EXHIBIT 10.5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is dated as of the 29th day of September,
2004 by and among B.O.S Better Online Solutions Ltd., an Israeli company No.
520042565, having its address at Beit Xxxxx, Xxxxxxxx Xxxxxxxxxx Xxxx, Xxxxxx
00000, Xxxxxx (the "BUYER"); and Quasar Communication Systems Ltd., an Israeli
company No. 511842460, having its address at 0 Xxxxxx Xxxxxx, Xxxxxxx Xxxx,
Xxxxxxx 00000, Xxxxxx (the "SELLER").
WHEREAS, the Seller is engaged, INTER ALIA, in the business of developing,
manufacturing and selling of cellular communication gateways (the "BUSINESS");
and
WHEREAS, the Buyer desires to purchase from Seller all of Seller's
activity, assets and rights, tangible and intangible, relating to, or used in
connection with, the Business, which includes, subject to the limitations and
exclusions described bellow in this Agreement, the following: (i) all equipment
of the Seller; (ii) assignment of all ASSIGNABLE agreements of the Seller with
its customers and suppliers, or in connection with the Business, and the
Seller's rights and obligations under said agreements, from the Closing date and
thereafter [together with the confirmation and consent of the parties to said
agreements to such assignment]; (iii) all of Seller's intellectual property
rights and industrial rights (iv) all of Seller's know-how, (v) all of Seller's
technology, (vi) all of Seller's trade secrets, (vii) all of Seller's licenses,
(viii) all of Seller's assignable existing distribution channels and markets;
and (ix) all of Seller's goodwill, all on the terms and conditions, and for the
consideration, set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, the Buyer and the Seller agree as follows:
1. PURCHASE AND SALE.
1.1. ACQUIRED ASSETS. Subject to the terms and conditions set forth in this
Agreement, at the Closing referred to in Section 4 hereof, the Seller shall
sell, assign, transfer and deliver to the Buyer, and the Buyer shall purchase,
acquire and take assignment and delivery of, all of the assets and rights of the
Seller relating to, or used in connection with, the Business (all of which
assets and rights are hereinafter referred to collectively as the "ACQUIRED
ASSETS"), including, without limitation, the following assets and rights:
(a) Any and all fixtures, machinery, installations, equipment
(including, without limitation, all production equipment), hardware,
software, furniture, tools, spare parts, supplies, materials, product
lines, fixed assets, and other personal property relating to, or used in
connection with, the Seller's conduct of the Business, including those
items described on SCHEDULE 1.1(A) (the "EQUIPMENT");
(b) All of the Seller's assignable rights and obligations under the
purchase orders, contracts and agreements described on SCHEDULE 1.1(B)
hereto (which Seller represents to constitute all of the purchase orders,
contracts and agreements of the Seller related to the Business and its
activity, which are currently in force and effect), and under all other
purchase orders, contracts and agreements of the Seller entered into in the
ordinary course of business following the date hereof but prior to the
Closing, consistent with the Seller's obligations under Section 7 hereof
(the purchase orders, contracts and agreements referred to in this
paragraph (b) being referred to collectively as the "OTHER CONTRACTS");
(c) All of the Seller's rights under license agreements pursuant to
which the Seller has been granted, and holds, a license (the "LICENSE
AGREEMENTS"); all of the License Agreements are listed on SCHEDULE 1.1(C);
(d) All of the Seller's rights under the assignable permits, approvals
and licenses, both governmental and private, described on SCHEDULE 1.1(D)
hereto (the "PERMITS");
(e) All of the Seller's trademarks, trade names, trade secrets,
corporate names, copyrights, designs, patents, licenses (as licensee or
licensor), other agreements and applications with respect to the foregoing,
production records, know how, technical information, manufacturing
know-how, processes, trade secrets, customer lists, inventions, , product
processes and techniques, research and development information,
copyrightable works, trade-names (whether registered or not), mask works,
logos, the trade names "Quasar", financial, marketing and business data,
pricing and cost information, business and marketing plans and customer and
supplier lists and all other intangible assets of any kind, all to the
extent that they relate to, or are used in connection with, the Business,
including, without limitation, those described on SCHEDULE 1.1(E) hereto
(the "INTANGIBLES");
(Without derogation from the generality of the aforesaid, it is
agreed, based on the Seller's representation, that the Intangibles include
all intellectual property rights which enable and/or secure and/or
facilitate the performance of the Business).
(f) All of the Seller's, information systems and all other documents
and records relating to, or used in connection with, the Acquired Assets;
(g) All of the Seller's rights under the insurance policies described
on SCHEDULE 1.1(G) hereto (the "INSURANCE POLICIES");
(h) All of the Seller's assignable distribution channels, markets and
goodwill associated with the Business.
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1.2. ACQUIRED INVENTORY. Subject to the terms and conditions set forth in
this Agreement, at the Closing referred to in Section 4 hereof, Seller
undertakes to sell and assign to the Buyer, and the Buyer undertakes to purchase
and acquire, the Inventory (as defined below) of the Seller relating to, or used
in connection with the Business as existed at the Closing . Inventory shall mean
the Seller's inventory specified in SCHEDULE 1.2 hereto, which schedule shall be
approved by physical counting by Buyer, to be completed within 10 days from the
date on which Buyer will receive from Seller its inventory report as of 30
September, 2004. Schedule 1.2 shall reflect the inventory existed on September
30, 2004 as stated on the Company's financial statements dated September 30,
2004 but not including any inventory designated as obsolete on the Company's
financial statements for June 30, 2004.
2. EXCLUDED ASSETS AND NO ASSUMPTION OF OBLIGATIONS
2.1. EXCLUDED ASSETS. Notwithstanding the foregoing, the Seller is not
selling and the Buyer is not purchasing, pursuant to this Agreement, and the
term "ACQUIRED ASSETS" shall not include, the following assets (the "EXCLUDED
ASSETS"):
(a) the consideration received by the Seller pursuant to this Agreement;
and
(b) the rights of the Seller under this Agreement.
(c) All of the Seller's rights and obligations under any lease agreement.
(d) Seller's rights and undertakings with respect to Sellers' employees.
(e) Seller's rights and obligations whatsoever which are not related to
the Business;
(f) Seller's rights and obligations with respect to the Business and
Acquired Assets accrued up and until the Closing Date (even if has to
be performed thereafter) including Seller's accounts receivable and
account payable;
(g) Seller's debts, warranties, guaranties or obligations to 3rd parties,
other than the customary 6 months warranties to clients;
(h) Any item that the Buyer shall refuse to purchase, excluding Other
Contracts, provided that Buyer refusal shall be forward to Seller in
writing not later than 45 days from the Closing Date; provided that
Buyer decision not to purchase any portion or item of the Purchased
Assets shall have no effect on any of the consideration described in
Section 3 hereinbelow.
2.2. EXCLUDED LIABILITIES The Buyer shall not assume, and shall not be
deemed to have assumed, any liability or obligation of the Seller whatsoever,
including, without limitation: (i) any liabilities or obligations for
Indebtedness, (ii) any liabilities or obligations for Taxes, or any liabilities
or obligations relating to any of the Seller's employees, as of the Closing
Date, including any of the Seller's employees hired by the Buyer as of the
Closing Date or thereafter.
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3. PURCHASE PRICE.
3.1 CONSIDERATION SHARES. In consideration for the sale, assignment,
transfer and delivery of all of the Acquired Assets (other than the Inventory),
at the Closing referred to in Section 4 hereof, the Buyer will issue to Seller a
share certificate representing 285,000 Ordinary Shares, of Buyer, par value NIS
4.00 each, (the "CONSIDERATION SHARES") free and clear from any claims, liens,
charges, pledges, security interests, encumbrances and any third party rights.
In addition to the consideration under Section 3.2 below, the issuance of said
shares to the Seller shall be the sole consideration, monetary or otherwise, to
be paid by the Buyer and/or to which the Seller may be entitled in connection
with the transactions contemplated in this Agreement. Upon the consummation of
the Closing, the Seller shall have no rights, of any nature, relating to or in
connection with the Business and/or the Buyer, other than its holdings of the
Consideration Shares and the rights attached to the Consideration Shares, as set
out in the Buyer corporate documents. Notwithstanding the said, Seller shall be
granted at the Closing a non revocable, free of any charge license to use the
name Quasar Communication Systems Ltd. for the purposes of securing Seller's
rights with respect to the Business and Acquired Assets accrued up and until the
Closing Date and/or for the purposes of any legal proceedings to which the
Seller is a party to on the Closing Date.
Subject to the terms and restrictions specified herein, the Consideration
Shares will be subject to an absolute "lock-up" for a period of one year
following the Closing. Notwithstanding the above and subject to any applicable
law, Seller will be entitled to transfer the Consideration Shares or any part
thereof to any of Seller's currently existing shareholders during the lock - up
period provided that each transferee of said Consideration Shares shall be
subject to abovementioned lock-up provision and shall confirm in writing that he
undertakes to comply with such restriction for the said one year period
following the Closing. Furthermore, Seller and Seller's currently existing
shareholders will be entitled to pledge the Consideration Shares or any part
thereof to their creditor banks, provided that each creditor bank will be
subject to all restrictions and lock up period and provided rurther that upon
receipt of the Consideration Shares by Seller, Seller undertake to pledge the
Consideration Shares to Bank Leumi subject to the lifting of its floating charge
on Seller's assets. The lock-up under this agreement is in addition to any
restriction applied by operation of law.
3.2 PURCHASE OF INVENTORY. Buyer shall purchase from Seller the Inventory,
as defined above, in the ordinary course of business and in accordance with
Buyer's needs for the conducting and operating of the purchased Business, for a
cash consideration equal to the book value of Seller's Inventory as stated on
Schedule 1.2 ("Inventory Consideration"). Seller shall invoice Buyer for each
purchase order of Seller's Inventory, title shall be transferred to Buyer at
each purchase order and payment of the consideration for each order shall be
paid by Buyer at times and in such amounts as shall be determined by mutual
agreement of the parties. The Parties agree that no later then 31 December 2004
they will set the terms of sale and payments (sums and dates of payments) of the
balance between payments actually paid to Seller on account of the Inventory
Consideration until to that date and the Inventory Consideration (the "Balance")
and such Balance shall be paid in full by Buyer to Seller not later than
December 31, 2005.
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4. CLOSING.
4.1. TIME AND PLACE. The closing of the the transactions contemplated by
this Agreement (the "CLOSING") shall be held at the offices of Amit, Pollak,
Matalon, & Xxx Xxxxxxx, Erez & Co., NYP Tower, 19th Floor, 00 Xxxxxxx Xxxxx
Xxxxxx, Xxx Xxxx, 00000, Israel, or at such other place as the Buyer and the
Seller may agree, upon the signature on this Agreement. The date on which the
Closing is actually held hereunder is sometimes referred to herein as the
"CLOSING DATE."
4.2. TRANSACTIONS AT CLOSING. At the Closing, the following actions shall
occur, which actions shall be deemed to take place simultaneously and no action
shall be deemed to have been completed or any document delivered until all such
actions have been completed and all required documents delivered:
(a) By signing this Agreement the Seller shall duly sell, transfer and
deliver to the Buyer title to all and ownership on all of the Acquired
Assets, in each case not subject to any Encumbrance (as defined in Section
5.9).
(b) The Buyer shall issue to the Seller, the Consideration Shares.
(c ) The Buyer shall provide the Seller a true and correct copy of the
resolutions of the Buyer's Board of Directors authorizing the issuing of
the Consideration Shares to the Seller pursuant to this Agreement together
with opinion of legal counsel in this reference as set forth in SCHEDULE
4.2(C);
(d) The Seller shall provide the Buyer a true and correct copies of
resolutions of the Seller's Board of Directors authorizing the transactions
contemplated under this Agreement;
(e) The Seller shall deliver to the Buyer the consent of Bank Leumi to
release its charges from the Acquired Assets in the form attached hereto as
SCHEDULE 4.2(E);.
(f) By signing this Agreement each of the parties hereto undertakes to
do its best efforts to execute and deliver each of the documents required
to be signed/delivered by such party pursuant to Sections 9 and 10, not
later than 60 days from the date hereof. Notwithstanding the said, the
Buyer shall provide the Escrow (as defined in Section 13) a share
certificate representing the Consideration Shares and shall register the
allotment of the Consideration Shares to the Seller with the Registrar of
Companies within 14 days from the date hereof
5. REPRESENTATIONS AND WARRANTIES OF THE SELLER. Acknowledging that the
Buyer is relying on the representations and warranties set forth in this Section
5, the Seller, 3 Pen Technologies Ltd. and Noa Investments Ltd. (the "Major
Shareholders") hereby represents and warrants to the Buyer as follows:
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5.1. ORGANIZATION OF SELLER; AUTHORITY. The Seller is a corporation duly
organized and validly existing under the laws of Israel. The Seller has all
requisite power and authority to own and hold the Acquired Assets owned or held
by it, to carry on the Business as such business is now conducted, and to
execute and deliver this Agreement and the other documents, instruments and
agreements contemplated hereby or thereby (collectively, the "TRANSACTION
Documents") to which it is a party and to carry out all actions required of it
pursuant to the terms of the Transaction Documents.
5.2. CORPORATE APPROVAL; BINDING EFFECT. Prior to the Closing Date, The
Seller will obtain all necessary authorizations and approvals from its Board of
Directors and its Shareholders required for the execution and delivery of the
Transaction Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby. On the Closing Date each of the
Transaction Documents will be duly executed and delivered by the Seller.
5.3. NON-CONTRAVENTION. The execution and delivery by the Seller of the
Transaction Documents to which it is a party and the consummation by the Seller
of the transactions contemplated hereby and thereby will not (a) violate or
conflict with any provision of the Memorandum and Articles of Association of the
Seller, each as amended to date; or (b) constitute a violation of, or be in
conflict with, or constitute or create a default under, or, unless otherwise
stipulated in Schedule 5.3, result in the creation or imposition of, any
Encumbrance upon any property of the Seller (including any of the Acquired
Assets) pursuant to (i) any agreement or instrument to which the Seller is a
party or by which the Seller or any of its properties (including any of the
Acquired Assets) is bound or to which the Seller or any of such properties
(including any of the Acquired Assets) is subject, or (ii) any statute,
judgment, decree, order, regulation or rule of any court or governmental or
regulatory authority.
5.4. GOVERNMENTAL CONSENTS; TRANSFERABILITY OF LICENSES, ETC. To the best
knowledge of the Seller, except as set forth on SCHEDULE 5.4, no consent,
approval or authorization of, or registration, qualification or filing with, any
governmental agency or authority is required for the execution and delivery by
the Seller of the Transaction Documents to which it is a party or for the
consummation by the Seller of the transactions contemplated hereby or thereby.
The Seller has and maintains, and the Permits listed on SCHEDULE 1.1(F) hereto
include, all licenses, permits and other authorizations from all governmental
authorities as to the best knowledge of the Seller, are necessary and/or
desirable for the conduct of the Business and/or in connection with the
ownership or use of the Acquired Assets. Except as expressly designated on
SCHEDULE 5.4, all of the Permits are transferable to the Buyer without any
conditions and/or limitations and the actual transfer thereof to the Buyer
pursuant to the terms hereof shall not in any manner limit and/or otherwise
adversely affect the rights and/or permissions and/or authorizations granted
thereby, and true and complete copies of such Permits have previously been
delivered to the Buyer.
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5.5. FINANCIAL STATEMENTS. The Seller has delivered the following financial
statements (the "FINANCIAL STATEMENTS") to the Buyer, and they are attached as
SCHEDULE 5.5 hereto. The Financial Statements sets forth a true, correct and
complete copy of the audited financial statement for the fiscal year ended
December 31, 2003 and of reviewed financial statements as of June 30, 2004. The
Company Financial Statements have been prepared in conformity with Israeli
generally accepted accounting principles ("GAAP"), applied on a consistent basis
throughout the periods indicated and with each other. The Company Financial
Statements are consistent in all material respects with the books and records of
the Company and fairly present the position of the Company as of the dates
thereof and the results of operations and cash flows of the Company for the
periods shown therein, subject, in the case of the unaudited financial
statements only, to normal and recurring year end adjustments. Nothing has come
to the attention of the Company since such respective dates that would indicate
that such financial statements are not true and correct in all material respects
as of the dates thereof.
5.6. ABSENCE OF CERTAIN CHANGES. Except as set forth on SCHEDULE 5.6, since
June 30, 2004, the Seller has carried on its business only in the ordinary
course, and there has not been (a) any material adverse change in the assets,
liabilities, sales, income or business of the Seller or in its relationships
with suppliers, customers or lessors, other than changes which were both in the
ordinary course of business and have not been, either in any case or in the
aggregate, adverse; (b) any acquisition or disposition by the Seller of any
asset or property other than sales of inventory in the ordinary course of
business; (c) any damage, destruction or loss, whether or not covered by
insurance, adversely affecting, either in any case or in the aggregate, the
Business or any of the Acquired Assets; (e) any mortgage, pledge (fixed or
floating), lien, lease, security interest or other charge or encumbrance on any
of the Acquired Assets.
5.7. LITIGATION, ETC. To the best knowledge of the Seller, except as set
forth on SCHEDULE 5.7 hereto, no action, suit, proceeding or investigation is
pending or threatened, relating to, connected with, or affecting any of the
Acquired Assets or the Business, or which questions the validity of the
Transaction Documents or challenges any of the transactions contemplated hereby
or thereby, nor, to the best knowledge of the Seller, is there any basis for any
such action, suit, proceeding or investigation.
5.8. CONFORMITY TO LAW. Except as set forth on SCHEDULE 5.8, to the best of
its knowledge, the Seller has complied with, and is in compliance with (a) all
laws, statutes, governmental regulations applicable to the Business or the
Acquired Assets and all judicial or administrative tribunal orders, judgments,
writs, injunctions, decrees or similar commands applicable to the Seller and
which pertain to the Business or any of the Acquired Assets (including any
labor, environmental, occupational health, zoning or other law, regulation or
ordinance) and (b) all unwaived terms and provisions of all contracts,
agreements and indentures to which the Seller is a party and which pertain to
the Business or any of the Acquired Assets, or by which any of the Acquired
Assets is subject. Except as set forth in SCHEDULE 5.8 hereto, the Seller has
not committed, been charged with, or, to the knowledge of the Seller, been under
investigation with respect to, nor does there exist, any violation of any
provision of any federal, state or local law or administrative regulation in
respect of the Business or any of the Acquired Assets.
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5.9. TITLE TO ACQUIRED ASSETS. The Seller is the lawful sole owner of and
possesses all other rights in, and has good and valid record and marketable
title to, all of the Acquired Assets, and no third party has any rights thereto
or therein. The Seller has the full right to sell, convey, transfer, assign and
deliver the Acquired Assets, without the need to obtain the consent or approval
of any other party, other than the consents and approvals listed on SCHEDULE
5.9. Except for liens described on SCHEDULE 5.9 hereto which secure Indebtedness
and which will be discharged at or prior to the Closing, all of the Acquired
Assets are entirely free and clear of any security interests, liens,
attachments, claims (including claims of the Israeli government or any agency
thereof), charges, options, mortgages, debts, leases (or subleases), conditional
sales agreements, title retention agreements, encumbrances of any kind, defects
as to title or restrictions against the transfer or assignment thereof
(collectively, "ENCUMBRANCES"). All of the Acquired Assets are in good condition
and repair (reasonable wear and tear excepted) and are adequate and sufficient
to carry on the Business as presently conducted and as proposed to be conducted.
At and as of the Closing, the Seller will convey the Acquired Assets to the
Buyer by deeds, bills of sale, certificates of title and other instruments of
assignment and transfer effective in each case to vest in the Buyer, and the
Buyer will have, good and valid record and marketable title to all of the
Acquired Assets, free and clear of all Encumbrances, other than as stated in
SCHEDULE 5.9.
5.10. REAL PROPERTY; SAFETY, ZONING AND ENVIRONMENTAL MATTERS.
(a) The Seller owns no real property. The Seller leases its premises
at 0 Xxxxxx Xxxxxx, Xxxxxxx Xxxx, Xxxxxxx, Xxxxxx, (the "REAL PROPERTY")
from Rorberg Contructing and Investments (1963) Ltd. (the "Lessor")
pursuant to a lease agreement dated June 21, 1999 and the amendments
thereto a true and correct copy of which has been provided to the Buyer
(the "Lease Agreement"). The Lease Agreement constitutes the full and
entire agreement relating to the Seller's lease of the Real Property. The
Seller has fully complied with all of its obligations, covenants and
undertakings set forth in the Lease Agreement, and the Seller believes that
the Lessor has fully complied with all of its obligations, covenants and
undertakings set forth in the Lease Agreement. The Seller has not received
any notice that either the whole or any portion of the Real Property is to
be condemned, requisitioned or otherwise taken by public authority.
(b) Except as set forth on SCHEDULE 5.10:
(i) the Seller is not in violation or alleged violation of any
judgment, decree, order, law, license, rule, regulation or ordinance
pertaining to health, safety or the environment in respect of the
Business or relating to, or in connection with, any of the Acquired
Assets (hereinafter "ENVIRONMENTAL LAWS");
(ii) the Seller has not received notice from any third party,
including any federal, state or local governmental authority, (A) that
any hazardous waste, any hazardous substance, any pollutant or
contaminant or any toxic substance, oil or hazardous material or other
chemical or substance regulated by any Environmental Laws ("HAZARDOUS
SUBSTANCES") which the Seller has generated, transported or disposed
of has been found at any site at which any agency or other third party
has conducted or has ordered that the Seller conduct a remedial
investigation, removal or other response action pursuant to any
Environmental Law; or (B) that the Seller is or shall be a named party
to any claim, action, cause of action, complaint, (contingent or
otherwise) legal or administrative proceeding arising out of any third
party's incurrence of costs, expenses, losses or damages of any kind
whatsoever related to, or in connection with, the release of Hazardous
Substances;
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5.11. EQUIPMENT. SCHEDULE 1.1(B) hereto sets forth a complete and accurate
list of all of the Equipment, and includes all equipment and property owned by
the Seller used in the Business. The Equipment and all other Acquired Assets are
utilized by the Seller in the ordinary course of business.
5.12. INVENTORIES. The Inventories are fairly reflected on the books of
account of the Seller, stating items of Inventory at the lower of cost or market
value in accordance with GAAP, consistently applied, with adequate allowance for
excessive or obsolete inventories.
5.13. INSURANCE. SCHEDULE 5.13 hereto lists all policies of fire,
liability, workmen's compensation, life, property and casualty and other
insurance owned or held by the Seller relating to, or connected with, the
Acquired Assets. Such policies of insurance are maintained with financially
sound and reputable insurance companies, funds or underwriters and are of the
kinds and cover such risks and are in such amounts and with such deductibles and
exclusions as are consistent with prudent business practice. All such policies
(a) are in full force and effect, (b) are sufficient for compliance by the
Seller with all requirements of law related to the Acquired Assets and all
agreements to which the Seller is a party in relation thereto, (c) provide that
they will remain in full force and effect through the respective dates set forth
in such Schedule, and (d) will not in any way be affected by, or terminate or
lapse by reason of, the transactions contemplated by this Agreement. The Seller
is not in default with respect to its obligations under any of such insurance
policies and has not received any notification of cancellation of any such
insurance policies.
5.14. CONTRACTS. SCHEDULE 5.14 sets forth a complete and accurate list of
all contracts to which the Seller is a party or by which the Seller is bound
with respect to any of the Acquired Assets, except contracts entered into in the
ordinary course of business after the date hereof and prior to the Closing,
which will be identified to the Buyer in writing prior to the Closing. As used
in this Section 5.14, the word "CONTRACT" means and includes every agreement or
understanding of any kind, written or oral, and specifically includes (a)
contracts and other agreements with respect to the Acquired Assets with any
current or former officer, director, employee, consultant or shareholder or any
partnership, corporation, joint venture or any other entity in which any such
person has an interest; (b) agreements with any labor union or association
representing any employee whose employment duties relate to, or are connected
with, the Business; (c) contracts and other agreements for the provision of
services by the Seller related to, or connected with, the Business; (d) bonds or
other security agreements provided by any party in relation to, or in connection
with, the Business; (e) contracts and other agreements for the sale of any of
the Acquired Assets other than in the ordinary course of business or for the
grant to any person of any preferential rights to purchase any of the Acquired
Assets; (f) joint venture agreements relating to, or connected with, the
Acquired Assets or the Business or by or to which the Business or any of the
Acquired Assets are bound or subject; (g) any contracts or other agreements with
regard to Indebtedness relating to, or connected with, the Business; or (i) any
other contract or other agreement whether or not made in the ordinary course of
business. The Seller has delivered to the Buyer true, correct and complete
copies of all such contracts, together with all modifications and supplements
thereto. Unless specifically stated otherwise on SCHEDULE 5.14, each of the
contracts listed on SCHEDULE 5.14 hereto or any of the other Schedules hereto is
in full force and effect, the Seller is not in breach of any of the provisions
of any such contract, nor, to the knowledge of the Seller, is any other party to
any such contract in default thereunder, nor does any event or condition exist
which with notice or the passage of time or both would constitute a default
thereunder. The Seller has in all material respects performed all obligations
required to be performed by it to date under each such contract. Subject to
obtaining any necessary consents by the other party or parties to any such
contract (the requirement of any such consent being reflected on SCHEDULE 5.14),
no contract includes any provision the effect of which may be to enlarge or
accelerate any obligations of the Buyer to be assumed thereunder or give
additional rights to any other party thereto or will in any other way be
affected by, or terminate or lapse by reason of, the transactions contemplated
by this Agreement.
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5.15. EMPLOYMENT MATTERS.
(a) SCHEDULE 5.15 hereto sets forth a full and accurate description,
as of the date hereof, of the names, positions and ranks (if any), dates of
commencement of employment, salaries and terms and conditions of
employment, of all employees and officers of the Seller that are primarily
engaged in activities related to, or connected with, the Business. Except
as set forth in SCHEDULE 5.15 hereto, there is no person or entity
(including "agents", "distributors", "independent contractors",
"consultants" or employees or manpower companies or other service
providers) that may be deemed to be an employee of the Seller who are
engaged in activities related to, or connected with, the Business.
(b) With respect to the employees listed on SCHEDULE 5.15 hereto,
individually and in the aggregate, no event has occurred and no condition
or set of circumstances exists in connection with which the Seller could be
subject to any liability that could have an adverse effect on the Business.
(c) Except as set forth in SCHEDULE 5.15 hereto, there is no labor
strike, slowdown or stoppage pending (or, to the best knowledge of the
Seller, any labor strike or stoppage threatened or contemplated) against or
affecting the Seller, and there have been no disputes between the Seller
and any number or category of employees listed on SCHEDULE 5.15 hereto and
there are no present circumstances which are reasonably likely to give rise
to any such dispute.
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5.16. TRADEMARKS, PATENTS, ETC. SCHEDULE 5.16 (1) hereto sets forth a
complete and accurate list of all of the Seller's trademarks, trade names, trade
secrets, corporate names, copyrights, designs, patents, licenses (as licensee or
licensor), other agreements and applications with respect to the foregoing,
production records, technical information, manufacturing know-how, processes,
trade secrets, customer lists, and other intangible assets of any kind, all to
the extent that they are related to, or connected with, the Business. Except to
the extent set forth in SCHEDULE 5.16 (1), the Seller owns or has the sole,
exclusive, unlimited and perpetual (subject to applicable law) right to use all
patents, trademarks, trade names and copyrights listed thereon, and has the
right, without restrictions, to use all technology, inventions, know-how and
processes, used, necessary and/or desirable for conducting the Business as
presently conducted and as proposed to be conducted, and the consummation of the
transactions contemplated hereby will not alter or impair any such right. Except
as set forth in SCHEDULE 5.16 (2), no claims have been asserted, and no claims
are pending, by any person regarding the use of any such patents, trademarks,
trade names, copyrights, technology, know-how or processes, or challenging or
questioning the validity or effectiveness of any license or agreement, and, to
the knowledge of the Seller, there is no basis for such claim. To the best of
its knowledge, the use by the Seller of such patents, trademarks, trade names,
copyrights, technology, inventions, know-how or processes in the ordinary course
of the Business (as currently conducted and as contemplated to be conducted)
does not infringe on the rights of any person. With respect to each item of
Intellectual Property that the Company uses pursuant to a license, sublicense,
agreement, or permission, to the best knowledge of the Company: (i) the license,
sublicense, agreement, or permission covering the item is legal, valid, binding,
enforceable, and in full force and effect; (ii) the license, sublicense,
agreement, or permission will continue to be legal, valid, binding, enforceable,
and in full force and effect on identical terms following the Closing; (iii) no
party to the license, sublicense, agreement, or permission is in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination, modification, or
acceleration thereunder; (iv) no party to the license, sublicense, agreement, or
permission has repudiated any provision thereof; (v) with respect to each
sublicense, the representations and warranties set forth in subsections (i)
through (iv) above are true and correct with respect to the underlying license;
(vi) the underlying item of Intellectual Property is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge; and (vii) no
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand is pending or, to the knowledge of the Company is threatened which
challenges the legality, validity, or enforceability of the underlying item of
Intellectual Property. The Company did not grant any sublicense or similar right
with respect to any such license, sublicense, agreement, or permission.
5.17. SUPPLIERS AND CUSTOMERS. SCHEDULE 5.17 hereto sets forth the
suppliers and customers of the Business as of the date hereof. The relationships
of the Seller with such suppliers and customers are good commercial working
relationships and, except as set forth on SCHEDULE 5.17, no supplier or customer
of material importance to the Business has cancelled or otherwise terminated, or
threatened to cancel or otherwise to terminate, its relationship with the Seller
or has during the last twelve (12) months decreased materially, or threatened to
decrease or limit materially, its services, supplies or materials for use in the
Business or its usage or purchase of the services or products of the Seller
except for normal cyclical changes related to customers' businesses. The Seller
has no knowledge that any such supplier or customer intends to cancel or
otherwise substantially modify its relationship with the Seller or to decrease
materially or limit its services, supplies or materials supplied to the Seller,
or its usage or purchase of the Seller's services or products, and to the
knowledge of the Seller, the consummation of the transactions contemplated
hereby will not adversely affect the relationship with any such supplier or
customer.
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5.18. ACQUIRED ASSETS COMPLETE. The Acquired Assets, when utilized with a
labor force substantially similar to that currently employed by the Seller who
are engaged in the Business, are adequate and sufficient to conduct the Business
as currently conducted and as proposed to be conducted by the Buyer.
5.19. NO UNDISCLOSED LIABILITIES. Except to the extent (a) incurred in the
ordinary course of business, or (b) described on any Schedule hereto, the Seller
has no material liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise (including as guarantor or otherwise with
respect to obligations of others) related to, or in connection with, the
Business or the Acquired Assets.
5.20. TAXES. Neither the Income Tax Authority of the State of Israel nor
any other taxing authority is now asserting or threatening to assert against the
Seller any deficiency or claim for additional Taxes or interest thereon or
penalties in relation thereto, or in connection therewith, or any adjustment
that would have an adverse effect on the Business.
5.21. BROKER. The Seller has not retained, utilized or been represented by
any broker, agent, finder or intermediary in relation to, or connection with,
the negotiation or consummation of the transactions contemplated by this
Agreement.
5.22. POTENTIAL CONFLICTS OF INTEREST. Except as set forth on SCHEDULE
5.22, no officer, director of the Seller, 3 Pen Technologies Ltd. nor Noa
Investments Ltd. (a) engage, anywhere in the world, in any business organization
that is engaged or becomes engaged in activities which are directly competitive
with the Business or is an officer, director, employee or consultant of any
Person which is a competitor, lessor, lessee, customer or supplier of the
Seller; (b) owns, directly or indirectly, in whole or in part, any tangible or
intangible property which the Seller is using or the use of which is necessary
for the business of the Seller; or (c) has any cause of action or other claim
whatsoever against, or owes any amount to, the Seller.
5.23. INDEBTEDNESS. Except for Indebtedness described on SCHEDULE 5.23
hereto, the Seller has no Indebtedness outstanding at the date hereof with
respect to the Business or the Acquired Assets. Except as disclosed on SCHEDULE
5.23 hereto, the Seller is not in default with respect to any outstanding
Indebtedness with respect to the Business or the Acquired Assets or any
instrument relating thereto, or connected therewith. Complete and correct copies
of all material instruments (including all amendments, supplements, waivers and
consents) relating to, or in connection with, any Indebtedness of the Seller
with respect to the Business or the Acquired Assets have been furnished to the
Buyer.
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5.24. DISCLOSURE. No representation or warranty by the Seller in this
Agreement or in any exhibit, schedule, written statement, certificate or other
document delivered or to be delivered to the Buyer pursuant hereto or in
connection with the consummation of the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact required to be stated therein or necessary to
make the statements contained therein not misleading or necessary in order to
provide the Buyer with proper and complete information as to the Seller and the
identity, value and usability of the Acquired Assets. There is no fact relating
to, or in connection with, the Acquired Assets or the Business which may
materially and adversely affect the same and which has not been disclosed to the
Buyer in writing.
5.26. GOVERNMENT GRANT PROGRAMS. SCHEDULE 5.26 hereto provides a complete
list of all pending and outstanding grants, tax benefits, incentives and
subsidies from the Government of the State of Israel or any agency thereof, or
from any foreign governmental or administrative agency, to the Seller related
to, or connected with, the Business or the Acquired Assets (collectively,
"GRANTS") including (i) Approved Enterprise Status granted by the Investment
Center and programs related thereto or connected therewith, and (ii) grants from
the Office of the Chief Scientist (the "OCS") and programs relating thereto or
connected therewith. The Seller has made available to the Buyer, prior to the
date hereof, correct copies of all applications for Grants submitted by the
Seller and of all letters of approval, and supplements thereto, granted to the
Seller related to, or in connection with, the Acquired Assets or the Business as
well as copies of all material correspondence with agencies which have provided
a Grant. SCHEDULE 5.26 details all material undertakings of the Seller given in
relation to, or connection with, the Grants. Without limiting the generality of
the above, SCHEDULE 5.26 includes the aggregate amounts of each Grant, and the
aggregate outstanding obligations thereunder of the Seller with respect to
royalties, or the outstanding amounts to be paid by the OCS to the Seller, and
the composition of such obligations or amount by the product or product family
that it relates to or is in connection with. The Seller is in full compliance
with the terms and conditions of the Grants and related programs and, except as
disclosed in SCHEDULE 5.26, has duly fulfilled all of its undertakings and
covenants relating thereto or in connection therewith. The Seller is not aware
of any event or other set of circumstances which might lead to the revocation or
material modification of any of the Grants.
5.27 SCHEDULES. The parties agree that any and all schedules called for
under this Section shall be provided within 14 days of the date hereof, which
schedules shall reflect substantially the same information previously provided
to the Buyer, with the required updates resulting from the ordinary course of
business.
6. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and
warrants to the Seller as follows:
6.1. ORGANIZATION OF BUYER; AUTHORITY. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Israel. The Buyer has all requisite power and authority to execute and deliver
the Transaction Documents to which it is a party and to carry out all of the
actions required of it pursuant to the terms of such Transaction Documents.
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6.2. CORPORATE APPROVAL; BINDING EFFECT. Subject to the other terms of this
Agreement the Buyer has obtained all necessary authorizations and approvals
required for the execution and delivery of the Transaction Documents to which it
is a party and the consummation of the transactions contemplated hereby and
thereby. Each of the Transaction Documents to which the Buyer is a party has
been duly executed and delivered by the Buyer and constitutes the legal, valid
and binding obligation of the Buyer, enforceable against the Buyer in accordance
with its terms, except as enforceability thereof may be limited by any
applicable bankruptcy, reorganization, insolvency or other laws affecting
creditors' rights generally or by general principles of equity.
6.3. NON-CONTRAVENTION. The execution and delivery by the Buyer of the
Transaction Documents to which it is a party and the consummation by the Buyer
of the transactions contemplated hereby and thereby will not (a) violate or
conflict with any provisions of the articles of association of the Buyer; or (b)
constitute a violation of, or be in conflict with, constitute or create a
default under, or result in the creation or imposition of any lien upon any
property of the Buyer pursuant to (i) any agreement or instrument to which the
Buyer is a party or by which the Buyer or any of its properties is bound or to
which the Buyer or any of its properties is subject, or (ii) any statute,
judgment, decree, order, regulation or rule of any court or governmental
authority to which the Buyer is subject.
6.4. GOVERNMENTAL CONSENTS. Other than as specified in SCHEDULE 6.4
hereunder, no consent, approval or authorization of, or registration,
qualification or filing with, any governmental agency or authority is required
for the execution and delivery by the Buyer of the Transaction Documents to
which it is a party or for the consummation by the Buyer of the transactions
contemplated hereby or thereby and the Buyer undertakes to receive all such
consent, approvals and authorizations within 60 days hereof.
6.5. BROKER. The Buyer has not retained, utilized or been represented by
any broker, agent, finder or other intermediary in relation to, or connection
with, the negotiation or consummation of the transactions contemplated by this
Agreement.
6.6 DUE DILIGENCE REVIEW. The Buyer's legal, financial and technical due
diligence review of the Business and the Acquired Assets have been completed.
7. REPRESENTATIONS AND UNDERTAKINGS REGARDING THE CONSIDERATION SHARES
7.1 INFORMATION AND ADVISE. The Seller confirms that it has received or
has had access to the information it considers necessary or appropriate to make
an informed decision with respect to this Agreement and the Consideration Shares
received by it hereunder. The Seller further confirms that it has had an
opportunity to ask questions and receive answers from the Buyer regarding the
Buyer's business, management and financial affairs and to obtain additional
information (to the extent the Company possessed such information or could
acquire it without unreasonable effort or expense) necessary to verify any
information furnished to the Seller or to which the Seller had access.
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7.2 AVAILABILITY OF EXEMPTIONS. The Buyer hereby represents to the Seller
that the Consideration Shares are being offered pursuant to an exemption or
exemptions from registration requirements of Israeli and US Federal and state
securities laws. The Seller understands that the Buyer is relying upon the truth
and accuracy of such Seller's representations, warranties, agreements,
acknowledgments and understandings set forth herein in order to determine the
applicability of such exemptions and the suitability of such Seller to receive
the Shares.
7.3 LEGENDS. The Seller acknowledges and agrees that certificates
representing the Consideration Shares will contain one or more legends to the
effect that transfer of such securities is prohibited except pursuant to
registration under the Securities Act or pursuant to an available exemption from
registration:
""THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933.. THE SHARES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THESE SHARES UNDER THE
SECURITIES ACT OF 1933 OR, AN OPINION OF THE COMPANY"S COUNSELTHAT
SUCH REGISTRATION IS NOT REQUIRED UNDER SAID ACT. IN ADDITION, THESE
SHARES ARE SUBJECT TO A NO SALE COMMITMENT AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF, BEFORE SEPTEMBER 29,2005 WITHOUT THE PRIOR
WRITTEN CONSENT OF B.O.S. BETTER ON-LINE SOLUTIONS LTD. ANY PURPORTED
SALE OR DISPOSITION IN CONTRIVANCE OF THE ABOVE SHALL BE DEEMED VOID
AND HAVE NO EFFECT ""
7.4 CONTROL OVER THE SELLER. the Seller to the Buyer a complete and
detailed list of individuals who have or share voting and/or investment control
over the Seller for the limited purpose of providing such information by the
Buyer to the Office of Chief Scientist (the "OCS") and the Investment Center of
the Ministry of Industry, Trade and Labor (the "Investment Center"), whose
approvals of the transaction contemplated hereby are a condition to the Buyer's
obligations hereunder. The Seller shall update such list as reasonably requested
by the Buyer, to comply with any request for such information from any
regulatory body, including, without limitation the OCS and the Investment
Center.
7.5 RESTRICTIONS ON TRANSFERABILITY AND HEDGING.
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7.5.1 The Seller understands that (i) the Consideration Shares have
not been registered under the Securities Act of 1933, or under the laws of
any other jurisdiction; (ii) such Consideration Shares are deemed to be
"restricted securities" as defined in Rule 144 promulgated under the
Securities Act, and cannot be sold, transferred or otherwise disposed of
unless they are registered under the Securities Act and, where required,
under the laws of other jurisdictions or unless an exemption from
registration is then available; (iii) there is now no registration
statement on file with the Securities and Exchange Commission with respect
to the Consideration Shares to be received by such Seller.
7.5.2 The Seller acknowledges that the Buyer will not register any
transfer of Consideration Shares not made pursuant to registration under
the Securities Act, or pursuant to an available exemption from registration
or made in contravention of the lock-up provisions below.
7.5.3 The Seller acknowledges, agrees and covenants not to engage in
hedging transactions with regard to the Consideration Shares offered
pursuant to this Agreement.
7.6 OFFSHORE TRANSACTION. The Seller is not a "U.S. Person", as such term
is defined in Regulation S under the Securities Act of 1933, its principal
address is outside the United States and it has no present intention of becoming
a resident of (or moving its principal place of business to) the United States.
The Seller was located outside the United States at the time any offer to sell
and any other action in connection with such offer and sale was made to it and
at the time that the buy order was originated by the Seller. The Consideration
Shares are being acquired solely for such Seller's own account, and in no event
and without derogating from the foregoing, for the account or the benefit of a
U.S. person.
7.7 INVESTMENT PURPOSES. The Consideration Shares are being acquired for
investment purposes. The Consideration Shares are not being purchased with a
view to, or for sale in connection with, any distribution or other disposition
thereof. The Seller has no present plans to enter into any contract,
undertaking, agreement or arrangement for any such resale, distribution or other
disposition and it will not divide its interest in the Consideration Shares with
others, resell or otherwise distribute the Consideration Shares in violation of
federal or state US Securities laws or the Israeli Securities Laws.
7.8 LOCK UP. For a period of one year from the Closing the Seller shall not
sell, assign, transfer, pledge, hypothecate, mortgage or otherwise encumber or
impose any lien upon the Consideration Shares or dispose of, by gift or
otherwise any of the Consideration Shares, subject to Section 3.1 above.
7.9 PIGGY-BACK REGISTRATION. If the Buyer, at any time starting from the
first anniversary of the date hereof and ending on the second anniversary of
this Agreement, shall determine to prepare and file with the Securities and
Exchange Commission a registration statement relating to an offering of its
equity securities, for its own account or the account of others (except with
respect to registration statements on Form F-4, Form S-8 or another form not
available for registering shares for sale to the public), each such time it will
give written notice to all holders of the Consideration Shares (the "Holders")
of its intention to do so. The Buyer shall, upon the written request of Holders,
received by the Buyer within 7 days after the giving of any such notice by the
Buyer, to register in the aggregate at least 50,000 Consideration Shares, use
its best efforts to cause such Consideration Shares to be included in the
registration statement proposed to be filed by the Buyer. In the event that any
registration pursuant to this Section shall be, in whole or in part, an
underwritten public offering, and the managing underwriter advises the Buyer
that the inclusion of all of the Consideration Shares requested to be included
in such registration would interfere with the successful marketing (including
pricing) of the offering, then the number of Consideration Shares to be included
in the offering shall be cut-back accordingly. Notwithstanding the foregoing
provisions, the Buyer may withdraw any registration statement referred to in
this Section without thereby incurring any liability to the Holders.
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7.10 NO SOLICITATION. At no time was the Seller presented with or solicited
by any leaflet, public promotional meeting, newspaper or magazine article, radio
or television advertisement or any other form of general advertising or general
solicitation in connection with the Consideration Shares and the transaction
contemplated hereby.
7.11 BROKER-DEALER. The Seller is not a broker-dealer, nor is it an
affiliate of any broker-dealer.
7.12 DISCLOSURE. The representations and warranties of the Seller contained
in this Section 7 as of the date hereof and as of the Closing, do not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated herein or necessary to make the statements herein, in
light of the circumstances under which they are made, not misleading. The Seller
understands and confirms that the Company will rely on the foregoing
representations in effecting the transaction contemplated hereby and other
transactions in securities of the Buyer.
8. CONDUCT OF BUSINESS AFTER CLOSING. It is agreed that for a period of
time commencing on the Closing Date and ending not later than December 31, 2004,
Buyer shall conduct the Business acquired hereunder, and at Buyer's discretion,
it may conduct the Business through the Seller which shall act as Buyer's
sub-contractor and in full compliance with Buyer's instructions to be provided
from time to time, provided that all expenses in related to such instructions
shall be exclusively on the account of Buyer. Therefore Seller covenants and
agrees that from the Closing, except as otherwise specifically consented to or
approved by the Buyer in writing:
8.1. FULL ACCESS. The Buyer shall have full access to all properties,
books, records, patents, patent filings (including all patent prosecution
documents), patent office actions, licenses and sub-licenses, research and
development agreements, vendor contracts and consulting agreements, contracts
and documents of the Seller relating to, or in connection with, the Business
and/or the Acquired Assets, and the Seller shall furnish or cause to be
furnished to the Buyer and its authorized representatives all assistance and
information with respect to the Acquired Assets and/or the Business as may be
requested.
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8.2. CARRY ON IN REGULAR COURSE. The Seller shall maintain the Acquired
Assets and Inventory in good operating condition and repair, and make all
necessary renewals, additions and replacements thereto provided that Buyer shall
bear all costs and expenses, and shall assist Buyer to enable Buyer to carry on
the Business diligently and substantially in the same manner as heretofore, in
the ordinary course consistent with past practice, and Buyer shall be entitled
to use all Seller's facilities and assets with no restriction whatsoever. Buyer
shall be entitled to use any of Seller's trade names (including Quasar
Communications or any similar name). Upon Buyer's request Seller shall give its
consent and approval to any Authority or Registrar in order to enable Buyer to
register a company, or trade name, as the case may be, using the name Quasar
Communications or any similar name. Not later then 31.12.2005 Seller shall
change its name and will ceased to use the name of Quasar (other as permitted
hereunder).
8.3 SELLER'S EMPLOYEES. Seller shall outsource its employees listed on
SCHEDULE 8.3 hereto to Buyer. Any Seller's employees so selected by Buyer will
dedicate all of his work time to Buyer's affairs without being considered as
Buyer's employee. Notwithstanding the said, such employees will assist Seller in
the collection of all accounts receivable from Seller's customers. Any
resignation of Seller's employee shall not constitute breach of Seller's
obligation under this Section. In the event that Buyer shall decide not to
receive outsourcing services of any of the employees listed on Schedule 8.3,
Buyer shall provide Seller in advance and in writing with names of such
Employee. The term of such advance notice shall not be shorter then the term of
the advance notice which such employee is entitled to receive under his
employment agreement with Seller, provided, however, that Buyer shall be
notified in advance by Seller of those Employees, whose term of the required
advanced notice exceeds 30 days. Buyer shall reimburse Seller, in cash, for the
full cost of the salaries and benefits, not later then the date in which such
salaries and benefits shall be paid by the Seller (but not severance payments
and payments in xxx of advanced notice) of the employees employed by Seller for
Buyer ,plus V.A.T. during the term in which such employees are outsourced. For
any payment under this Section 8.3 Seller shall issue to buyer an Invoice
("Cheshbonit Mass"). At all time Buyer is permitted to employ any of Seller's
Employees.
Subject to applicable cogent law, the Seller shall not grant any general or
uniform increase in the rates of pay of employees of the Seller engaged in the
performance of the Business, nor grant any general or uniform increase in the
benefits under any bonus or pension plan or other contract or commitment to, for
or with any such employees; and the Seller shall not increase the compensation
payable or to become payable to any employee relating to, or connected with, the
Business, or increase any bonus, insurance, pension or other benefit plan,
payment or arrangement made to, for or with any such employee.
During the 24_months period following the Closing, neither Seller nor its
Affiliates and any of its Major Shareholders and their respective Affiliates
("First Party"), shall directly or indirectly solicit or encourage any officer,
employee or consultant of Buyer or any of its Affiliates or subsidiaries
("Second Party") to leave its employment/engagement for employment/engagement by
or with such First Party or any competitor of the Second Party.
8.4. INSURANCE. With respect to the Acquired Assets and Designated Area and
until all insurance policies assigned to Buyer, or new insurance policies issued
to Buyer, as the case may be, the Seller shall not terminate the insurance
described on SCHEDULE 5.13. The Buyer shall not renew any insurance policies
unless requested to do so by Buyer and provided that Buyer bears all costs and
expenses in relation to such renewals.
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8.5. NO DEFAULT. The Parties shall not do any act or omit to do any act, or
permit any act or omission to act, which will cause a material breach of any
contract, commitment or obligation of the Seller or Buyer with respect to the
Acquired Assets, or otherwise related to, or in connection with, the Business
and shall assist Buyer with the assignment of all agreements and other contracts
from Seller to Buyer .
8.6. CONSENTS OF THIRD PARTIES. The Seller will employ its best efforts to
secure the consent, in form and substance satisfactory to the Buyer to the
consummation of the transactions contemplated by this Agreement by each party to
any of the Other Contracts, License Agreements, Permits, and Insurance Policies.
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The obligation of the Buyer
to consummate the Closing shall be subject to the satisfaction at or prior to
the Closing of each of the following conditions (to the extent noncompliance is
not waived in writing by the Buyer):
9.1. COMPLIANCE WITH AGREEMENT. The Seller shall have performed and
complied with all of its obligations and covenants under this Agreement to be
performed or complied with by it on or prior to the Closing Date.
9.2. NO CHANGE. The Acquired Assets and the Business shall not have been,
and shall not be threatened to be, adversely affected in any way whatsoever.
9.3. OPINION OF COUNSEL. ______________, counsel to the Seller, shall have
delivered to the Buyer a written opinion, addressed to the Buyer and dated as of
the Closing Date, substantially in the form of SCHEDULE 9.5 hereto.
9.4. APPROVALS. All corporate and other approvals in relation to, or
connection with, the transactions contemplated by this Agreement and the form
and substance of all certificates and other documents delivered hereunder shall
be reasonably satisfactory in form and substance to the Buyer and its counsel
and Seller shall deliver to Buyer a true and correct copy of a resolution of the
Board of Directors of the Seller, approving this Agreement and the transactions
contemplated hereby.
9.5. NO LITIGATION. No restraining order or injunction shall prevent the
transactions contemplated by this Agreement and no action, suit or proceeding
shall be pending or threatened before any court or administrative body: (a) in
which it will be or is sought to restrain or prohibit or obtain damages or other
relief relating to, or in connection with, this Agreement or the consummation of
the transactions contemplated hereby or (b) relating to, or in connection with,
any claim for damages against the Seller which has implications on the
transactions contemplated hereby.
9.6. DISCHARGE OF ENCUMBRANCES. Each Encumbrance on any of the Acquired
Assets described on SCHEDULE 5.9 hereto shall have been discharged.
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9.7. CONSENTS OF THIRD PARTIES. The Seller shall have obtained the consent,
in form and substance satisfactory to the Buyer and the Buyer's counsel, to the
consummation of the transactions contemplated by this Agreement by each party to
any of the License Agreements, Permits, and Insurance Policies, under which
consummation of such transactions without obtaining such consent would: (i)
constitute a breach or a default; (ii) create obligations of the Buyer, (iii)
permit cancellation of any such, Other Contracts, License Agreements, Permits,
or Insurance Policies; or (iv) prevent the lawful and full transfer of one or
more Acquired Assets to the Buyer.
9.8. PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings relating to,
or in connection with, the transactions contemplated by this Agreement and all
certificates and documents delivered to the Buyer which relate to, or are in
connection with, the transactions contemplated by this Agreement shall be
satisfactory in all respects to the Buyer and the Buyer's counsel, and the Buyer
shall have received the originals or certified or other copies of all such
records and documents as the Buyer may reasonably request.
9.9. GOVERNMENT APPROVALS. The Seller will have obtained all required
approvals from Governmental authorities, including the OCS and the Investment
Center of the Ministry of Industry and Trade.
9.10 Notwithstanding the above, the parties agree that the time for
compliance with the conditions set froth under sections 9.3-9.8____-- shall be
extend to 60 days after the Closing and Closing shall not be deemed contingent
upon or subject to their fulfillment.
9.11 Seller shall furnish to Buyer Seller's reviewed financial statements
for the period ending September 30, 2004 upon receipt of same by Seller.
10. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS. The obligation of the
Seller to consummate the Closing shall be subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (to the extent
noncompliance is not waived in writing by the Seller):
10.1. COMPLIANCE WITH AGREEMENT. The Buyer shall have performed and
complied with all of its obligations and covenants under this Agreement that are
to be performed or complied with by it at or prior to the Closing.
10.2 APPROVALS. Buyer's Board of Directors has approved, and certain
creditors consented to, the transactions contemplated hereunder. Buyer has
obtained all applicable regulatory approvals (including, without any
limitations, Investment Center, OCS & Tel-Aviv Stock Exchange). All corporate
and other approvals in relation to, or connection with, the transactions
contemplated by this Agreement and the form and substance of all certificates
and other documents delivered hereunder shall be reasonably satisfactory in
substance to the Seller and its counsel and Buyer shall deliver to Seller a true
and correct copy of a resolution of the Board of Directors of the Seller,
approving this Agreement and the transactions contemplated hereby.
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10.3. OPINION OF COUNSEL. ______________, counsel to the Seller, shall have
delivered to the Seller a written opinion, addressed to the Buyer and dated as
of the Closing Date, substantially in the form of SCHEDULE 10.4 hereto.
10.4. NO LITIGATION. No restraining order or injunction shall prevent the
transactions contemplated by this Agreement.
10.5 Notwithstanding the above, the parties agree that the time for
compliance with the conditions set froth under sections 10.2 & 10.3 shall be
extend to 60 days after the Closing and Closing shall not be deemed contingent
upon or subject to their fulfillment.
11. CERTAIN COVENANTS AND ARRANGEMENTS.
11.1. CONFIDENTIAL INFORMATION. The Seller, 3 Pen Technologies, Xx. Xxxxxx
Xxxx, Noa Investments Ltd. And each of their respective officers, directors and
shareholders, hereby agree to keep in strict confidence any and all information
of a confidential nature which is related to, or connected with, the Business
and/or any of the Acquired Assets ("Confidential Information"), including,
without limitation, financial information, customers, suppliers, sales
representatives, and anything else having an economic or pecuniary benefit to
the Buyer. The Seller agrees and covenants not to use any Confidential
Information for any purpose whatsoever, and not to disclose any Confidential
Information to any third party. Notwithstanding the aforesaid, no provision of
this Agreement shall be construed to preclude such disclosure of Confidential
Information as may be required by court order or applicable law, provided that:
(i) prior notice of such contemplated disclosure (including reasonable details
relating thereto) is provided to the Buyer as early as practicably possible; and
(ii) such disclosure is effected only to the minimum extent required. This
Section 11.1 shall survive the termination or expiration of this Agreement.
11.2. NON-COMPETITION. The Seller, its Affiliates (as defined below), the
Major Shareholders and each of their respective officers, directors and Major
Shareholders' shareholders shall not: (i) engage, anywhere in the world, in any
business organization that is engaged or becomes engaged in activities which are
directly competitive with the Business, or (ii) divert to any competitor of the
Buyer (or a subsidiary thereof) any customer of the Buyer (or a subsidiary
thereof) or otherwise interfere with the business relationships of the Buyer and
its subsidiaries. This Section 11.2 shall apply during the period commencing
upon the Closing Date and terminating upon the later of: (i) the expiration of
24 months from the Closing Date; The Seller shall be responsible for it's
Affiliates' full compliance with the provisions of this Section 11.2.
11.3. ENFORCEABILITY. If at any time the provisions of Section 11.1 or
Section 11.2 shall be determined to be invalid or unenforceable, by reason of
being vague, unreasonable as to area, duration or scope of activity or similar
reasons, the applicable Section shall be considered divisible and shall become
and be immediately amended to only such area, duration and scope of activity as
shall be determined to be reasonable and enforceable by the court or other body
having jurisdiction over the matter; and it is hereby agreed that such Section
as so amended shall be valid and binding as though any invalid or unenforceable
provision had not been included therein.
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11.4 RENTAL ARRANGEMENT. The Buyer undertakes to pay to the Seller all the
lease fees under the Lease Agreement, for the term commences at the Closing and
ended on the end of June 2005, such payments shall be executed no later than the
dates in which the Seller shall pay such fees to the lessor under the Lease
Agreement. The Seller hereby agrees that subject to the terms of the Lease
Agreement, as long as Buyer conducting the Business in Seller current premises
and until the end of June 2005, the Buyer will be entitled to use, at the
Buyer's option, the Seller's facility. The area of the Seller's facility which
may be used by the Buyer (the "Designated Area") shall be the same area which is
currently occupied by the Business. Until the end of the calendar year 2004, the
Designated Area shall not be occupied by, or otherwise used by, the Seller or
any other party. In addition, Buyer shall pay to Seller the applicable
municipality taxes levied on the Designated Area until the end of June 2005 and
all direct expenses related thereto i.e. telephone, electricity and water
expenses, etc. Such payments shall be excuted and delivered to Seller no later
than the dates in which Seller shall pay such payments to the relevant third
parties and authorities.
12. INDEMNIFICATION.
12.1. INDEMNITY BY THE SELLER. The Seller hereby agrees to indemnify and
hold the Buyer harmless from and with respect to any and all claims,
liabilities, losses, damages, costs and expenses, including the reasonable fees
and disbursements of counsel (collectively, the "LOSSES"), related to, or
arising out of any of the following:
(a) any failure or any breach by the Seller of any representation or
warranty, covenant, obligation or undertaking made by the Seller in or
pursuant to this Agreement (including the Schedules and Exhibits hereto) or
any other statement, certificate or other instrument delivered pursuant
hereto;
(b) any claim, liability, obligation or damage with respect to the
Excluded Liabilities, including, without limitation, the following:
(i) any contractual product warranty claims arising out of
defects in any product sold or manufactured by the Seller prior to the
Closing Date; or
(ii) any claim, obligation or liability arising in relation to,
or in connection with, the employment or termination of employment of
any persons involved in the conduct of the Business on, before or
after the Closing Date, including any workmen's compensation claims,
any employee grievances, any liabilities with respect to pension,
medical or other employment benefits and any liabilities (including
contingent liabilities) for accrued vacation, sick leave, bonus or
severance payments for the period of employment of said employee by
the Seller (including those who performed services to Buyer through
the outsourcing of Seller).
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12.2. CLAIMS.
(a) NOTICE. Buyer seeking indemnification from the Seller hereunder
(the "INDEMNIFIED PARTY") shall promptly notify the Seller in writing (the
"INDEMNIFYING PARTY") of any action, suit, proceeding, demand or breach (a
"CLAIM") with respect to which the Indemnified Party claims indemnification
hereunder, PROVIDED that failure of the Indemnified Party to give such
notice shall not relieve the Indemnifying Party of its obligations under
this Section 12 except to the extent, if at all, that such Indemnifying
Party shall have been prejudiced thereby.
(b) THIRD PARTY CLAIMS. If such Claim relates to, or is in connection
with, any action, suit, proceeding or demand instituted against the
Indemnified Party by a third party (a "THIRD PARTY CLAIM"), the
Indemnifying Party shall be entitled to participate in the defense of such
Third Party Claim after receipt of notice of such claim from the
Indemnified Party. Within thirty (30) days after receipt of notice of a
particular matter from the Indemnified Party, the Indemnifying Party may
assume the defense of such Third Party Claim, in which case the
Indemnifying Party shall have the authority to negotiate, compromise and
settle such Third Party Claim.
The Indemnified Party shall retain the right to employ its own counsel and
to participate in the defense of any Third Party Claim, the defense of
which has been assumed by the Indemnifying Party pursuant hereto, but the
Indemnified Party shall bear and shall be solely responsible for its own
costs and expenses relating to, or in connection with, such participation.
(c) 3 Pen Technologies Ltd. and Noa Investments Ltd. shall undertake
to indemnify the Seller subject to the conditions and limitations described
above in this Section 12 and subject further to the following terms,
provided that the aggregate sum of Buyer's Losses accounts to more than
$100,000:
(1) Buyer delivered 3 Pen Technologies and Noa Investments Ltd.
each Claim and Third Party Claim simultaneously with the notice given
to the Seller;
(2) Buyer used all available actions against the Seller in oreder
to enforce its rights under this Section and nevertheless was not
fully indemnified by the Seller;
(3) 3 Pen Technologies Ltd. shall be liable to indemnify Buyer
only for 58% of the sums which it will be entitled to be indemnified
by the Seller and in any case the liability of 3 Pen Technologies Ltd
under this Section 12 shall not exceed US$290,000;
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(4) Noa Investments Ltd. shall be liable to indemnify Buyer only
for 13% of the sums which it will be entitled to be indemnified by the
Seller and in any case the liability of Noa Investments Ltd. under
this Section 12 shall not exceed US$65,000;
13. Escrow. The Buyer shall deposit the Share certificate representing the
Consideration Shares in escrow with Avital, Dromi & Co. Advocates which shall
release such certificate to the Sellers only upon the delivery to the Buyer of
all the Schedules to this Agreement.
14. DEFINITIONS. As used herein the following terms not otherwise defined
have the following respective meanings:
"AFFILIATE": As applied to any Person (as defined in this Section 14), any
Person controlling, controlled by or under common control with such Person.
"CONTROL": With respect to any Person, the direct or indirect ownership of
more than 50% of the voting or income interest in such Person or the possession
otherwise, directly or indirectly, of the power to direct the management or
policies of such Person.
"PERSON": A corporation, an association, a partnership, a limited liability
company, an organization, a business, an individual, a government or political
subdivision thereof or a governmental agency.
"TAX": Any federal, state, local, foreign and other income, profits,
franchise, capital, withholding, unemployment insurance, social security,
occupational, production, severance, gross receipts, value added, sales, use,
excise, real and personal property, occupancy, transfer, employment, disability,
workers' compensation or other similar tax, duty, fee, assessment or other
governmental charge (including all interest and penalties thereon and additions
thereto).
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15. GENERAL.
15.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Seller contained in this Agreement or otherwise made in
writing in relation to, or in connection with, the transactions contemplated
hereby shall, notwithstanding any investigation by the Buyer, be deemed to have
been relied on by the Buyer, and they shall survive the Closing Date and the
consummation of the transactions contemplated herein.
Whenever a Representation is made "TO THE SELLER'S KNOWLEDGE" or is
qualified by any similar expression, the Seller shall be deemed: (i) to have
made due and careful inquiries about the facts stated in such Representation,
with the assistance (as the case may be) of any knowledgeable person within the
Seller, before making such a Representation; and (ii) to have knowledge of any
Breach of Representations if any or should reasonably have knowledge of such
Breach at the date of this Agreement.
A legal entity (including any of the Parties as applicable) shall be deemed
to have knowledge of a particular fact if any of the directors, executive
officers or other executives or officers of the legal entity has knowledge or
should reasonably have knowledge of that fact.
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15.2. EXPENSES. Each party shall bear its legal fees and any other fees
incurred by it in connection with the transaction hereunder, including in
connection with the negotiations, due diligence and preparation of this
Agreement.
15.3. STAMP TAX. The Parties shall bear, in equal parts, all stamp duty or
taxes which might resulted from the transaction/s contemplated hereunder
(including stamp duty with respect to the issuance of the Consideration Shares).
15.4. NOTICES. All notices, demands and other communications hereunder
shall be in writing or by written telecommunication, and shall be deemed to have
been duly given if delivered personally or if mailed by certified or registered
mail, return receipt requested, postage prepaid, or if sent by overnight
courier, or sent by written telecommunication, as follows:
If to the Buyer, to:
B.O.S Better Online Solutions Ltd.
Beit Xxxxx, Xxxxxxxx Xxxxxxxxxx Xxxx,
Xxxxxx 00000, Xxxxxx
Attn: Mr. Adiv Boneh
with a copy sent contemporaneously to:
Amit, Pollak, Matalon, & Co.
NYP Tower - 19th Floor
00 Xxxxxxx Xxxxx Xxxxxx
Xxx Xxxx, 00000, Xxxxxx
Facsimile: 000-0-0000000
Attn: Xxxxxx Xxxxxxx, Adv.
If to the Seller, to:
Quasar Communication Systems Ltd
c/o 3 Pen Technologies Ltd.
3 Hchilason St. Ramat Gan
Facsimile:
Attn: Xxxxxx Xxxxxxx
If to 3 Pen Technologies Ltd:
3 Pen Technologies Ltd.
3 Hchilason St. Ramat Gan
Facsimile:
Attn: Xxxxxx Xxxxxxx
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If to NOA INVESTMENTS LTD.:
NOA INVESTMENTS LTD.
Habarzel St.
Kiriat Atidim Tel-Aviv
Att: Xxxxx Xxxxxxx
Any such notice shall be effective (a) if delivered personally, when received,
(b) if sent by reputable courier, the date of delivery by such courier, and (c)
if sent by facsimile, when transmitted with written confirmation of transmission
having been received.
15.5. ENTIRE AGREEMENT. This Agreement contains the entire understanding of
the parties, supersedes all prior agreements and understandings relating to the
subject matter hereof and shall not be amended except by a written instrument
hereafter signed by both of the parties hereto.
15.6. GOVERNING LAW. The validity and construction of this Agreement shall
be governed by and construed in accordance with the laws of the State of Israel.
Any dispute arising under or in relation to this Agreement shall be resolved in
the competent court of Tel Aviv-Jaffa district only, and each of the parties
hereby submits irrevocably to the exclusive jurisdiction of such court.
15.7. SECTIONS AND SECTION HEADINGS. The headings of sections and
subsections are for reference only and shall not limit or control the meaning
thereof.
15.8. ASSIGNS. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors and
permitted assigns. Neither this Agreement nor the obligations of any party
hereunder shall be assignable or transferable by such party without the prior
written consent of the other party hereto; PROVIDED, HOWEVER, that nothing
contained in this Section 14.7 shall prevent the Buyer, without the consent of
the Seller, from transferring or assigning this Agreement or its rights (but not
the obligations) hereunder, or any portion thereof, to an Affiliate of the
Buyer.
15.9. SEVERABILITY. In the event that any covenant, condition, or other
provision herein contained is held to be invalid, void, or illegal by any court
of competent jurisdiction, the same shall be deemed to be severable from the
remainder of this Agreement and shall in no way affect, impair, or invalidate
any other covenant, condition, or other provision contained herein.
15.10. FURTHER ASSURANCES. The parties agree, without any additional
consideration, to take such reasonable steps and execute such other and further
documents as may be necessary or appropriate to cause the terms and conditions
contained herein to be carried into effect.
15.11. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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15.12. BEST EFFORTS TO SATISFY CLOSING CONDITIONS. The Seller and the Buyer
will use their best efforts to effect the Closing, as set forth herein. In no
event will either party bear any liability whatsoever (whether vis-a-vis the
other party or any third parties) in the event that it will elect not to
consummate the transactions contemplated herein if one or more of the conditions
to effect the Closing hereunder is not fully satisfied in a timely manner.
15.13. PUBLICITY. Except as is necessary for governmental notification
purposes or to comply with applicable laws and regulations or to enforce its
rights under this Agreement, and except as otherwise agreed to by the parties
hereto in writing, the Seller shall (a) keep the material terms of this
Agreement confidential and (b) obtain the prior written consent of the Buyer to
any public announcement relating to the transactions contemplated by this
Agreement, including the text and the exact timing of any such announcement.
15.14 INTERPRETATION. Words such as "herein", "hereinafter", "hereof" and
"hereunder" refer to this Agreement as a whole and not merely to a section or
paragraph in which such words appear, unless the context otherwise requires. The
singular shall include the plural, unless the context otherwise requires.
Whenever the word "include", "includes" or "including" appears in this
Agreement, it shall be deemed in each instance to be followed by the words
"without limitation."
15.15 RULES OF CONSTRUCTION. The parties agree that they have participated
equally in the formation of this Agreement and that the language and terms of
this Agreement shall not be construed against any party by reason of the extent
to which such party or its professional advisors participated in the preparation
of this Agreement.
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IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed and delivered as of the
date and year first above written.
B.O.S BETTER ONLINE SOLUTIONS LTD
By:________________________________
Name:
Title:
QUASAR COMMUNICATION SYSTEMS LTD.
By:________________________________
Name:
Title:
3 PEN TECHNOLOGIES LTD.
By:________________________________
Name:
Title
NOA INVESTMENTS LTD.
By:________________________________
Name:
Title
- 29 -
