SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this "Agreement") is made as of the 18th day
of May, 1999, by and among ELECMATEC ELECTRO-MAGNETIC TECHNOLOGIES LTD., an
Israeli company registered under company number 00-000000-0 (the "Company");
SCNV ACQUISITION CORP., a Delaware corporation (the "Purchaser"); Xxxxxxxxx
Xxxxxx Xxxxxxxx, Israeli ID Number 014609900; Dr. Arie El-Boher, Israeli ID
Number 050923268; and Xxxxxxxxx Xxxx Xxxxxxx, Latvian Passport Number (each a
"Founder" and together, the "Founders").
WITNESSETH:
WHEREAS, the Board of Directors of the Company has determined that it is in
the best interests of the Company to raise capital by means of the issuance of
19,688 of the Company's Ordinary A Shares, nominal value NIS 0.01 each,
constituting 49.6% of the Company's outstanding shares on a fully-diluted basis,
to the Purchaser for an aggregate purchase price of $96,906 (ninety-six
thousand, nine-hundred and six U.S. Dollars), plus certain loans as described
below, all on the terms and conditions more fully set forth in this Agreement;
and
WHEREAS, the Founders desire to sell an aggregate of 12,190 Ordinary
Shares, nominal value NIS 0.01 each (the "Founder Shares") for an aggregate
purchase price of $40,000 (forty thousand US Dollars); and
WHEREAS, the Purchaser desires to purchase the Shares and the Founders
Shares pursuant to the terms and conditions more fully set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties hereby agree as follows:
1. Issuance of Shares; Consideration.
1.1 Issuance and Purchase of Shares. Subject to the terms and conditions
hereof, at the Closing, the Company shall issue and allot to the Purchaser, and
the Purchaser shall purchase from the Company, an aggregate of19,688 of the
Company's Ordinary A Shares (the "Shares"), for an aggregate purchase price of
$96,906 (ninety-six thousand, nine-hundred and six U.S. Dollars) (the "Purchase
Price").
1.2 Additional Consideration. The Purchaser shall lend the Company certain
sums pursuant to the terms of the Loan Agreement attached hereto as Exhibit D
(the "Loan Agreement").
2. Sale of Founders Shares; Consideration.
2.1 Sale and Purchase of Founders Shares. Subject to the terms and
conditions hereof, at the Closing, the Founders shall sell and transfer to the
Purchaser, an aggregate of 12,190 of the Company's Ordinary Shares (the
"Founders Shares"), for an aggregate purchase
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price of $40,000 (forty thousand US Dollars) (the "Founders Purchase Price").
The number of Founder Shares to be sold by each Founder and the aggregate
purchase price for such Founder Shares shall be as follows: (i) Xxxxxxxxx
Xxxxxxxx shall sell 6,095 Ordinary Shares for an aggregate purchase price of
$20,000 (twenty thousand US Dollars); (ii) Dr. El-Boher shall sell 4,876
Ordinary Shares for an aggregate purchase price of $16,000 (sixteen thousand US
Dollars); and (iii) Xxxxxxxxx Xxxxxxx shall sell 1,219 Ordinary Shares for an
aggregate purchase price of $4,000 (four thousand US Dollars).
2.2 Additional Consideration. In the event the Company will be successful
in obtaining a Qualified Investment, as defined below, the Purchaser shall pay
the Founders additional sums, as follows:
2.2.1 for every dollar raised in the Qualified Investment, the Purchaser
shall pay Xxxxxxxxx Xxxxxxxx an additional sum of $0.0267 (two cents and
sixty-seven hundredths of a cent) up to an aggregate additional sum of $40,000
(forty thousand US Dollars);
2.2.2 for every dollar raised in the Qualified Investment, the Purchaser
shall pay Dr. El-Boher an additional sum of $0.0213 (two cents and thirteen
hundredths of a cent) up to an aggregate additional sum of $32,000 (thirty-two
thousand US Dollars); and
2.2.3 for every dollar raised in the Qualified Investment, the Purchaser
shall pay Xxxxxxxxx Xxxxxxx an additional sum of $0.0053 (fifty-three hundredths
of a cent) up to an aggregate additional sum of $8,000 (eight thousand US
Dollars).
For purposes of this Agreement, the term "Qualified Investment" shall mean
the raising by the Company of an aggregate sum of at least $500,000
(five-hundred thousand US dollars) in debt or equity financing from person(s)
other than the Purchaser or an Affiliate of the Purchaser; provided however that
in the event of debt financing, an investment shall not be deemed a Qualifies
Investment if (i) the Purchaser or an Affiliate of the Purchaser is required to
provide a guarantee in order for the Company to obtain such financing or (ii) as
a result of such debt financing, the pledge of the Company's assets in favor of
the Purchaser pursuant to the Pledge Agreement between the Company and the
Purchaser (a copy of which is attached hereto as Exhibit E) is made inferior to
a pledge in favor of such third party lender. For purposes of this Agreement,
"Affiliate" shall mean an entity controlled by, controlling, or under common
control with another entity where control is the power to elect or appoint more
than 50% of the board of directors or other governing body of such entity or the
power to vote more than 50% of the shares of such entity.
3. Closing of Issue and Purchase.
3.1 Closing. The issuance and allotment of the Shares, the sale of the
Founders Shares, the purchase by the Purchaser of the Shares and the Founders
Shares and the registration of the Shares and the Founders Shares in the name of
the Purchaser in the share transfer register of the Company, shall take place at
a closing (the "Closing") to be held on the date of this Agreement.
3.2 Transactions at Closing. At the Closing, the following transactions
shall occur, which transactions shall be deemed to take place simultaneously and
no transactions shall be deemed to have been completed or any document delivered
until all such transactions have been completed and all required documents
delivered:
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3.2.1 The Company shall deliver to the Purchaser the following documents:
(a) Resolutions of the Company's shareholders by which the Articles of
Association of the Company were replaced with the Amended Articles of
Association attached hereto as Exhibit A (the "Amended Articles");
(b) True and correct copies of resolutions of the Company's Board of
Directors issuing and allotting the Shares to the Purchaser against payment
of the Purchase Price and of the shareholders of the Company ratifying such
resolutions, together with a duly completed notice of such issuance to the
Israeli Registrar of Companies and a check in full payment of the stamp
duty on the issuance of the Shares, all of the foregoing in form and
substance acceptable for immediate filing with the Israeli Registrar of
Companies to be filed by the Company promptly after the Closing;
(c) True and correct copies of resolutions of the Company's Board of
Directors and of the shareholders of the Company approving the sale and
transfer of the Founders Shares to the Purchaser; and
(d) An opinion of Xxxxx Xxxxx, counsel to the Company, in the form
attached hereto as Schedule 3.2.1(d), dated as of the date of the Closing.
(e) An Opinion of Xxxxx, Xxxxxxx and Xxxxxx, patent counsel to the
Company, in the form attached hereto as Schedule 3.2.1(e), dated as of the
date of the Closing.
3.2.2 The Founders shall deliver to the Company the certificates
representing the Founders Shares, together with duly executed share transfer
deeds.
3.2.3 The Company shall register the issuance of the Shares and the
transfer of the Founders Shares to the Purchaser in the share transfer register
of the Company.
3.2.4 The Purchaser shall deliver to the Company the following documents:
(a) A true and correct copy of a resolution of the Purchaser's Board
of Directors authorizing the execution of this Agreement and the
performance of the obligations of the Purchaser contained herein; and
(b) An opinion of Xxxxxx Xxxxxxxxxx LLP, United States counsel to the
Purchaser, in the form attached hereto as Schedule 3.2.4(b), dated as of
the date of Closing.
3.2.5 The Purchaser shall cause the transfer to the Company of the Purchase
Price for the Shares, and of the Founders Purchase Price to the Founders by wire
transfer, banker's check, or such other form of payment as is mutually agreed to
by the parties.
4. Representations and Warranties of the Company and the Founders. The
Company and the Founders hereby represent and warrant to the Purchaser, and
acknowledge that the Purchaser is entering into this Agreement in reliance
thereon, as follows:
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4.1 Organization. The Company is duly organized, validly existing and in
good standing under the laws of the State of Israel, and has full corporate
power and authority to own, lease and operate its properties and assets and to
conduct its business as now being conducted. The Company has all requisite power
and authority to execute and deliver this Agreement, and other agreements
contemplated hereby or which are ancillary hereto, and to consummate the
transactions contemplated hereby and thereby. Copies of the Memorandum and
Articles of Association of the Company as in effect on the date hereof have been
provided to Israeli counsel for the Purchaser, and as will be in effect at the
Closing are attached hereto as Exhibit A. The Company has all franchises,
permits, licenses, and any similar authority necessary for the conduct of its
business as now being conducted, the lack of which could materially adversely
affect the business, properties, prospects, or financial condition of the
Company. The Company is not in default under any of such franchises, permits,
licenses, or other similar authority.
4.2 Share Capital. The registered share capital of the Company immediately
prior to the Closing shall be NIS 35,700 divided into: (i) 3,550,312 Ordinary
Shares of a nominal value of NIS 0.01 each (the "Ordinary Shares"), of which
20,000 are issued and outstanding; and (ii) 19,688 Series A Ordinary Shares of a
nominal value of NIS 0.01 each (the "Ordinary A Shares"), none of which are
issued and outstanding. Except for the transactions contemplated by this
Agreement, there are no other share capital, preemptive rights, convertible
securities, outstanding warrants, options or other rights to subscribe for,
purchase or acquire from the Company any share capital of the Company and there
are not any contracts or binding commitments providing for the issuance of, or
the granting of rights to acquire, any share capital of the Company or under
which the Company is, or may become, obligated to issue any of its securities.
All issued and outstanding share capital of the Company were duly authorized,
and are validly issued and outstanding and fully paid and non-assessable. The
Shares, when issued and allotted in accordance with this Agreement, will be duly
authorized, validly issued, fully paid, non-assessable, and free of any
preemptive rights, and will have the rights, preferences, privileges, and
restrictions set forth in the Amended Articles, and will be free and clear of
any liens, claims, encumbrances or third party rights of any kind and duly
registered in the name of each Purchaser in the Company's share transfer
register.
4.3 Ownership of Outstanding Shares. A complete and correct list of the
shareholding of the Company's share capital immediately prior to the Closing is
set forth in Schedule 4.3 attached hereto. The individuals identified in
Schedule 4.3 as the shareholders of the Company immediately prior to the Closing
are the lawful owners, beneficially and of record, of all of the issued and
outstanding share capital of the Company and of all rights thereto, free and
clear of all liens, claims, charges, encumbrances, restrictions, rights, options
to purchase, proxies, voting trust and other voting agreements, calls or
commitments of every kind, and none of the said individuals or companies owns
any other shares, options or other rights to subscribe for, purchase or acquire
any equity securities of the Company from the Company or from any other
shareholder.
4.4 Business Plan and Information. The description of the current and
intended business of the Company contained in the Business Plan attached hereto
as Schedule 4.4 (the "Business Plan") is accurate in all material respects, and
the financial projections set out in the Business Plan have been prepared based
on management's good faith estimates, and there
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are no other substantial facts or matters of which the Company or the Founders
are aware which would render any such descriptions, assessments or projections
misleading.
4.5 Subsidiaries. The Company does not own any of the issued and
outstanding share capital of any other company, and is not a participant in any
partnership or joint venture.
4.6 Directors, Officers. The directors of the Company are: Xxxxxxxxx
Xxxxxxxx and Dr. El-Boher. The Company has no agreement, obligation or
commitment with respect to the election of any individual or individuals to the
Board and there is no voting agreement or other arrangement among the Company's
shareholders, except for the agreement attached hereto as Exhibit B to be
entered into among the Purchaser and the Founders. All agreements, commitments
and understandings, whether written or oral, with respect to any compensation to
be provided to any of the Company's directors or officers have been fully
disclosed in writing to the Purchaser.
4.7 Outstanding Obligations. The Company was formed and acquired all of the
Metal Alloy-related assets of Ontec Ltd. ("Ontec") in November 1998. Schedule
4.7 sets forth all of the material outstanding obligations either acquired by
the Company from Ontec or incurred by the Company from inception until the date
of this Agreement. Schedule 4.7 is true and correct in all material respects,
fairly and accurately presents in all material respects the financial and other
obligations of the Company as of the date hereof. The Company has no material
liabilities, debts or obligations, whether accrued, absolute or contingent other
than liabilities reflected in Schedule 4.7. Other than as set forth in Schedule
4.7, neither the Company nor the Founders know of any other event or condition
related to the Company that would materially adversely affect the assets,
properties, condition (financial or otherwise), operating results or business of
the Company.
4.8 Authorization; Approvals. All corporate action on the part of the
Company necessary for (i) the authorization, execution, delivery, and
performance of all the of Company's obligations under this Agreement (ii) the
authorization, issuance, and allotment of the Shares being sold under this
Agreement and (iii) the transfer of the Founders Shares to the Purchaser, have
been (or will be) taken prior to the Closing. This Agreement, when executed and
delivered by or on behalf of the Company, shall constitute the valid and legally
binding obligations of the Company and the Founders, legally enforceable against
the Company and the Founders in accordance with its terms. No consent, approval,
order, license, permit or action by any governmental authority on the part of
the Company is required that has not been, or will not have been, obtained by
the Company prior to the Closing in connection with the valid execution,
delivery and performance of this Agreement or the offer, sale, or issuance of
the Shares and the sale of the Founders Shares.
4.9 Compliance with Other Instruments. The Company is not in default (a)
under its Memorandum or Articles of Association or other formative documents, or
under any material note, indenture, mortgage, lease, agreement, contract,
purchase order or other instrument, document or agreement to which the Company
is a party or by which it is bound or (b) with respect to any existing Israeli
law, statute, ordinance or regulation, or any order, writ, injunction, decree,
or judgment of any domestic court or any governmental department, commission,
board, bureau, agency or instrumentality, which default, in any such case, would
materially adversely affect or in the future is reasonably likely to materially
adversely affect the Company's business, condition (financial or otherwise),
affairs, operations or assets. No
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third party is in default under any material agreement, contract or other
instrument, document or agreement to which the Company is a party or by which it
is bound. The Company is a party to an agreement with the Office of the Chief
Scientist of the Ministry of Industry and Trade (the "OCS"). Other than the
terms of its agreement with the OCS, the Company is not a party to or bound by
any order, judgment, decree or award of any governmental authority, agency,
court, tribunal or arbitrator.
4.10 No Breach. Neither the execution and delivery of this Agreement nor
compliance by the Company and the Founders with the terms and provisions hereof,
will conflict with, or result in a breach or violation of, any of the terms,
conditions and provisions of: (i) the Company's Memorandum of Association or the
Articles of Association, or other governing instruments of the Company, (ii) any
judgment, order, injunction, decree, or ruling of any domestic court or
governmental authority, to which the Company or the any of the Founders is
subject, (iii) any agreement, contract, lease, license or commitment to which
the Company or any of the Founders is a party and which would impair the ability
of the Company to execute, deliver or perform this Agreement, or (iv) applicable
law. Such execution, delivery and compliance will not give to others any rights,
including rights of termination, cancellation or acceleration, in or with
respect to any agreement, contract or commitment referred to in this paragraph,
or to any of the properties of the Company.
4.11 Records. The minute book of the Company which has been provided to the
Purchaser contains accurate and complete copies of the minutes of every meeting
of the Company's shareholders and Board of Directors (and any committee
thereof). No resolutions have been passed, enacted, consented to or adopted by
the directors (or any committee thereof) or shareholders of the Company, except
for those contained in such minute books. The corporate records of the Company
are complete and accurate in all material respects.
4.12 Ownership of Assets. The Company does not own or lease any real
property, except as set forth in Schedule 4.12 hereto. Complete and accurate
copies of leases of property leased to the Company have been furnished to
Israeli counsel for the Purchaser. The Company's machinery, equipment,
furniture, supplies and all other tangible personal property are set forth in
Schedule 4.12. Except as set forth on Schedule 4.12 hereto, (i) the Company has
good and marketable title to all of the tangible properties and assets, both
real and personal, that it purports to own, and they are not subject to any
mortgage, pledge, lien, security interest, conditional sale agreement,
encumbrance or charge; and (ii) the Company is not in default or breach of any
material provision of its leases and holds a valid leasehold in the property it
leases. The Company's shareholders do not own, hold or posses, in their
individual, corporate or any other capacities, any property that the Company
purports to own.
4.13 Intellectual Property and Other Intangible Assets.
(a) The Company (i) owns or has the right to use, free and clear of
all liens, claims and restrictions, other than obligations to the OCS and a
pledge to the Purchaser, all patents, trademarks, service marks, mask
works, trade names and copyrights, and applications, licenses and rights
with respect to the foregoing, and all trade secrets, including know-how,
inventions, designs, processes, works of authorship, computer programs and
technical data and information (collectively herein "Intellectual
Property") set forth in Schedule 4.13 (a), and (ii) to the best knowledge
of the Company and the Founders, such Intellectual Property does not
infringe upon or violate any right, lien, or claim of others, including
without limitation of the Founders, other employees of the Company, Messrs.
Ariel
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Xxxxxx and Xxxxxx Xxxxxxxx, Ontec, former employees of the Founders or
Ontec and former employers of the Founders or other employees of the
Company. Other than its obligations towards the OCS, the Company is not
currently obligated or under any liability whatsoever to make any payments
by way of royalties, fees or otherwise to any owner or licensee of, or
other claimant to, any patent, trademark, service xxxx, trade name,
copyright or other intangible asset, with respect to the use thereof or in
connection with the conduct of its business or otherwise
(b) Any and all Intellectual Property of any kind currently being
developed by any employee of the Company in connection with his employment
by the Company, shall be the property solely of the Company. The Company
has taken security measures to protect the secrecy, confidentiality and
value of all the Intellectual Property, which measures are reasonable and
customary in the industry in which the Company operates. Each of the
Founders and the Company's employees and other persons who, either alone or
in concert with others, developed, invented, discovered, derived,
programmed or designed the Intellectual Property, or who has knowledge of
or access to information about the Intellectual Property, has entered into
a written employment agreement with the Company in form and substance
satisfactory to the Purchaser, which includes provisions regarding
ownership and treatment of the Intellectual Property. True and correct
copies of all such employment agreements have been provided to the
Purchaser.
(c) Neither the Company nor the Founders have received, nor to the
best knowledge of the Company and the Founders has Ontec received, any
communications alleging that the Company (or previously Ontec with respect
to the assets transferred by Ontec to the Company) has violated or that the
Company by conducting its business as currently conducted, would violate,
any of the patents, trademarks, service marks, trade names, copyrights or
trade secrets or other proprietary rights of any other person or entity.
Except as set forth in Schedule 4.13(c), none of the Founders nor, to the
best knowledge of the Company and the Founders, any of the Company's
employees are obligated under any contract (including licenses, covenants
or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of the Founders' or such employee's best efforts to
promote the interests of the Company or that would conflict with the
Company's business as conducted and as proposed to be conducted. Neither
the execution nor delivery of this Agreement, nor the carrying on of the
Company's business by the employees of the Company, nor the conduct of the
Company's business as proposed to be conducted, will conflict with or
result in a breach of the terms, conditions or provisions of, or constitute
a default under, any contract, covenant or instrument under which the
Founders are now obligated. It is not, and will not become, necessary, in
order to conduct the Company's business as currently contemplated, to
utilize any inventions of any of the Founders or of any of the Company's
employees (or people the Company currently intends to hire) made prior to
their employment by the Company or Ontec other than those that have been
assigned to the Company.
4.14 Contracts. Schedule 4.14 contains a true and complete list of all
material contracts and agreements, including agreements and correspondence with
the Investment Center and the Office of the Chief Scientist of the Ministry of
Industry and Trade, to which the Company is a party. Each of the contracts and
agreements set forth in Schedule 4.14 is in full force and effect, and neither
the Company nor any other party thereto is in breach thereof. True and correct
copies of all such contracts have been delivered to the Purchaser. Except as
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set forth on Schedule 4.14 hereto, the Company has no employment or consulting
contracts, deferred compensation agreements or bonus, incentive, profit-sharing,
or pension plans currently in force and effect, or any understanding with
respect to any of the foregoing.
4.15 Litigation. To the best knowledge of the Company and the Founders, no
action, proceeding or governmental inquiry or investigation is pending or
threatened against the Company or any of its officers, directors, or employees
(in their capacity as such), or against the Founders, or against any of the
Company's properties, before any court, arbitration board or tribunal or
administrative or other governmental agency, nor is there any material basis for
the foregoing. The foregoing includes, without limiting its generality, actions
pending or threatened involving the prior employment of the Founders or any of
the Company's employees or use by any of them in connection with the Company's
business of any information, property or techniques allegedly proprietary to any
of their former employers. Neither the Company nor the Founders are a party to
or subject to the provisions of any order, writ, injunction, judgment or decree
of any court or governmental agency or instrumentality. There is no action,
suit, proceeding or investigation by the Company currently pending or that the
Company intends to initiate. Except as set forth in Schedule 4.15, none of the
Founders has been subject to any bankruptcy proceedings or is or has been the
officer of any company which has been the subject of liquidation or insolvency
proceedings.
4.16 Offers. Schedule 4.16 contains a true and complete list of all persons
and entities which have received a copy of the Company's business plan. Except
as set forth in Schedule 4.16, neither the Company nor any of the Founders has
offered to sell any equity securities of the Company to any person or entity.
4.17 Interested Party Transactions. None of the Founders nor any officer,
director or shareholder of the Company or, to the best knowledge of the Company
and the Founders, of Ontec, or any Affiliate of any such person or entity or the
Company, has or has had, either directly or indirectly, (a) an interest in any
person or entity which (i) furnishes or sells services or products which are
furnished or sold or are proposed to be furnished or sold by the Company, or
(ii) purchases from or sells or furnishes to the Company any goods or services,
or (b) except as set forth in Schedule 4.17, holds a beneficial interest in any
contract or agreement to which the Company is a party or by which it is bound.
There are no existing material arrangements or proposed material transactions
between the Company and any of the Founders or any officer, director, or holder
of more than 5% of the capital stock of the Company, or any affiliate of any
such person. Except as set forth in Schedule 4.17, none of the Founders, nor any
employee, shareholder, officer, or director of the Company is indebted to the
Company, nor is the Company indebted (or committed to make loans or extend or
guarantee credit) to any of them.
4.18 Employees. As of the date hereof, the Company has no deferred
compensation or stock option plans covering any of its officers or employees.
The Company has complied in all material respects with all applicable employment
laws. Schedule 4.18 hereto lists all employment, non-competition and
confidentiality agreements between the Company and any employee or consultant of
the Company or any other entity. True and correct copies of such agreements have
been delivered to the Purchaser.
4.19 Brokers. No agent, broker, investment banker, person or firm acting in
a similar capacity on behalf of or under the authority of the Company are or
will be entitled to
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any broker's or finder's fee or any other commission or similar fee, directly or
indirectly, on account of any action taken by the Company in connection with any
of the transactions contemplated under the Agreement. Except as set forth in
Schedule 4.19, the Company is not party to any agreement, whether in writing or
oral, pursuant to which it may be required to pay finder's, brokerage or other
fees in connection with any present or future transaction involving the sale of
products, or purchase of supplies or machinery, by the Company.
4.20 Full Disclosure. Neither this Agreement nor any certificates made or
delivered in connection herewith contains any untrue statement of a material
fact or omits 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.
4.21 Effectiveness; Survival; Indemnification. Each representation and
warranty herein is deemed to be made on the date of this Agreement and at the
Closing, and shall survive and remain in full force and effect after the
Closing. In the event of any material breach or misrepresentation of any
covenant, warranty or representation made by the Company or the Founders under
this Agreement, the Company and the Founders shall indemnify the Purchaser and
hold the Purchaser harmless from any and all loss, damage (including, without
limitation, any decrease in the value of the Shares), liability and expense
(including reasonable legal fees and costs) sustained or incurred by the
Purchaser as a result of or in connection with said breach or misrepresentation
for a period of two years; provided that:
(i) the aggregate amount of the loss, damage, liability and/or expense
sustained by the Purchaser exceeds $25,000 (twenty-five thousand US
Dollars); and
(ii) the aggregate liability of the Founders together shall not exceed
$90,000 and the personal liability of each of the Founders shall be limited
as follows:
(A) Prior to the Company obtaining a Qualified Investment,
Xxxxxxxxx Xxxxxxxx'x personal liability hereunder will be limited to
$15, 000 (fifteen thousand US Dollars). In the event the Company is
successful in obtaining a Qualified Investment, the limit of Xxxxxxxxx
Xxxxxxxx'x personal liability hereunder shall be increased by an
additional $0.02 (two US Cents) for every US Dollar raised in the
Qualified Investment up to an aggregate addition of $30,000 (thirty
thousand US Dollars) to the liability limit, for an aggregate
liability limit of $45,000 (forty-five thousand US Dollars).
(B) Prior to the Company obtaining a Qualified Investment, Dr.
El-Boher's personal liability hereunder will be limited to $12, 000
(twelve thousand US Dollars). In the event the Company is successful
in obtaining a Qualified Investment, the limit of Dr. El-Boher's
personal liability hereunder shall be increased by an additional
$0.016 (one US Cent and six tenths of a USCent) for every US Dollar
raised in the Qualified Investment up to an aggregate addition of
$24,000 (twenty-four thousand US Dollars) to the liability limit, for
an aggregate liability limit of $36,000 (thirty-six thousand US
Dollars).
(C) Prior to the Company obtaining a Qualified Investment,
Xxxxxxxxx Xxxxxxx'x personal liability hereunder will be limited to
$3, 000 (three thousand US Dollars). In the event the Company is
successful in obtaining a Qualified Investment, the limit of Xxxxxxxxx
Xxxxxxx'x personal liability hereunder shall be increased by an
additional $0.004 (four tenths of a USCent) for every US Dollar raised
in the Qualified Investment up to
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an aggregate addition of $6,000 (six thousand US Dollars) to the
liability limit, for an aggregate liability limit of $9,000 (nine
thousand US Dollars).
5. Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company and the Founders, and acknowledges that
the Company and the Founders are entering into this Agreement in reliance
thereon, as follows:
5.1 Organization. The Purchaser is duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has full corporate
power and authority to own, lease and operate its properties and assets and to
conduct its business as now being conducted. The Purchaser has all requisite
power and authority to execute and deliver this Agreement, and other agreements
contemplated hereby or which are ancillary hereto, and to consummate the
transactions contemplated hereby and thereby.
5.2 Enforceability. Neither the execution and delivery of this Agreement
nor compliance by the Purchaser with the terms and provisions hereof, will
conflict with, or result in a breach or violation of, any of the terms,
conditions and provisions of: (i) the Purchaser's charter documents or other
governing instruments of the Purchaser, (ii) any judgment, order, injunction,
decree, or ruling of any domestic court or governmental authority, to which the
Purchaser is subject, (iii) any agreement, contract, lease, license or
commitment to which the Purchaser is a party and which would impair the ability
of the Purchaser to execute, deliver or perform this Agreement, or (iv)
applicable law. This Agreement, when executed and delivered by the Purchaser,
will constitute the valid, legally binding and enforceable obligation of the
Purchaser.
5.3 Authorization. All corporate action on the part of the Purchaser
necessary for the authorization, execution, delivery, and performance of all of
the Purchaser's obligations under this Agreement has been (or will be) taken
prior to the Closing. No consent, approval, order, license, permit or action by
any governmental authority on the part of the Purchaser is required that has not
been, or will not have been, obtained by the Purchaser prior to the Closing in
connection with the valid execution, delivery and performance of this Agreement.
5.4 Brokers. No agent, broker, investment banker, person or firm acting in
a similar capacity on behalf of or under the authority of the Purchaser are or
will be entitled to any broker's or finder's fee or any other commission or
similar fee, directly or indirectly, on account of any action taken by the
Purchaser in connection with any of the transactions contemplated under this
Agreement.
5.5 Experience; Receipt of Information. The Purchaser confirms that: (i) it
understands and is aware that the purchase of the Shares involves substantial
business risk which it shall bear for an indefinite period, should be regarded
as highly speculative and may cause it substantial or total loss of its
investment; (ii) it had an opportunity to examine the Company, its proposed
business and prospects and the related technology; (iii) it understands and is
aware that the Company is party to an agreement with the OCS (iv) it has
received information it requested from the Company and the Founders and
independently reached its decision to invest in the Company; (v) it has the
financial ability to enter into this Agreement and perform its obligations
hereunder; and (vi) it is acquiring the Shares for its own account for
investment and not with a view to sale or distribution of the Shares. The
foregoing, however, does not limit or modify the representations and warranties
of the Company and the Founders set forth in Section 4 hereof or the right of
Purchaser to rely thereon.
11
5.6 Full Disclosure. Neither this Agreement nor any certificates made or
delivered in connection herewith contains any untrue statement of a material
fact or omits 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.
5.7 Effectiveness; Survival; Indemnification. Each representation and
warranty herein is deemed to be made on the date of this Agreement and at the
Closing, and shall survive and remain in full force and effect after the
Closing. In the event of any material breach or misrepresentation of any
covenant, warranty or representation made by the Purchaser under this Agreement,
the Purchaser shall indemnify the Company and the Founders and hold them
harmless from any and all loss, damage, liability and expense (including
reasonable legal fees and costs) sustained or incurred by the Company or the
Founders as a result of or in connection with said breach or misrepresentation
for a period of two years; provided that the aggregate amount of the loss,
damage, liability and/or expense sustained by the Company exceeds $25,000
(twenty-five thousand US Dollars).
6. Conditions of Closing of the Purchaser. The obligations of the Purchaser
to purchase the Shares and the Founders Shares and transfer the Purchase Price
and the Founders Purchase Price at the Closing are subject to the fulfillment at
or before the Closing of the following conditions precedent, any one or more of
which may be waived in whole or in part by the Purchaser, which waiver shall be
at the sole discretion of the Purchaser:
6.1 Representations and Warranties. The representations and warranties made
by the Company and the Founders in this Agreement shall have been true and
correct when made, and shall be true and correct as of the Closing as if made on
the date of the Closing.
6.2 Covenants. All covenants, agreements, and conditions contained in this
Agreement to be performed or complied with by the Company and the Founders prior
to the Closing shall have been performed or complied with by the Company prior
to or at the Closing.
6.3 Consents, etc. The Company shall have secured all permits, consents and
authorizations, including approval of the Office of Chief Scientist, that shall
be necessary or required lawfully to consummate this Agreement and to issue the
Shares to be purchased by the Purchaser at the Closing.
6.4 Delivery of Documents. All of the documents to be delivered by the
Company pursuant to Section 3.2.1 shall have been delivered to the Purchaser.
The Share Purchase Agreement among the Purchaser and Messrs. Xxxxx Xxxxxx and
Xxxxxx Xxxxxxxx, attached hereto as Exhibit C, shall have been executed by each
of Messrs. Xxxxxx and Xxxxxxxx and shall have been delivered to the Purchaser
along with all documents required therein.
6.5 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchaser and its Israeli counsel, and
the Purchaser and its Israeli counsel shall have received all such counterpart
originals or certified or other copies of such documents as the Purchaser or its
Israeli counsel may reasonably request.
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6.6 Due Diligence Review. The Purchaser's technical, legal and financial
due diligence review shall have been completed to the sole and complete
satisfaction of the Purchaser.
6.7 Absence of Adverse Changes. From the date hereof until the Closing,
there will have been no material adverse change in the financial or business
condition of the Company, in the reasonable judgment of the Purchaser.
7. Conditions of Closing of the Company and the Founders. The Company's
obligations to sell and issue the Shares at the Closing are subject to the
fulfillment at or before the Closing of the following conditions, which may be
waived in whole or in part by the Company, and which waiver shall be at the sole
discretion of the Company:
7.1 Representations and Warranties. The representations and warranties made
by the Purchaser in this Agreement shall have been true and correct when made,
and shall be true and correct as of the date of the Closing.
7.2 Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed, or complied with, by the Purchaser prior to the
Closing shall have been performed or complied with by the Purchaser prior to or
at the Closing.
7.3 Consents, etc. The Purchaser shall have secured all permits, consents
and authorizations, that shall be necessary or required to enable it to lawfully
consummate this Agreement and fulfill its obligations hereunder.
7.4 Purchase Price. The Purchaser shall have transferred to the Company the
Purchase Price for the Shares in full.
7.5 Delivery of Documents. All of the documents to be delivered by the
Purchaser pursuant to Section 3.2.3 shall have been delivered to the Company.
The Loan Agreement between the Company and the Purchaser, attached hereto as
Exhibit D, shall have been executed by the Purchaser and shall have been
delivered to the Company. The Shareholders Agreement between the Founders and
the Purchaser, attached hereto as Exhibit B, shall have been executed by the
Purchaser and shall have been delivered to the Company.
8. Affirmative Covenants.
8.1 Stamp Tax. The Company will pay the stamp duty on the issuance of the
Shares.
8.2 Legal Fees. The Company will pay 50% (fifty percent) of the reasonable
and customary fees of counsel for the Purchaser in connection with the
transactions contemplated in this Agreement, including all documents related
thereto.
8.3 Share Option Plan. The Board of Directors of the Company shall adopt a
share option plan for the purpose of providing incentives to employees of the
Company. The amount of shares to be reserved for issuance, and the grants to be
made, under such plan shall be determined by the Board of Directors.
8.4 Insurance. The Company shall obtain fire and casualty insurance
policies with coverage sufficient in amount to allow it to replace any of its
material properties which may be damaged or destroyed.
8.5 OCS Obligations. SCNV hereby undertakes, as a shareholder of the
Company, to take all measures in its power to ensure that the Company (i)
observes all the requirements of The Encouragement of Research and Development
in Industry Law 5744-1984 (the "Law") and the regulations promulgated
thereunder, including without limitation the requirements under Section 19 of
the Law relating to the prohibition on the transfer of know-how and/or
production rights, and (ii) acts in accordance with the directions of the
Research Committee of the Office of Chief Scientist of the Ministry of Industry
and Trade.
9. Miscellaneous
9.1 Further Assurances. Each of the parties hereto shall perform such
further acts and execute such further documents as may reasonably be necessary
to carry out and give full effect to the provisions of this Agreement and the
intentions of the parties as reflected thereby.
9.2 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed according to the laws of the State of Israel, without regard to the
conflict of laws provisions thereof.
9.3 Successors and Assigns; Assignment. Except as otherwise expressly
limited herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors, and administrators of
the parties hereto. None of the rights, privileges, or obligations set forth in,
arising under, or created by this Agreement may be assigned or transferred
without the prior consent in writing of each party to this Agreement, with the
exception of assignments and transfers from the Purchaser to any other entity
which controls, is controlled by or is under common control with, the Purchaser;
provided in each case that each such transferee or assignee agrees in writing to
be bound by the terms of this Agreement.
9.4 Entire Agreement; Amendment and Waiver. This Agreement and the
Schedules hereto constitute the full and entire understanding and agreement
between the parties with regard to the subject matters hereof and thereof. Any
term of this Agreement may be amended and the observance of any term hereof may
be waived (either prospectively or retroactively and either generally or in a
particular instance) only with the written consent of all of the Company and the
Purchaser.
9.5 Notices, etc. All notices and other communications required or
permitted hereunder to be given to a party to this Agreement shall be in writing
and shall be telecopied or mailed by registered or certified mail, postage
prepaid, or otherwise delivered by hand or by messenger, addressed to such
party's address as set forth below or at such other address as the party shall
have furnished to each other party in writing in accordance with this provision:
if to the Purchaser: SCNV Acquisition Corp.
c/o Solmecs (Israel) Ltd.
Attn.: Chief Executive Officer
Omer Industrial Park
Omer, Israel
14
if to the Company: Elecmatec Electro-Magnetic Technologies Ltd.
Attn.: Chief Executive Officer
Omer Industrial Park
Omer, Israel
if to the Founders c/o the Company
or such other address with respect to a party as such party shall notify each
other party in writing as above provided. Any notice sent in accordance with
this Section 9.5 shall be effective (i) if mailed, seven (7) business days after
mailing, (ii) if sent by messenger, upon delivery, and (iii) if sent via
facsimile, upon transmission and electronic confirmation of receipt or (if
transmitted and received on a non-business day) on the first business day
following transmission and electronic confirmation of receipt.
9.6 Delays or Omissions. No delay or omission to exercise any right, power,
or remedy accruing to any party upon any breach or default under this Agreement,
shall be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent, or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any of the parties, shall be
cumulative and not alternative.
9.7 Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be unenforceable under applicable law, then such
provision shall be excluded from this Agreement and the remainder of this
Agreement shall be interpreted as if such provision were so excluded and shall
be enforceable in accordance with its terms; provided, however, that in such
event this Agreement shall be interpreted so as to give effect, to the greatest
extent consistent with and permitted by applicable law, to the meaning and
intention of the excluded provision as determined by such court of competent
jurisdiction.
9.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and enforceable against
the parties actually executing such counterpart, and all of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF the parties have signed this Agreement as of the date
first hereinabove set forth.
Elecmatec Electro-Magnetic Technologies Ltd. SCNV Acquisition Corp.
By: /s/ Dr. Arik El-Boher By: /s/ Xxxxx Xxxxx
------------------------- ---------------------
Name: Dr. Arik El-Boher Name: Xxxxx Xxxxx
Title: CEO Title: E.V.P.
/s/ X. Xxxxxxxx /s/ Arik El-Boher
------------------------- -------------------------
Xxxxxxxxx Xxxxxx Xxxxxxxx Dr. Arik El-Boher
/s/ X. Xxxxxxx
-------------------------
Xxxxxxxxx Xxxx Xxxxxxx
