed upon by the Purchaser and the
Company. Yoav may require by written notice, which notice shall
explain the reasons (such reasons must be reasonable reasons) for
his decision, that the Chief Financial Officer appointed by the
Purchaser be replaced by another appointee of the Purchaser
acceptable to Yoav. Yoav will have the same right with respect to
any successor to the position of Chief Financial Officer.
8.4 CEO. Yoav undertakes to serve as the Chief Executive Officer of the
Company pursuant to the terms of the Employment Agreement Exhibit
9.4.1 hereto for a period of at least three years.
8.5 Management Fees. The Company and the Purchaser shall enter into an
agreement whereby the Company shall pay the Purchaser annual
management fees in consideration for the participation of
representative's of the Purchaser on the Company's Board of
Directors, pursuant to the Management Agreement attached hereto as
Exhibit 9.4.8.
8.6 Shareholder's Loan. The Company undertakes, subject to the
applicable law, in accordance with the loan agreement attached
hereto as Exhibit 8.6, to pay to Zuckerman the amount of the
shareholder's loan provided by Zuckerman to the Company. This loan
principally represents the amounts which Zuckerman is obligated to
pay to Elscint Ltd. on account of Zuckerman's redemption of the
shareholders loans made by Elscint to the Company. In no event shall
Yoav's ownership interest in Zuckerman be diluted on account or as a
result of Zuckerman's repayment of the amounts due by Zuckerman to
Elscint Ltd.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
------------------------------------------------
The obligations of Purchaser to consummate the transactions contemplated
by this Agreement are subject to the satisfaction, at or prior to the
Closing, of each of the following conditions which the Company, the
Sellers and Yoav hereby undertake to fulfill any or all of which may be
waived in writing by Purchaser:
9.1 Accuracy of Representations. Each of the representations and
warranties made by the Company ,the Sellers and Yoav in this
Agreement and in each of the other agreements and instruments
delivered to Purchaser in connection with the transactions
contemplated by this Agreement shall have been accurate in all
material respects as of the date of this Agreement, and shall be
accurate in all material respects as of the Closing Date as if made
on the Closing Date.
9.2 Performance of Covenants. All of the covenants and obligations that
the Company, the Sellers and Yoav are required to comply with or to
perform at or prior to the Closing shall have been complied with and
performed in all material respects.
9.3 Consents. All Consents required to be obtained in connection with
the transactions contemplated by this Agreement shall have been
obtained and shall be in full force and effect.
9.4 Agreements and Documents. Purchaser shall have received the
following agreements and documents, each of which shall be in full
force and effect:
9.4.1 New Employment Agreement executed by Mr. Yoav Zuckerman and
the Company on January 2, 2001, and attached hereto as
Exhibit 9.4.1.
9.4.2 Certificates executed by an Officer of the Company, an
Officer of Zuckerman, an officer of Tawton , and Cowan,
certifying that each of the representations and warranties
made by it and set forth in Section 4 are accurate in all
material respects as of the Closing Date as if made on the
Closing Date and that the conditions set forth in Sections
9.1, 9.2 and 9.3 have been duly satisfied in the form
attached as Exhibit 9.4.2 to this Agreement (collectively the
"Company Closing Certificate"); and
9.4.3 (i) An opinion, dated the Closing, of Law Offices of Shimshon
Halpern, counsel to the Company, and, (ii) an opinion, dated
the Closing, of Law Offices of Shimshon Halpern, counsel to
Zuckerman, and (iii) an opinion, dated the Closing, of
Simcocks, counsel to Tawton in the form of Exhibits 9.4.3 ,
9.4.3(a) respectively attached hereto.
9.4.4 Validly executed Share Certificate reflecting the Purchased
Shares in the name of the Purchaser accompanied by (i) share
transfer deed duly executed by Cowan and (ii) legal opinion
from Tawton's counsel confirming that the Purchased Shares
were properly transferred to the ownership of the Purchaser
in accordance with applicable law.
9.4.5 written resignations of all directors, except Yoav, of the
Company, Zuckerman and Tawton, effective as of the Closing
Date;
9.4.6 Special Resolutions of the Company's and of Zuckerman's
shareholders in the form of Exhibit 9.4.6(a) and 9.4.6(b)
hereto, by which the Articles of Association of the Company
and of Zuckerman shall be replaced with the Amended Articles
attached hereto as Exhibit 9.4.6(a)(A) and 9.4.6(b)(A),
9.4.7 Resolutions of the Board of Directors of the Company, of
Zuckerman and of Tawton approving the Company's and the
Sellers' execution of this Agreement and any other document
contemplated hereby, the sale and transfer of the Purchased
Shares against payment of the Purchase Price, all in the form
attached hereto as Exhibit 9.4.7.
9.4.8 The Company shall deliver to the Purchaser a duly executed
Management Agreement in the form attached hereto as Exhibit
9.4.8.
9.4.8A Bank Hapoalim B.M. shall have approved this Agreement and the
transactions contemplated therein, in a form reasonabley
satisfactory to the Purchaser.
9.4.9 The Sellers shall provide the Purchaser with approvals of
exemption from tax deduction at source. The Purchaser shall
provide the Sellers with the necessary assistance, including
a power-of-attorney, to deal with this issue on behalf of the
Purchaser.
9.4.10 Yoav had signed and executed the pledge agreement attached as
Exhibit 4B.2.
9.4.11 Tawton shall register the Purchaser as the owner of the
Purchased Shares in it's shareholders' register.
9.4.12 The Company and Yoav shall have executed a loan agreement in
accordance with the provisions of Section 11.3 below in the
form attached as Exhibit 9.4.12 hereto.
9.4.13 Yoav shall have transferred his one ordinary share in the
Company to Zuckerman as evidenced by the executed share
transfer deed in the form attached as Exhibit 9.4.13 hereto
and by the signed letter to the Israeli Companies Registrar
in the form attached as Exhibit 9.4.13A hereto.
9.4.14 A letter from Elscint Ltd. specifying that the aggregate
amount of debts of the Company, Zuckerman and Yoav to the
Elscint Group as defined in Section 4.21 above, as of
September 30, 2000, does not exceed the amount of two million
three hundred and fifty thousand US Dollars ($2,350,000) (not
including interest) .
9.4.15 Resolution of the Board of Directors of the Company amending
the Board resolution dated November 2, 2000 in a way that the
release from liability and indemnification specified in that
resolution shall not apply to Yoav's representations,
warranties and undertakings included in this Agreement , in a
form attached as Exhibit 9.4.15 hereto.
9.5 No Legal Proceedings. No Person shall have commenced or taken
substantial steps towards any legal proceeding challenging or
seeking the recovery of a material amount of damages in connection
with the transactions contemplated by this Agreement or seeking to
prohibit or limit the exercise by Purchaser of any material right
pertaining to the Company's and/or Zuckerman's and/or Tawton's
assets or liabilities, unless disclosed in this Agreement.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS AND THE COMPANY
------------------------------------------------------------------
The obligations of the Sellers and the Company to consummate the
transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of the following conditions
which the Purchaser hereby undertakes to fulfill, any or all of which may
be waived in writing by the Company and/or the Sellers:
10.1 Accuracy of Representations. Each of the representations and
warranties made by Purchaser in this Agreement and in each of the
other agreements and instruments delivered to the Company or to the
Sellers in connection with the transactions contemplated by this
Agreement shall have been accurate in all material respects as of
the date of this Agreement, and shall be accurate in all material
respects as of the Closing Date as if made on the Closing Date.
10.2 Performance of Covenants. All of the covenants and obligations that
Purchaser is required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all
respects.
10.3 Consents. All Consents required to be obtained in connection with
the transactions contemplated by this Agreement shall have been
obtained and shall be in full force and effect.
10.4 Agreements and Documents. The Company and the Sellers shall have
received the following agreement and documents, each of which shall
be in full force and effect:
10.4.1 A Certificate executed by an Officer of the Purchaser
certifying that each of the representations and warranties
set forth in Section 5 are accurate in all material respects
as of the Closing Date as if made on the Closing Date and
that the conditions set forth in Sections 10.1, 10.2 and 10.3
have been duly satisfied in the form attached as Exhibit
10.4.1 to this Agreement (the "Purchaser Closing
Certificate"); and
10.4.2 Resolutions of the Board of Directors of the Purchaser
approving the Purchaser's execution of this Agreement and any
other document contemplated hereby, the sale and transfer of
the Purchased Shares against payment of the Purchase Price,
all in the form attached hereto as Exhibit 10.4.3.
10.4.3 An opinion, dated the Closing, of Efrati, Galili & Co.,
counsel to the Purchaser, in the form of Exhibit 10.4.3
attached hereto.
10.5 No Legal Proceedings. No Person shall have commenced any Legal
Proceeding challenging or seeking the recovery of a material amount
of damages in connection with the transactions contemplated by this
Agreement or seeking to prohibit or limit the exercise by Purchaser
of any material right pertaining to its ownership of stock of the
Company.
11. POST-CLOSING COVENANTS
----------------------
11.1 General. If at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement,
each of the parties will take such further action, including the
execution and delivery of such further instruments and documents as
the other party reasonably may request, all at the sole cost and
expense of the requesting party (If the requesting party is Yoav,
the Company or Zuckerman, as the case may be, shall bear such costs
and expenses).
11.2 Confidentiality. The Parties acknowledge, undertake and agree that
all documents and information (collectively, the "Confidential
Information") received from the Company, the Sellers, or Yoav, or
from the Purchaser, in connection with this Agreement or the holding
of the Company's Shares, directly or indirectly, will be used solely
for the purpose of furthering the business of the Company and that
such Confidential Information will be treated by Parties and their
respective affiliates, directors, officers, employees, agents,
accountants, representatives or advisors (collectively the
"Representatives") as secret and confidential; provided, however,
that the term "Confidential Information" shall not include any
information that (i) was in the lawful possession of the receiving
Party or its representatives receiving such information at the time
of the disclosure, as can be established by written evidences, (ii)
was in the public domain at the time of disclosure, or (iii) becomes
part of the public domain after the time of disclosure through no
act or omission by the Party to whom the disclosure was made.
11.3 Shareholder Loan. Within fourteen days following the Closing, Yoav
shall provide the Company with a loan in the amount of $600,000. The
loan shall bear interest at an annual rate of Libor + 2% . The
Company shall repay the loan plus applicable interest in its
entirety no later than December 31, 2001, provided that the Company
shall sell at least 100 systems in year 2001. In the event that the
Company sells between 50 and 99 systems in year 2001, then a
percentage of the loan and interest shall be repaid according to the
following formula: [(# of systems sold - 50) / 50] x (100). For
illustration purposes, if 75 units are sold, Yoav would be entitled
to receive 50% of the Loan - [(75-50) / 50] x 100 = 50%. In the
event that less than 40 systems are sold by the Company in the year
2001, the loan and interest shall not be repaid, and Yoav shall be
required to invest an additional $250,000 in the Company in
accordance with one of the following three options which Yoav shall
decide upon in his complete discretion: (a) a cash investment of
$250,000 ; (b) a transfer of a proportionate share of his shares in
the Company to the Purchaser according to a valuation of the Company
of $5,000,000, i.e., a transfer of 5% of his shares; or (c) some
combination of options (a) and (b). Should Yoav decide to transfer
shares to the Purchaser, then he shall be entitled to reacquire
these shares from the Purchaser at any time within 12 months from
the date of the transfer at a per share price equal to per share
price plus an annual interest of Libor + 2% on the day these shares
were transferred to the Purchaser. For illustration purposes, should
Yoav transfer 5% of his shares to the Purchaser, Yoav would be
entitled to reacquire these shares for a payment of $250,000. In no
event shall the Purchaser ownership interest in the Company be
diluted on account or as a result of the shareholder's loan
specified in this Section 11.3. As security for Yoav's undertaking
to provide the US$ 600,000 loan as set forth above, Yoav shall
pledge all of his Shares in Zuckerman, according to the terms and
conditions set forth in the Pledge Agreement, Exhibit 4B.2 hereto.
12. INDEMNITY
---------
12.1 Survival of Representations. All of the representations and
warranties of the Sellers, the Company, Yoav, and the Purchaser
contained in Section 4 and Section 5 of this Agreement shall survive
the Closing hereunder and continue in full force and effect until
the seventh anniversary of the Closing, subject to any applicable
statutes of limitations.
12.2 Indemnification by the Company, Yoav and Sellers. Each of the
Sellers, Yoav and the Company hereby, individually, agree to
indemnify and hold harmless the Purchaser and its directors,
officers, and Affiliates against any losses, liabilities, damages
and expenses including but not limited to counsel fees and
litigation expenses, as and when incurred arising out of, based
upon, or in connection with any material breach of any
representation or warranty made by it which is contained in Section
4 of this Agreement. Damages recoverable with respect to any breach
of any representation or warranty made in this Agreement shall not
exceed the Purchase Price plus the Guarantees Amount in the
aggregate minus any profit distribution made to the Purchaser and
minus any amount of the Guarantees Amount that was released to the
Purchaser . Notwithstanding the above said, neither the Company nor
the Sellers nor Yoav shall be required to indemnify the Purchaser
unless and until the amount of such Indemnification payment exceeds
$25,000 (twenty five thousand US dollars) in the aggregate per each
calendar year from the date of this agreement (the "Cushion").
However, if the indemnification amount exceed the Cushion, the
Purchaser will have the right to indemnification for those amounts
exceeding the Cushion. Notwithstanding anything to the contrary
herein, it is hereby agreed that Yoav and/or Cowan shall not be
entitled to be indemnified by the Company or Zuckerman for any loss
liability, damage and expenses sustained by Yoav and/or Cowan as a
result of a breach of any representation or warranty made by the
Company and/or Zuckerman contained in this Agreement. This Section
shall not derogate from any right and/or remedy of the Purchaser in
accordance with the applicable law.
12.3 Indemnification by the Purchaser. The Purchaser hereby agrees to
indemnify and hold harmless Yoav and/or Cowan against any losses,
liabilities, damages and expenses including but not limited to
counsel fees and litigation expenses, as and when incurred arising
out of, based upon, or in connection with any material breach of any
representation or warranty of the Purchaser contained in this
Agreement. Damages recoverable with respect to any breach of any
representation or warranty made in this Agreement shall not exceed
$650,000 in the aggregate. Notwithstanding the above said, the
Purchaser shall not be required to indemnify Yoav and/or Cowan
unless and until the amount of such Indemnification payment exceeds
$10,000 (ten thousand US dollars) in the aggregate per each calendar
year from the date of this agreement (the "Cushion"). However, if
the amount exceeds the Cushion, Yoav and/or Cowan will have the
right to indemnification for those amounts exceeding the Cushion.
This Section shall not derogate from any right and/or remedy of Yoav
and/or Cowan in accordance with the applicable law.
12.4 Notice of Claim. A Party seeking indemnification (a "Protected
"Party") shall provide the indemnifying party with prompt notice of
any claim asserted or threatened against the Protected Party on the
basis of which the Protected Party intends to seek indemnification
as provided for in this Section 12. However, the obligations of the
Protected Party under this Section 12 shall not be conditional upon
receipt of any such notice and no delay on the part of the Protected
Party in providing notice shall relieve the indemnifying Party from
any obligation hereunder except if such delay prejudices the
indemnifying party.
12.5 Other Remedies. The foregoing indemnification provisions are in
addition to, and not in derogation of, any statutory, equitable, or
common law remedy any Party may have with respect to the other
Parties to this Agreement.
13. THE CLOSING
-----------
The Closing shall take place on January 31, 2001, at the offices of
Efrati, Galili & Co., Wissotsky 6, Tel Aviv, at 11:00 a.m. or on any
other date or place agreed to in writing by the parties (the "Closing").
14. MISCELLANEOUS
-------------
14.1 Expenses. The Company shall reimburse the Purchaser and Zuckerman
upon the Closing of their accounting and legal fees and other
expenses incurred with respect to this Agreement and to the related
agreements and transactions contemplated hereby; provided, however,
that (i) such reimbursement to the Purchaser does not amount to a
sum greater than $40,000 (forty thousand U.S. dollars) plus V.A.T.
charges; and (ii) such reimbursement to Zuckerman does not amount to
a sum greater than $40,000 (forty thousand U.S. dollars) plus V.A.T.
charges in the aggregate.
All the expenses specified in this Section 14.1 shall be paid by the
Company to the Purchaser and to Zuckerman in twelve (12) monthly
equal installments, with the first payment to be made one year
following the Closing.
14.2 Entire Agreement. This Agreement, including its Exhibits which are
an integral part thereof, constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements between the parties thereto.
14.3 Waiver. Omission or delay on the part of any party in requiring due
and punctual fulfillment of any of the obligations of the other
parties hereunder shall not be deemed a waiver of such obligation,
or any other obligations, present or future, or of any resulting
remedy for the breach thereof.
14.4 Costs and Expenses. Save as otherwise expressly provided herein, all
costs, taxes, levies, fees and charges of any kind whatsoever
incurred pursuant to this Agreement will be borne by the party
incurring same.
14.5 Law and Jurisdiction. This Agreement shall be governed by and
construed according to the laws of the State of Israel, without
regard to the conflict of laws provisions thereof. Any dispute
arising under or in relation to this Agreement shall be resolved in
the competent court in Tel Aviv, Israel, and each of the Parties
hereby submits irrevocably to the exclusive jurisdiction of such
court.
14.6 Headings. The headings of the sections of this Agreement are not a
part of and are not intended to govern, limit or aid in the
construction of any term or provision hereof.
14.7 Assignment. None of the rights, privileges, or obligations set forth
in, arising under, or created by this Agreement may be assigned or
transferred without complying with the limitations on transfers of
shares imposed by the Amended Articles, with the exception of: (i)
assignments by the Purchaser or the other shareholders of the
Company to Permitted Transferees (as defined in the Amended Articles
of the Company) of shares of such Purchaser or other shareholder, as
applicable; (ii) assignments and transfers from the Purchaser or
other shareholder to any other entity which controls, is controlled
by or is under common control with, such Purchaser or shareholder;
provided however, that no such assignment or transfer shall become
effective unless each such transferee has provided the Company and
the Purchaser with a confirmation in writing that it is bound by all
terms and conditions of this Agreement as if it were an original
party to it. The Company shall not be entitled to assign any of its
rights or obligations hereunder (other than as provided for herein),
absent prior written consent of the Purchaser.
14.8 Amendments and Waivers. No waiver by a party or failure to enforce
any of its rights hereunder shall be construed as a waiver to
enforce other rights or the same right on future occasions. No
amendment, modification, or waiver of any of the provisions of this
Agreement shall be effective unless in writing and signed by the
party against whom such amendment, modification or waiver is sought
to be enforced.
14.9 Notices. Notices to be served hereunder shall be in writing as
hereinafter provided and shall be served upon the parties at the
addresses set forth below. Notices served by registered mail shall
be deemed served on the day of actual delivery by the addressee's
receipt, or at the expiration of the 7 (seven) days after the date
of mailing, whichever is earlier. Notices served by telex, telegram,
telecopier or cable shall be deemed to be in writing and to have
been served within 12 (twelve) hours (in the case of telex or
telecopier) and within 24 (twenty-four) hours (in the case of
telegrams or cables) or dispatch.
14.10 Addresses of the Parties. The addresses of the parties for the
purposes of this agreement are as follows:
If to Purchaser :
Aryt Industries Ltd
Haplada 7, POB 696, Or-Yehuda 60257
Tel: 03-5388666; Fax: 03-5339223
Att: Yoav Bar-Nes
with a copy to (which will not constitute notice):
Efrati, Galili & Co.
6 Wissotsky Street , Tel Aviv 62338
Att: Omer Ben-Zvi, Adv.
If to the Company:
ElscinTec Systems Ltd.
Advanced Technology Center
P.OB. Matam, Haifa 31905
Att: Yoav Zuckerman
with a copy to (which will not constitute notice):
Law Offices of Shimshon Halpern, J.D. Yoav Zuckerman
Jacoby House, P.O. Box 2987 & Fax: 04-824-3680
Even Yehuda 40500
Att: Shimshon Halpern, Adv.
Fax: 09-899-5964
If to Yoav:
Yoav Zuckerman
Fax: 04-824-3680
with a copy to (which will not constitute notice):
Law Offices of Shimshon Halpern, J.D.
Jacoby House, P.O. Box 2987
Even Yehuda 40500
Att: Shimshon Halpern, Adv.
Fax: 09-899-5964
If to Tawton:
-------------
With a copy to:
---------------
with a copy to:
If to Zuckerman:
Y. Zuckerman Properties (1999) Ltd.
c/o
Fax:
with a copy to (which will not constitute notice):
Law Offices of Shimshon Halpern, J.D. Yoav Zuckerman
Jacoby House, P.O. Box 2987 & Fax: 04-824-3680
Even Yehuda 40500
Att: Shimshon Halpern, Adv.
Fax: 09-899-5964
14.11 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held
to be prohibited by or invalid under applicable law, such provisions
will be effective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or
the remaining provisions of this Agreement.
14.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Share Purchase
Agreement on the date first written above:
- ------------------------------------------------- -----------------------------------------------------
Elscintec Systems Ltd. Y. Zuckerman Properties (1999) Ltd.
By: /s/ Yoav Zuckerman By: /s/ Yoav Zuckerman
------------------- -------------------
Title: CEO Title: CEO
------------------- -------------------
- ------------------------------------------------- -----------------------------------------------------
Tawton Ltd. Aryt Industries Ltd.
By: /s/ Schmuel Bachar
---------------------
By: /s/ John A. Cowan Title: ______________________
-------------------
Title: Director
--------------------
- ------------------------------------------- ------------------------------------------------------
John A. Cowan Mr. Yoav Zuckerman
/s/ John A. Cowan /s/ Yoav Zuckerman
- -------------------- -------------------