February 28, 2008
February
28, 2008
FOR
THE SALE AND PURCHASE OF
ENERTEC
SYSTEMS 2001 LTD.
BY
AND BETWEEN
Enertec
Management Ltd. and Xxxxx Xxxx
AND
S.D.S.
(Star Defense Systems) Ltd.
THIS
SHARE PURCHASE AGREEMENT (“this Agreement”)
is
made and entered into as of this 28th
day of
February, 2008 by and among:
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(1)
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Enertec
Management Ltd.
(“Management”)
a private company registered in the State of Israel, company number
00-000000-0,of 27 Hama’apilim Street, Kiryat Ata, an indirect wholly owned
subsidiary of Lapis
Technologies, Inc. (through
Lapis Technologies, Inc.’s holdings
in its fully owned subsidiary, Enertec
Electronics Ltd. (“Electronics”)),
a corporation organized under the laws of the State of Delaware,
the
common stock of which is quoted and traded on the OTC Bulletin
Board under
the symbol LPST.OB. (“Lapis”);
and
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(2)
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Xxxxx
Xxxx
I.D. 068255470, of 00 Xxx-Xxxxxx Xxxxxx, Xxxxxx Xxxxxxxx, Xxxxxx
(“Xxxx”);
and
(Management
and Xxxx shall collectively be
referred to as the “Sellers”
and each a “Seller”)
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(3)
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S.D.S.
(Star Defense Systems) Ltd.
a
public company registered in the State of Israel, company number
00-000000-0, traded on the Tel-Aviv Stock Exchange under the symbol
SDS
(א.ס.ד.ס)
(the “Purchaser”).
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WHEREAS,
Enertec Systems 2001 Ltd. (“Systems")
is a
private company limited by shares, registered in the State of Israel, and
the
Sellers are the legal and beneficial owners of the entire issued share capital
of Systems;
WHEREAS,
the Purchaser desires to purchase from the Sellers, and the Sellers desire
to
collectively sell to the Purchaser, a total of 251,000 ordinary shares with
a
par value of NIS 1 each, comprising the entire outstanding share capital
of
Systems, to be purchased from and sold by each Seller upon the terms and
subject
to the conditions set forth herein; and
WHEREAS,
Systems is active, in the field of design, development and manufacture of
test
systems, airborne, ship borne and land electronic equipment and other various
military systems.
NOW,
THEREFORE, in consideration of the mutual covenants, undertakings and terms
contained in this Agreement and for other good and valuable consideration,
the
parties to this Agreement (the “Parties”)
agree
as follows.
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1.
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INTERPRETATION
& DEFINITIONS
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The preamble
and Schedules
to this
Agreement are an integral part hereof.
In
this
Agreement, the following expressions shall bear the meanings set forth
alongside
them, insofar as such meaning does not contradict the contents or context
thereof:
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1.1.
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1.2.
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“Business”
means the business of Systems as carried out on the date of this
Agreement;
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2
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1.3.
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“Business
Days”
means a day on which banks generally are open in the State of
Israel for
the transaction of normal banking
business;
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1.4.
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“Claim”
means any claim for breach of the Sellers’ Warranties under this
Agreement;
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1.5.
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“Conditions”
means the conditions to Closing set out in Clause 7, and a “Condition” means
any of them;
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1.6.
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“Costs” means
losses, damages, costs (including reasonable legal costs) and
expenses;
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1.7.
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“Due
Diligence Information”
means the due diligence information relating to Systems, Lapis
and its
subsidiaries comprising the correspondence, contracts, agreements,
licences, documents and other information made available to the
Purchaser
and its advisers as listed in the Due Diligence Information Index
attached
to this Agreement;
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1.8.
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“Due
Diligence Information Index”
a
list containing documents and information as provided by the
Sellers to
the Purchaser and/or its advisers in respect of the accounting
and legal
due diligence exercise conducted by the Purchaser and the Investor
on
Systems, Lapis and its subsidiaries and attached hereto as Schedule
1.8;
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1.9.
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“Date
of Closing”
means the 21st
day following the date on which an information statement under
the
Exchange Act (as such term is defined in the Lapis SPA) is mailed
to the
shareholders of Lapis, provided that all Conditions have been
fulfilled or
waived in writing, where relevant by the Sellers or Purchaser,
in
accordance with the terms of this Agreement, and on which the
Closing
shall take place;
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1.10.
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“Disclosure
Letter”
means Schedule
1.8,
the Schedules to clause 3 (save for Schedule
3.3.1)
and Schedule
7.3.1
to
this Agreement;
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1.11.
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“Encumbrance”
means any form of security interest over securities including,
but not
limited, to any lien, mortgage, pledge, charge, title retention,
right to
acquire, hypothecation, option or right of first refusal over
securities;
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1.12.
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“Governmental
Entity”
means, in relation to anywhere in the world, any supra-national,
national,
state, municipal or local government (including any subdivision,
court,
administrative agency or commission or other authority thereof)
or any
quasi-governmental or private body exercising any regulatory,
taxing,
importing or other governmental or quasi-governmental
authority;
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1.13.
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“Investor” means,
Xxxxxxxxx Xxxxxxx, I.D. 30458954, of 00 Xxxxxx Xxxxxx, Ra’anana,
Israel;
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1.14.
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“Longstop
Date”
means the Date of Closing;
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1.15.
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“Material
Adverse Effect”
means such event, change or effect, which is materially adverse
to the
prospects, consolidated financial condition, business or results
of
operations of Systems, for the purposes of this Agreement, material
shall
be deemed any single or series of connected occurrences, actions
and/or
transactions amounting to an amount that is equal to or greater
than 5 per
cent of Systems’ revenues over the year
2007;
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3
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1.15.1.
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“Sellers’
Bank Account”
means the escrow account maintained by Sellers’ legal counsel, Balter,
Guth, Aloni & Co., the details of which will be provided prior to
Closing;
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1.16.
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“Surviving
Provisions”
means Clauses 9.3, 9.5, 9.6 and 9.16 of this
Agreement;
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1.17.
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“Third
Party Assurances”
means all guarantees, indemnities, counter-indemnities and letters
of
comfort of any nature whatsoever given to a third party by Xxxx
and/or Xx.
Xxx Xxxx and/or Electronics in respect of any obligation or liability
of
Systems or Lapis, for the avoidance of doubt, the above shall
include all
guarantees, obligations and/or liabilities of any nature whatsoever
either
Xxxx and/or Xx. Xxx Xxxx and/or Electronics may have, from time
to time,
towards any bank associated with the business and/or activities
of Systems
and/or Lapis; and
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1.18.
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“Transaction
Documents”
means this Agreement, the Lapis SPA (as such term is defined
below in
Clause 7), the Escrow Agreement (as such term is defined in the
Lapis
SPA), the Electronics SPA (as such term is defined below in Clause
7), the
Due Diligence Information, the Disclosure Letter and any other
Agreed Form
Documents.
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2.
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PURCHASE
OF PURCHASED SHARES, PURCHASE PRICE,
CLOSING
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2.1.
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Purchase
of Purchased Shares and Purchase
Price
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2.1.1.
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Subject
to and in accordance with the terms and conditions hereof and in
reliance
upon the representations, warranties, covenants
and agreements contained herein, at Closing (as defined below)
and
effective from Closing, the Sellers shall sell to the Purchaser,
and the
Purchaser shall purchase from the Sellers a total of 251,000 ordinary
shares, nominal value 1.00 New Israeli Shekel (“NIS”)
per share, comprising the entire outstanding and issued share capital
of
Systems owned by the Sellers (the “Purchased
Shares”)
free from all Encumbrances, for an aggregate purchase price equal
to one
million five
hundred thousand U.S. Dollars (US$
1,500,000)
(the "Purchase
Price").
The Purchaser shall purchase such number of Purchased Shares from
each of
the Sellers and pay such portion of the Purchase Price to each
of the
Sellers in accordance with the following
terms:
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2.1.1.1.
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the
Purchaser shall purchase from Xxxx 67,770 of the Purchased Shares,
being
27% of the issued share capital of Systems in consideration for
an amount
equal to four hundred five thousand US Dollars (US$405,000);
and
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2.1.1.2.
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the
Purchaser shall purchase from Management 183,230 of the Purchased
Shares,
being 73% of the issued share capital of Systems in consideration
for an
amount equal to one million ninety five thousand US Dollars
(US$1,095,000).
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2.2.
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Payment
of the Purchase Price
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The
Purchase Price shall be paid in cash at Closing in US$ or in NIS according
to
the last known official
US$/NIS exchange rate as published by the Bank of Israel on the day immediately
prior to Closing, and shall be paid to each Seller as indicated opposite
such
Seller’s name in Schedule
2.2
attached
hereto in accordance with the stipulations set out in Clause 9.1.
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2.3.
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Closing;
Deliveries
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2.3.1.
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Completion
of the sale and purchase of the Purchased Shares in accordance
with the
provisions of this Agreement (the "Closing")
shall take place on the 21st
day following the date on which an information statement under
the
Exchange Act is mailed to the shareholders of Lapis at 10:00 AM
at the
offices of Shnitzer, Xxxxxxx & Co., 7 Xxxxxxxx Xxxxx Road, Ramat-Gan
52681, or such other place as the Parties may agree, provided that
all
Conditions as stipulated in Clause 7 will have been fulfilled or
waived in
accordance with this Agreement.
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2.3.2.
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At
Closing, each of the Sellers and the Purchaser shall deliver or
perform
(or procure the delivery or performance) of all those documents,
items and
actions respectively listed in relation to that Party set out in
Schedule
2.3.2
and all of the above documents, items and actions shall be deemed
to be
delivered or take place simultaneously and no document, item and
action
shall be deemed to have been completed or delivered until all have
been
completed and delivered or waived.
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2.3.3.
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If
the Sellers or the Purchaser fail or are unable to perform any
of their
respective closing obligations as set out in Schedule
2.3.2,
which are required to be performed by them on or before Closing,
and
whichever of the Sellers or the Purchaser is the defaulting Party,
such
Party shall be referred to as the “Defaulting
Party”
and the other the “Non-Defaulting
Party”,
the Non-Defaulting Party shall not be obliged to complete the sale
and
purchase of the Purchased Shares and may, in its absolute discretion,
by
written notice to the Defaulting
Party:
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2.3.3.1.
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elect
to defer Closing by not more than twenty (20) Business Days after
the
original date for Closing to such other date as it may specify
in such
notice (in which event the provisions of this Clause 2.3.3.1 shall
apply,
mutatis mutandis, if any of the Sellers or the Purchaser fails
or is
unable to perform any of its closing obligations as set out in
Schedule
2.3.2
on
such other date);
or
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2.3.3.2.
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elect
to complete Closing and the sale and purchase of the Purchased
Shares on
that date and: (i) specify a further date (not being more than
twenty (20)
Business Days after the original date for Closing) on which the
Defaulting
Party shall be obliged to complete its outstanding obligations;
and/or (ii) waive all or some of the obligations contained in Schedule
2.3.2
at
its discretion.
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3.
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REPRESENTATIONS
AND WARRANTIES OF SELLERS
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3.1.
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Each
of the Sellers, jointly and severally, hereby represents and warrants
to
the Purchaser and acknowledges that the Purchaser is entering into
this
Agreement in reliance thereon, as follows at the date hereof (the
“Sellers’
Warranties”).
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3.2.
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The
Sellers’ Warranties are given subject to and are qualified
by:
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3.2.1.
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any
matters fairly disclosed by or under this Agreement, any Transaction
Document, the Disclosure Letter, any document contained in the
Due
Diligence Information or any other information provided in writing
to the
Purchaser or its advisers during the course of any investigation
by or on
behalf of the Purchaser into the affairs of Systems, Lapis or any
of its
subsidiaries; and
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3.2.2.
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the
other limitations and qualifications set out in this Clause 3 and
in
Schedule
3.3.1.
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3.3.
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The
Purchaser acknowledges and agrees
that:
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3.3.1.
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any
Claims shall be subject to the limitations on liabilities and other
provisions set out in Schedule
3.3.1;
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3.3.2.
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the
Sellers’ Warranties are the only warranties or representations of any kind
given by or on behalf of the Sellers on which the Purchaser may
rely in
entering into this Agreement; and
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3.3.3.
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at
the time of entering into this Agreement, the Purchaser is not
aware of
any facts or circumstances which are likely to result in a Claim
being
made against the Sellers
or any misrepresentation by or on behalf of the Sellers in connection
with
any of the Transaction Documents.
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3.4.
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Authorization;
Binding Authority;
Enforceability
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3.4.1.
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This
Agreement has been duly executed and delivered by each of the
Sellers, and
constitutes a legal, valid and binding obligation of each of
the Sellers,
enforceable against it in accordance with its
terms.
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3.4.2.
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The
execution of this Agreement by the Sellers and the consummation
of the
transaction contemplated herein by the Sellers will not constitute
a
breach of any agreement, other than where such breach would not
have a
Material Adverse Effect, to which the Sellers are parties and
will not
trigger any right of first refusal, tag-along rights or pre-emptive
rights
in respect of the Purchased
Shares.
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3.5.
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Ownership;
Title to Purchased Shares
Each Seller is the owner of the number of Purchased Shares indicated
opposite such Seller’s name in Schedule
2.2
attached hereto. Each Seller represents and warrants that at Closing,
such
Seller shall deliver to the Purchaser good title to all of its
respective
Purchased Shares to be sold to the Purchaser hereunder, free and
clear of
any Encumbrance, subject to fulfillment of the Condition in Clause
7.3
(“Guarantees and other Third Party
Assurances”).
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3.6.
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No
Violations
To
the best knowledge of the Sellers, the execution, delivery and
performance
by the Sellers of this Agreement will not: (i) violate any applicable
law,
other than where such breach would not have a Material Adverse
Effect; or
(ii) result in the breach of any agreement or license to which
Systems is
a party, other than where such breach would not have a Material
Adverse
Effect; or (iii) require Systems to obtain any consents or approvals
from
any Governmental Entity, save for approval in principle to be obtained
from the Israeli Investment Center.
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3.7.
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No
Subsidiaries
Systems has no subsidiaries, and does not own, of record or beneficially,
directly or indirectly, any interest or share capital or equity
interest
in any other corporation, association, partnership, joint venture
or other
business entity.
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3.8.
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Inter-Entity
Indebtedness
All Inter-Entity Indebtedness (as defined below) shall have been
repaid,
or waived, by and to Systems, Xxxx, Lapis and its subsidiaries
in full
prior to Closing. Inter-Entity Indebtedness means all indebtedness
and
sums owed as at Closing by or to and between one or more of the
following:
Xxxx, Systems, Electronics, Management and Lapis, including, but
not
limited to the information contained in Schedule
3.8
per the date of this Agreement. Given the nature of the Inter-Entity
Indebtedness set out in Schedule
3.8,
which will be subject to changes in the ordinary course of business
from
time to time, Schedule
3.8
will be amended and updated immediately prior to
Closing.
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3.9.
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Organization
and Standing
Systems is a corporation duly organized and validly existing
under the
laws of the State of Israel. Systems has all requisite corporate
power to
own and operate its properties and assets, and to carry on its
business as
presently conducted, save for where such would not have a Material
Adverse
Effect. Systems has not taken any action or failed to take any
action,
which action or failure would preclude or prevent Systems from
conducting
its business after the execution of this Agreement in the manner
conducted
on the date of the this Agreement, save for where such would
not have a
Material Adverse Effect. Systems has all permits, licenses and
any similar
authority necessary for the conduct of its Business, including
the
required business license from the municipality of Carmiel, the
lack of
which could have a Material Adverse Effect on the Business, properties,
prospects or financial condition of Systems. Systems is not in
default
under any of such permits, licenses, or other similar authority,
which
default would have a Material Adverse
Effect.
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3.10.
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Incorporation
Documents
No
act has been effected by Systems and/or its shareholders to amend
Systems’
articles of association in a manner which would alter the form
thereof as
disclosed to the Purchaser in the Due Diligence Information and/or,
to
Systems’ knowledge, to wind up Systems and/or to have it struck out from
the Israeli Registrar of Companies’ records.
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3.11.
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Capitalization
Systems' authorized share capital, immediately prior to Closing,
shall be
287,700 shares, divided into 287,700 ordinary shares with a par
value of
NIS 1 each (“Ordinary
Shares”).
Systems' issued and outstanding share capital immediately prior
to Closing
shall consist of 251,000 Ordinary Shares, all of which are duly
authorized
and validly issued, are fully paid and
non-assessable.
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3.12.
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Outstanding
Debt
Except as set forth in Schedule
3.12
Systems has no outstanding loans, and is not a guarantor of any
debt or
monetary obligation. Given the nature of the information set forth
in the
Schedule
3.12,
which will be subject to changes in the ordinary course of business
from
time to time, Schedule
3.12
will be amended and updated immediately prior to Closing to contain
information in respect of all outstanding loans and guarantees
granted by
Systems for any debt or obligation immediately prior to Closing.
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3.13.
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Taxes
Systems has timely filed all tax returns and tax reports required
by
applicable laws including, inter alia, the report for the tax year
2006.
All tax returns and reports of Systems were true and correct in
all
material respects and did not contain any outstanding issues when
filed
and Systems has paid all taxes and other assessments due. If Systems’ tax
returns and tax reports filed up to the date of this Agreement
will be
challenged by the Israeli tax authorities in the event of a tax
audit no
additional tax liabilities will be imposed on Systems. For the
purpose of
this clause “additional tax liabilities” shall mean tax liabilities, which
were not provided for in System’s financial statements or not disclosed in
any of the Transaction Documents (other than the potential tax
exposures
set out in Schedule
3.13)
or not contemplated under Systems’ tax returns of tax reports. To Systems’
knowledge, it made, where such could reasonably be required, the
proper
provisions in its financial statements with respect to any taxes
that are
due but not yet paid by Systems.
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3.14.
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Contracts
and Contractual Arrangements
To
Systems’ knowledge, Systems is, save for breaches or defaults that would
not have a Material Adverse Effect, not in default under any note,
indenture, mortgage, lease, agreement, contract, purchase order
or other
instrument, document or agreement to which Systems is a party or
by which
it or any of its property is bound or affected. To Systems’ knowledge and
save where such would not have a Material Adverse Effect, no third
party
is in material default under any agreement, contract or other instrument
or document to which Systems is a party or by which it or any of
its
property is affected. A list of all outstanding orders obtained
by Systems
during the year to date, is attached hereto as Schedule
3.14.1.
Except as detailed in Schedule
3.14.2,
there is no contract, license, commitment or undertaking to which
Systems
is a party that will be in effect after Closing: (i) that prohibits
or
substantially restricts Systems from freely engaging in any business
in
any part of the world; or (ii) obligating Systems to share, license
or
develop any product or technology.
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3.15.
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Indebtedness
of or to Major Shareholders; Conflicts of
Interest
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3.15.1.
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Except
as detailed in Schedule
3.15.1
or
Schedule
3.12,
none of Systems' affiliates, holders of ten percent (10%) or
more of
Systems’ share capital on a fully diluted basis (a “Major
Shareholder”),
directors, key officers or key employees is indebted to Systems,
other
than in the ordinary course of business or in an amount that
does not
exceed NIS 10,000, and Systems has no debt or obligation to any
of
them.
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3.15.2.
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To
the best of Systems' knowledge, except for Lapis and the directors,
officers, employees and consultants of Lapis, none of Systems'
affiliates,
directors, key officers or key employees, engages in any activity
which
competes with Systems, or directly or indirectly, owns any interest
in any
entity which is a competitor of Systems. For the avoidance of
doubt, the
business conducted by Electronics, is deemed to be an activity
that does
not compete with Systems.
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3.15.3.
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Save
for the matters disclosed in the Transaction Documents, to the
best of
Systems’ knowledge, none of Systems' affiliates, Major Shareholders,
directors, key officers or key employees: (i) has any interest
in the
assets, technology or know-how used or held by Systems or which
is
material for Systems to operate its business; (ii) is a party
to any
contract or business arrangement with Systems or any contract
affecting
the assets, technology or know-how used or held by Systems or
which is
material for Systems to operate its business; or (iii) has any
interest in
any other transaction related to the assets, technology or know-how
used
or held by Systems or which is material for Systems to operate
its
business.
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3.16.
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Litigation
Except as detailed in Schedule
3.16,
there are no civil, criminal or arbitration proceedings involving
Systems.
To Systems' knowledge, no such proceedings and no claims of any
nature are
pending or threatened in writing against Systems or the officers
or
directors of Systems, in their capacity as such, and to Systems’
knowledge, there are no facts likely to give rise to any such
proceedings.
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3.17.
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Title
to Properties
Systems owns, or holds under lease, all real estate and assets
used by it
and which are material to the Business. Schedule
3.17
contains a correct and complete list of all leases under which
Systems
leases real estate property or assets material to the
Business.
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3.18.
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Compliance
with Other Instruments
Save where such would not have a Material Adverse Effect: (i) Systems
is
not in violation of the terms of its articles of association as
amended
and in effect on and as of the date hereof; and (ii) it is not
to its
knowledge, in any violation of the terms of any judgment, decree,
order,
statute, rule or regulation to which it is
subject.
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3.19.
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Employees;
Directors and Major
Shareholders
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3.19.1.
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Schedule
3.19.1
contains a complete and accurate list of all employees of Systems.
If and
to the extent required due to changes in the list contained in
Schedule
3.19.1
prior to Closing, Schedule
3.19.1
will be amended and updated immediately prior to Closing to contain
a
complete and accurate list of all employees of Systems immediately
prior
to Closing.
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3.19.2.
|
To
Systems’ knowledge, no key employee, key officer, or director (each, a
"Representative"
and collectively, the "Representatives")
is a party to, or otherwise bound by, any agreement or arrangement
(including any confidentiality, non-competition, proprietary rights
agreement, licenses, covenants or commitments of any nature), between
such
Representative and any other person, or subject to any order or
any other
restriction that in any way materially adversely affects the performance
of such Representative’s duties as an employee, officer or director of
Systems. From 31 December 2007 none of Systems’ directors, key officers,
or key employees has informed Systems that he intended to terminate
his
employment with it.
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3.19.3.
|
The
severance pay provisions and contributions made in respect of employees
of
Systems on the date of this Agreement, who were employed by Electronics
prior to their employment by Systems (the “Original
Period”),
were sufficient to meet any liabilities for the payment of severance
pay
to such employees under the Severance Pay Law 5723 - 1963, as in
effect on
the date of the Original Period and in respect of the period of
employment
of such employees by Electronics before the commencement of employment
by
Systems. The above warranty shall not apply in respect to Xx. Xxx
Xxxx.
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3.20.
|
Labor
Relations; Compliance
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3.20.1.
|
Systems
is not bound by or subject to any contracts, commitments or arrangements
with any labor union.
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3.20.2.
|
Systems
has complied in all material respects with all material legal requirements
relating to employment, wages, hours, benefits, the payment of
social
security and similar taxes and occupational safety and
health.
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3.20.3.
|
Systems
does not have any labor relations problem pending, or to the knowledge
of
Systems, threatened and its labor relations are
satisfactory.
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3.20.4.
|
All
present key employees of Systems and directors of Systems who materially
contributed to the development of the Business, have entered into
a
written agreement with Systems, under which all copyrights on any
invention or patents invented by one of the above in the framework
of his
or her service with Systems and during the term of his engagement
with
Systems, belong solely to Systems.
|
9
|
3.21.
|
Licenses,
Patents, Trademarks
|
|
3.21.1.
|
For
purposes of this Agreement, “Intellectual
Property” means
the following items of intangible and tangible
property:
|
|
3.21.1.1.
|
Patents,
whether in the form of utility patents or design patents and
all pending
applications for such patents;
|
|
3.21.1.2.
|
Trademarks,
trade names, service marks, rights in designs, logos, trade dress,
and
trade styles, whether or not registered, and all pending applications
for
registration of the same; and
|
|
3.21.1.3.
|
Copyrights,
whether or not registered, and all pending applications for registration
of the same.
|
|
3.21.2.
|
So
far as the Sellers are aware, Systems has good title to and/or
ownership
of, and/or valid and enforceable licenses to use all of its Intellectual
Property that can be registered for ownership or requires licensing
and
which is used in the conduct of the Business, save for where such
would
not have a Material Adverse Effect. A list of all such licenses,
other
than licenses for off-the-shelf products, and registered ownership
of
Intellectual Property, is attached hereto as Schedule
3.21.2.
|
|
3.21.3.
|
Systems
has, save where such would not have a Material Adverse Effect,
taken
reasonable security measures, including measures against unauthorized
disclosure, to protect the secrecy, confidentiality and value of
its trade
secrets and other confidential technical
information.
|
|
3.21.4.
|
To
Systems' knowledge, the use of Systems’ Intellectual Property in the
Business, does not constitute an infringement, misappropriation
or misuse
of any intellectual property rights of any third party. There are
no
claims pending and, to Systems' knowledge, no claims threatened
in writing
against Systems or its directors regarding the use of, or challenging
or
questioning Systems' right or title in Systems’ Intellectual Property or
the use of it.
|
|
3.21.5.
|
Except
as set forth in Schedule
3.21.5,
Systems has no registered patents, trademarks and copyrights,
pending
applications for registration of patents, trademarks and
copyrights.
|
|
3.21.6.
|
Systems’
Intellectual Property rights as set forth in Schedules
3.21.2
and 3.21.5
is, in combination with certain off-the-shelf products to which
it has a
license, the required Intellectual Property to enable Systems to
carry on
its Business.
|
|
3.22.
|
Financial
Reports
|
A
true
and complete copy of the audited, consolidated financial statements of Systems
audited by Systems' external accountants prepared in accordance with generally
accepted accounting principles applied consistently with prior periods, for
the
year ended December 31, 2007, will be provided to the Purchaser upon Closing
(the “Yearly
Financial Statements”);
a
trial balance sheet for the period ended 3 days prior Closing, will be provided
to the Purchaser upon Closing (the "Trial
Balance").
The
Yearly Financial Statements will have been prepared in conformity with generally
accepted accounting principles in Israel (except: (i) as may be otherwise
indicated in the Yearly Financial Statements or the notes thereto; or (ii)
in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements). The Financial Statements
and the Trial Balance present fairly in all material respects the financial
condition, the results of operations, changes in shareholders' equity and
cash
flow of Systems as of such date and for the periods referred to in such Yearly
Financial Statements and in the Trial Balance, subject, in the case of unaudited
statements, to normal year-end audit adjustments.
10
|
3.22.1.
|
Other
than as disclosed in the Yearly Financial Statements and in the
Trial
Balance, Systems has no financial liabilities, debts or financial
obligations, whether accrued, absolute or contingent, which are
required
to appear in the Yearly Financial Statements and in the Trial Balance
in
accordance with generally accepted accounting
principles.
|
|
3.22.2.
|
Except
as set forth in the Yearly Financial Statements, since September
30, 2007
and until the date of this Agreement, Systems has not consummated
any of
the following: (i) a merger with or an acquisition of a company;
(ii) a
transaction which represents a sale of five percent (5%) of Systems’
activities during the fourth fiscal quarter of 2007; (iii) created
or
extended any credit facility, other than in the ordinary course
of
business; and (iv) a transaction which is out of the ordinary course
of
business of Systems.
|
|
3.22.3.
|
System’s
minute books, share record books, and other statutory records
of Systems
are correct in all material
respects.
|
|
3.23.
|
Title
to Property and Assets
Except as set forth in Schedule
3.23
or
as otherwise disclosed in the Transaction Documents, Systems owns
or
leases its property and assets, which are material to the Business,
free
and clear of all Encumbrances. With respect to the material property
and
assets it leases or licenses, which are material to the Business,
Systems
is in compliance with all applicable material terms of the lease
or
license agreements.
|
|
3.24.
|
To
Systems’ knowledge, all of the material property and assets used by
Systems in the operation of its Business are in good operating
condition
and are in the state of good repair and maintenance, subject to
normal
wear and tear.
|
|
3.25.
|
Governmental
Consents
No
consent, approval, or authorization of, or registration, or filing
with,
any Israeli Governmental Entity on the part of Systems is required
in
connection with the valid execution and delivery of this Agreement
that
will not be obtained prior to
Closing.
|
|
3.26.
|
Insurance Schedule
3.26
hereto lists all policies of insurance to which Systems is a party.
Such
policies are valid, outstanding, and enforceable, and taken together,
they
provide adequate insurance coverage against such risks and in such
amounts
as the management of Systems believes to be prudent and customary
in the
businesses in which Systems is
engaged.
|
|
3.27.
|
Suppliers
Except as set forth in Schedule
3.27
hereto, Systems does not rely on any sole supplier for the purchase
of any
material used by Systems in its Business. Such material is freely
available for purchase by Systems in the market from multiple
suppliers.
|
|
3.28.
|
Disclosure This
Agreement does not contain any untrue statement of a material fact
and
does not omit to state any material fact, the omission of which
causes the
statement from which it was omitted to become materially untrue,
materially inaccurate or materially
misleading.
|
11
|
3.29.
|
Warranties
Each of the Sellers’ Warranties shall be separate and independent and save
as expressly provided to the contrary in this Agreement or any
of the
Transaction Documents: (i) shall not be limited by reference to
or
inference from any other Sellers’ Warranty; or (ii) anything else in this
Agreement.
|
|
4.
|
REPRESENTATIONS
AND WARRANTIES OF
PURCHASER
|
The
Purchaser makes the following representations and warranties to each of the
Sellers jointly and severally and acknowledges that each of the Sellers is
entering into this Agreement in reliance thereon, as follows at the date
hereof
(the “Purchaser’s
Warranties”).
|
4.1.
|
Organization
|
The
Purchaser is a company duly organized and validly existing under the laws
of the
State of Israel and has full power to conduct its business as conducted at
the
date of this Agreement.
|
4.2.
|
Authorization;
Binding Authority;
Enforceability
|
|
4.2.1.
|
Subject
to obtaining the consents and approvals as per Clause 7 below prior
to
Closing, the Purchaser has full corporate power and authority to
execute
and deliver this Agreement, it has obtained all applicable governmental,
statutory, regulatory or other consents, licences, authorisations,
waivers
or exemptions required to empower it to enter into and to perform
its
obligations under this Agreement, to effect Closing and consummate
the
transactions contemplated under this Agreement and any other Transaction
Document to which it is (or is proposed to be) a party, including,
but not
limited to, the purchase of the Purchased Shares from the Sellers
pursuant
to the provisions of this
Agreement.
|
|
4.2.2.
|
This
Agreement once executed and delivered by the Purchaser, shall constitute
the legal, valid and binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its
terms.
|
|
4.2.3.
|
Entry
into and performance by the Purchaser of this Agreement and/or
any
Transaction Document to which it is a party, will not violate or
conflict
with the provisions of its memorandum and articles of association
in any
way that would materially adversely affect its ability to enter
into or
perform its obligations under this Agreement and/or any Transaction
Document to which it is a party.
|
|
4.2.4.
|
Subject
to fulfillment of the Conditions, neither entry into this Agreement
nor
entry into, and implementation of, the transactions contemplated
under
this Agreement or any of the Transaction Documents to which it
is (or is
proposed to be) a party, will:
|
|
4.2.4.1.
|
result
in violation or breach of any applicable laws or regulations in
any
relevant jurisdiction;
|
12
|
4.2.4.2.
|
amount
to a violation or default with respect to any statute, regulation,
order,
decree or judgment of any court or any governmental or regulatory
authority in any jurisdiction; or
|
|
4.2.4.3.
|
result
in a breach of, or give rise to a default under, any contract or
other
instrument,
|
by
the
Purchaser, which, in each case, would materially and adversely affect its
ability to enter into or perform its obligations under this Agreement and/or
any
Transaction Document to which it is a party.
|
4.2.5.
|
No
order has been made, petition presented or meeting convened for
the
winding up of the Purchaser or any of its direct or indirect holding
companies or subsidiaries, or for the appointment of any provisional
liquidator.
|
|
4.2.6.
|
So
far as the Purchaser is aware, the Purchaser is not subject to
any order,
judgment, direction, investigation or other proceedings by any
Governmental Entity, which will, or are reasonably likely to, prevent
or
delay the fulfillment of any of the
Conditions.
|
|
4.2.7.
|
The
Purchaser has available cash which will at Closing provide in immediately
available funds the necessary cash resources to pay the Purchase
Price and
meet its other obligations under this
Agreement.
|
|
5.
|
NO
RIGHTS OF RESCISSION OR
TERMINATION
|
The
sole
remedy of the Purchaser for any breach of any of the Sellers' Warranties
or any
other breach of this Agreement or any Transaction Document by the Sellers
shall
be an action for damages. The Purchaser shall not be entitled to rescind
or
terminate this Agreement in any circumstances whatsoever.
|
6.
|
COVENANTS
|
|
6.1.
|
Fairness
Opinion
The Purchaser shall have received a fairness opinion in Agreed
Form by an
independent investment bank or consulting firm, validating the
Purchase
Price, to be provided prior to
Closing.
|
|
6.2.
|
Employment
Agreement Avni
An
employment agreement in respect of Xx. Xxx Xxxx’x employment as CEO of
Systems, in Agreed Form attached hereto as Schedule
6.2,
shall have been entered into between Xx. Xxxx and Systems prior
to
Closing.
|
|
6.3.
|
Third
Party Assurances
|
|
6.3.1.
|
The
Sellers shall have received, prior to Closing, a letter by Bank
Leumi and
a letter by Bank Hapoalim (each a “Bank”
and collectively the “Banks”),
in the Agreed Form to be attached hereto prior to Closing as Schedules
6.3.1 and
6.3.2
in
which the Banks provide their consent to: (i) the Closing and consummation
of the Transactions contemplated in the Transaction Documents;
and (ii)
release Xxxx, Xx. Xxx Xxxx and Electronics form all Third Party
Assurances
per the Closing.
|
|
6.3.2.
|
Notwithstanding
any other provision of this Agreement or any of the Transaction
Documents,
the Purchaser shall procure that if the Condition set out in Clause
7.3
“Guarantees and other Third Party Assurances Closing” will have been
waived, and Closing will have become effective, it shall comply
with its
obligations under the above clause notwithstanding such waiver
and upon
the waiver of such Condition, the provisions thereof shall become
a post
Closing covenant.
|
13
|
6.4.
|
Corporate
Action
The Purchaser’s board of directors and the audit committee thereto shall
have passed prior to Closing all relevant resolutions required
in order to
approve the proposed transaction under, and the entry by the Purchaser
into, this Agreement.
|
|
7.
|
CONDITIONS
TO CLOSING
|
Closing
shall be conditional on fulfillment at or before the Date of Closing of the
following conditions precedent. The Conditions set out in Clauses 7.1.2 and
7.3 may only be waived by written notice from Xxxx, the Conditions set out
in
Clauses 7.1.1, 7.1.3 and 7.1.4 may be only waived by written notice from
the Purchaser and the Conditions set out in Clause 7.2 shall automatically
be waived if: (i) all conditions in the Lapis SPA shall have been fulfilled
or
waived, save for the conditions in Clause 12.1 of that agreement in respect
of
the closing of the Electronics SPA and the closing of this Agreement; and
(ii)
all conditions in the Electronics SPA shall have been fulfilled or waived,
save
for the conditions in Clause 6.1.1 and 6.1.7 of that agreement in respect
of the
closing of Lapis SPA and the closing this Agreement.
|
7.1.
|
Consents
|
|
7.1.1.
|
The
Sellers shall have delivered to the Purchaser all third party permits,
consents and authorizations set out in Schedule
7.1.1
required in order to: (i) consummate the transactions contemplated
by this
Agreement; and (ii) continue the Business, which shall be effective
on and
as of Closing (the “Sellers
Conditions”).
|
|
7.1.2.
|
The
shareholders of the Purchaser shall have passed the relevant resolutions
required in order to approve the proposed transaction under, and
the entry
by the Purchaser into, this
Agreement.
|
|
7.1.3.
|
The
shareholders of Lapis and Management shall have passed the relevant
resolutions required in order to approve the proposed transaction
under,
and the entry by Management into, this Agreement, including, but
not
limited to an information statement under the Exchange Act having
been
filed with the SEC and mailed to the shareholders of Lapis in respect
of
the Lapis SPA (as defined below) and a period of 20 days having
passed
from the date of mailing such information statement to the shareholders
of
Lapis.
|
|
7.1.4.
|
The
balance sheet item ‘total stockholders equity’ as featured on Systems’
balance sheet audited by Systems' external accountants prepared
in
accordance with generally accepted accounting principles, for the
year
ended December 31, 2007, shall not be lower than NIS
4,000,000.
|
|
7.2.
|
Consummation
of Additional Transactions Under Documents in Agreed
Form
|
|
7.2.1.
|
A
transaction between the Investor, Xxxx and Lapis, dated on or about
the
date of this Agreement, in which Lapis will, inter alia, issue
75,129,500
shares of Lapis to the Investor for the consideration of 4,539,557
shares
in Star Night Technologies Ltd., an Israeli public company whose
shares
are registered for trading on the Tel Aviv Stock Exchange, shall
have been
entered into and all conditions precedent therein shall have been
fulfilled or waived (the “Lapis
SPA”).
|
14
|
7.2.2.
|
A
transaction between Xxxx and Lapis, dated on or about the date
of this
Agreement, in which Xxxx or a company wholly owned by Xxxx shall
acquire
the entire share capital of Enertec Electronics Ltd., a wholly
owned
subsidiary of Lapis, shall have been entered into and all conditions
precedent therein shall have been fulfilled or waived (the “Electronics
SPA”).
|
|
7.3.
|
Guarantees
and other Third Party
Assurances
|
|
7.3.1.
|
The
Purchaser shall procure that at Closing Xxxx and Xx. Xxx Xxxx are
released
in full from all Third Party Assurances given by Xxxx or/or Xx.
Xxx Xxxx,
including, but not limited to the Third Party Assurances listed
in
Schedule
7.3.1.
Given the nature of the Business, the Third Party Assurances set
forth in
the Schedule
7.3.1
are, from time to time, subject to changes in the ordinary course
of
business and, therefore, Schedule
7.3.1
will be amended and updated immediately prior to
Closing.
|
|
7.3.2.
|
Without
prejudice to Clause 7.3.1 above:
|
|
7.3.2.1.
|
the
Purchaser shall use its reasonable endeavours to procure that,
as soon as
reasonably practicable after becoming aware of any Third Party
Assurance
not released upon Closing in respect of any obligations of Systems,
Xxxx
and/or Xx. Xxx Xxxx are released in full from such Third Party
Assurance;
and
|
|
7.3.2.2.
|
pending
release of any Third Party Assurance, the Purchaser undertakes
to
indemnify Xxxx and/or Xx. Xxx Xxxx against any and all Costs arising
under
or by reason of that Third Party
Assurance.
|
|
7.4.
|
Termination
|
|
7.4.1.
|
If
any of the Conditions has not been fulfilled (or waived in accordance
with
this Clause 7 on or before the Longstop Date, this Agreement (other
than
the Surviving Provisions) shall automatically terminate, unless
otherwise
agreed by the Parties. In such event, no Party shall have any claim
under
this Agreement of any nature whatsoever against any other Party
(except in
respect of any rights and liabilities which have accrued before
termination or in relation to any of the Surviving
Provisions).
|
|
8.
|
POST
CLOSING COVENANTS
|
|
8.1.
|
Xxxx'x
Liability to On Going Projects and General
Cooperation
|
At
the
request of the Purchaser, Xxxx shall employ his reasonable efforts in order
to
transfer his role as a director and CEO of Systems to a newly appointed
management to be appointed by the Purchaser and in order to facilitate the
successful performance of the projects in which Systems shall be engaged
in at
Closing for a period not exceeding 30 Business Days immediately succeeding
Closing. It is hereby clarified that this assistance during the above period
shall be rendered by Xxxx for no further consideration other than his share
in
the Purchase Price.
15
|
8.2.
|
Release
of Guarantees and other Third Party Assurances
In
the event that, notwithstanding
that the Condition set out in Clause 7.3 will have been waived
and Closing
will have become effective, Xxxx
and/or Xx. Xxx Xxxx shall not have been released from
any and all Third Party
Assurances per the Closing, then the Purchaser will take promptly
all
action required and/or necessary to fulfill the conditions set
out
in Schedules
6.3.1 and
6.3.2
to
release Xxxx and/or Xx. Xxx Xxxx from any and all Third Party
Assurances from which they were not released per the date of
Closing.
|
|
8.3.
|
Indemnification
If
the Purchaser becomes aware of any claim or potential claim by
a third
party (“a
third party claim”)
which might result in a Claim being made, the Purchaser
shall:
|
|
8.3.1.
|
promptly
(and in any event within 30 days of it becoming aware of it) give
notice
of such third party claim to the Sellers and procure that the Sellers
are
given all reasonable facilities to investigate
it;
|
|
8.3.2.
|
not
make any admission of liability, agreement or compromise with any
person,
body or authority in relation to that third party claim without
prior
written approval of each of the
Sellers;
|
|
8.3.3.
|
subject
to the Purchaser being indemnified by the Sellers against all reasonable
out of pocket costs and expenses incurred in respect of that third
party
claim;
|
|
8.3.4.
|
take
such action as the Sellers may reasonably request to avoid, resist,
dispute, appeal, compromise or defend such third party
claim;
|
|
8.3.5.
|
allow
the Sellers to take over the conduct of all proceedings and/or
negotiations of whatsoever nature arising in connection with the
third
party claim in question; and
|
|
8.3.6.
|
provide
such information and assistance as the Sellers may reasonably require
in
connection with the preparation for and conduct of any proceedings
and/or
negotiations relating to that third party
claim.
|
|
8.4.
|
Claims
If
the Purchaser makes a Claim against the Sellers or notifies the
Sellers of
any third party claim which might lead to such a Claim being made,
the
Purchaser shall
make available to accountants and other representatives appointed
by the
Sellers such access to the personnel, records and information of
Systems
as the Sellers reasonably request in connection with such Claim
or third
party claim.
|
|
8.5.
|
The
Purchaser may rely fully, subject to the terms of this Agreement,
upon all
of the Sellers’ Warranties.
|
|
8.5.1.
|
The
Sellers’ obligations in accordance with this clause are joint and several
and the Purchaser shall be entitled to address a Claim, to any
one of the
Sellers, at his discretion.
|
|
8.5.2.
|
Subject
to the terms of this Agreement, the Sellers agree to indemnify,
defend and
hold harmless the Purchaser and its successors and assigns from
and
against all proven Costs arising out of in respect of any breach
of any of
the Sellers’ Warranties in accordance with and subject to the stipulations
set forth in this Agreement.
|
16
|
9.
|
MISCELLANEOUS
|
|
9.1.
|
Payments
Any payment to be made pursuant to this Agreement by the Purchaser
shall
be made to each of the Sellers’ Bank Account in immediately available
funds by electronic transfer in US$ or in NIS in accordance with
the
provisions of Clause 2.2, or such other account as the Sellers
shall
nominate in writing, or such other method of payment as agreed
between the
Parties to this Agreement.
|
|
9.2.
|
Taxes;
Commissions
Any sales or transfer tax due upon the sale of any Purchased Share
under
this Agreement shall be borne by the party required to pay such
tax in
accordance with applicable laws. Any payment to the Sellers is
subject to
withholding tax, which shall be deducted by the Purchaser unless
provided
with an exemption thereof.
|
|
9.3.
|
Fees
& Expenses
Each Party to this Agreement shall bear its own legal fees and
all related
expenses incurred in connection with the negotiation, preparation,
entering into and completion of this
Agreement.
|
|
9.4.
|
Survival
Subject to any time limitations specifically set forth in this
Agreement,
all representations and warranties set forth in Clause 3 above
shall
survive the Closing.
|
|
9.5.
|
Notices
All notices, consents, approvals, waivers and other communications
hereunder shall be in writing and shall be deemed to have been
duly given
when delivered in person, or when confirmation of transmission
is received
when sent by telecopier, or three (3) days after delivery (prepaid)
to any
commercial overnight courier, addressed as
follows:
|
|
If
to the Sellers:
|
Enertec
Management Ltd.
00
Xxx-Xxxxxx Xxxxxx
Xxxxxx
Xxxxxxxx, Xxxxxx
Tel:
00-0000000
Fax:
00-0000000
xxxxxxx@xxxxxxxxx.xxx.xx
|
|
|
Xxxxx
Xxxx
00
Xxx-Xxxxxx Xxxxxx
Xxxxxx
Xxxxxxx, Xxxxxx
Tel:
00-0000000
Fax:
00-0000000
xxxxxxx@xxxxxxxxx.xxx.xx
|
||
|
With
a copy to:
|
Xxxxx
Xxxxxxxxx
Balter,
Guth, Aloni & Co.
00
Xxxxx Xxxx, Xxx Xxxx, 00000, Xxxxxx
Tel:
00-0000000
Fax:
00-0000000
xxxxxxxxxx@xxxxxx.xx.xx
|
17
|
If
to the Purchaser:
|
Uri
Nissani
00
Xxxxx Xx.
Xxxxx
Xxxxx, 00000, Xxxxxx
Tel:
000-0000000
Fax:
000-0000000
Xxx.Xxxxxxx@xxxx-xx.xxx
|
|
|
With
a copy to:
|
Xxxxx
Xxxxxxx, Adv.
Xxxxxxxx,
Xxxxxxx & Co.
0
Xxxxxxxx Xxxxx Xxxxxx,
Xxxxx
Xxx, 00000, Israel
Tel:
00-0000000
Fax:
00-0000000
xxxxx@xxxxx.xx.xx
|
or
to
such other address as the Parties may from time to time designate in
writing.
|
9.6.
|
Waiver
Any waiver hereunder must be in writing, duly authorized and signed
by the
Party to be bound, and shall be effective only in the specific
instance
and for the purpose for which given. No failure or delay on the
part of
any Seller or the Purchaser in exercising any right, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall
any
single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise
of any
other right, power or privilege.
|
|
9.7.
|
Entire
Agreement
This Agreement, the schedules hereto and the other Transaction
Documents
constitute the entire agreement among the Parties hereto and supersede
any
other agreement that may have been made or entered into by any
Seller or
the Purchaser solely relating to the transactions contemplated
by this
Agreement and the other Transaction Documents, including the Letter
of
Intent dated 11 October 2007, entered by the Investor, SDS, Lapis
and
Xxxx.
|
|
9.8.
|
Amendments
This Agreement may be amended or modified in whole or in part only
by a
duly authorized written agreement that refers to this Agreement
and is
signed by the Parties hereto.
|
|
9.9.
|
Headings
The headings in this Agreement are inserted for convenience of
reference
only and shall not be considered a part of or affect the interpretation
of
any provision of this Agreement.
|
|
9.10.
|
Counterparts
This Agreement may be executed in counterparts and by facsimile
signature,
each of which shall be deemed an original, but all of which together
shall
constitute one and the same
instrument.
|
|
9.11.
|
Further
Assurances
The Parties hereto shall execute and deliver such additional documents
and
shall take such additional actions (including without limitation
procuring
such resolutions or regulatory approvals) as may be reasonably
necessary
or appropriate to effect the provisions and purposes of this Agreement
and
the consummation of the transactions contemplated
hereby.
|
|
9.12.
|
Severability
If
any provision of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not
in any
way be affected, impaired or invalidated
thereby.
|
18
|
9.13.
|
Announcements
Any public announcement made by either the Purchaser or any of
the Sellers
concerning this transaction shall be made in a form mutually agreed
between the Parties. Notwithstanding the foregoing, the Purchaser
shall be
permitted to issue any release that it is legally required to be
issued or
made under any applicable laws; provided, however, that in such
event the
Purchaser will provide the Sellers with prompt written notice of
such
requirement and a copy of the release to be issued, and the Parties
shall
use reasonable commercial efforts to coordinate the content of
such
release.
|
|
9.14.
|
Governing
Law & Jurisdiction
This Agreement shall be governed by, and construed and enforced
in
accordance with, the laws of the State of Israel. Any dispute arising
under or with respect to this Agreement shall be resolved exclusively
in
the appropriate court in Tel Aviv,
Israel.
|
♣
♣
♣
♣
♣
♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣
[Signature
page follows]
19
IN
WITNESS WHEREOF, the Sellers and the Purchaser have each caused this Agreement
to be duly executed as of the date first above written.
|
The
Sellers:
|
The
Purchaser:
|
||
| /s/ Entertec Management Ltd. | /s/ S.D.S. (Star Defense Systems) Ltd. | ||
|
Enertec Management Ltd. |
S.D.S. (Star Defense Systems) Ltd. |
||
| By:
/s/ Xxxxx
Xxxx Title: Chief Executive Officer |
By:
/s/ Xxxx
Xxxxxxx, /s/ Xxxx Xxxxxxxxx Title: Chairman, Director |
||
|
/s/
Xxxxx Xxxx
|
|||
20
List
of Schedules
|
Schedule
1.8
|
Due
Diligence Information Index
|
|
Schedule
2.2
|
Purchased
Shares to be sold by the Sellers
|
|
Schedule
2.3.2
|
Closing
Obligations
|
|
Schedule
3.1.1
|
Limitations
on Liability
|
|
Schedule
3.8
|
Inter-Entity
Indebtedness
|
|
Schedule
3.12
|
Outstanding
Loans, Guarantees, Debts and Obligations
|
|
Schedule
3.13
|
Potential
Tax Exposures
|
|
Schedule
3.14.1
|
List
of Outstanding Orders During One Year to Date
|
|
Schedule
3.14.2
|
Restricting
Agreements
|
|
Schedule
3.15.1
|
Indebtedness
of or to Major Shareholders
|
|
Schedule
3.16
|
Legal
Proceedings
|
|
Schedule
3.17
|
List
of Leases
|
|
Schedule
3.19.1
|
List
of Employees
|
|
Schedule
3.21.2
|
List
of Licensees for the use of Systems' Intellectual
Property
|
|
Schedule
3.21.5
|
List
of Registered Patents, Trademarks and Copyrights
|
|
Schedule
3.23
|
List
of Encumbered Property and Assets
|
|
Schedule
3.26
|
List
of Insurance Policies
|
|
Schedule
3.27
|
List
of Sole Suppliers
|
|
Schedule
6.2
|
Employment
Agreement of Xx. Xxx Xxxx
|
|
Schedule
6.3.1
|
Consent
Letter Bank Leumi
|
|
Schedule
6.3.2
|
Consent
Letter Bank Hapoalim
|
|
Schedule
7.1.1
|
List
of Third Party Permits, Consents and Authorizations required for
Closing
|
|
Schedule
7.3.1
|
List
of Third Party Assurances
|
21
SCHEDULE
2.2
PURCHASED
SHARES TO BE SOLD BY SELLERS
|
SELLER
|
PURCHASED
SHARES TO BE SOLD
|
PORTION
OF PURCHASE PRICE
|
|
Management
|
183,230
|
73
per cent (US$1,095,000)
|
|
Xxxx
|
67,770
|
27
per cent (US$405,000)
|
|
Total
|
251,000
|
100
per cent
(US$
1,500,000)
|
22
SCHEDULE
2.3.2
CLOSING
OBLIGATIONS
Sellers’
Obligations
|
1.
|
At
Closing, the Sellers shall deliver to the Purchaser (or made available
to
the Purchaser’s reasonable
satisfaction):
|
|
1.1.
|
duly
executed transfer forms in respect of the Purchased Shares into
the name
of the Purchaser;
|
|
1.2.
|
the
share certificates in respect of all the Purchased
Shares;
|
|
1.3.
|
a
letter of resignation in Agreed Form duly executed by each of the
directors of Systems in respect of their directorships of
Systems;
|
|
1.4.
|
a
letter of resignation in Agreed Form duly executed by the auditors
of
Systems;
|
|
1.5.
|
a
copy (certified by a duly appointed officer as true and correct)
of a
resolution or written consent of:
|
|
1.5.1.
|
the
board of directors of Management;
|
|
1.5.2.
|
the
shareholders of Management;
|
|
1.5.3.
|
the
board of directors of Lapis; and
|
|
1.5.4.
|
the
shareholders of Lapis,
|
authorising
the execution of and the performance this Agreement;
|
1.6.
|
to
the extent required, a waiver
of any restrictions on transfer, including rights of pre-emption,
which
may exist in relation to the Purchased Shares, whether under the
articles
of association of Systems or
otherwise;
|
|
1.7.
|
a
certificate that the Sellers’ Warranties are correct in all material
respects per the Date of Closing;
|
|
1.8.
|
evidence
in respect of payment of inter-company debts or waiver in respect
thereof
|
|
1.9.
|
a
copy of the Yearly Financial
Statements, as such term is defined in Clause 3.22 of the Agreement;
and
|
|
1.10.
|
a
copy of the Trial Balance,
as
such term is defined in Clause 3.22 of the
Agreement.
|
|
2.
|
At
Closing, the Purchaser
shall have received a fairness opinion in Agreed Form by an independent
investment bank or consulting firm, validating the Purchase
Price.
|
23
Purchaser
Obligations
|
3.
|
At
Closing, the Purchaser shall:
|
|
1.11.
|
deliver
(or procure that there is delivered to the Sellers) a copy of a
resolution
(certified by a duly appointed officer as true and correct)
of:
|
|
1.11.1.
|
the
board of directors of the Purchaser;
and
|
|
1.11.2.
|
the
shareholders of the Purchaser,
|
authorising
the execution of and the performance by the Purchaser of its obligations
under
this Agreement;
|
1.12.
|
deliver
(or procure that there is delivered) to the Sellers documents of
release
of Xxxx and Mr. Zvi Avnifrom the Third Party Assurances referred
to in
Clause 7.3; and
|
|
1.13.
|
pay
to each of the Sellers the Purchase Price in accordance with Clause
2.1.
|
General
|
4.
|
All
documents and items delivered at Closing pursuant to this Schedule
2.3.2
shall be held by the recipient to the order of the person delivering
the
same until such time as Closing shall be deemed to have taken place
in
accordance with Clause 2.
|
|
5.
|
Simultaneously
with:
|
|
1.14.
|
delivery
of all documents and items required to be delivered at Closing
(or waiver
of the delivery thereof by the person entitled to receive the relevant
document or item);
|
|
1.15.
|
receipt
of an electronic funds transfer to the Sellers’ Bank Account in
immediately available funds of the Purchase
Price,
|
the
documents and items delivered in accordance with this Schedule shall cease
to be
held to the order of the person delivering the same and Closing shall be
deemed
to have taken place.
24
SCHEDULE 3.3.1
LIMITATIONS
ON LIABILITY
|
1.
|
Time
Limits
|
|
1.16.
|
The
Sellers shall not be liable for any Claim unless Xxxx receives
from the
Purchaser written notice (within thirty (30) days of the Purchaser
becoming aware of such Claim)
containing reasonably specific details of the Claim prior
to the
end of a period of 24 months immediately following the Date of
Closing.
|
|
2.
|
Thresholds
for Claims
|
|
1.17.
|
The
Sellers shall not be liable for any Claim unless the amount of
the
liability pursuant to the aggregate of all Claims exceeds fifty
thousand
US Dollars (US$50,000) (in which case the Purchaser shall be able
to claim
only for the excess over fifty thousand
US
Dollars (US$50,000)).
|
|
3.
|
Maximum
limit for all Claims
|
Notwithstanding
any
other
provision of this Agreement, the aggregate maximum amount of the liability,
jointly and severally, of the Sellers for all Claims shall not exceed the
sum of
the Purchase Price actually paid to, and received by, the Sellers. The
indemnification for all Claims shall be by way of reduction of the Minimum
Value.
|
4.
|
Matters
disclosed or taken into account in
adjustments
|
The
Sellers shall not be liable for any Claim for breach of the Warranties if
and to
the extent that the fact, matter, event or circumstance giving rise to such
Claim:
|
1.18.
|
is
disclosed in this Agreement or any other Transaction Document,
the
Disclosure Letter or
in any document disclosed in the Due Diligence Information;
and/or
|
|
1.19.
|
is
disclosed in the financial due diligence conducted in respect of
Systems,
Lapis and its subsidiaries by the Purchaser and its advisors and
any
documents and information
provided within the framework
thereof.
|
|
5.
|
Contingent
liabilities
|
If
any
Claim for breach of the Sellers’ Warranties is based upon a liability, which is
contingent only, the Sellers shall not be liable to make any payment unless
and
until such contingent liability gives rise to an obligation to make a
payment.
|
6.
|
No
liability for Claims arising from acts or omissions of
Purchaser
|
The
Sellers
shall
not be liable for any Claim, which would
not have
arisen but for any voluntary act, omission or transaction carried out after
the
date of this Agreement by the Purchaser or its respective directors, employees
or agents or successors in title.
25
|
7.
|
Nothing
to restrict Purchaser’s duty to
mitigate
|
Nothing
in this Schedule
3.3.1
shall in
any way restrict or limit the general obligation of the Purchaser to mitigate
any loss or damage which it may suffer in consequence of any breach by the
Sellers of the terms of this Agreement or any fact, matter, event or
circumstance likely to give rise to a Claim.
|
8.
|
No
double recovery
|
The
Purchaser shall not be entitled to recover
damages
or obtain payment, reimbursement, restitution or indemnity more than once
in
respect of any one liability, loss, cost, shortfall, damage, deficiency,
breach
or other set of circumstances which gives rise to more than one
Claim.
|
9.
|
No
recovery if compensation in another manner is
available
|
The
Purchaser shall not be entitled to recover
damages
or obtain payment, reimbursement, restitution or indemnity in respect of
any one
liability, loss, cost, shortfall, damage, deficiency, breach or other set
of
circumstances which:
|
1.20.
|
is
or can be recovered by the Purchaser under any policy of insurance
maintained or
customary to be obtained in the field of activity of Systems
or
from a third party, or would have been so recoverable but for
any change
in the current terms of insurance instigated by the Purchaser
after
Closing; and/or
|
|
1.21.
|
give
rise to or result in a benefit accruing to the Purchaser out
of the same,
including, but not limited to, any relief from taxation obtainable
by the
Purchaser and/or its affiliates, and any amount by which any
taxation for
which the Purchaser and/or its affiliates are accountable is
reduced or
extinguished.
|
|
10.
|
Purchaser’s
knowledge
|
The
Sellers shall not be liable for any Claim for breach of the Sellers’ Warranties
if and to the extent that the Purchaser is aware at the date of this Agreement
of the fact, matter, event or circumstance which is the subject matter of
the
Claim.
|
11.
|
Sellers
to have opportunity to remedy
breaches
|
A
breach
of the Sellers’ Warranties, which is capable of remedy shall not entitle the
Purchaser to compensation unless the Sellers are given written notice of
the
breach by the Purchaser and such breach is not remedied within a reasonable
period of time after the date on which such notice is served on the Sellers.
Without prejudice to its duty to mitigate any loss, the Purchaser shall provide
all reasonable assistance to the Sellers to remedy any such breach.
26
SCHEDULE
7.3.1
Third
Party Assurances
[To
be updated prior to Closing]
| · |
Third
Party Assurances Xxxx attached as separate
documents
|
| · |
Third
Party Assurances
Avni attached as separate documents
|
| · |
Third
Party Assurances
Electronics attached as separate
documents
|
27
