Exhibit 10.7

 

ASSET PURCHASE AGREEMENT

 

dated May 20, 2005

 

between

 

Cellular Express, Inc. and bcgi Technologies Ltd., as Buyers

 

and

 

PureSight, Inc. and PureSight Ltd., as Sellers

 

 

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TABLE OF CONTENTS

 

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ARTICLE I

THE ASSET PURCHASE

   4

1.1

   Purchase and Sale of Assets.    4

1.2

   Assumption of Liabilities.    4

1.3

   Purchase Price    4

1.4

   Escrow    4

1.5

   The Closing.    5

1.6

   Allocation    5

1.7

   Further Assurances    5 ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

   5

2.1

   Organization, Qualification and Corporate Power    6

2.2

   Capitalization.    6

2.3

   Authorization of Transaction    6

2.4

   Noncontravention    7

2.5

   Subsidiaries    7

2.6

   Financial Statements    7

2.7

   Absence of Certain Changes    7

2.8

   Undisclosed Liabilities    7

2.9

   Tax Matters.    7

2.10

   Ownership and Condition of Assets.    9

2.11

   Owned Real Property    9

2.12

   Real Property Leases    9

2.13

   Intellectual Property.    10

2.14

   Contracts.    11

2.15

   Accounts Receivable    12

2.16

   [Intentionally Omitted.]    12

2.17

   Insurance    12

2.18

   Litigation    12

2.19

   Warranties    12

2.20

   Employees.    12

2.21

   Employee Benefits.    13

2.22

   Environmental Matters.    13

2.23

   Legal Compliance    14

2.24

   Customers and Suppliers    14

2.25

   Permits    14

2.26

   Certain Business Relationships With Affiliates    14

2.27

   Brokers’ Fees    14

2.28

   Books and Records    14

2.29

   Disclosure    14 ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE BUYERS

   14

3.1

   Organization and Corporate Power    15

3.2

   Authorization of the Transaction    15

3.3

   Noncontravention    15

3.4

   Disclosure    15

3.5

   Independent Investigation    15

 

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ARTICLE IV

PRE-CLOSING COVENANTS

   15

4.1

   Closing Efforts    15

4.2

   Governmental and Third-Party Notices and Consents.    15

4.3

   Stockholder Approval    16

4.4

   Operation of Business    16

4.5

   Access to Information    17

4.6

   Termination of PureSight-Israel Employees    17

4.7

   Exclusivity.    18 ARTICLE V

CONDITIONS TO CLOSING

   18

5.1

   Conditions to Obligations of each Party    18

5.2

   Conditions to Obligations of the Buyer    18

5.3

   Conditions to Obligations of the Sellers    20 ARTICLE VI

POST-CLOSING COVENANTS

   20

6.1

   Proprietary Information    20

6.2

   Solicitation and Hiring.    20

6.3

   Non-Competition.    21

6.4

   Tax Matters    21

6.5

   Sharing of Data.    21

6.6

   Use of Name    21

6.7

   Cooperation in Litigation    22

6.8

   Collection of Accounts Receivable    22

6.9

   Maintenance of Corporate Existence; Restriction on Dividends and
Distributions    22

6.10

   Transfer of Approved Enterprise Status    22

6.11

   VAT    22 ARTICLE VII

INDEMNIFICATION

   22

7.1

   Indemnification by the Sellers    22

7.2

   Indemnification by the Buyers    23

7.3

   Indemnification Claims.    23

7.4

   Survival of Representations and Warranties    25

7.5

   Limitations.    25

7.6

   Treatment of Indemnity Payments    26

7.7

   Certain Offsets    26

7.8

   Exclusive Remedy    26 ARTICLE VIII

TERMINATION

   26

8.1

   Termination of Agreement    26

8.2

   Effect of Termination    27

 

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ARTICLE IX DEFINITIONS 27 ARTICLE X

MISCELLANEOUS

   35

10.1

  Press Releases and Announcements    35

10.2

  No Third Party Beneficiaries    35

10.3

  Entire Agreement    35

10.4

  Succession and Assignment    35

10.5

  Counterparts and Facsimile Signature    35

10.6

  Headings    35

10.7

  Notices    35

10.8

  Governing Law    36

10.9

  Amendments and Waivers    36

10.10

  Severability    36

10.11

  Expenses    36

10.12

  Submission to Jurisdiction    36

10.13

  Specific Performance    37

10.14

  Construction.    37

 

Exhibits

 

Exhibit A –     Escrow Agreement

Exhibit B –     [Omitted]

Exhibit C-1 – PureSight-US Trademark Assignment

Exhibit C-2 – PureSight-Israel Trademark Assignment

Exhibit D-1 –         U.S. Instrument of Assumption

Exhibit D-2 –         Israeli Instrument of Assumption

Exhibit E –    Form employment agreement

Exhibit F-1 – Employment Agreement with Netta Mendelson

Exhibit F-2 – Employment Agreement with Royi Cohen Exhibit F-3 – Employment
Agreement with Ouri Azoulay

Exhibit F-4 – Employee Waiver

Exhibit G-1 –         Opinion of Sellers’ U.S. Counsel

Exhibit G-2 –         Opinion of Sellers’ Israeli Counsel

Exhibit H –    Consulting Agreement with Cleve Adams

 

Schedules

 

Schedule 1.1(a) – Trademarks of PureSight-US

Schedule 1.1(b) – Excluded Assets

Schedule 1.3 – Payment and Allocation of Purchase Price

Schedule 1.6 – Allocation of Purchase Price

 

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ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement is entered into as of May 20, 2005 by and between
Cellular Express, Inc., a Massachusetts corporation (“Cellular Express”), and
bcgi Technologies, Ltd., a company organized under the laws of Israel
(“BCGI-Israel”), on the one hand, and PureSight, Inc., a Delaware corporation
(“PureSight-US”), and PureSight Ltd., a company organized under the laws of
Israel (“PureSight-Israel”), on the other hand. Cellular Express and BCGI-Israel
are each referred to herein as a “Buyer” and collectively as the “Buyers”.
PureSight-US and PureSight-Israel are each referred to herein as a “Seller” and
collectively as the “Sellers”.

 

This Agreement contemplates a transaction in which the Buyers will purchase
substantially all of the assets and assume certain of the liabilities of the
Sellers.

 

Capitalized terms used in this Agreement shall have the meanings ascribed to
them in Article IX.

 

In consideration of the representations, warranties and covenants herein
contained, the Parties agree as follows.

 

THE ASSET PURCHASE

 

Purchase and Sale of Assets.

 

Upon and subject to the terms and conditions of this Agreement, the Buyers shall
purchase from the Sellers, and the Sellers shall sell, transfer, convey, assign
and deliver to the Buyers, at the Closing, for the consideration specified below
in this Article I, all right, title and interest in, to and under the Acquired
Assets, such that (i) PureSight-US shall sell, transfer, convey, assign and
deliver to the Buyer only the trademarks listed in Schedule 1.1(a) and those
agreements to which PureSight-US is a party (other than those listed on Schedule
1.1(b) and (ii) PureSight-Israel shall sell, transfer, convey, assign and
deliver to the Buyer all of the other Acquired Assets.

 

Notwithstanding the provisions of Section 1.1(a), the Acquired Assets shall not
include the Excluded Assets.

 

Assumption of Liabilities.

 

Upon and subject to the terms and conditions of this Agreement, the Buyers shall
assume and become responsible for, from and after the Closing, the Assumed
Liabilities.

 

Notwithstanding the terms of Section 1.2(a) or any other provision of this
Agreement to the contrary, the Buyers shall not assume or become responsible
for, and the Sellers shall remain liable for, the Retained Liabilities.

 

Purchase Price. The Purchase Price to be paid by the Buyers for the Acquired
Assets at the Closing shall be a total of US $5,800,000 in cash. In addition, at
the Closing, BCGI-Israel shall pay to PureSight-Israel the VAT. Each of the
Buyers shall pay a portion of the Purchase Price to the respective Seller in
accordance with the schedule attached hereto as Schedule 1.3. Notwithstanding
the foregoing, the amount of the Purchase Price to be delivered to the Sellers
at the Closing shall be reduced by the amount, if any, that the Buyers have
advanced to Sellers prior to the Closing.

 

Escrow. At the Closing, US $550,000 (the “Escrow Amount”) of the Purchase Price
payable by the Buyers at Closing shall be paid by the Buyers to the Escrow Agent
for the purpose of securing the indemnification obligations of the Sellers set
forth in this Agreement. The Escrow Fund shall be held by the Escrow Agent under
the Escrow Agreement pursuant to the terms thereof. The Escrow Fund shall be
held as a trust fund and shall not be subject to any lien, attachment, trustee
process or any other judicial process of any creditor of any party, and shall be
held and disbursed solely for the purposes and in accordance with the terms of
the Escrow Agreement.

 

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The Closing.

 

The Closing shall take place at the offices of Wilmer Cutler Pickering Hale and
Dorr LLP in Waltham, Massachusetts commencing at 9:00 a.m. local time on the
Closing Date. All transactions at the Closing shall be deemed to take place
simultaneously, and no transaction shall be deemed to have been completed and no
documents or certificates shall be deemed to have been delivered until all other
transactions are completed and all other documents and certificates are
delivered.

 

At the Closing:

 

the Sellers shall deliver to the Buyers the various certificates, instruments
and documents referred to in Section 5.1;

 

the Buyers shall deliver to the Sellers the various certificates, instruments
and documents referred to in Section 5.2;

 

Each Seller shall execute and deliver to the Buyers one or more trademark
assignments in substantially the form attached hereto as Exhibit C-1 or Exhibit
C-2, as applicable, and such other instruments of conveyance (such as real
estate deeds, assigned certificates or documents of title, assigned negotiable
instruments and stock transfer powers) as the Buyers may reasonably request in
order to effect the sale, transfer, conveyance and assignment to the Buyers of
valid ownership of the Acquired Assets;

 

each Buyer shall execute and deliver to the Sellers an instrument of assumption
in substantially the form attached hereto as Exhibit D-1 or Exhibit D-2, as
applicable, and such other instruments as the Sellers may reasonably request in
order to effect the assumption by the Buyers of the Assumed Liabilities;

 

the Buyers shall pay to the Sellers, payable by wire transfer or other delivery
of immediately available funds to an account designated by the Sellers, the
Purchase Price set forth in Section 1.3, less the amount to be deposited in
escrow pursuant to Section 1.4, in accordance with the allocation set forth on
Schedule 1.3 attached hereto;

 

the Buyers, the Sellers and the Escrow Agent shall execute and deliver the
Escrow Agreement and the Buyers shall deposit the Escrow Amount, by wire or
other delivery of immediately available funds, with the Escrow Agent in
accordance with Section 1.4;

 

the Sellers shall deliver to the Buyers, or otherwise put the Buyers in
possession and control of, all of the Acquired Assets of a tangible nature; and

 

the Buyers and the Sellers shall execute and deliver to each other a
cross-receipt evidencing the transactions referred to above.

 

Allocation. The Buyers and the Sellers agree to allocate the Purchase Price (and
all other capitalizable costs) among the Acquired Assets and the
non-solicitation and non-competition covenants set forth in Sections 6.2 and 6.3
for all purposes (including financial accounting and tax purposes) in accordance
with the allocation schedule attached hereto as Schedule 1.6.

 

Further Assurances. At any time and from time to time after the Closing, at the
request of the Buyers and without further consideration, the Sellers shall
execute and deliver such other instruments of sale, transfer, conveyance and
assignment and take such actions as the Buyers may reasonably request to more
effectively transfer, convey and assign to the Buyers, and to confirm the
Buyers’ rights to, title in and ownership of, the Acquired Assets and to place
the Buyers in actual possession and operating control thereof.

 

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

 

Each Seller, jointly and severally, represents and warrants to the Buyers that,
except as set forth in the Disclosure Schedule, the statements contained in this
Article II are true and correct as of the date of this Agreement and will be
true and correct as of the Closing as though made as of the Closing, except to
the extent such representations and warranties are specifically made as of a
particular date (in which case such representations and warranties will be

 

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true and correct as of such date). The Disclosure Schedule shall be arranged in
sections and subsections corresponding to the numbered and lettered sections and
subsections contained in this Article II. The disclosures in any section or
subsection of the Disclosure Schedule shall qualify other sections and
subsections in this Article II only to the extent it is clear from a reading of
the disclosure that such disclosure is applicable to such other sections and
subsections. For purposes of this Article II, the phrases “to the knowledge of
the Sellers” or “the Sellers are not aware of” or any phrase of similar import
shall be deemed to refer to the actual knowledge of Netta Mendelson, Royi Cohen,
Ouri Azoulay and Cleve Adams, as well as any other knowledge which such persons
would have possessed had they made reasonable inquiry of appropriate employees
and agents of the Sellers with respect to the matter in question.

 

Organization, Qualification and Corporate Power. PureSight-US is a corporation
duly organized, validly existing and in corporate and tax good standing under
the laws of the State of Delaware, and PureSight-Israel is a company duly
organized, validly existing and in corporate and tax good standing under the
laws of Israel. Each Seller is duly qualified to conduct business and is in
corporate and tax good standing under the laws of each jurisdiction listed next
to such Seller’s name in Section 2.1 of the Disclosure Schedule, which
jurisdictions constitute the only jurisdictions in which the nature of such
Seller’s businesses or the ownership or leasing of its properties requires such
qualification. Each Seller has all requisite corporate power and authority to
carry on the businesses in which it is engaged and to own and use the properties
owned and used by it. PureSight-US has furnished to the Buyers complete and
accurate copies of its Certificate of Incorporation and by-laws and
PureSight-Israel has furnished to the Buyers complete and accurate copies of its
most recently updated Articles of Association. Neither Seller is in default
under or in violation of any provision of its Certificate of Incorporation,
by-laws or its most recently updated Articles of Association, as the case may
be.

 

Capitalization.

 

The authorized capital stock of PureSight-US consists of (A) 18,250,000 shares
of common stock, $.001 par value per share, of which, as of the date of this
Agreement, 40 shares were issued and outstanding and no shares were held in the
treasury of the Seller, and (B) 13,750,000 shares of Preferred Stock, $.001 par
value per share, of which (i) 1,561,224 shares have been designated as Series A
Convertible Preferred Stock, all of which, as of the date of this Agreement,
were issued and outstanding, (ii) 1,758,991 shares have been designated as
Series A1 Convertible Preferred Stock, all of which, as of the date of this
Agreement, were issued and outstanding, (iii) 28,560 shares have been designated
as Series A2 Convertible Preferred Stock, all of which, as of the date of this
Agreement, were issued and outstanding, (iv) 93,840 shares have been designated
as Series A3 Convertible Preferred Stock, all of which, as of the date of this
Agreement, were issued and outstanding and (v) one share has been designated as
Series A4 Convertible Preferred Stock, of which, as of the date of this
Agreement, one share was issued and outstanding. Section 2.2 of the Disclosure
Schedule sets forth a complete and accurate list, as of the date of this
Agreement, of (i) all stockholders of PureSight-US, indicating the number and
class or series of shares of capital stock of such Seller held by each
stockholder and (for shares other than common stock) the number of shares of
common stock (if any) into which such shares are convertible, (ii) all
outstanding options, warrants or other instruments giving any party the right to
acquire any of capital stock of such Seller, indicating (A) the holder thereof
and (B) the number and class or series of capital stock of such Seller subject
thereto and (for shares other than common stock) the number of shares of common
stock (if any) into which such shares are convertible. There are no outstanding
agreements or commitments to which PureSight-US is a party or which are binding
upon such Seller providing for the redemption of any of its capital stock.

 

The authorized capital stock of PureSight-Israel consists of 3,600,000 ordinary
shares, NIS 0.01 par value per share, of which, as of the date of this
Agreement, 153,639 shares were issued and outstanding. All of the issued and
outstanding shares of capital stock of PureSight-Israel are held of record and
beneficially owned by PureSight-US. PureSight-Israel has never granted any
options or similar rights to purchase shares of its capital stock to any person.

 

Authorization of Transaction. Each Seller has all requisite power and authority
to execute and deliver this Agreement and the Ancillary Agreements and, subject
to the Requisite Stockholder Approval in the case of PureSight-US to perform its
obligations hereunder and thereunder. The execution and delivery by each Seller
of this Agreement and the performance by each Seller of this Agreement and the
Ancillary Agreements and the consummation by each Seller of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate and, subject to the Requisite Stockholder Approval in the
case of PureSight-US, stockholder action on the part of each Seller. Without
limiting the generality of the foregoing, the Board of

 

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Directors of PureSight-US, at a meeting duly called and held, by the unanimous
vote of all directors determined that the sale of assets contemplated by this
Agreement is fair to and in the best interests of the Seller and its
stockholders, approved this Agreement in accordance with the Delaware General
Corporation Law, directed that such asset sale be submitted to the stockholders
of such Seller for their approval, and resolved to recommend that the
stockholders of such Seller vote in favor of the approval of such asset sale.
This Agreement has been duly and validly executed and delivered by each Seller
and constitutes, and each of the Ancillary Agreements, upon its execution and
delivery by each Seller, will constitute, a valid and binding obligation of each
Seller, enforceable against each Seller in accordance with its respective terms.

 

Noncontravention. Neither the execution and delivery by either Seller of this
Agreement or the Ancillary Agreements, nor the consummation by either Seller of
the transactions contemplated hereby or thereby, will (a) conflict with or
violate any provision of the Certificate of Incorporation or by-laws of
PureSight-US or the Articles of Association of PureSight-Israel, (b) except as
set forth in Section 2.4(b) of the Disclosure Schedule, require on the part of
either Seller any notice to or filing with, or any permit, authorization,
consent or approval of, any Governmental Entity, (c) except as set forth in
Section 2.4(c) of the Disclosure Schedule, conflict with, result in a breach of,
constitute (with or without due notice or lapse of time or both) a default
under, result in the acceleration of obligations under, create in any party the
right to terminate, modify or cancel, or require any notice, consent or waiver
under, any contract or instrument to which either Seller is a party or by which
either Seller is bound or to which any of their respective assets is subject,
(d) result in the imposition of any Security Interest upon any assets of either
Seller or (e) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to either Seller or any of their respective properties or
assets.

 

Subsidiaries. Other than PureSight-Israel, which is a wholly-owned subsidiary of
PureSight-US, neither Seller owns, controls directly or indirectly or has any
direct or indirect equity participation or similar interest in any corporation,
partnership, limited liability company, joint venture or other business
association or entity.

 

Financial Statements. The Sellers have provided to the Buyer the Financial
Statements. The Financial Statements have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby, fairly
present the consolidated financial condition, results of operations and cash
flows of the Sellers as of the respective dates thereof and for the periods
referred to therein and are consistent with the books and records of the
Sellers; provided, however, that the Financial Statements referred to in clause
(b) of the definition of such term are subject to normal recurring year-end
adjustments (which will not be material) and do not include footnotes.

 

Absence of Certain Changes. Since the Most Recent Balance Sheet Date, (a) there
has occurred no event or development which, individually or in the aggregate,
has had, or could reasonably be expected to have in the future, a Seller
Material Adverse Effect, and (b) neither Seller has taken any of the actions set
forth in paragraphs (a) through (n) of Section 4.4.

 

Undisclosed Liabilities. Neither Seller has any liability (whether known or
unknown, whether absolute or contingent, whether liquidated or unliquidated and
whether due or to become due), except for (a) liabilities shown on the Most
Recent Balance Sheet, (b) liabilities which have arisen since the Most Recent
Balance Sheet Date in the Ordinary Course of Business and which are reflected on
the Final Closing Balance Sheet and (c) contractual and other liabilities
incurred in the Ordinary Course of Business which are not required by GAAP to be
reflected on a balance sheet.

 

Tax Matters.

 

Each Seller has filed on a timely basis all Tax Returns that it was required to
file, and all such Tax Returns were complete and accurate in all material
respects. Neither Seller is or has ever been a member of a group of corporations
with which it has filed (or been required to file) consolidated, combined or
unitary Tax Returns, other than a group of which only the Sellers are or were
members. Each Seller has paid on a timely basis all Taxes that were due and
payable. The unpaid Taxes of the Sellers for tax periods through the Most Recent
Balance Sheet Date do not exceed the accruals and reserves for Taxes (excluding
accruals and reserves for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the Most Recent Balance
Sheet. Neither Seller has any actual or potential liability for any Tax
obligation of any taxpayer (including any affiliated group of corporations or
other entities that included the Sellers during a prior period) other than the
Sellers. All Taxes that either Seller is or was required by law to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid to the proper Governmental Entity.

 

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The Sellers have delivered to the Buyer complete and accurate copies of all
federal income Tax Returns, examination reports and statements of deficiencies
assessed against or agreed to by PureSight-US since inception and
PureSight-Israel since 2002. The federal income Tax Returns of PureSight-US have
been audited by the Internal Revenue Service or are closed by the applicable
statute of limitations for all taxable years through the taxable year specified
in Section 2.9(b) of the Disclosure Schedule. The Sellers have delivered or made
available to the Buyer complete and accurate copies of all other Tax Returns of
either Seller together with all related examination reports and statements of
deficiency for all periods from and after December 31, 2001. No examination or
audit of any Tax Return of either Seller by any Governmental Entity is currently
in progress, nor are the Sellers aware of any such examination or audit being
threatened or contemplated. Neither Seller has been informed by any jurisdiction
that the jurisdiction believes that either Seller was required to file any Tax
Return that was not filed. Neither Seller has waived any statute of limitations
with respect to Taxes or agreed to an extension of time with respect to a Tax
assessment or deficiency.

 

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Ownership and Condition of Assets.

 

The Sellers are the true and lawful owners, and have good title to, all of the
Acquired Assets, free and clear of all Security Interests, except as set forth
in Section 2.10(a)(i) of the Disclosure Schedule. Upon execution and delivery by
the Sellers to the Buyers of the instruments of conveyance referred to in
Section 1.5(b)(iii), the Buyers will become the true and lawful owners of, and
will receive good title to, the Acquired Assets, free and clear of all Security
Interests other than those set forth in Section 2.10(a)(ii) of the Disclosure
Schedule.

 

The Acquired Assets are sufficient for the conduct of the Sellers’ businesses as
presently conducted and constitute all assets (other than the Excluded Assets)
used by the Sellers in such businesses. Each tangible Acquired Asset is free
from material defects, has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and
tear) and is reasonably suitable for the purposes for which it presently is
used. PureSight-US does not own, license or otherwise use any assets (tangible
or intangible), other than the trademarks listed on Schedule 1.1(b), the shares
of capital stock of PureSight-Israel, and is not party to any agreement other
than the PureSight Loan Agreement.

 

Section 2.10(c) of the Disclosure Schedule lists individually (i) all Acquired
Assets which are fixed assets (within the meaning of GAAP) indicating the cost,
accumulated book depreciation (if any) and the Tangible Net Book Value of each
such fixed asset as of the Most Recent Balance Sheet Date, and (ii) all other
Acquired Assets of a tangible nature (other than inventories) whose book value
exceeds $5,000.

 

Each item of equipment and other asset that is being transferred to the Buyers
as part of the Acquired Assets and that either Seller has possession of pursuant
to a lease agreement or other contractual arrangement is in such condition that,
if such equipment or other asset is returned to its lessor or owner in its
current condition under the applicable lease or contract, all obligations to
such lessor or owner will have been discharged in full.

 

Owned Real Property. Neither Seller owns any real property.

 

Real Property Leases. Section 2.12 of the Disclosure Schedule lists all Leases
and lists the term of each such Lease, any extension and expansion options, and
the rent payable thereunder. The Sellers have delivered to the Buyers complete
and accurate copies of the Leases. With respect to each Lease:

 

such Lease is valid, binding, enforceable and in full force and effect;

 

such Lease is assignable by the applicable Seller to the Buyers without the
consent or approval of any party (except as set forth in Section 2.4 of the
Disclosure Schedule) and such Lease will continue to be, valid, binding,
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect immediately prior to the Closing;

 

neither Seller nor, to the knowledge of the Sellers, any other party, is in
breach or violation of, or default under, any such Lease, and no event has
occurred, is pending or, to the knowledge of the Sellers, is threatened, which,
after the giving of notice, with lapse of time, or otherwise, would constitute a
breach or default by either Seller or, to the knowledge of the Sellers, any
other party under such Lease;

 

there are no disputes, oral agreements or forbearance programs in effect as to
such Lease;

 

neither Seller has assigned, transferred, conveyed, mortgaged, deeded in trust
or encumbered any interest in the leasehold or subleasehold; and

 

neither Seller is aware of any Security Interest, easement, covenant or other
restriction applicable to the real property subject to such lease which would
reasonably be expected to materially impair the current uses or the occupancy by
either Seller of the property subject thereto.

 

 

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Intellectual Property.

 

Section 2.13(a) of the Disclosure Schedule lists (i) each patent, patent
application, copyright registration or application therefor, mask work
registration or application therefor, and trademark, service mark and domain
name registration or application therefor of the Sellers and (ii) each Customer
Deliverable of the Sellers.

 

Each of the Sellers owns or has the right to use all Intellectual Property
necessary (i) to use, manufacture, have manufactured, market and distribute the
Customer Deliverables and (ii) to operate the Internal Systems. Upon execution
and delivery by the Sellers to the Buyers of the instruments of conveyance
referred to in Section 1.5(b)(iii), each item of Seller Intellectual Property
will be owned or available for use by the Buyers immediately following the
Closing on substantially identical terms and conditions as it was immediately
prior to the Closing. Each Seller has taken all reasonable measures to protect
the proprietary nature of each item of Seller Intellectual Property, and to
maintain in confidence all trade secrets and confidential information, that it
owns or uses. No other person or entity has any rights to any of the Seller
Intellectual Property owned by either Seller (except pursuant to agreements or
licenses specified in Section 2.13(d) of the Disclosure Schedule), and, to the
knowledge of the Sellers, no other person or entity is infringing, violating or
misappropriating any of the Seller Intellectual Property. No person or entity
listed in Section 2.13(b) or Section 2.20 of the Disclosure Schedule as having
not signed an assignment of inventions agreement has been involved in, or
otherwise responsible for, the development or conception of any portion of any
material Seller Intellectual Property.

 

None of the Customer Deliverables, or the marketing, distribution, provision or
use thereof, infringes or violates, or constitutes a misappropriation of, any
Intellectual Property rights of any person or entity. None of the Internal
Systems, or the use thereof, infringes or violates, or constitutes a
misappropriation of, any Intellectual Property rights of any person or entity.
Section 2.13(c) of the Disclosure Schedule lists any complaint, claim or notice,
or written threat thereof, received by either Seller alleging any such
infringement, violation or misappropriation; and the Sellers have provided to
the Buyer complete and accurate copies of all written documentation in the
possession of either Seller relating to any such complaint, claim, notice or
threat. The Sellers have provided to the Buyer complete and accurate copies of
all written documentation in either Seller’s possession relating to claims or
disputes known to the Sellers concerning any Seller Intellectual Property.

 

Section 2.13(d) of the Disclosure Schedule identifies each license or other
agreement pursuant to which either Seller has licensed, distributed or otherwise
granted any rights to any third party with respect to, any Seller Intellectual
Property. Except as described in Section 2.13(d) of the Disclosure Schedule,
neither Seller has agreed to indemnify any person or entity against any
infringement, violation or misappropriation of any Intellectual Property rights
with respect to any Customer Deliverables.

 

Section 2.13(e) of the Disclosure Schedule identifies each item of Seller
Intellectual Property that is owned by a party other than the Sellers, and the
license or agreement pursuant to which the Seller or a Subsidiary uses such
Seller Intellectual Property (excluding off-the-shelf software programs licensed
by the Seller pursuant to “shrink wrap” licenses).

 

Section 2.13(f) of the Disclosure Schedule lists all Open Source Materials that
either Seller has used in the research, development, design, distribution,
manufacture, testing or use of any Customer Deliverables or Internal Systems in
any way. Except as set forth in Section 2.13(f) of the Disclosure Schedule,
neither Seller has (i) incorporated any Open Source Materials into, or combined
Open Source Materials with, any Customer Deliverables, (ii) distributed Open
Source Materials in connection with any Customer Deliverables, or (iii) used
Open Source Materials in any manner that (with respect to either clause (i),
(ii) or (iii) above) would (A) create, or purport to create, obligations for
either Seller, (B) require, or purport to require, the licensing of any Software
or any software licensed to either Seller for the purpose of making derivative
works, (C) grant, or purport to grant, to any third party any rights or
immunities under Intellectual Property rights owned by or licensed to either
Seller, (D) impose, or purport to impose, any restriction on the consideration
to be charged either Seller for the distribution of any Software or any software
licensed to either Seller, or (E) impose, or purport to impose, any other
material limitation, restriction, or condition on the right of either Seller to
use or distribute any Software or any software licensed to either Seller.
Without limiting the generality of the foregoing, neither Seller has used any
Open Source Materials that require, as a condition of use, modification and/or
distribution of such Open Source Materials, that other software incorporated
into, derived from or distributed with such Open Source Materials be (1)
disclosed or distributed in source code form, (2) licensed for the purpose of
making derivative works, or (3) redistributable at no charge.

 

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Neither Seller has disclosed the source code for the Software or other
confidential information constituting, embodied in or pertaining to the Software
to any person or entity, except pursuant to the agreements listed in Section
2.13(f) of the Disclosure Schedule, and each Seller has taken reasonable
measures to prevent disclosure of such source code.

 

All of the copyrightable materials (including Software) incorporated in or
bundled with the Customer Deliverables have been created by employees of a
Seller within the scope of their employment by such Seller or by independent
contractors of a Seller who have executed agreements expressly assigning all
right, title and interest in such copyrightable materials and the copyrights
therein to such Seller. No portion of such copyrightable materials was jointly
developed with any third party.

 

The Customer Deliverables and the Internal Systems are free from significant
defects or programming errors and conform in all material respects to the
written documentation and specifications therefor.

 

Contracts.

 

Section 2.14 of the Disclosure Schedule lists the following agreements (written
or oral) to which either Seller is a party as of the date of this Agreement:

 

any agreement (or group of related agreements) for the lease of personal
property from or to third parties;

 

any agreement (or group of related agreements) for the purchase or sale of
products or for the furnishing or receipt of services (A) which calls for
performance over a period of more than one year, (B) which involves more than
the sum of US$10,000, or (C) in which a Seller has granted manufacturing rights,
“most favored nation” pricing provisions or marketing or distribution rights
relating to any products or territory or has agreed to purchase a minimum
quantity of goods or services or has agreed to purchase goods or services
exclusively from a certain party;

 

any agreement concerning the establishment or operation of a partnership, joint
venture or limited liability company;

 

any agreement (or group of related agreements) under which it has created,
incurred, assumed or guaranteed indebtedness (including capitalized lease
obligations) or under which it has imposed a Security Interest on any of its
assets, tangible or intangible;

 

any agreement for the disposition of any significant portion of the assets or
business of either Seller (other than sales of products in the Ordinary Course
of Business) or any agreement for the acquisition of the assets or business of
any other entity (other than purchases of inventory, components or supplies in
the Ordinary Course of Business);

 

any agreement imposing a confidentiality or noncompetition obligation on either
Seller;

 

any employment or consulting agreement;

 

any agreement between either Seller and any current or former officer, director
or stockholder of either Seller or an Affiliate thereof;

 

any agreement under which the consequences of a default or termination would
reasonably be expected to have a Seller Material Adverse Effect;

 

any agreement under which a third party would be entitled to receive a license
or any other right to Intellectual Property of either Buyers or any of either
Buyer’s Affiliates following the Closing;

 

any agreement which contains any provisions requiring either Seller to indemnify
any other party (excluding indemnities contained in agreements for the purchase,
sale or license of products entered into in the Ordinary Course of Business);
and

 

any other agreement (or group of related agreements) either involving more than
$10,000 or not entered into in the Ordinary Course of Business.

 

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The Sellers have delivered to the Buyers a complete and accurate copy of each
agreement listed in Section 2.13 or Section 2.14 of the Disclosure Schedule.
With respect to each agreement so listed: (i) the agreement is valid, binding
and enforceable, in accordance with its respective terms, and in full force and
effect; (ii) for those agreements to which either Seller is a party, the
agreement is assignable by such Seller to the Buyers without the consent or
approval of any party (except as set forth in Section 2.4 of the Disclosure
Schedule) and will continue to be valid, binding and enforceable and in full
force and effect immediately following the Closing in accordance with the terms
thereof as in effect immediately prior to the Closing; and (iii) neither Seller
nor, to the knowledge of the Sellers, any other party, is in breach or violation
of, or default under, any such agreement, and no event has occurred, is pending
or, to the knowledge of the Sellers, is threatened, which, after the giving of
notice, with lapse of time, or otherwise, would constitute a breach or default
by either Seller or, to the knowledge of the Sellers, any other party under such
agreement.

 

Accounts Receivable. All accounts receivable of the Sellers reflected on the
Most Recent Balance Sheet (other than those paid since such date) are valid
receivables subject to no setoffs or counterclaims and are current and
collectible (within 90 days after the date on which it first became due and
payable), net of the applicable reserve for bad debts on the Most Recent Balance
Sheet. A complete and accurate list of the accounts receivable reflected on the
Most Recent Balance Sheet, showing the aging thereof, is included in Section
2.15 of the Disclosure Schedule. All accounts receivable of the Sellers that
have arisen since the Most Recent Balance Sheet Date are valid receivables
subject to no setoffs or counterclaims and are collectible (within 90 days after
the date on which it first became due and payable), net of a reserve for bad
debts in an amount proportionate to the reserve shown on the Most Recent Balance
Sheet. Neither Seller has received any written notice from an account debtor
stating that any account receivable in an amount in excess of $10,000 is subject
to any contest, claim or setoff by such account debtor.

 

[Intentionally Omitted.]

 

Insurance. Section 2.17 of the Disclosure Schedule lists each insurance policy
(including fire, theft, casualty, comprehensive general liability, workers
compensation, business interruption, environmental, product liability and
automobile insurance policies and bond and surety arrangements) to which either
Seller is a party, all of which are in full force and effect. There is no
material claim pending under any such policy as to which coverage has been
questioned, denied or disputed by the underwriter of such policy. All premiums
due and payable under all such policies have been paid, and each Seller is
otherwise in compliance in all material respects with the terms of such
policies. The Sellers have no knowledge of any threatened termination of, or
premium increase with respect to, any such policy.

 

Litigation. There is no Legal Proceeding which is pending or has been threatened
in writing against either Seller which (a) seeks either damages or equitable
relief or (b) in any manner challenges or seeks to prevent, enjoin, alter or
delay the transactions contemplated by this Agreement. There are no judgments,
orders or decrees issued by a court of competent jurisdiction outstanding
against either Seller.

 

Warranties. No product or service sold, licensed or delivered by either Seller
is subject to any guaranty, warranty, right of return, right of credit or other
indemnity other than (i) pursuant to the agreements listed in Section 2.19 of
the Disclosure Schedule, and (ii) manufacturers’ warranties for which such
Seller has any liability. Section 2.19 of the Disclosure Schedule sets forth the
aggregate expenses incurred by the Sellers in fulfilling their obligations under
their guaranty, warranty, right of return and indemnity provisions during each
of the fiscal years covered by the Financial Statements; and the Sellers do not
know of any reason why such expenses should reasonably be expected to
significantly increase as a percentage of sales in the future.

 

Employees.

 

Section 2.20 of the Disclosure Schedule contains a list of all employees of
PureSight-Israel, along with the position and the annual rate of compensation of
each such person. Each current or past employee of each Seller has entered into
a confidentiality/assignment of inventions agreement with such Seller, a copy or
form of which has previously been delivered to the Buyers. Section 2.20 of the
Disclosure Schedule contains a list of all employees of each Seller who are a
party to a non-competition agreement with either Seller; copies of such
agreements have previously been delivered to the Buyers. PureSight-US does not
employ any individuals other than Cleve Adams. Section 2.20 of the Disclosure
Schedule contains a list of all employees of PureSight-Israel that are not
citizens of Israel. To the knowledge of the Sellers, no key employee or group of
employees has any plans to terminate employment with the Sellers (other than for
the purpose of accepting employment with BCGI-Israel following the Closing) or
not to accept employment with BCGI-Israel.

 

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Neither Seller is a party to or bound by any collective bargaining agreement
(apart from any collective bargaining agreements in Israel regarding
PureSite-Israel’s employees which may have been extended through extension
orders), nor has either of them experienced any strikes, grievances or other
collective bargaining disputes. Neither Seller has any knowledge of any
organizational effort made or threatened, either currently or within the past
two years, by or on behalf of any labor union with respect to employees of
either Seller.

 

Employee Benefits.

 

Section 2.21(a) of the Disclosure Schedule contains a complete and accurate list
of all Seller Plans. Complete and accurate copies of all Seller Plans that have
been reduced to writing and all related trust agreements have been delivered to
the Buyers.

 

Each Seller Plan has been administered in all material respects in accordance
with its terms.

 

Each Seller has paid all of its current employees all wages and ancillary and
other expenses payable with respect to their employment with such Seller and has
made all of the required contributions under law and/or agreement with respect
to the employees’ employment, including, as applicable, for accrued leave,
convalescence, pension, retirement, severance, commissions and bonuses pursuant
to employment agreements, custom, law or as otherwise required.

 

There are no Legal Proceedings (except claims for benefits payable in the normal
operation of the Seller Plans and proceedings with respect to qualified domestic
relations orders) against or involving any Seller Plan or asserting any rights
or claims to benefits under any Seller Plan that could give rise to any material
liability.

 

There are no unfunded obligations under any Seller Plan providing benefits after
termination of employment to any employee of the Sellers (or to any beneficiary
of any such employee), including but not limited to retiree health coverage and
deferred compensation.

 

No act or omission has occurred and no condition exists with respect to any
Seller Plan that would subject the Sellers to any contractual indemnification or
contribution obligation protecting any fiduciary, insurer or service provider
with respect to any Seller Plan.

 

Environmental Matters.

 

Each Seller has complied with all applicable Environmental Laws. There is no
pending or, to the knowledge of the Sellers, threatened civil or criminal
litigation, written notice of violation, formal administrative proceeding, or
investigation, inquiry or information request by any Governmental Entity,
relating to any Environmental Law involving either Seller.

 

Neither Seller has any liabilities or obligations arising from the release of
any Materials of Environmental Concern into the environment.

 

Neither Seller is a party to or bound by any court order, administrative order,
consent order or other agreement with any Governmental Entity entered into in
connection with any legal obligation or liability arising under any
Environmental Law.

 

Set forth in Section 2.22(d) of the Disclosure Schedule is a list of all
documents (whether in hard copy or electronic form) that contain any
environmental reports, investigations and audits relating to premises currently
or previously owned or operated by either Seller (whether conducted by or on
behalf of such Seller or a third party, and whether done at the initiative of
such Seller or directed by a Governmental Entity or other third party) which
either Seller has possession of or access to. A complete and accurate copy of
each such document has been provided to the Buyers.

 

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The Sellers are not aware of any material environmental liability of any solid
or hazardous waste transporter or treatment, storage or disposal facility that
has been used by either Seller.

 

Legal Compliance. Each Seller is currently conducting, and has at all times
since inception conducted, its respective businesses in compliance with each
applicable law (including rules and regulations thereunder) of any federal,
state, local or foreign government, or any Governmental Entity, except for any
violations or defaults that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Seller Material Adverse Effect.
Neither Seller has received any notice or communication from any Governmental
Entity alleging noncompliance with any applicable law, rule or regulation.

 

Customers and Suppliers. Section 2.24 of the Disclosure Schedule sets forth a
list of (a) each customer that accounted for more than 1% of the consolidated
revenues of the Sellers during the last full fiscal year and the amount of
revenues accounted for by such customer during each such period and (b) each
supplier that is the sole supplier of any significant product or service to the
Sellers. No such customer or supplier has indicated within the past year that it
will stop, or decrease the rate of, buying products or supplying products, as
applicable, to the Sellers. All unfilled customer orders and commitments
obligating either Seller to process, manufacture or deliver products or perform
services were made, and are being filled, in the Ordinary Course of Business.

 

Permits. Section 2.25 of the Disclosure Schedule sets forth a list of all
Permits issued to or held by each Seller. Such listed Permits are the only
Permits that are required for the Sellers to conduct their respective businesses
as presently conducted. Each such Permit is in full force and effect; the
appropriate Seller is in material compliance with the terms of each such Permit,
and, neither Sellers has received any written notice as to any threatened
suspension or cancellation of such Permit.

 

Certain Business Relationships With Affiliates. No Affiliate of either Seller
(other than the Sellers) (a) owns any property or right, tangible or intangible,
which is used in the business of the Sellers, (b) has any claim or cause of
action against either Seller, or (c) owes any money to, or is owed any money by,
either Seller. Section 2.26 of the Disclosure Schedule describes any commercial
transactions between either Seller and any Affiliate of either Seller which
occurred or have existed since the beginning of the time period covered by the
Financial Statements.

 

Brokers’ Fees. Neither Seller has any liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement.

 

Books and Records. The minute books and other similar records of the Sellers
contain complete and accurate records of all actions taken at any meetings of
such Seller’s shareholders, Board of Directors or any committee thereof and of
all written consents executed in lieu of the holding of any such meeting. The
books and records of each Seller accurately reflect the assets, liabilities,
business, financial condition and results of operations of the Sellers and have
been maintained in accordance with good business and bookkeeping practices.

 

Disclosure. No representation or warranty by the Sellers contained in this
Agreement, and no statement contained in the Disclosure Schedule or the Seller
Certificate, contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading. Notwithstanding the foregoing, the
Sellers shall not be deemed to make to the Buyers any representation or warranty
(express or implied) other than as expressly made by the Sellers in this
Agreement.

 

REPRESENTATIONS AND WARRANTIES OF THE BUYERS

 

Each Buyer, jointly and severally, represents and warrants to the Sellers that
the statements contained in this Article III are true and correct as of the date
of this Agreement and will be true and correct as to the Closing as though made
as of the Closing.

 

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Organization and Corporate Power. Cellular Express is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and BCGI-Israel is a company duly organized,
validly existing and in corporate and tax good standing under the laws of
Israel. Each Buyer has all requisite corporate power and authority to carry on
the businesses in which it is engaged and to own and use the properties owned
and used by it.

 

Authorization of the Transaction. Each Buyer has all requisite power and
authority to execute and deliver this Agreement and the Ancillary Agreements and
to perform its obligations hereunder and thereunder. The execution and delivery
by each Buyer of this Agreement and the Ancillary Agreements, the performance by
the Buyers of this Agreement and the Ancillary Agreements, and the consummation
by each Buyer of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action on the part of such
Buyer. This Agreement has been duly and validly executed and delivered by each
Buyer and constitutes, and each of the Ancillary Agreements, upon its execution
and delivery by such Buyer, will constitute, a valid and binding obligation of
such Buyer, enforceable against it in accordance with its respective terms.

 

Noncontravention. Neither the execution and delivery by either Buyer of this
Agreement or the Ancillary Agreements, nor the consummation by either Buyer of
the transactions contemplated hereby or thereby, will (a) conflict with or
violate any provision of the Articles of Organization or by-laws of Cellular
Express or the Articles of Association of BCGI-Israel, (b) require on the part
of either Buyer any filing with, or permit, authorization, consent or approval
of, any Governmental Entity, (c) conflict with, result in a breach of,
constitute (with or without due notice or lapse of time or both) a default
under, result in the acceleration of obligations under, create in any party any
right to terminate, modify or cancel, or require any notice, consent or waiver
under, any contract or instrument to which either Buyer is a party or by which
it is bound or to which any of its assets is subject, (d) result in the
imposition of any Security Interest upon any assets of either Buyer or (e)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to either Buyer or any of its properties or assets.

 

Disclosure. No representation or warranty by the Buyers contained in this
Agreement, and no statement contained in the Buyer Certificates, contains or
will contain any untrue statement of a material fact or omits or will omit to
state any material fact necessary, in light of the circumstances under which it
was or will be made, in order to make the statements herein or therein not
misleading. Notwithstanding anything to the contrary, the Buyers shall not be
deemed to make to the Sellers any representation or warranty (express or
implied) other than as expressly made by the Buyers in this Agreement.

 

Independent Investigation. The Buyers, in entering into the transactions
contemplated in this Agreement, have relied upon an independent investigation
made by themselves and their representatives, if any, and information furnished
to them by the Sellers. In making their decision to enter and execute this
Agreement, the Buyers are not relying on any oral representations or assurances
from Seller or any other person. The Buyers have such experience in business and
financial matters that they are capable of evaluating the risks involved in the
contemplated transaction.

 

PRE-CLOSING COVENANTS

 

Closing Efforts. Each of the Parties shall use its commercially reasonable
efforts to take all actions and to do all things necessary, proper or advisable
to consummate the transactions contemplated by this Agreement, including using
its commercially reasonable efforts to ensure that (i) its representations and
warranties remain true and correct in all material respects through the Closing
Date and (ii) the conditions to the obligations of the other Party to consummate
the transactions contemplated by this Agreement are satisfied.

 

Governmental and Third-Party Notices and Consents.

 

Each Party shall use its commercially reasonable efforts to obtain, at its
expense, all waivers, permits, consents, approvals or other authorizations from
Governmental Entities, and to effect all registrations, filings and notices with
or to Governmental Entities, as may be required for such Party to consummate the
transactions contemplated by this Agreement and to otherwise comply with all
applicable laws and regulations in connection with the consummation of the
transactions contemplated by this Agreement.

 

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Each Seller shall use its respective commercially reasonable efforts to obtain,
at its expense, all such waivers, consents or approvals from third parties,
including, with respect to PureSight-Israel if so requested by BCGI-Israel prior
to the Closing, the written consent of the Israeli Investment Center regarding
the assignment of PureSight-Israel’s rights and obligations under the Approved
Enterprise Scheme to BCGI-Israel, including any Grants associated therewith, and
to give all such notices to third parties, as are required to be listed in the
Disclosure Schedule.

 

If (i) any of the Assigned Contracts or other assets or rights constituting
Acquired Assets may not be assigned and transferred by the Sellers to the Buyers
(as a result of either the provisions thereof or applicable law) without the
consent or approval of a third party, (ii) the Sellers, after using their
commercially reasonable efforts, are unable to obtain such consent or approval
prior to the Closing and (iii) the Closing occurs nevertheless, then (A) such
Assigned Contracts and/or other assets or rights shall not be assigned and
transferred by the applicable Seller to the Buyers at the Closing and the Buyers
shall not assume such Seller’s liabilities or obligations with respect thereto
at the Closing, (B) the Sellers shall continue to use their commercially
reasonable efforts to obtain the necessary consent or approval as soon as
practicable after the Closing, and (C) upon the obtaining of such consent or
approval, the Buyers and the Sellers shall execute such further instruments of
conveyance (in substantially the form executed at the Closing) as may be
necessary to assign and transfer such Assigned Contracts and/or other assets or
rights (and the associated liabilities and obligations of the Sellers) to the
Buyers.

 

Stockholder Approval.

 

PureSight-US shall use its commercially reasonable efforts to obtain, as
promptly as practicable, the Requisite Stockholder Approval, either at a special
meeting of stockholders or pursuant to a written stockholder consent, all in
accordance with the applicable requirements of the Delaware General Corporation
Law. If the Requisite Stockholder Approval is obtained by means of a written
consent, PureSight-US shall send, pursuant to Section 228 of the Delaware
General Corporation Law, a written notice to all stockholders of PureSight-US
that did not execute such written consent informing them that the sale of the
Acquired Assets as contemplated by this Agreement was approved by the
stockholders of PureSight-US.

 

Blumberg Capital I, L.P., Blumberg Capital Affiliates I, L.P. and Hitachi Ltd.
each agree (i) to vote all shares of capital stock of PureSight-US that are
beneficially owned by him, her or it in favor of the adoption of this Agreement
and the approval of the transactions contemplated by this Agreement, (ii) not to
vote any such shares in favor of any other acquisition (whether by way of
merger, consolidation, share, exchange, stock purchase or asset purchase) of all
or a majority of the outstanding capital stock or assets of PureSight-US or
PureSight-Israel and (iii) otherwise to use his, her or its commercially
reasonable efforts to obtain the Requisite Stockholder Approval.

 

Operation of Business. Except as contemplated by this Agreement, during the
period from the date of this Agreement to the Closing, each Seller shall
(conduct its operations in the Ordinary Course of Business and in compliance
with all applicable laws and regulations and, to the extent consistent
therewith, use its commercially reasonable efforts to preserve intact its
current business organization, keep its physical assets in good working
condition, keep available the services of its current officers and employees and
preserve its relationships with customers, suppliers and others having business
dealings with it. Without limiting the generality of the foregoing, prior to the
Closing, neither Seller shall, without the written consent of the Buyers:

 

issue or sell any shares or other securities of such Seller or any options,
warrants or other rights to acquire any such shares or other securities (except
pursuant to the conversion or exercise of options, warrants or other convertible
securities outstanding on the date hereof);

 

declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock;

 

create, incur or assume any indebtedness for borrowed money (including
obligations in respect of capital leases); assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person or entity; or make any loans,
advances or capital contributions to, or investments in, any other person or
entity;

 

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enter into, adopt or amend any Employee Benefit Plan or any employment or
severance agreement or arrangement of the type described in Section 2.21(k) or
(except for normal increases in the Ordinary Course of Business for employees
who are not Affiliates) increase in any manner the compensation or fringe
benefits of, or materially modify the employment terms of, its directors,
officers or employees, generally or individually, or pay any bonus or other
benefit to its directors, officers or employees (except for existing payment
obligations listed in Section 2.20 of the Disclosure Schedule) or (except in the
Ordinary Course of Business) hire any new officers or any new employees;

 

acquire, sell, lease, license or dispose of any of the Acquired Assets, other
than purchases and sales of assets in the Ordinary Course of Business;

 

mortgage or pledge any of the Acquired Assets or subject any such property or
assets to any Security Interest;

 

amend its charter, by-laws, Articles of Association or other organizational
documents in a manner that could have an adverse effect on the transactions
contemplated by this Agreement;

 

change its accounting methods, principles or practices, except insofar as may be
required by a change in GAAP, or make any new elections, or changes to any
current elections, with respect to Taxes that affect the Acquired Assets;

 

enter into, amend, terminate, take or omit to take any action that would
constitute a violation of or default under, or waive any rights under, any
contract or agreement of a nature required to be listed in Section 2.12, Section
2.13 or Section 2.14 of the Disclosure Schedule;

 

make or commit to make any capital expenditure in excess of $10,000 in the
aggregate;

 

institute or settle any Legal Proceeding;

 

take any action or fail to take any action permitted by this Agreement with the
knowledge that such action or failure to take action would result in (i) any of
the representations and warranties of the Sellers set forth in this Agreement
becoming untrue or (ii) any of the conditions to the Closing set forth in
Article V not being satisfied; or

 

agree in writing or otherwise to take any of the foregoing actions.

 

Access to Information. Each Seller shall permit representatives of the Buyers to
have reasonable access (at all reasonable times during normal business hours,
and in a manner so as not to interfere with the normal business operations of
the Sellers) to all premises, properties, financial, tax and accounting records
(including the work papers of either Seller’s independent accountants),
contracts, other records and documents, and personnel, of or pertaining to the
Sellers for the purpose of performing such inspections and tests as the Buyers
deems necessary or appropriate. The Buyers shall hold any such information that
is Proprietary Information (as defined in the Confidentiality Agreement) in
accordance with the Confidentiality Agreement (to the same extent and as if they
were parties thereto).

 

Termination of PureSight-Israel Employees. Concurrently with the execution of
this Agreement, PureSight-Israel shall provide a notice to all of its employees,
terminating their employment effective as of the Closing Date, and
PureSight-Israel shall cease to employ all of its employees effective as of the
Closing Date. BCGI-Israel, at its discretion, shall offer (directly or through
any of Buyers’ Affiliates) PureSight-Israel’s employees employment with
BCGI-Israel or an Affiliate effective as of the Closing Date, on substantially
the terms and conditions as included in the form employment agreement attached
hereto as Exhibit E. Sellers shall use their best efforts in order to cause each
of their employees to execute a waiver substantially in the form attached as
Exhibit F-4 hereto. It is hereby clarified that no representation is being made
herein with respect to the terms and conditions of employment of any of
PureSight-Israel’s employees by BCGI-Israel or its Affiliates (including the
period of such employment) and in any event, no representation of the Parties
herein shall confer any rights or remedies upon any employees of Sellers, and
such employees shall not be deemed hereunder, as third party beneficiaries.
Prior to or upon the Closing Date,

 

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each Seller shall pay all of its current employees, all wages and all ancillary
and other expenses payable with respect to their period of employment with such
Seller and the termination thereof, shall fulfill all of its obligations under
the applicable Seller Plans and shall make all of the required contributions
under law and/or agreement with respect to the employees’ employment and/or
termination thereof, including, as applicable, for accrued leave, convalescence,
pension, retirement, severance, advance notice, commissions and bonuses pursuant
to employment agreements, custom, law or as otherwise required.

 

Exclusivity.

 

Neither Seller shall, and each Seller shall require each of its officers,
directors, employees, representatives and agents not to, directly or indirectly,
(i) initiate, solicit, encourage or otherwise facilitate any inquiry, proposal,
offer or discussion with any party (other than the Buyers) concerning any
merger, reorganization, consolidation, recapitalization, business combination,
liquidation, dissolution, share exchange, sale of stock, sale of material assets
or similar business transaction involving either Seller or any division of
either Seller, (ii) furnish any non-public information concerning the business,
properties or assets of either Seller or any division of either Sellers to any
party (other than the Buyers) or (iii) engage in discussions or negotiations
with any party (other than the Buyers) concerning any such transaction.

 

The Sellers shall immediately notify any party with which discussions or
negotiations of the nature described in paragraph (a) above were pending that
the Sellers are terminating such discussions or negotiations. If the Sellers
receive any inquiry, proposal or offer of the nature described in paragraph (a)
above, the Sellers shall, within one business day after such receipt, notify the
Buyers of such inquiry, proposal or offer, including the identity of the other
party and the terms of such inquiry, proposal or offer.

 

CONDITIONS TO CLOSING

 

Conditions to Obligations of each Party. The respective obligations of each
Party to consummate the transactions contemplated by this Agreement are subject
to the satisfaction of the following condition: the sale of the Acquired Assets
by PureSight-US to the Buyers as contemplated by this Agreement shall have
received the Requisite Stockholder Approval.

 

Conditions to Obligations of the Buyer. The obligation of the Buyers to
consummate the transactions contemplated by this Agreement to be consummated at
the Closing is subject to the satisfaction of the following additional
conditions:

 

the Sellers shall have obtained at their own expense (and shall have provided
copies thereof to the Buyers) all of the waivers, permits, consents, approvals
or other authorizations, and effected all of the registrations, filings and
notices, referred to in Section 4.2 which are required on the part of the
Sellers, including without limitation, the written consent of the Israeli
Investment Center;

 

the representations and warranties of the Sellers set forth in the first
sentence of Section 2.1and in Section 2.3 and any representations and warranties
of the Sellers set forth in this Agreement that are qualified as to materiality
shall be true and correct in all respects, and all other representations and
warranties of the Sellers shall be true and correct in all material respects, in
each case as of the date of this Agreement and as of the Closing as though made
as of the Closing, except to the extent such representations and warranties are
specifically made as of a particular date (in which case such representations
and warranties shall be true and correct as of such date);

 

each Seller shall have performed or complied with its agreements and covenants
required to be performed or complied with under this Agreement as of or prior to
the Closing;

 

no Legal Proceeding shall be pending or threatened wherein an unfavorable
judgment, order, decree, stipulation or injunction would (i) restrain or
prohibit consummation of the transactions contemplated by this Agreement, (ii)
cause the transactions contemplated by this Agreement to be rescinded following
consummation or (iii) affect adversely the right of the Buyers to own, operate
or control any of the Acquired Assets, or to conduct the business of the Sellers
as currently conducted, following the Closing, and no such judgment, order,
decree, stipulation or injunction shall be in effect;

 

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the Sellers shall have delivered to the Buyers the Seller Certificates;

 

the Sellers shall have delivered to the Buyers documents evidencing the release
or termination of all Security Interests on the Acquired Assets, including
without limitation, requests for the termination of all outstanding charges
registered with the Israeli Registrar of Companies duly executed by all relevant
creditors, including with respect to a charge registered on August 7, 2002 and a
charge registered on March 18, 2004, as well as certification issued by the
Israeli Registrar of Companies confirming the termination of all charges with
respect to PureSight-Israel’s assets, and copies of filed UCC termination
statements with respect to all UCC financing statements evidencing Security
Interests;

 

the Buyers shall have received from counsel to the Sellers opinions in
substantially the forms attached hereto as Exhibit G-1 and Exhibit G-2,
addressed to the Buyers and dated as of the Closing Date;

 

the Buyers shall have received such other certificates and instruments
(including certificates of good standing of the Sellers, if applicable, in their
jurisdiction of organization and the various foreign jurisdictions in which they
are qualified, including authorizations from the Israeli Income Tax Authority
with regard to PureSight-Israel’s tax deductions and managing accounting
ledgers; certified charter documents; certificates as to the incumbency of
officers; and the adoption of authorizing resolutions) as they shall reasonably
request in connection with the Closing;

 

each of Netta Mendolson, Royi Cohen and Ouri Azoulay shall have entered into
employment agreements with the Buyer in substantially the forms attached hereto
as Exhibit F-1, Exhibit F-2 and Exhibit F-3, respectively, and approved by the
Buyers;

 

Cleve Adams shall have entered into a consulting agreement with the Buyer in the
form attached hereto as Exhibit H;

 

the Seller shall have delivered to the Buyer the Financial Statements;

 

at least 80% of the employees of PureSight-Israel shall have (i) agreed to
become employed by BCGI-Israel (and signed an employment agreement in
substantially the form attached hereto as Exhibit E) effective upon the Closing
and (ii) executed the waiver in the form attached hereto as Exhibit F-4;

 

the Buyers shall have received a written confirmation issued by an Israeli CPA
declaring that all amounts to be allocated and/or deposited in accordance with
the Employee Benefit Plans with respect to all of PureSite-Israel’s officers
and/or employees have been duly allocated and/or deposited as of the Closing
Date;

 

the Buyers shall have received a written confirmation issued by an Israeli CPA
declaring that all payments and/or contributions required to be made under law
and/or agreement with respect to the employment and termination of
PureSite-Israel’s officers and/or employees have been duly paid and/or
contributed in full as of the Closing Date, including, with respect to accrued
leave, convalescence, pension, retirement, severance, advance notice,
commissions and bonuses pursuant to employment agreements, custom, law or as
otherwise required; and

 

the Buyers shall have received written documentation, reasonably satisfactory to
the Buyers, that the source code escrow arrangement in place with Hitachi has
been terminated, which written documentation shall include a statement to the
effect that (i) no source code has previously been released under such
arrangement and (ii) Hitachi has no rights in or to any source code of the
Sellers.

 

the Buyers shall have received a copy of the resolutions approved by the Board
of Directors of PureSight-US terminating and/or rescinding the option grants
listed on Section 2.2 of the Disclosure Schedule.

 

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Conditions to Obligations of the Sellers. The obligation of the Sellers to
consummate the transactions contemplated by this Agreement to be consummated at
the Closing is subject to the satisfaction of the following additional
conditions:

 

the representations and warranties of the Buyers set forth in the first sentence
of Section 3.1 and in Section 3.2 and any representations and warranties of the
Buyers set forth in this Agreement that are qualified as to materiality shall be
true and correct in all respects, and all other representations and warranties
of the Buyers set forth in this Agreement shall be true and correct in all
material respects, in each case as of the date of this Agreement and as of the
Closing as though made as of the Closing, except to the extent such
representations and warranties are specifically made as of a particular date (in
which case such representations and warranties shall be true and correct as of
such date);

 

each Buyer shall have performed or complied with its agreements and covenants
required to be performed or complied with under this Agreement as of or prior to
the Closing;

 

no Legal Proceeding shall be pending or threatened wherein an unfavorable
judgment, order, decree, stipulation or injunction would (i) restrain or
prohibit consummation of the transactions contemplated by this Agreement or (ii)
cause the transactions contemplated by this Agreement to be rescinded following
consummation, and no such judgment, order, decree, stipulation or injunction
shall be in effect;

 

the Buyers shall have delivered to the Sellers the Buyer Certificates; and

 

the Sellers shall have received such other certificates and instruments
(including certificates of good standing of the Buyers in its jurisdiction of
organization, certificates as to the incumbency of officers and the adoption of
authorizing resolutions) as they shall reasonably request in connection with the
Closing.

 

POST-CLOSING COVENANTS

 

Proprietary Information. From and after the Closing, each Seller agrees that it
shall not disclose or make use of (except to pursue its rights, under this
Agreement or the Ancillary Agreements), and shall use its best efforts to cause
all of its Affiliates not to disclose or make use of, any knowledge, information
or documents of a confidential nature or not generally known to the public with
respect to Acquired Assets, the Sellers’ business or the Buyers or its business
(including the financial information, technical information or data relating to
the Sellers’ products and names of customers of the Sellers, as well as filings
and testimony (if any) presented in the course of any arbitration of a Dispute
pursuant to Section 7.3 and the arbitral award and the Arbitrator’s reasons
therefor relating to the same), except to the extent that such knowledge,
information or documents shall have become public knowledge other than through
improper disclosure by a Seller or an Affiliate thereof. The Sellers hereby
authorize the Buyers, on behalf of the Sellers but for the benefit of the Buyers
and at the Buyers’ expense, to enforce all confidentiality, invention
assignments and similar agreements between either Seller and any other party,
including current or former employees and other third parties, relating to the
Acquired Assets or the business of the Sellers that are not Assigned Contracts.

 

Solicitation and Hiring.

 

For a period of two years after the Closing Date, neither Seller shall, either
directly or indirectly (including through an Affiliate), (a) solicit or attempt
to induce any Restricted Employee to terminate his employment with either Buyer
or any subsidiary of either Buyer or (b) hire or attempt to hire any Restricted
Employee; provided, that this clause (b) shall not apply to any individual whose
employment with either Buyer or a subsidiary of either Buyer has been
terminated. The Sellers hereby authorize the Buyers, on behalf of the Sellers
but for the benefit of the Buyers and at the Buyers’ expense, to enforce all
non-solicitation, non-hiring and similar agreements between either Seller and
any other party, including current or former employees and other third parties,
that are not Assigned Contracts.

 

For a period of two years following the termination of this Agreement pursuant
to the provisions of Article VIII hereof, neither Buyer shall, either directly
or indirectly (through a recruiter or intermediary) solicit or attempt to induce
any individual who is employed by either Seller as of the date of this Agreement
to terminate his employment with such Seller; provided, however, that this
Section 6.2(b) shall not limit any Buyer’s right to continue customary general
advertisement for employees. The Parties agree that irreparable damage might
occur in the event that the provisions of this Section 6.2(b) were not performed
in accordance with their specific terms or were otherwise breached. It is

 

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accordingly agreed by the Parties that the Sellers shall be entitled to seek an
injunction or injunctions to prevent breaches of the provisions of this Section
6.2(b) and to seek to enforce specifically the terms and provisions hereof in
any court having jurisdiction, this being in addition to any other remedy to
which such party may be entitled at law or in equity.

 

Non-Competition.

 

For a period of three years after the Closing Date, neither Seller shall, either
directly or indirectly as a stockholder, investor, partner, consultant or
otherwise, (i) design, develop, manufacture, market, sell or license any product
or provide any service anywhere in the world which is competitive with any
product designed, developed (or under development), manufactured, sold or
licensed or any service provided by the Sellers within the three-year period
prior to the Closing Date or (ii) engage anywhere in the world in any business
competitive with the business of the Sellers as conducted as of the Closing Date
or during the three-year period prior to the Closing Date. The Sellers hereby
authorize the Buyers, on behalf of the Sellers but for the benefit of the Buyers
and at the Buyers’ expense, to enforce all non-competition and similar
agreements between either Seller and any other party, including current or
former employees and other third parties, that are not Assigned Contracts.

 

Each Seller agrees that the duration and geographic scope of the non-competition
provision set forth in this Section 6.3 are reasonable. In the event that any
court determines that the duration or the geographic scope, or both, are
unreasonable and that such provision is to that extent unenforceable, the
Sellers agree that the provision shall remain in full force and effect for the
greatest time period and in the greatest area that would not render it
unenforceable. The Sellers intend that this non-competition provision shall be
deemed to be a series of separate covenants, one for each and every county of
each and every state of the United States of America and each and every
political subdivision of each and every country outside the United States of
America, including, without limitation, Israel, where this provision is intended
to be effective.

 

Each Seller shall, and shall use its best efforts to cause its Affiliates to,
refer all inquiries regarding the business, products and services of the Sellers
to the Buyers.

 

Tax Matters. All transfer taxes, deed excise stamps, stamp duty and similar
charges related to the sale of the Acquired Assets contemplated by this
Agreement shall be paid by the Sellers; provided, that, in accordance with
Sections 1.3 and 1.4 hereof, BCGI-Israel shall pay to PureSight-Israel the VAT,
which PureSight-Israel shall pay to the appropriate taxing authorities in
accordance with Section 6.11 hereof.

 

Sharing of Data.

 

The Sellers shall have the right for a period of five years following the
Closing Date to have reasonable access to such books, records and accounts,
including financial and tax information, correspondence, production records,
employment records and other records that are transferred to the Buyers pursuant
to the terms of this Agreement for the limited purposes of concluding its
involvement in the business conducted by the Sellers prior to the Closing Date
and for complying with their respective obligations under applicable securities,
tax, environmental, employment or other laws and regulations. The Buyers shall
have the right for a period of five years following the Closing Date to have
reasonable access to those books, records and accounts, including financial and
accounting records (including the work papers of the Seller’s independent
accountants), tax records, correspondence, production records, employment
records and other records that are retained by the Sellers pursuant to the terms
of this Agreement to the extent that any of the foregoing is reasonably needed
by the Buyers for the purpose of conducting the business of the Sellers after
the Closing and complying with their respective obligations under applicable
securities, tax, environmental, employment or other laws and regulations. No
Party shall destroy any such books, records or accounts retained by it without
first providing the other Party with the opportunity to obtain or copy such
books, records, or accounts at such other Party’s expense.

 

Promptly upon the reasonable request by the Buyers made at any time following
the Closing Date, the Sellers shall authorize the release to the Buyers of all
files pertaining to the Sellers, the Acquired Assets or the business or
operations of the Sellers or the Subsidiaries held by any federal, state, county
or local authorities, agencies or instrumentalities.

 

Use of Name. The Sellers shall not use, and shall not permit any Affiliate to
use, the names “PureSight”, “Icognito” or “Geni” or any name reasonably similar
thereto after the Closing Date in connection with any business related to,

 

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competitive with, or an outgrowth of, the business conducted by the Sellers on
the date of this Agreement. Within one business day following the Closing, (i)
PureSight-US shall amend its Certificate of Incorporation and other corporate
records, if necessary, to comply with this provision and (ii) PureSight-Israel
shall file with the Company Registrar a shareholder resolution amending its
Articles of Association and other corporate records, if necessary, to comply
with this provision.

 

Cooperation in Litigation. From and after the Closing Date, each Party shall
fully cooperate with the other in the defense or prosecution of any litigation
or proceeding already instituted or which may be instituted hereafter against or
by such other Party relating to or arising out of the conduct of the business of
the Sellers or the Buyers prior to or after the Closing Date (other than
litigation among the Parties and/or their Affiliates arising out the
transactions contemplated by this Agreement). The Party requesting such
cooperation shall pay the reasonable out-of-pocket expenses incurred in
providing such cooperation (including legal fees and disbursements) by the Party
providing such cooperation and by its officers, directors, employees and agents,
but shall not be responsible for reimbursing such Party or its officers,
directors, employees and agents, for their time spent in such cooperation.

 

Collection of Accounts Receivable. Each Seller agrees that it shall forward
promptly to the Buyers any monies, checks or instruments received by such Seller
after the Closing Date with respect to the accounts receivable purchased by the
Buyer from the Sellers pursuant to this Agreement. Each Seller shall provide to
the Buyers such reasonable assistance as the Buyers may request with respect to
the collection of any such accounts receivable, provided the Buyers pay the
reasonable out-of-pocket expenses of the Sellers and their respective officers,
directors and employees incurred in providing such assistance. Each Seller
hereby grants to the Buyers a power of attorney to endorse and cash any checks
or instruments payable or endorsed to the Sellers or its order which are
received by either Buyer and which relate to accounts receivable purchased by
the Buyers from the Sellers. Notwithstanding the foregoing, the Buyers shall
promptly remit to the Sellers the first $100,000 of monies received by the
Buyers after the Closing Date with respect to the accounts receivable purchased
by the Buyers from the Sellers pursuant to this Agreement and such amount shall
be deemed to be an Excluded Asset for purposes of this Agreement.

 

Maintenance of Corporate Existence; Restriction on Dividends and Distributions.
For a period of twelve months following the Closing Date, no Seller shall
dispose, set aside or pay any dividend or other distribution in cash or other
property (other than capital stock of the Seller) in respect of its stock if,
following such dividend or distribution the Sellers would hold cash in an amount
that is less than the sum of (A) an aggregate amount for both Sellers of
$550,000 plus (B) the amount that would be required to satisfy all of such
Seller’s liabilities and third-party obligations in full.

 

Transfer of Approved Enterprise Status. To the extent that PureSight-Israel’s
Approved Enterprise status and any Grants associated therewith have not been
fully transferred to BCGI-Israel on or prior to the Closing Date,
PureSight-Israel shall, if requested by BCGI-Israel, approach the investment
Center of the Ministry of Industry, Trade and Labor and use its commercially
reasonable best efforts following the Closing in order to obtain, at its
expense, the written consent of the Israeli Investment Center regarding the
assignment of PureSight-Israel’s rights and obligations under the Approved
Enterprise Scheme to BCGI-Israel, including any Grants associated therewith.

 

VAT. PureSight-Israel shall, promptly following the Closing and in any event
within the timeframe required by applicable laws, rules and regulations, pay to
the appropriate taxing authorities the VAT.

 

INDEMNIFICATION

 

Indemnification by the Sellers. The Sellers, jointly and severally, shall
indemnify the Buyers in respect of, and hold the Buyers harmless against,
Damages incurred or suffered by the Buyer or any Affiliate thereof resulting
from, relating to or constituting:

 

any breach, as of the date of this Agreement or as of the Closing Date, of any
representation or warranty of the Sellers contained in this Agreement or in the
Seller Certificates;

 

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any failure to perform any covenant or agreement of the Sellers contained in
this Agreement or any Ancillary Agreement; or

 

any Retained Liabilities.

 

Indemnification by the Buyers. The Buyers, jointly and severally, shall
indemnify the Sellers in respect of, and hold it harmless against, any and all
Damages incurred or suffered by the Sellers resulting from, relating to or
constituting:

 

any breach, as of the date of this Agreement or as of the Closing Date, of any
representation or warranty of the Buyer contained in this Agreement or in the
Buyer Certificates;

 

any failure to perform any covenant or agreement of the Buyers contained in this
Agreement or any Ancillary Agreement; or

 

any Assumed Liabilities.

 

Indemnification Claims.

 

An Indemnified Party shall give written notification to the Indemnifying Party
of the commencement of any Third Party Action. Such notification shall be given
within 20 days after receipt by the Indemnified Party of notice of such Third
Party Action, and shall describe in reasonable detail (to the extent known by
the Indemnified Party) the facts constituting the basis for such Third Party
Action and the amount of the claimed damages; provided, however, that no delay
or failure on the part of the Indemnified Party in so notifying the Indemnifying
Party shall relieve the Indemnifying Party of any liability or obligation
hereunder except to the extent of any damage or liability caused by or arising
out of such failure. Within 20 days after delivery of such notification, the
Indemnifying Party may, upon written notice thereof to the Indemnified Party,
assume control of the defense of such Third Party Action with counsel reasonably
satisfactory to the Indemnified Party; provided that (i) the Indemnifying Party
may only assume control of such defense if (A) it acknowledges in writing to the
Indemnified Party that any damages, fines, costs or other liabilities that may
be assessed against the Indemnified Party in connection with such Third Party
Action constitute Damages for which the Indemnified Party shall be indemnified
pursuant to this Article VII and (B) the ad damnum is less than or equal to the
amount of Damages for which the Indemnifying Party is liable under this Article
VII and (ii) the Indemnifying Party may not assume control of the defense of a
Third Party Action involving criminal liability or in which equitable relief is
sought against the Indemnified Party. If the Indemnifying Party does not, or is
not permitted under the terms hereof to, so assume control of the defense of a
Third Party Action, the Indemnified Party shall control such defense. The
Non-controlling Party may participate in such defense at its own expense. The
Controlling Party shall keep the Non-controlling Party advised of the status of
such Third Party Action and the defense thereof and shall consider in good faith
recommendations made by the Non-controlling Party with respect thereto. The
Non-controlling Party shall furnish the Controlling Party with such information
as it may have with respect to such Third Party Action (including copies of any
summons, complaint or other pleading which may have been served on such party
and any written claim, demand, invoice, billing or other document evidencing or
asserting the same) and shall otherwise cooperate with and assist the
Controlling Party in the defense of such Third Party Action. The fees and
expenses of counsel to the Indemnified Party with respect to a Third Party
Action shall be considered Damages for purposes of this Agreement if (i) the
Indemnified Party controls the defense of such Third Party Action pursuant to
the terms of this Section 7.3(a) or (ii) the Indemnifying Party assumes control
of such defense and the Indemnified Party reasonably concludes pursuant to the
written advice of counsel that the Indemnifying Party and the Indemnified Party
have conflicting interests or different defenses available with respect to such
Third Party Action. The Indemnifying Party shall not agree to any settlement of,
or the entry of any judgment arising from, any Third Party Action without the
prior written consent of the Indemnified Party, which shall not be unreasonably
withheld, conditioned or delayed; provided that the consent of the Indemnified
Party shall not be required if the Indemnifying Party agrees in writing to pay
any amounts payable pursuant to such settlement or judgment and such settlement
or judgment includes a complete release of the Indemnified Party from further
liability and has no other adverse effect on the Indemnified Party. The
Indemnified Party shall not agree to any settlement of, or the entry of any
judgment arising from, any such Third Party Action without the prior written
consent of the Indemnifying Party, which shall not be unreasonably withheld,
conditioned or delayed.

 

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In order to seek indemnification under this Article VII, an Indemnified Party
shall deliver a Claim Notice to the Indemnifying Party. If the Indemnified Party
is the Buyer and is seeking to enforce such claim pursuant to the Escrow
Agreement, the Indemnifying Party shall deliver a copy of the Claim Notice to
the Escrow Agent pursuant to the Escrow Agreement.

 

Within 20 days after delivery of a Claim Notice, the Indemnifying Party shall
deliver to the Indemnified Party a Response, in which the Indemnifying Party
shall: (i) agree that the Indemnified Party is entitled to receive all of the
Claimed Amount (in which case the Response shall be accompanied by a payment by
the Indemnifying Party to the Indemnified Party of the Claimed Amount, by check
or by wire transfer; provided that if the Indemnified Party is the Buyer and is
seeking to enforce such claim pursuant to the Escrow Agreement, the Indemnifying
Party and the Indemnified Party shall deliver to the Escrow Agent pursuant to
the terms of the Escrow Agreement, within three days following the delivery of
the Response, a written notice executed by both parties instructing the Escrow
Agent to disburse the Claimed Amount to the Buyer), (ii) agree that the
Indemnified Party is entitled to receive the Agreed Amount (in which case the
Response shall be accompanied by a payment by the Indemnifying Party to the
Indemnified Party of the Agreed Amount, by check or by wire transfer; provided
that if the Indemnified Party is the Buyer and is seeking to enforce such claim
pursuant to the Escrow Agreement, the Indemnifying Party and the Indemnified
Party shall deliver to the Escrow Agent pursuant to the terms of the Escrow
Agreement, within three days following the delivery of the Response, a written
notice executed by both parties instructing the Escrow Agent to disburse the
Agreed Amount to the Buyer) or (iii) dispute that the Indemnified Party is
entitled to receive any of the Claimed Amount.

 

During the 30-day period following the delivery of a Response that reflects a
Dispute, the Indemnifying Party and the Indemnified Party shall use good faith
efforts to resolve the Dispute. If the Dispute is not resolved within such
30-day period, the Indemnifying Party and the Indemnified Party shall discuss in
good faith the submission of the Dispute to binding arbitration, and if the
Indemnifying Party and the Indemnified Party agree in writing to submit the
Dispute to such arbitration, then the provisions of Section 7.3(e) shall become
effective with respect to such Dispute. The provisions of this Section 7.3(d)
shall not obligate the Indemnifying Party and the Indemnified Party to submit to
arbitration or any other alternative dispute resolution procedure with respect
to any Dispute, and in the absence of an agreement by the Indemnifying Party and
the Indemnified Party to arbitrate any Dispute, such Dispute shall be resolved
in a state or federal court sitting in New York, New York, in accordance with
Section 10.12. If the Indemnified Party is the Buyer and is seeking to enforce
the claim that is the subject of the Dispute pursuant to the Escrow Agreement,
the Indemnifying Party and the Indemnified Party shall deliver to the Escrow
Agent pursuant to the terms of the Escrow Agreement, promptly following the
resolution of the Dispute (whether by mutual agreement, arbitration, judicial
decision or otherwise), a written notice executed by both parties instructing
the Escrow Agent as to what (if any) portion of the Escrow Fund shall be
disbursed to the Buyer and/or the Seller (which notice shall be consistent with
the terms of the resolution of the Dispute).

 

If, as set forth in Section 7.3(d), the Indemnified Party and the Indemnifying
Party agree to submit any Dispute to binding arbitration, the arbitration shall
be conducted by a single arbitrator (the “Arbitrator”) in accordance with the
Commercial Rules in effect from time to time and the following provisions.

 

In the event of any conflict between the Commercial Rules in effect from time to
time and the provisions of this Agreement, the provisions of this Agreement
shall prevail and be controlling.

 

The Parties shall commence the arbitration by jointly filing a written
submission with the New York, New York office of the AAA in accordance with
Commercial Rule 5 (or any successor provision).

 

No depositions or other discovery shall be conducted in connection with the
arbitration.

 

Not later than 30 days after the conclusion of the arbitration hearing, the
Arbitrator shall prepare and distribute to the Parties a writing setting forth
the arbitral award and the Arbitrator’s reasons therefor. Any award rendered by
the Arbitrator shall be final, conclusive and binding upon the Parties, and
judgment thereon may be entered and enforced in any court of competent
jurisdiction (subject to Section 10.12), provided that the Arbitrator shall have
no power or authority to grant injunctive relief, specific performance or other
equitable relief.

 

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The Arbitrator shall have no power or authority, under the Commercial Rules or
otherwise, to (x) modify or disregard any provision of this Agreement, including
the provisions of this Section 7.3(e), or (y) address or resolve any issue not
submitted by the Parties.

 

In connection with any arbitration proceeding pursuant to this Agreement, each
Party shall bear its own costs and expenses, except that the fees and costs of
the AAA and the Arbitrator, the costs and expenses of obtaining the facility
where the arbitration hearing is held, and such other costs and expenses as the
Arbitrator may determine to be directly related to the conduct of the
arbitration and appropriately borne jointly by the parties (which shall not
include any Party’s attorneys’ fees or costs, witness fees (if any), costs of
investigation and similar expenses) shall be shared equally by the Indemnified
Party and the Indemnifying Party.

 

Notwithstanding the other provisions of this Section 7.3, if a third party
asserts (other than by means of a lawsuit) that an Indemnified Party is liable
to such third party for a monetary or other obligation which may constitute or
result in Damages for which such Indemnified Party may be entitled to
indemnification pursuant to this Article VII, and such Indemnified Party
reasonably determines that it has a valid business reason to fulfill such
obligation, then (i) to the extent such Indemnified Party expects to seek
indemnification in accordance with the provisions of this Article VII, such
Indemnified Party shall be entitled to satisfy such obligation with prior notice
to or consent from the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed, (ii) such Indemnified Party may subsequently
make a claim for indemnification in accordance with the provisions of this
Article VII, and (iii) to the extent the fulfillment of such obligation is
consistent with the consent from the Indemnifying Party, such Indemnified Party
shall be reimbursed, in accordance with the provisions of this Article VII, for
any such Damages for which it is entitled to indemnification pursuant to this
Article VII (subject to the right of the Indemnifying Party to dispute the
Indemnified Party’s entitlement to indemnification, or the amount for which it
is entitled to indemnification, under the terms of this Article VII).

 

Survival of Representations and Warranties. All representations and warranties
that are covered by the indemnification agreements in Section 7.1(a) and Section
7.2(a) shall (a) survive the Closing and (b) shall expire on the date twelve
months following the Closing Date. If an Indemnified Party delivers to an
Indemnifying Party, before expiration of a representation or warranty, either a
Claim Notice based upon a breach of such representation or warranty, or an
Expected Claim Notice based upon a breach of such representation or warranty,
then the applicable representation or warranty shall survive until, but only for
purposes of, the resolution of any claims arising from or related to the matter
covered by such notice. If the legal proceeding or written claim with respect to
which an Expected Claim Notice has been given is definitively withdrawn or
resolved in favor of the Indemnified Party, the Indemnified Party shall promptly
so notify the Indemnifying Party; and if the Indemnified Party has delivered a
copy of the Expected Claim Notice to the Escrow Agent and funds have been
retained in escrow after the Termination Date (as defined in the Escrow
Agreement) with respect to such Expected Claim Notice, the Indemnifying Party
and the Indemnified Party shall promptly deliver to the Escrow Agent a written
notice executed by both parties instructing the Escrow Agent to disburse such
retained funds to the Seller in accordance with the terms of the Escrow
Agreement. The rights to indemnification set forth in this Article VII shall not
be affected by (i) any investigation conducted by or on behalf of an Indemnified
Party or any knowledge acquired (or capable of being acquired) by an Indemnified
Party, whether before or after the date of this Agreement or the Closing Date,
with respect to the inaccuracy or noncompliance with any representation,
warranty, covenant or obligation which is the subject of indemnification
hereunder or (ii) any waiver (other than an explicit waiver in writing signed by
the Indemnified Party) by an Indemnified Party of any closing condition relating
to the accuracy of any representations and warranties or the performance of or
compliance with agreements and covenants.

 

Limitations.

 

For purposes solely of this Article VII, all representations and warranties of
the Sellers in Article II (other than Sections 2.7 and 2.29) shall be construed
as if the term “material” and any reference to “Seller Material Adverse Effect”
(and variations thereof) were omitted from such representations and warranties.
Notwithstanding anything to the contrary herein, the Sellers shall not be liable
under Section 7.1(a) unless and until the aggregate Damages for which the
Sellers would otherwise be liable under Section 7.1(a) exceed US$50,000 (at
which point the Sellers shall become liable for the aggregate Damages under
Section 7.1(a), and not just amounts in excess of US$50,000). Notwithstanding
anything to the contrary herein, the aggregate liability of the Sellers for
Damages under Section 7.1(a) with respect to claims for which a Claim Notice or
an Expected Claim Notice is delivered on or prior to the date that is twelve
months following the Closing Date shall not exceed the sum of the Escrow Amount
plus US$550,000. The Sellers shall not be liable for Damages under Section
7.1(a) with respect to claims for which a Claim Notice or an Expected Claim
Notice is delivered after the date that is twelve months following the Closing
Date.

 

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For purposes solely of this Article VII, all representations and warranties of
the Buyer in Article III shall be construed as if the term “material” were
omitted from such representations and warranties. Notwithstanding anything to
the contrary herein, the Buyers shall not be liable under Section 7.2(a) unless
and until the aggregate Damages for which the Buyers would otherwise be liable
under Section 7.2(a) exceed US$50,000 (at which point the Buyers shall become
liable for the aggregate Damages under Section 7.2(a), and not just amounts in
excess of US$50,000). Notwithstanding anything to the contrary herein, the
aggregate liability of the Buyers for Damages under Section 7.2(a) with respect
to claims for which a Claim Notice or an Expected Claim Notice is delivered on
or prior to the date that is twelve months following the Closing Date shall not
exceed $1,100,000. The Buyers shall not be liable for Damages under Section
7.2(a) with respect to claims for which a Claim Notice or an Expected Claim
Notice is delivered after the date that is twelve months following the Closing
Date.

 

The Escrow Agreement is intended to secure the indemnification obligations of
the Seller under this Agreement. However, the rights of the Buyer under this
Article VII shall not be limited to the Escrow Fund but shall be limited under
the limitations set forth in Section 7.5(a) above and, subject to the
limitations set forth in Section 7.5(a) above, the Escrow Agreement shall not be
the exclusive means for the Buyer to enforce such rights; provided that the
Buyer shall not attempt to collect any Damages directly from the Seller unless
there are no remaining funds held in escrow pursuant to the Escrow Agreement.

 

Treatment of Indemnity Payments. Any payments made to an Indemnified Party
pursuant to this Article VII, pursuant to Article VIII or pursuant to the Escrow
Agreement shall be treated as an adjustment to the Purchase Price for tax
purposes.

 

Certain Offsets. Any indemnification payment made pursuant to this Article VII
shall be reduced by the amount of any insurance proceeds actually received by
the Indemnified Party with respect to the Damages incurred or suffered by the
Indemnified Party that are the subject of such indemnification payment.

 

Exclusive Remedy. After the Closing Date, this Article VII shall provide the
exclusive remedy for any of the matters addressed herein or other claims arising
out of this Agreement, other than for fraud or intentional misrepresentation.

 

TERMINATION

 

Termination of Agreement. The Parties may terminate this Agreement prior to the
Closing (whether before or after Requisite Stockholder Approval), as provided
below:

 

the Parties may terminate this Agreement by mutual written consent;

 

the Buyers may terminate this Agreement by giving written notice to the Sellers
in the event any Seller is in breach of any representation, warranty or covenant
contained in this Agreement, and such breach (i) individually or in combination
with any other such breach, would cause the conditions set forth in clauses (b)
or (c) of Section 5.2 not to be satisfied and (ii) is not cured within 20 days
following delivery by the Buyers to the Sellers of written notice of such
breach; provided, however, that the right to terminate this Agreement by the
Buyers shall not be available to the Buyers if either Buyer is at that time in
material breach of this Agreement;

 

the Sellers may terminate this Agreement by giving written notice to the Buyers
in the event any Buyer is in breach of any representation, warranty or covenant
contained in this Agreement, and such breach (i) individually or in combination
with any other such breach, would cause the conditions set forth in clauses (a)
or (b) of Section 5.3 not to be satisfied and (ii) is not cured within 20 days
following delivery by the Sellers to the Buyers of written notice of such
breach; provided, however, that the right to terminate this Agreement by the
Sellers shall not be available to the Sellers if either Seller is at that time
in material breach of this Agreement;

 

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either Party may terminate this Agreement by giving written notice to the other
Party at any time after the stockholders of PureSight-US have voted on whether
to approve the sale of the Acquired Assets contemplated by this Agreement in the
event such matter failed to receive the Requisite Stockholder Approval;

 

the Buyers may terminate this Agreement by giving written notice to the Sellers
if the Closing shall not have occurred on or before July 31, 2005 by reason of
the failure of any condition precedent under Section 5.1 or 5.2 (unless the
failure results primarily from a breach by either Buyer of any representation,
warranty or covenant contained in this Agreement); or

 

the Sellers may terminate this Agreement by giving written notice to the Buyers
if the Closing shall not have occurred on or before July 31, 2005 by reason of
the failure of any condition precedent under Section 5.1 or 5.3 (unless the
failure results primarily from a breach by either Seller of any representation,
warranty or covenant contained in this Agreement).

 

Effect of Termination. If any Party terminates this Agreement pursuant to
Section 8.1, all obligations of the Parties hereunder shall terminate without
any liability of any Party to the other Parties; provided that (a) the
provisions of Section 6.2(b) (Solicitation and Hiring), Section 10.1 (Press
Releases and Announcements), Section 10.8 (Governing Law) and Section 10.11
(Expenses) and this Section 8.2 shall remain in full force and effect and
survive any termination of this Agreement; (b) the Confidentiality Agreement
shall continue in full force and effect, and shall survive any termination of
this Agreement in accordance with its terms; and (c) nothing herein shall
relieve any Party from liability for willful breaches of this Agreement prior to
such termination.

 

DEFINITIONS

 

For purposes of this Agreement, each of the following terms shall have the
meaning set forth below.

 

“AAA” shall mean the American Arbitration Association.

 

“Accountant” shall mean an accountant, generally a member of the dispute
resolution group, at a mutually agreed accounting firm.

 

“Acquired Assets” shall mean (i) the trademarks of PureSight-US, each of which
is listed in Schedule 1.1 attached hereto, and (ii) all of the assets,
properties and rights of PureSight-Israel existing as of the Closing, excluding
the Excluded Assets, but including:

 

all trade and other accounts receivable and notes and loans receivable that are
payable to either Seller, and all rights to unbilled amounts for products
delivered or services provided, together with any security held by either Seller
for the payment thereof; provided that the first $100,000 of monies collected by
the Buyers from any accounts receivable shall be deemed to be an Excluded Asset
and shall be paid to the Sellers in accordance with the provisions of Section
6.8 of this Agreement;

 

all inventories of raw materials, work in process, finished goods, supplies,
packaging materials, spare parts and similar items, wherever located, including
consignment inventory and inventory held on order or in transit;

 

all computers, machinery, equipment, tools and tooling, furniture, fixtures,
supplies, leasehold improvements, motor vehicles and other tangible personal
property;

 

all real property, leaseholds and subleaseholds in real property, and easements,
rights-of-way and other appurtenants thereto;

 

all Intellectual Property;

 

all rights under Assigned Contracts;

 

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all claims, prepayments, deposits, refunds, causes of action, chooses in action,
rights of recovery, rights of setoff and rights of recoupment;

 

all books, records, accounts, ledgers, files, documents, correspondence, lists
(including customer and prospect lists), manufacturing and procedural manuals,
Intellectual Property records, sales and promotional materials, studies, reports
and other printed or written materials; and

 

to the extent transferred before, on or after Closing Date, all rights of the
Sellers under the Approved Enterprise Scheme and any Grants associated
therewith.

 

“Affiliate” shall mean any affiliate, as defined in Rule 12b-2 under the
Securities Exchange Act of 1934.

 

“Agreed Amount” shall mean part, but not all, of the Claimed Amount.

 

“Ancillary Agreements” shall mean the Escrow Agreement, the instruments of
conveyance referred to in Section 1.5(b)(iii), and the instrument of assumption
and other instruments referred to in Section 1.5(b)(iv).

 

“Arbitrator” shall have the meaning set forth in Section 7.3(e).

 

“Assigned Contracts” shall mean any contracts, agreements or instruments to
which either Seller is a party, including any agreements or instruments securing
any amounts owed to either Seller, any leases or subleases of real property, any
confidentiality agreements, assignment of inventions and similar agreements with
consultants or other third parties and any licenses or sublicenses relating to
Intellectual Property; provided, that the agreements, contracts, leases or
licenses listed on Schedule 1.1(b) shall not be Assigned Contracts.

 

“Assumed Liabilities” shall mean the following obligations of the Sellers and no
other obligations or liabilities:

 

(a) all obligations of the Sellers arising after the Closing under the Assigned
Contracts; and

 

(b) liabilities incurred by any Seller with respect to its obligations to
provide maintenance services and technical support (but not with respect to
warranty or similar claims) with regard to products sold by such Seller in the
Ordinary Course of Business and delivered by either Seller prior to the Closing
Date.

 

“Buyer” or “Buyers” shall have the meaning set forth in the first paragraph of
this Agreement.

 

“Buyer Certificates” shall mean certificates of each Buyer to the effect that
each of the conditions specified in clauses (a) through (c) (insofar as clause
(c) relates to Legal Proceedings involving the Buyers) of Section 5.3 is
satisfied in all respects.

 

“CERCLA” shall mean the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.

 

“Claimed Amount” shall mean the amount of any Damages incurred or reasonably
expected to be incurred by the Indemnified Party.

 

“Claim Notice” shall mean written notification which contains (i) a description
of the Damages incurred or reasonably expected to be incurred by the Indemnified
Party and the Claimed Amount of such Damages, to the extent then known, (ii) a
statement that the Indemnified Party is entitled to indemnification under
Article VII for such Damages and a reasonable explanation of the basis therefor,
and (iii) a demand for payment in the amount of such Damages.

 

“Closing” shall mean the closing of the transactions contemplated by this
Agreement.

 

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“Closing Date” shall mean the date two business days after the satisfaction or
waiver of all of the conditions to the obligations of the Parties to consummate
the transactions contemplated hereby (excluding the delivery at the Closing of
any of the documents set forth in Article V), or such other date as may be
mutually agreeable to the Parties.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

“Commercial Rules” shall mean the Commercial Arbitration Rules of the AAA.

 

“Confidentiality Agreement” shall mean the Confidentiality Agreement by and
between Boston Communications Group, Inc. and PureSight-US, dated as of December
2, 2004

 

“Controlling Party” shall mean the party controlling the defense of any Third
Party Action.

 

“Customer Deliverables” shall mean (a) the products that the Seller or any
Subsidiary (i) currently manufactures, markets, sells or licenses, or (ii) has
manufactured, marketed, sold or licensed within the previous five years, or
(iii) currently plans to manufacture, market, sell or license in the future and
(b) the services that the Seller or any Subsidiary (i) currently provides, or
(ii) has provided within the previous three years, or (iii) currently plans to
provide in the future.

 

“Damages” shall mean any and all debts, obligations and other liabilities
monetary damages, fines, fees, penalties, interest obligations, deficiencies,
losses and expenses (including amounts paid in settlement, interest, court
costs, costs of investigators, reasonable fees and expenses of attorneys,
accountants, financial advisors and other experts, and other expenses of
litigation, arbitration or other dispute resolution proceedings relating to a
Third Party Action or an indemnification claim under Article VII), other than
those costs and expenses of arbitration of a Dispute which are to be shared
equally by the Indemnified Party and the Indemnifying Party as set forth in
Section 7.3(e)(vi).

 

“Disclosure Schedule” shall mean the disclosure schedule provided by the Seller
to the Buyer on the date hereof.

 

“Dispute” shall mean the dispute resulting if the Indemnifying Party in a
Response disputes its liability for all or part of the Claimed Amount.

 

“Employee Benefit Plan” shall mean any “employee pension benefit plan” (as
defined in Section 3(2) of ERISA), any “employee welfare benefit plan” (as
defined in Section 3(1) of ERISA), “provident fund” (as defined in Section
47(a)(2) of the Israeli Income Tax Ordinance), and any other written or oral
plan, agreement or arrangement involving direct or indirect compensation,
including insurance coverage, severance benefits, disability benefits, deferred
compensation, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-retirement
compensation.

 

“Environmental Law” shall mean any U.S. federal, state or local, Israeli or
other country’s law, statute, rule, order, directive, judgment, Permit or
regulation or the common law relating to the environment, occupational health
and safety, or exposure of persons or property to Materials of Environmental
Concern, including any statute, regulation, administrative decision or order
pertaining to: (i) the presence of or the treatment, storage, disposal,
generation, transportation, handling, distribution, manufacture, processing,
use, import, export, labeling, recycling, registration, investigation or
remediation of Materials of Environmental Concern or documentation related to
the foregoing; (ii) air, water and noise pollution; (iii) groundwater and soil
contamination; (iv) the release, threatened release, or accidental release into
the environment, the workplace or other areas of Materials of Environmental
Concern, including emissions, discharges, injections, spills, escapes or dumping
of Materials of Environmental Concern; (v) transfer of interests in or control
of real property which may be contaminated; (vi) community or worker
right-to-know disclosures with respect to Materials of Environmental Concern;
(vii) the protection of wild life, marine life and wetlands, and endangered and
threatened species; (viii) storage tanks, vessels, containers, abandoned or
discarded barrels and other closed receptacles; and (ix) health and safety of
employees and other persons. As used above, the term “release” shall have the
meaning set forth in CERCLA.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.

 

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“ERISA Affiliate” shall mean any entity which is, or at any applicable time was,
a member of (1) a controlled group of corporations (as defined in Section 414(b)
of the Code), (2) a group of trades or businesses under common control (as
defined in Section 414(c) of the Code), or (3) an affiliated service group (as
defined under Section 414(m) of the Code or the regulations under Section 414(o)
of the Code), any of which includes or included the Seller or a Subsidiary.

 

“Escrow Agreement” shall mean an escrow agreement in substantially the form
attached hereto as Exhibit A.

 

“Escrow Agent” shall mean JP Morgan Chase.

 

“Escrow Amount” shall have the meaning set forth in Section 1.4.

 

“Escrow Fund” shall mean the fund established pursuant to the Escrow Agreement
paid by the Buyer to the Escrow Agent at the Closing pursuant to Section 1.4.

 

“Excluded Assets” shall mean the following assets of the Seller:

 

(a) the corporate charter, qualifications to conduct business as a foreign
corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
stock transfer books and other documents relating to the organization and
existence of the Seller as a corporation;

 

(b) all rights relating to refunds, recovery or recoupment of Taxes;

 

(c) any of the rights of the Seller under this Agreement or under the Ancillary
Agreements;

 

(d) those assets listed on Schedule 1.1(b) attached hereto;

 

(e) all rights of the Seller in and with respect to the assets associated with
its Employee Benefit Plans;

 

(f) all cash, short-term investments, deposits, bank accounts and other similar
assets;

 

(g) the corporate charter, taxpayer and other identification numbers, seals,
minute books, share transfer books, blank share certificates, and other
documents relating to the organization, maintenance, and existence of the
Sellers as corporations;

 

(h) rights and Claims under any D&O insurance policy of the Sellers;

 

(i) all insurance policies of the Sellers, as well as all proceeds which may be
payable thereunder and all rights and Claims under insurance policies of Seller;

 

(j) rights of the Sellers under this Agreement and the Ancillary Agreements, all
as the same exist on the Closing Date;

 

(k) PureSight-US’s rights with respect to the loans made by PureSight-US to
PureSight-Israel or any similar agreement or arrangement by which PureSight-US
loaned funds to PureSight-Israel (collectively, the “PureSight Loan Agreement”);
and

 

(l) the shares of capital stock of PureSight-Israel and the shares of capital
stock of any other corporation or entity that is an Affiliate of either Seller.

 

“Expected Claim Notice” shall mean a notice that, as a result of a legal
proceeding instituted by or written claim made by a third party, an Indemnified
Party reasonably expects to incur Damages for which it is entitled to
indemnification under Article VII.

 

 

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“Financial Statements” shall mean:

 

the audited consolidated balance sheets and statements of income, changes in
stockholders’ equity and cash flows of PureSight-US as of the end of and for
each of the last three fiscal years, and

 

the unaudited consolidated balance sheet as of April 30, 2005 and the unaudited
consolidated statements of income, changes in stockholders’ equity and cash
flows of PureSight-US for the four months ended April 30, 2005.

 

“GAAP” shall mean United States generally accepted accounting principles.

 

“Governmental Entity” shall mean any U.S., Israeli and/or any other country’s
court, arbitrational tribunal, administrative agency or commission or other
governmental or regulatory authority or agency.

 

“Grant” shall mean any grant, tax benefit, incentive or subsidy from any Israeli
or other Governmental Body, including in relation to “Approved Enterprise
Status” from the Investment Center of the Israeli Ministry of Industry, Trade
and Labor.

 

“Indemnified Party” shall mean a party entitled, or seeking to assert rights, to
indemnification under Article VII of this Agreement.

 

“Indemnifying Party” shall mean the party from whom indemnification is sought by
the Indemnified Party.

 

“Intellectual Property” shall mean all:

 

(a) patents, patent applications, patent disclosures and all related
continuation, continuation-in-part, divisional, reissue, reexamination, utility
model, certificate of invention and design patents, patent applications,
registrations and applications for registrations;

 

(b) trademarks, service marks, trade dress, Internet domain names, logos, trade
names and corporate names and registrations and applications for registration
thereof;

 

(c) copyrights and registrations and applications for registration thereof;

 

(d) mask works and registrations and applications for registration thereof;

 

(e) computer software, data and documentation;

 

(f) inventions, trade secrets and confidential business information, whether
patentable or nonpatentable and whether or not reduced to practice, know-how,
manufacturing and product processes and techniques, research and development
information, copyrightable works, financial, marketing and business data,
pricing and cost information, business and marketing plans and customer and
supplier lists and information;

 

(g) other proprietary rights relating to any of the foregoing (including
remedies against infringements thereof and rights of protection of interest
therein under the laws of all jurisdictions); and

 

(h) copies and tangible embodiments thereof.

 

“Internal Systems” shall mean the internal systems of either Seller that are
used in its business or operations, including computer hardware systems,
software applications and embedded systems.

 

“Lease” shall mean any lease or sublease pursuant to which either Seller leases
or subleases from another party any real property.

 

“Legal Proceeding” shall mean any action, suit, proceeding, claim, arbitration
or investigation before any Governmental Entity or before any arbitrator.

 

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“Materials of Environmental Concern” shall mean any: pollutants, contaminants or
hazardous substances (as such terms are defined under CERCLA), pesticides (as
such term is defined under the Federal Insecticide, Fungicide and Rodenticide
Act), solid wastes and hazardous wastes (as such terms are defined under the
Resource Conservation and Recovery Act), chemicals, other hazardous, radioactive
or toxic materials, oil, petroleum and petroleum products (and fractions
thereof), or any other material (or article containing such material) listed or
subject to regulation under any law, statute, rule, regulation, order, Permit,
or directive due to its potential, directly or indirectly, to harm the
environment or the health of humans or other living beings.

 

“Most Recent Balance Sheet” shall mean the audited consolidated balance sheet of
PureSight-US as of the Most Recent Balance Sheet Date.

 

“Most Recent Balance Sheet Date” shall mean December 31, 2004.

 

“Non-controlling Party” shall mean the party not controlling the defense of any
Third Party Action.

 

“Open Source Materials” shall mean all software or other material that is
distributed as “free software”, “open source software” or under a similar
licensing or distribution model, including without limitation under the GNU
General Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla
Public License (MPL), BSD Licenses, the Artistic License, the Netscape Public
License, the Sun Community Source License (SCSL) the Sun Industry Standards
License (SISL) and the Apache License.

 

“Ordinary Course of Business” shall mean the ordinary course of business
consistent with past custom and practice (including with respect to frequency
and amount).

 

“Parties” shall mean the Buyers and the Sellers.

 

“Permits” shall mean all permits, licenses, registrations, certificates, orders,
approvals, franchises, variances and similar rights issued by or obtained from
any Governmental Entity (including those issued or required under Environmental
Laws and those relating to the occupancy or use of owned or leased real
property).

 

“Purchase Price” shall mean the purchase price to be paid by the Buyers for the
Acquired Assets at the Closing, as set forth in Section 1.3.

 

“PureSight Loan Agreement” shall have the meaning assigned to such term in the
definition of Excluded Assets.

 

“Requisite Stockholder Approval” shall mean the approval of the sale of the
Acquired Assets of PureSight-US by PureSight-US to the Buyers as contemplated by
this Agreement by (i) a majority of the votes represented by the outstanding
shares of capital stock of PureSight-US entitled to vote thereon and (ii) a
majority of the votes represented by the outstanding shares of Series A
Preferred Stock of PureSight-US entitled to vote thereon.

 

“Response” shall mean a written response containing the information provided for
in Section 7.3(c).

 

“Restricted Employee” shall mean any person who either (i) was an employee of
either Buyer on either the date of this Agreement or the Closing Date or (ii)
was an employee of either Seller on either the date of this Agreement or the
Closing Date and received an employment offer from either Buyer within five
business days following the Closing Date.

 

“Retained Liabilities” shall mean any and all liabilities or obligations
(whether known or unknown, absolute or contingent, liquidated or unliquidated,
due or to become due and accrued or unaccrued, and whether claims with respect
thereto are asserted before or after the Closing) of the Sellers which are not
Assumed Liabilities. The Retained Liabilities shall include, without limitation,
all liabilities and obligations of the Sellers:

 

(a) for income, transfer, sales, use or other Taxes arising in connection with
the consummation of the transactions contemplated by this Agreement (including
any income Taxes arising as a result of the transfer by the Sellers to the
Buyers of the Acquired Assets;

 

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(b) for costs and expenses incurred in connection with this Agreement or the
consummation of the transactions contemplated by this Agreement;

 

(c) under this Agreement or the Ancillary Agreements;

 

(d) for any Taxes, including deferred taxes or taxes measured by income of any
Seller earned prior to, on or after the Closing, any liabilities for federal or
state income tax, FICA taxes and withholding taxes of employees of any Seller
which any Seller is legally obligated to withhold, any liabilities of any Seller
for employer FICA and unemployment taxes incurred, and any liabilities of any
Seller for sales, use or excise taxes or customs and duties; and all liabilities
and obligations of any Seller arising before, on or after the Closing under the
Employee Benefit Plans;

 

(e) under any agreements, contracts, leases or licenses which are listed on
Schedule 1.1(b);

 

(f) arising prior to the Closing under the Assigned Contracts (except to the
extent set forth in clause (b) of the definition of Assumed Liabilities), and
all liabilities for any breach, act or omission by any Seller prior to the
Closing under any Assigned Contract;

 

(g) except to the extent set forth in clause (b) of the definition of Assumed
Liabilities, for repair, replacement or return of products manufactured,
licensed or sold by any Seller before, on or after the Closing, including
without limitation, all obligations and liabilities to replace or repair
products pursuant to any warranty claims against either Seller arising before,
on or after the Closing Date with regard to products sold or delivered by either
Seller prior to the Closing Date.

 

(h) arising out of events, conduct or conditions existing or occurring prior to
the Closing that constitute a violation of or non-compliance with any law, rule
or regulation (including Environmental Laws), any judgment, decree or order of
any Governmental Entity, or any Permit or that give rise to liabilities or
obligations with respect to Materials of Environmental Concern;

 

(i) to pay severance benefits to any employee of any Seller whose employment is
terminated (or treated as terminated) in connection with the consummation of the
transactions contemplated by this Agreement, and all liabilities resulting from
the termination of employment of employees of any Seller that arose under any
federal or state law or under any Employee Benefit Plan established or
maintained by any Seller;

 

(j) to indemnify any person or entity by reason of the fact that such person or
entity was a director, officer, employee, or agent of any Seller or was serving
at the request of any Seller as a partner, trustee, director, officer, employee,
or agent of another entity (whether such indemnification is for judgments,
damages, penalties, fines, costs, amounts paid in settlement, losses, expenses,
or otherwise and whether such indemnification is pursuant to any statute,
charter document, bylaw, agreement, or otherwise);

 

(k) resulting from injury to or death of persons or damage to or destruction of
property (including any workers compensation claim);

 

(l) for medical, dental and disability (both long-term and short-term benefits),
whether insured or self-insured, owed to (A) employees or former employees of
any Seller that are employed by either Buyer after the Closing based upon (1)
exposure to conditions in existence prior to the Closing or (2) disabilities
existing prior to the Closing (including any such disabilities which may have
been aggravated following the Closing) and (B) employees or former employees of
any Seller that are not employed by either Buyer after the Closing;

 

(m) all liabilities and obligations of any Seller arising before, on or after
the Closing under the Employee Benefit Plans;

 

(n) all liabilities and obligations of the Sellers under the PureSight Loan
Agreement and any other obligation of PureSight-Israel to PureSight-US under any
other agreement or arrangement; and

 

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(o) all liabilities and obligations of the Sellers under the Convertible Secured
Bridge Note, dated January 30, 2004, the Convertible Debenture issued pursuant
to the Share Purchase and Convertible Loan Agreement, dated May 24, 2002, and
any other notes, debentures and other securities that any Seller has issued to
any person.

 

“Security Interest” shall mean any mortgage, pledge, security interest,
encumbrance, charge, tax lien or other lien (whether arising by contract or by
operation of law), other than (i) mechanic’s, materialmen’s, and similar liens,
(ii) liens arising under worker’s compensation, social security, retirement, and
similar legislation, (iii) tax liens of Taxes not yet due and payable and (iv)
liens on goods in transit incurred pursuant to documentary letters of credit, in
each case arising in the Ordinary Course of Business of the Seller and not
material to the Seller.

 

“Seller” or “Sellers” shall have the meaning set forth in the first paragraph of
this Agreement.

 

“Seller Certificates” shall mean certificates of each Seller to the effect that
each of the conditions specified in clause (a) of Section 5.1 and clauses (a)
through (d) (insofar as clause (d) relates to Legal Proceedings involving the
Sellers) of Section 5.2 is satisfied in all respects.

 

“Seller Intellectual Property” shall mean the Intellectual Property owned by or
licensed to either Seller and covering, incorporated in, underlying or used in
connection with the Customer Deliverables or the Internal Systems.

 

“Seller Material Adverse Effect” shall mean any material adverse change, event,
circumstance or development with respect to, or material adverse effect on, (i)
the business, assets, liabilities, capitalization, condition (financial or
other), or results of operations of the Sellers, taken as a whole, or (ii) the
ability of the Buyers to operate the business of the Sellers immediately after
the Closing; other than any change, event, circumstance, development or effect
arising solely and directly from (i) the public announcement of this Agreement,
compliance with terms of this Agreement or the consummation of the transactions
contemplated by this Agreement or (ii) any economic, political or industry
condition or effect that affects the economy in general or affects the Sellers’
industry on an industry-wide basis, and in each case not specifically relating
to, or disproportionately affecting, the Sellers. For the avoidance of doubt,
the parties agree that the terms “material”, “materially” or “materiality” as
used in this Agreement with an initial lower case “m” shall have their
respective customary and ordinary meanings, without regard to the meaning
ascribed to Seller Material Adverse Effect.

 

“Seller Plan” shall mean any Employee Benefit Plan maintained, or contributed
to, by any Seller or any ERISA Affiliate.

 

“Software” shall mean any of the software owned by any Seller.

 

“Taxes” shall mean all taxes, charges, fees, levies or other similar assessments
or liabilities, including income, gross receipts, ad valorem, premium,
value-added, excise, real property, personal property, sales, use, transfer,
withholding, employment, unemployment, insurance, social security, business
license, business organization, environmental, workers compensation, payroll,
profits, license, lease, service, service use, severance, stamp, occupation,
windfall profits, customs, duties, franchise and other taxes imposed by the
United States of America, the State of Israel or any state, local or foreign
government, or any agency thereof, or other political subdivision of the United
States, Israel or any such government, and any interest, fines, penalties,
assessments or additions to tax resulting from, attributable to or incurred in
connection with any tax or any contest or dispute thereof.

 

“Tax Returns” shall mean all reports, returns, declarations, statements or other
information required to be supplied to a taxing authority in connection with
Taxes.

 

“Third Party Action” shall mean any suit or proceeding by a person or entity
other than a Party for which indemnification may be sought by a Party under
Article VII.

 

“VAT” shall mean the amount of Value Added Tax required to be paid by applicable
law by BCGI-Israel to PureSight-Israel in connection with the purchase by
BCGI-Israel of the Acquired Assets hereunder.

 

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MISCELLANEOUS

 

Press Releases and Announcements. The Sellers shall not issue any press release
or public announcement relating to the subject matter of this Agreement without
the prior written approval of the Buyers. The Buyers shall not issue any press
release or public announcement relating to the subject matter of this Agreement,
unless the Sellers shall have first been given a copy of the draft of such press
release or public announcement and an opportunity to comment thereon.

 

No Third Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any person other than the Parties and their respective successors
and permitted assigns.

 

Entire Agreement. This Agreement (including the documents referred to herein)
constitutes the entire agreement between the Parties and supersedes any prior
understandings, agreements, or representations by or between the Parties,
written or oral, with respect to the subject matter hereof.

 

Succession and Assignment. This Agreement shall be binding upon and inure to the
benefit of the Parties named herein and their respective successors and
permitted assigns. Neither Party may assign any of its rights or delegate any of
its performance obligations hereunder without the prior written approval of the
other Party; provided that either Buyer may assign some or all of its rights,
interests and/or obligations hereunder to one or more direct or indirect
wholly-owned subsidiaries of Boston Communications Group, Inc.; provided,
however, that such assignment shall not relieve BCGI-US or BCGI-Israel from
their respective duties and obligations hereunder. Any purported assignment of
rights or delegation of performance obligations in violation of this Section
10.4 is void.

 

Counterparts and Facsimile Signature. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. This Agreement may be
executed by facsimile signature.

 

Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.

 

Notices. All notices, requests, demands, claims and other communications
hereunder shall be in writing. Any notice, request, demand, claim or other
communication hereunder shall be deemed duly delivered four business days after
it is sent by registered or certified mail, return receipt requested, postage
prepaid, or one business day after it is sent for next business day delivery via
a reputable nationwide overnight courier service, in each case to the intended
recipient as set forth below:

 

If to the Seller:

   Copy to:

PureSight, Inc.

   Howard Rice Nemerovski Canady Falk & Rabkin

300 Avenida de las Palmeras

   Three Embarcadero Center – 7th Floor

San Clemente, CA 92672

   San Francisco, CA 94111-4024

Attn: President

   Attn: Michael Sullivan, Esq.       

PureSight Ltd.

   Berkman Whecsler Sahar Bloom & co.

300 Ave Palmeras

   Law Offices

San Clemente, CA 92672

   1Azrieli Center, Tel-Aviv Israel 67021

Attn: Chief Executive Officer

   Attn: Alon Sahar, Adv.

 

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If to the Buyer:

   Copy to:

Boston Communications Group, Inc.

   Wilmer Cutler Pickering Hale and Dorr LLP

55 Middlesex Turnpike

   Bay Colony Corporate Center

Bedford, MA 01730

   1100 Winter Street, Suite 4650

Attn: General Counsel

   Waltham, MA 02451      Attn: Michael D. Bain, Esq.

 

Either Party may give any notice, request, demand, claim or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, ordinary mail, or electronic mail), but no such
notice, request, demand, claim or other communication shall be deemed to have
been duly given unless and until it actually is received by the party for whom
it is intended. Either Party may change the address to which notices, requests,
demands, claims and other communications hereunder are to be delivered by giving
the other Party notice in the manner herein set forth.

 

Governing Law. All matters arising out of or relating to this Agreement and the
transactions contemplated hereby (including without limitation its
interpretation, construction, performance and enforcement) shall be governed by
and construed in accordance with the internal laws of the Commonwealth of
Massachusetts, without giving effect to any choice or conflict of law provision
or rule (whether of the Commonwealth of Massachusetts or any other jurisdiction)
that would cause the application of laws of any jurisdictions other than those
of the Commonwealth of Massachusetts.

 

Amendments and Waivers. The Parties may mutually amend any provision of this
Agreement at any time prior to the Closing; provided, however, that any
amendment effected subsequent to the Requisite Stockholder Approval shall be
subject to any restrictions contained in the Delaware General Corporation Law.
No amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by each of the Parties. No waiver by either Party
of any right or remedy hereunder shall be valid unless the same shall be in
writing and signed by the Party giving such waiver. No waiver by either Party
with respect to any default, misrepresentation, or breach of warranty or
covenant hereunder shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in any
way any rights arising by virtue of any prior or subsequent such occurrence.

 

Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to limit the term or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable as so
modified.

 

Expenses. Except as set forth in Article VII and the Escrow Agreement, each
Party shall bear its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby. The Seller agrees that none of the costs and expenses (including legal
fees and expenses) incurred by it in connection with this Agreement or the
transactions contemplated hereby will be (a) borne by any Subsidiary or (b) paid
until after the Closing.

 

Submission to Jurisdiction. Each Party (a) submits to the jurisdiction of any
state or federal court sitting in New York, New York in any action or proceeding
arising out of or relating to this Agreement or the Ancillary Agreements
(including any action or proceeding for the enforcement of any arbitral award
made in connection with any arbitration of a Dispute hereunder), (b) agrees that
all claims in respect of such action or proceeding may be heard and determined
in any such court, (c) waives any claim of inconvenient forum or other challenge
to venue in such court, (d) agrees not to bring any action or proceeding arising
out of or relating to this Agreement or the Ancillary Agreements in any other
court and (e) waives any right it may have to a trial by jury with respect to
any action or proceeding arising out of or relating to this Agreement or the
Ancillary Agreements; provided in each case that, solely with respect to any
arbitration of a Dispute, the Arbitrator shall resolve all threshold issues
relating to the validity and applicability of the arbitration provisions of this
Agreement, contract validity, applicability of statutes of

 

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limitations and issue preclusion, and such threshold issues shall not be heard
or determined by such court. Each party agrees to accept service of any summons,
complaint or other initial pleading made in the manner provided for the giving
of notices in Section 10.7, provided that nothing in this Section 10.12 shall
affect the right of either Party to serve such summons, complaint or other
initial pleading in any other manner permitted by law.

 

Specific Performance. Each Party acknowledges and agrees that the other Party
would be damaged irreparably in the event any of the provisions of this
Agreement (including Sections 6.1, 6.2 and 6.3) are not performed in accordance
with their specific terms or otherwise are breached. Accordingly, each Party
agrees that the other Party shall be entitled to an injunction or other
equitable relief to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition to any other remedy to
which it may be entitled, at law or in equity. Notwithstanding the foregoing,
the Parties agree that if a Dispute is submitted to arbitration in accordance
with Section 7.3(d) and Section 7.3(e), then the foregoing provisions of this
Section 10.13 shall not apply to such Dispute, and the provisions of Section
7.3(d) and Section 7.3(e) shall govern availability of injunctive relief,
specific performance or other equitable relief with respect to such Dispute.

 

Construction.

 

The language used in this Agreement shall be deemed to be the language chosen by
the Parties to express their mutual intent, and no rule of strict construction
shall be applied against either Party.

 

Any reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise.

 

Any reference herein to “including” shall be interpreted as “including without
limitation”.

 

Any reference to any Article, Section or paragraph shall be deemed to refer to
an Article, Section or paragraph of this Agreement, unless the context clearly
indicates otherwise.

 

[Remainder of Page Intentionally Left Blank]

 

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.

 

CELLULAR EXPRESS, INC. By:  

/s/ Frederick E. von Mering

--------------------------------------------------------------------------------

Name:   Frederick E. von Mering Title:   Chief Operating Officer bcgi
TECHNOLOGIES LTD. By:  

/s/ Frederick E. von Mering

--------------------------------------------------------------------------------

Name:   Frederick E. von Mering Title:   Chief Operating Officer PURESIGHT, INC.
By:  

/s/ J. Cleve Adams

--------------------------------------------------------------------------------

Name:   J. Cleve Adams Title:   Chief Executive Officer PURESIGHT, LTD. By:  

/s/ Ouri Azoulay

--------------------------------------------------------------------------------

Name:   Ouri Azoulay Title:   General Manager

 

38

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The following stockholders of the Seller hereby execute this Agreement for the
limited purpose of agreeing to and becoming bound by the provisions of Section
4.3(b).

 

BLUMBERG CAPITAL I, L.P. BLUMBERG CAPITAL AFFILIATES I, L.P. By:  

/s/ David J. Blumberg

--------------------------------------------------------------------------------

Name:   David J. Blumberg Title:   Managing partner BLUMBERG CAPITAL AFFILIATES
I, L.P. By:  

/s/ David J. Blumberg

--------------------------------------------------------------------------------

Name:   David J. Blumberg Title:   Managing partner HITACHI LTD. By:  

/s/ Michiharu Nakamura

--------------------------------------------------------------------------------

Name:   Michiharu Nakamura Title:   Executive Vice President

 

 

39