EXHIBIT 10.6
SHARE PURCHASE AGREEMENT
This Agreement (the "AGREEMENT") is made as of November 2, 2004, by and
among the persons and entities whose names and addresses are set out in SCHEDULE
A hereto (collectively the "SELLERS"); B.O.S Better Online Solutions Ltd., an
Israeli company No. 520042565, having its address at Beit Rabin, Teradyon
Industrial Park, Misgav 20179, Israel, or an affiliate thereof (the
"PURCHASER"); and Odem Electronic Technologies 1992 Ltd., an Israeli company
No.51-1687402, having its address at 20 Frieman Jacob Street, Rishon Le-Zion,
75358, Israel (the "COMPANY").
W I T N E S S E T H :
WHEREAS, the Sellers are the owners of 75% of the issued and outstanding
capital share in the Company; and
WHEREAS, the Sellers wish to sell to the Purchaser, in the aggregate, 137
ordinary shares of the Company, nominal value NIS 0.1 each (the "COMPANY
SHARES") reflecting 51.11%, as of Closing (as defined below), of the issued and
outstanding shares in the Company; and
WHEREAS, The Purchaser wishes to acquire such Company Shares in the Company
in accordance with the terms of this Agreement; and
WHEREAS, the Board of Directors of the Company agrees to the transfer of
the Company Shares, as set forth below;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties hereby agree as follows:
1. SALE AND PURCHASE OF SHARES.
1.1 GENERAL. Each Seller, severally and not jointly, listed in SCHEDULE A
shall sell, at the Closing, to Purchaser and the Purchaser shall
purchase, at the Closing, all rights, title and interest in each
Seller's Sold Shares (as defined below) on the terms of this
Agreement, free from all claims, liens, charges, pledges, security
interests, encumbrances and third party rights of any kind (the
"SECURITY INTERESTS"), other than as currently existing under the
Articles (as defined below), as shall be amended by the Amendment (as
defined below), together with all rights, preferences and privileges
attaching to, or conferred by, them. "SOLD SHARES" shall mean, in
relation to a Seller, the Company Shares set forth opposite such
Seller's name in SCHEDULE A.
1.2 CONSIDERATION. Subject to Closing, the Purchaser shall, in
consideration for the purchase from each Seller of the Sold Shares:
(i) issue to the relevant Seller ordinary shares nominal value NIS
4.00 each, of the Purchaser, as set forth in SCHEDULE A (the
"CONSIDERATION SHARES"), reflecting a share price of $3.08 per
Consideration Share and (ii) pay to the relevant seller cash in the
amount set forth in SCHEDULE A hereto (the "CASH PAYMENT").
2. CLOSING OF SHARE EXCHANGE.
2.1 CLOSING. The closing of the sale and purchase of the Sold Shares of
each Seller listed in SCHEDULE A shall take place at a closing (the
"CLOSING"), which will be held at the offices of Amit, Pollak, Matalon
& Ben-Naftali, Erez & Co., Advocates and Notary, NYP Tower, 19th
Floor, 17 Yitzhak Sadeh St., Tel-Aviv 67775 fourteen (14) days from
the date hereof or on such other date, time and place as the Purchaser
and the Sellers shall mutually agree, subject to the fulfillment to
the Purchaser's satisfaction, or waiver of the conditions detailed in
Section 10 below, and subject further to the fulfillment to the
Sellers' satisfaction, or waiver, of the conditions detailed in
Section 11 below.
2.2 TRANSACTIONS AT CLOSING. At the Closing, the following transactions
shall occur, which transactions shall be deemed to take place
simultaneously and no transaction shall be deemed to have been
completed or any document delivered until all such transactions have
been completed and all required documents delivered:
2.2.1 The Sellers and the Company shall deliver, or procure the
delivery, to the Purchaser of the following documents:
a. Duly executed share transfer deeds with respect to the
transfer of all the Sold Shares to the Purchaser;
b. A true and correct copy of resolutions of the Board of
Directors of the Company, approving this Agreement and the
transactions contemplated hereby;
c. A validly executed share certificate covering the Sold
Shares, issued in the name of the Purchaser;
d. A certified copy of the Company's Shareholders Register,
updated to reflect the transfer of all of the Sold Shares to
the Purchaser. Promptly after the Closing, the Company shall
make all filings and registrations as may be necessary to
reflect such transfer and shall deliver copies thereof to
the Purchaser.
e. A certificate, duly executed by an executive officer of the
Company, dated as of the date of the Closing, confirming
that the representations and warranties made in Section 4
were true and correct in all material respects when made and
are true and correct in all material respects on and as of
the Closing Date, as though made on the Closing Date, and
that the Company has performed in all material respects all
obligations required under this Agreement to be performed by
it on or before the Closing;
f. Certificates of each of the Sellers dated as of the date of
the Closing, confirming that the representations and
warranties made in Section 3,4 and 5 were true and correct
in all material respects when made and are true and correct
in all material respects on and as of the Closing Date, as
though made on the Closing Date.
g. Signed opinion of Kantor & Co. counsel to the Company and
Sellers in the form attached hereto as EXHIBITS 2.2.1(G) ,
dated as of the date of the Closing and addressed to the
Purchaser.
h. Resignation letters signed by Ms. Sara Neuhof, resigning
from the Board of Directors of the Company, effective as of
the Closing.
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i. A duly executed employment agreement between Jacob Neuhof
and the Company in the form attached as EXHIBIT 2.2.1(I)
hereto.
j. A true and correct copy of resolutions of the Company's
shareholders, properly and duly adopted resolving to amend
the Company's current articles of association (the
"ARTICLES"), in the form attached hereto as EXHIBIT 2.2.1(J)
(the "AMENDMENt"). The Amendment shall include the increase
of the size of the Board of Directors to at least 5
directors and revisions to Article 32 and 32A of the
Articles, as more fully provided in EXHIBIT 2.2.1(J).
k. A a copy of a duly completed notice of the abovementioned
amendment to the Articles to be filed with the Israeli
Registrar of Companies immediately following the Closing, in
the form attached as EXHIBIT 2.2.1(K).
l. A waiver executed by Mr. Avidan Zelichovski ("Zelichovski"),
waiving any and all rights to receive options in the
Company. Purchaser shall issue to Zelichovski 73,000
ordinary shares of the Purchaser and grant Zelichovski
options to receive 73,000 ordinary shares of the Purchaser
(the "BOS OPTIONS"). The BOS options shall be issued under
the Purchaser's Stock Option Plan and pursuant to
Purchaser's standard Stock Option Agreement.
m. Duly Executed Stock Option Agreement by Zelichovski with
respect to the BOS Options, in the form attached hereto as
EXHIBIT 2.2.1(M) (the "AVIDAN OPTION AGREEMENT").
n. Waivers executed by Telsys Ltd. ("TELSYS"), waiving any and
all rights they may have with respect to the transfer of the
Sold Shares at the Closing, in the form attached hereto as
EXHIBIT 2.2.1(N);
o. A waiver executed by Seller, waiving any and all rights it
may have with respect to the sale and transfer of the
Company Shares at the Closing from Telsys to Purchaser, in
the form attached as EXHIBIT 2.2.1(O).
p. Copies of correspondence with Bank Leumi (the "BANK") with
respect to the continuance, post Closing, of the existing
credit facility extended by the Bank to the Company,
attached as EXHIBIT 2.2.1(P).
q. A copy of an agreement, effective as of the Closing,
terminating each of the agreement and memorandum entered
into between the Sellers and Telsys on September 27, 2000,
in the form attached as EXHIBIT 2.2.1(Q).
2.2.2 The Purchaser shall deliver to the Sellers the following
documents:
A. True and correct copies of resolutions of the Purchaser's
Board of Directors approving the transaction contemplated
hereby, the issuance of the Consideration Shares and the
transfer of the Cash Payment to the Sellers in accordance
with Exhibit A hereto, against the transfer to the Purchaser
of the Sold Shares, free and clear from any Security
Interest;
B. Validly executed share certificates covering the
Consideration Shares, issued in the names of the applicable
Sellers;
C. A certified copy of the Purchaser's Shareholders Register,
updated to reflect the issuance of all of the Consideration
Shares to the applicable Sellers. Promptly after the
Closing, the Purchaser shall make all filings and
registrations as may be necessary to reflect such issuance
and shall deliver copies thereof to the Sellers.
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D. A certificate duly executed by an executive officer of the
Purchaser, dated as of the date of the Closing, confirming
that the representations and warranties made by the
Purchaser in Section 6 were true and correct when made and
are true and correct in all material respects on and as of
the Closing Date, as though made on the Closing Date.
E. Avidan Option Agreement duly executed by Purchaser in the
form attached hereto as EXHIBIT 2.2.1(M);
F. A copy of all of the approvals and consents of any
governmental authority or agency, including, without
limittion, the OCS, the Investment Center (as such terms are
defined in Section 5.4 below) and the Laurus Master Fund
Ltd., needed in order to enter into and/or consummate the
transactions contemplated hereby.
2.2.3 The Purchaser shall commence the transfer of the Cash Payment to
the Sellers by wire transfer in immediately available funds to
the account of the Sellers, the details of which appear in
EXHIBIT 2.2.3 hereto. Such payment shall be made in U.S. dollars
.
2.2.4 The Purchaser shall deliver to the Company a written notice of
the appointment of three directors to the Company's Board of
Directors.
3. REPRESENTATIONS AND WARRANTIES OF EACH SELLER.
Each Seller, severally and not jointly, represents and warrants to the
Purchaser as follows:
3.1 It is the holder and legal owner of all rights, titles and interests
in and to the Sold Shares set forth opposite its name in SCHEDULE A,
free from all Security Interests, other than as set forth in the
Company's Articles, as shall be amended by the Amendment, together
with all rights, preferences and privileges attaching to, or conferred
by, such Sold Shares;
3.2 Other than as set forth in SCHEDULE 3.2, such Seller is not entitled
to purchase, receive or otherwise acquire from the Company any
additional securities of the Company, including without limitation
securities exercisable or convertible into securities of the Company.
3.3 The execution and delivery of this Agreement (and the other documents
contemplated hereby) by such Seller does not, and the consummation of
the transactions contemplated hereby and thereby will not:
(a) constitute a breach of any applicable law, rule or regulation of
any government applicable to such Seller;
(b) require the consent or agreement of any court, governmental body
or entity that has not been, or will not have been, obtained by
such Seller prior to the Closing;
(c) violate any material contract, agreement, indenture, mortgage,
instrument, lease, license, arrangement, or undertaking of such
Seller;
(d) result in the creation or enforcement of any Security Interest
upon the Sold Shares held by such Seller;
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(e) to the best of knowledge, violate or conflict with any judgment,
order, injunction, decree, or ruling of any court or governmental
authority to which the Seller is subject
3.4 It has, and will have at the Closing, the right to sell and transfer,
or procure the sale and transfer of, the full legal and beneficial
interest in its respective Sold Shares to the Purchaser on the terms
set out in this Agreement, free from all Security Interests, subject
to such consents and approvals contemplated hereby and which shall
have been obtained by the Closing.
4. REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY. The Company and each
Seller, severally and jointly, hereby represent and warrant to the
Purchaser as follows:
4.1 ORGANIZATION. Each of the Company and its subsidiary, Ruby-Tech, Inc.
("RUBY-TECH") is a private company, duly incorporated and validly
existing under the laws of its state of incorporation, and has full
corporate power and authority to own, lease and operate its properties
and assets and to conduct its business as currently being conducted
and as currently proposed to be conducted. The Company has all
requisite power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. A copy of the
Company's Certificate of Incorporation and Articles as in effect
immediately prior to the Closing are attached hereto as SCHEDULE 4.1.
Each of the Company and Ruby-Tech has all permits, licenses, and any
similar authority necessary for the conduct of its business as
currently being conducted by it, and the Company believes that it can
obtain, without undue burden or expense, all permits, licenses, and
any similar authority necessary for the conduct of its and Ruby-Tech's
business as planned to be conducted. Each of the Company and Ruby-Tech
is not in material default under any of its current franchises,
permits, licenses, or other similar authorities. Each of the Company
and Ruby-Tech has not taken any action or failed to take any action,
which such action or failure would preclude or prevent the Company or
Ruby-Tech, as the case may be, from conducting its business after the
Closing in the manner heretofore conducted, or as currently proposed
to be conducted.
4.2 SHARE CAPITAL.
4.2.1 The Company's authorized share capital as of the date hereof is
NIS 3,000,000. On the date hereof and immediately after the
Closing, such authorized share capital is and will be divided
into 30,000,000 Ordinary Shares, of which 268 Ordinary Shares are
issued and outstanding.
4.2.2 All issued and outstanding share capital of the Company has been
duly authorized and validly issued, is fully paid and
non-assessable, free and clear of any Security Interest.
A capitalization table showing the division of the issued and
outstanding share capital of the Company immediately prior to the
Closing (on a Fully Diluted Basis, as defined below) is attached as
SCHEDULE 4.2.2. Unless specifically specified otherwise in such
Schedule, the shareholders identified in such Schedule are, to the
best of knowledge, the shareholders of the Company immediately prior
to the Closing, and are the lawful record owners of all of the issued
and outstanding share capital of the Company. As used in this
Agreement, the expression "on a Fully Diluted Basis" means (i) all
issued and outstanding shares of the Company, including all Ordinary
Shares of the Company, and (ii) all options, warrants, convertible
debentures and other rights to acquire or purchase Ordinary Shares or
exchangeable for Ordinary Shares or other shares deemed exercised, and
(iii) all options under any incentive plan and shares reserved for
issuance to the Company's existing and future employees, consultants
and directors, deemed granted and exercised.
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4.2.3 Except as set forth in SCHEDULE 4.2.2 or in the Company's
Articles, there are no outstanding warrants, options or other
rights to subscribe for, purchase or acquire from the Company or
from Ruby-Tech any shares or other securities of the Company, and
there are no agreements or undertakings providing for the
issuance of, or the granting of the rights to acquire from the
Company or from Ruby - Tech any shares or other securities of the
Company or Ruby-Tech or under which the Company or Ruby-Tech is
or may become obligated to issue any of its shares or securities.
4.2.4 The Sold Shares, when issued to the Sellers were duly
authorized, validly issued, fully paid, non-assessable, and free
of any preemptive rights, and when transferred in accordance with
this Agreement will have the rights, preferences, privileges and
restrictions set forth in the Company's Articles, as amended by
the Amendment.
4.2.5 Except as set forth in SCHEDULE 4.2.5, and to the best of
knowledge, there are no shareholders agreements, voting
agreements, registration rights agreements or any other
agreements or undertakings relating to the share capital of the
Company.
4.2.6 Except as set forth in SCHEDULE 4.2.6, since its incorporation,
there has been no declaration or payment by the Company of
dividends, or any distribution by the Company of any assets of
any kind to any of its shareholders in redemption of, or as the
purchase price for, any of the Company's securities.
4.2.7 The Company is not under any obligation to register for trading
on any securities exchange any of its currently outstanding
securities or any of its securities, which may hereafter be
issued.
4.3 SUBSIDIARIES. SCHEDULE 4.3 lists all of the subsidiaries of the
Company, including their respective places of incorporation. The
Company's share ownership in each Subsidiary is described in SCHEDULE
4.3, and such shares are held by the Company free and clear of all
Security Interests. For the purpose of this Section, the term
"Subsidiary" means any corporation or other business entity of which
the Company owns all of its outstanding capital stock. Except as
listed in SCHEDULE 4.3, the Company does not own shares, equity or
other rights in any other company or corporation (in any
jurisdiction), is not a partner in any partnership (general or
limited, incorporated or unincorporated), and is not a party to any
joint venture activity.
4.4 BOARD OF DIRECTORS AND OFFICERS. A list of the directors and officers
of the Company and of Ruby-Tech is included in SCHEDULE 4.4. Except as
set forth in SCHEDULE 4.4, neither the Company nor the Sellers, or to
the best of knowledge, Telsys, are parties to any agreement,
obligation or commitment with respect to: (i) the election of any
individual or individuals to the Board, (ii) any voting agreement or
other arrangement among the Company's shareholders, or (iii) any
compensation to be provided to any of the Company's directors or
officers.
4.5 RECORDS. The minute books of the Company and of Ruby-Tech, which have
been provided to the Purchaser, contain accurate and complete copies
of the minutes of every meeting of the Company's and Ruby-Tech's
respective shareholders and Board of Directors (and any committee
thereof, if any). No resolutions have been passed, enacted, consented
to or adopted by the Board of Directors (or any committee thereof) or
by the shareholders of the Company of or Ruby-Tech, except for those
contained in such minute books. The corporate records of the Company
and of Ruby-Tech are complete and accurate in all material respects.
All registers required to be kept by the Company under the provisions
of the Companies Law - 1999 are complete, true and accurate. All
returns, particulars, resolutions and other documents required to be
filed with or delivered to the Registrar of Companies in respect of
the Company have been properly filed or delivered.
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4.6 FINANCIAL STATEMENTS.
4.6.1 SCHEDULE 4.6.1 sets forth a true, correct and complete copy of
the audited financial statement for the fiscal year ended
December 31, 2003 and of reviewed financial statements as of June
30, 2004 (collectively, the "COMPANY FINANCIAL STATEMENTS"). The
Company Financial Statements have been prepared in conformity
with the generally accepted accounting principles ("GAAP"),
applied on a consistent basis throughout the periods indicated
and with each other. The Company Financial Statements are
consistent in all material respects with the books and records of
the Company and fairly present the position of the Company as of
the dates thereof and the results of operations and cash flows of
the Company for the periods shown therein, subject, in the case
of the unaudited financial statements only, to normal and
recurring year end adjustments. Nothing has come to the attention
of the Company or the Seller since such respective dates that
would indicate that such financial statements are not true and
correct in all material respects as of the dates thereof. The
Company shall use its best efforts to promptly provide Purchaser
with its financial statements for the fiscal years 2002 and 2003,
reconciled to U.S. GAAP.
4.6.2 Except as set forth in SCHEDULE 4.6.2, during the period
commencing on December 31, 2003 and ending on the date hereof,
there has not been any of the following :
4.6.2.1 any material adverse change in the financial condition,
results of operations, assets, liabilities or business of
the Company or of Ruby-Tech;
4.6.2.2 any liability or obligation of any nature whatsoever
incurred by the Company, other than (i) the Company
Liabilities (as defined in Section 4.11.2), and (ii)
obligations under contracts and commitments incurred in the
ordinary course of business and are not required under GAAP
to be reflected in the Company Financial Statements, which,
individually or in the aggregate, the Company represents,
are not material to the financial condition or operating
results of the Company;
4.6.2.3 any material asset or property of the Company or
Ruby-Tech made subject to a Security Interest of any kind;
4.6.2.4 any waiver of any material right of the Company or
Ruby-Tech, or any cancellation of any material debt or claim
held by the Company or Ruby-Tech;
4.6.2.5 any payment of dividends on, or other distributions with
respect to, any shares of the capital stock of the Company,
or any agreement or commitment therefor;
4.6.2.6 any issuance of any shares of any class by the Company;
4.6.2.7 any sale, assignment, transfer or lease of any tangible
or intangible assets (including intellectual property
rights) of the Company, except for sales, assignments,
transfers or leases of assets which are not material
(individually or in the aggregate) to the Company's
business, in the ordinary course of business;
4.6.2.8 any loan by the Company or Ruby-Tech to any officer,
director, employee, consultant or shareholder of the Company
or Ruby-Tech or any agreement or commitment therefor other
than routine travel or loans made to employees who are not
directors or shareholders of the Company, in the ordinary
course of business;
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4.6.2.9 any material damage, destruction or loss (individually or
in the aggregate) (whether or not covered by insurance)
affecting the assets, property or business of the Company or
of Ruby-Tech;
4.6.2.10 any substantial change in the accounting methods,
practices or policies followed by the Company;
4.6.2.11 any material change or amendment to a material contract
or arrangement by which the Company or Ruby-Tech or any of
their respective assets or properties is bound or to which
the Company, Ruby-Tech or any of their respective assets is
subject;
4.6.2.12 any satisfaction or discharge of any claim or Security
Interest except in the ordinary course of business.
4.6.2.13 any material change in any compensation arrangement or
agreement with any director, officer, employee, consultant,
advisor or contractor of the Company or Ruby-Tech.
4.7 AUTHORIZATION; APPROVALS.
4.7.1 All corporate action on the part of the Company necessary for
the authorization, execution, delivery and performance of all its
obligations under this Agreement and for the transfer of the Sold
Shares under this Agreement has been (or will be) taken prior to
the Closing.
4.7.2 This Agreement, when executed, and delivered by the Company and
by each of the Sellers, shall constitute the valid and legally
binding obligation of the Company and of each of the Sellers,
enforceable against the Company or each Seller, as the case may
be, in accordance with its terms. No consent, approval, order,
license, permit, action by, or authorization of or from any
person or entity or filing with any governmental authority on the
part of the Company or any Seller is required that has not been,
or will not have been, obtained by the Company or such Seller
prior to the Closing in connection with the valid execution,
delivery and performance of this Agreement or the transfer of the
Sold Shares to the Purchaser.
4.8 COMPLIANCE WITH LAW AND OTHER INSTRUMENTS.
4.8.1 To the best of knowledge, each of the Company and Ruby-Tech has
conducted its business in accordance with all material applicable
laws and regulations to which it is subject.
4.8.2 Each of the Company and Ruby-Tech is not (a) in a default under
its Articles or other formative documents, or (b) to the best of
knowledge, in material default under any material note,
indenture, mortgage, lease, agreement, contract, license,
research and development commitment, purchase order or other
instrument, document or agreement to which it is a party or by
which it or any of its property is bound or affected or (c) To
the best of knowledge, in material default with respect to any
existing applicable law, statute, ordinance, regulation, order,
writ, injunction, decree or judgment of any court or any
governmental department, commission, board, bureau, agency or
instrumentality, in countries in which it conducts its business,
which default would have a material adverse effect.
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4.8.3 To the Company's and Seller's best knowledge, no third party is
in default under any material agreement, contract or other
instrument, document or agreement to which the Company or
Ruby-Tech is a party. Each of the Company and Ruby-Tech is not a
party to, or named in, any order, judgment, decree or award of
any governmental authority, agency, court, tribunal or
arbitrator.
4.9 NO BREACH.
4.9.1 Neither the execution and delivery of this Agreement nor
compliance by the Company with the terms and provisions hereof
and thereof, will conflict with or result in a breach or
violation of, any of the terms, conditions and provisions of: (i)
the Articles, or other governing instruments of the Company or
Ruby-Tech, (ii) to the best of knowledge, any judgment, order,
injunction, decree, or ruling of any court or governmental
authority, in countries in which each of the Company or Ruby-Tech
conducts its business, or to which the Company or Ruby-Tech is
subject, (iii) any material agreement, contract, lease, license
or commitment to which the Company or Ruby-Tech is a party and
which would impair the ability of the Company to execute, deliver
or perform this Agreement, or (iv) to the best of knowledge,
material applicable law in countries in which the Company or
Ruby-Tech conducts its business.
4.9.2 To the knowledge of the Company and the Seller, such execution,
delivery and compliance by the Company and/or the Sellers will
not (a) give to others any rights, including rights of
termination, cancellation or acceleration, in or with respect to
any agreement, contract or commitment referred to in Section
4.9.1, or (b) otherwise require the consent or approval of any
person, which consent or approval has not heretofore been
obtained or shall be obtained by the Closing.
4.10 OWNERSHIP OF ASSETS. Except as set forth in SCHEDULE 4.10, each of the
Company and Ruby-Tech has good and marketable title to, or a valid
leasehold or license interest in its premises and in the properties
and assets used by it, located on its premises, or shown on the
Company Financial Statements, free and clear of all Security
Interests, . No asset is shared by the Company with any other person
or entity.
4.11 BANK ACCOUNTS; DEBT AND LOAN FACILITIES.
4.11.1 Details regarding the Company's and Ruby-Tech's bank accounts
and the Company's and Ruby-Tech's bank credit facilities (the
"BANK CREDIT") are as set forth in SCHEDULE 4.11.1. Except for
the bank accounts identified in SCHEDULE 4.11.1, the Company and
Ruby-Tech does not have any other bank accounts severally or
jointly with others.
4.11.2 Except for liabilities disclosed in the Company Financial
Statements, the liabilities of the Company in excess of $10,000
are set forth in SCHEDULE 4.11.2 (the "COMPANY LIABILITIES"). The
aggregate amount of the liabilities which are not reflected in
the Company Financial Statements is set forth in SCHEDULE 4.11.2.
Except as set forth in Schedule 4.11.2, there are no debts owing
by or to the Company other than the debts, which have arisen in
the ordinary course of business, nor has the Company lent any
money which has not yet been repaid.
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4.11.3 No overdraft or other financial facilities have been made
available to the Company or Ruby-Tech by any bank or financing
institution, other than in the ordinary course of business.
4.11.4 To the best of knowledge, the Company or Ruby-Tech is not in
material default under any loan agreement or any other instrument
constituting any indebtedness or under any guarantee of any
indebtedness, and there is no reason why any such indebtedness or
guarantee should be called or the liabilities thereunder
accelerated before their due date (if any) or any loan facilities
terminated.
4.12 INTELLECTUAL PROPERTY AND OTHER INTANGIBLE ASSETS.
4.12.1 GENERAL. The Company owns or has the right to use, pursuant to
a license, sublicense, agreement, or permission (all such
licenses, sublicenses, agreements and permissions, except to the
extent that they are off-the-shelf, are listed in SCHEDULE
4.12.1), all Intellectual Property (as such term is defined
below) necessary for the operation of the businesses of the
Company as currently conducted. The Company has delivered to the
Purchaser correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date).
Each item of Intellectual Property owned or used by the Company
immediately prior to the Closing hereunder will be owned or
available for use by the Company on identical terms and
conditions immediately subsequent to the Closing hereunder.
Except for readily and commercially available off-the-shelf
products, to the knowledge of the Company and the Seller, no
other Intellectual Property of any kind, owned by a third party,
that is required by the Company to conduct its business, as
currently conducted, requires, or would require, the payment of
any substantial fee or royalty.
In this Agreement, "INTELLECTUAL PROPERTY" includes inventions
and discoveries (whether or not patentable), patents, patent
applications, trademarks, service marks, trade dress, designs,
trade names, copyrightable works, copyrights, mask works, trade
secrets, techniques, proprietary processes and formulas, business
strategies, and all other proprietary rights, industrial rights
and any other similar rights, if registrable, then in such
jurisdiction registered, and all copies and tangible embodiments
thereof, or any part thereof, in whatever form or medium.
4.12.2 NO INFRINGEMENT. The Company has not misappropriated any
Intellectual Property rights of any third party. To the best of
the Company's and the Seller's knowledge, the Company has not
infringed upon, or otherwise violated, any Intellectual Property
rights of any third party. The Company has not received any
charge, complaint, claim, demand, or notice alleging any
misappropriation, infringement, or violation (including any claim
that the Company must license or refrain from using any
Intellectual Property rights of any third party) by the Company
or its personnel of any Intellectual Property rights of any third
party. To the Company's and the Seller's best knowledge, no third
party has infringed upon, misappropriated, or otherwise violated,
any Intellectual Property rights of the Company.
- 10 -
4.12.3 OWNERSHIP OF INTELLECTUAL PROPERTY. All of the Intellectual
Property which has been conceived, discovered, researched,
created and developed or is currently being researched, created
and developed by the Company's employees, consultants or agents
related to (i) the Company's technology, (ii) any invention or
work product created by or for the Company or (iii) any part of,
or any derivative work of, any of the foregoing, is owned solely
and exclusively by the Company or is available for the Company's
use pursuant to a license, agreement or other permission listed
in SCHEDULE 4.12.1, subject to the terms thereof. SCHEDULE 4.12.3
identifies each: (a) patent, trade mark and/or applications for
registration thereof, which the Company has made with respect to
any of its Intellectual Property until the date hereof; (b) each
trade name or unregistered trademark used by the Company; and (c)
any license, agreement, or other permission which the Company has
granted to any third party with respect to any of its
Intellectual Property. The Company has made available to the
Purchaser correct and complete copies of all such patents,
copyrights, trade marks, registrations, applications, licenses,
agreements, and permissions (as amended to date) and all other
written documentation evidencing ownership and prosecution (if
applicable) of each such item. With respect to each item of
Intellectual Property required to be identified as set forth in
this Section: (i) the Company possesses all right, title, and
interest in and to the item, free and clear of any Security
Interest, license, royalty, commission or similar arrangements or
other restriction; (ii) to the best of knowledge, the item is not
subject to any outstanding injunction, judgment, order, decree,
ruling, or charge; (iii) to the best of knowledge, no action,
suit, hearing, charge, complaint, claim, or demand is pending,
or, to the knowledge of the Company, is threatened which
challenges the legality, validity, enforceability, use, or
ownership of the item; (iv) except as set forth in the agreements
and other documents listed in SCHEDULE 4.12.3 , the Company has
never agreed to indemnify any person or entity for or against any
infringement, misappropriation, or other violation with respect
to the item; and (v) except as set forth in SCHEDULE 4.12.3, the
Company has not granted, and there are not outstanding, options,
licenses or agreements of any kind relating to any Intellectual
Property rights of the Company, nor is the Company a party to any
option, license or agreement of any kind with respect to any of
its Intellectual Property.
4.12.4 PROTECTION OF IP RIGHTS AND TRADE SECRETS. The Company has
taken all actions which are in its reasonable discretion
necessary and desirable to maintain and protect each item of
Intellectual Property that it owns or uses, which actions are
customary in the industry in which the Company operates. All the
confidential information of the Company is being (and has been)
continuously maintained in confidence by taking reasonable
precautions to protect and prevent its disclosure to unauthorized
parties.
4.12.5 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each
employee and consultant of the Company has executed an agreement
with the Company pertaining to confidentiality and assignment of
invention sufficient to vest in the Company good title to the
work product or result of endeavors of every employee, officer or
contractor, free of any retained rights or royalty or similar
obligations except as set forth in SCHEDULE 4.12.5. To the
Company's and Seller's best knowledge, none of the said
employees, officers or consultants is in violation thereof.
4.13 TAXES.
4.13.1 Each of the Company and Ruby-Tech has accurately prepared and
timely filed with the appropriate tax authorities all income and
payroll tax returns, V.A.T. filings and any filings that it is
required to file (the "TAX REPORTS") and has paid or made
adequate reserves for the payment of, all amounts due pursuant to
such Tax Reports. The Tax Reports are true and complete in all
material respects and accurately reflect all liability for taxes
for the periods covered thereby.
4.13.2 Except as listed in SCHEDULE 4.13.2, none of the Tax Reports
have been audited by any taxing authority and the Company or
Ruby-Tech has not been advised that any of such Tax Reports will
be so audited, and there are no waivers in effect of the
applicable statute of limitations for any period. No deficiency
assessment or proposed adjustment of income or payroll taxes of
the Company or Ruby-Tech is pending and except as listed in
SCHEDULE 4.13.2, the Company, Ruby-Tech and the Seller has no
knowledge of any proposed liability for any tax to be imposed.
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4.13.3 Each of the Company and Ruby-Tech has complied with all
applicable laws, rules and regulations relating to the payment
and withholding of taxes and has duly and timely withheld from
employee salaries, wages and other compensation and has paid over
to the appropriate taxing authorities all amounts required to be
so withheld and paid over for all periods under all applicable
laws, except where such non-compliance, which is listed in
SCHEDULE 4.13.3, would not have a material adverse effect on the
Company or on Ruby-Tech.
4.14 CONTRACTS.
4.14.1 SCHEDULE 4.14.1 lists each of the Material Agreements (as
hereinafter defined) to which the Company or Ruby-Tech is a party
(collectively, the "COMPANY MATERIAL AGREEMENTS"). A "MATERIAL
AGREEMENT" means any arrangement under which the consequences of
a default or termination could have a material adverse effect on
the Company's business, operating results, properties, or
financial condition, or which was not entered into in the
ordinary course of business, or which has a value in excess of
$30,000. There is no oral Material Agreement to which the Company
or Ruby-Tech is party, other than those reflected in SCHEDULE
4.14.1, or the Company Liabilities. True and correct copies of
all such Company Material Agreements, as amended to date, have
been delivered to the Purchaser.
4.14.2 With respect to each Company Material Agreement, and except as
set forth in SCHEDULE 4.14.1, at Closing and immediately after
Closing hereunder: (i) to the Company's and the Seller's best
knowledge, such Company Material Agreement is legal, valid,
binding, enforceable and in full force and effect, subject to and
in accordance with its terms, subject as to enforceability to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to
general principles of equity; (ii) to the Company's and the
Seller's best knowledge, neither the Company, nor Ruby-Tech or
any other party in breach or default (including with respect to
any express or implied warranty or achievement of milestones or
completion dates required under license agreements), and no event
has occurred which with notice or lapse of time or both would
constitute a breach or default or permit termination,
modification or acceleration thereunder, except for any breaches,
defaults, terminations, modifications or accelerations which have
been cured or waived; and (iii) to the Company's and Seller's
best knowledge, no party has repudiated any provision of any such
Company Material Agreement.
4.14.3 The Company's representations and warranties included in the
Company's Agreement with Yail Noa Sokhnuyot Ltd., dated May 10,
2004 are true and correct in all material respects as of the
abovementioned date.
4.15 LITIGATION. Except as listed on SCHEDULE 4.15, neither the Company nor
Ruby-Tech has received notice in which it is: (i) named or otherwise
identified in any outstanding injunction, judgment, order, decree,
writ, stipulation, ruling, or charge of any court or any governmental
agency or any arbitrator; or (ii) a party or, to its best knowledge,
threatened to be made a party to, any action, suit, proceeding,
hearing, complaint, charge or investigation of, in, or before any
court or quasi-judicial or administrative agency of any state,
municipal, or foreign jurisdiction or before any arbitrator or other
method of settling disputes or disagreements. To the best knowledge of
the Company and the Sellers, no action, suit, proceeding, hearing,
complaint, charge or investigation is to be brought or threatened
against the Company or Ruby-Tech, and the Company or Ruby-Tech does
not intend to initiate any such action, suit, proceeding, hearing,
complaint, charge or investigation. Without derogating from any of the
foregoing, except as listed on SCHEDULE 4.15, to the best of
knowledge, there is no action, suit, proceeding, or investigation
pending or currently threatened involving the prior employment of any
of the Company's or Ruby-Tech's employees, their use in connection
with the Company's business of any information or techniques allegedly
proprietary to any of their former employers, or their obligations
under any agreement with prior employers.
- 12 -
4.16 INTERESTED PARTY TRANSACTIONS.
4.16.1 Except as set forth in SCHEDULE 4.16.1, no officer, director or
holder of more than 5% of the issued and outstanding share
capital of the Company ("INTERESTED PARTY"), or any affiliate of
such Interested Party or the Company, has or has had, either
directly or indirectly, (a) an interest in any person or entity
which (i) furnishes or sells services or products which are
furnished or sold or are proposed to be furnished or sold by the
Company or Ruby-Tech, or (ii) purchases from or sells or
furnishes to the Company or to Ruby-Tech any goods or services,
or (b) a beneficial interest in any contract or agreement to
which the Company or Ruby-Tech is a party to .
4.16.2 Except as set forth in SCHEDULES 4.2.5 and 4.16.1, there exist
no arrangements or proposed transactions, either directly or
indirectly, between the Company or Ruby-Tech and any Interested
Party, or to the best knowledge of the Company and the Seller,
any affiliate or associate of any such Interested Party. Except
as set forth in SCHEDULE 4.16.2, no employee, shareholder,
officer or director of the Company or of Ruby-Tech is indebted to
the Company or to Ruby-Tech, as the case may be, nor is the
Company or Ruby-Tech indebted (or committed to make loans or
extend or guarantee credit) to any of them, except in the
ordinary course of business.
4.17 EMPLOYEES.
4.17.1 A full list of all of the Company's and Ruby-Tech's officers
and employees and their agreements with the Company or Ruby-Tech,
copies of which were delivered to the Purchaser, is shown in
SCHEDULE 4.17.1, which agreements show all Benefits (as defined
below) payable or which the Company or Ruby-Tech is bound to
provide (whether now or at a future time set forth therein) to
each officer and employee. Such agreements include customary
non-compete and confidentiality provisions.
4.17.2 Except as listed on SCHEDULE 4.17.2, no key employee of the
Company or of Ruby-Tech has been dismissed in the last six months
or has given notice of termination of his/her employment.
4.17.3 Except as provided by law and/or under legally binding
collective agreements, there are no agreements or arrangements
(whether legally enforceable or not) for the payment of any
pensions, allowances, lump sums or other like benefits on
retirement or on death or during periods of sickness or
disablement for the benefit of any director or former director or
employee or former employee of the Company or of Ruby-Tech for
the benefit of the dependents of any such person in operation at
the date hereof, other than customary managers' insurance
policies.
4.17.4 Except as listed on SCHEDULE 4.17.4, each of the Company and
Ruby-Tech does not operate any share incentive scheme, share
option scheme or profit sharing scheme for the benefit of any of
its respective officers, directors, employees or consultants.
4.17.5 Except as listed on SCHEDULE 4.17.5, the Company has paid in
full or has made sufficient reserves in the Company Financial
Statements for all of the payments and obligations due or payable
with respect to its and Ruby-Tech's employees, including, but not
limited to, social security payments, income tax withholdings,
severance payments, pension and vacation pay.
- 13 -
4.17.6 For the purposes of this Section the term "BENEFITS" means
benefits of every description including, without limitation,
salaries, directors' fees, social benefits, bonuses, commissions,
profit shares under any incentive scheme and benefits in kind.
4.18 INSURANCE.
4.18.1 SCHEDULE 4.18.1 lists all of the insurance policies currently
maintained by the Company and Ruby-Tech (the "INSURANCE
POLICIES"). All such policies are in full force and effect, all
premiums due and payable thereunder have been paid, and no notice
of cancellation or termination has been received with respect to
any such policy. Such policies are valid, outstanding and
enforceable in accordance with their terms and will remain in
full force and effect without the payment of any additional
premiums through the Closing.
4.18.2 The Company believes that the coverage provided by the
Insurance Policies adequately insures the Company's business,
material assets and properties, as such material assets and
properties are now being used and held by the Company and
Ruby-Tech.
4.18.3 There are currently no claims pending under any Insurance
Policies. To the best knowledge of the Company and the Seller,
there is no threatened termination of any such Insurance
Policies. To the best knowledge of the Company and the Seller,
the Company has not been refused any insurance with respect to
its assets or operations, nor has its coverage been limited by
any insurance carrier to which it has applied for any such
insurance or with which it carried insurance since its
incorporation.
4.19 BROKERS OR FINDERS. Neither the Company nor any of the Sellers or any
of their respective employees or shareholders has employed or made any
agreement with any broker, finder or similar agent or any person or
firm, which will result, directly or indirectly, in the obligation of
the Seller, the Company or the Purchaser to pay any finder's fee,
brokerage fees or commission or similar payment in connection with the
transactions contemplated hereby. It is acknowledge that the Purchaser
has used Cukierman & Co. Investment House Ltd. as financial advisor to
this transaction. It is hereby clarified, that neither the Company nor
the Sellers shall be liable to pay Cukierman & Co. Investment House
Ltd. any broker's or finder's fee or any other commission or similar
fee, directly or indirectly, on account of any action taken by the
Purchaser in connection with any of the transactions contemplated
under this Agreement.
4.20 OPTION PLAN. As of the date hereof, none of the Company's unissued
Ordinary Shares are reserved for future issuance to employees,
officers and directors of the Company. Except for options covering
Thirteen (13) Ordinary Shares of the Company's unissued Ordinary
Shares, which have been promised to Zelichovski (and which shall be
waived upon Closing), no options have been granted and/or promised to
any employees or consultants of the Company.
4.21 COMPLIANCE WITH SECURITIES LAWS. The Company's securities have been
offered and sold in compliance with all material applicable securities
laws.
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4.22 FULL DISCLOSURE. The representations and warranties of the Company and
the Sellers in this Agreement, are each accurate, correct and complete
in all material respects, and do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements and information contained herein or therein not
misleading. To the best knowledge of the Company and the Sellers
neither the Company nor the Seller is aware of any material
information which would likely adversely and materially affect the
business, operating results, properties, or financial condition of the
Company, which has not been expressly disclosed to the Purchaser.
Subject to the Closing, the Purchaser has the right to rely fully upon
the representations, warranties, covenants and agreements of the
Company and the Seller contained in this Agreement or any Exhibit or
Schedule hereto or any ancillary agreements or documents executed or
delivered in connection with or pursuant to any of the foregoing.
5. REPRESENTATIONS AND UNDERTAKINGS REGARDING THE CONSIDERATION SHARES.
Each Seller, severally and jointly, hereby represents, warrants and
covenants to the Purchaser as follows:
5.1. INFORMATION AND ADVISE. Each Seller confirms that it has received or
has had full access to all 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
Seller further confirms that it has had an opportunity to ask
questions and receive answers from the Purchaser regarding the
Purchaser's business, management and financial affairs and to obtain
additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or
expense) necessary to verify any information furnished to the Seller
or to which the Seller had access.
5.2. AVAILABILITY OF EXEMPTIONS. Each Seller understands that the
Consideration Shares are being offered pursuant to an exemption or
exemptions from registration requirements of Israeli and US Federal
and state securities laws and that the Purchaser is relying upon the
truth and accuracy of such Seller's representations, warranties,
agreements, acknowledgments and understandings set forth in section 5
herein in order to determine the applicability of such exemptions and
the suitability of such Seller to receive the Shares.
5.3. LEGENDS. Each Seller acknowledges and agrees that certificates
representing the Consideration Shares will contain one or more legends
to the effect that transfer of such securities is prohibited except
pursuant to registration under the Securities Act or pursuant to an
available exemption from registration, similar to the following:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS. THESE 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 WITH
RESPECT TO THE SHARES EVIDENCED BY THIS CERTIFICATE, FILED AND
MADE EFFECTIVE UNDER THE SECURITIES ACT AND APPLICABLE STATE LAWS
OR AN OPINION OF COUNSEL TO B.O.S. BETTER ON-LINE SOLUTIONS LTD.
THAT SUCH REGISTRATION IS NOT REQUIRED. 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 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 "
- 15 -
5.4. CONTROL OVER THE SELLER. Each Seller who is not an individual has made
available to the Purchaser a complete and detailed list of individuals
who have or share voting and/or investment control over such Seller.
Each Seller acknowledges that such information shall be provided by
the Purchaser to the Office of Chief Scientist (the "OCS") and the
Investment Center of the Ministry of Industry, Trade and Labor (the
"INVESTMENT CENTER"), whose approvals of the transaction contemplated
hereby are a condition to the Purchaser's obligations hereunder. Each
Seller shall update such list as reasonably requested by the
Purchaser, to comply with any request for such information from any
regulatory body, including, without limitation the OCS and the
Investment Center. This Section 5.4 shall survive the Closing of the
transaction contemplated hereby.
5.5. RESTRICTIONS ON TRANSFERABILITY AND HEDGING.
5.5.1. Each Seller understands that (i) the Consideration Shares have
not been registered under the Securities Act of 1933, 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 now no
registration statement on file with the Securities and Exchange
Commission with respect to the Consideration Shares to be
received by such Seller.
5.5.2. Each Seller acknowledges that the Purchaser 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 or made in contravention of
the lock-up provisions of Section 5.8 below.
5.5.3. Each Seller acknowledges, agrees and covenants not to engage in
hedging transactions with regard to the Consideration Shares
offered pursuant to this Agreement.
5.6. OFFSHORE TRANSACTION. Such Seller is not a "U.S. Person", as such term
is defined in Regulation S under the Securities Act of 1933, 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. Such 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 such Seller and at the
time that the buy order was originated by the Seller. 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.
5.7. INVESTMENT PURPOSES. The Consideration Shares are being acquired for
investment purposes. The Shares are not being purchased with a view
to, or for sale in connection with, any distribution or other
disposition thereof. The 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 federal or state
US Securities laws or the Israeli Securities Laws.
- 16 -
5.8. LOCK UP. For a period of four years from the date of issuance of the
Consideration Shares, no Seller shall sell, assign, transfer, pledge,
hypothecate, mortgage or otherwise dispose of, by gift or otherwise
any of the Consideration Shares, provided however, that the
abovementioned restriction shall expire, for each Seller, with respect
to fifty percent (50%) of the Consideration Shares issued to such
Seller, upon the lapse of two years from the date of issuance of the
Consideration Shares. Upon expiration of the applicable lock-up
period, the Company shall cooperate with the Sellers in connection
with re-sales pursuant to Rule 144 under the Securities Act.
5.9. NO SOLICITATION. At no time was such 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.
5.10. BROKER-DEALER. The Seller is not a broker-dealer, nor is it an
affiliate of any broker-dealer.
6. REPRESENTATIONS AND WARRANTIES REGARDING THE PURCHASER. Purchaser hereby
represents and warrants to each of the Sellers as follows:
6.1. CORPORATE ORGANIZATION. The Purchaser is a corporation duly
incorporated and validly existing under the laws of Israel, and has
the corporate power to own its property and to carry on its business
as now being conducted. The Purchaser has all requisite power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The Purchaser's shares are traded on
the Nasdaq Market and on the Tel-Aviv Stock Exchange and as such it is
subject to both US and Israeli Securities Laws.
6.2. DUE AUTHORIZATION AND VALID ISSUANCE. The Agreement has been, or will
have been, at the time of its execution and delivery, duly executed
and delivered by a duly authorized officer of the Purchaser. Prior to
the Closing of this Agreement, the Purchaser shall have acted to
complete all corporate action necessary on its part for the issuance,
sale and delivery of the Consideration Shares. The Consideration
Shares will, upon issuance, be duly authorized, validly issued,
fully-paid and nonassessable.
6.3. BINDING AGREEMENT. The Agreement constitutes valid and legally binding
obligations of the Purchaser enforceable against the Purchaser in
accordance with its terms, except as (i) such enforceability may be
limited by bankruptcy, insolvency, reorganization, arrangement,
moratorium or similar laws relating to or affecting the rights of
creditors and contracting parties generally, (ii) the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefore may be brought.
6.4. NON-CONTRAVENTION. Neither the execution and delivery of the
Agreement, nor the consummation of the transactions or the performance
of the obligations contemplated hereby will result in any violation or
breach of any of the terms, conditions and provisions of: (i) the
Purchaser's articles of association, (ii) to the Purchaser's best
knowledge, any judgment, order, injunction, decree, or ruling of any
court or governmental authority, in countries in which the Purchaser
conducts its business, to which the Purchaser is subject, (iii) any
material agreement, contract, lease, license or commitment to which
the Purchaser is a party to and which would impair the ability of the
Purchaser to execute, deliver or perform this Agreement, or (iv)
material applicable law in countries in which the Company conducts its
business. To the knowledge of the Purchaser, such execution, delivery
and compliance by the Purchaser will not (a) give to others any
rights, including rights of termination, cancellation or acceleration,
in or with respect to any agreement, contract or commitment referred
to in this Section 6.4, except as would not have a material adverse
effect or (b) otherwise require the consent or approval of any person,
which consent or approval has not heretofore been obtained or shall be
obtained by the Closing.
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6.5. NO CONSENT. To the Purchaser's best knowledge, and in reliance on the
representations of the Sellers given in section 5 hereof, except for
reporting obligations and approvals required under applicable
securities laws and market regulations in Israel and the United States
and for approvals by the OCS, the Investment Center and of Laurus
Master Fund, Ltd., no consent of any governmental body or third party
is required to be made or obtained by the Purchaser in connection with
the execution and delivery of the Agreement by the Purchaser or the
consummation by the Purchaser of the transactions or the performance
of the obligations contemplated hereby by the Purchaser.
6.6. CAPITALIZATION. The authorized share capital of the Purchaser consists
as of the date hereof: 8,750,000 Ordinary Shares, par value NIS 4.00
per share, of which, as of September 30, 2004, 4,447,171 Ordinary
Shares are outstanding and issued, and 833,085 Ordinary shares are
reserved for issuance upon conversion of a Note and exercise of a
Warrant issued to Laurus Master Fund, Ltd. Any change in the above
capitalization between the date hereof and the date of the Closing
shall not constitute a default under this Agreement, provided,
however, that such change is the result of the conversion or exercise
of convertible securities, options or warrants of the Purchaser.
6.7. FINANCIAL STATEMENTS.
6.7.1 The audited consolidated financial statements of the Purchaser
as of December 31, 2003 and the related notes thereto, as filed
by the Purchaser with the Securities and Exchange Commission
under Form 20-F for the year ending December 31, 2003 are true,
correct and complete in all material respects and fairly present
the financial position of the Purchaser as of their respective
dates, and have been prepared in accordance with the books and
records of the Purchaser as at the applicable dates and for the
applicable periods. Such financial statements have been prepared
in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods therein
specified, except as may be disclosed in the notes to such
financial statements, or as may be permitted by the Securities
and Exchange Commission and except as disclosed in the filings
the Purchaser made in connection with such statements, if any.
6.7.2 Other than as reported in the Purchaser's public filings, since
December 31, 2003, there has not been any event or material
adverse change in the financial conditions of the Purchaser as
reflected in the financial statements which, individually or
collectively with other events or changes, could have a material
adverse effect on the Purchaser.
6.8 LEGAL PROCEEDINGS. Except as disclosed in the Purchaser's public
filings, there is no material legal or governmental proceeding pending
or, to the knowledge of the Purchaser, threatened to which the
Purchaser is or may be a party.
6.9 COMPLIANCE WITH LAW. To the knowledge of the Purchaser, the business
of the Purchaser is conducted in accordance with applicable laws,
except to extent that, individually or in the aggregate, would not
cause a material adverse effect on the Purchaser.
6.10 DISCLOSURE. The representations and warranties of the Purchaser
contained in this Section 6 as of the date hereof and as of the
Closing, read together with the Company's public filings, do not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements herein, in light of the
circumstances under which they are made, not misleading.
- 18 -
6.11 INFORMATION AND ADVICE. The Purchaser acknowledges that it has been
furnished by the Company and/or the Sellers with the documents and
information regarding the Company which it has requested, and has been
afforded the opportunity to ask questions of and receive answers from
duly authorized officers or other representatives of the Company
and/or Sellers concerning the Company's business, assets and financial
position and the Sold Shares. The Purchaser has relied solely upon the
advice of its own tax and legal advisors with respect to the tax
aspects of this transaction.
7. COVENANTS
7.1 From and after the signing of this Agreement and until the Closing,
the Company and each of the Sellers, severally and jointly, covenant
and agree with the Purchaser that the Company and Ruby-Tech shall not
engage in any practice, take any action, or enter into any transaction
outside the ordinary course of business. Without limiting the
generality of the foregoing, the Company will not, without the prior
consent of the Purchaser: (a) authorize or effect any change in its
corporate documents; (b) declare or pay any dividends or make any
other distributions with respect to its share capital; (c) issue any
shares or grant any option, warrant, convertible debenture or any
other form of security exercisable into or convertible into shares of
the Company; (d) 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;
and (e) sell its assets (other than the Company's inventory sold in
the ordinary course of business).
7.2 The Sellers further covenant with the Purchaser that none of the
Sellers shall dispose of any interest in the Company Shares or any of
them or grant any option over or create or allow to exist any Security
Interest over the Company Shares or any of them.
7.3 No announcement or other disclosure concerning the sale and purchase
of the Sold Shares or any ancillary matter shall be made before or
after the Closing by the parties or any person acting on their behalf,
except subject to Purchaser's prior written approval of the form and
content of such announcement or disclosure or otherwise as required by
law or by the applicable rules of any stock exchange or automated
quotation system.
8. CALL AND PUT OPTIONS
8.1 CALL OPTION TERMS.
(a) CALL OPTION. At any time starting from the third anniversary of
the Closing and until (but not including) the fourth anniversary of
the Closing (the "OPTION TERM"), and subject to Section 8.6 below, the
Purchaser may serve notice in writing on the Sellers requiring them to
sell or procure the sale of (the "CALL OPTION") any and all Company
Shares held by the Sellers at such time (the "OPTION SHARES"). The
Call Option may be exercised by the Purchaser on one or more occasions
during the Option Term, in full or in part.
(b) Starting from the date hereof and until the expiration of the
Option Term, the Sellers shall be permitted to transfer the Option
Shares to a third party only in the event that such sale is subject to
the Call Option rights set forth herein and the transferee agrees to
be bound by the terms of this Section 8.1.
- 19 -
8.2 CALL OPTION CONSIDERATION.
(a) The consideration to be paid by the Purchaser for the Call Option
Shares shall equal the relevant Company Valuation (as set forth
below), divided by the number of Company Shares issued and
outstanding immediately prior to the Call Option closing,
multiplied by the number of Call Option Shares. For purposes of
this Section 8.2, the "COMPANY VALUATION" shall be as follows:
(i) in the event that the Company achieves between NIS
207,000,000 and NIS 253,000,000 as Projected Results (as
defined below), the Company Valuation shall be Five Million
US Dollars ($ 5,000,000);
(ii) in the event that the Company achieves between NIS
172,500,000 and NIS 206,999,999 as Projected Results (as
defined below), the Company Valuation shall be Four Million
US Dollars ($ 4,000,000); and
(iii) in the event that the Company achieves above NIS
253,000,000 as Projected Results (as defined below), the
Company Valuation shall be Six Million US Dollars ($
6,000,000);
"PROJECTED RESULTS" equals the aggregate amount of revenues
in the years 2004, 2005 and 2006.
(b) The consideration for the Option Shares shall be comprised of
fifty percent (50%) cash and fifty percent (50%) new
Consideration Shares, with the value of each new Consideration
Share being the higher of: (i) the average closing price of the
Purchaser's shares on the Nasdaq Market during the twenty (20)
days immediately preceding the date of issuance of such
Consideration Shares or (ii) $3.08.
8.3 NEUHOF PUT OPTION.
8.3.1 At any time during the Option Term, the Sellers (jointly and not
severally), may serve notice in writing to the Purchaser,
requiring the Purchaser to purchase (the "PUT OPTION") the Option
Shares. The Put Option (or the accelerated Put Option) may be
exercised by the Sellers on one occasion during the Option Term,
in full and not in part. The consideration for the Option Shares
subject to the Put Option shall be calculated and paid in
accordance with the provisions of Section 8.2 hereof governing
the Call Option.
8.3.2 The closing of the Put Option (or the Accelerated Put Option (as
defined below), if applicable) shall be subject to Seller's
provision as of such closing, of the representations and
warranties of Sections 3 and 5 hereof, with respect to the Option
Shares and Consideration Shares. In addition, Seller undertakes
to make the same representations and warranties as are specified
in Sections 3 and 5 hereof with respect to the Option Shares and
Consideration Shares, in the event Purchaser exercises a Call
Option, as of the closing of such Call Option, subject to such
written exceptions and/or reservations as shall be specified by
the Sellers at the closing of such Call Option.
8.4 Any and all Consideration Shares issued in connection with the Call
Option or the Put Option, as the case may be, shall be subject to a
lock-up period from the date of issuance of such Consideration Shares,
in accordance with the lock-up provisions of Section 5.8 hereof.
- 20 -
8.5 ACCELERATED OPTION.
8.5.1 It is expressly agreed, that in the event that the Company
issues any ordinary shares or preferred shares or any other kind
of shares of the Company, whether now or hereafter authorized
(including as a result of the exercise or conversion, as the case
may be, of rights, options, or warrants to purchase ordinary
shares or preferred shares, or securities convertible into
ordinary shares or preferred shares of the Company) to any third
party, except for issuances as a result of: (i) conversion of any
warrants or notes outstanding as of the date hereof, or (ii) the
exercise of any options by former or existing employees or
consultants of the Company (the "TRIGGERING EVENT"), then, at
Sellers' sole discretion, Sellers may notify the Purchaser that
the Option Term (with respect to the Put Option only) shall be
deemed to commence upon such Triggering Event, and extend for a
period of 12 months thereafter (the "ACCELERATED PUT OPTION").
Sellers shall notify the Purchaser of the election to accelerate
the Put Option promptly upon their being aware of the appropriate
circumstances, and in any event no later than 7 business days
before the Triggering Event. Unless so notified by Sellers, the
provisions of this Section 8.5 shall NOT apply.
8.5.2 The consideration to be paid by the Purchaser for the
Accelerated Put Option shall equal the relevant Company Valuation
(as set forth in Section 8.5.3 below) divided by the number of
Company Shares issued and outstanding immediately prior to the
Triggering Event, multiplied by the number of Accelerated Put
Option Shares.
8.5.3 In the event the Triggering Event occurs after to the end of
2006, the Company Valuation shall be calculated in accordance
with Section 8.2(a) above. If, however, the Triggering Event
occurs prior to the end of 2006, than the Company Valuation shall
be the higher of (i) $4,500,000 or (ii) Company Valuation to be
calculated in accordance with Section 8.2(a) above but on the
basis of the Deemed Projected Results (defined below) and not of
Projected Results.
The term "DEEMED PROJECTED RESULTS" shall mean three (3) times
the aggregate revenues received during the twelve (12) month
period immediately prior to the Triggering Event
8.6 Notwithstanding anything else herein, in the event the Company total
pre-tax profits for the years 2004, 2005 and 2006 are, in the
aggregate, below 5% of the Minimum Projected Results (defined below),
then the Put Option shall immediately expire with no further force and
effect. The term "MINIMUM PROJECTED RESULTS" shall mean Projected
Results in an amount of Two Hundred and Thirty Million NIS (NIS
230,000,000), or in the event of Accelerated Put Option, shall mean
Deemed Projected Results in an amount of Two Hundred and Thirty
Million NIS (NIS 230,000,000).
9. BOARD OF DIRECTORS
9.1 The Articles, as amended by the Amendment, shall include, INTER ALIA,
the following:
Prior to the Company's IPO, the following shall apply:
(a) Sellers (jointly) shall have the right to appoint one (1)
member of the Company's Board of Directors, for as long as Sellers
(jointly) holds at least sixty four (64) shares of the Company.
- 21 -
(b) Telsys shall have the right to appoint one (1) member of the
Company's Board of Directors, for as long as Telsys holds at least
thirty three (33) shares of the Company.
(c) Purchaser shall have the right to appoint all remaining
members of the Company's Board of Directors and no less than three
(3).
9.2 The parties hereby undertake to vote their shares of the Company in
order to give effect to the provisions of this Section 9.
10 CONDITIONS OF CLOSING OF THE PURCHASER. The obligation of the Purchaser to
purchase the Sold Shares and issue the Consideration Shares at the Closing
are subject to the fulfillment at or before the Closing of the following
conditions precedent, any one or more of which may be waived in whole or in
part by and at the sole discretion of the Purchaser:
10.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by the Company and each of the Sellers in this Agreement shall
have been true and correct in all material respects when made, and
shall be true and correct in all material respects as of the Closing
as if made on the date of the Closing.
10.2 COVENANTS. All covenants, agreements, and conditions contained in this
Agreement to be performed or complied with by the Sellers and/or the
Company prior to the Closing shall have been performed or complied
with by the Sellers and the Company, as the case may be, prior to or
at the Closing.
10.3 NO INJUNCTION. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction, which prohibits the consummation of any of the
transactions contemplated by this Agreement.
10.4 CONSENTS, ETC. The Company and the Sellers shall have secured all
permits, consents, approvals and authorizations that shall be
necessary or required of them lawfully to consummate the transaction
contemplated by this Agreement and to transfer the Sold Shares to be
purchased by the Purchaser at the Closing, excluding the consents
required under the Company's various distribution agreements and
provided, however, that the Company shall use its best efforts to
provide Purchaser with such consents promptly after the public
announcement of this transaction.
10.5 DELIVERY OF DOCUMENTS. All of the documents to be delivered to the
Purchaser pursuant to Section 2 shall have been fully-executed (if
applicable) by all parties whose names appear as intended signatories
thereto (other than the Purchaser), and delivered to the Purchaser.
10.6 APPROVALS. The Purchaser shall have received all necessary approvals
by the OCS, the Investment Center and of Laurus Master Fund with
respect to the transactions contemplated hereby.
10.7 NOTICES TO NASDAQ THE TASE AND THE ISA. The Purchaser shall have made
all required filings of notices with NASDAQ, the Tel Aviv Stock
Exchange and the Israel Securities Authority and has received no
notice adversely affecting the performance of the transactions
contemplated hereunder. The Purchaser shall use its commercially
reasonable efforts to complete such filings.
- 22 -
10.8 RIGHTS OF FIRST REFUSAL. No Company Shareholder or any other person
has any rights of first refusal, tag along or similar rights in
connection with the issuance of any of the Sold Shares pursuant to
this Agreement, except those rights which have been duly waived.
10.9 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings of the
Company and the Sellers in connection with the transactions
contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory in substance and
form to the Purchaser and its counsel, and the Purchaser and its
counsel shall have received all such counterpart originals or
certified or other copies of such documents as the Purchaser or its
counsel may reasonably request.
10.10 ABSENCE OF ADVERSE CHANGES. From the date hereof until the Closing,
there will have been no material adverse change in the financial or
business condition of the Company, in the sole judgment of the
Purchaser.
10.11 TELSYS CLOSING. The closing of the purchase by Purchaser from Telsys
of Sixty Seven (67) Company Shares, reflecting approximately 12.5% of
the issued and outstanding Company Shares.
10.12 BANK CREDIT FACILITY. The Company's Bank credit facility for working
capital shall continue post Closing, as evidenced by the
correspondence attached as EXHIBIT 2.2.1(P) hereto.
10.13 DUE DILIGENCE. The completion of the due diligence review of the
Company by the Purchaser to the sole and complete satisfaction of the
Purchaser.
11. CONDITIONS OF CLOSING OF THE SELLERS. Each Seller's obligations to sell the
Sold Shares at the Closing are subject to the fulfillment, at the
discretion of such Sellers, at or before the Closing of the following
conditions precedent, any one or more of which may be waived in whole or in
part by the Seller:
11.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by the Purchaser in this Agreement shall have been true and
correct in all material respects when made, and shall be true and
correct in all material respects as of the Closing as if made on the
date of the Closing.
11.2. COVENANTS. All covenants, agreements, and conditions contained in
this Agreement to be performed or complied with by the Purchaser prior
to the Closing shall have been performed or complied with by the
Purchaser prior to or at the Closing.
11.3. NO INJUNCTION. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction, which prohibits the consummation of any of the
transactions contemplated by this Agreement.
11.4. CONSENTS, ETC. The Purchaser shall have secured all permits, consents
and authorizations that shall be necessary or required of it lawfully
to consummate the transactions contemplated by this Agreement and to
issue the Consideration Shares to be issued at the Closing.
11.5. DELIVERY OF DOCUMENTS. All of the documents to be delivered to the
Sellers pursuant to Section 2 shall have been fully-executed (if
applicable) by all parties whose names appear as intended signatories
thereto (other than the Sellers), and delivered to the Sellers or the
Company.
- 23 -
11.6. APPROVALS. The Purchaser shall have received all necessary approvals
by the OCS, the Investment Center and of Laurus Master Fund with
respect to the transactions contemplated hereby.
11.7. PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings of the
Purchaser in connection with the transactions contemplated by this
Agreement and all documents and instruments incident to such
transactions shall be satisfactory in substance and form to the
Company and Sellers and their respective counsels, and the Company and
Sellers and their counsel shall have received all such counterpart
originals or certified or other copies of such documents as the
Company and Sellers and their counsel may reasonably request.
11.8. BANK APPROVAL. The Bank shall have removed any obligation imposed on
Company Shares held by Jacob Neuhof in favor of such Bank.
11.9. ABSENCE OF ADVERSE CHANGES. From the date hereof until the Closing,
there will have been no material adverse change in the financial or
business condition of the Purchaser.
11.10. DUE DILIGENCE. The completion of the due diligence review of the
Purchaser by the Seller to the complete satisfaction of the Seller.
12. INDEMNIFICATION AND REMEDIES
12.1. The Sellers and the Company agree, jointly and severally, to
indemnify, and hold the Purchaser harmless against and in respect of
any and all loss, liability, deficiency or damage, or actions in
respect thereof (including reasonable legal fees and expenses) and any
reduction in the value of the Sold Shares purchase by the Purchaser
hereunder ("DAMAGES"), as and when incurred, occasioned by any breach
of any of the representations and warranties of the Sellers contained
herein (each such representation and warranty is deemed to be made on
the date of this Agreement and at the Closing) or any certificate or
other instrument furnished or to be furnished by the Sellers hereunder
, all subject to the terms set forth in this Section 12.
12.2. The Purchaser agrees to indemnify and hold each of the Sellers
harmless against and in respect of any Damages, as and when incurred,
occasioned by any breach of any of the representations and warranties
of the Purchaser contained in Section 6 above (each such
representation and warranty is deemed to be made on the date of this
Agreement and at the Closing) or any certificate or other instrument
furnished or to be furnished by the Purchaser hereunder.
12.3. Promptly after (i) receipt by the party making the claim pursuant to
this Section (or any of its directors, employees and advisors) of
notice of the commencement of any action, proceeding, or
investigation; or (ii) the party making the claim pursuant to this
Section (or any of its directors, employees and advisors) becoming
aware of any breach of this Agreement or falsity of representation, in
each case, in respect of which indemnity may be sought as provided
above, such person (the "INDEMNIFIED PARTY") shall notify the party or
parties from whom indemnification is claimed (the "INDEMNIFYING
PARTY") of the claim and, when known, the facts constituting the basis
of such claim. In the event of any such claim for indemnification
hereunder resulting from or in connection with any claim or legal
proceeding by a third party, the notice to the Indemnifying Party
shall specify, if known, the amount of damages asserted by such third
party.
- 24 -
12.4. Upon receipt of any such notice from the Indemnified Party, the
Indemnifying Party shall be entitled to participate in the defense of
such claim and may assume the defense of such claim at its own expense
and by its own counsel. If the Indemnifying Party elects to assume the
defense of such claim, the Indemnified Party shall reasonably
cooperate with the Indemnifying Party in defending such claim, at the
expense of the Indemnifying Party. The parties acknowledge and agree
that in the event the Indemnifying Party has properly assumed the
defense of such claims provided herein, the Indemnified Party shall be
entitled to retain its own counsel to participate in the defense of
such claim at its own cost and expense.
12.5. No claim shall be settled or compromised by the Indemnifying Party
without the written consent of the Indemnified Party (which shall not
be unreasonably withheld) if such settlement or compromise requires
the Indemnified Party to make any payment or to take or refrain from
taking any action or enjoins the Indemnified Party or subjects it to
other equitable relief or subjects it to any potential criminal law,
claim or liability.
12.6. Each party shall not bring any claim or series of claims for monetary
compensation under this Section 12 unless the Damages claimed in
accordance therewith are at least Thirty Thousand U.S. Dollars (US$
30,000).
12.7. Notwithstanding section 12.1 above the sole and exclusive recourse
with respect to each Seller under this Agreement or any theory of
liability, shall be limited to the Company shares and the
Consideration Shares held by such Seller (valued in accordance with
the their then fair market value) unless such Seller, upon its
discretion, elects to pay the Damages in cash in lieu of transferring
the appropriate amount of shares. Notwithstanding section 12.1 above,
the sole and exclusive recourse with respect to the Purchaser under
this Agreement or any theory of liability, shall be limited to Six
Hunderd and Seventy Thousand Dollars ($670,000).
12.8. The limitation of liabilities and remedies set forth in Sections 12.6
and 12.7. above, and the limitation on the survival period of the
representations and warranties as set forth in Section 12.10 below,
shall not apply with respect to fraud; or intentional or willful
breaches by the Company or the Sellers, each of its respective
representations, warranties or covenants.
12.9. Subject to Section 12.8 above, the remedies specified in this Section
12 shall be the sole and exclusive remedy to which either party is
entitled with regard to any losses or damages caused to it due to any
breach of representations, warranties or covenants made to them by the
othe party.
12.10. SURVIVAL OF REPRESENTATIONS. The representations and warranties made
in this Agreement shall survive the execution and the delivery of this
Agreement and the Closing and remain in full force and effect for a
period of twenty four (24) months after the Closing, except for
Sellers' representations and warranties under Section 4 hereof, which
shall remain in full force and effect for a period of twelve (12)
months after the Closing, and Sellers' representations and warranties
under Section 8.3.2 hereof, which shall remain in full force and
effect for a period of twenty four (24) months after the exercise of
the Put Option or Call Option, as the case may be.
- 25 -
13. MISCELLANEOUS
13.1. FURTHER ASSURANCES. Each of the parties hereto shall perform such
further acts and execute such further documents as may reasonably be
necessary to carry out and give full effect to the provisions of this
Agreement and the intention of the parties as reflected hereby.
13.2. GOVERNING LAW; 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 of Tel Aviv-Jaffa district only, and each of the parties hereby
submits irrevocably to the exclusive jurisdiction of such court.
13.3. EXPENSES. Each of the parties hereto shall be responsible for its own
costs and expenses (including legal fees) in connection with this
Agreement and any other documents or actions relating to the
transactions contemplated by this Agreement. All stamp duty and filing
fees payable in respect of this Agreement or the transfer of shares as
contemplated hereby shall be borne equally by the Sellers, on the one
hand, and the Purchaser, on the other.
13.4. SUCCESSORS AND ASSIGNS; ASSIGNMENT. Except as otherwise expressly
limited herein, the provisions hereof shall inure to the benefit of,
and be binding upon, the successors, assigns, heirs, executors, and
administrators of the parties hereto. None of the rights, privileges,
or obligations set forth in, arising under, or created by this
Agreement may be assigned or transferred without the prior consent in
writing of each party to this Agreement.
13.5. ENTIRE AGREEMENT. This Agreement and the Schedules and Exhibits
attached hereto constitute the full and entire understanding and
agreement between the parties with regard to the subject matters
hereof and thereof.
13.6. NOTICES, ETC. All notices and other communications required or
permitted hereunder to be given to a party to this Agreement shall be
in writing and shall be faxed or mailed by registered or certified
mail, postage prepaid, or otherwise delivered by hand or by messenger,
addressed to such party's address as set forth below or in SCHEDULE A,
as the case may be, or at such other address as the party shall have
furnished to each other party in writing in accordance with this
provision:
if to the Purchaser:
B.O.S. Better On-Line Solutions Ltd.
Beit Rabin, Teradyon Industrial Park,
Misgav 20179, Israel
Attention: Chief Financial Officer
Facsimile: (972) 4 999-0334
WITH A COPY TO:
Amit, Pollak, Matalon & Ben-Naftali,
Erez & Co.NYP Tower, 17 Yitzhak Sadeh Street,
19th Floor
Tel Aviv 67775
Attention: Shlomo Landress, Adv.
Facsimile: (972) 3 561-3620
- 26 -
if to the Company: Odem Electronic Technologies 1992 Ltd.
20 Frieman Jacob Street,
Rishon Le-Zion, 75358, Israel
Attention: Jacob Neuhof
Telephone: (972) 3 9540000
Facsimile: (972) 3 9660345
With a copy to:
Kantor & Co.
Oz House, 14 Abba Hillel Silver Rd.,
Ramat Gan, 52506 Israel
T: +972-3-6133371
F: +972-3-6133372
Attention of: Giora Gutman, Adv.
if to a Seller: to its address, as set forth on SCHEDULE A;
Any notice sent in accordance with this Section 13.6 shall be
effective (i) if mailed, three (3) business days after mailing, (ii)
if sent by messenger, upon delivery, and (iii) if sent via facsimile,
upon transmission and electronic confirmation of receipt or (if
transmitted and received on a non-business day) on the first business
day following transmission and electronic confirmation of receipt
(provided, however, that any notice of change of address shall only be
valid upon receipt).
13.7. DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power, or remedy accruing to any party upon any breach or default
under this Agreement, shall be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit,
consent, or approval of any kind or character on the part of any party
of any breach or default under this Agreement, or any waiver on the
part of any party of any provisions or conditions of this Agreement,
must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any of the parties,
shall be cumulative and not alternative.
13.8. SEVERABILITY. If any provision of this Agreement is held by a court
of competent jurisdiction to be unenforceable under applicable law,
then such provision shall be excluded from this Agreement and the
remainder of this Agreement shall be interpreted as if such provision
were so excluded and shall be enforceable in accordance with its
terms; provided, however, that in such event this Agreement shall be
interpreted so as to give effect, to the greatest extent consistent
with and permitted by applicable law, to the meaning and intention of
the excluded provision as determined by such court of competent
jurisdiction.
13.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and
enforceable against the parties actually executing such counterpart,
and all of which together shall constitute one and the same
instrument.
[Remainder of page intentionally left blank.]
- 27 -
IN WITNESS WHEREOF the parties have signed this Share Exchange Agreement as
of the date first hereinabove set forth.
PURCHASER: COMPANY:
_____________________________ _____________________________
B.O.S. BETTER ONLINE ODEM ELECTRONIC
SOLUTIONS LTD. TECHNOLOGIES LTD.
Name: _______________________ Name: _______________________
Title:_______________________ Title:_______________________
SELLERS:
_______________________________
JACOB NEUHOF
_______________________________
SARA NEUHOF
- 28 -
SCHEDULE A
NAME AND ADDRESS OF NO. OF SOLD % OF SHARE CAPITAL CONSIDERATION
SELLER SHARES (FULLY DILUTED) BOS SHARES CASH
------ ------ --------------- ---------- ----
Jacob Neuhof
13 Hankin Street, Rishon
Lezion 69 25.74% 109,560 $ 705,109.50
Sara Neuhof
13 Hankin Street, Rishon
Lezion 68 25.37% 107,972 $ 694,890.50
===== ===== ======= =============
TOTAL 137 51.11% 217,532 $1,400,000.00
- 29 -