Exhibit 10.1

 

 

 

 

SHARE PURCHASE AGREEMENT

 

BY AND AMONG

 

MICRONET ENERTEC TECHNOLOGIES INC.

 

ENERTEC MANAGEMENT LTD.

 

ENERTEC SYSTEMS 2001 LTD.

 

AND

 

COOLISYS TECHNOLOGIES, INC.

 

Dated as of December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

SHARE PURCHASE AGREEMENT

 

This SHARE PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of
December 31, 2017 by and among Coolisys Technologies, Inc., a Delaware
corporation (the “Buyer”), Enertec Management Ltd., an Israeli company limited
by shares (“Seller” or “Sub”), Micronet Enertec Technologies, Inc., a Delaware
corporation (“Parent” or “MICT”) and Enertec Systems 2001 Ltd., an Israeli
company limited by shares (the “Company”). The Parent and the Sub are referred
to herein collectively as the “Seller Parties”. Each of Buyer, Seller Parties
and the Company shall be referred to herein as a “Party”, and collectively, as
“Parties”).

 

W I T N E S E T H :

 

WHEREAS, the Seller is the record and beneficial owner of all of the issued and
outstanding share capital of the Company; and

 

WHEREAS, Seller desires to sell to Buyer, the Shares (as defined below) held by
Seller, and Buyer desires to purchase such Shares from the Seller, upon the
terms and subject to the conditions set forth herein; and

 

WHEREAS, Seller Parties and Buyer desire to make certain representations,
warranties, covenants and agreements in connection with this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements herein contained and intending to be legally bound hereby, the
parties hereby agree as follows:

 

1. DEFINITIONS AND INTERPRETATIONS

 

1.1. Certain Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:

 

1.1.1. “Affiliate” means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control (as such term
is defined in the Israeli Companies Law, 5759-1999) with such Person; provided
that the Company shall not be considered an Affiliate of Seller.

 

1.1.2. “Allowed Company Debt” shall mean Indebtedness in an aggregate amount of
US$4,000,000 (or equivalent thereof).

 

1.1.3. “Applicable Law” means, with respect to any Person, any federal, state or
local law (statutory, common or otherwise), constitution, treaty, convention,
ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling
or other similar requirement enacted, adopted, promulgated or applied by a
Governmental Authority that is binding upon or applicable to such Person, as
amended unless expressly specified otherwise.

 

1.1.4. “Assets” means, with respect to any Person, all of the assets, rights,
interests and other properties, real, personal and mixed, tangible and
intangible, owned by such Person.

 

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1.1.5. “Business Day” means any on which national banking institutions in the
State of Israel and New York, New York are open to the public for conducting
business and are not required or authorized by Applicable Law to close.

 

1.1.6. “Closing Date” means the date of the Closing.

 

1.1.7. “Closing Debt Deficit” means any amount of Company Debt in excess of the
Allowed Company Debt (i.e. a deficit). As example only, in the event the Company
Debt is US$5,000,000 (or equivalent thereof), the Closing Debt Deficit is
US$1,000,000 (or equivalent thereof).

 

1.1.8. “Closing Debt Surplus” means, in the event the Company Debt shall be
lower than the Allowed Company Debt, such amount equivalent to the difference
between the Allowed Debt and the Company Debt (i.e., Allowed Debt less the
Company Debt). As example only, in the event the Company Debt is US$3,000,000
(or equivalent thereof), the Closing Debt Surplus is US$1,000,000 (or equivalent
thereof).

 

1.1.9. “Codeˮ means the Internal Revenue Code of 1986, as amended from time to
time, or corresponding provisions of subsequent federal revenue Laws.

 

1.1.10. “Company Business” means development and manufacturing of advanced
electronic systems, test systems, simulators, for military applications.

 

1.1.11. “Company Debt” means the aggregate amount of Indebtedness of the Company
outstanding as of immediately prior to the Closing, (including for the avoidance
of doubt the aggregate amount of any Indebtedness that shall be terminated or
accelerated upon the Closing as a result of this Agreement as set forth in
Section ‎2.3 below).

 

1.1.12. “Company Intellectual Property” means any and all Intellectual Property
that is owned or is purported to be owned by, or any and all Intellectual
Property owned by a third party that is licensed to and/or used by the Company.

 

1.1.13. “Company Technology” means any and all Technology that is owned by the
Company including any Intellectual Property related thereto and/or included
therein.

 

1.1.14. “Contract” means any legally binding contract, agreement, lease,
license, instrument, note, guarantee, commitment, promise, purchase order, or
undertaking, whether written or oral.

 

1.1.15. “Domain Names” means Internet domain names.

 

1.1.16. “Environmental Laws” means any Applicable Law that has as its principal
purpose the protection of the environment.

 

1.1.17. “Indemnification Escrow Amount” shall mean 10% of the Purchase Price.

 

1.1.18. “Exchange Act” means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

 

1.1.19. “Financial Indebtedness” means (a) all indebtedness of the Company for
borrowed money, (b) all outstanding obligations of the Company evidenced by
notes, bonds, debentures or similar instruments, (c) any other outstanding
amounts owed by Company to any third party, (d) all obligations of the types
referred to in clauses (a) through (c) of any other Person, the payment of which
Company is responsible or liable, directly or indirectly, as obligor, guarantor,
surety or otherwise, including guarantees of such obligations and (e) all
obligations of the types referred to in clauses (a) through (c) of any other
Person secured by (or for which the holder of such obligations has an existing
right, contingent or otherwise, to be secured by) any Lien on any property or
asset of Company.

 

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1.1.20. “GAAP” means Israeli or United States generally accepted accounting
principles, as applicable.

 

1.1.21. “Governmental Authority” means any transnational, domestic or foreign
federal, state or local, governmental authority, department, ministry, court,
agency or official, including any political subdivision thereof.

 

1.1.22. “Indebtedness” means, indebtedness of the Company for borrowed money and
the Company’s aggregate bank debt, calculated as the aggregate amount of short
term debt and long term loans to the banks, including accrued but unpaid
interest, penalties (if any, according to Company’s agreement with the banks),
less the aggregate amount of all cash and cash equivalents (including bank
deposits). For the avoidance of doubt, Indebtedness shall not include any credit
extended by Company’s suppliers in the ordinary course and consistent with past
practice during 2017 or any outstanding amounts owed by Company to any third
party in the ordinary course of business and consistent with past practice
during 2017.

 

1.1.23. “Intellectual Property” means any and all proprietary or intellectual
property rights (anywhere in the world, whether statutory, common law or
otherwise), including (a) patents, (b) copyrights, (c) other rights with respect
to software, including registrations thereof and applications therefor, (d)
industrial design rights and registrations thereof and applications therefor,
including mask works, (e) rights with respect to trademarks, and all
registrations thereof and applications therefor, (f) rights with respect to
Domain Names, including registrations thereof and applications therefor, (g)
rights with respect to Trade Secrets or Confidential Information, including
rights to limit the use or disclosure thereof by any Person, (h) rights with
respect to Databases, including registrations thereof and applications therefor,
and (i) any rights equivalent or similar to any of the foregoing. Without
limiting the foregoing, this includes rights to derivatives, improvements,
modifications, enhancements, revisions, and releases to any of the foregoing,
claims and causes of action arising out of or related to infringement,
misappropriation or violation of any of the foregoing and other proprietary or
intellectual property rights now known or hereafter recognized in any
jurisdiction.

 

1.1.24. “ITA” means the Israeli Tax Authority.

 

1.1.25. “ITO” means the Israeli Income Tax Ordinance (New Version), 1961, as
amended, and all the rules and regulations promulgated thereunder.

 

1.1.26. “knowledge of Seller”, “Seller’s knowledge”, “knowledge of the Company”
or any other similar knowledge qualification in this Agreement, means the actual
knowledge of any officer or director of Seller Parties, or any director, the CEO
or the CFO of the Company after reasonable inquiry.

 

1.1.27. “Lien” means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest or encumbrance in respect of such property or
asset.

 

1.1.28. “Material Adverse Effect” means any condition, change, effect or event
individually or in the aggregate that has had, or is reasonably expected to have
a material adverse effect on the business, assets, liabilities, financial
condition of the Company, or results of operations of the Company, taken as
whole, except any such condition, change, effect or event, resulting from or
arising in connection with (i) this Agreement or the transactions contemplated
hereby, (ii) changes or conditions generally affecting the industry in which the
Company operates, (iii) changes in economic, regulatory or political conditions
generally or (iv) 2017 Statements.

 

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1.1.29. “Ordinary Shares” means ordinary shares, par value NIS 1.00 per share,
of the Company.

 

1.1.30. “Open Source Materials” means any software that is licensed or
distributed under a license agreement that meets the Open Source Definition (as
promulgated by the Open Source Initiative) or the Free Software Definition (as
promulgated by the Free Software Foundation or any substantially similar
license, including, without limitation, to any license approved by the Open
Source Initiative: such as GNU’s General Public License (GPL), Lesser/Library
GPL (LGPL), Affero General Public License (AGPL), the Artistic License (e.g.,
PERL), the Mozilla Public License, the Netscape Public License, the Sun
Community Source License (SCSL), the Sun Industry Standards License (SISL), the
BSD License, and the Apache License.

 

1.1.31. “Organizational Documents” means: (i) with respect to any corporation or
company, its articles or certificate of incorporation or association and by-laws
or similar documents, (ii) with respect to any limited liability company, the
limited liability company or operating agreement and articles of organization or
articles or certificate of formation of a limited liability company (and
associated by-laws, if applicable), (iii) with respect to a trust, its trust
agreement and associated constituent documents and (iv) with respect to any
other type of entity, its similar organizational or constituent documents.

 

1.1.32. “Permitted Liens” means (a) Liens for current Taxes not yet due and
payable or are being contested in good faith, (b) Liens disclosed on Schedule
‎1.1.32, (c) Liens disclosed on the Balance Sheet or notes thereto or securing
liabilities reflected on the Balance Sheet or notes thereto, and (d) mechanics’,
carriers’, workers’, repairers’, materialmens’, warehousemens’ and other Liens
arising or incurred in the ordinary course of business by operation of
Applicable Laws

 

1.1.33. “Person” means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a Governmental Authority.

 

1.1.34. “Personal Data” means any personal information that relates to an
identified or identifiable individual which is protected under the Israeli
Protection of Privacy Law, 1981 and any laws and regulations enacted thereunder.

 

1.1.35. “Real Property” means the real property leased or in respect of which
the Company has any other interest, together with all improvements, fixtures and
other appurtenances thereto and rights in respect thereof.

 

1.1.36. “Shares” means 251,000 Ordinary Shares.

 

1.1.37. “Subsidiary” means any entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time directly
or indirectly owned by the Company.

 

1.1.38. “Tax Return” shall mean any return, report or statement required to be
filed with respect to any Tax (including any elections, declarations, schedules,
exhibits or attachments thereto, and any amendment or supplement thereof)
including any information return, estimate, claim for refund, amended return or
declaration of estimated Tax, and including, where permitted or required,
affiliated, combined, consolidated or unitary returns for any group of entities
which includes the Company.

 

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1.1.39. “Tax” or “Taxes” shall mean (a) any and all, state, local and foreign
taxes, assessments and other governmental charges, duties, impositions, levies,
customs, tariffs, fees and liabilities of the same or similar nature, including
taxes based upon or measured by gross receipts, income, profits, gain, sales,
use and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, alternative minimum, estimated,
stamp, excise and property taxes as well as public imposts, fees, national
insurance and social security charges (including health, unemployment, workers’
compensation and pension insurance), together with all interest, linkage,
penalties and additions imposed with respect to such amounts or such interest,
penalties, or additions, (b) any liability for any amounts of the type described
in clauses (a), (c) and (d) hereof of a predecessor entity, (c) any liability
for the payment of any amounts of the type described in clauses (a), (b) or
(d) hereof as a result of being a member of an affiliated, consolidated,
combined or unitary group for any period and (d) any liability for the payment
of any amounts of the type described in clauses (a), (b) or (c) hereof as a
result of any express or implied obligation to indemnify any other Person or as
a result of any obligation under any agreement or arrangement or otherwise
obligated to make any payment determined by reference to the Tax liability of a
third party.

 

1.1.40. “Taxing Authority” shall mean the IRS, the ITA or any other governmental
body (whether state, local or non-U.S.) responsible for the administration of
any Tax.

 

1.1.41. “Technology” means any and all: (a) technology, formulae, algorithms,
procedures, processes, methods, techniques, know-how, ideas, creations,
inventions, discoveries, and improvements (whether patentable or unpatentable),
(b) technical, engineering and manufacturing information, (c) specifications,
designs, models, devices, prototypes, schematics, and development tools, (d)
software, content, and other works of authorship, and (e) tangible embodiments
of any of the foregoing, in any form or media whether or not specifically listed
in this definition.

 

1.1.42. “Trade Secrets” means confidential and proprietary information, whether
oral or written, including ideas, designs, concepts, compilations of
information, methods, techniques, procedures, processes and other know-how,
whether or not patentable, of any nature in any form, including all writings,
memoranda, copies, reports, papers, surveys, analyses, drawings, letters,
computer printouts, computer programs, computer applications, specifications,
business methods, business processes, business techniques, business plans, data
(including customer data), graphs, charts, sound recordings and/or pictorial
reproductions, that (a) derive independent economic value, actual or potential,
from not being generally known to the public or to other Persons who can obtain
economic value from its disclosure or use and (b) are the subject of efforts
that are reasonable under the circumstances to maintain their secrecy.

 

1.1.43. “Valid Certificate” means a certificate or ruling issued by the ITA
which is sufficient to enable to conclude that no withholding of Israeli Tax is
required with respect to any consideration payable by or on behalf of Buyer to
Seller in a form and substance reasonably acceptable to Buyer.

 

1.1.44. Each of the following terms is defined in the Section set forth opposite
such term:

 

Term

  Section Agreement   Preamble “Anti-Corruption Law”   ‎4.25 “Audited Balance
Sheet”   4.7 “Balance Sheet Date”   ‎4.7 “Buyer Indemnified Parties”   ‎9.2.1
“Buyer Termination Fee”   ‎10.3.1 “Claims Period”   9.1.1 “Closing Cash Payment”
  ‎2.2

 

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Term

  Section “Closing Statement”   ‎2.5 “Closing Date”   ‎3.1 “Company Securities”
  ‎4.4 “Current Representation”   ‎6.2.4.1 “Customer Information”   ‎4.18.24
“Designated Person”   6.2.6.1 “e-mail”   ‎11.1 “End Date”   ‎10.1.2 “Escrow
Agreement”   ‎2.6 “Escrow Agent”   2.5 “Financial Statements”   4.7 “Fundamental
Representations”   ‎9.1.1 “In-Licenses”   ‎4.18.11 “Indemnified Party”   ‎9.3.1
“Indemnifying Party”   ‎9.3 “Independent Contractors”   ‎4.23 “Interested Party”
“Interested Party Agreement”   ‎4.10 “IP Contracts”   4.17.12 “Losses”   ‎9.2
“Material Contracts”   ‎4.14.2 “Non-Compete Period”   ‎6.1.5.1 “Ordinary Shares”
  ‎4.4.1 “Out-Licenses”   ‎4.18.12 “Payor”   ‎2.7.2 “Paying Agent Agreement”,
“Paying Agent”   ‎2.7.3 “Post-Closing Representation”   ‎6.2.4.1 “Potential
Contributor”   ‎9.6 “Pre-Closing Tax Period”   ‎7.1 “Privacy Laws and
Requirements”   ‎4.18.23 “Purchase Price”   ‎2.2 “Related Party Agreements”    
“Released Parties”, “Released Claims”   ‎6.1.7 “Required Financing”   ‎6.2.3
“Seller Indemnified Parties”   ‎9.2.2 “Straddle Period”   7.1 “Third Party
Claim”   ‎9.3.1 “Warranty Breach”   ‎9.2 “Withholding Drop Date”   2.6.3

 

1.2. Other Definitional and Interpretative Provisions. The words “hereof”,
“herein” and “hereunder” and words of like import used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement. The captions herein are included for convenience of reference only
and shall be ignored in the construction or interpretation hereof. References to
Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits
and Schedules of this Agreement unless otherwise specified. All Exhibits and
Schedules annexed hereto or referred to herein are hereby incorporated in and
made a part of this Agreement as if set forth in full herein. Any capitalized
terms used in any Exhibit or Schedule but not otherwise defined therein, shall
have the meaning as defined in this Agreement. Any singular term in this
Agreement shall be deemed to include the plural, and any plural term the
singular. Whenever the words “include”, “includes” or “including” are used in
this Agreement, they shall be deemed to be followed by the words “without
limitation”, whether or not they are in fact followed by those words or words of
like import. “Writing”, “written” and comparable terms refer to printing, typing
and other means of reproducing words (including electronic media) in a visible
form. References to any Person include the successors and permitted assigns of
that Person. Except as otherwise provided herein, when calculating the period of
time before which, within which or following which any act is to be done or step
taken pursuant to this Agreement, the date that is the reference date in
calculating such period is excluded. If the last day of such period is not a
Business Day, the period in question ends on the next succeeding Business Day.
References to “law”, “laws” or to a particular statute or law shall be deemed
also to include any and all Applicable Law.

 

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2. PURCHASE AND SALE

 

2.1. Purchase and Sale. Upon the terms and subject to the conditions of this
Agreement, at the Closing (as defined in Section ‎3.1), Seller shall sell,
assign, convey, transfer and deliver to Buyer, free and clear of all Liens and
Buyer shall purchase, acquire and accept from Seller, the Shares, representing
100% of the issued and outstanding share capital of the Company, on a fully
diluted basis, against the Purchase Price (as defined below).

 

2.2. Upon the terms and subject to the conditions set forth herein, the purchase
price payable by Buyer to Seller for the Shares and the rights and benefits
conferred herein upon Closing shall be US$5,250,000, plus (i) the Closing Debt
Surplus, if any, or minus (ii) the Closing Debt Deficit (if any), as the case
may be (the “Purchase Price” or “Closing Cash Payment”).

 

2.3. if one or more lines of credit or financings set forth in Exhibit ‎2.3
received by the Company from financial institutions regarding the Company Debt
shall be subject to termination or acceleration as a result of this Agreement in
an aggregate amount of more than US$2,000,000 (the amount in excess of
US$2,000,000, the “Excess Amount”), then, the End Date shall be automatically
extended by additional thirty (30) days during which the Buyer shall seek
financing from other sources or financial institutions.

 

2.4. The Purchase Price shall be paid as provided in Section ‎3.

 

2.5. Closing Statement. On or at least up to two (2) Business Days prior to the
Closing, Seller shall deliver to Buyer a statement in the form attached hereto
as Exhibit ‎2.5, setting forth the Company Debt, together with bank statements
evidencing amount of Company Debt, and accordingly the amount of the Purchase
Price, which Closing Statement shall be countersigned Buyer on or at the
Closing.

 

2.6. Escrow Agreement. In order to secure the Closing of this Agreement and as
collateral and security for the payment of the Buyer Termination Fee, in
connection with the transactions contemplated by this Agreement, Buyer and
Seller are concurrently herewith entering (a) into that certain Escrow Agreement
attached hereto as Exhibit ‎2.6(a) (the “Escrow Agreement”) pursuant to which,
inter alia, within three (3) business days of the execution of this Agreement,
Buyer shall deposit in escrow an amount of cash equal to the Buyer Termination
Fee, with I.B.I. Trust Management (the “Escrow Agent”). The Buyer Termination
Fee will be held by the Escrow Agent until the earlier of (i) the Closing, at
which time the Buyer Termination Fee will be released to Buyer, and (ii) the
date on which this Agreement is terminated, at which time the Buyer Termination
Fee will be released to (A) Seller, if such termination is pursuant to (i)
Section ‎10.1.2 (and the conditions set forth in Section ‎10.3.1.2 have been
satisfied), or (ii) Section ‎10.1.6, or (B) Buyer, if not otherwise released to
Seller in accordance with the foregoing clause (A) and the Buyer and Seller
Parties shall then immediately jointly instruct in writing the Escrow Agent to
immediately release the Buyer Termination Fee to the Seller or Buyer, as
applicable, in accordance with the provisions of the Escrow Agreement.

 

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In addition, in order to secure the Sellers’ indemnification obligations under
this Agreement at the Closing, Buyer shall deliver or cause to be delivered, out
of and deducted from the Closing Cash Payment, cash in an amount equal to the
Indemnification Escrow Amount, and the Indemnification Escrow Amount shall be
deemed paid on account of the Purchase Price. The Indemnification Escrow Amount,
plus accrued interest, shall provide Buyer with recourse with respect to the
Seller Parties’ indemnification obligations under Section ‎9.2, subject to the
terms and conditions set forth in Section ‎9.2 and in the Escrow Agreement. The
Indemnification Escrow Amount and accrued interest (or any portion thereof)
shall be distributed to the Buyer and Seller at the times, and upon the terms
and conditions, set forth in the Escrow Agreement.

 

2.7. Withholding.

 

2.7.1. In the event a Valid Certificate is provided at least three (3) Business
Days prior to Closing, the Buyer shall pay the Purchase Price in full without
any withholding.

 

2.7.2. Each of the Buyer, the Escrow Agent and the Paying Agent (as this term is
defined below) (each a “Payor”), shall be entitled to deduct and/or withhold
from payment of the Closing Cash Payment or any other amounts (or any portion
thereof) payable pursuant to this Agreement to Seller, any such amounts as may
be required to be deducted and withheld with respect to the making of such
payment under the ITO, all as detailed in, and subject to, Section ‎2.7.3 below.

 

2.7.3. Notwithstanding the provisions of Section ‎2.7.2, if no Valid Certificate
was provided at least three (3) Business Days prior to the Closing, Buyer and
Seller will enter into that certain Paying Agent Agreement attached hereto as
Exhibit ‎2.7.3 (the “Paying Agent Agreement”) with I.B.I. Trust Management (the
“Paying Agent”) and the Closing Cash Payment (together with any adjustments)
payable to Seller shall be paid to, and retained by the Paying Agent for the
benefit of Seller, for a period of one-hundred eighty (180) days from the
Closing Date or an earlier date required in writing by Seller (the “Withholding
Drop Date”) (during which time unless otherwise approved by the ITA, no payments
shall be made by the Paying Agent to Seller and no amounts for Israeli Taxes
shall be withheld from the payments deliverable pursuant to this Agreement,
except as provided below and during which time Seller may obtain a Valid
Certificate). If Seller:

 

2.7.3.1. Delivers, no later than one (1) Business Day prior to the Withholding
Drop Date, a certificate or ruling issued by the ITA in a form and substance
acceptable to Paying Agent, which is sufficient to enable to conclude that no
withholding or reduced withholding of Israeli Tax is required with respect to
any consideration payable by or on behalf of Buyer to Seller, then the deduction
and/or withholding of any Israeli Tax shall be made only in accordance with the
provisions of such certificate or ruling issued by the ITA, and the balance of
the payment that is not withheld together with all amounts accruing thereon,
shall be paid and transferred to Seller in accordance with the provisions of the
Paying Agent Agreement; or

 

2.7.3.2. (i) Does not provide Paying Agent with a certificate or ruling issued
by the ITA, in a form and substance acceptable to Paying Agent which is
sufficient to enable to conclude that no withholding or reduced withholding of
Israeli Tax is required with respect to any consideration payable on behalf of
Buyer to Seller, by no later than one (1) Business Day before the Withholding
Drop Date, or (ii) submits a written request to the Paying Agent to release the
Purchase Price (together with any adjustment) prior to the Withholding Drop Date
and fails to submit such a certificate or ruling before such time, then the
amount required to be withheld from the Purchase Price shall be calculated
according to the applicable withholding rate, as reasonably determined by the
Paying Agent in accordance with the ITO, which amount shall be increased by the
interest plus linkage differences as defined in Section 159A of the ITO for the
time period specified under the ITO or the Paying Agent Certificate, and
calculated in NIS based on a U.S. dollars to NIS exchange rate not lower than
the effective exchange rate at the Closing Date.

 

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2.7.4. Any withholding made in New Israeli Shekels with respect to payments made
hereunder in U.S dollars shall be calculated based on applicable conversion rate
on the Closing Date and in a manner to be in compliance with the Applicable Law
and any currency conversion to be made to such payment recipient.

 

3. CLOSING AND CLOSING DELIVERIES

 

3.1. Closing. The term “Closing” as used herein shall refer to the actual sale,
assignment, conveyance, transfer, and delivery of the Shares to Buyer in
exchange for the Purchase Price payable to Seller pursuant to Section ‎2 above.
The Closing shall take place at the offices of Gross, Kleinhendler, Hodak,
Halevy, Greenberg & Co. at 1 Azrieli Center, round building, Tel-Aviv, or
remotely via the exchange of documents and signatures, as soon as practicable,
but in no event later than five (5) Business Days after satisfaction (or waiver)
of the conditions to Closing set forth in Section ‎8 below, or at such other
time or place as Buyer and Seller may agree (the “Closing Date”). The Closing
shall be deemed to occur at 5:00 pm Israel time on the Closing Date.

 

3.2. Transactions at the Closing. At the Closing the following transactions
shall occur, which transactions shall be deemed to take place simultaneously and
no transaction shall be deemed to have been completed or any document delivered
until all such transactions have been completed and all required documents
delivered:

 

3.2.1. Closing Delivers by Seller Parties. Seller Parties shall deliver or
caused to be delivered to Buyer the following:

 

3.2.1.1. Share transfer deed executed by Seller in the form attached hereto as
Exhibit ‎3.2.1.1;

 

3.2.1.2. Copies of the duly executed resolutions of the Board of Directors of
the Company in the form attached hereto as Exhibit ‎3.2.1.2, authorizing the
transfer of the Shares to Buyer;

 

3.2.1.3. Copy duly executed resolutions of the shareholders of the Company in
the form attached hereto as Exhibit ‎3.2.1.3 approving the transactions
contemplated under this Agreement and the execution thereof;

 

3.2.1.4. Copy of the share register of the Company reflecting the holdings of
the Company shares immediately prior to the Closing, such share register to be
certified by the Chief Executive Officer or a director of the Company on behalf
of the Company;

 

3.2.1.5. Duly executed share certificate reflecting the Company shares purchased
by the Buyer pursuant to this Agreement, issued in the name of the Buyer;

 

3.2.1.6. copies of the dully executed resolutions of the Board of Directors of
each of the Seller and Parent and dully executed resolutions of the shareholders
of the Seller, in the form attached hereto as Exhibit ‎3.2.1.6(a) and Exhibit
‎3.2.1.6(b), by which, inter alia, the execution, delivery and performance of
this Agreement shall be approved;

 

3.2.1.7. resignations from the Board of Directors of the Company of each
director of the Company, dated and effective as of the Closing Date, which shall
contain a waiver and release, in the form attached hereto as Exhibit ‎3.2.1.7;

 

3.2.1.8. termination agreements in the form attached hereto as Exhibit ‎3.2.1.8,
of all Interested Party Agreements, except for the Consulting Agreement;

 

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3.2.1.9. a Seller Parties’ certificate in the form attached hereto as Exhibit
‎3.2.1.9, executed by officer of each of Seller Parties, acting on behalf of
such Seller Party, certifying that (a) the representations and warranties of the
Seller Parties hereunder are true and correct in all material respects as of the
Closing Date; and (b) each of Seller Parties has performed in all material
respects all of its obligations hereunder required to be performed by it at or
prior to the Closing Date;

 

3.2.1.10. a Company certificate signed by the Chief Executive Officer or
director of the Company, acting on behalf of the Company, in the form attached
hereto as Exhibit ‎3.2.1.10, certifying that (i) the representations and
warranties of the Company and the hereunder are true and correct as of the
Closing Date in all material respects; (ii) Company has performed in all
material respects all of its obligations hereunder required to be performed by
it at or prior to the Closing Date; and (iii) all documents to be executed and
delivered by the Company at the Closing have been executed by a duly authorized
representative of Company.

 

3.2.1.11. the Company’s audited balance sheet as of December 31, 2017 and the
related audited consolidated statements of income and cash flows for the year
ended December 31, 2017 (the “2017 Statements”).

 

3.2.2. Closing Deliveries of Buyer. Buyer shall deliver, or caused to be
delivered, to the Seller Parties, Paying Agent or Escrow Agent, as the case may
be, the following:

 

3.2.2.1. To Seller or the Paying Agent, as applicable, the Closing Cash Payment
less the Indemnification Escrow Amount by wire transfer of immediately available
funds, to an account designated by Seller or Paying Agent (as applicable), by
notice to Buyer, which notice shall be delivered not later than two Business
Days prior to the Closing Date (or if not so designated, then by certified or
official bank check payable in immediately available funds to the order of
Seller in such amount);

 

3.2.2.2. To Escrow Agent, the Indemnification Escrow Amount, .

 

3.2.2.3. To Seller or the Paying Agent, as applicable, a duly executed share
transfer deed in respect of the Shares, in the form attached hereto as Exhibit
‎3.2.1.1;

 

3.2.2.4. To the Seller, copies of the dully executed resolutions of the Board of
Directors of the Buyer and DPW Holdings, Inc., a Delaware corporation and the
parent company of the Buyer (“DPW”) in the form attached hereto as Exhibit
‎3.2.2.4(a) and Exhibit ‎3.2.2.4(b), respectively, by which, inter alia, the
execution, delivery and performance of this Agreement and all other agreements
ancillary to this Agreement shall have been approved;

 

3.2.2.5. To the Seller, a certificate in the form attached hereto as Exhibit
‎3.2.2.5 executed by the Chief Executive Officer or director of the Buyer,
acting on behalf of the Buyer, certifying that (i) the representations and
warranties of the Buyer hereunder are true and correct as of the Closing Date in
all material respects; (ii) Buyer has performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to the
Closing Date; and (iii) all documents to be executed and delivered by the Buyer
at the Closing have been executed by a duly authorized representative of Buyer.

 

 11 

 

 

3.2.3. Closing Deliveries of the Parties. Seller Parties, Buyer and the Company,
as applicable, shall execute and deliver the following documents:

 

3.2.3.1. A consulting agreement, by and between the Company and Mr. David Lucatz
(Parent CEO) (or any company controlled by him) in the form attached hereto as
Exhibit ‎3.2.3.1, effective immediately after the Closing; and

 

3.2.3.2. any other instruments, documents and certificates that are required to
be delivered pursuant to this Agreement or as may be reasonably requested by any
Party in order to consummate the transactions contemplated hereby.

 

4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLER PARTIES

 

Except as set forth in the Seller Disclosure Schedule attached as Schedule ‎4 to
this Agreement, (the “Disclosure Schedule”) which exceptions shall be deemed to
be part of the representations and warranties made hereunder, the Company and
the Seller Parties, severally and jointly, represent and warrant to Buyer as of
the date hereof that:

 

4.1. Corporate Existence and Power.

 

4.1.1. The Company is a private company duly incorporated and validly existing
under the laws of the State of Israel and has all corporate powers and authority
to own, lease and operate its Assets and to carry on its business as now
conducted and as currently proposed to be conducted. The Company is duly
qualified or authorized to do business as a foreign corporation in, and is in
good standing under the laws of, each jurisdiction in which it conducts
business, in which the conduct of its business or the ownership of its
properties requires such qualification or authorization, except where the
failure to be so qualified, authorized or in good standing would not have a
Material Adverse Effect.

 

4.1.2. No act has been taken by the Company or the Seller Parties and/or their
respective shareholders and to Seller’s Knowledge, by others, to wind up,
liquidate or dissolve the Company. The Company has not taken any action or
failed to take any action, which action or failure would preclude or prevent the
Company from conducting its business after the Closing in the manner heretofore
conducted.

 

4.1.3. Prior to the date of this Agreement, the Seller Parties furnished to
Buyer true, complete and correct copies of the Company’s Organizational
Documents, which are in full force and effect and neither the Seller Parties nor
the Company is in violation of any material provision of the Organizational
Documents.

 

4.2. Corporate Authorization. The execution, delivery and performance by Seller
Parties of this Agreement and the consummation of the transactions contemplated
hereby are within each such Seller Parties’ corporate powers and have been duly
authorized by all necessary corporate action on the part of Seller and Parent.
This Agreement constitutes a valid and binding agreement of Seller Parties
enforceable against the Seller Parties in accordance with its terms.

 

4.3. Noncontravention; Consent of Third Parties.

 

4.3.1. Except as set forth in Schedule ‎4.3.1, the execution, delivery and
performance by Seller Parties of this Agreement and the consummation by Seller
Parties of the transactions contemplated hereby do not and will not (i) violate
the Organizational Documents of each of Seller Parties or the Company, (ii)
violate any Applicable Law in a material respect, require any consent or other
action by any Person under, result in a breach of, constitute a default under,
or give rise to any right of termination, cancellation or acceleration (whether
after the giving of notice or the lapse of time or both) of any right or
obligation of Seller Parties or the Company or to a loss of any benefit to which
the Company is entitled, or imposition of any penalties, under any provision of
any agreement or other instrument binding upon the Company, or by which its
properties, rights or assets are subject or bound in any material respect or
(iii) result in the creation or imposition of any Lien on any asset of the
Company, except for any Permitted Liens.

 

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4.3.2. Except as set forth in Schedule ‎4.3.1, no consent, waiver, authorization
or approval of any Person and no declaration to or filing or registration with
any Governmental Authority or any other Person, is required of or to be made by
the Company or the Seller Parties in connection with the execution and delivery
of this Agreement by any of them or the performance by any of them of their
respective obligations hereunder.

 

4.4. Capitalization.

 

4.4.1. The authorized share capital of the Company is NIS 287,700, divided into
287,700 Ordinary Shares NIS 1.00 par value per share (the “Ordinary Shares”), of
which 251,000 Ordinary Shares are issued and outstanding.

 

4.4.2. All issued and outstanding share capital of the Company has been duly
authorized, and is validly issued and outstanding and fully paid and
non-assessable. There are no (i) securities of the Company convertible into or
exchangeable for share capital or voting securities of the Company, or (ii)
except as set forth in Exhibit ‎8.1.10, options, warrants or other rights to
acquire from the Company, or other obligation of the Company to issue, any share
capital or securities convertible into or exchangeable for share capital of the
Company (the items in clauses (i)-(ii) being referred to collectively as the
“Company Securities”). There are no outstanding obligations of the Company to
repurchase, redeem or otherwise acquire any Company Securities.

 

4.4.3. Except as set forth in the Company’s Organizational Documents or under
applicable Law, there are no registration rights, preemptive rights,
anti-dilution rights, redemption rights, rights of first refusal or offer,
co-sale or tag-along rights, drag-along rights, and there is no voting trust,
proxy, rights plan, antitakeover plan or other agreements or understandings to
which the Company is a party or by which the Company is bound with respect to
any equity security of the Company.

 

4.4.4. Seller is the record and beneficial owner of the Shares, free and clear
of any Lien, and will transfer and deliver to Buyer at the Closing valid title
to the Shares free and clear of any Lien.

 

4.4.5. Except as set forth in Schedule ‎4.4.5, no share certificate in respect
of the Shares held by Seller was issued to Seller.

 

4.5. Directors, Officers. Schedule ‎4.5 contains a list of all directors and
officers of the Company. Except as set forth in Schedule ‎4.5, (a) the Company
has no agreement, obligation or commitment with respect to the election of any
individual or individuals to the Board, and (b) there are no agreements,
commitments and understandings with respect to any compensation to be provided
to any of the Company's directors or officers.

 

4.6. Subsidiaries. The Company does not have and has not had in the last 7 years
any Subsidiaries and does not, directly or indirectly, own any equity or voting
rights or similar interest in, or any interest convertible into or exchangeable
or exercisable for any equity or similar interest in, any corporation,
partnership or other business association or entity.

 

 13 

 

 

4.7. Financial Statements. Financial Information. The audited balance sheet as
of December 31, 2016 (the “Balance Sheet Date”) and the related audited
consolidated statements of income and cash flows for the year ended December 31,
2016 (the “Audited Balance Sheet”) and the unaudited consolidated interim
balance sheet as of September 30, 2017 and the related unaudited interim
statements of income and cash flows for the 9 months ended September 30, 2017,
of the Company (the “Interim Statements”, and together with the Audited Balance
Sheet, the “Financial Statements”), are attached hereto as Schedule ‎4.7. The
2017 Statements when delivered by the Company as of the Closing Date shall
replace, the Interim Statements for the purpose of the representations under
Section ‎4, and be included in the Financial Statement definition herein, and
such Interim Statements shall, as of such date, be removed from the Financial
Statements definition herein. The Financial Statements fairly present, in all
material respects, in conformity with Israeli GAAP applied on a consistent basis
(except as may be indicated in the notes thereto), the financial position of the
Company as of the dates thereof and its results of operations and cash flows for
the periods then ended (subject to normal year-end adjustments in the case of
any unaudited interim financial statements). The Financial Statements are in
accordance with the books and records of the Company. All necessary books of
account and accounting records have been maintained by the Company, are in the
Company’s possession and contain accurate information in accordance with
generally accepted principles.

 

4.7.1. Except for obligations and liabilities reflected in the Financial
Statements or set forth under Section ‎4.9, the Company has no obligation or
liability of any nature (matured or un-matured, fixed or contingent) to, or any
financial interest in, any other Person, the purpose or effect of which is to
defer, postpone, reduce or otherwise avoid or adjust the recording of debt
expenses incurred by the Company. Except as set forth in Schedule ‎4.7.1, the
Company has not undertaken and is not bound by any guarantee, indemnification or
other similar commitment or liability with respect to the liabilities,
obligations or Financial Indebtedness of any other Person (other than for the
avoidance of doubt indemnification obligations to customers in the ordinary
course of business). All reserves that are set forth in or reflected in the
Financial Statements have been established in accordance with Israeli GAAP
consistently applied.

 

4.7.2. Accounts Receivable. Except as set forth in Schedule ‎4.7.2, all of the
accounts and notes receivable of the Company, whether reflected on the Financial
Statements or arising since September 30, 2017, have arisen from bona fide
transactions in the ordinary course of business consistent with past practices
and are valid, genuine, and, subject to the allowance for doubtful accounts set
forth therein, to Seller’s knowledge, fully collectible in the aggregate amount
thereof; provided that, the foregoing shall not be construed as a guarantee of
such collectability.

 

4.8. Absence of Certain Changes. Since September 30, 2017 and except as set
forth in Schedule ‎4.8, the business of the Company has been conducted in the
ordinary course consistent with past practices and there has not been and no
Material Adverse Event has occurred or:

 

4.8.1. any declaration, setting aside or payment of any dividend or other
distribution with respect to any share capital of the Company, or any
repurchase, redemption or other acquisition by the Company of any outstanding
share capital or other securities of the Company;

 

4.8.2. any amendment of any material term of any outstanding security of the
Company;

 

4.8.3. any incurrence, assumption or guarantee by the Company of any Financial
Indebtedness other than in the ordinary course of business consistent with past
practices;

 

4.8.4. any making of any loan, advance or capital contributions to or investment
in any Person other than loans, advances or capital contributions to or
investments made in the ordinary course of business consistent with past
practices;

 

4.8.5. any waiver or compromise by the Company of a valuable right or of a
material debt owed to it;

 

 14 

 

 

4.8.6. any satisfaction or discharge of any lien, claim, or encumbrance or
payment of any obligation by the Company, except in the ordinary course of
business and the satisfaction or discharge of which would not have a Material
Adverse Effect;

 

4.8.7. any transaction or commitment made, or any contract or agreement entered
into, by the Company relating to its assets or business, in either case,
material to the Company, other than transactions and commitments in the ordinary
course of business consistent with past practices and those contemplated by this
Agreement;

 

4.8.8. any material change in any method of accounting or accounting practice by
the Company except for any such change required by reason of a concurrent change
in Israeli GAAP; or

 

4.8.9. any material change in any compensation arrangement or agreement with any
employee, officer, director or shareholder of the Company;

 

4.9. No Undisclosed Material Liabilities. Except as set forth in the Financial
Statements or disclosed in the notes thereto and except any liabilities that are
disclosed on Schedule ‎4.9, there are no liabilities (matured or un-matured,
fixed or contingent) of the Company of any kind or any Financial Indebtedness,
other than liabilities which have arisen since September 30, 2017 in the
ordinary course of business and which are, in nature and amount, consistent with
past practice and do not exceed US$50,000, individually or in the aggregate.

 

4.10. Interested Party Transactions. Except as set forth in Schedule ‎4.10 or
Schedule ‎4.5, no officer, director, or shareholder of the Company, or, to the
knowledge of Seller, any affiliate of any such Person (nor any immediate family
member of any of such Persons) (each, an “Interested Party”), has or has had,
(i) an interest in any Person which furnishes or sells, services or products
that the Company furnishes or sells, or proposes to furnish or sell, or (ii) an
interest in any Person that purchases from or sells or furnishes to the Company,
any goods or services, or (iii) an interest in, or is a party to, any contract
to which the Company is a party; provided, however, that ownership of no more
than five percent (5%) of the outstanding voting shares of a publicly traded
company shall not be deemed to be an “interest in any entity” for purposes of
this Section ‎4.10. Except as set forth in Schedule ‎4.10 or Schedule ‎4.5,
there are no existing arrangements or proposed transactions between the Company
and (a) its directors, (b) its officers or (c) Seller Parties or any of their
Affiliates (an “Interested Party Agreement”).

 

4.11. Intercompany Accounts. Schedule ‎4.11 contains a complete list of all
intercompany balances as of the Balance Sheet Date between Seller and its
Affiliates, on the one hand, and the Company, on the other hand. Since the
Balance Sheet Date there has not been any accrual of liability by the Company to
Seller or any of its Affiliates or other transaction between the Company and
Seller and any of its Affiliates, except in the ordinary course of business of
the Company consistent with past practice.

 

4.12. Tax Matters.

 

4.12.1. There are no federal, state, local or foreign taxes due and payable by
the Company which have not been timely paid. The Company has not incurred any
taxes, assessments or governmental charges other than in the ordinary course of
business, and, to the extent required under Applicable Law, the Company has made
adequate provisions on its books of account for all taxes, assessments and
governmental charges with respect to its business, properties and operations.

 

 15 

 

 

4.12.2. Except as set forth in Schedule ‎4.12, there have been no examinations
or audits and, to the knowledge of the Seller, threatened of any tax returns or
reports by any applicable federal, state, local or foreign governmental agency.
The Company has duly and timely filed all federal, state, local and foreign tax
returns required to have been filed by it and there are in effect no waivers of
applicable statutes of limitations with respect to taxes for any year and
Company has not requested any extension of time within which to file any Tax
Return, which Tax Return has not yet been filed, or executed or filed any power
of attorney with any taxing authority which is still in effect. Except as set
forth in Schedule ‎4.12, the Company has withheld or collected from each payment
made to each of its employees and suppliers, the amount of all taxes required to
be withheld or collected therefrom under Applicable Law, and has paid the same
to the income tax authority under its withholding tax file.

 

4.12.3. Except as set forth in Schedule ‎4.12, there is no claim, audit, action,
suit, proceeding or investigation currently pending or, to the knowledge of the
Company, threatened against, with respect to the Company in respect of any
income, franchise or other material Tax or material Tax asset.

 

4.12.4. The Company is not a party to or bound by any Tax sharing, allocation or
indemnification agreement or similar agreement or arrangement under which the
Company would be liable for any Taxes of any other Person. There are no Liens on
any of the assets of the Company with respect to unpaid Taxes, other than
Permitted Liens.

 

4.12.5. All Tax deficiencies which have been proposed, asserted or assessed
against the Company have been fully paid or finally settled. The Company has not
received a written notice of a claim by any Taxing Authority in any jurisdiction
where the Company does not file Tax Returns that the Company is or may be
subject to taxation by that jurisdiction.

 

4.12.6. The Company has not in the last seven (7) years received or requested
any ruling, transfer pricing agreement or similar agreement from any Taxing
Authority with respect to any Tax which will have any effect after the Closing.

 

4.12.7. The Company has not: (i) in the last seven (7) years been included in an
affiliated group (as defined in Section 1504 of the Code or any similar group
defined under a similar or comparable provision of state, local, or foreign
Law); or (ii) any liability for the Taxes of any other Person by Contract,
assumption or operation of Law, as a transferee or successor, or under Treasury
Regulations Section 1.1502-6 (or any similar or comparable provision of state,
local or foreign Law).

 

4.12.8. The Company has delivered or made available to Buyer: (i) complete and
correct copies of all Tax Returns of the Company relating to Taxes for all
taxable periods for which the applicable statute of limitations has not yet
expired; (ii) complete and correct copies of all material closing agreements,
settlement agreements, pending ruling requests and any similar documents
submitted by, received by, or agreed to by or on behalf of the Company relating
to Taxes for all taxable periods for which the statute of limitations has not
yet expired; and (iii) complete and correct copies of all material agreements,
rulings, settlements or other Tax documents relating to Tax incentives between
the Company and a Taxing Authority, if any.

 

4.12.9. The unpaid Taxes of the Company: (i) did not, in the most recent audited
Financial Statements, exceed the reserve for Tax liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the balance sheet contained within
the most recent audited Financial Statements (rather than in any notes thereto);
and (ii) will not exceed that reserve as adjusted for operations and
transactions through the Closing Date in accordance with the past custom and
practice of the Company in filing their Tax Returns.

 

4.12.10. The Company does not have (or has in the past 7 years had) a permanent
establishment in any country (other than its country of formation), as defined
in any applicable tax treaty or convention between its country of formation and
such other country and the Company has in the past 7 years been a resident for
Tax purposes solely in its relevant jurisdiction of incorporation.

 

 16 

 

 

4.12.11. The Company has not undertaken in all taxable periods for which the
statute of limitations has not yet expired any transaction that will require
special reporting in accordance with Section 131(g) of the ITO (or similar or
comparable provision of U.S. federal, state, local, or other foreign law) and
the Israeli Income Tax Regulations (Tax Planning Requiring Reporting), 2006 (or
similar or comparable provision of U.S. federal, state, local, or other foreign
law).

 

4.12.12. The Company is not subject to any restrictions or limitation pursuant
to Part E2 of the ITO or pursuant to any Tax ruling made with reference to the
provisions of Part E2 of the ITO.

 

4.12.13. The Company has not in the past 7 years been a “real propertyˮ company
(“Igud Mekarkeinˮ) as such term is defined in the Israeli Real Property Taxation
Law (Capital Gain, Sale and Purchase) 1963.

 

4.12.14. Any transactions conducted by the Company have been conducted at
arms-length. The Company did not conclude a transaction which required to be
documented by proper transfer pricing studies as required under applicable
transfer pricing laws, including Section 85A of the Israeli Tax Ordinance.

 

4.12.15. The Company is duly registered for the purposes of Israeli VAT Law and
has complied in all material respects with all requirements concerning value
added Taxes VAT. In particular, but without limitation to the forgoing:

 

4.12.15.1. There are no circumstances by reason of which the Company might not
be entitled to full credit for all VAT chargeable or paid on inputs, supplies,
and other transactions and imports made in each case by it, other than where
such would not have a Material Adverse Effect;

 

4.12.15.2. The Company has not received and to Seller’s Knowledge, there is no
claim of the Tax authority according to which the Company has not collected any
timely remitted to the Israeli Taxing Authority all output VAT which it is
required to collect and remit under any Applicable law; and

 

4.12.15.3. the Company has not received in the past seven (7) years, a refund or
credit for input VAT for which it (in each case) is not entitled under any
Applicable Law, other than where such would not have a Material Adverse Effect.

 

4.12.16. The Company has not been a party to, nor has been otherwise involved
in, any transaction, scheme or arrangement designed wholly or mainly or
containing steps or stages having no commercial purpose and designed wholly or
mainly for the purpose of avoiding or deferring Tax or reducing a liability to
Tax or amounts to be accounted for under payroll deduction.

 

4.13. Books and Records; Company Names. The minute books of the Company contain
true and correct records of all formal meetings and formal corporate actions of
its shareholders and board of directors and any committees thereof. The share
records of the Company are true, correct and complete and reflect all issuances,
transfers and cancellations of shares of the Company. The Seller has furnished
or made available to Buyer true, complete and correct copies of (a) all minute
books and (b) all share record books of the Company.

 

 17 

 

 

4.14. Material Contracts.

 

4.14.1. Except for this Agreement and except as set forth in Schedule ‎4.14(a),
the Company is not a party to or bound by:

 

4.14.1.1. any lease agreement (whether of real or personal property);

 

4.14.1.2. any agreement for the purchase of materials, supplies, goods,
services, equipment or other assets providing for aggregate payments by the
Company of NIS200,000 or more;

 

4.14.1.3. any agreement granting any other Person the right to market,
distribute or resell any technology, products or services of the Company;

 

4.14.1.4. any material partnership, joint venture or other similar agreement or
arrangement;

 

4.14.1.5. any agreement that requires the Company to provide non-cash
consideration;

 

4.14.1.6. any agreement relating to the acquisition or disposition of any
material business (whether by merger, sale of stock, sale of assets or
otherwise);

 

4.14.1.7. any agreement relating to indebtedness for borrowed money or the
deferred purchase price of property (in either case, whether incurred, assumed,
guaranteed or secured by any asset); or

 

4.14.1.8. any material agreement with Seller or any of its Affiliates or any
director or officer of Seller or any of its Affiliates.

 

4.14.2. Schedule ‎4.14(b), contains a true and complete list as of the date
hereof of all of the following Contracts in effect (excluding this Agreement) to
which the Company is a party as they pertain to the Company Business (the
“Material Contracts”):

 

4.14.2.1. Contracts governing the performance of the ten (10) largest projects
by anticipated total revenues currently being performed by the Company;

 

4.14.2.2. Contracts under which the Company has agreed to a "most favored
customer" or other similar pricing arrangement;

 

4.14.2.3. Any Contract that includes any change of control that would require
notice to or the consent of any Person as a result of the execution of this
Agreement or the consummation of any of the transactions contemplated hereunder;

 

4.14.2.4. Any other Contract that is material to the business, operations or
financial condition of the Company.

 

4.14.3. Each agreement, contract, plan, lease, arrangement or commitment
required to be disclosed pursuant to this Section ‎4.14 is a valid and binding
agreement of the Company, and is in full force and effect, and the Company or,
to the knowledge of Seller, any other party thereto is not in default or breach
in any respect under the terms of any such agreement, contract, plan, lease,
arrangement or commitment, except for any such defaults or breaches which would
not have a Material Adverse Effect.

 

 18 

 

 

4.15. Litigation. Except as set forth in Schedule ‎4.15, there is no civil,
criminal, administrative or other action pending or, to the knowledge of Seller,
threatened against Company, or against any officer, director, shareholder,
employee or agent of the Company in their capacity as such or relating to their
employment services or relationship with the Company. Except as set forth in
Schedule ‎4.15, there is no outstanding order, writ, judgment, injunction, fine,
award, determination or decree of any court, other Governmental Authority or
arbitrator against Company which has had or could reasonably be expected to have
a Material Adverse Effect or which in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the transactions contemplated by this
Agreement. There is no action or suit by any of the Company or the Seller
Parties (with respect to the affairs of or shareholdings in the Company),
pending, threatened or contemplated against any other Person.

 

4.16. Compliance with Laws and Court Orders. The Company has conducted its
business in compliance in all material respects with and is not in violation of
any Applicable Law, except for violations that have not had and would not
reasonably be expected to have a Material Adverse Effect to the Company, taken
as a whole.

 

4.17. Properties. The Company does not own, nor has owned in the last five
years, any Real Property. Schedule ‎4.17 contains a list of all leased Real
Property, and a copy of the lease agreement with respect to such Real Property.
All of the Real Property thereon are in good operating condition (subject to
normal wear and tear) and sufficient and appropriate in all material respects
for their current uses.

 

4.17.1. There is no material breach by the Company or to the knowledge of
Company, of the owner of any leased Real Property. The Company has obtained all
necessary licenses and permits to own, lease, occupy, possess or use the Real
Property and all of such licenses and permits are in full force and effect.

 

4.17.2. Except for Permitted Liens, the Company has good title to, or in the
case of leased property and assets have valid leasehold interests in, all of the
properties and assets (i) reflected in the Financial Statements, other than
assets sold since the date of the Financial Statements or acquired thereafter in
the ordinary course of business consistent with past practices, or
(ii) necessary and sufficient to conduct all of the business and operations of
the Company as currently conducted and proposed to be conducted, all except
where the failure to have such good title or valid leasehold interests would not
have a Material Adverse Effect; and none of such properties or assets is subject
to any Lien other than Permitted Liens. All of the Company’s tangible properties
and assets are in good working order and condition, subject to normal wear and
tear.

 

4.18. Intellectual Property.

 

4.18.1. Schedule ‎4.18.1 contains a complete and accurate list of all services
currently offered or sold by the Company (the “Company Services”).

 

4.18.2. Intellectual Property. The Company has full title and ownership of, or
is duly licensed under or otherwise authorized to use, all Company Intellectual
Property and Company Technology used or otherwise practiced or exploited by the
Company and necessary to enable it to carry on its business as conducted and as
proposed to be conducted, including as part of the design, development, use,
branding, advertising, promotion, marketing and performance of any Company
Services, without any infringement upon the rights of others. No third party
that has licensed or otherwise granted rights under Intellectual Property to the
Company has ownership rights or license rights to improvements or derivative
works made by the Company to that Intellectual Property, except if such
improvements or derivative works are created by the Company as part of its
engagement with its customers and for their benefit. The Company has not
received any notice or claim challenging the Company’s sole and exclusive
ownership of any Company owned Intellectual Property or suggesting that any
other Person has any claim of legal or beneficial ownership with respect
thereto. No proceeding alleging misappropriation or infringement of the
Intellectual Property of any third party is pending or, to the knowledge of the
Company, threatened against the Company (nor does the Company have knowledge of
any basis therefor). The Company Intellectual Property constitute all the
Intellectual Property: (i) used or otherwise practiced or exploited in the
operation of the Company Business; and (ii) necessary to enable Company to
operate such business immediately after the Closing Date in substantially the
same manner as such business is currently conducted.

 

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4.18.3. Registered Intellectual Property. Except with respect to Company's
Domain Names listed in Schedule ‎4.18.3, the Company has not registered or filed
any application to register any Company owned Intellectual Property and does not
own any registered Intellectual Property. The Company's Domain Names is valid,
subsisting, and in full force and effect. All necessary registration,
maintenance and renewal fees in connection with such Domain Names have been
paid.

 

4.18.4. Assignment. Without limiting the generality of Section ‎4.18.2, each
current or former Person who develops or has developed any Company Technology or
Company’s Intellectual Property that in each case, relate to any other aspects
of the Company Business, has executed and delivered to the Company proprietary
information, confidentiality and assignment agreements substantially in the
Company’s standard forms attached hereto as Schedule ‎4.18.4. All amounts
payable by the Company to any Persons involved in the research, development,
conception or reduction to practice of any Company’s Intellectual Property have
been paid in full, and no remuneration, compensation or other amounts remain
outstanding or may become due and payable under any circumstance, except for
amounts paid or payable to current or former Person in connection with
employment or services rendered or to be rendered in the ordinary course of
business and not in the nature of a royalty. All assignments with respect to the
Intellectual Property of the Company, that are required to be filed or recorded
in order to be valid or effective against bona fide purchasers without notice of
such assignment have been duly executed and filed or recorded with the United
States Patent and Trademark Office or Israeli Patent Office, or the United
States Copyright Office, as applicable, and any applicable Governmental
Authority elsewhere.

 

4.18.5. The Company has not received any notice or claim challenging or
questioning the validity or enforceability of any Intellectual Property owned or
used by the Company or indicating an intention on the part of any Person to
bring a claim that any of such Intellectual Property is invalid, is
unenforceable or has been misused (nor is the Company aware of any circumstances
which may give rise to such claims). Except as set forth in Schedule ‎4.18.5,
the Company has taken all commercially reasonable steps to protect its rights in
and to the Company’s owned Intellectual Property.

 

4.18.6. Trade Secrets. The Company has taken all commercially reasonable
necessary or appropriate steps for a Company of its size in accordance with all
applicable Laws relating to trade secrets to protect its rights in its
confidential information and Trade Secrets. The Company has taken all
commercially reasonable necessary or appropriate steps to protect its rights in
the confidential information and Trade Secrets of third parties. The Company has
complied at all times and in all material respects with the terms of any
agreements or understandings relating to such third party confidential
information or Trade Secrets to which the Company is a party or which otherwise
bind the Company. To Company’s knowledge, there has been no disclosure by the
Company of any confidential information or Technology of the Company that would
compromise the status or protectability of any of such Technology or any
Intellectual Property embodied therein or the confidentiality of any of such
confidential information other than applications for patents and patents.

 

4.18.7. Transferability. All Company’s Intellectual Property will be fully
transferable, alienable or licensable by the Company without restriction and
without payment of any kind to any third party.

 

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4.18.8. Export. Except as set forth in Schedule ‎4.18.8, all Company’s
Intellectual Property may be exported or transferred by Company out of Israel
without restriction and without payment of any kind to any third party or
Governmental Authority or permission thereof.

 

4.18.9. Absence of Liens. Except as set forth on Schedule ‎4.18.9 and other than
Permitted Liens, each item of the Company’s owned Intellectual Property, is free
and clear of any Liens. The Company has the sole and exclusive right to bring a
claim or suit against a third party for infringement, misappropriation or
violation of any Company’s Intellectual Property and to collect any damages or
other amounts payable by such third party to the Company as a result thereof.

 

4.18.10. Transfer. Except as set forth on Schedule ‎4.18.10, the Company has not
(i) transferred full or partial ownership of, or granted any exclusive license
of or exclusive right to use, or authorized the retention of any exclusive
rights to use or joint ownership of, any Intellectual Property that are
Company’s Intellectual Property, to any third party or (ii) permitted any of the
Company’s Intellectual Property to lapse or enter into the public domain.

 

4.18.11. Licenses-In. Schedule ‎4.18.11 contains a complete and accurate list of
all Contracts pursuant to which a third party has licensed or granted any right
to the Company in any Intellectual Property, except off the shelf products
(“In-Licenses”). The Company has and always had a valid and enforceable license
or other right to use, practice and exploit, as the case may be, all licensed
Company’s Intellectual Property and all in the manner in which the foregoing
Intellectual Property has been used, practiced and exploited, or is being used,
practiced or exploited and the Company is in compliance in all material respects
with all licenses governing third party Intellectual Property utilized in or in
connection with any Company’s Intellectual Property, including (i) complying
with all flow-through provisions of third party licenses (e.g., a requirement to
include a specific copyright notice or disclaimer), (ii) providing adequate
attribution as required by any Open Source Materials license, and (iii) any
limitations on the scope of license or covenants included in such licenses. The
Company is not obligated to pay any royalties, fees or other payments to any
Person or third parties with respect to the marketing, sale, distribution,
manufacture, license or use of any Company Technology or Company Intellectual
Property, except for amounts paid or payable in connection with employment or
services rendered or to be rendered in the ordinary course of business and not
in the nature of a royalty.

 

4.18.12. Licenses-Out. Schedule ‎4.18.12 contains a complete and accurate list
of all licenses pursuant to which the Company has granted or provided any third
party any rights or licenses to any Company’s Intellectual Property and/or
Company Technology or has agreed to or is required to provide or perform any
services related to any Company Technology (other than (i) non-disclosure
contracts entered into in the ordinary course of business, and (ii) contracts
for the sale, license, support or service of Company services in the ordinary
course of business pursuant to its customer Contract) (“Out-Licenses”, together
with the In-Licenses, the “IP Contracts”). No Out-Licenses grant any third party
the right to sublicense any Company’s Intellectual Property.

 

4.18.13. No Default/No Conflict. All IP Contracts are in full force and effect,
and enforceable in accordance with their terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors’ rights generally and by general equitable principles.
The consummation of the transactions contemplated by this Agreement shall (i)
neither violate nor by their terms result in the breach, modification,
cancellation, termination, suspension of, or acceleration of any payments with
respect to, any IP Contracts, and (ii) shall not impair or diminish the rights
of the Company in and to the Company’s Intellectual Property. The Company is in
material compliance with, and has not materially breached any term of any IP
Contracts and, to the knowledge of the Company, all other parties to all IP
Contracts are in compliance with, and have not materially breached any term of,
such IP Contracts. Following the Closing Date, except as set forth on Schedule
‎4.18.13, the Company shall be permitted to exercise all of the Company’s rights
under all IP Contracts to the same extent the Company would have been able to
had the transactions contemplated by this Agreement not occurred and without the
payment of any additional amounts or consideration other than ongoing fees,
royalties or payments which the Company would otherwise be required to pay.
There is no outstanding or threatened dispute or disagreement with respect to
any IP Contracts. The Company is not and was not in the past 7 years subject to
audit by any third party in respect of third party licenses. There is no
Contract, judicial decree, arbitral award or, to the Company’s knowledge, other
provision or requirement that obligates the Company to grant any licenses in the
future with respect to any currently existing owned Company’s Intellectual
Property, other than in Company’s agreement with its customers, in the ordinary
course of business.

 

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4.18.14. No Third Party Infringement. To the knowledge of the Company, no third
party has infringed, misappropriated or otherwise violated, or is infringing,
misappropriating or otherwise violating, any Company’s owned Intellectual
Property.

 

4.18.15. Transaction. Neither this Agreement nor the transactions contemplated
by this Agreement, will result in: (i) the Company granting to any third party
any right to or with respect to any Intellectual Property owned by, or licensed
to, it, or (ii) the Company, being bound by, or subject to, any non-compete,
exclusivity provision, or other material restriction on the operation or scope
of its businesses, all, except by virtue of it being a subsidiary of Buyer
immediately following Closing. The Company is not a party to, subject to, or
bound by any Contract or any obligation under applicable Law, that would give
any third party (including any Governmental Authority) any option, right of
first refusal or offer, right of negotiation or any other right with respect any
Company’s Intellectual Property.

 

4.18.16. No Order. No Company’s Intellectual Property or Company Technology is
subject to any proceeding or outstanding decree, order, judgment, settlement
Contract, forbearance to sue, consent, stipulation or similar obligation that
restricts in any manner the use, transfer or licensing thereof by the Company or
may affect the validity, use or enforceability of such Company’s Intellectual
Property or Company Technology.

 

4.18.17. Open Source. Schedule ‎4.18.17 contains a complete and accurate list of
all Open Source that has been used in the last 5 years in the development and
testing of the Company Technology. The Company does not incorporate any Open
Source as part of the components which it distributes to its customers while
providing the Company Services. The Company has been at all times and is
currently in compliance in all material respects with all licenses for Open
Source applicable thereto, including without limitation any and all Intellectual
Property notice and attribution requirements.

 

4.18.18. Source Code. Neither the Company, nor any other Person acting on its
behalf has disclosed, delivered or licensed to any Person, agreed to disclose,
deliver or license to any Person, or permitted the disclosure or delivery to any
escrow agent or other Person of, any source code that is Company’s Intellectual
Property, other than to Employees and subcontractors bound by Proprietary
Information Agreements.

 

4.18.19. Government Funding. Except as set forth on Schedule ‎4.18.19, the
Company has not entered into any Contract with any university, college or other
educational institution or research center for the creation or development of
Company’s Intellectual Property. Except as set forth on Schedule ‎4.18.19, none
of the Intellectual Property owned by the Company was, directly or indirectly,
in whole or in part: (i) developed by or on behalf of, or using any funding,
grants or subsidies from, or any monetary resources of, any university, college,
military, educational institution, research center or any entity affiliated with
any university, college, military, educational institution or research center
(“R&D Sponsor”); or (ii) developed utilizing any facilities of any R&D Sponsor;
or (iii) developed by any employee, faculty, independent contractor or students
of any R&D Sponsor; or (iv) developed by any independent contractor who in each
case was concurrently working for or providing services to any R&D Sponsor. No
R&D Sponsor has any claim of right to, ownership of or other Lien on any
Company’s Intellectual Property owned by or exclusively licensed to the Company.
The Company has not received any written notice from any Israeli Governmental
Authority claiming any rights under Section 55, Chapter 6 or Chapter 8 of the
Israeli Patent Law-1967.

 

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4.18.20. Industry Organizations and Consortia. Schedule ‎4.18.20 sets forth a
complete and correct list of each industry organization in which the Company has
participated in the past five years or applied for future participation, and a
listing and description of the membership Contracts and other Contracts by which
the Company is bound relating to such industry organization, copies of all of
which have been made available to Buyer. The Company has not made any
contribution or disclosure to any industry organization under, pursuant to or
that is subject to, or is bound by, or has agreed to be bound by, any Contract
which purports to license or potentially license any Intellectual Property of
the Company as a result of any contribution or disclosure to or participation in
any industry organization.

 

4.18.21. Encryption and Other Restricted Technology. Except as set forth on
Schedule ‎4.18.21, the Company’s business as currently conducted does not
involve the use or development of, or engagement in, encryption technology, or
other technology whose development, commercialization or export is restricted
under Israeli Law. Except as set forth on Schedule ‎4.18.21, the Company’s
business as currently conducted does not require the Company in the ordinary
course of business to obtain a license from the Israeli Ministry of Defense or
an authorized body thereof pursuant to Section 2(a) of the Control of Products
and Services Declaration (Engagement in Encryption), 5734-1974, or from the
Israeli Ministry of Economy pursuant to the Defense Export Control Law,
5767-2007, or under any other legislation regulating the development,
commercialization or export of technology.

 

4.18.22. Permits.

 

4.18.22.1. The Company Business is conducted solely in Israel and the Company
has not exported the Services and/or the Company Technology or any other product
outside of Israel. Without derogating from the above, if the Company has
exported any technical information or other technology within its control, it
has done so in compliance in all material respects with the applicable Laws,
including without limitation any Israeli Law and regulation thereunder including
the Defense Export Control Law -2007, the Law Governing the Control of
Commodities and Services – 1957, the Order Regarding the Engagement in
Encryption Items – 1974; the Declaration Governing the Control of Commodities
and Services (Engagement in Encryption Items) (Amendment) – 1998; the Import And
Export Order (Control Of Dual-Purpose Goods, Services And Technology Exports),
2006, and any other import/export control/sanctions Applicable Laws of the
countries where it conducts business, and where applicable, the Company has
filed with any other Governmental Authority that regulates exports, all reports
that are required under applicable Laws and all such reports are accurate and
complete.

 

4.18.22.2. Except as set forth in Schedule ‎4.18.21, the Company currently holds
and is in compliance with all licenses, permits, registrations and governmental
consents that are necessary for the conduct of its business, and for the
performance of Company Services to any of its current or pending customers. The
Company has not received any notices of noncompliance, complaints or warnings
with respect to its compliance with import/export control/sanctions Laws. No
event, fact or circumstance has occurred or is existing that is reasonably
likely to result in a finding of noncompliance with any export or import control
Law. Within the last seven years, to the knowledge of the Company, the Company
has not been the subject of any investigations, inspections or visits from any
Governmental Authorities pertaining to export control or customs laws.

 

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4.18.23. Privacy. The Company warrants that it does not collect any Personal
Data other than with respect to its employees as customary in connection with
their employments. The Company, the Company Service and to the knowledge of
Company, all third parties performing services for the Company or that otherwise
have access to Personal Data collected, processed, or maintained by or for the
Company, comply with all applicable Laws (including Israeli Privacy Protection
Law 5741-1981 and related regulations), obligations under Contracts, the
Company’s internal and public-facing privacy policies and any public statements
made by the Company regarding their privacy policies or practices and industry
standards (collectively, “Privacy Laws and Requirements”) relating to such
Personal Data, including the collection, interception, use, retention,
disclosure, disposal, security, or other processing thereof. Except as set forth
in Schedule ‎4.18.23, any consents required and notices under applicable Laws
for the collection, processing, transfer and other use of Personal Data by the
Company for the conduct of the business of the Company have been obtained. There
is not and has not been any complaint to, or claim filed against, proceeding,
and, to the Company’s knowledge, any audit or investigation (formal or informal)
against, the Company or any of their customers (relating to the Company
Services) by any private party or any Governmental Authority, foreign or
domestic, relating to Personal Data, and, to the knowledge of the Company, there
is no threatened complaint, proceeding, investigation (formal or informal) or
claim against the Company with respect thereto. With respect to all Personal
Data collected, stored, processed, used, maintained, or accessed by or for the
Company, the Company has at all times implemented reasonable security measures
to ensure that such Personal Data is protected against loss and against
unauthorized access, use, modification, and disclosure. To the Company’s
knowledge, there has been no unauthorized access to or modification or
disclosure of, or any other loss or misuse of, such Personal Data. Except as set
forth in Schedule ‎4.18.23, all databases required to be registered by the
Company have been properly registered, and the data therein has been used by the
Company solely as permitted pursuant to such registrations.

 

4.18.24. Customer Information. The Company retains in confidence customer
contact information and customer correspondence used in the Company’s Business
(the “Customer Information”). The Company's use of the Company’s Customer
Information is in compliance in all material respects with applicable Laws and
will not give rise to any third party claims.

 

4.19. Insurance Coverage. Schedule ‎4.19 contains a list of, and true and
complete copies of, all insurance policies maintained by or on behalf of the
Company. The Insurance Policies are in full force and effect, all premiums due
thereon have been paid and the Company has complied in all material respects
with the provisions of such insurance policies. The Company has not done
anything which has rendered or might render any polices of insurance taken out
by it void or voidable or which might result in a material increase in premium.
The Company has not received any written notices from any issuer of any of the
insurance policies canceling or amending them, materially increasing any
deductibles or retained amounts thereunder, or materially increasing premiums
payable thereunder. There are no claims by the Company pending under any of such
policies.

 

4.20. Finders’ Fees. Except as set forth in Schedule ‎4.20, there is no
investment banker, broker, finder or other intermediary which has been retained
by or is authorized to act on behalf of Seller or the Company who might be
entitled to any fee or commission in connection with the transactions
contemplated by this Agreement.

 

4.21. Bank Accounts. Schedule ‎4.21 of the Disclosure Schedule sets forth a true
and complete list of (i) all accounts at banks and other financial institutions
maintained by or for the use of the Company, together with the names of
authorized signatories thereof on each such account; and (ii) all personal
guarantees provided by any of the Company’s shareholders in connection with such
accounts specified under the foregoing clause (i).

 

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4.22. Employees.

 

4.22.1. Schedule ‎4.22.1(a) sets forth a list of all the Company’ employees as
of the date of this Agreement and the following information with respect to each
such employee: (i) name; (ii) date of hire; (iii) title and job function,
full-time, part-time or hourly status; (iv) salary and other compensation
including compensation payable pursuant to bonus or grants (for the current
fiscal year and the most recently completed fiscal year), commission
arrangements, overtime payment (global overtime, payment of overtime per actual
work or exempt from overtime payment), travel pay or car maintenance or car
entitlement, accrued sick leave and accrued recuperation pay and notice period;
(v) social benefits participation (including whether a managers insurance,
pension fund, education fund (keren hishtalmut) is maintained with respect to
such employee), their respective contribution rates and the salary basis for
such contributions, whether such employee, is subject to Section 14 Arrangement
under the Israeli Severance Pay Law - 1963 (“Section 14 Arrangement”) (and, to
the extent such employee is subject to the Section 14 Arrangement, an indication
of whether such arrangement has been applied to such person from the
commencement date of their employment and on the basis of their entire salary);
(vi) vacation allowance accrued and unused vacation days; and (vii) whether the
employee executed an employment agreement. Other than their salary and as set
forth in Schedule ‎4.22.1(b), the Company’ employees are not entitled to any
payment or benefit that may be reclassified as part of their determining salary
for all intent and purposes, including for the social contributions. Except as
set forth in Schedule ‎4.22.1(b), there are no written or unwritten Company
policies or customs that entitles any Company employee to benefits in addition
to those they are entitled to pursuant their employment agreements.

 

4.22.2. Except as set forth in Schedule ‎4.22.2, the Company is in compliance
with all mandatory applicable employment laws, procedures and agreements
relating to employment, terms and conditions of employment, including without
limitation all such laws relating to wages, hours, collective bargaining,
employment discrimination, disability, civil rights, fair labor standards,
occupational safety and health, workers’ compensation, and mandatory provisions
under the Prior Notice to the Employee Law, 2002, the Notice to Employee (Terms
of Employment) Law, 2002, the Prevention of Sexual Harassment Law, 1998, the
Hours of Work and Rest Law, 1951, the Annual Leave Law, 1951, the Employment by
Human Resource Contractors Law, 1996, the Advance Notice for Dismissal and
Resignation Law, 2001, the Salary Protection Law, 1958, the Law of Increased
Enforcement of Labor Laws, 2011, and wrongful discharge, and to the proper
withholding and remission to the proper tax and other authorities of all sums
required to be withheld from employees under applicable laws respecting such
withholding.

 

4.22.3. The Company is not bound by or subject to any written or oral, express
or implied, contract, commitment or arrangement with any labor union or any
collective bargaining agreement or extension orders except, for those provisions
of general agreements applicable to all the employees in Israel by extension
order. There is no, and there has not been in the past seven years, strike or
other labor dispute involving the Company, whether in the past or now pending,
or to the Seller’s knowledge, threatened, nor is the Seller aware of any labor
organization activity involving Company’s employees. Except as set forth in
Schedule ‎4.22.3, the Company has not paid in the past seven years, is not
required to pay and has not in the past five years been requested to pay any
payment (including professional organizational handling charges) to any
employers’ association or organization. Except as set forth in Schedule ‎4.22.3,
the Company is not currently, nor has been in the past seven years a member of
any employers’ association or organization, and no employers’ association or
organization has made any demand for payment of any kind from the Company. The
Company is not currently, nor has in the past seven years been, a party to any
collective bargaining agreement or similar labor agreement with a labor union,
works council or other employee representative (other than those of general
agreements applicable to all the employees in Israel by extension order). There
are no actions pending or to the knowledge of Seller threatened against the
Company in Israel or under Israeli law, relating to (i) employment practices
(including any labor, employment, safety or discrimination matters) or (ii)
Israeli labor laws. There are no known union organizing activities involving
employees of the Company, nor any employee of the Company notified the Company
they are represented by any labor organization or works council.

 

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4.22.4. To Seller’s knowledge, none of Company’s employees has violated any
material term of his or her employment agreement.

 

4.22.5. The Company is not delinquent in payments to any of its employees,
consultants, or independent contractors for any wages, salaries, commissions,
bonuses, or other direct compensation for any service performed for it to the
date hereof or amounts required to be reimbursed to such employees, consultants
or independent contractors. The Company has withheld and paid to the appropriate
governmental entity or is holding for payment not yet due to such governmental
entity all amounts required to be withheld from employees of the Company and is
not liable for any arrears of wages, taxes, penalties or other sums for failure
to comply with any of the foregoing.

 

4.22.6. Except as set forth in Schedule ‎4.22.6, provision for severance pay and
accrued vacation days due to the employees has been made as required according
to Israeli GAAP in the Financial Statements, and the Seller Parties are not
aware of any circumstance whereby any employee may have the right to demand any
claim for compensation on termination of employment beyond the statutory or
contractual rights to which such employee is entitled, including severance pay.

 

4.22.7. To the Seller’s knowledge, no key employee intends to terminate
employment with the Company or is otherwise likely to become unavailable to
continue as a key employee, nor does the Company have a present intention to
terminate the employment of any of the foregoing.

 

4.23. Independent Contractors. Schedule ‎4.23(a) of the Disclosure Schedule
lists the names of all independent contractors currently engaged by the Company
(the “Independent Contractors”), each such Person’s job title or function,
location and department, date of services agreement, termination notice, current
remunerations, and any incentive or bonus arrangement with respect to such
Person then in effect. Except as disclosed in Schedule ‎4.23(b) to the
Disclosure Schedule, the Company is not a party to any written or unwritten
agreements, arrangements or commitments with Independent Contractors. The
Company has not received any information that would reasonably lead it to
believe that any Independent Contractor intends to terminate his/her service
with the Company. All Company contractors and consultants were rightly
classified as Company contractors or consultants under Israeli law and all such
agreements contain provisions which state that no employer-employee relations
exist between such consultant or contractor and the Company. The Company does
not have and has not in the past seven years had any liability with respect to
any misclassification of any contractor or consultant (including former Company
contractors and consultants) as an independent contractor. The Company does not
engage any personnel through manpower agencies. The Company does not employ or
engage or engage through a third party with employees whom the Israeli Law for
Employment of Foreign Employees, 1991 applies to. To the knowledge of the
Company, no Company contractor and consultant or former Company contractor and
consultant has basis for or issued to the Company a written notice of a claim or
any other allegation that such contractor and/or consultant was not rightly
classified as an independent contractor.

 

4.24. Government Funding. Except as set forth in Schedule ‎4.24, the Company has
not applied for or received any financial assistance, incentive, subsidy, grant
or other support or benefits (including, without limitation, tax benefits under
a status of a Preferred Enterprise as defined in the Law for the Encouragement
of Capital Investment 5719-1959 (the “Encouragement Law”)) from any Israeli or
foreign government Authority, including the Israeli National Authority for
Technological Innovation (formerly referred to as the Office of the Chief
Scientist of the Israeli Ministry of Economy).

 

4.25. Corrupt Practices. Neither the Company nor any of its directors, officers
or to the Seller’s knowledge its employees, auditors, agents, consultants,
legal, accounting, financial or other advisors or representatives has taken any
action which would cause it to be in violation of Sections 291 and 291A of
Israel’s Penal Law 5737-1977, as amended till the date hereof, (the
“Anti-Corruption Law”) and the rules and regulations thereunder. The Seller
Parties are not, and to the knowledge of Seller, no director, officer of the
Company is aware of any action, directly or indirectly, that has resulted in a
violation by such Persons of the Anti-Corruption Law, including, without
limitation, making an offer, payment, promise to pay or authorization of the
payment of any money, or other offer, gift, promise to give, or authorization of
the giving of anything of value to any “Public Official” (oved tzibur) or
“Foreign Public Official” (oved tzibur zar) (as such terms are defined in the
Anti-Corruption Law) in violation of any such applicable Law.

 

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4.26. Environmental Matters. Except as to matters that would not reasonably be
expected to have a Material Adverse Effect, to the knowledge of Seller:

 

4.26.1. (a) no written notice, order, request for information, complaint or
penalty has been received by Seller or the Company, and (b) there are no
judicial, administrative or other actions, suits or proceedings pending or
threatened, in the case of each of (a) and (b), which allege a violation of any
Environmental Law and relate to the Company;

 

4.26.2. The Company has, and is in compliance with, all environmental permits,
licenses, authorizations, consents, and approvals from any Governmental
Authority necessary to lawfully conduct its business as presently conducted.

 

4.27. Disclosure. The representations and warranties of the Company in this
Section ‎4 of the Agreement (including the Disclosure Schedules attached hereto)
or in any certificate made or delivered in connection herewith at the Closing,
are accurate, correct and complete in all material respects and neither this
Agreement, the Disclosure Schedule the representations and warranties of the
Seller Parties contained in this Section ‎4 of the Agreement, as qualified by
the Disclosure Schedule, nor certificate to be furnished to Buyer at the
Closing, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading in view of the circumstances under which they were made.
The Buyer has the right to rely fully upon the representations, warranties,
covenants and agreements contained in this Section ‎4 of this Agreement
(including, without limitation, any Schedule hereto) or in any certificate made
or delivered in connection herewith at the Closing.

 

5. REPRESENTATIONS AND WARRANTIES OF BUYER

 

Except as set forth in the Buyer Disclosure Schedules, Buyer represents and
warrants to Seller Parties that:

 

5.1. Corporate Existence and Power.

 

Buyer is a corporation duly incorporated, validly existing and in good standing
under the laws of Delaware and has all corporate powers and all material
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted.

 

5.2. Authority.

 

5.2.1. Buyer has all necessary power and authority to execute and deliver this
Agreement and each document required hereby to be executed and delivered by
Buyer at the Closing and to perform its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by Buyer of this Agreement and each document required
hereby to be executed and delivered by Buyer at the Closing and the consummation
by Buyer of the transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary action, and no other proceedings on the part
of Buyer or DPW are necessary to authorize this Agreement or any document
required hereby to be executed and delivered by Buyer at the Closing or to
consummate the transactions contemplated hereby.

 

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5.2.2. This Agreement and each document required hereby to be executed and
delivered by Buyer at the Closing have been duly and validly executed and
delivered by Buyer, as the case may be and, assuming the due authorization,
execution and delivery by the Seller Parties, constitutes a legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, subject to bankruptcy, insolvency, reorganization or similar laws of
general application affecting the rights and remedies of creditors, and to
general equity principles.

 

5.2.3. No consent, approval, order, permit or authorization of, or registration,
declaration or filing with, or notification to any Governmental Authority or
other Person is required to be obtained by Buyer, or any of its respective
Affiliates (including DPW) in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated by this
Agreement, except where the failure to submit or obtain the same would not have
a material adverse effect on Buyer’s ability to consummate the transactions
contemplated by this Agreement.

 

5.3. Noncontravention. The execution, delivery and performance by Buyer of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not (i) conflict with or violate the Organizational Documents of Buyer,
(ii) violate any Applicable Law in a material respect (iii) require any consent
or other action by any Person under, result in a breach of, constitute a default
under, or give rise to any right of termination, cancellation or acceleration
(whether after the giving of notice or the lapse of time or both) of any right
or obligation of Buyer or to a loss of any benefit to which Buyer is entitled
under any provision of any agreement or other instrument binding upon Buyer, or
by which its properties, rights or assets are subject or bound in any material
respect or (iv) result in the creation or imposition of any material Lien on any
asset of Buyer.

 

5.4. Financing. Buyer will have immediately prior to the Closing, sufficient
available lines of credit or other sources of immediately available funds to
enable it to make payment of the Purchase Price and any other amounts to be paid
by it hereunder.

 

5.5. Purchase for Investment. Buyer is purchasing the Shares for investment for
its own account and not with a view to, or for sale in connection with, any
distribution thereof. Buyer (either alone or together with its advisors) has
sufficient knowledge and experience in financial and business matters so as to
be capable of evaluating the merits and risks of its investment in the Shares
and is capable of bearing the economic risks of such investment.

 

5.6. Inspection. Buyer has undertaken such investigation and has been provided
with and has evaluated such documents and information as it has deemed necessary
to enable it to make an informed decision with respect to the execution,
delivery and performance of this Agreement. Buyer has had an opportunity to
discuss the Company’s business, operations, management, financial affairs and
the terms and conditions of the offering of the Shares with the Seller and
Company’s management, and to ask questions of, and receive answers and
additional information from the Seller and Company’s management in relation
thereof, and it and its representatives have been permitted access to the books
and records, facilities and personnel of the Company for purposes of conducting
their due diligence investigation. Buyer acknowledges that Seller Parties make
no representation or warranty with respect to any projections, estimates or
budgets delivered to or made available to Buyer of future revenues, future
results of operations (or any component thereof), future cash flows or future
financial condition (or any component thereof) of the Company or the future
business and operations of the Company.

 

5.7. Litigation. There is no action, suit, investigation or proceeding pending
against, or to the knowledge of Buyer threatened against or affecting, Buyer
before any arbitrator or any Governmental Authority which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement.

 

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5.8. Finders’ Fees. There is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of
Buyer who might be entitled to any fee or commission in connection with the
transactions contemplated by this Agreement.

 

5.9. No Public Market. The Buyer understands that no public market now exists
for the Shares.

 

5.10. Seller Parties’ Representations. The representations and warranties in
Section ‎4 above or in the certificates delivered to Buyer at the Closing
pursuant to Section ‎3, are the only warranties or representations of any kind
given by or on behalf of Seller Parties on which the Buyer may rely in entering
into this Agreement, and Seller Parties do not make any express or implied
representation or warranty, and each of the Seller Parties hereby disclaims any
such representation or warranty with respect to the execution and delivery of
this Agreement and the consummation of the transactions contemplated by this
Agreement.

 

6. CERTAIN COVENANTS

 

6.1. Covenants of Seller Parties. Seller Parties agrees that:

 

6.1.1. Conduct of the Company. From the date hereof until the Closing Date, the
Company shall, and Seller Parties shall cause the Company, to use its best
efforts to conduct its businesses in the ordinary course consistent with past
practice and in compliance with all material respects of all Applicable Law and
to preserve intact its business organizations and relationships with third
parties and to keep available the services of its present officers, employees
and consultants, and the Company and the Seller Parties will promptly notify the
Buyers of any action or event to the contrary. If any action or event not in the
ordinary course of business occurs, the Company shall, and Seller Parties shall
cause the Company, to, with respect to such action or event, (a) give Buyer, its
counsel, financial advisors, auditors and other authorized representatives
subject to confidentiality provisions herein, reasonable access to books and
records of the Company relating to such action or event and (b) furnish, and
will cause the Company to furnish, to Buyer, its counsel, financial advisors,
auditors and other authorized representatives such financial and operating data
and other information relating to the Company as such Persons may reasonably
request. Without limiting the generality of the foregoing, from the date hereof
until the Closing Date, Seller Parties will not permit the Company, without the
Buyer’s prior consent to:

 

6.1.1.1. amend or otherwise make any change to the Company's Organizational
Documents;

 

6.1.1.2. issue, sell pledge, assign, transfer or otherwise dispose of or make
subject to any Lien or enter into any agreements in respect of, any equity
security to any of its shareholders or any Person;

 

6.1.1.3. mortgage, pledge or subject to any Lien any of its assets, properties
or rights;

 

6.1.1.4. merge or consolidate with any other Person or acquire a material amount
of assets from any other Person;

 

6.1.1.5. enter into any Contract with a labor union or collective bargaining
agreement;

 

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6.1.1.6. fail to pay accounts payable and other liabilities or obligations in
the ordinary course of business consistent with past practices;

 

6.1.1.7. modify the payment terms or payment schedule of any receivables other
than in the ordinary course of business consistent with past practices,
accelerate the collection of receivables or sell, securitize, factor or
otherwise transfer any accounts receivable;

 

6.1.1.8. incur any Financial Indebtedness or other liabilities or obligations
outside of the ordinary course of business consistent with past practices;

 

6.1.1.9. commence, settle or compromise any action, suit, proceeding,
litigation, claim, arbitration or investigation;

 

6.1.1.10. (i) increase the compensation payable or to become payable to any of
its directors, officers, consultants or employees outside of the ordinary course
of business consistent with past practices; (ii) make any loan, advance or
capital contribution to, or grant any bonus, severance or termination pay to, or
terminate, enter into or amend any employment, severance or similar Contract
with any of its directors, officers or other employees, other than in the
ordinary course of business consistent with past practices; (iii) establish,
adopt, enter into, amend, terminate or otherwise change the coverage or benefits
available under any Company benefit plan for the benefit of any of its current
or former directors, officers or employees; (iv) pay or otherwise grant any
unusual or extraordinary benefit or other unusual or extraordinary direct or
indirect compensation to any Person; or (v) change any actuarial assumption or
other assumption used to calculate funding obligations with respect to any
pension or retirement plan or change the manner in which contributions to any
such plan are made or the basis on which such contributions are determined;

 

6.1.1.11. enter into any Interested Party transaction;

 

6.1.1.12. hire any officer or other employee with a rank of VP or higher;

 

6.1.1.13. sell, lease, license or otherwise dispose of any material assets or
property except (a) pursuant to existing contracts or commitments or (b)
otherwise in the ordinary course consistent with past practice; or

 

6.1.1.14. Declare and/or pay any dividends to the shareholders of the Company;

 

6.1.1.15. agree or commit to do any of the foregoing.

 

6.1.2. Directors and Officers Insurance. The Seller or Parent shall purchase and
shall pay all related premiums, prior to or concurrent with the Closing, a
prepaid directors’ and officers’ liability insurance policy or policies (i.e.,
“tail coverage”) for acts or omissions of the directors and officers of the
Company occurring prior to the Closing Date that will remain in effect for a
period of seven (7) years after the Closing Date, the material terms of which,
including coverage and amount, are comparable to those of the Company’s current
directors’ and officers’ liability insurance policy (copies of which have been
delivered by the Seller to Buyer and its representatives prior to the date
hereof). Buyer shall cooperate in good faith with the former directors and
officers of the Company to use the tail coverage with respect to claims relating
to acts or omissions occurring prior to the Closing Date.

 

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6.1.3. Related Party Agreements. Except for the consulting agreement pursuant to
Section ‎3.2.3.1 on the Closing Date, the Seller shall have (a) terminated all
Contracts between the Seller or its Affiliates (other than the Company) or
director or officer of any of the foregoing, on the one part, and the Company,
on the other part (all such Contracts to be terminated, the “Related Party
Agreements”) and (b) delivered releases executed by such Persons with whom the
Company has terminated such Contracts pursuant to this Section ‎6.1.3 providing
that such Related Party Agreement has been terminated and is of no further force
and effect and no further payments are due, or may become due, and that neither
Company nor Buyer has any liability or obligation, under or in respect of any
such terminated Contracts.

 

6.1.4. Execution of IP Assignments. From the date hereof until the Closing Date,
the Company shall use its reasonable efforts, and the Seller Parties shall cause
the Company, to use its reasonable efforts to have the Company’s current
employees engaged in the development of Company’s Intellectual Property execute
a proprietary information, confidentiality and assignment agreement
substantially in the form attached hereto as Exhibit ‎6.1.4. The foregoing
notwithstanding, the Company shall and the Seller Parties shall cause the
Company to have the Company's directors execute the aforementioned proprietary
information, confidentiality and assignment agreement.

 

6.1.5. Non-Competition and Non-Solicitation.

 

6.1.5.1. Each of the Seller Parties, on behalf of itself and its Affiliates,
agrees that until the lapse of the later of (i) the termination of the
consulting agreement; and (ii) three (3) years commencing from the Closing Date
(the “Non-Compete Period”), the Seller Parties shall not, anywhere in the State
of Israel or in the United States, directly or indirectly, as an agent,
consultant, advisor, independent contractor, general partner, officer, director,
stockholder, investor, lender or guarantor of any corporation, partnership or
other entity, or in any other capacity (i) engage in the Company Business; (ii)
participate in or facilitate the financing, operation, management or control of,
any firm, partnership, corporation, entity or business which is competitive to
the Company Business; or (iii) approach, contact or solicit any of the Company’s
customers in connection with a business which is competitive to the Company
Business, all other than passive ownership of no more than five percent (5%) of
the outstanding voting shares of a publicly traded company.

 

6.1.5.2. Non-Solicitation. Each of the Seller Parties, on behalf of itself and
its Affiliates, agrees that until the lapse of the Non-Compete Period they shall
not directly or indirectly, personally or through others, encourage, induce or
solicit (on their own behalf or on behalf of any other Person) any individual
who (i) is or was an employee of the Company on the Closing Date or during the 6
months period prior to the Closing Date, and (ii) remains or becomes an employee
of the Company upon the Closing or at any time during the Non-Compete Period, to
leave his or her employment with the Company.

 

6.1.5.3. If the foregoing provisions of non-competition and non-solicitation
shall be held for any reason invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement, but this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein,
provided, however, that if the provision is held invalid, illegal or
unenforceable due to the length of the Non-Compete Period or due to the
geographical scope of the restriction and if such holding would be reversed had
the Non-Compete Period been for a shorter period of time or the geographical
scope been reduced, the Non-Compete Period will be reduced to the longest period
of time that would allow a reversal of such holding and the geographical scope
will be reduced to the largest scope that would allow a reversal of such holding
and the Parties will continue to perform this Section as before in all other
respects. Seller Parties acknowledge that Buyer may be irreparably harmed by any
breach of this Section and that there would be no adequate monetary remedy at
law or in damages to compensate Buyer for any such breach. Seller agrees that
Buyer shall be entitled to injunctive relief requiring specific performance by
each of the Seller Parties and/or any of its Affiliates of this Section.

 

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6.1.6. Change of Name. As of the Closing Date, each of the Seller Parties and
each of its Affiliates that is located in Israel or in the United States or that
does business in Israel or in the United States shall change its name to a name
that is not similar to “Enertec”, shall register the name changes with the
Israeli Registrar of Companies and any equivalent bodies of any foreign
Governmental Entity, and shall entirely cease any and all use of the name
“Enertec” in the State of Israel and in the United States. From and after the
Closing Date, the Seller Parties and their Affiliates shall be prohibited from
conducting business in or relating to the State of Israel and to the United
States with the use of the name “Enertec” or any similar name. All trademarks
registered in Israel by the Seller Parties or the Company or any Affiliate of
the foregoing with the name “Enertec” and the domain name www.enertec.co.il and
the “Enertec” logo shall be irrevocably assigned to the Company at Closing.

 

6.1.7. General Release and Waiver. Subject to Closing, each of the Company and
the Seller Parties and each of its Affiliates, directors, officers and
employees, upon the Closing, shall be deemed to have, and hereby do,
unconditionally and irrevocably, release and forever discharge the Buyer and any
Affiliate of Buyer, including their respective officers, directors and
employees, and Company (the “Released Parties”), from (i) any and all
obligations or duties the Company might have to each of the Seller Parties and
each of their Affiliates, directors, officers and employees in connection with
any events or circumstances occurring prior to the Closing and (ii) any and all
claims and actions of liability, whether legal or equitable, of every kind and
nature, which each of the Company and/or the Seller Parties and each of Seller
Parties’ Affiliates, directors, officers and employees ever had, now has or may
claim against the Released Parties, in each case arising out of facts or
circumstances occurring at any time on or prior to the date hereof (the
“Released Claims”). The Released Claims shall exclude claims, liabilities,
obligations and duties (i) of the Buyer under this Agreement or any agreement
entered pursuant hereto, and/or (ii) under any existing director and officer
indemnification agreement, and/or (iii) any on-going payments due to the Seller
Parties or each of their Affiliates pursuant to the existing arrangement as set
forth in Schedule ‎4.5 and ‎4.10 not yet paid. The Released Claims include all
other claims and actions arising out of facts or circumstances occurring at any
time on or prior to the Closing even if the claims and their existence are
unknown or not suspected, and even if knowledge of those claims would have
affected the acceptance of this general release.

 

6.1.8. Notices of Certain Events. Seller Parties shall promptly notify Buyer of:

 

6.1.8.1. any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;

 

6.1.8.2. any notice or other communication from any Governmental Authority in
connection with the transactions contemplated by this Agreement; and

 

6.1.8.3. any actions, suits, claims, investigations or proceedings commenced
relating to Seller Parties or the Company that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to Section
‎4.15.

 

6.2. Covenants of Buyer. Buyer agrees that:

 

6.2.1. Confidentiality. Prior to the Closing Date and after any termination of
this Agreement, Buyer and its Affiliates will hold, and will cause their
respective officers, directors, employees, accountants, counsel, consultants,
advisors and agents to hold, in confidence, unless compelled to disclose by
judicial or administrative process or by other requirements of law, all
confidential documents and information concerning the Company furnished to Buyer
or its Affiliates in connection with the transactions contemplated by this
Agreement, except to the extent that such information can be shown to have been
(i) previously known on a nonconfidential basis by Buyer, or (ii) in the public
domain through no fault of Buyer, and/or its Affiliates, their respective
officers, directors, employees, accountants, counsel, consultants, advisors and
agents; provided that Buyer may disclose such information to its officers,
directors, employees, accountants, counsel, consultants, advisors and agents in
connection with the transactions contemplated by this Agreement so long as such
Persons are informed by Buyer of the confidential nature of such information and
are directed by Buyer to treat such information confidentially. Buyer shall be
responsible for any failure to treat such information confidentially by such
Persons. The obligation of Buyer and its Affiliates to hold any such information
in confidence shall be satisfied if they exercise the same care with respect to
such information as they would take to preserve the confidentiality of their own
similar information. If this Agreement is terminated, Buyer and its Affiliates
will, and will cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to, destroy or deliver to
Seller, upon request, all documents and other materials, and all copies thereof,
obtained by Buyer or its Affiliates or on their behalf from Seller or the
Company in connection with this Agreement that are subject to such confidence.
Notwithstanding the foregoing, Buyer may disclose the terms of this Agreement
and related documents in any SEC document if required to be filed under the
rules of either the Securities Act or Exchange Act rules or NYSE American
listing rules, provided that such publication/disclosure is in reliance on the
advice of counsel concluding that said publication is necessary, and to the
extent necessary. Any press release by Buyer shall be coordinated in advance
with Seller Parties.

 

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6.2.2. Buyer will cause the Company, on and after the Closing Date, to afford to
Seller Parties and its agents reasonable access to Company properties, books,
records, employees and auditors to the extent necessary to permit Seller Parties
to determine any matter relating to its rights and obligations hereunder or to
any period ending on or before the Closing Date; provided that any such access
by Seller Parties shall not unreasonably interfere with the conduct of the
business of Buyer or the Company. Seller Parties will hold, and will use its
best efforts to cause their officers, directors, employees, accountants,
counsel, consultants, advisors and agents to hold, in confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of Applicable Law, all confidential documents and information
concerning the Company or provided to it pursuant to this Section.

 

6.2.3. Buyer Financing. Buyer shall use its best efforts to take all actions
necessary to obtain such amounts of cash as required to make all payments to
Seller as required under this Agreement and to otherwise consummate the
transactions contemplated hereby (the “Required Financing”). It is understood
and acknowledged that the Required Financing may be obtained from the working
capital of Buyer, pursuant to the issuance of debt or equity securities of Buyer
to one or more third parties (whether privately or through the public equity or
debt markets), through drawdowns of existing lines of credit held by Buyer or
through a combination of any of the foregoing. The terms and conditions of any
Required Financing will be at the sole discretion of Buyer. Nothing contained in
this Agreement, including in this Section ‎6.2.2, shall be deemed to, nor shall
it, make the consummation of the Required Financing by Buyer a condition to
Buyer’s obligations to consummate the transactions contemplated hereby.

 

6.2.4. Waiver of Conflicts Regarding Representation; Nonassertion of
Attorney-Client Privilege.

 

6.2.4.1. Buyer waives and will not assert, and agrees to cause the Company to
waive and not to assert, any conflict of interest arising out of or relating to
the representation, after the Closing (the “Post-Closing Representation”), of
any Seller, shareholder, officer, employee or director of Company (any such
Person, a “Designated Person”) in any matter involving this Agreement or any
other agreements or transactions contemplated thereby, by any legal counsel
currently representing the Company in connection with this Agreement or any
other agreements or transactions contemplated thereby (the “Current
Representation”).

 

6.2.4.2. Buyer waives and will not assert, and agrees to cause the Company to
waive and to not assert, any attorney-client privilege with respect to any
communication between any legal counsel and any Designated Person occurring
during the Current Representation in connection with any Post-Closing
Representation, including in connection with a dispute with Buyer, and following
the Closing, with the Company, it being the intention of the Parties that all
such rights to such attorney-client privilege and to control such
attorney-client privilege shall be retained by the Seller; provided that the
foregoing waiver and acknowledgement of retention shall not extend to any
communication not involving this Agreement or any other agreements or
transactions contemplated thereby, or to communications with any Person other
than the Designated Persons and their advisers.

 

6.3. Covenants of Buyer and Seller Parties. Buyer and Seller Parties agree that:

 

6.3.1. Further Assurances. Subject to the terms and conditions of this
Agreement, Buyer and Seller Parties will use their best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary or desirable under Applicable Law to consummate the transactions
contemplated by this Agreement. Seller Parties and Buyer agree, and Seller
Parties, prior to the Closing, and Buyer, after the Closing, to cause the
Company, to execute and deliver such other documents, certificates, agreements
and other writings and to take such other actions as may be necessary or
desirable in order to consummate or implement expeditiously the transactions
contemplated by this Agreement.

 

6.3.2. Certain Filings. Seller Parties and Buyer shall cooperate with one
another (i) in determining whether any action by or in respect of, or filing
with, any Governmental Authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to any material
contracts, in connection with the consummation of the transactions contemplated
by this Agreement and (ii) in taking such actions or making any such filings,
furnishing information required in connection therewith and seeking timely to
obtain any such actions, consents, approvals or waivers.

 

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6.3.3. Public Announcements. The Parties agree to consult with each other before
issuing any press release or making any public statement with respect to this
Agreement or the transactions contemplated hereby and, except for any press
releases and public announcements the making of which may be required by
Applicable Law or any listing agreement with any national securities exchange
(provided however that any publication relating to the financial condition of
the Company or results of operations of the Company in respect of the period
prior to Closing, shall be coordinated in advance between the Parties), will not
issue any such press release or make any such public statement prior to such
consultation.

 

6.3.4. Intercompany Accounts. All intercompany accounts, Financial Indebtedness
or other liabilities or obligations between each of the Seller Parties or its
Affiliates, on the one hand, and the Company, on the other hand (the
“Intercompany Accounts”), as of the Closing shall be settled or waived
(irrespective of the terms of payment of such Intercompany Accounts) in the
manner provided in this Section. At least two Business Days prior to the
Closing, Seller shall prepare and deliver to Buyer a statement setting out in
reasonable detail the calculation of all such Intercompany Accounts balances
based upon the latest available financial information as of such date and, to
the extent requested by Buyer, provide Buyer with supporting documentation to
verify the underlying Intercompany Accounts. All such Intercompany Accounts
balances shall be paid and in any event deemed waived by Seller Parties in full
on or prior to the Closing.

 

7. TAX MATTERS

 

7.1. Straddle Period. All Tax Returns of the Company for any Tax period ending
on or before the Closing Date (the “Pre-Closing Tax Period”) and any Straddle
Period, to the extent filed or required to be filed after the Closing Date,
shall be prepared and filed (or caused to be filed) by Buyer. With respect to
any such Tax Return relating to income Taxes (or other taxes based on income),
(a) Buyer will prepare (or cause to be prepared) such returns consistent with
past practice, except as required by Applicable Law and (b) Buyer shall provide
Seller Parties with a copy of such return prior to the filing thereof, and
Seller Parties shall have a reasonable opportunity (for a period of not less
than twenty (20) days) to review and comment on such return prior to filing. In
any case of a taxable period which includes the Closing Date (but does not end
on that day) (a “Straddle Period”), the Taxes, if any, attributable to a
Straddle Period shall be allocated (a) to the Seller Parties for the period up
to and including the close of business on the Closing Date and (b) to Buyer for
the period subsequent to the Closing Date (the “Post-Closing Tax Period”). For
purposes of such allocation, the amount of (i) any Taxes based on or measured by
income, receipts or payroll (other than payroll that is accrued but unpaid as of
the Closing Date) and (ii) any withholding Taxes to the extent not withheld from
amounts paid, shall in each case be allocated based on an interim closing of the
books of the Company as of the close of business on the Closing Date, provided
that any transaction (other than the transactions contemplated by this
Agreement) that occurs on the Closing Date and after the Closing that is not in
the ordinary course of business and is undertaken at the direction of Buyer
shall be included in the Post-Closing Tax Period. The amount of other Taxes of
the Company shall be apportioned to the Seller Parties based on the amount of
such Tax for the entire taxable period multiplied by a fraction, the numerator
of which is the number of days in the portion of the taxable period up to and
including the Closing Date, and the denominator of which is the number of days
in such Straddle Period.

 

7.2. Cooperation on Tax Matters. Buyer and the Sellers Parties shall cooperate
fully, as and to the extent reasonably requested by the other Party, in
connection with any Tax matters with respect to Buyer, the Seller Parties and/or
the Company, including any such matters relating to the preparation and filing
of any Tax Return, amended Tax Return or claim for refund, determining a Tax
liability or participating in or conducting any Tax Proceeding. All refunds for
Taxes for all Pre-Closing Tax Periods and any portion of the Straddle Period
ending on the Closing Date shall be paid to Seller Parties net of costs and
expenses of obtaining such refund (and only to the extent such amount is not
attributable to a tax attribute arising after the Closing Date) after receipt
from the Seller Parties of an undertaking that the Seller Parties shall return
such amounts (together with interest and penalties imposed by the applicable Tax
Authority) that may be subsequently claimed by the Tax Authority paying such
refund. Buyer and the Company shall not file any amended Tax Return that will
increase the Sellers Parties’ liability for Taxes or for indemnification under
this Agreement, without the written consent of the Seller Parties, which consent
shall not be unreasonably withheld.

 

8. CONDITIONS TO CLOSING

 

8.1. Conditions to Obligation of Buyer. The obligation of Buyer to consummate
the Closing is subject to the satisfaction, or, to the extent permitted by
Applicable Law, waiver by Buyer, of each of the following conditions:

 

8.1.1. No provision of any Applicable Law shall prohibit the consummation of the
Closing.

 

8.1.2. The representations and warranties of the Company and the Seller Parties
contained in Section ‎4 shall be true and correct in all material respects as of
the Closing Date, as if made at and as of such date.

 

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8.1.3. Seller Parties have obtained a Valid Certificate or Paying Agent holds a
certificate or ruling issued by the ITA in form and substance reasonably
acceptable to the Buyer, which is sufficient to enable to conclude that no
withholding of Israeli Tax is required with respect to the payment of the
Purchase Price to Paying Agent and specifically imposes the exclusive liability
on the Paying Agent for any withholding obligation with respect to the Purchase
Price (“Paying Agent Certificate”).

 

8.1.4. Each of the Company and the Seller Parties shall have performed and
complied, in all material respects, with all covenants, agreements, obligations
and conditions contained in this Agreement that are required to be performed or
complied with by the Company and/or the Seller Parties on or before the Closing
Date.

 

8.1.5. All corporate, governmental, regulatory and other approvals, consents
and/or waivers necessary lawfully to effect the transfer of the Shares, or
otherwise to consummate the transaction contemplated hereunder, to be obtained
by the Company and the Seller Parties, including the approvals of the Board of
Directors and the general meeting of the Company, all as provided in Exhibit
‎8.1.5 hereto, shall have been obtained, and a copy thereof shall have been
transferred to the Buyer at Closing, in each case in form and substance
reasonably satisfactory to Buyer, and no such consent, authorization or approval
shall have been revoked.

 

8.1.6. There shall not have been threatened, instituted or pending any lawsuit,
litigation, claims, investigations or other proceedings by any third party which
purports to prevent the transaction contemplated hereunder;

 

8.1.7. There shall have been no outstanding Lien on any assets of the Company
(other than the Permitted Liens).

 

8.1.8. No Material Adverse Effect shall have occurred from the date hereof to
the Closing Date;

 

8.1.9. The Company shall not be precluded from registering in its Share Registry
the transfer of all the Shares held by the Seller to the Buyer in accordance
with the Israeli Companies Law of 5759-1999 and its Organizational Documents.

 

8.1.10. The Company shall have taken care of the items listed on Exhibit ‎8.1.10
hereto, in a reasonable form and substance.

 

8.2. Conditions to Obligation of Seller Parties. The obligation of Seller
Parties to consummate the Closing is subject to the satisfaction, or, to the
extent permitted by Applicable Law, waiver by Seller Parties, of the following
further conditions:

 

8.2.1. No provision of any Applicable Law shall prohibit the consummation of the
Closing.

 

8.2.2. The representations and warranties of the Buyer contained in Section ‎5
shall be true and correct in all material respects as of the Closing Date, as if
made at and as of such date.

 

8.2.3. Buyer shall have performed and complied, in all material respects, with
all covenants, agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by Buyer on or
before the Closing Date.

 

8.2.4. All actions by or in respect of or filings with, and all authorizations,
approvals or permits, if any, of, any Governmental Authority that are required
in connection with the consummation of the Closing shall have been taken, made
or obtained and effective as of the Closing Date, in each case in form and
substance reasonably satisfactory to Seller Parties, and no such consent,
authorization or approval shall have been revoked.

 

 35 

 

 

8.2.5. All consents and approvals of the banks identified on Exhibit ‎8.2.5
shall have been obtained, in a manner reasonably satisfactory in form and
substance to Seller Parties, and no such consent, approval, order or
authorization shall have been revoked;

 

8.2.5.1. there shall not have been threatened, instituted or pending any
lawsuit, litigation, claims, investigations or other proceedings by any third
party which purports to prevent the transaction contemplated hereunder.

 

8.3. Each Party shall not (i) take any action that would make any of its
representations or warranties contained in this Agreement untrue or incorrect or
otherwise prevent such Party from performing its covenants hereunder or (ii)
omit to take any action necessary to prevent any such representation or warranty
from being untrue or incorrect or otherwise prevent such Party from performing,
or cause the Seller Parties or the Company not to perform, its covenants
hereunder.

 

9. SURVIVAL; INDEMNIFICATION

 

9.1. Survival.

 

9.1.1. Representations and Warranties. Seller’s representations and warranties
contained in this Agreement or in any certificate or other writing delivered
pursuant hereto or in connection herewith, shall survive the Closing and
continue in effect until the lapse of twenty (20) months of the Closing Date;
provided that the representations and warranties contained in (a) Section ‎4.1.1
and ‎4.1.2 (Corporate Existence and Power), ‎4.2 (Corporate Authorization), ‎4.4
(Capitalization), Section ‎4.6 (Subsidiaries), and Section ‎4.20 (Finders’ Fees
in respect of the Company only) (collectively, the “Seller’s Fundamental
Representations”) shall survive the Closing and remain in full force and effect
until the expiration of the applicable statute of limitation, (b) Section ‎4.18
(Intellectual Property) shall survive the Closing and continue in effect until
the date that is twenty four (24) months after the Closing Date, and (c)
Section ‎4.12 (Tax) and Section ‎4.22 (Employees) shall survive the Closing and
continue in effect until the date that is thirty six (36) months after the
Closing Date (the “Claims Period”). The representations and warranties of the
Buyer contained in this Agreement shall survive the Closing and remain in full
force and effect until twenty four (24) months after the Closing Date, provided
that the representations and warranties contained in (a) Sections ‎5.1
(Corporate Existence and Power), ‎5.2 (Authority), ‎5.6 (Inspection), and ‎5.10
(Seller Parties’ Representations) (collectively, the “Buyer’s Fundamental
Representations”) shall survive the Closing and remain in full force and effect
until the expiration of the applicable statute of limitation, and (b) the
representations and warranties contained in Section ‎5.4 (Financing) shall
terminate at Closing. Except in the case of fraud or willful misrepresentation,
the Seller Parties shall not have any liability with respect to any such
representation and warranty unless a detailed written notice of an indemnity
claim is given pursuant to this Agreement prior to the expiration of the Claims
Period for such representation and warranty and, other than with respect to
claims originated by third parties (subject however to the provisions of Section
‎9.3 below), a claim in relation to the subject matter of such notice has been
filed by Buyer with a competent court within no later than 180 days following
the expiration of the Claims Period for such representation and warranty, in
which case such representation and warranty shall survive as to that claim until
the claim has been finally resolved and paid (if applicable).

 

9.1.2. Covenants and Obligations. All covenants and obligations contained herein
or in any document or certificate delivered hereunder in connection with the
transactions contemplated hereby shall survive the Closing and continue in full
force until performed in accordance with their terms.

 

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9.2. Indemnification.

 

9.2.1. Effective at and after the Closing and subject to the terms and
conditions of this Agreement, Seller Parties, jointly and severally, shall
indemnify Buyer and its officers and directors (the “Buyer Indemnified Parties”)
against, and agrees to hold each of them harmless from, any and all losses,
damages, awards, fines, penalties, claims, expenses, fees, liabilities,
obligations, judgments, out of pocket costs and amounts paid in settlement
approved by Seller Parties in accordance with the procedure Section ‎9.3
(including reasonable fees and expenses of counsel and reasonable expenses of
investigation) (“Losses”) actually suffered by Buyer Indemnified Parties or by
the Company as a result of (i) any misrepresentation or breach of representation
or warranty (in each case, for purposes of determining the amount of Losses such
representation or warranty would read if all qualifications as to materiality,
including each reference to the defined term Material Adverse Effect, were
deleted therefrom) (each such misrepresentation and breach of representation or
warranty a “Warranty Breach”), or (ii) breach of covenant or agreement made or
to be performed by Seller Parties pursuant to this Agreement, or (iii) any
claims by any directors of the Company for indemnification from the Company with
respect to the period prior to Closing; provided that with respect to
indemnification by Seller for Warranty Breaches pursuant to this Section, except
in with respect to the Seller’s Fundamental Representations, (a) Seller Parties
shall not be liable unless the aggregate amount of Losses with respect to such
Warranty Breaches exceeds US$120,000 and if so exceeds then the Seller Parties
shall be liable from US$ 60,000 and beyond, and (b) Seller Parties’ maximum
liability for all such Warranty Breaches shall not exceed the Indemnification
Escrow Amount. The Buyer shall be entitled to satisfy any claims for
indemnification from the Indemnification Escrow Amount, subject to the terms and
conditions of the Escrow Agreement.

 

9.2.2. Effective at and after the Closing and subject to the terms and
conditions of this Agreement, Buyer shall indemnify Seller Parties and their
respective officers and directors (the “Seller Indemnified Parties”) against,
and agrees to hold each of them harmless from, any and all Losses actually
suffered by Seller Indemnified Parties arising out of any Warranty Breach or
breach of covenant or agreement made or to be performed by Buyer pursuant to
this Agreement; provided that with respect to indemnification by Buyer for
Warranty Breaches pursuant to this Section, except in with respect to the
Buyer’s Fundamental Representations (a) Buyer shall not be liable unless the
aggregate amount of Losses with respect to such Warranty Breaches exceeds US$
120,000 and if so exceeds then the Buyer shall be liable from US$ 60,000 and
beyond, and (b) Buyer’s maximum liability for all such Warranty Breaches shall
not exceed 10% of the Purchase Price.

 

9.2.3. Any limitation of liability or limitation of period shall not apply in
the event of fraud or willful misrepresentation or willful misconduct.

 

9.3. Third Party Claim Procedures.

 

9.3.1. The Party seeking indemnification under Section ‎9.2 (the “Indemnified
Party”) agrees to give prompt notice in writing to the Party against whom
indemnity is to be sought (the “Indemnifying Party”) of the assertion of any
claim or the commencement of any suit, action or proceeding by any third party
(“Third Party Claim”) in respect of which indemnity may be sought under such
Section. Such notice shall set forth in reasonable detail such Third Party Claim
and the basis for indemnification including a copy of the written notice/suit
received by the Indemnified Party asserting or commencing such Third Party Claim
(taking into account the information then available to the Indemnified Party).
The failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party of its obligations hereunder, except to the extent such
failure shall have adversely prejudiced the Indemnifying Party.

 

9.3.2. The Indemnifying Party shall be entitled to participate in the defense of
any Third Party Claim and, subject to the limitations set forth in this Section,
shall be entitled to control and appoint lead counsel for such defense, in each
case at its own expense.

 

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9.3.3. If the Indemnifying Party shall assume the control of the defense of any
Third Party Claim in accordance with the provisions of this Section ‎9.3, (a)
the Indemnifying Party shall obtain the prior written consent of the Indemnified
Party (which shall not be unreasonably withheld) before entering into any
settlement of such Third Party Claim, if the settlement does not release the
Indemnified Party from all liabilities and obligations with respect to such
Third Party Claim or the settlement imposes injunctive or other equitable relief
against the Indemnified Party, and (b) the Indemnified Party shall be entitled
to participate in the defense of any Third Party Claim and to employ separate
counsel of its choice for such purpose. The fees and expenses of such separate
counsel shall be paid by the Indemnified Party.

 

9.3.4. Each Party shall cooperate, and cause their respective affiliates to
cooperate, in the defense or prosecution of any Third Party Claim and shall
furnish or cause to be furnished such records, information and testimony, and
attend such conferences, discovery proceedings, hearings, trials or appeals, as
may be reasonably requested in connection therewith.

 

9.4. Direct Claim Procedures. In the event an Indemnified Party has a claim for
indemnity under Section ‎9.2 against an Indemnifying Party that does not involve
a Third Party Claim, the Indemnified Party agrees to give prompt notice in
writing of such claim to the Indemnifying Party. Such notice shall set forth in
reasonable detail such claim and the basis for indemnification (taking into
account the information then available to the Indemnified Party). The failure to
so notify the Indemnifying Party shall not relieve the Indemnifying Party of its
obligations hereunder, except to the extent such failure shall have actually
prejudiced the Indemnifying Party. If the Indemnifying Party has disputed its
indemnity obligation for any Losses with respect to such claim, the parties
shall proceed in good faith to negotiate a resolution of such dispute and, if
not resolved through negotiations within thirty (30) days after notice of such
notice was given to the Indemnifying Party, such dispute shall be resolved by
litigation in an appropriate court of jurisdiction determined pursuant to
Section ‎11.5.

 

9.5. Calculation of Losses.

 

9.5.1. The amount of any Losses payable under Section ‎9.2 by the Indemnifying
Party shall be net of any (a) amounts recovered (and subject to Indemnified
Party obligations pursuant to Section ‎9.5.4) by the Indemnified Party under
applicable insurance policies (less the amount of any premium paid) or from any
other Person alleged to be responsible therefor and (b) Tax benefit realized by
the Indemnified Party arising from the incurrence or payment of any such Losses.
In computing the amount of any such Tax benefit, the Indemnified Party shall be
deemed to fully utilize, at the highest marginal tax rate then in effect, all
Tax items arising from the incurrence or payment of any indemnified Losses. If
the Indemnified Party receives any amounts under applicable insurance policies,
or from any other Person alleged to be responsible for any Losses, subsequent to
an indemnification payment by the Indemnifying Party, then such Indemnified
Party shall promptly reimburse the Indemnifying Party for any payment made or
expense incurred by such Indemnifying Party in connection with providing such
indemnification payment up to the amount received by the Indemnified Party, net
of any expenses incurred by such Indemnified Party in collecting such amount,
including any premium paid.

 

9.5.2. The Indemnifying Party shall not be liable under Section ‎9.2 for any (a)
Losses relating to any matter to the extent that (A) there is included in the
Financial Statements a specific liability or reserve relating to such matter or
(B) the Indemnified Party had otherwise been compensated for such matter
pursuant to the Purchase Price adjustment hereunder.

 

9.5.3. An Indemnified Party shall not be entitled to recover Losses or obtain
payment, reimbursement, restitution or indemnity more than once in respect of
any Loss, breach or other set of circumstances which gives rise to more than one
Claim.

 

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9.5.4. Each Indemnified Party must mitigate in accordance with Applicable Law
any loss for which such Indemnified Party seeks indemnification under this
Agreement, including by enforcement of its rights under any applicable insurance
policies. If such Indemnified Party mitigates its loss after the Indemnifying
Party has paid the Indemnified Party under any indemnification provision of this
Agreement in respect of that loss, the Indemnified Party must notify the
Indemnifying Party and pay to the Indemnifying Party the extent of the value of
the benefit to the Indemnified Party of that mitigation (less the Indemnified
Party’s reasonable costs of mitigation) within two Business Days after the
benefit is received.

 

9.5.5. Adjustment to Purchase Price. Buyer and Seller agree to treat any
indemnity payment made pursuant to this Section ‎9.2 as an adjustment to the
Purchase Price for federal, state, local and foreign income tax purposes, except
as otherwise required by Applicable Law.

 

9.5.6. Each Indemnified Party shall use reasonable efforts to collect any
amounts available under insurance coverage, or from any other Person alleged to
be responsible, for any Losses payable under Section ‎9.2.

 

9.6. Assignment of Claims. If the Indemnified Party receives any payment from an
Indemnifying Party in respect of any Losses pursuant to Section ‎9.2 and the
Indemnified Party could have recovered all or a part of such Losses from a third
party (a “Potential Contributor”) based on the underlying Claim asserted against
the Indemnifying Party, the Indemnified Party shall assign such of its rights to
proceed against the Potential Contributor as are necessary to permit the
Indemnifying Party to recover from the Potential Contributor the amount of such
payment.

 

9.7. Exclusivity. Notwithstanding anything to the contrary, all remedies
whatsoever sought by Buyer Indemnified Parties, their affiliates, the Company or
anyone acting to their behalf in connection with this Agreement and under any
law, whether in contracts, torts, restitution or otherwise, shall be subject to
the limitations in Section ‎9.2. Indemnification under Section ‎9.2 shall be the
sole and exclusive remedy of the Indemnified Parties, their affiliates, the
Company or anyone acting to their behalf for a breach of the representations,
warranties, covenants and agreements in this Agreement and the Indemnified
Parties shall not be entitled to any further remedies in respect thereof under
Applicable Law or otherwise, all of which Indemnified Parties hereby waives,
provided (i) that Indemnified Party shall be entitled to seek specific
performance and other equitable remedies (ii) nothing set forth in this
Agreement shall limit the rights, remedies and claims of the Indemnified Party
with respect to any fraud or willful misconduct by any Indemnifying Party.
Without derogating from the generality of the forgoing and other than in the
event of fraud or willful misconduct, Buyer, on behalf of itself and Buyer
Indemnified Parties, their affiliates, the Company (to the maximum extent
permitted by law), its directors, officers, employees and/or anyone acting on
their behalf, hereby unconditionally and irrevocably waives any demand and/or
claim of any kind whatsoever they may have against any officers or directors of
Seller Parties and the Company with respect to the period prior to Closing,
regardless of the form of action, whether in contract, tort (including but not
limited to negligence) or otherwise, including claims for breach of duty,
provided that any claims by the Company that are not permitted by law to be
waived, shall be subject to all limitations under this Section ‎9.

 

10. TERMINATION

 

10.1. Grounds for Termination. This Agreement may be terminated at any time
prior to the Closing:

 

10.1.1. by mutual written agreement of Seller Parties and Buyer;

 

10.1.2. by either Seller Party or Buyer if the Closing shall not have been
consummated on or before the later of (i) 60 days following Effective Date and
(ii) 15 days of the date that the Company delivered to the Buyer the 2017
Statements (the “End Date”) (subject however to the automatic extension, if
applicable, as set forth in Section ‎2.3 above, provided, however, that the
right to terminate this Agreement under this Section ‎10.1.2 shall not be
available to any Party whose action or failure to act has been a principal cause
of or resulted in the failure of the consummation of the Closing on or before
such date and such action or failure to act constitutes a material breach of
this Agreement;

 

 39 

 

 

10.1.3. by either Seller Party or Buyer if any Applicable Law irrevocably
prohibits or makes the consummation of the transactions illegal, or if
consummation of the transactions contemplated hereby would violate any
nonappealable final order, decree or judgment of any Governmental Authority
having competent jurisdiction;

 

10.1.4. by Buyer, if there has been a material breach of any of the
representations, warranties or covenants of Seller Parties contained in this
Agreement, which breach has not been cured within fifteen (15) days after the
receipt of written notice of the breach from Buyer;

 

10.1.5. by the Buyer, if a Material Adverse Effect shall have occurred after the
date hereof;

 

10.1.6. by a Seller Party, if there has been a material breach of any of Buyer’s
representations, warranties or covenants contained in this Agreement, and which
material breach has not been cured or cannot be cured within fifteen (15) days
after the receipt of written notice of breach from Seller Party.

 

The party desiring to terminate this Agreement pursuant to Sections ‎10.1.2 -
‎10.1.6 shall give notice of such termination to the other Party, specifying the
provision or provisions hereof pursuant to which such termination is being
effected.

 

10.2. Effect of Termination. If this Agreement is terminated as permitted by
Section ‎10.1, such termination shall be without liability of either Party (or
any stockholder, director, officer, employee, agent, consultant or
representative of such Party) to the other Parties to this Agreement; provided
that if such termination shall result from the (i) failure of either Party to
fulfill a condition to the performance of the obligations of the other Party,
(ii) failure to perform a covenant of this Agreement or (iii) material breach by
either Party of any representation or warranty or agreement contained herein,
such Party shall be fully liable for any and all Losses incurred or suffered by
the other Party as a result of such failure or breach, excluding however any
indirect, special, consequential or punitive Losses, such as loss of profits,
loss of revenue, loss of a business opportunity or loss of goodwill. The
provisions of Sections 1 (Definitions and Interpretations), ‎9 (Indemnification,
except ‎9.1), which shall apply, mutatis mutandis, 10 (Termination) and ‎11
(Miscellaneous) shall survive any termination hereof.

 

10.3. Buyer Termination Fee.

 

10.3.1. Buyer shall pay to Seller and/or Parent, as shall be instructed in
writing by Parent, a termination fee in an amount of US$ 300,000 (the “Buyer
Termination Fee”) if this Agreement is terminated by Buyer or a Seller Party:

 

10.3.1.1. pursuant to Section ‎10.1.6; or

 

10.3.1.2. pursuant to Section ‎10.1.2 and (a) all of the conditions set forth in
Section ‎8.1 have been satisfied, and (b) Buyer shall have failed to consummate
the Closing by the End Date.

 

 40 

 

 

10.3.2. Buyer shall pay to Seller the Buyer Termination Fee by wire transfer of
same-day funds within two (2) Business Days following the date of termination of
this Agreement, in accordance with the terms and conditions of the Escrow
Agreement. Buyer acknowledges and agrees that the agreements contained in this
Section ‎10.3 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Seller Parties would not have
entered into this Agreement; accordingly, if Buyer fails to promptly pay the
Buyer Termination Fee when due pursuant to this Section ‎10.3, and in order to
obtain such payment Seller makes a claim against Buyer that results in an order
against Buyer, then in such case, Buyer shall pay to Seller Parties the Buyer
Termination Fee and all of Seller Parties’ costs and expenses (including
attorneys’ fees and expenses) in connection with such claim, together with
interest on the full amount of the Buyer Termination Fee from the date such
payment was required to be made until the date of payment at the prime lending
rate as published in The Wall Street Journal in effect on the date such payment
was required to be made. Buyer acknowledges that the Buyer Termination Fee is
not a penalty, but rather is liquidated damages in a reasonable amount that will
compensate Seller as sole and exclusive remedy (if collected by Seller, and
other than in the event of fraud or willful misconduct), in the circumstances in
which such fee is due and payable, for the efforts and resources expended, for
the damages that will be suffered by Seller Parties and their respective
businesses as a result of the termination of this Agreement and for the
opportunities forgone by Seller Parties while negotiating this Agreement and in
the expectation of the consummation of the transactions contemplated hereby,
which amount would otherwise be impossible to calculate with precision.

 

10.3.3. In the event that any of the conditions set forth in Section ‎8.1 have
not been satisfied within the applicable timeframes (other than non-fulfillment
due to a material breach of any of Buyer’s representations, warranties or
covenants contained in this Agreement), without derogating from any remedy
entitled to under this Agreement and under applicable law, Seller Parties shall
not be entitled to the Buyer Termination Fee, and the Buyer and Seller Parties
shall then immediately jointly instruct in writing the Escrow Agent to
immediately release the Buyer Termination Fee to the Buyer in accordance with
the provisions of the Escrow Agreement.

 

11. MISCELLANEOUS

 

11.1. Notices. All notices, requests and other communications to any Party
hereunder shall be in writing (including facsimile transmission and electronic
mail (“e-mail”) transmission, so long as a receipt of such e-mail is requested
and received) and shall be given,

 

if to Buyer, to:

 

Coolisys Technologies Inc.
48430 Lakeview Blvd.

Fremont, CA 94538

USA

Attention: Mr. Amos Kohn

Amos Kohn

President & CEO

E-mail: AKohn@coolisys.com

 

with a copy to:

 

Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co., Law Offices

One Azrieli Center

Tel-Aviv 67021, Israel

Facsimile: (972-3) -607-4566

Attn: Sharon Kadosh, Adv.

E-mail: sharonka@gkh-law.com

 

if to Seller Parties, to:

 

Enertec Management Ltd.
60 Tom Lantus Avenue
Netanya Israel
Attention: David Lucatz

Facsimile No.: 09-9548827
E-mail: david@micronet-enertec.com

 

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with a copy to:

 

Naschitz, Brandes & Co., Advocates
5 Tuval Street
Tel Aviv 67897 Israel
Attention: Guy Eyal
Facsimile: 972-3-6235106
E-mail: geyal@nblaw.com

 

or such other address or facsimile number as such Party may hereafter specify
for the purpose by notice to the other Parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. in the place of
receipt and such day is a Business Day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding Business Day in the place of receipt.

 

11.2. Amendments and Waivers.

 

11.2.1. Any provision of this Agreement may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by each Party to this Agreement, or in the case of a waiver, by the
Party against whom the waiver is to be effective.

 

11.2.2. No failure or delay by any Party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

 

11.3. Expenses. Except as otherwise provided herein, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby, including fees and expenses of financial advisors, financial sponsors,
legal counsel and other advisors, shall be paid by the Party incurring such cost
or expense.

 

11.4. Successors and Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of the Parties hereto and their respective
successors and permitted assigns; provided that no Party may assign, delegate or
otherwise transfer any of its rights or obligations under this Agreement without
the consent of each other Parties hereto.

 

11.5. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Israel, without regard to
the conflict of law provisions thereof. The Parties hereby irrevocably and
unconditionally submit to the exclusive jurisdiction of courts in Tel-Aviv in
respect of any matter arising in connection with this Agreement.

 

11.6. Counterparts; Effectiveness; Third Party Beneficiaries. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. Counterparts may be delivered via facsimile, electronic mail
(including pdf) or other transmission method and any counterpart so delivered
shall be deemed to have been duly and validly delivered and be valid and
effective for all purpose. This Agreement shall become effective when each Party
shall have received a counterpart hereof signed by the other Parties. Until and
unless each Party has received a counterpart hereof signed by the other Parties,
this Agreement shall have no effect and no Party shall have any right or
obligation hereunder (whether by virtue of any other oral or written agreement
or other communication). No provision of this Agreement is intended to confer
any rights, benefits, remedies, obligations, or liabilities hereunder upon any
Person other than the Parties hereto and their respective successors and
permitted assigns.

 

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11.7. Entire Agreement. This Agreement and the Schedules and exhibits hereto
constitute the full and entire understanding and agreement between the Parties
with regard to the subject matters hereof and thereof and any other written or
oral agreement relating to the subject matter hereof existing between the
Parties are expressly canceled, including the LOI executed between Parent and
Buyer dated July 11, 2017 (as amended). Previous drafts shall not be used for
interpretation of this Agreement.

 

11.8. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other Governmental
Authority to be invalid, void or unenforceable, hen such provision shall be
excluded from this Agreement and the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any Party. Upon such a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.

 

11.9. Disclosure Schedules. Seller Parties have set forth information on the
Disclosure Schedule in a section thereof that corresponds to the section of this
Agreement to which it relates. A matter set forth in one section of a Schedule
need not be set forth in any other section so long as its relevance to such
other section of the Schedule or section of the Agreement is reasonably apparent
on the face of the information disclosed therein and such matter will be deemed
to have been appropriately disclosed against or qualified for in each such other
section of the Disclosure Schedule, representation and warranty notwithstanding
the presence or absence of any cross-reference made in or to any section of the
Disclosure Schedule, representation or warranty. The Parties acknowledge and
agree that (a) the Schedules to this Agreement may include certain items and
information solely for informational purposes for the convenience of Buyer and
(b) the disclosure by Seller Parties of any matter in the Schedules shall not be
deemed to constitute an acknowledgment by Seller Parties that the matter is
required to be disclosed by the terms of this Agreement or that the matter is
material.

 

11.10. Specific Performance. The Parties agree that irreparable damage would
occur if any provision of this Agreement were not performed in accordance with
the terms hereof or otherwise are breached. Therefore, notwithstanding anything
to the contrary set forth in this Agreement, the Parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement or to enforce
specifically the performance of the terms and provisions hereof, in addition to
any other remedy to which they are entitled at law or in equity, and each Party
hereby agrees to waive the defense in any such suit that the other Parties to
this Agreement have an adequate remedy at law and to interpose no opposition,
legal or otherwise, as to the propriety of injunction or specific performance as
a remedy, and hereby agrees to waive any requirement to post any bond in
connection with obtaining such relief.

 

11.11. Mutual Drafting. The Parties have participated jointly in the negotiation
and drafting of this Agreement and have been (or had and voluntarily waived the
opportunity to be) represented by their own legal counsel in connection with the
transactions contemplated by this Agreement, with the opportunity to seek advice
as to their legal rights from such counsel. In the event any ambiguity or
question of intent or interpretation arises, this Agreement is to be construed
as jointly drafted by the parties hereto and no presumption or burden of proof
is to arise favoring or disfavoring any party by virtue of the authorship of any
provision of this Agreement or by reason of the extent to which any such
provision is inconsistent with any prior draft hereof.

 

11.12. Wrong Pocket.

 

11.12.1. In the event that receivables due or to be due to the Company are
received by the Seller or any of its Affiliates after the Closing Date, it shall
forward such receivables to the Company. The Seller and Buyer shall agree upon a
method reconciliation of claims on a periodic basis.

 

11.12.2. In the event that receivables due or to be due to the Seller or any of
its Affiliates are received by the Company or any of its Affiliates after the
Closing Date, it shall forward such receivables to the Seller. The Seller and
Buyer shall agree upon a method reconciliation of claims on a periodic basis.

 

[Remainder of Page Left Intentionally Blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

  COMPANY:       Enertec Systems 2001 Ltd.         By: /s/ David Lucatz   Name:
David Lucatz   Title: Chairman         PARENT:       Micronet Enertec
Technologies Inc.         By: /s/ David Lucatz   Name: David Lucatz   Title:
Chairman and Chief Executive Officer         SELLER       Enertec Management
Ltd.         By: /s/ David Lucatz   Name: David Lucatz   Title: Chief Executive
Officer and Director         BUYER:       Coolisys Technologies, Inc.        
By: /s/ Amos Kohn   Name: Amos Kohn   Title: President and Chief Executive
Officer

 

[Signature Page- SPA- Enertec- Coolisys]

 

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