SHARE
PURCHASE AGREEMENT


 


THIS
SHARE PURCHASE AGREEMENT (this “Agreement”), is entered into effective as of January 28, 2016 by and among
(i) DSIT SOLUTIONS LTD. (the “Company”), (ii) RAFAEL ADVANCED DEFENSE SYSTEMS LTD. (the
“Purchaser”), (iii) each of the Persons identified on Exhibit A, the “Sellers”),
and (iv) Michael Barth, as the Shareholders Representative.


 


RECITALS


 


WHEREAS,
the Sellers, the Signing Sellers and the Non-Signing Sellers, as defined below own of record and beneficially 100% of the issued
and outstanding share capital of the Company on a Fully Diluted Basis, as of the date hereof and as of Closing;


 


WHEREAS,
each of the Signing Sellers listed in Exhibit A-1 shall execute prior to the Closing an Exercise, Sale and Waiver Letter
in the form attached hereto as Exhibit A-2 (the “Signing Sellers Exercise, Sale and Waiver Letter”) under which
such Signing Seller shall exercise all of its Options prior to the Closing and shall sell certain of the Shares received pursuant
to such exercise to Purchaser;


 


WHEREAS,
each of the Non-Signing Sellers listed in Exhibit A-3 shall execute prior to the Closing an Exercise, Sale and Waiver Letter
in the form attached hereto as Exhibit A-4 (the “Non-Signing Sellers Exercise, Sale and Waiver Letter”) under
which each of such Non-Signing Seller shall exercise all of its Options prior to the Closing and shall sell all of the Shares
received pursuant to such exercise to Purchaser;


 


WHEREAS,
the Purchaser desires to acquire 50% of the share capital of the Company on a Fully Diluted Basis, free and clear of any Liens,
and the Sellers, the Signing Sellers and the Non-Signing Sellers desire to sell to the Purchaser in the aggregate 50% of the shares
of the Company on a Fully Diluted Basis, on the terms and conditions set forth herein; and


 


NOW,
THEREFORE, in consideration of the mutual representations, warranties, promises, covenants and agreements contained herein and
for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, hereby agree as follows:


 


Article
I


Definitions


 


Section
1.01Certain Definitions.


 


As
used in this Agreement, the following terms have the following meanings:


 


“Accounting
Principles” means generally accepted accounting principles in the United States (“US GAAP”), consistently
applied throughout the respective periods covered.


 


“Acquisition
Proposal” means any oral or written agreement, offer, proposal or bona fide indication of interest (other than this
Agreement or any other offer, proposal or indication of interest by the Purchaser), or any public announcement of intention to
enter into any such agreement or of (or intention to make) any offer, proposal or bona fide indication of interest, with respect
to an Acquisition Transaction.


 




    	 	 	 



    	 	 	 



    



 


“Acquisition
Transaction” means, whether in any single transaction or series of transactions: (a) any transaction or series of transactions
involving the sale, lease, license, pledge, exchange, transfer or other disposition of all or any portion of the Company’s
business or assets (or any material asset) (other than in the ordinary course consistent with past practice); (b) the issuance,
disposition or acquisition of (i) any share capital or other equity security of the Company, (ii) any option, call, warrant or
right (whether or not immediately exercisable) to acquire any share capital, unit or other equity security of the Company, or
(iii) any security, instrument or obligation that is or may become convertible into or exchangeable for any share capital or other
equity security of the Company; (c) any merger, consolidation, business combination, plan of arrangement, joint venture, reorganization,
recapitalization, tender offer, exchange or similar transaction involving the Company, its equity or assets; or (d) any liquidation,
dissolution or winding up of the Company.


 


“Affiliate”
means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries controls,
is controlled by, or is under common control with such Person. For purposes of this definition, “control” (including
the terms “controlled by” and “under common control with”), when used with respect to any specified Person,
means the possession, directly or indirectly, of the power to direct or cause the direction of such Person or the management of
such Person, whether through ownership of voting securities, by contract or otherwise. With respect to any Persons jointly holding,
each holder and its respective Affiliates. In case of any obligation of the Purchaser, such term shall only mean any other Person
controlled by the Purchaser.


 


“Antitrust
Laws” shall mean any applicable local or foreign competition, antitrust or investment or trade regulatory Applicable
Laws, including the Israeli Restrictive Trade Practices Law, 5748-1988 and the regulations promulgated thereunder.


 


“Applicable
Law” means, with respect to any Person, any law, including any federal, state, local, municipal, or other law (including
common law), statutes, regulations, regulatory guidance, directives, constitution, treaty, convention, ordinance, code, rule,
regulation, Order 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.


 


“Business
Day” means a day, other than Friday and Saturday or other day on which commercial banks in Tel Aviv, Israel are authorized
or required by Applicable Law to close.


 


“Change
of Control Payments” means the aggregate amount of all change of control, bonus, termination, severance or other similar
payments that are payable by the Company to any Person as a result of or in connection with the transactions contemplated by this
Agreement (alone or in combination with any other event), together with any employer-paid portion of any employment and payroll
taxes related thereto.


 


“Company
Debt” means at any specified time, any of the following indebtedness of the Company (whether or not contingent and including,
without limitation, any and all principal, accrued and unpaid interest, prepayment premiums or penalties, redemption costs and
fees, related expenses, commitment and other fees, sale or liquidity participation amounts, reimbursements, indemnities and other
amounts which would be payable in connection therewith): (a) any obligations for borrowed money or in respect of loans or advances
(whether or not evidenced by bonds, debentures, notes, or other similar instruments or debt securities); (b) any obligations as
lessee under any lease or similar arrangement required to be recorded as a capital lease in accordance with Accounting Principles;
(c) all liabilities under or in connection with letters of credit or bankers’ acceptances, performance bonds, sureties or
similar obligations that have been drawn down, in each case, to the extent of such draw; (d) any obligations to pay the deferred
purchase price of property, goods or services (including any “earn-out” or similar payments); (e) all liabilities
arising from cash/book overdrafts; (f) all liabilities under conditional sale or other title retention agreements; (g) all liabilities
arising out of interest rate, financial derivatives and currency swap arrangements and any other arrangements designed to provide
protection against fluctuations in interest or currency rates; (h) any liability or obligation of others guaranteed by, or secured
by any Lien on any assets or properties of, the Company; and (i) any long term liability required to be identified as such pursuant
to Accounting Principles.


 




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“Company
Disclosure Schedule” means the disclosure schedule dated the date of this Agreement that has been delivered by the Company
and the Sellers to the Purchaser pursuant to Article III and Article IV.


 


“Company
Intellectual Property” means any Intellectual Property that is owned by or licensed to the Company, or otherwise used
or held for use in connection with the operation of the business of the Company, including Company-Owned Intellectual Property.


 


“Company-Owned
Intellectual Property” means any Intellectual Property that is purported to be owned by or exclusively licensed to the
Company.


 


“Company
Shares” means the Ordinary Shares and the Preferred Shares.


 


“Company
Source Code” means, collectively, any human readable Software source code, or any material portion or aspect of the
Software source code, or any material proprietary information or algorithm contained, embedded or implemented in, in any manner,
any Software source code, in each case for any Company Product.


 


“Confidential
Information” means any and all non-public or confidential or proprietary information of the Company, including Trade
Secrets, techniques, know-how, processes, equipment, algorithms, Software, design details and specifications, financial information,
customer lists, business forecasts, sales and marketing plans, all notes, analyses, reports, compilations, studies, interpretations,
summaries or other documents, and any and all non-public or confidential or proprietary information disclosed to the Company or
any of its Representative by any other Person on a confidential basis.


 


“Consent”
means any consent, approval, license, permission, requirement, exemption, Order, waiver, allowance, novation, authorization, declaration,
clearances, filing, registration or notification.


 


“Contract”
means, with respect to a Person, any contract, agreement, understanding, arrangement, undertaking, obligation, promise and commitment,
indenture, note or bond (whether written or oral and whether express or implied) (i) to which such Person is a party, (ii) under
which such Person has any rights, (iii) under which such Person has any Liability, or (iv) by which such Person, or any of the
assets or properties owned or used by such Person, is bound, including all license agreements, manufacturing agreements, supply
agreements, purchase orders, sales orders, distributor agreements, sales representation agreements, warranty agreements, indemnity
agreements, maintenance and service agreements, employment and consulting agreements, guarantees, credit agreements, notes, mortgages,
security agreements, financing leases, leases, comfort letters, derivative agreements, confidentiality agreements, joint venture
agreements, partnership agreements, binding open bids and RFIs, RFPs and the like, powers of attorney, binding memoranda of understanding
and binding letters of intent, including, in each case, all amendments, modifications and supplements thereto and Consents thereunder.


 


“Copyrights”
means as set forth in the definition “Intellectual Property”.


 


“Documents”
means all files, documents, instruments, correspondence, papers, books, reports, records, tapes, microfilms, photographs, letters,
mails, e-mails, budgets, forecasts, ledgers, journals, customer lists, customer files, supplier lists, regulatory filings, operating
data and plans, technical documentation (design specifications, functional requirements, operating instructions, logic manuals,
flow charts, etc), user documentation (installation guides, user manuals, training materials, release notes, working papers, etc.),
marketing and advertising documentation (sales brochures, flyers, pamphlets, promotional materials, web pages, etc.), and other
similar materials, in each case in whatever form, including electronic databases, printed and other electronic media.


 




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“Domain
Names” means all Internet domain names, general-use e-mail addresses, Internet electronic addresses, uniform resource
locators (URL) and alphanumeric designations associated therewith and all registrations for any of the foregoing, worldwide.


 


“Earnout
Payment(s)” means each of the 2016, 2017 and 2018 Earnout Payment(s) (as such terms are defined in the Earnout Schedule
attached hereto as Exhibit B), as the case may be.


 


“Environmental
Laws” means any Applicable Law or any agreement with any Governmental Authority or other Person, relating to human health
and safety, the environment or to Hazardous Substances, including, but not limited to, to the extent applicable, the Israeli Packaging
Law, 5771-2011, the European Union Directive on Waste Electrical and Electronic Equipment in Europe and each state’s Electronic
Waste Recycling Act in the United States and other Applicable Laws relating to the recycling of electronic waste.


 


“Environmental
Permits” means all permits, licenses, franchises, certificates, approvals and other similar authorizations of Governmental
Authorities relating to or required by Environmental Laws and affecting, or relating in any way to, the business of the Company
and/or the Company Subsidiaries as currently conducted or as proposed to be conducted.


 


“Escrow
Agent” means ESOP Management and Trust Services Ltd. or such other entity selected by the Purchaser and the Shareholders
Representative to act as escrow agent under the Escrow Agreement.


 


“Escrow
Agreement” means the escrow agreement by and among the Purchaser, the Shareholders Representative and the Escrow Agent
in the form of Exhibit C attached hereto.


 


“Fully
Diluted Basis” means the issued and outstanding share capital of the Company assuming and taking into account the exercise
or conversion of all existing or promised securities, convertible debts, warrants, options and anti-dilution rights.


 


“Governmental
Authority” means any: (a) nation, principality, state, commonwealth, province, territory, county, municipality, district
or other jurisdiction of any nature, (b) federal, state, local, municipal, foreign or other government, (c) governmental, quasi
governmental or regulatory body of any nature, including any governmental division, subdivision, department, agency, bureau, branch,
office, commission, council, board, instrumentality, organization, unit, or body, or (d) court, arbitrator, public tribunal or
other body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power of any nature; or (e) any official of any of the foregoing.


 


“Governmental
Authorization” means any: (a) permit, license, certificate, franchise, permission, clearance, registration, qualification
or authorization issued, granted, given or otherwise made available by or under the authority of any Governmental Authority or
pursuant to any Applicable Law; or (b) right under any Contract with any Governmental Authority.


 


“Grant”
means any grant, incentive, subsidy, award, participation, exemption, status, cost sharing arrangement, reimbursement arrangement
or other benefit, relief or privilege provided or made available by or on behalf of or under the authority or funding of any Governmental
Authority or any other Person or entity.


 




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“Hazardous
Substances” means any pollutant, contaminant, waste or chemical or any toxic, radioactive, ignitable, corrosive, reactive
or otherwise hazardous substance, waste or material, or any substance, waste or material having any constituent elements displaying
any of the foregoing characteristics, including petroleum, its derivatives, by-products and other hydrocarbons, and any substance,
waste or material regulated under any Applicable Law relating to human health and safety, the environment or any of the foregoing
substances.


 


“Intellectual
Property” means any and all worldwide industrial and intellectual property rights and all rights associated therewith,
including (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), invention disclosures,
improvements, and all patents (including utility and design patents, industrial designs and utility models), patent applications,
and all other rights of inventorship, worldwide, together with all reissuances, renewals, extensions, provisionals, continuations,
continuations-in-part, divisions, revisions, supplementary protection certificates, extensions and re-examinations thereof (collectively,
“Patents”); (b) trademarks, common law trademarks, service marks, trade names, service names, brand names,
trade dress rights, logos, Domain Names, other indicia of commercial source or origin (whether registered, common law, statutory
or otherwise), together with the goodwill associated with any of the foregoing throughout the world, and all applications, registrations
and renewals thereof anywhere in the world (collectively, “Trademarks”); (c) copyrights copyrightable works,
rights in databases, data collections, registrations and applications for any of the foregoing, including in and to works of authorship,
moral rights, mask works, mask work registrations and applications therefor, and any equivalent or similar rights in semiconductor
masks, layouts, architectures or topology, and all other rights corresponding thereto throughout the world, whether published
or unpublished, including rights to prepare, reproduce, perform, display and distribute copyrighted works and copies, compilations,
collective works, and derivative works thereof (collectively, “Copyrights”); (d) all trade secrets and corresponding
rights in confidential information and other non-public information (whether or not patentable), including research and development
information, inventions, invention disclosures, unpatented blueprints, know-how, formulas, compositions, inventor’s notes,
discoveries and improvements, manufacturing and production processes and techniques, testing information, proposals and technical
data, business and marketing plans, market surveys, market know-how and customer lists and information, engineering, production
and other designs, plans, drawings, engineering notebooks, industrial models, software and specifications (collectively, “Trade
Secrets”); (e) all (i) software, computer programs, computer-based databases and compilations, in any form, including
any and all software implementations of algorithms, models and methodologies, Internet web sites, web content and links, operating
systems and specifications, data, databases, database management code, utilities, graphical user interfaces, menus, images, icons,
forms, methods of processing, software engines, platforms, development tools, library functions, compilers, and data formats,
whether in source code or object code, (ii) descriptions, flow-charts and other work product used to design, plan, organize and
develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons
and icons, (iii) all versions, updates, corrections, enhancements and modifications related to any of the foregoing, and (iv)
all Documents (including, user manuals, training documentation, developer notes, comments and annotations) related to any of the
foregoing (collectively, “Software”); (f) all rights to sue for and remedies against past, present and future
infringements of any or all of the foregoing and rights of priority and protection of interests therein under the Laws of any
jurisdiction worldwide; (g) all copies and tangible embodiments of any or all of the foregoing (in whatever form or medium, including
electronic media); and (h) all other proprietary, intellectual property and other rights relating to any or all of the foregoing.


 


“Internet
Resources” means all Domain Names, electronic addresses, uniform resource locators (URL) and other online resources.


 


“Israeli
Tax Ordinance” means the Israeli Tax Ordinance (New Version), and any regulations promulgated thereunder, as may be
amended from time to time.


 




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“Key
Persons” means the Persons identified on Exhibit D.


 


“Knowledge”
(and expressions of similar import) means (i) with respect to the Company, the knowledge of each of the following: any of the
Company’s directors, officers and Key Persons; and (ii) with respect to a Seller, the knowledge of such Seller (including
such Seller’s directors and officers and any individual ultimately controlling such Seller, if applicable). A Person will
be deemed to have “Knowledge” of a particular fact or matter if such Person (or any of its officers or directors)
is actually aware of such fact or matter or if such Person should have become aware of such fact or matter after making reasonable
inquiry or otherwise in the course of performing such Person’s duties (including, without limitation, to the extent required,
inquiry of such Persons who may be reasonably expected to have knowledge of the fact or matter asserted).


 


“Liability”
means any and all claims, debts, liabilities, Tax, penalty, fine, judgment, losses, loss of benefit or relief, cost or expense,
obligations and commitments of whatever nature, fixed, absolute or contingent, matured or un-matured, accrued or unaccrued, liquidated
or unliquidated or due or to become due, and whenever or however arising (including those arising out of any Contract or tort,
whether based on negligence, strict liability or otherwise) regardless of whether the same would be required by Accounting Principles
to be reflected as a liability in financial statements or disclosed in the notes thereto.


 


“Lien”
means, with respect to any security, property or asset, as the case may be, any mortgage, lien, pledge, charge, security interest,
encumbrance, hypothecation, options, easement, trust, equitable interest, servitude, proxies, right of first refusal, defect in
title, impediment of title, impairment of title, imperfection of title, preemptive right or restrictions or rights of third parties
of any nature (including any spousal community property rights, any restriction on the voting, transfer, receipt of any income
derived from, the possession of any security, or the exercise or transfer of any other attribute of ownership of a security) or
other adverse claim of any kind in respect of such property or asset, existing or known to be pending restriction on the use of
any asset or the possession, exercise or transfer of any attribute of ownership of any asset, or any claim with respect to any
of the foregoing. For purposes of this Agreement, a Person shall be deemed to own subject to a Lien any property or asset that
it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or
other title retention agreement relating to such property or asset.


 


“Losses”
means any and all losses, Liabilities, claims, damages, deficiencies, diminutions in value, fines, payments, Taxes, costs and
expenses, whether or not arising from or in connection with any third-party claims (including, without limitation, interest, penalties,
attorneys’, accountants’, consultants’ and experts’ costs, fees and expenses and all amounts paid in investigation,
preparation for, defense or settlement of any Proceedings) or any other claim, default, demands, assessments, judgments, settlements
and compromises (including in asserting, preserving or enforcing an indemnified party’s rights under this Agreement or any
Transaction Document), plus interest from the date of incurrence to the extent applicable, and in all cases, with respect to Losses
of the Company, taking into account, when determining the Losses of the Purchaser, the ownership percentage of the Purchaser in
the Company.


 


“Material
Adverse Effect” means any event, change, effect, condition or circumstance that, when taken individually or together
with any other adverse events, changes or effects, is or is reasonably likely (a) to be materially adverse (i) to the business,
assets, liabilities, affairs, operations, results of operations, cash flows or condition (financial or otherwise) of the Company
or (ii) to the unrestricted right of the Purchaser to use, exploit or derive benefits from the assets, properties and business
of the Company; or (b) to prevent or materially delay consummation of the transactions contemplated by this Agreement or performance
by the Company or any Seller of any material obligations under this Agreement or the Transaction Documents; other than any change,
effect, event, occurrence, condition, development or state of facts arising from or relating to changes or conditions generally
affecting the industries or markets related to the business of the Company to the extent that such changes or conditions do not
have a disproportionate adverse effect on the Company as a whole relative to other similarly situated companies.


 




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“Open
Source Materials” means any means any Software or other material that (i) contains, or is derived in any manner (in
whole or in part) from, any software that is or is required to be distributed as freeware, free software, open source software,
shareware, or similar licensing or distributing models; or (ii) is subject to any agreement with terms or conditions that impose
any requirement that any software using, linked with, incorporating, distributed with, based on, derived from or accessing, the
software: (A) be disclosed, made available or distributed in source code or object code form; (B) be licensed for the purpose
of making derivative works and/or redistributable; (C) be licensed under terms that allow or permit any third party to decompile,
recompile, update, modify, reverse engineering, reverse assembly or disassembly all or any part of the software or merge the software
into any other software; or (D) be redistributable at no charge. Open Source Materials includes, but is not limited to, any license
which complies with the Open Source Initiative Corporation’s (OSI) open source definition or which is, or is equivalent
to, a license approved by OSI, or software licensed or distributed under any of the following licenses or distribution models,
or licenses or distribution models similar to any of the following: GNU’s General Public License (GPL) or Lesser/Library
GPL (LGPL); the Artistic License (e.g., PERL); the Mozilla Public License(s); the Netscape Public License; the Berkeley Software
Design (BSD) license including Free BSD or BSD-style license; the Sun Community Source License
(SCSL) and the Sun Industry Standards License (SISL); an Open Source Foundation License (e.g., CDE and Motif UNIX user interfaces);
the Apache Server license; and any licenses listed at http://www.opensource.org/licenses. 


 


“Options”
means (i) securities, instruments or obligations that are or may become convertible into or exchangeable for Company Shares or
other securities of the Company; (ii) subscriptions, options, calls, convertible notes, warrants or rights (whether or not currently
exercisable) to acquire any Company Shares or other securities of the Company; and (iii) Contracts under which the Company is
or may become obligated to sell or otherwise issue any Company Shares or any other securities.


 


“Order”
means any temporary, preliminary or permanent order, injunction, judgment, decree, edict, pronouncement, determination, reported
decision, published opinion, verdict, sentence, stipulation, subpoena, ruling, writ, assessment or award that is or has been issued,
made, entered, rendered or otherwise put into effect by or under the authority of any court, administrative agency or other Governmental
Authority or any arbitrator or arbitration panel or any Contract with any Governmental Authority that is or has been entered into
in connection with any Proceeding.


 


“Ordinary
Shares” means the Ordinary Shares, nominal value NIS 0.01 each, of the Company.


 


“Patents”
means as set forth in the definition “Intellectual Property”.


 


“Paying
Agent” means ESOP Management and Trust Services Ltd. or such other entity selected by the Purchaser to act as a paying
agent.


 


“Payment
Spreadsheet” means the payment spreadsheet to be delivered to the Purchaser pursuant to ‎Section 6.08.


 


“Person”
means any individual, corporation, partnership, limited liability company, firm, joint venture, association, trust, estate, unincorporated
organization, Governmental Authority or other entity.


 


“Preferred
Shares” means the Preferred A Shares, nominal value NIS 0.01 each, of the Company.


 




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“Pro
Rata Portion” means, with respect to each Seller, the percentage appearing opposite the name of such Seller in Exhibit
A in the column titled Pro Rata Portion.


 


“Proceeding”
means any action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate
proceeding), hearing, inquiry, audit, examination or investigation commenced, brought, conducted or heard by or before, or otherwise
involving, any court or other Governmental Authority or any arbitrator or arbitration panel.


 


“Registered
Intellectual Property” means any Intellectual Property that is the subject of an application, certificate, filing, registration,
renewal or other document issued, filed with, or recorded by any Governmental Authority, including Patents, Trademarks, Copyrights
and Domain Names.


 


“Representative(s)”
means, with respect to any Person, such Person’s Affiliates, directors, officers, employees, agents, consultants, advisors
and other representatives, including legal counsel, accountants and financial advisors.


 


“Interim
Loan Amount” means an amount of up to USD 350,000 plus interest at the rate set forth in the Amended and Restated Loan
Agreement owed by Acorn to the Company, in accordance with the terms of the Amended and Restated Loan Agreement (as defined below).


 


“Sellers
Disclosure Schedule” means the disclosure schedule dated the date of this Agreement that has been delivered by the Sellers
to the Purchaser pursuant to Article IV.


 


“Shareholders
Representative” means the Person indicated above as Shareholders Representative on the date hereof, or any representative
appointed as a successor or in replacement thereof, from time to time, in accordance with this Agreement.


 


“Software”
means as set forth in the definition “Intellectual Property”.


 


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


 


“Tax”
or “Taxes” means any and all taxes, charges, duties, fees, levies, imposts or other assessments, reassessments,
or mandatory payments of any kind whatsoever, whether direct or indirect, imposed by or payable to or accrued to the benefit of
any federal, state, municipal, local or foreign tax authority and/or Governmental Authority, including, without limitation, gross
income, net income, gross receipts, license, payroll, employment, workers’ compensation, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, property, personal property, sales, use, transfer, registration, value added, business, ad
valorem, duties, turnover, goods, production, occupancy, utility, services, municipal, real property, abandoned property under
escheatment laws, capital gain, transfer and gain, alternative or add-on minimum, estimated, or other taxes or mandatory payments
of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not, including any liability
for the foregoing by reason of membership in affiliated, consolidated, combined, unitary or similar Tax group by Contract, indemnity
or otherwise and any obligation to indemnify or otherwise assume or succeed to the Liability of any other Person with respect
to any of the forgoing.


 


“Tax
Return” means any return, statement, declaration, notice, certificate, report or other document that is or has been
filed with or submitted to, or is or was required to be filed with or submitted to any Governmental Authority in connection with
the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation or enforcement
of or compliance with any Law related to any Tax (including any attachments thereto, and any amendment thereof) including, but
not limited to, any information return, claim for refund, amended return or declaration of estimated Tax, and including, where
permitted or required, combined, consolidated or unitary returns for any group of entities that includes Company, the Seller,
or any of their Affiliates.


 




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“Taxing
Authority” means any Israeli or foreign tax authority and any other Governmental Authority responsible for the imposition,
assessment, collection or administration of any Tax.


 


“Third
Party” means (whether or not a capitalized term) any Person, including the parties hereto, other than the referenced
Person or Persons.


 


“Trademarks”
means as set forth in the definition “Intellectual Property”.


 


“Trade
Secrets” means as set forth in the definition “Intellectual Property”.


 


“Transaction
Documents” means this Agreement, its exhibits and schedules and any and all other written Contracts, certificates and
documents attached, ancillary or to be delivered pursuant hereto or thereto.


 


“Transaction
Expenses” means any and all (whether or not disclosed) unpaid costs, fees and expenses (including value added tax thereon)
of outside professionals incurred or payable by the Company (whether on its behalf or for any Seller) arising from or in connection
with the negotiation, execution and consummation of the Transaction Documents and transactions contemplated thereby, including
all legal fees, tax, consulting, accounting, audit, investment banking, broker, finder, financial advisor or other similar fees,
including all applicable VAT.


 


“Transactions”
means the purchase of the Company Shares by the Purchaser and all the other transactions contemplated by this Agreement and the
other Transaction Documents.


 


“Valid
Tax Certificate” means a valid certificate, ruling or any other written instructions regarding Tax withholding, issued
by the Israeli Taxing Authority in customary form and substance reasonably satisfactory to the Purchaser (which includes the Purchaser’s
opportunity to review, comment and approve the application to the Israeli Taxing Authority) that is applicable to the payments
to be made to any Person pursuant to this Agreement stating that no withholding, or reduced withholding, of Israeli Tax is required
with respect to such payment or providing any other instructions regarding Tax withholding.


 


Section
1.02Reserved.


 


Section
1.03Definitional and Interpretative Provisions.


 


(a)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.


 


(b)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.


 


(c)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.


 




    	 	9	 



    	 	 	 



    


 


(d)Any
singular term in this Agreement shall be deemed to include the plural, and any plural term the singular.


 


(e)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.


 


(f)All
references to time shall refer to Israel time. The word “extent” in the phrase “to the extent” means the
degree to which a subject or other thing extends, and such phrase shall not mean simply “if”.


 


(g)The
use of the word “or” shall not, necessarily, be exclusive.


 


(h)Any
rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in the
construction or interpretation of this Agreement.


 


(i)Any
agreement or instrument defined or referred to herein, or in any agreement or instrument that is referred to herein, means such
agreement or instrument as from time to time amended, modified or supplemented. Other terms may be defined elsewhere in the text
of this Agreement and shall have the meaning indicated throughout this Agreement.


 


(j)The
term “foreign” when used with respect to Applicable Law or a Governmental Authority shall refer to all jurisdictions
other than Israel.


 


(k)The
term “Dollar”, “$”, or US$ shall refer to the currency of the United States of America.


 


(l)Unless
otherwise specified, time periods within or following which any payment is to be made or act is to be done shall be calculated
by excluding the day on which the period commences and including the day on which the period ends and by extending the period
to the first Business Day following if the last day of the period is not a Business Day.


 


Article
II


Purchase
Of Company Shares


 


Section
2.01Purchase and Sale of the Company Shares.


 


Subject
to the terms and conditions set forth in this Agreement, and in reliance on the representations, warranties and covenants of the
Company and the Sellers, at the Closing (i) the Non-Signing Sellers (acting through an instruction to ESOP Management and Trust
Services Ltd. (“ESOP”), if applicable), shall sell and transfer to the Purchaser their respective Shares (in
the aggregate, 73,142 of the Company Shares) pursuant to the terms of their respective Non-Signing Sellers Exercise, Sale and
Waiver Letter (the total of such Shares of the Non-Signing Shares as is set forth on Exhibit A-3, hereinafter the “Non-Signing
Sellers’ Shares”), (ii) the Signing Sellers (acting through an instruction to ESOP, if applicable), shall sell
and transfer to the Purchaser a certain portion of their respective Shares (in the aggregate, 1,021,242 of the Company Shares)
pursuant to the terms of their respective Signing Sellers Exercise, Sale and Waiver Letter (the total of such Shares of the Signing
Shares as is set forth on Exhibit A-1, hereinafter the “Signing Sellers’ Shares”) and (iii) the Sellers,
the Non-Signing Sellers and the Signing Sellers shall sell, assign, transfer and deliver to the Purchaser, in the aggregate, 1,094,384
of the Company Shares (each Seller, Non-Signing Seller and Signing Seller shall sell, assign, transfer and deliver to the Purchaser
such number of Company Shares appearing opposite the name of such Seller, Signing Seller and Non-Signing Seller in Exhibit
A, Exhibit A-1 and Exhibit A-3, respectively, in the column titled “Number of Purchased Shares” – such aggregate
Shares, the “Purchased Shares”), representing 50% of the share capital of the Company on a Fully Diluted Basis,
and (ii) the Purchaser shall purchase, acquire and accept from the Sellers, the Non-Signing Sellers and the Signing Sellers all
of the Purchased Shares, in each case, free and clear of any and all Liens. At the Closing, the Purchaser shall purchase all (and
not less than all) of the Purchased Shares. 


 




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Section
2.02Consideration. 


 


(a)General.
In consideration of the sale, assignment, transfer and delivery of the Purchased Shares to the Purchaser at the Closing under
the terms and conditions of this Agreement, (i) the Purchaser shall transfer the Purchase Price, subject to withholding, deductions
and the other terms and conditions of this Agreement, and (ii) each Seller, Signing Seller and Non-Signing Seller shall be eligible
to receive, subject to the terms of this Agreement and the procedure set forth in this ‎Section 2.02, such Seller’s,
Signing Seller’s and Non-Signing Seller’s respective payments pursuant to ‎Section 2.02‎(d), subject to deductions
as provided herein. 


 


(b)Appointment
of Paying Agent. No later than the Closing, the Purchaser shall appoint the Paying Agent to act as its paying agent and withholding
agent (as instructed by Purchaser) with respect to the payment to the Sellers, the Signing Sellers and the Non-Signing Sellers
due hereunder. Other than with respect to the withholding as may be required by Applicable Law, the Paying Agent shall act as
the agent and upon the instructions of the Sellers Representative and the Purchaser, acting jointly.


 


(c)Payment
Mechanism. The Purchaser shall deposit with the Paying Agent (i) each payment to Acorn in US$, and (ii) payments to the other
Sellers, the Signing Sellers and the Non-Signing Sellers in NIS (in accordance with the
representative rate of exchange published by the Bank of Israel immediately prior to the payment of the Purchaser to the Paying
Agent), if and when payable by the Purchaser in accordance with the terms of this Agreement. The Paying Agent shall disburse from
each such payment to the Sellers, to the Signing Sellers and to the Non-Signing Sellers in accordance with the Payment Spreadsheet,
subject to ‎Section 2.03, following receipt by the Paying Agent of an executed copy of a letter of transmittal in the
form attached hereto as Schedule 2.02 (the “Letter of Transmittal”), accompanied by such Seller’s
certificate(s) representing such Seller’s Company Shares (or affidavit of lost share certificate(s) in lieu). The allocation
of the Purchase Price (and the Earnout Payments, if applicable) among the Sellers and the Non-Signing Sellers, as set forth on
the Payment Spreadsheet, Exhibit A-1 and Exhibit A-3 is solely the responsibility of the Sellers. The Purchaser
and the Paying Agent are permitted and authorized to rely at all times on the allocation set forth in Exhibit A-1 and Exhibit
A-3and the Payment Spreadsheet, and the wire instructions set forth in the Letter of Transmittal, and shall have no responsibility
or liability with respect to such allocation or instructions. 


 


(d)The
Purchase Price. The purchase price shall consist of US$6,550,000 plus the Earnout Payments, subject to deductions as provided
herein (collectively, the “Purchase Price”) and shall be paid, subject to withholdings and deductions, as follows:


 


(1)A
payment in the amount of (A) US$6,550,000 (divided to NIS and USD as stipulated in Section 2.02(c)), less the Escrow Amount and
(ii) a cash payment equals to the Interim Loan Amount (the “Interim Loan Amount Purchase Price”, and the
result being the “Closing Payment”), shall be delivered by the Purchaser to the Paying Agent on the Closing
Date, and (B) the Interim Loan Amount Purchase Price shall be delivered by the Purchaser to the Paying Agent, only following a
written confirmation from the Company indicating that the Interim Loan Amount was paid to the Company in full (the “Interim
Loan Amount Confirmation Date”). In the event that such confirmation was not presented within three (3) months of the
Closing, such amount shall be deducted from Acorn’s consideration for its Purchased Shares.


 




    	 	11	 



    	 	 	 



    


 


(2)The
2016 Earnout Payment, in an aggregate amount not exceeding US$333,333, to the extent payable in accordance with the Earnout Schedule
(the “Earnout Schedule”);


 


(3)The
2017 Earnout Payment, in an aggregate amount not exceeding US$333,333, to the extent payable in accordance with the Earnout Schedule;
and


 


(4)The
2018 Earnout Payment, in an aggregate amount not exceeding US$333,333, to the extent payable in accordance with the Earnout Schedule.


 


(e)Escrow
Fund. At the Closing, the Purchaser will deliver to the Escrow Agent a cash amount of US$655,000 (such amount, as supplement
in accordance with the following sentence, the “Escrow Amount”) to be held by the Escrow Agent pursuant to
the Escrow Agreement (together with all income and interest earned or accrued thereon, the “Escrow Fund”) until
the expiration of 18 months from the Closing (the “Escrow Period”), subject to extensions under ‎Section
10.03(b). The Escrow Fund will be available to secure the indemnification and other payment obligations of the Sellers pursuant
hereto, and shall be held and distributed in accordance with the terms of this Agreement and the Escrow Agreement. The Escrow
Amount shall be contributed by each Seller based on its Pro Rata Portion.


 


(f)For
the avoidance of doubt, the Purchase Price and the payments provided under this Agreement are for the entire Purchased Shares,
and for the benefit of all the Sellers, the Signing Sellers and the non-Signing Sellers, and any payment required to be made by
the Purchaser pursuant to the Signing Sellers Exercise, Sale and Waiver Letter and the Non-Signing Sellers Exercise, Sale and
Waiver Letter (or under any other agreement, for purchasing the Purchased Shares from the Signing Sellers and the Non-Signing
Sellers) shall be part of the Purchase Price and shall not require any additional payment whatsoever by the Purchaser.


 


Section
2.03Withholding Tax.


 


(a)Each
of the Purchaser, the Paying Agent and the Escrow Agent and any other person acting on their behalf shall be entitled to deduct
and withhold (and timely remit to the applicable Taxing Authority) from any consideration payable or otherwise deliverable to
any Person pursuant to this Agreement (including any portion of the Escrow Amount and any Earnout Payment and the Interim Loan
Amount Purchase Price), such amounts as the Purchaser at its sole discretion determines that are required to be deducted and withheld
with respect to the making of any such payment under any Applicable Law, including, without limitation, the Israeli Income Tax
Ordinance, at the maximum applicable rate for such withholding, as determined by the Purchaser, unless the Purchaser is provided
with an exemption from such withholding tax in respect of each such payment, or a withholding certificate from the Israeli Taxing
Authority which determines the withholding tax rate or tax amount, to its reasonable satisfaction (and for the avoidance of doubt,
with respect to Israeli Taxes, with a Valid Tax Certificate) at least five (5) Business Days prior to the date of such payment.
To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the payment recipient, in respect of which such deduction and withholding was made. The Purchaser, Paying Agent and
Escrow Agent, as applicable, shall provide to the relevant payee evidence regarding any such withholding, following its request.


 




    	 	12	 



    	 	 	 



    


 


(b)Notwithstanding
the provisions of ‎(a) ‎Section 2.03(a) above, with respect to Israeli Taxes, the respective portion of Purchase
Price payable to the Sellers at Closing shall be retained by the Purchaser/Paying Agent for the benefit of each such payment recipient
for a period of one-hundred eighty (180) days from the Closing Date or an earlier date required in writing by a payment recipient
(the “Withholding Drop Dead Date”) (during which time no payments shall be made to any payment recipient 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 each payment recipient may obtain a Valid Tax Certificate). If a payment recipient delivers, no later
than three (3) Business Days prior to the Withholding Drop Dead Date a Valid Tax Certificate to the Purchaser/Paying Agent, then
the deduction and withholding of any Israeli Taxes shall be made only in accordance with the provisions of such Valid Tax Certificate
and the balance ‎of the payment that is not withheld shall be paid to such payment recipient. If any payment recipient (i)
does not provide a Valid Tax Certificate by no later than three (3) Business Days before the Withholding Drop Dead Date, or (ii)
submits a written request to the Purchaser to release the payment otherwise due to such recipient prior to ‎the Withholding
Drop Dead Date and fails to submit a Valid Tax Certificate no later than three (3) Business Days before such time, then the amount
to be withheld from such payment recipient’s portion of the Purchase Price at Closing shall be calculated according to the
applicable withholding rate as ‎reasonably determined by Purchaser, which amount shall be increased by the interest plus linkage
differences as defined in Section 159A of the Israeli Income Tax Ordinance for the time period between the fifteenth (15th) calendar
day of the month following the month during which the Closing Date occurs and the time the relevant payment is made, and calculated
in NIS based on a U.S. dollars to NIS exchange rate not lower than the effective exchange rate at (i) the Closing Date and (ii)
the date in which the relevant payment is made to the applicable Seller. 


 


(c)For
the avoidance of doubt, in the absence of a Valid Tax Certificate which also applies to the payment recipient’s portion
of the Escrow Amount and any Earnout Payment and the Interim Loan Amount Purchase Price, the applicable amount to be withheld
from such payment recipient’s portion of any amount received at the Closing Date or retained by the Purchaser/Paying Agent
in accordance with above sections will be calculated (as provided in the above sections) also on such payment recipient’s
portion of the Escrow Amount and any Earnout Payment and the Interim Loan Amount Purchase Price, and will be deducted, and delivered
to the Israeli Taxing Authority as provided above unless the Israeli Taxing Authority provides different written instructions
reasonably satisfactory to the Purchaser.


 


Section
2.04Closing.


 


(a)Time
and Place. The consummation of the Transactions (the “Closing”) shall take place at the offices of Tadmor
& Co. Yuval Levy & Co., Azrieli Centre, Square Tower, 34th floor, 132 Menachem Begin Road, Tel Aviv, Israel
at a time and on a date to be specified by the parties, which shall be no later than the fifth Business Day after the satisfaction
or waiver of all the conditions set forth in ‎Article VIII (other than those conditions that by their nature are to
be satisfied at the Closing), or at such other time, date and location as the Purchaser and the Shareholders Representative agree
in writing. The date on which the Closing actually takes place is referred to in this Agreement as the “Closing Date”.


 


(b)Transactions
at 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: 


 


(1)The
Company and the Sellers shall deliver to the Purchaser the following agreements and documents:


 


(i)the
Escrow Agreement executed by the Shareholders Representative and the Escrow Agent;


 


(ii)a
certificate, in the form attached hereto as Exhibit E, executed on behalf of the Company by its chief executive officer,
certifying (i) that the conditions set forth in ‎Section 8.01 and ‎Section 8.02 have been duly satisfied;
and (ii) the resolutions of the board of directors and the shareholders of the Company approving this Agreement and the Transactions;


 




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(iii)a
legal opinion of Pearl, Cohen, Zedek, Latzer, Baratz, counsel to the Company and to the Sellers other than Acorn and of Eillenberg
& Krause counsel of Acorn, in the form attached hereto as Exhibit F and F-1, respectively;


 


(iv)share
transfer deeds for the Purchased Shares in the form attached hereto as Exhibit G, duly executed by each Seller in favor
of the Purchaser (or as it shall otherwise direct in writing) accompanied by their respective share certificates or affidavit
in the form attached hereto as Exhibit G-1 evidencing that such certificate was lost or never issued;


 


(v)executed
resolutions of the shareholders of the Company in the form attached hereto as Exhibit H (i) approving this Agreement and
the Transaction Documents, and the consummation of the Transactions, and (ii) amending the current articles of association of
the Company, including all amendments thereto (the “Current Articles”) by replacing them in their entirety with the
amended and restated articles of association of the Company, attached hereto as Exhibit H-1 (the “Amended Articles”),
and approving the appointment as directors of the Company of such person or persons to be identified by the Purchaser, such number
of persons shall not be more than three (3);


 


(vi)executed
resolutions of the board of directors of the Company in the form attached hereto as Exhibit I approving this Agreement
and the Transaction Documents, and the consummation of the Transactions, the registration of the Share Transfer Deeds, the appointment
as directors of the Company such person or persons to be identified by the Purchaser, the acceptance of the resignations of the
existing directors of the Company listed in Exhibit I-1, and the adoption of new signatory rights in the Company acceptable
to Purchaser;


 


(vii)the
appointment of a firm of Independent Certified Public Accountants in the State of Israel who are affiliated with one of the “big
four” U.S. accounting firms;


 


(viii)written
resignations of directors, listed in Exhibit I-1, from their positions as directors effective as of the Closing Date, in
the forms attached hereto as Exhibit J;


 


(ix)the
Spousal Consent to entering into this Agreement and consummating the transactions contemplated hereby, including, without limitation,
the transfer and sale of Purchased Shares held by such Seller to the Purchaser pursuant to the terms hereof, validly executed
by the spouse of such Seller and delivered by the Seller to the Purchaser concurrently with the signing of this Agreement in the
form of Exhibit K, shall be in full force and effect;


 


(x)the
register of members of the Company evidencing the transfer and ownership of all of the Purchased Shares to the Purchaser certified
by a director of the Company;


 


(xi)a
new and validly executed share certificate(s) covering all of the Purchased Shares, issued in the name of the Purchaser;


 


(xii)evidence
that the Company is in good standing and has paid any annual registration fees due to the Israeli Companies’ Registrar;


 


(xiii)the
new employment agreements in the form attached hereto as Exhibit L, executed by each employee of the Company party thereto
in a form approved by the Purchaser (the “New Employment Agreements”);


 




    	 	14	 



    	 	 	 



    


 


(xiv)Assignments
of Intellectual Property in favor of the Company in the form attached hereto as Exhibit M validly executed by each of the
persons listed on Exhibit M-1;


 


(xv)Executed
shareholders agreement executed by all parties thereto, other than the Purchaser, in the form attached hereto as Exhibit N
(the “Shareholders Agreement”);


 


(xvi)The
Amended and Restated Loan Agreement among the Company, Acorn and Purchaser (the “Amended and Restated Loan Agreement”),
executed by all parties thereto on the date hereof, in the form attached hereto as Exhibit O;


 


(xvii)A
Non-Signing Seller Exercise, Sale and Waiver Letter executed by each of the Non-Signing Sellers;


 


(xviii)A
Signing Seller Exercise, Sale and Waiver Letter executed by each of the Signing Sellers on the date hereof;


 


(xix)Executed
releases on all Liens on the Purchased Shares ensuring that the Purchased Shares shall be transferred at Closing to the Purchaser
free and clear of any and all Liens;


 


(xx)such
other documents or instruments as the Purchaser may reasonably request or may be required to effect the transactions contemplated
by the Transaction Documents.


 


(2)The
Purchaser shall deliver to the Shareholders Representative the Escrow Agreement executed by the Purchaser and the Escrow Agent,
the Shareholders Agreement executed by the Purchaser, and, subject to ‎Section 2.03, shall transfer to the Paying Agent the
Closing Payment in readily available funds, enabling the Paying Agent to perform a distribution to each of the Sellers of such
amounts as shall be determined in accordance with the terms of this Agreement, and shall transfer to the Paying Agent the Interim
Loan Amount Purchase Price in readily available funds on the Interim Loan Amount Confirmation Date. 


 


(c)Adjustments.
Without derogating from the provisions of Section 6.01, in the event of any stock split (bonus shares), consolidation,
share dividend (including any dividend or distribution of securities convertible into share capital), reorganization, reclassification,
combination, recapitalization or other like change with respect to the Company Shares occurring after the date hereof and prior
to the Closing, all references in this Agreement to numbers of shares and all calculations provided for that are based upon numbers
affected thereby, shall be equitably adjusted to the extent necessary to provide the parties the same economic effect as contemplated
by this Agreement prior to such event.


 


Article
III


Representations
and Warranties of the Company


 


Subject
to the disclosures set forth in the Company Disclosure Schedule (each of which disclosures, in order to be effective, shall clearly
indicate the Section and, if applicable, the Subsection of this ‎Article III to which it relates (unless and only to
the extent the relevance to other representations and warranties is readily apparent from the actual text of the disclosures),
and each of which disclosures shall also be deemed to be representations and warranties made by the Company to Purchaser under
this ‎Article III), the Company represents and warrants to the Purchaser that the statements contained in this Article
III are true and correct as of the date of this Agreement and will be true and correct as of the Closing Date. 


 


Any
references to the Company shall be deemed to include and apply to every Subsidiary of the Company, if applicable.


 




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Section
3.01Corporate Existence and Power.


 


(a)The
Company (i) is a limited liability company duly incorporated, validly existing and in good standing under the laws of the state
of Israel; (ii) is duly licensed or qualified to do business and where applicable is in good standing as a foreign corporation
in all jurisdictions in which the conduct of its business or the activities it is engaged makes such licensing, qualification
or status necessary; and (iii) has all necessary power and authority: (A) to conduct its business in the manner in which its business
is currently being conducted and currently proposed to be conducted; (B) to own and use its assets in the manner in which its
assets are currently owned and used; and (C) to perform its obligations under all Contracts.


 


(b)Except
as disclosed in ‎Section 3.01(b) of the Company Disclosure Schedule, the Company has no Subsidiaries and there are
no corporations, limited liability companies, partnerships, joint ventures, associations or other entities or Persons in which
the Company owns, of record or beneficially, any direct or indirect equity or other interest or any right (contingent or otherwise)
to acquire the same.


 


(c)The
Company has delivered to the Purchaser and listed in ‎Section 3.01(c) of the Company Disclosure Schedule accurate and
complete copies of: (i) the Current Articles, and (ii) the minutes of the meetings and other proceedings (including any actions
taken by written consent or otherwise without a meeting) of the Company’s shareholders, board of directors, general managers
or any equivalent body and all committees thereof since January 1, 2002. There has not been any violation of any of the provisions
of the Current Articles, and the Company has not taken any action that is inconsistent with any resolution adopted by its shareholders,
board of directors, general managers, any equivalent body or any committee thereof. The books of accounts, stock records, minute
books and other records of the Company are accurate, up-to-date and complete in all material respects, and have been maintained
in accordance with prudent business practices and all Applicable Law.


 


(d)‎Section
3.01(d) of the Company Disclosure Schedule accurately sets forth: (i) the names of the members of the board of directors or
of the general managers of the Company; (ii) the names of the members of each committee of the board of directors (or similar
body) of the Company; and (iii) the names and titles of the officers of the Company.


 


(e)Except
as set forth in ‎Section 3.01(e) of the Company Disclosure Schedule, the Company has not conducted any business under
or otherwise used, for any purpose or in any jurisdiction, any fictitious name, assumed name, business name or other name, other
than its corporate name as set forth in this Agreement.


 


(f)Except
as disclosed in ‎Section 3.01(f) of the Company Disclosure Schedule, no power of attorney that would entitle any Person
to act on behalf of the Company is currently outstanding.


 


Section
3.02Corporate Authorization.


 


(a)The
Company has all necessary corporate power and authority to enter into and to perform its obligations under the Transaction Documents
to which it is a party in accordance with the respective terms thereof; and the execution, delivery and performance by the Company
of the Transaction Documents to which it is a party in accordance with the respective terms thereof have been duly authorized
by all necessary corporate action on the part of the Company and its shareholders. This Agreement constitutes the legal, valid
and binding obligation of the Company, and, assuming the due authorization, execution and delivery by the Purchaser, is enforceable
against the Company in accordance with its terms, except as such enforceability may be limited by principles of public policy
and subject to the laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies. Upon the execution of each of the other Transaction Documents
at the Closing, each of such Transaction Documents to which the Company is a party will constitute the legal, valid and binding
obligation of the Company, and will be, assuming the due authorization, execution and delivery by the Purchaser (if party thereto),
enforceable against the Company in accordance with its respective terms, except as such enforceability may be limited by principles
of public policy and subject to the laws of general application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other equitable remedies.


 




    	 	16	 



    	 	 	 



    


 


(b)In
a unanimous written consent or a duly convened meeting, the Company’s Board of Director has (i) approved, authorized and
adopted this Agreement and the Transaction Documents, and the consummation of the transactions contemplated thereby (ii) unanimously
approved the registration of the Share Transfer Deeds, and (iii) the acceptance of the resignations of the existing directors
of the Company listed in Exhibit I-1. In a resolution of all the Company’s shareholders, they (i) have approved,
authorized and adopted this Agreement and the Transaction Documents, and the consummation of the transactions contemplated thereby,
(ii) have approved the replacement in in their entirety of the Current Articles with the Amended Articles, and (iii) approved
the appointment as directors of the Company such person or persons to be identified by the Purchaser prior to the Closing, such
number of persons shall not be more than three (3).


 


(c)The
Company has not: (i) received any notice from any applicable Governmental Authority that its registration may be revoked, stricken
or erased, (ii) admitted an inability to pay its debts generally as they become due, filed or consented to the filing against
it of a petition in bankruptcy, liquidation, winding up, stay of proceedings, plan of arrangement or any similar proceeding or
passed any resolution approving any of the foregoing, or (iii) consented to the appointment of a receiver, liquidator, trustee
or special manager for itself or for any substantial part of its properties or assets, or made any determination in respect of
the distribution of its assets (the forgoing collectively referred to below as “Bankruptcy Events”). No notice
has been received of any action for, or the intent of any Person to request to seek or pursue, any remedy under or in connection
with a Bankruptcy Event and to the Company’s Knowledge there is no reasonable basis for (ii) or (iii) above.


 


Section
3.03Compliance with Applicable Law.


 


(a)The
Company is, and has at all times been, in compliance with and has operated its business and maintained its assets and properties
in compliance with all Applicable Laws. Neither the Company nor the operation of its business (whether by the Company or, to the
Knowledge of the Company, by any shareholder or any Affiliates thereof) is or has been under investigation with respect to, given
notice of any violation of, or, to the Company’s Knowledge, threatened to be charged with any violation of, Applicable Law
or received any written inquiry (or such other inquiry, to the Knowledge of the Company), regarding the possible violation of,
any Applicable Law. No event has occurred, and no condition or circumstance exists, that will or could reasonably be expected
to (with or without notice or lapse of time) constitute or result in a violation by the Company, or a failure on the part of the
Company to comply with or failure of its business and operations to be otherwise in compliance with, any Applicable Law.


 


(b)Neither
the Company nor any Representative or other Person acting on behalf of the Company has at any time, directly or indirectly: (i)
made any unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity and related in
any way to the Company’s business; (ii) made any unlawful payment to any foreign or domestic government official or employee,
foreign or domestic political parties or campaigns, official of any public international organization, or official of any state-owned
enterprise; (iii) violated any provision of the United Stated Foreign Corrupt Practices Act of 1977, as amended, the U.K. Bribery
Act 2010, Title 5 of the Israeli Penalty Law (Bribery Transactions), the Israeli Prohibition on Money Laundering Law, 2000, or
any other anti-corruption or anti-money laundering Applicable Law; (iv) made any bribe, payoff, influence payment, kickback or
other similar unlawful payment; or (v) made any payment (whether or not lawful) to any Person, or provided (whether lawfully or
unlawfully) any favor or anything of value (whether in the form of property or services, or in any other form) to any Person,
for the purpose of obtaining or paying for: (a) favorable treatment in securing business or (b) any other special concession;
or (vi) agreed, committed, offered or attempted to take any of the actions described in clauses (i) through (v) above.


 




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Section
3.04Regulatory Matters, Trade Compliance and Encryption.


 


(a)To
the extent any Company Product produced, manufactured, marketed or distributed at any time by or on behalf of the Company is being
marketed internationally, the Company has obtained all necessary approvals of the required regulatory authorities in the relevant
jurisdictions, and such regulatory authorities are listed in ‎Section 3.04(a) of the Company Disclosure Schedule (collectively,
the “Regulatory Authorities”) and is in compliance in all material respects with Applicable Law relating to
the manufacturing, marketing and selling of any of the Company Products. There have been no recalls, field notifications or seizures
ordered or adverse regulatory actions taken or, to the Company’s Knowledge, threatened by the Regulatory Authorities or
any other Governmental Authority with respect to any of the Company Products, including any facilities where any Company Products
are produced, manufactured, processed, packaged or stored. All filings with and submissions to the Regulatory Authorities and
any other Governmental Authority made by the Company with regard to the Company Products were true, accurate and complete in all
material respects as of the date made, and, to the extent required to be updated, as so updated remain true, accurate and complete
in all material respects as of the date hereof, and do not materially misstate any of the statements or information included therein,
or omit to state a material fact necessary to make the statements therein not misleading.


 


(b)Section
3.04(b) of the Company Disclosure Schedule contains a true and correct complete list of (i) all communications, filings and
submissions (and with respect to non-material communications, filings and submissions, such communications, filings and submissions
made within the past 3 years) with the any Regulatory Authority, whether pending or approved, pertaining to products manufactured,
marketed, sold or distributed by the Company or which are under development by the Company; and (ii) all inspections of the Company
conducted by any Regulatory Authority since January 1, 2010. Except as set forth in Section 3.04(b) of the Company Disclosure
Schedule, all requirements of any Regulatory Authority and any Applicable Law with respect to the maintenance, compilation, filing
and obtaining of approval or effectiveness of all documents specified in (i) and (ii) above have been complied with in all respects.
Except as set forth in Section 3.04(b) of the Company Disclosure Schedule, there are no unfulfilled outstanding agreements
with or commitments to, and no adverse regulatory actions by, any Regulatory Authority with respect to any of the Company Products;
and the Company or the Sellers have not received any written, or to the Knowledge of the Company any other information with respect
to the initiation, pendency, or threat by any Regulatory Authority of any adverse regulatory action affecting any of the Company
Products. The Company has not received any written notice or other written communication from any Regulatory Authority alleging
any violation of any laws by the Company. Section 3.04(b) of the Company Disclosure Schedule sets forth a list of all adverse
event reports by or to any Regulatory Authority related to the Company Products.


 




    	 	18	 



    	 	 	 



    


 


(c)The
Company has conducted its marketing, export and trade in accordance with all Applicable Laws relating to export, import and trade
compliance (including, without limitations, the Israeli Defense Export Control Law, 2007, the Israeli Order Governing the Control
of Commodities and Services (Engagement in Encryption Items), 1974, the Israeli Order of Import and Export (Supervision of Export
of Dual Use Goods, Services and Technologies), 2006, the Israeli Trading with the Enemy Ordinance, 1939, or other Applicable Laws
related to or governing such matters), including that: (a) the Company has obtained all Consents and/or Governmental Authorizations
required for its marketing, exports and import of the Company Products, the Software and technologies and related services, Documentation
and Intellectual Property, from any Governmental Authorities necessary for marketing, exporting or importing the same from any
country in which any Intellectual Property and/or Company Product or related services are currently marketed, sold, licensed for
use or otherwise distributed or for importing the same into any country in which the Company Products are now sold or licensed
for use, and all such Consents and/or Governmental Authorizations are valid, current and in full force and effect; (b) such Consents
and/or Governmental Authorizations (and any and all summaries of the discussions from the relevant Governmental Authorities) are
listed on ‎Section 3.04(a) of the Company Disclosure Schedule and a true, correct and complete copy thereof has been
provided to the Purchaser; (c) all such Consents and/or Governmental Authorizations throughout the world are in the name of the
Company, are valid, current, outstanding and in full force and effect, and the Company is in compliance with the terms of all
such Consents and/or Governmental Authorizations, including the decisions of relevant Governmental Authority; (d) there are no
pending or, to the Knowledge of the Company, threatened claims or Proceedings against the Company with respect to such marketing,
export or import Consents and/or Governmental Authorizations; and (e) there are no actions, conditions or circumstances pertaining
to the marketing, export or import transactions of the Company, and to the Knowledge of the Company, any threats with respect
to such matters, that would reasonably be expected to give rise to any claims or Proceeding against the Company or any of its
businesses or assets or any of their directors, managers or officers (in their capacity as directors, managers or officers of
the Company).


 


(d)The
Company Products, their underlying technology and related Intellectual Property, are owned exclusively by the Company, except
as disclosed in ‎Section 3.04(d) of the Company Disclosure Schedule.


 


(e)No
Company Product is subject to any restriction or limitation under Applicable Laws relating to export control, except as disclosed
in ‎Section 3.04(e) of the Company Disclosure Schedule.


 


(f)No
Company Product is registered with or required to be registered with or is otherwise subject to regulation by any applicable Governmental
Authority other than Regulatory Authorities.


 


(g)The
Company has not distributed any Company Products or any of its components to and has no obligations to any third party located
in Cuba, Iran, North Korea, Sudan, Lebanon or Syria.


 


(h)The
Company has not entered into, and the business of the Company does not and has not contained any transaction that falls within
the scope of, and has not, directly or indirectly, engaged in any operation in violation of, the sanctions and restrictive measures
of the European Union or any member state thereof.


 


(i)The
business of the Company, as conducted, and as currently proposed to be conducted (as evidenced by a written instrument or was
discussed in any board or management meeting), does not involve the use or development of, or engagement in, encryption technology,
or other technology whose development, commercialization or export is restricted, or requires a Consent or Governmental Authorization,
under Applicable Law, except as disclosed in ‎Section 3.04‎(i) of the Company Disclosure Schedule. The Company
Products do not contain any encryption or encryption functionality developed by the Company or otherwise used in or called by
the Company Products (collectively, “Encryption Items”), except as disclosed in ‎Section 3.04‎(i)
of the Company Disclosure Schedule (which contains a complete list by Company Product of each such Encryption Item, together
with the export control classification information received from the supplier of, or by the Company for, each such Encryption
Item). Any Encryption Item listed on such ‎Section 3.04‎(i) of the Company Disclosure Schedule which is Open Source
Material is indicated as being Open Source Material on such schedule. The Company holds and maintains all Consents and Governmental
Authorization required for any Encryption Item, or is exempted from such requirement (including, without limitation, from the
Israeli Ministry of Defense or an authorized body thereof pursuant to Section 2(a) of the Order Governing the Control of Commodities
and Services (Engagement in Encryption Items), 1974, as amended, or other local or foreign legislation regulating the development,
commercialization or export of technology); all such Consents and Governmental Authorization are listed on ‎Section 3.04(a),
and correct and complete copy thereof have been provided to the Purchaser; and the Company is in compliance with the terms thereof.


 




    	 	19	 



    	 	 	 



    


 


Section
3.05Governmental Authorizations; Grants.


 


(a)‎Section
3.05(a) of the Company Disclosure Schedule identifies each Governmental Authorization held by the Company or used for the
business, assets or properties of the Company, and the Company has delivered to the Purchaser accurate and complete copies of
all Governmental Authorizations identified in ‎Section 3.05(a) of the Company Disclosure Schedule and any and all correspondence
and amendments related thereto. The Governmental Authorizations identified in ‎Section 3.05(a) of the Company Disclosure
Schedule are valid and in full force and effect, and collectively constitute all Governmental Authorizations necessary to enable
the Company to conduct its business in the manner in which such business is currently being conducted and as proposed to be conducted.
Each of the Company and any other Person that held a Governmental Authorization on behalf of the Company or related to the Company
or is holding the same is, and has at all times been, in compliance with the terms and requirements of the respective Governmental
Authorizations identified in Section 3.05(a) of the Company Disclosure Schedule. Except as set forth in ‎Section
3.05(a) of the Company Disclosure Schedule, no written, or to the Knowledge of the Company, any other notice or other communication
from any Governmental Authority was received regarding: (i) any actual or possible violation of or failure to comply with any
term or requirement of any Governmental Authorization; or (ii) any actual or possible revocation, withdrawal, suspension, cancellation,
termination or modification of any Governmental Authorization. 


 


(b)‎Section
3.05‎(b) of the Company Disclosure Schedule identifies each Grant that has been or is provided or available or applicable
to the Company, its business or assets (including Company Intellectual Property). Except as set forth on ‎‎Section
3.05‎(b) of the Company Disclosure Schedule, the Company has never applied for or received any Grant nor is any asset
owned or used by the Company or otherwise necessary for its business (including Company Intellectual Property) is subject to any
limitations, restrictions, obligations or other Liabilities by virtue or as a result of any Grant made available to any other
Person. Except as set forth in ‎Section 3.05(b) of the Company Disclosure Schedule, no event has occurred, and no circumstance
or condition exists, that would or that could reasonably be expected to give rise to or serve as the basis for: (A) the annulment,
revocation, withdrawal, suspension, cancellation, recapture or modification of any Grant; (B) the imposition of any limitation
on any Grant or any benefit available in connection with any Grant; (C) a requirement that the Company return or refund any benefits
provided under any Grant; or (D) the applicability of any Grant (and any limitation or requirement arising therefore) on the Company,
its business or assets. 


 


(c)The
Company has (i) submitted and possesses, or qualifies for applicable exemptions to, such valid and current registrations, listings,
approvals, clearances, licenses, certificates, authorizations or permits and supplements or amendments thereto issued or required
by the appropriate Israeli or foreign regulatory agencies or bodies necessary to conduct its business, and (ii) has not received
any written notice of proceedings relating to the revocation or modification of, or non-compliance with, any such clearance, approval,
license, certificate, authorization or permit.


 




    	 	20	 



    	 	 	 



    


 


Section
3.06Non-Contravention.


 


Except
as set forth on ‎‎Section 3.06 of the Company Disclosure Schedule, neither: (1) the execution, delivery or performance
by the Company of this Agreement or any of the Transaction Documents to which it is a party; nor (2) the consummation of the Transactions,
will (with or without notice or lapse of time):


 


(a)contravene,
conflict with or result in a violation of: (i) any of the provisions of any Current Articles or (ii) any Applicable Law;


 


(b)contravene,
conflict with or result in a violation of, or give any Governmental Authority or other Person the right to challenge any of the
Transactions or to exercise any remedy or obtain any relief under, any Applicable Law or any Order to which the Company or any
of the assets owned or used by the Company, is subject;


 


(c)contravene,
conflict with or result in a violation of any of the terms or requirements of, or give any Governmental Authority the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is held by the Company or that otherwise
relates to the Company’s business or to any of the assets owned or used by the Company;


 


(d)contravene,
conflict with or result in a violation or breach of, or result in a default under, any provision of any Contract or Grant by which
the Company is bound, or give any Person the right to: (i) declare a default or exercise any remedy under any such Contract or
Grant; (ii) accelerate the maturity or performance of any such Contract or Grant; or (iii) cancel, terminate or modify any such
Contract or Grant; or


 


(e)result
in any Liability to the Company or in the imposition or creation of any Lien upon or with respect to any assets, properties or
rights owned or used by the Company or its share capital (registered or issued), other than in the terms hereof.


 


Except
as set forth in ‎Section 3.06 of the Company Disclosure Schedule, the Company is not and will not be required to make
any filing with or give any notice to, or to obtain any Consent from, any Person in connection with: (x) the execution, delivery
or performance of this Agreement or any of the other Transaction Documents; or (y) the consummation of the Transactions contemplated
by this Agreement.


 


Section
3.07Capitalization.


 


(a)At
the date of this Agreement, the authorized capital of the Company consists of 11,625,104 Ordinary Shares, out of which 1,578,520
are issued and outstanding and 514,896 Preferred Shares, out of which 370,724 are issued and outstanding and 239,524 Options to
purchase 239,524 Ordinary Shares. At the Closing, the authorized capital of the Company shall consist of 12,140,000 Ordinary Shares,
out of which 2,188,768 will be issued and outstanding and no Preferred Shares shall be issued and outstanding and no Options shall
be outstanding. All of the issued and outstanding Company Shares are and were when issued duly authorized and validly issued,
fully paid and nonassessable.


 


(b)Except
as set forth in Section 3.07(b) of the Company Disclosure Schedule, there are no outstanding (i) Options or other securities
of the Company or (ii) condition or circumstance that may give rise to or provide a basis for the assertion of a claim by any
Person to the effect that such Person is entitled to acquire or receive any Company Shares, Options or other securities of the
Company.


 




    	 	21	 



    	 	 	 



    


 


(c)‎Section
3.07(c) of the Company Disclosure Schedule sets forth a complete and accurate list, by name, of the Company’s shareholders,
the addresses of the Company’s shareholders, the number of Company Shares owned by such shareholder identified by class
and series as of the date hereof (Section 3.07(c)(i) of the Company Disclosure Schedule), as of immediately prior the Closing
(taking into account the exercise of all of the Company’s Options pursuant to this Agreement) (Section 3.07(c)(ii) of the
Company Disclosure Schedule), and as of immediately following the Closing (Section 3.07(c)(iii) of the Company Disclosure Schedule).
All outstanding Company Shares have been issued and granted in compliance with (i) all applicable securities laws and other Applicable
Law and (ii) all requirements set forth in applicable Contracts. None of the outstanding Company Shares were issued in violation
of any preemptive rights or other rights to subscribe for or purchase securities of the Company. ‎Section 3.07(c) of
the Company Disclosure Schedule accurately identifies each Contract relating to any securities of the Company that contains any
information rights, management rights, registration rights, first refusal, tag along, pre-emptive or first offer rights, financial
statement requirements or other terms that would survive the Closing unless terminated or amended prior to the Closing.


 


(d)At
the Closing, the Purchaser will receive good and valid title, free and clear of any Liens, to all Purchased Shares. The Purchaser
acknowledges that as of the date of this Agreement, all Company Shares held by Acorn are pledged to the Company and to Leap Tide
pursuant to the terms of the Intercreditor Agreement.


 


(e)The
Company has never repurchased, redeemed or otherwise reacquired any of its shares or other securities and there are no outstanding
rights or obligations of the Company to repurchase or redeem any of its securities. All shares of the Company ever repurchased
or redeemed by the Company were repurchased or redeemed in compliance with: (i) all applicable securities laws and other Applicable
Law; and (ii) all requirements set forth in all applicable Current Articles and Contracts.


 


(f)The
Pro Rata Portion appearing opposite the name of each Seller in Exhibit A, the details set forth in each Signing Seller
Exercise, Sale and Waiver Letter and in each Non-Signing Seller Exercise, Sale and Waiver Letter, and the Payment Spreadsheet
are true and correct as of the date hereof and as of the Closing and has been determined in accordance with the Company’s
Current Articles and/or any other Contract or instrument governing the distribution of any payment made in connection with the
Transactions. There are no claims by any Person or Proceedings pending in connection with the distribution of each payment to
be made pursuant to the terms herein in accordance with the Pro Rata Portion appearing opposite the name of each Seller in Exhibit
A upon the consummation of the Transactions, and there is no basis for such claim or Proceeding.


 


(g)‎‎
‎Section 3.07(g) of the Company Disclosure Schedule sets forth, as of the date hereof, a true, correct and complete list
of all holders of outstanding Options of the Company, the number and class of Company Shares underlying such Options, the date
of grant, the exercise price, the vesting schedule of such Options (and the terms of any acceleration thereof), the term of each
such Option and the Option plan under which it was granted.


 


Section
3.08Financial Statements. 


 


(a)The
Company has delivered to the Purchaser the Company’s audited consolidated balance sheets and related audited consolidated
statements of income, changes in shareholders’ equity, cash flow and notes thereto for the fiscal year ended December 31,
2014 (such date the “Balance Sheet Date”) (the “Financial Statements”).


 


(b)The
Financial Statements (i) have been prepared from the books and records of the Company, (ii) complied as to form in all respects
with applicable accounting requirements with respect thereto as of their respective dates, (iii) have been prepared in accordance
with Accounting Principles applied on a consistent basis throughout the periods indicated (except as may be indicated therein
or in the notes thereto) and consistent with each other, and (iv) fairly present, in all material respects, the financial condition
of the Company at the dates therein indicated and, when applicable, the consolidated results of operations and cash flows of the
Company for the periods therein specified.


 




    	 	22	 



    	 	 	 



    


 


(c)The
books of account and other financial records of the Company have been kept accurately in the ordinary course of business consistent
in all material respects with Applicable Law, the transactions entered therein represent bona fide transactions, and the revenues,
expenses, assets and liabilities of the Company have been properly recorded therein in all material respects.


 


(d)Neither
the Company nor any director, manager, officer, employee, auditor, accountant or representative of the Company, has received or
otherwise had or obtained Knowledge of any complaint, allegation, assertion or claim, whether made in writing or made orally to
any director, manager, executive officer, or inside legal counsel or, to the Company’s Knowledge, outside legal counsel
to the Company, regarding any material deficiency in the accounting or auditing practices, procedures, methodologies or methods
of the Company or its internal accounting controls, including any complaint, allegation, assertion or claim that the Company has
engaged not in accordance with applicable accounting or auditing practices.


 


(e)‎Section
3.08(e) of the Company Disclosure Schedule provides an accurate reconciliation of all accounts receivable, notes receivable
and other receivables of the Company as of the Balance Sheet Date. Except as set forth in ‎Section 3.08(e) of the Company
Disclosure Schedule, all existing accounts receivable of the Company (including those accounts receivable reflected on the Financial
Statements that have not yet been collected and those accounts receivable that have arisen since the Balance Sheet Date and that
have not yet been collected): (i) represent current and valid obligations arising from bona fide transactions entered into in
the ordinary course of business and not in violation of Applicable Law; and (ii) are current and will be collected in accordance
with generally accepted accounting principles when due, without any counterclaim or set off.


 


(f)‎Section
3.08(f) of the Company Disclosure Schedule provides an accurate and complete breakdown of all amounts (including loans, advances
or other indebtedness) owed to the Company by a director, manager officer, employee or shareholder of the Company (other than
travel advances made in the ordinary course of business) (the “Insider Receivables”). All Insider Receivables
(including those receivables reflected in the Financial Statements that have not yet been collected and those receivables that
have arisen since the Balance Sheet Date and have not yet been collected): (i) represent valid obligations arising from bona fide
transactions entered into in the ordinary course of business and not in violation of Applicable Law; and (ii) are current and
will be collected in accordance with generally accepted accounting principles when due, without any counterclaim or set off. Except
as set forth ‎Section 3.08(f) of the Company Disclosure Schedule, no Insider Receivables will remain outstanding as
of the Closing.


 


(g)The
financial projections provided to the Purchaser were prepared by the Company and its management in good faith based on the Company’s
and its management’s experience in the industry and on assumptions of fact and opinion as to future events which the Company
and its management believes to be reasonable, but neither the Company nor its management has Knowledge or provides assurance that
such financial projections will be attained. To the Knowledge of the Company, no facts exist which would require the Company to
revise or amplify the assumptions underlying such projections and other estimates or the conclusions derived therefrom in any
material respect.


 


(h)Other
than as set forth in ‎Section 3.08(h) of the Company Disclosure Schedule, the Company is not a party to any Contract
which: (i) prevents the Company or its Affiliates from selling directly to customers or indirectly through any other Person (including
exclusive distribution relationship with a distributor in any territory, region or market segment); (ii) promises delivery of
products or services that will not be available for delivery at the actual date designated for delivery in the applicable Contract
or order; (iii) promises products or services to be delivered now or in the future free of charge (except under a paid support
engagement providing updates to a previously licensed product); (iv) promises post-contract support provided on a free-of-charge
basis (whether for a finite or indefinite period) other than one-year support contracts included with the sale of a license; (v)
is a side letter or side agreement which modifies the existing terms or obligations under any other Contract or provides additional
terms or obligations not otherwise expressed in such other Contract without a formal authorized execution of an amendment to such
other existing Contract; (vi) provides a right of return based on customer favorable subjective criteria; (vii) provides a right
of return or refund which extends beyond three (3) months; (viii) provides a customer with an effective right of return or refund
where the products or services as delivered fail to meet the warranted criteria (excluding customary penalties or liquidated damages);
(ix) promises returns or credits on products or services previously delivered; (x) promises cancellation on executed transactions;
or (xi) provides for the distribution of Company Products and which is not terminable with 90 days’ written notice.


 




    	 	23	 



    	 	 	 



    


 


Section
3.09Absence of Certain Changes.


 


Since
the Balance Sheet Date, the business of the Company has been conducted in the ordinary course consistent with past practices (except
for actions taken in connection with the negotiation of this Agreement and the Transactions) and, except as set forth in ‎Section
3.09 of the Company Disclosure Schedule, there has not been:


 


(a)any
event, occurrence, development or state of circumstances or facts that has had or could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect;


 


(b)any
damage, destruction or other casualty loss (whether or not covered by insurance) affecting the business or assets of the Company
in any material manner;


 


(c)any
amendment of the Current Articles of the Company and the Company has not effected or been a party to any Acquisition Transaction;


 


(d)any
splitting, combination or reclassification of any Company Shares, Options or any other securities or declaration, setting aside
or payment of any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of
any Company Shares, Options or any other securities, or redemption, repurchase or other acquisition or offer to redeem, repurchase,
or otherwise acquire any Company Shares, Options or any other securities;


 


(e)(i)
any issuance, delivery or sale, or authorization of the issuance, delivery or sale of, any Company Shares (other than pursuant
to the exercise of the Options) or Options, or (ii) any amendment or waiver of (in each case, whether by merger, consolidation
or otherwise) any term of any Company Shares or Options (other than as is required to permit the exercise of the Options);


 


(f)any
capital expenditures or incurrence of any obligations or Liabilities in respect thereof by the Company, individually or in the
aggregate, in excess of US$100,000;


 


(g)any
acquisition (by merger, consolidation, acquisition of shares or assets or otherwise), directly or indirectly, by the Company of
any, all or substantially all assets, properties or securities of any Person;


 


(h)any
sale, lease or other transfer of, or creation or incurrence of any Lien on, any assets, securities, properties, interests or businesses
of the Company or its share capital (registered or issued) in excess of US$100,000;


 


(i)the
making by the Company of any loans (other than in the ordinary course of business), guarantee or capital contributions to, or
investments in, any other Person;


 


(j)the
creation of any Company Debt or the guarantee by the Company of any indebtedness formerly borrowed;


 


(k)(i)
the entering into of any Contract that limits or otherwise restricts in any respect the Company or any of its Affiliates or any
successor thereto from engaging or competing in any line of business, in any location or with any Person or (ii) the entering
into any amendment or modification or termination of any Contract or waiver, release or assignment of any material rights, claims
or benefits of the Company thereunder;


 




    	 	24	 



    	 	 	 



    


 


(l)the
sale, disposition, transfer or license to any Person of any rights, including any rights to any Company Intellectual Property
or other assets by the Company other than on a non-exclusive basis in the ordinary course of business consistent with past practice,
or the acquisition, lease or license from any Person of any rights including any Intellectual Property or other assets other than
in the ordinary course of business, or the sale, disposition of, transfer or provision of a copy of the Company’s Source
Code;


 


(m)(i)
the grant or increase of any severance or termination pay to (or amendment of any existing arrangement with) any director, manager,
officer, advisor, consultant or employee of the Company, (ii) any increase in benefits payable under any existing severance or
termination pay policies or employment agreements, (iii) the entering into of any employment, deferred compensation or other similar
agreement (or amendment of any such existing agreement) with any director, manager, officer, advisor, consultant or employee of
the Company, (iv) the establishment, adoption or amendment (except as required by Applicable Law) of any collective bargaining,
bonus, commission, profit-sharing, thrift, pension, retirement, deferred compensation, compensation, share option, restricted
share or other benefit plan or arrangement covering any director, manager, officer, advisor, consultant or employee of the Company,
or (v) any increase in compensation, bonus, commission or other benefits payable to any director, manager, officer, advisor, consultant
or employee of the Company;


 


(n)any
change in the methods of accounting or accounting practices of the Company, except as required by concurrent changes in Accounting
Principles as agreed to by its independent public accountants;


 


(o)any
settlement, or offer or proposal by the Company to settle: (i) any Proceeding or claim involving or against the Company, or (ii)
any Proceeding that relates to the Transactions;


 


(p)any
Tax election made or materially changed; any claim, notice, audit report or assessment in respect of Taxes settled or compromised
(or agreement with respect thereto); any Tax Return filed; any Tax allocation agreement, Tax sharing agreement, advance pricing
agreement, cost sharing agreement, pre-filing agreement, Tax indemnity agreement or closing agreement relating to any Tax entered
into; any annual Tax accounting period or method of Tax accounting changed or adopted; any Tax petition, Tax complaint or administrative
Tax appeal filed; any right to claim a Tax refund surrendered or foregone (which is reasonably be expected to be material to the
Company); or any extension or waiver of the statute of limitations period applicable to any Tax claim or assessment consented
to, nor has any application or negotiation for or receipt of a Tax ruling or arrangement been made by the Company or, to the Company’s
Knowledge, any Seller or on their behalf, whether or not in connection with the Transactions, except as explicitly contemplated
in this Agreement;


 


(q)any
application for or receipt of a Grant;


 


(r)any
write off as uncollectible, or the establishment of any general or specific reserve with respect to, any account receivable or
other indebtedness, other than as set forth on Section 3.09(r) of the Company Disclosure Schedule;


 


(s)any
pledge of or creation of a Lien on any of the assets, properties or rights of the Company or its share capital (registered or
issued), except for pledges of immaterial assets made in the ordinary course of business and consistent with past practices;


 


(t)any
material transaction or any other material action taken by the Company outside the ordinary course of business or inconsistent
with its past practices;


 




    	 	25	 



    	 	 	 



    


 


(u)any
material amendment of the credit terms of Company’s suppliers and customers.


 


(v)any
Proceeding initiated by or against the Company; or


 


(w)any
agreement or commitment of the Company, to take any of the actions referred to in clauses (a) through (u).


 


Section
3.10No Undisclosed Liabilities.


 


(a)The
Company has no Liabilities of any kind, whether or not required to be reflected or reserved in financial statements in accordance
with Accounting Principles, other than:


 


(1)Liabilities
reflected in the “liabilities” column of the Company’s Financial Statements or in the notes thereto;


 


(2)accounts
payable and accrued salaries that have been incurred by the Company since the Balance Sheet Date in the ordinary course of business
and consistent with past practice; and


 


(3)Liabilities
identified in ‎Section 3.10(a) of the Company Disclosure Schedule. 


 


(b)‎Section
3.10(b) of the Company Disclosure Schedule provides an accurate and complete breakdown and aging of: (i) all accounts payable
of the Company as of the date of this Agreement; and (ii) all notes payable of the Company and all other Company Debt as of the
date of this Agreement. Except as set forth in ‎Section 3.10(b) of the Company Disclosure Schedule there is no outstanding
Company Debt. 


 


(c)Other
than as set forth in ‎Section 3.10(c) of the Company Disclosure Schedule, the Company has never effected or otherwise
been involved in any “off-balance sheet arrangements”. 


 


Section
3.11Material Contracts.


 


(a)‎Section
3.11 of the Company Disclosure Schedule sets forth each material Contract to which the Company is a party to or by which it
is bound (and not terminated or expired in accordance with its terms with no further rights and/or liabilities to either of the
parties thereof) as well as any material Contract entered into by any shareholder of the Company or any Affiliate thereof relevant
to or necessary for the business, operations or assets of the Company, including without limitation (a Contract responsive to
any of the following categories, or which is listed in ‎Section 3.13(a) and ‎Section 3.16(e) of the Company
Disclosure Schedule being hereinafter referred to as a “Material Contract”):


 


(1)any
lease of tangible personal or real property;


 


(2)any
Contract relating to the acquisition, transfer, use, development, sharing or license of any technology, or Intellectual Property
rights (including any joint development agreement, technical collaboration agreement or similar agreement), to or from the Company
other than any end user license agreements for non-exclusive “off the shelf” Software;


 


(3)any
Contract imposing any restriction on the right or ability of the Company, (A) to compete with any other Person (including granting
exclusive rights or rights of first refusal to license, market, sell or deliver any of the products or services offered by the
Company), (B) to acquire any product or other asset or any services from any other Person, to sell any product or other asset
to or perform any services for any other Person or to transact business or deal in any other manner with any other Person (including
granting any rights of first refusal), or (C) to develop, distribute, license, sale or transfer any Intellectual Property rights;


 




    	 	26	 



    	 	 	 



    


 


(4)any
Contract for the purchase of materials, supplies, goods, services, equipment or other assets;


 


(5)any
Contract (including purchaser orders or a series of purchase orders) for the provision of the products or services of the Company;


 


(6)any
references to user, customer, agents or suppliers inquiries or leads (actual or potential) relating to the Company, its business
and the Company Products, and any potential fees, cost and expenses due to any Person in connection with each references, inquiries
or leads, including any Contract with such Person governing such matter;


 


(7)any
partnership, joint venture or any sharing of revenues, profits, losses, costs or liabilities Contract;


 


(8)any
Contract relating to the consolidation, reorganization, acquisition or disposition of any business (whether by merger, sale of
shares, sale of assets or otherwise) or any similar transaction to which the Company is party;


 


(9)any
Contract relating to borrowed money;


 


(10)any
Contract relating to the acquisition, issuance or transfer of any securities and the voting and any other rights or obligations
of a shareholder of the Company;


 


(11)any
Contract under which (A) any Person has directly or indirectly guaranteed any liabilities or obligations of the Company and (B)
the Company has directly or indirectly guaranteed liabilities or obligations of any other Person;


 


(12)any
Contract relating to the creation of any Lien with respect to any asset, property or right of the Company or its share capital
(registered or issued);


 


(13)any
Contract which contains any provisions requiring the Company to indemnify any Person;


 


(14)any
Contract of the Company with any Related Person (as defined below);


 


(15)any
employment, severance, retention, bonus, consulting, advisory or other agreement with any current employee, officer, director,
manager, advisor or consultant of the Company pursuant to which the Company has any current or future rights or obligations;


 


(16)any
Contract that contemplates or involves: (A) the payment or delivery of cash or other consideration by the Company; or (B) the
performance of services by, on behalf of or for the benefit of the Company;


 


(17)any
Contract with finders, sales agents, reseller and distributors or any other Contract providing for the sale, marketing or distribution
of Company Products by any Person.


 


(18)any
Contract with a Governmental Authority;


 


(19)any
Contract not terminable by the Company upon written notice given by the Company to the other party to such Contract; and


 




    	 	27	 



    	 	 	 



    


 


(20)any
other Contract to which the Company is a party or pursuant to which the Company has any rights or obligations or which otherwise
affects the Company or its assets or properties, not listed under subsections 1 through 16 of ‎Section 3.11(a) to the
Company Disclosure Schedule. 


 


(b)The
Company has delivered to the Purchaser accurate and complete copies of all written Material Contracts required to be identified
in ‎Section 3.11(a) of the Company Disclosure Schedule, including all amendments thereto. ‎Section 3.11(a)
of the Company Disclosure Schedule provides an accurate description of the material terms of each Material Contract identified
in ‎Section 3.11(a) of the Company Disclosure Schedule that is not in written form.


 


(c)Each
Material Contract is a valid and binding agreement of the party thereto, is in full force and effect, is enforceable by the Company
in accordance with its terms, and the Company is not and, to the Knowledge of the Company, no other party thereto is in default
under or breach of, any such Material Contract, and no event has occurred, and no circumstance or condition exists, that (with
or without notice or lapse of time) will, or would reasonably be expected to, (i) result in a violation or breach of any provisions
of any Material Contract by any party thereto, (ii) give any Person the right to declare a default or exercise any remedy under
any Material Contract, (iii) give any Person the right to accelerate the maturity or performance of any Material Contract, or
(iv) give any Person the right to cancel, terminate or modify any Material Contract. The Company has never waived any of its rights
under any Contract.


 


(d)Except
as set forth in ‎Section 3.11(d) of the Company Disclosure Schedule, the Company has never received any written notice
or any other communication regarding any material violation or breach of, or default under, any Material Contract.


 


(e)No
Person is renegotiating any amount paid by or payable to the Company under any Material Contract or renegotiating any other term
or provision of any Material Contract.


 


(f)Other
than as are set forth in ‎Section 3.11(f) of the Company Disclosure, all Contracts concerning the sale, marketing or
distribution by any Third Party of any Company Product or services related thereto (including, without limitation, agent or agency
agreement, sales representative, or Contract of similar nature, however called), and any power of attorney, proxy or similar instrument
in each case, with respect to the Company, are terminable by the Company, at any time and for any reason, upon prior notice to
the other party or holder thereof (it being acknowledged that certain non operative provisions of such Contracts may survive the
termination thereof, including confidentiality, governing law, venue and indemnification) without payment by the Company of any
amounts or consideration of any kind, and in any event following the Closing shall not limit or restrict the Purchaser in any
way in conducting the business of the Company or impose any Liability on the Purchaser.


 


Section
3.12Litigation.


 


(a)Except
as set forth in ‎‎ ‎Section 3.12(a) of the Company Disclosure Schedule there is no pending Proceeding
and to the Knowledge of the Company no Person has threatened to commence any Proceeding: (i) that involves the Company or its
business, any of the assets or properties owned or used by the Company, any Company Product or any Person whose liability the
Company has or may have retained or assumed, either contractually or by operation of law; (ii) that challenges, or that may be
reasonably expected to have the effect of preventing, delaying or making illegal the Transactions; or (iii) that relates to the
ownership of any share capital of the Company, or any Options, or any right to receive consideration as a result of this Agreement.
No event has occurred, and no claim, dispute or other condition or circumstance exists, that can reasonably be expected to give
rise to or serve as a basis for the commencement of any such Proceeding.


 




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(b)There
is no Order issued by any Governmental Authority by which the Company or any of the assets owned or used by the Company, is subject
or which restricts in any respect the ability of the Company to conduct its business as now being conducted, and as currently
proposed to be conducted (as evidenced by a written instrument or was discussed in any board or management meeting). To the Knowledge
of the Company, no officer, director, manager, shareholder or employee of the Company (in each case, in his or her capacity as
such) is subject to any Order that prohibits such person from engaging in or continuing any conduct, activity or practice relating
to the business of the Company.


 


Section
3.13Properties, Assets and Inventory.


 


(a)The
Company does not own any real property. The Company has a good and valid leasehold interest in each parcel of real property leased
by the Company or used or required for the conduct of its business (the “Company Leased Real Property”). ‎Section
3.13(a) of the Company Disclosure Schedule lists each lease, subleases, license or other occupancy agreement or arrangement
relating to the Company Leased Real Property (each, a “Real Property Lease”). The Company has the right to
use and occupy the Company Leased Real Property for the full term of the Real Property Lease relating thereto, subject to its
respective terms. 1 


 


(b)Other
than as set forth in ‎Section 3.13(b) of the Company Disclosure Schedule, the Company owns and has good and marketable
title to, or a valid license or leasehold interest in, all tangible personal property and assets used by the Company or required
for the conduct of its business (the “Assets”). None of the Assets is subject to any Lien, except for mechanic’s,
carrier’s, worker’s, material man’s, warehouse man’s, supplier’s, vendor’s or similar Liens
arising or incurred in the ordinary course of business with respect to Liabilities that are not yet due and payable.


 


(c)‎Section
3.13‎(c) of the Company Disclosure Schedule identifies all material Assets of the Company, including those Assets that
are being licensed or leased to the Company or used or required for the conduct of their business (the “Leased Assets”).
All Leased Assets are leased pursuant to valid, binding and enforceable Contracts in accordance with their respective terms. The
Company is not in default under any such Contract.


 


(d)The
Assets that are material to the conduct of the business as now being conducted, and as currently proposed to be conducted (as
evidenced by a written instrument or was discussed in any board or management meeting), have no material defects, are in good
operating condition and repair, ordinary wear and tear excepted, and have been reasonably maintained consistent with standards
generally followed in the industry (giving due account to the age and length of use of same, ordinary wear and tear excepted),
and are adequate and suitable for their present uses.


 


(e)Except
as set forth in ‎Section 3.13(e) of the Company Disclosure Schedule, the Assets constitute all of the tangible personal
property and assets used or held for use in connection with the businesses of the Company and represent all of the tangible personal
property and assets necessary for the conduct of the business of the Company as currently conducted and as proposed to be conducted,
and the Assets in the aggregate are in such operating condition and repair (subject to normal wear and tear) as is necessary for
the conduct of the businesses of the Company as currently conducted and as proposed to be conducted. 


 


(f)All
inventory of the Company, whether or not reflected on the balance sheets delivered as part of the Financial Statement pursuant
to Section 3.08 (the “Balance Sheets”), consists of a quality and quantity usable and salable in the
ordinary course of the Company’s business, except for obsolete items and items of below-standard quality, all of which have
been written off or written down to net realizable value in the Balance Sheets or on the accounting records of the Company as
of the Closing Date, as the case may be. The quantities of each item of inventory (whether raw materials, work-in-process or finished
goods) are not excessive, but are reasonable in the present circumstances of the Company.


 





 






1
Subject to due diligence 


 




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Section
3.14Warranty Obligations.


 


(a)‎Section
3.14(a) of the Company Disclosure Schedule sets forth (i) a list of all warranties, guarantees and written warranty policies
of the Company in respect of any of the Company Products and services, which are currently in effect (the “Warranty Obligations”),
and the duration of each such Warranty Obligation, (ii) each of the Warranty Obligations which is subject to any dispute or, to
the Knowledge of the Company, threatened dispute, and (iii) the experience of the Company with respect to warranties, guarantees
and warranty policies of or relating to the Company’s Products and services. True and correct copies of the Warranty Obligations
have been delivered to the Purchaser prior to the execution of this Agreement. There has not been any material deviation from
the Warranty Obligations, and no salesperson, employee or agent of or on behalf of the Company is authorized to undertake any
obligation to any customer or other Person in excess of such Warranty Obligations and the balance sheet included in the Financial
Statements reflects adequate reserves for Warranty Obligations.


 


(b)‎Section
3.14(b) of the Company Disclosure Schedule lists all pending warranty or indemnity claims made by any Person related to the
Company Products and services and the general nature of such claims. There is no pending or, to the Knowledge of the Company,
threatened Proceeding for any other product liability, backcharge, additional work, field repair or other claims by any Person
(whether based on Contract or tort and whether relating to personal injury, including death, property damage or economic loss)
arising from (i) services rendered by the Company, (ii) the sale, distribution, or installation of Software or other products
by the Company, or (iii) the operation of the businesses of the Company during the period through and including the Closing Date.


 


Section
3.15Customers and Suppliers. 


 


(a)‎Section
3.15 of the Company Disclosure Schedule sets forth a list of (a) each customer of the Company, during the period commencing
as of January 1, 2013 and ending on September 30, 2015, and the amount of revenues accounted for by such customer during each
such period, and (b) each supplier of any product or service to the Company. No such customer or supplier has indicated his dissatisfaction
regarding Company’s Products or materially reduced or changed the pricing or other terms of its business with the Company,
nor has indicated within the past year that it will stop purchasing or supplying products or services from or to the Company,
or materially reduce its general volume of purchases or supplies (without regard to normal short-term fluctuations) from or to
the Company. No unfilled customer order or commitment obligating the Company to process, manufacture or deliver products or perform
services will result in a loss to the Company upon completion of performance. No purchase order or commitment of the Company is
in excess of normal requirements, nor are prices provided therein in excess of current market prices for the products or services
to be provided thereunder.


 


(b)Since
January 1, 2013: (i) no customer has required any refund or other financial benefits due to failure of the Company Products to
meet specifications or service standards; and (ii) no Company Product was returned by a purchaser thereof or replaced by the Company
nor has the Company received any notice claiming that any Company Product is not in material conformity with applicable contractual
commitments or warranties.


 




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Section
3.16Intellectual Property.


 


(a)Products.
‎Section 3.16(a) of the Company Disclosure Schedule contains a complete and accurate list (by name and version number)
of all products and service offerings, including all Software, of the Company that have been or are currently sold, licensed,
distributed or otherwise made available to customers, as applicable, or that the Company intends to sell, license, distribute
or otherwise make available to customers in the future, including any products or services offerings currently under development,
including all works-in-progress and in development (collectively, together with any and all milestones and any developments, deliverables
and inventions, work product and inventions embodied in or resulting therefrom, the “Company Products”), and
identifies, for each such Company Product, whether the Company provides support or maintenance for such Company Product.


 


(b)Company
Intellectual Property. ‎Section 3.16(b) of the Company Disclosure Schedule sets forth a complete and accurate list
of (i) all Registered Intellectual Property and Internet Resources owned or controlled by the Company (the “Company Registered
Intellectual Property”), and (ii) all material unregistered Trademarks that are Company-Owned Intellectual Property.
For each listed item, ‎Section 3.16(b) of the Company Disclosure Schedule indicates, as applicable, the owner of such
Intellectual Property, the countries in which such Intellectual Property is registered or patented or in which an application
for same has been filed, the Patent, registration or application number, and the filing and expiration dates thereof; and sets
forth a list of all actions that are required to be taken by the Company (including the payment of any registration, maintenance
or renewal fees) within 120 days of the date hereof with respect to any such items of Intellectual Property in order to avoid
prejudice to, impairment or abandonment thereof. All necessary registration, maintenance and renewal fees in connection with all
Company Registered Intellectual Property have been paid and all necessary documents and articles in connection therewith have
been filed with the relevant patent, copyright, trademark or other Governmental Authority for the purposes of maintaining such
Company Registered Intellectual Property as of the date hereof. Except as set forth on ‎Section 3.16(b) of the Company
Disclosure Schedule, no Intellectual Property is owned by any Subsidiary of the Company.


 


(c)No
Restrictions on Company-Owned IP. All of the Company-Owned Intellectual Property is valid and subsisting and is wholly and
exclusively owned by the Company free and clear of all Liens and the Company has the right to use the Company-Owned Intellectual
Property without payment to any other Person. There are no facts or circumstances that would render any Company-Owned Intellectual
Property invalid or unenforceable. The Company is not bound by, and none of the Company-Owned Intellectual Property is subject
to, any Contract that in any way limits or restricts the ability of the Company to use, exploit, assert or enforce any such Company-Owned
Intellectual Property anywhere in the world. The Company has provided to the Purchaser any opinions of its patent or other Intellectual
Property counsel rendered or otherwise provided to the Company or otherwise relating to the business of the Company, including
any opinion relating to freedom to operate of the business of the Company as currently conducted and as currently proposed to
be conducted and any patent infringement analyses. Other than as set forth on ‎Section 3.16(c) of the Company Disclosure
Schedule, there is no Company-Owned Intellectual Property of which the Company is a joint owner or co-owner with another Person.
Other than as set forth on ‎Section 3.16(c) of the Company Disclosure Schedule, for any jointly owned or co-owned Company-Owned
Intellectual Property, there are no restrictions (by agreement between the Company and any third party joint owner or co-owner
of the Company-Owned Intellectual Property or otherwise) on the Company’s exercise of the full scope of rights afforded
a joint owner or co-owner of that type of Intellectual Property right under the Laws of the jurisdiction in which the Intellectual
Property right exists.


 


(d)No
Restrictions on Company Products. The Company solely and exclusively owns all right, title and interest in and to the Company
Products (other than the portions of the Company Products that are licensed and disclosed under ‎Section 3.16(d) of
the Company Disclosure Schedule), including all the Company Source Code, free and clear of all Liens and the Company Products
are fully transferable, alienable, licensable and otherwise distributable by the Company without restriction and without payment
to any Person or Governmental Authority and the Company has the right to use them without payment to any other Person. The Company
has not sold, transferred, assigned or otherwise disposed of any rights or interests therein or thereto.


 




    	 	31	 



    	 	 	 



    


 


(e)Licensed
Intellectual Property. (1) ‎Section 3.16(e) of the Company Disclosure Schedule lists all Contracts to which the
Company is a party relating to (i) the license in of any third-party Intellectual Property by the Company (other than off-the-shelf
software) that is used in the Company Products or is material to the operation of the Company or the Company Products, and (ii)
the license out of any Company Intellectual Property to any Person. (2) No Person who has licensed Intellectual Property to the
Company has ownership rights or license rights to improvements and other amendments made by the Company in such Intellectual Property.
Other than as set forth on ‎Section 3.16(e) of the Company Disclosure Schedule, the Company is not required, obligated,
or under any Liability, to make any payments by way of royalties, fees or otherwise to any owner, licensor of, or other claimant
to any third-party Intellectual Property, or to any other Person, with respect to the, ownership, use, possession, license-in,
license-out, sale, marketing, advertising or disposition, thereof or in connection with the conduct of the business of the Company
as conducted and as proposed to be conducted.


 


(f)Open
Source. (1) Except as set forth on ‎Section 3.16(f) of the Company Disclosure Schedule, no Company Product or Company-Owned
Intellectual Property is subject to the terms of any license governing Open Source Materials. ‎Section 3.16(f) of the
Company Disclosure Schedule lists all Open Source Materials used in the development of the Company Products, incorporated in or
distributed with the Company Products in any way, and briefly describes the general manner in which such Open Source Materials
were or are used. (2) The Company Owned Intellectual Property or Company Products: (i) do not incorporate Open Source Materials,
and are not combined with Open Source Materials; (ii) are not distributed in conjunction with any Open Source Materials; or (iii)
do not use Open Source Materials, in such a way that, with respect to (i), (ii) or (iii), creates, or purports to create obligations
for the Company with respect to any Company Owned Intellectual Property or Company Products or grant, or purport to grant, to
any Person, any rights or immunities under any Company Owned Intellectual Property or Company Products (including using any Open
Source Materials that require, as a condition of use, modification and/or distribution of such Open Source Materials, that other
Software incorporated into, derived from or distributed with such Open Source Materials be (A) disclosed or distributed in source
code form, (B) licensed for the purpose of making derivative works, or (C) redistributable at no charge). The Company’s
use and distribution of each component of Open Source Materials complies with all the applicable license terms of agreement, and
in no case does the use, modification or distribution of any Open Source Material gives rise, creates, or purports to create obligations
under such license terms or agreement to any rights or immunities to any third parties under any Company Product or Company-Owned
Intellectual Property, including without limitation, any obligation to disclose or distribute any Company Product or Company-Owned
Intellectual Property in Source Code form, to license any such Company Product or Company-Owned Intellectual Property for the
purpose of making derivative works, to distribute any such Company Product or Company-Owned Intellectual Property without charge
or grant any license to any of the Intellectual Property embedded therein.


 


(g)Created
Intellectual Property Properly Transferred to the Company. Except for the Intellectual Property licensed pursuant to the written
Contracts set forth in ‎Section 3.16(g) of the Company Disclosure Schedule, all Intellectual Property used in or necessary
for the conduct of the business of the Company as presently conducted was in the public domain or created solely by either (i)
employees of the Company acting within the scope of their employment who have validly and irrevocably assigned all of their rights
therein, including Intellectual Property rights, to the Company, or (ii) other Persons who have validly and irrevocably assigned
all of their rights therein, including Intellectual Property rights, to the Company, and no other Person owns or has any rights
to any portion of such Intellectual Property (other than non-exclusive end user licenses granted to the customers of the Company).
In addition, all such employees and other Persons specified in ‎Section 3.16(g) of the Company Disclosure Schedule
have waived or transferred, as the case may be, the right to exercise or assert moral rights against the Company. No current or
former employee or other person has the right to receive any compensation in connection with “Service Inventions”
under Section 134 of the Israeli Patent Law-1967.


 




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(h)Basic
Non-Infringement and Sufficiency. The operation of the business of the Company (including, without limitation, the design,
development, use, operation, import, export, manufacture, licensing, sale or other disposition of the Company Products or any
other exercise of rights in the Company Intellectual Property) does not, has not and will not breach, infringe or misappropriate
the Intellectual Property rights of any Person or violate (A) the rights of any Person (including rights to privacy or publicity)
or (B) any Contract (including terms of use). The Company has not (i) received any notice from any Person directly or indirectly,
whether in written or oral form, claiming that such operation, exercise of rights or any Company Product infringes, breaches or
misappropriates the Intellectual Property rights of any Person, constitutes unfair competition or trade practices under the Applicable
Laws of any jurisdiction or violates the rights of any Person (including rights to privacy or publicity) (nor, to the Knowledge
of the Company, does there exist any basis therefor) and (ii) received any offer for a license of Intellectual Property, including
but not limited to Patent rights, implying that the operation of or exercise of rights by the Company or any Company Product infringes,
breaches or misappropriates the Intellectual Property rights of a third party. The use of Company Products by the Company did
not and does not currently copy any data or information from Internet Resources in a form other than plain text. The use or operation
of Company Products does not require a license of any third-party Intellectual Property and is not in violation of the terms of
any license of any third-party Intellectual Property. The Company Intellectual Property together with intellectual property in
the public domain includes all of the Intellectual Property necessary and sufficient to enable the Company to conduct and operate
the business of the Company in the ordinary course of business, consistent with past practices, following the Closing. The Company
has not received any opinion of counsel that any Company Product or the operation of the business of the Company, as previously
or currently conducted, or as currently proposed to be conducted, infringes, breaches or misappropriates any Intellectual Property
rights of any Person.


 


(i)Company
Registered IP. The Company has not knowingly misrepresented or failed to disclosure any facts or circumstances for which it
has a duty to disclose in any application for any Company Registered Intellectual Property that would constitute fraud or a misrepresentation
with respect to such application or that would otherwise effect the validity or enforceability of any such Company Registered
Intellectual Property.


 


(j)No
Challenges to Company Intellectual Property. To the Knowledge of the Company, no Person is engaging, or has engaged in the
past, in any activity that infringes or misappropriates the Company Intellectual Property or violates the rights of the Company
(including rights to privacy or publicity). There is no Proceeding pending, asserted or, to the Knowledge of the Company, threatened
by, or against any other Person concerning any of the foregoing (nor, to the Knowledge of the Company, does there exist any basis
therefor). There is and has been no Proceeding pending, asserted or to the Knowledge of the Company, threatened by or against
the Company concerning, contesting or challenging the ownership, validity, registerability, enforceability or use of, or licensed
right to use, any Intellectual Property (nor, to the Knowledge of the Company, does there exist any basis therefor). No Company
Intellectual Property is subject to any outstanding Order or other disposition of any Proceeding.


 


(k)Source
Code Protection. Except as set forth on ‎‎ ‎Section 3.16(k) of the Company Disclosure Schedule,
none of the Company or any other Person acting on behalf of the Company has disclosed or delivered to any third party, or permitted
the disclosure or delivery by any escrow agent or other party of, any Company Source Code. No event has occurred, and no circumstance
or condition exists, that (with or without notice or lapse of time, or both) will, or would reasonably be expected to, require
the disclosure, license or delivery by the Company or any other Person acting on behalf of the Company to any Person of any Company
Source Code. ‎Section 3.16(k) of the Company Disclosure Schedule identifies each Contract under which the Company has
delivered, licensed, made available, deposited, or is or may be required to deposit, with an escrow agent or other third party,
any Company Source Code. Neither the execution of the Transaction Documents nor the consummation of any of the Transactions, in
and of itself, would reasonably be expected to result in the release of any Company Source Code from escrow.


 




    	 	33	 



    	 	 	 



    


 


(l)No
Adverse Consequences of Transaction. Neither this Agreement nor the Transactions (other than as a result of prior obligations
of the Purchaser or its Affiliates prior to the date hereof) will result in (i) the Purchaser or its Affiliates or the Company
granting to any Person any right to or with respect to any Intellectual Property owned by, or licensed to, any of them, (ii) the
Purchaser or its Affiliates or the Company being bound by, or subject to, any non-competition or other material restriction on
the operation or scope of their respective businesses, or (iii) the Purchaser or its Affiliates or the Company being obligated
to pay any royalties or other material amounts to any Person in excess of those payable by any of them, respectively, in the absence
of this Agreement or the Transactions.


 


(m)Protection
of Trade Secrets and Execution of Confidentiality and Invention Assignment Agreement. The Company has taken commercially reasonable
steps necessary to protect the confidentiality and value of all Trade Secrets, Company Source Code, confidential Company Intellectual
Property and all other Confidential Information. Without limiting the foregoing, (i) the Company has, and enforces, a policy requiring
each employee, consultant and contractor to execute proprietary information, confidentiality and assignment agreements in the
form set forth on ‎Section 3.16(m) of the Company Disclosure Schedule, and all current and former employees, consultants
and contractors of the Company have properly executed such an agreement in such form, and (ii) no Trade Secrets, Company Source
Code or material Confidential Information has been disclosed by the Company to any Person except pursuant to valid and appropriately
protective non-disclosure, assignment and/or license agreements that have not been breached. All use, disclosure or appropriation
of Confidential Information by the Company not owned by the Company has been pursuant to the terms of a written agreement between
the Company and the owner of such Confidential Information, or is otherwise lawful. All current and former employees and consultants
of the Company having access to Confidential Information or proprietary information of any of its customers or business partners
have executed and delivered to the Company an agreement regarding the protection of such Confidential Information or proprietary
information (in the case of proprietary information of the customers and business partners of the Company, to the extent required
by such customers and business partners).


 


(n)No
Government or University Funding or Involvement. Except as set forth in ‎Section 3.16(n) of the Company Disclosure
Schedule, none of the Company Intellectual Property was, directly or indirectly, in whole or in part: (i) developed by, or on
behalf of, or using funding, grants, or subsidies or any resources of, any Governmental Authority or any university, educational
institution, research center, foundation or any entity affiliated with such university, educational institution, foundation or
research center, (ii) developed utilizing any facilities of any Governmental Authority or any university, educational institution,
research center, foundation or any entity affiliated with such university, educational institution, foundation or research center,
(iii) developed by any employee, faculty or students of a Governmental Authority, university, college, other educational institution,
foundation or research center, or (iv) developed by any independent contractor who was concurrently working for a Governmental
Authority, university, college, other educational institution, foundation or research center. In the event that any such funds,
grants, subsidies, facilities, employees, faculty or students were used, such use will not preclude or restrict the sale, transfer,
alienation and/or license of any such Company Intellectual Property to the Purchaser free and clear of all Liens. 


 




    	 	34	 



    	 	 	 



    


 


(o)No
Material Product Defects. The Company has disclosed to the Purchaser all information relating to any performance or functionality
problem or issue with respect to any Company Product which does, or may reasonably be expected to, materially adversely affect
the value, functionality or fitness for the intended purposes of the same. The current versions of each of the commercially released
Company Products perform the functions described in all applicable published specifications or end user documentation, free of
defects, bugs or programming errors that materially and adversely affect the functionality of such Company Products. None of the
Company Products contain any code or feature that: (i) intentionally disrupts the operation of any Software, firmware, hardware,
computer system or network, (ii) permits any Person to access Software or data in an unauthorized manner, or (iii) deletes, damages
or corrupts any personal information, data, or communications.


 


(p)Compliance
with Privacy Laws. The Company has (i) complied in all material respects with its published privacy policies, internal privacy
policies and guidelines and all Applicable Laws relating to data privacy, data protection and data security, including with respect
to the collection, storage, transmission, transfer (including cross-border transfers), disclosure and use of personally identifiable
information, and (ii) taken commercially reasonable measures, including operational, managerial, physical and technical measures,
to ensure that personally identifiable information is protected against loss, damage and unauthorized and unlawful access, use,
modification or other misuse. There has been no loss, damage or unauthorized or unlawful access, use, modification or other misuse
of personally identifiable information by the Company and, to the Knowledge of the Company, their contractors. No Person (including
any Governmental Authority) has made any claim or commenced any written action with respect to loss, damage or unauthorized access,
use, modification or other misuse of any information or data by the Company, or any of its employees or contractors and, to the
Knowledge of the Company, there is no reasonable basis for any such claim or action. The execution, delivery and performance of
this Agreement and the transaction contemplated hereby comply with the applicable privacy policies of the Company. The Company
has at all times made all disclosures to, and obtained any necessary Consents from, users, customers, employees, contractors and
other applicable Persons required by Applicable Laws related to data privacy, data protection and data security.


 


(q)Compliance
with Internet Resource Terms. The Company and the Company Products comply with the applicable terms of use, and other applicable
terms and conditions governing the use, of Internet Resources that are utilized by the Company in the ordinary course of business
or utilized by the Company to market the Company Products.


 


(r)Compliance
with Third Party Licenses. The Company has a valid and enforceable license or other right to use, practice and exploit all
licensed Company Intellectual Property and all in the manner in which the foregoing Intellectual Property has been used, practiced
and exploited, is being used, practiced or exploited or is currently intended to be used, practiced or exploited and the Company
is in compliance with all licenses governing third party Intellectual Property utilized in or in connection with any Company Intellectual
Property, including the Company Products, 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.


 


(s)Information
Systems. ‎Section 3.16(s) of the Company Disclosure Schedule lists all the Software, equipment and information
systems (“Information Systems”) owned, licensed, leased or controlled by the Company that are material to the
operation of the business of the Company or the business of the customers of the Company. If such Information Systems are operated
or hosted by an outsourcer or other third-party provider, the identity and contact information for such third-party provider is
disclosed on ‎Section 3.16(s) of the Company Disclosure Schedule. None of the Information Systems depend upon any technology
or information of any third party (other than the Internet). Such Information Systems are sufficient for the conduct of the business
of the Company as currently conducted and as anticipated to be conducted by the Purchaser. The Company uses reasonable means,
consistent with state of the art generally available to the public, to protect the security and integrity of all such Information
Systems and the data stored thereon. The use by the Company of any Software or Information Systems does not exceed the scope of
the rights granted to the Company with respect thereto, including any applicable limitation upon the usage, type or number of
licenses, users, hardware, time, services or systems.


 




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(t)Industry
Bodies. The Company is not and has never been a member or promoter of, or a contributor to, any industry standards body or
any similar organization that could reasonably be expected to require or obligate any of the Company to grant or offer to any
other Person any license or right to any Company-Owned Intellectual Property Rights.


 


(u)Research
and Development Projects. ‎Section 3.16(u) of the Company Disclosure Schedule contains a list of all material research
and development projects currently in progress which are conducted or proposed to be conducted by the Company.


 


(v)Marketing
Materials.All products or services produced, marketed, licensed, sold, distributed or performed by or on behalf of the
Company and all products or services currently under development by the Company to customers and all services provided by or through
the Company to customers on or prior to the Closing conform in all material respects to (i) indications for use approved by Regulatory
Authorities and do not include any statements regarding any “off-label” uses, (ii) applicable contractual commitments,
express and implied warranties (to the extent not subject to legally effective express exclusions thereof), and (iii) to any representations
provided to customers and conform in all material respects to packaging, advertising and marketing materials and to applicable
product or service specifications or documentation. The Company has not received any written, or, to its Knowledge, oral, notice
alleging liability (and, to the Knowledge of the Company, there is no legitimate basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand against the Company giving rise to any material liability
relating to the foregoing Contracts) for replacement or repair thereof or other damages in connection therewith.


 


(w)General.
Any Liabilities of the Company arising in connection with, or resulting from, (i) the sale or license of any Company Intellectual
Property, including any Company Products, prior to the Closing Date, or (ii) the provision of any services by the Company prior
to the Closing Date to any Third Parties, shall be deemed to constitute a breach by the Company of the representations and warranties
set forth in ‎Section 3.16. 


 


Section
3.17Insurance Coverage.


 


‎Section
3.17 of the Company Disclosure Schedule identifies each insurance policy maintained by, at the expense of or for the benefit
of the Company or its business or assets and identifies any material claims made thereunder. The Company has delivered to the
Purchaser accurate and complete copies of all insurance policies listed on ‎Section 3.17 of the Company Disclosure
Schedule, each of which is in full force and effect. Such insurance policies provide insurance coverage for the properties, assets
and operations of the Company of the kinds, in the amounts and against the risks required to comply with Applicable Law and the
Contracts to which the Company or its Subsidiaries is a party and the risks of the sort normally insured by similar businesses.
There is no claim by the Company pending under any of such policies as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or in respect of which such underwriters have reserved their rights. All premiums payable
under all such policies have been timely paid and the Company has otherwise complied with all material terms and conditions of
all such policies. The Company has not received any notice or other communication regarding any actual or possible: (i) cancellation
or invalidation of any insurance policy; (ii) refusal of any coverage or rejection of any claim under any insurance policy; or
(iii) material adjustment in the amount of the premiums payable with respect to any insurance policy. Neither: (A) the execution,
delivery or performance of this Agreement or any of the Transaction Documents; nor (B) the consummation of the Transactions, will
(with or without notice or lapse of time): (1) result in the cancellation, invalidation or termination, or give any Person the
right to cancel, invalidate or terminate, any of the insurance policies of the Company; (2) result in the reduction of coverage,
or give any Person the right to reduce the coverage, under any such insurance policies; or (3) have any impact on the right or
ability of the Company to make a claim under any such insurance policies in respect of or relating to events or circumstances
that have occurred prior to the Closing.


 




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Section
3.18Tax Matters.


 


(a)The
Company has timely filed in a proper manner or caused to be filed with the appropriate Taxing Authorities all Tax Returns required
to be filed by the Company and has timely paid or caused to be paid all Taxes shown as due on any Tax Return. All such Tax Returns
are complete and accurate. All Taxes due and owing by the Company whether or not required to be shown on a Tax Return have been
fully paid, other than paid or accrued taxes as indicated in ‎Section 3.18‎(a) of the Company Disclosure Schedule.
With respect to any Taxes where payment is not yet due or owing, the Company has established in accordance with Accounting Principles
an adequate accrual for all such Taxes through the end of the last period for which the Company ordinarily records items on its
respective books and records. All required estimated Tax payments sufficient to avoid any underpayment penalties have been made
by or on behalf of the Company. The Company has no Liability for Taxes other than as set forth in ‎Section 3.18‎(a)
of the Company Disclosure Schedule. No written claim has ever been made by a Taxing authority or other Governmental Authority
in a jurisdiction where the Company does not file Tax Returns that the Company is or may be subject to taxation by that jurisdiction.
The Company has not had or does not have any nexus with any jurisdiction where it does not file a Tax Return, which nexus has
subjected it to Tax in such jurisdiction.


 


(b)The
unpaid Taxes of the Company did not, as of the last date of the Financial Statements, exceed the reserve for Tax liability set
forth on the face of the balance sheet included in the Financial Statements (rather than in any notes thereto), and (ii) will
not, as of the Closing Date, exceed such reserve. Since the last date of the Financial Statements, the Company has incurred no
liability for Taxes (i) from extraordinary gains or losses within the meaning of Accounting Principles, (ii) outside the ordinary
course of business, or (iii) otherwise inconsistent with past custom and practice.


 


(c)Except
as set forth on ‎‎ ‎Section 3.18(c) of the Company Disclosure Schedule, there is no dispute or matters
under discussion with any Taxing Authority in relation to the affairs of the Company. No deficiencies for Taxes with respect to
the Company have been claimed, proposed or assessed by any Taxing Authority or other Governmental Authority. There are no Proceedings,
investigations, assessments, audits, claims or other actions for or relating to any Liability in respect of Taxes pending or to
the Company’s knowledge threatened against the Company in respect of any Taxes and there are no matters under discussion,
audit or appeal with any Governmental Authority relating to Taxes. There are no circumstances which will or is likely to, whether
by lapse of time or the issue of any notice of assessment or otherwise, give rise to any dispute with any relevant Taxing Authority
in relation to the liability of the Company or accountability for Taxes, any claim made by it, any relief, deduction, or allowance
afforded to it, or in relation to the status or character of the Company under or for the purpose of any provision of any legislation
relating to Taxes. 


 


(d)The
Company has made available to the Purchaser (i) complete and accurate copies of all Tax Returns of the Company (and any predecessor
thereof) for all taxable years since the last tax year that is closed for tax purposes (either by a final assessment from the
Taxing Authority or due to the lapse of the statute of limitations with respect thereto); (ii) complete and accurate copies of
all audit or examination reports and statements of deficiencies assessed against or agreed to by the Company (or any predecessor
thereof or issued with respect to or relating to any Taxes due from or with respect to the Company); (iii) any closing or settlement
agreements entered into by or with respect to the Company with any Governmental Authority, (iv) all Tax opinions, memoranda and
similar documents addressing Tax matters or positions, and (v) all material written communications to, or received by the Company
from, any Governmental Authority including Tax rulings and Tax decisions.


 




    	 	37	 



    	 	 	 



    


 


(e)Neither
the Company (nor any predecessor thereof) has waived any statute of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency, nor has any request been made in writing for any such extension or waiver.


 


(f)The
Company has not requested, offered to enter into or entered into any agreement or other arrangement, or executed any waiver, providing
for any extension of time within which (i) to file any Tax Return covering any Taxes for which the Company is or may be liable;
(ii) to file any elections, designations or similar filings relating to Taxes for which the Company is or may be liable; (iii)
the Company is required to pay or remit any Taxes or amounts on account of Taxes; or (iv) any Governmental Authority may assess
or collect Taxes for which the Company is or may be liable. The Company will not be required to include any item of income in,
or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date,
including by virtue of (i) any change in method of accounting for a taxable period ending on or prior to the Closing Date, (ii)
any Tax related agreement or settlement concluded with any Taxing Authority, or (iii) any prepaid amount received on or prior
to the Closing Date.


 


(g)Neither
the Company nor any Subsidiary has made, prepared or filed any elections, designations or similar filings relating to Taxes or
entered into any agreement or other arrangement in respect of Taxes or Tax Returns that has effect for any period ending after
the Closing Date.


 


(h)Except
as set forth in ‎Section 3.18(h) of the Company Disclosure Schedule, the Company has never been assessed by any Taxing
Authority and notices of assessment have not been issued to the Company by any Taxing Authority. 


 


(i)No
power of attorney (other than powers of attorney authorizing employees or representative of the Company to act on behalf of the
Company) with respect to any Taxes has been executed or filed with any Taxing Authority, and each employee or representative of
the Company who is authorized to act on behalf of the Company with respect to any Taxes is identified on ‎‎ ‎Section
3.18(i) of the Company Disclosure Schedule.


 


(j)There
are no Liens for Taxes on any assets of the Company. Appropriate reserves have been established in accordance with Accounting
Principles with respect to all statutory Liens for Taxes that are being contested.


 


(k)Except
as set forth on ‎Section 3.18(k) of the Company Disclosure Schedule, since its incorporation, no closing agreements,
private letter rulings, technical advice memoranda, “taxation ruling or decision” (Hachlatat Misui) or similar
agreements or rulings relating to Taxes have been received from, or entered into or issued by any Governmental Authority with
or in respect of the Company or the holding in the Company. The Company has not requested or received a ruling from any Taxing
Authority.


 


(l)‎Section
3.18(l) of the Company Disclosure Schedule sets forth all Tax exemptions, material Tax holidays or other Tax reduction agreements
or arrangements or Orders applicable to the Company and any entity that is or was controlled by the Company (“Tax Incentives”).
The Company has made available to the Purchaser all material documentation relating to any Tax Incentives. The Company and any
entity that is or was controlled by the Company were, and are, in compliance with the requirements for any Tax Incentives. The
consummation of the actions contemplated in this Agreement will not have any adverse affect on: (i) the validity and effectiveness
of any Tax Incentives; and (ii) the continued qualification for the Tax Incentives or the terms or duration thereof or require
any recapture of any previously claimed incentive under such Tax Incentives.


 


(m)All
retained earning distributed under Section (d) of Chapter Seven of the Encouragement Law (Amendment 69 and Temporary Order), 5772-2012
(the “Temporary Order”), as applicable to the Company and any entity that is or was controlled by the Company,
were in full compliance with the conditions of the Temporary Order and the Tax due under the Temporary Order was correctly and
accurately calculated, reported and paid.


 




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(n)Except
as set forth on ‎‎ ‎Section 3.18(n) of the Company Disclosure Schedule, the Company is duly registered
for the purposes of Israeli value added tax and has complied in all respects with all requirements concerning value added Taxes
(“VAT”). The Company (i) has not made any exempt transactions (as defined in the Israel Value Added Tax Law
of 1975) and there are no circumstances by reason of which there might not be an entitlement to full credit of all VAT chargeable
or paid on inputs, supplies, and other transactions and imports made by it, (ii) have collected and timely remitted to the relevant
Taxing Authority all output VAT which it is required to collect and remit under any applicable law; and (iii) has not received
a refund for input VAT for which it is not entitled under any applicable Law. 


 


(o)The
Company duly and timely withheld and paid all Taxes and other amounts required by law to be withheld by it (including Taxes and
other amounts required to be withheld by it in respect of any amount paid or credited or deemed to be paid or credited by it to
or for the account or benefit of any Person, including any employees, officers, directors, independent contractor, creditor, shareholders
of the Company or other Person, whether or not an Israeli tax resident), other than such delays in payments and withholding as
would not reasonably likely to trigger any additional taxes, interest, fines or any other Loss in respect thereof.


 


(p)The
Company has duly and timely collected all amounts on account of any sales or transfer taxes, including goods and services, harmonized
sales and provincial or territorial sales taxes, required by law to be collected by it and has duly and timely remitted to the
appropriate Governmental Authority any such amounts required by law to be remitted by it.


 


(q)All
records which the Company are required under Applicable Law to keep for tax purposes (including all documents and records likely
to be needed to defend any challenge by any Governmental Authority to the transfer pricing of any transaction) have been duly
kept in all material aspects in accordance with all applicable requirements and are available for inspection at the premises of
the Company.


 


(r)The
Company has at all times been resident for Tax purposes of its country of incorporation. Since its incorporation, the Company
has not paid and has no liability for Taxes in any jurisdiction other than its respective country of incorporation; no claim has
been made in writing by any Taxing Authority in any jurisdiction where the Company does not file Tax Returns that it is or may
be subject to Tax by such jurisdiction.


 


(s)The
Company is not subject to any restrictions or limitations pursuant to Part E2 of the Israeli Income Tax Ordinance or pursuant
to any tax ruling made with reference to the provisions of Part E2.


 


(t)Any
related party transactions subject to Section 85A of the Israeli Tax Ordinance or any similar Applicable Law in foreign jurisdictions
conducted by the Company has been conducted on an arms-length basis in accordance with Section 85A of the Israeli Tax Ordinance
or Applicable Law in such foreign jurisdictions and in compliance with the requirements of Section 85A of the Israeli Tax Ordinance
and the regulations promulgated thereunder.


 


(u)The
Company has not undertaken or participating or engaged in any transaction which is listed on, or requires or will require special
reporting in accordance with, Section 131(g) of the Israeli Tax Ordinance and the Income Tax Regulations (Reportable Tax Planning),
5767-2006 promulgated thereunder.


 




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(v)Neither
the Company nor its Subsidiary has ever been a real property corporation (Igud Mekarke’in) within the meaning of this term
under Section 1 of the Israeli Land Taxation Law (Appreciation and Acquisition), 5723-1963.


 


(w)Except
as set forth in ‎Section 3.18(w) of the Company Disclosure Schedule, the Company has not filed or maintained any share
incentive or option plan that is intended to qualify under Section 102 of the Israeli Tax Ordinance.


 


Section
3.19Employees; Contractors and Benefit Plans.


 


(a)‎Section
3.19(a) of the Company Disclosure Schedule sets forth a list of the following with respect to each employee, manager, independent
contractor, consultant, agent, manager and director of the Company, including each employee on leave of absence, disability or
workers’ compensation leave, military or family leave or layoff status: name; job title; date of commencement of employment
or engagement; location of work; actual scope of employment (e.g., full, part-time or temporary), overtime classification
(e.g., exempt or non-exempt), prior notice entitlement, current annual compensation and all social benefits paid or payable
maintained or contributed to or with respect to which any potential liability is borne by the Company (whether now or in the future)
to each employee, manager, independent contractor, consultant, agent, manager and director of the Company and including but not
limited to the following entitlements: bonus (including type of bonus, calculation method and amounts received in the past two
years), deferred compensation, commissions (including calculation method and amounts received in the past two years), overtime
payment, vacation entitlement and accrued vacation, travel entitlement (e.g. travel pay, car, leased car arrangement and car maintenance
payments), pension arrangement and/or any other provident fund (including managers’ insurance and education fund), their
respective contribution rates (by percentage) and the salary basis for such contributions, whether such employee is subject to
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 his employment and on the basis of his entire salary)
and any change in compensation and such social benefits since January 1, 2011; sick and vacation leave that is accrued but unused;
and service credited for purposes of vesting and eligibility to participate under any Benefit Plan. The Company has provided to
the Purchaser complete copies of all Contracts with such Persons.


 


(b)‎Section
3.19(b) of the Company Disclosure Schedule sets forth an accurate and complete list identifying each employment, consulting,
severance, termination, retirement, profit sharing, bonus, incentive or deferred compensation, retention or transaction bonus
or change in control agreement, pension, stock option, restricted stock or other equity-based benefit, profit sharing, savings,
retirement, life, health, long term care, perquisite, fringe benefit, death benefit or other material compensation or benefit
plan, program, arrangement, agreement, fund or commitment (i) for the benefit or welfare of any current or former director, manager,
officer, shareholder, service provider or employee of any of the Company, or any shareholder or Affiliate thereof employing such
person for the benefit of the Company, or (ii) with respect to which the Company has any Liability. Such plans are referred to
collectively herein as the “Benefit Plans”. With respect to the Benefit Plans, except as set forth in ‎Section
3.19(b) of the Company Disclosure Schedule: (i) all employer and employee contributions to each Benefit Plan required by applicable
Legal Requirements or by the terms of such Benefit Plan have been made, or, if applicable, accrued, in accordance with normal
accounting practices; (ii) the fair market value of the assets of each funded Benefit Plan, the liability of each insurer for
any Benefit Plan funded through insurance or the book reserve established for any Benefit Plan, together with any accrued contributions,
is sufficient to procure or provide for the accrued benefit obligations, as of the Closing Date, with respect to all current and
former participants in such Benefit Plan according to the actuarial assumptions and valuations most recently used to determine
employer contributions to such Benefit Plan and no transaction contemplated by this Agreement shall cause such assets or insurance
obligations to be less than such benefit obligations; (iii) each Benefit Plan required to be registered with a Governmental Authority
has been registered with a Governmental Authority and has been maintained in good standing with applicable Governmental Authority;
and (iv) there are no pending, or, to the Knowledge of the Company, threatened or anticipated Actions in connection with any Benefits
Plan and there has been no act or omission which has given or may give rise to fines, penalties, taxes or related charges under
any applicable Legal Requirement. The Company has delivered to the Purchaser (i) accurate and complete copies of each Benefit
Plan to the extent currently effective, including all amendments thereto and copies of applicable resolutions adopting each such
amendment, (ii) all written Contracts relating to each Benefit Plan to the extent currently effective, (iii) correspondence to
or from any Governmental Authority relating to any Benefit Plan and (iv) all employee manuals and handbooks, employment policy
statements, employment customs, internal regulations, collective labor agreements and employment agreements with respect to Employees,
including written summaries of any of the foregoing to the extent not available in written form. The Company has performed all
obligations required to be performed by the Company thereunder, is not in default or violation of, and has no Knowledge of any
default or violation by any other party to, any Benefit Plan. Each Benefit Plan has been established and maintained in accordance
with its terms and in compliance in all material respects with Applicable Law. 


 




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(c)Other
than as set forth in ‎Section 3.19(c) of the Company Disclosure Schedule, the consummation of the Transactions will
not (either alone or together with any other event, including a subsequent termination of employment or service), and other than
in the event that the Transaction shall be deemed as a change of control by a competent court decision, entitle any employee,
service provider or independent contractor of the Company or any employee of such independent contractor to severance pay (including
increased severance payment), retention, bonus or other similar payment or accelerate the time of payment or vesting or trigger
any payment of funding (through a grantor trust or otherwise) of compensation or benefits under.


 


(d)There
is no Proceeding pending against or involving or threatened or anticipated against or involving any Benefit Plan (other than routine
claims for benefits).


 


(e)Except
as set forth in ‎Section 3.19(e) of the Company Disclosure Schedule, each person providing services to the Company
that has been characterized as a consultant or independent contractor and not an employee has been properly characterized as such,
and neither the Company, nor the Purchaser (or its Affiliates) has or will have any Liability, including under or on account of
any Benefit Plan, arising out of the hiring or retention of persons to provide services to the Company, treating such persons
as consultants or independent contractors and not as employees, or otherwise with respect to the period pre-Closing.


 


(f)Except
as set forth in ‎Section 3.19(f) of the Company Disclosure Schedule, the Company is not a party to any collective bargaining
Contract, collective labor agreement or other Contract or arrangement with a labor union, workers committee, trade union or other
organization or body involving any of its employees, or is not otherwise required (under any Applicable Law, under any Contract
or otherwise) to provide benefits or working conditions beyond the benefits and working conditions required by Applicable Law
or pursuant to applicable extension orders. The Company has not and is not subject to, and, except as set forth in ‎Section
3.19(f) of the Company Disclosure Schedule, no employee of the Company benefits from, any extension order (tzavei harchava)
except for extension orders applicable to all employees in Israel.


 


(g)The
Company is not subject to any Proceeding asserting that it has committed an unfair labor practice or seeking to compel it to bargain
with any labor union or labor organization nor is there pending or, to the Company’s Knowledge, threatened, nor has there
been, any labor strike, dispute, walk-out, work stoppage, slow-down or lockout involving the Company. The consummation of this
transaction will not entitle any third party (including any labor union or labor organization) to any payments under any labor
and collective bargaining agreements.


 




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(h)Except
as set forth in ‎Section 3.19(h) of the Company Disclosure Schedule, all Contracts between the Company and any of its
employees can be terminated by the Company upon not more than thirty (30) days notice. No Employee’s or Service Provider’s
employment by the Company requires the Company to obtain any special license, permit or other authorization of a Governmental
Authority.


 


(i)The
Company has complied with all Applicable Laws relating to its employees and their terms and conditions of employment, including,
without limitation, any Applicable Law related to workplace health and safety; all amounts that the Company is legally or contractually
required either (i) to deduct from its employees’ salaries or to transfer to such employees’ pension or provident,
life insurance, incapacity insurance, continuing education fund or other similar funds, or (ii) to withhold from its employees’
salaries and benefits and to pay to any Governmental Authority as required by the Applicable Law have been duly deducted, transferred,
withheld and paid, and the Company has no outstanding obligation to make any such deduction, transfer, withholding or payment;
and except as set forth in ‎Section 3.19(i) of the Company Disclosure Schedule, the Company is in compliance with all
Applicable Laws and/or Contracts and/or customs recognized as such by the Company relating to employment, employment practices,
wages, bonuses, pension benefits and other compensation matters and terms and conditions of employment related to its Employees
or Service Providers, including but not limited to, the Israeli Prior Notice to the Employee Law, 2002, the Israeli Notice to
Employee (Terms of Employment) Law, 2002, the Israeli Prevention of Sexual Harassment Law, 1998, the Hours of Work and Rest Law,
1951, the Annual Leave Law, 1951, the Salary Protection Law, 1958, the Increased Enforcement of Labor Laws, 2011, and the Israeli
Employment by Human Resource Contractors Law, 1996. There are no claims from or on behalf of any Employee or Service Providers
pending or, to the Company’s Knowledge, threatened against the Company.


 


(j)Except
as set forth in ‎Section 3.19(j) of the Company Disclosure Schedule, all obligations of the Company with respect to
statutorily required severance payments to current employees have been fully satisfied or have been fully funded by contributions
to appropriate insurance funds pursuant to Applicable Law, including the Israeli Severance Pay Law, 1963 and/or to the extent
required has been reserved for in the Financial Statements. There are no unwritten policies, practices or customs of the Company
that, by extension, could reasonably be expected to entitle any Employee or Service Provider to benefits in addition to what such
Employee or Service Provider is entitled to by applicable Legal Requirements or under the terms of such Employee’s or Service
Provider’s employment Contract (including unwritten customs or practices concerning bonuses, the payment of statutory severance
pay when it is not required under applicable Legal Requirements).


 


(k)Except
as set forth in ‎‎ ‎Section 3.19(k) of the Company Disclosure Schedule, to the Knowledge of the Company,
no Key Person: (i) intends to terminate his or her employment or engagement for the benefit of the Company; (ii) has received
an offer to join a business that is competitive with the business of Company; or (iii) is a party to or is bound by any confidentiality
agreement, non-competition agreement or other Contract (with any Person) that may have a material adverse effect on: (A) the performance
by such individual’s duties or responsibilities as an employee or consultant (as applicable) of the Company or its service
providers or (B) the businesses or operations of the Company.


 


Section
3.20Environmental Matters.


 


The
Company is, and has at all times been, in compliance with all Environmental Laws and all Environmental Permits, and there are
no liabilities of the Company under any such Applicable Law or any Hazardous Substance and there is no condition, situation or
set of circumstances that could reasonably be expected to result in or be the basis for any such liability. The Company has not
entered into any agreement that may require it to guarantee, reimburse, pledge, defend, hold harmless or indemnify any other party
with respect to liabilities arising out of Environmental Laws or any activities of the Company related to Hazardous Substance.


 




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Section
3.21Affiliate Transactions.


 


Except
as set forth in ‎Section 3.21 of the Company Disclosure Schedule, no shareholder, director, manager, officer or employee
of the Company or members of any of their immediate family or any Affiliate thereof (each of the foregoing, a “Related
Person”), other than in its capacity as a shareholder, director, manager, officer or employee of the Company, (i) has
been involved, directly or indirectly, in any business arrangement or other material relationship with the Company (whether written
or oral), (ii) directly or indirectly owns, or otherwise has any right, title, interest in, to or under, any property or right,
tangible or intangible, that is used by the Company or (iii) is engaged, directly or indirectly, in the conduct of the businesses
of the Company. In addition, to the Knowledge of the Company, no such Related Person has an interest in any Person that competes
with the businesses of the Company in any market presently served by the Company, in each case, except as explicitly set forth
in ‎Section 3.21 of the Company Disclosure Schedule. For purpose of this Agreement, “immediate family”
of any individual shall mean spouse, parents, children and brothers and sisters of such Person.


 


Section
3.22Finders’ Fees.


 


Except
as set forth in ‎Section 3.22 of the Company Disclosure Schedule, which is provided for informational purposes only
and, notwithstanding anything to the contrary in this Agreement or the Disclosure Schedules, shall not be regarded as an exception
of this representation, no broker, investment banker, financial advisor or other Person acting for or on behalf of the Company
is entitled to any broker’s, finder’s, financial advisor’s or similar fee or commission in connection with the
Transactions contemplated by this Agreement or any other Transaction Document. 


 


Section
3.23Bank Accounts.


 


Except
as provided in ‎Section 3.23 of the Company Disclosure Schedule, the Company has no outstanding credit facility, overdraft,
loan, loan stock, debenture, letter of credit, acceptance credit or other financial facility.


 


Section
3.24Company Transaction Expense. 


 


‎Section
3.24 of the Company Disclosure Schedule sets forth the Company’s current reasonable estimate of the total amount of
Transaction Expenses and Change of Control payments that are payable or have been paid by the Company.


 


Section
3.25Company Assets. 


 


Any
and all tangible and intangible assets, properties and rights, including any Intellectual Property, in which any Seller or its
Affiliates has or has had at any time any interest, right or claim and which are necessary with respect to physical assets or
necessary or desirable with respect to intellectual property, in connection with the business, operations, activities or technologies
of the Company as currently conducted and as proposed to be conducted, have been duly assigned and transferred by such Seller
or its Affiliates to the Company, as applicable, and such Seller or its Affiliates has no remaining right or interest in such
assets, properties and rights. In the event that, notwithstanding the foregoing, it transpires that any Seller or its Affiliates
has any right or interest in any such assets, properties and rights, then such Seller shall or shall cause his Affiliates to be
deemed to hold such rights or interests in trust for the sole benefit of the Company, as applicable, and the Seller shall and
shall cause its Affiliates to take any and all actions and execute any and all documents, as necessary or as otherwise deemed
by the Purchaser to be desirable in order to transfer and assign such rights and interests to the Company and vest full and unrestricted
title thereof in the Company.


 




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Section
3.26Full Disclosure.


 


This
Agreement (including its Schedules) does not, and the Transaction Documents do not: (i) contain any representation, warranty or
information that is false or misleading with respect to any material fact; or (ii) omit to state any material fact necessary in
order to make the representations, warranties and information contained and to be contained herein and therein (in the light of
the circumstances under which such representations, warranties and information were or will be made or provided) not false or
misleading. Neither the Company nor any of its Representatives is aware of any facts pertaining to the Company or its business
which have had or would reasonably be expected to have a Material Adverse Effect and which have not been disclosed in the Company
Disclosure Schedule.


 


Section
3.27Express Disclaimer of Other Representations and Warranties.


 


Purchaser
acknowledges and agrees that no representations or warranties are or have been made by the Company except for the representations
and warranties expressly set forth in this Agreement and in any other Transaction Document.


 


Article
IV


Representations
and Warranties of the Sellers


 


Subject
to the disclosures set forth in the Sellers Disclosure Schedule (each of which disclosures, in order to be effective, shall clearly
indicate the Section and, if applicable, the Subsection of this ‎Article IV to which it relates (unless and only to
the extent the relevance to other representations and warranties is readily apparent from the actual text of the disclosures),
and each of which disclosures shall also be deemed to be representations and warranties made by the Sellers, severally and not
jointly, to the Purchaser under this ‎Article IV), each Seller, severally and not jointly, represents and warrants
to the Purchaser that the statements contained in this ‎Article IV are true and correct as of the date of this Agreement
and will be true and correct as of the Closing Date:


 


Section
4.01Title to Company Shares; Pro Rata Portion.


 


Except
as set forth in ‎Section 4.01 of the Sellers Disclosure Schedule, such Seller has good and valid title to, and is the
sole lawful owner, free and clear of any and all Liens, beneficially and of record, of all of the Company Shares set forth opposite
the name of such Seller on ‎Section 3.07(c) of the Company Disclosure Schedule. The Seller has sole voting power and
sole power to issue instructions with respect to the matters set forth in this Agreement, sole power of disposition and sole power
to agree to all of the matters set forth in this Agreement, in each case with respect to the foregoing Company Shares. At the
Closing, Seller shall convey to the Purchaser, and the Purchaser shall acquire, good and marketable title to the respective Company
Shares referred to above, free and clear of any Liens and from any agreement, obligation or commitments to create, grant, give
or permit to maintain any Liens. Except as set forth in ‎Section 4.01 of the Sellers Disclosure Schedule, the Seller
has not sold, pledged or otherwise transferred (whether by operation of law or otherwise, including, without limitation, transfers
pursuant to any decree of divorce or separate maintenance, any property settlement, any separation agreement or any other agreement
with a spouse) any interests in the respective Company Shares to any person. All of such Company Shares set forth opposite the
name of such Seller on ‎Section 3.07(c) of the Company Disclosure Schedule (a) have been duly authorized and validly
issued, (b) are fully paid and non-assessable, and (c) have been issued in full compliance with (i) all applicable securities
laws and any other Applicable Laws and (ii) all requirements set forth in applicable Contracts. Except as set forth in ‎Section
4.01 of the Sellers Disclosure Schedule, the respective Company Shares are not subject to any shareholders agreements, voting
agreements, proxies, trusts, information rights, management rights, registration rights, first refusal, tag along, pre-emptive
or first offer rights, financial statement requirements or other provisions, agreements or understandings relating to the voting,
disposition or transfer of Company Shares thereof, which would continue to be binding upon the Purchaser after the Closing. Any
proxies heretofore given in respect of the respective Company Shares are not irrevocable, and any such proxies are or shall be
revoked by the Closing. The Pro Rata Portion appearing opposite the name of each Seller in Exhibit A, and the details set
forth in each Signing Seller Exercise, Sale and Waiver Letter and in each Non-Signing Seller Exercise, Sale and Waiver Letter,
is true and correct as of the date hereof and as of the Closing and may be relied upon by the Purchaser and is binding and enforceable
against such Seller’s respective successors, heirs, executors, and administrators.


 




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Section
4.02Authority; Binding Effect.


 


Such
Seller has full right, power and authority to enter into and to perform such Seller’s obligations under each of the Transaction
Documents to which such Seller is or may become a party. Such Seller has all requisite power and authority to execute, deliver
and perform his obligations under this Agreement and the other Transaction Documents to which such Seller is a party and to consummate
the transactions contemplated hereunder and thereunder. The execution, delivery and performance of this Agreement and the other
Transaction Documents to which such Seller is a party have been duly authorized by such Seller. All organizational actions and
proceedings required to be taken by or on the part of such Seller to authorize and permit the execution, delivery and performance
by such Seller of this Agreement and the other Transaction Documents to which such Seller is a party, have been duly and properly
taken. This Agreement has been, and each other Transaction Document to which such Seller is a party has been or will be, duly
executed and delivered by such Seller. This Agreement constitutes the legal, valid and binding obligation of such Seller, and,
assuming the due authorization, execution and delivery by the Purchaser (if party thereto), enforceable against such Seller in
accordance with its terms, except as such enforceability may be limited by principles of public policy and subject to the laws
of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies, and upon the execution of each of the other Transaction Documents, each of such
other Transaction Documents will constitute the legal, valid and binding obligation of such Seller who is a party thereto, and
will be, assuming the due authorization, execution and delivery by the Purchaser (if party thereto), enforceable against such
Seller in accordance with its terms, except as such enforceability may be limited by principles of public policy and subject to
the laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies.


 


Section
4.03Non-Contravention; Consents.


 


Neither
(1) the execution, delivery or performance of this Agreement and any other Transaction Document by such Seller, nor (2) the consummation
of the Transactions by such Seller, will (with or without notice or lapse of time):


 


(a)contravene,
conflict with or result in a violation or breach of any provisions of any Applicable Law, or give any Governmental Authority or
other Person the right to challenge the Transactions or to exercise any remedy or obtain any relief under any Order to which such
Seller is bound;


 


(b)contravene,
conflict with or result in a violation or breach of or a default under any provision of, or require any consent under, Seller’s
organizational documents, if applicable, or any Contract to which such Seller is a party or by which such Seller is bound, or
result in the creation of a Lien on any property or asset of such Seller or any of his Affiliates;


 


(c)except
as set forth on ‎Section 4.03(c)of the Sellers Disclosure Schedule and as provided in this Agreement, require to make
any filing with or give any notice to, or to obtain any Consent from, any Person; or


 




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(d)other
than as expressly provided in this Agreement, cause any Option or right of pre-emption to become exercisable, expect to the extent
it has been waived on the date hereof.


 


Section
4.04Capacity of Seller.


 


(a)Such
Seller:


 


(1)is
not bankrupt or insolvent has not, at any time, (A) made or proposed a general assignment, arrangement or composition for the
benefit of creditors, (B) filed, or had filed against such Seller, any bankruptcy petition or similar filing, (C) suffered the
attachment or other judicial seizure of all or a substantially all of such Seller’s assets, (D) admitted in writing such
Seller’s inability to pay such Seller’s debts as they become due, or (E) taken or been the subject of any action that
will have an adverse effect on such Seller’s ability to comply with or perform any of such Seller’s covenants or obligations
under any of the Transaction Documents; or


 


(2)is
not subject to any Applicable Law that may have an adverse effect on such Seller’s ability to comply with or perform any
of such Seller’s covenants or obligations under any of the Transaction Documents.


 


(b)There
is no Proceeding pending and, to such Seller’s Knowledge, no Person has threatened to commence any Proceeding that may have
an adverse effect on the ability of such Seller to comply with or perform any of such Seller’s covenants or obligations
under any of the Transaction Documents. To the Knowledge of the Sellers, no event has occurred, and no claim, dispute or other
condition or circumstance exists, that will or might give rise to or serve as the basis for any such Proceeding or the threat
of any such Proceeding.


 


(c)The
consummation of the Transactions shall not constitute a fraudulent transfer by such Seller under applicable bankruptcy and other
similar laws relating to bankruptcy and insolvency of such Seller.


 


Section
4.05Share Capital.


 


In
the case of a Seller that is a company, Exhibit A sets forth a complete and accurate list, by name, of such Seller’s
ultimate beneficial holder(s), their addresses, the number of shares owned by each of them identified by class and series and
their Pro Rata Portion, other than with respect to publicly traded companies regarding their securities which are held by the
public.


 


Section
4.06Tax Matters.


 


Such
Seller (with respect to its holdings in the Company) is not subject to any restrictions or limitations pursuant to Part E2 of
the Israeli Income Tax Ordinance or pursuant to any tax ruling made with reference to the provisions of Part E2.


 


Section
4.07Disclosure.


 


This
Agreement and any other Transaction Document executed by the Seller do not and will not (a) contain any representation, warranty
or information made by or relating to such Seller that is false or misleading with respect to any material fact, or (b) omit to
state any material fact necessary in order to make the representations, warranties and information made by or relating to such
Seller contained herein and therein (in the light of the circumstances under which such representations, warranties and information
were or will be made or provided) not false or misleading with respect to such Seller. The Seller is not aware of any facts pertaining
to the Company which have had or would reasonably be expected to have a Material Adverse Effect and which have not been disclosed
in the Company Disclosure Schedule.


 




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Section
4.08Finder’s Fees.


 


Except
as set forth on ‎Section 4.08 of the Sellers Disclosure Schedule, which is provided for informational purposes only
and, notwithstanding anything to the contrary in this Agreement or the Disclosure Schedules, shall not be regarded as an exception
of this representation, no broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s,
financial advisor’s or similar fee or commission in connection with the Transactions contemplated by this Agreement or any
other Transaction Document to which such Seller is a party based on any Contract to which such Seller is a party or that is otherwise
binding upon such Seller.


 


Section
4.09Company Assets. 


 


Any
and all tangible and intangible assets, properties and rights, including any Intellectual Property, in which any Seller or its
Affiliates has or has had at any time any interest, right or claim and which are necessary with respect to physical assets or
necessary or desirable with respect to intellectual property in connection with the business, operations, activities or technologies
of the Company as currently conducted and as proposed to be conducted, have been duly assigned and transferred by such Seller
or its Affiliates to the Company, as applicable, and such Seller or its Affiliates has no remaining right or interest in such
assets, properties and rights. In the event that, notwithstanding the foregoing, it transpires that any Seller or its Affiliates
has any right or interest in any such assets, properties and rights, then such Seller shall or shall cause his Affiliates to be
deemed to hold such rights or interests in trust for the sole benefit of the Company, as applicable, and the Seller shall and
shall cause its Affiliates to take any and all actions and execute any and all documents, as necessary or as otherwise deemed
by the Purchaser to be desirable in order to transfer and assign such rights and interests to the Company and vest full and unrestricted
title thereof in the Company.


 


Section
4.10Express Disclaimer of Other Representations and Warranties.


 


Purchaser
acknowledges and agrees that no representations or warranties are or have been made by the Sellers except for the representations
and warranties expressly set forth in this Agreement and in any other Transaction Document.


 


Article
V


Representations
and Warranties of the Purchaser


 


The
Purchaser represents and warrants to the Company and the Sellers that the statements contained in this Article V are true
and correct as of the date of this Agreement and will be true and correct as of the Closing:


 


Section
5.01Corporate Authorization.


 


The
Purchaser is a limited liability company duly incorporated and validly existing under the laws of Israel. The Purchaser has all
necessary corporate power and authority to enter into and to perform its obligations under this Agreement and the other Transaction
Documents to which it is a party, and the execution, delivery and performance by the Purchaser of this Agreement and the other
Transaction Documents to which it is a party have been duly authorized by all necessary corporate action on the part of the Purchaser.
This Agreement constitutes and any other Transaction Document to which the Purchaser is or will be a party constitutes or will
constitute the legal, valid and binding obligation of the Purchaser, and assuming the due authorization and execution thereof
by the other parties thereto, enforceable against the Purchaser in accordance with its terms, except as such enforceability may
be limited by principles of public policy and subject to the laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies.


 




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Section
5.02Non Contravention.


 


Neither
the execution, delivery or performance of this Agreement or any of the Transaction Documents by the Purchaser nor the consummation
of the Transactions by the Purchaser, subject to the terms of this Agreement, will (with or without notice or lapse of time):


 


(a)contravene,
conflict with or result in a violation of any of (i) the provisions of the articles of association or any other charter documents
of the Purchaser or (ii) any Applicable Law;


 


(b)contravene,
conflict with or result in a violation of, or give any Governmental Authority or other Person the right to challenge any of the
Transactions or to exercise any remedy or obtain any relief under, any Applicable Law or any Order to which the Purchaser or any
of the assets owned or used by the Purchaser is subject; or


 


(c)contravene,
conflict with or result in a violation or breach of, or result in a default under, any provision of any material Contract by which
the Purchaser is bound,


 


except,
in the case of clauses (a) through (c) above, for such violations, breaches or defaults as would not, individually or in the aggregate,
have a material adverse effect on the ability of the Purchaser to consummate the transactions contemplated by this Agreement or
any other Transaction Document.


 


The
Purchaser is not and will not be required to make, subject to the terms of this Agreement, any filing with or give any notice
to, or to obtain any Consent from, any Person in connection with: (x) the execution, delivery or performance by the Purchaser
of this Agreement or any of the other Transaction Documents; or (y) the consummation by the Purchaser of the Transactions contemplated
by this Agreement (except as required by Applicable Law and stock exchange rules).


 


Section
5.03Finders’ Fees.


 


No
broker, investment banker, financial advisor or other Person acting for or on behalf of the Purchaser is entitled to any broker’s,
finder’s, financial advisor’s or similar fee or commission in connection with the Transactions contemplated by this
Agreement or any other Transaction Document.


 


Article
VI

Pre Closing Covenants 


 


Section
6.01Conduct of Business.


 


From
the date of this Agreement until the Closing Date, or the earlier termination of this Agreement in accordance with its terms,
the Company shall, and the Sellers shall cause the Company to, conduct its businesses in the ordinary course consistent with past
practice and use commercially reasonable efforts to (i) preserve intact its respective present business organizations, (ii) maintain
in effect Governmental Authorizations necessary for the conduct of the Company’s business, (iii) keep available the services
of all officers, employees and service providers of the Company, and (iv) maintain satisfactory relationships with the customers,
lenders and suppliers of the Company and others having a business relationship with the Company. Without limiting the generality
of the foregoing, except as expressly contemplated by this Agreement or pursuant to the prior written consent of the Purchaser,
the Company shall not, and the Sellers shall ensure that the Company and each of its Subsidiaries shall not:


 


(a)amend
its articles of association or other similar organizational documents (whether by merger, consolidation or otherwise);


 




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(b)declare,
set aside or pay any dividend or other distribution (whether in cash, share or property or any combination thereof) in respect
of any Company Shares or any other securities, or redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or otherwise
acquire any Company Shares or any other securities;


 


(c)affect
any stock split (including issuance of bonus shares), consolidation, reorganization, reclassification, combination, recapitalization
or other like change with respect to the Company Shares or Options or any other securities;


 


(d)(i)
issue, deliver or sell, or authorize the issuance, delivery or sale of, any Company Shares or Options or any other securities;
or (ii) amend any term of any Company Share or Options or any other securities (whether by merger, consolidation or otherwise),
other than as is contemplated herein with respect to the exercise of certain existing options to purchase the Shares as are outstanding
as of the date hereof and the sale of the underlying Shares of such Options as part of this Transaction;


 


(e)Except
as set forth in Section 6.01(e) of the Company Disclosure Schedule, and other than in the ordinary course of business and
consistent with past practice in which the Company may incur any Liabilities not in excess of US$50,000 individually, the Company
shall not incur any capital expenditures or any obligations or Liabilities in excess of US$100,000 in the aggregate;


 


(f)acquire
(by merger, consolidation, acquisition of share or assets or otherwise), directly or indirectly, any securities or all or substantially
all of the assets, properties or businesses of any third party;


 


(g)sell
or otherwise transfer, or create or incur any Lien on, any of the Company share capital (registered or issued);


 


(h)sell,
lease or otherwise transfer, or create or incur any Lien on, any tangible or intangible assets, properties or rights of the Company
not in the ordinary course consistent with past practice;


 


(i)make
any loans, advances or capital contributions to, or investments in, any other Person in excess of US$50,000 in the aggregate;


 


(j)create,
incur, assume, suffer to exist or otherwise be liable with respect to any Company Debt in excess of US$100,000 in the aggregate,
except as set forth in Schedule 6.01(j) of the Company’s Disclosure Schedule;


 


(k)enter
into, amend or modify in any respect or terminate any Contract or otherwise waive, release or assign any material rights, claims
or benefits of the Company not in the ordinary course consistent with past practice;


 


(l)(i)
grant or increase any severance or termination pay to (or amend any existing arrangement with) any director, manager, officer,
or senior employee of the Company, (ii) other than in accordance to agreements entered into prior to the date hereof and disclosed
in the Company Disclosure Schedule, increase benefits payable under any existing severance or termination pay policies or employment
agreements or any other benefits payable to any director, manager, officer or senior employee of the Company, (iii) enter into
any employment, deferred compensation or other agreement or offer (or amend any such existing agreement or offer) with any director,
manager, officer, or senior employee of the Company, or (v) terminate any Key Person;


 


(m)change
the Company’s methods of accounting or accounting practices, except as required by concurrent changes in Accounting Principles
and as agreed to by its independent public accountants;


 




    	 	49	 



    	 	 	 



    


 


(n)commence,
settle or offer or propose to settle (i) any Proceeding involving or against the Company not in the ordinary course consistent
with past practice, (ii) any Proceeding against any of the Company’s officers directors or managers, or (iii) any Proceeding
that relates to the Transactions;


 


(o)other
than as may be required under Applicable Law or with the prior review, comment and written approval of Purchaser, make or change
any Tax election; settle or compromise any claim, notice, audit report or assessment in respect of Taxes; file any Tax Return
or prepare any financial statements; enter into any Tax allocation agreement, Tax sharing agreement, Tax indemnity agreement,
pre-filing agreement, advance pricing agreement, cost sharing agreement or closing agreement relating to any Tax; change or adopt
any annual Tax accounting period or method of Tax accounting; surrender or forfeit any right to claim a Tax refund; file any Tax
petition, Tax complaint or administrative Tax appeal; or consent to any extension or waiver of the statute of limitations period
applicable to any Tax claim or assessment or request, negotiate, apply for or receive a Tax ruling on its own behalf or on behalf
of any of the Sellers;


 


(p)enter
into Contracts that contemplate the Company engaging in a new line of business;


 


(q)form
or acquire any Subsidiaries;


 


(r)apply
for or accept any Grant, except as set forth in Schedule 6.01(r) of the Company’s Disclosure Schedule;


 


(s)take
any action which would adversely affect the ability of the parties to consummate the transactions contemplated by this Agreement;
or


 


(t)agree,
resolve or commit to do any of the foregoing.


 


Section
6.02No Solicitation; Other Offers.


 


From
the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms,
(a) each Seller shall not, and shall cause each of its Representatives not to, and (b) the Company shall not, and shall cause
each of its Representatives not to, directly or indirectly: (i) solicit, initiate, facilitate, support, seek, respond, induce,
entertain or encourage, or take any action to solicit, initiate, facilitate, support, seek, respond, induce, or encourage any
inquiries, announcements or communications relating to, or the making of any submission, proposal or offer that constitutes, or
that would reasonably be expected to lead to, an Acquisition Proposal that may involve the Purchased Shares; (ii) enter into,
participate in, maintain or continue any discussions or negotiations relating to any Acquisition Proposal that may involve the
Purchased Shares with any Person other than the Purchaser; (iii) furnish to any Person other than the Purchaser any information
that the Company or such Seller believes or should reasonably know would be used for the purposes of formulating any inquiry,
expression of interest, proposal or offer relating to an Acquisition Proposal that may involve the Purchased Shares or take any
other action regarding any inquiry, expression of interest, proposal or offer that constitutes, or would reasonably be expected
to lead to, an Acquisition Proposal that may involve the Purchased Shares; (iv) accept any Acquisition Proposal or enter into
any agreement, arrangement or understanding (whether written or oral) providing for the consummation of any transaction contemplated
by any Acquisition Proposal or otherwise relating to any Acquisition Proposal; or (v) submit any Acquisition Proposal or any matter
related thereto to the vote of the shareholders of the Company. Each Seller shall, and shall cause each of its Representatives
to, and the Company shall, and shall cause each of its Representatives to, immediately cease and cause to be terminated any and
all existing activities, discussions or negotiations with any Persons conducted prior to or on the date of this Agreement with
respect to any Acquisition Proposal that may involve the Purchased Shares, and shall promptly (and in any event within 24 hours)
provide the Purchaser with: (x) a written description of any expression of interest, inquiry, proposal or offer relating to a
possible Acquisition Transaction that is received by the Company or such Seller or by any Representative of the Company or such
Seller from any Person (other than the Purchaser), including in such description the identity of the Person from which such expression
of interest, inquiry, proposal or offer was received (the “Other Interested Party”); and (y) a copy of each
written communication and a complete summary of each other communication transmitted on behalf of the Other Interested Party or
any of the Other Interested Party’s Representatives to the Company or any Seller or any Representative of the Company or
Seller or transmitted on behalf of the Company or Seller or any Representative of the Company or Seller to the Other Interested
Party or any of the Other Interested Party’s Representatives. Furthermore, the parties agree that each of the Sellers shall
be obligated, and subject to, Sections 3 (Right of First Offer), 7 (Effect of Failure to Comply), 11 (Miscellaneous) all of the
provisions of the Shareholders Agreement, and the Purchaser shall have all the rights provided to it under the Shareholder Agreement,
in each case, as if such Shareholder Agreement was executed and in full force and effect, as of the date hereof, and Purchaser
shall be deemed to own, for the purpose of such obligations and rights, all of the Purchased Shares.


 




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Section
6.03Access to Information.


 


From
the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms,
the Company shall (a) give the Purchaser and its Representatives during normal business hours, reasonable access to the offices,
properties, books and records, customers, suppliers, agents and partners of the Company, so long as such access does not unreasonably
interfere with the conduct of the Company’s business (b) furnish to the Purchaser and its Representatives such financial
and operating data and other information relating to the Company as such Persons may request, and (c) instruct its respective
employees, counsel, accountants and financial and tax advisors to cooperate with the Purchaser in its due diligence investigation
of the Company; provided, however, that no investigation pursuant to this ‎Section 6.03 shall affect
or be deemed to modify any representation or warranty made by the Company or the Sellers herein. 


 


Section
6.04Notices of Certain Events.


 


(a)From
the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms,
the Company and each Seller shall promptly notify the Purchaser of:


 


(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;


 


(2)any
notice or other communication from any Governmental Authority (i) delivered in connection with the Transactions, or (ii) indicating
that a Governmental Authorization is revoked or about to be revoked or that a Governmental Authorization is required in any jurisdiction
in which such Governmental Authorization has not been obtained;


 


(3)any
actions, suits, claims, investigations or proceedings commenced or, to their respective Knowledge, threatened against, relating
to or involving or otherwise affecting the Company, that, if pending on the date of this Agreement, would have been required to
have been disclosed pursuant to ‎Article III or ‎Article IV, as the case may be, or that relate to the consummation
of the Transactions;


 


(4)any
inaccuracy in or breach of any of their respective representations, warranties or covenants contained in this Agreement; and


 


(5)any
event, condition, fact or circumstance that would make (or is reasonably expected to make) the timely satisfaction of any of the
conditions set forth in ‎Article VIII impossible or unlikely, or cause it to be delayed.


 




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(b)If
any event, condition, fact or circumstance that is required to be disclosed pursuant to ‎Section 6.04(a) requires any
change in the Company Disclosure Schedule or the Sellers Disclosure Schedule, as applicable, or if any such event, condition,
fact or circumstance would require such a change assuming the Company Disclosure Schedule or the Sellers Disclosure Schedule,
as applicable, were dated as of the date of the occurrence, existence or discovery of such event, condition, fact or circumstance,
then the Company or such Seller, as applicable, shall promptly deliver to the Purchaser an update to the Company Disclosure Schedule
or the Sellers Disclosure Schedule, as applicable, specifying such change. No such notice or update shall be deemed to supplement
or amend the Company Disclosure Schedule or Sellers Disclosure Schedule, as applicable, for the purpose of (i) determining the
accuracy of any of the representations and warranties made by the Company or any Seller in this Agreement and any indemnification
obligation hereunder, or (ii) determining whether any of the conditions set forth in ‎Article VIII has been satisfied
(the “Disclosure Schedules Updates for Informational Purposes”); provided that with respect to any update of
any representation of the Company that is not a Fundamental Representation resulting from events that occurred following the date
hereof, the Company may elect that such update shall be deemed to supplement or amend the Company Disclosure Schedule (such updates,
the “Disclosure Schedules Updates for Exception Purposes”).


 


Section
6.05Restriction on Transfer.


 


Each
Seller agrees that, prior to the Closing, such Seller shall not directly or indirectly sell or otherwise transfer or dispose of,
or pledge or otherwise permit to be subject to any Lien, any Purchased Shares, or any direct or indirect beneficial interest therein.


 


Section
6.06Filings.


 


(a)Each
of the parties shall, and shall cause their respective Representatives to, promptly and no later than ten (10) Business Days after
the date hereof, execute and file, or join in the execution and filing of, any application, notification (including any notification
or provision of information, if any, that may be required under the Antitrust Laws) or other document that may be required to
be delivered by such party to, or filed by such party with, in order to obtain the Consent of any Governmental Authority or Third
Party, which may be reasonably required, or which Purchaser may reasonably request, in connection with the consummation of the
transactions contemplated by this Agreement and the Transaction Documents.


 


(b)Regarding
filings to, or any communication with, any Governmental Authority other than the Israel Antitrust Authority - Any such filings
or notification by any Seller or the Company shall be subject to the prior review and approval of the Purchaser. The Company and
each Seller shall, upon request of the Purchaser, promptly deliver to the Purchaser a copy of each such filing made, each such
notice given and each such Consent obtained by it. Each of the parties shall use commercially reasonable efforts to obtain, and
to cooperate with the other to promptly obtain, all such Consents and shall pay any associated filing fees payable by it with
respect to such Consents. The Company and the Sellers shall not amend or modify or otherwise waive, release or assign any material
rights, claims or benefits of the Company or pay any fee or other compensation to any Person (other than associated filing fees
payable by it with respect to such Consents) in order to obtain any Consent by such party in connection with the Transactions.
If such Consents are subject to conditions that are implemented on the Purchaser, the Company or its Affiliates, the Company shall
receive Purchaser’s approval of such conditions. Each of the parties shall promptly inform the other of any material communication
between it (and its Representatives) and any Governmental Authority regarding any of the transactions contemplated by the Transaction
Documents or the required Consents. Each of the parties shall cause all documents that it is responsible for filing with any Governmental
Authority or Third Party to comply as to form and substance in all material respects with the Applicable Laws, shall keep each
other apprised of the status of any communications with, and any inquiries or requests for additional information from, any Governmental
Authority or Third Party and shall comply promptly with any such inquiry or request. If any of the parties or any of their Representatives
receives any formal or informal request for supplemental information or documentary material from any Governmental Authority or
Third Party with respect to the transactions contemplated by the Transaction Documents or the required Consents, then it shall
make, or cause to be made, as soon as reasonably practicable, a response in compliance with such request, in consultation with
and while considering in good faith the views of the other party.


 




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(c)Regarding
filings to, and communications with, the Israel Antitrust Authority – subject to any applicable law, the Company, the Purchaser
and the Shareholders Representative shall, upon request of the other Party, promptly deliver to the requestor a copy of each such
filing made, each such notice given and each such Consent obtained by it. Each of the Company, the Purchaser and the Sellers,
shall use commercially reasonable efforts to obtain, and to cooperate with the other to promptly obtain, the Consent required
under Antitrust Laws and shall pay any associated filing fees payable by it with respect to such Consents. Each of the parties
shall promptly inform the other (and in the case of informing the Sellers, shall inform the Shareholders Representative) of any
material communication between it (and its Representatives) and the Israel Antitrust Authority regarding any of the transactions
contemplated by the Transaction Documents or the required or suggested Consents. Each of the parties shall cause all documents
that it is responsible for filing with the Israel Antitrust Authority to comply as to form and substance in all material respects
with the Applicable Laws, shall keep each other (and in the case of the Sellers, shall keep the Shareholders Representative) apprised
of the status of any communications with, and any inquiries or requests for additional information from the Israel Antitrust Authority
and shall comply promptly with any such inquiry or request. If any of the parties or any of their Representatives receives any
formal or informal request for supplemental information or documentary material from the Israel Antitrust Authority with respect
to the transactions contemplated by the Transaction Documents or the required Consents, then it shall make, or cause to be made,
as soon as reasonably practicable, a response in compliance with such request, while considering in good faith the views of the
other party (and in the case of the Sellers, with the Shareholders Representative).


 


(d)Notwithstanding
anything in this Agreement to the contrary, if any administrative, judicial action or other Proceeding is instituted or threatened
to be instituted challenging any transaction contemplated by the Transaction Documents as violative of any Antitrust Laws, it
is expressly understood and agreed that: (i) Purchaser shall not have any obligation to litigate or contest any administrative,
judicial action or other Proceeding or any Order, whether temporary, preliminary or permanent; and (ii) Purchaser shall be under
no obligation to make proposals, execute or carry out agreements or submit to Orders providing for (A) the sale, license or other
disposition or holding separate (through the establishment of a trust or otherwise) of any assets or categories of assets of any
of the Purchaser or any of its affiliates or the Company or any of its assets, properties or rights, (B) the imposition of any
limitation or regulation on the ability of Purchaser or any of their affiliates to freely conduct their business or the business
of the Company or own any assets, or (C) the holding separate of the Company or any of its assets, properties or rights or any
limitation or regulation on the ability of Purchaser or any of their affiliates to exercise full rights of ownership thereon or
to conduct their business or the Company’s business; (any of the foregoing, an “Antitrust Restraint”).
Subject to the foregoing, the parties shall each instruct their respective counsels to cooperate with each other and use reasonable
efforts to facilitate and expedite the identification and resolution of any antitrust issues and shall use reasonable efforts
to assure that the respective waiting periods required by the Antitrust Laws have expired or been terminated at the earliest practicable
dates. Nothing in this Section ‎Section 6.06 shall limit a party’s right to terminate this Agreement pursuant to ‎Article
IX.


 




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(e)In
the event that under this Agreement, any Consents are not a condition to the Closing or their satisfaction was waived, then each
of the parties shall continue to be bound by this ‎Section 6.06 after the Closing in order to obtain the foregoing as soon
as reasonably possible after the Closing.


 


Section
6.07Third Party Consents and Notices.


 


(a)Each
of the Company and the Sellers shall use its commercially reasonable efforts to obtain prior to the Closing, and deliver to Purchasers
at or prior to the Closing, all Consents under each Contract listed or described on ‎Section 3.06 of the Company Disclosure
Schedule (and any Contract entered into after the date hereof that would have been required to be listed or described thereon
if entered into prior to the date hereof). 


 


(b)Each
of the Company and the Sellers shall use its commercially reasonable efforts to notify, file or register with any Governmental
Authority or Third Party at or prior to the Closing, all notification, filings or registrations listed or described on ‎Section
3.06 of the Company Disclosure Schedule (and any such notification, filings or registrations that would have been required
to be listed or described thereon if entered into prior to the date hereof). 


 


(c)The
Company and the Sellers hereby agree to terminate all indemnification rights provided by the Company
to any of the shareholders of the Company in their status as shareholders of the Company, but excluding any indemnity rights granted
by the Company to directors, officers, employees and consultants of the Company. In addition, within no more than 3 Business Days
after the date hereof, the Company shall give notice of termination or non-renewal under, and take any further actions
in order to terminate, all Contracts set forth on ‎Section 6.07 of the Company Disclosure Schedule, in form and content approved
in advance by the Purchaser. In connection with the termination of the foregoing Contracts, the Company shall request that any
proprietary and/or confidential information relating to the Company and disclosed or delivered under such Contracts, be either
returned to the Company or destroyed. The Company covenants that neither these Contracts, nor the termination thereof, will give
rise or result in any Liability to the Purchaser or the Company or any restriction on its business or assets.


 


Section
6.08Payment Spreadsheet.


 


(a)At
the date hereof, and at least three (3) Business Days prior to the scheduled date of the Closing, the Company shall deliver a
payment spreadsheet (the “Payment Spreadsheet”) in a form reasonably acceptable to the Purchaser and the Paying
Agent, certified as complete and accurate by the Chief Executive Officer and the Chief Financial Officer of the Company, setting
forth the following information:


 


(1)the
calculation of the Purchase Price payable at the Closing, including a separate line item for each deduction thereof in accordance
with the term of this Agreement; and


 


(2)with
respect to each Seller, (i) such Sellers’s address as appearing in the shareholder register of the Company, (ii) the number
of Purchased Shares to be sold to the Purchaser at the Closing, (iii) the portion of the Purchase Price to be paid to such Seller
at such Closing, (iv) such Seller’s Pro Rata Portion, (v) such Seller’s respective portion of the payments at the
Closing into the Escrow Fund, and (vi) such other relevant information that the Purchaser or the Paying Agent may reasonably require
in order to enable distribution of any amount hereunder to such Seller.


 




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(3)With
respect to each Non-Signing Seller, the name of such Non-Signing Seller, the number of Purchased Shares to be sold to the Purchaser
at the Closing by such Non-Signing Seller and the consideration payable for such Shares.


 


(4)With
respect to each Signing Seller, the name of such Signing Seller, the number of Purchased Shares to be sold to the Purchaser at
the Closing by such Signing Seller and the consideration payable for such Shares.


 


(b)In
the event that any information set forth in the Payment Spreadsheet becomes inaccurate at any time prior to the Closing, the Company
shall deliver a revised Payment Spreadsheet, together with a new certification consistent with ‎Section 6.08‎(a),
whereupon such revised Payment Spreadsheet shall be deemed to be the “Payment Spreadsheet” for all purposes of and
under this Agreement. 


 


Article
VII


Additional
Agreements


 


Section
7.01Confidentiality; Public Disclosure.


 


(a)The
Purchaser and/or the Company and/or the Sellers may not issue any public statements (“Public Disclosure”) regarding
this Agreement and the other Transaction Documents or the transactions contemplated hereby and thereby, including their content,
existence, negotiations and termination thereof, or any Confidential Information, without the prior written approval of both Purchaser
and the Company; except, in each case, (i) to the extent required pursuant to Applicable Law, including any securities exchange
regulations. A copy of the required disclosure shall be provided to the Purchaser at least 2 days prior to the disclosure and
the Sellers may release such disclosure, unless the Purchaser objects within such period. In the event the Purchaser will object
to the requirement to disclose pursuant to Applicable Law, and there will be a dispute between the parties as for the requirement
to disclosure under Applicable Law, the Sellers shall provide a written opinion of its counsel to such effect and the disclosure
shall contain only the part of the Confidential Information that is required by law to be disclosed, and (ii) as reasonably necessary
for each of the Purchaser, the Company or the Sellers to obtain the Consents contemplated by this Agreement. This section shall
survive the consummation, termination or expiration of this Agreement, the Closing and the transactions contemplated hereby.


 


(b)The
parties acknowledge that the Purchaser and the Company have previously executed a Mutual Non-Disclosure/Confidentiality Agreement,
dated as of October 25, 2015 (the “Nondisclosure Agreement”), the provisions of which are incorporated by reference
and shall apply to all parties hereto with respect to all information furnished to the Purchaser and its Representatives until
the Closing (whereupon such provisions shall lapse and no longer be in force or effect) and to all information furnished to the
Company or the Sellers by or on behalf of the Purchaser and its Representatives. As an amendment to the Non-Disclosure Agreement,
from the Closing, Purchaser and its Affiliates are hereby released from any obligation thereunder. In case of any contradiction
between the Nondisclosure Agreement and this Agreement, this Agreement shall prevail.


 


Section
7.02Litigation Support


 


After
the Closing, in the event that, and for so long as, the Purchaser is actively contesting or defending against any Proceeding or
demand in connection with (a) any transaction contemplated by the Transaction Documents or (b) any fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction involving the
Company, the Shareholders Representative and each Seller will reasonably cooperate with such contesting or defending party and
its counsel in the contest or defense, make available their personnel, and provide such testimony and access to their books and
records as shall be reasonably necessary in connection with the contest or defense.


 




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Section
7.03Reasonable Efforts


 


Each
of the parties hereto agrees to use its commercially reasonable efforts, and to cooperate with each other party hereto, to take,
or cause to be taken, all actions, and to do, or cause to be done, all things necessary, appropriate or desirable to consummate
and make effective, in the most expeditious manner practicable, the Closing and the other Transactions contemplated hereby, including
the satisfaction of the respective conditions set forth in ‎Article VIII and the execution and delivery of such other instruments
and performance of such other acts and things as may be necessary or reasonably desirable for effecting completely the consummation
of the Transactions contemplated hereby. Without limiting the generality of the foregoing, each of the Company and the Sellers
shall use reasonable commercial efforts to secure each of the Consents listed on ‎Section 3.06 of the Company Disclosure Schedule
prior to the Closing, in form and substance satisfactory to the Purchaser.


 


Section
7.04Non-solicitation.


 


(a)In
further consideration for the payment of the Purchase Price and in order to protect the value of the Company (including, without
limitation, the goodwill inherent in the Company as of the Closing and that the Purchaser may have and enjoy the full benefit
of the Company, and its business and the assets), each Seller agrees that during the period beginning at the Closing date and
ending on the third (3)-year anniversary of the Closing date, each Seller shall not, and shall cause its respective Affiliates,
not to, directly or indirectly (including, without limitation, through its respective Affiliates and any director, officer, Employee,
agent or consultant thereof or of its respective Affiliates) (1) other than those employees listed in ‎Section 7.04(a)
of the Company Disclosure Schedule, encourage, induce, solicit or attempt to encourage, induce or solicit any officer, director,
manager, consultant or employee of the Company or any of its Subsidiaries (collectively, the “Company Group”)
to leave the employ of or stop providing services to the Company Group; (2) other than those employees listed in ‎Section
7.04(a) of the Company Disclosure Schedule, hire or employ any Person (or any company owned by any such Person) who is or
was during the immediately preceding six (6) month period an officer, director, manager, consultant or employee of the Company
Group; (3) call on, solicit, or service any customer, supplier, distributor, reseller, licensee, licensor or other business relation
of the Company Group with respect to products or services that have been provided by the Company Group, are currently being provided
by the Company Group, or which the Company Group is currently in the process of developing or negotiating; or (4) encourage, induce
or solicit, or attempt to encourage, induce or solicit, any customer, supplier, distributor, reseller, licensee, licensor or other
business relation of the Company Group to cease doing business with or reducing its business activity with the Company Group.


 


(b)Each
Seller acknowledges and represents that: (1) sufficient consideration has been given as it relates to such party’s obligations
under ‎Section 7.04; (2) such Seller has consulted with legal counsel of such Seller’s choosing regarding his
or her rights and obligations under this ‎Section 7.04; (3) such Seller fully understands the terms and conditions
contained herein; (4) the restrictions and agreements in this ‎Section 7.04 are reasonable in all respects and necessary
for the protection of the Company and the other members of the Company Group and that, without such protection, the Company Group
customer and client relationship and competitive advantage would be materially adversely affected; and (5) the agreements in this
‎Section 7.04 are an essential inducement to the Purchaser to enter into this Agreement and they are in addition to,
rather than in lieu of, any similar or related covenants to which such party is party to or by which such party is bound (whether
under Contract or by Applicable Law). Each Seller that is an individual further acknowledges that the restrictions contained in
this ‎Section 7.04 do not impose an undue hardship on him.


 




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(c)The
covenants and undertakings contained in this ‎Section 7.04 relate to matters which are of a special, unique and extraordinary
character and a violation of any of the terms of this ‎Section 7.04 may cause irreparable injury to the Company Group
(and their successors, assigns and any third-party beneficiary), the amount of which will be impossible to estimate or determine
and which cannot be adequately compensated. Therefore, the Purchaser and the Company Group (and their its successors, assigns
and any third-party beneficiary) may be entitled to seek, in addition to other rights and remedies existing in their favor under
Applicable Law or in equity, an injunction, restraining order or other equitable relief from any court of competent jurisdiction
in the event of any breach or threatened breach of any provisions of this ‎Section 7.04. 


 


(d)If
at any time a court of competent jurisdiction or arbitrator’s award holds that the restrictions in this ‎Section
7.04 are unreasonable under circumstances then existing, or that a specified time period, a specified geographical area, a
specified business limitation or any other relevant feature of this ‎Section 7.04 is unreasonable, arbitrary or against
public policy, the parties hereto agree that the maximum period, not arbitrary, and not against public policy under such circumstances
shall be substituted for the stated period or any other relevant feature and may then be enforced against the applicable party.



 


Section
7.05Waiver of Claims. 


 


(a)As
a material inducement to the Purchaser’s willingness to enter into and perform this Agreement and to purchase the
Company Shares for the consideration to be paid or provided to the Sellers in connection with such purchase, each Seller, on
behalf of himself, herself or itself, and on behalf of each of such Seller’s Affiliates and Representatives, hereby
releases and forever discharges the Company and each of its individual, joint or mutual, past, present and future
Representatives, Affiliates, shareholders, controlling persons, Subsidiaries, successors and assigns (individually, a
“Releasee” and collectively, “Releasees”) from any and all Proceedings, Contracts and
Liabilities relating in any way whatsoever to the Company, any action or omission of any such Person relating to the Company,
whether known or unknown, suspected or unsuspected, both at law and in equity, which each Seller or any of their respective
Representatives now has, has ever had or may hereafter have against the respective Releasees arising contemporaneously with
or prior to the Closing Date or on account of or arising out of any matter, cause or event occurring contemporaneously with
or prior to the Closing Date, including, but not limited to, any rights to indemnification or reimbursement from any
Releasee, whether pursuant to their respective Current Articles, Amended Articles Contract or otherwise and whether or not
relating to claims pending on, or asserted after, the Closing Date; provided, however, that nothing
contained herein shall operate to release (i) any obligation of the Purchaser arising under this Agreement, and (ii) any
obligation of the Company arising, following the date hereof, under the agreements listed on Section 7.05(a) of the Company
Disclosure Schedule.2 Each Seller hereby irrevocably covenants to refrain from,
directly or indirectly, asserting any claim or demand, or commencing, instituting or causing to be commenced, any Proceeding
of any kind against any Releasee, based upon any matter purported to be released hereby.


 


(b)Without
limitation of the foregoing, each Seller and the Company hereby agrees, effective as of the Closing, to terminate any and all
Contracts by and between the Company and any such Seller without any remaining liability to the Company, if any, other than the
agreements listed on Section 7.05(b) of the Company Disclosure Schedule.


 


(c)The
Sellers hereby waive any and all first refusal, first offer, notification, veto or other rights under the Current Articles, Amended
Articles or any Contract to which any of them are a party with respect to the execution of this Agreement, the Transaction Documents
and the consummation of the Transactions.


 





 



2
The Schedule shall include the specific agreements betweenthe Sellers and the Company that shall stay in effect.


 




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Section
7.06Adjustments of Bank Undertakings.


 


Following
the Closing, the Purchaser and Acorn shall take the necessary actions to be equally responsible to the shareholders undertaking
towards the banks listed in Section 7.06 of the Company Disclosure Schedule, as such undertaking shall be negotiated and agreed
with such banks following the Closing.


 


Section
7.07Exercise of Options.


 


(a)The
Company shall use its best efforts to deliver to the Purchaser, as soon as practicably reasonable following the execution of this
Agreement, but not later than 5 Business days prior to the Closing, the Non-Signing Sellers Exercise, Sale and Waiver Letter executed
by all the Non-Signing Sellers. Notwithstanding anything to the contrary in this Agreement, in the event that one or more Non-Signing
Sellers have not executed the Non-Signing Sellers Exercise, Sale and Waiver Letter, the Purchaser, at its sole discretion, shall
have the right to inform the other parties to this Agreement that the Agreement shall terminate in accordance with Article IX.


 


(b)The
Company shall deliver to the Purchaser, not later than 5 Business Days following the execution of this Agreement, resolutions
of the Board of Directors of the Company, (i) clarifying that the term “Corporate Transaction” under the amendment
to the 2006 Key Employee Share Option Plan of the Company (the “Option Plan”), shall also include the transactions
contemplated under this Agreement, (ii) approving and confirming the treatment of the unexercised Options at Closing as provided
below. All Options shall be terminated and cancelled at Closing for all purposes, without the requirement of any further action
on behalf of the Option Holders.


 


(c)At
Closing, each unexercised Options, whether vested or unvested, shall expire and be cancelled in exchange for, in accordance with
Section 13(d)(ii) of the Option Plan, a cash payment in the amount detailed in Exhibit A-3 in the column titled “Option
Consideration” with respect to each Non-Signing Seller, respectively.


 


(d)Withholding
Tax. Each of the Purchaser, the Paying Agent and the Escrow Agent and any other person acting on their behalf shall be entitled
to deduct and withhold (and timely remit to the applicable Taxing Authority) from the consideration payable to any Non-Signing
Seller such amounts reflecting the maximum rate applicable for withholding, as determined by the Purchaser in its sole discretion.


 


(e)In
the event that following the termination of the Options, if any, as set forth above the number of issued and outstanding Company
Shares on a Fully Diluted Basis shall be odd, than the Company shall issue to Acorn one Company Share at par value in order to
ensure that following the Closing Rafael shall hold exactly 50% of Company’s issued and outstanding shares on a Fully Diluted
Basis.


 


Section
7.08Further Actions


 


In
case at any time after the Closing any further actions are necessary to carry out the purposes of this Agreement, each party hereto
will take such further actions (including the execution and delivery of such further instruments and documents) as any other such
party may reasonably request.


 




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Article
VIII


Conditions
to the Transactions


 


Section
8.01Conditions to the Obligations of Each Party.


 


The
obligations of the Company, the Purchaser and the Sellers to consummate the Transactions are subject to the satisfaction of the
following conditions:


 


(a)No
Injunction. No temporary restraining Order, preliminary or permanent injunction or other Order issued by any Governmental
Authority of competent jurisdiction shall be in effect and no Applicable Law shall have been enacted or be deemed applicable to
the Transactions which could reasonably be expected to impair, prevent or prohibit the consummation of the Transactions.


 


(b)Governmental
Consents. All Consents of Governmental Authorities legally required for the entry into the Transaction Documents and the consummation
of the Transactions shall have been obtained, including, without limitations, the approval of the Ministry of Defense, and Consent
under the Antitrust Laws, without Antitrust Restraint that adversely affects the Company or the Purchaser in a material manner
(provided that with respect to such Antitrust Restraint that adversely affects the Purchaser in a material manner, such condition
may be waived solely by the Purchaser).


 


Section
8.02Conditions to the Obligations of the Purchaser


 


The
obligations of the Purchaser to consummate the Transactions are subject to the satisfaction or waiver by the Purchaser in its
sole discretion, at or prior to the Closing, of the following further conditions:


 


(a)Representations
and Warranties. The representations and warranties of the Company and the Sellers set forth in this Agreement and any Transaction
Document shall be true and correct in all material respects (except for such representations and warranties that are qualified
by their terms by a reference to materiality, which representations and warranties as so qualified shall be true and correct in
all respects) on and as of the date of this Agreement and on and as of the Closing as though made at and as of the Closing, except
(i) for the Fundamental Representations (as defined below) which shall be true and accurate in all respects on and as of the date
of this Agreement and on and as of the Closing Date; and (ii) to the extent such representations and warranties expressly relate
to an earlier date, in which case such representations and warranties shall be true and correct as aforesaid on and as of such
earlier date.


 


(b)Covenants.
Each of the Company and the Sellers shall have performed and complied, in all material respects, with all covenants required to
be performed or complied with by each such party prior to the Closing.


 


(c)Consents
and Approvals. Each of the Consents listed on ‎Section 3.06 of the Company Disclosure Schedule, as well as any
Consents required under any Grant, shall have been obtained in form and substance satisfactory to the Purchaser and shall be in
full force and effect.


 


(d)Receipt
of Closing Deliveries. The Purchaser shall have received each of the documents and deliverables listed in ‎Section
2.04(b)(1) in form and substance reasonably acceptable to the Purchaser.


 


(e)Employees.
(i) all employees employed by the Company have executed the New Employment Agreements and such New Employment Agreements are in
full force and effect,[3] (ii) none of the Key Persons shall have indicated his or
her intention to terminate its New Employment Agreements, and each such Key Person dedicates his full time and attention to the
affairs of the Company (except for Mr. Michael Barth who shall continue to provide services to Acorn); and (iii) at least 80%
of all employees employed by the Company on the date hereof shall remain employed by the Company, and shall not have indicated
his or her intention to terminate such employment.


 




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(f)Related
Party Transactions. All Contracts between the Company, on the one hand, and any Related Person, on the other hand, other than
the agreements listed on Section 8.02(f) of the Company Disclosure Schedule, shall have been terminated with no remaining
Liability of the Company.


 


(g)Termination
of Certain Contracts. All Contracts listed on Section 8.02‎(g) of the Company Disclosure Schedule shall have been
terminated with no remaining Liability to the Company.


 


(h)Conversion
of Preferred Shares. All Preferred Shares shall be converted into Ordinary Shares.


 


(i)Litigation.
There shall not be: (i) pending by or before any Governmental Authority any Proceeding that (A) seeks to frustrate, prevent or
restrict the consummation of the Transactions on their terms, and the conferring upon the Purchaser and the Company all of their
respective rights and benefits, contemplated by this Agreement, or which has or could have the effect of limiting or restricting
Purchaser’s ownership or the conduct or operation of the business by the Company following the Closing, (B) Other than as
is set forth in Section 3.12 of the Company Disclosure Schedule , seeks the award of Losses in an amount which is reasonably
determined by the Purchaser to be material and payable by, or any other remedy against, the Company if the Transactions are consummated,
or (C) seeks remedy to the effect that any of the Company Products, its technologies or Intellectual Property, or otherwise the
business of the Company, infringes, misappropriates or otherwise violates the Intellectual Property rights of any other Person;
or (ii) any Proceeding threatened in writing by any Person that if successful would have any of the effects described in clause
(i) above.


 


(j)Options.
All the Company’s Options have been exercised or terminated and there are no outstanding Company’s Options or condition
or circumstance that may give rise to or provide a basis for the assertion of a claim by any Person to the effect that such Person
is entitled to any Company’s Options, or to acquire or receive any Company Shares, other than as provided in Section
3.07(c)(ii) of the Company Disclosure Schedule.


 


(k)Company’s
Pledge. The Company has removed its pledge over all the Purchased Shares that shall be excluded from the Pledged Shares (as
this term is defined in the Loan Agreement dated June 1, 2015 between the Company and Acorn).


 


(l)BIRD
Approval. The BIRD Foundation has provided the Company its written approval of the transaction contemplated in this Agreement.


 


(m)OCS.
The Company has provided the OCS with the required notice regarding the transaction contemplated in this Agreement.


 


(n)Bank’s
and other Approvals. Bank Leumi and Bank Mizrahi-Tefahot have provided the Company their written approval of the transaction
contemplated in this Agreement. All Liens of Bank Bein-Leumi (FIBI), Bank Mizrahi-Tefahot, Leap Tide and any other Liens, if any,
have been released, and the Purchased Shares are free and clear.


 


(o)Intellectual
Property Assignment. The Purchaser has received sufficient comfort that any and all Intellectual Property developed by Company’s
employees, advisors or consultants in connection with the License and Research Funding Agreement by and between the Company and
Ramot at Tel Aviv University Ltd. (“Ramot”) dated January 2, 2014, and the Research and License Agreement by
and between the Company and Ramot dated May 5, 2015, was assigned to Ramot or the Company, as applicable, and shall be available
for filing, registration, licensing and any other use set forth in Research an License Agreements mentioned above, all in accordance
with the terms of such agreements.


 


(p)Material
Adverse Effect. Since the date of this Agreement, there shall have been no Material Adverse Effect.


 




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Section
8.03Conditions to the Obligations of the Sellers.


 


The
obligations of the Sellers to consummate the Transactions are subject to the satisfaction, or waiver by the Shareholders Representative,
of the following further conditions:


 


(a)Representations
and Warranties. The representations and warranties of the Purchaser set forth in this Agreement shall be true and correct
in all material respects (except for such representations and warranties that are qualified by their terms by a reference to materiality,
which representations and warranties as so qualified shall be true and correct in all respects) on and as of the date of this
Agreement and on and as of the Closing as though made at and as of the Closing.


 


(b)Covenants.
The Purchaser shall have performed and complied, in all material respects, with all covenants required to be performed or complied
with by the Purchaser prior to the Closing.


 


(c)Receipt
of Closing Deliveries. The Seller Representative shall have received each of the documents and deliverables listed in ‎Section
2.04(b)(1).


 


(d)Closing
Payment; Escrow Amount Payment. The Purchaser shall have delivered the Closing Payment to the Paying Agent and the Escrow
Amount to the Escrow Agent.


 


Article
IX


Termination


 


Section
9.01Termination.


 


This
Agreement may be terminated and the Transactions may be abandoned at any time prior to the Closing:


 


(a)by
mutual written agreement of the Shareholder’s Representative and the Purchaser;


 


(b)by
either the Shareholder’s Representative or the Purchaser, if the Closing has not been consummated on or before April 30,
2016 (the “End Date”), except that the End Date may be extended by the Purchaser for an additional sixty (60)
days in the event that in the Purchaser’s reasonable judgment the Closing may occur prior to the End Date (as so extended);
provided that the right to terminate this Agreement pursuant to this ‎Section 9.01(b) shall not be available
to any party whose breach of or failure to comply with any provision of this Agreement results in the failure of the Transactions
to be consummated by such time;


 


(c)by
either the Company or the Purchaser, if a Governmental Authority shall have issued any Order or taken any other action, in each
case, which has become final and non-appealable and which restrains, enjoins or otherwise prohibits the Transactions or there
shall be any statute, rule, regulation or Order enacted, promulgated or issued or deemed applicable to the Transactions by any
Governmental Entity that would make consummation of the Transactions illegal;


 


(d)by
the Purchaser, if (i) any representation, warranty, covenant or obligation of the Company or a Seller contained in this Agreement
shall be (or is reasonably expected to be) inaccurate or breached, resulting in failure by the Company and/or the Seller to satisfy
any of the conditions set forth in ‎Section 8.01 or ‎Section 8.02 had the Closing occurred on such date, provided that
such inaccuracy(ies) or breach(es) are not capable of cure, or, if capable of cure, are not cured within fifteen (15) days of
delivery of written notice thereof from the Purchaser, or (ii) any of the conditions in ‎Section 8.02(c) shall have
or is reasonably expected to fail or to be satisfied; 


 




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(e)by
the Purchaser, if the Company shall update any of its representations as “Disclosure Schedules Updates for Exception
Purposes” pursuant to Section 6.04(b); or


 


(f)by
the Company, if any representation, warranty, covenant or obligation of the Purchaser contained in this Agreement shall be (or
is reasonably expected to be) inaccurate or breached, resulting in failure by the Purchaser to satisfy the condition set forth
in ‎Section 8.01 or ‎Section 8.03 had the Closing occurred on such date, provided such inaccuracy(ies) or
breach(es) are not capable of cure, or, if capable of cure, are not cured within fifteen (15) days of delivery of written notice
thereof from the Company or the Shareholders Representative to the Purchaser.


 


The
party desiring to terminate this Agreement pursuant to this Section (other than pursuant to ‎Section 9.01(a)) shall
give a notice of such termination to the other parties setting forth a brief description of the basis on which such party is terminating
this Agreement.


 


Section
9.02Procedure Upon Termination. 


 


In
the event of termination by Purchaser or the Company, or both, pursuant to ‎Article IX hereof, written notice thereof
shall forthwith be given to the other party, and this Agreement shall terminate, except for this ‎Section 9.02 and ‎Section
7.01, ‎Section 9.03 and ‎Article XII of this Agreement, which shall remain in full force and effect. 


 


Section
9.03Effect of Termination.


 


If
this Agreement is terminated pursuant to this Article IX, this Agreement shall become void and of no effect and there shall be
no liability or obligation on the part of any party or any of its or their Affiliates to any other Person by virtue of, arising
out of or otherwise in connection with this Agreement or any other Transaction Document; provided that none of the Sellers, the
Company, the Shareholders Representative or the Purchaser shall be relieved of any obligation or liability arising from any willful
or material breach of this Agreement or any other Transaction Document prior to the effective date of such termination or for
any breach that gave rise, caused or resulted in such termination.


 


Article
X


Indemnification


 


Section
10.01Survival of Representations.


 


(a)Subject
to ‎Section 10.01‎(b) and ‎Section 10.01‎(c), all representations, warranties, covenants and agreements
of the Purchaser, the Company and the Sellers contained herein or in any Transaction Documents shall survive the execution and
delivery of this Agreement or such Transaction Documents and the consummation of the transactions contemplated hereby and thereby,
regardless of any investigation made by or on behalf of any party hereto or its Affiliates or the knowledge of any such party’s
(or its Affiliates’) officers, directors, shareholders, managers, members, partners, employees, representatives or agents.



 


(b)The
representations and warranties of the parties contained in ‎Article III, ‎Article IV and ‎Article V of this Agreement
shall survive the Closing through and including 24 months following the Closing Date, other than (A) (i) claims for a Fraud Event
and the representations and warranties set forth in ‎Article IV (the “Seller Fundamental Representations”)
which shall survive the Closing Date indefinitely, or (ii) the representations and warranties set forth in ‎Section 3.01
(Corporate Existence and Power), ‎Section 3.02 (Corporate Authorization.), ‎Section 3.06 (Non-Contravention.),
‎Section 3.07 (Capitalization.), ‎Section 3.18 (Tax Matters.) and ‎Section 3.22 (Finders’
Fees.) (together with the Seller Fundamental Representations, collectively the “Fundamental Representations”);
all of which shall survive the Closing until the date that is 60 days after the expiration of the applicable statute of limitations
(including all periods of extension and revisiting whether automatic or permissive) with respect to any theretofore unasserted
claims arising out of or otherwise in respect thereof; and (B) the representations and warranties set forth in ‎Section 3.04
(Regulatory Matters, Trade Compliance and Encryption.) and ‎Section 3.16 (Intellectual Property.)
(the “Specified Representations”) which shall survive the Closing through and until 48 months following the
Closing Date with respect to any theretofore unasserted claims arising out of or otherwise in respect thereof (each such period
specified in clauses (A)(i) and (ii) and (B), as the case may, be shall be referred to as the “Survival Period”);
provided, however, that the representations and warranties as to which notice to the Indemnifying Party is delivered in accordance
with this ‎Article X on or prior to the termination of the applicable Survival Period shall continue to survive until such
matter is finally resolved. The parties hereby agree that this Section shall constitute a separate agreement for the requirements
of Section 19 of the Israeli Limitation Law, 1958. 


 




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(c)
Notwithstanding anything to the contrary contained herein, no limitation set forth herein shall apply in the case of claims involving
or alleging fraud, intentional misrepresentation, willful misconduct or intentional breach (collectively, “Fraud Events”),
whether by the Company, any Seller or any of their respective officers, directors, managers, employees, consultants, agents, representatives
or shareholders.


 


Section
10.02Indemnification by Sellers.


 


(a)Indemnification.


 


(1)The
Company and the Sellers hereby agree, severally and jointly in respect to its or his representations (provided that the Sellers
solely among themselves shall be liable severally and not jointly), but subject to the limitation set forth in Section 10.02(c)
below, to indemnify the Purchaser and its Affiliates (including the Company after the Closing) and each of their respective
officers, directors, shareholders, managers, members, partners, employees, consultants, agents, representatives, successors and
assigns (collectively, the “Purchaser Indemnified Parties”) and hold each of them harmless from and against
and pay on behalf of or reimburse any such Purchaser Indemnified Party in respect of such Seller’s Pro Rata Portion of the
entirety of any Loss which such Purchaser Indemnified Party may suffer, sustain or become subject to, as a result of, arising
out of, relating to or in connection with the following, or any claim by any Third Party alleging, constituting or involving any
of the following: 


 


(i)any
failure of any representation or warranty made by the Company in this Agreement or in any Transaction Document (including, the
Company Disclosure Schedule, and any exhibit or schedule thereto) to be true and correct as of the date of this Agreement and
as of the Closing Date as though such representation or warranty were made as of the Closing Date, except in the case of representations
and warranties which specifically relate to an earlier date, which representations and warranties shall be true and correct as
of such date, in each case without giving effect to any limitation or qualification as to “materiality,” “material,”
“Material Adverse Effect” or similar qualifiers set forth in such representation or warranty for purposes of determining
whether there is such a failure or breach;


 


(ii)any
breach, default or violation of any covenant or obligation of, or agreement by, the Company or the Shareholders Representative
contained in this Agreement or in any other Transaction Document;


 


(iii)any
claim, demand or Proceeding against the Company by any Seller, director, shareholder or Option holder (in respect to their options)
of the Company or any Affiliate of such Person in connection with any Losses arising out of or pertaining to matters or facts
existing or occurring at or prior to the Closing;


 


(iv)any
claim, demand, Proceeding or Order relating to the allocation of any payment paid, deemed paid or due to the Sellers pursuant
to the provisions of this Agreement (to the extent made in accordance with the terms of this Agreement and the other Transaction
Documents) and the Transaction Documents, other than the Shareholders Agreement for events following the Closing, and any other
claim, demand or Proceeding against the Company or any Purchaser Indemnified Parties by any Seller or other security holder of
the Company related to the Transactions, other than the Shareholders Agreement for events following the Closing;


 




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(v)any
Earnout Payments that are received by the Sellers in excess of their entitlement pursuant to the Earnout Schedule;


 


(vi)any
costs, fees and expenses of an arbitrator payable hereunder or in connection with the Earnout Schedule by the Shareholders Representative
to the extent not paid by the Shareholders Representative or the Sellers;


 


(vii)any
claim, demand, Proceeding, Order, Losses or any Tax Liability with respect to, or of, the Purchaser, the Company and/or any of
its Affiliates, in connection with the transactions and/or classifications and/or the matters listed in Section 10.02(a)(1)(vii)
of the Company Disclosure Schedule;


 


(viii)any
claim, demand, Proceeding, Order or Losses against, or of, the Company or any of its Affiliates by any Governmental Authority
and/or any employee, consultant or contractor, with respect to services rendered to the Company on or prior to the Closing Date,
related to the right of such Person to receive any employment related benefits, consideration or rights related to: (1) Section
14 Arrangements; (2) Compensation for overtime hours; (3) The classification of salesperson bonuses as part of the determining
wage; (4) the reclassification of any consultant or contractors as employees, each in connection with the period prior to the
Closing Date; or (5) any benefits (employments, social, etc.) regarding sales commissions or similar fees.


 


(ix)any
Losses incurred in connection with any event, condition, fact or circumstance that result in an amendment to the Company Disclosure
Schedule or Sellers Disclosure Schedule, as applicable, in accordance with Section 6.04(b) above, which are “Disclosure
Schedules Updates for Informational Purposes”;


 


(x)any
breach of the Amended and Restated Loan Agreement, provided that any such breach in this Section 10.02(a)(1)(x) shall only be
indemnified by Acorn and the Company; and


 


(xi)any
payments made by the Company (or any of its Affiliates) in connection with Grants received in connection with the Cooperation
and Project Funding Agreement, dated October 28, 2012, by and between DSIT Solutions Ltd., US Seismic Systems Inc. and the BIRD
Foundation, other than payments pursuant to Section B.3 thereto.


 


(xii)any
payments made, or that are reasonably expected to be required to be made, by the Sellers, the Company, or any of their respective
Affiliates, in connection with any broker’s, finder’s, financial advisor’s or similar fee or commission in connection
with this Agreement, any transaction documents, or any of the Transactions contemplated by this Agreement or the transaction documents.


 


(xiii)any
Losses (including, without limitation, regarding warranty or warranty expenses) incurred in connection with the following disputes
regarding the Company Products (that are in excess of warranty provisions already recorded on
the Financial Statement of the Company) with respect to (i) the dispute with NSTL regarding the MAR system, and (ii) the
dispute with the State Border Service of the Republic of Azerbaijan regarding the damaged cable.


 


(xiv)any
Losses (including, without limitations, any Losses connection to Taxes and any Tax obligations) incurred in connection with the
matters and adjustments described in certain waiver letters dated January, 2016 attached hereto as Schedule 10.02(a)(xiv).


 




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(xv)Any
failure of the statements made under this sub-section to be true and correct as of the date of this Agreement: the net liabilities
of the Company to banks and any other third party are between US$10.7 million and US$12.7 million. In addition, the working capital
of the Company is between US$5.0 million and US$7.0 million, and it is consistent with the normative working capital of the Company.
In this section, working capital includes all restricted cash and current deferred taxes, and does not include any write-off of
current deferred taxes. Such write-off of current deferred taxes if recorded will not be taken into account in determining whether
the Company is within the range of $1,000,000 of $6.0 million as provided above.


 


(2)Each
Seller, severally, shall indemnify the Purchaser Indemnified Parties and hold each of them harmless from and against and pay on
behalf of or reimburse any such Purchaser Indemnified Party in respect of the entirety of any Loss which such Purchaser Indemnified
Party may suffer, sustain or become subject to, as a result of, arising out of, relating to or in connection with the following,
or any claim by any Third Party alleging, constituting or involving any of the following:


 


(i)any
failure of any representation or warranty made by such Seller in this Agreement or in any Transaction Document (including, the
Seller Disclosure Schedule, and any exhibit or schedule thereto) to be true and correct as of the date of this Agreement and as
of the Closing Date as though such representation or warranty were made as of the Closing Date, except in the case of representations
and warranties which specifically relate to an earlier date, which representations and warranties shall be true and correct as
of such date; and


 


(ii)any
breach, default or violation of any covenant or obligation of, or agreement by, such Seller contained in this Agreement or in
any other Transaction Document.


 


(b)Indemnification
and Liability Cap. The maximum aggregate Losses payable by the Sellers shall be as follows: (i) indemnification obligations
for failure of any of any Fundamental Representation to be true and correct as aforesaid in ‎Section 10.02‎(a)(1)(i)
or ‎Section 10.02‎(a)(2)(i) (other than Fraud Events) shall not exceed one hundred percent (100%) of the Purchase
Price paid to the Sellers (including the amounts paid into the Escrow Fund and the amounts earned or as earned in future payments
of the Earnout Payments) (the “Cap”), (ii) indemnification obligations for failure of the Specified Representations
to be true and correct as aforesaid in ‎Section 10.02‎(a)(1)(i) (other than Fraud Events) shall not exceed 50%
of the Cap, (iii) indemnification obligations involving ‎Section 10.02‎(a)(1)(ii) through (a)(1)(xv) and ‎Section
10.02‎(a)(2)(ii) or a Fraud Event shall not be limited in amount (provided that other than for ‎Section 10.02‎(a)(2)(ii),
with respect to the Sellers listed on Schedule 10.02(b)4 that have not perpetrated
such Fraud Event, their indemnification obligations shall not exceed one hundred percent (100%) of the Purchase Price paid to
the Sellers (including the amounts paid into the Escrow Fund and the amounts earned or as earned in future payments of the Earnout
Payments)), and (v) any indemnification obligations pursuant to ‎Section 10.02‎(a)(1)(i) (but which does not fall
into any of the above clauses) shall be limited to twenty percent (20%) of the Purchase Price paid to the Sellers (including the
amounts paid into the Escrow Fund and the amounts earned or as earned in future payments of the Earnout Payments). Nothing herein
shall prevent a Purchaser Indemnified Party from seeking: (i) injunctive or other equitable relief to enjoin the breach, or threatened
breach, of any provision of this Agreement or any Transaction Document, (ii) specific performance of the provisions of this Agreement
or any Transaction Document, and (iii) declaratory relief with respect to this Agreement and any Transaction Documentsprovided,
however that the indemnification provided by the Company and the Sellers hereunder and the enforcement of such indemnification
shall be the sole and exclusive monetary remedies available to the Purchaser against the Company and the Sellers in connection
with any inaccuracy in or breach of any representation or warranty contained herein (but shall not limit the Purchaser, in any
way, from any remedy available by any applicable law for any claim that is not based on the inaccuracy in or breach of any representation
or warranty contained herein). 


 





 






4
Schedule 10.02(b) shall include all Sellers who are natural persons.


 




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(c)Order
of Indemnification. The Purchaser shall be indemnified by the Company only after, and immediately after, (i) making a claim
for indemnity against the Sellers in accordance with this ‎Article X, and (ii) the Sellers’ failed to fulfill their
indemnification obligations hereunder in full (not later than a 30 day period following the date in which they are required to
do so in accordance with the terms of this Agreement), in each case (i) and (ii), unless the Purchaser reasonably determines that
Acorn shall not be able to indemnify in full the Purchaser. In the event that Purchaser shall seek indemnification from the Company,
the Purchaser’s ownership stake in the Company shall be taken into account when determining the amount of indemnification
required to indemnify the Purchaser for its Losses. Furthermore, Purchaser may, in its sole discretion, determine the method of
indemnification by the Company, whether by immediate payment to Purchaser, by liquidation and dividend preference in the amount
required to indemnify the Purchaser, or otherwise. 


 


(d)Allocation
of Losses. Any claim for Losses arising as a result of inaccuracies in, or breaches of, any Seller Fundamental Representations
provided by any Seller may be claimed only from such Seller. Any indemnification by the Sellers under this Agreement, other than
pursuant to ‎Section 10.02‎(a)(2), shall be allocated among the Sellers in accordance with each such Seller’s Pro
Rata Portion of the entirety of any Loss, it being clarified that a Purchaser Indemnified Party may bring the claim against the
Shareholders Representative only. The liability of a Seller that is a shareholder of the Company, together with any Person that
is listed on Exhibit A as the record or beneficial holder of such shareholder, shall be limited to the Pro Rata Portion
of the shareholder-Seller, and shall be joint and several among them. 


 


(e)Basket.Except
in connection with (i) a Fraud Event and (ii) inaccuracies in or breaches of any of the Fundamental Representations, the Sellers
shall not be liable for any Losses arising under ‎Section 10.02(a)(1)(i) until the aggregate amount of Losses exceeds
US$130,000 (the “Basket”); provided, however, that if such aggregate amount exceeds the Basket,
then the Purchaser Indemnified Parties shall be entitled to indemnification for all such Losses, disregarding the Basket. For
the avoidance of doubt, the above limitations shall not apply with respect to any other basis for indemnification hereunder, whether
or not it also constitutes a basis for indemnification under ‎Section 10.02‎(a)(1)(i).


 


Section
10.03Claims and Procedures.


 


(a)Officer’s
Claim Certificate. If any Purchaser Indemnified Party has or claims to have incurred or suffered Losses for which it is or
may be entitled to indemnification, compensation or reimbursement pursuant to this ‎Article X, the Purchaser may deliver
to the Shareholders Representative a certificate signed by any officer of the Purchaser, provided however that failure of the
Purchaser or any Purchaser Indemnified Party to give any such certificate will not affect the indemnification provided hereunder
(any certificate delivered in accordance with the provisions of this ‎Section 10.03(a), an “Officer’s
Claim Certificate”). Such Officer’s Claim Certificate shall:


 


(1)state
that a Purchaser Indemnified Party believes that there is or may have been a breach of a representation, warranty or covenant
contained in this Agreement or that such Purchaser Indemnified Party is or may otherwise be entitled to indemnification under
‎Article X of this Agreement;


 


(2)to
the extent possible, contain a good faith non-binding, preliminary estimate of the amount to which such Purchaser Indemnified
Parties claim to be entitled to receive, which shall be the amount of Losses such Purchaser Indemnified Party claims to have so
incurred or suffered or could reasonably be expected to incur or suffer (the aggregate amount of such estimate, as it may be modified
by each Purchaser Indemnified Party in good faith from time to time, being referred to as the “Claimed Amount”);
and


 




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(3)contain
a brief description (based upon the information then possessed by Purchaser Indemnified Party) of the material facts known to
the Purchaser Indemnified Party giving rise to such claim.


 


(b)Notwithstanding
the foregoing, if a Purchaser Indemnified Party seeks indemnification for Losses (or any other amount due to Purchaser) pursuant
to this Agreement prior to the termination of the Escrow Agreement, the Purchaser Indemnified Party shall first, to the extent
the Escrow Fund is sufficient to recover such Losses, recover such Losses from the Escrow Fund in accordance with the terms of
the Escrow Agreement. Such portion of the Escrow Fund at the conclusion of the Escrow Period as may be necessary to satisfy any
unresolved or unsatisfied claims for Losses specified in any Officer’s Claim Certificate delivered to the Indemnifying Party
and the Escrow Agent prior to expiration of the Escrow Period shall remain in the Escrow Fund until such claims for Losses have
been resolved or satisfied. The remainder of the Escrow Fund, if any, shall be released and paid to the Sellers promptly after
the expiration of the Escrow Period.


 


(c)Dispute
Procedure. During the twenty (20) day period commencing upon the date that notice is deemed duly given pursuant to ‎Section
12.06 to the Shareholders Representative of an Officer’s Claim Certificate (the “Dispute Period”),
the Shareholders Representative may deliver to the Purchaser a written response (the “Response Notice”) in
which the Shareholders Representative: (i) agrees that the full Claimed Amount is owed to the Purchaser Indemnified Party; (ii)
agrees that part, but not all, of the Claimed Amount (the “Agreed Amount”) is owed to the Purchaser Indemnified
Party; or (iii) indicates that no part of the Claimed Amount is owing to the Purchaser Indemnified Party. Any part of the Claimed
Amount that is not agreed to be owing to the Purchaser Indemnified Party pursuant to the Response Notice shall be the “Contested
Amount”. If a Response Notice is not duly given to the Purchaser prior to the expiration of the Dispute Period, then
the Shareholders Representative shall be conclusively deemed to have agreed that the full Claimed Amount is owed to the Purchaser
Indemnified Party. 


 


(d)Payment
of Claimed Amount. If (a) the Shareholders Representative delivers a Response Notice agreeing that the full Claimed Amount
or the Agreed Amount is owed to the Purchaser Indemnified Parties; or (b) the Shareholders Representative does not deliver a Response
Notice during the Dispute Period, then, each Seller shall, severally, within ten (10) calendar days following the earlier of the
delivery of such Response Notice or the expiration of the Dispute Period, pay such Seller’s Pro Rata Portion of the Claimed
Amount or the Agreed Amount, as the case may be, to the Purchaser Indemnified Parties.


 


(e)Resolution
between the Parties. If the Shareholders Representative delivers a Response Notice indicating that there is a Contested Amount,
the Shareholders Representative and the Purchaser shall attempt in good faith to resolve the dispute related to the Contested
Amount. If the Purchaser and the Shareholders Representative resolve such dispute, such resolution shall be binding on the Shareholders
Representative, the Sellers and the Purchaser and a settlement agreement stipulating the amount owed to the Purchaser Indemnified
Parties (the “Stipulated Amount”) shall be signed by Purchaser and the Shareholders Representative, and, unless
the Purchaser Indemnified Parties shall recover such Stipulated Amount from the Escrow Fund and then the Sellers shall within
ten (10) calendar days following the execution of such settlement agreement, pay the Stipulated Amount to the Purchaser Indemnified
Parties.


 




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(f)Dispute
Resolution. If the Shareholders Representative and the Purchaser are unable to resolve the dispute relating to any Contested
Amount within thirty (30) calendar days after the date that the Response Notice is deemed duly given pursuant to ‎Section
12.06 to the Purchaser, then either the Purchaser or the Shareholders Representative may submit the claim described in the
Officer’s Claim Certificate to arbitration to be conducted by a sole arbitrator and in accordance with the rules provisions
of the Israeli Arbitration Law-1968 (the “Arbitration Law”), except as otherwise provided herein. The arbitration
shall be conducted in Hebrew and in Tel-Aviv, Israel or such other place mutually acceptable to the Purchaser and Shareholders
Representative. The arbitrator shall have the necessary expertise required in order to review materials provided by the Purchaser
(the “Arbitrator”) to be appointed by the Shareholders Representative and the Purchaser, and if no agreement
is reached on the identity of the Arbitrator within ten (10) days following the submission of such dispute to arbitration, the
identity of the Arbitrator will be determined by the President of the Israeli Bar Association. The parties agree to use all reasonable
efforts to cause the arbitration hearing to be conducted within 60 (sixty) days after the appointment of the Arbitrator and to
use all reasonable efforts to cause the decision of the Arbitrator to be furnished within fifteen (15) days after the conclusion
of the arbitration hearing. The Arbitrator’s authority shall be confined to: (i) deciding whether the Purchaser Indemnified
Party is entitled to recover the Contested Amount (or a portion thereof), and the portion of the Contested Amount the Purchaser
Indemnified Party is entitled to recover; and (ii) awarding expenses of the arbitration proceedings pursuant to this Section.
The Arbitrator shall not be bound by procedural law or rules of evidence and shall have no authority to issue any injunctions,
Orders or other interlocutory remedies, but will rule on a basis consistent with the substantive law of the State of Israel, disregarding
its conflict of law rules. Pending the Arbitrator’s award the cost of the Arbitrator shall be borne equally by the Purchaser
and the Sellers. The award of the Arbitrator shall be in writing, state the reasons upon which it is based, and shall be final
and binding upon the parties. If the Purchaser is requested or required in connection with this arbitration to provide any documents
or information (whether or not in writing or by testimony), and the Purchaser considers such document or information under the
circumstance to be confidential, proprietary or otherwise sensitive, then such document or information shall only be presented
or provided to the Arbitrator (and not to any other Person). Any arbitration proceeding hereunder and the content of any discussions
or communications with the Arbitrator shall be conducted on a confidential basis, shall be subject to such disclosure restrictions
imposed on the parties under any Applicable Law and the Arbitrator shall be required to execute, prior to the commencement of
its service, the Purchaser’s standard confidentiality agreement. The Sellers shall, within ten (10) calendar days following
the delivery of the final decision of the Arbitrator, pay the Purchaser Indemnified Parties in accordance with the written decision
of the Arbitrator, unless the Purchaser Indemnified Parties can recover such amount from the Escrow Fund. Any ruling or decision
of the Arbitrator may be enforced in any court of competent jurisdiction. The award of the Arbitrator may be appealed to a second
single arbitrator within twenty (21) days from the first Arbitrator’s award in which case the arbitration principals described
above shall apply with respect to the appeal as well, except that the second arbitrator’s award shall be final. This Section
constitutes an Arbitration Agreement in accordance with the Arbitration Law. In the event of any contradiction between the provisions
hereof and the Arbitration Law, the provisions of this Agreement shall prevail.


 


Section
10.04Defense of Third-Party Claims.


 


In
the event of the assertion or commencement by any Person of any claim or Proceeding with respect to which any Seller may become
obligated to hold harmless, indemnify, compensate or reimburse any Purchaser Indemnified Party pursuant to ‎Article X,
the Purchaser shall have the right, at its election, to proceed with the defense of such claim or Proceeding on its own. If the
Purchaser so proceeds with the defense of any such claim or Proceeding:


 


(a)each
Seller and the Shareholders Representative shall make available to the Purchaser any documents, materials and other information
in his possession or control that may be necessary to the defense of such claim or Proceeding; and


 




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(b)the
Purchaser shall have the right to settle, adjust or compromise such claim or Proceeding; provided, however, that if the Purchaser
settles, adjusts or compromises any such claim or Proceeding without the consent of the Shareholders Representative, (i) such
settlement, adjustment or compromise shall not be conclusive evidence of the amount of Losses incurred by the Purchaser Indemnified
Party in connection with such claim or Proceeding (it being understood that if the Purchaser requests that the Shareholders Representative
consent to a settlement, adjustment or compromise, the Shareholders Representative shall not unreasonably withhold or delay such
consent) and (ii) any amount of such settlement in excess of amounts consented to by the Shareholders Representative shall be
deemed Contested Amounts.


 


The
Purchaser shall give the Shareholders Representative, as promptly as practicable, notice of the commencement of any such Proceeding
against any Purchaser Indemnified Party and provide information reasonably requested by the Shareholders Representative and not
subject to attorney-client privilege of the Purchaser or Purchaser’s Indemnified Parties relating to such claim; provided,
however, that any failure to so notify the Shareholders Representative and provide such information shall not limit any of the
obligations of the Sellers under ‎Article X (except to the extent such failure materially prejudices the defense of
such Proceeding). If the Purchaser does not elect to proceed with the defense of any such Proceeding, the Shareholders Representative
or the Sellers may proceed with the defense of such claim or Proceeding with counsel reasonably satisfactory to the Purchaser;
provided, however, that the Shareholders Representative or the Sellers may not settle, adjust or compromise any such Proceeding
without the prior written consent of the Purchaser (which consent may not be unreasonably withheld or delayed).


 


Section
10.05 No Contribution.


 


No
Seller shall have, or be entitled to exercise or assert (or attempt to exercise or assert), any right of contribution, right of
indemnity or other right or remedy against the Company in connection with any indemnification obligation or any other liability
to which it may become subject under or in connection with this Agreement.


 


Section
10.06 Adjustment to Purchase Price.


 


The
parties hereto agree to treat any indemnity payment made pursuant to this ‎Article X or as an adjustment to the Purchase
Price.


 


Section
10.07 Additional Provisions.


 


(a)The
representations, warranties, covenants and obligations of the Company and the Sellers, and the rights and remedies that may be
exercised by the Purchaser Indemnified Parties, shall not be limited or otherwise affected by or as a result of any information
furnished to, or any investigation made by or knowledge of, any of the Purchaser Indemnified Parties or any of their Representatives.


 


(b)The
Sellers’ liability for Losses shall be reduced, if and to the extent relevant by: (A) insurance proceeds, if any, actually
received by the Purchaser Indemnified Party(ies) with respect thereto; and (B) the proceeds and/or indemnification (net of Taxes)
actually received by the Purchaser Indemnified Party(ies) from any third party with respect thereto, provided, however, that no
Purchaser Indemnified Party shall be obligated to pursue any such insurance proceeds or other recovery. In such cases, the Losses
shall include the costs and expenses incurred by the Purchaser Indemnified Party(ies) in recovery of such proceeds (including
any future increase of premiums on such account, and any deductibles payable). The Sellers’ liability for Losses shall be
increased to take account of any Tax incurred (grossed up for such increase) by the Purchaser Indemnified Party(ies) arising from
the receipt of indemnity hereunder, insurance proceeds or proceeds from any other Person.


 




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Article
XI


Shareholders
Representative


 


Section
11.01Appointment of Shareholders Representative; Power and Authority.


 


(a)By
virtue of the execution of this Agreement, each Seller hereby irrevocably agrees, constitutes and appoints the Shareholders Representative,
and by the execution of this Agreement as Shareholders Representative, the Shareholders Representative as of the date hereof hereby
accepts his appointment, as the true, exclusive and lawful agent and attorney-in-fact of each of the Sellers: (i) to act as a
Shareholders Representative under this Agreement and to have the right, power and authority to perform all actions (or refrain
from taking any actions) the Shareholders Representative shall deem necessary, appropriate or advisable in connection with, or
related to, this Agreement and the Transactions, (ii) to act in the name, place and stead of each Seller in connection with the
Transactions, in accordance with the terms and provisions of this Agreement, and in any Proceeding involving this Agreement, and
(iii) to do or refrain from doing all such further acts and things, and to execute all such documents as the Shareholders Representative
shall deem necessary or appropriate in connection with the Transactions (including any Transaction Document). This power of attorney
is coupled with an interest and is irrevocable. All actions, decisions and instructions of the Shareholders Representative shall
be conclusive and binding upon all of the Sellers. Each of the Sellers acknowledges and agrees that upon execution of this Agreement,
upon any delivery by the Shareholders Representative of any waiver, amendment, agreement, opinion, certificate or other document
executed by the Shareholders Representative, such Seller shall be bound by such documents as fully as if such Seller had executed
and delivered such documents.


 


(b)Without
derogating from the generality of the foregoing, as of the date hereof the Shareholders Representative shall have the right, power
and authority to:


 


(1)act
for the Sellers with regard to all matters set forth in this Agreement and the other Transaction Documents;


 


(2)execute
and deliver all amendments, waivers, ancillary agreements, share powers, certificates and documents that the Shareholders Representative
deems necessary or appropriate in connection with the consummation of the Transactions;


 


(3)do
or refrain from doing any further act or deed on behalf of the Sellers that the Shareholders Representative deems necessary or
appropriate in his sole discretion relating to the subject matter of this Agreement and the other Transaction Documents as fully
and completely as the Sellers could do if personally present;


 


(4)deliver
and receive all notices or other communications or documents given or to be given to or from the Shareholders Representative by
the Purchaser pursuant to this Agreement and the other Transaction Documents;


 


(5)receive
service of process on behalf of any Seller in connection with any claims under this Agreement and the other Transaction Documents;


 


(6)negotiate,
undertake, compromise, settle, consent, defend, object, resolve and settle any suit, Proceeding, claim or dispute under this Agreement
and the other Transaction Documents on behalf of the Sellers, including authorize deliveries or set off to the Indemnified Parties
of payment in satisfaction of claims asserted by the Indemnified Parties (including by not objecting to such claims) and comply
with Orders with respect thereto;


 


(7)agree
to any modification or amendment of, or supplements to, or waiver relating to this Agreement and the other Transaction Documents
in accordance with ‎Section 12.02 and execute and deliver an agreement of such modification, amendment, supplement
or waiver; and


 




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(8)take
all such other actions as the Shareholders Representative may deem necessary, appropriate or advisable to carry out the intents
and purposes of this ‎Section 11.01, in each case without having to seek or obtain the consent of any Seller under
any circumstance.


 


(c)The
Shareholders Representative may be removed or replaced from time to time by the Sellers holding at least a majority of Purchased
Shares as of immediately prior to the Closing, subject to Purchaser’s prior written consent (which consent shall not be
unreasonably withheld). The Shareholders Representative shall be replaced as agent by the Sellers holding at least a majority
of Purchased Shares as of immediately prior to the Closing, subject to Purchaser’s prior written consent (which consent
shall not be unreasonably withheld), immediately if (a) the then presiding Shareholders Representative is unable to reasonably
perform his duties as a Shareholders Representative hereunder, (b) any proceeding, whether voluntary or involuntary, is instituted
by or against the then presiding Shareholders Representative seeking to adjudicate it (as applicable) bankrupt or insolvent or
dissolved, or seeking liquidation, winding up, arrangement with creditors, protection, or relief of it or its debts under any
law or statute of any jurisdiction, or seeking the entry of an Order for relief or the appointment of a temporary or permanent
receiver, liquidator, custodian trustee, or other similar official for it or for a material portion of its assets; (c) if the
Shareholders Representative is a natural person - upon his death or incapacity; (d) if the Shareholders Representative is an entity
- the Shareholders Representative makes an assignment of all or a material portion of its assets; (e) the Shareholders Representative
admits its inability to pay its debts generally; (f) if the Shareholders Representative is an entity - the transaction of the
business of the Shareholders Representative is suspended, substantially curtailed or ceased for a period longer than 30 days;
or (g) if the appointment is terminated or withdrawn in accordance with Applicable Law or an Order. Any new or successor Shareholders
Representative appointed as aforesaid shall be deemed for all purposes as an agent under this Agreement having the powers and
authorities set forth herein.


 


(d)The
Shareholders Representative may resign at any time only upon thirty (30) days’ prior written notice of such decision to
resign and the appointment of a successor Shareholders Representative as described above.


 


(e)No
bond shall be required of the Shareholders Representative and the Shareholders Representative shall not receive compensation for
service in such capacity.


 


(f)Any
notice or communication given or received by, and any decision, action, failure to act within a designated period of time, agreement,
consent, settlement, resolution or instruction of, the Shareholders Representative shall constitute a notice or communication
to or by, or a decision, action, failure to act within a designated period of time, agreement, consent, settlement, resolution
or instruction of the Sellers and shall be final, binding and conclusive upon the Sellers. The Purchaser, the Indemnified Parties,
the Company, the Escrow Agent, the Paying Agent and any other Person may conclusively and absolutely rely, without inquiry, upon
any notice, communication, decision, action, failure to act within a designated period of time, agreement, consent, settlement,
resolution or instruction of the Shareholders Representative in all matters referred to herein and each of the foregoing is hereby
relieved from any liability to any Person for any acts done by the Shareholders Representative and any acts done by the any of
the foregoing in accordance with any decision, act, consent or instruction of the Shareholders Representative.


 


Section
11.02Reimbursement.


 


Each
Seller shall be responsible for and shall, severally, reimburse the Shareholders Representative upon demand for all such Seller’s
Pro Rata Portion of any reasonable expenses, disbursements and advances incurred or made by the Shareholders Representative in
accordance with any of the provisions of this Agreement or any other documents executed in connection herewith or therewith, including
the costs and expense of receiving advice of counsel according to this Agreement.


 




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Section
11.03Liability; Indemnification.


 


Each
Seller hereby releases the Shareholders Representative and each Seller agrees, severally, to indemnify, defend and hold harmless
the Shareholders Representative, in accordance with such Seller’s Pro Rata Portion (including any losses incurred, as such
losses are incurred) for, arising out of or in connection with the acceptance or administration of the Shareholders Representative’s
duties hereunder or any action taken or not taken by him in his capacity as such agent (including the legal costs and expenses
of defending the Shareholders Representative against any claim or liability (and all actions, claims, proceedings and investigations
in respect thereof) in connection with, caused by or arising out of, directly or indirectly, the performance of the Shareholders
Representative’s duties hereunder), except for the liability of the Shareholders Representative to a Seller for losses which
such holder may suffer from gross negligence, willful misconduct or a fraud of the Shareholders Representative in carrying out
the Shareholders Representative’s duties hereunder. In all questions arising under this Agreement, the Shareholders Representative
may rely on the advice of counsel, and the Shareholders Representative will not be liable to the Seller for anything done, omitted
or suffered by the Shareholders Representative based on such advice.


 


Article
XII


Miscellaneous


 


Section
12.01Entire Agreement.


 


This
Agreement, the Transaction Documents and the Nondisclosure Agreement (and the respective schedules and exhibits hereto and thereto)
constitute and represent the entire agreement between the parties with respect to the subject matter of this Agreement and supersede
all prior agreements and understandings, both written and oral (with no concession being made as to the existence of any such
agreements and understandings), between the parties with respect to the subject matter of this Agreement (including without limitation
any prior proposal, term sheet, letter of intent, memorandum of terms or expression of interest).


 


Section
12.02Amendments and Waivers.


 


(a)This
Agreement may not be amended, modified, altered or supplemented other than by means of a written instrument duly executed and
delivered on behalf of the Purchaser, on the one hand, and the Company or, following the Closing, the Shareholders Representative,
on the other hand. Any amendment executed in accordance with the foregoing shall be binding upon all parties and their respective
successors and assigns.


 


(b)No
failure on the part of any Person to exercise any power, right, privilege or remedy under this Agreement, and no delay on the
part of any Person in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such
power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege or remedy.


 


(c)No
Person shall be deemed to have waived any claim arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument
duly executed and delivered on behalf of such Person; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.


 


Section
12.03Assignment; No Third Party Beneficiaries.


 


(a)No
party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of
each other party hereto, except that the Purchaser may transfer or assign its rights and obligations under this Agreement, in
whole or from time to time in part, to one or more of its Affiliates at any time, provided that in case of an assignment prior
to the completion of all payment obligations of the Purchaser hereunder, the Purchaser shall remain liable for all of its obligations
hereunder.


 




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(b)Subject
to sub-Section ‎(a) above, the provisions of this Agreement shall be binding upon, inure to the benefit of and be enforceable
by, the parties hereto and their respective successors, assigns, heirs, executors, and administrators. This Agreement is not intended
to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person, other than the parties hereto
and their respective successors and assigns.


 


Section
12.04Governing Law.


 


This
Agreement shall be governed by and construed in accordance with the laws of the State of Israel, without giving effect to principles
of conflicts of laws that would require the application of the laws of any other jurisdiction.


 


Section
12.05Jurisdiction.


 


Subject
to the arbitration proceedings referred to in ‎Section 10.03(f), the parties hereto agree that any Proceeding seeking
to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the Transactions shall
be brought in the competent courts in the Tel Aviv-Jaffa, and each of the parties hereby irrevocably consents to the exclusive
jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such Proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such
Proceeding in any such court or that any such Proceeding brought in any such court has been brought in an inconvenient forum.
Process in any such Proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of
any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided ‎Section
12.06 shall be deemed effective service of process on such party. 


 


Section
12.06Notices.


 


All
notices, requests and other communications required or permitted under, or otherwise made in connection with, this Agreement,
shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) upon receipt after dispatch
by registered or certified mail, postage prepaid, confirmation of delivery requested, or (c) on the next Business Day if transmitted
by national overnight courier (with confirmation of delivery), in each case, addressed as follows:


 


if
to the Purchaser or to the Company following the Closing Date, to:


 


P.O.
Box 2250, Haifa 31021, Israel


 


Attention:
Avital Rosenberg


E-mail:
avitalr@rafael.co.il


 


with
a copy (which shall not constitute notice) to:


 


	 	Tadmor
    & Co. Yuval Levy & Co. 
	 	Azriely
    Centre, Square Tower, 34th floor
	 	132
    Menachem Begin Road, Tel Aviv, Israel
	 	Attention:
    	Dr.
    Ophir Nave, Advocate 

Oded
    Levy, Advocate 
	 	Telephone
    No.:	972-3-6846000+
	 	Facsimile
    No.: 	972-3-6846001+
	 	E-mail:
    	ophir@tadmor-levy.com
	 	 	oded@tadmor-levy.com


 




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if
to the Company, to:


 


DSIT
Solutions Ltd.


Rehavam
Zeevi 2,


Givat
Shmuel


 


	 	Telephone:	035313333
    
	 	Facsimile:	035313322
    
	 	Attention:	CEO


 


with
a copy (which shall not constitute notice, but may serve as a service of process on behalf of any Seller, if required) to:


 


Joel
Stein, Pearl Cohen Zedek Latzer Baratz, Azrieli Center, Round Tower, 18th Floor, Tel Aviv


 


Telephone:
036073777


Facsimile:09
972 8001


Attention:Joel
Stein


E-mail:
Joels@pzclaw.com


 


if
to the Shareholders Representative and to any Seller, to:


 


Michael
Barth


Rehavam
Zeevi 2,


Givat
Shmuel


 


	 	Telephone:
    	035313333;
    0544202878
	 	Facsimile:	035313322
	 	Attention:	Michael
    Barth
	 	E-mail:	barthm@dsit.co.il


 


or
to such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto
in accordance with this ‎Section 12.06.


 


Section
12.07Severability.


 


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, 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 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 affect the original intent of the parties as closely as possible
in an acceptable manner in order that the Transactions be consummated as originally contemplated to the fullest extent possible.


 


Section
12.08Remedies


 


All
rights and remedies of any party hereto are cumulative of each other and of every other right or remedy such party may otherwise
have at law or in equity, and the exercise of one or more rights or remedies shall not prejudice
or impair the concurrent or subsequent exercise of other rights or remedies. 


 


Section
12.09Specific Performance.


 


The
parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with
the terms hereof and that 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 of this Agreement in addition to any other remedy to which
they are entitled at law or in equity, in each case without the requirement of posting any bond or other type of security.


 




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Section
12.10Set-off.


 


To
the extent that the Purchaser or any other Purchaser Indemnified Party is entitled to any payment from any Seller under this Agreement
or any Transaction Document, including, without limitation, payment under the indemnification provisions of ‎Article X
or ‎‎Section 2.02 (Consideration), notwithstanding anything to the contrary in this Agreement, the Purchaser
shall be entitled to offset such amount from any payment due and payable or that may become due and payable to any of the Sellers
in accordance with ‎‎Section 2.02, the Earnout Schedule or otherwise in accordance with any Transaction Document,
provided however that no set-offs shall be made against salaries and/or any employment related benefits of any of the Key
Employees. If any payment to any Sellers under this Agreement or the Transaction Documents, including any payment of the Purchase
Price (which in turn includes any Earnout Payment), becomes due in accordance with this Agreement while a claim for indemnification
that would be subject to offset against such payment is pending and not yet finally resolved, then the Purchaser may withhold
such portion of such payment that it determines in good faith would be necessary to satisfy such pending claim. 


 


Section
12.11Expenses.


 


Whether
or not the Closing occurs, and except as specifically and expressly provided otherwise in this Agreement, all costs and expenses
incurred in connection with the negotiation, execution and performance of this Agreement and each other Transaction Document and
the consummation of the transactions contemplated hereby and thereby, including all third-party legal, accounting, financial advisory,
consulting or other fees and expenses incurred in connection with the Transactions, shall be paid by the party incurring such
cost or expense.


 


Section
12.12Transfer Taxes. 


 


All
transfer, documentary, sales, use, stamp, registration and other Taxes and fees incurred in connection with or arising or resulting
from this Agreement (collectively, “Transfer Taxes”) shall be the sole responsibility and liability of, and paid by,
the Sellers when due, and the Sellers will, at their own expense, file all necessary Tax Returns and other documentation with
respect to all such Transfer Taxes. Each Seller and the Shareholders Representative shall provide the Purchaser with evidence
satisfactory to the Purchaser that such Transfer Taxes have been paid by the Sellers.


 


Section
12.13Interpretation.


 


Each
of the parties acknowledges that it had assessed the risk, uncertainties and benefits of the transactions contemplated by this
Agreement and each Transaction Document to which it is a party, and that it was represented by legal counsel in the negotiation,
execution and delivery of the Transaction Documents. Accordingly, and based on the foregoing facts, among other factors, each
party acknowledges and agrees that, for purposes of interpreting this Agreement or any other Transaction Document, no party has
had any preference in the design of the provisions of this Agreement (within the meaning of Section 25(b1) of the Contracts Law
(General Part), 1973 (as amended)).


 


Section
12.14Counterparts; Effectiveness.


 


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. The exchange of a fully executed Agreement (in counterparts or otherwise) by
electronic transmission in PDF format (or the like) or by facsimile transmission shall be sufficient to bind the parties to the
terms and conditions of this Agreement as an original.


 




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IN
WITNESS WHEREOF the Parties have signed this Share Purchase Agreement as of the date first hereinabove set forth.


 





	DSIT
    SOLUTIONS LTD.:	 
	 	 	 
	By:	 	 
	Name:	 	 
	Title:	 	 
	 	 	 
	ACORN
    ENERGY INC.:	 
	 	 	 
	By:	 	 
	Name:	 	 
	Title:	 	 
	 	 	 
	RAFAEL
    ADVANCED DEFENSE SYSTEMS LTD.:	 
	 	 
	By:	 	 
	Name:	 	 
	Title:	 	 




  



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