AGREEMENT
Exhibit
10.13
AGREEMENT
This
Share Purchase Agreement (“Agreement”) signed on 13
November , 2005 by and between Pimi Xxxxxx Holdings Ltd,
(Company number 51-349712-3), incorporated in the State of Israel (“The Company”) and Mr. Nimrod Xxx-Xxxxxx, I.D.
051795631 and Omdan
Consulting and Instructing LTD private company no.
00-000000-0, (jointly and severally: the “Shareholders”) from one
side, and Xx. Xxxx Xxxxxx
and JNS Capital
LLC (jointly and severally: “The Investors”) from the
other side.
RECITALS
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Whereas
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The
parties have executed a term sheet pursuant to which they now wish to
execute this Agreement, and;
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Whereas
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The
Investors after having conducted due diligence of the Company business
inter alia by
experts, and after being involved in the Company business and activity
(including trade show and negotiations) desire to invest in The Company
against the issuance of The Company’s Ordinary and Management shares in
accordance with the terms set forth in this
Agreement.
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Now
therefore the parties agree to the following:
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1.
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DEFINITIONS
AND EXHIBITS
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For the
purpose of this Agreement, capitalized words shall have the meanings as
specified below or as defined in other parts of this Agreement.
“Business Plan” - Financial
and non-financial targets that the Company believes it can meet, on a quarterly
basis in the years 2005, 2006 and 2007 – all of which are incorporated in a
document titled the Business Plan which is attached to this agreement as Appendix “A”.
“Investment” - A total of US
$900,002 to be funded in quarterly installments as provided for in the Business
Plan against the issuance of 120,000 Ordinary Shares of the Company at the price
of $7.50 per shares, and 2 Management Shares at the price of $1.00
each.
“The Loan Agreement” –
the loan agreement dated February 7, 2005 and as amended on May 11, 2005
attached hereto as Appendix
“B”.
“The Loan” - Investors have
previously made four loans to the Company totaling $180,000 pursuant to The Loan
Agreement.
“Intellectual Property” - The
Patents and Patent applications described in Appendix “C”, as well as any
and all related intellectual property, including knowledge, technologies and
know-how that have been developed, registered and/or accumulated by Mr. Nimrod
Xxx-Xxxxxx, in relation to the Patents and Patents applications which
Intellectual Property is currently owned by the Company or will be transferred
to the ownership of the Company without any consideration – excluding rights to
use and/or benefit from that portion of the Intellectual Property that pertains
to the exclusive purpose of water treatment.
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2.
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SALE
AND TRANSFER OF SHARES / SIGNING AND
CLOSING
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2.1 SHARES
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Subject
to the terms and conditions of this Agreement (including, without
limitation, subject to the fulfillment of the conditions and obligations
set out in Sections 2.3 and 2.4 below), at the Closing, The Company shall
issue and deliver the Investors the Shares, free and clear of all
Encumbrances, and The Investors will invest the investment sums in The
Company, as set out in Section 2.2
below.
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2.2 INVESTORS
UNDERTAKINGS
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(a)
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The
investment shall be in the total sum of US$ 900,002 (Nine hundred thousand
and two US Dollars) (“The
Investment”).
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(b)
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The
Investment shall be satisfied as
follows:
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i)
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Pursuant
to a previously signed Term Sheet, the Investors have increased their loan
to the Company to US $110,000 on the same terms and conditions provided in
the Loan Agreement dated February 7, 2005 and its addendum dated May 11,
2005.
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ii)
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On
August 23 2005, the Parties have agreed to a new Business Plan, and
therefore Investors have increased the loan to the Company to $140,000 on
the same terms and conditions provided in the Loan Agreement dated
February 7, 2005 and its addendum dated May 11,
2005.
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iii)
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On
October 2005 the Investors have made an additional loan to the Company in
the sum of $40,000 on the same terms and conditions provided in the Loan
Agreement dated February 7, 2005 and its addendum dated May 11,
2005.
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(c)
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The
investors shall convert any and all sums, which were furnished to the
company as The Loan, to an investment to be deducted immediately from the
funding obligations undertaken by
Investors.
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(d)
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Pay
to the Company the sum of $2.00 for the 2 Management Shares at the price
of $1.00 per Management Share.
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(e)
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Fund
The Investment instalments according to the Business Plan. Each instalment
shall be funded for the subsequent quarter, no later than 45 days prior to
the end of each quarter, subject to clause 4.2(b)
hereinafter.
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(f)
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In
the event that the Company exceeds the quarterly benchmarks provided in
the Business Plan, Investors shall consider, favourably, the possibility
to accelerate the funding of their Investment should Investors decide that
such acceleration of funding assists the needs of the
Company.
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2
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2.3
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COMPANY
UNDERTAKINGS
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(a)
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The
Company shall issue to The Investors 24,000 Ordinary Shares against the
funding of the Investment pursuant to Paragraphs 2.2 (b)(a) and 2.2
(b)(b).
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(b)
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In
addition, The Company shall issue 96,000 Ordinary shares to an Escrow
holder pursuant to the Escrow Clause set forth
below.
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(c)
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The
Company shall issue 2 management shares to the Escrow holder pursuant to
the Escrow Clause below.
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(d)
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Subsequently,
Company will provide to The Investors financial reports as
following:
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i)
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Management-prepared
monthly reports – no later than on the 20th
day of the subsequent month.
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ii)
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Auditor-reviewed
reports – no later than on the 45th
day of the month subsequent to the end of each of the 1st,
2nd
and 3rd
quarter of the year.
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iii)
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Audited
financial reports – no later than 120 days subsequent to the end of the
year.
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2.4
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ESCROW
CLAUSE
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(a)
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The
parties shall appoint Advocate Xxxx Xxxx of Twin Tower 1, 33 Jabotinsky
st., Ramat Gan to act as escrow holder (“Escrow Holder”). At the signing
of this Agreement, the Company shall issue 96,000 ordinary
shares of NIS 0.01par value each and two (2) management shares of NIS 1
par value each to the Escrow Holder. The Escrow Holder shall act in
accordance with the following:
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(b)
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Escrow
shall deliver to Investors the Ordinary
Shares:
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i)
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Upon
notice from the Investors to Escrow, with a copy to the Company, of the
funding of an instalment of the Investment accompanied by a receipt from
the Company evidencing such instalment or a receipt
evidencing a wire transfer of such instalment to the Company’s bank
account Escrow shall deliver to Investors the number of shares that, at
the price of $7.50 per share, corresponds to the amount of the
instalment.
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ii)
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All
the shares held by Escrow upon notice, by Investors, of a Material Breach
by Company, as defined hereinafter, and against payment to Escrow, by
Investors, of the sum representing NIS 0.01 per share multiplied by the
total number of shares held by Escrow, which sum Escrow will then deliver
to the Company. The notice will be accompanied by an affidavit of one of
the Investors that all the terms of section 4.2(iii) (b) have been
fulfilled.
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(c)
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Escrow
shall deliver to Investors the 2 Management Shares held by Escrow as
following:
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i)
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One
(1) Management Share shall be delivered to Investors upon notice from the
Investors to Escrow, with a copy to the Company, that they have funded a
total of $450,000 of the investment, accompanied by receipts from the
company and/or wire transfer receipts evidencing funding of the entire
$450,000 less the sums provided in Paragraphs 2.a and
2.b.
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3
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ii)
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One
(1) Management Share shall be delivered to Investors upon notice from the
Investors to Escrow, with a copy to the Company, that they have completed
the funding of their entire Investment obligation under the Investment
Agreement, accompanied by receipts from the company and/or wire transfer
receipts evidencing funding of the entire $900,000 less the sums provided
in Paragraphs 2.a and 2.b.
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iii)
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Upon
receipt of notice from the Investors to Escrow, with a copy to the
Company, of a Material Breach by Company, as defined hereinafter,
accompanied by an affidavit of one of the Investors that all the terms of
section 4.2(iii)(b) have been
fulfilled.
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(d)
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In
the event of a breach by the Investors, Escrow shall deliver all the
Ordinary Shares and Management Shares then held by Escrow to the
Company.
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2.5 Performances by Share
Holders:
The
holders of the 2 Management Shares not allocated to Investors shall support the
creation by the Company of an Employee Stock Option Plan and the allocation of
24,000 of the authorized ordinary shares to such plan.
2.6 SIGNING
AND CLOSING
Acts to
be Performed Prior to the execution of this agreement:
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(a)
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Immediately
prior to the execution of this agreement, the Company and the Shareholders
will present to The Investors for examination all the documents (“The
Closing Documents"), as set out
below:
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(1)
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Resolutions
of The Company’s board of directors (“The Company’s Board of Directors“)
resolving (i) to approve the execution of this Agreement; and (ii) to
approve the issuing of the shares pursuant to this Agreement and to
authorize the directors of The Company to sign the appropriate
documentation;
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(2)
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Share
allocation forms conforming with the articles of association of The
Company, in respect of the shares, duly executed by The Company and The
Shareholders;
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3.
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REPRESENTATIONS
AND WARRANTIES.
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The
Company and the Shareholders hereby represent and warrant, jointly and
severally, to The Investors the representations and warranties set forth in
Sections 3.1 through 3.6 (inclusive) (“The Warranties“) and undertake
that the Warranties are true and accurate in all respects as of the agreement
execution date, and acknowledge that The Investor has agreed to enter into this
Agreement relying, inter
alia, on the truth and accuracy of The Warranties. No representation or
warranty of The Company or the Shareholders in this Agreement omits to state a
material fact necessary to make the statements herein or therein, and is, in
light of the circumstances in which they were made, not misleading. It is hereby
clarified that the Investors have conducted due diligence of the Company
business, Know-How, and Patents by their own experts, and has escorted the
Company and took part in its activity since 1st of
January 2005.
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3.1
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SHARE
CAPITAL, TITLE, ORGANIZATION, AUTHORITY,
COMPLIANCE
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3.1.1
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Share
Capital and Title
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The
authorized share capital of The Company consists of 9,999,600 ordinary shares of
NIS 0.01 par value per share and 4 management shares of NIS 1.00 par value per
share, of which 120,000 ordinary shares and 2 management shares are issued and
outstanding, and constitute all of The Company’s shares prior to the issuance of
shares pursuant to this Agreement. The Shareholders are the registered owners
and holders of all the issued shares, free and clear of all encumbrances,
including, without limitation any encumbrances to the benefit of any beneficiary
owners. Mr. Nimrod Xxx-Xxxxxx, through Ash-Dor Assets Management and
Trusts Ltd is the owner of 75% of the Shares, comprising 90,000 Ordinary Shares
and 1 Management Share, and Xx. Xxxxx Xxxxxxx through Omdan Consulting and
Instruction Ltd is the owner of 25% of the Shares, comprising 30,000 ordinary
shares and 1 management share. No reference to any purported Encumbrance appears
upon any certificate representing the share capital of The Company. All of the
outstanding share capital of The Company, has been duly authorized, validly
issued and is fully paid-up and non-assessable. There are no options, warrants
and/or any Contracts relating to the issuance, sale, or transfer of any shares
or other securities of The Company except for the obligation to eNitiatives
under section 3.3.8(iii) of this Agreement. None of the outstanding shares or
other securities of The Company was issued in violation of the Israeli Companies
Law, 1999 or any other legal requirement. The shares shall, upon their issuance
or transfer to The Investors, vest in The Company, free of any encumbrances, and
all rights (including voting rights, equity and all other rights) of
shareholders in The Company.
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3.1.2
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Subsidiaries
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The
Company does not own directly or indirectly, nor is entitled and/or required to
acquire, any shares or other securities of any Person pursuant to any Contract
or otherwise, nor does The Company have any direct or indirect equity or
ownership interest in any other business.
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3.1.3
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Organization
and Good Standing
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(a)
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The
Company is a corporation duly organized, validly existing, and in good
standing under the laws of Israel, with full corporate power and authority
to conduct its business as it is now being conducted, to own, lease or use
the assets that it purports to own, lease or use, and to perform all its
obligations under Contracts..
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(b)
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The
minute books, and records of The Company are complete, correct and
up-to-date in all respects and have been maintained in accordance with
sound business practices and applicable legal requirements. The minute
books of The Company contain accurate, complete and up-to-date records of
all meetings held, and corporate action taken by the shareholders and the
board of directors of The Company, and no meeting of any such shareholders
or board of directors has been held for which minutes have not been
prepared and are not contained in such minute books. At the agreement
execution, all of those books and records will be in the possession of The
Company.
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5
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(c)
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The
Disclosure Letter (Appendix “D”) contains
complete copies of all Organizational Documents of The Company as
currently in effect. The copies of the Articles of Association of The
Company attached hereto as aforesaid, are complete, correct and up-to-date
in all respects and have embodied in them or annexed thereto a copy of
every shareholders’ resolution amending the Article of Association in any
way.
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(d)
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The
Disclosure letter sets out the name of each bank in or with which the
Company has had accounts, credit lines or safety deposit boxes, and the
names of all persons presently authorized to draw thereon or having access
thereto, and a brief description of each such
account.
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(e)
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The
Disclosure letter sets out the names of all persons now holding any power
of attorney from The Company and a summary of the terms
thereof.
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3.1.4
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Authority
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This
Agreement (including all those agreements and documents, the execution of which
is contemplated under this Agreement) have been, or will have been upon the
execution of this Agreement, duly and validly executed by The Company and/or the
Shareholders and are, or as the case may be, will on Execution, constitute the
legal, valid, and binding obligation of The Company and the Shareholders, and
such other parties, and enforceable against The Company and Shareholders and
such other parties in accordance with their terms. The Company and the
Shareholders have the absolute and unrestricted right, power, authority, and
capacity to execute and deliver this Agreement and to perform their obligations
under this Agreement.
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3.1.5
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Compliance
with Legal or Contractual
Requirements
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(a)
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Except
as set forth in the Disclosure Letter (Appendix “D”), neither the
execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or
indirectly (with or without notice or lapse of
time):
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(i)
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Contravene,
conflict with, or result in a violation of (A) any provision of the
Organizational Documents of The Company, or (B) any resolution
adopted by the board of directors or the shareholders of The
Company;
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(ii)
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Contravene,
conflict with, or result in a violation of: (A) any rights of any
Person, or (B) any Contracts to which any of the Shareholders are parties;
or (C) any legal requirement or any Order to which The Company or any
Shareholder, or any of the assets owned, leased or used by The Company,
may be subject; or entitle any Governmental Body or other person to
challenge any of the contemplated transactions or to exercise any remedy
or obtain any relief under any legal requirement or any Order as
aforesaid;
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(iii)
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Contravene,
conflict with, or result in a violation of any of the terms or
requirements of, or result in any Governmental Body revoking, withdrawing,
suspending canceling, terminating, or modifying, any Governmental
Authorization held by The Company, relating to the business of, or any of
the assets owned, leased or used by, The
Company;
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(iv)
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Cause
the Company to become subject to, or to become liable for the payment of,
any Tax;
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(v)
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Cause
any of the assets owned by The Company to be reassessed or revalued by any
taxing authority or other Governmental
Body;
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(vi)
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Contravene,
conflict with, or result in a violation or breach of, or entitle any
Person to declare a default or exercise any remedy under, or to accelerate
the maturity or performance of, or to cancel, terminate, or modify, any
Contract and/or any provision
thereof;
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(vii)
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Relieve
any Person of any obligation to The Company (whether contractual or
otherwise) or entitle any Person to terminate any obligation, right or
benefit (whether contractual or otherwise) enjoyed by The
Company;
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(viii)
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Result
in the imposition or creation of any encumbrance upon or with respect to
any of the assets owned, leased or used by The Company;
or
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(ix)
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Cause
any officer or key employee of The Company to leave their
employment.
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(b)
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Except
as set forth in the Disclosure Letter (Appendix “D”), The
Company nor any of the Shareholders are and will not be required to give
any notice to, or obtain any consent, approval, ratification, waiver or
other authorization (including, without limitation, any governmental
authorization) from any person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of
the contemplated transactions.
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(c)
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All
returns, particulars, resolutions, and documents required by the Israeli
Companies Law, 1999 or any other legislation to be filed with the Israeli
Registrar of Companies or with any other Governmental Body, have been duly
filed.
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3.2
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FINANCIAL
STATEMENTS AND ASSETS
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3.2.1
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Proper
Accounting and Compliance with Israeli Generally Accepted Accounting
Principles
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The books
of account and all records of the Company are or will be complete, correct and
up-to-date and have been maintained in accordance with sound business practices,
and generally accepted accounting principles in Israel (”Israeli GAAP“), including the
maintenance of an adequate system of internal controls.
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3.2.2
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Balance
Sheets and Profit and Loss
Statements
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(a)
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General
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(i)
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The
Company has delivered to The
Investors:
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(1)
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The
unaudited trial balance of The Company as of August 31, 2005 and the
related profit and loss statements (hereinafter the “Financial
Statements").
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(ii) The
Financial Statements (A) conform to the books and records of The Company
in all material respects; (B) present a true, complete and correct view of
the financial condition and the results of operations, changes in
shareholders' equity, and cash flow of The Company as at the respective
dates of and for the periods referred to therein, all in accordance with
Israeli GAAP; (C) reflect the consistent application of Israeli GAAP
throughout the periods involved. No financial statements of any Person
other than The Company are required by Israeli GAAP to be included in the
financial statements of The
Company.
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(iii) To
the best of the Company’s and the Shareholders knowledge and of the
knowledge of the officers of The Company, as of the date of the execution
of this Agreement, there are no facts or circumstances which are material
in relation to the assets, business or financial condition of The Company
which do not appear from the Financial Statements and/or which have not
been fully and fairly disclosed in the Disclosure Letter (Appendix
“D”).
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(b)
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Without prejudice to and
notwithstanding the generality of the above Section
3.2.2(a):
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(b1)
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Title
to Assets
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The
Company owns, leases or has the legal right to use all assets used in the
operation of its business and has good and marketable title to, or in the
case of leased assets, valid leases in respect of, all the assets: (i (i)
purchased or otherwise acquired by The Company since its organization,
which assets purchased or acquired as aforesaid (other than inventory and
short-term investments) are listed in the Disclosure Letter (Appendix “D”). All the
assets owned, leased or used by The Company as aforesaid are free and
clear of all Encumbrances and are not subject to any limitations of any
nature, save as set out in the Disclosure Letter (Appendix
“D”).
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(b2)
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Condition
And Sufficiency Of Assets
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The
Company owns, leases, or has the legal right to use all the assets that it
needs in order to continue to run its business after the execution of this
agreement in the same manner as it has during the 12 (twelve) months
preceding that date.
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The
equipment of The Company is structurally sound, in good operating
condition and repair, and does not require any maintenance or repairs,
except for routine maintenance and repairs, in the ordinary course of
business, that are not material in nature or
cost.
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8
Without
derogating from any other provision in this Agreement, it is recorded that all
office space (including shared storage space) occupied by The Company is validly
leased by The Company from Kibutz Alonim being registered owner thereof,
pursuant to a lease agreement dated 1/4/2005, which is in full force and effect.
The said Buildings are in good repair and fit for the purposes for which they
are used, and there is no material defect in the condition thereof, and the said
Buildings comply with all required planning and building permits. Save for the
said office space, The Company does not own, lease, occupy or use any other
immovable property in connection with its business.
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(b3)
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Accounts
receivable
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All
accounts receivable of The Company reflected in the Financial Statements and in
the accounting records of The Company as of the date of this agreement execution
(collectively, the "Accounts receivable") represent valid obligations arising
from sales actually made or services actually performed in the ordinary course
of business. Unless paid prior to the execution date, the Accounts receivable
are, or will be, as of the execution date current and collectible net of the
respective reserves shown on the Financial Statements, respectively, or in the
accounting records of The Company as of the execution date (which reserves are
adequate and calculated consistent with the practice used for the year 2004 and,
in the case of the reserve as of the execution date, will not represent a
greater percentage of the Accounts receivable as of the execution date than the
reserve reflected in the 2004 Balance Sheet in respect of the Accounts
receivable reflected therein and will not represent a Material Adverse Change in
the composition of such Accounts receivable in terms of aging). Subject to such
reserves, each of the Accounts receivable either has been or will be collected
in full, without any set-off, within ninety days after the day on which it first
becomes due and payable. There is no contest, claim, or right of set-off, other
than returns in the ordinary course of business, under any Contract with any
obligor of an Accounts receivable relating to the amount or validity of such
Accounts receivable. The Disclosure Letter (Appendix “D”) contains a
complete and accurate list of all Accounts receivable as of 31.8.2005.
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(b4)
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Inventory
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All
inventory of The Company, whether or not reflected in the Financial Statements,
respectively, is in good and undamaged condition, and consists of a quality and
quantity usable and salable in the ordinary course of business, except for
obsolete items and items of below-standard quality, all of which have been
written off or written down to net realizable value in the Financial Statements,
respectively, or in the accounting records of The Company as of the execution
date, as the case may be. All inventories not written off have been priced at
the lower of cost or net realizable value. The quantities of each item of
inventory (whether raw materials, work-in-process, or finished goods) are not
excessive, but are reasonable in the present circumstances of The
Company.
(b5) Intellectual
Property
(b5/1)
Know-How Necessary for the Business
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(i)
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Except
as set forth in the Disclosure Letter (Appendix “D”), The
Company is the owner of all right, title, and interest in and to each of
the Intellectual Property Assets, whether or not reflected in the
Financial Statements, necessary for the operation of its business as it is
currently conducted and/or as reflected in the business plan given to The
Investors, and such right, title, and interest is free and clear of all
encumbrances, and other adverse claims, and has the right to use all such
Intellectual Property Assets, without payment to, or the consent of any
third party.
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(ii)
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Except
as set forth in the Disclosure Letter (Appendix “D”), all
former and current employees of The Company have executed written
Contracts with The Company that assign without compensation to The Company
all rights to any inventions, improvements, discoveries, or information
relating to the business of The Company, if and to the extent that such
assignment is not effected by operation of law under the law applicable to
such Contract. No employee of The Company has entered into any Contract
that requires the employee to transfer, assign, or disclose information
concerning his work to anyone other than The
Company.
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(b/5.2)
Patents and Trademarks
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(i)
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The
Company has registered patents, trademarks and/or is in the process of
registering patents as detailed in Appendix
“C”.
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(b5/3)
Trade Secrets
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(i)
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The
Shareholders and The Company have taken all reasonable precautions to
protect the confidentiality of their Trade
Secrets.
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(ii)
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The
Company has good title and an absolute (but not necessarily exclusive)
right to use the Trade Secrets. The Trade Secrets are not part of the
public knowledge or literature, and, to Shareholder’s knowledge, have not
been used, divulged, or appropriated either for the benefit of any Person
(other than to The Company) or to the detriment of The Company. No Trade
Secret is subject to any adverse claim or has been challenged or
threatened in any way.
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(b6)
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Tax
and Social Security Contributions
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(a)
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The
Company has filed or caused to be filed (on a timely basis since its
incorporation) all Tax Returns and all Social Security Returns that are or
were required to be filed by or with respect to The Company, pursuant to
applicable legal requirements, and all such Tax Returns and Social
Security Returns filed by The Company are true, correct, and complete, and
there is no tax or social security sharing agreement that will require any
payment by The Company after the execution date The Disclosure Letter
(Appendix “D”)
contains a complete and accurate list of, all such Tax and of all such
Social Security Returns filed since its
organization.
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(b)
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The
Company has fully and on a timely basis paid, or made full provision for
the payment of, all Taxes and all Social Security Contributions that have
become due, except such Taxes and/or Social Securities Contributions, if
any, as are listed in the Disclosure Letter (Appendix “D”) and are
being contested in good faith and as to which adequate reserves have been
provided in the Financial Statements. The charges, accruals, and reserves
with respect to Taxes and Social Security Contributions in The Company’s
books are adequate (determined in accordance with Israeli GAAP) and are at
least equal to The Company's liability for Taxes and Social Security
Contributions. There exists no proposed Tax or Social Security
Contribution assessment against The Company except as disclosed in the
Financial Statements, respectively, or in the Disclosure Letter (Appendix “D”). All Taxes
and/or Social Security Contributions that The Company is or was required
by legal requirements to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper
Governmental Body or other Person.
|
10
To the
best of the Shareholders’ knowledge, no facts exist that could constitute
grounds for the assessment of any material liability for Taxes and/or Social
Security Contributions by any Governmental Body with respect to The Company. The
Company has taken all steps reasonably required by it to be taken prior to the
execution date, in order to obtain any Tax credits, or other Tax benefits,
whether available in respect of the period prior to or after the execution
date.
|
(b7)
|
Employee
Compensations
|
|
|
(a)
|
The
Disclosure Letter (Appendix “D”) contains a
complete and accurate list of the following information for each employee
or director of The Company, including each employee on leave of absence or
layoff status:
|
|
|
(i)
|
Employee
name, job title, material terms of employment, (including, without
limitation, particulars regarding, salary, linkage of salary, annual
vacation, accrued vacation, Supplementary Education Fund (Keren Hishtalmut), sick
pay, pension fund and provident fund or manager’s insurance, travel
allowances), any agreements or promises, whether written or oral,
regarding current or future profit-sharing, cash, shares or other bonus
entitlements, fringe benefits, severance pay, retirement pay, accrued
vacation pay, any change in compensation since January 1,
2005;
|
|
|
(ii)
|
Service
credited for purposes of vesting and eligibility to participate under The
Company's pension, retirement, profit-sharing, thrift-savings, deferred
compensation, share bonus, share option, cash bonus, employee share
ownership (including investment credit or payroll share ownership),
severance pay, insurance, medical, welfare, or vacation
plan.
|
|
|
(b) Except
as disclosed in article 3.2.2 (b7) The payments by The Company to pension
and provident funds (including, without limitation, manager’s insurance),
together with the relevant reserves reflected in the Financial Statements,
respectively, fully cover the liability of The Company under law or under
any collective agreement, individual employment agreement, or other
employment agreement or arrangement with respect to its employees and
directors as at the dates of the aforesaid balance sheets for pension,
severance pay, vacation pay and similar Liabilities, and The Company has
continued to make all current payments to such pension and provident funds
(including, manager’s insurance) until the execution date. All of the
employees and directors shall have been paid all amounts owing to them by
The Company, and all amounts deductible from The Company’s employees shall
have been duly deducted, as at the execution date. To the best of the
Shareholders knowledge, there are no outstanding claims against The
Company by any of its employees and/or
directors.
|
11
|
|
(c)
|
Except
as disclosed in Part 3.2.2(b7) or in the Employment Agreements referred to
in Section 2.3(ii) (5) of this Agreement, there exist no agreements or
promises between The Company and any of its employees or directors,
whether written or oral, with respect to any change in compensation,
current or future profit-sharing, cash, shares or other bonus
entitlements, fringe benefits, severance pay, retirement pay, accrued
vacation pay, vacation accrued, and no service credited for purposes of
vesting and eligibility to participate under The Company's pension,
retirement, profit-sharing, thrift-savings, deferred compensation, share
bonus, share option, cash bonus, employee share ownership (including
investment credit or payroll share ownership), severance pay, insurance,
medical, welfare, or vacation plan.
|
3.3 NO
LIABILITIES
|
3.3.1
|
General
|
Except as
set forth in any Part of the Disclosure Letter (Appendix “D”) The Company
has no Liabilities or obligations of any nature whatsoever except for
Liabilities or obligations reflected or reserved against in the Financial
Statements, and Liabilities incurred in the ordinary course of business since it
organization.
In
particular and without derogating from the generality of the foregoing, the
following is represented and warranted:
|
3.3.2
|
Compliance
with Legal Requirements
|
Except as
set forth the Disclosure Letter (Appendix “D”), The
Company is, and at all times since its incorporation has been, in full
compliance with each legal requirement that is or was applicable to it or to the
conduct or operation of its business or the ownership or use of any of its
assets. To the best of the Company knowledge, no event has occurred, act been
performed or omission omitted which may result after the execution date in
violation by The Company of any of the laws referred to in this Section or in
the incurring by The Company of any Liability or cost in connection
therewith.
|
3.3.3
|
Contracts:
No Defaults
|
Except as
set forth the Disclosure Letter (Appendix
“D”):
|
(a)
|
no
officer, director, agent, employee, consultant, or contractor of The
Company is bound by any Contract that purports to limit or which adversely
affects or will affect (i) the ability of such individual or of The
Company to engage in or continue any conduct, activity, or practice
relating to the business of The Company, or (ii) the ability of such
individual to assign to The Company any rights to any invention,
improvement, discovery or other Intellectual Property
Assets.
|
12
|
(b)
|
Each
Contract is in full force and effect and is legal, valid and enforceable
in accordance with its terms, and shall continue in full force and effect
(and not be subject to termination by the counterparty thereto),
notwithstanding the consummation of the transactions contemplated by this
Agreement, and is, and has been, fully complied with by all of the parties
thereto. None of the parties to any Contract is in breach or default
thereof and no event has occurred or circumstance exists that may result
in a violation or breach of any Contract, or give any party to such
Contract the right to declare a default or an acceleration of maturity or
performance, or to exercise any
remedy.
|
|
(c)
|
There
are no renegotiations of, or outstanding rights to renegotiate any
material amounts paid or payable to The Company under current or completed
Contracts with any Person and no such Person has made oral or written
demand for such renegotiation.
|
|
3.3.4
|
Employees
|
|
(a)
|
No
director, officer, or other key employee of The Company intends to
terminate its employment with The
Company.
|
|
(b)
|
The
Disclosure Letter (Appendix “D”)
contains a complete and accurate list of the following information for
each retired employee or director of The Company, or their dependents,
receiving benefits or scheduled to receive benefits in the future: Name,
pension benefit, retiree medical insurance coverage, retiree life
insurance coverage, and other
benefits.
|
|
|
Except
as disclosed in the Disclosure Letter (Appendix “D”), such
retired employees or directors, or their dependents, will not receive or
are not scheduled to receive any pension benefits, retiree medical
insurance coverage, retiree life insurance coverage, and other
benefits.
|
|
3.3.5
|
Insurance
|
|
(i)
|
All
policies set out in the Disclosure Letter (Appendix “D”) which
are held by The Company or that provide coverage to any Shareholder, The
Company or any director or officer of The Company: (i) are valid,
outstanding, and enforceable, (ii) are issued by an insurer that is
reputable to be financially sound, and (iii) taken together, provide
adequate insurance coverage for the assets and the operations of The
Company, (iv) are sufficient for compliance with all legal requirements
and Contracts to which The Company is a party or by which any of them is
bound, (v) will continue in full force and effect following the
consummation of the Contemplated Transactions, and (vi) do not provide for
any retrospective premium adjustment or other experienced-based liability
on the part of The Company.
|
|
(ii)
|
None
of the Shareholders nor The Company has received (i) any refusal of
coverage or any notice that a defense will be afforded with reservation of
rights, or (ii) any notice of cancellation or any other indication that
any insurance policy is no longer in full force or effect or will not be
renewed or that the issuer of any policy is not willing or able to perform
its obligations.
|
13
|
(iii)
|
The
Company has punctually paid all respective premiums due, and has otherwise
performed all of its obligations, under each policy to which it is a party
or that provides coverage to it or to any director
thereof.
|
|
(iv)
|
The
Company has given timely notice to the insurer of all claims that may be
insured thereby.
|
|
(v)
|
The
Shareholders are not aware of the occurrence of any act or omission, which
could invalidate or impair such
insurance.
|
|
3.3.6
|
Environmental
Matters
|
Without
derogating from the provisions of Section 3.3.1 above, except as set forth in
the Disclosure Letter (Appendix
“D”), The Company is, and at all times has been, in full compliance
with, and has not been and is not in violation of or has Liability or potential
Liability under, any legal requirement relating to environmental protection,
occupational, health and safety and similar laws.
|
3.3.7
|
Labor
Relations; Compliance
|
|
Except
as set forth in The Disclosure Letter (Appendix
“D”):
|
|
(i)
|
There
has not been, nor is there presently pending or existing, nor Threatened,
any Proceeding against or affecting The Company relating to the alleged
violation of any legal requirement pertaining to labor relations or
employment matters. No event has occurred nor circumstance exists that
could provide the basis for any labor
dispute.
|
|
(ii)
|
The
Company has complied in all respects with all legal requirements relating
to employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining, Occupational
Safety and Health, and plant
closing.
|
|
3.3.8
|
Certain
Payments / Finder's Fees
|
|
(i)
|
Except
as disclosed in the Disclosure Letter (Appendix “D”):
neither The Company, nor any director, officer, agent, employee of The
Company, nor any other Person associated with or acting for or on behalf
of any Company, has directly or indirectly (i) made any bribe, payoff,
kickback, or other payment to any Person, private or public, regardless of
form, whether in money, property, or services to obtain or reward special
concessions, or favorable treatment in securing business for or in respect
of The Company or in violation of any legal requirement, (ii) established
or maintained any fund or asset that has not been recorded in the books
and records of The Company.
|
|
(ii)
|
Upon
execution of the Investment the Company shall pay to eNitiatives – New
Business Architects Ltd. (“eNitiatives”), within 30 days of the Investment
Agreement, the sum of $18,000 plus VAT as consideration for eNitiatives’
work done to facilitate the
Investment.
|
|
(iii)
|
eNitiatives
shall have the right to receive from The Company and The Company shall
have the right to deliver to eNitiatives, 1,200 Ordinary Shares at a value
of $7.50 per share, in lieu of 50% of the payment provided, in which case
The Company shall only pay to eNitiatives the sum of $9,000 in addition to
the delivery of the shares plus VAT on the entire value, the transaction
to take place within 30 days of the execution of this
Agreement.
|
14
|
(iv)
|
The
holders of the 2 Management Shares not held by Investors shall vote in
support of Investors’ Management Shares regarding employment of
eNitiatives and/or Xx. Xxxxxx Xxxxx, which employment shall be covered in
a separate agreement.
|
3.4 NO
PENDING OR THREATENED PROCEEDINGS
Except as
set forth in the Disclosure Letter (Appendix
“D”):
| (a) | There is no pending Proceeding: | |
|
|
(i)
|
That
has been commenced by or against The Company or that otherwise relates to
or may affect the business of, or any of the assets owned, leased or used
by, The Company; or
|
|
|
(ii)
|
That
challenges, or that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the Contemplated
Transactions; or
|
|
|
(iii)
|
That
Threatens to subject any officer, director, agent, or employee of The
Company or any of its Subsidiaries to any Order that would prohibit such
officer, director, agent, or employee from engaging in or continuing any
conduct, activity, or practice relating to the business of The
Company.
|
| (b) |
To
the knowledge of The Company and the Shareholders: (i) no such
Proceeding has been Threatened, and (ii) no event has occurred or
circumstance exists that may give rise to or serve as a basis for the
commencement of any such Proceeding. The Proceedings listed in the
Disclosure Letter (Appendix “D”) will
not have a Material Adverse Effect on the business, operations, assets,
condition, or prospects of The
Company.
|
3.5 NO
MATERIAL ADVERSE CHANGE
| (a) | Since January 1, 2005 and until the execution of this Agreement: | |
|
|
(i)
|
No
dividend, bonus or distribution (including without limitation, cash
payment) has been declared, made or paid on or in respect of any share
capital of, or otherwise to any shareholder (or any Related Persons
thereof) of The
Company;
|
|
|
(ii)
|
Except
as set forth in the Disclosure Letter (Appendix “D”), The
Company has conducted its business only in the ordinary course of
business, and there has been no material adverse change, nor have there
been any events or circumstances that may have a material adverse effect,
including without limitation;
|
|
|
(iii)
|
No
change in The Company's authorized or issued share capital; grant of any
share options; issuance of any security convertible into such share
capital; grant of any registration rights; purchase, redemption,
retirement, or other acquisition by The Company of any shares of such
share capital;
|
|
|
(iv)
|
No
amendment to the incorporation documents of The Company was
made;
|
15
|
|
(v)
|
Except
as detailed in Section 2.3(a)(5) no payment nor increase by The Company of
any salaries, bonuses, or other compensation payable by The Company to any
Shareholder, director, officer, or (except in the ordinary course of
business) to any employee; or entry by The Company into any employment, or
other similar Contract with any director, officer, or employee (except in
the ordinary course of business), and no making, forgiveness or other
change in the terms of any loan by The Company to any
employee;
|
|
|
(vi)
|
Except
as detailed in Section 2.3(a)(5), no adoption of, or increase in the
payments to or benefits under, any profit sharing, bonus, deferred
compensation, savings, insurance, pension, retirement, or other employee
benefit plan for or with any employees of The
Company;
|
|
|
(ix)
|
No
sale, transfer, lease, or other disposition of any asset of The Company
outside the ordinary course of business, nor mortgage, pledge, or
imposition of any lien or other Encumbrance on any material asset of The
Company; and no amendment or modification of any agreement other than in
the ordinary course of business;
|
|
|
(xi)
|
No
material change in the accounting methods, principles or practices
followed by The Company;
|
|
|
(xii)
|
No
agreement, commitment, or undertaking, whether oral or written, by The
Company to do any of the foregoing.
|
|
(b)
|
There
is no fact known to any Shareholder or The Company (other than general
economic or industry conditions) that has or will have a Material Adverse
Effect or materially threatens, the assets, business, prospects, financial
condition, or results of operations of The Company that has not been set
forth in this Agreement or the Disclosure Letter (Appendix
“D”).
|
3.6 MR.
NIMROD XXX-XXXXXX:
Xx. Xxxxxx Xxx-Xxxxxx (“Nimrod”):
|
a)
|
Will
provide his services to The Company in the capacity of Chief Technology
Officer for a period of no less than three years, starting on the date of
execution of this Agreement.
|
|
b)
|
Shall
act as The Company’s Director of Business Development until such time as
the board will resolve that the Company should hire a dedicated person to
serve in the capacity of Director of Business
Development.
|
|
c)
|
Will
substantially devote all his time and efforts to the business of The
Company and to the continued development of its technology and
intellectual property, as may be requested, from time to time, by The
Company’s board of directors.
|
|
d)
|
Nimrod
shall not be involved, directly or indirectly, in any venture whose
interests are deemed by The Company’s board of directors, in conflict with
The Company or in the event such involvement is detriment to the business
of The Company. To the extent that Nimrod is currently in any other
venture or any other time-consuming activity and/or research and, to the
extent that Nimrod currently own other patents and/or technologies,
disclosure of same is made in the Disclosure Letter (Appendix
“D”).
|
16
Nimrod’s
compensation from The Company shall include the following:
|
e)
|
Monthly
gross salary of NIS 25,000 starting April 2005, including Twenty (20) paid
vacation days per year, and specifically includes the compensation for the
limitation undertaken under Section 6 herein
below.
|
|
f)
|
Executive
insurance.
|
|
g)
|
“Keren
Hishtalmut at the rate of 10% (7.5% contribution by the
Company).
|
|
h)
|
Disability
insurance at a rate not to exceed 2% with customary
coverage.
|
|
i)
|
A
fully paid rental car (including taxes assessed for private
use).
|
|
j)
|
A
company-provided mobile phone. The phone charges shall be fully covered by
The Company.
|
|
k)
|
A
semi-annual bonus as following:
|
|
(i)
|
NIS
25,000 if the company meets its financial targets in the pertinent half
year.
|
|
(ii)
|
NIS
60,000 if the company exceeds its financial targets by 30% or more in the
pertinent half year.
|
Nimrod
shall receive from The Company the following for the purpose of performing his
obligations in accordance with his employment with The Company:
|
l)
|
A
laptop computer paid by The
Company.
|
|
m)
|
A
company credit card to be used exclusively for company-approved expenses.
The use of such credit card shall be audited, at the end of each year, by
the Company’s auditors and any improper or un-approved use of the credit
card, as determined by the auditors, shall be deducted from Nimrod’s
salary as expediently as possible.
|
|
n)
|
When
traveling on business, the Company shall also
pay:
|
|
(iii)
|
Airfare
in economy class;
|
|
(iv)
|
Non-luxury
hotels;
|
|
(v)
|
Transportation;
|
|
(vi)
|
Up
to the sum of $100 per day for other
expenses.
|
|
(vii)
|
The
Company shall further pay for entertainment of customers and selected
vendors and service providers hosted by
Nimrod.
|
A breach,
by Nimrod, of any of these provisions shall be considered a Material Breach as
defined hereinafter and shall entitle the Investors to their remedies resulting
from a Material Breach as provided for hereinafter.
17
|
4.
|
INDEMNIFICATION
|
|
4.1
|
BREACHES
BY THE COMPANY
|
|
(a)
|
The
Company shall be deemed in “Breach” in the event
that:
|
(i) For
the period of July 1, 2005 through March 31, 2006:
|
1.
|
The
Company fails to deliver financial reports to Investors on the dates
provided hereinbefore, provided the Company delivers such reports no later
than 60 days subsequent to the dates provided
hereinbefore.
|
|
2.
|
Failure
by the Company and/or Nimrod to fulfill their undertakings pursuant to
this Agreement.
|
(ii) At
any time subsequent to March 31, 2006:
|
3.
|
It
fails to meet 65% of its financial targets as provided in the Business
Plan in any given quarter; and/or,
|
|
4.
|
It
fails to meet any of its quarterly non-financial targets as provided in
the Business Plan.
|
|
(b)
|
The
Company shall be deemed to be in a “Material Breach” in the event
that:
|
|
(i)
|
At
any time subsequent to the execution of this Agreement, and provided the
Investors are not in breach as provided
herein
|
|
(1)
|
The
Company fails to deliver financial reports to Investors on the dates
provided hereinbefore, provided such failure is not remedied within 60
days.
|
|
(2)
|
The
Company and/or Nimrod fail to rectify a breach within 45 days of receipt
of a notice of breach from The
Investors.
|
(ii) Subsequent
to march 31, 2006 and provided Investors are not in breach, as provided
herein:
|
(1)
|
It
fails to meet at least 75% of its cumulative financial targets for any two
consecutive quarters, as provided in the Business Plan;
and/or
|
|
(2)
|
It
fails to meet any of its quarterly non-financial targets for any quarter,
as provided in the Business Plan and fails to
remedy such shortcomings, in addition to making the non-financial targets
in the subsequent quarter;
|
4.2 REMEDIES
GRANTED TO INVESTORS:
(a) Unless
specifically agreed upon otherwise, The Company and the Shareholders, severally,
hereby undertake to indemnify and hold harmless The Investors or, at The
Investors option, The Company, for any Liability, loss, claim, damage
(including, without limitation, incidental and consequential damages), expense
(including, without limitation, costs of investigation, defense, reasonable
attorneys' fees, and other legal expenses) or diminution of value, whether or
not involving a third-party claim (collectively, "Damages"), arising, directly
or indirectly, from or in connection with:
| (i) | any breach of any of the Shareholders’ Warranties; | |
|
|
(ii)
|
any
breach by any Shareholder of any covenant or obligation of such
Shareholder in this Agreement;
|
| (iii) | In case of Breach or Material Breach as defined above: |
18
|
(a)
|
In
the event of a Breach The Investors shall have the right, at their sole
discretion, to postpone the installment of the quarter subsequent to the
breach until after the last installment of the
investment.
|
|
(b)
|
In
the event of a Material Breach: Investors shall be under no obligation to
further invest in the Company and shall nonetheless receive from the
Escrow holder the Ordinary Shares and Management Shares then remaining in
Escrow as provided in the Escrow Provision – Provided, however, that the
Company fails to:
|
|
(i)
|
Rectify
the Material Breach in the subsequent quarter in addition to
meeting the subsequent quarter’s targets;
or
|
|
(ii)
|
Repurchase
from Investors all their shares of the Company at the price of $7.50 per
shares, within 1 year from such Material Breach (“Repurchase”).
|
Notwithstanding
the foregoing, should the Company recruit a new investor or a purchaser for the
entire company at a price, or post-investment valuation of $5 million Dollars or
higher, The Company shall give Investors a notice of such investment and/or
purchase and the Investors shall have the right to cure the funding of the
Investment within 10 days of receipt of such notice and restore all their rights
provided in the Agreement.
It is
hereby clarified that if the Investors decided to act according to this section
they will not be able to act in accordance with section 4.2(i) or 4.2(ii)
above.
4.3 Breaches by Investors and
Remedies granted to Company:
|
(a)
|
Breach:
Investors sole obligation is to fund the Investment in accordance with the
Investment Agreement, unless The Company is in
breach. Investors shall be deemed in breach if Investors
default on their funding obligations and fail to
cure such default within 37 days of receipt of a notice of default from
the Company.
|
|
(b)
|
Remedy: In the
event of a breach by Investors, Investors shall lose their right to
complete the investment and lose their right to the Management Shares held
by the Escrow at such time – all of which shall be returned by Escrow to
the Company’s pursuant to the Escrow
Provision.
|
|
5 TIME
LIMITATIONS
|
|
(i)
|
Subject
to the clause (ii) below, Shareholders liability (for indemnification or
otherwise) with respect to any of their Warranties, or covenant or
obligation in this Agreement shall continue until and be time barred in
accordance with the Israeli statute of
limitation.
|
|
(ii)
|
The
Shareholders acknowledge and agree that the Investors is and/or was under
no obligation or duty whatsoever to investigate, inspect or examine the
Shares and/or The Company for defects or deficiencies at any time before,
on or after the execution date, except for the examination of all
documents and/or materials and/or other information presented by the
Shareholders to the Investors.
|
|
6
|
NON-COMPETITION
BY SHAREHOLDERS
|
6.1 COVENANT
NOT TO COMPETE
|
(a)
|
For
a period of 3 years after the date of signing of this Agreement, and in
case of Nimrod 3 years after the date of termination of his employment
with the Company, which ever is
later:
|
19
|
|
(i)
|
Each
Shareholder will not, directly or indirectly, engage or invest in, own,
manage, operate, finance, control, or participate in the ownership,
management, operation, or control of, be employed by, associated with, or
in any manner connected with, lend such Shareholders’ name or any similar
name to, lend such Shareholders’ credit to, or render services or advice
to, any business whose products or activities compete in whole or in part
with the products or activities of The Company in Israel (boundaries as of
execution date), provided, however, that any Shareholder may purchase or
otherwise acquire up to (but not more than) one percent of any class of
securities of any enterprise (but without otherwise participating in the
activities of such enterprise) if such securities are listed on any
national or regional securities exchange. Each Seller agrees that this
covenant is reasonable with respect to its duration, geographical area,
and scope;
|
|
|
(ii)
|
Each
Shareholder will not, directly or indirectly, either for himself or any
other Person, (A) induce or attempt to induce any employee of The
Company to leave its employ, (B) employ, or otherwise engage as an
employee, independent contractor, or otherwise, any employee of The
Company, or (D) induce or attempt to induce any customer, supplier,
licensee, or business relation of The Company to cease doing business with
such Company, or in any way interfere with the relationship between any
customer, supplier, licensee, or business relation of The
Company.
|
|
(b)
|
In
the event of a breach by any Shareholder of any covenant set forth in
clause (a) above, the term of such covenant will be extended by the period
of the duration of such breach.
|
|
(c)
|
Each
Shareholder will, for a period of 3 years after the date of signing of
this Agreement (as defined hereinafter), within ten days after accepting
any employment, advise The Investors of the identity of any employer of
such Shareholder. The Investors or The Company may serve notice upon each
such employer that such Shareholder is bound by the non-competition
covenant of this Agreement (Section 6.1) and furnish each such employer
with a copy of Sections 6 and 5.1 of this Agreement or relevant portions
thereof.
|
|
(d)
|
The
restrictions under (a), (b) and (c) above shall apply also to the
Investors mutatis mutandis.
|
|
7.
|
GENERAL
PROVISIONS
|
7.1 EXPENSES
Except as
otherwise expressly provided in this Agreement, the Investors, the Shareholders
and The Company will bear their respective expenses incurred in connection with
the preparation, execution, and performance of this Agreement and the
contemplated transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. stamp duty, if any, payable in
respect of this Agreement shall be paid by the Shareholders and/or The Company.
The Shareholder will ensure that The Company does not bear or incur any fees and
expenses of agents, representatives, counsel, and accountants
20
7.2 CONFIDENTIALITY
/ PUBLIC ANNOUNCEMENTS
This
Agreement and its contents shall be kept confidential by the parties hereto. The
contents of any communication about this Agreement to third parties shall be
mutually agreed upon by the parties. Any public announcement, press release or
similar public communication with respect to this Agreement will, however, be
issued at such time and in such manner as shall be mutually
determined.
7.3 ENTIRE
AGREEMENT AND MODIFICATION
Save for
The Loan Agreement, this Agreement replaces and supersedes all prior agreements,
term sheets or any other document or previous understanding between the parties
with respect to its subject matter and constitutes (along with all its Exhibits
which are an integral part of it) a complete and exclusive statement of the
terms of the agreement between the parties with respect to its subject matter.
This Agreement may not be amended except by a written agreement executed and
signed by the parties to be charged with the amendment, and any waiver of this
provision shall only be valid and binding if executed in writing by the party
giving the waiver.
7.4 DISCLOSURE
LETTER
In the
event of any inconsistency between any provisions of and/or the statements in
this Agreement and those in the Disclosure Letter (Appendix “D”) (unless
otherwise specifically stated in the Disclosure Letter with respect to a
specific representation or warranty), the provisions or statements in this
Agreement shall prevail.
7.5 ASSIGNMENTS,
SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither
party may assign any of its rights under this Agreement without the prior
consent of the other parties, except that The Investors may assign any of their
rights (but not obligations) under this Agreement to any related person or
entity. Subject to the above said, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the parties.
7.6 SEVERABILITY
If any
provision of this Agreement is held invalid or unenforceable by any court or
arbitral tribunal of competent jurisdiction, the other provisions of this
Agreement will remain in full force and effect, and the invalid or unenforceable
provision shall be substituted by a valid and enforceable provision closest to
the economic intent intended by the parties with the invalid or unenforceable
provision which achieves, as far as possible, the original business purposes of
the excluded provision.
7.7 GOVERNING
LAW AND ARBITRATION
|
7.7.1
|
Governing
Law and Jurisdiction
|
This
Agreement shall be governed by and construed according to the laws of Israel and
the authorized courts of Tel-Aviv, Israel, shall have the sole and exclusive
jurisdiction over any dispute arising between the parties hereto.
21
7.8 ENTRY
INTO FORCE / COUNTERPARTS
|
(a)
|
This
Agreement shall come into force as of the date last below written, once
duly executed by all the parties.
|
|
(b)
|
This
Agreement and its Exhibits may be executed in 3 original sets (one such
set for each party).
|
IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date last below written.
| Pimi Xxxxxx Holdings, Ltd. |
Title
|
|
||
|
|
||||
| By: /s/ Eitan Shmeuli |
Director
|
|
||
| Eitan Shmeuli | ||||
|
Omdan Education and
Instructing, Ltd.
|
||||
|
/s/
Eitan Dhmeuli
|
|
|||
| Eitan Dhmeuli | ||||
|
INS Captial LLC.
|
||||
|
/s/
Xxx Xxxxxxx
|
Managing
Member
|
|
||
| Xxx Xxxxxxx |
Agreed to
by:
|
eNitiatives - New Business
Architects, Ltd.
|
|
|||
|
/s/
Xxxxxx Xxxxx
|
|
|
||
| Name: Xxxxxx Xxxxx |
|
|||
|
Title:
General Manager
|
|
22
EXHIBIT
A
Mile
Stones
First
Quarter (Q4 2005)
|
·
|
|
·
|
Begin
series of field trials
|
|
·
|
Initial
web site on air
|
|
·
|
Attend
key industry conference to promote next seeding season use of products
followed
by aggressive follow-up with key
leads.
|
|
·
|
Identify
& appoint Israel Sales manager with primary task to aggressively begin
sales in Israel
|
|
·
|
Identify
certification requirements and specialists in key
countries/regions
|
Second
Quarter (Q1 2006)
|
·
|
Identify
and appoint CEO to company, subect to comitment of the Investors ot
continue their investment.
|
|
·
|
Begin
field trial in at least Europe or
USA
|
|
·
|
Complete
first draft of usage protocol
|
Third
Quarter (Q2 2006)
|
·
|
Gather
and publish results of field trials
|
|
·
|
Complete
formal usage protocol
|
|
·
|
Nominate
world wide Marketing and Sale
Manager.
|
Fourth
Quarter (Q3 2006)
|
·
|
Add
at least one new product to product
line
|
|
·
|
First
sale to at least one non-Israel
client
|
A-1
Financial plan
|
2005
|
||||||||||||||||
|
Q1
|
Q2
|
Q3
|
Q4
|
|||||||||||||
|
Sales
|
||||||||||||||||
|
Diluted
Material (Litters)
|
- | - | - | 25 | ||||||||||||
|
Price
per Litter
|
$ | 20 | $ | 20 | $ | 22 | $ | 22 | ||||||||
|
Sales
of diluted (in $000)
|
$ | - | $ | - | $ | - | $ | 550 | ||||||||
|
Extract
Material (Litters)
|
- | - | - | - | ||||||||||||
|
Price
per Litter
|
$ | 3,000 | $ | 3,000 | $ | 3,000 | $ | 3,000 | ||||||||
|
Sales
of Extract ($000)
|
- | - | - | - | ||||||||||||
|
Sales
of Potato Spudefender
|
$ | - | $ | - | $ | 15,000 | $ | 15,000 | ||||||||
|
Total
Revenues
|
$ | - | $ | - | $ | 15,000 | $ | 15,550 | ||||||||
|
Total
Revenues Annual
|
$ | 30,550 | ||||||||||||||
|
Expenses
|
||||||||||||||||
|
Cost
of Goods Sold
|
$ | - | $ | - | $ | - | $ | 83 | ||||||||
|
Gross
Profit
|
$ | - | $ | - | $ | 15,000 | $ | 15,468 | ||||||||
|
Gross
Margin
|
n/a | n/a | 100 | % | 99 | % | ||||||||||
|
Research
& Development
|
$ | 15,000 | $ | 34,000 | $ | 45,000 | $ | 50,000 | ||||||||
|
Marketing
& Sales
|
$ | 1,000 | $ | 2,000 | $ | 15,000 | $ | 40,070 | ||||||||
|
General
& Administrative
|
$ | 6,000 | $ | 6,000 | $ | 11,500 | $ | 28,240 | ||||||||
|
Total
Other Expenses
|
$ | 22,000 | $ | 42,000 | $ | 71,500 | $ | 118,310 | ||||||||
|
Pre
Tax Profit
|
$ | (22,000 | ) | $ | (42,000 | ) | $ | (56,500 | ) | $ | (102,843 | ) | ||||
|
Pre
Tax Profit Annual
|
$ | (223,343 | ) | |||||||||||||
|
Proceeds
from the Investment
|
$ | 50,000 | $ | 50,000 | $ | 80,000 | $ | 100,000 | ||||||||
|
Cash-on-hand
|
$ | 28,000 | $ | 36,000 | $ | 59,500 | $ | 56,658 | ||||||||
|
Accumulated
investment
|
$ | 50,000 | $ | 100,000 | $ | 180,000 | $ | 280,000 | ||||||||
A-2
|
2006
|
||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | |||||||||||||
|
Sales
|
||||||||||||||||
|
Diluted
Material (Litters)
|
75 | 650 | 1,200 | 2,200 | ||||||||||||
|
Price
per Litter
|
$ | 25 | $ | 25 | $ | 25 | $ | 25 | ||||||||
|
Sales
of diluted (in $000)
|
$ | 1,875 | $ | 16,250 | $ | 30,000 | $ | 55,000 | ||||||||
|
Extract
Material (Litters)
|
- | - | - | 1 | ||||||||||||
|
Price
per Litter
|
$ | 3,000 | $ | 3,000 | $ | 3,000 | $ | 3,000 | ||||||||
|
Sales
of Extract ($000)
|
- | - | - | 3,000 | ||||||||||||
|
Sales
of Potato Spudefender
|
$ | 15,000 | $ | 15,000 | $ | 30,000 | $ | 30,000 | ||||||||
|
Total
Revenues
|
$ | 16,875 | $ | 31,250 | $ | 60,000 | $ | 88,000 | ||||||||
|
Total
Revenues Annual
|
$ | 196,125 | ||||||||||||||
|
Expenses
|
||||||||||||||||
|
Cost
of Goods Sold
|
$ | 281 | $ | 2,438 | $ | 4,500 | $ | 8,550 | ||||||||
|
Gross
Profit
|
$ | 16,594 | $ | 28,813 | $ | 55,500 | $ | 79,450 | ||||||||
|
Gross
Margin
|
98 | % | 92 | % | 93 | % | 90 | % | ||||||||
|
Research
& Development
|
$ | 55,000 | $ | 65,500 | $ | 86,500 | $ | 91,750 | ||||||||
|
Marketing
& Sales
|
$ | 51,000 | $ | 56,000 | $ | 68,000 | $ | 68,000 | ||||||||
|
General
& Administrative
|
$ | 36,500 | $ | 36,500 | $ | 39,500 | $ | 45,000 | ||||||||
|
Total
Other Expenses
|
$ | 142,500 | $ | 158,000 | $ | 194,000 | $ | 204,750 | ||||||||
|
Pre
Tax Profit
|
$ | (125,906 | ) | $ | (129,188 | ) | $ | (138,500 | ) | $ | (125,300 | ) | ||||
|
Pre
Tax Profit Annual
|
$ | (518,894 | ) | |||||||||||||
|
Proceeds
from the Investment
|
$ | 115,000 | $ | 105,000 | $ | 100,000 | $ | 100,000 | ||||||||
|
Cash-on-hand
|
$ | 45,751 | $ | 21,564 | $ | (16,936 | ) | $ | (42,236 | ) | ||||||
|
Accumulated
investment
|
$ | 395,000 | $ | 500,000 | $ | 600,000 | $ | 700,000 | ||||||||
A-3
|
2007
|
||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | |||||||||||||
|
Sales
|
||||||||||||||||
|
Diluted
Material (Litters)
|
3,750 | 7,000 | 10,000 | 14,000 | ||||||||||||
|
Price
per Litter
|
$ | 22 | $ | 22 | $ | 22 | $ | 22 | ||||||||
|
Sales
of diluted (in $000)
|
$ | 82,500 | $ | 154,000 | $ | 220,000 | $ | 308,000 | ||||||||
|
Extract
Material (Litters)
|
4 | 8 | 18 | 33 | ||||||||||||
|
Price
per Litter
|
$ | 3,000 | $ | 3,000 | $ | 3,000 | $ | 3,000 | ||||||||
|
Sales
of Extract ($000)
|
10,500 | 22,500 | 52,500 | 97,500 | ||||||||||||
|
Sales
of Potato Spudefender
|
$ | 30,000 | $ | 30,000 | $ | 45,000 | $ | 45,000 | ||||||||
|
Total
Revenues
|
$ | 123,000 | $ | 206,500 | $ | 317,500 | $ | 450,500 | ||||||||
|
Total
Revenues Annual
|
$ | 1,097,500 | ||||||||||||||
|
Expenses
|
||||||||||||||||
|
Cost
of Goods Sold
|
$ | 13,425 | $ | 25,350 | $ | 38,250 | $ | 55,950 | ||||||||
|
Gross
Profit
|
$ | 109,575 | $ | 181,150 | $ | 279,250 | $ | 394,550 | ||||||||
|
Gross
Margin
|
89 | % | 88 | % | 88 | % | 88 | % | ||||||||
|
Research
& Development
|
$ | 96,750 | $ | 96,750 | $ | 102,000 | $ | 102,000 | ||||||||
|
Marketing
& Sales
|
$ | 68,000 | $ | 68,000 | $ | 86,750 | $ | 86,750 | ||||||||
|
General
& Administrative
|
$ | 47,000 | $ | 47,000 | $ | 47,000 | $ | 47,000 | ||||||||
|
Total
Other Expenses
|
$ | 211,750 | $ | 211,750 | $ | 235,750 | $ | 235,750 | ||||||||
|
Pre
Tax Profit
|
$ | (102,175 | ) | $ | (30,600 | ) | $ | 43,500 | $ | 158,800 | ||||||
|
Pre
Tax Profit Annual
|
$ | 69,525 | ||||||||||||||
|
Proceeds
from the Investment
|
$ | 100,000 | $ | 100,000 | $ | - | $ | - | ||||||||
|
Cash-on-hand
|
$ | (44,411 | ) | $ | 24,989 | $ | 68,489 | $ | 227,289 | |||||||
|
Accumulated
investment
|
$ | 800,000 | $ | 900,000 | $ | 900,000 | $ | 900,000 | ||||||||
A-4
|
|
Exhibit
B
|
|
|
LOAN
AGREEMENT
|
This
Loan Agreement is entered into by and among
|
Debtor
|
Pimi
Xxxxxx Holdings Ltd, a company incorporated in the State of Israel, and
its Subsidiaries, wherever they may be incorporated (hereinafter, “the
Company”),
|
|
Lenders:
|
Alon
Carmel, whose address is 000 Xx. Xxxxxx Xx., Xxxxxxx Xxxxx, XX
00000,
And
JNS
Capital LLC, whose address is 0000 Xxxxxxxxxx Xx., Xxxxxxx Xxxxx, XX
00000
(Hereinafter
jointly referred to as “Lenders”)
|
|
Whereas
|
Lenders
have agreed in principal to invest the sum of US$900,000 in the Company,
at pre-investment valuation of the company of $900,000 and against the
issuance by the Company, to Lenders, of 1200 fully paid ordinary shares of
the Company, representing, post issuance, 50% of the issued share capital
of the Company; and
|
|
Whereas
|
Lenders
and the Company are negotiating the terms of the Investment Agreement and
due diligence by Lenders and anticipate completion of such within sixty
(60) days; and
|
|
Whereas
|
Lenders
have agreed to lend to the Company the sum of $50,000 (“The
Loan”);
|
|
|
NOW,
THEREFOR:
|
|
1.
|
Preamble
and Appendices
|
The
Preamble to this Loan Agreement and the Appendices are one and integral part of
the Loan Agreement.
|
2.
|
Purpose
of the Loan
|
B-1
The
Company shall use the Loan for
|
a.
|
Development
of documentation and manuals for use of the Company’s product
of Seed Potatoes treatment (to be completed within 60
days).
|
|
b.
|
Advancement
of sales efforts of the Company’s products in
Israel.
|
|
c.
|
A
tour of various trade shows and potential customers in the United States
license application from the EPA.
|
|
d.
|
Payment
to patent lawyers in order to advance patents
applications.
|
|
3.
|
The
Loan
|
The Loan
shall be made in one installment of $50,000 (fifty thousands US
Dollars) (hereinafter: “The Loan”).
The Loan
shall be transferred, in full, to the bank account of the Company within 2
working days from the date of signature of this Loan Agreement by all
parties.
The
Company’s bank account details are as follows:
Name:
Pimi Xxxxxx Holdings Ltd.
Account #
100083
Branch
537 (Yaalom Branch)
Poalim
Bank # 12
Code:
Poalilit
|
4.
|
Interest
on and Term of the Loan
|
The Loan
shall bear an interest rate of 4% above the six month LIBOR.
The
Company shall repay the loan in one payment, including principal and interest,
180 days subsequent to the funding of the Loan.
|
5.
|
Event
of Default
|
In the
event of a default, to be defined as the breach of any provision of this Loan
Agreement, Lenders shall be entitled to any and all remedial measures provided
to Lender as aforementioned and hereinafter described. Without derogating from
any other provision of this Agreement, for the purpose of this section herein
described, and the section that follows, the Company and its Subsidiaries,
jointly and severally shall be referred to as the Company.
An Event
of Default could occur hereunder if:
(a)
The Company shall:
|
|
(i)
|
Apply
for or consent to the appointment of a receiver, trustee or liquidator for
it or all or a substantial part of its
assets,
|
|
|
(ii)
|
Admit
in writing its inability to pay its debts as they
mature,
|
|
|
(iii)
|
Make
a general assignment for the benefit of
creditors,
|
|
|
(iv)
|
Be
adjudicated a bankrupt or insolvent,
|
|
(v)
|
File
a voluntary petition for winding up or a petition or an answer seeking
reorganization or an arrangement with creditors to take advantage of any
insolvency law,
|
|
|
(vi)
|
File
an answer admitting the material allegations of a petition filed against
it in any winding up, reorganization or insolvency proceeding or fail to
dismiss such petition within 60 days after the filing thereof;
OR
|
|
(b)
|
If
an order, judgment or decree shall be entered, without the application,
approval or a consent of the Company by any court of competent
jurisdiction approving a petition seeking reorganization or liquidation of
the Company or appointing a receiver, trustee or liquidator of the Company
for all or a part of its assets and such order, judgment or decree shall
not be vacated or stayed on appeal or otherwise stayed within 60 days;
OR
|
B-2
|
(c)
|
The
Company has not fulfilled its obligations to repay the loan(s) herein
described.
|
Notwithstanding
the above, if such breach is cured by the Company within 30 days from the date
the Company received a notice from the Lender with respect to such Event of
Default, such default will be considered cured and all steps taken by the Lender
and/or the Escrow Agent, if any, will be canceled.
|
6.
|
Remedial
Measure in Event of Default
|
Upon the
occurrence of an Event of Default, the Lenders may, in addition to all other
remedies provided to Lenders under applicable laws, declare immediately due and
payable the entire outstanding balance of the loan, principal and interest
accrued thereon, and any and all other sums payable hereunder, and may decide to
exercise his rights according to any law in order to enable him to receive all
amounts due on that date. A Receiver, if appointed, shall be entitled to any and
all powers and authorities available under law, shall be empowered to realize
all rights of the Lender in order to deal with the Company’s assets, in
accordance with his discretion, for the purpose of enabling the Lender to
receive the amounts specified above.
Notwithstanding,
the waiver of a default by Lenders, or their failure to invoke one or more
remedial measures, shall not be considered as a waiver of other defaults and
remedial measures provided herein.
|
7.
|
Absence
of Dividends
|
The
Company hereby declares that no form of dividend shall be distributed by the
same to its shareholders prior to the repayment or conversion of any outstanding
Loan amounts owed to the Lender.
|
8.
|
No
Finders Fee
|
The
Company confirms that no agent, finder or broker acting on behalf of or under
the authority of the Company is or will be entitled to any broker’s or finder’s
fee or any other similar commission or fee in connection with the transactions
contemplated hereby.
|
9.
|
Confidentiality
|
The
Company, the Lender and any other person acting on their behalf shall keep this
Agreement and any related correspondence in strict confidence, and shall not
issue any public statement or press release concerning this transaction without
the other parties prior written approval of the substance and form of any such
statement or release. The Lender agrees to treat confidentially all
confidential information provided by the Company and shall use such confidential
information solely for the purpose of evaluating the transactions contemplated
hereby and shall not disclose any of such confidential information to any third
party without the prior written consent of the Company.
|
10.
|
Notices
|
All
notices dispatched and sent by registered mail, by courier, by fax or by e-mail
shall be deemed to have been delivered five days after posting them if by
registered mail, and on the following business day when delivered by courier, by
fax or by e-mail, subject to receipt of delivery, fax or e-mail transmittal
confirmation.
|
11.
|
Conflict
of Laws
|
The laws
of the State of Israel shall govern this Agreement. The
competent courts of the State of Israel, and particularly of Tel Aviv-Jaffo,
shall have jurisdiction in all disputes, which may arise in connection with this
Agreement.
B-3
|
12.
|
Cost
of Litigation:
|
In the
event of litigation resulting from this agreement, the loosing party shall
reimburse the prevailing party for all of its expenses in connection with such
litigation, including, without limitation, Attorneys fees.
|
The
Lenders
Date:___________________________
|
The Company
Date:___________________________
|
|||
|
/s/
Alon Carmel
|
/s/
Xxxxx Xxxxxxx
|
|||
|
Xxxx
Xxxxxx
|
Xxxxx
Xxxxxxx, Manager
|
|||
|
|
|
|||
|
JNS
Capital LLC
|
||||
| /s/ Xxx Xxxxxxx | ||||
|
Xxx
Xxxxxxx, Managing Member
|
B-4
Exhibit
C
We hereby
state in good faith that this is a comprehensive list that includes all patents
and patents applications under section 1g of the Term Sheet.
|
275’1
|
US
Patent No. 6,797,320 – US Application No. 09/744,681 titled
“Environmentally Compatible Processes, Compositions And Materials Treated
Thereby” was filed on June 6, 2001 as part of a section 371 of
PCT/IL99/00403 which, in turn, claimed priority from Israeli Patent
Application No. 125520 filed July 27, 1998. Application 09/744,681 matured
into US Patent 6,797,302 and is in force. Assignment duly filed in the
USPTO on September 15, 2005 for all patent right to the assignee Pimi
Xxxxxx Holdings Ltd.
|
|
275’2
|
US
Patent Application No. 10/792,759 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” was filed on March
5, 2004 as a Divisional Application of US Application No. 09/744,681
(275’1). As of May 9, 2005 our US Associates has advised that the Examiner
is preparing to allow this
Application.
|
|
275’3
|
New
US Patent Application titled “Environmentally Compatible Processes,
Compositions And Materials Treated Thereby” was filed or is being filed
transient to the preparation of this report as a Divisional Application of
US Application No. 09/744,681
(275’1).
|
|
275’4
|
European
Patent Application No. 99933105.1 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” was filed on July
22, 1999 as part of a section 371 of
PCT/IL99/00403.
|
|
275’5
|
Chinese
Patent No. 99810112.5 titled “Environmentally Compatible Processes,
Compositions And Materials Treated Thereby” was granted on July 23, 2003
and is in force.
|
|
275’6
|
Russian
Patent Application No. 2001102049 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” has received a
Decision of Grant on February 16,
2005.
|
|
275’7
|
Russian
Patent Application No. 2005115093 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” was filed on May 16
2005 as a Divisional Application of Russian Patent Application No.
2001102049 (275’6)
|
|
275’8
|
Australian
Patent No. 757,181 titled “Environmentally Compatible Processes,
Compositions And Materials Treated Thereby” matured from Australian Patent
Application 49273/99 was filed on June 6, 2001 as part of a section 371 of
PCT/IL99/00403.
|
|
275’9
|
South
African Patent No. 2001/1528 titled “Environmentally Compatible Processes,
Compositions And Materials Treated Thereby” was issued on April 24, 2002
and is in force.
|
|
275’10
|
Israeli
Patent Application No. 125520 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” was filed on July
27, 1998.
|
|
275’11
|
Chilean
Patent Application No. 1675-99 titled “Environmentally Compatible
Processes, Compositions And Materials Treated
Thereby”.
|
|
275’12
|
Mexican
Patent Application No. PA/a/2001/000967 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby”. Notice of
Allowance recently received.
|
|
275’13
|
Canadian
Patent Application No. 2,338,718 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby”. As of May 13, 2005
our Canadian Associates have been instructed to duly file the Assignment
of all patent right to the name of Pimi Xxxxxx Holdings
Ltd.
|
C-1
|
275’14
|
Kenyan
Patent Application No. PCT/IL99/00403 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby”. A Response to the
outstanding Office Action is being prepared and shall be timely filed in
the Kenyan Patent Office.
|
|
275’15
|
Argentinean
Patent Application No. P990103701 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” is pending before
the Argentinean Patent Office.
|
|
275’16
|
Bulgarian
Patent No. 105167 titled “Environmentally Compatible Processes,
Compositions And Materials Treated Thereby” is pending before the
Bulgarian Patent Office.
|
|
275’17
|
Bolivian
Patent Application No. 7651 titled “Environmentally Compatible Processes,
Compositions And Materials Treated Thereby” is pending before the Bolivian
Patent Office.
|
|
275’18
|
Brazilian
Patent Application No. PI9912697-4 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” is pending before
the Brazilian Patent Office.
|
|
275’19
|
Colombian
Patent Application No. 99047340 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” is pending before
the Colombian Patent Office.
|
|
275’20
|
Costa
Rican Patent Application No. 6061 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” is pending before
the Costa Rican Patent Office.
|
|
275’21
|
Cuban
Patent Application No. 22/2001 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” is pending before
the Cuban Patent Office.
|
|
275’22
|
Czech
Republic Patent Application No. PV 2001-254 titled “Environmentally
Compatible Processes, Compositions And Materials Treated Thereby” is
pending before the Czech Republic Patent
Office.
|
|
275’23
|
Georgian
Patent Application No. AP1999004257 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” is pending before
the Georgian Patent Office.
|
|
275’24
|
Guatemala
Patent Application No. PI99-01099 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” is pending before
the Guatemala Patent Office.
|
|
275’25
|
Honduras
Patent Application No. PCT/IL99/120 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” is pending before
the Honduras Patent Office.
|
|
275’26
|
Hungarian
Patent Application No. P0201109 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” is pending before
the Hungarian Patent Office.
|
|
275’27
|
Korean
Patent Application No. 2001-7001082 titled “Environmentally Compatible
Processes, Compositions and Materials Treated Thereby” is pending before
the Korean Patent Office.
|
|
275’28
|
Latvian
Patent Registration No. 12750 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby”. As of May 13, 2005
our Latvian Associates have been instructed to duly file the Assignment of
all patent right to the name of Pimi Xxxxxx Holdings
Ltd.
|
C-2
|
275’00
|
Xxxxxxxxx
Patent Registration No. 1441; Patent No. 125520 titled “Environmentally
Compatible Processes, Compositions And Materials Treated Thereby” was
granted on November 20. 2001.
|
|
275’30
|
New
Zealand Patent Application No. 509566 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” is pending before
the New Zealand Patent Office and received a notice of Acceptance on June
4 2003.
|
|
275’31
|
Peruvian
Patent Application No. 760 titled “Environmentally Compatible Processes,
Compositions And Materials Treated Thereby” is pending before the Peruvian
Patent Office.
|
|
275’32
|
Polish
Patent Application No. P-348722 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” is pending before
the Polish Patent Office. As of May 13, 2005 our Polish Associates have
been instructed to duly file the Assignment of all patent right to the
name of Pimi Xxxxxx Holdings Ltd.
|
|
275’33
|
Paraguay
Patent No. 4217 (Application 72/99) titled “Environmentally Compatible
Processes, Compositions and Materials Treated Thereby” was issued by the
Paraguayan Patent Office on August 2,
2003.
|
|
275’34
|
Slovenian
Patent No. 9920057 - 20615 titled “Environmentally Compatible Processes,
Compositions and Materials Treated Thereby” was issued by the Slovenian
Patent Office on February 28, 2002.
|
|
275’35
|
Slovakian
Patent Application No. PV97-2001 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” is pending before
the Slovakian Patent Office.
|
|
275’36
|
Turkish
Patent No. TR2001 00231 titled “Environmentally Compatible Processes,
Compositions And Materials Treated Thereby” is pending before the Turkish
Patent Office.
|
|
275’37
|
Ukrainian
Patent Application No. 2001010598 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” was expressly
abandoned by Makhteshim in the Ukrainian Patent
Office.
|
|
275’38
|
Uruguayan
Patent Application No. 025.625 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” is pending before
the Uruguayan Patent Office.
|
|
275’39
|
Venezuelan
Patent Application No. 1999-001481 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” is pending before
the Venezuelan Patent Office.
|
|
275’40
|
Serbia
and Montenegro Patent Application No. P-51/01 titled “Environmentally
Compatible Processes, Compositions And Materials Treated Thereby” is
pending before the Serbia and Montenegro Patent
Office.
|
|
275’41
|
Norwegian
Patent Application No. 20010447 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” is pending before
the Norwegian Patent Office.
|
|
275’42
|
Romanian
Patent Application No. a2001-00090 titled “Environmentally Compatible
Processes, Compositions And Materials Treated Thereby” is pending before
the Romanian Patent Office.
|
|
275’43
|
US
Trademark Application No. 78620464 for the xxxx “SPUDEFENDER” in Class 001
was filed on May 1, 2005 and is pending before the US Patent and Trademark
Office.
|
|
275’44
|
US
Trademark Application No. 78620465 for the xxxx “FOG IT” in Class 001 was
filed on May 1, 2005 and is pending before the US Patent and Trademark
Office.
|
C-3
Exhibit
D
EDISCLOSURE
LETER
This
letter together with the documents listed in Specific Disclosure Appendix
constitute the Disclosure Letter referred to in the agreement (the “Agreement”) to be entered into
today between Pimi Xxxxxx Holdings Ltd (the “Company”), Mr. Nimrod
Xxx-Xxxxxx and Omdan Consulting and Instructing LTD (jointly and
severally:
“Shareholders”) from one side, and Xx. Xxxx Xxxxxx and JNS Capital LLC
(jointly and severally: “The
Investors”) from the other side, in connection with the investment made
by the investors in the company against the issuance of the company’s Ordinary
and Management shares.
Preliminary
Matters
|
|
Unless
the context requires otherwise, words and expressions defined in the
Agreement shall have the same meanings in this letter. References in this
letter to paragraph, headings and numbers shall, unless the context
otherwise requires, to be those headings and numbers in the agreement.
Such headings and numbers are for convenience only and shall not alter the
construction of this letter.
|
|
|
In
the event of any conflict or inconsistency between any provisions of
and/or the statements in this Agreement and those in this letter, unless
otherwise specifically stated in this letter with respect to a specific
representation or warranty, the provisions or statements in the Agreement
shall prevail.
|
|
|
Where
any conflict or inconsistency arises between the contents of any document
supplied to the investors by the shareholders and the terms of this letter
and the documents attached to this letter, the information contained in
this letter shall prevail unless otherwise expressly stated in this
letter.
|
D-1
Specific
Disclosures
|
Article
|
Disclosure
|
|
3.1.3
(c)
|
See
Disclosure Document no. 1.
|
|
3.1.3
(d)
|
Bank
Hapoalim LTD. Branch no. 537 – Yaalom. Account no. 100083. Signatories:
Xx. Xxxxx Xxxxxxx or Xx. Xxxxxx Xxx-Xxxxxx.
|
|
3.1.3(e)
|
None.
|
|
3.1.5
(a)
|
None.
|
|
3.1.5
(b)
|
None.
|
|
3.2.2
(a) (i)
|
See
Disclosure Document no. 2.
|
|
3.2.2
(a) (iii)
|
None.
|
|
3.2.2
(b1)
|
Lease
Agreement dated 1.4.2005 signed with Kibutz Alonim is attached as
Disclosure Document no. 3.
List
of countries in which assignment of title in Patents or Patents
applications was not completed yet: Argentina, Georgia, Guatemala,
Honduras, Mexico, Norway, Paraguay, Republic of Korea, Romania, Slovakia,
Venezuela Yugoslavia, China, Turkey, Czech Republic, South Africa, Cuba,
Uruguay, Peru, Costa Rica and Colombia.
Assignment
between Makhteshim Chemical Works LTD. and Nir Ecology LTD. of the Patents
and the Patents application is attached as Disclosure Document no.
4.
Agreement
between the Company and Nir Ecology LTD. with regard to the completion of
the assignments is attached as Disclosure Document no.
5.
|
|
3.2.2
(b3)
|
See
Disclosure Document no. 6.
|
|
3.2.2
(b5) (i)
|
Sanosil
SA supplies the concentrate for the material and owns its formula.
Agreement for the supply of the concentrate by Nir Ecology LTD. is
attached as Disclosure Document no. 7.
The
right of use of the patents for water treatment applications has been
granted without limitation of time and territory to Nir Ecolgy
Nimrod an/or Xxxx Xxx Xxxxxx .
|
|
3.2.2
(b5) (ii)
|
Xxxxxx
Xxx-Xxxxxx or Nir Ecology or any company in which Xxxxxx Xxx-Xxxxxx or
Xxxx Xxx-Xxxxxx have an interest, in has the right of use in the Patents
for water treatments.
|
|
3.2.2
(b6) (a)
|
None.
|
|
3.2.2
(b6) (b)
|
None.
None.
|
|
3.2.2
(b7)
|
Mr.
Avi Levi’s employment contract with Pimi is attached as Disclosure
Document no. 8. Xxxxxx Xxx-Xxxxxx terms of employment are as in section
3.6.
|
|
3.3.1
|
See
Disclosure Document no. 9.
(v) The
Company patent advisor is advocate Xxxxxx Brass who is currently entitled
to monthly payment of US$ 3,000 per month.
(vi) The
Company legal advisor is advocates Xxxxx Xxxxxxx. Xx Xxxxxxx fee will be
agreed upon for any service or will based on hourly fee.
(vii) The
Company accountat is Xxxx Xxxx who is entitled to annual payment of US$
3,000 for the year 2004.
|
|
3.3.2
|
None.
|
|
3.3.3
|
None.
|
|
3.3.4
|
None.
|
|
3.3.5
|
See
Disclosure Document no. 10. To be attached.
|
|
3.3.6
|
None.
|
|
3.3.7
(i)
|
None.
|
|
3.3.8
(i)
|
None.
|
|
3.4
(a)
|
None.
|
|
3.4
(b)
|
None.
|
|
3.5
(a) (ii)
|
None.
|
|
3.5
(b)
|
None.
|
|
3.6
(d)
|
Water
treatment and other areas of operation, which are not covered by the
patents and/or patents
applications.
|
