Annual Report by a Foreign Private Issuer — Form 20-F
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 20-F Annual Report by a Foreign Private Issuer HTML 2.01M
4: EX-4.10 Instrument Defining the Rights of Security Holders 26 91K
-- exhibit_4-10
2: EX-4.4 Instrument Defining the Rights of Security Holders 64 292K
-- exhibit_4-4
3: EX-4.5 Instrument Defining the Rights of Security Holders 79 292K
-- exhibit_4-5
5: EX-8.1 Opinion re: Tax Matters -- exhibit_8-1 HTML 19K
8: EX-13.1 Annual or Quarterly Report to Security Holders -- HTML 10K
exhibit_13-1
9: EX-13.2 Annual or Quarterly Report to Security Holders -- HTML 10K
exhibit_13-2
6: EX-12.1 Statement re: Computation of Ratios -- HTML 17K
exhibit_12-1
7: EX-12.2 Statement re: Computation of Ratios -- HTML 17K
exhibit_12-2
10: EX-15.1 Letter re: Unaudited Interim Financial Information HTML 10K
-- exhibit_15-1
EX-4.5 — Instrument Defining the Rights of Security Holders — exhibit_4-5
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EXHIBIT 4.5
ASSET PURCHASE AGREEMENT
By and Among
NICE SYSTEMS LTD.
and
NICE CTI Systems UK Limited
and
NICE Systems, Inc.
and
ORSUS SOLUTIONS LIMITED
and
ORSUS SOLUTIONS USA, Inc.
and
ORSUS SOLUTIONS (Israel) 99 Ltd.
and
ORSUS SOLUTIONS UK Limited
and
ORSUS USA, LLC
Dated as of November 22, 2009
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of November 22, 2009 (the "AGREEMENT"),
by and among (i) NICE SYSTEMS LTD., a company organized under the laws of the
State of Israel ("PARENT"); (ii) NICE CTI Systems UK Limited a company organized
under the laws of England and Wales, ("PURCHASER SUB1"); (iii) NICE Systems,
Inc. a company organized under the laws of the State of Delaware, United States
of America ("PURCHASER SUB2", together with Purchaser SUB1 and with the Parent,
the "PURCHASERS"); (iv) ORSUS Solutions Limited, a company organized under the
laws of the British Virgin Islands ("COMPANY"); (v) ORSUS Solutions USA, Inc. a
corporation organized under the laws of the State of Delaware, ("SELLER USA
INC"); (vi) ORSUS Solutions (Israel) 99 Ltd. a company organized under the laws
of the State of Israel ("SELLER ISRAEL SUB"); (vii) ORSUS Solutions UK Limited a
company organized under the laws of the United Kingdom ("SELLER UK SUB"); (viii)
ORSUS USA, LLC a limited liability company organized under the laws of the State
of Delaware, ("SELLER USA LLC", and together with Seller UK Sub, Seller Israel
Sub, Seller USA INC and Company collectively the "SELLERS").
W I T N E S S E T H:
WHEREAS The Sellers are, among other things, engaged in the Business (as
defined below);
WHEREAS the Business is conducted with certain assets and liabilities of
the Sellers;
WHEREAS Sellers desire to sell, transfer and assign to the Purchasers,
and the Purchasers desire to acquire and assume from Sellers, all
of the Purchased Assets and Assumed Liabilities (as hereinafter
defined);
WHEREAS In order to induce the Purchasers to enter into this Agreement
all of the Key Employees (as hereinafter defined) of the Sellers
have entered into as of the date hereof, written letters in which
they undertake to be employed by the Purchasers upon and after
the Closing Date.
NOW, THEREFORE the parties hereby agree as follows:
1. DEFINITIONS
1.1. CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings specified in this SECTION 1.1:
"ACCOUNTS RECEIVABLE" means all Sellers' accounts and notes receivable
from customers related to or arising out of the Business or the
Purchased Assets in connection with the sale and license of products
or provision of services.
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"AFFILIATE" means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, such Person, and
the term "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of such Person, whether through ownership of voting
securities, by contract or otherwise.
"BUSINESS" means the Sellers' business for situation management and
physical security information management systems ("PSIM") including
the "Situator" product and all global commercial activities conducted
by the Sellers related to the past, current or the currently planned,
design, development, sale, production, manufacturing, marketing of and
provisioning of related services for, products, software, documents,
solutions and technology of the Situator, as such business has been
conducted prior to and as of the Closing Date by the Sellers including
through its channel partners; provided, however that Business shall
not include the business or operations solely related to the Orsus
Mobile Framework (OMF) and/or iglue (the "EXCLUDED BUSINESS").
"BUSINESS DAY" means any day of the year on which national banking
institutions in Israel, are open to the public for conducting business
and are not required by law to close.
"CODE" means the United States Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"COMPANY OPTION PLANS" means the 1999 Purchase Plan (the "1999 PLAN"),
the 2001 Stock Option Plan (the "2001 PLAN") and the 2007 Incentive
Option Plan (the "2007 PLAN") of the Company.
"COMPANY SHARES" means Ordinary A Shares of $0.01 par value each of
the Company.
"CONSENTS" means consents, approvals, requirements, exemptions,
orders, waivers, allowances, novations, authorizations, declarations,
filings, registrations and notifications.
"CONTRACT" means, with respect to any Person, all agreements,
undertakings, contracts, obligations, arrangements, promises,
understandings and commitments (whether written or oral and whether
express or implied) (i) to which such Person is a party, (ii) under
which such Person has any rights, (iii) under which such Person has
any Liability or (iv) by which such Person, or any of the assets or
properties owned or used by such Person, is bound, including all
license agreements, manufacturing agreements, supply agreements,
purchase orders, sales orders, distributor agreements, sales
representation agreements, warranty agreements, indemnity agreements,
maintenance and service agreements, employment and consulting
agreements, guarantees, credit agreements, notes, mortgages, security
agreements, financing leases, leases (including Leases), comfort
letters, derivative agreements, confidentiality agreements, joint
venture agreements, partnership agreements, binding open bids and
RFIs, RFPs and the like, powers of attorney, binding memoranda of
understanding and binding letters of intent, including, in each case,
all amendments, modifications and supplements thereto and Consents
thereunder.
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"DAMAGES" means any and all losses, Liabilities, claims, damages,
fines, payments, Taxes, costs and expenses, whether asserted or
reasonably expected to be asserted, fixed, absolute or contingent,
matured or unmatured, accrued or unaccrued, liquidated or unliquidated
or due or to become due, and whenever or however arising and whether
or not resulting from Third Party claims (including the reasonable
costs and expenses of any and all Legal Proceedings or other legal
matters).
"DOCUMENTS" means all files, documents, instruments, correspondence,
papers, books, reports, records, tapes, microfilms, photographs,
letters, mails, budgets, forecasts, ledgers, journals, customer lists,
customer files, supplier lists, regulatory filings, operating data and
plans, technical documentation (design specifications, functional
requirements, operating instructions, logic manuals, flow charts,
etc), user documentation (installation guides, user manuals, training
materials, release notes, working papers, etc.), marketing and
advertising documentation (sales brochures, flyers, pamphlets,
promotional materials, web pages, etc.), and other similar materials,
in each case in whatever form, including electronic databases, printed
and other electronic media.
"EMPLOYEES" means all individuals who are employed by the Sellers as
of the date hereof in connection with the Business, either by way of
employment agreements, consulting agreements or agreements with
man-power companies, and listed in SCHEDULE 1.1(A) hereof under the
title "employees", and/or employed by the Sellers at the Closing.
"EMPLOYEE AGREEMENT" means, with respect to the Sellers, each
employment and consulting agreement and each signing bonus,
relocation, repatriation, expatriation, or similar agreement between
the Sellers and any of their ERISA Affiliates and any Employee.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means, with respect to any Person, any other Person
under common control with such Person or any of such Person's
Subsidiaries within the meaning of Section 414(b), (c), (m) or (o) of
the Code.
"ESCROW AGENT" means ESOP Trust Company selected by the Purchasers and
the Sellers to act as escrow agent under the Escrow Agreement.
"ESCROW AGREEMENT" means an escrow agreement by and among the Parent,
the Sellers and the Escrow Agent in the form of EXHIBIT A attached
hereto.
"GAAP" means Generally Accepted Accounting Principles in effect in the
United States on the date on which they are to be applied pursuant to
this Agreement, applied consistently throughout the relevant periods.
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"GOVERNMENTAL BODY" means any: (a) nation, principality, state,
commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature, (b) federal, state, local,
municipal, foreign or other government, (c) governmental, quasi
governmental or regulatory body of any nature, including any
governmental division, subdivision, department, agency, bureau,
branch, office, commission, council, board, instrumentality,
organization, unit, or body, or (d) court, public or private
arbitrator or other public tribunal.
"HARDWARE" means any and all computer and computer-related hardware or
equipment, including, but not limited to, computers, file servers,
facsimile servers, scanners, color printers, laser printers and
related peripherals.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents (including utility and design
patents, industrial designs and utility models), patent applications,
and all other rights of inventorship, worldwide, together with all
reissuances, continuations, continuations-in-part, divisions,
revisions, supplementary protection certificates, extensions and
re-examinations thereof (collectively, "Patents"); (b) trademarks,
service marks, trade names, service names, brand names, trade dress
rights, logos, Internet domain names and addresses and general-use
e-mail addresses, together with the goodwill associated with any of
the foregoing throughout the world, and all applications,
registrations and renewals thereof (collectively, "Marks"); (c)
copyrights and registrations and applications therefor, including in
and to works of authorship, moral rights, mask works and all other
rights corresponding thereto throughout the world, whether published
or unpublished, including rights to prepare, reproduce, perform,
display and distribute copyrighted works and copies, compilations,
collective works, and derivative works thereof (collectively,
"COPYRIGHTS"); (d) all trade secrets and confidential business and
technical information (including ideas, research and development,
know-how, formulas, technology, compositions, manufacturing and
production processes and techniques, technical data, engineering,
production and other designs, plans, drawings, engineering notebooks,
industrial models, software and specifications) ((collectively, "TRADE
SECRETS"); (e) all (i) computer programs, including any and all
software implementations of algorithms, models and methodologies,
whether in source code or object code, (ii) computer-based databases
and compilations, (iii) descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the
foregoing, screens, user interfaces, report formats, firmware,
development tools, templates, menus, buttons and icons, and (iv) all
Documents related to any of the foregoing, (collectively, "SOFTWARE");
(f) all computer and electronic data, data processing programs,
documentation and software, both source code and object code
(including flow charts, diagrams, descriptive texts and programs,
computer print-outs, underlying tapes, computer databases and similar
items), computer applications and operating programs; (g) all rights
to sue for and remedies against past, present and future infringements
of any or all of the foregoing and rights of priority and protection
of interests therein under the Laws of any jurisdiction worldwide; (h)
all copies and tangible embodiments of any or all of the foregoing (in
whatever form or medium, including electronic media); and (i) all
other proprietary, intellectual property and other rights relating to
any or all of the foregoing.
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"KEY EMPLOYEE OPTIONS" means options to purchase Company Shares and
Company Shares in the form of restricted stock awards to be granted by
the Company to the Key Employees in accordance with Section 3.6
hereunder.
"KEY EMPLOYEES" means the Employees listed in SCHEDULE 1.1(B) hereof
under the title "key employees".
"KNOWLEDGE OF SELLERS" or "SELLERS' KNOWLEDGE" means with respect to a
matter in question, the knowledge of the officers of the Sellers
listed below. An individual will be deemed to have "Knowledge" of a
particular fact or matter if such individual is actually aware of such
fact or matter or if such individual should have become aware of such
fact or matter after making reasonable inquiry or otherwise in the
course of performing his or her duties. Knowledge of the Sellers shall
mean the knowledge of Gil Weiser, Rafi Bhonker, Alex Taskar, Max
Kholmyansky, and Jacob Fox. "ACTUAL KNOWLEDGE OF SELLERS" means with
respect to a matter or fact in question, the actual awareness of such
matter or fact by Gil Weiser, Rafi Bhonker, Alex Taskar, Max
Kholmyansky, and Jacob Fox. "SELLERS' IP KNOWLEDGE" means with respect
to a matter or fact in question if the individuals above are actually
aware of such fact or matter or if such individual should have become
aware of such fact or matter in the course of performing his or her
duties, without conducting any inquiry of third party (outside of the
Sellers), patent search or a "freedom to operate" study.
"LAW" means any federal, state, local, municipal, foreign or other law
(including common law), statute, legislation, constitution, code,
Order, edict, decree, proclamation, treaty, convention, directive,
ordinance, rule, regulation, permit, ruling, determination, decision,
interpretation or other requirement that is issued, enacted, adopted,
passed, approved, promulgated, implemented or otherwise put into
effect by or under the authority of any Governmental Body and is
applicable to and binding upon the relevant Person.
"LEGAL PROCEEDING" means any judicial, administrative or arbitral
action, suit, litigation, proceeding (including civil, criminal,
administrative, investigative or appellate proceeding), at law or in
equity by or before any Governmental Body.
"LIABILITY" means any and all claims, debts, liabilities, obligations
and commitments of whatever nature, fixed, absolute or contingent,
matured or unmatured, accrued or unaccrued, liquidated or unliquidated
or due or to become due, and whenever or however arising (including
those arising out of any Contract or tort, whether based on
negligence, strict liability or otherwise) regardless of whether the
same would be required by GAAP to be reflected as a liability in
financial statements or disclosed in the notes thereto.
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"LIEN" means any lien, pledge, hypothecation, mortgage, deed of trust,
security interest, preference, lease, charge, option, right of first
refusal, easement, trust, equitable interest, servitude, proxy,
encumbrance, interference, defect in title, impediment of title,
impairment of title, imperfection of title, existing or known to be
pending restriction on the use of any asset or the possession,
exercise or transfer of any attribute of ownership of any asset, or
any claim with respect to any of the foregoing. It is hereby clarified
that (i) with respect to an asset that the Sellers have rights with
respect thereto but is not owned by the Sellers, the foregoing shall
apply to the said right held by the Sellers and not to the underlying
asset, and (ii) that a right of a Third Party to prohibit transfer of
an assets without the consent of such Third Party shall not constitute
a Lien.
"MATERIAL ADVERSE EFFECT" means any event, change, effect, condition
or circumstance that, when taken individually or together with all
other adverse events, changes or effects, is or is reasonably likely
(a) to be materially adverse to the Purchased Assets, as a whole; or
(b) to be materially adverse to the Business as a whole and/or to the
ability of the Purchasers to continue such Business immediately after
the Closing substantially as conducted prior to the Closing; or (c) to
prevent consummation of the transactions contemplated by this
Agreement; other than any change, effect, event, occurrence,
condition, development or state of facts arising from or relating to
changes or conditions generally affecting the industries or markets
related to the Business to the extent that such changes or conditions
do not have a disproportionate material adverse effect on the Sellers
as a whole relative to other similarly situated companies.
"NETWORK IDENTIFIERS" means all internet protocol addresses and
networks used by the Sellers, related directly or indirectly, in whole
or in part, to the Business, including without limitation, DNS domain
names, e-mail addresses, world wide web (www) and http addresses,
network names, network addresses, and services (such as mail or
web-site) whether or not used or currently in service, and including
all registrations relating thereto in or with all registration bodies
or organizations.
"ORDER" means any temporary, preliminary or permanent order,
injunction, judgment, decree, edict, pronouncement, determination,
reported decision, published opinion, verdict, sentence, stipulation,
subpoena, ruling, writ, assessment or award that is or has been
issued, made, entered, rendered or otherwise put into effect by or
under the authority of any court, administrative agency or other
Governmental Body or any arbitrator or arbitration panel or any
Contract with any Governmental Body that is or has been entered into
in connection with any Legal Proceeding.
"ORDINARY COURSE OF BUSINESS" describes any action taken by each of
the Sellers if such action is consistent with the ordinary and usual
course of normal operations of the Business through the date hereof
and consistent with past practice.
"PARENT ORDINARY SHARES" means ordinary shares, NIS 1.00 par value per
share, of the Parent.
"PERMITS" means any approvals, authorizations, consents, licenses,
permits or certificates of a Governmental Body.
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"PERSON" means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint-stock
company, trust, estate, unincorporated organization, Governmental Body
or other entity.
"PLAN" means each plan, including any pension, retirement, cash
balance, money purchase, savings, profit sharing, annuity, deferred
compensation, bonus, incentive (including, without limitation, cash,
stock option, stock bonus, stock appreciation, phantom stock,
restricted stock, restricted stock unit and stock purchase), medical,
dental, vision, hospitalization, long-term care, prescription drug and
other health, employee assistance, cafeteria, flexible benefits, life
insurance, short and long term disability, vacation pay, severance
pay, other welfare and fringe benefit and similar plans, programs,
understandings, arrangements or agreements, including without
limitation all employee benefit plans, sponsored or maintained by any
of the Sellers.
"PURCHASED CONTRACTS" means (i) all Contracts relating to the
Purchased Assets and/or the Business and/or to the operation
(including without limitation past operation) of the Sellers in
connection with the Business (e.g., premises lease, car leases etc.)
to which any of the Sellers is a party, including without limitation
those that are listed on SCHEDULE 2.1.6 hereto (ii) all Contracts
relating to the Purchased Assets or the Business and/or to the
operation of the Sellers in connection with the Business entered into
after the date hereof and prior to the Closing either in the Ordinary
Course of Business or in accordance with the provisions of this
Agreement or that were approved by the Parent in advance and in
writing; and (iii) all other Contracts in effect as of the Closing to
which any of the Sellers is a party and are related to the Purchased
Assets or the Business and/or to the operation (including without
limitation past operation) of the Sellers in connection with the
Business (the "OTHER CONTRACTS"), including without limitation those
which will be added to Schedule 2.1.6 to be provided to the Purchasers
prior to the Closing, provided that any Other Contract of which the
Parent is made aware after the Closing Date shall become a Purchased
Contract.
"PURCHASED EQUIPMENT" means all office equipment, telecom equipment
and any material or machines, as well as all furniture, fixtures,
furnishings, leasehold improvements, vehicles, computer and computer
related Hardware, equipment (including research and development
equipment) and other tangible personal property used, owned or leased
by the Sellers, used for the conduct of the Business, including
without limitation as set forth in SCHEDULE 2.1.2, except to the
extent included in the Excluded Assets.
"PURCHASED INTELLECTUAL PROPERTY LICENSES" means any grant to Sellers
of a right to use a Third Party Intellectual Property in connection
with the Business, including for the creation of proxies, gateways,
interfaces (including GUI) and libraries, including without limitation
those listed on SCHEDULE 1.1(C).
"REPRESENTATIVES" means, with respect to any Person, such Person's
Affiliates, directors, officers, employees, agents, consultants,
advisors and other representatives, including legal counsel,
accountants and financial advisors.
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"RETENTION OPTIONS" means options to purchase Company Shares to be
granted by the Company to certain Hired Employees in accordance with
Section 3.6 hereunder.
"STOCK CONSIDERATION" means the Key Employee Options together with the
Retention Options.
"SUBSIDIARY" means any Person of which a majority of the outstanding
voting securities or other voting equity interests are owned, directly
or indirectly, by the Company.
"TARGET AMOUNT" means US$0.
"TAX" or "TAXES" means any and all taxes, charges, duties, fees,
levies, imposts or other assessments, reassessments, or mandatory
payments of any kind whatsoever, whether direct or indirect, imposed
by or payable to or accrued to the benefit of any federal, state,
local or foreign tax authority and/or Governmental Authority,
including, without limitation, gross income, net income, gross
receipts, license, payroll, employment, workers' compensation, excise,
severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability,
property, personal property, sales, use, transfer, registration, value
added, business, ad valorem, duties, turnover, goods, production,
occupancy, utility, services, municipal, real property, abandoned
property under escheatment Laws, capital gain, transfer and gain,
alternative or add-on minimum, estimated, or other taxes or mandatory
payments of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not, including any liability for
the foregoing by reason of membership in affiliated, consolidated,
combined, unitary or similar Tax group by Contract, indemnity or
otherwise.
"TAXING AUTHORITY" means the U.S. Internal Revenue Service, the
Israeli Tax Authority and any other Governmental Body responsible for
the imposition, assessment, collection or administration of any Tax.
"TAX RETURN" means any return, statement, declaration, notice,
certificate, report or other document that is or has been filed with
or submitted to, or is or was required to be filed with or submitted
to any Governmental Body in connection with the determination,
assessment, collection, or payment of any Tax or in connection with
the administration, implementation or enforcement of or compliance
with any Law related to any Tax (including any attachments thereto,
and any amendment thereof) including, but not limited to, any
information return, claim for refund, amended return or declaration of
estimated Tax, and including, where permitted or required, combined,
consolidated or unitary returns for any group of entities that
includes Seller, any of its Subsidiaries, or any of their Affiliates.
"THIRD PARTY" means any Person not an Affiliate of the other
referenced Person or Persons.
"TRANSACTION DOCUMENTS" means this Agreement or any other agreement,
exhibit or document attached or ancillary to this Agreement.
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"TRANSFERRED COPYRIGHT" means the Copyrights relating to the
Transferred Software and its related Documents.
"TRANSFERRED INTELLECTUAL PROPERTY" means any and all of the rights,
titles and interest in registered and unregistered Intellectual
Property, used, licensed or owned by each and any of the Sellers,
related directly or indirectly, in whole or in part, to the Business,
including without limitation, the Transferred Copyrights, the
Transferred Patents, Transferred Software, Transferred Trademarks,
Network Identifiers, and the Transferred Trade Secrets (excluding
Purchased Intellectual Property Licenses).
"TRANSFERRED PATENTS" means the Patents listed on SCHEDULE 1.1(D).
"TRANSFERRED SOFTWARE" means the Software listed on SCHEDULE 1.1(E).
"TRANSFERRED TRADEMARKS" means the Marks listed on SCHEDULE 1.1(F).
"TRANSFERRED TRADE SECRETS" means the Trade Secrets owned by the
Sellers which are related to the Transferred Software and the
Transferred Copyright.
1.2. TERMS GENERALLY. The definitions in Section 1.1 shall apply equally to
both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes"
and "including" shall be deemed to be followed by the phrase "without
limitation". The words "herein", "hereof" and "hereunder" and words of
similar import refer to this Agreement (including the Exhibits and
Schedules to this Agreement) in its entirety and not to any part
hereof unless the context shall otherwise require. All references
herein to Articles, Sections, Exhibits and Schedules shall be deemed
references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Unless the
context shall otherwise require, any references to any agreement or
other instrument or statute or regulation are to it as amended and
supplemented from time to time (and, in the case of a statute or
regulation, to any successor provisions). Any reference to any
supranational, national, federal, state, local, or foreign statute or
law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. Any
reference in this Agreement to a "day" or a number of "days" (without
explicit reference to "Business Days") shall be interpreted as a
reference to a calendar day or number of calendar days. If any action
is to be taken or given on or by a particular calendar day, and such
calendar day is not a Business Day, then such action may be deferred
until the next Business Day.
2. PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
2.1. PURCHASE AND SALE OF ASSETS. On the terms and subject to the
conditions set forth in this Agreement, at the Closing, Purchasers
shall, in consideration for the Base Purchase Price, purchase, acquire
and accept from the Sellers, and Sellers shall sell, transfer, assign,
convey and deliver to Purchasers all of the Sellers' right, title and
interest in, to and under the Purchased Assets.
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Any Purchased Assets (as defined hereunder) purchased by the
Purchasers may require separate instruments of transfer that shall be
executed with such Purchaser. In the event that the actual assignment,
transfer, conveyance or delivery of any Purchased Asset to the
Purchasers or any Affiliate thereof, in and of itself, involves or
gives rise to any Liability, such Liability shall be borne by the
Purchasers (other than Tax Liabilities related to the transfer itself,
and excluding any Liabilities resulting from any transfer of assets or
liabilities in and of itself between the Sellers themselves which
shall be an Excluded Liability).
"PURCHASED ASSETS" shall mean the following assets of the Sellers:
2.1.1. the Transferred Intellectual Property, including all
works-in-progress and Transferred Software in development;
2.1.2. the Purchased Equipment, including without limitation as set
forth on Schedule 2.1.2;
2.1.3. all of the goodwill associated with the Business and the
Transferred Trademarks included in the Transferred Intellectual
Property, including without limitation all rights associated with
the Seller's Network Identifiers;
2.1.4. (i) the Accounts Receivable outstanding at the Closing,
including without limitation those outstanding on the date hereof
and listed on SCHEDULE 2.1.4 to the extent they remain
outstanding as of the Closing, together with all related
Contracts (the "PURCHASED ACCOUNTS RECEIVABLE");
2.1.5. the Purchased Intellectual Property Licenses;
2.1.6. the Purchased Contracts (including without limitation all
back-log of the Business outstanding as of the Closing);
2.1.7. all Documents that are used or held for use in, or that arise
out of, or relate to, the Business, the Purchased Assets, or the
Transferred Intellectual Property (the Sellers shall be entitled
to retain copies for their record);
2.1.8. all Permits used or held for use as of Closing in the Business
or relating to the Purchased Assets (or any portion thereof) and
listed on SCHEDULE 2.1.8, except for any Permits that are
corporate Permits of the Sellers, such as Permits that qualify
the Sellers to operate in any jurisdiction, and except for
Permits that relate generally to the operations of the Sellers
and not specifically with respect to the Business or the
operation of the Purchased Assets and except for Permits that are
not transferable under Law;
2.1.9. all proposals submitted by the Sellers prior to the date hereof
to potential customers of the Business which proposals are still
outstanding, including without limitation those listed in
SCHEDULE 2.1.9 hereof and all pipeline of the Sellers related to
the Business;
2.1.10. all Third Party property and casualty insurance proceeds to
the extent received or receivable after Closing in respect of any
of the Purchased Assets;
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2.1.11. all assets related to the Business and/or the Purchased Assets
included on the Financial Statements, including, without
limitation, all prepaid expenses, other than prepaid expenses of
directors and officers liability insurance and other than
Excluded Assets;
2.1.12. all performance and other bonds, security and other similar
deposits provided by third parties for the benefit of the
Sellers, related to any of the Purchased Contracts;
2.1.13. all rights in, to and under claims for refunds, rebates or
other discounts due from suppliers or vendors and rights to
offset in respect thereof under the Purchased Contracts and
arising after the Closing Date; and
2.1.14. all other assets, properties and business, other than the
Excluded Assets, of every kind and description, wherever located,
real, personal or mixed, tangible or intangible, owned, held for
use or used in the conduct of the Business by the Sellers as the
same will exist on the Closing Date.
The lists and schedules of Purchased Assets will be updated
immediately prior to the Closing, to take into consideration
additional Purchased Assets acquired by the Sellers during the period
from the date hereof to the Closing Date, in the Ordinary Course of
Business or in accordance with the provisions of Section 7.2 below
and/or with the prior written authorization of the Parent. It is
clarified that any asset that falls within the above definition of
Purchased Assets shall be deemed a Purchased Asset, notwithstanding
the failure to list such asset on any of the aforementioned lists and
schedules.
The Purchased Assets are held by the different Sellers and as such,
not all Purchased Assets listed above are purchased from each Seller,
rather each Seller is selling such Purchased Assets that are owned by
it (for example, if Seller Israel Sub has no goodwill, then no
goodwill is being sold by the Seller Israel Sub).
2.2. EXCLUDED ASSETS. Notwithstanding anything in SECTION 2.1 to the
contrary, the Purchased Assets shall not include, and the Sellers are
not selling, transferring, assigning, conveying or delivering to
Purchasers and the Purchasers are not purchasing, acquiring or
accepting from the Sellers, any of the rights, properties or assets,
whether tangible or intangible, real, personal or mixed which are not
defined as Purchased Assets under this Agreement (the "EXCLUDED
ASSETS"). Without limiting the generality of the foregoing, the
Excluded Assets shall include: (i) any equity held by the Company in
the Sellers (which are not the Company), (ii) any intercompany debt of
the Sellers and any obligations, rights or undertakings between any of
the Sellers and any of the shareholders or other equity holders of any
of the Sellers (in their capacity as such), (iii) any cash or cash
equivalents of the Sellers, (iv) all rights of the Sellers to receive
Tax refunds and all Tax attributes of the Sellers and (A) that are
personal to the Sellers or to the holders of interest therein, and (B)
(x) that relate to any taxable period ending on or before the Closing
Date, or (y) with respect to any taxable period that includes but does
not end on the Closing Date, that relate to the portion of such
taxable period prior to and including the Closing Date; (v) all Tax
Returns of the Sellers and all other Documents relating to the Tax
liabilities and attributes of the Sellers; (vi) all purchase price
consideration to be paid by Purchasers to the Sellers pursuant to the
terms of this Agreement, and all of the Sellers' contractual rights in
and to this Agreement and the ancillary agreements to which they are a
party; (vii) all rights and remedies (including cash payments) to
which Seller Israel Sub is entitled to in connection with a certain
office sub-lease agreement that was previously in effect by the Seller
Israel Sub and which has previously terminated; (viii) all Documents
relating to the Excluded Assets; (ix) all personnel Documents and
other Documents that the Sellers are required by Law to retain in
their possession; provided, however, the Sellers shall provide
Purchasers with copies of all such Documents to the extent not
prohibited by applicable Laws; (x) Directors and Officers liability
insurance of each of the Sellers (if any) and any other insurance
policies; (xi) a deposit in the amount of Euro 100,000 which was
placed in escrow as a performance guaranty of the Seller Israel Sub
for the benefit of the Parent; and (xii) the Excluded Business.
- 12 -
2.3. ASSUMPTION OF LIABILITIES. On the terms and subject to the conditions
set forth in this Agreement, at the Closing, each of the Purchasers
shall assume and acquire, severally and not jointly, effective as of
the Closing, the following Liabilities of the Sellers (collectively,
the "ASSUMED LIABILITIES"):
2.3.1. all Liabilities related to the Purchased Assets and/or the
Business and/or the operation (including without limitation past
operation) of the Business whether originated prior to the
Closing date or thereafter, whether or not such Liabilities are
disclosed in this Agreement or pursuant thereto and whether known
or unknown, but other than the Excluded Liabilities related to
the Business or the Purchased Assets and set forth in Sections
2.4.1 - 2.4.7 below.
2.3A It is being clarified that Purchaser SUB1 shall acquire the Purchased
Assets and Assumed Liabilities of Seller UK Sub, Purchaser SUB2 shall
acquire the Purchased Assets and Assumed Liabilities of Seller USA INC
and Seller USA LLC, Parent shall acquire the Purchased Assets and
Assumed Liabilities of Seller Israel Sub, Purchaser SUB2 shall acquire
the Purchased Assets and Assumed Liabilities of the Company, other
than those Purchased Contracts listed in SCHEDULE 2.3A, which
Purchased Contracts will be transferred and assigned prior to the
Closing from Seller Israel Sub to the Company, and will be purchased
by Purchaser SUB1.
2.4. EXCLUDED LIABILITIES. Purchasers will not assume or be liable for any
Excluded Liabilities. "EXCLUDED LIABILITIES" shall mean all
Liabilities of the Sellers, except for the Assumed Liabilities. For
the avoidance of doubt, the following shall be deemed to be Excluded
Liabilities:
2.4.1. any Liabilities arising out of or in connection with the
Excluded Business and/or the Excluded Assets;
2.4.2. any Liabilities for (i) Taxes of the Sellers relating to the
Excluded Assets or Excluded Liabilities, (ii) Taxes that relate
to the Purchased Assets or the Assumed Liabilities or the
Business for taxable periods (or portions thereof) ending on or
before the Closing Date, and (iii) payments under any Tax
allocation, sharing or similar agreement (whether oral or
written) for taxable periods (or portions thereof) ending on or
before the Closing Date;
- 13 -
2.4.3. any Liabilities in respect of the pending or threatened Legal
Proceeding set forth in SCHEDULE 2.4.3;
2.4.4. all of the Sellers Liabilities with respect to costs and
expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including the transaction
expenses;
2.4.5. any intercompany debt of the Sellers and any obligations,
rights or undertakings between any of the Sellers and any of the
shareholders or other equity holders of any of the Sellers (in
their capacity as such).
2.4.6. any action or threatened action by or on behalf of any current
or prior shareholder or member of the Sellers (in its capacity as
such) whether or not in connection with this Agreement or the
transactions contemplated hereby.
2.4.7. any claim, Liability or obligation of the Sellers towards any
Employee that is not a Hired Employee.
2.5. FURTHER CONVEYANCES AND ASSUMPTIONS; CONSENT OF THIRD PARTIES.
2.5.1. Effective at the Closing, the Sellers hereby irrevocably
constitute and appoint each of the Purchasers the true and lawful
attorneys (separately and jointly) of each of the Sellers, with
full power of substitution, in the name of the Sellers or
Purchasers, but on behalf of and for the benefit of the
Purchasers and at Purchasers' cost and expense: (i) to demand and
receive from time to time any and all the Purchased Assets and to
make endorsements and give receipts and releases for and with
respect to the same and any part thereof; and (ii) to institute,
prosecute and settle any and all actions or proceedings that
Purchasers may deem proper in order to collect, assert or enforce
any claim, right or title of any kind in or to the Purchased
Assets; (iii) to defend or settle any or all actions or
proceedings with respect to any of the Purchased Assets, except
that if indemnification is sought by the Purchasers under Section
11, the provisions of Section 11 shall apply to such action or
proceeding and the Purchasers may not be entitled to defend or
settle such action or proceeding except as set forth in Section
11, (iv) to do all such acts and things in relation thereto as
Purchasers shall deem necessary or desirable. Each of the Sellers
hereby acknowledge that the appointment hereby made and the
powers hereby granted are coupled with an interest and are not
and shall not be revocable by it in any manner or for any reason.
Each of the Sellers shall deliver to the Purchasers at the
Closing an acknowledged power of attorney to the foregoing effect
executed and notarized and/or apostiled by each of the Sellers in
the form attached hereto as SCHEDULE 2.5.1. Without limiting the
foregoing, in the event that the Sellers receive, at any time
after the Closing, any payments related to the Business
(including without limitation from any customer for payment under
any Purchased Contract), the Sellers shall promptly transfer such
payment to the Purchasers (or any Affiliate of the Purchasers
designated by the Purchasers) as designated by the Parent.
- 14 -
2.5.2. Without derogating from anything in Section 2.5.1, from time to
time following the Closing and without additional consideration
to the Sellers, the Sellers and Purchasers shall, and shall cause
their respective Affiliates to, execute, acknowledge and deliver
in a reasonably prompt manner, all such further conveyances,
notices, assumptions, releases and such other instruments, and
shall take such further actions, in each case, as may be
commercially reasonably necessary or appropriate to assure fully
to Purchasers and their respective successors or assignees, all
of the properties, rights, titles, interests, remedies, powers
and privileges intended to be conveyed to the Purchasers under
this Agreement including with respect to the Purchased Assets and
to assure fully to the Sellers and their Affiliates, successors
and assignees, the assumption of the Assumed Liabilities, and to
otherwise make effective the transactions contemplated hereby and
thereby provided that Purchasers shall bear all expenses in
connection with the foregoing. In addition, the Sellers shall
provide Purchasers with all information, and copies of all
Documents, which are part of the Excluded Assets and relate to
Tax liabilities and attributes of the Sellers, as may be required
to enable Purchasers to prepare their Tax Returns for any
post-closing Tax period. The obligations of the Sellers under
this Section 2.5.2 shall expire after 12 months from the Closing
Date.
- 15 -
2.5.3. Notwithstanding anything to the contrary contained in this
Agreement, to the extent the sale, assignment, transfer,
conveyance or delivery or attempted sale, assignment, transfer,
conveyance or delivery to the Purchasers of any Purchased Asset
is prohibited by any applicable law or would require any
Governmental Body or third-party authorizations, approvals,
consents, or waivers and such authorizations, approvals, consents
or waivers shall not have been obtained prior to the Closing Date
or that Closing has occurred irrespective that such condition was
not met, and the obtaining thereof is not a condition to the
Closing, then this Agreement will not constitute an agreement to
assign any such Purchased Asset or any claim or right or any
benefit arising thereunder or resulting therefrom and following
the Closing, and without limiting the provisions set forth in
Section 7.3, the Sellers shall be deemed to hold the respective
Purchased Asset and all rights, benefits and privileges with
respect thereto as a trustee for the sole benefit of the
Purchasers and at the Purchasers' sole cost and expense
(including the allocation of any resources that may be required
in connection with such Purchased Assets which may include
provisions of the required services and personnel as
subcontractors of the Sellers) and shall manage such Purchased
Asset solely in accordance with instructions of the Parent, and
the parties shall use their respective reasonable best efforts,
and cooperate with each other, to obtain promptly such
authorizations, approvals, consents or waivers. Pending such
authorization, approval, consent, or waiver, the parties shall
cooperate with each other in any reasonable and lawful
arrangements designed to provide to the Purchasers the full
benefits of use of such Purchased Asset. Once such authorization,
approval, consent or waiver for the sale, assignment, transfer,
conveyance or delivery of a Purchased Asset not sold, assigned,
transferred, conveyed or delivered at the Closing is obtained,
the Sellers shall promptly assign, transfer convey or deliver, or
cause to be assigned, transferred, conveyed and delivered, such
Purchased Asset to the Purchasers for no additional
consideration. To the extent that any such Purchased Asset cannot
be transferred or the full benefits of use of any such Purchased
Asset cannot be provided to the Purchasers following the Closing,
the Purchasers and the Sellers shall enter into such arrangements
for no additional consideration from the Purchasers (including
subleasing or subcontracting if permitted) at the Purchasers'
sole cost and expense (including the allocation of any resources
that may be required in connection with such Purchased Assets
which may include provisions of the required services and
personnel as subcontractors of the Sellers), to provide to the
Purchasers the operational equivalent of obtaining such
authorization, approval, consent or waiver, to the extent
possible. Without limitation of the foregoing, in the event that
at the Closing the registration of any Transferred Intellectual
Property in the name of the applicable Purchaser with the
relevant Governmental Body was not yet completed and perfected
then without limitation of any other rights of the Purchasers, to
the extent necessary to grant to the Purchasers full and
unrestricted use of such Transferred Intellectual Property, each
of the Sellers hereby grants to each of the Purchasers, effective
as of the Closing and subject to any Purchased Intellectual
Property Licenses, an irrevocable, perpetual, royalty free, fully
paid, worldwide, unrestricted, exclusive license to make any use
or exploitation with respect thereto. The obligations of the
Sellers under this Section 2.5.3 shall expire after 12 months
from the Closing Date.
2.5.4. In the event that during the period of 12 months following the
Closing, the Purchasers discover any Contract, Software,
Copyright, Trademark or other item of Intellectual Property or
other asset owned by the Sellers as of the Closing and used in
conducting the Business prior to Closing (an "ADDITIONAL ASSET"),
but was not properly transferred to the Purchasers for any
reason, then the Sellers undertake to license or transfer such
Additional Asset, as applicable under this Section, to the
applicable Purchaser in accordance with the provisions hereunder,
and such item shall be deemed a Purchased Asset or Transferred
Intellectual Property under this Agreement, for no additional
consideration. Sellers shall provide upon Purchasers' request,
written confirmation and, such item shall be transferred, and in
any event shall be deemed a part of the Purchased Assets and any
Liability in connection therewith shall be considered as an
Assumed Liability. If any of the Sellers so discover any such
Additional Asset, it shall notify the Purchasers and, the
Purchasers shall undertake to receive the Additional Asset, and
the Sellers shall be deemed to have licensed or transferred such
Additional Asset together with the respective Liability (if any)
to Purchasers in accordance with the terms of this Section.
- 16 -
2.5.5. To the extent any amount due to Purchasers under a Purchased
Account Receivable or that is otherwise related to the Business
is paid by a Third Party to the Sellers following the Closing
Date, then the Sellers shall promptly forward such amounts in
full to the Purchasers.
2.5.6. The Purchasers shall be entitled to benefit from the rights of
the Sellers under all non-disclosure, non-competition,
non-solicitation and assignment agreements (not including the
exhibits attached to this Agreement), provisions and arrangements
to which the Sellers are a party, which are related to the
Purchased Assets and/or the Business, the Transferred
Intellectual Property or current or former employees of the
Sellers who are or were engaged in the Business (the "NDA
AGREEMENTS") solely to the extent that such NDA Agreements relate
to the Purchased Assets, and/or the Business and/or the
Transferred Intellectual Property. In case of a claimed
infringement or breach by any Third Party under an NDA Agreement
related to the Purchased Assets and/or the Business and/or the
Transferred Intellectual Property, at the request of the
Purchasers or the Parent, the Sellers shall institute Legal
Proceedings and take any other reasonable actions, at the
reasonable direction of the Purchasers, against such infringing
or breaching party. All the expenses incurred by the Sellers,
including reasonable fees for the time spent by Sellers'
employees, shall be borne and paid by Purchasers, and the Sellers
shall not be required to take any such actions unless all such
expenses are paid in advance or are otherwise guaranteed by the
Purchasers. The Sellers shall not settle or compromise or permit
a default or consent to entry of any judgment without the consent
of the Parent, which shall not be unreasonably withheld. Nothing
herein shall restrict Purchasers' rights to pursue any action to
which it is legally entitled independently of the Sellers.
2.5.7. For the avoidance of doubt, nothing in the Section 2.5 shall
obligate any of the Sellers to maintain any Employees engaged
with the Sellers or shall prevent the Sellers from initiating and
finalizing any winding up of liquidation process of the Sellers
before the termination of the applicable periods specified in
this Section 2.5, and any of the foregoing shall not be deemed a
breach of the obligations of the Sellers hereunder and upon
liquidation by the Sellers their obligations under this Section
2.5 shall expire.
- 17 -
2.5.8. GUARANTEE. No later than the Closing, Parent shall take all
reasonable commercial action necessary to release the deposit in
the amount of Euro 100,000 which was placed in escrow as a
performance guaranty of the Seller Israel Sub and necessary to
pay such deposit to the Seller Israel Sub at the Closing (the
"GUARANTEE").
2.6. ISRAELI TAX RULING. As soon as reasonably practicable after the
execution of this Agreement, the Parent shall instruct its counsel,
advisors and accountants to prepare and file with the Israeli Income
Tax Authority an application for a ruling confirming that (i) the
assumption of the Stock Consideration granted to Israeli Employees of
Seller Israel Sub who shall become Hired Employees and the conversion
or replacement of Stock Consideration into or with options to purchase
Parent Ordinary Shares in accordance with Section 3.6.3 will not
result in a requirement for an immediate Israeli tax payment by the
said holders of the Stock Consideration and that the Israeli taxation
will be deferred until the exercise of such Assumed Options, or in the
case of Assumed Options that are part of a "Section 102 Plan," until
the actual sale of the underlying shares of Parent Ordinary Shares by
the holders of such Assumed Options; and (ii) that the "lock-up
period" under any "Section 102 Plan" will continue to run and will not
be restarted as a result of the assumption of the Assumed Options
(which ruling may be subject to customary conditions regularly
associated with such a ruling) (the "ISRAELI OPTION TAX RULING"). Each
of the Sellers and the Purchasers shall, and shall instruct their
Representatives to, coordinate all activities and to cooperate with
each other, with respect to the preparation and filing of such
application and in the preparation of any written or oral submissions
that may be necessary, proper or advisable to obtain the Israeli
Option Tax Ruling to the reasonable satisfaction of the Sellers and
the Purchasers. Subject to the terms and conditions hereof, the
parties shall use commercially reasonable efforts to promptly take, or
cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable Law to obtain
the Israeli Option Tax Ruling as promptly as practicable.
2.7. TRANSFER TAXES. Sellers shall be liable for any real property transfer
or gains, sales, use, transfer, consumption, goods and services, stock
transfer, stamp duties, and any similar taxes, duties, registration
charges or other like charges which become payable in connection with
the transactions contemplated hereby, provided however that any value
added tax imposed in connection with the transactions contemplated
hereby shall be borne by the Purchasers.
- 18 -
2.8. WITHHOLDING TAXES. Notwithstanding any other provision in this
Agreement, the Purchasers or their Representatives shall have the
right to deduct and withhold Taxes from any payments to be made
hereunder if such withholding is required by law, including, without
limitation, the Code or the Israeli Income Tax Ordinance (to the
extent applicable to any such Seller). To the extent that amounts are
so withheld, such withheld amounts shall be treated for all purposes
of this Agreement as having been delivered and paid to the Sellers or
other recipient of payments in respect of which such deduction and
withholding was made. Purchasers agree to apply a reduced or zero rate
of withholding under any Tax law to any consideration payable
hereunder to the extent that the Sellers have provided the Purchaser
with a valid unequivocal reduction or exemption certificate or ruling
issued by a relevant Tax authority which can clearly be relied upon by
the Purchaser and which is presented at least 7 (seven) calendar days
prior to the time that payment of any or all of the consideration is
due to be made. Any amounts deducted and withheld pursuant to this
Section 2.8 shall be remitted to the relevant Tax authority accordance
with applicable Law only on the last day that such Tax payments are
due and provided that Sellers have not provided a valid reduction or
exemption certificate or ruling issued by a relevant Tax authority at
least 2 Business Days prior to such day. Subject to the
representations in Section 5.8 being true and correct and a copy of
the exemption certificate issued by the Israeli Tax authority to
Seller Israel Sub that was provided to Parent, the Sellers can confirm
that no withholding taxes are due at the Closing in connection with
the payments by Parent, Purchaser SUB1 and Purchaser SUB2 to Seller
Israel Sub, the Company, Seller US Sub and Seller UK Sub.
3. CONSIDERATION.
3.1. CONSIDERATION. The aggregate consideration for the Purchased Assets
and Assumed Liabilities shall be an amount equal to US$22,000,000 as
adjusted in accordance with Section 3.4 (the "BASE PURCHASE PRICE").
3.2. PAYMENT OF CLOSING DATE PURCHASE PRICE. On the Closing Date, the
Purchasers shall pay the Sellers (each Purchaser paying the applicable
Seller in accordance with Section 2.3A above) the Base Purchase Price
after any adjustment in accordance with Section 3.4.2 less (i) the
Escrow Fund; and (ii) the Stock Consideration Value (as defined below)
(the "CLOSING DATE PURCHASE PRICE") plus VAT if applicable, against
delivery of a value added tax invoice. The Closing Date Purchase Price
shall be split between the Sellers in accordance with the Allocation
Statement (as defined herein). At least 5 Business Days prior to the
Closing, the Sellers shall deliver to the Parent a detailed list with
the bank account details and wiring instructions for each of the
Sellers. Notwithstanding to the foregoing, to the extent that Seller
UK Sub does not actually have a bank account - then the amount due to
Seller UK Sub shall be transferred to the Company, as paying agent on
behalf of Seller UK Sub.
3.3. PAYMENT OF ESCROW FUND. At the Closing, the Purchasers will deliver to
the Escrow Agent a cash amount of US$2,000,000 to be held by the
Escrow Agent pursuant to the Escrow Agreement (the "ESCROW FUND"). The
Escrow Fund shall be withheld and paid from: (a) the Closing Date
Purchase Price otherwise payable to Seller Israel Sub, up to the
amount equal to the full amount of the Escrow Fund, and (b) any
additional amount in excess of the Closing Date Purchase Price
otherwise payable to Seller Israel Sub which is required to be placed
in escrow so that the entire amount of Escrow Fund is met, shall be
pro-rated between each of the other Sellers' portion of the Closing
Date Purchase Price.
- 19 -
3.4. BASE PURCHASE PRICE ADJUSTMENT. The Base Purchase Price shall be
subject to adjustment as follows:
3.4.1. "NET WORKING CAPITAL" means balance sheet figures reflecting
the excess of (a) all short term assets related to the Business
included in the Purchased Assets, but excluding (i) deferred Tax
assets, (ii) cash and cash equivalents and (iii) any accounts
receivable payable by the Purchasers over (b) all short term and
long term liabilities related to the Business included in the
Assumed Liabilities, but excluding (i) deferred Tax liabilities
and (ii) any accounts payable of the Sellers to the Purchasers;
all determined on a consolidated basis in accordance with GAAP
and consistent with past practices as of the close of business on
the date hereof. For the purposes of the Net Working Capital
calculation only, deferred revenues shall be equal to $250,000
regardless of the amounts reflected in the financial statements.
3.4.2. Prior to the date hereof, the Company shall have prepared and
delivered to Parent a draft estimate of the Signing Net Working
Capital (as defined below) (the "DRAFT SIGNING NET WORKING
CAPITAL") on a consolidated basis, which Draft Signing Net
Working Capital is attached hereto as SCHEDULE 3.4.2. The Company
shall make such information, personnel and resources available to
Parent as may be reasonably necessary to enable Parent and its
Representatives to review the Draft Signing Net Working Capital.
If the Draft Signing Net Working Capital is less than the Target
Amount, then the amount of such deficiency (on a dollar for
dollar basis), shall be subtracted from the Base Purchase Price
(pro-rata between the Sellers) and withheld by the Purchasers
until final determination of the Signing Net Working Capital (the
"NWC WITHHELD AMOUNT"). If the Signing Net Working Capital is
equal to or greater than the Target Amount, then no adjustment to
the Base Purchase Price shall be made based on the Signing Net
Working Capital.
3.4.3. At least 5 days prior to the Closing Date, the Company shall
provide the Parent an estimate, as of the anticipated Closing
Date, of the result obtained by (i) multiplying (a) the Daily
Gross Burn Rate by (b) the anticipated number of days between the
date hereof and the Closing Date, (ii) adding to such result any
out of pocket cost or expense of the Sellers that is related to
the Business and is not included within the Daily Gross Burn Rate
calculation and was actually incurred or expended by the Sellers
between the date hereof and the Closing Date, provided that such
cost or expense is reasonably approved by Parent, in advance in
writing and (iii) subtracting from such result the Estimated
Interim Expenses (the "ESTIMATED BURN RATE ADJUSTMENT").
- 20 -
"DAILY GROSS BURN RATE" shall mean an amount of US$14,274, which
the Sellers (together with the Purchaser) estimate in good faith
is the average daily gross burn rate of the Sellers (based on the
burn rate in the period prior to the date hereof and as
anticipated for the period until the Closing), including salaries
and employee compensation, as well as all other costs and
expenses. It is hereby agreed that in the event that such
estimation is found to be inaccurate, it shall not result in any
adjustment to any amount paid by Purchasers to Sellers or any
liability of the Sellers or the Purchasers.
"INTERIM EXPENSES" shall mean the sum of (i) the increase of the
account payables related to the Business from the date hereof to
the Closing, plus (ii) account receivables that are paid to the
Sellers between the date hereof and the Closing, plus (iii) the
increase in the accruals of the Sellers (calculated in accordance
with GAAP) from the date hereof until the Closing relating to the
Business. "ESTIMATED INTERIM EXPENSES" shall mean the Interim
Expenses reasonably anticipated at the Closing.
In the event that the Estimated Burn Rate Adjustment is a
positive number, then no further adjustment to the Base Purchase
Price shall be made at Closing. In the event that the Estimated
Burn Rate Adjustment is less than zero than such amount below
zero shall be reduced from the Base Purchase Price (pro-rata
between the Sellers) and withheld by the Purchasers (the "BURN
RATE WITHHELD AMOUNT" and together with the NWC Withheld Amount,
the "WITHHELD AMOUNTS").
3.4.4. Promptly following the Closing, but in any event no later than
30 days thereafter, the Company shall prepare and deliver to the
Parent: (x) an unaudited statement (the "SIGNING DATE STATEMENT")
which will set forth the Net Working Capital of the Company and
its Subsidiaries on a consolidated basis and separately broken
down per each Seller legal entity as of the end of business on
the date hereof (the "SIGNING NET WORKING CAPITAL"), prepared in
accordance with GAAP consistently applied with the Sellers past
practices and in accordance with the definition set forth in
Section 3.4.1 above, (y) the result obtained by (i) multiplying
(a) the Daily Gross Burn Rate by (b) the actual number of days
between the date hereof and the Closing Date, and subtracting
from such result (ii) the Interim Expenses (the "FINAL BURN RATE
ADJUSTMENT"), and (z) a calculation of the adjusted Base Purchase
Price (calculated in accordance with Section 3.4.8) that results
therefrom.
3.4.5. The Signing Date Statement and the Final Burn Rate Adjustment
shall be accompanied by all relevant backup materials and
schedules relating to the calculation of the Signing Net Working
Capital and the Final Burn Rate Adjustment, in detail reasonably
acceptable to the Parent. Company's independent accountants shall
participate in the preparation of the Signing Net Working Capital
and Final Burn Rate Adjustment, but shall not be required to
express an opinion thereon. Company shall make such information,
personnel and resources available to the Parent as may be
reasonably necessary to enable the Parent to review the Signing
Net Working Capital and the Final Burn Rate Adjustment; provided
that the obligation of the Company to provide such information,
personnel and resources shall be limited to normal business hours
with reasonable prior notice and in such a manner so as not to
interfere unreasonably with the conduct of its business.
- 21 -
3.4.6. In the event that the Parent disputes the Signing Date
Statements or the Signing Net Working Capital or the Final Burn
Rate Adjustment, the Parent shall notify the Company in writing
(the "PARENT DISPUTE NOTICE") of the amount, nature and basis of
such dispute, within 15 calendar days after delivery of the
Signing Date Statement; provided however that the amounts
designated as deferred revenue in the Draft Signing Net Working
Capital (i) shall remain unchanged and be reflected in exactly
the same manner and amounts in the Signing Date Statement, and
(ii) shall not be subject to dispute by the Purchasers. In the
event of such a dispute, the Company and the Parent shall first
use their diligent good faith efforts to resolve such dispute
among themselves. If the Company and the Parent are unable to
resolve the dispute within 15 calendar days after delivery of the
Parent Dispute Notice then any remaining items in dispute shall
be submitted to one of the "BIG 4" accounting firms jointly
chosen by the Company and the Parent, which in the absence of an
agreement shall be Deloitte (the "AUDIT FIRM"), whom Parent and
the Company hereby represent and warrant to the other that
neither such party nor any of their Affiliates uses as its
independent accountant or has any material relationship
therewith.
3.4.7. The written decision of the Audit Firm shall be rendered within
no more than 30 days from the date that the matter is referred to
such firm and shall be final and binding on the parties hereto
and shall not be subject to dispute or review. Parent and the
Company shall cooperate in good faith with the determination
process and the Audit Firm requests for information, including
providing the Audit Firm with information as promptly as
practicable after its request therefor. No particular procedures
are intended to be imposed upon the Audit Firm, it being the
desire of Parent and the Company that any such dispute shall be
resolved as expeditiously and inexpensively as reasonably
practicable; provided, however, that Parent and the Company shall
be entitled to provide the Audit Firm with supporting
documentation and shall be entitled to make an oral presentation
to the Audit Firm in connection with the resolution of the items
in dispute. Each of Parent and the Company shall be entitled to
receive copies of all materials provided by the other to the
Audit Firm in connection with the determination process and to
make the same number of submissions and presentations to the
Audit Firm as the other. In making its determination on the
disputed items, the Audit Firm shall make such determinations (i)
only in accordance with the standards set forth in this
Agreement, (ii) only with respect to the disputed items submitted
to the Audit Firm, (iii) on a disputed item by disputed item
basis (i.e., not in the aggregate), and (iv) where the result of
the Audit Firm's determination is either a number proposed by
Parent or the Company for the item in dispute or a compromise
position between the ranges presented by Parent or the Company to
the Audit Firm. Following any such dispute resolution (whether by
mutual agreement of the parties or by written decision of the
Audit Firm), the Signing Net Working Capital and Final Burn Rate
Adjustment (as determined in such dispute resolution) shall be
determined final. Each of Parent and the Company shall bear its
own expenses and fees and expenses of its own Representatives,
including its independent accountants, in connection with the
preparation, review, dispute (if any) and final determination of
the Signing Date Statement and the Final Burn Rate Adjustment.
The expenses of the Audit Firm shall be borne by the party whose
aggregate estimate of the disputed amount differs most greatly
from the determination of the Audit Firm.
- 22 -
3.4.8. Immediately upon the expiration of the 15 calendar day period
for giving the Parent Dispute Notice, if no such notice is given,
or upon notification by the Parent to the Company that no such
notice will be given, or immediately upon the resolution of
disputes, if any, pursuant to this SECTION 3.4, the Base Purchase
Price shall be adjusted as follows:
3.4.8.1. If the Draft Signing Net Working Capital was equal to or
greater than the Target Amount (i.e. the NWC Withheld Amount
equals zero), then (a) if the Signing Net Working Capital is
less than the Target Amount, then the amount of such
deficiency (on a dollar for dollar basis), shall be
subtracted from the Base Purchase Price and shall be repaid
by the Sellers to the Purchasers as instructed by the Parent
in cash, and (b) if the Signing Net Working Capital is equal
to or greater than the Target Amount, then no adjustment to
the Base Purchase Price shall be made. If the Draft Signing
Net Working Capital was less than the Target Amount (i.e.
the NWC Withheld Amount is a positive number), then (i) if
the Signing Net Working Capital is less than the Target
Amount but equal to or greater than the Draft Signing Net
Working Capital, then the portion of the NWC Withheld Amount
representing the difference between the Draft Signing Net
Working Capital and the Signing Net Working Capital shall be
paid by the Purchasers to the Sellers (pro-rata between the
Sellers) in cash, and the portion of the NWC Withheld Amount
representing the difference between the Signing Net Working
Capital and the Target Amount shall be retained by the
Parent and deem subtracted from the Base Purchase Price,
(ii) if the Signing Net Working Capital is less than the
Draft Signing Net Working Capital, then in addition to the
NWC Withheld Amounts which shall be retained by the
Purchasers, the difference between the Draft Signing Net
Working Capital and the Signing Net Working Capital shall be
repaid by the Sellers (pro-rata between the Sellers) to the
Purchasers in cash, and (iii) if the Signing Net Working
Capital is equal to or greater than the Target Amount, then
the NWC Withheld Amounts shall be paid by the Purchasers to
the Sellers (pro-rata between the Sellers) and no adjustment
to the Base Purchase Price shall be made.
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3.4.8.2. In the event that Estimated Burn Rate Adjustment is
greater than zero (i.e. the Burn Rate Withheld Amount equals
zero), then (i) in the event that the Final Burn Rate
Adjustment is greater than zero the Final Burn Rate
Adjustment shall be added to the Base Purchase Price and
shall be paid by the Purchasers to the Sellers (pro-rata
between the Sellers), and (ii) in the event that the Final
Burn Rate Adjustment is less than zero, then the Final Burn
Rate Adjustment shall be subtracted from the Base Purchase
Price and repaid by the Sellers (pro-rata between the
Sellers) to the Purchasers.
3.4.8.3. In the event that Estimated Burn Rate Adjustment is less
than zero (i.e. the Burn Rate Withheld Amount is a positive
number), then (i) in the event that the Final Burn Rate
Adjustment is greater than Estimated Burn Rate Adjustment
but less than zero, then the portion of the Burn Rate
Withheld Amount representing the difference between the
Final Burn Rate Adjustment and zero shall be retained by the
Purchasers and deducted from the Base Purchase Price
(pro-rata between the Sellers), and the portion of the Burn
Rate Withheld Amount representing the difference between the
Final Burn Rate Adjustment and the Estimated Burn Rate
Adjustment shall be paid by the Purchasers to the Sellers
(pro-rata between the Sellers), (ii) in the event that the
Final Burn Rate Adjustment is less than the Estimated Burn
Rate Adjustment, then in addition to the Burn Rate Withheld
Amount which shall be retained by the Purchasers, the
difference between the Final Burn Rate Adjustment and the
Estimated Burn Rate Adjustment shall be subtracted from the
Base Purchase Price and repaid by the Sellers (pro-rata
between the Sellers) to the Purchasers, and (iii) in the
event that the Final Burn Rate Adjustment is greater than
Estimated Burn Rate Adjustment and greater than zero, then
the Burn Rate Withheld Amount together with the difference
between the Final Burn Rate Adjustment and zero, shall be
added to the Base Purchase Price and paid by the Purchaser
to the Sellers (pro-rata between the Sellers).
- 24 -
For the avoidance of any doubt, the adjustments described in
this Section 3.4.8 shall be made in cash, and there shall be
no adjustments to the Stock Consideration as a result of
such adjustments.
3.5. BASE PURCHASE PRICE ALLOCATION. Prior to the Closing Date, Parent
shall deliver to the Company a statement (the "ALLOCATION STATEMENT")
allocating the Base Purchase Price (as adjusted) (including the
Assumed Liabilities) among the Purchased Assets / Sellers. The Company
shall provide such information as Parent reasonably request for the
preparation of the Allocation Statement. Company and Purchasers shall
report the purchase and sale of the Purchased Assets in accordance
with such allocation (as finally determined) for all Tax purposes and
filings. The Purchasers shall bear the costs of a valuation advisor.
The initial indication provided by the Parent's independent valuation
firm of the Allocation Statement, based on the information provided by
the Sellers, is attached hereto as Schedule 3.5 (the "INITIAL
ALLOCATION").
3.6. STOCK CONSIDERATION.
3.6.1. 1999 PLAN AND 2001 PLAN. The Parent has previously notified the
Company that it does not intend to assume the 1999 Plan, the 2001
Plan or any options to purchase shares or stock of the Company or
other rights or awards granted thereunder.
3.6.2. The Company shall, immediately prior to the Closing:
3.6.2.1. amend the 2007 Plan so as to (a) increase the size of
the pool under the 2007 Plan to 20,000,000 Company Shares,
and (b) include provisions therein so that the Company can
grant restricted stock awards in addition to options;
3.6.2.2. grant the Key Employee Options under the 2007 Plan, in
the amount and under the terms and conditions set forth in
SCHEDULE 3.6.2.1; in the aggregate value of 3.5% of the Base
Purchase Price (as adjusted at the Closing and disregarding
any further adjustments under Section 3.4.8) and applicable
vesting schedule
3.6.2.3. grant the Retention Options under the 2007 Plan, in the
amount and under the terms and conditions set forth in
SCHEDULE 3.6.2.3. in the aggregate exercise price of 2% of
the Base Purchase Price (as adjusted at the Closing and
disregarding any further adjustments under Section 3.4.8)
and applicable vesting schedule
- 25 -
3.6.3. ASSUMPTION OF THE KEY EMPLOYEE OPTIONS AND THE RETENTION
OPTIONS. At the Closing, each Key Employee Option and Retention
Option which is outstanding immediately prior to the Closing Date
(the "ASSUMED OPTIONS") shall be assumed by the Parent, and the
Assumed Options shall be converted into an option to purchase
Parent Ordinary Shares (except that any Key Employee Options
which are in the form of shares of restricted stock shall be
converted into Parent Ordinary Shares in the form of restricted
stock) (collectively, the "PARENT ASSUMED OPTIONS"), in such
number and at such exercise price as provided below and otherwise
having the same terms and conditions as in effect immediately
prior to the Closing (except to the extent that such terms,
conditions and restrictions may be altered in accordance with
their terms as a result of the Transaction contemplated hereby
and except that all references in each such Parent Assumed
Options to Company shall be deemed to refer to the Parent):
3.6.3.1. The number of shares of Parent Ordinary Shares subject
to the Parent Assumed Options shall be equal to the product
of: (x) the number of Company Shares subject to the Assumed
Options immediately prior to the Closing; multiplied by (y)
the Exchange Ratio.
3.6.3.2. The exercise price per share of Parent Ordinary Shares
under the Parent Assumed Options shall be equal to: (A) in
the case of the Retention Options - (x) the exercise price
per share of each of the Assumed Options in effect under the
applicable Assumed Option immediately prior to the Closing
divided by (y) the Exchange Ratio; or (B) in the case of the
Key Employee Options - the par value of the Parent Ordinary
Shares (and in the event that such Key Employee Options are
in the form of restricted stock, the purchase price of such
restricted stock shall be the par value).
For the purpose of this Agreement the term "EXCHANGE RATIO" means
the quotient obtained by dividing (a) the result of (i) the
aggregate consideration attributable to the Assumed Options
(assuming the shares underlying such options were participating
in the distribution of the entire Base Purchase Price in
accordance with the corporate documents of the Company as of the
Closing Date (which would reflect the following changes to the
Original Issue Price, as such term is defined in the Amended and
Restated Articles of Association of the Company as currently in
effect - in Section 1A, under the definition of "Original Issue
Price", the number "$0.589362" specified in (ii) shall be
replaced with "$0.736703" and the number "$0.736703" specified in
(iii) shall be replaced with "$0.589362"), divided by (ii) the
number of Assumed Options, outstanding as of the Closing Date; by
(b) the Average Share Price.
3.6.4. Each Person who is eligible to receive any of the Stock
Consideration shall execute and deliver to the Company, together
with the receipt of such Stock Consideration and as a condition
hereto, a final waiver and release from any and all actions
and/or claims against the Sellers related to such Person's
engagement with the Sellers prior to the Closing Date, as part of
the consent of such Employee to the assignment of his employment
to the Purchasers.
- 26 -
3.6.5. In effecting such assumption and conversion, the aggregate
number of Parent Ordinary Shares to be subject to each of the
Assumed Options will be rounded down, if necessary, to the next
whole share and the aggregate exercise price shall be rounded up,
if necessary, to the next whole cent.
3.6.6. Any adjustments provided herein with respect to the Stock
Consideration (whether vested or not) shall be effected in a
manner consistent with applicable Law and, to the extent
applicable, that maintains any intended favorable tax treatment
relating to such options or restricted stock that existed prior
to such adjustment and in accordance with the Israeli Option Tax
Pre-Ruling. The assumption of the Plan including the Assumed
Options and their conversion into Parent Assumed Options will not
result in any accelerated vesting of such Parent Assumed Options,
the Parent Ordinary Shares purchasable thereunder, and the
vesting schedule in effect for each Assumed Option (except as
provided by their terms) shall remain in full force after the
assumption thereof by Purchasers.
3.6.7. STOCK CONSIDERATION VALUE. The value of each Parent Ordinary
Share shall be equal to the average last sale price of the Parent
Ordinary Shares reported on Nasdaq, during the 30 trading days
ending on the third trading day preceding the Closing Date (the
"AVERAGE SHARE PRICE").The value attributable to the Stock
Consideration (the "STOCK CONSIDERATION VALUE") shall be
calculated as the sum of: (a) with respect to the Key Employees
Options - an amount equal to the total number of Key Employee
Options divided by the Exchange Ratio and multiplied by the
Average Share Price; plus (b) with respect to the Retention
Options - the total number of Retention Options multiplied by the
Exchange Ratio and multiplied by the Black and Scholes formula
value of the Parent Assumed Options.
3.7. UK VAT PROVISIONS.
3.7.1. Such part of the Base Purchase Price allocated to the Purchased
Assets being sold by Seller UK Sub is exclusive of VAT.
3.7.2. Seller UK Sub and each Purchaser intend that the provisions of
the applicable UK VAT Law pertaining to the transfer of a
business apply to the sale of the Purchased Assets being sold by
Seller UK Sub so that such transactions are treated as neither a
supply of goods nor a supply of services for VAT purposes.
3.7.3. If, notwithstanding the foregoing, any VAT is payable on any
supply by Seller UK Sub under this Agreement, the relevant
Purchaser shall pay the amount of that VAT in addition to the
relevant part of the Base Purchase Price against delivery to the
relevant Purchaser of a proper VAT invoice in respect of that
VAT.
- 27 -
3.7.4. Seller UK Sub shall deliver to the relevant Purchaser such
records relating to VAT as are required to be delivered in
accordance with the relevant Laws, and the relevant Purchaser
shall preserve such records, and make them available for
inspection by Seller UK Sub, for whatever period is required
under such legislation and regulations.
4. CLOSING
4.1. CLOSING DATE. Subject to the satisfaction of the conditions set forth
in Sections 10.1 and 10.2 hereof, the closing of the purchase and sale
of the Purchased Assets and the assumption of the Assumed Liabilities
(the "Closing") shall take place at the offices of Meitar Liquornik
Geva & Leshem Brandwein (or at such other place as the parties may
designate in writing) at 10:00 a.m. (Israel time) on a date to be
specified by the parties (the "Closing Date"), which date shall be no
later than the second Business Day after satisfaction or waiver of the
conditions set forth in Section 10, unless another time or date, or
both, are agreed to in writing by the parties hereto.
4.2. DELIVERIES AT CLOSING. At the Closing, the following actions and
occurrences will take place, all of which shall be deemed to have
occurred simultaneously and no action shall be deemed to have been
completed and no document or certificate shall be deemed to have been
delivered, until all actions are completed and all documents and
certificates delivered.
4.2.1. The Sellers shall deliver to the Purchasers:
4.2.1.1. The Purchased Assets by way of transfer of ownership
via, among others, a general assignment, assumption and bill
of sale (in the form of EXHIBIT B attached hereto), duly
executed by the Sellers evidencing the sale, conveyance,
transfer and assignment to Purchasers of the Purchased
Assets (other than those Purchased Assets covered under
Section 4.2.1.6 below);
4.2.1.2. a certificate signed by the Chief Financial Officer or
Chief Executive Officer or director of each of the Sellers
(on behalf of the Sellers) authorized to such effect by the
respective Board of Directors of each of the Sellers, in the
form attached as SCHEDULE 4.2.1.2, which certificate will
include any updates to the extent deemed by the Company
advisable to be made to the Disclosure Schedules due to the
period between signing and Closing, it being agreed and
acknowledged that any such update shall not be deemed a
representation made for the purpose of indemnity hereunder,
and the Purchasers' rights to seek indemnification for any
matter so disclosed (to the extent indemnification is due in
that respect and subject to the limitations set forth in
Section 11 of this Agreement) will not be effected or
prejudiced due to such disclosure;
- 28 -
4.2.1.3. a certificate of good standing of each of the Sellers
(to the extent existing in the jurisdiction of the Seller),
dated no more than three (3) days prior to the Closing Date;
4.2.1.4. a duly executed power of attorney of each of the Sellers
in accordance with Section 2.5.1;
4.2.1.5. duly executed copies of the binding resolutions of the
shareholders, stockholders or members of each of the Sellers
(as applicable) approving the signing, delivery and
performance of this Agreement, the Transaction Documents and
the transactions contemplated hereunder and thereunder;
4.2.1.6. duly executed assignment and assumption agreements to
each of the Purchasers in the form of EXHIBIT C hereto,
transferring the Purchased Contracts and the Assumed
Liabilities to the Purchasers together with (A) duly
executed assignments of all Transferred Patent, Transferred
Software, Transferred Copyright, Transferred Trade Secrets
and Transferred Trademarks in forms suitable for recordation
with the U.S. Patent and Trademark Office and all
counterparts in all foreign jurisdictions, (B) and such
other general assignments of all other Intellectual Property
purchased by Purchasers, as reasonably requested by
Purchasers in order to validly effect the transfer thereof;
4.2.1.7. Duly executed copies of the third party (including from
any Governmental Body) consents, waivers and approvals
listed on SCHEDULE 4.2.1.7;
4.2.1.8. fully executed resolutions of the board of directors of
each of the Sellers (or stockholders, to the extent such
Seller's stockholders have taken the authority of the board
of directors) duly adopted in the form attached hereto as
SCHEDULE 4.2.1.8;
4.2.1.9. an opinion of O'Neal Webster Law Offices, counsel to the
Company, dated as of the Closing, in the form attached
hereto as SCHEDULE 4.2.1.9A; and an opinion of Zysman,
Aharoni, Gayer & Ady Kaplan & Co. Law Offices, counsel to
the Seller Israel Sub, dated as of the Closing, in the form
attached hereto as SCHEDULE 4.2.1.9B;
4.2.1.10. a written confirmation and consent from each Person
listed in Schedule 4.2.1.10 as having any Lien (other than
Permitted Lien) over any of the Purchased Assets and any
Person who as of the Closing Date has any such Lien (other
than Permitted Lien), that such Lien has been removed and is
no longer in effect, together with certifications for such
removals from the applicable Governmental Body (including
any UCC filings required); and
- 29 -
4.2.1.11. all such other instruments of conveyance, assignment
and transfer, and such affidavits, as reasonably required to
be delivered by the Sellers at or prior to the Closing Date,
as shall be effective to transfer to Purchasers the
Purchased Assets and the Assumed Liabilities pursuant to
this Agreement.
4.2.2. Purchasers shall deliver:
4.2.2.1. to the Company a certificate signed by an executive
officer of each of the Purchasers dated as of the Closing
Date, in the form attached as SCHEDULE 4.2.2.1;
4.2.2.2. to each of the Sellers, such Seller's portion of the
Closing Date Purchase Price pursuant to Section 3.2;
4.2.2.3. to the Company the duly executed bills of sale to each
of the applicable Sellers in the form of EXHIBIT B hereto;
4.2.2.4. to the Company, a letter of release of the Guarantee
from escrow, in the form attached hereto as SCHEDULE
4.2.2.4.
4.2.2.5. to the Company the duly executed assignment and
assumption agreements in the form attached hereto as EXHIBIT
C hereto; and
4.2.2.6. to the Company, all such other instruments of
conveyance, assignment and transfer, and such affidavits, as
reasonably required to be delivered by the Sellers at or
prior to the Closing Date, as shall be effective to transfer
from the Sellers the Purchased Assets and the Assumed
Liabilities pursuant to this Agreement.
4.2.3. ESCROW FUND.
4.2.3.1. Seller Israel Sub, Parent and Escrow Agent shall execute
the Escrow Agreement;
4.2.3.2. Purchasers shall deliver to the Escrow Agent the amount
to be held in the Escrow Fund, to be held and disposed of by
the Escrow Agent as provided in the Escrow Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Except as otherwise set forth in the disclosure schedule delivered by each
of the Sellers to the Purchasers on the date hereof (the "DISCLOSURE
SCHEDULE"), the Sellers, jointly and severally, hereby represent and
warrant to each of the Purchasers, as of the date hereof and as of the
Closing Date as set forth below:
- 30 -
5.1. ORGANIZATION AND GOOD STANDING OF COMPANY. Company is a corporation
duly organized, validly existing and in good standing under the laws
of the British Virgin Islands, and Company has all requisite corporate
power and authority to own, lease and operate the Purchased Assets and
to carry on the Business as now conducted. Company is duly qualified
or authorized to do business in the place it conducts its business and
(to the extent applicable in its jurisdiction of incorporation) is in
good standing under the laws of each jurisdiction in which the conduct
of the Business or ownership of Purchased Assets requires such
qualification or authorization, except where failure to be so
qualified would not have a Material Adverse Effect. Seller's
certificate of incorporation and memorandum and articles of
association as in effect on the date hereof have been provided to the
Purchasers, and the Company is not in violation of any of the
provisions of the said corporate documents.
5.2. SELLERS AND COMPANY SUBSIDIARIES. SCHEDULE 5.2 sets forth a list of
each of the Sellers, Subsidiary and each other Affiliate thereof that
is currently engaged in the operation of the Business or that has
title to any Purchased Asset or Assumed Liability, together with its
jurisdiction of organization, as well as all other Subsidiaries and
Affiliates of the Company. Except as set forth in SCHEDULE 5.2, each
such Subsidiary and Affiliate is duly organized, validly existing, and
(to the extent applicable in its jurisdiction of incorporation) is in
good standing under the Laws of its jurisdiction of organization and
has all requisite corporate or similar power and authority to own,
lease, use and operate the Purchased Assets owned, leased, used or
operated by it and is duly qualified to do business and is in good
standing as a foreign corporation or other entity (in any jurisdiction
that recognizes such concept) in each jurisdiction where the
ownership, lease, use or operation of its properties and assets
comprising the Purchased Assets requires such qualification, except
where failure to comply would not have a Material Adverse Effect. Each
such Subsidiary's and Affiliate's Memorandum of Association, Articles
of Association, Certificates of Incorporation and Bylaws or comparable
governing documents (collectively, the "CORPORATE DOCUMENTS"), each as
amended to the date hereof, and each as so delivered to the Purchasers
is in full force and effect. None of the Subsidiaries or Affiliates of
the Company is in violation of any of the provisions of its respective
Corporate Documents.
5.3. AUTHORIZATION OF AGREEMENT. Each of the Sellers has all requisite
power, authority and legal capacity to execute and deliver this
Agreement and each of their Subsidiaries has all requisite power,
authority and legal capacity to execute and deliver each other
agreement, document, instrument or certificate contemplated by this
Agreement or to be executed by the Sellers or their Subsidiaries in
connection with the consummation of the transactions contemplated by
this Agreement (the "TRANSACTION DOCUMENTS"), to perform their
respective obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Transaction Documents and the
consummation of the transactions contemplated hereby and thereby have
been duly authorized by all requisite corporate action on the part of
each of the Sellers. This Agreement has been, and each of the
Transaction Documents will be at or prior to the Closing, duly and
validly executed and delivered by the Sellers which is a party thereto
and (assuming the due authorization, execution and delivery by the
other parties hereto and thereto) this Agreement constitutes, and each
of the Transaction Documents when so executed and delivered will
constitute, legal, valid and binding obligations of the Sellers,
enforceable against each of the Sellers in accordance with their
respective terms, except as enforcement hereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar Laws relating to or affecting the
enforcement of creditors' rights generally and legal principles of
general applicability governing the availability of equitable remedies
(whether considered in a proceeding in equity or at law or under
applicable legal codes).
- 31 -
None of the Sellers has: (i) received any written notice from any
applicable Governmental Body in their respective states of
incorporation that its registration may be revoked, stricken or
erased; (ii) admitted an inability to pay its debts generally as they
become due, filed or consented to the filing against it of a petition
in bankruptcy, liquidation winding up, stay of proceedings, plan of
arrangement or any similar proceeding, or (iii) consented to the
appointment of a receiver, liquidator, trustee or special manager for
itself or for any substantial part of its properties, or made any
determination in respect of the distribution of its assets (the
forgoing collectively referred to below as "BANKRUPTCY EVENTS"). No
written notice has been received of any Action for, or the intent of
any Person to request to seek or pursue, any remedy under or in
connection with a Bankruptcy Event and to the Sellers Knowledge there
is no reasonable basis for (ii) or (iii) above.
5.4. CONFLICTS. The execution, delivery and performance by each of the
Sellers of this Agreement and the Transaction Documents, does not and
will not (i) conflict with, or result in a violation of the respective
Corporate Documents of each of the Sellers; (ii) violate any order of
Governmental Body by which such Seller is bound; (iii) violate any Law
applicable to such Seller; (iv) except as set forth in SCHEDULE 5.4,
result in any material breach of, or constitute a material default (or
event which with the giving of notice or lapse of time, or both, would
become a default) under, or give to any Person any rights of
termination, amendment, acceleration or cancellation of any note,
bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument related to the Purchased Assets
and to which the Sellers are a party or to which the Purchased Assets
of the Sellers are subject; or (v) except as set forth in SCHEDULE
5.4, result in the creation of any Lien on the Purchased Assets held,
leased, licensed, owned or used by the Sellers.
5.5. CONSENTS OF THIRD PARTIES. Except as set forth in SCHEDULE 5.5, the
execution and delivery of this Agreement and the Transaction Documents
by each of the Sellers does not, and the performance of this Agreement
by the Sellers, including, without limitation, transfer and assignment
of all the Purchased Assets and the assumption of the Assumed
Liabilities free and clear of all Liens, will not, require any
consent, approval, authorization or other action by, or filing with or
notification to, any Governmental Body or any other Person.
- 32 -
5.6. FINANCIAL STATEMENTS.
5.6.1. Attached as SCHEDULE 5.6(A) are the audited consolidated
balance sheets of the Company as of December 31, 2007 and
December 31, 2008, accompanied by the report of the Seller's
independent public accountants thereon (the "FINANCIAL
STATEMENTS"). Attached as SCHEDULE 5.6B are the unaudited but
reviewed consolidated balance sheet of the Company as of June 30,
2009 (the "BALANCE SHEET DATE") and the related consolidated
statements of income and cash flows for the six months then ended
(the "UNAUDITED INTERIM FINANCIAL STATEMENTS" or the "COMPANY
CURRENT BALANCE SHEET"). The Financial Statements (including the
related notes thereto) and the Unaudited Interim Financial
Statements are true and complete in all material respects and in
accordance with GAAP applied on a consistent basis throughout the
periods involved, and fairly present in all material respects in
accordance with GAAP the consolidated financial position of the
Sellers as at the date thereof and the consolidated results of
its operations and cash flows for the period indicated.
5.6.2. Without derogating from the generality of Section 5.6.1 hereof,
each of the Sellers maintains a standard system of accounting
established and administered in accordance with GAAP. The Sellers
maintain a system of internal accounting sufficient to provide
reasonable assurance that: (A) transactions are executed in
accordance with management's general or specific authorizations;
(B) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP and to maintain
accountability for its assets; and (C) access to assets is
permitted only in accordance with management's general or
specific authorization. The Sellers have made available to
Purchasers complete and correct copies of, all written
descriptions of, and all policies, manuals and other documents
promulgating, such internal accounting control.
5.6.3. The Sellers did not receive from the Sellers' independent
auditors any notice with respect to (A) any fraud, whether or not
material, that involves the Sellers' management or other
employees who have a role in the preparation of financial
statements or the internal controls utilized by the Sellers, or
(B) any material claim or allegation regarding any of the
foregoing.
5.6.4. Except as set forth in SCHEDULE 5.6.4, all Liabilities of the
Sellers are reflected in or reserved against in the Company
Current Balance Sheet to the extent required by GAAP; other than
Liabilities (A) that have arisen in the ordinary course of
business consistent with past practices since the Balance Sheet
Date, or (B) that are less than USD50,000 (Fifty Thousand United
States Dollars) individually or that with all other such
Liabilities do not exceed USD150,000 (One Hundred and Fifty
Thousand United States Dollars) in the aggregate.
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5.6.5. All the Purchased Accounts Receivables have arisen from bona
fide transactions in the Ordinary Course of Business. All the
Purchased Accounts Receivable reflected on the Financial
Statements and the Company Current Balance Sheet were recorded in
a manner consistent with past practice and in accordance with
GAAP consistently applied. Sellers have not taken any action to
cause the Purchased Accounts Receivables not to be collectible in
accordance with their terms, such as waiver. All goods and
services to be delivered underlying the Purchased Accounts
Receivable have been delivered in accordance with their
respective terms.
5.6.6. NO CHANGES. Except as set forth in SCHEDULE 5.6.6, since the
Balance Sheet Date and prior to the date hereof, there has not
been, occurred or arisen any:
5.6.6.1. material transaction with respect to the Purchased
Assets by the Sellers except in the Ordinary Course of
Business and consistent with past practices;
5.6.6.2. capital expenditure or capital commitment by the Sellers
not in the Ordinary Course of Business or in excess,
individually or in the aggregate of USD150,000 (One Hundred
and Fifty Thousand United States Dollars);
5.6.6.3. destruction of, damage to, or loss of any material
Purchased Asset of the Sellers (whether or not covered by
insurance);
5.6.6.4. work stoppage, labor strike or other labor trouble, or
any action, suit, claim, labor dispute or grievance, whether
pending or threatened, relating to any labor, safety or
discrimination matter involving the Sellers, including,
without limitation, charges of wrongful termination of
employment or other unlawful labor practices or actions;
5.6.6.5. change in accounting methods or practices (including any
change in depreciation or amortization policies or rates) by
the Sellers other than as required by GAAP;
5.6.6.6. material revaluation by the Sellers of any of their
respective Purchased Assets;
5.6.6.7. increase in the salary or other compensation payable or
to become payable by the Sellers to any of its officers,
directors or employees, independent contractors or advisors
other than in the Ordinary Course of Business consistent
with past practices;
5.6.6.8. Any termination, extension, amendment or modification or
any material breach or default of any of the parties of the
terms of any Contract which the Sellers are a party to and
which is considered one of the Purchased Assets and/or
material to the Business, other than Contracts entered into
in connection with the transactions contemplated hereby, all
of which have been revealed to Purchasers prior to the date
hereof;
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5.6.6.9. sale, lease, license or other disposition of any of the
material assets or properties of the Sellers (other than in
the ordinary course of business) related to the Business or
any creation of any security interest in any of the
Purchased Assets;
5.6.6.10. loans in excess of $5,000 individually, by any of the
Sellers to any person or entity, incurring by the Sellers of
any indebtedness, guaranteeing by the Sellers of any
indebtedness, issuance or sale of any debt securities of the
Sellers or guaranteeing of any debt securities of others;
5.6.6.11. waiver or release of any material right or claim of the
Sellers, including any material write-off or other
compromise of any Purchased Account Receivable of the
Sellers;
5.6.6.12. (A) sale by the Sellers of any Intellectual Property
related to the Business or the entering into of any license
agreement, security agreement, assignment or other
conveyance or option, with respect to each of the Sellers'
Intellectual Property related to the Business with any
person or entity (other than customer license agreements
entered into in the Ordinary Course of Business consistent
with past practice), or (B) the purchase or other
acquisition of any Intellectual Property related to the
Business or the entering into of any license agreement,
security agreement, assignment or other conveyance or option
with respect to the Intellectual Property related to the
Business of any Person,;
5.6.6.13. any event or condition of any kind or nature whatsoever
that has had or is reasonably likely to have a Material
Adverse Effect with respect to the Sellers, and/or the
Business or the Purchased Assets; or
5.6.6.14. agreement by the Sellers to do any of the things
described in the preceding Sections 5.6.6.1 through
5.6.6.13.
5.7. TITLE TO PURCHASED ASSETS; SUFFICIENCY. As of the date hereof and as
of the Closing, Sellers hold and shall continue to hold good and
marketable title to and have and shall continue to have valid
interests in all of the Purchased Assets free and clear of any and all
Liens except for (i) Liens for taxes not yet due and payable which are
in amounts for which the Sellers have sufficient funds and that do not
impose any liability in excess of the Assumed Liabilities, and (ii)
Liens of employees and laborers for current wages not yet due which
are in amounts for which the Sellers have sufficient funds and that do
not impose any liability in excess of the Assumed
Liabilities(collectively, "PERMITTED LIENS"). Except as set forth in
SCHEDULE 5.7, the Sellers are not in material default or in material
breach of any provision which is required to be performed by it under
any of its leases or licenses and holds a valid ownership, leasehold
or licensed interest in the Purchased Assets not outright owned by it.
The Purchased Assets are in good operating condition and repair,
reasonable wear and tear accepted, and conform in all material
respects with all applicable Laws. The Purchased Assets include all
assets, rights, properties, licenses and permits, contracts and other
benefits that are necessary in order to allow the Purchasers to
continue after the Closing to conduct the Business as presently
conducted. At and as of the Closing, the Purchasers shall have good,
valid and marketable title to all of the Purchased Assets, free and
clear of any Liens, other than Permitted Liens.
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To the Actual Knowledge of the Sellers the transfer of any Purchased
Asset transferred hereunder does not require any payments or fees to
be paid to any third party in connection with such transfer, excluding
registration fees or similar costs.
5.8. TAXES.
5.8.1. Each of the Sellers is registered and uniquely resident for Tax
purposes in its respective countries of incorporation and do not
have any other requirement to register for Taxes in any other
jurisdiction(s).
5.8.2. Except as set forth in SCHEDULE 5.8.2, each of the Tax Returns
required to be filed by or on behalf of each of the Sellers with
any Governmental Entity with respect to any taxable period before
the date hereof (the "SELLER TAX RETURNS"): (i) has been filed on
or before the applicable due date (including any extensions of
such due date); and (ii) has been properly prepared and correct
and complete in all material respects.
5.8.3. There are no outstanding Contracts with respect to the
Purchased Assets extending or waiving the statutory period of
limitations applicable to any claim for, or the period for the
collection, assessment or reassessment of, Taxes due from the
Sellers for any taxable period and no request for any such waiver
or extension is currently pending.
5.8.4. No audit or other proceeding by any Governmental Entity is
pending or, to the Actual Knowledge of the Sellers, threatened
with respect to any amount of Taxes due from or with respect to
the Sellers and, to the Actual Knowledge of the Sellers, there is
no reasonable basis for any such additional Taxes due. No
Governmental Entity has given notice of its intention to assert
any deficiency or claim for additional amounts of Taxes against
the Sellers. No claim has been made against the Sellers by any
Governmental Entity in a jurisdiction where the Sellers do not
file Tax Returns that the Sellers are or may be subject to
taxation by that jurisdiction.
5.8.5. There are no Liens for Taxes upon the Purchased Assets, except
for statutory Liens for current Taxes not yet due.
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5.8.6. The Sellers have each withheld to the extent required under
applicable Law from their respective Employees, independent
contractors, creditors, shareholders and third parties, and
timely paid to the appropriate Taxing Authority, proper and
accurate amounts which were due prior to the date hereof in all
material respects for all periods ending on or before the date
hereof in compliance with all Tax withholding and remitting
provisions of applicable Laws. The Sellers have each complied in
all material respects with all Tax information reporting
provisions under applicable Laws relating to the Purchased Assets
and the Assumed Liabilities and the Business.
5.8.7. Except as set forth in SCHEDULE 5.8.7, with respect to the 2007
Plan: (i) the Sellers comply in all material respects with all
the relevant requirements of Section 102 of the Israeli Income
Tax Ordinance and the regulations promulgated thereunder (to the
extent applicable to any of the Sellers), with respect to any
option or any share issued under the 2007 Plan pursuant to the
provisions of such section, and (ii) the Sellers (to the extent
applicable to any of the Sellers) have complied in all material
respects with the requirements of Section 3(i) of the Israeli
Income Tax Ordinance with respect to the grant of options or
shares to independent contractors or "Controlling Shareholders"
(as defined in said section).
5.8.8. There are no Tax rulings, Contracts and arrangements (whether
by written agreement or not) issued to or agreed by the Sellers,
relating to Taxes relating to the Business.
5.8.9. The Sellers and the transactions contemplated hereunder are not
subject to any restrictions or limitations pursuant to Part E2
(change of structure and merger) of the Ordinance.
5.8.10. None of the Assumed Liabilities is an obligation to make a
payment that is not deductible under Section 280G of the Code.
5.9. INTELLECTUAL PROPERTY.
5.9.1. SCHEDULE 5.9.1 sets forth an accurate and complete list of all
Transferred Patents, registered Transferred Trademarks, pending
applications for registrations of any Transferred Trademarks,
unregistered Transferred Trademarks used since January 1, 2000
and related to the Business, registered Transferred Copyrights
and pending applications for the registration of Transferred
Copyrights which are included in the Transferred Intellectual
Property. SCHEDULE 5.9.1 lists all of the jurisdictions in which
each such item of Transferred Intellectual Property has been
issued or registered or in which any such application for such
issuance or registration has been filed. Each item of Transferred
Intellectual Property is valid and subsisting, and has not been
abandoned or passed into the public domain.
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5.9.2. Except as disclosed on SCHEDULE 5.9.2, the Seller, directly or
through its Subsidiaries, is the sole and exclusive owner of all
right, title and interest in and to all the Transferred
Intellectual Property, including the Patents, the Marks, the
Copyright and the Software included therein. All Transferred
Intellectual Property either (i) was invented or created by
employees of the Sellers, acting within the scope of their
employment, or by Third Parties (including consultants,
independent contractors, Representatives, former employees or
agents of the Sellers or of any of the Subsidiaries), all of
which employees and Third Parties have validly and irrevocably
assigned all of their rights, title and interest including
Intellectual Property rights therein, to the Sellers, and no
Third Party (including any employee of Seller) owns or has any
rights, title and interest to any of such Transferred
Intellectual Property, or (ii) is duly and validly licensed to
the Sellers for use, license or sale in the manner currently
used, licensed or sold by the Sellers in the operation of the
Business, as it is currently conducted, in either case, free and
clear of all Liens or obligations to others (except for Permitted
Liens and those specified licenses included on SCHEDULE 5.9.5).
No Person who has licensed any Transferred Intellectual Property
to the Sellers has any ownership rights or license rights to
improvements or derivative works made by the Sellers with respect
to such Transferred Intellectual Property.
5.9.3. To the Sellers' IP Knowledge, the operation of the Business as
currently conducted, including the use of the Transferred
Intellectual Property in connection with the Business, and the
present business practices and methods of the Sellers as part of
the Business, do not infringe, misappropriate or constitute the
unauthorized use of any Intellectual Property of any Person,
violate the right to privacy or publicity of any person. The
Transferred Intellectual Property, including the Purchased
Intellectual Property Licenses, include all of the Intellectual
Property currently used by the Sellers in the Business as
currently conducted.
5.9.4. Except with respect to licenses of commercial off-the-shelf
Software, and to the Sellers' IP Knowledge, except pursuant to
the Purchased Intellectual Property Licenses listed on SCHEDULE
5.9.4, the Sellers are not required, obligated, or under any
Liability, to make any payments by way of royalties, fees or
otherwise to any owner, licensor of, or other claimant to any
Transferred Intellectual Property, or to any other person, with
respect to the use thereof or in connection with the conduct of
the Business as currently conducted.
5.9.5. SCHEDULE 5.9.5 sets forth a complete and accurate list of all
Purchased Contracts currently in effect to which the Sellers are
a party which are related to the Business (i) consisting of any
Purchased Intellectual Property Licenses, (ii) pursuant to which
the Sellers have granted to any Third Party any right to use,
license or sell any of the Transferred Intellectual Property
(other than customers of the Sellers in the Ordinary Course of
Business), (iii) containing a covenant limiting the ability of
the Sellers to exploit any of the Transferred Intellectual
Property or (iv) containing an agreement to indemnify any Person
against any claim that the use or other exploitation of the
Transferred Intellectual Property by such Third Party violates,
infringes, misappropriates or constitutes an unauthorized use of
any Intellectual Property rights or any other rights of any
Person (other than customers, partners, distributors, resellers,
OEMs and alike of the Sellers in the Ordinary Course of
Business).
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5.9.6. Except as set forth in SCHEDULE 5.9.6, each of the Purchased
Intellectual Property Licenses is in full force and effect and,
is the legal, valid and binding obligation of the parties
thereto, enforceable against the respective Seller, or to the
Actual Knowledge of the Sellers, against the other parties
thereto, in accordance with its terms. The Sellers are not in
material default under any Purchased Intellectual Property
License, nor, to the Actual Knowledge of Seller, is any other
party to a Purchased Intellectual Property License in material
default thereunder, and no event has occurred that with the lapse
of time or the giving of notice or both would constitute a
material default thereunder. No party to any of the Purchased
Intellectual Property Licenses has exercised any termination
rights with respect thereto.
5.9.7. Except as set forth in SCHEDULE 5.9.7, no Transferred Trade
Secret relating to the Business as presently conducted has been
authorized to be disclosed or has been actually disclosed by the
Sellers to any employee, Affiliate or any Third Party other than
pursuant to a non-disclosure agreement restricting the disclosure
and use of such Transferred Trade Secret. The Sellers have taken
reasonable security measures to protect the secrecy,
confidentiality and value of all the Trade Secrets of their
Sellers that constitute part of the Transferred Intellectual
Property and any other non-public, proprietary information,
including invention disclosures, not covered by any Patents owned
by the Sellers that constitute part of the Transferred
Intellectual Property, which measures are reasonable in the
industry in which the Sellers operate. Each employee, consultant,
independent contractor, representative and agent of any of the
Sellers that was engaged in the past three years who have
contributed to or participated in any way in the conception
and/or development of the Transferred Intellectual Property has
entered into a written non-disclosure and invention assignment
agreement with the applicable of the Sellers.
5.9.8. The Sellers have not received written (including, without
limitation, by electronic mail) notice of any such threatened
claim against the Sellers of infringement, unauthorized use, or
violation of any Intellectual Property or other right, or
challenging the ownership, use, validity or enforceability of any
Transferred Intellectual Property or any Purchased Intellectual
Property Licenses.
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5.9.9. To the Sellers' IP Knowledge, there is no facts or information
that: (i) would render any Transferred Intellectual Property or
any Purchased Intellectual Property License invalid or
unenforceable, or (ii) would adversely affect or impede the
ability of the Sellers to use any Transferred Intellectual
Property or any Purchased Intellectual Property Licenses in the
conduct of the Business as it is currently conducted. The Sellers
have not misrepresented, or failed to disclose, and has no
Knowledge of any misrepresentation or failure to disclose, any
fact or circumstances in any application or other filing with
respect to, any Transferred Intellectual Property that would
constitute fraud or a misrepresentation with respect to such
application or other filing or that to Seller's Knowledge would
otherwise affect the validity or enforceability of any
registration with respect to any Transferred Intellectual
Property.
5.9.10. All registration, maintenance, renewal or any other fees in
connection with each item of Transferred Intellectual Property
which are due prior to the date hereof have been paid, and all
material documents and certificates in connection with
Transferred Intellectual Property which are due for filing prior
to the date hereof have been filed with the relevant authorities
for the purpose of maintaining the registrations, recordations,
filings and effectiveness with respect to any Transferred
Intellectual Property. There are no actions that must be taken by
any of the Sellers or the Purchasers within forty five (45) days
following the Closing Date, including the payment of any
registration, maintenance or renewal fees or the filing of any
responses to office actions, documents, applications or
certificates for the purposes of obtaining, maintaining,
perfecting, preserving or renewing any Transferred Intellectual
Property registered in, or for which application was made. To the
maximum extent provided for by, and in accordance with, Laws, the
Sellers have recorded in a timely manner each assignment of
registered Transferred Intellectual Property assigned to the
Sellers with the relevant governmental authority, including the
United States Patent and Trademark Office or their respective
counterparts in any relevant foreign jurisdiction, as the case
may be.
5.9.11. To the Knowledge of the Sellers, except as set forth in
SCHEDULE 5.9.11, no Person is infringing, violating, misusing or
misappropriating any Transferred Intellectual Property of the
Sellers or to Seller's Actual Knowledge any Purchased
Intellectual Property Licenses licensed by the Sellers to third
parties, and no such claims have been made in writing against any
Person by the Sellers.
5.9.12. There are no Orders to which the Sellers are a party or by
which the Sellers are bound which restrict the rights to use any
of the Transferred Intellectual Property or any Purchased
Intellectual Property Licenses.
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5.9.13. Except as set forth in Schedule 5.9.13, the consummation of
the transactions contemplated hereby, in and of themselves, will
not result in the loss or impairment of Purchasers' right to own
or use any portion of the Transferred Intellectual Property or
any Purchased Intellectual Property Licenses, assuming receipt of
the consents under such Purchased Intellectual Property Licenses
specified in SCHEDULE 1.1(C), provided the above shall not
include any such loss or impairment resulting directly from the
identity of the Purchasers or any rules or Laws applicable to
them and not to the Sellers.
5.9.14. No present or former employee, consultant, independent
representative, agent or contractor of the Sellers has any right,
title, or interest, directly or indirectly, in whole or in part,
in any Transferred Intellectual Property. To the Sellers' IP
Knowledge of the Sellers, no employee, consultant, independent
representative, agent or contractor of the Sellers is, as a
result of or in the course of such employee's, consultant's or
independent contractor's engagement by the Sellers in connection
with the Transferred Intellectual Property, in default or breach
of any material term of any non-disclosure agreement, assignment
of invention agreement or similar agreement.
5.9.15. SCHEDULE 5.9.15 sets forth (i) a complete and accurate list of
all Software that is owned exclusively by the Sellers and is used
in the operation of the Business and (ii) a complete and accurate
list of all Software that is used by the Sellers in the operation
of the Business that is not exclusively owned by the Sellers,
except for standard off the shelf Software.
5.9.16. The Software referred to in clause (i) of Section 5.9.15
operate in a manner which is substantially in conformity and
compliance with all specifications relating thereto relating to
the design, performance, operation, test, support and maintenance
of such Software, and other documentation relating to such
technical specifications. All Software included as Purchased
Assets shall be delivered at Closing (i) free of any viruses,
including any Trojan horse, worm, harmful or disruptive
component, or computer programming code intentionally constructed
to damage, interfere with or otherwise adversely effect other
codes, computer programs, data files or operations, except for
technical measures and features that are expressly documented in
the source code and that are designated to prevent unauthorized
use of the Software, and (ii) free of any code that would disable
or shut down, in whole or in part, any material computer program,
including any device or method that permits any person to
circumvent the normal security of the Software.
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5.9.17. SCHEDULE 5.9.17 sets forth a complete list of all Purchased
Contracts pursuant to which any source code that relates to, or
is part of, any Transferred Intellectual Property has been placed
in escrow for the benefit of any Third Party. Neither the
execution of this Agreement, the Transaction Documents nor any of
the transactions contemplated hereby or thereby will cause the
release of or give any Person the right to demand any source code
or other data or information from any escrow agreement or similar
arrangement to which the Sellers are a party and which relate to
or is part of any Transferred Intellectual Property; provided
that any act or omission of the Purchasers which triggers such
release terms in such escrow arrangement shall not be deemed a
breach of this representation.
5.9.18. SCHEDULE 5.9.18, lists all software or other material that is
or is required to be distributed as "freeware," "free software,"
"open source software" or under a similar licensing or
distribution model (including but not limited to any license
which complies with the Open Source Initiative Corporation's
(OSI) open source definition or which is, or is equivalent to, a
license approved by OSI) that the Sellers use or license, and
identifies that which is incorporated into, combined with, or
distributed in conjunction with any Sellers' products or services
("INCORPORATED OPEN SOURCE SOFTWARE"). The Sellers' use and
distribution of each component of Incorporated Open Source
Software complies with all material provisions of the applicable
license agreement, and in no case does such use, modification or
distribution give rise under such license agreement to any rights
to any third parties under any of Sellers Intellectual Property,
including without limitation any obligation to disclose or
distribute any Transferred Intellectual Property or Purchased
Intellectual Property Licenses in source code form, to license
any such Transferred Intellectual Property or Purchased
Intellectual Property Licenses for the purpose of making
derivative works, to distribute any such Transferred Intellectual
Property or Purchased Intellectual Property Licenses without
charge or grant any patent license to any of the patents embedded
therein.
5.9.19. None of the Sellers uses or has the right to use any Software
which is "open source" or "free software" or subject to any
public license or to any license the terms of which are analogous
to the foregoing, under the terms of which it may be required to,
among others, disclose or distribute any such Transferred
Intellectual Property or Purchased Intellectual Property Licenses
in source code form, to license any such Transferred Intellectual
Property or Purchased Intellectual Property Licenses for the
purpose of making derivative works, or to distribute any such
Transferred Intellectual Property or Purchased Intellectual
Property Licenses without charge.
5.9.20. SCHEDULE 5.9.20 contains a list of all material research and
development projects currently in progress which are conducted by
the Sellers that relate to the Business.
5.10. MATERIAL CONTRACTS.
5.10.1. SCHEDULE 5.10.1 lists, under the corresponding subsection, the
following Contracts (other than Transaction Documents):
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5.10.1.1. all Purchased Contracts, including all licensing, OEM,
royalty and other Contracts related to the Purchased Assets
or the Business, and any Contract that involves the
Transferred Intellectual Property or any Third Party
Intellectual Property that are related to the Business or
the Purchased Assets, to which any of the Sellers are a
party;
5.10.1.2. customer agreements involving the receipt of payment in
2009 or thereafter of more than $50,000 annually or
involving continued performance of services by the
Purchasers after the Closing;
5.10.1.3. Contracts involving the obligation of the Sellers (with
respect to any portion of the Business) to purchase
products, materials, supplies, advertising, equipment or
services for more than $50,000 annually;
5.10.1.4. joint venture or partnership agreements and Contracts
providing for the formation of a joint venture, long-term
alliance or partnership or involving an equity investment or
sharing of profits by the Sellers (with respect to any
portion of the Business);
5.10.1.5. Contracts (including Employee Agreements) that by the
express terms affect or limit the freedom in any material
manner of the Business or any portion thereof, or any of the
Purchased Assets, to compete in any line of business or with
any Person or in any geographic area, including any
exclusivity agreements;
5.10.1.6. Contracts (or a group of related Contracts) under which
the Sellers (in each case, with respect to any portion of
the Business or any of the Purchased Assets or Assumed
Liabilities) has created, incurred, assumed, or guaranteed
any indebtedness or that relates to the lending of amounts,
or providing for the creation of any Lien upon any Purchased
Asset;
5.10.1.7. leases, subleases or similar agreements under which the
Sellers are a lessee or sublessee of tangible personal
property used or held for use in any portion of the
Business;
5.10.1.8. joint research and development Contracts involving the
Business;
5.10.1.9. Contracts concerning the marketing or distribution by
Third Parties of any products or services of the Business
(including Contracts requiring the payment of any sales or
marketing or distribution commissions or granting to any
Person rights to market, distribute or sell such products or
services); SCHEDULE 5.10.1.9 contains a list of all such
Contracts requiring the payment of any sales or marketing or
distribution commissions which are due as of the date
hereof;
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5.10.1.10. other Contracts relating to the Business which were
entered into other than in the Ordinary Course of Business
involving annual payments to or from Third Parties in excess
of $50,000;
5.10.1.11. any Contract obligating the Sellers (in each case,
with respect to any portion of the Business or any of the
Purchased Assets or Assumed Liabilities) to guarantee the
performance of any other Person;
5.10.1.12. any Contract with any Governmental Body related to the
Business or Purchased Assets;
5.10.1.13. any power of attorney, proxy or similar instrument (in
each case, with respect to any portion of the Business or
any of the Purchased Assets or Assumed Liabilities); (other
than powers of attorney given in the Ordinary Course of
Business with respect to routine export, Tax or securities
matters);
5.10.1.14. any Contract relating to the Business to indemnify any
Person or to share in or contribute to the Liability of any
Person (other than in the Ordinary Course of Business);
5.10.1.15. all Contracts which include a provision for their
termination or any change of any material term thereof
(including any increase in payments, any loss of right,
etc.) as a result of the assignment thereof in an event of a
sale of all or any of the assets of the Sellers or similar
provisions (in each case, with respect to any portion of the
Business or any of the Purchased Assets or Assumed
Liabilities);
5.10.1.16. all Contracts which related to the Purchased Assets
and are otherwise material to the Sellers which are not
described in any of the categories specified in this SECTION
5.10.1.
5.10.2. The Contracts set forth on SCHEDULE 5.10.1 are referred to
herein as "MATERIAL CONTRACTS". The Sellers have heretofore made
available to Purchasers true and complete copies of all written
Material Contracts.
5.10.3. Each Material Contract is in full force and effect and is
legal, valid and binding on any of the Sellers that is a party
thereto and, to the Knowledge of the Sellers, the other party or
parties thereto.
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5.10.4. The Sellers (and, to the Knowledge of the Sellers, each of the
other party or parties thereto), have performed in all material
respects all obligations required to be performed by them under
each Material Contract. Except as set forth in SCHEDULE 5.10.4,
no event has occurred with respect to the Sellers or, to the
Actual Knowledge of the Sellers, with respect to any other Person
that (with or without lapse of time or the giving of notice or
both) materially contravenes, conflicts with or results in a
material violation or breach of, or gives any of the Sellers or
the other party thereof the right to declare a default or
exercise any remedy under, or to accelerate the maturity of, or
to cancel, terminate or modify, any Material Contract. To the
Knowledge of the Sellers, no party to any Material Contract has
repudiated any material provision thereof or terminated any
Material Contract and none of the Sellers has received any
written notice that any other party or parties to any Material
Contract intend to exercise any right of cancellation,
termination or non-renewal thereof.
5.11. EMPLOYEE MATTERS.
5.11.1. SCHEDULE 5.11.1 INCLUDES a list of the names of all the
Continuing Employees, including their title, their employment
start date, and their compensation terms including the identity
of their employer. A list of the names of all the other Employees
was previously provided to the Parent. The Sellers are not in
default with respect to any of their respective obligations
relating to the salaries or benefits owed to their Continuing
Employees. All employees involved in the Business are engaged by
the Sellers, and other than the Employees, there are no other
employees or consultants involved in the Business and engaged by
the Sellers or any Subsidiary thereof.
5.11.2. None of the Sellers are a party to any collective bargaining
agreement with any labor union applicable to the Employees,
except for any extension orders applying to all employees and/or
to employees in the Seller Israel Sub's field of industry. To the
best of Sellers' Knowledge there are no representation or
certification proceedings or petitions seeking a representation
or certification proceeding pending or threatened to be brought
or filed with the National Labor Relations Board or any labor
relations tribunal involving the Employees.
5.11.3. Except as set forth in SCHEDULE 5.11.3, there are no
grievances, unfair labor practices or employment discrimination
charges, complaints or claims of the employees against the
Sellers that is either pending, or, to the best of Sellers'
Knowledge, threatened before any Governmental Body. The Sellers
are not now, nor during the last two years, have been the subject
of any complaint, charge, suit or other legal process with
respect to any of its/their employees, independent contractors or
consultants by a Governmental Authority.
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5.11.4. Except as set forth in SCHEDULE 5.11.4, (i) the Sellers are,
and have been at all times, in compliance with all applicable
federal, state and local Laws, rules and regulations (including
without limitation the National Labor Relations Act) as well as
any national, industry or company collective agreement, order or
award, respecting employment, pension and social security,
employment practices, terms and conditions of employment, wages
and hours and workplace safety and are not engaged in any unfair
labor practices; (ii) the Sellers obligations to provide
statutory severance pay to the Continuing Employees pursuant to
severance Laws, including without limitation, under the Israeli
Severance Pay Law (5723-1963) (the "SEVERANCE LAW"), are to the
extent required fully funded or accrued on the Seller's audited
financial statements as of the date of such. Except for those
Continuing Employees listed in SCHEDULE 5.11.4, all the
Continuing Employees of the Seller Israeli Sub are subject to a
severance arrangement under Section 14 of the Severance Law.
5.11.5. No Continuing Employee is or will be entitled to any
compensation, bonus, severance pay or any other benefits or
entitlements on account of or resulting from any action taken by
the Sellers in connection with any of the transactions
contemplated under the Agreement or on account of or resulting
from the termination of any Continuing Employees or their
recruitment by the Purchasers except (i) as set forth in SCHEDULE
5.11.5, (ii) rights and benefits provided under applicable Law
but solely to the extent so provided in such applicable Laws, and
(iii) amounts due from Plans which have been fully funded and
will be payable solely by such Plans, (iv) as contemplated in
this Agreement.
5.11.6. SCHEDULE 5.11.6 contains an accurate and complete list of each
Plan and each Employee Agreement of the Continuing Employees.
Sellers have made available to the Purchasers or its counsel
true, complete and correct copies of (i) the most recent Plan
documents, adoption agreements, summary Plan descriptions, and
all amendments thereto for each Plan, and (ii) the most recent
actuarial and audit reports for each Plan for which such reports
are available.
5.11.7. Each Plan, including plans maintained for the benefit of
Employees in Israel, the United States the United Kingdom or
elsewhere, has been established and maintained in accordance with
its terms and all applicable Laws and (i) all contributions to
each such Plan required through the Closing Date have been and
will be made by the Sellers, (iii) each Plan is either fully
funded (or fully insured) based upon generally accepted local
actuarial and accounting practices and procedures or adequate
accruals for each Plan have been made in Seller's financial
statements in accordance with GAAP, (iv) there are no judicial,
regulatory, arbitration or similar proceedings, inquiries,
investigations or audits pending, or, to the Sellers' Knowledge,
threatened in writing (other than routine claims for benefits)
against any Plan or against the assets of any Plan; (v) none of
the Sellers nor any ERISA Affiliate is subject to any penalty or
Tax with respect to any Plan; (vi) each Plan that is intended to
be qualified under Section 401(a) of the Code is so qualified and
has received a favorable determination opinion, notification or
advisory letter with respect to such status from the IRS, and
(vii) no event has occurred and no condition or circumstance has
existed or exists which may reasonably be expected to result in
the disqualification of such Plan.
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5.11.8. All amounts that the Sellers are legally or contractually
required either (i) to deduct from any Continuing Employee's
salary or to transfer to such Continuing Employee's pension or
provident, life insurance, incapacity insurance, continuing
education fund or other similar fund or (ii) to withhold from any
Continuing Employee's salary and pay to any Governmental Body as
required by applicable Laws have, in each case, been duly
deducted, transferred, withheld and paid, and the Sellers have no
outstanding obligation which is currently due to make any such
deduction, transfer, withholding or payment.
5.12. LITIGATION. Except as set forth on SCHEDULE 5.12, there is no Legal
Proceeding or governmental investigation pending or, to the Knowledge
of Sellers, threatened by or against the Sellers relating to the
Business or affecting the Purchased Assets (including without
limitation, any claims for assessment or collection of Taxes on any
Purchased Assets) or that seeks to impair, prohibit or restrain the
ability of Sellers to enter into this Agreement or any Transaction
Document, as applicable, or to consummate any of the transactions
contemplated hereby or thereby and the Sellers are not subject to any
Order in respect of the Business or any Purchased Asset.
5.13. COMPLIANCE WITH LAWS; PERMITS.
5.13.1. Except as set forth in SCHEDULE 5.13, the Sellers are, and at
all times have been, in compliance in all material respects with
all Laws applicable to the Business or the Purchased Assets,
including all export Laws. The Sellers have not received any
written notice of or been charged with the violation of any Law
affecting the Business or the Purchased Assets. To the Sellers'
Knowledge, none of the Sellers is under investigation with
respect to the violation of any Laws affecting the Business, the
Purchased Assets or the Assumed Liabilities.
5.13.2. The Sellers hold all Permits which are required for the
operation of the Business as currently conducted. The Sellers are
not in default or violation (and no event has occurred which,
with notice or the lapse of time or both, would constitute a
default or violation) in any material respect of any term,
condition or provision of any such Permit.
5.14. GRANTS, INCENTIVES AND SUBSIDIES. None of the Sellers has received
any grants, incentives and subsidies (collectively, "GRANTS") from the
Government of the State of Israel or any agency thereof, or from any
foreign governmental or administrative agency, including, without
limitation, (i) "Approved or Privileged Enterprise" from the
Investment Center and (ii) grants from the grants from the Office of
the Chief Scientist in the Israeli Ministry of Industry, Trade &
Labor.
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5.15. FOREIGN CORRUPT PRACTICES ACT. The activities of the Sellers and
their respective officers, directors and employees has complied, and
the operations, including the Business, of the Sellers has complied,
with all applicable laws governing corrupt or illicit business
practices, including, without limitation, laws dealing with improper
or illegal payments, gifts or gratuities or the payment of money or
anything of value directly or indirectly to any person (whether a
government official or private individual) for the purpose of
illegally or improperly inducing any person or government official, or
political party or official thereof, or any candidate for any such
position, in making any decision or improperly assisting any person in
obtaining or retaining business or taking any other action favorable
to such person, or dealing with business practices in relation to
investments outside of the United States (including, by way of
example, if applicable, the U.S. Foreign Corrupt Practices Act, as
amended).
5.16. INSURANCE. All insurance policies by which any or all of the
Purchased Assets are covered are set forth in SCHEDULE 5.16 and all
such policies are in full force and effect, all premiums with respect
thereto have been duly paid and Sellers are not aware of any reason
that such policies shall not be extended on similar terms upon their
expiration. Since January 1, 2004, no material claim by the Sellers
for coverage under any such policies (or any predecessor policies) has
been denied.
5.17. RELATED PARTY TRANSACTIONS. Except as set forth on SCHEDULE 5.17,
none of the Sellers, or any Affiliate of any of the Sellers or any of
their respective officers, directors or, to the Actual Knowledge of
Sellers, any employees thereof, (i) owns any direct or indirect
interest of any kind in, or controls or is a director, officer,
employee or partner of, any Person which is (A) a competitor,
supplier, customer, creditor or debtor (other than any salary,
benefits or compensation that may be owed to such Person, as an
employee of the Sellers) of the Business, or (B) a participant in any
transaction to which any of the Sellers is a party in connection with
the Business or (ii) is a party to any Contract with the Sellers
acting on behalf of the Business.
5.18. CUSTOMERS AND SUPPLIERS.
5.18.1. SCHEDULE 5.18.1 sets forth a list of the ten (10) largest
customers of the Business during the period from January 1, 2007
to October 30, 2009 and the ten (10) suppliers that the Company
believes are the major suppliers of the Business.
5.18.2. Since January 1, 2007, no customer or supplier of the Business
listed in SCHEDULE 5.18.1 has terminated its relationship with
the Sellers or materially reduced or changed the pricing or other
terms of its business with the Sellers and no customer or
supplier listed on SCHEDULE 5.18.1 has notified the Sellers that
it intends to terminate or materially reduce the scope or pricing
terms of its business with any of the Sellers.
5.18.3. SCHEDULE 5.18.3 lists the Sellers installed base of systems in
the Business, by customer, including location of each system,
date of installation, and specifying whether such customer is
still entitled to a warranty period (and if so when such warranty
period expires) or is under maintenance services (and if so when
the current maintenance period is due to end).
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5.18.4. The Sellers have made available to the Purchasers copies of
all material Contracts currently outstanding between the Sellers
and customers of the Sellers in the Business and all other
Contracts of the Sellers that, in Sellers' judgment, are
materially relevant for the continuation of the Business, as
currently conducted, by the Sellers.
5.19. PRODUCT WARRANTY; PRODUCT LIABILITY.
5.19.1. Except as set forth on SCHEDULE 5.19, each product
manufactured, sold or delivered by the Sellers under any
Purchased Contract has been in conformity with all substantial
product specifications and all express and implied warranties.
The Sellers have provided Purchasers with true and complete
copies of all warranties, warranty policies, service and
maintenance agreements related to the Purchased Assets and
Assumed Liabilities. SCHEDULE 5.19 sets forth a true and accurate
list of all warranty claims in respect of the Business or the
Purchased Assets since January 1, 2009 requiring from the Sellers
either disconnection of a product, replacement of a product or
payment of damages or penalties (whether liquidated or not).
5.19.2. Except as set forth on SCHEDULE 5.19, to the Sellers'
Knowledge, the Sellers have not in conducting the Business
intentionally committed any act or failed to commit any act,
which resulted in, and there has been no occurrence in the
Sellers' control which gives rise to or form the reasonable basis
of, any product Liability or Liability for breach of warranty
(whether covered by insurance or not) on the part of the Sellers
with respect to products included in the Business and that were
designed, manufactured, assembled, repaired, maintained,
delivered or installed or services rendered prior to the Closing.
5.20. FINANCIAL ADVISORS. No Person has acted, directly or indirectly, as a
broker, finder or financial advisor for any of the Sellers in
connection with the transactions contemplated by this Agreement that
would result in the obligation of Purchasers to pay any finder's fee,
brokerage fee, commission or similar payment in connection with the
transactions contemplated hereby.
5.21. FULL DISCLOSURE. Neither this Agreement nor any certificates made or
delivered by the Sellers in connection herewith contains or, at the
Closing Date, will contain, any untrue statement of a material fact or
Knowingly omits or will, at the Closing Date, omit, to state a
material fact necessary to make the statements herein or therein not
misleading, in view of the circumstances in which they were made.
6. REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Each of the Purchasers, jointly and severally, hereby represents and
warrants to each of the Sellers as of the date hereof and as of the Closing
Date as set forth below:
6.1. ORGANIZATION AND GOOD STANDING. Each Purchaser is a corporation duly
organized, validly existing and in good standing (to the extent
applicable in its jurisdiction of incorporation) under the laws of its
jurisdiction of incorporation and has all requisite corporate power
and authority to own, lease and operate its business.
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6.2. AUTHORIZATION OF AGREEMENT. Each Purchaser has full corporate power
and authority to execute and deliver this Agreement and the other
Transaction Documents, and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance by each
Purchaser of this Agreement and each Transaction Document have been
duly authorized by all necessary corporate actions on behalf of each
of the Purchasers. This Agreement has been, and each Transaction
Document will be at or prior to the Closing, duly executed and
delivered by each Purchaser and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this
Agreement constitutes, and each Transaction Document when so executed
and delivered will constitute, legal, valid and binding obligations of
each Purchaser, enforceable against such Purchaser in accordance with
their respective terms.
6.3. CONFLICTS; CONSENTS OF THIRD PARTIES; NON-CONTRAVENTION.
6.3.1. The execution, delivery and performance by the Purchasers of
this Agreement and the Transaction Documents, will not (i)
contravene conflict with, or result in a violation of or breach
of any provision of the respective organizational documents of
each of the Purchasers, (ii) contravene, conflict with, or result
in any violation or breach of any provision of any judgment,
injunction, order or decree of Governmental Body by which each
such Purchaser is bound, (iii) contravene, conflict with, or
result in any violation or breach of any provision of any Law
applicable to such Purchaser; or (iv) subject (to the extent
applicable) to the receipt of all the Consents set forth in
Schedules 5.4 or 5.5 or required to be set forth therein, require
any Consent by any Person or Governmental Body.
6.3.2. No consent, waiver, approval, Order, Permit or authorization
of, or declaration or filing with, or notification to, any Person
or Governmental Body is required on the part of Purchasers in
connection with the execution and delivery of this Agreement or
the Transaction Documents or the compliance by Purchasers with
any of the provisions hereof or thereof.
6.4. AVAILABLE FUNDS. The Purchasers have, or will have prior to the
Closing, sufficient funds to enable it to consummate the transactions
contemplated herein.
6.5. AVAILABLE SHARES. The Parent has, or will have prior to the Closing,
sufficient reserved Parent Ordinary Shares in its authorized but
unissued share capital to allow the issuance of the shares underlying
the Parent Assumed Options.
6.6. FORM S-8. Parent is eligible to file with the United States Securities
and Exchange Commission ("SEC") a registration statement on Form S-8
(or any other successor or other appropriate form) for the
registration of Parent Ordinary Shares underlying Parent Assumed
Options.
- 50 -
6.7. FINANCIAL ADVISORS. No Person has acted, directly or indirectly, as a
broker, finder or financial advisor for the Purchasers in connection
with the transactions contemplated by this Agreement that would result
in the obligation of the Sellers to pay any finder's fee, brokerage
fee, commission or similar payment in connection with the transactions
contemplated hereby.
7. COVENANTS.
7.1. ACCESS TO INFORMATION. The Sellers agree that until the earlier of the
Closing Date and the termination of this Agreement, Purchasers and
Parent shall be entitled, through their officers, employees and
Representatives, to continue to have access to, to review and discuss
with the Sellers and their officers, the properties, and operations of
the Sellers and their Subsidiaries and such books and records relating
to the Business or the Purchased Assets, including without limitation,
correspondence with contacts at potential customers of the Business,
all the foregoing for the purpose of consummating the transactions
contemplated hereunder, ensuring compliance by the parties with the
provisions of this Agreement and ensuring a smooth transition for the
Business, its customers and the Employees. Nothing herein shall
diminish or obviate any of the representations, warranties, covenants
or agreements of the Sellers contained in this Agreement or the
Transaction Documents. All information referred to in this Section 7.1
shall be subject to the Mutual Non Disclosure Agreement between
Company and Parent, dated November 24, 2008, which shall continue to
be in full force and effect.
7.2. CONDUCT OF THE BUSINESS PENDING THE CLOSING.
7.2.1. From and after the date hereof and until the earlier of the
Closing Date and the termination of this Agreement, except as
otherwise expressly provided by this Agreement or with the prior
written consent of Parent, which shall not be unreasonably
withheld, Sellers shall:
7.2.1.1. conduct the Business only in the Ordinary Course of
Business;
7.2.1.2. use their reasonable commercial efforts to (A) preserve
the present Business operations, organization (including
management and the sales force) and goodwill of the Business
and (B) preserve the present relationships with Persons
having business dealings with the Sellers in the conduct of,
or relating to, the Business (including customers and
suppliers);
7.2.1.3. use their reasonable commercial efforts to maintain (A)
all of the Purchased Equipment in their current condition,
ordinary wear and tear excepted and (B) insurance upon all
of the Purchased Assets in such amounts and of such kinds
comparable to that in effect on the date of this Agreement,
if at all in existence;
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7.2.1.4. (A) maintain the books, accounts and records of Company
and its Subsidiaries relating to the Business in the
Ordinary Course of Business, (B) continue to collect
accounts receivable and pay accounts payable and other
Liabilities and Taxes consistent with past practice in the
Ordinary Course of Business, utilizing normal procedures and
without materially discounting or accelerating payment of
such accounts, and (C) comply in all material respects with
all material contractual and other obligations applicable to
the operation of the Business, including those included in
the Purchased Contracts;
7.2.1.5. use their reasonable commercial efforts to maintain all
Permits relating to the Business in all material respects;
7.2.1.6. provide Purchaser with prompt notice of any material
damage, destruction or loss, whether or not covered by
insurance, with respect to the tangible Purchased Assets or
any other event that could reasonably be expected to have a
Material Adverse Effect;
7.2.1.7. pay all maintenance and similar fees if and when due and
take all other appropriate actions as necessary in the
Ordinary Course of Business to prevent the abandonment, loss
or impairment of all Transferred Intellectual Property;
7.2.1.8. comply in all material respects with all applicable
Laws;;
7.2.1.9. not grant or issue any shares or options to purchase
shares or similar rights to any Employees, other than as
specifically contemplated herein; or
7.2.1.10. not take any action with the intent to adversely affect
the ability of the parties to consummate the transactions
contemplated by this Agreement.
7.2.2. The Sellers agree that, from and after the date hereof and
until the earlier of the Closing Date and the termination of this
Agreement, except as otherwise expressly provided by this
Agreement or with the prior written consent of the Parent, which
shall not be unreasonably withheld (if any of the actions below
is required under Law or a Purchased Contract in effect on the
date hereof, the Sellers will be obligated to notify the Parent
of such action and an approval will not be required), Sellers
shall not:
7.2.2.1. hire any new Employee to serve in the Business or,
except as required or allowed under this Agreement,
terminate any Employee, or, except as may be required
pursuant to any applicable Law, or agreement with such
Employee which is specified in the Disclosure Schedules, (A)
increase the level of compensation of or pay any bonus to,
any Continuing Employee other than pursuant to the terms of
engagement existing as of the date hereof and set forth in
the disclosure schedules, with such Continuing Employee, (B)
increase the coverage or benefits available under any (or
create any new) Plan made to, for, or with any of the
Continuing Employees or otherwise modify or amend or
terminate any such Plan, except with respect to Employees
that do not become Continuing Employees, or (C) grant any
Employee or other person any change of control, severance,
retention or termination compensation or benefits, or any
increase therein;
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7.2.2.2. voluntarily subject the Purchased Assets to any Lien or
otherwise encumber or permit or allow to be encumbered, any
of the Purchased Assets (whether tangible or intangible),
except under any applicable Law and other than in accordance
with the provisions of the Purchased Contract or Assumed
Liability related to the Purchased Asset;
7.2.2.3. other than in the Ordinary Course of Business acquire
any properties or assets in connection with the Business in
an amount exceeding $15,000 individually, or sell, assign,
license, transfer, convey, lease or otherwise dispose of any
of the Purchased Assets;
7.2.2.4. modify, renew, terminate or elect not to renew any
Purchased Contract or enter into any Contract related to the
Business or which would be deemed a Purchased Contract
hereunder;
7.2.2.5. cancel or compromise any debt or claim or waive or
release any right of the Sellers in respect of the Purchased
Assets;
7.2.2.6. enter into any commitment for capital expenditures
relating to the Business;
7.2.2.7. introduce any change with respect to the operation of
the Business, including any change in the types, nature,
composition or quality of products or services or make any
material change in product specifications;
7.2.2.8. enter into any Contract or commitment that restrains,
restricts, limits or impedes the ability of the Business, or
the ability of the Purchasers, to compete with or conduct
any business or line of business related to the Business in
any geographic area;
7.2.2.9. terminate, modify, renew, restate, supplement or waive
any rights under any (A) Purchased Contract or Purchased
Intellectual Property License or (B) Permit (except as
required by Law);
- 53 -
7.2.2.10. disclose any information not customarily disclosed in
the Ordinary Course of Business to any person concerning the
Business, and the Sellers' technologies or properties or
afford to any person or entity including, but not limited
to, financing parties, access to its properties, books or
records;
7.2.2.11. declare, set aside, or distribute any dividend or other
distribution (whether payable in cash, stock, property or a
combination thereof) with respect to any of the capital
stock (or other equity securities) of the Sellers;
7.2.2.12. (A) accelerate or delay collection of Purchased
Accounts Receivable in advance of or beyond their regular
due dates or the dates when the same would have been
collected in the Ordinary Course of Business; (B) delay or
accelerate payment of any account payable in advance of its
due date or the date such liability would have been paid in
the Ordinary Course of Business; (C) delay or postpone the
repair or maintenance of their properties related to the
Business; or (D) vary any inventory purchase practices in
any material respect from past practices;
7.2.2.13. write up, write down or write off the book value of any
Purchase Assets, individually or in the aggregate, except
for depreciation and amortization in accordance with GAAP
consistently applied;
7.2.2.14. agree to do anything prohibited by this Section 7.2
(including providing any promises or assurances with respect
to any of the foregoing).
7.3. REGULATORY AND OTHER AUTHORIZATIONS; CONSENTS. From the date hereof
until the earlier of Closing or termination of this Agreement, the
Sellers shall use their best commercial efforts to obtain all
authorizations, consents, orders and approvals of all Governmental
Bodies and any third Persons that may be or become necessary for the
execution and delivery of, and the performance of the obligations
pursuant to this Agreement including for the transfer of all the
Purchased Assets hereunder without any additional liability or
obligation to the Purchasers, other than the Assumed Liabilities, and
will cooperate reasonably with the Purchasers and such Governmental
Body and third Persons in seeking to obtain all such authorizations,
consents, orders and approvals. The Purchasers will, to the extent
reasonably necessary, cooperate with the Sellers with respect to the
Sellers' efforts to obtain the authorizations, consents, orders and
approvals contemplated by this Section 7.3.It is clarified that the
failure of the Sellers to obtain the authorizations, consents, orders
and approvals contemplated by this Section 7.3 shall not create any
Liability whatsoever on the Sellers.
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7.4. CHANGE OF NAME. From and after the Closing, the Sellers shall
immediately cease using the Trademarks, Network Identifiers,
trade-names and domain names included in the Transferred Intellectual
Property, and shall, within 90 days as of the Closing, cease to do
business under a corporate name or trade name that incorporates such
Trademarks, Network Identifiers or trade names or any marks or names
substantially similar or confusingly similar thereto and the
Purchasers shall be entitled to fully use such Trademarks, the
trade-names and domain names included in the Transferred Intellectual
Property and Network Identifiers as well as corporate name. Following
such 90-day period, Purchasers shall be entitled to take all steps
necessary for the removal of the name of the Sellers from any Register
of Record of Trademark registered users in any office or agency of any
government or organization, and the Sellers will render any reasonable
assistance required by the Purchasers in connection with such removal.
7.5. TRANSITION. During the period between the signing of this Agreement
and the earlier of the Closing Date or termination of this Agreement,
the Sellers and the Purchasers shall cooperate with one another in
creating joint plans for the transition of the Business, the Purchased
Assets and Assumed Liabilities from the Sellers to the Purchasers at
and after the Closing. The Sellers shall not take any action that is
intended to have the effect of discouraging any lessor, licensor,
user, customer, supplier, or other business associate of the Business
from maintaining the same business relationship with the Purchasers
after the Closing as it maintained with the Sellers prior to the
Closing. Prior to the Closing, for the transition purposes,
representatives of the Sellers shall have, together with
Representatives of the Purchaser, run a copy of source code of the
Situator Software from beginning to end with all components and
libraries in order to demonstrate the performance of the source code
of the Situator Software, in accordance with the guidelines set forth
in SCHEDULE 7.5 attached hereto. For the avoidance of doubt nothing
herein implies that the said source code will run uninterrupted or
error free. Following the Closing, the Sellers shall use reasonable
efforts to refer all user and customer inquiries relating to the
Business to the Purchasers.
7.6. NON-COMPETITION; NON-SOLICITATION; CONFIDENTIALITY.
7.6.1. In order that the Purchasers may have and enjoy the full
benefit of the Purchased Assets, Sellers shall not, directly or
indirectly, from the Closing Date hereof until the expiration of
36 (thirty six) months after the Closing (the "NON-COMPETE
PERIOD"): (i) own, manage operate, finance, join, control or
participate in the ownership, management, financing, operation,
business or control of or otherwise be involved in any way in any
business anywhere in the world that at any time during the
Non-Compete Period (a) engages in the developing, producing,
offering, distributing, selling or supporting of products or
services similar to, or directly or indirectly competitive with,
the products and services that are included in the Business, as
conducted, (b) engages in any activity concerning Intellectual
Property that is competitive with the Transferred Intellectual
Property; or (ii) initiate or maintain any contact with any
Person associated with the Sellers in the past and/or the present
regarding all matters relating to the Purchased Assets with the
intent to adversely affect the rights of the Purchasers to enjoy
the Purchased Assets and the Business. Each of the Sellers
acknowledges that the consideration received by the Sellers
hereunder is paid in consideration, in part, for the non-compete
obligations hereunder and that in light of the nature of this
transaction, the interest that the Sellers have in the success of
the Purchasers and the critical significance of the non-compete
covenant to the Purchasers' business and to their willingness to
enter into this Agreement and pay the Base Purchase Price, the
non-compete covenant is reasonable and fair in the circumstances.
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7.6.2. For a period from the date hereof to the second anniversary of
the Closing Date (provided that if Closing is no consummated for
any reason whatsoever, this provision shall expire upon
termination of the Agreement), the Sellers shall not, and shall
cause all the Affiliates directly or indirectly controlled by the
Sellers not to: (i) cause, solicit, induce or encourage any
Employees who become Continuing Employees to leave such
employment or otherwise engage any such individual; (ii) solicit,
induce or encourage any Continuing Employees that received offers
of engagement by Purchasers, in each case who have refused offers
to become Continuing Employees pursuant to Section 9, to become
or continue to be employees or consultants of the Sellers, or
(iii) cause, induce or encourage any material actual or
prospective client, customer, supplier or licensor of the
Business (including any existing customer of the Sellers and any
Person that becomes a client or customer of the Business after
the Closing) or any other Person who has a business relationship
with the Business, to terminate or adversely modify any such
actual or prospective relationship. In addition, to the extent
that, during the period of one year after Closing, the Sellers
are approached by any potential customer who is interested in the
Business, then the Sellers shall make diligent efforts to refer
such potential customer to the Purchasers.
7.6.3. From and after the date hereof, Sellers shall not disclose,
reveal, divulge or communicate to any Person other than
authorized employees, officers, directors and professional
advisors of the Sellers or use or otherwise exploit for its own
benefit or for the benefit of anyone other than the Purchasers or
other than as contemplated under this Agreement or in exercise of
any right of Sellers under this Agreement or in defending any
claim against Sellers, any Purchasers' Related Confidential
Information. For purposes of this Section 7.6, "PURCHASERS
RELATED CONFIDENTIAL INFORMATION" shall mean any Trade Secrets or
other confidential information with respect to the Purchased
Assets, the Assumed Liabilities or the Business. "PURCHASERS
RELATED CONFIDENTIAL INFORMATION" does not include, and there
shall be no obligation hereunder with respect to, information
that (i) is in the public domain at the time of disclosure by
Purchasers or subsequently becomes so through no fault of Seller;
(ii) is furnished to the Sellers by a third party having a lawful
right to do so; (iii) was explicitly approved for release by
written authorization of Purchasers; (iv) or is required to be
furnished in connection with any correspondence or applications
of the Sellers with any Governmental Body (such as with tax
authorities) or (v) is disclosed in response to a valid order of
a court or other Governmental Body with jurisdiction over the
Sellers or Purchasers, but only to the extent of and for the
purposes of such order, provided, however, that the Sellers shall
first notify Purchasers in writing of the order, and permit
Purchasers to seek an appropriate protective order.
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7.6.4. The covenants and undertakings contained in this SECTION 7.6
relate to matters which are of a special, unique and
extraordinary character and a violation of any of the terms of
this SECTION 7.6 may cause irreparable injury to the Purchasers,
the amount of which will be impossible to estimate or determine
and which cannot be adequately compensated. Therefore, the
Purchasers will be entitled to an injunction, restraining order
or other equitable relief from any court of competent
jurisdiction in the event of any breach of this SECTION 7.6. The
rights and remedies provided by this SECTION 7.6 are cumulative
and in addition to any other rights and remedies which Purchasers
may have hereunder or at Law or in equity.
7.6.5. The parties hereto agree that, if any court of competent
jurisdiction in a final nonappealable judgment determines that a
specified time period, a specified geographical area, a specified
business limitation or any other relevant feature of this SECTION
7.6 is unreasonable, arbitrary or against public policy, then a
lesser time period, geographical area, business limitation or
other relevant feature which is determined to be reasonable, not
arbitrary and not against public policy may be enforced against
the applicable party.
7.7. PUBLICITY. Sellers shall not issue any press release or announcement
concerning the transactions contemplated hereby without the prior
written consent of the Purchasers. If the Purchasers elect to publicly
announce the transaction contemplated by this Agreement, the Sellers
will assist the Purchasers in the preparation of a release or
announcement, and subject to applicable Law or stock exchange rules
and regulations, Purchasers shall provide Sellers with reasonable time
to propose comments on such release or announcement in advance of such
issuance; provided that Purchasers, in their sole discretion, shall
not be obligated to accept such proposed comments.
7.8. NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt notice
to the other parties of (i) the occurrence or nonoccurrence of any
event which has caused or would be likely to cause any representation
or warranty contained in this Agreement by such first party to be
untrue or inaccurate in any material respect at or prior to the
Closing; (ii) any material failure by such first party to comply with
or satisfy in any material respect any covenant condition or agreement
to be complied with or satisfied by it hereunder; (iii) any material
notice or other material communication of which such party has
knowledge from any Governmental Body or other Person in connection
with the transactions contemplated by this Agreement; (iv) any Actions
commenced or to the knowledge of such party threatened against,
relating to, involving or otherwise affecting, the Purchased Assets
and/or the Business which, if pending on the date of this Agreement,
would individually or in the aggregate have or would reasonably be
expected to have a Material Adverse Effect or which relate to the
consummation of the transactions contemplated by this Agreement; or
(v) any other material adverse effect or any event that would
materially impair such party's ability to perform its obligations
under this Agreement. The delivery of any notice pursuant to this
Section 7.8 shall not cure such breach or non-compliance or limit or
otherwise affect the remedies available hereunder to the party
receiving such notice.
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7.9. FORM S-8. Parent agrees to take all corporate action necessary to
reserve for issuance a sufficient number of Parent Ordinary Shares for
delivery upon exercise of options included in the Parent Assumed
Options and shares included in such Parent Assumed Options. As soon as
practicable, but in any event not later than 180 days after the
Closing Date, Parent shall file with the SEC a registration statement
on Form S-8 (or any other successor or other appropriate form), with
respect to the Parent Ordinary Shares underlying the Parent Assumed
Options and shall use best commercial efforts to maintain the
effectiveness of such registration statement for so long as such
options remain outstanding. Not later than the filing of the Form S-8
as specified above, Parent shall cause Parent Ordinary Shares
underlying Parent Assumed Options to be authorized for listing on the
national securities exchange on which Parent Ordinary Shares are
listed.
7.10. INTERIM FINANCIAL STATEMENTS. Within 5 Business Days from the Closing
Date, the Company shall provide the Parent with a management report
(unaudited and not reviewed) financial statement for the period
between September 30, 2009 and the Closing Date and the related
consolidated statements of income and cash flows for the period then
ended.
8. EXCLUSIVITY.
8.1. From and after the date of this Agreement until the Closing or
termination of this Agreement pursuant to Section 12, the Sellers will
not authorize or permit any of their respective Representatives acting
on their behalf to, directly or indirectly, (i) solicit, initiate,
seek, entertain, encourage, facilitate, support or induce the making,
submission or announcement of any inquiry, expression of interest,
proposal or offer that constitutes, or would reasonably be expected to
lead to, an Acquisition Proposal (as hereinafter defined), (ii) enter
into, participate in, maintain or continue any communications (except
solely to provide written notice as to the existence of these
provisions) or negotiations regarding, or deliver or make available to
any Person any non-public information with respect to, or take any
other action regarding, any inquiry, expression of interest, proposal
or offer that constitutes, or would reasonably be expected to lead to,
an Acquisition Proposal, (iii) agree to, accept, approve, endorse or
recommend (or publicly propose or announce any intention or desire to
agree to, accept, approve, endorse or recommend) any Acquisition
Proposal, (iv) enter into any letter of intent or any other Contract
contemplating or otherwise relating to any Acquisition Proposal, or
(v) submit any Acquisition Proposal to the vote of any security
holders of the Sellers, other than the one pursuant to the Agreement.
The Sellers will immediately cease and cause to be terminated any and
all existing activities, discussions or negotiations with any Persons
conducted prior to or on the date of this Agreement with respect to
any Acquisition Proposal.
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"ACQUISITION PROPOSAL" shall mean, with respect to the Sellers, any
agreement, offer, proposal or bona fide indication of interest (other
than this Agreement or any other offer, proposal or indication of
interest by Parent or the Purchasers), or any public announcement of
intention to enter into any such agreement or of (or intention to
make) any offer, proposal or bona fide indication of interest, with
respect to the Business relating to, or involving: (A) any acquisition
or purchase from the Sellers, or from the stockholders, shareholder or
members of the Sellers, by any Person or Group (as hereinafter
defined) of voting securities of the Sellers or any tender offer or
exchange offer for voting securities of the Sellers or any merger,
consolidation, business combination or similar transaction involving
any of the Sellers; (B) any sale, lease, mortgage, pledge, exchange,
transfer, license (other than in the ordinary course of business),
acquisition, or disposition of all or substantially all of the assets
(or any material asset) of any of the Sellers in any single
transaction or series of related transactions; or (C) any liquidation,
dissolution, recapitalization or other significant corporate
reorganization of any of the Sellers, or any extraordinary dividend,
whether of cash or other property or the sale of any of the Purchased
Assets.
"GROUP" shall have the definition ascribed to such term under Section
13(d) of the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder and related case law.
9. EMPLOYEES AND EMPLOYEE BENEFITS.
9.1. Each of the Sellers shall provide such reasonable assistance to the
Purchasers in the solicitation and hiring of the Continuing Employees,
as the Purchasers shall reasonably request.
9.2. Promptly following the date hereof, and subject to Purchasers
receiving proper evidence that each such Continuing Employee has a
legal right to work in his or her country of current employment, to
the extent such Continuing Employee is not a resident of the country
of current employment, any of the Purchasers shall offer employment,
effective as of the Closing and thereafter to any such Employee listed
in SCHEDULE 9.19.2. (each such offer, an "EMPLOYMENT OFFER" and each
such Employee to which an Employment Offer is made shall be referred
to herein as the "CONTINUING EMPLOYEE"). Each Employment Offer shall
be made to each Continuing Employee on terms and conditions that are
materially the same as a whole as their conditions immediately prior
to the date thereof. Each Continuing Employee who accepts an
Employment Offer and who actually becomes employed by any of the
Purchasers or any of its Subsidiaries in accordance with such offer is
referred to herein as a "HIRED EMPLOYEE". Each of the Sellers shall
reasonably cooperate and assist the Purchasers in their efforts to
secure satisfactory employment arrangements with the Continuing
Employees; provided however that the Sellers provide no assurance that
all Continuing Employees will accept their respective Employment
Offers.
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9.3. The Sellers (as applicable) shall pay (either to such Hired Employees,
the Tax authorities, or the applicable funds, as applicable) all
benefits that such Hired Employees may be eligible to receive under an
Employment Agreement, the Company Option Plans or applicable Law,
including, without limitation, all wages, bonuses, commissions, pay
for other compensated absences and other remuneration (including
mandatory or discretionary benefits) due to such Hired Employees as of
the close of business on the Closing Date, including any related
payroll deductions (such as employee benefit plan contributions and
employment Taxes which shall be paid when due) with respect thereto,
regardless of whether such amounts have been accrued on the books of
the Sellers at the close of business on the Closing Date, but
excluding such payments which are Assumed Liabilities and the funds
for which will be transferred to the Purchasers for the benefit of the
Hired Employees at the Closing as specified below.
9.4. Prior to the Closing, (i) each of the Sellers shall make all such
payments, transfers and fully fund all such amounts required to be
placed with the Plans that would have been required to be transferred
and paid to all the Hired Employees had the employment of such Hired
Employees been terminated by the Sellers at the Closing, and (ii) the
Sellers shall assign and transfer to the Purchasers all its rights in
all such Plans with respect to the relevant Hired Employees, and such
Plans shall be deemed Purchased Assets hereunder. The parties shall
apply for the approval from the Income Tax Authorities (the "ITA")
regarding the transfer of the provident and pension funds, severance
payments funds, managers' insurance policies and education funds
relating to the Hired Employees of the Sellers (together, the "FUNDS")
from the Seller's and its Subsidiaries' account to the relevant
account of the Purchasers. At the Closing, the Sellers will transfer
title to the Funds to relevant account of the Purchasers. The Sellers
and the Purchasers undertake to make all appropriate filings with the
ITA and all Funds' policy managers. For the avoidance of doubt, in the
event that any Hired Employee ceases to be employed by the Purchasers
after the Closing Date, the Purchasers shall be solely responsible for
any severance or other payments due to the employee as a result of
such termination of employment.
9.5. Immediately prior to the Closing, the Sellers shall redeem accumulated
and unused vacation days of the Hired Employees, such that all such
Hired Employees will be transferred to the Purchasers with no more
than 10 accrued vacation days.
9.6. With respect to any Hired Employees employed or engaged by Seller USA
INC, Seller USA LLC or Seller UK Sub, the following shall apply
notwithstanding the above: all such Hired Employees shall be
terminated by the applicable Seller with effect as of the Closing, and
Sellers shall be required to make all payments to such employees in
connection with their termination (such as severance, redemption of
vacation days, etc.), The applicable Purchaser shall provide each
Continuing Employees with an Employment Offer. Each Employment Offer
shall be made to each Continuing Employee on terms and conditions that
are materially the same as a whole as their conditions immediately
prior to the date thereof.
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9.7. Nothing in the employment or other agreements between any Hired
Employees and the Sellers shall: (i) as of the Closing, limit or
restrict such Employee from serving as employees or consultant of the
Purchasers or any of their Subsidiaries; and (ii) as of the Closing,
the Hired Employees or any other Continuing Employee subsequently
employed or engaged by the Purchasers shall be relieved and released
from the confidentiality and non-compete obligations owed to the
Sellers to such extent required to perform the obligations and duties
under their respective employment or engagement agreements with the
Purchasers.
9.8. BENEFITS. On and after the Closing Date, Purchasers shall cause each
Hired Employee to receive full credit for all prior service with the
Sellers for purposes of determining any benefits to be received by
such Hired Employee to the extent that service or length of employment
is an applicable factor for determining benefits under any benefit
Plan of Purchasers or under applicable Laws. Purchasers agree, to the
extent practicable, to facilitate a rollover of the account balances
and related liabilities of the Hired Employees from the tax qualified
defined contribution plan maintained by the Sellers (as applicable) to
a tax-qualified defined contribution plan maintained by the
Purchasers, if any.
9.9. SELLERS OBLIGATION FOR SEVERANCE PAYMENTS. Purchasers shall not be
responsible for any severance or other obligation that becomes payable
to or due to any Employee who are not Hired Employees as a result of a
termination of his or her employment with any of the Sellers. In the
event that any Employee terminates his employment with the Sellers at
any time prior to the Closing, then any severance or other obligation
that becomes payable to or due to such Employee as a result of a
termination of his or her employment shall be the sole responsibility
of the Sellers.
9.10. As soon as practicable after the Purchasers have offered all the
Continuing Employees Employment Offers (and with respect to Employees
which are not Continuing Employees, promptly after the date hereof),
Parent shall notify the Company in writing of those Employees of the
Sellers that Purchasers intend not to offer Employment Offers to, and
shall further, at such time as it deems reasonable, notify the Company
of any Continuing Employees who have refused to accept the Employment
Offer and will not be engaged by the Purchasers ("NON-CONTINUING
EMPLOYEES"). Notwithstanding anything to the contrary in this
Agreement, it is hereby agreed that the Sellers shall have sole
discretion whether to terminate such Non-Continuing Employees
forthwith or at the Closing.
10. CONDITIONS TO CLOSING
10.1. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASERS. The obligation of
Purchasers to consummate the transactions contemplated by this
Agreement is subject to the fulfillment, on or prior to the Closing
Date, of each and every of the following conditions:
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10.1.1. the representations and warranties of each of the Sellers set
forth in Section 5 of this Agreement shall be true and correct
(a) in all material respects as of the date of this Agreement and
(b) as of the Closing as though made at and as of the Closing,
except for such failures to be true and correct as would not have
individually or in the aggregate a Material Adverse Effect;
except in any case, to the extent such representations and
warranties expressly relate to an earlier date (in which case
such representations and warranties shall be true and correct on
and as of such earlier date);
10.1.2. the Sellers shall have performed and complied in all material
respects with all obligations and agreements required in this
Agreement to be performed or complied with by them on or prior to
the Closing Date;
10.1.3. the Seller Israel Sub shall have sold, assigned, transferred,
conveyed or delivered those Purchased Contracts listed on
Schedule 2.3A (together with all related Assumed Liabilities) to
the Company under such terms and conditions agreed upon by the
parties such that such Purchased Contracts and Assumed
Liabilities are acquired at the Closing from the Company
(disregarding any third party consents for assignment required
but not received by the Closing);
10.1.4. the Sellers shall have entered into and provided the Parent
with a copy of an absolute, complete and final release and
settlement agreement in the form acceptable to the Parent from
any and all actions and/or claims relating to the legal action
described in SCHEDULE 10.1.4.
10.1.5. each of the Persons that is entitled to receive any of the
Stock Consideration shall have waived any rights with respect to
previous options to purchase shares of the Company, as part of
his or her execution of agreement to the assignment and transfer
of employment to the Purchasers.
10.1.6. (i) there shall be no Legal Proceedings against the Sellers or
Purchasers either temporarily or permanently restraining or
prohibiting the consummation of the transactions contemplated
hereby, and (ii) there shall not be in effect any Order by or any
objection from a Governmental Body of competent jurisdiction
restraining, enjoining or otherwise prohibiting or objecting to
the consummation of the transactions contemplated hereby;
10.1.7. the parties hereto shall have obtained the Consents, approval,
order or authorization of, or registration, declaration or filing
with, any Governmental Body or Third Party, listed in SCHEDULE
10.1.7, required to be obtained or made in connection with the
execution and delivery of this Agreement or the performance of
the transactions contemplated herein; all in a form reasonably
satisfactory to Purchasers, and any waiting periods, including
with respect to filing requirements with the Committee on Foreign
Investment in the United States ("CFIUS") shall have expired;
- 62 -
10.1.8. at least 70% of the Continuing Employees (counting the Key
Employees as Continuing Employees as well for such purpose) shall
have consented to becoming Hired Employees;
10.1.9. there shall not have occurred a Material Adverse Effect (which
for the avoidance of doubt, shall disregard and not take into
consideration any consents required under any Purchased Contract
which were not obtained prior to the Closing, and the
non-assignment of such permits used for the Business which
permits are non-assignable, and the effects thereof);
10.1.10. the Purchasers shall have received all closing deliverables
as set forth in SECTION 4.2.1 in form and substance reasonably
acceptable to the Purchasers, provided that in the event of a
contradiction between the provisions of Section 4.2.1 and this
Section 10.1, the provisions of this Section 10.1 shall prevail;
10.1.11. none of the Key Employees, except for one, has provided a
notice of revocation, cancellation or termination, of his/her
respective undertaking and consent to the assignment of his or
her employment to the Purchasers, and the Sellers are not aware
of the intention of any such Key Employees to so revoke or cancel
or terminate his respective Key Employee Undertaking; and
10.1.12. The Company shall have provided the Parent with its unaudited
but reviewed consolidated balance sheet as of September 30, 2009
and the related consolidated statements of income and cash flows
for the nine months then ended, in accordance with GAAP applied
on a consistent basis throughout the periods involved.
10.2. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS. The obligation of
the Sellers to consummate the transactions contemplated by this
Agreement is subject to the fulfillment, prior to or on the Closing
Date, of each of the following conditions:
10.2.1. The representations and warranties of the Purchasers set forth
in Section 6 of this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the
Closing as though made at and as of the Closing, except to the
extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties
shall be true and correct on and as of such earlier date);
10.2.2. Purchasers shall have performed and complied in all material
respects with all obligations and agreements required by this
Agreement to be performed or complied with by the Purchasers on
or prior to the Closing Date;
10.2.3. (i) there shall be no Legal Proceedings against the Sellers or
any of the Purchasers either temporarily or permanently
restraining or prohibiting the consummation of the transactions
contemplated hereby, and (ii) there shall not be in effect any
Order by or any objection from a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting or
objecting to the consummation of the transactions contemplated
hereby; and
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10.2.4. The Company shall have received all closing deliverables as
set forth in SECTION 4.2.2 in form and substance acceptable to
the Company.
10.2.5. The Purchasers have paid the Closing Date Purchase Price in
accordance with the provisions of Section 3.2 above.
10.2.6. The Parent shall have assumed all of the Assumed Options in
accordance with Section 3.6.3 and the provisions of the
applicable Law.
10.2.7. The Parent shall have provided the Company with the Allocation
Statement, and the difference between the value attributed to
Seller Israel Sub in the Allocation Statement is less than three
(3) times the value attributed to the Seller Israel Sub in the
Initial Allocation, provided however, that if the difference
between the value attributed to Seller Israel Sub in the
Allocation Statement is more than three (3) times the value
attributed to the Seller Israel Sub in the Initial Allocation,
then (a) if such difference is a result of incorrect information
provided by the Company, this condition shall be deemed to have
been met, and (b) if such difference is not a result of incorrect
information provided by the Company, the Parent shall compensate
the Sellers for any direct Israeli Tax Damages suffered by the
Sellers due directly to the difference in such valuation (from 3
times to the actual valuation) and which are in excess of any
accumulated losses of Seller Israel Sub, in which case the
condition set forth in this Section 10.2.7 shall be deemed to
have been met.
11. INDEMNIFICATION.
11.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the parties contained in Sections 5 and 6 of this
Agreement shall survive the Closing through and including 18 months
following the Closing Date, other than claims for fraud, (the
"SURVIVAL PERIOD"); provided, however, that any obligations to
indemnify and hold harmless shall not terminate with respect to any
Damages as to which the Person to be indemnified shall have given
notice (stating in reasonable detail the basis of the claim for
indemnification) to the indemnifying party in accordance with Section
11.5 before the termination of the Survival Period.
11.2. INDEMNIFICATION BY EACH OF THE SELLERS.
Subject to the procedures and limitations set forth in Section 11.1,
11.3 and 11.5-11.8, the Company and the Seller Israeli Sub on behalf
of all Sellers and in connection with their entire Liability under
this Agreement, shall jointly and severally, indemnify, defend and
hold harmless the Parent and the Purchasers and their Affiliates and
their respective employees, directors and officers (collectively, the
"PARENT GROUP") from and against, and pay or reimburse, as the case
may be, the Parent Group for, any and all Damages paid, incurred,
accrued or sustained by the Parent or any other member of the Parent
Group based upon, arising out of or otherwise in any way relating to
or in respect of:
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11.2.1. any breach of any representation or warranty made by the
Sellers in any Transaction Document on the date of this Agreement
or on the Closing Date;
11.2.2. any breach or violation of any covenant or agreement by the
Sellers contained in any Transaction Document;
11.2.3. any and all Damages based on, arising under or resulting from
any Excluded Asset or any Excluded Liability (other than as set
forth in Section 11.2.4 below); or
11.2.4. any and all Taxes, including withholding taxes, that may be
imposed as a result of the transactions contemplated hereunder,
either on the Sellers or any of their stockholders, including if
such Taxes are actually imposed on the Purchasers following the
transaction (and only in connection with the transaction), upon
the transfer of Transferred Intellectual Property (and Purchased
Intellectual Property Licenses) from Purchaser SUB2 to the
Parent.
11.3. INDEMNIFICATION FROM ESCROW PROCEDURES.
11.3.1. Subject to the following requirements, the Escrow Fund shall
be in existence immediately following the Closing Date and shall
terminate at 5:00 p.m., Israel local time, on the date that is 18
months following the Closing Date (the "RELEASE DATE" and the
"ESCROW PERIOD", respectively). For the avoidance of doubt, the
Escrow Fund shall be the sole and exclusive remedy for any claim
made pursuant to Sections 11.2.1 or 11.2.2 or 11.2.4 other than
claims for fraud.
11.3.2. Prior to the Release Date, any claims of the Parent Group
pursuant to the indemnification obligations of the Company
pursuant to Section 11.2 shall be made in accordance with the
following procedures until such time as the amount in the Escrow
Fund is less than the aggregate unresolved Indemnity Claim
Amounts (including any Indemnity Claim Amounts resolved in favor
of Parent but not distributed which time the Parent Group may
bring claims against the Sellers as provided in Section 11.5).
The procedures set forth in this Section 11.3 will govern any
right of the Parent Group for indemnification including under
Section 11.5.
11.3.3. If any member of the Parent Group determines in good faith
that it is entitled to indemnification for Damages from the
Sellers pursuant to Section 11.2, Parent shall give to the Seller
Israel Sub (or its designee, whose identity was provided to the
Parent and Escrow Agent in writing) and the Escrow Agent a
written notice with respect thereto (a "NOTICE OF CLAIM") setting
forth in reasonable detail the basis for such claim, and
specifying the amount of Damages claimed (which, if not finally
determined, may be a good faith estimate thereof) (the amount of
Damages so claimed being hereinafter referred to as the
"INDEMNITY CLAIM AMOUNT").
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11.3.4. The Seller Israel Sub may, within 30 days after delivery of
any Notice of Claim, object to such Notice of Claim and dispute
any Indemnity Claim Amount set forth in such Notice of Claim by
delivery to the Escrow Agent, with a copy to Parent, of written
notice of such dispute (a "DISPUTE NOTICE"), setting forth in
reasonable detail the basis for such dispute and the amount of
the Indemnity Claim Amount which the Seller Israel Sub objects to
being claimed by Parent in respect of the Notice of Claim.
11.3.5. If the Escrow Agent does not receive a Dispute Notice that
relates to a Notice of Claim within 30 days after Parent delivers
such Notice of Claim, the Escrow Agent will pay an amount from
the Escrow Fund equal to such Damages specified in such Notice of
Claim within three Business Days after the expiration of such 30
-day period. If the Escrow Agent receives a Dispute Notice that
relates to a Notice of Claim within such 30 -day period, the
Escrow Agent (A) will be authorized in respect of such Notice of
Claim only to pay Parent out of the Escrow Fund in an amount
equal to the portion, if any, of the Indemnity Claim Amount
specified in such Notice of Claim which is not objected to in
such Dispute Notice within three Business Days after the receipt
of such Dispute Notice, and (B) subject to Section 11.3.6 below
will not be authorized to disburse Escrow Fund in respect of such
portion of the Indemnity Claim Amount which is objected to in
such Dispute Notice unless it has received either a joint notice
of release signed by Parent and the Seller Israel Sub directing
the Escrow Agent to deliver out of the Escrow Fund an amount
equal to all or any portion of such funds and setting forth
instructions as to payment, which joint notice Parent and the
Seller Israel Sub agree to deliver to the Escrow Agent promptly
following resolution of such Notice of Claim, or a final order by
a court of competent jurisdiction, which order is not subject to
appeal (a "FINAL ORDER"), directing the Escrow Agent to disburse
to Parent and/or the Sellers, as the case may be, such amount out
of the Escrow Fund as set forth in such Final Order.
11.3.6. Notwithstanding the receipt of one or more Dispute Notices,
the Escrow Agent will be authorized to disburse out of the Escrow
Fund to Parent such amounts specified in one or more Notices of
Claim for which no Dispute Notices have been timely received by
it regardless of whether such disbursal would reduce the value of
the Escrow Fund to an amount less than the amount subject to
Dispute Notices which have been timely received by the Escrow
Agent. It is being clarified that in such case the amounts
remaining in the Escrow Fund following such disbursement shall
serve as the sole and exclusive remedy in respect of claims made
pursuant to Section 11.2.1 or 11.2.2 or 11.2.4, regardless of
such amounts being less than the Indemnity Claim Amounts, other
than claims for fraud.
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11.3.7. Upon completion of the later of (i) 18 month period following
the Closing Date, or (ii) the date which no Notice of Claim which
was delivered to the Company and the Escrow Agent during the 18
month period following the Closing Date is outstanding; any
remaining funds in the Escrow Fund which are not subject to an
outstanding Notices of Claim and Dispute Notices shall be
immediately released first, to the Seller Israel Sub up to the
Base Purchase Price that would have been payable to Seller Israel
Sub at Closing in the absence of the Escrow Fund, and thereafter,
pro-rata among the Sellers. It is clarified that any amounts
remaining in the Escrow Fund in respect Notices of Claim and
Dispute Notices which are outstanding on a date that is 18 months
following the Closing Date shall serve only to satisfy the
resolutions of the such respective outstanding Notices of Claim
and Dispute Notices and no Notices of Claim may be delivered
following the Escrow Period, excluding with respect to claims for
fraud or claims for indemnification under Section 11.2.3.
11.4. INDEMNIFICATION BY PURCHASER.
Purchasers shall, jointly and severally, indemnify, defend and hold
harmless the Sellers and their Affiliates and their respective
employees, directors and officers (collectively, the "SELLERS GROUP")
from and against, and pay or reimburse, as the case may be, the
Sellers Group for, any and all Damages paid, incurred, accrued or
sustained by the Sellers Group directly or indirectly based upon,
arising out of or otherwise in any way relating to or in respect of:
11.4.1. any breach of any representation or warranty made by the
Purchasers in any Transaction Document on the date of this
Agreement or on the Closing Date; or
11.4.2. any breach or violation of any covenant or agreement by the
Purchasers that should have been performed at or prior to the
Closing as contained in any Transaction Document.
11.4.3. any and all Damages based on, arising under or resulting from
any Purchased Asset or any Assumed Liability or for failure to
pay to Sellers in full the purchase price for the Purchased
Assets in accordance with this Agreement; provided that such
indemnification shall not derogate from the right of the Buyer
Group to seek indemnification from the Sellers in connection with
such Purchased Asset or Assumed Liability in the event of a
breach of representation or warranty or covenant by Sellers in
that regard, subject to and in accordance with Section 11.2.
The indemnification obligations of the Purchasers under Sections
11.4.1 and 11.4.2 shall terminate 18 months after the Closing Date,
provided, however, that any obligations to indemnify and hold harmless
shall not terminate with respect to any Damages as to which the Person
to be indemnified shall have given notice (stating in reasonable
detail the basis of the claim for indemnification) to the indemnifying
party in accordance with Section 11.5 before the termination of such
18-month period.
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11.5. PROCEDURES FOR INDEMNIFICATION.
11.5.1. If a claim or demand is made against any member of the Sellers
Group or the Parent Group (each an "INDEMNITEE"), or an
Indemnitee shall otherwise learn of an assertion, by any Person
who is not a party to this Agreement (and who is not an Affiliate
of a party to this Agreement) (a "THIRD PARTY CLAIM") as to which
a party (the "INDEMNIFYING PARTY") may be obligated to provide
indemnification pursuant to this Agreement, such Indemnitee will
notify the Indemnifying Party in writing, and in reasonable
detail, of the Third Party Claim reasonably promptly after
becoming aware of such Third Party Claim; PROVIDED, HOWEVER, that
failure to give any such notification will not affect the
indemnification provided hereunder except to the extent the
Indemnifying Party shall have been actually and materially
prejudiced as a result of such failure. It is hereby clarified
that in case the Third Party Claim is based on Sections 11.2.1 or
11.2.2 or 11.2.4, 11.4.1 or 11.4.2, then the obligations set
forth in this Section 11.5 shall apply to the Indemnifying Party
solely in case such Third Party Claim is initiated during a
period of 18 months following the Closing Date and the notice of
such Third Party Claim is provided by the Indemnitee to the
Indemnifying Party (and to the Escrow Agent, if applicable),
other than claims for fraud.
11.5.2. If a Third Party Claim is made against an Indemnitee, and the
Indemnifying Party agrees in writing to indemnify the Indemnitee
therefor, the Indemnifying Party will be entitled to assume the
defense thereof (at the expense of the Indemnifying Party) with
counsel selected by the Indemnifying Party and reasonably
satisfactory to the Indemnitee. Should the Indemnifying Party so
elects to assume the defense of a Third Party Claim, the
Indemnifying Party will not be liable to the Indemnitee for any
legal or other expenses subsequently incurred by the Indemnitee
in connection with the defense thereof as long as the
Indemnifying Party diligently conducts such defense; PROVIDED
that, if (i) in opinion of a legal counsel of the Indemnitee a
conflict of interest exists in respect of such claim or (ii) any
Indemnifying Party fails to provide reasonable assurance to the
Indemnitee (upon request of the Indemnitee) of such Indemnifying
Party's financial capacity to defend such Third Party Claim and
provide indemnification with respect thereto, such Indemnitee
will have the right to employ separate counsel to represent such
Indemnitee and in that event the reasonable fees and expenses of
such separate counsel will be paid by such Indemnifying Party;
provided that the Indemnifying Party shall not be required to
bear the fees and expenses of more than one counsel to all
Indemnitees. If the Indemnifying Party assumes the defense of any
such Third Party Claim, the Indemnitee will have the right to
participate in the defense thereof and to employ counsel, at its
own expense, separate from the counsel employed by the
Indemnifying Party. The Indemnifying Party will be liable for the
reasonable fees and expenses of counsel employed by the
Indemnitee for any period during which the Indemnifying Party has
failed to assume the defense thereof or if it does not expressly
elect to assume the defense thereof (including the agreement by
each Indemnifying Party to indemnify the Indemnitee as
aforesaid). If the Indemnifying Party assumes the defense of any
such Third Party Claim, the Indemnifying Party will promptly
supply to the Indemnitee copies of all correspondence and
documents relating to or in connection with such Third Party
Claim and keep the Indemnitee fully informed of all developments
relating to or in connection with such Third Party Claim
(including, without limitation, providing to the Indemnitee
reasonable updates and summaries as to the status thereof). If
the Indemnifying Party chooses to defend a Third Party Claim, the
Indemnitee will fully cooperate with the Indemnifying Party in
the defense thereof if requested by the Indemnifying Party (such
cooperation to be at the expense, including reasonable legal fees
and expenses, of the Indemnifying Party).
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11.5.3. No Indemnifying Party will consent to any settlement,
compromise or discharge (including the consent to entry of any
judgment) of any Third Party Claim without the Indemnitee's prior
written consent, which will not be unreasonably withheld;
PROVIDED, that if the Indemnifying Party agrees to indemnify the
Indemnitee for a Third Party Claim, the Indemnitee will agree to
any settlement, compromise or discharge of such Third Party Claim
which unconditionally and irrevocably releases the Indemnitee
(pursuant to a release which is reasonably satisfactory to the
Indemnitee) completely from all Liability in connection with such
Third Party Claim; PROVIDED, HOWEVER, that the Indemnitee may
refuse to agree to any such settlement, compromise or discharge
that provides for injunctive or other non-monetary relief
adversely affecting the Indemnitee. If an Indemnifying Party
agrees to indemnify the Indemnitee for a Third Party Claim, the
Indemnitee will not (unless required by law) admit any liability
with respect to, or settle, compromise or discharge, such Third
Party Claim without the Indemnifying Party's prior written
consent (which consent will not be unreasonably withheld).
11.5.4. Notwithstanding anything to the contrary in Sections 11.5.1 to
11.5.3 above, if a claim is made by any Tax authority which, if
successful, is likely to result in an indemnity payment to any
member of the Parent Group pursuant to Section 11.2.4, Parent
shall notify the Company of such claim (a "TAX CLAIM"), stating
the nature and basis of such claim and the amount thereof, to the
extent known. Failure to give such notice shall not relieve the
Company from any liability which it may have on account of this
indemnification, except to the extent that the Company is
actually materially prejudiced thereby. The Company shall have
the right, at its option, to participate in, but not control, the
defense of such Tax Claim and to employ counsel of its choice, at
its own cost and expense. The Sellers and Purchasers shall fully
cooperate with each other in contesting any such Tax Claim, which
cooperation shall include the retention and, upon the request of
the respective party, the provision of records and information
which are reasonably relevant to such Tax Claim and making
representatives thereof available on a mutually convenient basis
to provide additional information or explanation of any material
provided hereunder. The Purchasers shall deliver at least ten
(10) Business Days prior to the due date (taking into account any
extension) for the filing of any Tax Returns, Tax exemption
requests or similar filings to be made by the Purchasers in
connection with the transactions contemplated hereunder, to the
Company for review and comment and shall consider such comments
in good faith. The Purchasers will promptly supply to the Company
copies of all correspondence and documents relating to or in
connection with such Tax Claim or any such Tax Returns, Tax
exemption requests or similar filings, and keep the Company fully
informed of all developments relating to or in connection
therewith (including, without limitation, providing to the
Company reasonable updates and summaries as to the status
thereof).
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11.5.5. Any claim on account of Damages which does not involve a Third
Party Claim shall be asserted by written notice given by the
Indemnitee to the Indemnifying Party from whom such
indemnification is sought. The failure by any Indemnitee so to
notify the Indemnifying Party will not relieve the Indemnifying
Party from any liability which it may have to such Indemnitee
under this Agreement, except to the extent that the Indemnifying
Party is reasonably expected to be prejudiced as a result of such
failure. Any notice pursuant to this Section 11.5 will contain a
statement, in prominent and conspicuous type, that if the
Indemnifying Party does not dispute its liability to the
Indemnitee with respect to the claim made in such notice by
notice to the Indemnitee prior to the expiration of a
30-calendar-day period following the Indemnifying Party's receipt
of notice of such claim, the claim will be conclusively deemed a
liability of the Indemnifying Party. If the Indemnifying Party
does not notify the Indemnitee prior to the expiration of a
30-calendar-day period following its receipt of such notice that
the Indemnifying Party disputes its liability to the Indemnitee
under this Agreement, such claim specified by the Indemnitee in
such notice will be conclusively deemed a liability of the
Indemnifying Party under this Agreement and the Indemnifying
Party shall pay (with respect to the Sellers Group out of the
Escrow Fund; except with respect to claims raising out of
circumstances specified in Section 11.2.3 above or claims for
fraud, which can be made from the Escrow Fund or otherwise) the
amount of Damages subject to such claim to the Indemnitee on
demand or, in the case of any notice in which the amount of the
Damages subject to such claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or
such portion thereof) becomes finally determined. If the
Indemnifying Party has timely disputed its liability with respect
to such Damages subject to such claim, as provided above, the
Indemnifying Party and the Indemnitee will proceed in good faith
to negotiate a resolution of such dispute and, if not resolved
through negotiations by the 30th day after notice of such claim
was given to the Indemnifying Party, the Indemnifying Party and
the Indemnitee will be free to pursue such remedies as may be
available under this Agreement or applicable Law.
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11.5.6. Notwithstanding anything to the contrary in this Section 11.5,
any indemnification to be paid by to the Parent Group by Sellers
shall be made out of the Escrow Fund up to the funds then
existing in the Escrow Fund (with respect to claims related to
Sections 11.2.1 and 11.2.2 and 11.2.4) and in accordance with the
procedures specified in Section 11.3.1 through 11.3.7 and the
limitations set forth in Section 11.6, provided nothing herein
shall limit the indemnification rights of the Parent Group for
indemnification under Section 11.2.3 or claims for fraud.
11.6. LIMITATIONS ON INDEMNIFICATION FOR BREACHES OF REPRESENTATIONS AND
WARRANTIES.
11.6.1. An indemnifying party shall not have any Liability under
Section 11.2 (excluding under Section 11.2.3), Section 11.3,
Section 11.4 (excluding under Section 11.4.3) or Section 11.5
hereof unless the aggregate amount of Damages claimed by the
Indemnitee is in the excess of $150,000 in the aggregate (the
"BASKET") and, in such event, the indemnifying party shall be
required to pay the entire amount of such Damages from the first
dollar.
11.6.2. Notwithstanding anything to the contrary in this Agreement,
except in the event of fraud and any Damages resulting from any
breach of post Closing covenants set forth in Section 7.6 or
indemnification under Section 11.2.3 or under Section 11.4.3, the
maximum aggregate Liability or indemnification for Damages
arising under Sections 11.2, 11.3, 11.4 or 11.5 hereof shall be
limited to the Escrow Fund (and in respect to indemnification to
be paid to the Parent Group by Sellers, to an aggregate amount
equal to initial amount of the Escrow Fund). Except with respect
to equitable (e.g., non monetary and non-rescission) relief for
post-closing covenants, and any Damages related to Excluded
Assets or Excluded Liabilities or Damages under 11.4.3, the
remedies set forth in Section 11 are intended and shall be
construed so as to be the sole and exclusive remedy after the
Closing which any member of the Parent Group may have arising out
of or related to this Agreement or the transactions contemplated
herein, including under any theory of Law, including tort. No
loss, Liability, damage or deficiency shall constitute Damages to
any party to the extent of any insurance proceeds actually
received by such party with respect to such loss, Liability,
damage or deficiency (after deducting reasonable costs and
expenses incurred in connection with recovery of such proceeds).
No investigation made by or on behalf of any party hereto or its
Affiliates or the knowledge of any such party's (or its
Affiliates') officers, directors, stockholders, managers,
members, partners, employees or agents shall effect any
indemnification rights under this Section 11.
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11.6.3. Notwithstanding anything to the contrary in this Agreement, no
indemnified party will be entitled to any recovery under this
Agreement or in connection therewith for its consequential,
incidental or indirect damages, including loss of profits or loss
of opportunities (excluding any such damages awarded by a court
to a Third Party as part of a Third Party Claim, which shall be
deemed direct damages for all intents and purposes hereunder).
11.6.4. The parties shall use all commercially reasonable efforts and
shall consult and cooperate with each other with a view towards
mitigating any Damages that may give rise to claims for
indemnification under this Section 11.
11.7. The Sellers shall not take any actions to liquidate or wind-up, and
will not distribute to any of its shareholders, stockholders or
members (as applicable) of the consideration received hereunder unless
and until each such shareholder, stockholder or member (as applicable)
(to the extent it is not a Seller hereunder) receiving such
consideration has provided to Parent a written undertaking in the form
attached hereto as SCHEDULE 11.7, agreeing to be bound by all the
indemnification provisions under this Section 11 as they relate to
indemnification obligations relating to or arising from fraud, solely
with respect to and up to the amount of the consideration received by
such stockholder, shareholder, member or Person and in proportion to
the amount of consideration received by other stockholders,
shareholders or members (i.e., severally and not jointly), and solely
in case that the funds and assets held by the Sellers are not
sufficient to cover the indemnification obligations of the Sellers set
forth in this Section 11, in which case each such stockholder,
shareholder or member shall be deemed the "Seller" for all intents and
purposes solely under this SECTION 11, and except that [the Company]
(or a third party or parties designated by it in writing) shall always
act as the sole and exclusive binding representative and attorney in
fact on behalf of all recipients with respect to all matters relating
to this Agreement, including with respect to the Escrow Fund and the
Escrow Agreement. All decisions and actions by the Company (or such
third party designee(s)) shall be binding upon all the stockholders,
shareholder or members of the Sellers, and no such Person shall have
the right to object, dissent, protest or otherwise contest the same.
- 72 -
11.8. TAX TREATMENT OF INDEMNITY PAYMENTS. Company and Purchasers agree to
treat any indemnity payment made pursuant to this SECTION 11 as an
adjustment to the Base Purchase Price for all Tax purposes to the
extent allowable under applicable Law. If, notwithstanding the
treatment required by the preceding sentence, any indemnification
payment received by the Purchasers or Company is determined to be
taxable by any Taxing Authority, then subject to SECTION 11, the
Company (which amount shall not exceed in any event the remaining
funds in the Escrow Fund to the extent the claim is based on Sections
11.2.1 or 11.2.2 or 11.2.4 and will not exceed in the aggregate an
amount equal to initial amount of the Escrow Fund to the extent the
claim is based on Sections 11.4.1 or 11.4.2 but not on fraud) or
Purchasers, as the case may be, shall also indemnify the Purchasers or
Seller, as the case may be, for any Taxes incurred by reason of the
receipt of such payment and any Expenses incurred by the Purchasers or
Seller, as the case may be, in connection with such Taxes (or any
asserted deficiency, claim, demand, action, suit, proceeding, judgment
or assessment, including the defense or settlement thereof, relating
to such Taxes).
12. TERMINATION OF AGREEMENT.
12.1. This Agreement may be terminated prior to the Closing as follows:
12.1.1. Subject to the provisions set forth in Schedule 12.1.1., at
the election of Company or Parent, on or after January 5, 2010,
if the Closing shall not have occurred by the close of business
on such date, provided that the terminating party is not in
material default of any of its obligations hereunder that has
caused any of the conditions set forth in SECTION 10 not to have
occurred; notwithstanding the foregoing, the failure of a party
to obtain a Third Party Consent shall not be considered as
material default of such party.
12.1.2. by mutual written consent of Company and the Parent;
12.1.3. by Company or Parent if there shall be in effect a final
nonappealable Order of a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby or a
material portion thereof;
12.1.4. by any of the Purchasers if it is not in material breach of
its obligations under this Agreement and if there shall have been
a material breach by Company of any representation, warranty,
covenant or agreement of any of the Sellers set forth in this
Agreement, which breach would give rise to a failure of a
condition set forth in SECTIONS 10.1.1 or 10.1.2 and is incapable
of being cured or, if capable of being cured, shall not have been
cured within 15 days following receipt by Company of notice of
such breach from Purchasers; notwithstanding the foregoing, the
failure of a Seller to obtain a Third Party Consent shall not be
considered as material default of such party; or
12.1.5. by Company if it is not in material breach of its obligations
under this Agreement and if there shall have been a material
breach by any of the Purchasers of any representation, warranty,
covenant or agreement of Purchasers set forth in this Agreement,
which breach would give rise to a failure of a condition set
forth in SECTIONS 10.2.1 or 10.2.2 and is incapable of being
cured or, if capable of being cured, shall not have been cured
within 15 days following receipt by the applicable Purchaser of
notice of such breach from Company.
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12.2. PROCEDURE UPON TERMINATION. In the event of termination and
abandonment by Purchasers or Seller, or both, pursuant to SECTION 12
hereof, written notice thereof shall forthwith be given to the other
party or parties, and this Agreement shall terminate, except for
SECTIONS 12.3, 13.3 and 13.5 of this Agreement, which shall remain in
full force and effect. In such event the Mutual Non Disclosure
Agreement between Company and Parent, dated November 24, 2008, which
shall continue to be in full force and effect for additional five
years and shall apply to all parties hereto and shall apply to the
Transaction Documents including their content, existence and
negotiations between the parties in connection therewith.
12.3. EFFECT OF TERMINATION. In the event that this Agreement is validly
terminated as provided herein, then each of the parties shall be
relieved of their duties and obligations arising under this Agreement
after the date of such termination and such termination shall be
without liability to the terminating party; provided, however, that
nothing in this SECTION 12.3 shall relieve Purchasers or Sellers of
any direct liability for a willful and material breach of this
Agreement prior to the effective date of such termination. It is
hereby clarified that no party shall be liable for any consequential,
incidental or indirect damages, including loss of profits or loss of
opportunities of the other party.
13. MISCELLANEOUS.
13.1. EXPENSES. Except as otherwise provided in this Agreement, each of the
Sellers and of the Purchasers shall bear its own expenses incurred in
connection with the negotiation and execution of this Agreement and
each other agreement, document and instrument contemplated by this
Agreement and the consummation of the transactions contemplated hereby
and thereby.
13.2. SPECIFIC PERFORMANCE. The parties acknowledge and agree that the
breach of this Agreement would cause irreparable damage to the parties
and that the parties will not have an adequate remedy at law.
Therefore, the obligations of the parties under this Agreement,
including Sellers' obligation to sell the Purchased Assets to
Purchasers and Assumed Liabilities and Purchasers' obligation to pay
the Base Purchase Price (as may be adjusted), shall be enforceable by
a decree of specific performance issued by any court of competent
jurisdiction, and appropriate injunctive relief may be applied for and
granted in connection therewith. Such remedy shall, however, be
cumulative and not exclusive and shall be in addition to any other
remedies which any party may have under this Agreement.
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13.3. GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by, and construed in accordance with, the laws of the State
of Israel. Each of the parties to this Agreement hereby irrevocably
and unconditionally submits, for itself and its assets and properties,
to the exclusive jurisdiction of the competent courts in the district
of Tel-Aviv, in any action or proceeding arising out of or relating to
this Agreement, the agreements delivered in connection with this
Agreement, or the transactions contemplated hereby or thereby, or for
recognition or enforcement of any judgment relating thereto, and each
of the parties to this Agreement hereby irrevocably and
unconditionally (i) agrees not to commence any such action or
proceeding except in such courts; (ii) agrees that any claim in
respect of any such action or proceeding may be heard and determined
in such Tel Aviv court or; (iii) waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any such action or proceeding
in any such Tel Aviv court and (iv) waives, to the fullest extent
permitted by Law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such Tel Aviv court.
Each of the parties to this Agreement hereby agrees that a final
judgment in any such action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by Law. Each of the parties to this Agreement
hereby irrevocably consents to service of process in the manner
provided for notices in SECTION 13.5. Nothing in this Agreement shall
affect the right of any party to this Agreement to serve process in
any other manner permitted by applicable Law.
13.4. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement (including
the schedules and exhibits hereto and all other Transaction Documents)
represents the entire understanding and agreement between the parties
hereto with respect to the subject matter hereof and can be amended,
supplemented or changed, and any provision hereof can be waived, only
by written instrument making specific reference to this Agreement
signed by the party against whom enforcement of any such amendment,
supplement, modification or waiver is sought. No action taken pursuant
to this Agreement, including without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by
the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein. The waiver by any
party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a further or continuing waiver of such
breach or as a waiver of any other or subsequent breach. No failure on
the part of any party to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of such right, power or
remedy by such party preclude any other or further exercise thereof or
the exercise of any other right, power or remedy.
13.5. NOTICES. All notices and other communications under this Agreement
shall be in writing shall be given or made by delivery in person (and
shall be deemed to have been duly given upon such delivery), by
overnight courier service (and shall be deemed to have been duly given
two days after delivery to the courier service), by facsimile (and
shall be deemed to have been duly given after transmission in full
with electronic confirmation of transmission if delivered during
recipient's business hours, or on the next Business Day if delivered
after recipient's business hours), or by registered or certified mail
(postage prepaid, return receipt requested) (and shall be deemed to
have been duly given five days after delivery to the mail service) to
the respective parties at the following addresses (or to such other
address or facsimile number as a party may have specified by notice
given to the other party pursuant to this provision):
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If to Sellers:
[_______________]
[_______________]
[_______________]
With a copy to:
Zysman, Aharoni, Gayer & Ady Kaplan & Co.
41-45 Rothschild Blvd.,
Tel Aviv 65784, Israel
Facsimile: 972-3-795-5550
Attn: Eran Ben Dor, Adv.
If to Purchasers or Parent, to:
Nice Systems Ltd.
8 Hapnina Street, P.O.Box 690
Ra'anana 43197
Tel: +972-9-7753777
Fax: +972-9-9-7437446
Attn.: Yechiam Cohen, General Counsel
With a copy to:
Meitar, Liquornik, Geva & Leshem, Brandwein & Co.
16 Abba Hillel Street
Ramat Gan 52506, Israel
Facsimile: 972-3-610-3656
Attn: Asaf Harel, Adv.
13.6. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal, or incapable of being enforced by any law or public
policy, all other terms or provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic
or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal, or
incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner
in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.
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13.7. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors
and permitted assigns. Nothing in this Agreement shall create or be
deemed to create any third party beneficiary rights in any person or
entity not a party to this Agreement except as provided below. No
assignment of this Agreement or of any rights or obligations hereunder
may be made by either Sellers or Purchasers (by operation of law or
otherwise) without the prior written consent of the other party hereto
and any attempted assignment without the required consents shall be
void; PROVIDED, HOWEVER, that Purchasers may assign this Agreement and
any or all rights or obligations hereunder (including, without
limitation, Purchasers' rights to purchase the Purchased Assets and
assume the Assumed Liabilities and Purchasers' rights to seek
indemnification hereunder) to any Affiliate thereof and any of the
other Purchasers; provided that Purchasers shall remain liable for all
of its obligations hereunder. Upon any such permitted assignment, the
references in this Agreement to Purchasers shall also apply to any
such assignee unless the context otherwise requires.
13.8. OTHER REMEDIES. Subject to the provisions of Section 11 above, any
and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a
party of any one remedy will not preclude the exercise of any other
remedy
13.9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of
this Agreement and all of which, when taken together, will be deemed
to constitute one and the same agreement.
13.10. NO IMPLIED REPRESENTATION. The parties hereto acknowledge that,
except as expressly provided in Sections 5 and 6 (including any
schedule attached thereto) above or as otherwise explicitly provided
herein or in any other Transaction Document, none of the parties is
making any representations or warranties of any kind, express or
implied, and no party has relied or is relying on any such other
representations or warranties. The parties further agree and
acknowledge that neither party nor any representative thereof, shall
be entitled to rely on, present as evidence, or otherwise disclose to
any party (including in any Legal Proceeding) any previous drafts of
this Agreement.
[Rest of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase Agreement
to be executed by their respective officers thereunto duly authorized, as of the
date first written above.
NICE SYSTEMS LTD. NICE CTI SYSTEMS UK LIMITED
By:/s/ Zeev Bregman /s/ Eran Liron By: /s/ Zeev Bregman
----------------------------------- --------------------
Name: Zeev Bregman Eran Liron Name: Zeev Bregman
Title: CEO VP Business Development Title: Director
NICE SYSTEMS, INC.
By: /s/ Zeev Bregman
--------------------
Name: Zeev Bregman
Title: Director
- 78 -
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase Agreement
to be executed by their respective officers thereunto duly authorized, as of the
date first written above.
ORSUS SOLUTIONS LIMITED ORSUS SOLUTIONS USA, INC.
By: /s/ Avishai Silvershatz By: /s/ Avishai Silvershatz
--------------------------- ---------------------------
Name: Avishai Silvershatz Name: Orsus Solutions Limited
Title: Director Title: Sole stockholder
Authorized signatory: Avishai Silvershatz
ORSUS SOLUTIONS (ISRAEL) 99 LTD. ORSUS SOLUTIONS UK LIMITED
By: /s/ Avishai Silvershatz By: /s/ Avishai Silvershatz
--------------------------- ---------------------------
Name: Orsus Solutions Limited Name: Orsus Solutions Limited
Title: Sole shareholder Title: Sole shareholder
Authorized signatory: Avishai Authorized signatory: Avishai
Silvershatz Silvershatz
ORSUS USA, LLC
By: /s/ Avishai Silvershatz
---------------------------
Name: Orsus Solutions Limited
Title: Sole members
Authorized signatory: Avishai Silvershatz
- 79 -
Dates Referenced Herein and Documents Incorporated by Reference
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