Exhibit 10.1

 

 

 

 

ASSET PURCHASE AGREEMENT

 

by and between

 

 

BRIDGELINE DIGITAL, INC.,

as Purchaser

 

 

SEEVOLUTION, INC.,

 

and

 

CELEBROS, INC.,

 

and

 

ELISHA GILBOA

 

Collectively, as Seller

 

 

 

 

February 13, 2019

 

 

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ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement (the “Agreement”) is made as of this 13 day of
February, 2019 by and between Bridgeline Digital, Inc., a Delaware corporation,
(“Purchaser”) and Seevolution, Inc a Delaware corporation, (“Seevolution”),
Celebros, Inc., a Delaware corporation and Elisha Gilboa, an individual
(“Celebros”, “Elisha Gilboa” collectively with Seevolution, “Seller”).
Purchaser, and Seller are sometimes referred to herein individually as a “Party”
and collectively as the “Parties”).

 

Recitals

 

WHEREAS, the Board of Directors of Purchaser and the Board of Directors of
Seller and the shareholders of Seller, have approved the sale of the Purchased
Assets (as defined herein), such Purchased Assets constituting all of the
tangible and intangible personal property and assets that are used or held for
use by Seller in connection with e-commerce site search, merchandizing and
navigation conversion technologies for online retailers (the “Business”);

 

WHEREAS, Seller desires to sell, and Purchaser desires to purchase, certain
assets and assume certain liabilities of Seller for the consideration and on the
terms set forth in this Agreement (the “Transaction”); and

 

WHEREAS, each of the Parties to the Agreement desires to make certain
representations, warranties, and agreements in connection with the Transaction
between the Parties and to prescribe various conditions thereto.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, and for other good and valuable consideration, the receipt, adequacy
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

ARTICLE I

 

PURCHASE AND SALE OF ASSETS

 

1.1.     Sale and Purchase of Assets. At the Closing (as defined in Section 1.6
hereof) and subject to and upon the terms and conditions of this Agreement,
Seller shall sell, convey, transfer, assign and deliver or cause to be sold,
conveyed, transferred, assigned and delivered to Purchaser, and Purchaser will
purchase from Seller, free and clear of all liens, charges, claims, pledges,
security interests and encumbrances (“Liens”), the Assets (as hereinafter
defined). The term “Assets” shall mean all of Seller’s right, title and interest
in and to, as of the Closing, all of the assets and properties, whether tangible
or intangible, wherever situated, and whether or not specifically referred to in
any instrument or conveyance delivered pursuant hereto, that are identified on
Schedule 1.1 hereto, and which shall specifically include all equity interests
owned by Seller in any Subsidiary free and clear of all Liens. The Assets
include all of the assets and properties of the Business other than the Excluded
Assets (as defined in Section 1.2 hereof).

 

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1.2.     Excluded Assets. Notwithstanding anything contained in Section 1.1 to
the contrary, Seller shall retain, as of and following the Closing, all of
Seller’s right, title and interest in and to all of the assets and properties,
whether tangible or intangible, wherever situated and whether or not
specifically referred to herein or in any instrument or conveyance delivered
pursuant hereto, that are identified on Schedule 1.2 hereto (the “Excluded
Assets”).

 

1.3.     Purchase Price; Adjustment to Purchase Price.

 

(a)     Purchase Price. In exchange for the Assets, and subject to the terms and
conditions contained in this Agreement, on the Closing Date, Purchaser agrees
to: (a) pay to Seller Four Hundred Thousand Dollars ($400,000) via wire transfer
to an account designated by Seller plus Ten Thousand Dollars ($10,000) every
month for ten (10) months beginning on April 30, 2019 and ending January 31,
2020 totaling One Hundred Thousand Dollars ($100,000) (the “Cash
Consideration”); and (b) instruct its transfer agent to issue to Seller (or at
Seller’s direction, to Seller’s shareholders) Two Million (2,000,000) shares of
restricted common stock of Purchaser, $0.001 par value per share (with
Purchaser’s common stock referred to herein as the “Purchaser Stock” and the
2,000,000 shares referred to as the “Stock Consideration” and together with the
Cash Consideration, the “Purchaser Price”). For purposes of this Agreement, the
term “Effective Price” shall mean the volume weighted average closing price for
Purchaser Common Stock as reflected on the Nasdaq Capital Market exchange for
the 15-day trading period ending on the trading day immediately preceding the
Closing Date. The Purchaser Stock shall be restricted as set forth in Section
5.6 below. The Purchase Price shall be reduced of any Deferred Revenue (as
defined below) as set forth in Section 1.3(b). Seller is solely responsible to
disperse any and all Cash Consideration and Stock Consideration to the
appropriate shareholders.

 

(b)     Adjustments for Deferred Revenue; Accounts Receivable; and Accounts
Payable. “Deferred Revenue” shall mean amounts recorded on Exhibit C as amounts
received from customers from Seller prior to the Closing for services not yet
performed by Seller subsequent to the end of the calendar month for which the
Closing. If at any time after the Closing, Purchaser shall receive credible
evidence from customers of Seller that the Deferred Revenue listed on Exhibit C
is more than $5,000 less than the actual amount received by Seller for services
not yet performed, then the Cash Consideration shall be reduced by such deficit
(the “Excess Pre-Collections”) and Purchaser shall be able to offset any
payments still owed to Seller by the amount of the Excess Pre-Collections.
Notwithstanding the preceding sentence, immediately upon being informed of the
possibility of any Excess Pre-Collections, Purchaser shall inform Seller the
nature of such claim and Seller shall be given a reasonable time to dispute such
client’s claim as to Deferred Revenue.

 

1.4.     Allocation of Purchase Price. Schedule 1.4 to this Agreement sets forth
in detail the total purchase price allocation. Purchaser and Seller agree to
prepare and file their respective tax returns in a manner consistent with the
allocation of the purchase price set forth on such schedule. Each of Purchaser
and Seller shall file, in accordance with the Internal Revenue Code of 1986, as
amended (the “Code”), an asset allocation statement on Form 8594 with its
respective federal income tax return for the tax year in which the Closing Date
occurs and shall provide the other Party with a copy of the Form 8594 being
filed.

 

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1.5.     Assumption of Liabilities. Subject to the terms and conditions
contained in this Agreement, in addition to the Purchase Price, Purchaser shall,
at the Closing, assume and agree to pay or perform, or cause to be paid or
performed, as they become due or payable, only those liabilities, duties and
obligations identified on Schedule 1.5A hereto (the “Assumed Liabilities”).
Other than as set forth above, Purchaser shall not assume, and nothing contained
in this Agreement shall be construed as an assumption by Purchaser, of any
liabilities, obligations, or undertakings of Seller of any nature whatsoever,
whether fixed or contingent, known or unknown. Seller shall be responsible for
all of the liabilities, obligations and undertakings not specifically assumed by
Purchaser, including, without limitation, the excluded liabilities identified on
Schedule 1.5 hereto (the “Excluded Liabilities”).

 

1.6.     Closing. The closing (the “Closing”) of the Transaction contemplated by
this Agreement shall take place on a date and time to be specified by Purchaser
and Seller (the “Closing Date”), at the offices of Purchaser. The Seller need
not be physically present at the Closing in order to consummate the Transaction
contemplated herein. The Parties agree that the execution and delivery of this
Agreement and all ancillary agreements may take place by means of .pdf signature
pages with original signature pages to follow.

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES OF SELLER AND ELISHA GILBOA

 

In order to induce Purchaser to enter into this Transaction, Seller and Elisha
Gilboa jointly and severally represent and warrant to Purchaser that, except as
set forth in the disclosure schedules of Seller (the “Disclosure Schedules”),
the statements made in this Article II are true and correct as of the date
hereof, 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 true and correct as of such date). The Disclosure
Schedules will be arranged in paragraphs corresponding to the numbered and
lettered sections contained in this Article II and the disclosure in any
paragraph shall qualify other sections in this Article II to the extent that it
is apparent from a reading of such disclosure that it also qualifies or applies
to such other sections. Whenever in this Article II the term “to the knowledge
of Seller” is used, it shall mean the actual knowledge of Mr. Joseph Shemesh and
Mr. Elisha Gilboa after reasonable inquiry.

 

2.1.     Organization and Corporate Power. Each of Seller is a corporation duly
organized, validly existing and in corporate good standing under the laws of the
State of Delaware and has the power and authority to carry on its business as
presently conducted. There is no other jurisdiction wherein the character of its
property, or the nature of the activities presently conducted by it, makes such
qualification necessary, except where the failure to be so qualified will not
have a Material Adverse Effect on Seller. For purposes of this Agreement, the
term “Material Adverse Effect”, when used with respect to a Party to this
Agreement, means a material adverse effect upon the results of operations,
financial condition, assets, liabilities, intellectual property, tangible
properties or business of such entity, taken as a whole.

 

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2.2.     Authorization to Execute and Perform Agreements. (a) Seller has the
right, power and legal capacity and has taken all necessary legal, director and
shareholder action required for the due and valid authorization, execution,
delivery and performance by Seller of this Agreement and any other agreement or
instrument executed by Seller in connection herewith (collectively, the
“Transaction Documents”) and the consummation of the transactions contemplated
herein or therein. This Agreement is, and to the extent that Seller is a party
thereto, each of the Transaction Documents is, a valid and binding obligation of
Seller enforceable in accordance with its respective terms, except to the extent
that such enforcement may be subject to applicable bankruptcy, reorganization,
insolvency, fraudulent conveyance or other laws affecting creditors’ rights
generally and to the application of general equitable principles; and (b) Elisha
Gilboa has the legal right, power and capacity to enter into, execute and
deliver the Transaction Documents to which he is a party and to perform his
obligations under the Transaction Documents to which he is a party. The
Transaction Documents to which Elisha Gilboa is a party have been duly executed
and delivered and are the valid and binding obligation of Elisha Gilboa
enforceable in accordance with their terms, except as may be limited by
bankruptcy, moratorium, reorganization, insolvency or other similar Laws now or
hereafter in effect generally affecting the enforcement of creditors’ rights.

 

2.3.     No Conflicts. Except as set forth on the Disclosure Schedule, the
execution, delivery and performance of this Agreement and the Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby by Seller does not and will not violate, conflict with, result in a
breach of or constitute a default under (or which with notice or lapse of time,
or both, would constitute a breach of or default under), or result in the
creation of any lien, security interest or other encumbrance under (a) any note,
agreement, contract, license, instrument, lease or other obligation to which
Seller is a party or by which Seller is bound, and for which Seller has not
previously obtained a written waiver of such breach or default, which waiver has
been delivered to Purchaser, except where such violation would not have a
Material Adverse Effect on Seller, (b) any judgment, order, decree, ruling or
injunction known and applicable to Seller, (c) any statute, law, regulation or
rule of any governmental agency or authority, or (d) the certificate of
formation, by-laws, organizational documents or equivalent documents of Seller
(collectively, the “Seller Charter Documents”). This Agreement and the
transactions contemplated hereby have been unanimously approved by Seller’s
Board of Directors and approved by Seller’s shareholders as required by the
Seller Charter Documents, and do not require any further legal action or
authorization, and are not and will not be subject to any right of first
refusal, put, call or similar right.

 

2.4.     Government Approvals. No consent, approval, license, order or
authorization of, or registration, qualification, declaration, designation, or
filing (each a “Consent”) with any court, arbitral tribunal, administrative
agency or commission or other governmental or regulatory agency (each a
“Governmental Entity”), is or will be required on the part of each of Seller and
its Subsidiaries in connection with the execution, delivery and performance of
this Agreement, the other Transaction Documents and any other agreements or
instruments executed by Seller in connection herewith or therewith, the failure
of which would have a Material Adverse Effect on Seller.

 

2.5.     Authorized and Outstanding Equity Interests. The Disclosure Schedule
sets forth the issued and outstanding equity interests of Seller, all of which
are validly issued and outstanding, and all options and warrants or similar
rights to acquire equity interests of Seller. Such equity interests are all of
the issued and outstanding equity interests, actual or contingent, in Seller and
are validly issued. Except as set forth in the Seller Charter Documents or on
the Disclosure Schedule, there are no voting agreements, voting trusts,
registration rights, rights of first refusal, preemptive rights, buy-sell
agreements, co-sale rights, or other restrictions applicable to any equity
interests in Seller. All of the issued and outstanding equity interests in
Seller were issued in transactions complying with or exempt from the
registration requirements of the Securities Act of 1933, as amended (the
“Securities Act”) and any applicable state “blue sky” laws.

 

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2.6.     Subsidiaries. Celebros is a wholly owned subsidiary of Seevolution.
Celebros B.V. (Netherlands) is a wholly owned subsidiary of Celebros. Other than
the preceding, Seller does not have any subsidiaries. Except as set forth on the
Disclosure Schedule, or in the Seller Financial Statements, Seller does not have
any investment or other interest in, or any outstanding loan or advance to or
from, any person or entity, including, without limitation, any officer, director
or shareholder.

 

2.7.     Financial Information. Seller has previously delivered to Purchaser the
unaudited trial balance sheet of Seller for the years ending 2015, 2016 a 2017,
and Seller’s customer accounts receivables and aging report (collectively, the
“Annual Seller Financial Statements”). The Annual Seller Financial Statements
present fairly, in all material respects, the financial condition and results of
operations of Seller as of and for the relevant periods and have been prepared
from, and are consistent with, the books and records of Seller. Except as set
forth on the Disclosure Schedule, Seller has no liability, contingent or
otherwise, which is not adequately reflected in or reserved against in the
Annual or Interim Seller Financial Statements that is reasonably likely to
materially and adversely affect the financial condition of Seller. Except as set
forth in the Seller Financial Statements or on the Disclosure Schedule, since
January 31, 2019 (the “Balance Sheet Date”), (i) there has been no change in the
business, property, assets, liabilities, condition (financial or otherwise),
operations, results of operations, affairs or prospects of Seller except for
changes in the ordinary course of business which, in the aggregate, would not
have a Material Adverse Effect, and (ii) none of the business, property, assets,
liabilities, condition (financial or otherwise), operations, results of
operations, affairs or prospects of Seller have been materially adversely
affected by any occurrence or development, in the aggregate, whether or not
insured against.

 

2.8.     Events Subsequent to the Annual Seller Financial Statements. Except as
set forth on the Disclosure Schedule, or in the Seller Financial Statements,
since the Balance Sheet Date, Seller has not, in excess of $15,000 (i) issued
any equity interest, (ii) borrowed any amount or incurred or become subject to
any material liability (absolute, accrued or contingent), except liabilities
under contracts entered into in the ordinary course of business, (iii)
discharged or satisfied any lien or encumbrance or incurred or paid any
obligation or liability (absolute, accrued or contingent) other than current
liabilities shown on the Seller Financial Statements and incurred in the
ordinary course of business, (iv) declared or made any payment, other than
ordinary payments of compensation in amounts consistent with the historic
levels, or distributions to stockholders or purchased or redeemed any Shares or
other equity interests, except for the exercise of stock options or similar
rights, (v) mortgaged, pledged or subjected to lien any of its assets, tangible
or intangible, other than liens of current real property taxes not yet due and
payable or such liabilities or obligations which would not have a Material
Adverse Effect on Seller, (vi) sold, assigned or transferred any of its tangible
assets except in the ordinary course of business, or canceled any material debt
or claim, except in the ordinary course of business, in an individual amount in
excess of $10,000, or $20,000 in the aggregate, (vii) sold, assigned,
transferred or granted any license with respect to any patent, trademark, trade
name, service mark, copyright, trade secret or other intangible asset, except
pursuant to license or other agreements entered into in the ordinary course of
business, in an individual amount in excess of $10,000, or $20,000 in the
aggregate, (viii) suffered any material loss of property or knowingly waived any
right of substantial value whether or not in the ordinary course of business,
(ix) made any change in officer compensation, (x) made any material change in
the manner of business or operations of Seller, (xi) entered into any
transaction except in the ordinary course of business or as otherwise
contemplated hereby, or (xii) entered into any commitment (contingent or
otherwise) to do any of the foregoing.

 

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2.9.     Litigation. There is no litigation or governmental proceeding or
investigation, pending or, to Seller’s knowledge, threatened, against Seller or
affecting any of Seller’s properties or assets, or against any director,
officer, key employee, or present shareholder of Seller in his or her capacity
as such, nor to Seller’s knowledge has there occurred any event or does there
exist any condition on the basis of which any litigation, proceeding or
investigation might properly be instituted. To Seller’s knowledge, Seller is not
in default with respect to any order, writ, injunction, decree, ruling or
decision of any court, commission, board or other government agency, except for
such order, writ, injunction, decree, ruling or decision which would not have a
Material Adverse Effect on Seller.

 

2.10.   Compliance with Laws and Other Instruments. Except as set forth on the
Disclosure Schedule, Seller is in compliance with the Seller Charter Documents,
and in all material respects with the provisions of each mortgage, indenture,
lease, license, other agreement or instrument, judgment, decree, judicial order,
statute and regulation by which it is bound or to which its properties are
subject and where non-compliance would not have a Material Adverse Effect on
Seller.

 

2.11.   Taxes.

 

(a)     The term “Taxes” as used in this Agreement means all federal, state,
local, foreign net income, alternative or add-on minimum tax, estimated, gross
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, capital profits, lease, service, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit taxes, customs, duties and other taxes,
governmental fees and other like assessments and charges of any kind whatsoever,
together with all interest, penalties, additions to tax and additional amounts
with respect thereto, and the term “Tax” means any one of the foregoing Taxes.
The term “Tax Returns” as used herein means all returns, declarations, reports,
claims for refund, information statements and other documents relating to Taxes,
including all schedules and attachments thereto, and including all amendments
thereof, and the term “Tax Return” means any one of the foregoing Tax Returns.
“Tax Authority” means any governmental authority responsible for the imposition
of any Tax.

 

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(b)     The Seller has timely filed all Tax Returns required to be filed by it
and has paid all Taxes owed (whether or not shown as due on such returns),
including, without limitation, all Taxes which Seller is obligated to withhold
for amounts paid or owing to employees, creditors and third parties. All Tax
Returns filed by Seller were complete and correct in all material respects.
Except as set forth on the Disclosure Schedule, none of the Tax Returns filed by
Seller or Taxes payable by Seller have been the subject of an audit, action,
suit, proceeding, claim, examination, deficiency or assessment by any
governmental authority, and no such audit, action, suit, proceeding, claim,
examination, deficiency or assessment is currently pending or, to the knowledge
of Seller, threatened. Except as set forth on the Disclosure Schedule, Seller is
not currently the beneficiary of any extension of time within which to file any
Tax Return, and Seller has not waived any statute of limitation with respect to
any Tax or agreed to any extension of time with respect to a Tax assessment or
deficiency. All material elections with respect to Taxes with respect to Seller,
as of the Closing Date, are set forth in the Seller Financial Statements or in
the Disclosure Schedule.

 

(c)     To the best of Seller’s knowledge, no circumstances exist or have
existed which would constitute grounds for assessment against Seller of any tax
liability with respect to any period for which Tax Returns have been filed

 

(d)     Seller is not a party to any Tax sharing agreement or similar
arrangement. Seller has never been a member of a group filing a consolidated
federal income Tax Return (other than a group the common parent of which was the
Seller), and Seller has no liability for the Taxes of any Person. “Person” shall
mean an individual or entity, including a partnership, limited liability
company, corporation, association, joint stock company, trust, joint venture,
unincorporated organization or Governmental Entity (or any department, agency,
or political subdivision thereof).

 

(e)     There are no liens for Taxes upon any of the assets. The unpaid Taxes of
Seller did not, as of December 31, 2018, exceed by any material amount the
accrual for current Taxes (as opposed to any accrual for deferred Taxes
established to reflect timing differences between book and Tax income) as shown
on the Annual Seller Financial Statements, and will not exceed by any material
amount such reserve as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of Seller in filing its Tax
Returns. Seller has not incurred any liability for Taxes from January 1, 2019
through the Closing Date other than in the ordinary course of business
consistent with past practice. Seller is not obligated to file any Tax Return in
any jurisdiction (whether foreign or domestic) other than those jurisdictions in
which it currently files Tax Returns.

 

(f)     Each Plan (as defined in Section 2.21) that is a non-qualified deferred
compensation plan subject to Section 409A of the Code has been operated in good
faith compliance with Section 409A of the Code and IRS Notice 2005-1 since
January 1, 2005 and Seller does not have, and does not expect to have any
future, Tax withholding obligation in respect of Section 409A under any Plan.

 

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(g)     Seller is not a party to any agreement, contract, arrangement or plan
that has resulted or would result, separately or in the aggregate, in the
payment of (i) any “excess parachute payments” within the meaning of Section
280G of the Code (without regard to the exceptions set forth in Sections
280G(b)(4) and 280G(b)(5) of the Code).

 

(h)     Seller has not been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(2) of the Code.

 

2.12.   Real Property.

 

(a)     The Disclosure Schedule sets forth the addresses and uses of all real
property that Seller owns, leases or subleases, and any lien or encumbrance on
any such owned real property or Seller’s leasehold interest therein, specifying
in the case of each such lease or sublease, the name of the lessor or sublessor,
as the case may be, the lease term and the rental obligations of the lessee
thereunder.

 

(b)     There are no defaults by Seller under any existing leases, subleases or
other contractual obligations pertaining to real property that Seller owns,
leases or subleases, and to the knowledge of Seller, by any other party, which
might curtail in any material respect the present use of Seller’s property
listed on the Disclosure Schedule.

 

2.13.   Assets. Seller is the true and lawful owner and has good title to the
Assets, free and clear of all Liens. Upon execution and delivery by Seller to
Purchaser of the instruments of conveyance referred to herein, Purchaser will
become the true and lawful owner of, and will receive good title to, the Assets
free and clear of all Liens. The Assets include all of the properties and other
assets necessary for Seller to conduct the Business as presently conducted and
as presently proposed to be conducted and constitute all assets used by Seller
in the Business. Each tangible 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 suitable for the
purpose for which it is presently used.

 

2.14.   Intellectual Property.

 

(a)     The Disclosure Schedule lists all (i) patented or registered
Intellectual Property (as defined herein) owned by Seller in connection with the
Business, (ii) pending patent applications and applications for registrations of
other Intellectual Property filed by or on behalf of Seller in connection with
the Business, (iii) domain names and Internet websites maintained solely by or
on behalf of Seller in connection with the Business, (iv) all products and
services of Seller currently being licensed, offered, or sold or that are
currently being developed, and (v) computer software programs (other than
“off-the-shelf’ software applications) that are owned or licensed by Seller in
connection with the Business. The Disclosure Schedule also contains a complete
and accurate list of all licenses, sublicenses and other agreements to which
Seller is a party and pursuant to which Seller or any other person is authorized
to use the Intellectual Property owned by Seller and all licenses, sublicenses
and other agreements granted by any third party to Seller in connection with the
Business with respect to any Intellectual Property (other than “off-the-shelf’
software applications).

 

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(b)     Seller owns all right, title and interest in and to all Intellectual
Property that it purports to own as described on the Disclosure Schedule (in
each case free and clear of all Liens). To Seller’s knowledge, there have been
no written claims made against Seller asserting the invalidity, misuse or
unenforceability of any of such Intellectual Property or asserting that the
conduct by Seller of the Business has infringed or misappropriated any
Intellectual Property of any other person. To Seller’s knowledge, the
Intellectual Property owned by Seller has not been infringed or misappropriated
by any other person. The consummation of Transaction will not have a Material
Adverse Effect on any Intellectual Property owned by Seller.

 

(c)     Seller owns or has the rights to use all Intellectual Property necessary
to operate Seller’s internal systems that are material to the business or
operations of Seller, including without limitation, computer hardware systems,
software applications and embedded systems (the “Seller Internal Systems”). None
of the Seller Internal Systems, or the use thereof, infringes or violates, or
constitutes a misappropriation of, any Intellectual Property rights of any
person or entity.

 

(d)     For purposes of this Agreement, “Intellectual Property” means any
patent, patent application, trademark (whether registered or unregistered),
trademark application, trade name, fictitious business name, service mark
(whether registered or unregistered), service mark application, domain name,
copyright (whether registered or unregistered), copyright application, mask
work, mask work application, trade secret, know-how, customer list, franchise,
system, software, invention, design, blueprint, engineering drawing, proprietary
product, technology, proprietary right or other intellectual property right or
intangible asset, in each case relating to the Business.

 

2.15.   Agreements of Directors, Officers, Employees and Consultants. To
Seller’s knowledge, no current or former officer or employee of or consultant to
Seller is in violation of any term of any employment contract, non-competition
agreement, non-disclosure agreement or other contract or agreement containing
restrictive covenants relating to the conduct of any such current or former
shareholder, officer, employee, or consultant or otherwise relating to the use
of trade secrets or proprietary information of others by any such person. Joseph
Shemesh currently serves as a director, the President, Chief Executive Officer
and Secretary of Seevolution and as sole director, President and Chief Executive
Officer of Celebros. Bruce Epstein serves as Secretary of Celebros. The
preceding are the only current officers of Seller, and were duly elected and are
presently serving as such officer or director. Other directors of Seevolution
are Elisha Gilboa and Josef Gorowitz whom have been duly elected and are
presently serving as directors. Set forth on the Disclosure Schedule is a list
of all current employees of Seller. Except as set forth on the Disclosure
Schedule, or in the Seller Financial Statements, since January 1, 2018, Seller
has not paid or become committed to pay any bonus or similar additional
compensation to any officer, director or employee of Seller.

 

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2.16.   Governmental Licenses. Seller has all the material permits, licenses,
orders, franchises and other rights and privileges of all federal, state, local
or foreign governmental or regulatory bodies necessary for Seller to conduct its
Business as presently conducted. All such permits, licenses, orders, franchises
and other rights and privileges are in full force and effect and, to Seller’s
knowledge, no suspension or cancellation of any of them is threatened, and none
of such permits, licenses, orders, franchises or other rights and privileges
will be Materially Adversely Affected by the consummation of the Transaction
contemplated by this Agreement or any of the Transaction Documents.

 

2.17.   List of Material Contracts and Commitments. The Disclosure Schedule sets
forth a complete and accurate list of all material contracts to which Seller is
a party or by or to which any of its assets or properties are bound or subject.
As used on the Disclosure Schedule, the phrase “Seller Material Contract” means
and includes every material agreement or material understanding of any kind,
written or oral, which is legally enforceable by or against Seller, and
specifically includes without limitation (a) contracts and other agreements with
any current or former manager, officer, employee, consultant or member or any
partnership, company, joint venture or any other entity in which any such person
or entity has an interest; (b) agreements with any labor union or association
representing any Seller employee; (c) contracts and other agreements for the
provision of services other than by employees of Seller which entail a
reasonably foreseeable financial consequence to any contracting party of at
least $15,000; (d) bonds or other security agreements provided by any party in
connection with the Business; (e) contracts and other agreements for the sale of
any of the assets or properties of Seller other than in the ordinary course of
business or for the grant to any person or entity of any preferential rights to
purchase any of said assets or properties; (f) joint venture agreements relating
to the assets, properties or Business of Seller or by or to which any of its
assets or properties are bound or subject; (g) contracts or other agreements
under which Seller agrees to indemnify any party, to share tax liability of any
party, or to refrain from competing with any party; (h) any contracts or other
agreements with regard to any indebtedness of Seller; or (i) any other contract
or other agreement whether or not made in the ordinary course of business and
involving a reasonably foreseeable financial consequence to any contracting
party of at least $15,000. Seller has made available to Purchaser true, correct
and complete copies of all such contracts, together with all modifications and
supplements thereto. Except as set forth on the Disclosure Schedule, each of the
contracts listed on the Disclosure Schedule is in full force and effect. Seller
is not in breach of any of the material provisions of any such Seller Material
Contract, nor, to the best knowledge of Seller, is any other party to any such
contract in default thereunder, nor does any event or condition exist which with
notice or the passage of time or both would constitute a default of a material
provision thereunder, except for any such breach or default that individually
and in the aggregate would not have a Material Adverse Effect on Seller. Seller
has performed in all material respects all obligations required to be performed
by it under each such contract as of the Closing.

 

2.18.   Accounts Receivable. The Disclosure Schedule sets forth a full and
complete list of Seller’s accounts receivable as of January 31, 2019 for
services provided to customers prior to January 31, 2019. Except as set forth on
the Disclosure Schedule, all accounts receivable reflected on the Seller
Financial Statements, and all accounts receivable arising subsequent to the date
of such balance sheets, have arisen in the ordinary course of business and
represent valid obligations owing to Seller. Except as set forth on the
Disclosure Schedule, to the best knowledge of Seller, none of Seller’s
receivables are subject to any claim of offset, recoupment, setoff or
counterclaim and Seller has no knowledge of any specific facts or circumstances
(whether asserted or unasserted) that could give rise to any such claim. No
material amount of receivables is contingent upon the performance by Seller of
any obligation or contract other than normal warranty repair and replacement. No
person has any lien on any such receivables and no agreement for deduction or
discount has been made with respect to any such receivables. Except as set forth
on the Disclosure Schedule, to the best knowledge of Seller, all of Seller’s
accounts and notes receivable reflected on the Seller Financial Statements and
all accounts and notes receivable arising subsequent to the date of such balance
sheets are collectible in full by Seller in the ordinary course of business.

 

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2.19.   Inventory. The Disclosure Schedule hereto sets forth a true and correct
list of all inventory of each of Seller, including supplies, raw materials and
work in process and finished goods, as of the date specified on such Disclosure
Schedule. To the knowledge of Seller, all inventories included within the Assets
are of a quality and quantity usable and salable in the ordinary course of the
Business.

 

2.20.   Insurance Coverage. The Disclosure Schedule hereto contains an accurate
summary of the insurance policies currently maintained by each of Seller. Except
as described on the Disclosure Schedule, there are currently no claims pending
against either Seller pursuant to any insurance policy currently in effect and
covering the property, the business or the employees of Seller.

 

2.21.   Employee Matters. Except as set forth on the Disclosure Schedule,
neither Seller nor any person that together with Seller would be treated as a
single employer (an “ERISA Affiliate”) under Section 414 of the Code has
established or maintains or is obligated to contribute to (a) any bonus,
severance, stock option, or other type of incentive compensation plan, program,
agreement, policy, commitment, contract or arrangement (written or oral), (b)
any pension, profit-sharing, retirement or other plan, program or arrangement,
or (c) any other employee benefit plan, fund or program, including, but not
limited to, those described in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”). All such plans (individually, a
“Plan” and collectively, the “Plans”) have been operated and administered in all
material respects in accordance with their terms, as applicable, with the
requirements prescribed by any and all statutes, orders, rules and regulations,
including but not limited to ERISA and the Code. No act or failure to act by
Seller has resulted in, nor does Seller have knowledge of a non-exempt
“prohibited transaction” (as defined in ERISA) with respect to the Plans.
Neither Seller nor any ERISA Affiliate maintains or has ever maintained or
contributed to any Plan subject to Title IV of ERISA. With respect to the
employees and former employees of Seller, there are no employee post-retirement
medical or health plans in effect, except as required by Section 4980B of the
Code. Seller has funded, or made adequate reserves for, the full amounts of the
employer contributions that are required under the terms of said plan to be paid
by Seller with respect to the year ended December 31, 2017 and the period from
and including January 1, 2018 through and including the Closing Date.

 

2.22.   Customers. Except as set forth on the Disclosure Schedule:

 

(a)     The relationships of Seller with its significant customers are good
commercial working relationships and no significant customer of Seller has
canceled or otherwise terminated, or to Seller’s knowledge, threatened to cancel
or otherwise to terminate any contract with Seller prior to the end of its term
and, to Seller’s knowledge, the consummation of the transactions contemplated
hereby will not materially adversely affect the relationship of Purchaser with
any such customer.

 

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(b)     To Seller’s knowledge, no supplier or customer has notified Seller that
it intends to cancel or otherwise substantially modify its relationship with
Seller or to decrease materially or limit its services, supplies or materials to
Seller, or its usage or purchase of the services of Seller, and, to Seller’s
knowledge, the consummation of the transactions contemplated hereby will not
materially adversely affect the relationship of Purchaser with any such
supplier.

 

2.23.   Brokers or Finders. Except as set forth herein, no person or entity has
or will have, as a result of the actions of Seller have any right, interest or
claim against or upon Seller for any commission, fee or other compensation as a
finder or broker arising from the transactions contemplated by this Agreement.
Seller has engaged Bois Capital, LLC as a broker in the Transaction and shall be
solely responsible for any and all fees associated with such engagement.

 

2.24.   Transactions with Insiders. Except as set forth on the Disclosure
Schedule, there are no currently outstanding loans, leases or other contracts
between Seller and any officer or director of Seller, or any person or entity
owning five percent (5%) or more of the total number of Shares, or any
respective family member or affiliate of any such officer, director or
shareholder.

 

2.25.   Privacy and Data Collection. Seller has at all times complied with all
laws and regulations relating or applicable to privacy, publicity, data
protection, collection, storage, transfer, release and use of personal
information and user information gathered or accessed in the course of the
business and operations of Seller. Seller has at all times complied in all
material respects with all rules, policies and procedures established by Seller
from time to time with respect to privacy, publicity, data protection,
collection, storage, transfer and use of personal information and user
information gathered or accessed in the course of the business and operations of
Seller (collectively, the “Seller Privacy Policies”), noncompliance with which
would result in a Material Adverse Effect on Seller. No claims have been
asserted or, to the knowledge of Seller, threatened against Seller by any Person
or governmental entity alleging a violation of such Person’s, or any other
Person’s, privacy, publicity, personal or confidentiality rights under any such
laws, or a breach or other violation of any of the Seller Privacy Policies,
where such violation would have a Material Adverse Effect on Seller. Seller has
taken commercially reasonable measures (including but not limited to,
implementing and monitoring compliance with adequate measures with respect to
technical and physical security) to ensure that personal and consumer
information is protected against loss and against unauthorized access, use,
modification, disclosure or other misuse. To the knowledge of Seller, there has
been no unauthorized access to, use, modification, disclosure or other misuse of
such information. Neither the execution, delivery nor performance of this
Agreement or the consummation of the transaction contemplated hereby shall
result in any breach or violation of the Seller Privacy Policies or violate any
Law with respect to such data or information.

 

2.26.   Solvency. Seller has no knowledge of any facts or circumstances which
may cause it to file for reorganization or liquidation or to have filed against
it any proceeding under the bankruptcy or reorganization laws of any
jurisdiction within eighteen (18) months from the Closing Date.

 

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2.27.   Disclosure. Neither the representations or warranties made by Seller in
this Agreement, nor the Disclosure Schedule or any other certificate executed
and delivered by Seller pursuant to this Agreement, when taken together,
contains any untrue statement of a material fact, or omits to state a material
fact necessary to make the statements or facts contained herein or therein not
misleading in light of the circumstances under which they were furnished.

 

ARTICLE III

 

INTENTIONALLY OMITTED

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

In order to induce Seller to enter into this Transaction, Purchaser represents
and warrants to Seller that the statements made in this Article III are true and
correct as of the date hereof, 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 true and correct as of such date).

 

4.1.     Organization and Qualification. Purchaser is a corporation duly
organized, validly existing and in corporate good standing in the State of
Delaware and has the power and authority to carry on its business as presently
conducted. Purchaser is duly qualified to do business and is in good standing in
all jurisdictions in which its ownership of property or the character of its
business requires such qualification, except where the failure to be so
qualified will not have a Material Adverse Effect on Purchaser. Each subsidiary
of Purchaser is a corporation duly organized, validly existing and in corporate
good standing under the laws of its jurisdiction of incorporation.

 

4.2.     Authority. This Agreement, and to the extent Purchaser is a party to
the Transaction Documents, each of the Transaction Documents, has been duly
authorized, executed and delivered by Purchaser and constitutes a legal, valid
and binding obligation of Purchaser, enforceable against it in accordance with
its terms except to the extent that such enforcement may be subject to
applicable bankruptcy, reorganization, insolvency, fraudulent conveyance or
other laws affecting creditors’ rights generally and to the application of
general equitable principles. Purchaser has the right, power and authority to
enter into this Agreement and to carry out the terms and provisions of this
Agreement, and to enter into and carry out the terms of all agreements and
instruments required to be delivered by Purchaser by the terms of this
Agreement, without obtaining the consent of any third parties or authorities.
This Agreement and the Transaction contemplated hereby have been unanimously
approved by the Board of Directors of Purchaser and no additional corporate
action or authorization is required by Purchaser in connection with the
consummation of the Transaction contemplated by this Agreement.

 

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4.3.    No Conflicts. The execution, delivery and performance of this Agreement
and the Transaction Documents, and the consummation of the Transaction
contemplated hereby and thereby by Purchaser, and compliance with the provisions
hereof, do not and will not: (a) violate, conflict with or result in a breach of
any provision or constitute a default under (i) the Certificate of Incorporation
or By-laws of Purchaser (the “Purchaser Charter Documents”), or (ii) any
contract or agreement to which Purchaser is a party or to which the assets or
business of Purchaser may be subject, except where such violation would not have
a Material Adverse Effect on Purchaser; or (b) violate any judgment, ruling,
order, writ, injunction, award, decree, statute, law, ordinance, code, rule or
regulation of any court or foreign, federal, state, county or local government
or any other governmental, regulatory or administrative agency or authority
which is applicable to the assets, properties or business of Purchaser, except
where such violation would not have a Material Adverse Effect on Purchaser.

 

4.4.     Government Approvals. No Consent with any Governmental Entity is or
will be required on the part of the Purchaser in connection with the execution,
delivery and performance of this Agreement, the other Transaction Documents and
any other agreements or instruments executed by Purchaser in connection herewith
or therewith, the failure of which would have a Material Adverse Effect on
Purchaser.

 

4.5.     SEC Filings. Since July 5, 2007, Purchaser has filed all reports,
registrations, prospectuses, schedules, forms, statements and other documents
(including all exhibits to any of the foregoing), together with any required
amendments thereto, that Purchaser is required to file with the Securities
Exchange Commission (“SEC”), including forms 10-K, 10Q, 8-K and proxy statements
(collectively, the “Purchaser SEC Reports”). The Purchaser SEC Reports (i) were
prepared in compliance with the requirements of the Securities Act and (ii) did
not, at the time they were filed, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.

 

4.6.    Solvency. Purchaser is not insolvent and will not become insolvent as a
direct result of entering into this Agreement and the other Transaction
Documents, including without limitation the commitment to perform the
obligations to deliver cash and shares under the terms and conditions set forth
herein.

 

4.7.     No Brokers or Finders. No person or entity has or will have, as a
result of the actions of Purchaser, any right, interest or claim against or upon
Purchaser for any commission, fee or other compensation as a finder or broker
arising from the transactions contemplated by this Agreement.

 

ARTICLE V

 

ADDITIONAL AGREEMENTS

 

5.1.     Employee Matters.

 

(a)     Except as stated specifically below, nothing contained herein will be
considered as requiring Seller or Purchaser to continue the employment of any
employee for any specified period, at any specified location or under any
specified job category, except as specifically provided for in an offer letter
or other agreement of employment. Except as otherwise set forth herein, it is
specifically understood that continued employment with Seller or employment with
Purchaser is not offered or implied for any employees of Seller.

 

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(b)     Existing Employees. Purchaser agrees that the following employees and/or
consultants of Seller shall receive at a minimum six (6) weeks’ severance (at
the higher of their salary as of the Closing Date or as of any departure date
from Purchaser) in the case of their separation from Purchaser for any reason:
Therese Clementi, Davina Mosheyoff Johnson, Erwin Segal, and Anat Shadmi. In
addition, the following employees and/or consultants of Seller shall receive at
a minimum four (4) weeks’ severance (at the higher of their salary as of the
Closing Date or as of any departure date from Purchaser) in the case of their
separation from Purchaser for any reason: Liza Sarfati and Orit Barr. The
preceding persons (the “Existing Employees”) shall continue to earn severance
amounts above the preceding amounts based on Purchaser’s customary severance
policy1. Purchaser shall not be obligated to provide any severance to any of the
Existing Employees in the event of Termination for Cause as defined in the
following paragraph:

 

(c)     Termination for Cause. Any of the Existing Employee’s employment
hereunder may be terminated for Cause. "Cause" is conduct, as determined by the
Chief Executive Officer of Purchaser, or his designee, involving one or more of
the following: (i) gross misconduct by the Existing Employee; or (ii) the
willful disregard of the rules or policies of Purchaser, provided that Purchaser
must provide Existing Employee with written notice from Purchaser of such
willful disregard of the rules or policies of Purchaser and Existing Employee
fails to cure (if curable) such willful disregard of the rules or policies of
Purchaser within five (5) business days of such notice; or (iii) the violation
of any noncompetition or nonsolicitation covenant with, or assignment of
inventions obligation to, Purchaser; or (iv) the formal charge of the Existing
Employee of a felony; or (v) the commission of an act of embezzlement, fraud or
breach of fiduciary duty against Purchaser (vi) engagement in a specific act or
pattern of behavior which, in the reasonable opinion of Purchaser, impugns the
reputation of Purchaser or which creates an environment materially non-conducive
to the growth and development of Purchaser, (vii) the failure of the Existing
Employee to perform in a material respect his employment obligations as set
forth in his employment agreement without proper cause and the continuation
thereof after delivery to Existing Employee of written notice from Purchaser
specifying in reasonable detail the nature of such failure. For purposes of this
Section, no act, or failure to act, on the Existing Employee’s part shall be
considered “willful” unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his action or omission was in the best
interest of Purchaser.

 

 

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1 Erwin Segal, Anat Shadmi, Liza Sarfati and Orit Barr are technically employees
of Celebros, Ltd., Israel (“Celebros Israel”) which currently provides
independent consulting services to Seller.  In the case of any termination of
their services, amounts owed to them will be invoiced by and paid to Celebros
Israel who shall pay such amounts to its employees.

 

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(d)     Additional Agreements. In case at any time after the Closing Date any
further action is reasonably necessary or desirable to carry out the purposes of
this Agreement or to vest Purchaser with full title to all properties, assets,
rights, approvals, immunities and franchises of Seller, the Parties will take
all such necessary action.

 

5.2.    Public Announcements. Except as may be required by law or stock market
regulations, neither Purchaser nor Seller will disseminate any press release or
other announcement concerning this Agreement or the Transaction contemplated
herein to any third party (except to the managers, directors, officers and
employees of the parties to this Agreement whose direct involvement is necessary
for the consummation of the Transaction contemplated under this Agreement, or to
the attorneys, advisors and accountants of the parties hereto) without the prior
written agreement of Purchaser and Seller.

 

5.3.    Confidentiality. Seller and Purchaser have previously entered into a
Non-Disclosure Agreement dated as of June 4, 2018 (the “Confidentiality
Agreement”) concerning each Party’s obligations to protect the confidential
information of the other Party. Seller and Purchaser each hereby affirm each of
their obligations under such Confidentiality Agreement.

 

5.4.    Benefit Plans.      As soon as administratively practicable after the
Closing Date and to the extent allowable under the Purchaser Benefit Plans (as
defined below), Purchaser shall take all reasonable action so that employees of
Seller that become employees of Purchaser after the Closing Date shall be
entitled to participate in each employee benefit plan, program or arrangement of
Purchaser of general applicability (the “Purchaser Benefits Plans”) to the same
extent as similarly-situated employees of Purchaser and its subsidiaries (it
being understood that inclusion of the employees of Seller in the Purchaser
Benefits Plans may occur at different times with respect to different plans).

 

5.5.     Restrictive Undertakings.

 

(a)     Noncompetition Covenant. The restrictive covenants set forth in this
Section 5.5 are a material inducement for Purchaser to enter into this
Agreement. For good and valuable consideration provided pursuant to this
Agreement, the receipt and sufficiency of which is hereby acknowledged, Seller
agrees that, during the Restrictive Period (as hereinafter defined), it shall
not, directly or indirectly, (i) engage in any activities either on its own
behalf or that of any other business organization (whether as principal,
partner, shareholder, member, officer, director, stockholder, agent, joint
venturer, consultant, creditor, investor or otherwise) which are in direct or
indirect competition with or similar to the Business in the United States (the
“Competitive Services”), (ii) undertake planning for an organization or offering
of Competitive Services, or (iii) combine or collaborate with other employees or
representatives of Purchaser or any third party for the purpose of organizing,
engaging in, or offering Competitive Services. Notwithstanding anything to the
contrary contained herein, Purchaser acknowledges and agrees that actions taken
by the officers or managers of Seller following the consummation of the
Transaction to perform their obligations in accordance with this Agreement
hereof shall not violate the restrictive covenants set forth in this Section
5.5.

 

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(b)     Nonsolicitation of Customers. Seller agrees that, during the Restrictive
Period, it shall not directly or indirectly, either for itself or for any other
person, corporation, partnership, limited liability company or any other
business entity, service or supervise or assist the servicing or supervision of,
divert or take away or attempt to divert or take away, or directly or indirectly
call on or solicit or attempt to call on or solicit any of the Clients (as
hereinafter defined) of Purchaser, or communicate, advise or consult with, write
or respond to, or inform any such Client for the purpose of soliciting, selling
or recommending Competitive Services, or otherwise attempt to induce any such
Client to terminate, modify or reduce such Client’s relationship with Purchaser.

 

(c)     Nonsolicitation of Employees. Seller agrees that, during the Restrictive
Period, it shall not directly or indirectly (including but not limited to,
through the use of “headhunters,” recruiters or employment agencies, and whether
on-line or off-line recruiting activities) or by action in concert with others,
hire, recruit or otherwise induce or influence (or seek to induce or influence)
any person who is or shall be hereafter engaged (as an employee, agent,
independent contractor or otherwise) to terminate such Person’s employment or
engagement, or employ or engage, seek to employ or engage, or cause any other
Person, corporation, partnership, limited liability company or other business
entity (whether for-profit or non-profit) to employ or engage or seek to employ
or engage any such person. This restriction includes that Seller shall not (i)
disclose to any third party the names, backgrounds or qualification of any of
Purchaser’s employees or otherwise identify them as potential candidates for
employment, or (ii) participate in any pre-employment interviews or
consultations with such employee.

 

(d)     Definitions. For purposes of this Section 5.5, the term Purchaser shall
include Purchaser and any of its subsidiaries, divisions or business units. For
purposes of this Section 5.5, the term “Restrictive Period” shall mean the
period commencing on the Closing Date and ending on the one-year anniversary
thereof. For the purposes of this Section 5.5, “Client” shall mean any person or
entity to which Purchaser has provided services to or made Proposals to at any
time within the twelve (12) months preceding this Agreement or thereafter. For
the purposes of this Section 5.5 “Proposal” shall mean any Client-specific, bona
fide proposal for services that included a description of services, time line
and proposed fees for the project.

 

(e)     Geographic Restrictions Reasonable. Seller expressly declares that the
territorial and time limitations contained in this Section 5.5 are entirely
reasonable and are properly and necessarily required for the adequate protection
of the business, operations, trade secrets and goodwill of Purchaser and are
given as an integral part of this Transaction, but for which Purchaser would not
have entered into this Agreement. It is the desire and intent of Seller and
Purchaser that the provisions of this Section 5.5 shall be enforced to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Section 5.5, including but not limited to, any territorial or
time limitations set forth in this Section 5.5, shall be adjudicated to be
invalid or unenforceable by a court of competent jurisdiction, whether due to
passage of time, change of circumstances or otherwise, the provisions of this
Section 5.5 shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, or to reduce said territorial or
time limitations to such areas or periods of time as said court shall deem
reasonable, such deletion or reduction to apply only with respect to the
operation of this Section 5.5 in the particular jurisdiction in which such
adjudication is made.

 

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(f)     Rights Cumulative. The non-competition and non-solicitation provisions
contained herein are in addition to, and not in limitation of, any rights that
Purchaser may have under any other contract, law or otherwise. Seller
acknowledges that the remedy at law for any breach of this Section 5.5 may be
inadequate. Seller agrees that upon any such breach of this Section 5.5,
Purchaser shall, in addition to all other available remedies (including but not
limited to, seeking an injunction or other equitable relief), be entitled to
injunctive relief without having to prove the inadequacy of the remedies
available at law and without being required to post bond or other security.

 

(g)     Computation of Restrictive Period. All time periods in this Section 5.5
shall be computed by excluding from such computation any time during which
Seller is in violation of any provision of this Section 5.5 and any time during
which there is pending in any court of competent jurisdiction any action
(including any appeal from any final judgment) in which action Purchaser seeks
to enforce the agreements and covenants in this Section 5.5 or in which any
person or entity contests the validity of such agreements and covenants or their
enforceability or seeks to avoid their performance or enforcement which is
determined adversely against Seller or such other party.

 

(h)     Corporate Existence; Good Standing; No Dissolution. For a period of not
less than twelve (12) months, or as otherwise agreed to by the Parties in
writing, following the Closing, Seller (i) shall maintain its existence in good
standing, perform its obligations and satisfy its liabilities when due, pay its
Taxes when due, and maintain adequate cash and liquid assets to pay and perform
its liabilities and obligations as they fall due and (ii) shall not resolve,
agree or take any action to liquidate, wind-up or dissolve.

 

5.6.     Lock-Up Agreement.

 

(a)     Except as set forth in Section 5.6(b), Seller and each recipient of
Purchaser Stock, acknowledges and agrees that, for a period of one (1) year
subsequent to the Closing Date (the “Lock-Up Period”), he or it will not (1)
offer, sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, pledge, hypothecate, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, the Purchaser Stock; (2) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Purchaser Stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of the Purchaser Stock, in
cash or otherwise, or (3) make any demand for or exercise any right with respect
to the registration of the Purchaser Stock or any security convertible into or
exercisable or exchangeable for the Purchaser Stock. The Seller and each
recipient of Purchaser Stock further agrees not to enter into any private
transaction involving the Purchaser Stock unless (i) Purchaser receives an
opinion of counsel acceptable in form and substance to Purchaser to the effect
that the proposed transaction is exempt from the registration requirements of
the Act and (ii) the proposed transferee agrees to be bound by all the
provisions in this Section 5.6 prior to any such private transaction.
Notwithstanding anything to the contrary contained herein, the restrictions
contained herein shall not apply to the transfer of the Purchaser Stock by
Seller or any recipient to any trust, partnership or limited liability company
for the direct or indirect benefit of such Seller or any recipient and/or the
immediate family of such Seller or any recipient for estate planning purposes,
provided that (i) the trustee of the trust, partnership or the limited liability
company, as the case may be, agrees in writing to be subject to the restrictions
of this Section 5.6 and (ii) any such transfer shall not involve a disposition
for value.

 

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(b)     The restrictions set forth in Section 5.6(a) shall terminate immediately
upon the earlier to occur of the following events: (a) a Change in Control of
Purchaser (as defined below), or (b) if Purchaser’s publicly traded common stock
(as adjusted by any stock splits, recapitalization, or other similar
adjustments) closes above $1.00 for ten (10) consecutive trading days. For
purposes of this Section 5.6(b), a “Change in Control” will be deemed to have
occurred if through one or more transactions after the Closing Date (other than
the through the sale of the Purchaser’s common stock in open market
transactions) any “person” (or persons), as such term is used in Section 13(d)
and 14(d) the Securities and Exchange Act of 1934, as amended (the “Exchange
Act”), (other than the Purchaser, any trustee or other fiduciary holding
securities under an employee benefit plan of Purchaser, or any corporation owned
directly or indirectly by the stockholders of Purchaser in substantially the
same proportion as their ownership in stock of Purchaser) is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of Purchaser representing 50.1% or more of the
combined voting power of Purchaser’s then outstanding securities.

 

5.7.     Preemptive Rights. From after the Closing Date of this Agreement until
the Preemptive Rights Termination Date (as defined below), in the event
Purchaser wishes at any time to offer and sell any equity rights in Purchaser
(including warrants, debt or other rights convertible into equity of Purchaser)
in connection with any financing transaction (other than in connection with a
Change of Control as defined in Section 5.7(b) above) (a “Preemptive Event”),
Purchaser shall deliver written notice to Seller (or those persons that have
received Purchaser Stock directly from Seller as permitted by Section 5.8(a) (in
either event, a “Seller Shareholder”)) (a “Preemptive Notice”), which Preemptive
Notice shall be delivered on or before ten (10) business days prior to the
anticipated closing of the Preemptive Event, and shall set forth the terms and
conditions of such proposed financing; provided, however, no Seller Shareholder
shall be entitled to receive a Preemptive Notice unless such Seller Shareholder
beneficially owns Purchaser Stock equal to at least 4.0% of the issued and
outstanding shares of common stock of Purchaser on the date of the Preemptive
Event.  A Seller Shareholder entitled to a Preemptive Notice shall have the
right to subscribe for and purchase a number of such shares of common stock
determined by multiplying the total number of shares offered in the financing by
a fraction, the numerator of which shall be the number of shares of Purchaser
Stock, as adjusted by any stock splits, recapitalization, or other similar
adjustments, and the denominator of which shall be the total number of shares of
common stock of Purchaser issued and outstanding as of the date of such
Preemptive Notice (the “Purchaser Allocation”). Such right shall be exercised by
the Seller Shareholder by giving written notice of acceptance to the Purchaser
within the later of (i) five (5) business days after the receipt of the
Preemptive Notice from the Purchaser (ii) or five (5) business days prior the
expected closing date of the Preemptive Event. In the event the Seller
Shareholder exercises such right it shall subscribe, purchase and pay for such
Purchaser Allocation of common stock on the terms and conditions set forth in
the Preemptive Notice, on the purchase date set forth in the Preemptive Notice.
For purposes of this Section 5.7, the Preemptive Rights Termination Date shall
be the date that no Seller Shareholder owns at least 4% of the of the issued and
outstanding shares of common stock of Purchaser or four (4) years, whichever
comes first.

 

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5.8.     Purchaser Stock Recipient Representations. Seller represents that its
present intention is to acquire the shares of Purchaser Stock that may be issued
in connection with this Agreement for his or its own account and that such
Purchaser Stock is being and will be acquired for the purpose of investment and
not with a view to distribution or resale thereof. Seller represents that it has
had an opportunity to ask questions of and receive answers from the authorized
representatives of Purchaser and to review any relevant documents and records
concerning the business of Purchaser and the terms and conditions of this
investment and that any such questions have been answered to Seller’s
satisfaction. Seller acknowledges receipt of the most recent Annual Report on
Form 10-K of Purchaser and the most recent proxy statement relating to the
meeting of stockholders of Purchaser. Seller acknowledges that it has been
called to its attention that this investment involves a high degree of risk.
Seller acknowledges that it can bear the economic risks of its investment in the
Purchaser Stock and that it has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of this
investment in the Purchaser Stock and protecting its own interests in connection
with this investment. Except as set forth on the Disclosure Schedule attached
hereto, Seller hereby represents and warrants to Purchaser that it is an
“accredited investor” as such term is defined under Section 501(a) of Regulation
D promulgated under the Securities Act. Seller understands that the Purchaser
Stock to be issued in connection with the transactions contemplated hereby has
not been registered under the Securities Act and that such shares must be held
indefinitely unless a subsequent disposition thereof is permitted under the
Securities Act or is exempt from such registration. Seller further represents
that it understands and agrees that until transferred as herein provided, or
transferred pursuant to the provisions of Rule 144 of the Securities Act, all
certificates evidencing the Purchaser Stock that may be issued hereunder shall
bear a legend (and Purchaser will make a notation on its transfer books to such
effect) prominently stamped or printed thereon reading substantially as follows:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO
DISTRIBUTION OR RESALE AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS, OR UNLESS AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.

 

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5.9.    Securities Laws Filings. Upon the Closing Date, Seller will enter into
an engagement (“SEC Filings Engagement”) with legal counsel of Purchaser’s
election, for the sole purpose of making up to four (4) filings each year until
the termination of the Lock-Up Period as required in connection with Seller’s
ownership of the Purchaser Stock (or ownership by any shareholders of Seller
receiving Purchaser Stock) including but not limited to filings required by
Sections 13d, 13g and Section 16 of the Exchange Act and rules promulgated
thereunder. Purchaser shall pay, on behalf of Seller, the fees associated with
the SEC Filings Engagement. This SEC Filings Engagement shall end once the
Lock-Up Period has ended.

 

5.10.   Deferred Consents. Notwithstanding anything in this Agreement to the
contrary, this Agreement shall not constitute an agreement to assign or transfer
any assumed agreement or any claim, right, or benefit arising thereunder or
resulting therefrom, if an attempted assignment or transfer thereof, without the
consent of a third party thereto, would constitute a breach thereof or would
otherwise constitute an event of default thereunder. If any such consent is not
obtained prior to Closing (each a “Deferred Consent”), or if an attempted
assignment or transfer thereof would be ineffective or would affect the rights
thereunder so that Purchaser would not receive all such rights and benefits,
then (i) Seller and Purchaser will cooperate to obtain such Deferred Consents as
soon as practicable to the extent feasible; provided that Purchaser shall not
have any obligation (A) to pay any fees or deliver any other consideration to
any Person to obtain any Deferred Consent or (B) agree to any adverse change in
any Assumed Agreement in order to obtain a Deferred Consent, and (ii) until such
Deferred Consent is obtained, Seller and Purchaser will cooperate in all
reasonable respects to provide to Purchaser the rights and benefits under the
Assumed Agreement to which such Deferred Consent relates. In particular, in the
event that any such Deferred Consent is not obtained prior to Closing, then, to
the extent permitted and reasonably possible, Purchaser and Seller shall enter
into lawful and commercially reasonable arrangements (including subleasing or
subcontracting if permitted) to provide to Purchaser the economic and
operational equivalent of having obtained such Deferred Consent and having
assigned or transferred such Assumed Agreement, including enforcement for the
benefit of Purchaser of all claims or rights arising thereunder, and the
performance by Purchaser of the obligations, to the extent rights and benefits
thereunder are received, thereunder on a prompt and punctual basis.

 

ARTICLE VI

 

CONDITIONS PRECEDENT

 

6.1.     Conditions to Each Party’s Obligation to Effect the Transaction. The
respective obligations of each Party to effect the Transaction will be subject
to the satisfaction prior to the Closing Date of the following conditions:

 

(a)     Governmental Approvals. All statutory requirements and all Consents of
Governmental Entities legally required for the consummation of the Transaction
contemplated by this Agreement will have been filed, occurred, or been obtained,
other than such Consents for which the failure to obtain would not have a
material adverse effect on the consummation of the Transaction contemplated
hereby.

 

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(b)    No Restraints. No statute, rule or regulation, and no final and
nonappealable order, decree or injunction will have been enacted, entered,
promulgated or enforced by any court or Governmental Entity of competent
jurisdiction which enjoins or prohibits the consummation of the Transaction.

 

(c)    Stockholder Approval. This Agreement and the Transaction shall have been
approved and adopted by the shareholders of Seller in accordance with the Seller
Charter Documents.

 

6.2.     Conditions of Obligations of Purchaser. The obligations of Purchaser to
effect the Transaction are subject to the satisfaction of the following
conditions unless waived by Purchaser:

 

(a)     Representations and Warranties of Seller. The representations and
warranties of Seller 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 Seller set forth in this Agreement shall be
true and correct in all material respects, in each case as of the date of the
Closing, except (i) as otherwise contemplated by this Agreement, (ii) as a
result of actions taken or not taken at the direction of or after consultation
with and written concurrence of Purchaser and/or (iii) for representations and
warranties specifically limited to an earlier date(s) (in which case such
representations and warranties shall be true and correct as of such date).
Purchaser will have received a certificate signed by an authorized officer of
Seller to such effect on the Closing Date.

 

(b)     Performance of Obligations of Seller. Seller will have performed in all
material respects all agreements and covenants required to be performed by it
under this Agreement prior to the Closing Date except (i) as otherwise
contemplated or permitted by this Agreement and/or (ii) as a result of actions
taken or not taken at the direction of or after consultation with and written
concurrence of Purchaser, and Purchaser will have received a certificate signed
by an authorized officer of Seller to such effect on the Closing Date.

 

(c)     No Material Adverse Effect. No event, occurrence, fact, condition,
change, development or effect that has not been disclosed in the Seller
Financial Statements or on the Disclosure Schedule shall exist or have occurred
or come to exist or been threatened that, individually or in the aggregate, has
had or resulted in or could be expected to become or result in a Material
Adverse Effect on Seller, and Purchaser will have received from Seller a
certificate signed by Seller to such effect on the Closing Date.

 

(d)     Legal Action. There will not be overtly threatened or pending any
action, proceeding or other application before any court or Governmental Entity
brought by any Person or Governmental Entity: (i) challenging or seeking to
restrain or prohibit the consummation of the transactions contemplated by this
Agreement, or seeking to obtain any material damages from Purchaser or Seller as
a result of such transactions; or (ii) seeking to prohibit or impose any
limitations on Purchaser’s ownership or operation of all or any portion of the
Assets, or to compel Purchaser to dispose of or hold separate all or any portion
of its Business or the Assets as a result of the transactions contemplated by
the Agreement which if successful would have a material adverse effect on
Purchaser’s ability to receive the anticipated benefits of the Transaction.

 

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(e)     Bill of Sale. Seller shall have executed and delivered a Bill of Sale in
the form attached hereto as Exhibit A and all additional transfer documents
required to validly assign the Intellectual Property of Seller to Purchaser in
recordable form, including without limitation, any domain name assignment,
trademark assignment, copyright assignment, as applicable.

 

(f)     Corporate Proceedings Satisfactory. All corporate and other proceedings
to be taken by Seller in connection with the Transaction contemplated hereby and
all documents incident thereto will be satisfactory in form and substance to
Purchaser and its counsel, and Purchaser and its counsel will have received all
such counterpart originals or certified or other copies of such documents and
other closing documents as they reasonably may request.

 

(g)     Seller Certificate. Purchaser shall have received a certificate signed
by the Secretary of Seller which shall (i) certify the names of the officers or
directors of Seller authorized to sign this Agreement and the other documents,
instruments or certificates to be delivered pursuant to this Agreement by Seller
or any of its officers or directors, together with the true signatures of such
officers or directors, (ii) attach a copy of the Seller Charter Documents, (iii)
certify a copy of the resolutions of the Board of Directors of Seller evidencing
the adoption of the approval of this Agreement and the other matters
contemplated hereby, and (iv) attach a certificate of good standing for Seller
from each jurisdiction where Seller has been formed or is doing business,
certified by the appropriate authorities from such jurisdictions.

 

(h)     FIRPTA. Seller shall have delivered to Purchaser a properly executed
statement satisfying the requirements of Treasury Regulation Sections 1.897-2(h)
and 1.1445-2(c)(3) in a form reasonably acceptable to Purchaser and any state
Tax clearance certificates required to relieve Seller of any withholding
obligation relating to foreign ownership of U.S. real property interests.

 

(i)     Assignment and Assumption Agreement. Seller shall have executed and
delivered an Assignment and Assumption Agreement, substantially in the form
attached hereto as Exhibit B (the “Assignment and Assumption Agreement”).

 

(j)     Third Party Consents. All consents, Permits and approvals which may be
required in connection with the performance of Seller’s obligations under this
Agreement, or the continuation of any of the Seller Material Contracts after the
Closing shall have been obtained from the third parties.

 

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(k)    Indebtedness; Lien Terminations. Seller shall have delivered to Purchaser
the evidence of the release of the liens on all or any portion of the Purchased
Assets, satisfactory to the Purchaser.

 

6.3.     Conditions of Obligation of Seller. The obligation of Seller to effect
the Transaction is subject to the satisfaction of the following conditions
unless waived by Seller:

 

(a)     Representations and Warranties of Purchaser. The representations and
warranties of Purchaser 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 Purchaser set forth in this Agreement shall be
true and correct in all material respects, in each case as of the date of the
Closing, except (i) as otherwise contemplated by this Agreement, (ii) as a
result of actions taken or not taken at the direction of or after consultation
with and written concurrence of Seller and/or (iii) for representations and
warranties specifically limited to an earlier date(s) (in which case such
representations and warranties shall be true and correct as of such date).
Seller will have received a certificate signed by the president of Purchaser to
such effect on the Closing Date.

 

(b)    Performance of Obligations of Purchaser. Purchaser will have performed in
all material respects all agreements and covenants required to be performed by
them under this Agreement prior to the Closing Date, and Seller will have
received a certificate signed by the president of Purchaser to such effect on
the Closing Date.

 

(c)     No Material Adverse Effect. No event, occurrence, fact, condition,
change, development or effect that has not been disclosed on the Purchaser
Disclosure Schedules shall exist or have occurred or come to exist or been
threatened that, individually or in the aggregate, has had or resulted in or
could be expected to become or result in a Material Adverse Effect on Purchaser,
and Seller will have received from a certificate signed by the president of
Purchaser to such effect on the Closing Date.

 

(d)     Delivery of Consideration. On the Closing Date, Purchaser shall have
paid the Cash Consideration in accordance with Section 1.3.

 

(e)     Assignment and Assumption Agreement. Purchaser shall have executed and
delivered an Assignment and Assumption Agreement in the form attached hereto as
Exhibit B.

 

(f)      Purchaser Supporting Documents. Purchaser shall have delivered to
Seller a certificate (i) of the Secretary of State of the State of Delaware
dated on or around the Closing Date, certifying as to the corporate legal
existence and good standing of Purchaser, and (ii) of the Assistant Secretary of
Purchaser, dated as of the Closing Date, certifying on behalf of Purchaser: (1)
that attached thereto is a true and complete copy of the Certificate of
Incorporation of Purchaser, certified by the Secretary of State of the State of
Delaware; (2) that attached thereto is a true and complete copy of the By-Laws
of Purchaser as in effect on the date of such certification; (3) that attached
thereto is a true and complete copy of all resolutions adopted by the Board of
Directors of Purchaser authorizing the execution, delivery and performance of
the Agreement and the consummation of the Transaction; and (4) to the incumbency
and specimen signature of each officer of Purchaser executing on behalf of
Purchaser this Agreement and the other agreements related hereto.

 

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ARTICLE VII

 

FEES AND EXPENSES

 

All fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the Party incurring such fees
and expenses, whether or not the Transaction is consummated.

 

ARTICLE VIII

 

INDEMNIFICATION

 

8.1.     Seller Indemnification. Subject to the limitations set forth in Section
8.4 below, Seller and Elisha Gilboa agree, jointly and severally, to indemnify
and hold harmless Purchaser and its officers, directors, agents and employees
(“Purchaser Indemnified Parties”) to the fullest extent lawful, from and against
any and all actions, suits, claims, counterclaims, proceedings, costs, losses,
liabilities, obligations, demands, damages, judgments, amounts paid in
settlement and reasonable expenses, including, without limitation, reasonable
attorneys’ fees and disbursements (hereinafter collectively referred to as a
“Claim,” “Loss” or “Losses”) suffered or incurred by Purchaser to the extent
relating to or arising out of:

 

(a)     any inaccuracy in or breach, violation or nonobservance of the
representations or warranties, made by Seller herein or in the Transaction
Documents or failure of any certificate, document or instrument delivered by or
on behalf of Seller pursuant hereto or in connection herewith to be true and
correct as of the Closing, provided however, that for purposes of determining
whether such a breach has occurred and the amount of any Losses resulting
therefrom, any reference to materiality, knowledge, or similar language shall be
disregarded;

 

(b)     any breach or failure by Seller to perform any of the covenants or
agreements of Seller contained in this Agreement or in the Transaction Documents
or failure of any certificate, document or instrument delivered by or on behalf
of Seller pursuant hereto or in connection herewith to be true and correct as of
the Closing;

 

(c)     any acts or omissions of Seller relating to the operations, ownership,
condition or conduct of the Purchased Assets and the Business prior to the
Closing;

 

(d)     any Excluded Asset or Retained Liability;

 

(e)     any liabilities arising prior to the Closing relating to the employees
or independent contractors of Seller, including the classification thereof;

 

(f)     any claim by any Person for a brokerage or finder’s fee, commission or
similar payment based upon any agreement or understanding alleged to have been
made by such Person with Seller (or any Person acting on Seller’s behalf) in
connection with the transactions contemplated by this Agreement.

 

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8.2.     Purchaser Indemnification. Subject to the limitations set forth in
Section 8.4 below, Purchaser agrees to indemnify and hold harmless Seller and
its officers, directors, agents and employees to the fullest extent lawful, from
and against any and all Claims or Losses suffered or incurred by Seller to the
extent relating to or arising out of (i) any inaccuracy in or breach, violation
or nonobservance of the representations, warranties, covenants or other
agreements made by Purchaser herein or in the Transaction Documents or failure
of any certificate, document or instrument delivered by or on behalf of
Purchaser pursuant hereto or in connection herewith to be true and correct as of
the Closing and (ii) any liabilities or obligations with respect to the Assumed
Liabilities.

 

8.3.     Third Party Claims. In the event that a Party (the “Indemnitee”)
desires to make a claim against another Party (the “Indemnitor”) pursuant to
Section 8.1 or Section 8.2 in connection with any action, suit, proceeding or
demand at any time instituted against or made upon the Indemnitee by any third
party for which the Indemnitee may seek indemnification hereunder (a “Third
Party Claim”), the Indemnitee shall promptly notify, in writing, the Indemnitor
of such Third Party Claim and of the Indemnitee’s claim of indemnification with
respect thereto. The Indemnitor shall have thirty (30) days after receipt of
such notice to notify the Indemnitee if he/she or it has elected to assume the
defense of such Third Party Claim. If the Indemnitor elects to assume the
defense of such Third Party Claim, the Indemnitor shall be entitled at his/her
or its own expense to conduct and control the defense and settlement of such
Third Party Claim through counsel of his/her or its own choosing; provided,
however, that the Indemnitee may participate in the defense of such Third Party
Claim with his/her or its own counsel at his/her or its own expense and the
Indemnitor may not settle any Third Party Claim without the Indemnitee’s
consent, which shall not be unreasonably withheld. If the Indemnitor fails to
notify the Indemnitee within thirty (30) days after receipt of the Indemnitee’s
written notice of a Third Party Claim, the Indemnitee shall be entitled to
assume the defense of such Third Party Claim at the expense of the Indemnitor;
provided, however, that the Indemnitee may not settle any Third Party Claim
without the Indemnitor’s consent, which shall not be unreasonably withheld.

 

8.4.     Limitations of Liability.

 

(a)     Seller and Purchaser shall have no liability with respect to the matters
described in Sections 8.1 and 8.2, respectively, for any Claim or Loss until the
total of all Claims or Losses exceeds Fifty Thousand Dollars ($50,000) (the
“Basket”), at which point Seller or Purchaser, as the case may be, shall be
obligated to indemnify the other Party from and against all such Claims or
Losses in excess of the Basket; provided, however, that these limitations shall
not apply to any Claims or Losses incurred by Purchaser as a result of or with
respect to (i) any accounts payable of Seller that are not Assumed Liabilities
identified on Schedule 1.5A, or (ii) any breach of the representations contained
in Sections 2.1 (Organization and Corporate Power), 2.2 (Authorization), 2.11
(Taxes), 2.13 (Assets) and 2.14 (Intellectual Property). Notwithstanding
anything contained in this Agreement to the contrary, except for the
representations set forth in Sections 2.1 (Organization and Corporate Power),
Section 2.2 (Authorization), 2.11 (Taxes), 2.13 (Assets), and Section 2.14
(Intellectual Property), which shall be uncapped, the other indemnity
obligations of Seller on the one hand and Purchaser, on the other hand, under
this Agreement shall not exceed the Purchase Price.

 

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(b)     In any situation in which an indemnification payment or expense
reimbursement is due from Seller hereunder, Purchaser shall seek to satisfy such
obligation, in whole or in part, from the Escrow Amount. In any situation in
which an indemnification payment is due from Purchaser hereunder, Seller shall
seek to satisfy such obligation by acceptance of a cash payment by Purchaser
equal to the fair value of the Claim or Loss.

 

(c)     No action or claim for Losses pursuant to this Article VIII shall be
brought or asserted after the relevant date of survival referred to in Article
IX hereof (the “Representation Expiration Date”). The amount of any Claims or
Losses suffered by an Indemnitee shall be reduced by any tax benefit that has
been realized or that is certain to be realized, and any insurance benefits or
claims against third parties which are actually received by such Party in
respect of or as a result of such Claims or Losses, or the facts or
circumstances relating thereto. If any Losses for which indemnification is made
hereunder are subsequently reduced by any tax benefit or insurance payment, the
value of such tax benefit or other benefit or the amount of such payment or
other recovery shall be remitted to the Indemnitor.

 

(d)     Notwithstanding anything in this Agreement to the contrary, except as
specifically set forth below in this Section 8.4(d) or attributable to fraud,
Purchaser’s sole recourse to Seller for any Claims or Losses under this Article
8 shall be solely against the Purchaser Stock and any Cash Consideration that
has not already been paid by Purchaser to Seller and such ability of Purchaser
to collect from such Purchaser Stock shall expire immediately upon the
termination of the restrictions on the Purchaser Stock pursuant to Section
5.6(a) above. The preceding limitation on Purchaser shall not apply to any
Claims or Losses related to a breach of a representation set forth in Section
2.2 (Authorization) if any shareholder of Seller has brought any claim against
Seller challenging Seller’s authorization of this Transaction prior to
one-hundred (120) days after the Closing date.

 

(e)     Purchaser and Seller acknowledge and agree that, except as to Claims or
Losses attributable to fraud, their sole remedy against the other for any matter
arising out of a breach, violation or nonobservance of any representation,
warranty, covenant or other agreement contained in this Agreement is set forth
in this Article VIII, and that except to the extent a Party has asserted a claim
for indemnification prior to the Representation Expiration Date, neither Party
shall have any remedy against the other Party for any breach, violation or
nonobservance of a representation, warranty, covenant or other agreement made by
such other Party in this Agreement. The Parties acknowledge that this Section
8.4 has been negotiated fully by the Parties and that neither Party would have
entered into this Agreement but for the inclusion of this Section 8.4.

 

8.5.     Expenses; Reimbursement. Subject to the limitations set forth in
Section 8.4 above, an Indemnitor hereunder promptly shall reimburse the
Indemnitee for all Losses constituting reasonable expenses (including reasonable
attorneys’ fees and disbursements) as they are incurred in connection with
investigating, preparing to defend or defending any third-party action, suit,
claim or proceeding (including any inquiry or investigation) for which indemnity
is available under either Section 8.1 or Section 8.2, as applicable.

 

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8.6.     Notice. Each Party shall provide written notice to the other of any
claim with respect to which it seeks indemnification promptly after the
discovery of any matters giving rise to a claim for indemnification; provided,
however, that the failure of such Party to give notice as provided herein shall
not relieve the Indemnitor of its obligations under this Article VIII, except if
and to the extent that the Indemnitor has been materially prejudiced thereby.
For purposes of this Article VIII it shall be deemed that Indemnitor has been
materially prejudiced if Indemnitor was denied a reasonable opportunity to have
such claim settled, released or extinguished if it had received such required
notice.

 

8.7.     Survival. Subject to the provisions and limitations set forth in
Section 8.4(d) and in Article IX below, the obligations of Purchaser and Seller
under this Article VIII shall survive and continue in effect following the
Closing until all Claims or Losses are resolved.

 

ARTICLE IX

 

SURVIVAL

 

Except as provided herein, all representations, warranties, covenants and other
agreements of the parties contained herein shall survive the execution and
delivery of this Agreement and continue in effect following the Closing for a
period commencing on the Closing Date and ending on the date that is twenty-four
(24) months after the Closing Date. Notwithstanding the preceding sentence, the
representations set forth in Section 2.11 (Taxes) shall survive until the
expiration of the applicable statute of limitations, the representations set
forth in Section 2.14 (Intellectual Property) shall survive for a period
commencing on the Closing date and ending on a date that is twenty (24) months
after the Closing Date and the representations set forth in Sections 2.1
(Organization and Corporate Power), 2.2 (Authorization) and 2.13 (Assets) will
survive for a period commencing on the Closing date and ending on a date that is
twenty (24) months after the Closing Date.

 

ARTICLE X

 

MISCELLANEOUS

 

10.1.   Parties in Interest. Except as otherwise set forth herein, all
covenants, agreements, representations, warranties and undertakings contained in
this Agreement shall be binding on and shall inure to the benefit of the
respective heirs, successors and assigns of the Parties hereto. Except as may be
required to be disclosed by order of a court or otherwise required by law, the
parties agree to maintain in confidence the terms of this Agreement, except that
the parties hereto may disclose such terms to its accountants, lawyers, bankers
and advisors in the ordinary course. Except as otherwise specifically provided
herein, this Agreement shall not confer any rights or remedies upon any person
other than the parties hereto and their respective heirs, successors and
assigns. Notwithstanding anything to the contrary set forth herein, the members
of Seller are not intended third party beneficiaries of any of Seller’s
representations and warranties contained in this Agreement.

 

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10.2.   Notices. All notices, requests, consents, reports and demands shall be
in writing and shall be hand delivered, sent by electronic medium with receipt
confirmed, or sent by Federal Express or other overnight courier service
providing proof of delivery, to Purchaser or Seller, at the addresses set forth
below or to such other address for any such Party as may be furnished in writing
to the other Party hereto:

 

Purchaser:

Roger Kahn, President & CEO

Bridgeline Digital, Inc.

80 Blanchard Road

Burlington, MA 01803

              With copy to:

Joseph C. Marrow, Esq.

Morse, Barnes-Brown & Pendleton, P.C.

230 Third Avenue, 4th Floor

Waltham, MA 02451

Fax No.: 781-622-5933

              Seller:

Elisha Gilboa

SeeVolution, Inc.

Celebros, Inc.

28720 Roadside Drive, Suite 198

Augora Hills, California 91301

              With copy to:

Law Office of Jeffrey Maller, PC     

4221 Wilshire Blvd., Suite 355

Los Angeles, CA, 90010

Attn: Jeffrey Maller, Esq.

 

   

10.3.   Severability. All agreements and covenants contained in this Agreement
are severable, and in the event that any of them shall be held to be invalid or
unenforceable by any court of competent jurisdiction, then this Agreement shall
be interpreted as if such invalid agreements or covenants were not contained
herein.

 

10.4.   Counterparts. This Agreement and any exhibit hereto may be executed in
multiple counterparts, each of which shall constitute an original, but all of
which shall constitute but one and the same instrument. One or more counterparts
of this Agreement or any exhibit hereto may be delivered via fax or via e-mail
delivery of a “.pdf” format data file, with the intention that they shall have
the same effect as an original counterpart hereof.

 

10.5.   Effect of Headings/Gender References. The article and section headings
herein are for convenience only and shall not affect the construction or
interpretation hereof. The use of any gender in the Agreement shall be deemed to
include the other genders, and the use of the singular in this Agreement shall
be deemed to include the plural (and vice versa), wherever appropriate.

 

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10.6.   Governing Law/Forum. This Agreement shall be deemed a contract made
under the laws of Delaware and together with the rights and obligations of the
parties hereunder, shall be construed under and governed by the laws of such
state. Any action or proceeding seeking to enforce any provision of, or based on
any right arising out of, this Agreement or any of the transactions contemplated
hereby, shall be brought against any of the parties and brought and heard before
a mutually agreed to single arbitrator whom is a member of at least one of these
associations; Arbitration Association, the National Arbitration Forum or the
International Council for Commercial Arbitration, depending on the type of
dispute.

 

10.7.   Arbitration; Reasoned Award. The Parties agree that the arbitration will
be a “reasoned award”, meaning: (a) the award will be in writing, dated, and
signed by the arbitrator; (b) the writing will include a list of briefs and or
exhibits considered, the testimony and evidence presented at the hearing; (c)
the award should identify each issue necessary to the decision, state the
arbitrators determination of each issue, and provide the reason(s) for the
arbitrator’s resolution of each issue; (d) the award may include a statement or
outline of the operative facts (to the extent any factual finding presents a
significant reason for the arbitrator’s resolution of a contested issue,
however, the finding shall be included in the award; and (e) the award may also
include conclusions of law.

 

10.8.   Attorney’s Fees. In the case of any dispute under this Agreement
resolved pursuant to Section 10.6, the prevailing Party, defined as the Party
whom an arbitrator finds substantially in favor of, shall be entitled to recover
reasonable attorney’s fees, arbitration costs (filing fee and travel), interest,
if applicable, and all other costs associated with bringing the action. Process
in any action or proceeding referred to in the preceding sentence may be served
on either Party anywhere in the world.

 

[Remainder of page intentionally left blank]

 

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Signature Page to Asset Purchase Agreement

 

 

 

IN WITNESS WHEREOF, the Parties hereto have executed this Asset Purchase
Agreement on the date written above.

 

 

BRIDGELINE DIGITAL, INC. 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Roger Kahn

 

 

 

Name: Roger Kahn 

 

 

 

Title: President and Chief Executive Officer 

 

 

 

 

 

SEEVOLUTION, INC. 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Joseph Shemesh

 

 

 

Name: Joseph Shemesh 

 

 

 

Title: President and Chief Executive Officer 

 

 

 

 

 

CELEBROS, INC. 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Joseph Shemesh

 

 

 

Name: Joseph Shemesh 

 

 

 

Title: President and Chief Executive Officer 

 

 

 

 

 

ELISHA GILBOA 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Elisha Gilboa 

 

 

 

Name: Elisha Gilboa, signing in the capacity as Shareholder

of Seller 

 

 

 

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Schedules and Exhibits to Asset Purchase Agreement

by and among

Bridgeline Digital, Inc.,

and

Seevolution Inc.

 

 

Schedule 1.1 – Assets

 

(a)     the Customers listed on Schedule 1.1(a), attached hereto and
incorporated herein;     

 

(b)     all Pre-Acquisition Licensed Software relating to the Customers, as
further described on Schedule 1.1(b), attached hereto and incorporated herein;

 

(c)     all contracts (“Contracts”) relating to the Customers, as further
described on Schedule 1.1(c), attached hereto and incorporated herein;

 

(d)     all licenses (“Licenses”) relating to the Customers, as further
described on Schedule 1.1(d), attached hereto and incorporated herein; and

 

(e)     all Intellectual Property developed under the Pre-Acquisition Licensed
Software, the Contracts and the Licenses that is owned by Seller; and

 

(f)     all of Seller’s right, title and interest in and to all trade secrets,
common law rights, privileges, franchises, memberships, confidential or
proprietary information, technology, laboratory notebooks, drawings, engineering
specifications, ideas, methods, know-how, techniques, research, software,
computer programs, source code, source code repository, debugging scripts, and
any software or hardware used to maintain, build, or operate the Pre-Acquisition
Licensed Software product designs, plans, discoveries, improvements or
developments, whether patentable or not patentable (including all licenses with
respect thereto), of or relating to the Pre-Acquisition Licensed Software; and

 

(g)     Seller is entitled to only those Accounts Receivable, related to
services performed, up to February 28, 2019;

 

(h)     Seller will collect and remit to Purchaser for services performed after
March 1, 2019, but not less than monthly;

 

(i)     all prepaid expenses and other assets related to performing services for
customers; and

 

(j)     Backlog of work orders, Statements of Work evidenced by signed
contracts.

 

 

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Schedule 1.2 – Excluded Assets

 

All of Seller’s bank accounts (and amounts held therein); and

 

All of Seller’s books and records including but not limited to all corporate and
tax records. and excluding those identified in Schedule 1.1(a); and

 

All of Seller’s fixed assets: furniture, computers, equipment, etc.

 

Accounts Receivable of Seller as of the Closing Date.

 

 

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Schedule 1.4 – Purchase Price Allocation

 

To be completed post-Closing by Agreement of the parties in accordance with
Section 1.4 of the Agreement.

 

 

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Schedule 1.5A – Assumed Liabilities

 

All obligations of Seller to perform services after the Closing Date for which
Seller’s customers have prepaid for such services.

 

Seller has agreed to pay amounts now due on the Azure hosting agreement.
Thereafter Purchaser has agreed (approximately $12,000 per month) to assume the
remainder of the Azure hosting agreement until the end of the contract in
December 2019.

 

Purchaser agrees to pay the monthly expenses associated with the attached list
of service providers until such time as Purchaser cancels or transfers such
services to its own accounts. To the extent that Seller is obligated to pay for
such services (or actually pays for such services), Purchaser shall upon
delivery of evidence to such obligation to Purchaser, shall at Seller’s request,
either pay such amount directly to service provider or pay to Seller.

 

 

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Schedule 1.5B – Excluded Liabilities

 

 

1.

All cash receipts collected prior to Closing by Seller for services to be
provided by the post-Closing other than the deferred revenue.

 

 

2.

Accrued wages (including accrued paid time off) for current or former employees
of Seller.

 

 

3.

Accrued employer payroll taxes, if applicable, with respect to current or former
employees of Seller.

 

 

4.

Accrued bonuses due to any current or former employee of Seller.

 

 

5.

Severance payments due to any current or former employee of Seller.

 

 

6.

Accrued or unpaid employee expense reports with respect to any former or current
employee of Seller.

 

 

7.

Accounts Payable and accrued expenses.

 

 

8.

Any liability for any Taxes of Seller relating to the Assets for periods prior
to the Closing Date.

 

 

9.

All claims, judgments, demands and rights of third parties against Seller
relating to the Business, including without limitation (i) any rights or claims
against Seller for infringement, misappropriation, misuse or unauthorized use of
intellectual property and (ii) all rights under or pursuant to warranties,
representations, guaranties and services contracts made by Seller with third
parties in connection with products or services sold by Seller in connection
with its Business..

 

 

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Seller Disclosure Schedules

 

 

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Exhibit A. Bill of Sale

 

 

 

BILL OF SALE

 

Seevolution, Inc a Delaware corporation, (“Seevolution”), Celebros, Inc., a
Delaware corporation and Elisha Gilboa, an individual and shareholder
(“Celebros”, “Elisha Gilboa” collectively with Seevolution, (“Seller”), for good
and valuable consideration paid to it by or on behalf of Bridgeline Digital,
Inc. a Delaware corporation (“Buyer”), pursuant to that certain Asset Purchase
Agreement dated as of February 13, 2019 (the “Asset Purchase Agreement”) by and
among the Buyer, Seller, and the person(s) executing the Agreement as a
Stockholder(s), does hereby sell, convey, transfer, assign and deliver to Buyer,
its successors and assigns, to have and to hold forever, all of the Assets (as
defined in the Asset Purchase Agreement).

 

The terms of the Asset Purchase Agreement, including but not limited to the
parties’ representations, warranties, covenants, agreements and indemnities
relating to the Assets are incorporated herein by this reference. The parties
acknowledge and agree that the representations, warranties, covenants,
agreements and indemnities contained in the Asset Purchase Agreement shall not
be superseded hereby but shall remain in full force and effect to the full
extent provided therein. In the event of any conflict or inconsistency between
the terms of the Purchase Agreement and the terms hereof, the terms of the Asset
Purchase Agreement shall govern.

 

This Bill of Sale is delivered pursuant to, on the terms and subject to the
conditions set forth in the Asset Purchase Agreement. Nothing contained herein
shall be deemed to alter, modify, expand or diminish the terms and provisions of
the Purchase Agreement. Unless otherwise defined herein, all capitalized terms
used herein shall have the meanings ascribed to such terms in the Asset Purchase
Agreement.

 

 

 

[Signature Page Follows]

 

 

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IN WITNESS WHEREOF, the parties have caused this Bill of Sale to be duly
executed on this 13 day of February, 2019.

 

 

BUYER:

 

BRIDGELINE DIGITAL, INC.

 

 

By: /s/ Roger Kahn                                       

Name: Roger Kahn

Title: President and Chief Executive Officer

 

 

SELLER:

 

SEEVOLUTION, INC.

 

 

By: /s/ Joseph Shemesh                                

Name: Joseph Shemesh

Title: President and Chief Executive Officer

 

 

 

CELEBROS, INC.

 

 

By: /s/ Joseph Shemesh                               

Name: Joseph Shemesh

Title: President and Chief Executive Officer

 

 

ELISHA GILBOA

 

 

By: /s/ Elisha Gilboa                                   

Name: Elisha Gilboa, signing in the capacity as Shareholder of Seller

 

 

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Exhibit B. Assignment and Assumption Agreement

 

Instrument of Assignment and Assumption

 

This Instrument of Assignment and Assumption is made and entered into February
13, 2019, by and between Seevolution, Inc a Delaware corporation,
(“Seevolution”), Celebros, Inc., a Delaware corporation and Elisha Gilboa, an
individual (“Celebros”, “Elisha Gilboa” and collectively with Seevolution, a
Delaware corporation (“Assignor”), and Bridgeline Digital, Inc., a Delaware
corporation (“Assignee”).

 

WHEREAS, Assignor and Assignee are parties to that certain Asset Purchase
Agreement dated as of February 13, 2019 (the “Asset Purchase Agreement”),
pursuant to which Assignee has purchased substantially all of the assets of
Assignor; and

 

WHEREAS, pursuant to the Asset Purchase Agreement, Assignor has agreed to assign
certain rights and agreements to Assignee, and Assignee has agreed to assume
certain obligations of Assignor, all as set forth therein;

 

NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt, adequacy and legal sufficiency of which are hereby acknowledged, the
parties do hereby agree as follows:

 

1.      Capitalized Terms. Capitalized terms used but not defined herein shall
have the meanings for such terms that are set forth in the Asset Purchase
Agreement.

 

2.      Assignment and Assumption. Assignor hereby assigns, sells, transfers and
sets over (collectively, the “Assignment”) to Assignee all of Assignor's right,
title, benefit, privileges and interest in and to each of the Assets, and all of
Assignor's burdens, obligations and liabilities in connection with, each of the
Assumed Liabilities. Assignee hereby accepts the Assignment and assumes and
agrees to observe and perform all of the duties, obligations, terms, provisions
and covenants, and to pay and discharge all of the liabilities of Assignor to be
observed, performed, paid or discharged from and after the Closing in connection
with the Assumed Liabilities. Assignee assumes no Excluded Liabilities, and the
parties hereto agree that all such Excluded Liabilities shall remain the sole
responsibility of Assignor.

 

3.     Terms of the Purchase Agreement. The terms of the Asset Purchase
Agreement, including but not limited to the parties’ representations,
warranties, covenants, agreements and indemnities relating to the Assumed
Liabilities, are incorporated herein by this reference. The parties acknowledge
and agree that the representations, warranties, covenants, agreements and
indemnities contained in the Purchase Agreement shall not be superseded hereby
but shall remain in full force and effect to the full extent provided therein.
In the event of any conflict or inconsistency between the terms of the Purchase
Agreement and the terms hereof, the terms of the Purchase Agreement shall
govern.

 

 

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4.     Further Actions. Each of the parties hereto covenants and agrees to
execute and deliver, at the request of the other party hereto, such further
instruments of transfer and assignment and to take such other action as such
other party may reasonably request to more effectively consummate the
assignments and assumptions contemplated by this Instrument of Assignment and
Assumption.

 

 

 

ASSIGNEE:

 

BRIDGELINE DIGITAL, INC.

 

 

By: /s/ Roger Kahn                                        

Name: Roger Kahn

Title: President and Chief Executive Officer

 

 

ASSIGNOR:

 

SEEVOLUTION, INC.

 

 

By: /s/ Joseph Shemesh                                

Name: Joseph Shemesh

Title: President and Chief Executive Officer

 

 

CELEBROS, INC.

 

 

By: /s/ Joseph Shemesh                                

Name: Joseph Shemesh

Title: President and Chief Executive Officer

 

 

ELISHA GILBOA

 

 

By: /s/ Elisha Gilboa                                      

Name: Elisha Gilboa, signing in the capacity as Shareholder of Seller

 

 

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Exhibit C. Deferred Revenue (see attached)