ASSET PURCHASE AGREEMENT
Exhibit
10.1
Execution
Copy
THIS
ASSET PURCHASE AGREEMENT (this “Agreement”),
dated
as of November 7,
2006,
is by and between SuperCom Ltd., an Israeli corporation (“Seller”)
and On
Track Innovations Ltd., an Israeli corporation (“Buyer”).
WHEREAS,
Buyer desires to purchase certain assets of Seller and to assume certain
liabilities of Seller in connection with the Acquired Assets and Seller desires
to sell such assets and assign such liabilities to Buyer, upon the terms and
conditions set forth herein (the “Asset
Purchase”);
and
WHEREAS,
and contemporaneous with Closing, Seller and Buyer will enter into the Service
and Supply Agreement, and Buyer will issue to Seller and Seller will purchase
from Buyer the Restricted Shares pursuant to the terms of this
Agreement;
NOW,
THEREFORE, in consideration of the premises and the representations, warranties,
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE
I
Certain
Definitions
As
used
herein, unless the context otherwise requires, the following terms (or any
variant in the form thereof) have the following respective meanings. Terms
defined below or otherwise herein in the singular shall have a comparable
meaning when used in the plural, and vice
versa,
and the
reference to any gender shall be deemed to include all genders. Unless otherwise
defined or the context otherwise clearly requires, terms for which meanings
are
provided herein shall have such meanings when used in any Schedule hereto and
each collateral document and certificate executed or required to be executed
pursuant hereto or thereto or otherwise delivered, from time to time, pursuant
hereto or thereto.
“Acquired
Assets”
means
all those properties, rights, interests and other tangible and intangible assets
of Seller, except for the Excluded Assets (as defined below), whether or not
required to be reflected on a balance sheet prepared in accordance with
generally accepted accounting principles of Seller, including without
limitations:
(a) the
inventory scheduled in Part 1.1(a) of the Disclosure Schedule;
(b) the
equipment scheduled in Part 1.1(b) of the Disclosure Schedule, together with
all
existing documentations, drawings, records, instructions, manuals and other
information related thereto;
(c) the
Software Agreements scheduled in Part 1.1(c) of the Disclosure
Schedule;
(d) the
rights of Seller under the Contracts scheduled in Part 1.1(d) of the Disclosure
Schedule;
(e) the
Governmental Authorizations scheduled in Part 1.1(e) of the Disclosure
Schedule;
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(f) the
SuperCom Intellectual Property as scheduled in Part 1.1(f) of the Disclosure
Schedule, including SuperCom Software (together with its source code and
compilation modules);
(g) all
claims of Seller (including claims for past infringement of Intellectual
Property), and causes of action of Seller against other Persons (regardless
of
whether or not such claims and causes of action have been asserted by Seller),
and all rights of indemnity, warranty rights, rights of contribution, rights
to
refunds, rights of reimbursement and other rights of recovery possessed by
Seller (regardless of whether such rights are currently exercisable), scheduled
in Part 1.1(g) of the Disclosure Schedule;
(h) all
advertising and promotional materials relating to the Acquired Business;
and
(i) all
books, records, files and data of Seller relating to the Acquired Business
and
necessary to its continuance.
“Acquired
Business”
means
the portion of Seller’s business, which is specifically and principally
dedicated to the development, license, sale, distribution, maintenance, or
support of the IPS activities (in the meaning used by Seller), smartcards,
ID
cards and/or tags, plastic cards, passports, passport components, certificates
and any similar technology, contact and/or contactless technology and any
similar technology, except for the activities and rights used (and with regard
to Intellectual Property rights, exclusively used) in the fields specified
in
sub sections (i) and (ii) under the definition of the Excluded
Assets.
“Action”
means
any action, suit, arbitration, litigation, inquiry, proceeding or investigation
by or before any court, governmental or other regulatory or administrative
agency, commission or tribunal.
“Adverse,”
or
“Adversely”
when
used in conjunction with “Affect,” “Change” and “Effect” means, with respect to
Seller, Buyer or other Person, whichever is the obligor in the context to which
such term applies, any event which could reasonably be expected to (a) adversely
affect the enforceability of this Agreement by the obligee, or (b) adversely
affect the obligor’s properties, financial condition or results of operations,
or (c) impair the obligor’s ability to fulfill its obligations under the terms
of this Agreement, or (d) adversely affect the aggregate rights and remedies
of
the obligee under this Agreement.
“Affiliate”
means,
with respect to any Person, any other Person controlling, controlled by or
under
common control with, such Person, with “control” for such purpose meaning the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities or voting interests, by contract or otherwise.
“Assumed
Liabilities”
means
those liabilities of Seller scheduled on Part 1.2 of the Disclosure Schedule
(including the Contingent Liabilities).
“Xxxx
of Sale“
has
the
meaning assigned to it in Section 2.2(a) below.
“Buyer’s
Assumed Employees”
means
employees of Seller as the date hereof, specified in Schedule
I.
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“Buyer
SEC Reports“
has
the
meaning assigned to it in Section 4.4(a) below.
“Closing”
means
the consummation of the transactions contemplated by Section 2.1 of this
Agreement.
“Closing
Date”
means
the date on which the conditions set forth in Articles VII and VIII hereof
shall
be satisfied or duly waived, or if Seller and Buyer mutually agree on a
different date for the Closing, the date upon which they have mutually
agreed.
“Closing
Documents”
has
the
meaning assigned to it in Section 2.2(b) below.
“Contingent
Liabilities”
means,
those Liabilities of Seller as of the date of this Agreement to the extent
not
satisfied by Seller by the Closing Date (pursuant to their original terms),
a
list of which is scheduled in Part 1.2 of the Disclosure Schedule, plus each
of
the Liabilities incurred by Seller prior to Closing in the Ordinary Course
of
Business.
“Contract”
means
any written note, bond, mortgage, indenture, lease, contract, instrument,
license, agreement, sales order, purchase order, open bid or other obligation
or
commitment and all rights therein.
“Disclosure
Schedule”
means
the schedule (dated as of the date of the Agreement) delivered to Buyer on
behalf of Seller, a copy of which is attached hereto and incorporated herein
by
reference.
“Entity”
means
any Person other than a natural Person.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended
“Excluded
Assets”
means,
all of Seller's and its Affiliate's business activities, assets and rights,
including IP rights, used in the following fields: (i) Tracking solutions based
on active RF tags; (ii) IRMS systems (formerly known as SDSMS); and (iii) the
Existing Projects, as defined herein. For the avoidance of doubt,
notwithstanding anything to the contrary herein, none of the assets described
in
clauses (a) to (i) of the definition of Acquired Assets shall be deemed as
Excluded Assets.
“Existing
Projects“
means
all projects listed in Part 1.3 of the Disclosure Schedule, including inventory
related thereto, but excluding the Intellectual Property rights related thereto.
“Facility”
means
the premises under lease pursuant to the Lease.
“Governmental
Authority”
means
any nation or government, any state or other political subdivision thereof,
any
federal, state, local or foreign Entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
including any government authority, agency, department, board, commission,
or
instrumentality of the United States, any state of the United States or
political subdivision thereof, and any tribunal or arbitral authority of
competent jurisdiction, and any self-regulatory organization.
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“Governmental
Authorizations”
means,
with regard to any Person, all approvals, concessions, consents, franchises,
licenses, permits, plans, registrations and other authorizations of all
Governmental Authorities.
“Indemnification
Period”
has
the
meaning assigned to it in Section 9.1(a) below.
“Intellectual
Property”
means
all intellectual property rights, including, without limitation, Patents with
respect to a design or an invention, including patents and certificates of
addition, utility models, and patent applications, as well as, any continuation,
division, extension, renewal, revival, or reissue thereof or substitution
therefore; Trademarks; Copyrights; Trade Secrets, including any (i) information
which is currently in Seller’s possession and used, compiled or produced by the
Seller for its commercial activity,
such
as,
for example, components supply and cost information, marketing plans, customer
lists, sales leads, competitor analyses, active transaction files, business
plans, business contacts, files, books, records and instruments, to the extent
exist, (ii) information which is currently in Seller’s possession that generally
facilitates its activity, increases its revenues, or provides an advantage
over
the competition and is not generally known, to the extent exists, and (iii)
any
material currently in Seller’s possession which embodies or describes the Seller
and its activity; Know-How including, without limitation all factual knowledge
and information currently in Seller’s possession which is not capable of
precise, separate description but which, in an accumulated form, after being
acquired as a result of trial and error, gives to the one acquiring it the
ability to produce and market something which one otherwise would not have
known
how to produce and market with the same accuracy or precision necessary for
commercial success that Seller owns or is licensed to use or has in it's
control; Technology including impositions, articles of manufacture, processes,
apparatus, data, writings and works of authorship (including, without
limitation, software, protocols, program codes, audio-visual effects created
by
program code, and documentation relating thereto); drawings and other tangible
items (including, without limitation, materials, samples, components, and
operating devices, e.g., board assemblies, prototypes, and engineering models),
all of which are in Seller’s possession at the date hereof.
“Key
Employees”
has
the
meaning assigned to it in Section 3.17(a) below.
“Law”
means
any statute, regulation, ordinance, rule, edict, resolution, principle of common
law, treaty, convention, determination or decision and other law promulgated,
issued, enacted, adopted, passed, approved or otherwise put into effect by
a
Governmental Authority.
“Lease”
means
that certain Lease Agreement, dated as of April 18 2005 by and between Seller
and Somat Hasharon Ltd.
“Liability”
means
any debt, obligation, duty or liability of any nature (including any unknown,
undisclosed, unmatured, unaccrued, unasserted, contingent, indirect,
conditional, implied, vicarious, derivative, joint, several or secondary
liability), regardless of whether such debt, obligation, duty or liability
would
be required to be disclosed on a balance sheet prepared in accordance with
generally accepted accounting principles and regardless of whether such debt,
obligation, duty or liability is immediately due and payable.
“Lien”
means
a
restriction on voting or transfer, or a pledge, lien, mortgage, hypothecation,
collateral assignment, encumbrance, easement or security interest.
“Lock-Up
Agreement”
means
that certain Lock-Up Agreement, dated as of the Closing Date, between Seller
and
Buyer, in the form attached hereto as Exhibit A.
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”Machines”
means
those machines scheduled in Part 1.4 of the Disclosure Schedule.
“Options”
has
the
meaning assigned to it in Section 4.3(b) below.
“Orders”
means
judgments, orders, injunctions, decrees, stipulations or awards (whether
rendered by a court, administrative agency, arbitrator or other tribunal and
whether imposed or entered by consent).
“Ordinary
Course of Business” means
any
action taken by or on behalf of Seller that is:
(a) recurring
in nature, consistent with the past practices of Seller and taken in the
ordinary course of the normal day-to-day operations of Seller;
(b) not
required to be authorized or reauthorized by the shareholders of Seller, the
board of directors of Seller or any committee of the board of directors of
Seller; and
(c) notwithstanding
the foregoing, with regard to Liabilities incurred by the Seller between the
date of this Agreement and the Closing Date, such Liabilities shall be deemed
as
part of the Ordinary Course of Business, as long as they do not exceed $20,000
individually and $150,000 in the aggregate until December 31st
2006,
and $300,000 for the entire period.
“Ordinary
Shares“
means
Ordinary Shares, par value NIS 0.10 each, of Buyer.
“Other
Seller Businesses”
means
all operations, activities and businesses conducted or committed to on or before
the Closing Date, and all reasonably related activities conducted thereafter,
by
Seller, or any of its Affiliates, other than the operations and activities
of
Seller in connection with the Acquired Business.
“Person”
means
an individual, a corporation, a limited liability company, a partnership, an
association, a trust or any other entity or organization, including a
Governmental Authority.
“Registration
Rights Agreement”
means
that certain Registration Rights Agreement, dated as of the Closing Date,
between Seller and Buyer, in the form attached hereto as Exhibit B.
“Regulation
S”
means
Regulation S under the Securities Act.
“Restricted
Shares”
means
2,827,200 Ordinary Shares, par value NIS 0.10 each of Buyer, to be issued to
Seller at Closing.
“SEC“
means
the United
States Securities and Exchange Commission.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Service
and Supply Agreement”
means
that certain Service and Supply Agreement dated as of the Closing Date between
Seller and Buyer, in substantially the form attached hereto as Exhibit C.
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“SuperCom
Contracts”
means
the Contracts listed as Acquired Assets in Part 1.1(d) of the Disclosure
Schedule.
“SuperCom
Intellectual Property”
has
the
meaning assigned to it in Section 3.11(a) below.
“SuperCom
Software”
has
the
meaning assigned to it part 1.1(h) to the Disclosure Schedule.
“Taxes”
means
all taxes (whether federal, state, local or foreign) based upon or measured
by
income (whether gross, net, alternative taxable or other) and any other tax
whatsoever, including, but not limited to, gross receipts, profits, sales,
use,
occupation, value added, ad valorem, transfer, franchise, withholding, payroll,
employment, excise or property taxes, together with any interest, penalties
or
additions imposed with respect thereto.
“Transaction
Documents”
means:
(a) this Agreement; (b) the Service and Supply Agreement; (c) the Registration
Rights Agreement; (d) the Xxxx of Sale; and (e) the other agreements and
documents contemplated hereby.
ARTICLE
II
Sale
of Assets; Closing
Section
2.1 Purchase
and Sale
(a) On
the
basis of the representations, warranties, covenants and agreements and subject
to the satisfaction or waiver of the conditions set forth herein, at the
Closing, against the issuance of the Restricted Shares free and clear of all
Liens, Buyer will purchase from Seller and Seller will sell, convey, transfer,
assign and deliver to Buyer, free and clear of all Liens, the Acquired Assets
at
Seller’s premises, and Seller will assign and Buyer will assume and agree to
pay, satisfy and discharge when due in accordance with their terms any and
all
Assumed Liabilities. All transactions at the Closing shall be deemed to be
effective as of the close of business on the Closing Date, and events taking
place and periods ending thereafter shall be deemed to have taken place or
ended
after the Closing Date.
(b) Seller
shall retain all rights with respect to the Excluded Assets and Buyer shall
have
no rights with respect to the Excluded Assets.
(c) Seller
shall retain all rights, liabilities and obligations related to the Acquired
Assets and the Acquired Business, the due date of which is prior to the Closing
Date.
Section
2.2 Closing
Documents
At the
Closing:
(a) Seller
shall assign and transfer to Buyer the Acquired Assets, and Buyer shall assume
from Seller the due payment, performance and discharge of the Assumed
Liabilities by delivery of (i) a General Assignment, Assumption and Xxxx of
Sale
in form and substance reasonably satisfactory to Seller and Buyer (the
“Xxxx
of Sale”),
duly
executed by Seller and Buyer, (ii) all such other good and sufficient
instruments of conveyance, assignment and transfer, and such affidavits and
other instruments in form and substance as shall be effective to transfer to
Buyer the Acquired Assets, and (iii) all such other good and sufficient
instruments of assumption as shall be effective to cause Buyer to assume the
Assumed Liabilities.
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Buyer
shall issue the Restricted Shares to Seller, and shall, in such denominations
as
may reasonably be requested by Seller, deliver one or more share certificates
evidencing the issuance of the Restricted Shares to Seller.
(b) Seller
and Buyer shall deliver the certificates and other documents required to be
delivered under Articles VII and VIII hereof (together with the other documents
specified in Section 2.2(a), the “Closing
Documents”).
Section
2.3 Time
and Place of Closing
The
Closing shall take place on the Closing Date at 10:00 a.m. (Israel time), at
the
offices of Zysman, Aharoni, Xxxxx & Co., Law Xxxxxxx, 00X Xxxxxxxx Xx., Xxx
Xxxx, or such other place or time as the parties may agree.
Section
2.4 Nonassignable
Contracts
Anything
in this Agreement to the contrary notwithstanding, this Agreement shall not
constitute an agreement to assign any claim or obligation imposed by Contract
or
Law or Governmental Authorization, or any claim, right or benefit arising
thereunder or resulting therefrom, if the Asset Purchase would be deemed an
attempted assignment thereof without the required consent of a third party
thereto or Governmental Authority, as the case may be, and would constitute
a
breach thereof or in any way affect the rights of Seller or Buyer thereunder.
If
such consent is not obtained, or if the consummation of the Asset Purchase
would
affect the rights of Seller thereunder so that Buyer would not in fact receive
the benefit of all such rights, Seller shall cooperate with Buyer in any
arrangement designed to provide for the benefits thereof to Buyer, including
subcontracting, sublicensing or subleasing to Buyer or enforcement for the
benefit of Buyer of any and all rights of Seller against a third party thereto
arising out of the breach or cancellation by such third party or otherwise;
and
any assumption by Buyer of obligations thereunder whether by operation of Law
or
otherwise in connection with the Asset Purchase which shall require the consent
or approval of any third party shall be made subject to such consent or approval
being obtained.
ARTICLE
III
Representations
and Warranties of Seller
Seller
hereby represents and warrants to Buyer as follows:
Section
3.1 Incorporation;
Authorization; Capitalization; Etc.
(a) Seller
is
an Israeli corporation. Seller is duly organized and validly existing, and
qualified to transact business in each jurisdiction in which the nature of
property owned or leased by Seller or the conduct of its business requires
it to
be so qualified, except where the failure to be in good standing or to be duly
qualified to transact business, does not have a material Adverse Affect on
the
Acquired Assets.
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(b) Seller
has all requisite power and authority (corporate and other) to own the Acquired
Assets, to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of the Transaction Documents
and
the consummation of the transactions contemplated thereby have been duly and
validly authorized by all necessary corporate proceedings on the part of Seller.
The execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby will not (i) violate any provision
of
Seller’s Articles of Association, or (ii) violate any provision of, or be an
event that is (or with the giving of notice or the passage of time will result
in) a violation of, or result in the acceleration of or entitle any Person
to
accelerate (whether after the giving of notice or lapse of time or both) any
obligation under, or result in the imposition of any Lien upon (except such
Liens as do not interfere with current use of) any of the Acquired Assets
pursuant to, any Contract or Order to which Seller is a party or by which it
is
bound that, in the case of clause (ii), would, reasonably expected to have
a
material Adverse Effect on the Acquired Assets. This Agreement has been duly
executed and delivered by Seller, and, assuming the due execution hereof by
Buyer, this Agreement constitutes the legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms.
Section
3.2 Title
to Assets
Except
as set forth in Part 3.2 of the Disclosure Schedule, Seller owns and has good
title to the Acquired Assets, free and clear of all Liens, and Seller will
deliver the same to Buyer at the Closing, free and clear of all Liens. Except
as
set forth in Part 3.2 of the Disclosure Schedule, the Acquired Assets
collectively constitute all of the properties, rights, Government
Authorizations, interests and other tangible and intangible assets employed
or
relied upon by Seller to conduct the Acquired Business as conducted and as
proposed to be conducted.
Section
3.3 Reserved
Section
3.4 Compliance
with Laws
(a)
Except as set forth in Part 3.4 of the Disclosure Schedule and except for
violations or failures, if any, that do not have a material Adverse Effect:
(a)
Seller is in material compliance with each Law that is applicable to the
Acquired Business or to Seller’s ownership or use of any of the Acquired Assets;
and (b) Seller has not received any notice in writing or, to its knowledge,
otherwise from any Governmental Authority regarding any actual or alleged
violation of, or failure to comply with, any Law that is applicable to the
Acquired Business or to Seller’s ownership or use of any of the Acquired Assets.
This Section does not relate to employee benefit matters to which Section 3.17
is applicable.
Section
3.5 Consents,
Approvals, Other Authorizations
Except
as set forth in this Agreement, no filing with, notice to or authorization,
consent or approval of, any Governmental Authority is required to be made,
filed, given or obtained by Seller or any of its Affiliates, in connection
with
the consummation of the Asset Purchase, except as set forth in Part 3.5 of
the
Disclosure Schedule and except for those that the failure to make, file, give
or
obtain which are not expected to have a material Adverse Effect on the Acquired
Assets. There is no material Governmental Authorization required of Seller
that
is required and that it has not obtained in connection with its conduct of
the
Acquired Business as conducted.
Section
3.6 Insurance
Seller
is adequately insured or has been self-insured against all risks and liabilities
with respect to the Acquired Assets. No insurance policies or benefits
thereunder are included in the Acquired Assets.
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Section
3.7 Machines
Seller
has provided Buyer with all existing documentations, drawings, records,
instructions, manuals and other information in writing in connection with the
Machines, sufficient for the assembly, construction and maintenance of the
Machines by a third party without prior experience with the assembly,
construction and maintenance of such machines.
Section
3.8 Reserved.
Section
3.9 Customers;
Distributors
Seller
has not, to its knowledge, received any notice in writing from any customer
that
is a party to SuperCom Contract or anyone else who is considered a significant
customer in connection with the Acquired Assets stating its intent to terminate
or significantly reduce its use under SuperCom Contract or the Acquired Assets.
Included in the SuperCom Contracts are all Contracts into which Seller has
entered providing for the license and distribution of the SuperCom Software
to
customers.
For
purposes of this section 3.9, a "significant" customer means a customer that
generates to Seller a yearly income that exceeds U.S. $ 150,000.
Section
3.10 Inventory
Except
as scheduled in Part 3.10 of the Disclosure Schedule, the inventory scheduled
in
Part 1.1(a) of the Disclosure Schedule is of such quality and quantity as to
be
usable and saleable by Seller in the Ordinary Course of Business.
Section
3.11 Equipment,
Etc.
Except
as scheduled in Part 3.11 of the Disclosure Schedule, the Equipment scheduled
in
Part 1.1(b): (i) is structurally sound, free of material defects and
deficiencies and in good repair (ordinary wear and tear excepted); and (ii)
is
adequate for the uses to which it is being put by Seller.
Section
3.12 Real
Property
Seller
does not own or hold under lease any real property or interest therein, except
for the Facility, the primary use of which is to support the Acquired Business.
With respect to the Lease: (i) the Lease is in full force and effect; (ii)
Landlord (as defined in the Lease) is not in default or breach of any of
Landlord’s material obligations under the Lease and Seller has no claims against
Landlord under the Lease; (iii) no agreements exist which modify, surrender
or
rescind the Lease or affect the premises, by and between Seller and Buyer;
(iv)
the Annual Base Rent (as defined in the Lease) and all additional rent due
until
the Closing Date have been or shall be paid through and including the Closing
Date; and (v) Seller has not assigned, encumbered, pledged or mortgaged in
any
way whatsoever the leasehold interest of Seller thereby assigned.
Section
3.13 Intellectual
Property
(a) Part
3.13
of the Disclosure Schedule lists all patents, patent applications, registered
trademarks and applications thereof, registered servicemarks and applications
therefore registered maskworks and application therefore, and registered
copyrights and applications therefore that (i) are owned by Seller as of the
date of this Agreement, and (ii) are used or held for use in the conduct of
the
Acquired Business as conducted by Seller as of the date of this Agreement and
as
proposed to be conducted (“SuperCom Intellectual Property”).
(b) Without
derogating from the foregoing in this Agreement, except as set forth in Part
3.13(b) of the Disclosure Schedule, there are, as of the date of this Agreement,
no restrictions on Seller’s right to assign the SuperCom Intellectual Property
which Seller is required to assign to Buyer pursuant to this Agreement free
and
clear of all Liens.
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(c) Except
as
otherwise set forth in Part 3.13(c) of the Disclosure Schedule and except for
any claims which have been previously resolved and are no longer outstanding
or
which were made more than four (4) years prior to the date of this Agreement
and
which have not been subsequently pursued, to Seller’s knowledge, as of the date
hereof, Seller has not received any written claim from any third party alleging
infringement of said third party’s Intellectual Property which is based on the
use of the SuperCom Intellectual Property in connection with the conduct of
the
Acquired Business and which would reasonably be expected to have a material
Adverse Effect on the Acquired Business as conducted by Seller as of the date
hereof and as Seller may be required to conduct pursuant to the Potential
Projects (as defined in the Service and Supply Agreement).
(d) Upon
Closing, Buyer shall have the same rights as possessed by the Seller as of
the
date hereof to use, hold for use or otherwise exploit, to the fullest extent
permitted by law, all SuperCom Intellectual Property.
(e) To
the
Seller’s knowledge, the use of the SuperCom Intellectual Property in the conduct
of the Acquired Business as conducted as of the date hereof and as proposed
to
be conducted does not infringe any enforceable patent where such infringement
would reasonably be expected to have an Adverse Effect on the Acquired Business
and Seller has not received any notice of such infringement.
(f)Except
as
set forth on Part 3.13(f) of the Disclosure Schedule and except for claims
that
have previously been resolved or that were made more than four (4) years prior
to the date of this Agreement and were not subsequently pursued during the
four
(4) year period prior to the date of this Agreement, Seller has not made any
written claim to any third party alleging infringement of SuperCom Intellectual
Property, where such infringement would reasonably be expected to have an
Adverse Effect on the Acquired Business as conducted by Seller as of the date
hereof.
(g)Except
as
set forth on Part 3.13(f) of the Disclosure Schedule, there is no action, suit
or proceeding pending and served or, to Seller’s knowledge, threatened in
writing which challenges the validity, enforceability or ownership of any
SuperCom Intellectual Property, .
(h)
No
portion of SuperCom
Intellectual Property
and
SuperCom Software is subject to any open source license that requires disclosure
of any source code included in or used in connection with the generation of
SuperCom
Intellectual Property
and the
SuperCom Software as a result of any distribution thereof. To the extent that
any portion of SuperCom Software includes software that was licensed from a
third party pursuant to a certain license, Seller is in compliance with all
material terms and condition of such license. The execution, delivery and
performance of this Agreement will not result in the breach of, or create on
behalf of any third party the right to terminate or modify, any material
license, sublicense or other agreement relating to any SuperCom Software or
any
SuperCom
Intellectual Property.
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(i)To
Seller’s knowledge, the Intellectual Property assigned to Buyer pursuant to this
Agreement constitutes all Intellectual Property used in connection with the
Acquired Business as conducted prior to and until the Closing Date, and as
proposed to be conducted at the Closing Date that (i) is owned by Seller as
of the date of this Agreement, (ii) is used or has application in the
Acquired Business as conducted by Seller as of the date of this Agreement and
as
proposed to be conducted, provided, however, that, within two years of the
Closing Date, if either Seller or Buyer shall discover and identify any
Intellectual Property owned by Seller at Closing, which has any application
to
the Acquired Business as it is conducted on the Closing Date or proposed to
be
conducted at such time, then Seller shall amend the list set forth in Part
3.13
of the Disclosure Schedule to include such Intellectual Property and shall
take
all necessary actions to assign such Intellectual Property. The parties further
agree that within two years of the Closing Date, if Seller or Buyer shall
discover and identify any Intellectual Property owned by Seller at Closing,
which has any application to the Acquired Business as it is conducted on the
Closing Date or proposed to by conducted at such time and such Intellectual
Property also has been used within or has application to Other Seller
Businesses, Seller shall grant to Buyer a non-exclusive, royalty-free license
with a right to sublicense (and in a case of a merger, consolidation or sale
of
substantially all the assets of Buyer, the right to transfer) such Intellectual
Property solely for use in connection with the Acquired Assets or Acquired
Business.
(j)Except
as
set forth in Part 3.13(j) of the Disclosure Schedule, to Seller’s knowledge, it
has not, prior to the date hereof, materially infringed upon any copyrighted
material or breached any confidentiality obligation to any third party with
respect to any trade secrets which copyrighted material or trade secret is
incorporated in the SuperCom Software as of the date hereof exists and where
such infringement or breach shall have a material Adverse Effect on the Acquired
Business.
(k)Except
as
set forth
in
Part
3.13(k) of the Disclosure Schedule,
(i) the
source code to SuperCom
Software has
not
been disclosed to any third party and/or (ii) the Seller is not subject to
any
obligation to disclose such source code pursuant to any source code escrow
or
other agreements.
Section
3.14 Contracts
(a) Part
1.1(d) of the Disclosure Schedule provides an accurate list of each material
Contract used primarily in support of or furtherance of the Acquired Business.
Seller has delivered to Buyer accurate and complete copies of all SuperCom
Contracts identified in Part 1.1(d) of the Disclosure Schedule, including all
amendments thereto and. Each SuperCom Contract is in full force and effect.
(b) Except
as
set forth in Part 3.14(b) of the Disclosure Schedule or as would not result
in a
material Adverse Effect: (i) to Seller’s knowledge, no Person has violated or
breached, or declared or committed any material default under, any SuperCom
Contract; (ii) no event has occurred, and no circumstance or condition exists
(including the consummation of the transactions set forth in the Agreement),
that might (with or without notice or lapse of time) (A) result, to Seller’s
knowledge, in a material violation or material breach of any of the provisions
of any SuperCom Contract by either Seller or any other Person who is a party
to
such SuperCom Contract, (B) give any obligee under a SuperCom Contract the
right
to accelerate the maturity or performance of any SuperCom Contract, or (C)
give
any obligee under a SuperCom Contract the right to cancel, terminate or modify
any SuperCom Contract; (iii) Seller has not received any notice or other
communication (in writing) regarding any actual, alleged, possible or potential
violation or breach of, or default under, any SuperCom Contract; and (iv) Seller
has not waived any material right under any SuperCom Contract.
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(c) Part
3.14(c) of the Disclosure Schedule lists all material ongoing support and
maintenance obligations of Seller, not otherwise reflected in the SuperCom
Contracts, in connection with the SuperCom Software.
Section
3.15 Liabilities
Seller
has no Liabilities constituting Assumed Liabilities, except those scheduled
in
Part 1.2 of the Disclosure Schedule or obligations under the SuperCom Contracts
that arise after the Closing Date (except for such obligations thereunder that
are not ascertainable by reference to such Contracts).
Section
3.16 Reserved
Section
3.17 Employee
and Labor Matters
(a) Part
3.17
of the Disclosure Schedule sets forth all employees of Seller engaged directly
or indirectly in the Acquired Business (the “Key
Employees”,
and
all such Key Employees agreeing to offer of employment from Buyer shall be
referred to as (“Assumed
Employees”))
and
with respect to each such Key Employee lists: (i) the name and title of such
employee; (ii) the aggregate NIS amounts of the compensation (including wages,
salary, commissions, other benefits such as bonuses, car, phone, etc.) received
by such employee from Seller with respect to services performed in the twelve
month period prior to the Closing Date. Seller is current on all obligations
to
the Key Employees. Except as disclosed on Part 3.17(a) of the Disclosure
Schedule, the Key Employees constitute substantially all the employees employed
by Seller for the purpose of conducting the Acquired Business as of the date
hereof. Except as set forth in Part 3.17 of the Disclosure Schedule, Seller
is
not a party to or bound by, any employment contract or any union contract,
collective bargaining agreement or similar contract related to the Acquired
Business, other than those with general application to all employees in
Israel.
(b) No
Key
Employee, to Seller’s knowledge, has received within the six months prior to the
date hereof, an offer to join a business that may be competitive with the
Acquired Business. To Seller’s knowledge, no employee of Seller is a party to or
is bound by any confidentiality agreement, non-competition agreement or other
Contract (with any Person) that prevents the performance by such Key Employee
of
any of his material duties or responsibilities as an employee of Seller related
to the Acquired Business.
(c) Part
3.17(c) of the Disclosure Schedule sets forth the name of, and a general
description of the services performed by each independent contractor to whom
Seller has made any payment in excess of $50,000
since June 30, 2004, for the purpose of conducting the Acquired
Business.
Section
3.18 Deleted
Section
3.19 Sale
of Products
Each
product that has been sold by Seller in connection with the Acquired Business
to
any Person conformed and complied in all material respects with the terms and
requirements of any applicable warranty or other Contract. No product
manufactured or sold by Seller in connection with the Acquired Business has
been
the subject of any recall or other similar action; and no event has occurred,
and no condition or circumstance exists, that, to Seller’s knowledge, might
(with or without notice or lapse of time) give rise to or serve as a basis
for
any such recall or other similar action relating to any such product.
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Section
3.20 Performance
Of Services
All
services that have been performed on behalf of Seller for the purpose of
supporting or furthering the Acquired Business were, to Seller’s knowledge,
performed in material compliance with the Contracts applicable thereto.
Section
3.21 Actions;
Orders
Except
as set forth in Part 3.21 of the Disclosure Schedule, there is no pending
Action, and, to Seller’s knowledge, no Person has threatened (in writing) to
commence any Action: (i) that involves the Acquired Business or that otherwise
relates to or would materially Adversely Affect the Acquired Business or the
Acquired Assets (whether or not Seller is named as a party thereto); or (ii)
that challenges, or that may have the effect of preventing, delaying, making
illegal or otherwise interfering with, any of the transactions contemplated
hereby. Seller has delivered to Buyer accurate and complete copies of all
pleadings, correspondence and other written materials possessed by Seller that
relate to the Actions identified in Part 3.21 of the Disclosure Schedule. Except
as identified in Part 3.21 of the Disclosure Schedule, there is no Order to
which the Acquired Business, or any of the Acquired Assets owned or used by
Seller, is subject. To the knowledge of Seller, no Key Employee is subject
to
any Order that materially prohibits such Key Employee from engaging in or
continuing for Buyer any practice, conduct or activity currently engaged in
for
Seller. This Section does not relate to Intellectual Property matters, as to
which Section 3.13 is applicable.
Section
3.22 Non-Contravention;
Consents
(a)
Except
as
set forth in Part 3.22 of the Disclosure Schedule or except as would not result
in an Adverse Effect, neither the execution and delivery of any of the
Transaction Documents, nor the consummation or performance of any of the
transactions contemplated hereby, will directly or indirectly (with or without
notice or lapse of time):
(i) give
any
Governmental
Authority or other Person the right to prevent or delay the consummation of
any
of the transactions contemplated hereby;
(ii) contravene,
conflict with or result in a violation of any of the terms or requirements
of,
or give any Governmental Authority the right to revoke, withdraw, suspend,
cancel, terminate or modify, any Governmental Authorization that is to be
included in the Acquired Assets;
(iii) constitute
a material violation or breach of, or result in a material default under, any
provision of any Contract that is to be included in the Acquired Assets;
(iv) result
in
the imposition or creation of any Lien upon or with respect to any of the
Acquired Assets; and
(v) give
any
obligee the right to declare a default under, or to cancel, terminate or modify,
any SuperCom Contract, or to accelerate the maturity or performance
thereof.
(b)
Except
as
set forth in Part 3.5 or Part 3.22 of the Disclosure Schedule Seller is not
or
will not be required, to make any filing with or give any notice to, or to
obtain any consent from, any Person in connection with the execution and
delivery of any of the Transaction Documents or the consummation or performance
of any of the transactions contemplated hereby.
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Section
3.23 Investment
Representations
Seller
understands that the Restricted Shares have not been registered under the
Securities Act. Seller also understand that the Restricted Shares are being
offered and sold pursuant to an exemption from registration contained in the
Securities Act based in part upon Seller’s representations contained in the
Agreement. Seller hereby represents and warrants as follows:
(a) It
is
acquiring the Restricted Shares for its own account for investment only, and
not
with a view towards their distribution.
(b) It
represents that by reason of its, or of its management’s, business or financial
experience, it has the capacity to protect its own interests in connection
with
the transactions contemplated hereunder. Further, it is aware of no publication
of any advertisement in connection with the transactions contemplated
hereunder.
(c) It
represents that it is an accredited investor within the meaning of Regulation
D
under the Securities Act.
(d) It
has
had the opportunity to ask questions of and receive answers from, Buyer and
its
management regarding the terms and conditions of its investment in Buyer and
also conducted an independent due diligence by a representative
thereof.
(e) It
acknowledges and agrees that the Restricted Shares must be held indefinitely
unless it is subsequently registered under the Securities Act or an exemption
from such registration is available. It has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act as in effect from
time to time, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things: the availability of certain current public information about
Buyer, the resale occurring following the required holding period under Rule
144
and the number of shares being sold during any three-month period not exceeding
specified limitations.
(f) The
Seller is not a “U.S. person”, as such term is defined in Regulation S, his
principal address is outside the United States, and it was located outside
the
United States at the time any offer to buy the Restricted Shares was made to
the
Seller and at the time that this agreement was entered into by the
Seller.
(g) At
no
time was the Seller presented with or solicited by any leaflet, public
promotional meeting, newspaper or magazine article, radio or television
advertisement or any other form of general advertising or general solicitation
concerning the Restricted Shares.
(h) The
Seller represents that it is not a broker or dealer, nor is it an affiliate
of
any broker or dealer. For the purpose of this Sub-Section, the term "dealer"
means any person who engages either for all or part of his time, directly or
indirectly, as agent, broker, or principal, in the business of offering, buying,
selling, or otherwise dealing or trading in securities issued by another person;
and the term "broker" means any person engaged in the business of effecting
transactions in securities for the account of others.
(i) The
Seller acknowledges and agrees that the certificate representing the Restricted
Shares shall bear a restrictive legend as the Buyer’s transfer agent may
determine is necessary or appropriate under applicable securities laws,
substantially to the effect of the following:
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“The
securities represented by this certificate have not been registered under the
Securities Act of 1933 and may not be transferred, sold or otherwise disposed
of
in the absence of an effective registration statement with respect to the shares
evidenced by this certificate, filed and made effective under the Securities
Act
of 1933, or an opinion of counsel satisfactory to On Track Innovations Ltd.
to
the effect that registration under such Act is not required.”
(j) The
Seller will not register any transfer of the Restricted Shares not made in
accordance with the provisions of Regulation S, pursuant to registration under
the Securities Act, or pursuant to an available exemption from
registration.
Section
3.24 Restrictions
on Short Sales
Seller
represents, warrants and covenants that neither it nor any Affiliate thereof
is
engaged in (i) any “short sales” (as such term is defined in Rule 200
promulgated under the Exchange Act) of the Restricted Shares, including, without
limitation, the maintaining of any short position with respect to, establishing
or maintaining a “put equivalent position” (within the meaning of Rule 16a-1(h)
under the Exchange Act) with respect to, entering into any swap, derivative
transaction or other arrangement (whether any such transaction is to be settled
by delivery of Ordinary Shares, other securities, cash or other consideration)
that transfers to another, in whole or in part, any economic consequences or
ownership, or otherwise dispose of, any of the Restricted Shares by such
purchaser or (ii) any hedging transaction which establishes a net short position
with respect to the Restricted Shares.
Section
3.25 Accuracy
of Information Furnished; Full Disclosure
All
representation of Seller herein or in any of the Disclosure Schedules are true,
correct and complete in all material respects. Such information states all
material facts required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which such statements are made,
true, correct and complete in all material respects. All facts and information
with regard to the condition of the Acquired Assets, the Assumed Assets and
Acquired Business that would reasonably be considered as material for disclosure
in connection with the transactions set forth in this Agreement have been
disclosed to Buyer. Neither this Agreement nor any ancillary agreement or any
certificate made or delivered in connection herewith or therewith 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.
Section
3.26 Schedules
(a) Any
matter set forth in any Part of the Disclosure Schedule shall be deemed to
be
referred to all other Parts of the Disclosure Schedule to which such matter
would relate.
(b) The
inclusion of any item on any Part of the Disclosure Schedule shall not be
construed as an indication that such item is material in any respect or as
a
representation or warranty with respect to such item.
ARTICLE
IV
Representations
and Warranties of Buyer
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Buyer
hereby represents and warrants to Seller as follows:
Section
4.1 Incorporation;
Authorization; Etc.
Buyer is
a corporation duly organized, and validly existing under the laws of the State
of Israel. Buyer has full corporate power to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of the Transaction Documents,
the performance of Buyer’s obligations hereunder, including issuance of the
Restricted Shares to Seller, and thereunder and the consummation of the
transactions contemplated hereby and thereby at the Closing, shall have been
duly and validly authorized by Buyer and no other corporate proceedings or
actions on the part of Buyer, its Board of Directors or its shareholders shall
be necessary at the Closing. This Agreement has been duly executed and delivered
by Buyer, and, assuming the due execution hereof by Seller, this Agreement
constitutes the legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms. An updated and complete copy of
the
Memorandum and Articles of Association of Buyer was provided to Seller prior
to
the date hereof.
Buyer
has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, the failure
of
which does not have a material Adverse Effect on Buyer. Each of the Buyer and
its subsidiaries is duly qualified or licensed to carry on its business as
it is
now being conducted, and is qualified to do business in each jurisdiction where
the character of its properties owned or leased or the nature of its activities
makes such qualification necessary, except for failures to be so qualified
that
would not have a material Adverse Effect.
Section
4.2 Issuance
of Restricted SharesThe
Restricted Shares issued to Seller pursuant to this Agreement at the Closing
against the transfer of the Acquired Assets and the assignment of the Assumed
Liabilities, shall be duly authorized and validly issued, fully paid,
nonassessable and free of any preemptive rights, liens, restrictions,
encumbrances or third party rights (except for restrictions on transfer set
forth in the Transaction Documents or imposed by applicable securities laws),
and will have the rights, preferences, privileges, and restrictions set forth
in
Buyer’s Articles of Association and this Agreement.
Section
4.3 Capitalization
(a) The
authorized share capital of Buyer consists of 50,000,000 Ordinary Shares of
which 15,556,008 Ordinary Shares are issued and outstanding on the date hereof.
All of such issued and outstanding shares are validly issued, fully paid and
nonassessable. No Ordinary Shares are owned by the Buyer or any of its
subsidiaries.
(b) As
of the
date hereof, Buyer has reserved an adequate number of Ordinary Shares for
issuance upon exercise of outstanding options or other securities convertible
or
exchangeable into Ordinary Shares (together, the “Options”),
the
total number of such Options as of the date of this Agreement is set forth
in
Schedule
4.3(b).
Other
than the 2001 Share Option Plan, the 1995 Share Option Plan and the 2001
Employees Share Option Plan (collectively, the "Option
Plans"),
Buyer
has no other plan which provides for the grant of options, warrants or rights
to
purchase Ordinary Shares, share appreciation or similar rights or share awards.
Schedule
4.3(b)
sets
forth the following information with respect to each Option outstanding as
of
the date of the Agreement: (i) the number of shares subject to such Option;
(ii)
the exercise price; Except as set forth above, there are not now, and at the
Closing there will not be any claims, rights (including without limitation
any
share appreciation or similar rights), convertible securities or other
agreements or commitments of any character obligating the Buyer to issue,
transfer or sell any additional securities, other than Ordinary Shares issued
after the date hereof upon the exercise of Options outstanding on the date
hereof, and options and warrants issued to employees, consultants and service
providers between the date hereof and the Closing.
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Section
4.4 Commission
Filings; Financial Statements
(a) Buyer
has
filed all forms, reports, schedules, statements and other documents required
to
be filed by it since January 1, 2005, to the date of this Agreement with the
SEC
(all such filings collectively, as supplemented and amended since the time
of
the filing, the "Buyer
SEC Reports")
all of
which complied, when filed, in all material respects with all applicable
requirements of the Exchange Act, and the rules and regulations promulgated
thereunder, as the case may be. Buyer has made available to Seller a true and
correct copy of each of the Buyer SEC Reports. The audited consolidated
financial statements and unaudited consolidated financial statements of Buyer
included or incorporated by reference in the Buyer SEC Reports, (i) comply
as to
form, in all material respects, with the published rules and regulations of
the
SEC, (ii) have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and (iii) present fairly,
in
all material respects, the financial position and results of operations and
cash
flows of the Buyer and its subsidiaries on a consolidated basis at the
respective dates and for the respective periods indicated (except, in the case
of interim financial statements, for normal year-end adjustments and to which
hereby represented based on Buyer's best knowledge, and the absence of notes).
Without derogating from the generality of the aforesaid, the Buyer's report
on
Form 20-F for the period ended December 31, 2005, a copy of which was made
available to Seller, (i) has been prepared in compliance in all material
respects with all applicable requirements of the Exchange Act and (ii) does
not
contain any untrue statements of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstance under which they were made, not
misleading.
(b) Since
December 31, 2005, except as disclosed in the Buyer SEC Reports, there has
been
no material Adverse change in the business, operations, properties, prospects,
assets or condition of Buyer, and to Buyer's knowledge, no event has occurred
or
circumstances exist that shall result in a material Adverse Effect.
Section
4.5 Nasdaq
Listing Matters
The
Ordinary Shares are registered pursuant to Section 12(b) of the Exchange Act
and
are listed on the Nasdaq under the ticker symbol “XXXX.” Buyer
has not
received any notice that it is not currently in compliance with the listing
or
maintenance requirements of the Nasdaq. The issuance and sale of the Restricted
Shares under this Agreement do not contravene the rules and regulations of
Nasdaq.
Buyer
has taken no action and has no present intent to take any action, designed
to,
or likely to have the effect of, terminating the registration of the Ordinary
Shares under the Exchange Act or de-listing the Ordinary Shares from
Nasdaq.
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Section
4.6 No
Conflict, Breach, Violation or Default; Required Filings and
Consents
(a) The
execution, delivery and performance of the Transaction Documents by Buyer and
the issuance and transfer of the Restricted Shares will not conflict with or
result in a material breach or material violation of any of the terms and
provisions of, or constitute a material default under (i) Buyer’s Articles or
Memorandum
of
Association, as in effect on the date hereof (true and complete copies of which
have been made available to Seller), or (ii)(A) any statute, rule, regulation
or
order of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over Buyer, or any of its assets or properties, or (B)
any
agreement or instrument to which Buyer is a party or by which Buyer is bound
or
to which any of its assets or properties is subject, where the failure to comply
under (i) and (ii) in this Section 4.6, shall have a material Adverse Effect
on
Buyer.
(b)
Except
as set forth in this Agreement, the execution and delivery of this Agreement
by
Buyer does not, and the performance of its obligations hereunder will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, except (i) for applicable
requirements, if any, of the Securities Act, the Exchange Act, and the rules
and
regulations thereunder, applicable applications with Nasdaq and appropriate
documents with the relevant authorities of other jurisdictions in which Buyer
is
qualified to do business, and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not, reasonably be expected to have a material Adverse Effect on Buyer,
or
prevent the parties hereto from performing their obligations under the
Transaction Documents.
Section
4.7 Compliance.
Buyer
is in material compliance with, and is not in material violation of, any
applicable Laws with respect to the conduct of its business, or the ownership
or
operation
of its
business, except for failures to comply or violations which, shall not have
a
material Adverse Effect on Buyer. Buyer is not in a material default or
violation of any term, condition or provision
of its
Articles
or Memorandum of Association.
No
written notice of a material non-compliance with any
applicable Laws
has been
received by Buyer during the 12 month period prior to the date of this
Agreement.
ARTICLE
V
Covenants
of Seller and Buyer
Section
5.1 Confidentiality
(a) Any
information provided by Buyer or its representatives to Seller or its
representatives pursuant to this Agreement and in the conduct of their due
diligence and other actions related to the preparation of this Agreement shall
be held by Seller and its representatives in accordance with, and shall be
subject to the terms of, the Confidentiality Agreement dated August 11, 2006
by
and between Seller and Buyer, which is hereby incorporated in this Agreement
as
though fully set forth herein.
(b) Any
information provided by Seller or its representatives to Buyer or its
representatives pursuant to this Agreement and in the conduct of their due
diligence and other actions related to the preparation of this Agreement and
is
not part of the Acquired Assets or the Assumed Liabilities, shall be held by
Seller and its representatives in accordance with, and shall be subject to
the
terms of, the Confidentiality Agreement dated August 11 2006 by and between
Seller and Buyer, which is hereby incorporated in this Agreement as though
fully
set forth herein.
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Section
5.2 Best
Efforts; Obtaining Consents
In case
at any time after the date hereof, any further action is necessary or desirable
(i) to obtain necessary waivers, consents and approvals from other parties
to
material Contracts, (ii) to obtain consents, approvals and authorizations that
are required to be obtained under any Law, (iii) to lift or rescind any Order
Adversely Affecting the Asset Purchase, or (iv) to effect necessary
registrations and filings and submissions of information requested by
Governmental Authorities (it being understood that such efforts shall not
include any requirement of Seller to expend material sums of money or grant
any
material financial or other accommodation), Seller and Buyer shall exercise
best
efforts to take all such necessary action.
Section
5.3 Further
Assurances
(a) Seller
and Buyer agree that, from time to time, whether before, at or after the Closing
Date, each of them will execute and deliver such further instruments of
conveyance and transfer and take such other action as may be reasonably required
or desirable to carry out the purposes and intent of this Agreement, including
(i) allocating rights and obligations under Contracts and other arrangements,
if
any, relating to the Acquired Assets or the Assumed Liabilities, (ii)
determining whether to enter into any service or other sharing agreements on
a
mutually acceptable arm’s-length basis that may be necessary to assure a smooth
and orderly transition, and (iii) each
of
the parties hereto shall execute such documents and other instruments and take
such further actions as may be reasonably required to carry out the provisions
hereof.
(b) Notwithstanding
anything to the contrary herein, immediately after the execution of this
Agreement, Seller shall allow the Buyer access to all customers’ files,
production files, components files, and all other necessary documentations
and
information required by Buyer.
Section
5.4 Preservation
of Acquired Assets
(a) From
the
date hereof to the Closing Date, subject to the terms and conditions of this
Agreement, Seller shall use reasonable efforts (i) to preserve the Acquired
Assets intact, and (ii) to preserve the good will of customers and others having
material business relations with Seller pursuant to the SuperCom Contracts.
Notwithstanding the foregoing, nothing in this Section 5.4 or otherwise shall
be
construed to make Seller responsible in any respect for the cancellation of
any
Contracts or for any customer’s discontinuing its business with Buyer or Seller.
Notwithstanding the foregoing or any other provision herein, neither Seller
nor
Buyer shall be required to enter into any Contract that it has not expressly
agreed to enter into hereunder; except pursuant to Section 5.3 or Section
5.8.
(b) From
the
date hereof to the Closing Date, Seller shall not take any action not in the
Ordinary Course of Business, without Buyer’s prior written consent (which
consent shall not be unreasonably withheld).
Without
derogating from the foregoing, Seller shall:
(i) Maintain
its corporate existence, pay its debts when due, pay or perform other
obligations when due, and carry on its business in the usual, regular and
ordinary course in a manner consistent with past practice and in accordance
with
the provisions of this Agreement and in compliance with all applicable Laws,
Authorizations and Contracts.
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(ii) Use
its
reasonable best efforts consistent with past practices and policies to keep
available the services of its present employees and preserve its relationships
with customers,
suppliers, distributors, licensors, licensees, and others having business
dealings with it, to the end that its goodwill and ongoing business be
substantially unimpaired on the Closing Date.
(iii) Promptly
notify Buyer of any event or occurrence not in the Ordinary Course of
Business.
(c) From
the
date hereof to the Closing Date, Seller shall permit Buyer and its
representatives, to visit and inspect the Buyer’s properties, to examine its
books of account and records and to discuss the Buyer’s affairs, with its
officers, all at such reasonable times as may be requested by Buyer and its
representative.
Section
5.5 Public
Announcements
Seller
and Buyer will consult with each other before issuing, or permitting any agent
or Affiliate to issue, any press releases or otherwise making or permitting
any
agent or Affiliate to make, and, absent mutual agreement, will not (and will
not
permit any agent or Affiliate to) issue any press release or make any public
statements with respect to this Agreement and the transactions contemplated
hereby, and, except as may be required by applicable law or any listing
agreement with any securities exchange, will not issue any such press release
or
make any such public statement, unless the text of such statement shall have
been agreed upon by the parties.
Section
5.6 At
any
time following the Closing Date, upon Buyer’s demand, Seller shall destroy
copies and any documentation regarding the Acquired Assets.
Section
5.7 Insurance
Buyer
shall adequately insure the Acquired Assets and maintain such insurance, against
all risks and liabilities. Without derogating from the aforesaid, Buyer shall
insure the Acquired Assets in such degree of coverage that is not less than
the
coverage obtained by Seller for the Acquired Assets.
Section
5.8 Employees,
Employee Benefits and Other Transitional Matters
(a) On
or
prior to the Closing, Buyer shall have the right, but not the obligation, to
offer employment to all the Key Employees, provided that Seller shall terminate,
immediately prior to Closing, the employment of any employee who accepts such
offer. Any such offer shall be at such salary or wage and benefit levels and
on
such other terms and conditions as Buyer shall in its sole discretion deem
appropriate. From the date of this Agreement, Buyer may interview and conduct
background investigations with respect to any Key Employee, and Seller will
not
take any action that would impede, hinder, interfere or otherwise compete with
Buyer’s effort to hire any Key Employees and shall use its best efforts to cause
such Key Employee to accept the Buyer's offer. From the date of this Agreement,
Seller shall provide Buyer access to such files, records and other materials
relating to the Key Employees as is permitted by Law, including, without
limitation, information relating to compensation and benefits. Buyer shall
not
assume responsibility for any Key Employee until such employee commences
employment with Buyer. From the date of this Agreement, Seller shall not modify,
amend or otherwise alter any non-competition or other similar restrictions
with
any Key Employee without the prior written consent of Buyer, and Seller shall
not waive, and shall use commercially reasonable efforts to enforce, such
non-competition or other restrictions in connection with any violation thereof.
Seller hereby undertakes to release any Key Employee to which Buyer makes an
offer of employment from the provisions of any non-competition or other similar
restrictions in order to allow such Key Employee to accept such offer of Buyer.
On or prior to Closing, Buyer shall have the right, but not the obligation,
to
offer to Key Employees bonuses or any other consideration that will be paid
at
such time as may be agreed between Buyer and such Key Employees for their
assistance to Buyer in connection with effecting the transition of the Acquired
Assets and the Assumed Liabilities to the Buyer.
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The
same
provisions and undertakings shall apply, mutatis mutandis, to the members of
Seller's advisory board.
(b) Nothing
in the provision of this Section 5.9 shall create any third party beneficiary
or
other rights in any employee (including any beneficiary or dependent thereof)
of
Seller (whether or not a Key Employee) with respect to continued employment
(or
resumed employment) with Buyer or any of its affiliates, and no provision of
this Section 5.9 shall create any such rights with respect to any benefits
that
may be provided, directly or indirectly, under any employee plan or benefit
arrangement that may be established by Buyer or any of its affiliates.
Section
5.9 Non-competition
(a) Seller
agrees that for a period beginning at the Closing and ending on the five (5)
year anniversary of the Closing, it shall not
(i) engage,
either directly or indirectly, as a principal or for its own or another’s
account, solely or jointly with others, or through any form of ownership in
another entity or otherwise (other than by holding or having ownership of up
to
4.99% of the equity, interest or voting power in any publicly traded company),
in any business that operates in the field of the Acquired Business, except
for
the activity related to the activities specified in sub sections (i) and (ii)
under the definition of the Excluded Assets, and except for the petroleum
business which competes with Buyer;
(ii) employ
or
solicit or offer or induce or receive or accept the performance of services
by
any Assumed Employee; and
In
addition to the foregoing, Seller will act in good faith and use best efforts,
whenever required, to prevent an Adverse impact on the business relationship
between Buyer and any customer, suppliers,
distributors, licensors, licensees, and others having business dealings with
Seller
in
connection with the Acquired Business prior to the Closing Date. In any event
where Seller shall be approached by any customer, suppliers,
distributors, licensors, licensees, and others in connection to the Acquired
Business, Seller shall advise Buyer of such approach in writing and shall refer
such Person or Entity to Buyer.
(b) Seller
shall use its best efforts to cause all of its directors, officers and employees
to execute a similar undertaking set forth in subsection (a) above, towards
Buyer.
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(c) Buyer
agrees that for a period beginning at the Closing and ending on the five (5)
year anniversary of the Closing, it shall not:
(i) engage,
either directly or indirectly, as a principal or for its own or another’s
account, solely or jointly with others, or through any form of ownership in
another entity or otherwise (other than by holding or having ownership of up
to
4.99% of the equity, interest or voting power in any publicly traded company),
in any activity related to the activities specified in sub sections (i) and
(ii)
under the definition of the Excluded Assets;
(ii) employ
or
solicit or offer or induce the performance of services by any employees of
the
Seller which are not Assumed Employees.
(d) Buyer
shall use its best efforts to cause all the Assumed Employees to execute a
similar undertaking as set forth in subsection (c) above, towards
Seller.
Section
5.10 Service
and Supply Agreement At
the
Closing, Seller and Buyer shall execute and deliver the Service and Supply
Agreement.
Section
5.11 Registration
Rights Agreement.
At the
Closing, Seller and Buyer shall execute and deliver the Registration Rights
Agreement.
ARTICLE
VI
Tax
Matters
Section
6.1 Tax
Matters
(a)
Any
transfer, documentary, sales, use or other Taxes assessed upon or with respect
to the transfer of the Acquired Assets to Buyer and the assumption of the
Assumed Liabilities thereby (except for V.A.T.) shall be the responsibility
of
Seller; provided, however, that Buyer shall cooperate with Seller to minimize
any such Taxes.
(b) V.A.T
levied on the sale of the Acquired Assets shall be paid by Buyer on the date
due
to be paid by Seller against a proper receipt (Heshbonit Mas) issued by
Seller.
ARTICLE
VII
Conditions
of Buyer’s Obligation to Close
Buyer’s
obligation to consummate the Asset Purchase shall be subject to the satisfaction
on or prior to the Closing Date of all of the following conditions:
Section
7.1 Representations,
Warranties and Covenants of Seller
(a) The
representations and warranties of Seller contained in this Agreement shall
be
true and correct on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of such date (except
for representations and warranties that speak as of a specific date or time,
which need only be true and correct as of such date or time), in each case,
whether or not such representations or warranties contain a qualification as
to
“Adverse Effect,” for such inaccuracies which have not had or would not
reasonably be expected to have an Adverse Effect on the Acquired
Assets.
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(b) Seller
shall have performed in all material respects each obligation and agreement
and
shall have complied in all material respects with each covenant to be performed
and complied with by it hereunder at or prior to the Closing (other than
Seller’s covenants pursuant to Section 2.2(a) with respect to delivery of
documents of transfer of the Acquired Assets at the Closing, which shall be
performed in all respects).
(c) Buyer
shall receive at or prior to the Closing a certificate as to the matters set
forth in paragraphs (a) and (b), dated the Closing Date, and validly executed
by
an authorized officer of Seller on behalf of Seller.
Section
7.2 Filings;
Consents; Waiting Periods
All
registrations, filings, applications, notices, consents, approvals, orders,
qualifications and waivers required to be obtained or made as of the Closing
Date shall have been filed, made or obtained, except for such registrations,
filings, notices, consents, approvals, orders, qualifications and waivers the
lack of which would not reasonably be expected to have an Adverse Effect on
the
Acquired Assets.
Section
7.3 No
Injunction
At the
Closing Date, there shall be no Order of any nature of any Governmental
Authority of competent jurisdiction that is in effect that restrains or
prohibits the consummation of all or any portion of the Asset Purchase, and
no
Law shall have been enacted by any Governmental Authority which prevents
consummation of the Asset Purchase.
Section
7.4 Reserved
Section
7.5 Proxy
Seller
shall have executed and delivered to Buyer a proxy in the form attached hereto
as Exhibit D.
Section
7.6 Lock-Up
Agreement
Seller
shall have executed and delivered to Buyer the Lock-Up Agreement.
Section
7.7 Termination
of Confidentiality and Proprietary Agreements with Assumed Employees and
Employment Agreement
(a) Seller
shall have release any Buyer’s Assumed Employees from the provisions of any
non-competition or other similar restrictions towards Seller.
(b) Buyer
shall have entered into employment agreements with Buyer’s
Assumed Employees.
Section
7.8 Lease
Agreement/Assignment
Buyer
shall have entered into a sublease or assignment agreement with respect to
the
ground floor, on terms back-to-back to the Seller's existing lease agreement.
The sublease or assignment will be valid until December 31st
2007.
Section
7.9 Anti-Trust
The
approval of the anti trust commissioner, if required.
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Section
7.10 Legal Opinion Seller
shall have provided a legal opinion of Xxxxx Xxxxxxx, Arad & Co., Law
Offices in the form agreed by the parties.
Section
7.11 Shareholders
Approval Buyer
shall have obtained shareholders approval for the transaction contemplated
herein.
Section
7.12 Withholding
at Source Seller
shall provide Buyer a certificate of exemption with regard to withholding at
source of taxes otherwise withheld by Buyer in connection with the payment
of
the consideration by Buyer pursuant to the terms of this Agreement.
ARTICLE
VIII
Conditions
to Seller’s Obligation to Close
Seller’s
obligation to consummate the Asset Purchase is subject to the satisfaction
on or
prior to the Closing Date of all of the following conditions:
Section
8.1 Representations,
Warranties and Covenants of Buyer
(a) The
representations and warranties of Buyer contained in this Agreement shall be
true and correct on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of such date (except
for representations and warranties that speak as of a specific date or time,
which need only be true and correct as of such date or time), in each case,
whether or not such representations or warranties contain a qualification as
to
“Adverse Effect,” for such inaccuracies which have not had or would not
reasonably be expected to have an Adverse Effect on Buyer.
(b) Buyer
shall have performed in all material respects each obligation and agreement
and
shall have complied in all material respects with each covenant to be performed
and complied with by it hereunder at or prior to the Closing.
(c) Seller
shall receive at or prior to the Closing a certificate as to the matters set
forth in paragraphs (a) and (b), dated the Closing Date, and validly executed
by
an executive officer of Buyer on behalf of Buyer.
Section
8.2 Filings;
Consents; Waiting Periods
All
registrations, filings, applications, notices, consents, approvals, orders,
qualifications and waivers required to be obtained or made as of the Closing
Date shall have been filed, made or obtained, except for such registrations,
filings, notices, consents, approvals, orders, qualifications and waivers the
lack of which would not reasonably be expected to have an Adverse Effect on
Buyer.
Section
8.3 No
Injunction
At the
Closing Date, there shall be no Order of any nature of any Governmental
Authority of competent jurisdiction that is in effect that restrains or
prohibits the consummation of all or any portion of the Asset Purchase, and
no
Law shall have been enacted by any Governmental Authority which prevents
consummation of the Asset Purchase.
Section
8.4 Service
and Supply Buyer
shall have executed and delivered to Seller the Service and Supply
Agreement.
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Section
8.5 Registration
Rights Agreement.
Buyer
shall have executed and delivered to Seller the Registration Rights
Agreement.
Section
8.6 Anti-Trust the
approval of the anti trust commissioner, if required.
Section
8.7 Loan Buyer,
with Seller's cooperation, hereby undertakes to cause a loan in the principal
amount of U.S.$ 2.5 Million (the "Loan")
to be
extended to Seller by a financial institution at the Closing. The terms of
the
loan shall be as follows:
(a)
The
Loan will carry interest at the common rate for USD loans in Hapoalim Bank,
Israel, for 18 months.
(b)
The
Loan
will be secured by all the Restricted Shares and will be repaid (principal
and
interest) out of the first proceeds received from each sale of Restricted Shares
sold by Seller, but not later than 18 months after the Closing
Date.
ARTICLE
IX
Survival;
Indemnification
Section
9.1 Survival
of Representations And Covenants
(a) The
representations, warranties, covenants and obligations of each party to this
Agreement shall survive (without limitation): (i) the Closing and the sale
of
the Acquired Assets to Buyer and the assumption of the Assumed Liabilites;
and
(ii) the dissolution of either party to this Agreement. All of said
representations, warranties, covenants and obligations shall remain in full
force and effect and shall survive for a period of twelve months from the
Closing Date (“Indemnification
Period”).
(b) The
representations, warranties, covenants and obligations of Seller, and the rights
and remedies that may be exercised by Buyer, shall not be limited or otherwise
affected by or as a result of any information furnished to, or any investigation
made by or any knowledge of Buyer.
(c) The
representations, warranties, covenants and obligations of Buyer, and the rights
and remedies that may be exercised by Seller, shall not be limited or otherwise
affected by or as a result of any information furnished to, or any investigation
made by or any knowledge of, Seller or any of its representatives.
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Section
9.2 Indemnification
(a) Seller
hereby undertakes to indemnify Buyer against, and agrees to hold it harmless
from, any and all damages, claims, debts, actions, assessments, judgments,
losses, fines, fees, penalties and expenses (including, without limitation,
reasonable expenses of investigation and reasonable attorneys’ fees and expenses
in connection with any action, suit or proceeding) (collectively, “Losses”)
incurred or suffered by it during the term of Indemnification Period (or
attributed to the Indemnification Period) arising out of:
(i) |
any
misrepresentation, inaccuracy or breach of representation and warranty,
covenant or agreement made or to be performed by Seller pursuant
to this
Agreement; and
|
(ii) | without limiting sub-section (i) above, the assertion of any claim based upon the Seller having infringed upon, violated or misappropriated, or the Buyer’s use of the SuperCom Intellectual Property after the Closing infringing upon, violating or misappropriating any Intellectual Property of any third party. |
(b) Seller
hereby undertakes to indemnify Buyer against, and agrees to hold it harmless
from, any and all Losses incurred or suffered by it arising out of the failure
of Seller to assume responsibility for any obligation or liability relating
to
the Excluded Assets and failure to pay and discharge when due any liability
which is not part of the Assumed Liabilities.
(c) Buyer
hereby undertakes to indemnify Seller against, and agrees to hold it harmless
from, any and all Losses incurred or suffered by it during the term of
Indemnification Period arising out of any breach of representation and warranty,
covenant or agreement made or to be performed by Buyer pursuant to this
Agreement.
(d) Notwithstanding
the aforesaid in this Article IX, it is hereby agreed that the indemnification
obligation of Seller and Buyer under Sections 9.2(a), and 9.2(c) hereinabove
and
any other damage loss or expense incurred by Seller or Buyer, as the case may
be, will be limited to and will apply to Losses that (in the aggregate) are
greater than U.S. $300,000, in which event the indemnitor will indemnify the
indemnitee from the first dollar. In no such event the indemnitor shall be
required to indemnify the indemnitee for any Loss or Losses that (in the
aggregate) are greater than U.S. $3,000,000.
ARTICLE
X
Termination
Section
10.1 Termination
This
Agreement may be terminated at any time prior to the Closing by:
(a) The
mutual written consent of Seller and Buyer; or
(b) Either
Seller or Buyer if the Closing has not occurred by the close of business
onJanuary 31, 2007, and if the failure to consummate the Asset Purchase on
or
before such date did not result from the failure by the party seeking
termination of this Agreement to fulfill any undertaking or commitment provided
for herein that is required to be fulfilled prior to Closing; or
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(c) Seller,
provided it is not then in material breach of any of its obligations hereunder,
if Buyer fails to perform in any material respect any covenant in this Agreement
when performance thereof is due or Buyer shall have breached in any material
respect any of the representations or warranties contained in this Agreement
and
does not cure the failure or breach within thirty (30) days after Seller
delivers written notice thereof; or
(d) Buyer,
provided it is not then in material breach of any of its obligations hereunder,
if Seller fails to perform in any material respect any covenant in this
Agreement when performance thereof is due or Seller shall have breached in
any
material respect any of the representations and warranties contained in this
Agreement and does not cure the failure or breach within thirty (30) days after
Buyer delivers written notice thereof.
Section
10.2 Procedure
and Effect of Termination
In the
event of termination of this Agreement by either or both of Seller and Buyer
pursuant to Section 10.1, written notice thereof shall forthwith be given by
the
terminating party to the other party hereto, and this Agreement shall thereupon
terminate and become void and have no effect, and the transactions contemplated
hereby shall be abandoned without further action by the parties hereto, except
that the provisions of Section 11.4 shall survive the termination of this
Agreement; provided, however, that such termination shall not relieve any party
hereto of any liability for any breach of this Agreement. If this Agreement
is
terminated as provided herein, all filings, applications and other submissions
made in anticipation of the transactions contemplated hereby shall, to the
extent practicable, be withdrawn from the agency or other persons to which
they
were made.
ARTICLE
XI
Miscellaneous
Section
11.1 Counterparts
This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement, and shall become effective when one
or
more counterparts have been signed by each of the parties and delivered to
the
other party.
Section
11.2 Governing
Law; Consent to Jurisdiction
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Israel without reference to the choice of law principles thereof.
Buyer
and Seller consent to and hereby submit to the exclusive jurisdiction of the
suitable court in Tel-Aviv Jaffa.
Section
11.3 Entire
Agreement
Except
as provided in , this Agreement (including agreements incorporated by reference
herein), the Disclosure Schedule and the Exhibits hereto contain the entire
agreement between the parties with respect to the subject matter hereof and
there are no agreements, understandings, representations or warranties between
the parties other than those set forth or referred to herein or
therein.
Section
11.4 Expenses
Each
party to this Agreement shall bear and pay all fees, costs and expenses
(including legal fees and accounting fees) that have been incurred or that
are
incurred by such party in connection with the transactions contemplated by
this
Agreement, including all fees, costs and expenses incurred by such party in
connection with the negotiation, preparation and review of this Agreement,
all
agreements, certificates, opinions and other instruments and documents delivered
or to be delivered in connection with the transactions contemplated by this
Agreement and the preparation and submission of any filing or notice required
to
be made or given in connection with any of the transactions contemplated by
this
Agreement.
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Section
11.5 Notices
All
notices hereunder shall be sufficiently given for all purposes hereunder if
in
writing and delivered personally, sent by documented overnight delivery service
or, to the extent receipt is confirmed, telecopy, telefax or other electronic
transmission service to the appropriate address or number as set forth below.
Notices
to Seller shall be addressed to:
Xxxxxxxx
Xxxxxxxxxx xxxx,
X.X.X.
0000, Xxxxxx 00000; Israel.
Tel.:
x000-0-0000000
Fax:
x000-0-0000000
Attention:
CEO
With
a
copy to:
Xxxxx
Xxxxxxx, Arad & Co.
Tel.:
x000-0-0000000
Fax:
x000-0-0000000
Attention:
Xxxxx Xxxxxxx, Adv.
or
at
such other address and to the attention of such other Person as Seller may
designate by written notice to Buyer.
Notices
to Buyer shall be addressed to:
On
Track
Innovations Ltd.
Address:
X.X. Xxx 00 XXX XX, Xxxx Xxxx, Xxxxxx 00000
Fax:
x000
0 0000000
Attention:
Xx. Xxxx Xxxxxx
With
a
copy to:
Zysman,
Aharoni, Xxxxx and Co., Law Xxxxxxx
00X
Xxxxxxxx Xx.
Xxx
Xxxx,
Xxxxxx
Attn.:
Xxxx Xxx Xxx, Adv.
Fax:
000-0-0000000
Any
notice sent in accordance with this Section 11.5 shall be effective (i) if
mailed, five (5) business days after mailing (if domestic) and ten (10) business
days (if international), (ii) if sent by express courier, two (2) business
days
after mailing (if domestic) and three (3) business days after mailing (if
international), (iii) if sent by messenger, on the first business day following
the day of delivery, and (iv) if sent via facsimile, on the first business
day
after transmission and electronic confirmation of receipt or (if transmitted
and
received on a non-business day) on the second business day following
transmission and electronic confirmation of receipt.
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Section
11.6 Successors
and Assigns
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided, however, that no party
hereto will assign its rights or delegate its obligations under this Agreement
without the express prior written consent of each other party hereto, except
that either party may assign this Agreement to any Entity that succeeds to
substantially all of such party’s assets and liabilities only after the
Closing.
Section
11.7 Headings:
Definitions
The
section and article headings contained in this Agreement are inserted for
convenience of reference only and will not affect the meaning or interpretation
of this Agreement. All references to Sections or Articles contained herein
mean
Sections or Articles of this Agreement unless otherwise stated.
Section
11.8 Amendment
This
Agreement may not be amended, modified, superseded, canceled, renewed or
extended except by a written instrument signed by the party to be charged
therewith.
Section
11.9 Waiver;
Effect of Waiver
No
provision of this Agreement may be waived except by a written instrument signed
by the party waiving compliance. No waiver by any party hereto of any of the
requirements hereof or of any of such party’s rights hereunder shall release the
other parties from full performance of their remaining obligations stated
herein. No failure to exercise or delay in exercising on the part of any party
hereto any right, power or privilege of such party shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise thereof or the exercise of
any
other right, power or privilege by such party.
Section
11.10 Interpretation;
Absence of Presumption
(a) For
the
purposes hereof, (i) the terms “hereof,” “herein” and “herewith” and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole (including all of the Schedules hereto) and not to any
particular provision of this Agreement, and Article, Section, paragraph and
Schedule references are to the Articles, Sections, paragraphs and Schedules
to
this Agreement unless otherwise specified, (ii) the word “including” and words
of similar import when used in this Agreement means “including, without
limitation,” unless the context otherwise requires or unless otherwise
specified, (iii) the word “or” shall not be exclusive, (iv) provisions shall
apply, when appropriate, to successive events and transactions and (v) all
references to any period of days shall be deemed to be to the relevant number
of
calendar days.
(b) This
Agreement shall be construed without regard to any presumption or rule requiring
construction or interpretation against the party drafting or causing any
instrument to be drafted.
Section
11.11 Finder’s
Fees Each
party shall bear its own finder’s fees obligations in connection with this
Agreement and the transactions contemplated herein, to the extent such party
undertook to pay any finder’s fees.
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Section
11.12 Remedies
No
remedy under this Agreement or at law or in equity shall include, provide for
or
permit the payment of multiple, exemplary, punitive or consequential damages
or
any equitable equivalent thereof or substitute therefor, and the burden shall
be
on the party claiming loss to show actual loss in the amount claimed. Except
for
the right of indemnification according to Article IX above, Seller and Buyer
shall have no other or further remedy against the other party under this
Agreement.
Section
11.13 Severability
In the
event that any provision of this Agreement, or the application of any such
provision to any Person or set of circumstances, shall be determined to be
invalid, unlawful, void or unenforceable to any extent, the remainder of this
Agreement, and the application of such provision to Persons or circumstances
other than those as to which it is determined to be invalid, unlawful, void
or
unenforceable, shall not be impaired or otherwise affected and shall continue
to
be valid and enforceable to the fullest extent permitted by law.
[The
remainder of this page has been intentionally left
blank.]
30
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on their behalf as of the date first written above.
ON TRACK INNOVATIONS LTD. | ||
By: | ||
Name: | ||
Title |
By: | ||
Name: | ||
Title |
31
Exhibit
A
On
Track
Innovations Ltd.
Z.H.R.
Industrial Zone
X.X.
Xxx
00
Xxxxx
Xxxx, Xxxxxx 00000
Re: Lock-Up
Agreement
The
undersigned, a Shareholder of On Track Innovations Ltd. (the “Company”),
holding 2,827,200 ordinary shares nominal value NIS 0.1 per share, of the
Company (“Restricted Shares”),
issued to the Shareholder by the Company pursuant to a certain Asset Purchase
Agreement by and between the undersigned and the Company dated November 7,
2006
(the “APA”),
on
the Closing Date, hereby agrees that, without the prior written consent of
the
Company, the undersigned will not, for a period as determined under the
Schedule
A
attached
hereto, commencing on the Closing Date (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, or otherwise dispose of or transfer, the Restricted Shares or (2)
enter
into any swap or other derivative transaction that transfers to another, in
whole or in part, directly or indirectly, the economic consequence of ownership
of respective part of the Restricted Shares as determined under Schedule
A
hereunder, whether any such transaction or swap described in clause (1) or
(2)
above is to be settled by delivery Restricted Shares, in cash or otherwise;
provided however that the undersigned shall be entitled to pledge the Restricted
Shares in order to secure financing for the undersigned's (or its Affiliates)
benefit, including without limitation pursuant to Section 8.6 of the APA,
subject to the Restricted Shares being locked up pursuant to the terms of this
Lock-Up Agreement (the “Lock
Up-Undertaking“).
Capitalized terms used and not defined herein have the meanings assigned to
them
in the APA.
In
furtherance of the foregoing, the Company, and any duly appointed transfer
agent
for the registration or transfer of the securities described herein, is hereby
authorized to decline to make any transfer of securities if such transfer would
constitute a violation or breach of this Lock-Up Agreement.
The
undersigned hereby represents and warrants that the undersigned has full power
and authority to enter into this Lock-Up Agreement. All authority herein
conferred or agreed to be conferred and any obligations of the undersigned
shall
be binding upon the successors, assigns, heirs or personal representatives
of
the undersigned.
The
undersigned understands that this Lock-Up Agreement is irrevocable.
This
Lock-Up Agreement shall be governed by and construed in accordance with the
laws
of the State of Israel.
Very truly yours,
|
||
By: | ||
Name: | ||
Title |
32
Exhibit
A
Schedule
A
1. |
403,885
Restricted Shares will be free from the Lock-Up Undertaking immediately
on
________ (the "Closing Date").
|
2. |
Additional
403,885 Restricted Shares will be free from the Lock-Up Undertaking
on
__________ [3 months after the Closing
Date].
|
3. |
Additional
403,885 Restricted Shares will be free from the Lock-Up Undertaking
on
__________ [6 months after the Closing
Date].
|
4. |
Additional
403,885 Restricted Shares will be free from the Lock-Up Undertaking
on
___________ [9 months after the Closing
Date].
|
5. |
Additional
403,885 Restricted Shares will be free from the Lock-Up Undertaking
on
__________ [12 months after the Closing
Date].
|
6. |
Additional
403,885 Restricted Shares will be free from the Lock-Up Undertaking
on
___________ [15 months after the Closing
Date].
|
7. |
Additional
403,890 Restricted Shares will be free from the Lock-Up Undertaking
on
_____________ [18 months after the Closing
Date].
|
33
Exhibit
B
REGISTRATION
RIGHTS AGREEMENT
This
Registration Rights Agreement (this “Agreement”)
is
made and entered into as of ________________, 2006 by and between On Track
Innovations Ltd., an Israeli corporation (the “Company”),
and
SuperCom Ltd., an Israeli corporation (“SuperCom”).
This
Agreement is made pursuant to the Asset Purchase Agreement, dated as of the
date
hereof, between the Company and SuperCom (the “Purchase
Agreement”.
All
capitalized terms used but not defined herein shall bear the meaning ascribed
to
them in the Purchase Agreement).
The
parties hereby agree as follows:
1. Certain
Definitions.
As
used
in this Agreement, the following terms shall have the following
meanings:
“Affiliate”
means,
with respect to any person, any other person which directly or indirectly
controls, is controlled by, or is under common control with, such
person.
“Business
Day”
means
a
day, other than a Saturday or Sunday, on which banks in Israel are open for
the
general transaction of business.
“Filing
Deadline”
means
(a) with respect to the initial Registration Statement required to be filed
under Section 2(a)(i), the later of: (i) ninety (90) days after the Closing
Date; or (ii) 45 days after receipt of all information required from SuperCom
to
file the initial Registration Statement, and (b) with respect to any additional
Registration Statements that may be required pursuant to Section 2(a)(ii),
the
30th
day
following (x) if such Registration Statement is required because the SEC shall
have notified the Company in writing that certain Registrable Securities were
not eligible for inclusion on a previously filed Registration Statement, the
date or time on which the SEC shall indicate as being the first date or time
that such Registrable Securities may then be included in a Registration
Statement, or (y) if such Registration Statement is required for a reason other
than as described in (x) above, the date on which the Company first knows,
or
reasonably should have known, that such additional Registration Statement(s)
is
required; provided,
however,
that if
such Registration Statement under Section 2(a)(ii) is required to be filed
due
to SuperCom's failure to provide necessary information requested by the Company
in connection with the preparation and filing of a Registration Statement
hereunder, including, without limitation, information required under Regulation
S-X, then such Registration Statement shall be filed no later than 45 days
following the receipt of all required information.
“Ordinary
Shares”
shall
mean the Company’s Ordinary Shares, par value NIS0.10 per share, and any
securities into which such Ordinary Shares may hereinafter be
reclassified.
“Prospectus”
shall
mean (i) any preliminary or final prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus, and (ii) any “free
writing prospectus” as defined in Rule 163 under the 1933 Act.
34
Exhibit
B
“Register,”
“registered”
and
“registration”
refer
to a registration made by preparing and filing a Registration Statement or
similar document in compliance with the 1933 Act (as defined below), and the
declaration or ordering of effectiveness of such Registration Statement or
document.
“Registrable
Securities”
shall
mean (i) the Shares and (ii) any other securities issued or issuable with
respect to or in exchange for Registrable Securities.
“Registration
Statement”
shall
mean any registration statement of the Company filed under the 1933 Act that
covers the resale of any of the Registrable Securities pursuant to the
provisions of this Agreement, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and all material
incorporated by reference in such Registration Statement.
“SEC”
means
the U.S. Securities and Exchange Commission.
“Shares”
means
the Ordinary Shares issued pursuant to the Purchase Agreement.
“1933
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“1934
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
35
Exhibit
B
2. Registration.
(a) Registration
Statements.
(i) Promptly
following the Closing Date (as defined in the Purchase Agreement) but no later
than the Filing Deadline, the Company shall prepare and file with the SEC a
Registration Statement on Form F-3 (or, if Form F-3 is not then available to
the
Company, on such form of registration statement as is then available to effect
a
registration for resale of the Registrable Securities), covering the resale
of
the Registrable Securities. Such Registration Statement shall include a plan
of
distribution substantially in the form attached hereto as Exhibit
A
(subject
to any comments thereon by the SEC). Such Registration Statement also shall
cover, to the extent allowable under the 1933 Act and the rules promulgated
thereunder (including Rule 416), such indeterminate number of additional
Ordinary Shares resulting from stock splits, stock dividends or similar
transactions with respect to the Registrable Securities. The Registration
Statement (and each amendment or supplement thereto, and each request for
acceleration of effectiveness thereof) shall be provided in accordance with
Section 3(c) to SuperCom and its counsel prior to its filing or other
submission. If a Registration Statement covering the Registrable Securities
is
not filed with the SEC by the Filing Deadline, the Company will make pro rata
payments to SuperCom, as liquidated damages and not as a penalty, in an amount
equal to 0.75% of the fair market value of the aggregate consideration received
by SuperCom pursuant to the Purchase Agreement (calculated based on the average
closing price of the Ordinary Share traded on Nasdaq Global Market during the
ten (10) trading days prior to the date of the Purchase Agreement) of such
Registrable Securities released from the lock-up undertaking pursuant to the
Lock-Up Agreement at such time (and in the event such number changes during
the
period, the weighted-average number of such Registrable Securities, during
the
applicable period) (“Liquidated
Damages“))
for
each 30-day period or pro rata for any portion thereof following the Filing
Deadline for which no Registration Statement is filed with respect to the
Registrable Securities payable within 3 Business Days after the end of such
successive 30-day period (or portion thereof); provided,
however,
that in
no event shall such Liquidated Damages in the aggregate exceed 10% of such
aggregate consideration received by SuperCom pursuant to the Purchase Agreement.
Such payments shall be made to SuperCom in cash. In recognition of the
difficulty of determining SuperCom's damages or loss as a result of the
Registration Statement not being filed within the time periods described above,
it is hereby agreed that the foregoing amount of Liquidated Damages is deemed
to
represent a reasonable estimate of SuperCom's damages and shall be the sole
monetary remedy of SuperCom in this regard, but shall not affect the right
of
SuperCom to seek injunctive relief.
36
Exhibit
B
(ii) Additional
Registrable Securities.
If for
any reason the SEC does not permit all of the Registrable Securities to be
included in the Registration Statement filed pursuant to Section 2(a)(i), or
for
any other reason any outstanding Registrable Securities are not then covered
by
an effective Registration Statement, then the Company shall prepare and file
with the SEC by the Filing Deadline an additional Registration Statements on
Form F-3 (or, if Form F-3 is not then available to the Company, on such form
of
registration statement as is then available to effect a registration for resale
of such additional Ordinary Shares (the “Additional Shares”)) covering the
resale of the Additional Shares. Such Registration Statement also shall cover,
to the extent allowable under the 1933 Act and the rules promulgated thereunder
(including Rule 416), such indeterminate number of additional Ordinary Shares
resulting from stock splits, stock dividends or similar transactions with
respect to the Additional Shares. The Registration Statement (and each amendment
or supplement thereto, and each request for acceleration of effectiveness
thereof) shall be provided in accordance with Section 3(c) to SuperCom and
its
counsel prior to its filing or other submission. If a Registration Statement
covering the Additional Shares is required to be filed under this Section
2(a)(ii) and is not filed with the SEC by the Filing Deadline, the Company
will
make pro rata payments to SuperCom, as liquidated damages and not as a penalty,
in an amount equal to the Liquidated Damages multiplied by a fraction, the
numerator of which is the Registrable Securities not included in the
Registration Statement filed pursuant to Section 2(a)(i) and the denominator
of
which is all of the Registrable Securities, and in the same manner such
Liquidated Damages are being paid under Section 2.1(a)(i) above. Such payments
shall be made to SuperCom in cash. In recognition of the difficulty of
determining SuperCom's damages or loss as a result of the Registration Statement
not being filed within the time periods described above, it is hereby agreed
that the foregoing amount of Liquidated Damages is deemed to represent a
reasonable estimate of SuperCom's damages and shall be the sole monetary remedy
of SuperCom in this regard, but shall not affect the right of SuperCom to seek
injunctive relief.
(b) Expenses.
The
Company will pay all expenses associated with each registration, including
filing and printing fees, the Company’s counsel and accounting fees and
expenses, costs associated with clearing the Registrable Securities for sale
under applicable state securities laws and listing fees, but excluding
discounts, commissions, fees of underwriters, selling brokers, dealer managers
or similar securities industry professionals with respect to the Registrable
Securities being sold. It is hereby clarified that the Company shall not pay
any
fees and expenses of counsel to SuperCom or any other of SuperCom’s expenses in
connection with the registration.
37
Exhibit
B
(c) Effectiveness.
The
Company shall use reasonable best efforts to have the Registration Statement
declared effective as soon as practicable. The Company shall notify SuperCom
by
facsimile or e-mail as promptly as practicable, and in any event, within
twenty-four (24) hours, after any Registration Statement is declared effective
and shall promptly provide SuperCom with copies of any related Prospectus to
be
used in connection with the sale or other disposition of the securities covered
thereby. If (A)(x) a Registration Statement covering the Registrable Securities
is not declared effective by the SEC prior to the earlier of (i) ten (10)
Business Days after the SEC shall have informed the Company that no review
of
the Registration Statement will be made or that the SEC has no further comments
on the Registration Statement or (ii) the 120th
day
after the earlier of the Filing Deadline or the filing of the Registration
Statement (provided that SuperCom did not delay the declaration of the
Registration Statement as effective), or (y) a Registration Statement covering
Additional Shares is not declared effective by the SEC within one-hundred and
twenty (120) days following the time such Registration Statement was required
to
be filed pursuant to Section 2(a)(ii); except, in each case, due solely to
SuperCom's failure to provide the necessary information requested by the Company
in connection with the preparation and filing of a Registration Statement
hereunder, including, without limitation, information required under Regulation
S-X, or
(B)
after a Registration Statement has been declared effective by the SEC, sales
cannot be made pursuant to such Registration Statement for any reason (including
without limitation by reason of a stop order, or the Company’s failure to update
the Registration Statement), but excluding the inability of SuperCom to sell
the
Registrable Securities covered thereby due to market conditions and except
as
excused pursuant to subparagraph (e) below,then
the
Company will make pro rata payments to SuperCom, as liquidated damages and
not
as a penalty, in an amount equal to the Liquidated Damages for each 30-day
period or pro rata for any portion thereof following the date by which such
Registration Statement should have been effective. The amounts payable as
Liquidated Damages pursuant to this paragraph shall be payable within three
(3)
Business Days at the end of such successive 30-day period (or portion thereof);
provided,
however,
that in
no event shall such Liquidated Damages in the aggregate exceed 10% of such
aggregate consideration received by SuperCom pursuant to the Purchase Agreement.
Such payments shall be made to SuperCom in cash. In recognition of the
difficulty of determining SuperCom's damages or loss as a result of the
Registration Statement not being declared effective within the time periods
described above, it is hereby agreed that the foregoing amount of Liquidated
Damages is deemed to represent a reasonable estimate of SuperCom's damages
and
shall be the sole monetary remedy of SuperCom in this regard, but shall not
affect the right of SuperCom to seek injunctive relief.
(d) Notwithstanding
anything herein to the contrary, the Company’s obligations hereunder shall be
suspended with respect to the Registrable Securities in the event that SuperCom
fails to provide promptly to the Company such information as the Company may
reasonably request at any time to enable the Company to comply with any
applicable law or regulation or to facilitate preparation of a Registration
Statement.
(e) Suspension.
38
Exhibit
B
(i) In
addition to any suspension rights under Section 2(e)(ii) below, upon the
happening of any pending corporate development, public filing with the SEC
or
similar event, that, in the reasonable judgment of Company's
Board
of
Directors, renders it advisable to suspend the use of the Prospectus or upon
the
request by an underwriter in connection with an underwritten public offering
of
the Company's securities, the Company may, on not more than two (2) occasions
each calendar year and for not more than forty-five (45) days on each such
occasion, suspend use of the Prospectus, upon written notice to SuperCom (which
notice will not disclose the content of any material non-public information
and
will indicate the date of the beginning and end of the intended period of
suspension, if known), in which case SuperCom shall discontinue any disposition
of Registrable Securities by the Registration Statement or Prospectus until
copies of a supplemented or amended Prospectus are distributed to SuperCom
or
until SuperCom is advised in writing by the Company that sales of Registrable
Securities under the applicable Prospectus may be resumed and have received
copies of any additional or supplemental filings that are incorporated or deemed
incorporated by reference in any such Prospectus; provided,
however,
that
the Company may not suspend use of the Prospectus on more than two (2) occasion
for more than sixty (60) days each time, during each calendar year period
following the Closing Date and ending on such date that the Registration
Statement is not effective and can not be used for resale of the Registrable
Securities. In the event the reason for such Suspension ceased to exist, the
Company will use its commercially reasonable efforts to cause the use of the
Prospectus so suspended to be resumed as soon as possible after delivery of
a
Suspension Notice (as defined below) to SuperCom. The suspension and notice
thereof described in the foregoing sentences shall be held by SuperCom in
strictest confidence and shall not be disclosed by SuperCom.
39
Exhibit
B
(ii) Subject
to Section 2(e)(iii) below, in the event of: (1) any request by the SEC or
any
other U.S. federal or state governmental authority during the Effectiveness
Period for amendments or supplements to a Registration Statement or related
prospectus or for additional information, (2) the issuance by the SEC or any
other U.S. federal or state governmental authority of any stop order suspending
the effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose, (3) the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction
or the initiation of any proceeding for such purpose, or (4) any event or
circumstance which necessitates the making of any changes in the Registration
Statement or Prospectus, or any document incorporated or deemed to be
incorporated therein by reference, so that, in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or any
omission to state a material fact required to be stated therein or necessary
to
make the statements therein not misleading, and that in the case of the
Prospectus, it will not contain any untrue statement of a material fact or
any
omission to state a material fact required to be stated therein or necessary
to
make the statements therein, in the light of the circumstances under which
they
were made, not misleading, then the Company shall deliver a certificate in
writing to SuperCom (“Suspension Notice”) to the effect of the foregoing (which
notice will not disclose the content of any material non-public information
and
will indicate the date of the beginning and end of the intended period of
suspension, if known), and, upon receipt of such Suspension Notice, SuperCom
will discontinue disposition of Registrable Securities covered by the
Registration Statement or Prospectus (“Suspension”) until SuperCom's receipt of
copies of a supplemented or amended Prospectus prepared and filed by the
Company, or until SuperCom is advised in writing by the Company that the current
Prospectus may be used, and have received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in any such prospectus. In the event of any Suspension, the Company will use
its
commercially reasonable efforts to cause the use of the Prospectus so suspended
to be resumed as soon as possible after delivery of a Suspension Notice to
SuperCom. The Suspension and Suspension Notice described in this Section
2(e)(ii) shall be held by SuperCom in strictest confidence and shall not be
disclosed by SuperCom.
(iii) Provided
that a Suspension is not then in effect, SuperCom may sell Registrable
Securities under the Registration Statement, provided that SuperCom arranges
for
delivery of a current Prospectus to the transferee of such Registrable
Securities to the extent such delivery is required by applicable law. In the
event of a sale of Registrable Securities by SuperCom, SuperCom must also
deliver to the Company's transfer agent, with a copy to the Company, a
certificate of subsequent sale reasonably satisfactory to the Company, so that
ownership of the Registrable Securities may be properly transferred. The Company
will cooperate to facilitate the timely preparation and delivery of certificates
(unless otherwise required by applicable law) representing Registrable
Securities sold.
3. Company
Obligations.
The
Company will use reasonable best efforts to effect the registration of the
Registrable Securities in accordance with the terms hereof, and pursuant thereto
the Company will, as expeditiously as possible:
40
Exhibit
B
(a) use
reasonable best efforts to cause such Registration Statement to become effective
and to remain continuously effective for a period that will terminate upon
the
earlier of (i) the date on which all Registrable Securities covered by such
Registration Statement as amended from time to time, have been sold, (ii) the
date on which all Registrable Securities covered by such Registration Statement
may be sold by non-Affiliates of the Company immediately without registration
under the Securities Act and without volume restrictions pursuant to Rule
144(k), or (iii) 30 months following the date the Registration Statement
covering all Registrable Securities was declared effective (the “Effectiveness
Period”), and advise SuperCom in writing when the Effectiveness Period has
expired;
(b) prepare
and file with the SEC such amendments and post-effective amendments to the
Registration Statement and the Prospectus as may be necessary to keep the
Registration Statement effective for the Effectiveness Period and to comply
with
the provisions of the 1933 Act and the 1934 Act with respect to the distribution
of all of the Registrable Securities covered thereby;
(c) provide
copies of each Registration Statement and all amendments and supplements thereto
to SuperCom no fewer than four (4) days prior to their filing with the
SEC;
(d) furnish
to SuperCom and its legal counsel (i) promptly after the same is prepared and
publicly distributed, filed with the SEC, or received by the Company (but not
later than two (2) Business Days after the filing date, receipt date or sending
date, as the case may be) one (1) copy of any Registration Statement and any
amendment thereto, each preliminary prospectus and Prospectus and each amendment
or supplement thereto, and each letter written by or on behalf of the Company
to
the SEC or the staff of the SEC, and each item of correspondence from the SEC
or
the staff of the SEC, in each case relating to such Registration Statement
if
and to the extent the Company deems such information to be applicable to
SuperCom (other than any portion of any thereof which contains information
for
which the Company has sought confidential treatment), and (ii) such number
of
copies of a Prospectus, including a preliminary prospectus, and all amendments
and supplements thereto and such other documents as SuperCom may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by SuperCom that are covered by the related Registration
Statement;
(e) use
reasonable best efforts to (i) prevent the issuance of any stop order or other
suspension of effectiveness and, (ii) if such order is issued, obtain the
withdrawal of any such order at the earliest possible moment;
(f) prior
to
any public offering of Registrable Securities, use reasonable best efforts
to
register or qualify or cooperate with SuperCom and its counsel in connection
with the registration or qualification of such Registrable Securities for offer
and sale under the securities or blue sky laws of such jurisdictions requested
by SuperCom and do any and all other commercially reasonable acts or things
necessary or advisable to enable the distribution in such jurisdictions of
the
Registrable Securities covered by the Registration Statement;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (i) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(f), (ii) subject itself to general taxation in any jurisdiction where
it would not otherwise be so subject but for this Section 3(f), or (iii) file
a
general consent to service of process in any such jurisdiction;
41
Exhibit
B
(g) use
reasonable best efforts to cause all Registrable Securities covered by a
Registration Statement to be listed on each securities exchange, interdealer
quotation system or other market on which similar securities issued by the
Company are then listed;
(h) immediately
notify SuperCom, at any time prior to the end of the Effectiveness Period,
upon
discovery that, or upon the happening of any event as a result of which, the
Prospectus includes an untrue statement of a material fact or omits to state
any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and promptly
prepare, file with the SEC and furnish to such holder a reasonable number of
copies of a supplement to or an amendment of such Prospectus as may be necessary
so that such Prospectus shall not include an untrue statement of a material
fact
or omit to state a material fact required to be stated therein or necessary
to
make the statements therein not misleading in light of the circumstances then
existing.; and
(j) With
a
view to making available to SuperCom the benefits of Rule 144 (or its successor
rule) and any other rule or regulation of the SEC that may at any time permit
SuperCom to sell Ordinary Shares to the public without registration, the Company
covenants and agrees to use its reasonable best efforts to: (i) make and keep
public information available, as those terms are understood and defined in
Rule
144, until the earlier of (A) such date as all of the Registrable Securities
may
be resold pursuant to Rule 144(k) or any other rule of similar effect or (B)
such date as all of the Registrable Securities shall have been resold; (ii)
file
with the SEC in a timely manner all reports and other documents required of
the
Company under the 1934 Act; and (iii) furnish to SuperCom upon request, as
long
as SuperCom owns any Registrable Securities, (A) a copy of the Company’s most
recent Annual Report on Form 20-F or Statement of a Foreign Private Issuer
on
Form 6-K, and (B) such other information as may be reasonably requested in
order
to avail SuperCom of any rule or regulation of the SEC that permits the selling
of any such Registrable Securities without registration.
4. Due
Diligence Review; Information.
Upon
reasonable notice and without undue interference of the Company’s business or
operations, the Company shall make available, during normal business hours,
for
inspection and review by SuperCom, advisors to and representatives of SuperCom
(who may or may not be affiliated with SuperCom and who are reasonably
acceptable to the Company), all relevant publicly available, non-confidential
financial and other records, pertinent corporate documents and properties of
the
Company as is customary for due diligence examinations in connection with public
offerings, and cause the Company's officers, directors and employees to supply
all such relevant publicly available non-confidential information reasonably
requested by SuperCom, its advisors to and representatives mentioned above.
The
Company shall not disclose material nonpublic information to SuperCom, or to
advisors to or representatives of SuperCom, unless prior to disclosure of such
information the Company identifies such information as being material nonpublic
information and provides SuperCom, such advisors and representatives with the
opportunity to accept or refuse to accept such material nonpublic information
for review and SuperCom, if it wishes to obtain such information, enters into
an
appropriate confidentiality agreement with the Company with respect
thereto.
42
Exhibit
B
5. Obligations
of SuperCom.
(a) SuperCom
shall furnish in writing to the Company such information regarding itself,
the
Registrable Securities held by it and the intended method of disposition of
the
Registrable Securities held by it, as shall be reasonably required to effect
the
registration of such Registrable Securities and shall execute such documents
in
connection with such registration as the Company may reasonably request. At
least sixty (60) days prior to the first anticipated filing date of any
Registration Statement, the Company shall notify SuperCom of the information
the
Company requires from SuperCom to have any of the Registrable Securities
included in the Registration Statement. SuperCom shall provide such information
to the Company at least forty-five (45) days prior to the first anticipated
filing date of such Registration Statement to have any of the Registrable
Securities included in the Registration Statement, in order to comply with
Item
5(b)(1) of Form F-3 or a successor provision thereof.
(b) SuperCom,
by its acceptance of the Registrable Securities, agrees to cooperate with the
Company as reasonably requested by the Company in connection with the
preparation and filing of a Registration Statement hereunder.
(c) SuperCom
agrees that, upon receipt of any notice from the Company of either (i) the
commencement of the applicable suspension pursuant to Section 2(e) above, or
(ii) the happening of an event pursuant to Section 3(h) hereof, SuperCom will
immediately discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities, until SuperCom
is
advised by the Company that such dispositions may again be made.
(d) SuperCom
represents, warrants and covenants that neither it nor any affiliate thereof
is or
has
engaged, or will engage, in (i) any "short sales" (as such term is defined
in
Rule 200 promulgated under the Exchange Act) of the Registrable Securities,
including, without limitation, the maintaining of any short position with
respect to, establishing or maintaining a "put equivalent position" (within
the
meaning of Rule 16a-1(h) under the Exchange Act) with respect to, entering
into
any swap, derivative transaction or other arrangement (whether any such
transaction is to be settled by delivery of Ordinary Shares, other securities,
cash or other consideration) that transfers to another, in whole or in part,
any
economic consequences or ownership, or otherwise dispose of, any of the
Registrable Securities or (ii) any hedging transaction which establishes a
net
short position with respect to the Registrable Securities.
6. Indemnification.
(a) Indemnification
by the Company.
The
Company will indemnify and hold harmless SuperCom and its officers, directors,
employees and agents, successors and assigns, and each other person, if any,
who
controls SuperCom within the meaning of the 1933 Act, against any losses,
claims, damages or liabilities, joint or several, to which they may become
subject under the 1933 Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, any preliminary Prospectus or final
Prospectus, or any amendment or supplement thereof; (ii) any blue sky
application or other document executed by the Company specifically for that
purpose or based upon written information furnished by the Company filed in
any
state or other jurisdiction in order to qualify any or all of the Registrable
Securities under the securities laws thereof (any such application, document
or
information herein called a “Blue Sky Application”); (iii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; (iv) any violation
by the Company or its agents of any rule or regulation promulgated under the
1933 Act applicable to the Company or its agents and relating to action or
inaction required of the Company in connection with such registration; or (v)
any failure to register or qualify the Registrable Securities included in any
such Registration in any state where the Company or its agents has affirmatively
undertaken or agreed in writing that the Company will undertake such
registration or qualification on SuperCom’s behalf and will reimburse SuperCom,
and each such officer, director or member and each such controlling person
for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided,
however,
that
the Company will not be liable in any such case if and to the extent that any
such loss, claim, damage or liability arises out of or is based upon (i) an
untrue statement or alleged untrue statement or omission or alleged omission
so
made in conformity with information furnished by SuperCom or any such
controlling person in writing specifically for use in such Registration
Statement or Prospectus; or (ii) the use of an outdated or defective Prospectus
after the Company has notified SuperCom in writing that the Prospectus is
outdated or defective pursuant to Section 2(e) above.
43
Exhibit
B
(b) Indemnification
by SuperCom.
SuperCom agrees to indemnify and hold harmless the Company, its directors,
officers, employees, agents, successors and assigns, and each person who
controls the Company (within the meaning of the 0000 Xxx) against any losses,
claims, damages, liabilities and expense (including reasonable attorney fees)
resulting from any untrue statement or alleged untrue statement of a material
fact or any omission or alleged ommission of a material fact required to be
stated in the Registration Statement or Prospectus or amendment or supplement
thereto or necessary to make the statements therein not misleading, to the
extent, but only to the extent, that such untrue or alleged untrue statement
or
omission or alleged omission is contained in information furnished in writing
by
SuperCom to the Company specifically for inclusion in such Registration
Statement or preliminary Prospectus or Prospectus or amendment or supplement
thereto. In no event shall the liability of SuperCom be greater in amount than
the dollar amount of the proceeds (net of all expense paid by SuperCom in
connection with any claim relating to this Section 6 and the amount of any
damages SuperCom has otherwise been required to pay by reason of such untrue
statement or omission) received by SuperCom upon the sale of the Registrable
Securities included in the Registration Statement giving rise to such
indemnification obligation. For the avoidance of doubt, the provisions of this
Section 6(b) will remain in full force and effect and survive the sale by
SuperCom of the Registrable Securities covered by the Registration
Statement.
(c) Conduct
of Indemnification Proceedings.
Any
person entitled to indemnification hereunder shall (i) give prompt notice to
the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) permit such indemnifying party to assume the defense of such claim
with
counsel reasonably satisfactory to the indemnified party; provided
that any
person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such person unless
(a)
the indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such person or (c) in the reasonable
judgment of any such person, based upon written advice of its counsel, a
conflict of interest exists between such person and the indemnifying party
with
respect to such claims (in which case, if the person notifies the indemnifying
party in writing that such person elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such claim on behalf of such person); and
provided,
further,
that
the failure of any indemnified party to give notice as provided herein shall
not
relieve the indemnifying party of its obligations hereunder, except to the
extent that such failure to give notice shall materially adversely affect the
indemnifying party in the defense of any such claim or litigation. It is
understood that the indemnifying party shall not, in connection with any
proceeding in the same jurisdiction, be liable for fees or expenses of more
than
one separate firm of attorneys at any time for all such indemnified parties.
No
indemnifying party will, except with the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of such
claim or litigation.
44
Exhibit
B
(d) Contribution.
If for
any reason the indemnification provided for in the preceding paragraphs (a)
and
(b) is unavailable to an indemnified party or insufficient to hold it harmless,
other than as expressly specified therein, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result
of
such loss, claim, damage or liability in such proportion as is appropriate
to
reflect the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations. No person guilty of
fraudulent misrepresentation within the meaning of Section 11(f) of the 1933
Act
shall be entitled to contribution from any person not guilty of such fraudulent
misrepresentation. In no event shall the contribution obligation of a holder
of
Registrable Securities be greater in amount than the dollar amount of the
proceeds (net of all expenses paid by such holder in connection with any claim
relating to this Section 6 and the amount of any damages such holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission) received by it upon the sale of
the
Registrable Securities giving rise to such contribution obligation.
7. Miscellaneous.
(a) Amendments
and Waivers.
This
Agreement may be amended only by a writing signed by the Company and SuperCom.
The Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have obtained
the written consent to such amendment, action or omission to act, of
SuperCom.
(b) Notices.
All
notices and other communications provided for or permitted hereunder shall
be
made as set forth in Section 11.5 of the Purchase Agreement.
(c) Assignments
and Transfers by SuperCom.
The
provisions of this Agreement shall be binding upon and inure to the benefit
of
SuperCom and its successors and assigns. SuperCom may transfer or assign, in
whole or from time to time in part, to one or more persons its rights hereunder
in connection with the transfer of Registrable Securities by SuperCom to such
person, provided that SuperCom complies with all laws applicable thereto and
provides written notice of assignment to the Company promptly after such
assignment is effected and provided further that the number of Registrable
Securities so transferred is not less than 200,000.
(d) Assignments
and Transfers by the Company.
This
Agreement may not be assigned by the Company (whether by operation of law or
otherwise) without the prior written consent of SuperCom, provided, however,
that the Company may assign its rights and delegate its duties hereunder to
any
surviving or successor corporation in connection with a merger or consolidation
of the Company with another corporation, or a sale, transfer or other
disposition of all or substantially all of the Company’s assets to another
corporation, without the prior written consent of SuperCom, after notice duly
given by the Company to SuperCom.
(e) Benefits
of the Agreement.
The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective permitted successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
45
Exhibit
B
(f) Counterparts;
Faxes.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument. This Agreement may also be executed via facsimile, which shall
be
deemed an original.
(g) Titles
and Subtitles.
The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.
(h) Severability.
Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof but shall be interpreted as if it were written so as to be
enforceable to the maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law
which
renders any provisions hereof prohibited or unenforceable in any
respect.
(i) Further
Assurances.
The
parties shall execute and deliver all such further instruments and documents
and
take all such other actions as may reasonably be required to carry out the
transactions contemplated hereby and to evidence the fulfillment of the
agreements herein contained.
(j) Entire
Agreement.
This
Agreement is intended by the parties as a final expression of their agreement
and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
(k) Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Israel, without reference to the choice of law principles thereof.
The
Company and SuperCom consent to and hereby submit to the exclusive jurisdiction
of the suitable court in Tel-Aviv Jaffa.
46
Exhibit B
IN
WITNESS WHEREOF, the parties have executed this Agreement or caused their duly
authorized officers to execute this Agreement as of the date first above
written.
ON TRACK INNOVATIONS LTD. | |
By:_________________________
Name:
Title:
|
|
SUPERCOM LTD. | |
By:_________________________
Name:
Title:
|
47
Exhibit
A
Plan
of Distribution
The
selling stockholders, which as used herein includes donees, pledgees,
transferees or other successors-in-interest selling Ordinary Shares or interests
in Ordinary Shares received after the date of this prospectus from a selling
stockholder as a gift, pledge, partnership distribution or other transfer,
may,
from time to time, sell, transfer or otherwise dispose of any or all of their
Ordinary Shares or interests in Ordinary Shares on any stock exchange, market
or
trading facility on which the Ordinary Shares are traded or in private
transactions. These dispositions may be at fixed prices, at prevailing market
prices at the time of sale, at prices related to the prevailing market price,
at
varying prices determined at the time of sale, or at negotiated
prices.
The
selling stockholders may use any one or more of the following methods when
disposing of Ordinary Shares or interests therein:
-
ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
-
block
trades in which the broker-dealer will attempt to sell the Ordinary Shares
as
agent, but may position and resell a portion of the block as principal to
facilitate the transaction;
-
purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;
-
an
exchange distribution in accordance with the rules of the applicable
exchange;
-
privately negotiated transactions;
through
the writing or settlement of options or other hedging transactions, whether
through an options exchange or otherwise;
-
broker-dealers may agree with the selling stockholders to sell a specified
number of such Ordinary Shares at a stipulated price per share; and
-
a
combination of any such methods of sale.
The
selling stockholders may, from time to time, pledge or grant a security interest
in some or all of the Ordinary Shares owned by them and, if they default in
the
performance of their secured obligations, the pledgees or secured parties may
offer and sell the Ordinary Shares, from time to time, under this prospectus,
or
under an amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act amending the list of selling stockholders to
include the pledgee, transferee or other successors in interest as selling
stockholders under this prospectus. The selling stockholders also may transfer
the Ordinary Shares in other circumstances, in which case the transferees,
pledgees or other successors in interest will be the selling beneficial owners
for purposes of this prospectus.
48
In
connection with the sale of our Ordinary Shares or interests therein, the
selling stockholders may loan or pledge the Ordinary Shares to broker-dealers
that in turn may sell these securities. The selling stockholders may also enter
into option or other transactions with broker-dealers or other financial
institutions or the creation of one or more derivative securities which require
the delivery to such broker-dealer or other financial institution of Ordinary
Shares offered by this prospectus, which Ordinary Shares such broker-dealer
or
other financial institution may resell pursuant to this prospectus (as
supplemented or amended to reflect such transaction).
The
aggregate proceeds to the selling stockholders from the sale of the Ordinary
Shares offered by them will be the purchase price of the Ordinary Shares less
discounts or commissions, if any. Each of the selling stockholders reserves
the
right to accept and, together with their agents from time to time, to reject,
in
whole or in part, any proposed purchase of Ordinary Shares to be made directly
or through agents. We will not receive any of the proceeds from this
offering.
The
selling stockholders also may resell all or a portion of the Ordinary Shares
in
open market transactions in reliance upon Rule 144 under the Securities Act
of
1933, provided that they meet the criteria and conform to the requirements
of
that rule.
The
selling stockholders and any underwriters, broker-dealers or agents that
participate in the sale of the Ordinary Shares or interests therein may be
"underwriters" within the meaning of Section 2(11) of the Securities Act. Any
discounts, commissions, concessions or profit they earn on any resale of the
Ordinary Shares may be underwriting discounts and commissions under the
Securities Act. Selling stockholders who are "underwriters" within the meaning
of Section 2(11) of the Securities Act will be subject to the prospectus
delivery requirements of the Securities Act.
To
the
extent required, the Ordinary Shares to be sold, the names of the selling
stockholders, the respective purchase prices and public offering prices, the
names of any agents, dealer or underwriter, any applicable commissions or
discounts with respect to a particular offer will be set forth in an
accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this
prospectus.
In
order
to comply with the securities laws of some states, if applicable, the Ordinary
Shares may be sold in these jurisdictions only through registered or licensed
brokers or dealers. In addition, in some states the Ordinary Shares may not
be
sold unless they have been registered or qualified for sale or an exemption
from
registration or qualification requirements is available and is complied
with.
We
have
advised the selling stockholders that the anti-manipulation rules of Regulation
M under the Exchange Act may apply to sales of Ordinary Shares in the market
and
to the activities of the selling stockholders and their affiliates. In addition,
to the extent applicable, we will make copies of this prospectus (as it may
be
supplemented or amended from time to time) available to the selling stockholders
for the purpose of satisfying the prospectus delivery requirements of the
Securities Act. The selling stockholders may indemnify any broker-dealer that
participates in transactions involving the sale of the Ordinary Shares against
certain liabilities, including liabilities arising under the Securities
Act.
49
We
have
agreed to indemnify the selling stockholders against liabilities, including
liabilities under the Securities Act and state securities laws, relating to
the
registration of the Ordinary Shares offered by this prospectus.
We
have
agreed with the selling stockholders to keep the registration statement of
which
this prospectus constitutes a part effective until the earlier of (1) such
time
as all of the Ordinary Shares covered by this prospectus have been disposed
of
pursuant to and in accordance with the registration statement or (2) the date
on
which the Ordinary Shares may be sold pursuant to Rule 144(k) of the Securities
Act.
50
Exhibit C
SERVICE
AND SUPPLY AGREEMENT
THIS
SERVICE AND SUPPLY AGREEMENT (this “Agreement”),
dated
as of ___________ __,
2006,
is by and between SuperCom Ltd., an Israeli corporation (“Seller”)
and On
Track Innovations Ltd., an Israeli corporation (“Buyer”).
WHEREAS,
Buyer and Seller entered into an Asset Purchase Agreement of even date (the
“APA”),
to
which this Agreement is attached as a copy; and
WHEREAS,
as a condition to Closing of the transactions contemplated in the APA, Seller
and Buyer agreed to enter into this Agreement, that will set forth and define
the parties' mutual rights and undertakings with respect to the Existing
Projects, the Potential Projects (as defined hereinafter) and
otherwise;
NOW,
THEREFORE, in consideration of the promises and the representations, warranties,
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and
intending to be legally bound hereby, the parties hereby agree as follows:
ARTICLE
I
Certain
Definitions
As
used
herein, and unless the context otherwise requires, the following terms (or
any
variant in the form thereof) shall have the following respective meanings.
Without derogating from the aforesaid, and unless otherwise specifically defined
herein or the context otherwise clearly requires, capitalized terms used in
this
Agreement shall have the meaning assigned to such terms in the APA.
"Existing
Contracts" those
binding agreements entered into by Seller with respect to the Existing Projects
or in connection therewith a purchase order has been granted, prior to the
date
of the APA and not assigned to Buyer, a list of which is attached hereto as
Annex
B1,
accompanied by the date of their expiration.
"Excluded
Project"
means
that certain project set forth in Annex
C.
“Potential
Projects”
means
potential projects listed in Annex
D
hereto,
which are on the date of the APA, in the stage of working leads and not assigned
to Buyer. For the avoidance of doubt, any project not designated as an Existing
Project on the date of the APA, shall be deemed as a Potential Project, even
if
on the date of this Agreement, the parties to such project have reached an
agreement regarding the terms thereof, and such project shall be added to Annex
D (and the respective contracts covering such project shall not be part of
the
Existing Contracts).
ARTICLE
II
Existing
Projects
Section
2.1 Grant
of License.
For the
avoidance of doubt, it is made clear that the Existing Projects and the Excluded
Project are not part of the Acquired Assets, and the rights in and to the
Existing Projects and the Excluded Project are not transferred or assigned
to
Buyer. In order to enable Seller to perform and carry out the Existing Projects
and the Excluded Project, Buyer hereby grants Seller an irrevocable, worldwide,
non-exclusive, non-assignable and non-transferable license to utilize the
applicable SuperCom Intellectual Property transferred to Buyer as part of the
Acquired Assets for the purpose of carrying the Existing Projects and the
Excluded Project (the "License").
The
License will be valid until the completion of each Existing Project and Excluded
Project, individually, at which time, it will automatically expire with respect
to that certain Existing Project or Excluded Project (except as otherwise
provided in Annex
E);
provided, however, that in the event of termination of this Agreement for any
reason (in whole or in part in connection with a specific project), the Buyer
will be entitled nevertheless to be paid a license fee equal to 15% of the
Direct Cost plus 15% of the Operational Cost as defined below of the relevant
project as set forth in Annex
B
(which
obligation shall survive the termination of this Agreement).
Section
2.2 Buyer
Services.
Buyer
hereby undertakes as follows:
(a)Buyer
hereby undertakes to: (i) supply all products and materials as required by
Seller from time to time (which order shall be provided to Buyer at least 60
days in advance in writing and in such format agreed by Buyer and Seller),
and
(ii) to provide all services as required by Seller from time to time (which
order shall be provided to Buyer at least 60 days in advance in writing (or
as
agreed otherwise in writing) and in such format agreed to by Buyer and Seller).
It is agreed that Seller will continue to act as the main contractor of all
Existing Projects, while all duties with respect to performance of the Existing
Projects required by Seller as aforesaid, will be carried out by Buyer as
sub-contractor pursuant to this Agreement. Unless Buyer is otherwise requested
by Seller, Buyer shall be dealing directly with customers in the Existing
Projects, except for the Excluded Project. Seller shall have no right to use
the
services of any third party (including itself), (and as the date hereof has
no
agreement with any third party regarding the foregoing), other than the Buyer,
in rendering and supplying the products, materials and services, Seller is
required to provide under the Existing Contracts and the Excluded Project,
provided that and as long as Buyer complies with and fulfills its undertakings
under this Agreement to supply all products and materials and to provide all
services.
Except
for the services to be provided by Buyer per Seller’s request pursuant to the
provisions of Section 2.2(a) above, Seller hereby undertakes to duly and timely
perform its undertakings and/or any of its other duties under the Existing
Projects.
(b)Annex
F,
attached hereto is a frame order of the estimated services, products and
materials to be provided by Buyer to Seller until December 31st
2007.
Annex
G,
attached hereto is a forecast of the estimated services, products and materials
to be provided by Buyer to Seller for the year 2008. A frame order for the
year
2008 shall be agreed upon by the parties by September 30th
2008.
(c)
Deleted
51
(d)In
consideration for the supply of products and materials, and for the services
to
be performed by Buyer under this Agreement and in consideration for the License,
Seller will pay Buyer the fees set forth in Annex
H.
(e)Buyer
will invoice the Seller for the applicable consideration set forth in
sub-section (d) above upon each performance of the service or shipment of the
products and/or materials, respectively, and will accompany such invoice with
a
written detail of the services performed and/or the products and/or materials
supplied, and their related costs. Notwithstanding the aforesaid in this
sub-section (e), it is agreed that until December 31, 2007, Buyer will invoice
Seller for Direct Cost: Maintenance (as specified in Annex B) and for the
Operational Cost in accordance with the terms set forth in Annex
B.
(f)Seller
will pay each respective invoice within 30 days from the end of each month
of
receipt of Buyer's invoice against a proper tax invoice of Buyer. In addition,
Seller will pay the applicable VAT on the date it is due to be paid by Buyer
(against a proper tax invoice ('Heshbonit Mas')).
Section
2.3 Deleted.
Section
2.4 Expiration
of and Changes to the Existing Contracts.
(a)Unless
otherwise required by Buyer, Seller shall use its best efforts to cause the
Existing Contracts and the Existing Projects to expire upon the earliest date
possible according to the terms thereof, except of the Excluded Project. If
Seller has a right to extend the term of such Existing Contracts and the
Existing Projects, Seller shall not extend such Existing Contract and Existing
Projects without Buyer's prior written consent. This sub section shall not
apply
to the Excluded Project.
(b)Seller
shall not make any change to any provision of the Existing Contracts and shall
not take any actions in connection therewith not in accordance with their terms,
without the prior written consent of Buyer. This provision shall also apply
to
the Excluded Projects, with respect to the period until December 31st
2007
within the frame order concluded between Seller and Buyer with respect to this
period, and when frame order for the year 2008 is concluded between the Seller
and Buyer, also for the year 2008 within the frame order concluded between
Seller and Buyer with respect to this period; provided that and only in the
case
that such change has a material adverse affect on the interests of Buyer under
this Agreement.
Section
2.5 Renewal
of Existing Contracts.
Notwithstanding the foregoing, after termination or expiration of each Existing
Contract, Seller shall use its best efforts to negotiate the renewal of the
Existing Contract, unless otherwise instructed by Buyer, and to assign all
rights in and to the renewal Existing Contract to Buyer, (except as otherwise
provided in Annex
E),
after
which such Existing Contract shall be the sole property of Buyer.
52
ARTICLE
III
Potential
Projects
It
is
hereby agreed that the following terms and conditions will apply to the
Potential Projects:
Section
3.1 Assignment
of Rights.
Seller
hereby undertakes to use its best efforts in order to assign all rights and
interest in and to the Potential Projects to Buyer, and subject to the approval
and consent of all parties to each Potential Project (other than the Seller)
and
the Buyer, all rights and interest in and to any Potential Project, the
assignment of which has been approved and consented to by all parties to said
Potential Project (other than the Seller) and by the Buyer, will be assigned
to
Buyer as of the Closing Date.
Subject
to Seller's right to be paid certain Seller's Fee (as defined in Section 3.6
below), Seller will have no rights derived from the Potential Projects, nor
will
Seller have any obligation in connection with the Potential Projects
assigned.
Section
3.2 Non-assigned
Potential Projects.
Potential Projects and all rights related thereto which are not assigned to
Buyer according to the terms of Section 3.1 hereinabove, will nevertheless
be
the sole property of Buyer as of the Closing, where Seller shall formally act
as
the main contractor. Seller shall act in accordance with Buyer's instructions
with regard to all Potential Projects that are not assigned, including without
limitations, withdraw from such bids as required by Buyer, revoke any Potential
Project in the event any Potential Project materializes to a binding purchase
order or contract, sign the binding formal contract as main contractor or
otherwise, all subject to the instructions of Buyer. Concurrently with the
execution of any formal contract by Seller with the party ordering the services
under the Potential Project, Seller and Buyer will enter into a back to back
agreement according to which Buyer will assume all of Seller's undertakings
under said formal contract entered into by Seller, and will undertake to perform
all such undertakings at its own cost and expense.
Section
3.3 No
Guarantee.
For the
avoidance of any doubt, it is made clear that no binding contracts have been
signed with respect to any of the Potential Projects and Seller does not
guarantee that any Potential Projects, whether assigned or not, will actually
yield any purchase orders or binding contracts. Buyer will have no claim against
Seller in case any or all of the Potential Projects do not materialize into
binding agreement or purchase order.
Section
3.4 All
services to be performed by Buyer with respect to each Potential Project will
be
provided by Buyer on a "back to back" basis to all obligations of Seller
according to each Potential Project.
53
Section
3.5 Reserved
Section
3.6 In
consideration of its undertakings under this Agreement with respect to the
non-assigned Potential Projects, Seller will be entitled to a fee equal to
all
income minus the applicable third parties marketing expenses (if any) derived
from the non-assigned Potential Projects (the "Net
Consideration")
multiplied by 7.5% plus VAT against a proper tax invoice ('Heshbonit Mas')
(the
"Seller's
Fee").
Seller's Fee will be paid by deducting Seller's Fee plus VAT from the net
consideration. Seller will transfer to Buyer the Net Consideration, after
deducting Seller’s Fee as aforesaid within five (5) business days following
receipt of the applicable payment.
ARTICLE
IIIA
Additional
Services, Products and Materials
Section
3.1AIt
is
hereby agreed that any additional services, products or materials requested
by
Seller and not covered by the provisions of Article II and Article III above,
as
and if agreed between Buyer and Seller, shall be performed by Buyer upon
Seller’s request, . In consideration of such services, Buyer will be entitled to
be paid a fee equal to its costs in performing the additional services, products
or materials plus 50% of such costs, to be paid within 30 days from the end
of
each month of receipt of Buyer's invoice against a proper tax invoice of Buyer.
In addition, Seller will pay the applicable VAT on Buyer's due date (against
a
proper tax invoice ('Heshbonit Mas')).
ARTICLE
IV
Indemnification
Section
4.1 Indemnification
by Buyer. Buyer
hereby undertakes to indemnify Seller and agrees to hold it harmless from,
any
and all damages, claims, debts, actions, assessments, judgments, losses, fines,
fees, penalties and expenses (including, without limitation, reasonable expenses
of investigation and reasonable attorneys’ fees and expenses in connection with
any action, suit or proceeding) (collectively, “Losses”)
incurred or suffered by Seller arising out of:
(a) Buyer's
failure to duly and timely perform its undertakings and/or any of its other
duties under any of the Existing Projects which were not assigned to Buyer
and
the Excluded Project; Provided that Buyer's obligation to indemnify Seller
under
this Section 4.1(a) is limited to and will apply only to its undertakings to
supply products and materials under the Existing Projects and the Excluded
Project and to the amount of consideration paid to Buyer under the term of
Article II of the Agreement and further provided that Buyer's failure does
not
result from Seller's failure to comply with its undertakings under the terms
of
the APA and this Service and Supply Agreement.; and
54
(b) Buyer's
failure to duly and timely perform its undertakings and/or any of its other
duties under any non-assigned Potential Project; provided that Buyer's failure
does not result from Seller's failure to comply with its undertakings under
the
terms of the APA and this Service and Supply Agreement.
(c)
Any
claims or complaints against Seller initiated by any third party with respect
to
the performance of any Existing Projects not assigned to Buyer and the Excluded
Project or the Potential Projects resulting from Buyer's failure as set forth
in
sub-sections (a) and (b) above.
(d) It
is
hereby agreed that Seller shall have no remedy against Buyer with regard to
any
breach or failure by Buyer and/or any Loss incurred by Seller other than those
Losses covered by Sections 4.1(a), 4.1(b) and 4.1(c) above.
Section
4.2 The
right
of Seller and others to indemnification under this Section 4 shall lapse upon
termination of the applicable customer's right to indemnification pursuant
to
its agreement with Seller.
Section
4.3 Indemnification
by Seller. Seller
hereby undertakes to indemnify Buyer and agrees to hold it harmless from, any
and all Losses incurred or suffered by Buyer arising out of (i) Seller’s failure
to duly and timely perform its undertakings and/or any of its other duties
under
any of the Existing Projects (other than the Excluded Project) which were not
assigned to Buyer pursuant to the terms of this Agreement; and (b) any claims
or
complaints against Buyer initiated by any third party with respect to the
performance of any Existing Projects (other than the Excluded Project) not
assigned to Buyer resulting from Seller’s failure to perform its undertakings
and/or any of its other duties under any of the Existing Projects (other than
the Excluded Project) not assigned to Buyer pursuant to the terms of this
Agreement; provided that Seller's failure does not result from Buyer's failure
to comply with its undertakings under the terms of the APA and this Service
and
Supply Agreement.
ARTICLE
V
Termination
Section
5.1 Termination.
This
Agreement may be terminated by:
(a) The
mutual written consent of Seller and Buyer; or
55
(b) Seller,
with regard to the applicable non-assigned Existing Project (together with
the
applicable Existing Contracts) or the applicable non-assigned Potential Project
(“Applicable
Terminated Project”),
provided it is not then in material breach of any of its obligations hereunder,
if Buyer fails to perform in any material respect any covenant pursuant to
this
Agreement with regard to the Applicable Terminated Project when performance
thereof is due or Buyer shall have breached in material respect its obligations
with regard to the Applicable Terminated Project and does not cure the failure
or breach within thirty (30) days after Seller delivers written notice thereof;
or
(c) Buyer,
with regard to the Applicable Terminated Project, provided it is not then in
material breach of any of its obligations hereunder, if Seller fails to perform
in any material respect any covenant pursuant to this Agreement with regard
to
the Applicable Terminated Project when performance thereof is due or Seller
shall have breached in material respect its obligations with regard to the
Applicable Terminated Project and does not cure the failure or breach within
thirty (30) days after Buyer delivers written notice thereof.
ARTICLE
VI
Miscellaneous
Section
6.1 Independent
Contractors.
Both
Buyer and Seller agree that they shall act as independent contractors in the
performance of their undertakings hereunder and that nothing contained herein
shall create or be construed to create an employer-employee relationship between
the parties.
Section
6.2 Counterparts.
This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement, and shall become effective when one
or
more counterparts have been signed by each of the parties and delivered to
the
other party.
Section
6.3 Governing
Law; Consent to Jurisdiction.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Israel without reference to the choice of law principles thereof.
Buyer
and Seller consent to and hereby submit to the exclusive jurisdiction of the
suitable court in Tel-Aviv Jaffa.
Section
6.4 Cooperation.
In
performing their undertakings under this Agreement, Buyer and Seller will adhere
to any reasonable requests of the other party with respect to the performance
of
each other's duties. Any and all material written communication provided to
Seller and sent by Seller in connection with the Existing Projects, Existing
Contracts and the Potential Projects, shall be sent to Buyer upon receipt or
delivery thereof.
56
Section
6.5 Entire
Agreement.
Except
as provided in the APA, this Agreement (including agreements incorporated by
reference herein), the Disclosure Schedule and the Exhibits hereto contain
the
entire agreement between the parties with respect to the subject matter hereof
and there are no agreements, understandings, representations or warranties
between the parties other than those set forth or referred to herein or therein.
For the avoidance of doubt, the indemnification provision in the APA shall
not,
in any way, apply to this Agreement.
Section
6.6 Notices.
All
notices hereunder shall be made in accordance with the provisions of the
APA.
Section
6.7 Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided, however, that no party
hereto will assign its rights or delegate its obligations under this Agreement
without the express prior written consent of each other party hereto, except
that either party may assign this Agreement to any Entity that succeeds to
substantially all of such party’s assets and liabilities, provided, however,
that if such assignor is the Seller, at the time of such assignment, Seller
is
permitted to assign, the Existing Projects, the Existing Contracts and the
Potential Projects not assigned to Buyer at such time.
Section
6.8 Headings:
Definitions.
The
section and article headings contained in this Agreement are inserted for
convenience of reference only and will not affect the meaning or interpretation
of this Agreement. All references to Sections or Articles contained herein
mean
Sections or Articles of this Agreement unless otherwise stated.
Section
6.9 Amendment.
This
Agreement may not be amended, modified, superseded, canceled, renewed or
extended except by a written instrument signed by the party to be charged
therewith.
Section
6.10 Waiver;
Effect of Waiver.
No
provision of this Agreement may be waived except by a written instrument signed
by the party waiving compliance. No waiver by any party hereto of any of the
requirements hereof or of any of such party’s rights hereunder shall release the
other parties from full performance of their remaining obligations stated
herein. No failure to exercise or delay in exercising on the part of any party
hereto any right, power or privilege of such party shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise thereof or the exercise of
any
other right, power or privilege by such party.
57
Section
6.11 Interpretation;
Absence of Presumption
(a) For
the
purposes hereof, (i) the terms “hereof,” “herein” and “herewith” and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole (including all of the Schedules hereto) and not to any
particular provision of this Agreement, and Article, Section, paragraph and
Schedule references are to the Articles, Sections, paragraphs and Schedules
to
this Agreement unless otherwise specified, (ii) the word “including” and words
of similar import when used in this Agreement means “including, without
limitation,” unless the context otherwise requires or unless otherwise
specified, (iii) the word “or” shall not be exclusive, (iv) provisions shall
apply, when appropriate, to successive events and transactions and (v) all
references to any period of days shall be deemed to be to the relevant number
of
calendar days.
(b) This
Agreement shall be construed without regard to any presumption or rule requiring
construction or interpretation against the party drafting or causing any
instrument to be drafted.
Section
6.12 Remedies.
No
remedy under this Agreement or at law or in equity shall provide for or permit
the payment of multiple, exemplary, punitive or consequential damages or any
equitable equivalent thereof or substitute therefor, and the burden shall be
on
the party claiming loss to show actual loss in the amount claimed. Except for
the right for indemnification, Seller and Buyer shall have no other or further
remedy against each other under this Agreement with respect to the subject
matter hereof. Notwithstanding the foregoing, and in addition thereto, Buyer
shall have a right for remedy against Seller pursuant to the terms of this
Agreement which claim is limited to the Excluded Projects only.
Section
6.13 Severability.
In the
event that any provision of this Agreement, or the application of any such
provision to any Person or set of circumstances, shall be determined to be
invalid, unlawful, void or unenforceable to any extent, the remainder of this
Agreement, and the application of such provision to Persons or circumstances
other than those as to which it is determined to be invalid, unlawful, void
or
unenforceable, shall not be impaired or otherwise affected and shall continue
to
be valid and enforceable to the fullest extent permitted by law.
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remainder of this page has been intentionally left
blank.]
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on their behalf as of the date first written above.
ON TRACK INNOVATIONS LTD. | |
By:_________________________________
Name:
Title:
|
|
SUPERCOM LTD. | |
By:_________________________________
Name:
Title:
|
59
Exhibit
D
IRREVOCABLE
PROXY
The
undersigned, shareholder (“Shareholder”)
of On
Track Innovations Ltd., an Israeli company (the “Company”),
hereby irrevocably (to the fullest extent permitted by law) appoints the
Company’s Chairman on behalf of the Board of Directors, or whom the Company’s
Board of Directors will instruct, as the sole attorneys-in-fact and proxies
of
the undersigned with full power of substitution and re-substitution, to vote
and
put into effect all voting and related rights with respect to, and to grant
consent or approval in respect of (in each case, to the full extent that the
undersigned is entitled to do so), 2,827,200 ordinary shares nominal value
NIS
0.1 per share, of the Company (each - a "Share", and collectively -
“Shares”)
issued
to the undersigned pursuant to a certain Assets Purchase Agreement by and
between the Company and the undersigned, dated as of November 7 2006 (the
“APA”).
Any
and
all prior proxies heretofore given by the undersigned with respect to any of
the
Shares are hereby revoked and the undersigned hereby covenants and agrees not
to
grant any subsequent proxies with respect to any Shares.
This
Proxy is irrevocable (to the fullest extent permitted by law) and is granted
as
part of the APA.
The
attorneys-in-fact and proxies named above are hereby authorized and empowered
by
the undersigned to act as the undersigned’s attorney-in-fact and proxy to vote
each Share and to exercise all voting, consent and similar rights of the
undersigned with respect to the Shares (including, without limitation, the
power
to execute and deliver written consents), at every annual, special, adjourned
or
postponed meeting of the shareholders of the Company and in every written
consent in lieu of such meeting until the sale or transfer of such Share to
a
third party who is not an Affiliate of the undersigned in an arm's length
transaction, as such term is defined in the APA (the “Termination
Date”).
Immediately following the Termination Date in respect of a Share, the
attorneys-in-fact and proxies named above may not, with respect to such Share,
exercise this Proxy with respect to any matter.
Any
obligation of the undersigned hereunder shall be binding upon the permitted
successors and assigns of the undersigned until the Termination Date.
In
the
event the Shareholder or its Affiliate(s), as such term is defined in the APA,
is an officer or director of the Company, nothing in this Proxy shall be
construed as preventing or otherwise affecting any actions taken by the
Shareholder in its capacity as an officer or director of the Company or in
any
of its subsidiaries or from fulfilling the obligations of such office (including
without limitation, the performance of obligations required by the fiduciary
obligations of Shareholder acting solely in his or her capacity as an officer
or
director).
This
Proxy shall terminate, and be of no force or effect, immediately following
the
Termination Date.
|
|
By:
____________________
Title:
___________________
Date:
___________________
|
60