Document:

exhibit_4-13.htm

Exhibit 4.13

 

Summary of Economic Terms

 

	
Lender: Bank Leumi Le Israel

	  	  	  	  	  
	  	  	  	  	  	  
	  	  	
Credit Line

	  	
Long Term

	  
	
Principal

	  	
13,500,000

	  	
4,200,000

	  
	
Loan currency

	  	
NIS

	  	
NIS

	  
	
Term

	  	
revolving

	  	
ends October 16, 2010

	  
	
Interest payment

	  	
monthly

	  	
monthly

	  
	
Principal payment

	  	
revolving

	  	
monthly

	  
	
Interest rate

	  	
Fixed 4.85%/P+2.5%

	  	
P+2.1%

	  

  

  

  

  

 

Form of Request to Allocate a Credit in Israeli Currency (unlinked)

 

	
To:

	
Bank Leumi le-Israel B.M.

	  	
_________________ Branch

	
Date: _________________

 

Re: Request to allocate Credit in Israeli Currency (Unlinked)

 

	
1.

	
Advance and amount of the Credit

 

Please allocate to us a credit, /we confirm receipt of a credit* in the sum of NIS ______ (hereinafter: “the Credit”) in our account number ___________ maintained with yourselves (hereinafter: “the Credit Account”) and, if no such account as above presently exists with yourselves, please open for us an account in our name and allocate the Credit therein. The General Conditions for Opening an Account for Receiving Credits signed by us in your favor (hereinafter: “the Terms of Operation”), in addition to the additional conditions hereinafter contained, will apply to the Credit Account and to the Credit. Please credit our Account with yourselves, Account No. __________ (the “the Master Account”) with the amount of the Credit.

 

	
2.

	
Term of the Credit

 

	  	
The Credit will be for a term of ___________ (the “Term of the Credit”). The date of advancing the Credit will be ____________ (the “Date of Allocation of Credit”).

 

	
3.

	
Interest

 

	  	
(a)

	
The unpaid balance of the Credit will bear interest based upon the Bank’s preference, on the daily balance or will bear interest on a different period, as will be customary in the Bank, commencing from the date the Credit is advanced until the full and actual payment thereof to the Bank. The interest will be calculated according to the number of days which have actually elapsed divided by 365 or 366, depending on the number of years in that relevant period.

 

	  	
(b)

	
Fixed interest

 

	  	
If this request, is a request to allocate credit with a fixed interest, then the rate of interest on the unpaid balance of the Credit will be _____% a (the “Interest Rate)” and the adjusted interest will be _________% (the “Adjusted Interest”). Notwithstanding the mentioned in section 3(a), if it is agreed that the repayment shall be made in the Spitzer method, the interest shall be calculated, from the date the credit is advanced until the full and actual payment thereof to the Bank based upon 360 days in a year and 30 days in a month.

 

	  	
(c)

	
Variable interest

 

	  	
1.

	
If this request, is a request to allocate credit with a variable interest, then the rate of interest mentioned in paragraph (a) above will be an interest rate in an amount that is higher/lower than ______ % (the “Interest Spread”) which is higher/lower than ______% above the prime rate of interest as defined below.

 

	  	
For the purposes hereof “the prime rate of interest” means interest at the basic rate customary in the Bank from time to time in overdraft accounts in Israeli currency.

 

  

  

  

 

	  	
2.

	
We have taken note that a change in the prime rate of interest in the Bank will lead to a change in the interest on the Credit, by a percentage identical to such change in the basic interest, or at the Bank’s option, by the same ratio whereby the basic rate of interest has been changed against the basic rate as it existed prior to such change. In the event of repayment (credit with variable interest) using the Spitzer method, then the interest shall be calculated as detailed in Section 3(a) and if any change occurs in the prime rate of interest on a day not being an interest payment day, the new interest rate will apply as from the immediately succeeding interest payment date following the date of the change, or on the date of the change of interest, at the option of the Bank.

 

	  	
3.

	
We are aware that the interest of _________% (the “Initial Interest Rate”) shall be the interest that shall commence on the date of grant of the Credit until the change of the prime rate of the interest, as aforementioned.

 

	  	
4.

	
For the avoidance of doubt, it is hereby stated that the Bank will be entitled, from time to time, to change the interest rate as aforesaid even with respect to amounts of the Credit which have already been allocated to us in the Credit Account.

 

	
4.

	
Repayment of Principal and Interest

 

	  	
(a)

	
We hereby undertake to repay the Bank the principal of the Credit together with the interest thereon in______ consecutive equal monthly installments in the sum of approximately _________________ each, on each ______ of every calendar month, commencing on _______________ and terminating on ____________(the “Repayment of Principal”).

 

	  	
(b)

	
We hereby commit to repay the interest of the unpaid balance of Credit in _________ consecutive installments in the sum of approximately _________________ each, on each ______ of every calendar month, commencing on _______________ and terminating on ___________(the “Repayment of Interest”).

 

	  	
In case that the Interest shall be repaid in one installment, the Interest shall be added to the principal and shall compound interest from commencing on _______________ and terminating on _______ (the “Accumulation Period”), from the date of allocation of the Credit.

 

	  	
(c)

	
If the credit shall be paid under the Spitzer method, then instead of the detailed in sections (a) and (b) above, we hereby commit to the Bank to repay the Bank, the principal together with the interest with respect to the unpaid balance of the Credit in equal monthly sequential installments, in ______ consecutive equal monthly installments in the sum of approximately _________________ each, on each ______ of every calendar month, commencing on _______________ and terminating on ____________(the “Repayment using Spitzer Method (Principal and Interest)”). Notwithstanding the stated in this section, the monthly payments may be unequal due to the calculation method, based upon the number of days as detailed in section 3(a).

 

  

  

  

 

	  	
(d)

	
We are aware that the total repayment schedule which includes the exact amount of each payment will be provided to us soon after the allocation of the Credit and we that the amount that shall bind us is the one set forth the in the repayment schedule or if amended, as detailed in the amended repayment schedule.

 

	  	
In the event of a change in the interest rates as provided by paragraph 3(c) above, the amount of the unpaid balance of the Credit will be adjusted and the amounts of the installments changed accordingly so that the amounts of the installments will be equal from the date of the change until the next succeeding date of change. An amended repayment schedule will be given to us promptly after the date of the change.

 

	
5.

	
Mode of repaying the Credit

 

	  	
On the date of payment of each amount on account of the principal of the Credit, principal, interest or other charges, please debit our Master Account as mentioned above for the purpose of discharging such amounts.

 

	  	
If the credit balance in the Master Account shall be insufficient to cover the amount, in whole or in part, please grant us a credit in the amount required to discharge such sum, either through the Master Account or through any other account, thereby debiting the Master Account or such other account.

 

	  	
We are aware and agree that if, at the time the Master Account or the other account is debited with the credit as aforesaid, the balance in such account will be a debit balance or become overdrawn as a result of such debiting, the credit will bear interest at the Customary Rate at such time according to the Terms of Operation of such account. We are aware that if the credit advanced to us as above exceeds the Credit facility previously authorized, then such credit will bear Interest at the Maximum Rate according to the Terms of Operation of such account.

 

We are aware that the interest that shall be debited to us in the Master Account or any other account, might be higher than one or more of the options as to Interest specified in the Terms of Operation. If it transpires, either before or after such debiting, that the state of the Account does not or did not enable a debit in such amount to be effected, and you decide that you do not wish for any reason to advance us a credit, or any legal impediment will exist to the debiting of the Account, you will be entitled to debit a special account to be opened in our name with such amount, and such special account will bear interest as provided by Clause 5 or Clause 13.5, titled “Deficiency Interest” of the Terms of Operation.

 

	
6.

	
We shall not be entitled to repay the Credit (principal and interest) before the agreed upon Repayment Date, except if we have a legal right to do so, that may not be conditioned, or that the Bank agrees to do so in advance, in writing. The Bank shall be entitled to condition any such early repayment, with certain terms, including an early repayment commission, in the maximum amount legally allowed. It is hereby agreed that section 13(b) to the Israeli Pledge Law 1967, and any section that shall replace it, shall not apply to the early repayment of credit.

 

	
7.

	
We approve that we have received a copy of this document.

 

	  	
Customers' signatures: ____________________ ____________________

 

  

  

  

 

Form of Request to Allocate a Credit Framework in Debitory Account (unlinked)

 

	
Bank Leumi le-Israel B.M.

	
Branch_____________________________________

	
Account No_____________

	
Date:______________

	  

 

Request to Allocate a Credit Framework In Israeli Currency Account No _________ 

(hereinafter referred to as “the Account”)

 

	
1.

	
The Request

 

We hereby request from Bank Leumi le-Israel B.M. (the “Bank”) the allocation of a credit framework in account no. _______ ( the “Credit Framework”) in an amount of _______ (the “Credit Framework Amount”) in accordance with the detailed in this Request and in the terms and conditions for operation of the Account, as modified or as will be modified in the future (the “Terms and Conditions of Operation”).

 

	
2.

	
Term of the Credit

 

	  	
2.1

	
The date of advancing the Credit will be _______________ (“Date of Credit Advancement”). If the Date of the Credit Advancement will not be stated, the date shall be the date stated on the Bank notice regarding the advancement of the Credit. The end of the term of the Credit shall be __________________ (the “Credit Expiration Date”).

 

	  	
2.2

	
We request that at each Credit Expiration Date, the Credit Framework shall be renewed for an additional year (or another time period), at the terms that shall be in force at such renewal date, including without limitation with respect to the interest rate, rate of Allocation of Credit Commission and additional commissions, which shall be in force at the renewal date. Each renewal of the Credit Framework shall be subject to the receipt from the Bank, at least 10 days prior to the end of the existing term of the Credit, a written notice stating the Bank’s approval for such renewal, which shall include the new terms of the Credit framework.

 

For the avoidance of doubt, it is hereby clarified that nothing in this Request derogates the Bank’s right to not renew the Credit Framework in whole or in part, or to renew it for a period of less than a year and/or to decrease or annul, at any time, any Credit Framework, as described in the Terms and Conditions of Operation.

 

	
3.

	
Interest

 

We have noted that subject to the Terms and Conditions of Operation and for so long as you do not notify us otherwise-

 

	  	
3.1

	
Interest Rate for Debit Balances in the Credit Framework

 

	  	
The rate of interest on debit balances in the Credit Framework will be a changing rate, equal to the interest at the basic rate customary in the Bank from time to time in overdraft accounts in Israeli currency (the “Prime Rate”), as shall be from time to time, with a margin of ________________ (the “Interest Rate for Debit Balances in the Credit Framework”).

 

	  	
3.2

	
Maximum Interest Rate on Debit Balances

 

	  	
The maximum interest rate of debit balances shall be a changing rate, based upon the highest interest rate ____________ (the “Interest Rate for Debit Balances”), in addition to the interest rate of _________ (the “Maximum Interest Rate for Debit Balances”).

 

	  	
3.3

	
Term of Interest Calculation and Repayment Dates

 

	  	
3.3.1.

	
The interest mentioned in paragraphs 3.1 and 3.2 above shall be computed based upon the number of days that there was been a debit balance in the Account; and it will be paid by us or will be credited as debt in our Account, on the last business day of March, June, September and December each year.

 

  

  

  

 

	
4.

	
Credit Allocation Commission

 

The credit allocation commission in respect of the Credit Framework, for each quarter, will be in the amount of or at the rate of ______% (the “Quarterly Credit Allocation Commission”) and will be paid by us or it shall be credited to the Account in advance at the time of the determination or increase of any Credit Framework and thereafter it will be paid by us or it shall be credited to the Account on the first business day of every January, April, July and October each year .

 

In cases that the Credit Allocation Commission shall be stated in percentages, the calculation of the commission shall be made by multiplication of the amount of the of the Credit Framework by the stated percentage and the number of days until the end of the term or the end of the quarter (the earlier of the two), divided by the number of days in the quarter.

 

Notwithstanding the above, the Bank may determine a minimum or maximum Credit Allocation Commission.

 

	
5.

	
Unilateral Credit Framework

 

	  	
5.1

	
We agree that the Bank may, but will not be obliged, at its sole discretion, to provide us with a unilateral credit framework, in the Account, with out our request. If the bank provides us with such unilateral credit framework, it shall not be interpreted as the Bank’s agreement, to repeat this in the future or to renew all or part of the unilateral credit framework it has provided.

 

	  	
In any case that the Bank shall provide us with a unilateral credit framework, it shall be deemed part of the Credit Framework and the terms of this document and the Terms and Conditions of Operation shall apply.

 

	  	
5.2

	
The debit balances in the unilateral credit framework, if the Bank shall agree to it, shall bear a changing interest rate equal to the Maximum Interest Rate for Debit Balances, in the highest rate stated under the most recent agreed upon Credit scale.

 

	  	
5.3

	
The time period of the unilateral credit framework may be different than the one set for the Credit Framework herein.

 

	  	
5.4

	
The unilateral credit framework shall not bear a Credit Allocation Commission.

 

	  	
5.5

	
The Bank will provide us a notice with respect to the unilateral credit framework, close to the time of its bestowal.

 

	
6.

	
Amendments

 

	  	
6.1

	
We are aware that the Bank may, from time to time, amend the interest rates mentioned herein or any component of them (including the margin rate or the Maximum Interest Rate for Debit Balances), the Credit Allocation Commission rate (including the minimum and maximum rates), the term of Credit and their way of calculation.

 

Notwithstanding the abovementioned, as the interest in based upon the Prime Rate, any change in the Prime Rate shall cause a similar change in the interest. All such changes shall also be applicable to the unilateral credit framework mentioned in paragraph 5, if such credit framework shall be provided.

 

	  	
6.2

	
Such amendment shall apply to all debit balances existing at the time of the amendment and to all debit balances existing thereafter.

 

	  	
6.3

	
The notice with respect to any amendment shall be provided as required under applicable law.

 

	  	
6.4

	
Notwithstanding the aforementioned, we are aware that there may be a change in a certain component of the interest before the Bank provides the Credit Framework, and in such case the interest rate shall apply to the debit balances shall be at the new rate at that time and not in the rates detailed herein, that is given only for information purposes.

 

	
7.

	
We confirm that we received a copy of this document.

 

Customers’ signature ______________

 

  

  

  

 

Bank Leumi – BOS-ODEM Credit Line Agreement

 

[Translated from Hebrew]

 

Date: February 7, 2010

 

To

 

BOS-ODEM Ltd. (hereinafter the "Company")

 

Dear Sir or Madam,

 

As per your request, we hereby inform you, that we Bank Leumi Le-Israel Ltd. (hereinafter - the "Bank"), are prepared in principle to place at your disposal credit up to a total sum that will not exceed 23,850,000 (twenty-three million eight hundred and fifty thousand N.I.S. only) (hereinafter - the "Credit Framework" or the "Credit") and all subject to all the conditions detailed in this document below:

 

	
1.

	
The Credit Framework

 

	
1.1.

	
The Credit Framework will be extended according to the following breakdown:

 

	 	
1.1.1.

	
Short-Term Credits in a total amount that will not exceed N.I.S. 9,800,000 (nine million eight hundred thousand N.I.S. only), whose payment date shall occur no later than 31/12/10. "Short Term Credits" means credits whose repayment date will be no later than 12 months from the time of their provision.

 

	 	
1.1.2.

	
Long-term credits in a total amount that will not exceed N.I.S. 8,000,000 (eight million N.I.S. only) that were placed at the disposal of the Company prior to the date of this document according to the following details: loan number 400300399 671-10-120800-08 in the amount of N.I.S. 4,000,000 on 25/06/08. Loan number 903500016 671-20-120800/08 in the amount of $1,000,000 on 25/06/08. After each one of the aforementioned loans is repaid, the Bank will be prepared to enlarge the Short-Term Credits framework as detailed in paragraph 1.1.1 above in an amount equal to the amount of the loan that was paid.

 

	 	
1.1.3.

	
Long-term credits in a total amount that will not exceed N.I.S. 550,000 (five hundred and fifty thousand N.I.S. only) that were placed at the Company's disposal before the date of this document in accordance with that detailed hereinafter: loan number 302000015 671-10-120800/08 in the amount of N.I.S. 6,000,000 on 28/03/07.

 

	 	
1.1.4.

	
Additional long-term credits in conjunction with the agreement of 29/1/2008 between the Company and Dimex Systems (1998) Ltd. with reference to the Asset Purchase Agreement of the assets of Dimex Systems (1998) Ltd. (hereinafter the "Agreement") in a total amount that will not exceed N.I.S. 4,000,000 (four million N.I.S. only) that were placed to the disposal of the Company before the date of this document according to the detailing as follows: as part of the loan number 406500018 671-10-120800/08 on 16/04/09.

 

  

  

  

 

	 	
1.1.5.

	
Additional long-term credits in a total amount that will not exceed N.I.S. 200,000 (two hundred thousand N.I.S.) that were placed to the disposal of the Company before the date of this document according to the detailing as follows: as part of the loan number 406500018 671-10-120800/08 on 16/04/09.

 

	 	
1.1.6.

	
Credit framework for the purpose of issuing bank obligations on behalf of the customers, such as issuing bank guarantees etc., in a total aggregate amount that will not exceed 300,000 (three hundred thousand N.I.S. only) whose final payment date will occur no later than 31/12/2010 and provided that the last day for utilizing the credit on account of the aforementioned credit framework shall occur no later than 31/12/10.

 

Any amount that will not be exploited on account of this credit framework can be exploited as Short-Term Credit according to the conditions detailed in paragraph 1.1.1 above.

 

	 	
1.1.7.

	
Framework for Future Transactions in a total amount that will not exceed N.I.S. 1,000,000 (one million N.I.S. only). "Framework for Future Transactions" means: the framework of the requirement for securities portraying the maximal exposure for making future deals (options, spot and forward) which expire no later then 30.8.10.

 

	
1.2.

	
The currency of the Credit and the other conditions of the Credit including the interest rate for each part and the commissions attached to it, will be as agreed upon in writing between the Bank and yourselves before the Credit is provided and if it will not be agreed upon as is accepted practice in the Bank regarding credit of that category, at the time that it is provided.

 

	
1.3.

	
Let it be clear that the Credit Framework includes also credits of any category whatsoever that the Bank will extend to you in practice in any account whatsoever prior to the signing of this document and/or any credit framework agreed upon between the Bank and yourselves prior to the signing of this document.

 

	
1.4.

	
Any credit from the frameworks detailed in paragraphs 1.1.3 1.1.4, and 1.1.5 that was utilized and repaid prior to the final date for its utilization will not be provided anew.

 

	
2.

	
Securities

 

	
2.1.

	
Let it be clear that in order to guarantee the full and the punctilious repayment of all your debts and obligations all the securities and guarantees of every type and category that were provided and/or will be provided the Bank by you and/or by any third party whatsoever will be at the Bank's disposal, including and without detracting from the generality of the aforesaid, the following securities and guarantees:

 

	
  

	
2.1.1.

	
Promissory notes, unlimited in amount, pledge documents under which a fixed lien will be imposed on your non-released stock capital and goodwill as well as a floating Lien on all the assets and rights of any category whatsoever, that you possess and will possess in the future;

 

  

  

  

 

	
  

	
2.1.2.

	
Promissory notes, unlimited in amount, pledge documents under which a fixed lien will be imposed on the non-released stock capital and goodwill as well as a floating lien on all the assets and rights of any category whatsoever, of B.O.S. Better Online Solutions Ltd. as well as a floating lien on all assets and rights of any type or category whatsoever that B.O.S. Better Online Solutions Ltd. possesses or will possess in the future;

 

	
  

	
2.1.3.

	
Promissory notes, unlimited in amount and pledge documents via which B.O.S. Better Online Solutions Ltd. will mortgage its securities in BOS-ODEM Ltd. and all the rights on their behalf.

 

	
  

	
2.1.4.

	
At all times there will be on deposit at your account at Leumi Bank Israel Ltd. and mortgaged on behalf of the Bank in a first ranking fixed lien, without any limit to the amount, checks and notes of customers that are accepted by the Bank and that would award the Bank the right of someone who lawfully holds them, whose total amount deposited in your account in the Israel Leumi Bank Ltd. will not fall below the amount of 1,875,000 N.I.S. (one million eight hundred and seventy five thousand N.I.S. only) (hereinafter the "Mortgaged Notes").

 

	
  

	
2.1.5.

	
A fixed lien of the first degree and the endorsement of rights via mortgaging all their rights, including the right to receive monies, according to the agreement with Beterton Development and Properties Ltd. on 21/10/97 with regards to bloc 3939 plot 21 in the Rishon Lezion Industrial Zone; additionally, we will be provided with an irrevocable directives document to the second party in the aforesaid agreement, in a wording acceptable to the Bank, to the effect inter alia that any amount that is due to you from the aforesaid second party, will be paid solely to the credit of your account at the Bank.

 

	
  

	
2.1.6.

	
A promissory note of the first level, regarding all the monies in account number 120800/08 that is being managed by BOS-ODEM Ltd. in branch 671 and all rights to and pertaining to the aforesaid account.

 

	
  

	
2.1.7.

	
A standing guarantee unlimited in amount to secure all your debts and the fulfillment of your obligations towards the Bank signed by B.O.S. Better Online Solutions Ltd.

 

	
  

	
2.1.8.

	
A standing guarantee unlimited in amount to secure all your debts and the fulfillment of your obligations to the Bank signed by the Dimex Solutions Ltd.

 

	
  

	
2.1.9.

	
A standing guarantee unlimited in amount to secure all your debts and the fulfillment of your obligations to the Bank signed by the Dimex Hagalil Projects (2008) Ltd.

 

	
2.2.

	
All the aforementioned assets and rights whose pledge/mortgage and/or endorsement to the Bank are required under this document will be pledged/mortgaged/endorsed over when they are free of any lien, attachment or any other third-party right whatsoever.

 

  

  

  

 

	
3.

	
Additional Conditions for the Extension of Credits:

 

In addition to the aforesaid, the extension of the Credits all or partial and their continued management will be contingent on the observance of all the following additional conditions:

 

	
3.1.

	
Immediately upon our demand all the documents and authorizations that will be necessary according to our discretion, will be signed and provided in the wording that we find acceptable for the provision of the Credits and the creation of the guarantees and the obligations detailed above.

 

	
3.2.

	
No event whatsoever will take place allowing the Bank, on the basis of any document that was signed and/or will be signed by you, including and without detracting from the generality of the aforesaid above under the directives of the general conditions for providing a credit in foreign currency and in Israeli currency agreement - as is the Bank's practice - to call for the immediate payment of your debts and obligations to the Bank all or partially, and this irrespective of whether the existence or nonexistence of the aforementioned event is dependent upon you or not.

 

	
3.3.

	
No change in the Bank's opinion will occur that will prevent, prohibit or limit the options of the Bank to place the Credits, including a change in the local or international capital markets, or a change that derives from a demand, directive or request that was made or referred by the Bank of Israel or by a another competent authority, irrespective of whether the aforementioned directive, demand or request will derive from a change in the law or whether it derives from an agreement that was made will be made periodically between the Bank and the Bank of Israel or another competent authority and no legal impediment whatsoever will be created in the Bank's opinion to extending the Credit, all or partially according to any Legal Directive.

 

In this document "Legal Directive" means - any directive of law or legislation as well as the directives of the Bank of Israel and any other competent authority, whether it has legal powers were not, and including agreements between the Bank of Israel and another competent authority as aforesaid.

 

	
3.4.

	
For removal of doubt let it be clear that the continued management of the Credit is subordinate to all the Bank's rights and subject to all your obligations under all the documents that were signed and will be signed by you and/or under any law and there is nothing in this document to detract, in any manner whatsoever from the rights of the Bank and/or your obligations under any other document that will be signed by you to the Bank.

 

  

  

  

 

	
4.

	
Commissions

 

	
4.1.

	
Our offer to extend the Credit Framework under this letter will enter into effect if by 28/02/2010 inclusive, you will confirm with your signature at the bottom of this letter your agreement to all the conditions detailed above, and you will provide us with a copy of this letter as confirmed by you. And you will pay us a commission in the total amount of N.I.S 20,000 for the breach of financial yardsticks as you obligated in 2009.

 

	
4.2.

	
During the entire period where the Credit Framework will be in effect you will pay us a commission for non-utilization at a rate of 0.7% per annum which will be calculated on the balance of the non-exploited Credit Framework. The examination of the total non-utilized Credit Framework will be performed on a daily basis and the payment of a commission will be done retroactively at the end of each calendar quarter.

 

	
5.

	
Your rights under this document are not subject to transfer or endorsement in any form whatsoever to any third party whatsoever. The presentation of this letter of ours or any part of it before any other party shall be done only after the receipt of prior written consent from us.

 

 

	 	 Respectfully yours,
	 	 
	 	   Bank Leumi Le-Israel Ltd.

 

  

  

  

 

Bank Leumi – BOS-DIMEX Credit Line Agreement

 

[Translated from Hebrew]

 

 Date: February 7, 2010

 

To

 

BOS-DIMEX Ltd. (hereinafter the "Company")

 

Dear Sir or Madam.,

 

As per your request, we hereby inform you, that we, Bank Leumi Le-Israel Ltd. (hereinafter -  the "Bank"), are prepared in principle to place at your disposal credit in N.I.S. up to a total sum that will not exceed 13,500,000 N.I.S. (thirteen million five hundred thousand N.I.S.) (hereinafter - the Credit framework" or the "Credit") and all subject to the terms detailed in this document below:

 

	
1.

	
The Credit Framework

 

	
1.1.

	
the Credit Framework will be extended according to the following breakdown:

 

	
  

	
1.1.1.

	
Short-Term Credits in a total amount that will not exceed 13,200,000 N.I.S. (thirteen million two hundred thousand N.I.S. only), whose final repayment date shall occur no later than 31/12/10. "Short-Term Credits" means - credits whose final payment date will occur no later than 12 months from the date of their provision.

 

	
  

	
1.1.2.

	
A credit framework for the purpose of issuing bank obligations on behalf of the customers, such as issuing bank guarantees etc., in a total aggregate amount that will not exceed 300,000 (three hundred thousand N.I.S. only), provided that the last day for utilizing the credit on account of the aforementioned credit framework shall occur no later than 31/12/10.

 

Any amount that will not be exploited on account of this credit framework can be exploited as Short-Term Credit according to the conditions detailed in paragraph 1.1.1 above.

 

	
1.2.

	
The currency of the Credit and the other conditions of the Credit including the interest rate for each part and the commission attached to it, will be as agreed upon in writing between the Bank and yourselves before it is provided, and if it will not be agreed it will be as is accepted practice in the Bank regarding credit of that category, at the time that it is provided.

 

	
1.3.

	
Let it be clear that the Credit Framework includes also credits of any category whatsoever that the Bank actually extended to you in any account whatsoever prior to the signing of this document and/or any credit framework agreed upon between the Bank and yourselves prior to the signing of this document.

 

  

  

  

	
2.

	
Securities

 

	
2.1.

	
Let it be clear that in order to guarantee the full and the punctilious repayment of all your debts and obligations all the securities and guarantees of every type and category that were provided and/or will be provided to the Bank by you and/or by any third party whatsoever will be at the Bank's disposal, including and without detracting from the generality of the aforesaid, the following securities and guarantees:

 

	
  

	
2.1.1.

	
Promissory notes, unlimited in amount, pledge documents under which a fixed lien will be imposed on your non-released stock capital and goodwill as well as a floating lien on all the assets and rights of any category whatsoever, that you possess and will possess in the future;

 

	
  

	
2.1.2.

	
Promissory notes, unlimited in amount, pledge documents under which a fixed lien will be imposed on the non-released stock capital and goodwill as well as a floating lien on all the assets and rights of any category whatsoever, of B.O.S Better Online Solutions Ltd. as well as a floating lien on all assets and rights of any type or category whatsoever that B.O.S. Better Online Solutions Ltd. possesses or will possess in the future;

 

	
  

	
2.1.3.

	
Promissory notes, unlimited in amount, and pledge documents via which B.O.S Better Online Solutions Ltd. will mortgage its securities in Dimex Solutions Ltd. and all the rights on their behalf.

 

	
  

	
2.1.4.

	
At all times there will be on deposit at your account at Leumi Bank Israel Ltd. and mortgaged on behalf of the Bank in a first ranking fixed lien, without any limit to the amount, checks and notes of customers that are accepted by the Bank and that would award the Bank the right of someone who lawfully holds them, whose total amount deposited will not fall below the amount of 1,000,000 N.I.S. (one million N.I.S. only) (hereinafter: the "Mortgaged Notes")

 

	
  

	
2.1.5.

	
A standing guarantee unlimited in amount to secure all your debts and the fulfillment of your obligations towards the Bank signed by B.O.S. Better Online Solutions Ltd.

 

	
  

	
2.1.6.

	
A standing guarantee unlimited in amount to secure all your debts and the fulfillment of your obligations to the Bank signed by Dimex Hagalil Projects (2008) Ltd.

 

	
  

	
2.1.7.

	
A standing guarantee unlimited in amount to guarantee your debts and the fulfillment of your obligations to the Bank signed by Odem Electronic Technologies 1992 Ltd.

 

	
2.2.

	
All the aforementioned assets and rights whose pledge/mortgage and/or endorsement to the Bank are required according to this document will be pledged/mortgaged/endorsed when they are free of any lien, attachment or any other third-party right whatsoever.

 

  

  

  

 

	
3.

	
Additional Conditions for the Extension of Credit:

 

In addition to the aforesaid, the extension of the Credits all or partial and their continued management will be contingent on the observance of all the following additional conditions:

 

	
3.1.

	
Immediately upon our demand all the documents and authorizations that will be necessary according to our discretion, will be signed and provided in the wording that we find acceptable for the provision of the Credits and the creation of the guarantees and the obligations detailed above.

 

	
3.2.

	
No event whatsoever will take place allowing the Bank, on the basis of any document that was signed and/or will be signed by you, including and without detracting from the generality of the aforesaid above under the directives of the General Conditions for Providing Credit In Foreign Currency and in Israeli Currency Agreement - as is the Bank's practice - to call for the immediate payment of your debts and obligations to the Bank, fully or partially, and this irrespective of whether the existence or nonexistence of the aforementioned event is dependent upon you or not.

 

	
3.3.

	
No change in the Bank's opinion will occur, that will prevent, prohibit or limit the options of the Bank to place the credits, including a change in the local or international capital markets, or a change that derives from a demand, directive or request that was made or referred by the Bank of Israel or by a another competent authority, irrespective of whether the aforementioned directive, demand or request will derive from a change in the law or whether it derives from an agreement that was made will be made periodically between the Bank and the Bank of Israel or another competent authority and no legal impediment whatsoever will be created in the Bank's opinion to extending the credit, all or partially according to any Legal Directive.

 

In this document "Legal Directive" means - any directive of law or legislation as well as the directives of the Bank of Israel and any other competent authority, whether it has legal powers were not, and including agreements between the Bank of Israel and another competent authority as aforesaid.

 

	
3.4.

	
For removal of doubt let it be clear that continued management of the credit is subordinate to all the Bank's rights and subject to all your obligations under all the documents that were signed and will be signed by you and/or or under any law and there is nothing in this document to detract, in any manner whatsoever from the rights of the Bank and/or your obligations under any other document that will be signed by you to the Bank.

 

	
4.

	
Commissions

 

	
4.1.

	
Our offer to extend the Credit Framework under this letter will enter into effect if by 28/02/2010 inclusive, you will confirm with your signature at the bottom of this letter your agreement to all the conditions detailed above, and you will provide us with a copy of this letter as confirmed by you.

 

 

  

  

  

 

	
4.2.

	
During the entire period where the Credit Framework will be in effect you will pay us a commission for non-utilization at a rate of 0.7% per annum which will be calculated on the balance of the non-exploited Credit Framework. The examination of the total non-utilized Credit Framework will be performed on a daily basis and the payment of a commission for it will be made retroactively at the end of each calendar quarter.

 

	
5.

	
Your rights under this document are not subject to transfer or endorsement in any form whatsoever to any third party whatsoever. The presentation of this letter of ours or any part of it before any other party shall be done only after the receipt of prior written consent from us.

 

	 	 Respectfully yours,
	 	 
	 	   Bank Leumi Le-Israel Ltd.

 

  

  

  

 

EBIDTA Covenants Letter

 

[Translated from Hebrew]

 

 

 

Date:  February 7, 2010

 

To

 

Bank Leumi Le-Israel Ltd.

 

Whereas as one of the conditions for providing credits, banking services and the receipt of various obligations and guarantees from us the undersigned BOS-ODEM Ltd. and/or BOS-DIMEX Ltd. and/or B.O.S. Better Online Solutions Ltd. (hereinafter together and separately the "Companies") you demanded that we should sign for you on this letter and we have assented to this;

 

We therefore hereby declare and obligate ourselves as follows:

 

	
1.

	
Efficiency Relations/Operational Relations

 

We agree that the granting of credits and the provision of banking services to the Companies and/or upon their guarantee and their continued management will be on condition that the ratio of the Companies' Debt Service according to the consolidated financial statements of B.O.S. Better Online Solutions Ltd. only (while neutralizing BOS SUPPLY CHAIN SOLUTIONS (LYNK) INC.) - shall not fall below 1.

 

In this Section the following meanings shall be attached to the terms below:

 

"Debt Service Ratio" means that quotient obtained by dividing the operating profit for debt service by the amount of Debt Service.

 

"The Operating Profit for Debt Service" (EBITDA) means the cumulative total of operating profit from ongoing activity, according to the financial statements for recent year, prior to financing expenditures (interest, linkage differentials, rate of exchange and currency differentials and commissions) and taxes with the addition of depreciation and amortization expenses that were entered in the same period.

 

(2) With regards to financial statements drawn up under IFRS and US GAAP standards the definition for EBITDA will change and its calculation will not include the clauses detailed below:

 

	
  

	
a.

	
Profits/losses from the reevaluation of real estate for investment.

 

	
  

	
b.

	
Profits/losses deriving from changes in actuarial assumptions that were employed for the purpose of estimating worker benefits.

 

	
  

	
c.

	
Capital profits/losses.

 

	
  

	
d.

	
Income/expenditure for the reevaluation of warrants where the exercise price is linked/ the conversion component of convertible bonds whose exercise price is linked.

 

"Debt Service" means the cumulative total according to the recent annual financial statements of financing expenses with the addition of payment of current maturities for long-term loans that the companies were to have paid in the course of the calendar year to which the report refers to (the abovementioned four calendar quarters).

 

Finance Expenses: finance expenses as they appear in the Financial Statements excluding finance expenses due to convertible notes in the books of B.O.S. Better Online Solutions Ltd.

 

  

  

  

 

"Financial Statements" means - profit loss statements on a consolidated basis of B.O.S. Better Online Solutions Ltd. alone (neutralizing BOS SUPPLY CHAIN SOLUTIONS (LYNK) INC) prepared according to generally accepted accountancy principles US GAAP for periods of six months ending on June 30, 2010 and for the year ending on December 31, 2010.

 

(Below - jointly and severally - the "Companies") you have asked that we execute this document and we have agreed to do so;

 

The financial yardsticks that were determined in Section 1 above (hereinafter the "Yardsticks") are based on accountancy standards, rules of accountancy, and accountancy estimates and policy (hereinafter - "Accountancy Treatment") as implemented in the recent Financial Statements accurate to the date of this document (hereinafter - the "Recent Statements").

 

Accountancy Treatment that differs from the one on whose basis the Recent Statements were prepared including, but not only, as a result of the implementation of the international accountancy standardization (IFRS - International Financial Reporting Standards) or US GAAP, new accountancy standards/others/whatsoever in Israel or abroad, changes in estimates and/or a change in accountancy policy (all the aforesaid will be called below together and separately, - "New Accountancy Treatment") can result in changes that will have repercussions on the Yardsticks.

 

Therefore, the Companies agree as follows:

 

At any time that the bank should believe, upon its sole discretion, that changes were caused and/or are about to be caused in the Companies' Financial Statements, due to New Accountancy Treatment, it will be entitled, after consultation with the Companies but without requiring their consent, to inform the companies what are the amendments it requires in the Yardsticks (hereinafter - the "Amended Yardsticks") in order to adjust them to the aforesaid changes, and this with a view to amending them to suit the original economic purpose based on which the Yardsticks were determined.

 

 

If the bank informed the company what are the Amended Yardsticks - they shall bind the company commencing with the date that the bank gave notification and they will view this document as if it incorporates the Amended Yardsticks, beginning with the date that the bank gave notice.

 

	
2.

	
An Obligation to Provide Financial Reports

 

We obligate ourselves to provide you no later than the date of 31.3 of each year the annual consolidated financial statements as per their aforesaid definition; audited by an external certified accountant and referring to 31.12 of the previous year.

 

Likewise we obligate ourselves to provide you no later than 60 days from the end of every quarter, quarterly financial statements as per their aforesaid definition signed by the CEO and CFO of the Company.

 

	
3.

	
An Obligation to Provide Additional Reports

 

We obligate ourselves to provide you a copy of any authorization, notification report or any other document that we must turn over to the Registrar of Companies and/or to the Israel Securities Authority under any law, and this concomitantly with its provision to the Registrar of Companies and/or to the Securities Authority as aforesaid.

 

	
4.

	
The Validity of These Obligations

 

Our aforesaid obligations will be in force as long as any amounts are due or will be due to you from us on account of loans, credits and/or other banking services, that you provided or will provide us in the future, and/or as long as the various obligations and guarantees of the Company towards you or in your favor will remain in effect.

 

  

  

  

 

In any case where we have failed to meet the Financial Yardsticks, all or some of them, or if we should violate any of our other obligations detailed in this aforementioned letter, all or some of them, then - in addition to any other relief that you will be entitled to by any law or as a result of any other obligation towards you that are included or that will be included in any document whatsoever - you will be entitled to call for the immediate payment of all or part of our debts and obligations towards you, and collect them from us with the addition of any amount that in the bank's opinion will suffice to cover the losses and/or the expenses that the bank will incur due to the aforesaid call for immediate payment.

 

Let it be clear that if the bank did not initiate proceedings due to the violation of a previous obligation or a failure to meet one or more of the obligations towards the bank, whether that obligation is included in this letter or is included or will be included in any other document, this will not be considered an abandonment or a waiver by the bank of its rights and/or as a justification or an excuse for the continued existence of the violation and/or the existence of any other violation or to further nonobservance of any condition or any obligation on our part as aforesaid.

 

To avoid any doubt there is nothing in the aforesaid to detract from our obligations to you on the basis of any document whatsoever and/or any law, and there is nothing to detract from any grounds for demanding immediate payment that is available and/or will be available to you under any document whatsoever and/or any law.

 

	 	 Respectfully yours,
	 	 
	 	 

_____________

BOS-ODEM Ltd.

_____________

BOS-DIMEX Ltd.

_____________

B.O.S. Better Online Solutions Ltd.

 

  

  

  

 

Tangible Equity Capital Covenants Letter

 

[Translated from Hebrew]

 

Date: February 7, 2010

To

Bank Leumi Le-Israel

Whereas you have placed and/or will place, as you should deem proper, loans, credits and/or other banking services at the disposal of BOS-ODEM Ltd. (hereinafter the "Company"), under terms and in amounts as agreed upon or will be agreed upon periodically between us;

And whereas you have received and/or will receive various obligations and guarantees to you or on your behalf from us;

And whereas as one of the conditions for the granting of the loans, the credits and/or the aforementioned banking services and the receipt of the various obligations and guarantees, you have demanded that we should sign on this document for you and we have assented to this;

We therefore hereby declare and obligate ourselves as follows:

	
1.

	
An Obligation to Preserve Tangible Equity Capital

 

We obligate in 2010 to accrue a Tangible Equity Capital of the Company of at least $100,000, in addition to the existing Tangible Equity Capital as published in the consolidated financial statements for 2009. This based on the data appearing in the annual and financial statements of the Company on a consolidated basis for 2009.

 

"Tangible Equity Capital" means - equity capital as presented in the financial statements, including, paid-up stock capital, non-distributed surpluses, funds, with the addition of the balance of the amounts of the shareholders' loan funds regarding which documents of subordination were signed towards the bank, by the company and shareholders and while deducting non-tangible assets such as: goodwill, patents, trademarks, brand names, copyrights etc. and deducting those liable to the Company who are interested parties and/or subsidiaries and/or companies related to the Company (as the aforementioned terms are defined in the Securities Law, 5728-1968) as well as deducting guarantees that were given by the Company to secure the debts of interested parties and/or subsidiaries and/or companies related to the Company.

 

With regards to financial statements drawn up according to IFRS or US GAAP standards the definition of equity capital will change in accordance with what is detailed below:

 

	
  

	
a.

	
Minority rights that appear in the framework of equity capital (with regards to consolidated statements) will not be included in the framework of equity capital.

 

	
  

	
b.

	
Equity capital will also include the exchange component for option warrants when the exercise money for them is linked (they will appear in the framework of liabilities).

 

	
  

	
c.

	
Equity capital also includes the conversion component for convertible bonds whose exercise price is linked (in the event that they should appear separately within the framework of liabilities in the balance).

 

	
  

	
d.

	
A revaluation fund will not be incorporated for fixed assets that were created due to the adoption of a revaluation model in the period following the formulation of the financial conditions.

 

  

  

  

 

The financial yardsticks that were determined in Section 1 above (hereinafter the "Yardsticks" are based on accounting standards, accounting rules, estimates and accounting policy (hereinafter - "Accountancy Treatment") as implemented in the Company's recent financial statements, accurate to the date of this document (hereinafter the - "Recent Statements").

 

Accountancy Treatment that differs from the one on whose basis the recent reports were prepared including, but not merely, as a result of the implementation of 'IFRS' - (International Financial Reporting Standards), US GAAP new accountancy standards/others/whatsoever in Israel or abroad, changes in estimates and/or a change in accountancy policy (all the aforesaid will be termed below together and separately, - "New Accountancy Treatment") can result in changes that will exert repercussions on the Yardsticks.

 

Therefore, the company agrees as follows:

 

At any time that the bank should believe, upon its sole discretion, that changes were caused and/or are about to be caused to the Company's financial statements, due to new Accountancy Treatment, it will be entitled, after consultation with the Company but without requiring its consent, to inform the Company what are the changes that it requires in the Yardsticks (hereinafter - the "Amended Yardsticks") in order to adjust them to the aforesaid changes, and this with a view to adjusting them to achieve the original economic purpose on which the Yardsticks were set.

 

If the bank informed the company what the Amended Yardsticks are - they will bind the Company beginning with the date that the bank gave notification and this document should be viewed as incorporating the Amended Yardsticks, commencing with the date that the bank gave notice.

 

	
2.

	
An Obligation Not to Change Control in the Company

 

We obligate ourselves that no change in control of the Company will occur as opposed to the situation on the day that this document was signed, save by prior written consent of the bank.

 

"Control" for the purpose of the aforesaid will be as the term is defined in the Securities Law 5728-1968.

 

	
3.

	
An Obligation not to Perform a Merger

 

	
  

	
a.

	
We obligate ourselves not to perform, not to obligate ourselves to perform and not to adopt any procedure whatsoever to perform a merger with another corporation/s without obtaining the bank's prior written consent. For this purpose we obligate ourselves to immediately turn over to the bank any information or documents, required by the bank, at its discretion, so it can formulate its position regarding the merger.

 

	
  

	
b.

	
This aforesaid obligation in this Section above applies both to a merger according to the 8th part or according to the 9th part of the Companies Law, 5759-1999 as well as with regards to any activity that will result in the purchase of the bulk of the Company's assets by a person or another corporation or any activity that as result of which Company securities are purchased thus awarding the purchaser Control of the Company or any activity that results in the Company purchasing, directly or indirectly, the bulk of the assets of another corporation or the securities of a another corporation that would award it control in that corporation.

 

	
  

	
For the purpose of this Section, the term "Control" - is as defined in the Securities Law, 5728-1968.

 

  

  

  

 

	
4.

	
An Obligation to Provide Financial Statements

 

We obligate ourselves to provide you no later than the date of 31.03 of each year the Company's financial statements, on a consolidated basis as well as that of the company alone; that comprise inter alia a balance, a profit statement, cash flow and any other report that will be required by the competent authorities, (hereinafter "Financial Statements"), audited by an external certified accountant and referring to 31.12 of the previous year.

 

Likewise we obligate ourselves to provide you no later than 60 days from the end of every quarter, quarterly financial statements of the Company on a consolidated basis, signed by the CEO and CFO of the Company and referring to the recently ended quarter.

 

	
5.

	
An Obligation to Provide Additional Reports

 

We obligate ourselves to provide you a copy of any authorization, notification report or any other document that we must turn over to the registrar of companies and/or to the Israel Securities Authority under any law, and this concomitantly with its provision to the registrar of companies and/or to the Securities Authority as aforesaid.

 

	
6.

	
An Obligation Not to Issue Bearer Securities

 

We obligate ourselves not to issue bearer securities, without the prior written consent of the bank.

 

We declare that as of the date of the signing of this document no bearer securities were issued by the company.

 

	
7.

	
The Validity of These Obligations

 

Our aforesaid obligations will remain in force as long as any amounts are due or will be due to you from us on account of loans, credits and/or other banking services that you provided and/or will provide us in the future and/or as long as the obligations and guarantees towards you or on your behalf will remain in effect.

 

In any event that you should inform us that one of our aforesaid obligations was violated, completely or partially, then in addition to any other relief that you will be entitled to by law or by any other of our obligations towards you that are included or will be included in any document whatsoever-then you will be entitled to call for immediate payment of all or part of our debts and obligations towards you, and collect them from us with the addition of any amount that in the bank's opinion will suffice to cover the losses and/or expenses that the bank will incur due to the aforesaid call for immediate payment.

 

To remove any doubt there is nothing in the aforesaid to detract from our obligations towards you on the basis of any document whatsoever and/or any law, and there is nothing in the aforesaid to detract from any grounds for demanding immediate payment that is available and/or will it be available to you under any document whatsoever and/or any law.

 

	 	
Respectfully yours,

	 	 
	 	 BOS-ODEM Ltd.

 

  

  

  

Tangible Equity Capital Covenants Letter

 

[Translated from Hebrew]

 

Date: February 7, 2010

To

Bank Leumi Le-Israel

Whereas you have placed and/or will place, as you should deem proper, loans, credits and/or other banking services at the disposal of BOS-DIMEX Ltd. (hereinafter the "Company"), under terms and in amounts as agreed upon or will be agreed upon periodically between us;

And whereas you have received and/or will receive various obligations and guarantees to you or on your behalf from us;

And whereas as one of the conditions for the granting of the loans, the credits and/or the aforementioned banking services and the receipt of the various obligations and guarantees, you have demanded that we should sign on this document for you and we have assented to this;

We therefore hereby declare and obligate ourselves as follows:

	
1.

	
An Obligation to Preserve Tangible Equity Capital

 

We obligate in 2010 to accrue a Tangible Equity Capital of the Company of at least $90,000, in addition to the existing Tangible Equity Capital as published in the consolidated financial statements for 2009. This based on the data appearing in the annual and financial statements of the Company on a consolidated basis for 2009.

 

"Tangible Equity Capital" means - equity capital as presented in the financial statements, including, paid-up stock capital, non-distributed surpluses, funds, with the addition of the balance of the amounts of the shareholders' loan funds regarding which documents of subordination were signed towards the bank, by the company and shareholders and while deducting non-tangible assets such as: goodwill, patents, trademarks, brand names, copyrights etc. and deducting those liable to the Company who are interested parties and/or subsidiaries and/or companies related to the Company (as the aforementioned terms are defined in the Securities Law, 5728-1968) as well as deducting guarantees that were given by the Company to secure the debts of interested parties and/or subsidiaries and/or companies related to the Company.

 

With regards to financial statements drawn up according to IFRS or US GAAP standards the definition of equity capital will change in accordance with what is detailed below:

 

	
  

	
a.

	
Minority rights that appear in the framework of equity capital (with regards to consolidated statements) will not be included in the framework of equity capital.

 

	
  

	
b.

	
Equity capital will also include the exchange component for option warrants when the exercise money for them is linked (they will appear in the framework of liabilities).

 

	
  

	
c.

	
Equity capital also includes the conversion component for convertible bonds whose exercise price is linked (in the event that they should appear separately within the framework of liabilities in the balance).

 

	
  

	
d.

	
A revaluation fund will not be incorporated for fixed assets that were created due to the adoption of a revaluation model in the period following the formulation of the financial conditions.

 

  

  

  

 

The financial yardsticks that were determined in Section 1 above (hereinafter the "Yardsticks" are based on accounting standards, accounting rules, estimates and accounting policy (hereinafter - "Accountancy Treatment") as implemented in the Company's recent financial statements, accurate to the date of this document (hereinafter the - "Recent Statements").

 

Accountancy Treatment that differs from the one on whose basis the recent reports were prepared including, but not merely, as a result of the implementation of 'IFRS' - (International Financial Reporting Standards), US GAAP new accountancy standards/others/whatsoever in Israel or abroad, changes in estimates and/or a change in accountancy policy (all the aforesaid will be termed below together and separately, - "New Accountancy Treatment") can result in changes that will exert repercussions on the Yardsticks.

 

Therefore, the company agrees as follows:

 

At any time that the bank should believe, upon its sole discretion, that changes were caused and/or are about to be caused to the Company's financial statements, due to new Accountancy Treatment, it will be entitled, after consultation with the Company but without requiring its consent, to inform the Company what are the changes that it requires in the Yardsticks (hereinafter - the "Amended Yardsticks") in order to adjust them to the aforesaid changes, and this with a view to adjusting them to achieve the original economic purpose on which the Yardsticks were set.

 

If the bank informed the company what the Amended Yardsticks are - they will bind the Company beginning with the date that the bank gave notification and this document should be viewed as incorporating the Amended Yardsticks, commencing with the date that the bank gave notice.

 

	
2.

	
An Obligation Not to Change Control in the Company

 

We obligate ourselves that no change in control of the Company will occur as opposed to the situation on the day that this document was signed, save by prior written consent of the bank.

 

"Control" for the purpose of the aforesaid will be as the term is defined in the Securities Law 5728-1968.

 

	
3.

	
An Obligation not to Perform a Merger

 

	
  

	
a.

	
We obligate ourselves not to perform, not to obligate ourselves to perform and not to adopt any procedure whatsoever to perform a merger with another corporation/s without obtaining the bank's prior written consent. For this purpose we obligate ourselves to immediately turn over to the bank any information or documents, required by the bank, at its discretion, so it can formulate its position regarding the merger.

 

	
  

	
b.

	
This aforesaid obligation in this Section above applies both to a merger according to the 8th part or according to the 9th part of the Companies Law, 5759-1999 as well as with regards to any activity that will result in the purchase of the bulk of the Company's assets by a person or another corporation or any activity that as result of which Company securities are purchased thus awarding the purchaser Control of the Company or any activity that results in the Company purchasing, directly or indirectly, the bulk of the assets of another corporation or the securities of a another corporation that would award it control in that corporation.

 

	
  

	
For the purpose of this Section, the term "Control" - is as defined in the Securities Law, 5728-1968.

 

  

  

  

 

	
4.

	
An Obligation to Provide Financial Statements

 

We obligate ourselves to provide you no later than the date of 31.03 of each year the Company's financial statements, on a consolidated basis as well as that of the company alone; that comprise inter alia a balance, a profit statement, cash flow and any other report that will be required by the competent authorities, (hereinafter "Financial Statements"), audited by an external certified accountant and referring to 31.12 of the previous year.

 

Likewise we obligate ourselves to provide you no later than 60 days from the end of every quarter, quarterly financial statements of the Company on a consolidated basis, signed by the CEO and CFO of the Company and referring to the recently ended quarter.

 

	
5.

	
An Obligation to Provide Additional Reports

 

We obligate ourselves to provide you a copy of any authorization, notification report or any other document that we must turn over to the registrar of companies and/or to the Israel Securities Authority under any law, and this concomitantly with its provision to the registrar of companies and/or to the Securities Authority as aforesaid.

 

	
6.

	
An Obligation Not to Issue Bearer Securities

 

We obligate ourselves not to issue bearer securities, without the prior written consent of the bank.

 

We declare that as of the date of the signing of this document no bearer securities were issued by the company.

 

	
7.

	
The Validity of These Obligations

 

Our aforesaid obligations will remain in force as long as any amounts are due or will be due to you from us on account of loans, credits and/or other banking services that you provided and/or will provide us in the future and/or as long as the obligations and guarantees towards you or on your behalf will remain in effect.

 

In any event that you should inform us that one of our aforesaid obligations was violated, completely or partially, then in addition to any other relief that you will be entitled to by law or by any other of our obligations towards you that are included or will be included in any document whatsoever-then you will be entitled to call for immediate payment of all or part of our debts and obligations towards you, and collect them from us with the addition of any amount that in the bank's opinion will suffice to cover the losses and/or expenses that the bank will incur due to the aforesaid call for immediate payment.

 

To remove any doubt there is nothing in the aforesaid to detract from our obligations towards you on the basis of any document whatsoever and/or any law, and there is nothing in the aforesaid to detract from any grounds for demanding immediate payment that is available and/or will it be available to you under any document whatsoever and/or any law.

 

	 	 Respectfully yours,
	 	 
	 	 BOS-DIMEX Ltd.

 

  

  

  

 

Form of Subordination Letters of BOS-DIMEX Ltd. and of BOS-ODEM Ltd.

 

[Translated from Hebrew]

 

"A"

Letter of Subordination and Additional Obligations for the Signature of Shareholders and Holders of Controlling Interest

                                                                                                  Date: February 7, 2010

 

 

To

 

Bank Leumi Le-Israel Ltd.

 

Whereas Bank Leumi Le-Israel Ltd. (the "Bank") has granted or agrees to allocate to ______________ (the "Company") periodically as the Bank deems fit, credits and/or other banking services in amounts and under the terms agreed upon or that will be agreed upon between the Bank and the Company;

 

And whereas the Bank received and/or will receive from the Company various obligations and guarantees towards the Bank or on its behalf;

 

And whereas as one of the conditions for providing the aforementioned credits and/or other banking services the Bank demanded that we should sign on this letter and we have assented to this;

 

Therefore, we the undersigned, shareholders in the Company and/or holders of controlling interest in the Company, all of us together and each one of us separately, declare and obligate ourselves towards you, on our behalf and on behalf of the companies under our and our Family Members' control, as follows:

 

For the purpose of the aforesaid in this Letter the following meanings will be attached to the terms below:

 

"Corporations Under Our Control"- any company and any other corporation under our control or under the control of any of us.

 

"Control", "Family Member" - as defined in the Securities Law 5728 - 1968 as will be valid from time to time.

 

	
1.

	
We, Corporations Under Our Control, as well as our Family Members, will not demand, will not receive, will not collect, will not expend, directly or indirectly or in any form or manner whatsoever, any amount whatsoever from or on account of capital notes that the Company has issued and/or will issue on our behalf and/or on behalf of any of us and/or from or on account of loans that were given and/or will be given the Company, including payments of principal, interest, commissions and expenses (all the aforementioned amounts shall be hereinafter referred to as  the "Loans").

 

Likewise, we obligate ourselves that we, the Corporations Under Our Control, as well as our Family Members, will not demand, will not receive, will not collect, will not expend from the Company (from its profits, from its capital or from any source whatsoever) either directly or indirectly, in any form or manner whatsoever, dividends (as per their definition in the Companies Law 5759-1999 as may be amended from time to time) or interest or management fees or indemnification fees or compensation fees or consultancy fees or amounts of money or monetary equivalents (these amounts shall be hereinafter referred to as "Dividends") and we shall not demand and shall not request from the company an obligation to distribute the aforesaid Dividends.

 

  

  

  

 

Likewise we will not transfer to another/others either directly or indirectly, all or any part of our rights, existing and future, to the company for the dividends and/or the loans, without the prior written consent of the Bank.

 

Likewise it is clarified that there is nothing in the aforesaid and/or below, as long as no event has occurred awarding the Bank the right to put up our obligations towards the Bank for immediate repayment, to prevent the transfer of monies between the Company and the B.O.S. Better Online Solutions Ltd. (hereinafter - "B.O.S.") for the Company's share in the expenses of B.O.S. up to a total amount that will not exceed $175,000 (one hundred an seventy five thousand USD) for a period of six months ending on June 30, 2010, and this exclusively on the basis of expenses detailed in the list attached as Appendix C that constitutes an integral part of this Letter, and this on condition that there is nothing in the aforementioned transfer of funds that constitutes a violation of any other obligation whatsoever of the Company under any document whatsoever that it signs including and without detracting from the generality of the aforesaid, the document of conditions that it signed on ____ in favor of the Bank, and subject to the directives of the Companies Law and the law.

 

It is hereby clarified that meeting the budget for six months of 2010, as presented to the Bank in Appendix D attached hereto – signed by you, will enable transfer of monies between the Company and B.O.S. on account of the Company's participation in the expenses of B.O.S. up to a total amount that will not exceed $175,000 (one hundred and seventy five thousand USD) for a period of six months ending on December 31, 2010, and this exclusively on the basis of the expenses detailed in the list attached as Appendix C which constitutes an integral part of this Letter. The aforementioned is subject to the monies not constituting a violation of any other obligation whatsoever of the Company under any document that it has executed including without limitation, the covenants document that it signed on ____ in favor of the Bank, and subject to the provisions of the Companies Law and the law.

 

	
2.

	
Without derogating from the aforesaid, in the event that any of us, and/or the Corporations Under Our Control and/or Family Members and/or others as aforesaid, shall receive from the Company any amount whatsoever on account or with relation to the Loans or the Dividends, then we will transfer to the Bank any such amount immediately once it has been received by any of us as aforesaid. The Bank will be entitled to credit, as it sees fit any amount that it should receive as aforesaid, for repayment on account of the amounts that are due and/or will be due to the Bank from the company in any manner whatsoever.

 

	
3.

	
We obligate ourselves to provide you an obligation by the company to act in accordance with our obligations towards you as detailed in this Letter, in the wording enclosed and marked "B".

 

	
4.

	
The Bank's ledgers and accounts will serve as ostensive proof with regards to the Company's liabilities to the Bank.

 

	
5.

	
The aforesaid in this Letter will obligate all the undersigned, even if some of the shareholders in the Company or holders of controlling interests have not signed on it.

 

Our aforesaid obligations will be in force as long as the Bank receives or will receive from the Company, amounts whatsoever on account of the Loans, credits and/or other banking services, that exist today and/or will exist the future, and/or as long as the various obligations and guarantees of the company towards the Bank or on its behalf will remain in force.

 

  

  

  

 

B.O.S Better Online Solutions Ltd. Subordination Letter

 

[Translated from Hebrew]

 

Letter of Subordination and Additional Obligations for the Company’s Signature

 

 

Date: March 9, 2008

 

 

To:

 

 

Bank Leumi Le-Israel Ltd.

 

Whereas periodically, as per our request, if the matter should meet with your approval, you consent to provide or allocate to us, the undersigned corporation (“the company”), credits and/or other banking services, under conditions and in amounts as agreed or will be agreed periodically between us;

 

And whereas you have received and/or will receive from us various obligations and guarantees towards you or on your behalf;

 

And whereas as one of the conditions for the aforementioned grant of credits and/or the banking services and for the receipt of the various obligations and guarantees, you have demanded that we sign on this letter and we have assented to this;

 

We therefore declare and obligate ourselves hereby as follows:

 

For the purpose of what is stated in this letter the following meanings will be attached to the terms below:

 

“Corporations under the control of the shareholders” – any company or other corporation that is at the time of the signing of this letter or that in the future will be under the control of any of the shareholders or any of the holders of controlling interests in the Company.

 

“Subsidiary company”, “control” “family member” “stakeholder” – as per their definition in the Securities Law 5728- 1968 as will be valid from time to time.

 

“The shares of the company” includes also securities that can be converted into company shares as well as securities that can be realized via shares in the company.

 

	
1.

	
We shall not pay in any form or manner whatsoever, either directly or indirectly, to any of our stockholders or any of the holders of controlling interest among us who obligated themselves towards you as aforesaid, and/or to a family member of any of them and/or to corporations under the control of any of them and/or to another third party who will supplant them or act on their behalf, any amount whatsoever from or on account of the capital notes that the company issued and/or will issue to your benefit and/or from any other loan account that was placed and/or will be placed at our disposal by any of the aforementioned, or in connection with them, including, but without detracting from the generality of the aforesaid, payment of principal, interest, commissions and expenses (all the aforementioned amounts will be termed below “the loans”); all this unless we have received your prior agreement in writing.

 

  

  

  

 

	  	
Likewise we will not pay and we will not obligate to pay in any form or manner whatsoever either directly or indirectly, from the company (from its profit or its capital or from any source whatsoever) dividends (as defined in the Companies Law 5759-1999 as may be amended from time to time) or interest or management fees or indemnification fees or compensation fees or consultancy fees or amounts of money or monetary equivalents (these amounts will be called below “dividends”) to our shareholders or to the holders of controlling interest among us, irrespective of whether they obligated themselves towards you according to the wording marked “A” and/or they did not obligate towards you in the wording marked “A”, and/or to a family member of any of them, and/or to companies or corporations where one of our shareholders is a stakeholder in them and/or to any third party whatsoever who shall replace any of the aforesaid or act on his behalf.

 

	
2.

	
Should any demand whatsoever be made for any payment whatsoever on account of the amounts of the loans or dividends or with reference to them, on the part of our shareholders and/or on the part of any other party from the aforesaid, we will inform you of this immediately and upon your request we will coordinate with you actions to cancel the demand for payment.

 

	
3.

	
The company obligates itself not to purchase, not to provide financing for the purchase and not to obligate itself to purchase or to provide financing for the purchase of company securities, in any form or manner whatsoever including and without detracting from the generality of the aforesaid by providing guarantees, either directly or indirectly, by the company or by its subsidiary company or by an another corporation under its control, without receiving the prior written consent of the bank.

 

	
4.

	
Purely for the sake of removing doubt, let it be clear that if for any reason whatsoever, we should violate the obligations under this letter, all or some of them, then in addition to any other relief that you will be entitled to under any law or as a result of any other obligation towards you included or that will be included in another document-you will be entitled to call for the immediate payment of all or part of the amounts that are due to you or will be due to you from us, directly and/or indirectly at that time, whether their payment date has arrived by that time or not, and collect them from us with the addition of any amount that in your opinion will suffice to cover the losses and/or the expenses that you will incur as a result of a call for immediate payment as aforesaid.

 

	
5.

	
It is hereby clarified, that the aforementioned will not prevent the Company from making: (a) payments to Cukierman & Co. Investment House Ltd. (“Cukierman”) derived from the agreement dated April 15, 2003, attached hereto and which constitutes a part of this document and/or (b) payments to shareholders or to corporations in their control with respect to commissions due to raising of funds for the Company through debentures or shares, upto a threshold of 10% of the funds raised.

 

Our aforesaid obligations shall remain in force as long as the bank receives or will receive from the company, any amounts whatsoever on account of the loans, credits and/or other banking services, that exist today or will exist the future, and/or as long as the various obligations and guarantees of the company towards the bank or on its behalf will remain valid.

 

 B.O.S Better Online Solutions Ltd.exhibit_4-16.htm

 

Exhibit 4.16

 

LOAN AGREEMENT

 

        THIS LOAN AGREEMENT (the “Agreement”) is made as of the __th day of _______, 2009, by and among B.O.S Better Online Solutions Ltd. (the “Company”), and each of the lenders listed on Schedule A hereto, severally (the “Lender(s)”).

 

W I T N E S S E T H:

 

        WHEREAS, the Company wishes to borrow from each Lender, severally, and the Lenders wish to extend to the Company loans in the aggregate amount of up to US$3,750,000 (the “Loan”);

 

        NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Lenders hereby agrees as follows:

 

     Section 1.         Loan and Warrant.

 

    1.1.        Disbursement. Upon the terms and subject to the conditions set forth in this Agreement and on the basis of the Company representations and warranties hereinafter set forth in Section 4 hereto, subject to the fulfillment of the condition precedent listed in Section 6 below each Lender hereby undertakes within 3 Business Days from the date hereof (the “Closing Date”) to deliver to the Company the amount listed next to such Lender’s name on Schedule A, (without deduction of any fees or taxes) by means of a wire transfer of immediately available funds to the Company’s bank account, Account ___________, at ___________, Routing no: ___________, Business Branch No. ___________, Swift Code: ___________. For purposes of this Agreement, the term “Business Day” means any day on which banks in Israel are open and execute foreign exchange transactions. It is expressly agreed that Schedule A may be unilaterally amended by the Company from time to time, to include additional Lenders, which shall execute a copy of the Agreement.

 

    1.2.        Issuance of Warrant. On the Closing Date, the Company shall issue and deliver to each Lender who delivered its applicable amount listed on Schedule A, a Warrant in the form attached hereto as Schedule B (the “Warrant”) to purchase the amount of Ordinary Shares of the Company, nominal value NIS 4.00 each (each, a “Share” and collectively, the “Shares”) equal to the number of Shares issuable upon conversion of the entire Loan extended by such Lender (100% warrant coverage), all as listed next to such Lender’s name in Schedule A (the “Warrant Shares”). Each Warrant shall be exercisable for a period of 18 months commencing on the date that is 18 months from the Closing Date and shall expire on the Maturity Date (as defined below). Each Warrant’s exercise price shall be $0.55 per Share (subject to adjustment in the event of share splits or consolidations, issuance of bonus shares, and similar recapitalization events).

 

     Section 2.         Loan Terms.

 

    2.1.        Term of Loan. The term of the Loan shall commence on the Closing Date and shall terminate, upon payment in full of all outstanding principal and interest hereunder or conversion in full pursuant to Section 2.4 hereof, on the date that is 36 months from the Closing Date (the “Maturity Date”), unless, as a result of Default (as defined in Section 3 herein) or subject to the prior written consent of the Lender, paid in full prior to such date, in which event the term shall expire immediately upon such payment, in full (the “Term”).

 

  

  

  

 

     2.2.        Interest. The annual rate of interest on the Loan shall be 8% (the “Interest”). Interest on the Loan shall accrue starting from the Closing Date, shall be compounded annually and will be calculated on the basis of a 360-day year and pro rated with respect to any portion thereof, respectively to the actual date of payment.

 

    2.3.        Payment. The principal and Interest on the Loan, together with applicable value added tax and subject to any tax withholding, applicable with respect to the Interest, shall be paid to each Lender’s account, as stated next to such Lender’s name in Schedule A, on the Maturity Date.

 

    2.4.        Conversion. Any Lender may, at any time until the Maturity Date, by giving at least 30-days prior written notice to the Company , or upon the occurrence of a Default event listed in Section 3 below, convert the principal amount plus Interest (subject to applicable withholding tax) accrued on its portion of the Loan to Shares at a conversion price of $0.65 per Share (subject to adjustment in the event of share splits or combinations, consolidations, mergers, issuance of bonus shares, reclassifications and similar recapitalization events) (the “Conversion Shares”).

 

     Section 3.         Default.

 

Without derogating from the generality of the provisions of this Loan Agreement, each Lender shall be entitled to demand the immediate repayment of its respective portion of the Loan Amount, upon the occurrence of any one of the events enumerated below (a “Default”), in which case the Company undertakes to pay the Lender(s) all of the Loan Amount due to it and any accrued Interest, and each Lender shall be entitled to take whatever steps it deems fit for the collection of the Loan and Interest as provided under this Agreement

 

    3.1.        the Company is unable to pay its debts as they come due, makes a general assignment for the benefit of its creditors, or files for voluntary liquidation;

 

    3.2.        the filing against the Company of any petition in liquidation or any petition under the provisions of applicable law for the relief of creditors or a liquidator or receiver is appointed for or over all of or a substantial part of the assets of the Company, if such petition or appointment is not dismissed or stayed within sixty (60) days;

 

    3.3.        Any representation made by the Company in this Agreement was false or materially inaccurate, subject to receipt of 5 Business Days prior notice;

 

    3.4.        the Company fails to duly perform or comply with any of its covenants or other obligations under this Agreement and (if capable of remedy) such failure is not remedied within 21 Business Days, after the Lenders provide written notice thereof to the Company.

 

    3.5.        the Company adopts a resolution for a merger with and into a third party, where the Company is not the surviving entity (excluding, for the avoidance of doubt, reorganization among the Company and its subsidiaries) or a sale of all or substantially all of the Company’s assets, in each case where such event may reasonably be deemed to have a material adverse effect on the Lenders ability to receive the Loan repayment hereunder.

 

  

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     Section 4.         Representations and Warranties by the Company.

 

        The Company hereby represents and warrants to the Lenders that:

 

    4.1.        Corporate Organization. The Company is a public corporation traded on NASDAQ and duly incorporated and validly existing under the laws of Israel, and has the corporate power to own its property and to carry on its business as now being conducted.

 

    4.2.        Due Authorization and Valid Issuance. The Company has the corporate power to enter into this Agreement and the Registration Rights Agreement (the “Transaction Documents”). The Transaction Documents have been duly approved by the necessary corporate bodies, executed and delivered by the Company. The Conversion Shares and Warrant Shares will, upon issuance and payment therefore pursuant to the terms hereof, be duly authorized, validly issued, fully-paid and nonassessable, free of any preemptive rights and are free and clear of any liens, claims, encumbrances or third party rights of any kind.

 

    4.3.         Binding Agreement. The Transaction Documents constitute a valid and legally binding obligation of the Company enforceable against the Company in accordance with their terms, except as (i) such enforceability may be limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or similar laws relating to or affecting the rights of creditors and contracting parties generally, (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefore may be brought, and (iii) rights to indemnity and contribution may be limited by Israeli or U.S. state or federal securities laws applicable to the Company or by the public policy underlying such laws.

 

    4.4.        Non-Contravention. Neither the execution and delivery of the Transaction Documents, nor the consummation of the transactions or the performance of the obligations contemplated hereby will result in any violation or breach of the Company’s articles of association, by-laws, board resolutions or shareholders resolutions.

 

    4.5.        No Consent. In reliance on the representations of the Lenders given in Section 5 hereof, except for reporting obligations and approvals required under applicable security laws and market regulations in Israel and the United States and for notices (coupled with customary undertakings by foreign Lenders) to or approvals by the Office of the Chief Scientist and the Investment Center of the Ministry of Industry, Trade and Labor (if required), no consent of any governmental body or third party is required to be made or obtained by the Company in connection with the execution and delivery of the Transaction Documents by the Company or the consummation by the Company of the transactions or the performance of the obligations contemplated therein by the Company.

 

    4.6.        Capitalization. The authorized share capital of the Company consists of 35,000,000 Ordinary Shares, nominal value NIS 4.00 per share, of which, as of May 31, 2009, ___________ Ordinary Shares are issued and outstanding. Schedule A sets forth, to the Company’s knowledge, the Lenders holdings assuming the full conversion of the aggregate Loan amount and exercise of the Warrants.

 

  

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    4.7.        Financial Statements. The audited consolidated financial statements of the Company as of December 31, 2008 and the related notes thereto, as filed by the Company with the Securities and Exchange Commission (“SEC”) under Form 6-K on March 31, 2009, fairly present the financial position of the Company as of their respective dates, and have been prepared in accordance with the books and records of the Company as at the applicable dates and for the applicable periods. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods therein specified, except as may be disclosed in the notes to such financial statements, or as may be permitted by the Securities and Exchange Commission and except as disclosed in the filings the Company made in connection with such statements, if any. To the Company’s knowledge, the unaudited consolidated financial statements of the Company as of March 31, 2009, as filed by the Company with the SEC under Form 6-K on May 18, 2009, fairly present the financial position of the Company as of their respective dates, and have been prepared in accordance with the books and records of the Company as at the applicable dates and for the applicable periods.

 

    4.8.        Legal Proceedings. Except as disclosed in the Company’s public filings, there is no material legal or governmental proceeding pending or, to the knowledge of the Company, threatened to which the Company is or may be a party.

 

    4.9.        Intellectual Property. (i) The Company, either directly or through its subsidiaries, owns or possesses sufficient rights to use all material patents, patent rights, trademarks, copyrights, licenses, inventions, trade secrets, trade names and know-how (collectively, “Intellectual Property”) described or referred to in the Company’s public filings as owned or possessed by it, except where the failure to own or possess would not have a material adverse effect on the Company, (ii) to the knowledge of the Company, the Company is not infringing, nor has it received any notice of, any asserted infringement of, any rights of a third party with respect to any Intellectual Property that, individually or in the aggregate, would have a material adverse effect on the Company.

 

    4.10.       Compliance with Law. To the knowledge of the Company, the business of the Company is conducted in accordance with applicable laws, except to the extent that, individually or in the aggregate, would not have a material adverse effect on the Company.

 

    4.11.       Disclosure. The representations and warranties of the Company contained in this Section 4 as of the date hereof and as of the Closing Date, and in the Company’s public filings with the SEC, do not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements herein, in light of the circumstances under which they are made, not misleading. The Company understands and confirms that the Lenders will rely on the foregoing representations in effecting the transaction contemplated in the Transaction Documents and other transactions in securities of the Company.

 

     Section 5.         Representations and Warranties by the Lenders.

 

        Each Lender represents severally to the Company that:

 

    5.1.        Enforceability. (i) Each Lender is authorized and qualified and has full right and power to become an lender to and an investor in the Company, is authorized to loan its portion of the Loan to the Company, to convert its portion of the Loan into Shares in the event of a conversion pursuant to Section 2.4 hereof, to exercise its Warrant, and to perform its obligations pursuant to the provisions hereof, (ii) the person signing the Transaction Documents and any other instrument executed and delivered therewith on behalf of each Lender has been duly authorized by such entity and has full power and authority to do so, and (iii) no Lender has been formed for the specific purpose of extending the Loan or of acquiring an interest in the Company.

 

    5.2.        Restrictions on Transferability and Hedging.

 

  

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    5.2.1.      Each Lender understands that, in the absence of an effective registration statement or an opinion of the Company’s counsel that registration under the Securities Act of 1933 (the “Act”) is not required: (i) the Conversion Shares and Warrant Shares, when issued, shall not be registered under the Act, or under the laws of any other jurisdiction; (ii) such shares cannot be sold, transferred or otherwise disposed of unless they are subsequently registered under the Securities Act and, where required, under the laws of other jurisdictions or unless an exemption from registration is then available; (iii) there is now no registration statement on file with the Securities and Exchange Commission with respect to such shares.

 

    5.2.2.      Each Lender acknowledges and agrees that the certificates representing the Conversion Shares and the Warrant Shares shall bear restrictive legends, substantially as follows, or as may be required in order to comply with applicable securities rules and regulations:

 

        “The shares represented by this certificate have not been registered under the Securities Act of 1933. The shares have been acquired for investment and may not be sold, transferred, assigned or otherwise disposed of in the absence of an effective registration statement with respect to the shares evidenced by this certificate, filed and made effective under the Securities Act of 1933, or an opinion of the Company’s counsel that registration under such Act is not required.”

 

    5.2.3.      The Company will not register any transfer of Conversion Shares or Warrant Shares not made pursuant to registration under the Securities Act, or pursuant to an available exemption from registration.

 

    5.2.4.      Each Lender agrees not to engage in hedging transactions with regard to the Conversion Shares or the Warrant Shares.

 

    5.3.           Offshore Transaction. Each Lender represents that it is not a “U.S. Person”, as such term is defined in Regulation S under the Securities Act of 1933 (“Reg. S”), its principal address is outside the United States and it has no present intention of becoming a resident of (or moving its principal place of business to) the United States. Each Lender was located outside the United States at the time any offer in connection with this Agreement was made to such Lender and at the time that the Lender accepted any such offer. The Conversion Shares and the Warrant Shares if issued, will be acquired solely for each Lender’s own account, and in no event and without derogating from the foregoing, for the account or the benefit of a U.S. person. Each Lender shall comply with the applicable distribution compliance periods pursuant to Reg. S.

 

    5.4.           Investment Purposes. The Conversion Shares and Warrant Shares, if issued will be acquired for investment purposes. Such Shares will not be acquired with a view to, or for sale in connection with, any distribution or other disposition thereof. No Lender has any present plans to enter into any contract, undertaking, agreement or arrangement for any such resale, distribution or other disposition, and it will not divide its interest in the Company’s Shares with others, resell or otherwise distribute the Company Shares in violation of federal or state U.S. Securities laws or the Israeli Securities Law.

 

    5.5.           Information and Advice.

 

    5.5.1.        Each Lender has carefully reviewed and understands the risks of extending the Loan and of the acquisition of the Conversion Shares and Warrant Shares. In connection with such Lender’s extension of the Loan and, if applicable, investment in the Company, it has obtained the advice of its own investment advisors, counsel and accountants (the “Advisors”). Each Lender and its Advisors have reviewed the Company’s public filings and have been furnished with all materials relating to the Company or the Company Shares that they have requested. The Lender and its Advisors have been afforded the opportunity to ask questions of the Company concerning the financial and other affairs of the Company and to obtain any additional information necessary to verify the accuracy of any representations or information set forth herein.

 

  

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    5.5.2.        The Company has answered all reasonable inquiries that any Lender or its Advisors have made concerning the Company or any other matters relating to the creation and operations of the Company and the terms and conditions of the Loan.

 

    5.6.           Sophistication and Risk. Each Lender represents that:

 

    5.6.1.        It has such knowledge and experience in financial and business matters, that it is capable of evaluating, and has evaluated, the merits and risks of the Loan and the acquisition of the Conversion Shares and Warrant Shares.

 

    5.6.2.        It understands that no Israeli or U.S. federal or state agency has passed upon the Shares or made any finding or determination as to the fairness of the transactions contemplated in the Transaction Documents.

 

    5.6.3.        Without derogating from any of the Companies representations and warranties contained herein, it understands that the Loan and any acquisition of the Shares involves a high degree of risk, including the risk that such Lender might lose its entire amount invested in the Company.

 

    5.6.4.        It understands that any tax benefits that may be available to the Lenders may be lost through adoption of new laws, amendments to existing laws or regulations, or changes in the interpretation of existing laws and regulations.

 

    5.6.5.         It is an “Accredited Investor” as such term is defined in Rule 501 of Regulation D under the Securities Act of 1933.

 

    5.7.          No solicitation. At no time was any Lender presented with or solicited by any leaflet, public promotional meeting, newspaper or magazine article, radio or television advertisement or any other form of general advertising or general solicitation concerning the Loan or any investment in the Shares. The Lender is aware of the Company’s proxy statement in respect of its Special General Shareholders Meeting publicly filed by the Company with the SEC, in which the Company sought approval for a framework of a private placement of convertible debt securities.

 

    5.8.          Broker-Dealer. No Lender is a broker-dealer, nor is it an affiliate of any broker-dealer.

 

    5.9.          Further Indebtedness. Each Lender acknowledges that no provision of the Transaction Documents executed and delivered by the Company restricts, or shall be construed to restrict, in any way the ability of the Company to incur indebtedness or to issue share capital or other equity securities (or securities convertible into equity securities) of the Company or to grant liens on its property and assets.

 

  

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    5.10.        Voting and/or Investment Control over the Lenders. Each Lender has made available to the Company a list of individuals who have or share voting and/or investment control over such Lender. Each Lender shall update such list as reasonably requested by the Company in order to comply with its public filing obligations or requests for such information from any regulatory body.

 

    5.11.        Independent Investment. Each Lender is acting independently with respect to its extension of the Loan and its entering into the Transaction Documents. For the avoidance of doubt, each Lender’s rights, obligations, representations and warranties hereunder stand severally from any other Lender’s rights and obligations hereunder.

 

    5.12.        Holdings. Schedule A attached hereto reflects the holdings of the Company’s shares by each Lender and its affiliates as of the date hereof, and as of the Closing Date.

 

    5.13.        Availability of Exemptions. Each Lender understands that the Conversion Shares and the Warrant Shares if issued will be issued in reliance on a transactional exemption or exemptions from the registration requirements of Israeli and U.S. Federal and state securities laws, and the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Lenders set forth herein in order to determine the applicability of such exemptions and the suitability of each Lender to acquire the Shares.

 

    5.14.        Disclosure. The representations and warranties of each Lender contained in this Section 5 as of the date hereof and as of the Closing Date, do not contain any untrue statement of a material fact or omit to state a material fact required to be stated herein or necessary to make the statements herein, in light of the circumstances under which they are made, not misleading. Each Lender understands and confirms that the Company will rely on the foregoing representations in effecting the transaction contemplated in the Transaction Documents and other transactions in securities of the Company.

 

     Section 6.         Conditions Precedent to Closing and Funding of Loan.

 

        The obligations of each Lender to extend the Loan is subject to the fulfillment at or before the Closing Date, of the following conditions precedent, any one or more of which may be waived in whole or in part by such Lender:

 

    6.1.        Representations and Warranties. The representations and warranties of the Company under this Agreement shall be true in all material respects as of the Closing Date, with the same effect as though made on and as of such date.

 

    6.2.        Compliance with Agreements. The Company shall have performed and complied with all agreements or conditions required by this Agreement to be performed and complied with by it prior to or as of the Closing Date.

 

    6.3.        No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

 

    6.4.        Registration Rights Agreement. As of the Closing, the Registration Rights Agreement in the form attached hereto as Schedule C (the “Registration Rights Agreement”) shall have been executed and delivered by the Company and each Lender.

 

  

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    6.5.        Notices to SEC and Nasdaq. The Company shall have made all filings or notices with the SEC and/or Nasdaq, required to be made prior to the Closing Date.

 

    6.6.        Bank Approval. The Company has obtained a notice form Bank Leumi of the exclusion of the Loan repayment from the Company’s subordination letter.

 

     Section 7.         Conditions Precedent to Obligations of the Company.

 

        The Closing is subject to the fulfillment or waiver by the Company prior to or on the Closing Date of the conditions set forth in this Section 7.

 

    7.1.        Representations and Warranties. The representations and warranties of each Lender under this Agreement shall be true in all material respects as of the Closing Date, with the same effect as though made on and as of such date.

 

    7.2.        Compliance with Agreements. Each Lender shall have performed and complied in all respects with all agreements or conditions required by this Agreement to be performed and complied with by it prior to or as of the Closing Date.

 

    7.3.        No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

 

    7.4.        Delivery of Loan Amount. Each Lender shall have delivered to the Company its portion of the Loan on or prior to the Closing Date.

 

    7.5.        Government Approvals. The Company shall have received all necessary governmental approvals with respect to the transactions contemplated hereby. Each Lender shall have executed any confirmations required by the Office of Chief Scientist, if applicable.

 

     Section 8.        Confidentiality. Any information disclosed to any Lender or its Advisors, which has not previously been made available to the general public by the Company or which has not become public knowledge otherwise (except as a result of breach of Lender hereunder), if any, shall be considered Confidential Information. Each Lender acknowledges the confidential nature of the Confidential Information it may have received, and agrees that the Confidential Information is the valuable property of the Company. Each Lender agrees that it and its Advisors shall not reproduce any of the Confidential Information without the prior written consent of the Company, nor shall they use any Confidential Information for any purpose except as permitted by and for the purpose of the performance of this Agreement, or divulge all or any part of the Confidential Information to any third party. The confidentiality obligations undertaken by each Lender hereunder will remain in full force and effect regardless of the execution and consummation or termination of this Agreement.

 

     Section 9.         Miscellaneous.

 

    9.1.        Fees. Upon the Closing, the Company shall pay the Lenders’ reasonable legal fees of one counsel to the Lenders.

 

    9.2.        Amendments. This Agreement may be modified, supplemented or amended only by a written instrument executed by the Company and the respective Lender solely with respect to such Lenders rights and obligations.

 

  

8

  

 

    9.3.        Notices. Any notice that is required or provided to be given under this Agreement shall be deemed to have been sufficiently given and received for all purposes, (i) when delivered in writing by hand, upon delivery; (ii) if sent via facsimile or email, upon transmission and electronic confirmation of receipt (and if transmitted and received on a non-business day, on the first Business Day following transmission and electronic confirmation of receipt), (iii) three (3) Business Days (and ten (10) Business Days for international mail) after being sent by certified or registered mail, postage and charges prepaid, return receipt requested, or (iv) three (3) Business Days after being sent by internationally overnight delivery providing receipt of delivery, to the following addresses:

 

if to the Company, B.O.S Better Online Solutions Ltd., 20 Freiman Street, Rishon Lezion, 75101 Israel Attn: Mr. Eyal Cohen, CFO, facsimile: (972) 3 954-1003, with a copy to Amit, Pollak Matalon & Co., Nitzba Tower, 17 Yitzhak Sadeh St., Tel-Aviv 67775 Israel attn: Shlomo Landress, Adv. Fax: (972) 3 568-9001; or at any other address designated by the Company to the Lenders in writing;

 

if to a Lender, to its address listed in Schedule A for such Lender or at any other address designated by such Lender to the Company in writing.

 

    9.4.        Survival of Representations and Warranties. All representations and warranties contained herein or in any Transaction Document or in any other certificate delivered hereunder or thereunder shall survive after the execution and delivery of this Agreement or such certificate or document, as the case may be, during the Term and for a period of 6 months thereafter. All covenants and agreements in the Transaction Documents shall survive in accordance with their terms. This Section shall survive the termination of this Agreement for any reason.

 

    9.5.        Delays or Omissions; Waiver. Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any party under this Agreement shall impair any such right, power or remedy of such party nor shall it be construed to be a waiver of any breach or default, or an acquiescence thereto, or of a similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party hereto of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing.

 

    9.6.        Other Remedies. Any and all remedies herein expressly conferred upon a party shall be deemed cumulative with, and not exclusive of, any other remedy conferred hereby or by law on such party, and the exercise of any one remedy shall not preclude the exercise of any other.

 

    9.7.        Entire Agreement. This Agreement and the exhibits and schedules hereto, constitute the entire understanding and agreement of the parties hereto with respect to the subject matter hereof and thereof and supersede all prior and contemporaneous agreements or understandings, inducements or conditions, express or implied, written or oral, between the parties with respect hereto and thereto.

 

  

9

  

 

    9.8.        Headings. All section headings herein are inserted for convenience only and shall not modify or affect the construction or interpretation of any provision of this Agreement.

 

    9.9.        Severability. Should any one or more of the provisions of this Agreement (including its exhibits and schedules) or of any agreement entered into pursuant to this Agreement be determined to be illegal or unenforceable, all other provisions of this Agreement and of each other agreement entered into pursuant to this Agreement, shall be given effect separately from the provision or provisions determined to be illegal or unenforceable and shall not be affected thereby. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision, which will achieve, to the extent possible, the economic, business and other purposes of the void or unenforceable provision.

 

    9.10.        Assignment. This Agreement may not be assigned in whole or in part by any Lender without the prior written consent of the Company.

 

    9.11.        Governing Law and Venue. This Agreement shall be construed in accordance with and governed by the internal laws of the State of Israel, without regard to conflict of laws provisions. Any dispute arising under or in relation to this Agreement shall be adjudicated in the competent court of Tel Aviv-Jaffa district only, and each of the parties hereby submits irrevocably to the exclusive jurisdiction of such court.

 

    9.12.        Counterparts. This Agreement may be executed concurrently in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

    9.13.        Further Actions. At any time and from time to time, each party agrees, without further consideration, to take such actions and to execute and deliver such documents as may be reasonably necessary to effectuate the purposes of this Agreement.

 

IN WITNESS WHEREOF the parties have signed this Loan Agreement in one or more counterparts as of the date first appearing above.

 

	
B.O.S BETTER ONLINE SOLUTIONS LTD.

	
[Lenders] [Duplicate for each Lender]

	  	  
	
By:___________________________

	
By:____________________________

	
Name:_________________________

	
Name:__________________________

	
Title:__________________________

	
Title:___________________________

  

10

  

 

Schedule A

 

	
LENDER'S NAME

AND ADDRESS

	
ACCOUNT

INFORMATION

	
LOAN AMOUNT

	
NO. OF

CONVERSION SHARES

	
NO. OF

WARRANT

SHARES

	
PRE-LOAN HOLDINGS

	
POST-LOAN

HOLDINGS

(ASSUMING

CONVERSION OF

LOAN AND EXERCISE

OF WARRANT)

	
Amount

	
Percent

	
Amount

	
Percent

	  	  	
$________

	  	  	  	  	  	  
	
           TOTAL

	  	  	  	  	  	  	  	  

 

  

1

  

 

Schedule B

FORM OF WARRANT

 

THIS WARRANT AND THE ORDINARY SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE ORDINARY SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO B.O.S. BETTER ONLINE SOLUTIONS LTD.  THAT SUCH REGISTRATION IS NOT REQUIRED.

 

Right to Purchase up to _______ Ordinary Shares of

B.O.S. Better Online Solutions Ltd.

(subject to adjustment as provided herein)

 

ORDINARY SHARES PURCHASE WARRANT

 

	
No. BOS09- __

	
Issue Date: _______

B.O.S. BETTER ONLINE SOLUTIONS LTD. a company incorporated under the laws of the State of Israel hereby certifies that, for value received, _______ or assigns (the "Holder"), is entitled, subject to the terms set forth below, to purchase from the Company (as defined herein) from and after the date that is 18 months from the Issue Date of this Warrant and at any time or from time to time before 5:00 p.m., New York time, through the close of business of the date that is 36 months from the Issue Date (the "Expiration Date"), up to _______ fully paid and nonassessable Ordinary Shares (as hereinafter defined), NIS 4.00 nominal value per share, at the exercise price of $0.55 per Ordinary Share (the “Exercise Price”).  The number and character of such Ordinary Shares and the Exercise Price per share are subject to adjustment as provided herein.

As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

 

(a)           The term "Company" shall include B.O.S. Better Online Solutions Ltd.  and any corporation which shall succeed, or assume the obligations of B.O.S. Better Online Solutions Ltd. hereunder.

 

(b)           The term "Other Securities" refers to any securities of the Company or any other person (corporate or otherwise) which the Holder of the Warrant at any time shall be entitled to receive, or shall have received, on the exercise of the Warrant, in lieu of or in addition to Ordinary Shares, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Ordinary Shares or Other Securities pursuant to Section 3 or otherwise.

 

  

  

  

 

Capitalized terms used herein without definition shall have the meanings ascribed to such terms in that Loan Agreement dated as of the date hereof by and among the Company and the Lenders (as defined therein).

 

	
1.

	
Exercise of Warrant.

 

	
  

	
1.1

	
Number of Shares Issuable upon Exercise.  From and after the date hereof through and including the Expiration Date, the Holder shall be entitled to receive, upon exercise of this Warrant in whole or in part, by delivery of an original or fax copy of an exercise notice in the form attached hereto as Exhibit A (the "Exercise Notice") and payment in accordance with Section 2.2 below, Ordinary Shares of the Company (the “Warrant Shares”), subject to adjustment pursuant to Section 4.

 

	
  

	
1.2

	
Company Acknowledgment.  The Company will, at the time of the partial exercise of the Warrant, upon the request of the Holder hereof acknowledge in writing its continuing obligation to afford to such Holder any rights to which such Holder shall continue to be entitled after such partial exercise in accordance with the provisions of this Warrant. If the Holder shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to such Holder any such rights.

 

	
2.

	
Procedure for Exercise.

 

	
  

	
2.1

	
Delivery of Share Certificates, Etc., on Exercise.  The Company agrees that the Warrant Shares purchased upon exercise of this Warrant shall be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares in accordance herewith.  As soon as practicable after the exercise of this Warrant in full or in part, and in any event within three (3) business days thereafter, the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the Holder, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct in compliance with applicable securities laws, a certificate or certificates for the number of duly and validly issued, fully paid and nonassessable  Warrant Shares (or Other Securities) to which the Holder shall be entitled on such exercise.

 

  

2

  

 

	
  

	
2.2

	
Exercise.

 

Payment shall be made in cash, by wire transfer to a bank account the details of which shall have been provided by the Company to the Holder in writing or by certified or official bank check payable to the order of the Company, of the amount equal to the applicable aggregate Exercise Price for the number of Ordinary Shares specified in the Exercise Notice (as such exercise number shall be adjusted to reflect any adjustment in the total number of Warrant Shares issuable to the Holder per the terms of this Warrant) and the Holder shall thereupon be entitled to receive the applicable number of duly authorized, validly issued, fully-paid and non-assessable  Warrant Shares (or Other Securities) determined as provided herein.

 

	
  

	
2.3

	
Fractional Shares.  This Warrant may not be exercised for fractional shares. In lieu of fractional shares the Company shall make a cash payment therefor based upon the Exercise Price then in effect.

 

	
3.

	
Effect of Reorganization, Etc.; Adjustment of Exercise Price.

 

	
  

	
3.1

	
Reorganization, Consolidation, Merger, Etc.  In case at any time or from time to time, the Company shall (a) effect a reorganization, (b) consolidate with or merge into any other person, including the sale of substantially all of the Company’s outstanding share capital to a corporate third party, in consideration for such third party’s securities, or (c) transfer all or substantially all of its properties or assets to any other person under any plan or arrangement contemplating the dissolution of the Company, then, in each such case, as a condition to the consummation of such a transaction, proper and adequate provision shall be made by the Company whereby the Holder of this Warrant, on the exercise hereof as provided in Sections 1 and 2 at any time after the consummation of such reorganization, consolidation or merger or the effective date of such dissolution, as the case may be, shall receive, in lieu of the Ordinary Shares issuable on such exercise prior to such consummation or such effective date, the shares  and Other Securities and property (including cash) to which such Holder would have been entitled upon such consummation or in connection with such dissolution, as the case may be, if such Holder had so exercised this Warrant, immediately prior thereto, all subject to further adjustment thereafter as provided in Section 4.

 

  

3

  

 

	
  

	
3.2

	
Extraordinary Events Regarding Ordinary Shares.  In the event that the Company shall (a) issue additional Ordinary Shares as a dividend or other distribution on outstanding Ordinary Shares, (b) subdivide its outstanding Ordinary Shares, or (c) combine its outstanding Ordinary Shares into a smaller number of Ordinary Shares, then, in each such event, the Exercise Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Exercise Price by a fraction, the numerator of which shall be the number of Ordinary Shares outstanding immediately prior to such event and the denominator of which shall be the number of  Ordinary Shares outstanding immediately after such event, and the product so obtained shall thereafter be the Exercise Price then in effect. The Exercise Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 3.2.  The number of Ordinary Shares that the Holder of this Warrant shall thereafter, on the exercise hereof be entitled to receive shall be increased or decreased, as the case may be, to a number determined by multiplying the number of Ordinary Shares that would otherwise (but for the provisions of this Section 3.2) be issuable on such exercise by a fraction of which (a) the numerator is the Exercise Price that would otherwise (but for the provisions of this Section 3.2) be in effect, and (b) the denominator is the Exercise Price in effect on the date of such exercise.

 

	
  

	
3.3

	
Good Faith. All determinations with respect to adjustments by the Company hereunder shall be made by the Board of Directors in good faith.

 

4.           Certificate as to Adjustments.  In each case of any adjustment or readjustment in the Ordinary Shares (or Other Securities) issuable on the exercise of the Warrant, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the terms of the Warrant and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based.

 

5.           Reservation of Shares, Etc., Issuable on Exercise of Warrant.  The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of the Warrant, Ordinary Shares (or Other Securities) from time to time issuable on the exercise of the Warrant.

 

6.           Representations of the Company.  The Company represents that (i) all corporate actions on the part of the Company, its officers, directors and shareholders necessary for the sale and issuance of the Warrant Shares pursuant hereto and the performance of the Company's obligations hereunder were taken prior to and are effective as of the issue date of this Warrant; (ii) the Warrant Shares are duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable and not subject to any preemptive rights, and (iii) the execution and delivery of this Warrant are not, and the issuance of the Warrant Shares upon exercise of this Warrant in accordance with the terms hereof will not be, inconsistent with the Company’s Articles of Association, do not and will not contravene any law, governmental rule or regulation, or, to the Company’s knowledge, any judgment or order applicable to the Company, and, except except as would not have a Material Adverse Effect, do not and will not conflict with or contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound, or require the consent or approval of, the giving of notice to, the registration with or the taking of any action in respect of or by any government authority or agency or other person. As used herein, “Material Adverse Effect” means any material adverse effect on the business, properties, assets, operations, prospects, results of operations or condition (financial or otherwise) of the Company and its subsidiaries, taken as a whole.

 

  

4

  

 

7.           Representations and Warranties by the Holder.  The Holder represents and warrants to the Company as follows:

 

	
  

	
7.1

	
Holder understands that the Warrant is being offered and sold pursuant to an exemption or exemptions from registration requirements of Israeli and US Federal and state securities laws and that the Company is relying upon the truth and accuracy of Holder’s representations contained in that Loan Agreement of even date herewith, including, without limitation, that the Holder is an "Accredited Investor" within the meaning of Regulation D under the Securities Act of 1933.

 

	
  

	
7.2

	
Holder has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. Holder is able to bear the economic risk of this investment.

 

	
  

	
7.3

	
Holder is acquiring the Warrant and the Ordinary Shares issuable upon exercise of the Warrant for its own account for investment only, and not as a nominee or agent and not with a view towards or for resale in connection with their distribution.

 

8.           Assignment; Exchange of Warrant.  Subject to compliance with applicable securities laws, this Warrant, and the rights evidenced hereby, may be transferred in whole by any registered Holder hereof (a "Transferor") in whole or in part.  On the surrender for exchange of this Warrant, with the Transferor's endorsement in the form of Exhibit B attached hereto (the "Transferor Endorsement Form") and together with evidence reasonably satisfactory to the Company demonstrating compliance with applicable securities laws, which shall include, without limitation, a legal opinion from the Transferor's counsel that such transfer is exempt from the registration requirements of applicable securities laws, the Company at its expense (but with payment by the Transferor of any applicable transfer taxes) will issue and deliver a new Warrant of like tenor, in the name of the transferee specified in such Transferor Endorsement Form (each a "Transferee"), calling in the aggregate on the face thereof for the number of Ordinary Shares called for on the face of the Warrant so surrendered by the Transferor. Notwithstanding the foregoing, no opinion of counsel or "no-action" letter shall be necessary for a transfer without consideration by a Holder to any other entity which controls, is controlled by or is under common control with the Holder.

 

  

5

  

 

9.           Replacement of Warrant.  On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of this Warrant, the Company at its expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.

 

10.           Registration Rights.  The Holder of this Warrant has been granted certain registration rights by the Company.  These registration rights are set forth in a Registration Rights Agreement entered into by the Company and the Holder dated as of even date of this Warrant.

 

11.           Rights of Shareholders.   No Holder shall be entitled, in its capacity as a Warrant holder only, to vote or receive dividends or be deemed the holder of the Ordinary Shares or any Other Securities of the Company, which may at any time be issuable upon the exercise of this Warrant for any purpose, nor shall anything contained herein be construed to confer upon the Holder, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any other matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of shares, reclassification of shares, change of nominal value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have been exercised and the Ordinary Shares issuable upon the exercise hereof shall have become deliverable, as provided herein.

 

12.           Transfer on the Company's Books.  Until this Warrant is transferred on the books of the Company, the Company may treat the registered holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.

 

13.           Notices, Etc.  All notices and other communications from the Company to the Holder of this Warrant shall be deemed to have been sufficiently given and received for all purposes,  (i) when delivered in writing by hand, upon delivery; (ii) if sent via facsimile or email, upon transmission and electronic confirmation of receipt (and if transmitted and received on a non-business day, on the first business day following transmission and electronic confirmation of receipt), (iii) seven (7) business days (and fourteen (14) business days for international mail) after being sent by certified or registered mail, postage and charges prepaid, return receipt requested, or (iv) three (3) business days after being sent by internationally overnight delivery providing receipt of delivery, to the address as may have been furnished to the Company in writing by such Holder or, until any such Holder furnishes to the Company an address, then to, and at the address of, the last Holder of this Warrant who has so furnished an address to the Company.

 

  

6

  

 

14.           Miscellaneous.  This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be governed by and construed in accordance with the laws of the State of Israel without regard to principles of conflicts of laws. Any dispute arising under or in relation to this Agreement shall be adjudicated in the competent court of Tel Aviv-Jaffa district only, and each of the parties hereby submits irrevocably to the exclusive jurisdiction of such court. In the event that any provision of this Warrant is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law.  Any such provision, which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Warrant.  The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof.  The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

 

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK;

SIGNATURE PAGE FOLLOWS]

 

  

7

  

 

IN WITNESS WHEREOF, this Warrant is executed as of the date first written above.

 

	
B.O.S. Better Online Solutions Ltd.

	  	
______________

	  	  	  
	
By:

	  	  	
By:

	  
	
Name:

	  	  	
Name:

	  
	
Title:

	  	  	
Title:

	  

  

8

  

 

EXHIBIT A

 

FORM OF SUBSCRIPTION

(To Be Signed Only On Exercise Of Warrant)

 

To:           B.O.S. Better Online Solutions Ltd.

 

                Attention:                      Chief Financial Officer

The undersigned, pursuant to the provisions set forth in the attached Warrant (No.____), hereby irrevocably elects to purchase (check applicable box):

 

	________  	  	
________  Ordinary Shares covered by such Warrant;

o          The undersigned herewith makes payment of the full Exercise Price for such shares at the price per share provided for in such Warrant, which is $___________.  Such payment takes the form of (check applicable box or boxes):

 

	  	
o

	
$__________ by wire transfer of lawful money of the United States; and/or

	  	  	  
	  	
o

	
$__________ by certified or official bank check payable to the order of the Company

	  

The undersigned requests that the certificate for such shares be issued in the name of, and delivered to ______________________________________________ whose address is ___________________________________________________________________________.

 

The undersigned represents and warrants that all offers and sales by the undersigned of the securities issuable upon exercise of the within Warrant shall be made pursuant to registration of the Ordinary Shares under the Securities Act of 1933, as amended (the "Securities Act") or pursuant to an exemption from registration under the Securities Act.

 

	
Dated:

	  	  	  
	  	  	
(Signature must conform to name of Holder as specified on the face of the Warrant)

	  	  	  
	  	  	
Address:

	  
	  	  	  	  

  

A-1

  

 

EXHIBIT B

 

FORM OF TRANSFEROR ENDORSEMENT

(To Be Signed Only on Transfer of Warrant)

 

For value received, the undersigned hereby sells, assigns, and transfers unto the person named below under the heading "Transferee" the right represented by the within Warrant to purchase the number of Ordinary Shares of B.O.S Better Online Solutions Ltd. into which the within Warrant relates and appoints each such person attorney-at-fact to transfer its respective right on the books of B.O.S. Better Online Solutions Ltd.  with full power of substitution.

 

	
NAME OF TRANSFEREE

	  	
ADDRESS

	  
	  	  	  	  

 

	
DATED:

	  	  	  
	  	  	
(SIGNATURE MUST CONFORM TO NAME OF HOLDER AS SPECIFIED ON THE FACE OF THE WARRANT)

	  	  	  
	  	  	
ADDRESS:

	  
	  	  	  	  

 

	
ACCEPTED AND AGREED:

[TRANSFEREE]

	  	  
	
By:

	  	  	
 

	
Name:

	  	  	
 

	
Title:

	  	  	
 

 

 

 

 

Schedule C

 

REGISTRATION RIGHTS AGREEMENT

 

        This Registration Rights Agreement is made and entered into as of _________, 2009 by and among B.O.S. Better Online Solutions Ltd., an Israeli company (the “Company”), and the entities listed in Schedule 1, as may be unilaterally amended from time to time by the Company, to reflect the inclusion of additional Lenders (collectively, the “Lenders” and each, a “Lender”).

 

WHEREAS, the Company and the respective Lender have entered into that certain Loan Agreement (the “Loan Agreement”) dated as of ________, 2009; and

 

WHEREAS, pursuant to the Loan Agreement and in accordance with the terms thereof, the Loan extended by the Lender is convertible into Ordinary Shares, each with a nominal value of NIS 4.00 per share, of the Company (“Ordinary Shares”);

 

WHEREAS, the Company has also issued to the Lenders Warrants (the “Warrants”) for the purchase of Ordinary Shares of the Company, each with a nominal value of NIS 4.00; and

 

        WHEREAS, the parties desire to set forth certain matters regarding ownership of the Company Shares (as defined below), as more fully set forth herein.

 

        NOW, THEREFORE, the parties hereto agree as follows:

 

	
1.

	
DEFINITIONS.

 

	  	
For purposes of this Agreement, the following terms shall have the meanings set forth below:

 

	  	
1.1

	
“Holders” means any Lender, transferee or assignee to whom any of the Lenders assigns its rights, in whole or in part, and any transferee or assignee thereof to whom a transferee or assignee assigns its rights, in accordance with Section 9.

 

	  	
1.2

	
“ISA” means the Israel Securities Authority or any similar or successor agency of Israel administering the Israel Securities Law.

 

	  	
1.3

	
“Israel Securities Law” means the Israel Securities Law, 5728-1968 (including the regulations promulgated thereunder), as amended.

 

	  	
1.4

	
"1933 Act" means the U.S. Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute.

 

	  	
1.5

	
"1934 Act" means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, or any similar successor statute.

 

	  	
1.6

	
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

 

	 	
1.7

	
“Permitted Transferee” means with respect to any Holder: (i) a transferee by operation of law; (ii) a spouse or child of the Holder; (iii) in the case of a transfer by a Holder that is a limited partnership, any affiliated limited partnership managed by the same management company or to the partners of the limited partnership; (iv) in the case of a transfer by a Holder that is a limited liability company, any affiliated limited liability company managed by the same management company, and the members of such limited liability company; and (v) an entity Controlling the Holder, under the Control of the Holder or under common Control with the Holder or any Permitted Transferee set forth in (i) – (iv) of this definition.

  

1

  

 

	  	
1.8

	
“Register”, “registered”, and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the 1933 Act and the effectiveness of such registration statement in accordance with the 1933 Act or the equivalent actions under the laws of another jurisdiction.

 

	  	
1.9

	
“Registrable Securities” means any Shares (as defined below) held by the Lender and any other securities issued by the Company to the Lender in respect of such Shares by means of exchange, reclassification, dividend, distribution, split-up, combination, subdivision, recapitalization, merger, spin-off, reorganization, contractual obligation or otherwise, prior to the date the Registration Statement was filed with the SEC, except that Shares that can be sold without restriction pursuant to Rule 144 under the 1933 Act shall not be deemed Registrable Securities.

 

	  	
1.10

	
“Registration Statement” means a registration statement or registration statements of the Company covering Registrable Securities filed with the SEC under the 1933 Act on Form F-3, so as to allow the Holder to freely resell the Registrable Securities on the exchange on which securities of the Company of the same class or series are then listed.

 

	  	
1.11

	
“SEC” means the United States Securities and Exchange Commission or any similar or successor agency of the United States administering the 1933 Act.

 

	  	
1.12

	
"Shares" means the Ordinary Shares issued to the Lenders upon conversion of the Loan and any Warrant Shares .

 

	  	
1.13

	
"Warrant Shares" means Ordinary Shares purchased by the Lenders pursuant to the exercise of the Warrant.

 

	  	
1.2

	
Capitalized terms used herein without definition shall have the meanings ascribed to them in the Loan Agreement.

 

	
2.

	
LISTING & REGISTRATION OF THE SHARES

 

	  	
2.1

	
The Company shall prepare and, no later than 12 months following the closing of the Loan Agreement, file with the SEC a Registration Statement on Form F-3 covering the resale of all of the then Registrable Securities that are not already registered. The Company shall use commercially reasonable efforts to have the Registration Statement declared effective by the SEC as soon as possible after such filing with the SEC. Notwithstanding the above, each Lender acknowledges that the SEC may mandate a limit on the number of Registrable Securities that can be included in the Registration Statement and in such case the Company shall be required to register only such amount of Registrable Securities as shall not exceed the aforementioned limit, pro-rated amongst the Lenders.

 

	  	
2.2

	
In the event that Form F-3 shall not be available for the registration of the resale of Registrable Securities hereunder, the Company shall promptly register the resale of the Registrable Securities on another appropriate form in accordance with its undertakings hereunder, to the extent such registration is permitted under the rules and regulations of the SEC and in compliance with the SEC’s requirements therefore.

  

2

  

 

	  	
2.3

	
The Company represents and warrants to the Lenders that the Company is not a party to any agreement that conflicts in any manner with the Lenders’ rights to cause the Company to register Registrable Shares pursuant to this Agreement.

 

	
3.

	
RELATED OBLIGATIONS.

 

	  	
3.1

	
Following the filing and effectiveness of each Registration Statement with the SEC pursuant to Section 2.1, the Company shall use commercially reasonable efforts to keep the Registration Statement effective pursuant to Rule 415 of the 1933 Act at all times until the earlier of (i) the date as of which all of the Registrable Securities covered by such Registration Statement may be sold without restriction pursuant to Rule 144(k) under the 1933 Act (ii) the date on which the Holders shall have sold all the Registrable Securities covered by such Registration Statement; or (iii) the fifth anniversary of the date hereof (the “Registration Period”). The Company shall ensure that such Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, subject to Section 3.5 below.

 

	  	
3.2

	
The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with such Registration Statement, as may be necessary to keep such Registration Statement effective at all times during the Registration Period, and, during such period, comply with the provisions of the 1933 Act and the Israel Securities Law with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement. In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to the Agreement (including pursuant to this Section 3.2 by reason of the Company filing a report on Form 20-F, Form 6-K or any analogous report under the 1934 Act), the Company shall have incorporated such report by reference into the Registration Statement, if applicable, or shall file such amendments or supplements with the SEC as may be required to maintain the Registration Statement effective during the Registration Period.

 

	  	
3.3

	
The Company shall furnish such Holder whose Registrable Securities are included in any Registration Statement, without charge, (i) a copy of such Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference, all exhibits and each preliminary prospectus, (ii) upon the effectiveness of any Registration Statement, a copies of the prospectus included in such Registration Statement and all amendments and supplements thereto and (iii) such other documents, as such Holder may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by such Holder.

 

  

3

  

 

	  	
3.4

	
The Company shall use its commercially reasonable efforts to (i) register and qualify, unless an exemption from registration and qualification applies, the resale by the Holders of the Registrable Securities covered by a Registration Statement under such other securities or “blue sky” laws of all the states of the United States, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3.4, or (y) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify each Holder who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky”laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.

 

	  	
3.5

	
The Company shall notify each Holder in writing of the happening of any event, (a “Discontinuation Event”) as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or an omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company shall use its commercially reasonable efforts to minimize the period of time during which a Registration Statement includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company shall promptly notify each Holder in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed so that the Registration Statement does not include an untrue statement of a material fact or an omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and when a Registration Statement or any post-effective amendment has become effective, (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate.

 

	  	
3.6

	
The Company shall use its commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction (each, a “Suspension Event”) and, if such an order or suspension is issued, to promptly obtain the withdrawal of such order or suspension and to notify each Holder who holds Registrable Securities being sold of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.

 

  

4

  

 

	  	
3.7

	
The Company shall use its commercially reasonable efforts to cause all the Registrable Securities covered by a Registration Statement to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed.

 

	  	
3.8

	
The Company shall cooperate with the Holders who hold Registrable Securities being offered and, to the extent applicable, facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to the effective Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Holders may reasonably request and registered in such names as the Holders may request.

 

	  	
3.9

	
The Company shall provide a transfer agent and registrar of all Registrable Securities and a CUSIP number not later than the effective date of the applicable Registration Statement.

 

	  	
3.10

	
If requested by a Holder, the Company shall, to the extent necessary for compliance with the Securities Act of 1933: (i) as soon as practicable incorporate in a prospectus supplement or post-effective amendment such information as a Holder requests to be included therein, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) as soon as practicable make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) as soon as practicable, supplement or make amendments to any Registration Statement if reasonably requested by a Holder of such Registrable Securities.

 

	  	
3.11

	
The Company shall comply with all applicable securities laws and rules and regulations of the SEC and the ISA.

 

	
4.

	
OBLIGATIONS OF THE HOLDERS.

 

	  	
Each Holder agrees that, upon receipt of any notice from the Company of the happening of a Discontinuation Event (as defined in Section 3.5) or a Suspension Event (as defined in Section 3.6), such Holder will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until such Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3.5 or receipt of notice that no supplement or amendment is required or that the Suspension Event was removed.

 

	
5.

	
EXPENSES OF REGISTRATION.

 

	  	
All expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, fees and disbursements of one counsel to the Lenders and counsel to the Company shall be paid by the Company.

 

  

5

  

 

	
6.

	
INDEMNIFICATION.

 

	  	
In the event any Registrable Securities are included in a Registration Statement under this Agreement:

 

	  	
6.1

	
To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Holder, the directors, officers, partners, employees, agents, representatives of, and each Person, if any, who controls any Holder within the meaning of the 1933 Act or 1934 Act (each, an “Indemnified Person”), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or several, (collectively, “Claims”) incurred in defending any action, claim, suit, inquiry, proceeding, investigation by or before any court or governmental, administrative or other regulatory agency, body or the SEC or the ISA, whether pending or threatened, whether or not a Person to be indemnified is or may be a party thereto (“Indemnified Damages”), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement, preliminary prospectus, final prospectus or “free writing prospectus” (as such term is defined in Rule 405 under the 1933 Act) or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) any violation by the Company of the 1933 Act, the 1934 Act, the Israel Securities Law or other federal or state or Israeli securities law applicable to the Company and relating to any action or inaction required of the Company in connection with such registration (“Violations”). Subject to Section 6.3, the Company shall reimburse the Indemnified Persons promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6.1: shall not apply: (i) to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such Indemnified Person expressly for inclusion in any such Registration Statement, preliminary prospectus, final prospectus or free writing prospectus or any such amendment thereof or supplement thereto; (ii) to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld; and (iii) to the use of the Registration Statement or the related Prospectus following a Discontinuation Event or a Suspension Event, provided the Indemnified Person received prior notice of such event; or (iv) if the Indemnified Person fails to deliver a prospectus, as then amended or supplemented, provided that the Company shall have delivered to the Indemnified Person such prospectus. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Holders pursuant to Section 9.

 

  

6

  

 

	  	
6.2

	
In connection with any Registration Statement in which a Holder is participating, each such Holder agrees, severally and not jointly, to indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6.1, the Company, each of its directors, each of its officers, employees, agents. Representatives and each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act (each an “Indemnified Party”), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Holder expressly for inclusion in Registration Statement, preliminary prospectus, final prospectus or free writing prospectus and, subject to Section 6.3, such Holder will reimburse any legal or other expenses reasonably incurred by an Indemnified Party in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6.2 and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Holder, which shall not be unreasonably withheld; provided, further, however, that the Holder shall be liable under this Section 6 for only that amount of a Claim or Indemnified Damages as does not exceed the higher of: (i) the net proceeds to such Holder as a result of the sale of Registrable Securities pursuant to such Registration Statement and (ii) the aggregate Conversion Price (as defined in the Loan Agreement) and the aggregate Exercise Price (as defined in the Warrant) paid by the applicable Holder for the Ordinary Shares and the Warrant Shares. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Holders pursuant to Section 9.

 

	  	
6.3

	
Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses of not more than one counsel for such Indemnified Person or Indemnified Party to be paid by the indemnifying party, if the representation by such counsel of the Indemnified Person or Indemnified Party together with the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. In the case of an Indemnified Person, legal counsel referred to in the immediately preceding sentence shall be selected by the Holders holding a majority in interest of the Registrable Securities included in the Registration Statement to which the Claim relates. The Indemnified Party or Indemnified Person shall cooperate with the indemnifying party in connection with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or Claim. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action, but the omission to so notify the indemnifying party will not relieve such indemnifying party of any liability that it may have to any Indemnified Person or Indemnified Party otherwise than under this Section 6.3, including pursuant to Section 6.5.

 

  

7

  

 

	  	
6.4

	
The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred.

 

	  	
6.5

	
The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.

 

	
7.

	
CONTRIBUTION.

 

	  	
To the extent any indemnification by an indemnifying party is prohibited or limited by law or insufficient to hold an Indemnified Person or an Indemnified Party, as the case may be, harmless, then the indemnifying party, in lieu of indemnifying such Indemnified Person or Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Person or Indemnified Party as a result of such Claims and Indemnified Damages (each as defined in Section 6.1 above) in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the Indemnified Person or Indemnified Party, as the case may be, on the other hand in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the Indemnified Person or Indemnified Party, as the case may be, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the Indemnified Person or Indemnified Party, as the case may be, and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission.

 

  

8

  

 

	  	
Notwithstanding the foregoing, (i) no Person involved in the sale of Registrable Securities, which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale, shall be entitled to contribution from any Person involved in such sale of Registrable Securities who was not guilty of fraudulent misrepresentation; and (ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities pursuant to such Registration Statement.

 

	
8.

	
REPORTS UNDER THE 1934 ACT.

 

	  	
With a view to making available to the Holders the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the Holders to sell securities of the Company to the public without registration (“Rule 144”), the Company agrees to:

 

	  	
8.1

	
make and keep public information available, as those terms are understood and defined in Rule 144;

 

	  	
8.2

	
file with the SEC in a timely manner all reports and other documents required by the Company under the 1993 Act and the 1934 Act so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and

 

	  	
8.3

	
furnish to each Holder so long as such Holder owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Holders to sell such securities pursuant to any rule or regulation of the SEC allowing the Holder to sell any securities without registration.

 

	
9.

	
ASSIGNMENT OF REGISTRATION RIGHTS.

 

	  	
Subject to the prior approval of the Company, at any time prior to the time the Registration Statement was filed with the SEC, the rights under this Agreement shall be assignable by each Lender to any transferee of all or any portion of such Lender’s respective portion of the Loan together with its Registrable Securities or the Warrant if: (i) the Lender agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee, and (b) the securities with respect to which such registration rights are being transferred or assigned; (iii) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the 1933 Act and applicable state securities laws; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein; and (v) such transfer shall have been made in accordance with the applicable requirements of the Loan Agreement and applicable securities laws.

 

  

9

  

 

	  	
Notwithstanding the above, any Holder may assign its right to cause the Company to register Shares pursuant to this Agreement to (i) a Permitted Transferee of all or any part of its Shares, or (ii) an acquirer of no less than twenty percent (20%) of the Holder’s Shares if: (a) the transferor shall, within 14 (fourteen) days after such transfer, furnish the Company with written notice of the name and address of such transferee, the securities with respect to which such registration rights are being assigned, and the transferee’s written agreement to be bound by this Agreement; (b) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the 1933 Act and applicable state securities laws; and (c) such transfer shall have been made in accordance with the applicable securities laws.

 

	
10.

	
MISCELLANEOUS

 

	  	
10.1

	
Amendments; Waivers. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by the Company and the applicable Lender(s).

 

	  	
10.2

	
Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to its subject matter, and supersedes and replaces all prior agreements and understandings of the parties in connection with such subject matter.

 

	  	
10.3

	
Notices. All notices and other communications required or permitted hereunder to be given to a party to this Agreement shall be in writing and shall be faxed or mailed by registered or certified mail, postage prepaid, or otherwise delivered by hand or by messenger in accordance with the provisions of the Loan Agreement.

 

	  	
10.4

	
Governing Law; Jurisdiction. This Agreement shall be governed by and construed according to the internal laws of the State of Israel without regard to the provisions relating to conflicts of law. Any dispute arising under or in relation to this Agreement shall be resolved exclusively by the competent courts of Tel-Aviv Jaffa district, and the parties hereto irrevocably submit to the exclusive jurisdiction of such court for such purposes.

 

	  	
10.5

	
Successors and Assigns. Except as otherwise expressly limited herein, the provisions of this Agreement shall inure to the benefit of, and shall be binding upon, the successors and permitted assigns of the parties hereto. This Agreement may not be assigned by any party without the prior written consent of the other party hereto.

 

	  	
10.6

	
Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable under applicable law, then such provision shall be excluded from this Agreement and the remainder of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms; provided, however, that in such event this Agreement shall be interpreted so as to give effect, to the greatest extent consistent with and permitted by applicable law, to the meaning and intention of the excluded provision as determined by such court of competent jurisdiction.

 

	  	
10.7

	
No Waiver. The failure of any party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance.

  

  

10

  

 

	  	
10.8

	
Headings. The section and paragraph headings in this Agreement are for convenience of reference only and are not intended to be a part of this Agreement or to affect the meaning or interpretation of this Agreement.

 

	  	
10.9

	
Counterparts. This Agreement may be executed in one or more counterparts (including facsimile counterparts), all of which taken together shall constitute one agreement.

 

	  	
10.10

	
Equitable Relief. The parties hereto agree that legal remedies may be inadequate to enforce the provisions of this Agreement and that equitable relief, including specific performance and injunctive relief, may be used to enforce the provisions of this Agreement.

 

IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement as of the date first set forth above.

 

B.O.S. Better Online Solutions Ltd. .

 

By: ___________________________

 

Name: _________________________

 

Title: _________________________

 

[LENDER]

 

By:____________________________

 

Name: ______________________

 

Title: _______________________

 

 

______________________ .

 

By:____________________________

 

Name: ______________________

 

Title: _______________________

 

11

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