Re: Stock Purchase/Sale Agreement
Exhibit
10.2
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Xxxx
X. Xxxxxx
0000
Xxxxxxx
Xxx
Xxxxx, Xxxxxxxx 00000
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Xxx
X. Xxxx
0000
Xxxx Xxxxxx Xxxxx
Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
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February
15, 0000
Xxxxxxx
Xxxxxxxxxxx
000
Xxxx
00xx
Xxxxxx
Xxxxx
000
Xxx
Xxxx,
Xxx Xxxx 00000
Attention: Xxxxxx
X.
Xxxxxxx
Chairman,
President and CEO
Gentlemen:
Reference
is made to the Stock Purchase and Sale Agreement dated January 7, 2004 (the
“Agreement”) by and among ourselves (the “Shareholders”), Arotech Corporation, a
Delaware corporation (“Arotech”), and FAAC Incorporated, a Michigan corporation
(“FAAC”). All capitalized terms used and not otherwise defined herein shall have
the meanings ascribed to such terms in the Agreement.
This
will
confirm our agreement to your request that we modify the terms of the Agreement
to provide that, notwithstanding anything to the contrary in the Agreement
or in
the Restated Security Agreement dated February 19, 2004 (the “Security
Agreement”) between and among Arotech, FAAC, and the Shareholders, payment of
the 2004 Earnout Consideration shall be made by Arotech as follows:
| 1. |
On
or prior to Xxxxx 00, 0000, Xxxxxxx will transfer to the Shareholders
all
right and title to the Debt Instruments, as defined in and serving
as
security under the Security Agreement and being held pursuant to
the terms
of an Escrow Agreement dated February 19, 2004 between and among
Arotech,
the Shareholders and HSBC Bank USA or, at Arotech’s option, Arotech will
deliver to the Shareholders a cashier’s check or wire transfer of
immediately available funds in an amount equal to the principal plus
accrued interest then outstanding under those Debt
Instruments.
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| 2. |
As
soon as Arotech has filed its Form 10-K for 2004, but in no event
later
than April 30, 2005 (the “Issuance Date”), Arotech will issue in the name
of the Shareholders and deliver to CIBC Israel, a subsidiary of CIBC
World
Markets (the “Broker”), that number of registered shares of Arotech Common
Stock (the “Shares”) having a value, based upon the lowest of the bid
price in the previous 20 days immediately preceding the Issuance
Date, of
$10,000,000 (which is approximately 125% of the amount that Arotech
and
the Shareholders estimate will be the remaining balance of the 2004
Earnout Consideration after application of the amount specified in
Paragraph 1) for sale or distribution in accordance with the procedures
hereafter described.
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| 3. |
Immediately
following the Issuance Date, the Buyer will cause the Broker to initiate
and thereafter implement as rapidly as possible the sale, in one
or more
transactions, of that number of the Shares as will be required to
generate
net proceeds to the Shareholders (after all fees to the Broker and
all
other transactional expenses) of the remaining balance of the 2004
Earnout
Consideration after application of the amount specified in Paragraph
1,
plus (as provided in the Agreement) interest on that remaining balance
from April 1, 2005 until paid at the rate of 12% per annum (collectively,
the “Earnout Balance”) and, within three (3) business days following each
such sale, to disburse such net proceeds to the Shareholders by wire
transfer to an account or accounts designated by the Shareholders.
In
implementing those sales, the Broker shall operate with the primary
objective to generate net proceeds equal to the Earnout Balance for
distribution to the Shareholders on or before September 30, 2005
and, to
the extent (but only to the extent) consistent with that primary
objective, to maximize the average price per share at which the Shares
are
sold. Unless at the written directive of the Shareholders, no sales
of
Shares will be completed at a price that is less than 80% of the
price per
share that was the valuation basis for the issuance of the Shares.
|
Arotech
Corporation
February
15, 2005
Page
2
| 4. |
If,
on or prior to September 30, 2005, the Shareholders receive full
payment
of the Earnout Balance from distributions of cumulative net proceeds
of
the sales of the Shares, then (a) any net proceeds of such sales
in excess
of the Earnout Balance shall be delivered to the Buyer and (b) any
Shares
remaining unsold after such full payment shall be delivered to the
Buyer.
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| 5. |
If
as of September 30, 2005, the Shareholders have not received full
payment
of the Earnout Balance from distributions of cumulative net proceeds
of
the sales of the Shares, then the Shareholders shall have the right,
as of
or at any time after that date, exercisable by written notice (the
“Notice”) delivered to the Broker and Arotech, to (a) require that the
Broker release and deliver to the Shareholders any remaining net
proceeds
from the prior sales of the Shares and any remaining Shares that
had not
yet been sold as of the date the Notice was delivered and the Broker,
on
or after the fifth (5th)
business day following the date of delivery of the Notice, shall
deliver
to the Shareholders and the Shareholders shall accept such remaining
net
proceeds and the original Stock Certificate(s) representing such
remaining
Shares in complete satisfaction of the Earnout Balance or (b) require
that
the Buyer, on or before the tenth (10th)
business day following the date of delivery of the Notice, pay to
the
Shareholders by a cashier’s check or wire transfer of immediately
available funds an amount equal to Earnout Balance and, following
receipt
of such payment, the Shareholders will waive all rights to any remaining
net proceeds from the prior sales of the Shares and to any remaining
Shares that had not yet been sold as of the date such payment, and
any
remaining net proceeds and Shares shall be delivered to the Buyer
as
provided in Paragraph 4 above.
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| 6. |
Any
portion of the 2004 Earnout Consideration not paid when due under
this
amendment will bear interest at the rate specified in Section 12.1
of the
Agreement.
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| 7. |
Unless
and until the 2004 Earnout Consideration is paid in full, the provisions
for security for that payment in the Security Agreement will remain
in
full force and effect.
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Except
as
expressly stated above, all provisions of the Agreement, as originally signed
and previously amended, remain in full force and effect.
If
the
foregoing is acceptable to you, kindly sign in the place provided for your
signature below, whereupon this letter will become a binding amendment to the
Agreement, the Security Agreement and the Escrow Agreement.
| Sincerely,
Xxxx
X. Xxxxxx
Xxx
X. Xxxx
|
ACCEPTED
AND AGREED:
AROTECH
CORPORATION
| By: | ||
| Xxxxxx X. Xxxxxxx | ||
| Chairman, President and CEO |
ACCEPTED
AND AGREED:
FAAC
INCORPORATED
| By: | ||
| Xxxx X. Xxxxxx | ||
| Chairman and CEO |
