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EXHIBIT 4.11
ASSET PURCHASE AGREEMENT
BY AND AMONG
MTS INTEGRATRAK INC.
A DELAWARE CORPORATION
MER TELEMANAGEMENT SOLUTIONS LTD.
AN ISRAELI COMPANY
AND
ANCHORPOINT, INC.
A MASSACHUSETTS CORPORATION
DECEMBER 23, 2008
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TABLE OF CONTENTS
PAGE
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ARTICLE I SALE OF ASSETS AND TERMS OF PAYMENT ........................... 1
1.01 Assets Being Sold ............................................. 1
1.02 Retained Assets ............................................... 3
1.03 Assumed Liabilities ........................................... 3
1.04 Retained Liabilities .......................................... 4
1.05 Purchase Price ................................................ 5
1.06 Allocation of the Purchase Price .............................. 5
1.07 Closing Balance Sheet ......................................... 6
1.08 Working Capital Adjustment .................................... 7
1.09 Escrow ........................................................ 8
1.10 Absolute Sale ................................................. 9
1.11 Other Contracts ............................................... 10
1.12 Bulk Sales Laws ............................................... 10
ARTICLE II RELATED AGREEMENTS ........................................... 10
2.01 Escrow Agreement .............................................. 10
2.02 Assignment and Assumption of Liabilities ...................... 10
2.03 Bill of Sale .................................................. 10
2.04 Assignment of Trademarks ...................................... 10
2.05 Assignment of Real Property Leases ............................ 10
2.06 Employment Agreements ......................................... 11
2.07 Assignment of Domain Name ..................................... 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER .................... 11
3.01 Organization and Good Standing ................................ 11
3.02 Authorization, Compliance with Other Instruments and Law ...... 11
3.03 Financial Statements .......................................... 12
3.04 Absences of Certain Changes or Events ......................... 13
3.05 Tax Matters ................................................... 14
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3.06 Material Contracts and Commitments ............................ 14
3.07 Licenses, Permits and Authorizations .......................... 14
3.08 Title to Purchased Assets ..................................... 14
3.09 Transferred Intellectual Property ............................. 15
3.10 Employee Benefit Plans ........................................ 16
3.11 Litigation and Other Claims ................................... 17
3.12 Sufficiency of Purchased Assets ............................... 18
3.13 Compliance with Laws .......................................... 18
3.14 Insurance ..................................................... 18
3.15 Inventory; Accounts Receivable ................................ 18
3.16 Real Property Leases .......................................... 19
3.17 Labor Matters ................................................. 19
3.18 Condition of Purchased Assets ................................. 19
3.19 Environmental Matters ......................................... 20
3.20 Absence of Certain Payments ................................... 21
3.21 Investment Representation ..................................... 21
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER ...................... 21
4.01 Organization .................................................. 21
4.02 Due Authorization ............................................. 22
ARTICLE IVA REPRESENTATIONS, WARRANTIES AND COVENANTS OF MTS ........... 22
4A.1 Organization .................................................. 22
4A.2 Due Authorization ............................................. 22
4A.3 Capitalization ................................................ 23
4A.4 Financial Statements .......................................... 23
4A.5 Consideration Shares .......................................... 23
4A.6 Public Documents .............................................. 23
4A.7 Litigation and Other Claims ................................... 24
ARTICLE V COVENANTS PENDING CLOSING ..................................... 24
5.01 Conduct of Business of Seller Prior to the Closing ............ 24
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5.02 Access to Information ......................................... 25
5.03 Consents ...................................................... 25
5.04 Public Announcements .......................................... 25
5.05 Confidentiality ............................................... 26
5.06 Related Agreements ............................................ 26
5.07 No-Shop ....................................................... 27
ARTICLE VI CLOSING CONDITIONS ........................................... 27
6.01 Conditions to Each Party's Obligations to Effect the
Transactions Contemplated Hereby .............................. 27
6.02 Conditions to the Obligations of Seller to Effect the
Transactions Contemplated Hereby .............................. 27
6.03 Conditions to the Obligations of Buyer to Effect the
Transactions Contemplated Hereby .............................. 28
ARTICLE VII THE CLOSING ................................................. 29
7.01 Time and Place of Closing ..................................... 29
7.02 Closing ....................................................... 29
ARTICLE VIII SUCCESSOR EMPLOYER ......................................... 29
8.01 Employment with Buyer ......................................... 29
8.02 Third Parties ................................................. 30
8.03 Accrued Vacation, Personal and Sick Time ...................... 30
8.04 Accrued Unpaid Commissions .................................... 30
ARTICLE IX WORKERS' COMPENSATION AND PRODUCT LIABILITY RESPONSIBILITY ... 30
9.01 Workers' Compensation ......................................... 30
9.02 Product Liability and Warranty Claims ......................... 30
9.03 Responsibility for Prior Claims ............................... 30
ARTICLE X POST-CLOSING COVENANTS ........................................ 31
10.01 Lock-up of Consideration Shares ............................... 31
10.02 Piggy-back Registration Rights ................................ 31
10.03 Board Representation .......................................... 35
10.04 Listing of MTS's Ordinary Shares .............................. 35
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10.05 Further Assurances ............................................ 35
10.06 Commissions and Fees .......................................... 35
10.07 Sales, Transfer and Use Taxes ................................. 35
10.08 Nondisclosure; Noncompetition ................................. 36
10.09 Indemnification ............................................... 37
10.10 Defense of Claims ............................................. 38
10.11 Exclusive Remedy .............................................. 40
10.12 Name .......................................................... 40
10.13 2008 Financial Statements ..................................... 40
10.14 Expenses ...................................................... 40
ARTICLE XI MISCELLANEOUS ................................................ 40
11.01 Binding Effect ................................................ 40
11.02 No Assignment ................................................. 40
11.03 Counterparts .................................................. 41
11.04 Governing Law ................................................. 41
11.05 Arbitration ................................................... 41
11.06 Survival ...................................................... 41
11.07 Notices ....................................................... 41
11.08 Amendment and Modification .................................... 43
11.09 Waiver of Compliance .......................................... 43
11.10 Interpretation ................................................ 43
11.11 Entire Agreement .............................................. 44
11.12 Damages and Equitable Relief .................................. 44
11.13 Severability of Covenants ..................................... 44
ARTICLE XII TERMINATION AND ABANDONMENT ................................. 44
12.01 Termination ................................................... 44
12.02 Procedure and Effect of Termination ........................... 45
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SCHEDULES
SCHEDULE DESCRIPTION
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1.01(a) Furniture, Machinery and Equipment
1.01(b) Inventories
1.01(c)(x) Materials, Supplies and Services
1.01(c)(y) Real Property Leases
1.01(c)(z) Material Contracts
1.01(d) Patents, Trademarks and Related Assets
1.01(f) Governmental Licenses, Permits and Authorizations
1.01(g) Accounts and Notes Receivable
1.01(h) Other Current Assets
1.03(a) Deferred Maintenance Contracts
1.03(b) Other Uncompleted Contracts
1.03(c) Accounts Payable
1.06 Allocation of the Purchase Price
3.01 Jurisdictions
3.05 Tax Matters
3.07 Licenses, Permits and Authorizations
3.08 Exceptions to Title to Purchased Assets
3.10 Employee Benefit Plans
3.14 Insurance
3.16 Real Property Leases Defaults
3.18 Labor Matters
3.19 Environmental Matters
4A.3 Capitalization of MTS
6.03(e) Consents
8.01 Transferred Employees
8.03 Accrued Vacation, Personal and Sick Time of Transferred Employees
8.04 Accrued Unpaid Commissions
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EXHIBITS
EXHIBIT DESCRIPTION
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A Form of Escrow Agreement
B Form of Assignment and Assumption of Liabilities Agreement
C Form of Bill of Sale
D Form of Assignment of Trademarks
E(i) Form of Assignment of Real Property Leases (Powder Springs,
Georgia)
E(ii) Form of Assignment of Real Property Leases (Framingham,
Massachusetts)
F(i) Form of Employment Agreement with Transferred Employees (standard
employees)
F(ii) Form of Employment Agreement with Roger Challen
F(iii) Form of Employment Agreement with John Dretler
G Form of Domain Name Assignment Agreement
H Form of Opinion of MTS's Israeli Counsel
I Form of Opinion of Buyer's Counsel
J Form of Opinion of Seller's Counsel
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of December 23, 2008 by
and among MTS IntegraTRAK Inc., a company incorporated under the laws of the
State of Delaware ("Buyer"), Mer Telemanagement Solutions Ltd., a company
organized under the laws of the State of Israel, the parent company of Buyer
("MTS") and AnchorPoint, Inc., a company incorporated under the laws of the
Commonwealth of Massachusetts ("Seller").
SUMMARY OF TRANSACTION
WHEREAS, Seller is a leading provider of telecom expenses management
solutions that enable enterprises to gain visibility and control of strategic
assets that drive key business processes and crucial competitive advantage;
WHEREAS, MTS is a worldwide provider of solutions for
telecommunications expense management used by enterprises, and billing
solutions, used by information and telecommunication service providers; and
WHEREAS, Seller wishes to sell and MTS wishes to purchase certain of
the Proprietary Rights of Seller and Buyer wishes to purchase the remainder of
the business of Seller (the "Business") and substantially all of the assets
related to the Business of Seller, subject to certain of the liabilities of
Seller.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, representations and warranties herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
mutually acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
SALE OF ASSETS AND TERMS OF PAYMENT
1.01 ASSETS BEING SOLD. Upon the terms and subject to the
conditions set forth in this Agreement, Seller agrees to sell and MTS and Buyer
agree to purchase, at the Closing (as defined in Section 7.01 hereof), certain
of the assets of Seller related to the Business as they shall exist on the
Closing Date (as defined in Section 7.01 hereof), except for the Retained Assets
(as defined in Section 1.02 hereof), consisting of the following assets (the
"Purchased Assets"):
(a) FURNITURE, MACHINERY AND EQUIPMENT. All the furniture,
machinery, equipment, computers, fixtures and leasehold improvements of
Seller related to the Business which are listed on SCHEDULE 1.01(a) hereto,
which shall be updated to include all similar assets of Seller acquired
hereafter prior the Closing.
(b) INVENTORIES. All inventories owned by Seller of any kind
related to the Business, including, but not limited to, finished goods
(whether manufactured or purchased), work-in-process, supplies and raw
materials listed on SCHEDULE 1.01(b) hereto;
(c) CONTRACTS AND COMMITMENTS. Subject to the provisions of
Section 1.11 hereof, all of the right, title and interest of Seller in, to
and under all pending and executory contracts, agreements, commitments and
understandings of Seller related to the Business, including, without
limitation, those with respect to (w) confidentiality of information
relating to the Business of Seller supplied to potential purchasers of the
Business of Seller, (x) the purchase of materials, supplies or services,
including, without limitation, any warranties running with such materials,
supplies or services, as listed on SCHEDULE 1.01(c)(x) hereto, (y) the
leases for the Seller's premises at 5041 Dallas Highway, Building 3, Suite
300, Powder Springs, GA 30127 and at 46 Park Street, Framingham, MA 01702
(the "Real Property Leases") as specified on SCHEDULE 1.01(c)(y), and (z)
the Material Contracts as defined in Section 3.06, which Material Contracts
are listed on SCHEDULE 1.01(c)(z) hereto;
(d) PROPRIETARY RIGHTS.
(i) PATENTS, TRADEMARKS AND RELATED ASSETS. All United
States and foreign patents, trademarks, service marks, domain names,
Internet websites and their contents (including, without limitation,
"HTTP://WWW.ANCHORPOINT.COM/"), software and goodwill appurtenant thereto,
and applications and registrations therefor, copyrights, tradenames
(including, without limitation, "AnchorPoint" and variations thereof),
brand names and licenses ("Proprietary Rights") of Seller related to the
Business, including those listed in Schedule 1.01(d) to the Purchase
Agreement;
(ii) TECHNICAL KNOW-HOW. All proprietary and other
technical information, technology, knowledge and expertise ("Technical
Know-how") owned by Seller related to the Business (including research and
development in progress), including inventions and discoveries, protocols,
improvements, processes, know-how, formulae, drawings, specifications,
production data, trade secrets, plans, files, notebooks and other records
and documents pertaining to research and development;
(iii) LICENSES. All right, title and interest related to
the Business of Seller in, to and under any licenses of any Proprietary
Rights or Technical Know-how owned by any third party; and
(iv) RELATED AGREEMENTS. All secrecy or other agreements
related to the Business of Seller with others, including employees,
relating to disclosure, assignment or patenting of any Proprietary Rights
or Technical Know-how;
(e) BOOKS AND RECORDS. All books and records and printed
materials, including all sales and credit records, marketing, advertising
and sales material, literature, catalogues and other publications, customer
lists, supplier lists, financial records and personnel and payroll records
of Seller related to the Business, but excluding the corporate books and
records of the Seller and any books and records, or portions thereof, that
relate to Retained Assets;
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(f) GOVERNMENTAL LICENSES, PERMITS AND AUTHORIZATIONS. To the
extent assignable, all governmental licenses, permits and authorizations
related to the Business, if any, a complete list of which is set forth on
SCHEDULE 1.01(f) hereto;
(g) ACCOUNTS AND NOTES RECEIVABLE. All of Seller's accounts
receivable and notes receivable related to the Business as reflected on
Seller's balance sheet as of September 30, 2008, as listed on SCHEDULE
1.01(g);
(h) OTHER CURRENT ASSETS. To the extent assignable, all of
Seller's cash and cash equivalents, prepaid expenses and other current
assets related to the Business as reflected on Seller's balance sheet as of
September 30, 2008, as listed on SCHEDULE 1.01(h);
(i) INTANGIBLE ASSETS. The Business of Seller as a going concern
and the goodwill thereof; and
(j) OTHER ASSETS. All of Seller's right, title and interest in
and to all other assets, properties, and rights of every kind and nature
owned or held by Seller related to the Business or in which Seller has an
interest on the Closing Date, known or unknown, fixed or unfixed, accrued,
absolute, contingent or otherwise, whether or not specifically referred to
in this Agreement, other than the Retained Assets.
Of such Purchased Assets, MTS shall purchase all of the
proprietary rights and related licenses, including the proprietary software
listed on SCHEDULE 1.01(d), as described in paragraphs 1.01(d)(i) and (iii)
and Buyer shall acquire the remainder of the Purchased Assets.
1.02 RETAINED ASSETS. Notwithstanding the foregoing, the
Purchased Assets shall not include (i) any receivable or other rights arising
from a settlement agreement between the Seller and A.G. Edwards & Sons entered
into in May 2008 (including approximately $565,200 in cash received from such
settlement); (ii) all rights of Seller under this Agreement or any of the
Related Agreements; and (iii) all rights in and to the Consideration Shares and
the Escrow Shares other than as set forth in this Agreement and the Related
Agreements (the "Retained Assets").
1.03 ASSUMED LIABILITIES. Buyer agrees to assume, perform and
discharge those of Seller's liabilities related to the Business set forth below
(the "Assumed Liabilities") and in any event shall not include the Retained
Liabilities, as defined below:
(a) DEFERRED MAINTENANCE CONTRACTS. All of Seller's obligations
with respect to the deferred maintenance contracts being purchased
hereunder listed on SCHEDULE 1.03(a) hereto (the "Deferred Maintenance
Contracts"), but not including any obligations arising from any breach of
any such Deferred Maintenance Contracts occurring prior to the Closing
Date, and except as provided in Section 1.11 hereof;
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(b) OTHER UNCOMPLETED CONTRACTS. All of Seller's obligations
with respect to the uncompleted contracts and commitments being purchased
as Purchased Assets other than the Deferred Maintenance Contracts, as
listed on SCHEDULE 1.03(b) hereto, including, but not limited to, the
Material Contracts and Real Property Leases, but not including any
obligations arising from any breach of any such contract or commitment
occurring prior to the Closing Date, and except as provided in Section 1.11
hereof;
(c) EMPLOYEE OBLIGATIONS. All of the obligations and liabilities
relating to the Transferred Employees (as defined in Section 8.01), to the
extent such obligations arise after the Closing Date; PROVIDED, HOWEVER,
that Buyer has agreed to credit the Transferred Employees for accrued
vacation, sick time and personal time pursuant to Section 8.03 hereof and
to pay the Transferred Employees any accrued and unpaid commissions
pursuant to Section 8.04 hereof; PROVIDED that at the Closing, Seller shall
reimburse Buyer for such accrued vacation, sick time and personal time and
commissions in accordance with and subject to Section 6.03(f); and
(d) REAL PROPERTY LEASES. The liabilities, if any, of Seller
under the Real Property Leases relating to the last quarter of the year
ended December 31, 2008, but only to the extent properly accrued on the
Closing Balance Sheet.
(e) ACCOUNTS PAYABLE. The Seller's accounts payable related to
the Business specified in SCHEDULE 1.03(c).
Buyer shall not assume any liabilities or obligations of Seller except
as specifically assumed by Buyer pursuant to the provisions of Sections 1.03,
8.03, 8.04, 9.01 and 9.02 and Seller agrees to indemnify and hold harmless Buyer
with respect to any such non-assumed liabilities and obligations in the manner
provided in Section 10.09(a) hereof.
1.04 RETAINED LIABILITIES. Notwithstanding the foregoing, the
Assumed Liabilities shall not include (i) tax liabilities of Seller arising
prior to the Closing Date; and (ii) any liabilities or obligations arising out
of, resulting from, or relating to claims, whether founded upon negligence,
breach of warranty, strict liability in tort or any other similar legal theory,
seeking compensation or recovery for or relating to injury to person or damage
to property arising out of or related to a defect or alleged defect of, or
otherwise related to, any product made or sold by Seller or any predecessor of
Seller on or prior to the Closing Date (except such warranty claims in the
ordinary course of business); and (iii) any liabilities or obligations arising
out of, resulting from, or relating to claims of infringement or other
misappropriation of intellectual property rights of third parties with respect
to the manufacture, use and sale of products by Seller or any predecessor of
Seller on or prior to the Closing Date; and (iv) any liabilities or obligations
arising out of, resulting from or relating to any litigation, proceedings,
actions, arbitrations, claims or investigations at law or in equity or by or
before any governmental agency pending or threatened against Seller as of the
Closing Date; and (v) Environmental Claims (as defined in Section 3.19); and
(vi) any liabilities or obligations of Seller, or any consolidated group of
which Seller is a member, for any foreign, Federal, state or local income,
franchise, gross receipts, property, sales, use or value added taxes or any
interest, additions to tax or penalties thereon, accrued for or applicable to
Seller on or prior to the Closing Date; and (vii) any liabilities or obligations
of Seller owed or relating to related parties and stockholders of the Seller;
and (viii) any liabilities or obligations with respect to bank loans and credit
lines existing prior to the Closing Date, and (ix) except as otherwise provided
in Section 1.03(c), any liabilities or obligations arising prior to the Closing
Date with respect to the Transferred Employees (as defined in Section 8.01
hereinbelow), including, without limitation, all obligations for salary,
benefits and other compensation which accrue prior to the Closing Date, and (x)
any liabilities or obligations relating to any Employee Benefit Plan, as defined
in Section 3.10 hereof, and (xi) any liabilities and obligations of Seller in
connection with or under this Agreement; and (xii) any other liabilities not
specifically assumed by Buyer pursuant to Section 1.03 hereof (collectively, the
"Retained Liabilities").
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1.05 PURCHASE PRICE.
(a) PAYMENT. MTS and Buyer, in consideration for the purchase of
the Purchased Assets being sold pursuant to this Agreement, agree to pay
and deliver to Seller 2,174,615 ordinary shares, par value NIS 0.01 per
share, of MTS ("Ordinary Shares"), representing after issuance 25% of MTS's
issued and outstanding shares (the "Purchase Price"), that shall be paid at
the Closing as follows (the "Consideration Shares"): (y) 1,848,423 Ordinary
Shares representing 85% of the Consideration Shares (the "Closing Shares")
shall be issued and delivered to Seller at Closing; and (z) 326,192
Ordinary Shares representing 15% of the Consideration Shares (the "Escrow
Shares") shall be issued in the name of Seller at Closing and delivered to
Carter Ledyard & Milburn LLP, as escrow agent (the "Escrow Agent"), to be
held in trust for a period of fifteen (15) months following the Closing in
accordance with the terms of Section 1.09 hereof and pursuant to the terms
of the Escrow Agreement in the form of EXHIBIT A hereto (the "Escrow
Agreement"). The Escrow Shares held by the Escrow Agent pursuant to the
Escrow Agreement are herein called the "Escrow Fund." The percentages in
this paragraph (a) assume 6,523,845 Ordinary Shares are issued and
outstanding immediately prior to Closing (which excludes 219,490 ordinary
shares issued in a private placement on September 29, 2008).
(b) ASSUMPTION OF OBLIGATIONS. At the Closing, Buyer shall
deliver to Seller an instrument in the form of EXHIBIT B hereto by which
Buyer shall assume and agree to perform and discharge the Assumed
Liabilities.
1.06 ALLOCATION OF THE PURCHASE PRICE. Seller, MTS and Buyer
agree to allocate the purchase price for the Purchased Assets in the manner set
forth on SCHEDULE 1.06 hereto, which shall be prepared in accordance with the
rules under Section 1060 of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Treasury Regulations promulgated thereunder, which allocation
the parties shall adhere to for the purposes of all Federal, state and local tax
returns filed by them subsequent to the Closing, including the determination by
Seller of taxable gain or loss on the sale of the Purchased Assets hereunder and
the determination by Buyer of its tax basis with respect to the Purchased
Assets.
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1.07 CLOSING BALANCE SHEET.
(a) As soon as possible after Closing, but in no event later
than ninety (90) days after the Closing, the Buyer shall prepare and
deliver to the Seller a consolidated balance sheet of the Purchased Assets
and the Assumed Liabilities as of the Closing Date (the "Closing Balance
Sheet") and a written statement (the "Closing Statement") derived therefrom
which sets forth, as of the Closing Date, the value of the current assets
less current liabilities, excluding from current liabilities (i) any
deferred revenues; (ii) current liabilities due to related parties and
shareholders of Seller, other than as provided in Section 1.03(d); and
(iii) accounts receivable for which an invoice has been rendered with
respect to the provision of professional services by Seller or under any
agreement involving the license of the Seller's solutions, to the extent
that any milestone(s) have not been completed under such arrangement or
agreement (the "Closing Working Capital"). The Closing Balance Sheet,
Closing Statement and value of the Closing Working Capital shall be
determined in accordance with generally accepted accounting principles in
the United States ("U.S. GAAP"), consistent with the Seller's past
practices as used in preparing the Seller's audited financial statements as
of December 31, 2006 and 2007 and for each of the two years ended December
31, 2007.
(b) Promptly after the Closing Balance Sheet and the Closing
Statement are delivered to the Seller pursuant to Section 1.07(a), the
Seller shall examine the Closing Balance Sheet and the Closing Statement.
The Buyer shall give the Seller timely and reasonable access to such of the
working papers, documents, financial information and other information used
in the preparation of the Closing Balance Sheet and the Closing Statement
as the Seller reasonably requests in connection with such examination. The
Seller shall complete its examination of the Closing Balance Sheet and the
Closing Statement during the Examination Period. The "Examination Period"
shall commence upon delivery to the Seller of the Closing Balance Sheet and
the Closing Statement and end on the earliest of (i) fifteen (15) days
after such delivery, (ii) the date the Seller delivers an Objection Notice,
as defined in paragraph (c) below to the Buyer, or (iii) the date the
Seller notifies the Buyer that the Seller accepts the Closing Balance Sheet
and the Closing Statement and the Closing Working Capital set forth
therein.
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(c) DISPUTES. During the Examination Period, the Seller may
object to any item or valuation contained in the Closing Balance Sheet,
Closing Statement or to the calculation of the Closing Working Capital by
providing to the Buyer, acting for itself and for MTS, a written notice
describing in reasonable detail the Seller's objections thereto (an
"Objection Notice"). Seller shall send any Objection Notice concurrently to
Buyer and Escrow Agent. The Seller's failure to deliver an Objection Notice
to the Buyer within the Examination Period shall constitute the Seller's
binding acceptance of the Closing Balance Sheet and the Closing Statement
and all matters identified therein. If the Buyer and the Seller fail to
resolve any objection described in an Objection Notice within ten (10)
business days after the date the Objection Notice is delivered to the
Seller, then, at the request of either party, the Buyer and the Seller
shall meet in an attempt to resolve each unresolved objection described in
the Objection Notice and reach a written agreement with respect to such
objection (the "Settlement Agreement"). If the parties enter into a
Settlement Agreement, the Closing Balance Sheet, the Closing Statement and
the Closing Working Capital shall be deemed to be as agreed therein. If the
parties are unable to resolve all objections described on the Objection
Notice within twenty (20) business days after receipt by the Buyer of such
Objection Notice, then the Buyer and Seller shall select an independent
accounting firm (the "Independent Accountants") of recognized national
standing (or, if the parties cannot agree upon a selection, they shall
select such accounting firm by lot from among the four largest accounting
firms in the United States); provided, that, such selected accounting firm
shall not at the time of selection be performing services for either the
Buyer or Seller or any affiliate of the Buyer or Seller. Such selected
accounting firm shall resolve all unresolved objections as promptly as
practicable. A decision by the independent accounting firm as to the
resolution of such objections and the resulting calculation of the Closing
Working Capital (the "Accountant's Determination") shall be (absent an
agreement of the parties regarding an error that is manifest) conclusive
and binding upon the parties for purposes of this Agreement. The
Accountant's Determination shall be (i) in writing, (ii) made in accordance
with U.S. GAAP, consistent with the Seller's past practices as used in
preparing the Seller's audited financial statements as of December 31, 2006
and 2007 and for each of the two years ended December 31, 2007, and (iii)
nonappealable and incontestable by the Buyer and Seller and each of their
respective affiliates and successors and not subject to collateral attack
for any reason. All fees and costs payable to the Independent Accountants
shall be apportioned between the Buyer and Seller based upon the inverse
proportion of the amount of the objections resolved by such accounting firm
in favor of such party (i.e. so the prevailing party bears a lesser amount
of such fees and costs), such apportionment to be determined by the
Independent Accountants and stated in the Accountant's Determination.
1.08 WORKING CAPITAL ADJUSTMENT.
(a) If the Closing Working Capital as finally determined
pursuant to Section 1.07 is less than $600,000, the Seller shall pay to the
Buyer, acting for itself and for MTS, an amount equal to the difference
between $600,000 and the Closing Working Capital (the "Working Capital
Adjustment").
(b) Any payment due from the Seller to the Buyer under this
Section 1.08 shall first be satisfied from the Escrow Fund, to the extent
available, and the Seller shall pay to Buyer the value of any excess over
such amount in Ordinary Shares of MTS or cash, as shall be determined by
Buyer at its sole discretion.
(c) Payments required to be made pursuant to this Section 1.08
shall be made as follows: (i) if the Seller shall not have delivered an
Objection Notice to the Buyer in accordance with the provisions of Section
1.07(c), then within five (5) days after the end of the Examination Period,
joint written instructions of Buyer, acting for itself and for MTS, and
Seller ("Joint Instructions") shall be delivered to Escrow Agent,
instructing Escrow Agent to release a particular number of Escrow Shares
from the Escrow Fund; and (ii) if the Seller shall have delivered such an
Objection Notice to the Buyer, then within five (5) days after the end of
the Examination Period, Joint Instructions shall be delivered to Escrow
Agent, instructing Escrow Agent to release undisputed amounts of Escrow
Shares and Joint Instructions with respect to any disputed amounts of
Escrow Shares shall be delivered to Escrow Agent within five (5) days after
the resolution of the dispute, whether by the Settlement Agreement or upon
the Accountant's Determination.
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1.09 ESCROW.
(a) The Escrow Shares shall be distributed by the Escrow Agent
as follows:
(x) unless Seller elects to pay such amount in cash, to
Buyer, acting for itself and for MTS, upon Joint Instructions, up to an
amount of Escrow Shares to satisfy payment for the Working Capital
Adjustment, as provided in and in accordance with Section 1.08 of this
Agreement (a "Working Capital Adjustment Claim"). If any Escrow Shares have
been distributed by Escrow Agent to Buyer to satisfy a Working Capital
Adjustment Claim, Seller shall promptly thereafter deliver to the Escrow
Agent a number of Ordinary Shares of MTS in such amount so that the
aggregate number of Escrow Shares after such delivery shall be equal to the
value of 15% of the sum of the Purchase Price minus the Working Capital
Adjustment. The value of the additional Ordinary Shares of MTS to be
delivered by Seller to Escrow Agent pursuant to this Section 1.09(a)(x)
shall be determined based on the Escrow Share Base Value, as defined in
Section 1.09(e). The term "Escrow Shares" in this Agreement shall be deemed
to include any such additional Ordinary Shares of MTS so delivered by
Seller to the Escrow Agent.
(y) subject to subparagraph (d) below, from time to
time, to Buyer, acting for itself and for MTS, as requested by Buyer (if
agreed by Seller or resolved pursuant to Section 1.09(c) below) to satisfy
a claim for indemnification under Section 10.09(a) of this Agreement (an
"Indemnification Claim");
(z) fifteen (15) months after the Closing, to Seller,
any balance of the Escrow Shares in the Escrow Fund minus (i) any Working
Capital Adjustment Claim and Indemnification Claim not paid to Buyer when
due; (ii) any disputed amounts under any outstanding Objection Notice (and
upon resolution of the dispute, whether by Settlement Agreement or upon the
Accountant's Determination pursuant to Section 1.07 hereof, the agreed or
resolved amount shall be delivered to Buyer or Seller, as applicable, upon
or as soon as practicable following Escrow Agent's receipt of Joint
Instructions); (iii) any Indemnification Claim asserted by Buyer but not
satisfied (and upon resolution of any such Indemnification Claim pursuant
to Section 1.09(c), the agreed or resolved amount with respect of such
Indemnification Claim shall be delivered to Buyer or Seller, as
applicable); and (iv) when no unsettled or unresolved Objection Notice and
Indemnification Claim remains, the remainder of any Escrow Shares shall be
delivered to Seller).
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(b) Buyer, acting for itself and for MTS, shall send any
Indemnification Claim concurrently to Escrow Agent and Seller.
(c) OBJECTIONS.
(i) Notwithstanding anything contained in Sections
1.09(a), Seller shall have thirty (30) days from the date an
Indemnification Claim is given to Seller to object in writing to all or
part of an Indemnification Claim (a "Notice of Claim Dispute"). Copies of
each Notice of Claim Dispute shall be sent by Seller to the Escrow Agent
and Buyer. If Buyer and Seller fail to resolve any objection contained in
such Notice of Claim Dispute within ten (10) days after the date the Notice
of Claim Dispute is delivered to Buyer, then, at the request of either
party, Buyer and Seller shall meet in an attempt to resolve the objection
described in such Notice of Claim Dispute and reach a written agreement
with respect to such objection (a "Claim Settlement Agreement").
(ii) If Buyer, acting for itself and for MTS, and Seller
enter into a Claim Settlement Agreement, the objections contained in such
Notice of Claim Dispute shall be deemed to be as resolved therein. If Buyer
and Seller are unable to resolve the objection described in such Notice of
Claim Dispute within twenty (20) days after delivery to Buyer of such
Notice of Claim Dispute, then either of Buyer or Seller may submit the
objections contained in such Notice of Claim Dispute to arbitration as
contemplated by Section 11.05 hereof.
(d) Seller and Buyer shall provide instructions to the Escrow
Agent to implement the provisions of this Section 1.09.
(e) The value of the Escrow Shares in the Escrow Fund as of the
Closing Date (the "Escrow Share Base Value") shall be determined based on
the average of the closing prices of the Ordinary Shares of MTS on the
NASDAQ Capital Market for the last ten (10) trading days ending on the
trading day immediately prior to the Closing Date. The value of Escrow
Shares being tendered for payment for a Working Capital Adjustment Claim
shall be determined based on the Escrow Share Base Value. The value of
Escrow Shares being tendered for payment for an Indemnification Claim (the
"Escrow Share Adjusted Value") shall be determined based on the closing
prices of the Ordinary Shares of MTS on the NASDAQ Capital Market for the
last ten (10) trading days ending on the trading day immediately prior to
the date of such payment; provided, however, that in no event shall the
Escrow Share Adjusted Value be equal to less than 75% of the Escrow Share
Base Value or more than 125% of the Escrow Share Base Value.
1.10 ABSOLUTE SALE. Seller agrees that the sale, conveyance,
transfer and delivery of the Purchased Assets to Buyer and MTS shall be free and
clear of all title defects, liabilities, obligations, liens, encumbrances,
charges and claims of any kind, except any liabilities and obligations expressly
assumed by Buyer pursuant to Section 1.03 hereof and the title exceptions listed
in SCHEDULE 3.08 hereto.
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1.11 OTHER CONTRACTS. This Agreement shall not constitute an
agreement to assign or sublicense, as the case may be, any contracts, leases,
licenses, agreements or arrangements (for purposes of this Section 1.11
collectively called "contracts") if such attempted assignment or sublicense,
without the consent of the other party thereto, is not permitted as a matter of
law or in accordance with the terms of such contracts or would constitute a
breach of such contracts or would in any way impair the rights of Seller or
Buyer thereunder. Seller will use its best efforts to obtain, or will assist
Buyer and MTS to obtain, such consents as may be necessary or appropriate to
vest in Buyer all of Seller's right, title and interest in all such contracts.
If such consent is not obtained or if an assignment, attempted assignment or
sublicense is not so permitted or would be ineffective or would impair Buyer's
rights thereunder, Seller will cooperate with Buyer in any reasonable
arrangement designed to provide for Buyer the benefits under any such contracts.
1.12 BULK SALES LAWS. Seller and Buyer hereby waive compliance
with the provisions of any applicable bulk sales laws; PROVIDED, HOWEVER, that
Seller agrees to pay and discharge when due or to contest or litigate all claims
of creditors which are asserted against Buyer or the Purchased Assets by reason
of such noncompliance, to indemnify, defend and hold harmless Buyer from and
against any and all such claims in the manner provided in Section 10.09(a)
hereof, and to take promptly all necessary action to remove any lien or
encumbrance which is placed on the Purchased Assets by reason of such
noncompliance.
ARTICLE II
RELATED AGREEMENTS
Simultaneously with the Closing hereunder the following agreements
(the "Related Agreements") shall be executed and delivered:
2.01 ESCROW AGREEMENT. Escrow Agreement substantially in the form
attached as EXHIBIT A;
2.02 ASSIGNMENT AND ASSUMPTION OF LIABILITIES. Assignment and
Assumption of Liabilities Agreement substantially in the form attached as
EXHIBIT B;
2.03 BILL OF SALE. Bill of Sale substantially in the form
attached as EXHIBIT C;
2.04 ASSIGNMENT OF TRADEMARKS. Trademarks Assignment Agreement
substantially in the form attached as EXHIBIT D;
2.05 ASSIGNMENT OF REAL PROPERTY LEASES. Assignment of Real
Property Leases for the premises of the Seller located in Powder Springs,
Georgia and Framingham, Massachusetts substantially in the forms attached as
EXHIBIT E(i) and EXHIBIT E(ii), respectively;
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2.06 EMPLOYMENT AGREEMENTS. Employment Letter Agreements with the
individuals listed on SCHEDULE 8.01 hereto substantially in the forms attached
as EXHIBIT F(i) (for standard employees), EXHIBIT F(ii) (for Roger Challen) and
EXHIBIT F(iii) (for John Dretler).
2.07 ASSIGNMENT OF DOMAIN NAME. Domain Name Assignment Agreement
substantially in the form attached as EXHIBIT G.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the correspondingly numbered Section of the
disclosure schedule delivered by the Seller to Buyer and MTS prior to the
execution of this Agreement (the "Seller Disclosure Schedule") (provided,
however, that a matter disclosed with respect to one representation or warranty
shall also be deemed to be disclosed with respect to each other representation
or warranty to which the matter disclosed reasonably relates, but only to the
extent such relationship is reasonably apparent on the face of the disclosure
contained in the Seller Disclosure Schedule with respect to such matter), Seller
represents and warrants to Buyer and MTS as of the date hereof and as of the
Closing Date as set forth in this Article III. As used herein, any
representation or warranty made to the "Seller's knowledge," "knowledge of the
Seller" or "best knowledge of Seller" or similar phrases shall mean the actual
knowledge of such facts, circumstances or information of Roger Challen.
3.01 ORGANIZATION AND GOOD STANDING. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Massachusetts, and has the corporate power and authority to own and operate its
properties and assets (including the Purchased Assets) and to conduct its
business as it is now being conducted. Seller is duly qualified to do business
and in good standing to do business in all jurisdictions in which Seller owns,
leases or operates property or otherwise conducts Seller's business, except
where the failure to be so qualified or in good standing would not have a
material adverse effect on Seller's ability to conduct business using the
Purchased Assets. Each of such jurisdictions is set forth on SECTION 3.01 of the
Seller Disclosure Schedule.
3.02 AUTHORIZATION, COMPLIANCE WITH OTHER INSTRUMENTS AND LAW.
Seller has full corporate power and authority to enter into this Agreement and
the other agreements and documents to be executed and delivered by it at Closing
as contemplated hereby, including, without limitation, the Related Agreements
(collectively, the "Closing Documents"), to consummate the transactions
contemplated hereby and thereby and to perform its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement and the
Closing Documents and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action on the
part of the shareholders and board of directors of Seller. This Agreement has
been duly executed and delivered by Seller, and is a valid and binding
obligation of Seller enforceable against Seller in accordance with its terms and
the Closing Documents and will, when executed and delivered by Seller at
Closing, constitute valid and binding obligations of Seller enforceable against
Seller in accordance with their terms. The execution, delivery and performance
of this Agreement and the Closing Documents will not (i) conflict with or result
in a violation of any provision of the Certificate of Incorporation or By-Laws
of Seller or of any order, writ, injunction, judgment, decree, law, statute,
rule or regulation to which Seller is a party or by which Seller or the
Purchased Assets may be bound or affected; or (ii) result in a default (or give
rise to any right of termination, cancellation or acceleration) or result in the
creation of any lien, encumbrance, security agreement, charge, pledge, equity or
other claim or right of any person in or to the Purchased Assets under the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which Seller is a party or by
which Seller or the Purchased Assets may be bound. All necessary authorizations
of the transactions contemplated by this Agreement required to be obtained by
Seller from any Federal, state, local or foreign government or agency shall have
been obtained prior to the Closing, and any filings, notifications or
disclosures required by law or regulation of any such government or agency shall
have been made in such form as is acceptable as filed. Buyer shall cooperate
with Seller with respect to the aforesaid filings, notifications or disclosures
to the extent necessary to obtain said authorizations. Seller will deliver to
Buyer at the Closing true and complete copies of all resolutions of its
shareholders, if required, and board of directors by which the execution,
delivery and performance of this Agreement and the Closing Documents and the
consummation of the transactions contemplated hereby and thereby were
authorized, certified by its respective Secretary or Assistant Secretary as of
the Closing Date.
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3.03 FINANCIAL STATEMENTS.
(a) Seller has previously furnished to Buyer true and correct
copies of (i) the audited balance sheets of Seller as at December 31, 2006
and 2007; (ii) the audited income statements of Seller and statements of
stockholders' equity and cash flow for the fiscal years ended December 31,
2006 and 2007; (iii) unaudited balance sheet as of June 30, 2008 and
September 30, 2008 and the related statements of income, stockholders'
equity and cash flow for the periods then ended (collectively, the
"Financial Statements"). The balance sheets included in the Financial
Statements (including the related notes thereto) are true, complete and
correct and present fairly the financial position of Seller as of their
respective dates, and the related income statements included in the
Financial Statements are true, complete and correct and present fairly the
results of operations of Seller for the periods then ended, and all have
been prepared on a consistent basis, all in conformity with generally
accepted accounting principles in the United States ("U.S. GAAP") applied
on a consistent basis.
(b) Seller has no liabilities or obligations (whether absolute,
accrued, contingent or otherwise, and whether due or to become due)
required to be reflected or reserved against on a balance sheet prepared in
accordance with U.S. GAAP related to the Business which are not fully
reflected or reserved against in the Financial Statements except those
which have been incurred in the ordinary course of business of Seller since
the date of the Financial Statements (all of which will, unless satisfied
on or prior to the Closing Date, constitute Retained Liabilities).
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3.04 ABSENCES OF CERTAIN CHANGES OR EVENTS.
(a) Since the close of business on September 30, 2008, Seller's
Business has been operated, and through the Closing Date will have been
operated, in the ordinary course, except to the extent that Buyer and MTS
have otherwise agreed (or may prior to the Closing Date otherwise agree) in
writing or as is expressly contemplated by this Agreement. From the date
hereof until the Closing Date, Seller shall continue to use its best
efforts to preserve the goodwill of Seller's Business and its relationship
with employees, customers and suppliers.
(b) In furtherance of the foregoing, since September 30, 2008,
Seller has not (a) incurred any obligations or liabilities, whether
absolute, accrued, contingent or other, other than obligations and
liabilities incurred in the ordinary course of business, (b) mortgaged,
pledged or subjected to any lien, lease, security interest or other
encumbrance (other than liens for taxes, assessments or other governmental
charges not yet due and payable, or presently payable without penalty or
interest) any of its assets, real or personal, tangible or intangible,
other than in the ordinary course of business, (c) acquired or disposed of
any assets or properties, or entered into any agreement for any such
acquisition or disposition, except in the ordinary course of business, (d)
declared, made, paid or set apart any cash for any dividend or other
distribution to its stockholders, or purchased or redeemed any shares of
its capital stock or granted any option, warrant or right to purchase any
such capital stock, (e) forgiven or canceled any debts or claims other than
in the ordinary course of business or waived any rights of material value
not previously accrued for, (f) granted any increase in compensation in any
form to any officer, salaried employee or any class of other employees, or
granted any severance or termination pay, or entered into any employment
agreement, or any modification of a previously existing employment
agreement, with any officer or any other salaried employee, other than
increases in compensation of 5% (five percent) or less granted in the
ordinary course of business consistent with prior practice, (g) adopted,
amended or entered into any collective bargaining, bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation or
other plan, agreement or arrangement for the benefit of employees, (h)
granted any rights or licenses under or to any of its patents, trademarks,
trade names, copyrights, domain names or other intellectual property
rights, (i) suffered any loss of, or material adverse change in its
relationship with, any supplier or customer or has knowledge that any such
supplier or customer intends any action which would constitute or lead to
such a loss or material adverse change, (j) suffered any damage,
destruction or loss (whether or not covered by insurance) which has a
material adverse effect on its business, (k) suffered any strike or other
labor trouble which has had a material adverse effect on its operations,
(l) terminated or made any substantial revision of, or engaged in any
renegotiation of, any material contract, (m) decreased the level of
maintenance on, or its expenditures for maintenance of, the real property,
machinery, equipment, tools, furniture and fixtures owned or leased by it,
(n) made any change in accounting principles or methods or in
classification, depreciation or amortization policies or rates, (o) settled
any dispute involving payment by the Seller in excess of $10,000, (p) made
any loan or advance in excess of $10,000 to any person or entity other than
travel or expense advances in accordance with its normal policies which
have been accounted for or repaid and extension of trade credit in
accordance with its normal business practices, or (q) entered into any
material transaction other than in the ordinary course of business.
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3.05 TAX MATTERS. Other than as disclosed in SECTION 3.05 of the
Seller Disclosure Schedule, there is no tax obligation of Seller which
constitutes, or may in the future constitute, a lien on the Purchased Assets,
and if any such lien exists or arises, it will be promptly discharged by Seller.
The Seller has withheld and paid any and all taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
3.06 MATERIAL CONTRACTS AND COMMITMENTS. SCHEDULE 1.01(c)(z)
hereto constitutes a full and complete list, as of the date hereof, of all
contracts and commitments of Seller related to the Business involving aggregate
rights or obligations of Seller in excess of $25,000 per contract or which have
a remaining term, as of the date hereof, of over six months in length of
obligation on the part of Seller ("Material Contracts"). Except as indicated on
SCHEDULE 1.01(c)(z), Seller is not in breach or violation of, or in default
under any of the Material Contracts; the execution of this Agreement and the
consummation of the transactions contemplated hereby will not constitute a
default or breach under the Material Contracts; and, except as specifically
indicated in SCHEDULE 1.01(c)(z), the execution of this Agreement and the
consummation of the transactions contemplated hereby will not give rise to any
consent requirement under any of the Material Contracts. All of the contracts
listed on SCHEDULE 1.01(c)(z) are in full force and effect and have not been
modified or amended, except as set forth on SCHEDULE 1.01(c)(z).
3.07 LICENSES, PERMITS AND AUTHORIZATIONS. Seller has obtained,
and will as of the Closing Date continue to have, all material approvals,
authorizations, consents, licenses, franchises, orders, certificates and other
permits of, and has made and will have made on the Closing Date all filings
with, any governmental authority, whether foreign, Federal, state or local,
which are required for the ownership of the Purchased Assets or the conduct of
Seller's Business as presently conducted. A complete list of all such approvals,
authorizations, consents, licenses, franchises, orders, certificates, permits
and filings is included in SECTION 3.07 of the Seller Disclosure Schedule.
3.08 TITLE TO PURCHASED ASSETS. Seller has good title to the
Purchased Assets and shall at the Closing deliver to Buyer good title to the
Purchased Assets free and clear of all title defects, liabilities, obligations,
liens, mortgages, security interests, encumbrances, easements, claims or similar
adverse interests of any kind or character except (i) any Assumed Liabilities
expressly assumed by Buyer pursuant to Section 1.03 hereof, and (ii) the title
exceptions listed in SECTION 3.08 of the Seller Disclosure Schedule. All leases
pursuant to which Seller leases any of the Purchased Assets are valid and
binding in accordance with their respective terms.
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3.09 TRANSFERRED INTELLECTUAL PROPERTY. Except as set forth in
SCHEDULE 1.01(d), to the knowledge of Seller and only insofar as they relate to
the Business:
(a) Seller owns or has the right to use pursuant to license,
sublicense, public domain, agreement, or permission the following
intellectual property (the "Transferred Intellectual Property"): (i) all
trademarks, service marks, trade dress, logos, trade names, and corporate
names, including all goodwill associated therewith, and all applications
registrations, and renewals in connection therewith, (ii) all trade secrets
and confidential business information (including protocols, ideas, research
and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information,
and business and marketing plans and proposals), (iii) all proprietary
software, (iv) all other proprietary rights, and (v) all copies and
tangible embodiments thereof (in whatever form or medium).
(b) Seller has not knowingly interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any intellectual
property rights of third parties, and none of Seller's officers have ever
received any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation, including any
claim that Seller must license or refrain from using any intellectual
property rights of any third party. To the knowledge of Seller, no third
party has interfered with, infringed upon, or misappropriated in any
material respect any intellectual property rights of Seller.
(c) SCHEDULE 1.01(d) identifies each patent or registration
which has been issued to Seller with respect to any of the Transferred
Intellectual Property, identifies each pending patent application or
application for registration which Seller has made with respect to any of
the Transferred Intellectual Property, and identifies each material
license, agreement, or other permission which Seller has granted to any
third party with respect to any of the Transferred Intellectual Property
outside the ordinary course of business. SCHEDULE 1.01(d) also identifies
each registered trade name or registered trademark used by Seller with
respect to the Transferred Intellectual Property and identifies each
pending trademark application filed with respect to the Transferred
Intellectual Property. Except as set forth on SCHEDULE 1.01(d) to Seller's
knowledge with respect to each such item of Transferred Intellectual
Property required to be identified in SCHEDULE 1.01(d):
(i) Seller possesses all rights, title, and interest in
and to the item, free and clear of any security interest, license or other
restriction;
(ii) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling or charge; and
(iii) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or, to the
knowledge of Seller, is threatened which challenges the legality, validity,
enforceability, use or ownership of the item.
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(d) SCHEDULE 1.01(d) identifies each item of Transferred
Intellectual Property that any third party owns and that Seller uses
pursuant to license, sublicense, agreement, or permission. Seller has
delivered or made available at its offices to Buyer correct and complete
copies of all such licenses, sublicenses, agreements, and permissions (as
amended to date). Except as set forth on SCHEDULE 1.01(d), to Seller's
knowledge with respect to each such item of Transferred Intellectual
Property:
(i) the license, sublicense, agreement, or permission
covering the item is, to Seller's knowledge, legal, valid, binding,
enforceable, and in full force and effect;
(ii) the license, sublicense, agreement, or permission
will continue to be legal, valid, binding, enforceable, and in full force
and effect on identical terms and to the same extent following the
consummation of the transactions contemplated hereby;
(iii) no party to the license, sublicense, agreement, or
permission 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 thereunder;
(iv) no party to the license, sublicense, agreement, or
permission has repudiated any provision thereof; and
(v) Seller has not granted any sublicense or similar
right with respect to the license, sublicense, agreement, or permission.
(e) Seller is not aware that any of the Transferred Employees
(as defined in Section 8.01 hereinbelow) is obligated under any contract
(including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would conflict with the Business.
3.10 EMPLOYEE BENEFIT PLANS.
(a) SECTION 3.10 of the Seller Disclosure Schedule contains a
description of all employee benefit plans, policies, practices and
arrangements (including, without limitation, those within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended) of Seller which have been applicable at any time to any of the
Seller's employees (each an "Employee Plan" and collectively, the "Employee
Plans"), including, without limitation, retirement, disability, sick leave,
medical, dental and other health insurance, life insurance, cafeteria plan,
separation, stock options, deferred compensation and vacation. All of the
Employee Plans are and have at all times been in material compliance with
and have been administered in material accordance with all applicable laws.
No Employee Plan is a pension plan, subject to Part 3 of Title I of ERISA,
Title IV of ERISA, or Section 412 of the Code, or a "multi-employer plan,"
as defined in Section 3(37) of ERISA.
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(b) There is no pending or, to Seller's knowledge, threatened
legal action, arbitration or other proceeding or investigation against
Seller or any Employee Plan with respect to any Employee Plan, other than
routine claims for benefits, which could result in liability to any such
Employee Plan, Seller or Buyer, and there is no reasonable basis for any
such legal action or proceeding.
(c) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not result in
payment (either of severance pay or otherwise) becoming due from any of the
Employee Plans, Seller or Buyer to any current or former employee or
self-employed individual, and will not result in the payment, vesting,
acceleration or increase of any benefit payable under any Employee Plan to
any current or former employee or self-employed individual, except as may
otherwise be required by law to preserve the tax-qualified status of any
Employee Plan that is subject to Section 401(a) of the Code.
(d) To Seller's knowledge, there does not exist any liability,
obligation or claim (other than a routine claim for benefits) resulting
from, relating to or arising out of any Employee Plan, or any liability,
obligation or claim (other than a routine claim for benefits) resulting
from, relating to or arising out of any "employee benefit plan," as defined
in Section 3(3) of ERISA, maintained by an employer which, with Seller, is
considered to be, or to be part of, a single employer under Section 414(b),
(c), (m) or (o) of the Code, including, but not limited to, any liability,
obligation or claim (other than a routine claim for benefits) in connection
with a "multiemployer plan" as defined in Section 3(37) of ERISA. There
does not exist any liability, obligation or claim resulting from, relating
to or arising out of any Employee Plan that is a "Group Health Plan," as
defined in Section 4980B(g) of the Code, under the Consolidated Omnibus
Budget Reconciliation Act of 1985 (COBRA).
(e) All obligations relating to the Employee Plans (including,
without limitation, payroll taxes and deductions and contributions) have
been satisfied and there are no outstanding defaults or violations by any
party thereto and no taxes, penalties or fees owing or eligible under any
of the Employee Plans.
(f) No transaction contemplated by this Agreement will result in
liability to the Pension Benefit Guaranty Corporation under Section
302(c)(11), 4062, 4063, 4064 or 4069 of ERISA with respect to the Purchased
Assets, and no condition exists which could reasonably be expected to
result in any such liability.
3.11 LITIGATION AND OTHER CLAIMS. There are no actions, suits,
arbitration proceedings, claims or other proceedings arising out of or related
to the Business of the Seller pending or, to the knowledge of Seller, threatened
before any foreign, Federal, state, municipal or other court, department,
commission, arbitration panel, board, bureau, agency, body or instrumentality
against Seller or affecting the Purchased Assets at law or in equity. Seller is
not a party to or subject to the provisions of any order, writ, injunction,
decree or judgment of any court or foreign, Federal, state, municipal or other
governmental or administrative body, department, commission, board, bureau,
securities exchange or other agency or instrumentality in connection with the
ongoing operations of Seller.
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3.12 SUFFICIENCY OF PURCHASED ASSETS. The Purchased Assets are
sufficient to operate Seller's Business as currently operated. Seller is not a
party to any contract which is necessary in any material respect to Seller's
Business as currently conducted other than contracts which will be assigned to
Buyer at the Closing hereunder.
3.13 COMPLIANCE WITH LAWS.
(a) Neither the Purchased Assets nor the operations of Seller's
Business, as conducted at the date hereof and as will be conducted through
the Closing Date, violate, in any material respect, any foreign, Federal,
state or local law, ordinance, rule or regulation.
(b) Seller's solution are not subject to the regulatory
requirements and the authority of the Federal Communications Commission.
3.14 INSURANCE. Seller maintains, and through the Closing Date
will maintain, adequate insurance including self-insurance insuring the
Purchased Assets and the operations of Seller's Business. All policies of
insurance of any kind maintained, owned or held by Seller which cover the
Purchased Assets or Seller's Business are set forth in SECTION 3.14 of the
Seller Disclosure Schedule and such policies are in full force and effect, all
premiums with respect thereto covering all periods up to and including the
Closing Date have been paid, and no notice of cancellation or termination has
been received with respect to any such policy which has not been replaced on
substantially similar terms prior to the date of such cancellation or
termination. The insurance policies to which Seller is a party which cover the
Purchased Assets or Seller's Business are sufficient for compliance with all
requirements of applicable laws and all agreements to which Seller is a party or
by which Seller or the Purchased Assets may be bound.
3.15 INVENTORY; ACCOUNTS RECEIVABLE. The inventories of the
Seller are, as of the most recent date of the Financial Statements, and as of
the Closing Date will be (a) merchantable to customers in the normal course of
its business, and (b) not obsolete, deteriorated, unusable or in excess of
customary levels. Except to the extent reserved for in accordance with U.S.
GAAP, all the accounts receivable reflected on the balance sheets of Seller
included in the Financial Statements, and all accounts receivable of Seller
arising since the date of such balance sheets, constitute as of the date hereof
and shall constitute as of the Closing, valid and enforceable claims arising
from bona fide transactions in the ordinary course of Seller's business, and the
materials or services involved have been provided to the account obligor, and no
further materials or services (other than customary post-sales support) are
required to be provided in order to complete the sales and to entitle Seller, or
its assignee, to collect such accounts receivable in full, and there are no
known or asserted claims, refusals to pay or other rights to set-off against
thereof. None of such accounts receivable have been assigned or pledged to any
other person, firm or corporation, and no defense or setoff to any such accounts
receivable has been asserted by any obligor, except as reserved.
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3.16 REAL PROPERTY LEASES. Each of the Real Property Leases is
valid and binding upon the lessor and is in full force and effect. Except as set
forth in SECTION 3.16 of the Seller Disclosure Schedule, there are no existing
defaults by Seller under the Real Property Leases and no event has occurred
which (whether with or without notice, lapse of time, or both) would constitute
a default thereunder by Seller. Seller has delivered to Buyer a true and
complete copy of the Real Property Leases.
3.17 LABOR MATTERS. SECTION 3.17 of the Seller Disclosure
Schedule lists the current salaries and bonuses of each director, officer and
employee, and other remuneration with respect to any consultant or agent of the
Seller currently paid at a rate in excess of $25,000 per year, and indicates
which of such persons are stockholders or related parties of Seller. Except as
disclosed in SECTION 3.17 of the Seller Disclosure Schedule, no officer or other
key employee of the Seller has indicated to the Seller or, to the knowledge of
the Seller, has an intention to terminate his or her employment with the Seller.
Except as set forth in SECTION 3.17 of the Seller Disclosure Schedule: (a)
Seller is in compliance in all material respects with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair labor practice;
(b) there is no unfair labor practice complaint against Seller pending or, to
the best of Seller's knowledge, threatened with respect to Seller's employees
before the National Labor Relations Board or any other applicable tribunal; (c)
there is no labor strike, dispute, slowdown or stoppage actually pending or, to
the best of Seller's knowledge, threatened against or affecting Seller; (d)
Seller has received no notice that any representation or petition respecting the
employees of Seller has been filed with the National Labor Relations Board or
any other applicable tribunal; (e) no grievance nor any arbitration proceeding
arising out of or under any collective bargaining agreements with respect to
Seller's employees is pending against Seller; and (f) Seller has not experienced
any strike or work stoppage or other industrial dispute involving Seller's
employees in the past five years.
3.18 CONDITION OF PURCHASED ASSETS. The Purchased Assets are in
good repair and working condition, normal wear and tear excepted, are suited for
their current uses, are in conformity with all material applicable laws,
ordinances, rules and regulations and are in good merchantable condition, normal
wear and tear excepted.
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3.19 ENVIRONMENTAL MATTERS.
(a) To Seller's knowledge, except as set forth in SECTION 3.19
of the Seller Disclosure Schedule: (i) Seller is in compliance in all
material respects with all environmental laws, regulations, permits and
orders applicable to it, and with all laws, regulations, permits and orders
governing or relating to asbestos removal and abatement; (ii) Seller has
not transported, stored, treated or disposed, or allowed or arranged for
any third parties to transport, store, treat or dispose, of any Hazardous
Substances or other waste to or at any location other than a site lawfully
permitted to receive such Hazardous Substances or other waste for such
purposes, or had performed, arranged for or allowed by any method or
procedure such transportation, storage, treatment or disposal in
contravention of any laws or regulations, nor has Seller disposed of, or
allowed or arranged for any third parties to dispose of, Hazardous
Substances or other waste upon property owned or leased by it; (iii) there
has not occurred, nor is there presently occurring, a Release of any
Hazardous Substance on, into or beneath the surface of any parcel of real
property in which Seller has an ownership interest or any leasehold
interest; (iv) Seller has not transported or disposed of, or allowed or
arranged for any third parties to transport or dispose of, any Hazardous
Substance or other waste to or at a site which, pursuant to the U.S.
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA") or any similar law, (A) has been placed on the
National Priorities List or its state equivalent, or (B) the Environmental
Protection Agency or the relevant state agency has proposed or is proposing
to place on the National Priorities List or its state equivalent; (v)
Seller has not received notice, and has no knowledge of any facts which
could give rise to any notice, that Seller is a potentially responsible
party for a Federal or state environmental cleanup site or for corrective
action under CERCLA or any other applicable law or regulation or notice of
any other Environmental Claim; (vi) Seller has not received any written or
oral request for information in connection with any Federal or state
environmental cleanup site and has not undertaken (or been requested to
undertake) any response or remedial actions or cleanup actions of any kind
at the request of any Federal, state or local governmental entity, or at
the request of any other person or entity; (vii) there are no laws,
regulations, ordinances, licenses, permits or orders relating to
environmental or worker safety matters requiring any work, repairs,
construction or capital expenditures with respect to the assets or
properties of Seller; and (viii) SECTION 3.19 of the Seller Disclosure
Schedule identifies (w) all environmental audits, assessments or
occupational health studies undertaken by Seller or its agents or by any
governmental agencies with respect to the operations or properties of
Seller; (x) the results of any ground water, soil, air or asbestos
monitoring undertaken with respect to any real property owned or leased by
Seller; (y) all written communications of Seller with environmental
agencies; and (z) all citations issued to Seller under the Occupational
Safety and Health Act (29 U.S.C. Sections 651 ET SEQ.).
(b) For the purposes of this Agreement, "Environmental Claim"
shall mean any demand, claim, governmental notice or threat of litigation
or the actual institution of any action, suit or proceeding at any time by
a person other than the parties which asserts that an Environmental
Condition constitutes a violation of or otherwise may give rise to any
liability or obligation under, any statute, ordinance, regulation, or other
governmental requirement or the common law, including, without limitation,
any such statute, ordinance, regulation, or other governmental requirement
relating to the emission, discharge, or release of any Hazardous Substance
into the environment or the generation, treatment, storage, transportation,
or disposal of any Hazardous Substance. "Environmental Condition" shall
mean the presence on the Closing Date, whether discovered or undiscovered
on the Closing Date, in surface water, ground water, drinking water supply,
land surface, subsurface strata or ambient air of any pollutant,
contaminant, industrial solid waste or Hazardous Substance arising out of
or otherwise related to the operations or other activities of Seller, or of
any predecessor in interest or line of business to Seller, conducted or
undertaken prior to the Closing Date. "Hazardous Substance" shall mean any
substance defined in the manner set forth in Section 101(14) of the U.S.
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, and shall include any additional substances designated
under Section 102(a) thereof. "Release" shall mean releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing into the environment.
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3.20 ABSENCE OF CERTAIN PAYMENTS. The Seller nor any officers,
directors, employees, agents, representatives, or independent contractors of the
Seller has made, or arranged for the making of, any unlawful payment to any
official, officer or employee of any foreign, Federal, state, county, municipal
or other governmental or regulatory body or authority or any self regulatory
body or authority, or made any payment to any customer or supplier of the Seller
or any officer, director, partner, employee or agent of any customer or
supplier, for the unlawful sharing of fees or to any such customer or supplier
or any such officer, director, partner, employee or agent for the unlawful
rebating of charges, or engaged in any other unlawful reciprocal practice, or
made any other unlawful payment or given any other unlawful consideration to any
such customer or supplier or any such officer, director, partner, employee or
agent, in respect of the Seller.
3.21 INVESTMENT REPRESENTATION. Seller represents and warrants
that it is acquiring the Consideration Shares for its own account only, for
investment purposes and not with a view to distribution and acknowledges that
the Consideration Shares are and will be "restricted securities" within the
meaning of the Rules and Regulations under the Securities Act of 1933, as
amended (the "Securities Act"), that the disposition of such securities is
subject to compliance with the registration provisions of the Securities Act,
and that certificates for the securities issued hereunder will bear a legend to
that effect. MTS and Buyer have provided Seller with such information regarding
the business, operations and financial condition of MTS, and has granted Seller
the opportunity to ask such questions of and receive satisfactory answers from
representatives of MTS, its officers, directors, employees and agents, as Seller
deems relevant in making an informed decision with respect to its acquisitions
of the Consideration Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Seller as follows:
4.01 ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
the corporate power and authority to own and operate its properties and assets
and to conduct its business as it is now being conducted. Buyer is duly
qualified to do business in all other jurisdictions in which Buyer owns, leases
or operates property or otherwise conducts Buyer's business if the failure to be
qualified would have a material adverse effect on Buyer's ability to conduct
business using the Purchased Assets.
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4.02 DUE AUTHORIZATION. Buyer has full corporate power and
authority to enter into this Agreement and the Related Agreements and to
consummate the transactions contemplated hereby and thereby and to perform its
obligations hereunder and thereunder. The execution, delivery and performance of
this Agreement and the Related Agreements, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary corporate action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer, and is a valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms. The execution, delivery
and performance of this Agreement and the Related Agreements will not conflict
with or result in a violation of any provision of the Certificate of
Incorporation or By-Laws (or similar corporate organizational documents) of
Buyer, or of any material contract by which it is bound, or of any judgment or
decree to which it is a party or by which it is bound. All necessary
authorizations of the transactions contemplated by this Agreement and the
Related Agreements required to be obtained by Buyer from any Federal, state,
local or foreign government or agency shall have been obtained prior to the
Closing, and any filings, notifications or disclosures required by law or
regulations of such government or agency shall have been made in such form as is
acceptable to file. Seller shall cooperate with Buyer with respect to the
aforesaid filings, notifications or disclosures to the extent necessary to
obtain said authorizations.
ARTICLE IVA
REPRESENTATIONS, WARRANTIES AND COVENANTS OF MTS
MTS hereby represents and warrants to, and covenants with, Seller:
4A.1 ORGANIZATION. MTS is a corporation duly organized and
validly existing under the laws of the State of Israel, and has the corporate
power and authority to own and operate its properties and assets and to conduct
its business as it is now being conducted.
4A.2 DUE AUTHORIZATION. MTS has full corporate power and
authority to enter into this Agreement and the Related Agreements and to
consummate the transactions contemplated hereby and thereby and to perform its
obligations hereunder and thereunder. The execution, delivery and performance of
this Agreement and the Related Agreements, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary corporate action on the part of MTS. This Agreement has been duly
executed and delivered by MTS, and is a valid and binding obligation of MTS
enforceable against MTS in accordance with its terms. The execution, delivery
and performance of this Agreement and the any Related Agreements will not
conflict with or result in a violation of any provision of the Memorandum of
Association and Articles of Association (or similar corporate organizational
documents) of MTS, or of any material contract by which it is bound, or of any
judgment or decree to which it is a party or by which it is bound. All necessary
authorizations of the transactions contemplated by this Agreement and the
Related Agreements required to be obtained by MTS from any Federal, state, local
or foreign government or agency shall have been obtained prior to the Closing,
and any filings, notifications or disclosures required by law or regulations of
such government or agency shall have been made in such form as is acceptable to
file. Seller shall cooperate with Buyer and MTS with respect to the aforesaid
filings, notifications or disclosures to the extent necessary to obtain said
authorizations.
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4A.3 CAPITALIZATION. The authorized share capital of MTS consists
of 12,000,000 Ordinary Shares, of which 6,743,335 Ordinary Shares are issued and
outstanding immediately prior to Closing (not including the Consideration
Shares). All of the issued and outstanding shares of MTS's capital stock are
duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. Except for the transactions contemplated by this Agreement or
as set forth in the Disclosure Documents, as defined below, or on SCHEDULE 4A.3
there are no options, warrants, calls, subscriptions, convertible securities, or
other rights or other agreements or commitments of any character whatsoever
obligating MTS to issue or sell any shares of its capital stock, or any
securities convertible into or exchangeable or exercisable for or otherwise
evidencing a right to acquire any shares of its capital stock or other
securities of any kind of MTS. To the best knowledge of MTS, there are no voting
trusts or other agreements or understandings with respect to the voting of the
capital stock of MTS.
4A.4 FINANCIAL STATEMENTS. MTS has previously delivered to the
Seller true and complete copies of (a) the audited consolidated balance sheets
of MTS as of December 31, 2006 and 2007, and the related audited consolidated
income statements, movement in shareholders' equity and cash flows for the three
years ended December 31, 2007 ("MTS's Financials"), provided that MTS may have
satisfied such delivery of MTS's Financials by filing them with the SEC via its
Electronic Data Gathering, Analysis and Retrieval ("EDGAR") system. MTS's
Financials have been prepared in accordance with U.S. GAAP applied on a
consistent basis throughout the periods specified, and present fairly and in
accordance with generally accepted accounting principles the financial position
of MTS as of the respective dates specified and the results of operations and
changes in financial position of MTS for the respective periods specified.
4A.5 CONSIDERATION SHARES. The Consideration Shares will, upon
issuance in accordance with the terms of this Agreement, be duly authorized,
validly issued, fully paid, non-assessable and free of pre-emptive rights. Upon
delivery of payment for the Consideration Shares as herein provided, the Seller
will acquire good and valid title to the Closing Shares, free and clear of any
lien or other encumbrance. Upon the release and delivery to Seller of any
remaining Escrow Shares from escrow (if any) in accordance with the provisions
of Section 1.09 hereof and the Escrow Agreement, the Seller will acquire good
and valid title to any such Escrow Shares, free and clear of any lien or other
encumbrance.
4A.6 PUBLIC DOCUMENTS. MTS has heretofore furnished the Seller
with true, correct and complete copies of MTS's Annual Report on Form 20-F for
the year ended December 31, 2007 (the "2007 Annual Report") filed with the
Securities and Exchange Commission (the "SEC"), and all Reports on Form 6-K
submitted to the SEC since December 31, 2007 (collectively the "Disclosure
Documents"); provided that MTS may have satisfied such delivery of the
Disclosure Documents by filing them with the SEC via EDGAR. The Disclosure
Documents have been prepared and filed in accordance with the rules and
regulations of the SEC and constitute all forms, reports, schedules, statements
and other documents required to be filed by MTS with the SEC under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The 2007
Annual Report fairly summarize the business, operations, properties and
management of MTS and its subsidiaries as of the dates of filing. The Disclosure
Documents, as of respective dates on which such documents were filed, and the
representations made by MTS therein do not and did not contain any misstatements
of a material fact or omit to state a material fact necessary to make the
statements contained therein, in the light of the circumstances under which they
were made, not misleading. Except as described in the Disclosure Documents,
since December 31, 2007, there has been no material adverse change in the
financial condition, results of operations or business of MTS.
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4A.7 LITIGATION AND OTHER CLAIMS. Except as described in the
Disclosure Document, there are no actions, suits, arbitration proceedings,
claims or other proceedings arising out of or related to the business of MTS.
ARTICLE V
COVENANTS PENDING CLOSING
5.01 CONDUCT OF BUSINESS OF SELLER PRIOR TO THE CLOSING. Except
as contemplated by this Agreement, during the period from the date of this
Agreement to the Closing Date, Seller will conduct Seller's Business and
operations in, and only in, the ordinary course of business and substantially in
the manner heretofore conducted. Without limiting the generality of the
foregoing, and except as contemplated in this Agreement, prior to the Closing
Date, without the prior written consent of Buyer and MTS, Seller will not:
(a) except for Retained Liabilities, create, incur or assume any
indebtedness for money borrowed, including obligations in respect of
capital leases; or incur any material liabilities or obligations other than
in the ordinary course of business consistent with past practices; or
assume, guarantee, endorse or otherwise become liable or responsible
(whether directly or contingently or otherwise) for the obligations of any
person; PROVIDED, that Seller may endorse negotiable instruments for
collection in the ordinary course of business;
(b) except as a result of a normal individual review cycle, or
individual plan cycle, increase the rate or terms of compensation payable
or to become payable by Seller to Seller's employees; or increase the rate
or terms of any bonus, insurance, pension or other employee benefit plan,
payment or arrangement made to, for or with the employees of Seller; or
enter into any new employment agreement or modify the terms of any existing
employment agreement;
(c) except in the ordinary course of business with product
purchasers, enter into any material contract or arrangement providing for,
in the aggregate, payment or receipt of more than $25,000 or which is
greater than six months in duration without Buyer's consent which shall not
be unreasonably withheld or delayed;
(d) in any material way, violate, breach or allow to lapse any
Material Contract or enter into any other agreement, commitment or
transaction (including without limitation any borrowing, capital
expenditure or capital financing), except in the ordinary course of
business consistent with past practice;
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(e) sell, transfer, mortgage, encumber or otherwise dispose of
any of the Purchased Assets, except in the ordinary course of business
consistent with past practice; or
(f) agree or make any commitment to take any actions prohibited
by this Section 5.01.
5.02 ACCESS TO INFORMATION. Between the date of this Agreement
and the Closing Date, Seller will, during ordinary business hours (a) give
Buyer, acting for itself and for MTS, and its authorized representatives and
advisors access to all books, records, offices and other facilities and
properties of Seller, (b) permit Buyer to make such inspections thereof as Buyer
may reasonably request, and (c) cause its officers and advisors to furnish Buyer
with such financial and operating data and other information with respect to
Seller as Buyer may from time to time reasonably request; in addition, Seller
will cause its accountants to make their personnel, their work papers and such
other requested documentation relating to their work papers and to their audits
of the books and records of Seller available to Buyer and its advisors and
representatives.
5.03 CONSENTS. The parties hereto will use their best efforts to
promptly obtain any required consents (including any required consents to the
assignment of contracts) of all persons and governmental authorities necessary
for the consummation of the sale of the Purchased Assets and the other
transactions contemplated by this Agreement and the Related Agreements.
5.04 PUBLIC ANNOUNCEMENTS. From the date hereof through the
Closing, no party hereto shall make any press release or public announcement or
any disclosure to any third person (other than to employees of Seller, employees
of Buyer, attorneys, accountants and other advisors of the parties hereto in
connection with the transactions contemplated hereby) concerning the
transactions contemplated by this Agreement; PROVIDED, HOWEVER, that the parties
will make such announcements, if any, as are required by applicable law or stock
exchange rules or rules of the association that maintains the listing of the
securities of a party hereto or its affiliates and will mutually agree to the
content thereof. In conjunction with the Closing, Buyer, acting for itself and
for MTS, and Seller shall consult with each other concerning the form of any
post-closing press release or any other public announcement concerning the
transactions contemplated by this Agreement, and the parties shall use their
best efforts to cause a mutually agreeable form of such release or announcement
to be issued.
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5.05 CONFIDENTIALITY.
(a) All information furnished by Buyer and MTS (or their agents
and representatives) to Seller (or its agents and representatives) or
furnished by Seller (or its agents or representatives) to Buyer and MTS (or
their agents and representatives) pursuant hereto shall be treated as the
sole property of the party furnishing the information until the Closing
Date, and if the Closing shall not occur, the party receiving the
information shall return to the party which furnished such information all
copies of any documents or other materials containing, reflecting or
referring to such information, shall keep confidential all of such
information regarded as confidential by the party supplying such
information, and shall not directly or indirectly use such information for
any competitive or other commercial purpose. The obligation to keep such
information confidential shall not apply to (i) any information which (w)
the party receiving the information can establish was already in its
possession prior to the disclosure thereof by the party furnishing the
information, (x) was then generally known to the public, (y) became known
to the public through no fault of the party receiving the information; or
(z) was disclosed to the party receiving the information by a third party
not bound by an obligation of confidentiality to the party furnishing the
information; or (ii) disclosures in accordance with an order of a court of
competent jurisdiction or as required by any law, rule or regulation
applicable to the party making the disclosure, including any rule of, or
agreement of any party or its affiliates with, any stock exchange or
association that maintains the listing of a party's securities.
(b) Each party hereto agrees, whether or not the Closing shall
occur, to maintain, and to cause their agents and representatives to
maintain, the confidentiality of the terms and conditions of this Agreement
and the Related Agreements and all documents executed and delivered in
connection with the transactions contemplated by this Agreement and the
Related Agreements. The provisions of this Section 5.05(b) shall not apply
to particular conditions or terms of the above referenced documents (i) if
the party seeking to make such disclosure shall have obtained the prior
written consent of the other party to the disclosure of such conditions or
terms, (ii) that are required to be disclosed during the course of any
litigation or arbitration which may be brought by any party related to the
provisions of any of the above referenced documents, (iii) that are or
become generally available to the public other than as a result of actions
taken by the party seeking to make such disclosure or its agents and
representatives, or (iv) that are required to be disclosed pursuant to and
in accordance with any law, rule or regulation applicable to the party
seeking to make such disclosure, including any rule of, or agreement of any
party or its affiliates with, any stock exchange or association that
maintains the listing of a party's securities.
Notwithstanding the foregoing, if a party is requested or required (by
oral questions, interrogatories, requests for information or document subpoena,
civil investigative demand or similar process) to disclose any of the
above-referenced documents, such party will promptly notify the other party of
such request so that such other party may seek an appropriate protective order
or waive compliance with the provisions hereof. If, in the absence of a
protective order or the receipt of a waiver hereunder, a party is nonetheless,
in the opinion of its counsel, compelled to disclose any terms or conditions of
the above-referenced documents to any tribunal or else stand liable for contempt
or suffer other censure or penalty, such party may disclose such information to
such tribunal without liability hereunder.
5.06 RELATED AGREEMENTS. The parties hereto agree that at Closing
they will execute and deliver (or cause their affiliates to execute and deliver)
the Related Agreements to which they or their affiliates are to be a party.
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5.07 NO-SHOP. The Seller hereby agrees that it shall not pursue
or become involved in any negotiations or discussions or enter into any
agreement regarding the sale of the Business, assets or stock of Seller to any
third person or entity.
ARTICLE VI
CLOSING CONDITIONS
6.01 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE
TRANSACTIONS CONTEMPLATED HEREBY. The respective obligations of each party to
effect the transactions contemplated hereby shall be subject to the fulfillment
at or prior to the Closing Date of the following conditions:
(a) NO ORDER, DECREE OR INJUNCTION. None of the parties hereto
shall be subject to any order, decree or injunction of a court of competent
jurisdiction or governmental agency and no statute, rule or regulation
shall be in effect or be enacted or issued which (i) prevents or delays any
of the transactions contemplated by this Agreement, or (ii) would impose
any limitation on the ability of Buyer or MTS effectively to exercise full
rights of ownership of the Purchased Assets.
(b) RELATED AGREEMENTS. All Related Agreements shall have been
executed and delivered by the parties thereto.
6.02 CONDITIONS TO THE OBLIGATIONS OF SELLER TO EFFECT THE
TRANSACTIONS CONTEMPLATED HEREBY. The obligations of Seller to effect the
transactions contemplated hereby shall be further subject to the fulfillment at
or prior to the Closing Date of the following conditions, any one or more of
which may be waived by Seller:
(a) COVENANTS PERFORMED; REPRESENTATIONS AND WARRANTIES TRUE.
Each of Buyer and MTS shall have performed and complied with the covenants
and agreements contained in this Agreement required to be performed and
complied with by it at or prior to the Closing Date and the representations
and warranties of Buyer and MTS set forth in this Agreement shall be true
and correct as of the Closing Date as though made at and as of the Closing
Date, and Seller shall have received a certificate to that effect signed on
behalf of Buyer by an authorized officer of Buyer as to itself and on
behalf of MTS by an authorized officer of MTS as to itself.
(b) CORPORATE APPROVAL. At the Closing, Seller shall have
received from Buyer and MTS certified board resolutions of Buyer and MTS
approving this agreement and any and all transactions contemplated by it
(including, without limitation the issuance of the Consideration Shares by
MTS) and the Related Agreements.
(c) PURCHASE PRICE. At the Closing, Buyer, acting for itself and
for MTS, shall have delivered certificates registered in the name of the
Seller representing (y) the Closing Shares to the Seller; and (z) the
Escrow Shares to the Escrow Agent, to be held in accordance with the terms
of Section 1.09 hereof and the Escrow Agreement.
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(d) OPINION LETTERS. At the Closing, Seller shall have received
an opinion from each of Israeli counsel for MTS and counsel for the Buyer,
dated as of the Closing Date and satisfactory in form and substance to
Buyer and its counsel, substantially in the forms of EXHIBIT H and EXHIBIT
I.
6.03 CONDITIONS TO THE OBLIGATIONS OF BUYER TO EFFECT THE
TRANSACTIONS CONTEMPLATED HEREBY. The obligations of Buyer, acting for itself
and for MTS, to effect the transactions contemplated hereby shall be further
subject to the fulfillment at or prior to the Closing Date of the following
conditions, any one or more of which may be waived by Buyer:
(a) COVENANTS PERFORMED; REPRESENTATIONS AND WARRANTIES TRUE.
Seller shall have performed and complied with the covenants and agreements
contained in this Agreement required to be performed and complied with by
it at or prior to the Closing Date, and the representations and warranties
of Seller set forth in this Agreement shall be true and correct as of the
Closing Date as though made at and as of the Closing Date, and Buyer shall
have received a certificate to that effect signed by an authorized officer
of Seller.
(b) NO MATERIAL ADVERSE CHANGE. There shall not have been, since
September 30, 2008, any material adverse change in the business, results of
operations, financial condition or prospects of Seller, and Buyer shall
have received a certificate to that effect signed by authorized officers of
Seller.
(c) CORPORATE APPROVAL. At the Closing, Buyer shall have
received from Seller certified board and stockholder resolutions of Seller
approving this agreement and any and all transactions contemplated by it
and the Related Agreements.
(d) OPINION LETTER. At the Closing, Buyer shall have received an
opinion from counsel for the Seller, dated as of the Closing Date and
satisfactory in form and substance to Buyer and its counsel, substantially
in the form of EXHIBIT J.
(e) CONSENTS OBTAINED. Prior to Closing, all licenses, permits
and other governmental approvals and authorizations and all consents of
third parties required to effect the transactions contemplated by this
Agreement, and for the Business of Seller to be operated by Buyer after the
Closing in the manner and to the extent of Seller's current operations
(including, without limitation, all consents required for the assignment of
the Real Property Leases and Material Contracts), as listed on SCHEDULE
6.03(e), shall have been obtained and delivered to Buyer.
(f) PAYMENT FOR EMPLOYEE OBLIGATIONS. At the Closing, Seller
shall have paid and delivered to Buyer cash in such amount to reimburse
Buyer for its undertaking under Section 1.03(c) hereof to credit the
Transferred Employees for accrued vacation, sick time and personal time
pursuant to Section 8.03 hereof, as listed on SCHEDULE 8.03, and to pay the
Transferred Employees any accrued and unpaid commissions pursuant to
Section 8.04 hereof, as listed on SCHEDULE 8.04 (such amounts shall be
referred to together as the "Payment for Employee Obligations"); PROVIDED,
HOWEVER, that to the extent that the Closing Working Capital is greater
than $600,000, such excess amount shall be credited against the Payment for
Employee Obligations owed by Seller to Buyer under this Section 6.03(f).
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ARTICLE VII
THE CLOSING
7.01 TIME AND PLACE OF CLOSING. Upon the terms and subject to the
satisfaction or waiver of the conditions in this Agreement, the Closing of the
transactions contemplated hereby (the "Closing") shall take place on December
[29], 2008 at the offices of Buyer's counsel, Carter Ledyard & Milburn LLP, Two
Wall Street, New York, New York 10005, or at such other time and place as the
parties hereto may agree in writing. The effective time of the Closing is herein
referred to as the "Closing Date."
7.02 CLOSING. At the Closing, the Buyer shall deliver to Seller
an instrument in the form of EXHIBIT B hereto by which Buyer shall assume and
agree to perform and discharge the Assumed Liabilities with effect from the
Closing Date in a form satisfactory to Seller. Seller will deliver to Buyer,
acting for itself and for MTS, such warranty deeds, bills of sale, instruments
of assignment, including an instrument in the form of EXHIBIT C and other good
and sufficient instruments of transfer and the other instruments and documents
contemplated hereby, executed by Seller or its affiliates and in form and
substance reasonably satisfactory to Buyer, as Buyer may reasonably require to
vest in Buyer and MTS all right, title and interest of Seller and their
affiliates in and to the Purchased Assets, and Buyer shall pay to Seller the
Purchase Price, and deliver to Seller the other instruments and documents
required of it at the Closing.
Seller shall deliver to Buyer and MTS at the Closing possession of the
Purchased Assets being sold pursuant to this Agreement and the entire right,
title and interest of Seller in and to such Purchased Assets shall pass to Buyer
and MTS at the Closing.
ARTICLE VIII
SUCCESSOR EMPLOYER
8.01 EMPLOYMENT WITH BUYER. Buyer shall offer employment to
certain employees of Seller and Buyer shall enter into employment agreements
substantially in the form of EXHIBIT F hereto immediately after the Closing with
those employees of Seller who are listed on SCHEDULE 8.01 and are employed by
Seller with respect to the Business immediately prior to Closing. Such offer of
employment shall be on terms and conditions that are reasonably comparable to
the terms and conditions in effect for such employees immediately prior to the
Closing Date as set forth on SCHEDULE 8.01. (Those employees of Seller who
accept employment with Buyer are hereinafter referred to as the "Transferred
Employees.") Notwithstanding the foregoing, nothing herein shall be deemed to
require Buyer to continue to employ any such Transferred Employee for any
specific period of time after the Closing Date. Buyer shall not be responsible
for compensation, bonuses, sales commissions, severance and any other payment or
benefits due to any Transferred Employee with respect to periods prior to the
Closing. Buyer shall be responsible for the payment of severance, if any, to any
employee of Seller whose employment is terminated after Closing for any reason
with respect to periods after the Closing.
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8.02 THIRD PARTIES. The covenants of Buyer and Seller in this
Article VIII are not intended to create any right in any Transferred Employee or
his or her heirs, executors, beneficiaries or personal representatives.
8.03 ACCRUED VACATION, PERSONAL AND SICK TIME. Buyer will permit
the Transferred Employees to take any outstanding vacation time, personal time
and sick time accrued and unused by any of the Transferred Employees with
respect to periods prior to the Closing Date during the calendar year 2008 as
listed on SCHEDULE 8.03.
8.04 ACCRUED UNPAID COMMISSIONS. Buyer will pay the Transferred
Employees any accrued and unpaid commissions with respect to periods prior to
the Closing Date as listed on SCHEDULE 8.04.
ARTICLE IX
WORKERS' COMPENSATION AND
PRODUCT LIABILITY RESPONSIBILITY
9.01 WORKERS' COMPENSATION. Seller will retain responsibility for
all workers' compensation claims of employees of Seller other than Transferred
Employees and will retain responsibility for workers' compensation claims by
Transferred Employees pending as of the Closing Date or arising as a result of
events occurring or conditions caused solely on or prior to the Closing Date.
For workers' compensation claims by Transferred Employees filed after the
Closing Date and arising solely as a result of events occurring or conditions
caused solely after the Closing Date, Buyer will be responsible. The
responsibility for workers' compensation claims by Transferred Employees
relating to events occurring or conditions caused both during the period before
and the period after the Closing Date shall be shared equitably by Buyer and
Seller.
9.02 PRODUCT LIABILITY AND WARRANTY CLAIMS. At the Closing, Buyer
shall assume and agree to perform and discharge all product liability and
warranty claims (including claims for injury to person or property) and
litigation relating to the business conducted by Buyer and arising from products
sold after the Closing Date; Seller shall retain responsibility for such claims
and litigation relating to products sold by Seller or any predecessor of
Seller's Business on or prior to the Closing Date (except such warranty claims
in the ordinary course of business), unless arising from Buyer's improper
actions after the Closing Date.
9.03 RESPONSIBILITY FOR PRIOR CLAIMS. It is understood and agreed
that Buyer does not assume any liability for, and shall not otherwise be
responsible for, any product liability or warranty claims (including warranty
claims for injury to person or property) of Seller and arising from products
sold or occurrences on or prior to the Closing Date (except such warranty claims
in the ordinary course of business), and Seller agrees to indemnify and hold
harmless Buyer with respect to any such claims as provided in Section 10.09.
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ARTICLE X
POST-CLOSING COVENANTS
10.01 LOCK-UP OF CONSIDERATION SHARES. During the period
commencing on and including the Closing date and ending twelve (12) months
following the Closing Date (the "Lock-up Period"), Seller will not, without the
prior written consent of Buyer and MTS (which consent may be withheld in their
sole discretion), directly or indirectly, sell, offer, contract or grant any
option to sell, pledge, transfer or otherwise dispose of any Consideration
Shares. Notwithstanding the foregoing, Seller may not, directly or indirectly,
sell, offer, contract or grant any option to sell, pledge, transfer or otherwise
dispose of any Escrow Shares unless and until released from escrow in accordance
with Section 1.09 and the Escrow Agreement. MTS will direct its transfer agent
to place stop transfer restrictions upon the Consideration Shares for the
duration of the Lock-up Period. Notwithstanding the foregoing, nothing herein
shall restrict the Seller from distributing the Consideration Shares to its
shareholders during the Lock-up Period, provided, however, such shareholder
agrees to be bound by the terms of this Section 10.01 and that the distribution
is made subject to an exemption under the Securities Act exempting the
registration of the distributed Consideration Shares.
10.02 PIGGY-BACK REGISTRATION RIGHTS.
(a) PIGGY-BACK REGISTRATION RIGHTS If at any time following the
Lock-up Period, (i) MTS proposes to register Ordinary Shares under the
Securities Act for any reason (a "Proposed Registration") other than a
registration statement on Form S-8 or Form S-4 or any successor or other
forms promulgated for similar purposes and (ii) a registration statement
covering the sale of all of the Consideration Shares is not then effective
and available for sales thereof by the Seller, MTS shall, at such time,
promptly give the Seller written notice of such Proposed Registration. The
Seller shall have ten (10) business days from its receipt of such notice to
deliver to MTS a written request specifying the amount of Consideration
Shares that the Seller intends to sell and its intended method of
distribution. Upon receipt of such request, MTS shall use its best efforts
to cause all Consideration Shares which MTS has been requested to register
to be registered under the Securities Act to the extent necessary to permit
their sale or other disposition in accordance with the intended methods of
distribution specified in the request of Seller; PROVIDED, HOWEVER, that
MTS shall have the right to postpone or withdraw any registration effected
pursuant to this Section 10.02 without obligation to the Seller. If, in
connection with any underwritten public offering for the account of MTS or
for shareholders of MTS that have contractual rights to require MTS to
register Ordinary Shares, the managing underwriter(s) thereof shall impose
a limitation on the number of Ordinary Shares which may be included in a
registration statement because, in the judgment of such underwriter(s),
marketing or other factors dictate such limitation is necessary to
facilitate such offering, then the number of Consideration Shares to be
included in such registration statement may be limited to the extent so
recommended by such underwriter(s); provided, however, that such limitation
shall be proportionate (based on the number of shares to be included) to
the limitation applied to any other holders of Ordinary Shares of MTS with
registration rights who request the inclusion of shares in the registration
statement.
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(b) EFFECTIVENESS PERIOD. MTS will maintain the registration
statement pursuant to this Section 10.02 (the "Registration Statement")
effective under the Securities Act until the earlier of (i) the date that
all of the Consideration Shares have been sold pursuant to the Registration
Statement, (ii) the date the Seller receives an opinion from counsel to MTS
that the Consideration Shares may be sold under the provisions of Rule 144
under the Securities Act without limitation as to volume, (iii) the date
that all Consideration Shares have been otherwise transferred to persons
who may trade such Consideration Shares without restriction under the
Securities Act, and MTS has delivered a new certificate or other evidence
of ownership for such Consideration Shares not bearing a restrictive
legend; or (iv) 12 (twelve) months following the Lock-up Period.
Notwithstanding the foregoing, if MTS furnishes to Seller a certificate
signed by the President of MTS stating (x) that there shall have occurred
any event, or there shall exist any circumstances, which would require the
disclosure of material non-public information that MTS has a reasonable
justification for keeping confidential, or (y) that there shall have
occurred any event which makes any statement made in the Registration
Statement, the prospectus forming a part thereof, or any document
incorporated therein by reference untrue or which requires the making of
any changes in such Registration Statement, prospectus or incorporated
document so that they will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, the Seller shall
forthwith discontinue disposition of the Consideration Shares covered by
such Registration Statement until the Seller shall be in receipt of written
notice from MTS to the effect that use of the Registration Statement or
prospectus may be resumed and shall have been furnished copies of any
amended or supplemented registration statement or prospectus or
incorporated documents, as the case may be.
(c) OBLIGATIONS OF SELLER. In connection with the registration
of the Consideration Shares pursuant to a Registration Statement, and as a
condition to MTS's obligations under this Section 10.02, Seller shall:
(i) timely furnish to MTS in writing such information
regarding itself and the intended method of disposition of the
Consideration Shares as MTS shall reasonably request in order to effect the
registration thereof;
(ii) to the extent required by applicable law, deliver
a prospectus to the purchaser of such Consideration Shares; and
(iii) notify MTS when it has sold all of the
Consideration Shares pursuant to either the Registration Statement or Rule
144 under the Securities Act.
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(d) REGISTRATION RIGHTS INDEMNIFICATION. In the event that any
Consideration Shares are included in a Registration Statement under this
Agreement:
(i) To the extent permitted by law, MTS shall
indemnify and hold harmless the Seller, the officers, directors, employees,
agents and representatives of the Seller, and each person, if any, who
controls the Seller within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages, liabilities or
reasonable out-of-pocket expenses (whether joint or several) (collectively
for the purpose of this Section 10.02, including legal or other expenses
reasonably incurred in connection with investigating or defending same,
"Losses"), insofar as any such Losses arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, or (ii) the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make
the statements therein (in the case of any preliminary or final prospectus,
in the light of the circumstances under which they were made), not
misleading. Subject to the provisions of paragraph d(iii) below, MTS will
reimburse Seller, and each such officer, director, employee, agent,
representative or controlling person, for any reasonable legal or other
out-of-pocket expenses as incurred by any such entity or person in
connection with investigating or defending any Loss; PROVIDED, HOWEVER,
that the foregoing indemnity shall not apply to amounts paid in settlement
of any Loss if such settlement is effected without the consent of MTS
(which consent shall not be unreasonably withheld), nor shall MTS be
obligated to indemnify any person for any Loss to the extent that such Loss
is (i) based upon and is in conformity with written information furnished
by such person expressly for use in the Registration Statement or (ii)
based on a failure of such person to deliver or cause to be delivered the
final prospectus contained in the Registration Statement and made available
by MTS, if such delivery is required by applicable law. MTS shall not enter
into any settlement of a Loss that does not provide for the unconditional
release of Seller from all liabilities and obligations relating to such
Loss.
(ii) To the extent permitted by law, Seller shall
indemnify and hold harmless MTS, the officers, directors, employees, agents
and representatives of MTS, and each person, if any, who controls MTS
within the meaning of the Securities Act or the Exchange Act, against any
Losses to the extent (and only to the extent) that any such Losses are
based upon and in conformity with written information furnished by Seller
expressly for use in the Registration Statement. Subject to the provisions
of paragraph d(iii) below, Seller will reimburse any reasonable legal or
other expenses as incurred by MTS and any such officer, director, employee,
agent, representative, or controlling person, in connection with
investigating or defending any such Loss; PROVIDED, HOWEVER, that the
foregoing indemnity shall not apply to amounts paid in settlement of any
such Loss if such settlement is effected without the consent of Seller
(which consent shall not be unreasonably withheld).
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(iii) Promptly after receipt by an indemnified party
under this Section 10.02 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under
this Section 10.02, deliver to the indemnifying party a written notice of
the commencement thereof and the indemnifying party shall have the right to
participate in and to assume the defense thereof with counsel mutually
satisfactory to the parties; PROVIDED, HOWEVER, that an indemnified party
shall have the right to retain its own counsel, with the reasonably
incurred fees and expenses of one such counsel for all indemnified parties
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be
inappropriate under applicable standards of professional conduct due to
actual or potential conflicting interests between such indemnified party
and any other party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, to the extent
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
Section 10.02 with respect to such action, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under
this Section 10.02 or with respect to any other action unless the
indemnifying party is materially prejudiced as a result of not receiving
such notice.
(iv) In the event that the indemnity provided in
paragraph d(i) or d(ii) of this Section 10.02 is unavailable or
insufficient to hold harmless an indemnified party for any reason, MTS and
Seller agree, severally and not jointly, to contribute to the aggregate
Losses to which MTS or Seller may be subject in such proportion as is
appropriate to reflect the relative fault of MTS and Seller in connection
with the statements or omissions which resulted in such Losses. Relative
fault shall be determined by reference to whether any alleged untrue
statement or omission relates to information provided by MTS or by Seller.
MTS and Seller agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph d(iv),
no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who is not guilty of such fraudulent misrepresentation. For
purposes of this Section 10.02, each person who controls the Seller within
the meaning of either the Securities Act or the Exchange Act and each
officer, director, employee, agent or representative of Seller shall have
the same rights to contribution as Seller, and each person who controls MTS
within the meaning of either the Securities Act or the Exchange Act and
each officer, director, employee, agent or representative of MTS shall have
the same rights to contribution as MTS, subject in each case to the
applicable terms and conditions of this paragraph d(iv).
(v) The obligations of MTS and Seller under this
Section 10.02 shall survive completion of any offering or sale of
Consideration Shares pursuant to a Registration Statement under this
Agreement, or otherwise.
(e) EXPENSES OF REGISTRATION. All reasonable expenses, other
than underwriting discounts and commissions and fees and expenses of
counsel and other advisors to Seller, incurred in connection with the
registration of the Consideration Shares under this Agreement shall be
borne by MTS.
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10.03 BOARD REPRESENTATION. MTS agrees to use its best efforts to
elect Mr. Roger Challen as a member of its Board of Directors following the
Closing, to serve in such capacity until the next general meeting of
shareholders following such appointment. MTS agrees to include the election of
Mr. Challen to its Board of Directors in the agenda for its next general meeting
of its shareholders and to recommend to its shareholders to vote in favor of
such proposal at such meeting.
10.04 LISTING OF MTS'S ORDINARY SHARES. MTS's Ordinary Shares are
listed on the NASDAQ Capital Market. Following the Closing, MTS will use its
best efforts to maintain the listing of its Ordinary Shares on the NASDAQ
Capital Market.
10.05 FURTHER ASSURANCES. Subject to the terms and conditions of
this Agreement, each of the parties hereto will use its best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the sale of the Purchased Assets, the Assumed
Liabilities and the other transactions contemplated by this Agreement and the
Related Agreements. From time to time after the date hereof (including after the
Closing Date if requested), Seller and its affiliates will, at their own expense
and without further consideration, execute and deliver such instruments and
documents to Buyer as Buyer may reasonably request in order more effectively to
vest in Buyer good title to the Purchased Assets and to more effectively
consummate the transactions contemplated by this Agreement and the Related
Agreements. From time to time after the date hereof, including after the Closing
Date if requested, Buyer will, at its expense and without further consideration,
execute and deliver such instruments and documents to Seller as Seller may
reasonably request in order to more effectively transfer to Buyer the Assumed
Liabilities and to more effectively consummate the transactions contemplated
hereby and the Related Agreements.
10.06 COMMISSIONS AND FEES. Except for MTS's obligations to Oberon
Securities, LLC, each party hereto represents and warrant to the other that no
broker, finder, financial adviser or other person is entitled to any brokerage
fees, commissions or finder's fees in connection with the transactions
contemplated hereby by reason of any action taken by the party making such
representation. Seller on the one hand, and Buyer and MTS, on the other hand,
will pay to the other or otherwise discharge, and will jointly and severally
indemnify and hold the other harmless from and against, any and all claims or
liabilities for all brokerage fees, commissions and finder's fees (other than as
described above) incurred by reason of any action taken by such party.
10.07 SALES, TRANSFER AND USE TAXES. All sales, transfer and use
taxes incurred in connection with this Agreement and the Related Agreements and
the transactions contemplated hereby and thereby will be borne by Seller, and
Seller will, at its own expense, file all necessary tax returns and other
documentation with respect to all such sales, transfer and use taxes, and, if
required by applicable law, Buyer will join in the execution of any such tax
returns or other documentation; provided, that Buyer shall deliver to the Seller
at Closing a resale certificate and/or an exempt use certificate, as applicable,
which shall cover all of the Seller's inventory (including, without limitation,
raw materials, work-in-progress and finished goods) included within the
Purchased Assets).
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10.08 NONDISCLOSURE; NONCOMPETITION.
(a) Seller agrees not to use or disclose at any time after
consummation of the transactions contemplated hereby, except with the prior
written consent of an officer authorized to act in the matter by the Board
of Directors of Buyer, any trade secrets, proprietary information or other
information relating to the Business that Buyer considers confidential
relating to suppliers, operations, marketing, cost and pricing data, master
files or customer lists utilized by Seller prior to the Closing or by Buyer
or any of its affiliates (the "Buyer Group"), or the skills, abilities and
compensation of the Buyer Group's employees, and all other similar
information material to the conduct of the Buyer Group's business, which is
not presently generally known to the public; PROVIDED, HOWEVER, that this
provision shall not preclude Seller from (i) the use or disclosure of such
information which presently is known generally to the public or which
subsequently comes into the public domain, other than by way of disclosure
in violation of this Agreement or in any other unauthorized fashion, or
(ii) disclosure of such information required by law or court order,
provided that prior to such disclosure required by law or court order
Seller will give Buyer three business days' written notice (or, if
disclosure is required to be made in less than three business days, then
such notice shall be given as promptly as practicable after determination
that disclosure may be required) of the nature of the law or order
requiring disclosure and the disclosure to be made in accordance therewith.
(b) For a period of two (2) years from the Closing Date, the
Seller, any entity controlling, controlled by or under common control with
Seller, and Roger Challen (the "Restricted Person") severally agrees not
to, without the written consent of an officer authorized to act in the
matter by the Board of Directors of Buyer, directly or indirectly: (i) own,
manage, operate, join, control, participate in, invest in, or otherwise be
connected with, in any manner, whether as an officer, director, employee,
partner, investor, consultant, lender or otherwise, any business entity
which is engaged in, or is in any way related to or competitive with, the
business currently conducted by Seller; or (ii) on behalf of anyone else
engaged in any such line of business (x) persuade or attempt to persuade
any employee of any member of the Buyer Group or any individual who was an
employee of any member of the Buyer Group during the one year prior to the
date of this Agreement, to leave the employ of any member of the Buyer
Group or to become employed by any person other than the members of the
Buyer Group or hire any such employee; (y) persuade or attempt to persuade
any current client or former customer of Seller or any member of the Buyer
Group to cease doing business with, or to reduce the amount of business it
does or intends or anticipates doing with, Seller or Buyer (or any
successor to Seller or Buyer's business); or (z) solicit the business of
any of such customer or former customer with respect to the business
conducted by Seller. Notwithstanding the foregoing, ownership of less than
5% of the total voting equity of a publicly held company which competes
with the Business shall not be a violation of this Section 10.08(b). Each
of Frederick Fink, Bradford Gallagher and Keith Larson are not subject to
this Section 10.08(b) by virtue of their office as directors of Seller,
notwithstanding any other non-competition agreements to which they may be
subject.
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10.09 INDEMNIFICATION
(a) INDEMNIFICATION BY SELLER. Seller agrees to save, defend and
indemnify Buyer and MTS and their officers, directors, agents and
employees, subsidiaries, directors and employees of subsidiaries, and each
person, if any, who controls or may control Buyer and MTS within the
meaning of the Securities Act (each of the foregoing, a "Buyer Indemnified
Party") against and hold them harmless from any and all claims,
liabilities, losses, damages, deficiencies, costs and expenses, of every
kind, nature and description, fixed or contingent (including, without
limitation, interest, penalties and reasonable counsel's fees and expenses
in connection with any action, claim or proceeding relating thereto or
seeking enforcement of a party's obligations hereunder) (collectively for
the purpose of this Section 10.09 "Losses"), imposed upon or incurred by a
Buyer Indemnified Party arising out of or in connection with (i) any breach
of any representation, warranty, covenant or agreement made by the Seller
under this Agreement (including the Schedules and Exhibits thereto and any
certificate delivered in connection with this Agreement and any Related
Agreement), or (ii) any Retained Liability, or (iii) any Environmental
Claim; PROVIDED, HOWEVER, that (A) Seller shall not have any obligation to
indemnify a Buyer Indemnified Party from and against any Losses with
respect to breaches described in (i) above until a Buyer Indemnified Party
has suffered aggregate Losses by reason of all such breaches (excluding de
Minimis Claims as hereinafter defined) in excess of $100,000, in which
event a Buyer Indemnified Party shall be entitled to indemnification for
the amount of its aggregate Losses in excess thereof, (B) in no event shall
the aggregate of the Seller's indemnification payments with respect to
breaches described in (i) above exceed the value of fifty percent 50% of
the Purchase Price paid by Buyer hereunder other than with respect to fraud
by Seller, in which case a Buyer Indemnified Party may recover all of its
Losses from the Seller without limitation, and (C) indemnification claims
with respect to the representations and warranties contained in Article III
hereof must be made by a Buyer Indemnified Party within the survival period
therefor specified in Section 11.06 hereof. The foregoing limitations shall
not apply with respect to any Losses arising out of any Retained Liability.
For purposes hereof, "de Minimis Claims" shall mean any indemnification
claim for which the amount of Losses claimed is less than $10,000
(providing that any series of claims arising from the same or substantially
similar facts or circumstances shall be treated as one claim for such
determination).
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(b) BY BUYER. Buyer agrees to save, defend and indemnify Seller
against and hold it harmless from any and all Losses arising out of (i) any
breach of any representation, warranty, covenant or agreement made by Buyer
under this Agreement, or (ii) any Assumed Liability; PROVIDED, HOWEVER,
that (A) Buyer shall not have any obligation to indemnify Seller from and
against any Losses with respect to breaches described in (i) above until
Seller has suffered aggregate Losses by reason of all such breaches
(excluding de Minimis Claims) in excess of $100,000, in which event Seller
shall be entitled to indemnification for the amount of its aggregate Losses
in excess thereof, and (B) in no event shall the aggregate of Buyer's
indemnification payments with respect to breaches described in (i) above
exceed the value of fifty percent 50% of the Purchase Price paid by Buyer
hereunder other than with respect to fraud by the Buyer, in which case
Seller may recover all of its Losses from the Buyer without limitation, and
(C) indemnification claims with respect to the representations and
warranties contained in Article IV hereof must be made by Seller within the
survival period therefor specified in Section 11.06 hereof. The foregoing
limitations shall not apply with respect to any Losses arising out of any
Assumed Liability.
(c) For the purpose of Sections 10.09(a) and (b), the value of
the Purchase Price paid by Buyer hereunder will be determined based on the
average of the closing prices of the Ordinary Shares of MTS on the NASDAQ
Capital Market on the last ten (10) trading days ending on the trading day
immediately prior to the Closing Date.
(d) INDEMNIFICATION PAYMENT. Any payment that that the Seller is
obligated to make to the Buyer pursuant to this Section 10.09 will be paid
at Seller's election in cash or by release of Escrow Shares to Buyer from
the Escrow Fund within five (5) business days after the final determination
of the amount of such payment pursuant to and in accordance with this
Section 10.09. The value of the Escrow Shares being tendered for payment
for an Indemnification Claim under Sections 10.09(a) and (b) shall be
determined in accordance with Section 1.09(e).
10.10 DEFENSE OF CLAIMS.
(a) Should any claim, action or proceeding by or involving a
third party arise after the Closing Date for which any party (the
"Indemnifying Party") is liable for indemnification under the terms of this
Agreement, the other party (the "Indemnified Party") shall notify the
Indemnifying Party within a reasonable time after such claim, action or
proceeding arises and is known to the Indemnified Party (provided that the
failure to give timely notice shall not affect the right to indemnification
hereunder except to the extent that the Indemnifying Party is actually
damaged or prejudiced by such delay), and if the Indemnifying Party shall
admit in writing its potential indemnification obligation in respect
thereof, the Indemnified Party shall give the Indemnifying Party a
reasonable opportunity:
(i) to take part in any examination of the books and
records;
(ii) to conduct any proceedings or negotiations in
connection therewith and necessary or appropriate to defend the Indemnified
Party or prosecute any claim, action, counterclaim or other proceeding with
respect thereto;
(iii) to take all other required steps or proceedings to
settle or defend any such claim, action or proceeding; and
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(iv) to employ counsel to contest any such claim,
action or proceeding in the name of the Indemnified Party or otherwise.
The expenses of all proceedings, contests or lawsuits with respect to
such claims or actions shall be borne by the Indemnifying Party. If the
Indemnifying Party wishes to assume the defense and/or settlement of any such
claim or action, it shall give written notice to the Indemnified Party admitting
the possibility of its indemnification obligation in respect thereof and stating
that it intends to assume such defense within fifteen (15) business days after
notice from the Indemnified Party of such claim or action (unless the claim or
action reasonably requires a response in less than fifteen (15) business days
after notice thereof is given to the Indemnifying Party, in which event it shall
notify the Indemnified Party at least five (5) business days prior to such
reasonably required response date), and the Indemnifying Party shall thereafter
assume the defense of such claim or action, through counsel reasonably
satisfactory to the Indemnified Party; provided that the Indemnified Party may
participate in any such defense at its own expense. The Indemnified Party shall
afford the Indemnifying Party's counsel and other authorized representatives
reasonable access during normal business hours to all books, records, offices
and other facilities and properties of the Indemnified Party, and to the
personnel of the Indemnified Party, and shall otherwise use all reasonable
efforts to cooperate with the Indemnifying Party, such counsel and such other
authorized representatives in connection with the exercise of the rights of the
Indemnifying Party pursuant to this Section 10.10; PROVIDED, HOWEVER, that prior
to the Indemnifying Party entering into any settlement arrangement it must first
acknowledge its obligation to indemnify the Indemnified Party.
(b) If the Indemnifying Party shall not assume the defense of,
or if after so assuming it shall fail to actively defend, any such claim or
action, the Indemnified Party may defend against any such claim or action
in such manner as it may deem appropriate, and the Indemnified Party may
settle such claim or action on such terms as it may deem appropriate, and
the Indemnifying Party promptly shall reimburse the Indemnified Party for
the amount of such settlement and for all expenses, legal and otherwise,
reasonably and necessarily incurred by the Indemnified Party in connection
with the defense against and settlement of such claim or action. If no
settlement of such claim or action is made, the Indemnifying Party shall
satisfy any judgment rendered with respect to such claim or in such action,
before the Indemnified Party is required to do so, and pay all expenses,
legal or otherwise, reasonably and necessarily incurred by the Indemnified
Party in the defense against such claim or action.
(c) If a judgment is rendered against the Indemnified Party in
any action covered by the indemnification hereunder, or any lien attaches
to any of the assets of the Indemnified Party, the Indemnifying Party
immediately upon such entry or attachment shall pay such judgment in full
or discharge such lien unless, at the Indemnifying Party's expense and
direction, an appeal is taken under which the execution of the judgment or
satisfaction of the lien is stayed. If and when a final judgment is
rendered in any such action, the Indemnifying Party shall forthwith pay
such judgment before the Indemnified Party is compelled to do so.
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10.11 EXCLUSIVE REMEDY. Except in the case of fraud and subject to
such equitable and injunctive relief to which Buyer may be entitled under
Section 11.12 hereof, the rights and obligations provided for in Sections 10.09
and 10.11 hereof shall be the sole and exclusive remedies of Buyer and Seller
with respect to the transactions contemplated by this Agreement and the
representations and warranties contained herein.
10.12 NAME. After the Closing, Seller will abstain from using the
name "AnchorPoint, Inc.," except as required by law, and within ten (10) days of
the Closing Date will change its name by removing the words "AnchorPoint" to a
name reasonably not to be deemed similar to "AnchorPoint, Inc."
10.13 2008 FINANCIAL STATEMENTS. Within thirty (30) days after the
Closing Date, Seller will deliver to Buyer the audited financial statements of
Seller as of December 31, 2008, prepared in accordance with U.S. GAAP,
consistently applied and setting forth in comparative form the figures for the
previous fiscal year (the "2008 Financial Statements"), all in reasonable detail
and audited by independent public accountants of national standing, and
accompanied by an opinion of such firm which opinion shall state that the
balance sheet, statements of income and stated cash flows have been prepared in
accordance with U.S. GAAP applied on a basis consistent with that of the
preceding fiscal year, and present fairly and accurately the financial position
of Seller as of their date, and that the audit by such accountants has been made
in accordance with the standards of the Public Company Accounting Oversight
Board. Buyer will pay the audit fees for the audit of the 2008 Financial
Statements up to a total amount of $10,000, with any audit fees in excess of
$10,000 to be paid by Seller.
10.14 EXPENSES. Except as otherwise provided herein, each party
hereto shall each bear its own costs and expenses incurred in connection with
this Agreement, the Related Agreements and the transactions contemplated hereby
and thereby. Buyer and MTS shall be responsible for the fees, commissions,
expenses and reimbursements incurred by or required to be paid to their
professional advisors, and Seller shall be responsible for the fees,
commissions, expenses and reimbursements incurred by or required to be paid to
its professional advisors.
ARTICLE XI
MISCELLANEOUS
11.01 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
11.02 NO ASSIGNMENT. This Agreement may not be assigned by any
party hereto without the prior written consent of the other parties, PROVIDED,
HOWEVER, that each party may assign its rights, but not its obligations,
hereunder, in whole or in part, to any corporation or other entity controlled
by, controlling or under common control with such party, and such party or its
assignee may assign their rights hereunder, in whole or in part, to any
purchaser of substantially all of the assets or business of such party or such
assignee. Any attempted or purported assignment by either party other than in
accordance with this Section 11.02 shall be null and void. Nothing herein is
intended to prohibit Seller from assigning the proceeds of the sale hereunder to
a third party.
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11.03 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, and by any party on separate counterparts, each of which as so
executed and delivered shall be deemed an original but all of which together
shall constitute one and the same instrument, and it shall not be necessary in
making proof of this Agreement as to any party hereto to produce or account for
more than one such counterpart executed and delivered by such party. Execution
by facsimile signature shall be deemed to be, and shall have the same effect as,
execution by original signature.
11.04 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal substantive laws of the State of New
York (without regard to conflict of law principles) as to all matters, including
but not limited to matters of validity, construction, effect, performance and
remedies.
11.05 ARBITRATION. The parties hereto agree that any dispute or
claim arising out of or relating in any way to this Agreement or the Related
Agreements or the transactions contemplated hereby and thereby, shall be settled
by arbitration administered by the American Arbitration Association under its
Commercial Arbitration Rules. Unless the parties otherwise agree in writing, the
arbitration shall be held in New York, New York. Judgment on the award rendered
by the arbitrator(s) may be entered in any court having jurisdiction thereof.
11.06 SURVIVAL. The representations, warranties, indemnities and
agreements of the parties to this Agreement contained herein or in any document
delivered pursuant to or in connection herewith shall survive the Closing for
fifteen (15) months and shall survive any investigation by any party hereto;
PROVIDED, HOWEVER, that the representations and warranties of Seller contained
in Sections 3.05, 3.09 and 3.20 shall survive until the expiration of the
relevant statute of limitations. The covenants contained in Section 5.05 and
Article X shall survive the Closing indefinitely, except as otherwise provided
therein.
11.07 NOTICES. All notices required to be given under the terms of
this Agreement or which any of the parties desires to give hereunder shall be in
writing and personally delivered or sent by registered or certified mail, return
receipt requested, or sent by overnight courier, or sent by fax addressed as
follows:
(a) TO BUYER. If to Buyer addressed to:
MTS IntegraTRAK Inc.
18-35 River Road, 2nd Floor
Fair Lawn, NJ 07410
Fax: 201-421-2280
Attn: Chief Executive Officer
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With copies to:
Mer Telemanagement Solutions Ltd.
22 Zarhin Street
Ra'anana 43662, Israel
Fax: +972-9-746-6596
Attn: Chief Financial Officer
Carter Ledyard & Milburn LLP
2 Wall Street
New York, New York 10005
Fax: 212-732-3232
Attn: Steven J. Glusband, Esq.
(b) TO MTS. If to MTS addressed to:
Mer Telemanagement Solutions Ltd.
22 Zarhin Street
Ra'anana 43662, Israel
Fax: +972-9-746-6596
Attn: Chief Financial Officer
With copies to:
Carter Ledyard & Milburn LLP
2 Wall Street
New York, New York 10005
Fax: 212-732-3232
Attn: Steven J. Glusband, Esq.
(c) TO SELLER. If to Seller addressed to:
AnchorPoint, Inc.
46 Park Street
Framingham, MA 01702
Fax: 508-628-4566
Attn: Roger Challen, President and Chief Executive Officer
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With copies to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Fax: 617-542-2241
Attn: Daniel H. Follansbee, Esq.
Any such notice shall be deemed to have been duly given or made and to
have become effective (a) if delivered by hand to an officer of the party to
which it is directed, at the time of the receipt thereof by such officer, (b) if
sent by recognized overnight carrier or by registered or certified first-class
mail, postage pre-paid, upon the date of first attempted delivery, as shown on
the return receipt therefore or the returned item itself; and (c) if sent by
facsimile, at the time of dispatch thereof which machine generated confirmation
of transmission, if in normal business hours in the country of receipt, or
otherwise at the opening of business on the following business day.
Any party may designate a change of address at any time by giving
written notice thereof to the other parties in accordance with the provisions of
this Section.
11.08 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by a written instrument executed by all of the
parties hereto.
11.09 WAIVER OF COMPLIANCE. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party or parties
entitled to the benefits thereof only by a written instrument signed by the
party or parties granting such waiver, but any such waiver or the failure to
insist upon strict compliance with any obligation, covenant, agreement or
condition herein, shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure or breach.
11.10 INTERPRETATION. The table of contents and the article and
section headings contained in this Agreement are solely for the purpose of
reference, are not part of the agreement of the parties and shall not in any way
affect the meaning or interpretation of this Agreement. As used in this
Agreement, the term "person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization or a governmental entity or any department or agency thereof. As
used in this Agreement, the term "subsidiary," when used in reference to any
other person, shall mean any corporation of which outstanding securities having
ordinary voting power to elect a majority of the Board of Directors of such
corporation are owned directly or indirectly by such other person. As used in
this Agreement, the term "affiliate" shall have the meaning set forth in Rule
12b-2 of the General Rules and Regulations under the Exchange Act. When used
herein, the masculine, feminine or neuter gender and the singular or plural
number shall each be deemed to include the others whenever the context so
indicates or permits.
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11.11 ENTIRE AGREEMENT. This Agreement and the Related Agreements,
including the schedules, exhibits, documents, certificates and instruments
referred to herein and therein, embody the entire agreement and understanding of
the parties hereto in respect of any transactions contemplated by this Agreement
and the Related Agreements and supersede all prior agreements, representations
and understandings among the parties with respect thereto or with respect to the
transactions contemplated hereby.
11.12 DAMAGES AND EQUITABLE RELIEF. In the event of a breach or
threatened breach by the Seller or the Restricted Person of its covenants under
Section 10.08 hereof, such Restricted Person acknowledges that Buyer may not
have an adequate remedy at law for money damages. Accordingly, in the event of
such breach or threatened breach, Buyer will be entitled to such equitable and
injunctive relief as may be available to restrain the Restricted Person from the
violation of the provisions of said Section 10.08 in addition to any other
remedy to which Buyer may be entitled, at law or in equity, for such breach or
threatened breach.
11.13 SEVERABILITY OF COVENANTS. Seller acknowledges that the
covenants contained in Section 10.08 of this Agreement are reasonable and
necessary for the protection of Buyer and its investment in the Purchased Assets
and that each covenant, and the period or periods of time and the types and
scope of restrictions on the activities specified therein are, and are intended
to be, divisible and shall be deemed a series of separate covenants, one for
each state or jurisdiction to which they are applicable. In the event that any
provision of this Agreement, including any sentence, clause or part hereof,
shall be deemed contrary to law or invalid or unenforceable in any respect by a
court of competent jurisdiction, the remaining provisions shall remain in full
force and effect to the extent that such provisions can still reasonably be
given effect in accordance with the intentions of the parties, and any invalid
and unenforceable provisions shall be deemed, without further action on the part
of the parties, modified, amended and limited solely to the extent necessary to
render the same valid and enforceable.
ARTICLE XII
TERMINATION AND ABANDONMENT
12.01 TERMINATION. This Agreement may be terminated at any time
prior to the Closing:
(a) by the written agreement of all of the parties hereto;
(b) by Buyer or MTS if there has been a material violation or
breach by Seller of any covenant, agreement, representation or warranty
contained in this Agreement entitling Buyer not to Close under Article VI;
(c) by Seller if there has been a material violation or breach
by Buyer or MTS of any covenant, agreement, representation or warranty
contained in this Agreement entitling Seller not to Close under Article VI;
or
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(d) by any party hereto if the Closing of the transactions
contemplated by this Agreement shall not have been consummated on or before
December 31, 2008.
12.02 PROCEDURE AND EFFECT OF TERMINATION. In the event of
termination of this Agreement and abandonment of the transactions contemplated
hereby by any of the parties pursuant to Section 12.01(b), (c) or (d) of this
Agreement, written notice thereof shall forthwith be given by the terminating
party to the other parties and this Agreement shall terminate and the
transactions contemplated hereby shall be abandoned, without further action by
any of the parties hereto. If this Agreement is properly terminated, none of the
parties hereto nor any of their respective directors, officers or affiliates, as
the case may be, shall have any liability or further obligation to any of the
other parties or any of their respective directors, officers or affiliates, as
the case may be, pursuant to this Agreement; PROVIDED, HOWEVER, that if any such
termination shall result from the breach of a warranty or the failure of a party
to fulfill a condition to the performance of the obligations of the other
parties or to perform a covenant or agreement contained in this Agreement or
from any other willful breach by any party to this Agreement, such party shall
be solely liable for any and all damages, costs and expenses (including, but not
limited to, counsel's fees) sustained or incurred by the other parties as a
result of such failure or breach. The provisions of Sections 5.05, 11.04, 11.05,
11.07, 11.13 and 12.02 shall survive any termination hereof.
[SIGNATURE PAGES TO FOLLOW]
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IN WITNESS WHEREOF, the parties have each caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
BUYER
MTS INTEGRATRAK INC.
By: _________________________________
Name:
Title:
MTS
MER TELEMANAGEMENT SOLUTIONS LTD.
By: _________________________________
Name:
Title:
SELLER
ANCHORPOINT, INC.
By: _________________________________
Name:
Title:
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
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IN WITNESS WHEREOF, the following "Restricted Person" has caused this
Agreement to be executed solely for the purposes of Sections 10.08(b) and 11.12.
________________________________
ROGER CHALLEN
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
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