Document:

February
      28, 2008

     

     

      
        

      

    

     

    AGREEMENT

    FOR
      THE SALE AND PURCHASE OF

    ENERTEC
      SYSTEMS 2001 LTD.

     

    
      
        

      

    

     

     

    BY
      AND BETWEEN

     

    Enertec
      Management Ltd. and Harry Mund

     

    AND

     

    S.D.S.
      (Star Defense Systems) Ltd.

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    THIS
      SHARE PURCHASE AGREEMENT (“this Agreement”)
      is
      made and entered into as of this 28th
      day of
      February, 2008 by and among:

    

      
        	
                (1)

              	
                Enertec
                  Management Ltd.
                  (“Management”)
                  a private company registered in the State of Israel, company number
                  51-186902-6,of 27 Hama’apilim Street, Kiryat Ata, an indirect wholly owned
                  subsidiary of Lapis
                  Technologies, Inc. (through
                  Lapis Technologies, Inc.’s holdings
                  in its fully owned subsidiary, Enertec
                  Electronics Ltd. (“Electronics”)),
                  a corporation organized under the laws of the State of Delaware,
                  the
                  common stock of which is quoted and traded on the OTC Bulletin
                  Board under
                  the symbol LPST.OB. (“Lapis”);
                  and

              

      

      
        	
                (2)

              	
                Harry
                  Mund
                  I.D. 068255470, of 73 Ben-Gurion Street, Kiriat Motztkin, Israel
                  (“Mund”);
                  and

                (Management
                  and Mund shall collectively be
                  referred to as the “Sellers”
                  and each a “Seller”)

              

      
        	
                (3)

              	
                S.D.S.
                  (Star Defense Systems) Ltd.
                  a
                  public company registered in the State of Israel, company number
                  52-003731-8, traded on the Tel-Aviv Stock Exchange under the symbol
                  SDS
                  (א.ס.ד.ס)
                  (the “Purchaser”).

              

      

    

     

    
      WHEREAS,
        Enertec Systems 2001 Ltd. (“Systems")
        is a
        private company limited by shares, registered in the State of Israel, and
        the
        Sellers are the legal and beneficial owners of the entire issued share capital
        of Systems;

      

      WHEREAS,
        the Purchaser desires to purchase from the Sellers, and the Sellers desire
        to
        collectively sell to the Purchaser, a total of 251,000 ordinary shares with
        a
        par value of NIS 1 each, comprising the entire outstanding share capital
        of
        Systems, to be purchased from and sold by each Seller upon the terms and
        subject
        to the conditions set forth herein; and 

      

      WHEREAS,
        Systems is active, in the field of design, development and manufacture of
        test
        systems, airborne, ship borne and land electronic equipment and other various
        military systems.

      

      NOW,
        THEREFORE, in consideration of the mutual covenants, undertakings and terms
        contained in this Agreement and for other good and valuable consideration,
        the
        parties to this Agreement (the “Parties”)
        agree
        as follows.

      
         

        
          	
                  1.

                	
                  INTERPRETATION
                    & DEFINITIONS

                

        

         

        The preamble
          and Schedules
          to this
          Agreement are an integral part hereof.

         

        In
          this
          Agreement, the following expressions shall bear the meanings set forth
          alongside
          them, insofar as such meaning does not contradict the contents or context
          thereof:

         

        
          	 	
                  1.1.

                	
                  “Agreed
                    Form”
                    means, in relation to a document, the form of that document which
                    has been
                    agreed by the Sellers and the Purchaser, acting reasonably, and
                    attached
                    to this Agreement as a Schedule on the date of this Agreement
                    and/or on
                    Closing;

                

        

         

        
          	 	
                  1.2.

                	
                  “Business”
                    means the business of Systems as carried out on the date of this
                    Agreement;

                

        

         

        
           

          
            
               

            

            
              2

              
                

              

            

            
               

            

          

           

        

         

        
          	 	
                  1.3.

                	
                  “Business
                    Days”
                    means a day on which banks generally are open in the State of
                    Israel for
                    the transaction of normal banking
                    business;

                

        

         

        
          	 	
                  1.4.

                	
                  “Claim”
                    means any claim for breach of the Sellers’ Warranties under this
                    Agreement;

                

        

         

        
          	 	
                  1.5.

                	
                  “Conditions”
                    means the conditions to Closing set out in Clause 7, and a “Condition” means
                    any of them;

                

        

         

        
          	 	
                  1.6.

                	
                  “Costs” means
                    losses, damages, costs (including reasonable legal costs) and
                    expenses;

                

        

         

        
          	 	
                  1.7.

                	
                  “Due
                    Diligence Information”
                    means the due diligence information relating to Systems, Lapis
                    and its
                    subsidiaries comprising the correspondence, contracts, agreements,
                    licences, documents and other information made available to the
                    Purchaser
                    and its advisers as listed in the Due Diligence Information Index
                    attached
                    to this Agreement;

                

        

         

        
          	 	
                  1.8.

                	
                  “Due
                    Diligence Information Index”
a
                    list containing documents and information as provided by the
                    Sellers to
                    the Purchaser and/or its advisers in respect of the accounting
                    and legal
                    due diligence exercise conducted by the Purchaser and the Investor
                    on
                    Systems, Lapis and its subsidiaries and attached hereto as Schedule
                    1.8;

                

        

         

        
          	 	
                  1.9.

                	
                  “Date
                    of Closing”
                    means the 21st
                    day following the date on which an information statement under
                    the
                    Exchange Act (as such term is defined in the Lapis SPA) is mailed
                    to the
                    shareholders of Lapis, provided that all Conditions have been
                    fulfilled or
                    waived in writing, where relevant by the Sellers or Purchaser,
                    in
                    accordance with the terms of this Agreement, and on which the
                    Closing
                    shall take place;

                

        

         

        
          	 	
                  1.10.

                	
                  “Disclosure
                    Letter”
                    means Schedule
                    1.8,
                    the Schedules to clause 3 (save for Schedule
                    3.3.1)
                    and Schedule
                    7.3.1
                    to
                    this Agreement;

                

        

         

        
          	 	
                  1.11.

                	
                  “Encumbrance”
                    means any form of security interest over securities including,
                    but not
                    limited, to any lien, mortgage, pledge, charge, title retention,
                    right to
                    acquire, hypothecation, option or right of first refusal over
                    securities;

                

        

         

        
          	 	
                  1.12.

                	
                  “Governmental
                    Entity”
                    means, in relation to anywhere in the world, any supra-national,
                    national,
                    state, municipal or local government (including any subdivision,
                    court,
                    administrative agency or commission or other authority thereof)
                    or any
                    quasi-governmental or private body exercising any regulatory,
                    taxing,
                    importing or other governmental or quasi-governmental
                    authority;

                

        

         

        
          	 	
                  1.13.

                	
                  “Investor” means,
                    Mordechai Solomon, I.D. 30458954, of 11 Dganya Street, Ra’anana,
                    Israel;

                

        

         

        
          	 	
                  1.14.

                	
                  “Longstop
                    Date”
                    means the Date of Closing;

                

        

         

        
          	 	
                  1.15.

                	
                  “Material
                    Adverse Effect”
                    means such event, change or effect, which is materially adverse
                    to the
                    prospects, consolidated financial condition, business or results
                    of
                    operations of Systems, for the purposes of this Agreement, material
                    shall
                    be deemed any single or series of connected occurrences, actions
                    and/or
                    transactions amounting to an amount that is equal to or greater
                    than 5 per
                    cent of Systems’ revenues over the year
                    2007;

                

        

         

        
           

          
            
               

            

            
              3

              
                

              

            

            
               

            

          

           

        

         

        
          	 	
                  1.15.1.

                	
                  “Sellers’
                    Bank Account”
                    means the escrow account maintained by Sellers’ legal counsel, Balter,
                    Guth, Aloni & Co., the details of which will be provided prior to
                    Closing;

                

        

         

        
          	 	
                  1.16.

                	
                  “Surviving
                    Provisions”
                    means Clauses 9.3, 9.5, 9.6 and 9.16 of this
                    Agreement;

                

        

         

        
          	 	
                  1.17.

                	
                  “Third
                    Party Assurances”
                    means all guarantees, indemnities, counter-indemnities and letters
                    of
                    comfort of any nature whatsoever given to a third party by Mund
                    and/or Mr.
                    Zvi Avni and/or Electronics in respect of any obligation or liability
                    of
                    Systems or Lapis, for the avoidance of doubt, the above shall
                    include all
                    guarantees, obligations and/or liabilities of any nature whatsoever
                    either
                    Mund and/or Mr. Zvi Avni and/or Electronics may have, from time
                    to time,
                    towards any bank associated with the business and/or activities
                    of Systems
                    and/or Lapis; and

                

        

         

        
          	 	
                  1.18.

                	
                  “Transaction
                    Documents”
                    means this Agreement, the Lapis SPA (as such term is defined
                    below in
                    Clause 7), the Escrow Agreement (as such term is defined in the
                    Lapis
                    SPA), the Electronics SPA (as such term is defined below in Clause
                    7), the
                    Due Diligence Information, the Disclosure Letter and any other
                    Agreed Form
                    Documents.

                

        

      

       

      
        
          	
                  2.

                	
                  PURCHASE
                    OF PURCHASED SHARES, PURCHASE PRICE,
                    CLOSING

                

        

         

        
          
            	
                    2.1.

                  	
                    Purchase
                      of Purchased Shares and Purchase
                      Price

                  

          

        

      

       

      
        	 	
                2.1.1.

              	
                Subject
                  to and in accordance with the terms and conditions hereof and in
                  reliance
                  upon the representations, warranties, covenants
                  and agreements contained herein, at Closing (as defined below)
                  and
                  effective from Closing, the Sellers shall sell to the Purchaser,
                  and the
                  Purchaser shall purchase from the Sellers a total of 251,000 ordinary
                  shares, nominal value 1.00 New Israeli Shekel (“NIS”)
                  per share, comprising the entire outstanding and issued share capital
                  of
                  Systems owned by the Sellers (the “Purchased
                  Shares”)
                  free from all Encumbrances, for an aggregate purchase price equal
                  to one
                  million five
                  hundred thousand U.S. Dollars (US$
                  1,500,000)
                  (the "Purchase
                  Price").
                  The Purchaser shall purchase such number of Purchased Shares from
                  each of
                  the Sellers and pay such portion of the Purchase Price to each
                  of the
                  Sellers in accordance with the following
                  terms:

              

      

       

      
        	 	
                2.1.1.1.

              	
                the
                  Purchaser shall purchase from Mund 67,770 of the Purchased Shares,
                  being
                  27% of the issued share capital of Systems in consideration for
                  an amount
                  equal to four hundred five thousand US Dollars (US$405,000);
                  and

              

      

       

      
        	 	
                2.1.1.2.

              	
                the
                  Purchaser shall purchase from Management 183,230 of the Purchased
                  Shares,
                  being 73% of the issued share capital of Systems in consideration
                  for an
                  amount equal to one million ninety five thousand US Dollars
                  (US$1,095,000).

              

      

       

      
        	
                2.2.

              	
                Payment
                  of the Purchase Price

              

      

       

      The
        Purchase Price shall be paid in cash at Closing in US$ or in NIS according
        to
        the last known official
        US$/NIS exchange rate as published by the Bank of Israel on the day immediately
        prior to Closing, and shall be paid to each Seller as indicated opposite
        such
        Seller’s name in Schedule
        2.2
        attached
        hereto in accordance with the stipulations set out in Clause 9.1.

      
         

         

        
          
             

          

          
            4

            
              

            

          

          
             

          

        

         

         

      

      
        	
                2.3.

              	
                Closing;
                  Deliveries

              

      

       

      
        	 	
                2.3.1.

              	
                Completion
                  of the sale and purchase of the Purchased Shares in accordance
                  with the
                  provisions of this Agreement (the "Closing")
                  shall take place on the 21st
                  day following the date on which an information statement under
                  the
                  Exchange Act is mailed to the shareholders of Lapis at 10:00 AM
                  at the
                  offices of Shnitzer, Gotlieb & Co., 7 Menachem Begin Road, Ramat-Gan
                  52681, or such other place as the Parties may agree, provided that
                  all
                  Conditions as stipulated in Clause 7 will have been fulfilled or
                  waived in
                  accordance with this Agreement.

              

      

       

      
        	 	
                2.3.2.

              	
                At
                  Closing, each of the Sellers and the Purchaser shall deliver or
                  perform
                  (or procure the delivery or performance) of all those documents,
                  items and
                  actions respectively listed in relation to that Party set out in
                  Schedule
                  2.3.2
                  and all of the above documents, items and actions shall be deemed
                  to be
                  delivered or take place simultaneously and no document, item and
                  action
                  shall be deemed to have been completed or delivered until all have
                  been
                  completed and delivered or waived.

              

      

       

      
        	 	
                2.3.3.

              	
                If
                  the Sellers or the Purchaser fail or are unable to perform any
                  of their
                  respective closing obligations as set out in Schedule
                  2.3.2,
                  which are required to be performed by them on or before Closing,
                  and
                  whichever of the Sellers or the Purchaser is the defaulting Party,
                  such
                  Party shall be referred to as the “Defaulting
                  Party”
                  and the other the “Non-Defaulting
                  Party”,
                  the Non-Defaulting Party shall not be obliged to complete the sale
                  and
                  purchase of the Purchased Shares and may, in its absolute discretion,
                  by
                  written notice to the Defaulting
                  Party:

              

      

       

      
        	 	
                2.3.3.1.

              	
                elect
                  to defer Closing by not more than twenty (20) Business Days after
                  the
                  original date for Closing to such other date as it may specify
                  in such
                  notice (in which event the provisions of this Clause 2.3.3.1 shall
                  apply,
                  mutatis mutandis, if any of the Sellers or the Purchaser fails
                  or is
                  unable to perform any of its closing obligations as set out in
                  Schedule
                  2.3.2
                  on
                  such other date);
                  or

              

      

       

      
        	 	
                2.3.3.2.

              	
                elect
                  to complete Closing and the sale and purchase of the Purchased
                  Shares on
                  that date and: (i) specify a further date (not being more than
                  twenty (20)
                  Business Days after the original date for Closing) on which the
                  Defaulting
                  Party shall be obliged to complete its outstanding obligations;
                  and/or (ii) waive all or some of the obligations contained in Schedule
                  2.3.2
                  at
                  its discretion.

              

      

       

      
        	
                3.

              	
                REPRESENTATIONS
                  AND WARRANTIES OF SELLERS

              

      

       

      
        	
                3.1.

              	
                Each
                  of the Sellers, jointly and severally, hereby represents and warrants
                  to
                  the Purchaser and acknowledges that the Purchaser is entering into
                  this
                  Agreement in reliance thereon, as follows at the date hereof (the
                  “Sellers’
                  Warranties”).

              

      

       

      
        	
                3.2.

              	
                The
                  Sellers’ Warranties are given subject to and are qualified
                  by:

              

      

       

      
        	 	
                3.2.1.

              	
                any
                  matters fairly disclosed by or under this Agreement, any Transaction
                  Document, the Disclosure Letter, any document contained in the
                  Due
                  Diligence Information or any other information provided in writing
                  to the
                  Purchaser or its advisers during the course of any investigation
                  by or on
                  behalf of the Purchaser into the affairs of Systems, Lapis or any
                  of its
                  subsidiaries; and

              

      

       

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

       

       

      
        	 	
                3.2.2.

              	
                the
                  other limitations and qualifications set out in this Clause 3 and
                  in
                  Schedule
                  3.3.1.

              

      

       

      
        	
                3.3.

              	
                The
                  Purchaser acknowledges and agrees
                  that:

              

      

       

      
        	 	
                3.3.1.

              	
                any
                  Claims shall be subject to the limitations on liabilities and other
                  provisions set out in Schedule
                  3.3.1;

              

      

       

      
        	 	
                3.3.2.

              	
                the
                  Sellers’ Warranties are the only warranties or representations of any kind
                  given by or on behalf of the Sellers on which the Purchaser may
                  rely in
                  entering into this Agreement; and

              

      

       

      
        	 	
                3.3.3.

              	
                at
                  the time of entering into this Agreement, the Purchaser is not
                  aware of
                  any facts or circumstances which are likely to result in a Claim
                  being
                  made against the Sellers
                  or any misrepresentation by or on behalf of the Sellers in connection
                  with
                  any of the Transaction Documents.

              

      

       

      
        	
                3.4.

              	
                Authorization;
                  Binding Authority;
                  Enforceability

              

      

       

      
        
          	 	
                  3.4.1.

                	
                  This
                    Agreement has been duly executed and delivered by each of the
                    Sellers, and
                    constitutes a legal, valid and binding obligation of each of
                    the Sellers,
                    enforceable against it in accordance with its
                    terms.

                

        

         

        
          	 	
                  3.4.2.

                	
                  The
                    execution of this Agreement by the Sellers and the consummation
                    of the
                    transaction contemplated herein by the Sellers will not constitute
                    a
                    breach of any agreement, other than where such breach would not
                    have a
                    Material Adverse Effect, to which the Sellers are parties and
                    will not
                    trigger any right of first refusal, tag-along rights or pre-emptive
                    rights
                    in respect of the Purchased
                    Shares.

                

        

      

       

      
        	
                3.5.

              	
                Ownership;
                  Title to Purchased Shares
                  Each Seller is the owner of the number of Purchased Shares indicated
                  opposite such Seller’s name in Schedule
                  2.2
                  attached hereto. Each Seller represents and warrants that at Closing,
                  such
                  Seller shall deliver to the Purchaser good title to all of its
                  respective
                  Purchased Shares to be sold to the Purchaser hereunder, free and
                  clear of
                  any Encumbrance, subject to fulfillment of the Condition in Clause
                  7.3
                  (“Guarantees and other Third Party
                  Assurances”).

              

      

       

      
        	
                3.6.

              	
                No
                  Violations
                  To
                  the best knowledge of the Sellers, the execution, delivery and
                  performance
                  by the Sellers of this Agreement will not: (i) violate any applicable
                  law,
                  other than where such breach would not have a Material Adverse
                  Effect; or
                  (ii) result in the breach of any agreement or license to which
                  Systems is
                  a party, other than where such breach would not have a Material
                  Adverse
                  Effect; or (iii) require Systems to obtain any consents or approvals
                  from
                  any Governmental Entity, save for approval in principle to be obtained
                  from the Israeli Investment Center.

              

      

       

      
        	
                3.7.

              	
                No
                  Subsidiaries
                  Systems has no subsidiaries, and does not own, of record or beneficially,
                  directly or indirectly, any interest or share capital or equity
                  interest
                  in any other corporation, association, partnership, joint venture
                  or other
                  business entity.

              

      

       

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

       

       

      
        	
                3.8.

              	
                Inter-Entity
                  Indebtedness
                  All Inter-Entity Indebtedness (as defined below) shall have been
                  repaid,
                  or waived, by and to Systems, Mund, Lapis and its subsidiaries
                  in full
                  prior to Closing. Inter-Entity Indebtedness means all indebtedness
                  and
                  sums owed as at Closing by or to and between one or more of the
                  following:
                  Mund, Systems, Electronics, Management and Lapis, including, but
                  not
                  limited to the information contained in Schedule
                  3.8
                  per the date of this Agreement. Given the nature of the Inter-Entity
                  Indebtedness set out in Schedule
                  3.8,
                  which will be subject to changes in the ordinary course of business
                  from
                  time to time, Schedule
                  3.8
                  will be amended and updated immediately prior to
                  Closing.

              

      

       

      
        
          	
                  3.9.

                	
                  Organization
                    and Standing
                    Systems is a corporation duly organized and validly existing
                    under the
                    laws of the State of Israel. Systems has all requisite corporate
                    power to
                    own and operate its properties and assets, and to carry on its
                    business as
                    presently conducted, save for where such would not have a Material
                    Adverse
                    Effect. Systems has not taken any action or failed to take any
                    action,
                    which action or failure would preclude or prevent Systems from
                    conducting
                    its business after the execution of this Agreement in the manner
                    conducted
                    on the date of the this Agreement, save for where such would
                    not have a
                    Material Adverse Effect. Systems has all permits, licenses and
                    any similar
                    authority necessary for the conduct of its Business, including
                    the
                    required business license from the municipality of Carmiel, the
                    lack of
                    which could have a Material Adverse Effect on the Business, properties,
                    prospects or financial condition of Systems. Systems is not in
                    default
                    under any of such permits, licenses, or other similar authority,
                    which
                    default would have a Material Adverse
                    Effect.

                

        

      

       

      
        	
                3.10.

              	
                Incorporation
                  Documents
                  No
                  act has been effected by Systems and/or its shareholders to amend
                  Systems’
                  articles of association in a manner which would alter the form
                  thereof as
                  disclosed to the Purchaser in the Due Diligence Information and/or,
                  to
                  Systems’ knowledge, to wind up Systems and/or to have it struck out from
                  the Israeli Registrar of Companies’ records.

              

      

       

      
        	
                3.11.

              	
                Capitalization
                  Systems' authorized share capital, immediately prior to Closing,
                  shall be
                  287,700 shares, divided into 287,700 ordinary shares with a par
                  value of
                  NIS 1 each (“Ordinary
                  Shares”).
                  Systems' issued and outstanding share capital immediately prior
                  to Closing
                  shall consist of 251,000 Ordinary Shares, all of which are duly
                  authorized
                  and validly issued, are fully paid and
                  non-assessable.

              

      

       

      
        	
                3.12.

              	
                Outstanding
                  Debt
                  Except as set forth in Schedule
                  3.12
                  Systems has no outstanding loans, and is not a guarantor of any
                  debt or
                  monetary obligation. Given the nature of the information set forth
                  in the
                  Schedule
                  3.12,
                  which will be subject to changes in the ordinary course of business
                  from
                  time to time, Schedule
                  3.12
                  will be amended and updated immediately prior to Closing to contain
                  information in respect of all outstanding loans and guarantees
                  granted by
                  Systems for any debt or obligation immediately prior to Closing.
                  

              

      

       

      
        	
                3.13.

              	
                Taxes
                  Systems has timely filed all tax returns and tax reports required
                  by
                  applicable laws including, inter alia, the report for the tax year
                  2006.
                  All tax returns and reports of Systems were true and correct in
                  all
                  material respects and did not contain any outstanding issues when
                  filed
                  and Systems has paid all taxes and other assessments due. If Systems’ tax
                  returns and tax reports filed up to the date of this Agreement
                  will be
                  challenged by the Israeli tax authorities in the event of a tax
                  audit no
                  additional tax liabilities will be imposed on Systems. For the
                  purpose of
                  this clause “additional tax liabilities” shall mean tax liabilities, which
                  were not provided for in System’s financial statements or not disclosed in
                  any of the Transaction Documents (other than the potential tax
                  exposures
                  set out in Schedule
                  3.13)
                  or not contemplated under Systems’ tax returns of tax reports. To Systems’
                  knowledge, it made, where such could reasonably be required, the
                  proper
                  provisions in its financial statements with respect to any taxes
                  that are
                  due but not yet paid by Systems.

              

      

       

       

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

       

       

      
        	
                3.14.

              	
                Contracts
                  and Contractual Arrangements
                  To
                  Systems’ knowledge, Systems is, save for breaches or defaults that would
                  not have a Material Adverse Effect, not in default under any note,
                  indenture, mortgage, lease, agreement, contract, purchase order
                  or other
                  instrument, document or agreement to which Systems is a party or
                  by which
                  it or any of its property is bound or affected. To Systems’ knowledge and
                  save where such would not have a Material Adverse Effect, no third
                  party
                  is in material default under any agreement, contract or other instrument
                  or document to which Systems is a party or by which it or any of
                  its
                  property is affected. A list of all outstanding orders obtained
                  by Systems
                  during the year to date, is attached hereto as Schedule
                  3.14.1.
                  Except as detailed in Schedule
                  3.14.2,
                  there is no contract, license, commitment or undertaking to which
                  Systems
                  is a party that will be in effect after Closing: (i) that prohibits
                  or
                  substantially restricts Systems from freely engaging in any business
                  in
                  any part of the world; or (ii) obligating Systems to share, license
                  or
                  develop any product or technology.

              

      

       

      
        	
                3.15.

              	
                Indebtedness
                  of or to Major Shareholders; Conflicts of
                  Interest

              

      

       

      
        
          	 	
                  3.15.1.

                	
                  Except
                    as detailed in Schedule
                    3.15.1
                    or
                    Schedule
                    3.12,
                    none of Systems' affiliates, holders of ten percent (10%) or
                    more of
                    Systems’ share capital on a fully diluted basis (a “Major
                    Shareholder”),
                    directors, key officers or key employees is indebted to Systems,
                    other
                    than in the ordinary course of business or in an amount that
                    does not
                    exceed NIS 10,000, and Systems has no debt or obligation to any
                    of
                    them.

                

        

         

        
          	 	
                  3.15.2.

                	
                  To
                    the best of Systems' knowledge, except for Lapis and the directors,
                    officers, employees and consultants of Lapis, none of Systems'
                    affiliates,
                    directors, key officers or key employees, engages in any activity
                    which
                    competes with Systems, or directly or indirectly, owns any interest
                    in any
                    entity which is a competitor of Systems. For the avoidance of
                    doubt, the
                    business conducted by Electronics, is deemed to be an activity
                    that does
                    not compete with Systems.

                

        

         

        
          	 	
                  3.15.3.

                	
                  Save
                    for the matters disclosed in the Transaction Documents, to the
                    best of
                    Systems’ knowledge, none of Systems' affiliates, Major Shareholders,
                    directors, key officers or key employees: (i) has any interest
                    in the
                    assets, technology or know-how used or held by Systems or which
                    is
                    material for Systems to operate its business; (ii) is a party
                    to any
                    contract or business arrangement with Systems or any contract
                    affecting
                    the assets, technology or know-how used or held by Systems or
                    which is
                    material for Systems to operate its business; or (iii) has any
                    interest in
                    any other transaction related to the assets, technology or know-how
                    used
                    or held by Systems or which is material for Systems to operate
                    its
                    business.

                

        

      

       

      
        	
                3.16.

              	
                Litigation
                  Except as detailed in Schedule
                  3.16,
                  there are no civil, criminal or arbitration proceedings involving
                  Systems.
                  To Systems' knowledge, no such proceedings and no claims of any
                  nature are
                  pending or threatened in writing against Systems or the officers
                  or
                  directors of Systems, in their capacity as such, and to Systems’
                  knowledge, there are no facts likely to give rise to any such
                  proceedings.

              

      

       

       

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

       

       

      
        	
                3.17.

              	
                Title
                  to Properties
                  Systems owns, or holds under lease, all real estate and assets
                  used by it
                  and which are material to the Business. Schedule
                  3.17
                  contains a correct and complete list of all leases under which
                  Systems
                  leases real estate property or assets material to the
                  Business.

              

      

       

      
        	
                3.18.

              	
                Compliance
                  with Other Instruments
                  Save where such would not have a Material Adverse Effect: (i) Systems
                  is
                  not in violation of the terms of its articles of association as
                  amended
                  and in effect on and as of the date hereof; and (ii) it is not
                  to its
                  knowledge, in any violation of the terms of any judgment, decree,
                  order,
                  statute, rule or regulation to which it is
                  subject.

              

      

       

      
        	
                3.19.

              	
                Employees;
                  Directors and Major
                  Shareholders

              

      

       

      
        	 	
                3.19.1.

              	
                Schedule
                  3.19.1
                  contains a complete and accurate list of all employees of Systems.
                  If and
                  to the extent required due to changes in the list contained in
                  Schedule
                  3.19.1
                  prior to Closing, Schedule
                  3.19.1
                  will be amended and updated immediately prior to Closing to contain
                  a
                  complete and accurate list of all employees of Systems immediately
                  prior
                  to Closing.

              

      

       

      
        	 	
                3.19.2.

              	
                To
                  Systems’ knowledge, no key employee, key officer, or director (each, a
                  "Representative"
                  and collectively, the "Representatives")
                  is a party to, or otherwise bound by, any agreement or arrangement
                  (including any confidentiality, non-competition, proprietary rights
                  agreement, licenses, covenants or commitments of any nature), between
                  such
                  Representative and any other person, or subject to any order or
                  any other
                  restriction that in any way materially adversely affects the performance
                  of such Representative’s duties as an employee, officer or director of
                  Systems. From 31 December 2007 none of Systems’ directors, key officers,
                  or key employees has informed Systems that he intended to terminate
                  his
                  employment with it.

              

      

       

      
        	 	
                3.19.3.

              	
                The
                  severance pay provisions and contributions made in respect of employees
                  of
                  Systems on the date of this Agreement, who were employed by Electronics
                  prior to their employment by Systems (the “Original
                  Period”),
                  were sufficient to meet any liabilities for the payment of severance
                  pay
                  to such employees under the Severance Pay Law 5723 - 1963, as in
                  effect on
                  the date of the Original Period and in respect of the period of
                  employment
                  of such employees by Electronics before the commencement of employment
                  by
                  Systems. The above warranty shall not apply in respect to Mr. Zvi
                  Avni.

              

      

       

      
        	
                3.20.

              	
                Labor
                  Relations; Compliance

              

      

       

      
        	 	
                3.20.1.

              	
                Systems
                  is not bound by or subject to any contracts, commitments or arrangements
                  with any labor union.

              

      

       

      
        	 	
                3.20.2.

              	
                Systems
                  has complied in all material respects with all material legal requirements
                  relating to employment, wages, hours, benefits, the payment of
                  social
                  security and similar taxes and occupational safety and
                  health.

              

      

       

      
        	 	
                3.20.3.

              	
                Systems
                  does not have any labor relations problem pending, or to the knowledge
                  of
                  Systems, threatened and its labor relations are
                  satisfactory.

              

      

       

      
        	 	
                3.20.4.

              	
                All
                  present key employees of Systems and directors of Systems who materially
                  contributed to the development of the Business, have entered into
                  a
                  written agreement with Systems, under which all copyrights on any
                  invention or patents invented by one of the above in the framework
                  of his
                  or her service with Systems and during the term of his engagement
                  with
                  Systems, belong solely to Systems.

              

      

       

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

       

       

      
        	
                3.21.

              	
                Licenses,
                  Patents, Trademarks

              

      

       

      
        	 	
                3.21.1.

              	
                For
                  purposes of this Agreement, “Intellectual
                  Property” means
                  the following items of intangible and tangible
                  property:

              

      

       

      
        
          	 	
                  3.21.1.1.

                	
                  Patents,
                    whether in the form of utility patents or design patents and
                    all pending
                    applications for such patents;

                

        

         

        
          	 	
                  3.21.1.2.

                	
                  Trademarks,
                    trade names, service marks, rights in designs, logos, trade dress,
                    and
                    trade styles, whether or not registered, and all pending applications
                    for
                    registration of the same; and

                

        

         

        
          	 	
                  3.21.1.3.

                	
                  Copyrights,
                    whether or not registered, and all pending applications for registration
                    of the same.

                

        

         

      

      
        	 	
                3.21.2.

              	
                So
                  far as the Sellers are aware, Systems has good title to and/or
                  ownership
                  of, and/or valid and enforceable licenses to use all of its Intellectual
                  Property that can be registered for ownership or requires licensing
                  and
                  which is used in the conduct of the Business, save for where such
                  would
                  not have a Material Adverse Effect. A list of all such licenses,
                  other
                  than licenses for off-the-shelf products, and registered ownership
                  of
                  Intellectual Property, is attached hereto as Schedule
                  3.21.2.

              

      

       

      
        	 	
                3.21.3.

              	
                Systems
                  has, save where such would not have a Material Adverse Effect,
                  taken
                  reasonable security measures, including measures against unauthorized
                  disclosure, to protect the secrecy, confidentiality and value of
                  its trade
                  secrets and other confidential technical
                  information.

              

      

       

      
        	 	
                3.21.4.

              	
                To
                  Systems' knowledge, the use of Systems’ Intellectual Property in the
                  Business, does not constitute an infringement, misappropriation
                  or misuse
                  of any intellectual property rights of any third party. There are
                  no
                  claims pending and, to Systems' knowledge, no claims threatened
                  in writing
                  against Systems or its directors regarding the use of, or challenging
                  or
                  questioning Systems' right or title in Systems’ Intellectual Property or
                  the use of it.

              

      

       

      
        	 	
                3.21.5.

              	
                Except
                  as set forth in Schedule
                  3.21.5,
                  Systems has no registered patents, trademarks and copyrights,
                  pending
                  applications for registration of patents, trademarks and
                  copyrights.

              

      

       

      
        	 	
                3.21.6.

              	
                Systems’
                  Intellectual Property rights as set forth in Schedules
                  3.21.2
                  and 3.21.5
                  is, in combination with certain off-the-shelf products to which
                  it has a
                  license, the required Intellectual Property to enable Systems to
                  carry on
                  its Business.

              

      

       

      
        	
                3.22.

              	
                Financial
                  Reports

              

      

       

      A
        true
        and complete copy of the audited, consolidated financial statements of Systems
        audited by Systems' external accountants prepared in accordance with generally
        accepted accounting principles applied consistently with prior periods, for
        the
        year ended December 31, 2007, will be provided to the Purchaser upon Closing
        (the “Yearly
        Financial Statements”);
        a
        trial balance sheet for the period ended 3 days prior Closing, will be provided
        to the Purchaser upon Closing (the "Trial
        Balance").
        The
        Yearly Financial Statements will have been prepared in conformity with generally
        accepted accounting principles in Israel (except: (i) as may be otherwise
        indicated in the Yearly Financial Statements or the notes thereto; or (ii)
        in
        the case of unaudited interim statements, to the extent they may not include
        footnotes or may be condensed or summary statements). The Financial Statements
        and the Trial Balance present fairly in all material respects the financial
        condition, the results of operations, changes in shareholders' equity and
        cash
        flow of Systems as of such date and for the periods referred to in such Yearly
        Financial Statements and in the Trial Balance, subject, in the case of unaudited
        statements, to normal year-end audit adjustments.

       

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

       

       

      
        	 	
                3.22.1.

              	
                Other
                  than as disclosed in the Yearly Financial Statements and in the
                  Trial
                  Balance, Systems has no financial liabilities, debts or financial
                  obligations, whether accrued, absolute or contingent, which are
                  required
                  to appear in the Yearly Financial Statements and in the Trial Balance
                  in
                  accordance with generally accepted accounting
                  principles.

              

      

       

      
        	 	
                3.22.2.

              	
                Except
                  as set forth in the Yearly Financial Statements, since September
                  30, 2007
                  and until the date of this Agreement, Systems has not consummated
                  any of
                  the following: (i) a merger with or an acquisition of a company;
                  (ii) a
                  transaction which represents a sale of five percent (5%) of Systems’
                  activities during the fourth fiscal quarter of 2007; (iii) created
                  or
                  extended any credit facility, other than in the ordinary course
                  of
                  business; and (iv) a transaction which is out of the ordinary course
                  of
                  business of Systems.

              

      

       

      
        
          	 	
                  3.22.3.

                	
                  System’s
                    minute books, share record books, and other statutory records
                    of Systems
                    are correct in all material
                    respects.

                

        

      

       

      
        	
                3.23.

              	
                Title
                  to Property and Assets
                  Except as set forth in Schedule
                  3.23
                  or
                  as otherwise disclosed in the Transaction Documents, Systems owns
                  or
                  leases its property and assets, which are material to the Business,
                  free
                  and clear of all Encumbrances. With respect to the material property
                  and
                  assets it leases or licenses, which are material to the Business,
                  Systems
                  is in compliance with all applicable material terms of the lease
                  or
                  license agreements.

              

      

       

      
        	
                3.24.

              	
                To
                  Systems’ knowledge, all of the material property and assets used by
                  Systems in the operation of its Business are in good operating
                  condition
                  and are in the state of good repair and maintenance, subject to
                  normal
                  wear and tear.

              

      

       

      
        	
                3.25.

              	
                Governmental
                  Consents
                  No
                  consent, approval, or authorization of, or registration, or filing
                  with,
                  any Israeli Governmental Entity on the part of Systems is required
                  in
                  connection with the valid execution and delivery of this Agreement
                  that
                  will not be obtained prior to
                  Closing.

              

      

       

      
        	
                3.26.

              	
                Insurance Schedule
                  3.26
                  hereto lists all policies of insurance to which Systems is a party.
                  Such
                  policies are valid, outstanding, and enforceable, and taken together,
                  they
                  provide adequate insurance coverage against such risks and in such
                  amounts
                  as the management of Systems believes to be prudent and customary
                  in the
                  businesses in which Systems is
                  engaged.

              

      

       

      
        	
                3.27.

              	
                Suppliers
                  Except as set forth in Schedule
                  3.27
                  hereto, Systems does not rely on any sole supplier for the purchase
                  of any
                  material used by Systems in its Business. Such material is freely
                  available for purchase by Systems in the market from multiple
                  suppliers.

              

      

       

      
        	
                3.28.

              	
                Disclosure This
                  Agreement does not contain any untrue statement of a material fact
                  and
                  does not omit to state any material fact, the omission of which
                  causes the
                  statement from which it was omitted to become materially untrue,
                  materially inaccurate or materially
                  misleading.

              

      

       

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

       

       

       

      
        	
                3.29.

              	
                Warranties
                  Each of the Sellers’ Warranties shall be separate and independent and save
                  as expressly provided to the contrary in this Agreement or any
                  of the
                  Transaction Documents: (i) shall not be limited by reference to
                  or
                  inference from any other Sellers’ Warranty; or (ii) anything else in this
                  Agreement.

              

      

       

      
        
          	
                  4.

                	
                  REPRESENTATIONS
                    AND WARRANTIES OF
                    PURCHASER

                

        

      

       

      The
        Purchaser makes the following representations and warranties to each of the
        Sellers jointly and severally and acknowledges that each of the Sellers is
        entering into this Agreement in reliance thereon, as follows at the date
        hereof
        (the “Purchaser’s
        Warranties”).

       

      
        	
                4.1.

              	
                Organization

              

      

       

      The
        Purchaser is a company duly organized and validly existing under the laws
        of the
        State of Israel and has full power to conduct its business as conducted at
        the
        date of this Agreement.

       

      
        	
                4.2.

              	
                Authorization;
                  Binding Authority;
                  Enforceability

              

      

       

      
        	 	
                4.2.1.

              	
                Subject
                  to obtaining the consents and approvals as per Clause 7 below prior
                  to
                  Closing, the Purchaser has full corporate power and authority to
                  execute
                  and deliver this Agreement, it has obtained all applicable governmental,
                  statutory, regulatory or other consents, licences, authorisations,
                  waivers
                  or exemptions required to empower it to enter into and to perform
                  its
                  obligations under this Agreement, to effect Closing and consummate
                  the
                  transactions contemplated under this Agreement and any other Transaction
                  Document to which it is (or is proposed to be) a party, including,
                  but not
                  limited to, the purchase of the Purchased Shares from the Sellers
                  pursuant
                  to the provisions of this
                  Agreement.

              

      

       

      
        	 	
                4.2.2.

              	
                This
                  Agreement once executed and delivered by the Purchaser, shall constitute
                  the legal, valid and binding obligation of the Purchaser, enforceable
                  against the Purchaser in accordance with its
                  terms.

              

      

       

      
        	 	
                4.2.3.

              	
                Entry
                  into and performance by the Purchaser of this Agreement and/or
                  any
                  Transaction Document to which it is a party, will not violate or
                  conflict
                  with the provisions of its memorandum and articles of association
                  in any
                  way that would materially adversely affect its ability to enter
                  into or
                  perform its obligations under this Agreement and/or any Transaction
                  Document to which it is a party.

              

      

       

      
        	 	
                4.2.4.

              	
                Subject
                  to fulfillment of the Conditions, neither entry into this Agreement
                  nor
                  entry into, and implementation of, the transactions contemplated
                  under
                  this Agreement or any of the Transaction Documents to which it
                  is (or is
                  proposed to be) a party, will:

              

      

       

      
        	 	
                4.2.4.1.

              	
                result
                  in violation or breach of any applicable laws or regulations in
                  any
                  relevant jurisdiction;

              

      

       

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

       

       

      
        	 	
                4.2.4.2.

              	
                amount
                  to a violation or default with respect to any statute, regulation,
                  order,
                  decree or judgment of any court or any governmental or regulatory
                  authority in any jurisdiction; or

              

      

       

      
        	 	
                4.2.4.3.

              	
                result
                  in a breach of, or give rise to a default under, any contract or
                  other
                  instrument,

              

      

       

      by
        the
        Purchaser, which, in each case, would materially and adversely affect its
        ability to enter into or perform its obligations under this Agreement and/or
        any
        Transaction Document to which it is a party.

       

      
        	 	
                4.2.5.

              	
                No
                  order has been made, petition presented or meeting convened for
                  the
                  winding up of the Purchaser or any of its direct or indirect holding
                  companies or subsidiaries, or for the appointment of any provisional
                  liquidator.

              

      

       

      
        	 	
                4.2.6.

              	
                So
                  far as the Purchaser is aware, the Purchaser is not subject to
                  any order,
                  judgment, direction, investigation or other proceedings by any
                  Governmental Entity, which will, or are reasonably likely to, prevent
                  or
                  delay the fulfillment of any of the
                  Conditions.

              

      

       

      
        	 	
                4.2.7.

              	
                The
                  Purchaser has available cash which will at Closing provide in immediately
                  available funds the necessary cash resources to pay the Purchase
                  Price and
                  meet its other obligations under this
                  Agreement.

              

      

       

      
        	
                5.

              	
                NO
                  RIGHTS OF RESCISSION OR
                  TERMINATION

              

      

       

      The
        sole
        remedy of the Purchaser for any breach of any of the Sellers' Warranties
        or any
        other breach of this Agreement or any Transaction Document by the Sellers
        shall
        be an action for damages. The Purchaser shall not be entitled to rescind
        or
        terminate this Agreement in any circumstances whatsoever.

       

      
        	
                6.

              	
                COVENANTS

              

      

       

      
        	
                6.1.

              	
                Fairness
                  Opinion
                  The Purchaser shall have received a fairness opinion in Agreed
                  Form by an
                  independent investment bank or consulting firm, validating the
                  Purchase
                  Price, to be provided prior to
                  Closing.

              

      

       

      
        	
                6.2.

              	
                Employment
                  Agreement Avni
                  An
                  employment agreement in respect of Mr. Zvi Avni’s employment as CEO of
                  Systems, in Agreed Form attached hereto as Schedule
                  6.2,
                  shall have been entered into between Mr. Avni and Systems prior
                  to
                  Closing.

              

      

       

      
        	
                6.3.

              	
                Third
                  Party Assurances

              

      

       

      
        	 	
                6.3.1.

              	
                The
                  Sellers shall have received, prior to Closing, a letter by Bank
                  Leumi and
                  a letter by Bank Hapoalim (each a “Bank”
                  and collectively the “Banks”),
                  in the Agreed Form to be attached hereto prior to Closing as Schedules
                  6.3.1 and
                  6.3.2
                  in
                  which the Banks provide their consent to: (i) the Closing and consummation
                  of the Transactions contemplated in the Transaction Documents;
                  and (ii)
                  release Mund, Mr. Zvi Avni and Electronics form all Third Party
                  Assurances
                  per the Closing.

              

      

       

      
        	 	
                6.3.2.

              	
                Notwithstanding
                  any other provision of this Agreement or any of the Transaction
                  Documents,
                  the Purchaser shall procure that if the Condition set out in Clause
                  7.3
                  “Guarantees and other Third Party Assurances Closing” will have been
                  waived, and Closing will have become effective, it shall comply
                  with its
                  obligations under the above clause notwithstanding such waiver
                  and upon
                  the waiver of such Condition, the provisions thereof shall become
                  a post
                  Closing covenant.

              

      

       

       

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

       

       

      
        	
                6.4.

              	
                Corporate
                  Action
                  The Purchaser’s board of directors and the audit committee thereto shall
                  have passed prior to Closing all relevant resolutions required
                  in order to
                  approve the proposed transaction under, and the entry by the Purchaser
                  into, this Agreement.

              

      

       

      
        	
                7.

              	
                CONDITIONS
                  TO CLOSING

              

      

       

      Closing
        shall be conditional on fulfillment at or before the Date of Closing of the
        following conditions precedent. The Conditions set out in Clauses 7.1.2 and
        7.3 may only be waived by written notice from Mund, the Conditions set out
        in
        Clauses 7.1.1, 7.1.3 and 7.1.4 may be only waived by written notice from
        the Purchaser and the Conditions set out in Clause 7.2 shall automatically
        be waived if: (i) all conditions in the Lapis SPA shall have been fulfilled
        or
        waived, save for the conditions in Clause 12.1 of that agreement in respect
        of
        the closing of the Electronics SPA and the closing of this Agreement; and
        (ii)
        all conditions in the Electronics SPA shall have been fulfilled or waived,
        save
        for the conditions in Clause 6.1.1 and 6.1.7 of that agreement in respect
        of the
        closing of Lapis SPA and the closing this Agreement.

       

      
        	
                7.1.

              	
                Consents

              

      

       

      
        	 	
                7.1.1.

              	
                The
                  Sellers shall have delivered to the Purchaser all third party permits,
                  consents and authorizations set out in Schedule
                  7.1.1
                  required in order to: (i) consummate the transactions contemplated
                  by this
                  Agreement; and (ii) continue the Business, which shall be effective
                  on and
                  as of Closing (the “Sellers
                  Conditions”).

              

      

       

      
        	 	
                7.1.2.

              	
                The
                  shareholders of the Purchaser shall have passed the relevant resolutions
                  required in order to approve the proposed transaction under, and
                  the entry
                  by the Purchaser into, this
                  Agreement.

              

      

       

      
        	 	
                7.1.3.

              	
                The
                  shareholders of Lapis and Management shall have passed the relevant
                  resolutions required in order to approve the proposed transaction
                  under,
                  and the entry by Management into, this Agreement, including, but
                  not
                  limited to an information statement under the Exchange Act having
                  been
                  filed with the SEC and mailed to the shareholders of Lapis in respect
                  of
                  the Lapis SPA (as defined below) and a period of 20 days having
                  passed
                  from the date of mailing such information statement to the shareholders
                  of
                  Lapis.

              

      

       

      
        	 	
                7.1.4.

              	
                The
                  balance sheet item ‘total stockholders equity’ as featured on Systems’
                  balance sheet audited by Systems' external accountants prepared
                  in
                  accordance with generally accepted accounting principles, for the
                  year
                  ended December 31, 2007, shall not be lower than NIS
                  4,000,000.

              

      

       

      
        	
                7.2.

              	
                Consummation
                  of Additional Transactions Under Documents in Agreed
                  Form

              

      

       

      
        	 	
                7.2.1.

              	
                A
                  transaction between the Investor, Mund and Lapis, dated on or about
                  the
                  date of this Agreement, in which Lapis will, inter alia, issue
                  75,129,500
                  shares of Lapis to the Investor for the consideration of 4,539,557
                  shares
                  in Star Night Technologies Ltd., an Israeli public company whose
                  shares
                  are registered for trading on the Tel Aviv Stock Exchange, shall
                  have been
                  entered into and all conditions precedent therein shall have been
                  fulfilled or waived (the “Lapis
                  SPA”).

              

      

       

       

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

       

       

      
        	 	
                7.2.2.

              	
                A
                  transaction between Mund and Lapis, dated on or about the date
                  of this
                  Agreement, in which Mund or a company wholly owned by Mund shall
                  acquire
                  the entire share capital of Enertec Electronics Ltd., a wholly
                  owned
                  subsidiary of Lapis, shall have been entered into and all conditions
                  precedent therein shall have been fulfilled or waived (the “Electronics
                  SPA”).

              

      

       

      
        	
                7.3.

              	
                Guarantees
                  and other Third Party
                  Assurances

              

      

       

      
        	 	
                7.3.1.

              	
                The
                  Purchaser shall procure that at Closing Mund and Mr. Zvi Avni are
                  released
                  in full from all Third Party Assurances given by Mund or/or Mr.
                  Zvi Avni,
                  including, but not limited to the Third Party Assurances listed
                  in
                  Schedule
                  7.3.1.
                  Given the nature of the Business, the Third Party Assurances set
                  forth in
                  the Schedule
                  7.3.1
                  are, from time to time, subject to changes in the ordinary course
                  of
                  business and, therefore, Schedule
                  7.3.1
                  will be amended and updated immediately prior to
                  Closing.

              

      

       

      
        	 	
                7.3.2.

              	
                Without
                  prejudice to Clause 7.3.1 above:

              

      

       

      
        	 	
                7.3.2.1.

              	
                the
                  Purchaser shall use its reasonable endeavours to procure that,
                  as soon as
                  reasonably practicable after becoming aware of any Third Party
                  Assurance
                  not released upon Closing in respect of any obligations of Systems,
                  Mund
                  and/or Mr. Zvi Avni are released in full from such Third Party
                  Assurance;
                  and

              

      

       

      
        	 	
                7.3.2.2.

              	
                pending
                  release of any Third Party Assurance, the Purchaser undertakes
                  to
                  indemnify Mund and/or Mr. Zvi Avni against any and all Costs arising
                  under
                  or by reason of that Third Party
                  Assurance.

              

      

       

      
        	
                7.4.

              	
                Termination

              

      

       

      
        	 	
                7.4.1.

              	
                If
                  any of the Conditions has not been fulfilled (or waived in accordance
                  with
                  this Clause 7 on or before the Longstop Date, this Agreement (other
                  than
                  the Surviving Provisions) shall automatically terminate, unless
                  otherwise
                  agreed by the Parties. In such event, no Party shall have any claim
                  under
                  this Agreement of any nature whatsoever against any other Party
                  (except in
                  respect of any rights and liabilities which have accrued before
                  termination or in relation to any of the Surviving
                  Provisions).

              

      

       

      
        	
                8.

              	
                POST
                  CLOSING COVENANTS

              

      

       

      
        	
                8.1.

              	
                Mund's
                  Liability to On Going Projects and General
                  Cooperation

              

      

       

      At
        the
        request of the Purchaser, Mund shall employ his reasonable efforts in order
        to
        transfer his role as a director and CEO of Systems to a newly appointed
        management to be appointed by the Purchaser and in order to facilitate the
        successful performance of the projects in which Systems shall be engaged
        in at
        Closing for a period not exceeding 30 Business Days immediately succeeding
        Closing. It is hereby clarified that this assistance during the above period
        shall be rendered by Mund for no further consideration other than his share
        in
        the Purchase Price.

       

       

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

       

       

      
        	
                8.2.

              	
                Release
                  of Guarantees and other Third Party Assurances
                  In
                  the event that, notwithstanding
                  that the Condition set out in Clause 7.3 will have been waived
                  and Closing
                  will have become effective, Mund
                  and/or Mr. Zvi Avni shall not have been released from
                  any and all Third Party
                  Assurances per the Closing, then the Purchaser will take promptly
                  all
                  action required and/or necessary to fulfill the conditions set
                  out
                  in Schedules
                  6.3.1 and
                  6.3.2
                  to
                  release Mund and/or Mr. Zvi Avni from any and all Third Party
                  Assurances from which they were not released per the date of
                  Closing.

              

      

       

      
        	
                8.3.

              	
                Indemnification
                  If
                  the Purchaser becomes aware of any claim or potential claim by
                  a third
                  party (“a
                  third party claim”)
                  which might result in a Claim being made, the Purchaser
                  shall:

              

      

       

      
        	 	
                8.3.1.

              	
                promptly
                  (and in any event within 30 days of it becoming aware of it) give
                  notice
                  of such third party claim to the Sellers and procure that the Sellers
                  are
                  given all reasonable facilities to investigate
                  it;

              

      

       

      
        	 	
                8.3.2.

              	
                not
                  make any admission of liability, agreement or compromise with any
                  person,
                  body or authority in relation to that third party claim without
                  prior
                  written approval of each of the
                  Sellers;

              

      

       

      
        	 	
                8.3.3.

              	
                subject
                  to the Purchaser being indemnified by the Sellers against all reasonable
                  out of pocket costs and expenses incurred in respect of that third
                  party
                  claim;

              

      

       

      
        	 	
                8.3.4.

              	
                take
                  such action as the Sellers may reasonably request to avoid, resist,
                  dispute, appeal, compromise or defend such third party
                  claim;

              

      

       

      
        	 	
                8.3.5.

              	
                allow
                  the Sellers to take over the conduct of all proceedings and/or
                  negotiations of whatsoever nature arising in connection with the
                  third
                  party claim in question; and

              

      

       

      
        	 	
                8.3.6.

              	
                provide
                  such information and assistance as the Sellers may reasonably require
                  in
                  connection with the preparation for and conduct of any proceedings
                  and/or
                  negotiations relating to that third party
                  claim.

              

      

       

      
        	
                8.4.

              	
                Claims
                  If
                  the Purchaser makes a Claim against the Sellers or notifies the
                  Sellers of
                  any third party claim which might lead to such a Claim being made,
                  the
                  Purchaser shall
                  make available to accountants and other representatives appointed
                  by the
                  Sellers such access to the personnel, records and information of
                  Systems
                  as the Sellers reasonably request in connection with such Claim
                  or third
                  party claim.

              

      

       

      
        	
                8.5.

              	
                The
                  Purchaser may rely fully, subject to the terms of this Agreement,
                  upon all
                  of the Sellers’ Warranties.

              

      

       

      
        	 	
                8.5.1.

              	
                The
                  Sellers’ obligations in accordance with this clause are joint and several
                  and the Purchaser shall be entitled to address a Claim, to any
                  one of the
                  Sellers, at his discretion.

              

      

       

      
        	 	
                8.5.2.

              	
                Subject
                  to the terms of this Agreement, the Sellers agree to indemnify,
                  defend and
                  hold harmless the Purchaser and its successors and assigns from
                  and
                  against all proven Costs arising out of in respect of any breach
                  of any of
                  the Sellers’ Warranties in accordance with and subject to the stipulations
                  set forth in this Agreement.

              

      

       

       

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

       

       

      
        	
                9.

              	
                MISCELLANEOUS

              

      

       

      
        	
                9.1.

              	
                Payments
                  Any payment to be made pursuant to this Agreement by the Purchaser
                  shall
                  be made to each of the Sellers’ Bank Account in immediately available
                  funds by electronic transfer in US$ or in NIS in accordance with
                  the
                  provisions of Clause 2.2, or such other account as the Sellers
                  shall
                  nominate in writing, or such other method of payment as agreed
                  between the
                  Parties to this Agreement.

              

      

       

      
        	
                9.2.

              	
                Taxes;
                  Commissions
                  Any sales or transfer tax due upon the sale of any Purchased Share
                  under
                  this Agreement shall be borne by the party required to pay such
                  tax in
                  accordance with applicable laws. Any payment to the Sellers is
                  subject to
                  withholding tax, which shall be deducted by the Purchaser unless
                  provided
                  with an exemption thereof.

              

      

       

      
        	
                9.3.

              	
                Fees
                  & Expenses
                  Each Party to this Agreement shall bear its own legal fees and
                  all related
                  expenses incurred in connection with the negotiation, preparation,
                  entering into and completion of this
                  Agreement.

              

      

       

      
        	
                9.4.

              	
                Survival
                  Subject to any time limitations specifically set forth in this
                  Agreement,
                  all representations and warranties set forth in Clause 3 above
                  shall
                  survive the Closing.

              

      

       

      
        	
                9.5.

              	
                Notices
                  All notices, consents, approvals, waivers and other communications
                  hereunder shall be in writing and shall be deemed to have been
                  duly given
                  when delivered in person, or when confirmation of transmission
                  is received
                  when sent by telecopier, or three (3) days after delivery (prepaid)
                  to any
                  commercial overnight courier, addressed as
                  follows:

              

      

      

      
        	 	
                If
                  to the Sellers:

              	
                Enertec
                  Management Ltd.

                73
                  Ben-Gurion Street

                Kiriat
                  Motztkin, Israel

                Tel:
                  04-8404177

                Fax:
                  04-8403471

                enertec@netvision.net.il

              
	 	 	 
	 	 	
                Harry
                  Mund

                73
                  Ben-Gurion Street

                Kiriat
                  Motzkin, Israel

                Tel:
                  04-8404177

                Fax:
                  04-8403471

                enertec@netvision.net.il

              
	 	 	 
	 	
                With
                  a copy to:

              	
                Tomer
                  Maharshak

                Balter,
                  Guth, Aloni & Co.

                96
                  Yigal Alon, Tel Aviv, 67891, Israel

                Tel:
                  03-5111111

                Fax:
                  03-6246000

                tmaharshak@bgalaw.co.il

              

      

       

       

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

       

       

       

      
        	 	
                If
                  to the Purchaser:

              	
                Uri
                  Nissani

                12
                  Basel St.

                Petah
                  Tikva, 49180, Israel

                Tel:
                  073-2324501

                Fax:
                  073-2324509

                Uri.Nissani@star-ds.com

              
	 	 	 
	 	
                With
                  a copy to:

              	
                David
                  Gotlieb, Adv.

                Shnitzer,
                  Gotlieb & Co.

                7
                  Menachem Begin Street, 

                Ramat
                  Gan, 52681, Israel 

                Tel:
                  03-6113000

                Fax:
                  03-6113001

                david@sglaw.co.il

              

      

      

      or
        to
        such other address as the Parties may from time to time designate in
        writing.

       

      
        	
                9.6.

              	
                Waiver
                  Any waiver hereunder must be in writing, duly authorized and signed
                  by the
                  Party to be bound, and shall be effective only in the specific
                  instance
                  and for the purpose for which given. No failure or delay on the
                  part of
                  any Seller or the Purchaser in exercising any right, power or privilege
                  under this Agreement shall operate as a waiver thereof, nor shall
                  any
                  single or partial exercise of any right, power or privilege hereunder
                  preclude any other or further exercise thereof or the exercise
                  of any
                  other right, power or privilege.

              

      

       

      
        	
                9.7.

              	
                Entire
                  Agreement
                  This Agreement, the schedules hereto and the other Transaction
                  Documents
                  constitute the entire agreement among the Parties hereto and supersede
                  any
                  other agreement that may have been made or entered into by any
                  Seller or
                  the Purchaser solely relating to the transactions contemplated
                  by this
                  Agreement and the other Transaction Documents, including the Letter
                  of
                  Intent dated 11 October 2007, entered by the Investor, SDS, Lapis
                  and
                  Mund.

              

      

       

      
        	
                9.8.

              	
                Amendments
                  This Agreement may be amended or modified in whole or in part only
                  by a
                  duly authorized written agreement that refers to this Agreement
                  and is
                  signed by the Parties hereto.

              

      

       

      
        	
                9.9.

              	
                Headings
                  The headings in this Agreement are inserted for convenience of
                  reference
                  only and shall not be considered a part of or affect the interpretation
                  of
                  any provision of this Agreement.

              

      

       

      
        	
                9.10.

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

              

      

       

      
        	
                9.11.

              	
                Further
                  Assurances
                  The Parties hereto shall execute and deliver such additional documents
                  and
                  shall take such additional actions (including without limitation
                  procuring
                  such resolutions or regulatory approvals) as may be reasonably
                  necessary
                  or appropriate to effect the provisions and purposes of this Agreement
                  and
                  the consummation of the transactions contemplated
                  hereby.

              

      

       

      
        	
                9.12.

              	
                Severability
                  If
                  any provision of this Agreement is held by a court of competent
                  jurisdiction to be invalid, illegal or unenforceable, the validity,
                  legality and enforceability of the remaining provisions shall not
                  in any
                  way be affected, impaired or invalidated
                  thereby.

              

      

       

       

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

       

       

       

      
        	
                9.13.

              	
                Announcements
                  Any public announcement made by either the Purchaser or any of
                  the Sellers
                  concerning this transaction shall be made in a form mutually agreed
                  between the Parties. Notwithstanding the foregoing, the Purchaser
                  shall be
                  permitted to issue any release that it is legally required to be
                  issued or
                  made under any applicable laws; provided, however, that in such
                  event the
                  Purchaser will provide the Sellers with prompt written notice of
                  such
                  requirement and a copy of the release to be issued, and the Parties
                  shall
                  use reasonable commercial efforts to coordinate the content of
                  such
                  release.

              

      

       

      
        	
                9.14.

              	
                Governing
                  Law & Jurisdiction
                  This Agreement shall be governed by, and construed and enforced
                  in
                  accordance with, the laws of the State of Israel. Any dispute arising
                  under or with respect to this Agreement shall be resolved exclusively
                  in
                  the appropriate court in Tel Aviv,
                  Israel.

              

      

      

       

      ♣
♣
♣
♣
♣
        ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣

       

      [Signature
        page follows]

       

    

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

    
       

      IN
        WITNESS WHEREOF, the Sellers and the Purchaser have each caused this Agreement
        to be duly executed as of the date first above written.

       

      
        	 	 	 	 
	
                The
                  Sellers:

              	 	 	
                The
                  Purchaser:

              
	 	 	 	 
	/s/ Entertec
                Management Ltd.	 	 	/s/ S.D.S.
                (Star Defense Systems) Ltd.
	
                
Enertec
                Management Ltd.	 	 	
                
S.D.S.
                (Star Defense Systems)
                Ltd.
	By:
                /s/ Harry
                Mund
Title: Chief Executive Officer	 	 	By:
                /s/ Moty
                Solomon, /s/ Yona Leibowitz
Title: Chairman, Director
	 	 	 	 
	
                 /s/
                  Harry Mund

              	 	 	 
	 	 	 	 

      

       

       

      
        
           

        

        
          20

          
            

          

        

        
           

        

      

       

       

      List
        of Schedules

      

      
        	
                Schedule
                  1.8

              	
                Due
                  Diligence Information Index

              
	 	 
	
                Schedule
                  2.2

              	
                Purchased
                  Shares to be sold by the Sellers

              
	 	 
	
                Schedule
                  2.3.2

              	
                Closing
                  Obligations

              
	 	 
	
                Schedule
                  3.1.1

              	
                Limitations
                  on Liability

              
	 	 
	
                Schedule
                  3.8

              	
                Inter-Entity
                  Indebtedness

              
	 	 
	
                Schedule
                  3.12

              	
                Outstanding
                  Loans, Guarantees, Debts and Obligations

              
	 	 
	
                Schedule
                  3.13

              	
                Potential
                  Tax Exposures

              
	 	 
	
                Schedule
                  3.14.1

              	
                List
                  of Outstanding Orders During One Year to Date

              
	 	 
	
                Schedule
                  3.14.2

              	
                Restricting
                  Agreements

              
	 	 
	
                Schedule
                  3.15.1

              	
                Indebtedness
                  of or to Major Shareholders

              
	 	 
	
                Schedule
                  3.16

              	
                Legal
                  Proceedings

              
	 	 
	
                Schedule
                  3.17

              	
                List
                  of Leases

              
	 	 
	
                Schedule
                  3.19.1

              	
                List
                  of Employees

              
	 	 
	
                Schedule
                  3.21.2 

              	
                List
                  of Licensees for the use of Systems' Intellectual
                  Property

              
	 	 
	
                Schedule
                  3.21.5

              	
                List
                  of Registered Patents, Trademarks and Copyrights

              
	 	 
	
                Schedule
                  3.23

              	
                List
                  of Encumbered Property and Assets

              
	 	 
	
                Schedule
                  3.26

              	
                List
                  of Insurance Policies

              
	 	 
	
                Schedule
                  3.27

              	
                List
                  of Sole Suppliers

              
	 	 
	
                Schedule
                  6.2

              	
                Employment
                  Agreement of Mr. Zvi Avni

              
	 	 
	
                Schedule
                  6.3.1

              	
                Consent
                  Letter Bank Leumi

              
	 	 
	
                Schedule
                  6.3.2

              	
                Consent
                  Letter Bank Hapoalim

              
	 	 
	
                Schedule
                  7.1.1

              	
                List
                  of Third Party Permits, Consents and Authorizations required for
                  Closing

              
	 	 
	
                Schedule
                  7.3.1

              	
                List
                  of Third Party Assurances

              

      

      

       

       

      
        
           

        

        
          21

          
            

          

        

        
           

        

      

       

       

      SCHEDULE
        2.2

       

      PURCHASED
        SHARES TO BE SOLD BY SELLERS

      

      

      
        	
                SELLER

              	
                PURCHASED
                  SHARES TO BE SOLD

              	
                PORTION
                  OF PURCHASE PRICE

              
	
                Management
                  

              	
                183,230

              	
                73
                  per cent (US$1,095,000)

              
	
                Mund

              	
                67,770

              	
                27
                  per cent (US$405,000)

              
	
                Total

              	
                251,000

              	
                100
                  per cent

                (US$
                  1,500,000)

              

      

      

       

       

      
        
           

        

        
          22

          
            

          

        

        
           

        

      

       

       

      SCHEDULE
        2.3.2

       

      CLOSING
        OBLIGATIONS

       

      Sellers’
        Obligations

       

      
        	
                1.

              	
                At
                  Closing, the Sellers shall deliver to the Purchaser (or made available
                  to
                  the Purchaser’s reasonable
                  satisfaction):

              

      

       

      
        	 	
                1.1.

              	
                duly
                  executed transfer forms in respect of the Purchased Shares into
                  the name
                  of the Purchaser;

              

      

       

      
        	 	
                1.2.

              	
                the
                  share certificates in respect of all the Purchased
                  Shares;

              

      

       

      
        	 	
                1.3.

              	
                a
                  letter of resignation in Agreed Form duly executed by each of the
                  directors of Systems in respect of their directorships of
                  Systems;

              

      

       

      
        	 	
                1.4.

              	
                a
                  letter of resignation in Agreed Form duly executed by the auditors
                  of
                  Systems;

              

      

       

      
        	 	
                1.5.

              	
                a
                  copy (certified by a duly appointed officer as true and correct)
                  of a
                  resolution or written consent of:

              

      

       

      
        	 	
                1.5.1.

              	
                the
                  board of directors of Management;

              

      

       

      
        	 	
                1.5.2.

              	
                the
                  shareholders of Management;

              

      

       

      
        	 	
                1.5.3.

              	
                the
                  board of directors of Lapis; and

              

      

       

      
        	 	
                1.5.4.

              	
                the
                  shareholders of Lapis,

              

      

       

      authorising
        the execution of and the performance this Agreement;

       

      
        	 	
                1.6.

              	
                to
                  the extent required, a waiver
                  of any restrictions on transfer, including rights of pre-emption,
                  which
                  may exist in relation to the Purchased Shares, whether under the
                  articles
                  of association of Systems or
                  otherwise;

              

      

       

      
        	 	
                1.7.

              	
                a
                  certificate that the Sellers’ Warranties are correct in all material
                  respects per the Date of Closing;

              

      

       

      
        	 	
                1.8.

              	
                evidence
                  in respect of payment of inter-company debts or waiver in respect
                  thereof

              

      

       

      
        	 	
                1.9.

              	
                a
                  copy of the Yearly Financial
                  Statements, as such term is defined in Clause 3.22 of the Agreement;
                  and

              

      

       

      
        	 	
                1.10.

              	
                a
                  copy of the Trial Balance,
                  as
                  such term is defined in Clause 3.22 of the
                  Agreement.

              

      

       

      
        	
                2.

              	
                At
                  Closing, the Purchaser
                  shall have received a fairness opinion in Agreed Form by an independent
                  investment bank or consulting firm, validating the Purchase
                  Price.

              

      

       

       

      
        
           

        

        
          23

          
            

          

        

        
           

        

      

       

       

      Purchaser
        Obligations

       

       

      
        	
                3.

              	
                At
                  Closing, the Purchaser shall:

              

      

       

      
        	 	
                1.11.

              	
                deliver
                  (or procure that there is delivered to the Sellers) a copy of a
                  resolution
                  (certified by a duly appointed officer as true and correct)
                  of:

              

      

       

      
        	 	
                1.11.1.

              	
                the
                  board of directors of the Purchaser;
                  and

              

      

       

      
        	 	
                1.11.2.

              	
                the
                  shareholders of the Purchaser,

              

      

       

      authorising
        the execution of and the performance by the Purchaser of its obligations
        under
        this Agreement;

       

      
        	 	
                1.12.

              	
                deliver
                  (or procure that there is delivered) to the Sellers documents of
                  release
                  of Mund and Mr. Zvi Avnifrom the Third Party Assurances referred
                  to in
                  Clause 7.3; and

              

      

       

      
        	 	
                1.13.

              	
                pay
                  to each of the Sellers the Purchase Price in accordance with Clause
                  2.1.

              

      

       

      General

       

      
        	
                4.

              	
                All
                  documents and items delivered at Closing pursuant to this Schedule
                  2.3.2
                  shall be held by the recipient to the order of the person delivering
                  the
                  same until such time as Closing shall be deemed to have taken place
                  in
                  accordance with Clause 2.

              

      

       

      
        	
                5.

              	
                Simultaneously
                  with:

              

      

       

      
        	 	
                1.14.

              	
                delivery
                  of all documents and items required to be delivered at Closing
                  (or waiver
                  of the delivery thereof by the person entitled to receive the relevant
                  document or item);

              

      

       

      
        	 	
                1.15.

              	
                receipt
                  of an electronic funds transfer to the Sellers’ Bank Account in
                  immediately available funds of the Purchase
                  Price,

              

      

       

      the
        documents and items delivered in accordance with this Schedule shall cease
        to be
        held to the order of the person delivering the same and Closing shall be
        deemed
        to have taken place.

       

       

      
        
           

        

        
          24

          
            

          

        

        
           

        

      

       

       

      
SCHEDULE
        3.3.1

       

      LIMITATIONS
        ON LIABILITY

       

      
        	
                1.

              	
                Time
                  Limits

              

      

       

      
        	 	
                1.16.

              	
                The
                  Sellers shall not be liable for any Claim unless Mund receives
                  from the
                  Purchaser written notice (within thirty (30) days of the Purchaser
                  becoming aware of such Claim)
                  containing reasonably specific details of the Claim prior
                  to the
                  end of a period of 24 months immediately following the Date of
                  Closing.

              

      

       

      
        	
                2.

              	
                Thresholds
                  for Claims

              

      

       

      
        	 	
                1.17.

              	
                The
                  Sellers shall not be liable for any Claim unless the amount of
                  the
                  liability pursuant to the aggregate of all Claims exceeds fifty
                  thousand
                  US Dollars (US$50,000) (in which case the Purchaser shall be able
                  to claim
                  only for the excess over fifty thousand
                  US
                  Dollars (US$50,000)).

              

      

       

      
        	
                3.

              	
                Maximum
                  limit for all Claims

              

      

       

      Notwithstanding
        any
        other
        provision of this Agreement, the aggregate maximum amount of the liability,
        jointly and severally, of the Sellers for all Claims shall not exceed the
        sum of
        the Purchase Price actually paid to, and received by, the Sellers. The
        indemnification for all Claims shall be by way of reduction of the Minimum
        Value.

       

      
        	
                4.

              	
                Matters
                  disclosed or taken into account in
                  adjustments

              

      

       

      The
        Sellers shall not be liable for any Claim for breach of the Warranties if
        and to
        the extent that the fact, matter, event or circumstance giving rise to such
        Claim:

       

      
        	 	
                1.18.

              	
                is
                  disclosed in this Agreement or any other Transaction Document,
                  the
                  Disclosure Letter or
                  in any document disclosed in the Due Diligence Information;
                  and/or

              

      

       

      
        	 	
                1.19.

              	
                is
                  disclosed in the financial due diligence conducted in respect of
                  Systems,
                  Lapis and its subsidiaries by the Purchaser and its advisors and
                  any
                  documents and information
                  provided within the framework
                  thereof.

              

      

       

      
        	
                5.

              	
                Contingent
                  liabilities

              

      

       

      If
        any
        Claim for breach of the Sellers’ Warranties is based upon a liability, which is
        contingent only, the Sellers shall not be liable to make any payment unless
        and
        until such contingent liability gives rise to an obligation to make a
        payment.

       

      
        	
                6.

              	
                No
                  liability for Claims arising from acts or omissions of
                  Purchaser

              

      

       

      The
        Sellers
        shall
        not be liable for any Claim, which would
        not have
        arisen but for any voluntary act, omission or transaction carried out after
        the
        date of this Agreement by the Purchaser or its respective directors, employees
        or agents or successors in title.

       

       

      
        
           

        

        
          25

          
            

          

        

        
           

        

      

       

       

      
        	
                7.

              	
                Nothing
                  to restrict Purchaser’s duty to
                  mitigate

              

      

       

      Nothing
        in this Schedule
        3.3.1
        shall in
        any way restrict or limit the general obligation of the Purchaser to mitigate
        any loss or damage which it may suffer in consequence of any breach by the
        Sellers of the terms of this Agreement or any fact, matter, event or
        circumstance likely to give rise to a Claim.

       

      
        	
                8.

              	
                No
                  double recovery

              

      

       

      The
        Purchaser shall not be entitled to recover
        damages
        or obtain payment, reimbursement, restitution or indemnity more than once
        in
        respect of any one liability, loss, cost, shortfall, damage, deficiency,
        breach
        or other set of circumstances which gives rise to more than one
        Claim.

       

      
        	
                9.

              	
                No
                  recovery if compensation in another manner is
                  available

              

      

       

      The
        Purchaser shall not be entitled to recover
        damages
        or obtain payment, reimbursement, restitution or indemnity in respect of
        any one
        liability, loss, cost, shortfall, damage, deficiency, breach or other set
        of
        circumstances which:

      
         

        
          	 	
                  1.20.

                	
                  is
                    or can be recovered by the Purchaser under any policy of insurance
                    maintained or
                    customary to be obtained in the field of activity of Systems
or
                    from a third party, or would have been so recoverable but for
                    any change
                    in the current terms of insurance instigated by the Purchaser
after
                    Closing; and/or

                

        

         

        
          	 	
                  1.21.

                	
                  give
                    rise to or result in a benefit accruing to the Purchaser out
                    of the same,
                    including, but not limited to, any relief from taxation obtainable
                    by the
                    Purchaser and/or its affiliates, and any amount by which any
                    taxation for
                    which the Purchaser and/or its affiliates are accountable is
                    reduced or
                    extinguished.

                

        

      

       

      
        	
                10.

              	
                Purchaser’s
                  knowledge

              

      

       

      The
        Sellers shall not be liable for any Claim for breach of the Sellers’ Warranties
        if and to the extent that the Purchaser is aware at the date of this Agreement
        of the fact, matter, event or circumstance which is the subject matter of
        the
        Claim.

       

      
        	
                11.

              	
                Sellers
                  to have opportunity to remedy
                  breaches

              

      

       

      A
        breach
        of the Sellers’ Warranties, which is capable of remedy shall not entitle the
        Purchaser to compensation unless the Sellers are given written notice of
        the
        breach by the Purchaser and such breach is not remedied within a reasonable
        period of time after the date on which such notice is served on the Sellers.
        Without prejudice to its duty to mitigate any loss, the Purchaser shall provide
        all reasonable assistance to the Sellers to remedy any such breach.

       

       

      
        
           

        

        
          26

          
            

          

        

        
           

        

      

       

      

      SCHEDULE
        7.3.1

       

      Third
        Party Assurances

       

      [To
        be updated prior to Closing]

       

      

        
          	
                	·	
                  Third
                    Party Assurances Mund attached as separate
                    documents

                

        

        

        
          	
                	·	
                  Third
                    Party Assurances
                    Avni attached as separate documents

                

        

        

        
          	
                	·	
                  Third
                    Party Assurances
                    Electronics attached as separate
                    documents

                

        

      

       

       

      
        
           

        

        
          27THIS
      AGREEMENT (“Agreement”) is
      made
      on 28 February 2008

     

    Between
      

     

    
      	
              1.

            	
              Lapis
                Technologies, Inc.,
                whose registered office is at 19 West 34th Street, Suite 1008, New
                York,
                New York 10001, the United States of America (the “Vendor”);
                and

            

    

     

    
      	
              2.

            	
              Mund
                Holdings Ltd.
                whose registered office is at 27 HaMapilim Street, Qiryat Ata, Israel
                (the
                “Purchaser”).

            

    

     

     

    Whereas
      

     

    (A)
      Enertec
      Electronics Ltd.
      (the “Company”)
      is a
      private company limited by shares, company number 51-164007-0, whose entire
      issued share capital is NIS 100 divided into 100 shares of NIS 1 each (the
      “Shares”).
      The
      Vendor is the sole legal and beneficial owner of the Shares.

     

    (B)
      The
      Company has a wholly owned subsidiary wholly
      owned subsidiary, Enertec Management Ltd. (“Management”)

     

    (C)
      The
      Vendor has agreed to sell the entire issued and outstanding share capital of
      the
      Company, being all of the Shares, to the Purchaser for the consideration and
      upon the terms set out in this Agreement.

     

    It
      is agreed as
      follows.

     

    
      	
              1.

            	
              Sale
                of the shares and
                consideration

            

    

     

    
      	
              1.1

            	
              The
                Vendor agrees to sell the entire issued and outstanding share capital
                of
                the Company, being all of the Shares, and the Purchaser agrees to
                purchase
                the Shares, subject to the conditions precedent set out in clause
                6 below
                and with effect per the Closing (as such term is defined in clause
                2
                below). The Shares shall be sold free from all security interests,
                options, equities, claims or other third party rights (including,
                without
                limitation, rights of pre-emption) of any nature whatsoever, together
                with
                all rights attaching to them.

            

    

     

    
      	
              1.2

            	
              The
                total purchase price for the Shares shall be the payment by the Purchaser
                to the Vendor of the sum of US$250,000 (two hundred fifty thousand
                US
                Dollars) (the “Purchase
                Price”).

            

    

     

    
      	
              3.

            	
              Closing

            

    

     

    
      	
              3.1

            	
              The
                sale and purchase of the Shares shall be completed, upon the fulfilment
                of
                the conditions set out in clause 6 below (the “Closing”).

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
            	
              3.2

            	
              At
                Closing, the Vendor and Purchaser shall deliver or cause to be delivered
                to the Vendor or the Purchaser all those documents, items and actions
                respectively listed in relation to that party set out in Schedule
                1, and
                all of the above documents, items and actions shall be deemed to
                be
                delivered or take place simultaneously and no document, item and
                action
                shall be deemed to have been completed or delivered until all have
                been
                completed and delivered or waived. The documents, items and actions
                listed
                in Schedule 1 include, but are not limited to:

            

    

    
      	 	
              (a)

            	
              a
                duly executed transfer deed into the name of the Purchaser or its
                nominee
                in respect of all the Shares, together with the relative share
                certificates; and

            

    

    
      	 	
              (b)

            	
              a
                copy of a resolution of the board of directors of the Vendor, authorising
                the execution of and the performance by the Vendor of its obligations
                under this Agreement, including, but not limited to the undertakings
                set
                out in clause 3; and.

            

    

    
      	 	
              (c)

            	
              a
                copy of a resolution of the board of directors of the Purchaser,
                authorising the execution of and the performance by the Purchaser
                of its
                obligations under this Agreement, including, but not limited to the
                undertakings set out in clause 3.

            

    

    
      	
            	
              3.3

            	
              At
                Closing, the Purchase Price shall be paid to the Vendor by cheque
                or any
                other method of payment agreed between the
                parties.

            

    

     

    
      	
              4.

            	
              Party’s
                indemnification
                undertakings

            

    

     

    
      	
            	
              4.1.

            	
              The
                Vendor shall indemnify and hold the Purchaser harmless against any
                tax
                liabilities resulting from or in relation to the payment of a dividend
                by
                Management to the Company and the Company to the Vendor immediately
                prior
                and subject to Closing, in the gross amount of a dividend payment
                the
                Management and the Company received pursuant to sale by Management
                of its
                shares in Enertec Systems 2001 Ltd. (“Systems”).
                Provided, however, that the above undertaking by the Vendor to indemnify
                and hold the Purchaser harmless shall be limited to an amount equal
                to the
                portion of the consideration Management received for the sales of
                shares
                held by it in Systems in the amount of
                US$1,095,000.

            

    

     

    
      	
            	
              4.2.

            	
              The
                Purchaser shall indemnify and hold the Vendor harmless against any
                actual
                and materialised tax liabilities to which the Vendor will be subject
                resulting from or in relation to the payment of the Purchase Price
                for the
                Shares, if any. Provided, however, that the above undertaking by
                the
                Purchaser to indemnify and hold the Vendor harmless shall be limited
                to an
                amount equal to cover any applicable income tax imposed on and actually
                and unconditionally paid by the Vendor over the receipt of the Purchase
                Price. 

            

    

     

    
      	
              5.

            	
              Restrictions
                on Vendor

            

    

     

    
      	
            	
              5.1.

            	
              The
                Vendor shall not and shall procure that each other company with which
                it
                is or shall become affiliated in the period set forth in this clause
                4.1
                (whether alone or jointly with another and whether directly or indirectly)
                within a period of 24 months after Closing, directly or indirectly,
                solicit or endeavour to entice away from the Company, offer employment
                to
                or employ, or offer or conclude any contract for services with, any
                person
                who was employed by the Company in skilled or managerial work at
                any time
                during the 24 months prior to
                Closing.

            

    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    
      	
            	
              5.2.

            	
              Except
                so far as may be required by law and in such circumstances only after
                prior consultation with the Purchaser, the Vendor shall not and shall
                procure that each other company with which it is or shall become
                affiliated shall not at any time disclose to any person or use to
                the
                detriment of the Company any trade secret or other confidential
                information of a technical character which it holds in relation to
                the
                Company or its affairs.

            

    

     

    
      	
              6.

            	
              Warranties

            

    

     

    The
      Vendor represents and warrants to the Purchaser in the terms of the warranties
      set out in Schedule 2
      and
      acknowledges that the Purchaser entered into this Agreement in reliance upon
      such representations and warranties.

     

    
      	
              7.

            	
              Conditions
                to Closing

            

    

     

    
      	
            	
              7.1.

            	
              Closing
                shall be conditional on fulfilment or waiver at or before the date
                of
                Closing of the following
                conditions:

            

    

    
      	 	
              7.1.1.

            	
              the
                consummation of a transaction between Harry Mund and Management as
                sellers
                and SDS (Star Defense Systems) Ltd., an Israeli public company whose
                shares are registered for trading on the Tel Aviv Stock Exchange,
                as
                purchaser for the purchase and sale of the entire outstanding share
                capital of Systems the (“Systems
                SPA”);
                

            

    

    
      	 	
              7.1.2.

            	
              the
                receipt of a dividend payment by the Company from Management in the
                amount
                equal to its portion of the consideration for the sale of the shares
                in
                Systems under the transaction set out in clause 6.1.1 above, subject
                to
                the repayment of taxes - if any, upon Closing;

            

    

    
      	 	
              7.1.3.

            	
              the
                release of the Company from all guarantees, indemnities,
                counter-indemnities and letters of comfort of any nature whatsoever
                given
                to a third party by the Company in respect of any obligation of Systems
                and/or the Vendor upon Closing;

            

    

    
      	 	
              7.1.4.

            	
              the
                repayment of all Inter-Entity Indebtedness, as such term is defined
                in the
                Systems SPA, prior to Closing; 

            

    

    
      	 	
              7.1.5.

            	
              the
                payment of a dividend by the Company to the Vendor in the net after
                taxes
                amount of the dividend payment received from Management upon Closing;
                

            

    

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    
      	 	
              7.1.6.

            	
              the
                consummation of a transaction between Mr. Mordechai Solomon (the
                “Investor”),
                the Harry Mund and the Vendor, dated on or about the date of this
                Agreement, in which the Vendor will issue [75,129,500] shares to
                the
                Investor for the consideration of 4,539,557 shares in Star Night
                Technologies Ltd., an Israeli public company whose shares are registered
                for trading on the Tel Aviv Stock Exchange (the “Lapis
                SPA”);
                and

            

    

    
      	 	
              7.1.7.

            	
              an
                information statement under the Exchange Act (as such term is defined
                in
                the Lapis SPA) shall have been filed with the SEC and mailed to the
                Vendor’s shareholders and a period of 20 days following the mailing of the
                information statement to the Vendor’s shareholders shall have lapsed.
                

            

    

     

    
      	
            	
              7.2.

            	
              The
                Conditions set out in clauses 6.1.2 and 6.1.5 above may only be
                waived by written notice from the Vendor, the Conditions set out
                in
                clauses 6.1.3 and 6.1.4 above may be only waived by written notice
                from the Purchaser and the Conditions set out in clauses 6.1.1 and
                6.1.6 shall automatically be waived if: (i) all conditions in the
                Lapis
                SPA shall have been fulfilled or waived, save for the conditions
                in clause
                12.1 of that agreement in respect of the closing of the Systems SPA
                and
                the closing of this Agreement; and (ii) all conditions in the Systems
                SPA
                shall have been fulfilled or waived, save for the conditions in clause
                7.3
                of that agreement in respect of the closing of Lapis SPA and the
                closing
                this Agreement. 

            

    

    
      	
            	
              7.3.

            	
              Notwithstanding
                any other provision of this Agreement or any of the Transaction Documents
                (as such term is defined in the Systems SPA and the Lapis SPA), the
                Vendor
                shall procure that if the Conditions set out in clauses 6.1.3 and
                6.1.4
                above will have been waived, and Closing will have become effective,
                it
                shall comply with its obligations under the above clauses notwithstanding
                such waiver and upon the waiver of such Condition, the provisions
                thereof
                shall become a post Closing
                covenant.

            

    

    
      	
            	
              7.4.

            	
              If
                any of the above Conditions will not have been fulfilled (or waived)
                before the Date of Closing (as such term is defined in the Systems
                SPA),
                this Agreement shall automatically terminate, unless otherwise agreed
                by
                the parties hereto. In such event, no party to this Agreement shall
                have
                any claim under this Agreement of any nature whatsoever against any
                other
                party to this Agreement.

            

    

     

    
      	
              8.

            	
              Post
                Closing covenant

            

    

     

    In
      the
      event that, notwithstanding that the Conditions set out in clauses 6.13 and
      6.1.4 will have been waived and Closing will have become effective, the
      Conditions set out therein shall not have been fully fulfilled per the Closing
      (the release of the Company from: (i) all
      guarantees, indemnities, counter-indemnities and letters of comfort of any
      nature whatsoever given to a third party by the Company in respect of any
      obligation of Systems and/or the Vendor; and (ii) all Inter-Entity
      Indebtedness), then the Purchaser will take promptly all action required and/or
      necessary after Closing to fully release the Company as set out in clauses
      6.13
      and 6.1.4 above.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      	
              9.

            	
              Entire
                agreement

            

    

     

    This
      Agreement and the documents required for the fulfilment of the Conditions set
      out in clause 6 above, set out the entire agreement and understanding between
      the parties in respect of the sale and purchase of the Shares. It is agreed
      that:

     

    
      	 	
              (a)

            	
              No
                party has entered into this Agreement in reliance upon any representation,
                warranty or undertaking of any other party, which is not expressly
                set out
                or referred to in this Agreement.

            

    

     

    
      	 	
              (b)

            	
              A
                party may claim in contract for breach of warranty under this Agreement
                but shall have no claim or remedy under this Agreement in respect
                of
                misrepresentation (whether negligent or otherwise, and whether made
                prior
                to, and/or in, this Agreement) or untrue statement made by any other
                party.

            

    

     

    
      	
              10.

            	
              Counterparts

            

    

     

    This
      Agreement may be entered into in any number of counterparts and by the parties
      to it on separate counterparts, each of which is an original, but all of which
      together constitute one and the same instrument.

     

    
      	
              11.

            	
              Further
                assurance

            

    

     

    The
      Vendor agrees to perform (or procure the performance of) all further acts and
      things, and execute and deliver (or procure the execution and delivery of)
      such
      further documents, as may be required by law or as the Purchaser may reasonably
      require, whether on or after Closing, to implement and/or give effect to this
      Agreement and the transaction contemplated by it and for the purpose of vesting
      in the Purchaser the full benefit of the assets, rights and benefits to be
      transferred to the Purchaser under this Agreement.

     

    
      	
              12.

            	
              Severability

            

    

     

    If
      any
      provision of this Agreement is held to be invalid or unenforceable, then such
      provision shall (so far as it is invalid or unenforceable) be given no effect
      and shall be deemed not to be included in this Agreement but without
      invalidating any of the remaining provisions of this Agreement. The parties
      shall then use all reasonable endeavours to replace the invalid or unenforceable
      provision by a valid and enforceable substitute provision the effect of which
      is
      as close as possible to the intended effect of the invalid or unenforceable
      provision.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    
      	
              13.

            	
              Variation

            

    

     

    No
      variation of this Agreement (or of any of the documents referred to in this
      Agreement) shall be valid unless it is in writing and signed by or on behalf
      of
      each of the parties to it. The expression "variation" shall include any
      amendment, variation, supplement, deletion or replacement however
      effected.

     

    
      	
              14.

            	
              Governing
                law

            

    

     

    This
      Agreement and the relationship between the parties shall be governed by, and
      interpreted in accordance with, the laws of the State of Israel.

     

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    In
      witness whereof
      this Agreement has been signed by and on behalf of the parties on the day and
      year first before written.

     

    
      	
              The
                Vendor:

            	
              The
                Purchaser:

            
	
               

               

              /s/
                Lapis Technologies, Inc.

              Lapis
                Technologies, Inc.

              By:
                /s/ Harry Mund

              Title:
                Chief Executive Officer 

                

            	
               

               

              /s/
                Mund Holdings Ltd.

              Mund
                Holdings Ltd.

              By:
                /s/ Harry Mund

              Title:
                Chief Executive Officer 

            

    

    

     

    

    
 

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    

     

    SCHEDULE 1

     

    CLOSING
      OBLIGATIONS

     

    Vendor’s
      Obligations

     

     

    
      	 	
              1.

            	
              At
                Closing, the Vendor shall deliver to the Purchaser (or made available
                to
                the Purchaser’s reasonable
                satisfaction):

            

    

     

    
      	 	 	
              duly
                executed transfer forms in respect of the Shares into the name of
                the
                Purchaser,
                as set out in clause 2.2(a) of this
                Agreement;

            

    

     

    
      	 	 	
              the
                share certificates in respect of all the Shares, as set out in clause
                2.2(a) of this Agreement; 

            

    

     

    
      	 	 	
              a
                copy (certified by a duly appointed officer as true and correct)
                of a
                resolution of:

            

    

     

    
      	 	 	
              the
                board of directors of Lapis; and

            

    

     

    
      	 	 	
              the
                shareholders of Lapis, 

            

    

     

    authorising
      the execution of and the performance this Agreement and the performance of
      its
      obligations thereunder, as set out in clause 2.2(b) of this
      Agreement;

     

    
      	 	 	
              evidence
                in respect of release of:

            

    

     

    
      	 	 	
               Inter-Entity
                Indebtedness
                or
                waiver in respect thereof; and

            

    

     

    
      	 	 	
              all
                guarantees, indemnities, counter-indemnities and letters of comfort
                of any
                nature whatsoever given to a third party by the Company in respect
                of any
                obligation of Systems and/or the Vendor.

            

    

     

    
      	 	
              2.

            	
              In
                addition, at Closing, the Vendor shall deliver to the Purchaser (or
                made
                available to the Purchaser’s reasonable
                satisfaction):

            

    

     

    
      	 	 	
              a
                copy (certified by a duly appointed officer as true and correct)
                of a
                resolution of:

            

    

     

    
      	 	 	
              the
                board
                of directors of Management; 

            

    

     

    
      	 	 	
              the
                shareholders of Management;

            

    

     

    
      	 	 	
              the
                board
                of directors of the Company; and

            

    

     

    
      	 	 	
              the
                shareholders of the Company,

            

    

     

    authorizing
      and effecting the Conditions set out under clauses 6.1.2 and 6.1.5 of this
      Agreement. 

     

    Purchaser’s
      Obligations

     

    
      	 	
              3.

            	
              At
                Closing, the Purchaser shall:

            

    

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    
      	 	 	
              deliver
                (or procure that there is delivered to the Vendor) a copy of a resolution
                (certified by a duly appointed officer as true and correct)
                of:

            

    

     

    
      	 	 	
              the
                board of directors of the Purchaser;
                and

            

    

     

    
      	 	 	
              the
                shareholders of the Purchaser,

            

    

     

    authorising
      the execution of and the performance by the Purchaser of its obligations under
      this Agreement, as set out in clause 2.2(c) of this Agreement; and 

     

    
      	 	 	
              pay
                to the Vendor the Purchase Price in accordance with clause 2.1 of
                this
                Agreement.

            

    

    General

     

     

    
      	 	
              4.

            	
              All
                documents and items delivered at Closing pursuant to this Schedule
                1 shall
                be held by the recipient to the order of the person delivering the
                same
                until such time as Closing shall be deemed to have taken place in
                accordance with clause 2.

            

    

     

    
      	 	
              5.

            	
              Simultaneously
                with:

            

    

     

    
      	 	 	
              delivery
                of all documents and items required to be delivered at Closing (or
                waiver
                of the delivery thereof by the person entitled to receive the relevant
                document or item); 

            

    

     

    
      	 	 	
              receipt
                of the Purchase
                Price by the Vendor,

            

    

     

    the
      documents and items delivered in accordance with this Schedule shall cease
      to be
      held to the order of the person delivering the same and Closing shall be deemed
      to have taken place.

     

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    SCHEDULE
      2

     

    THE
      WARRANTIES

     

     

    
      	
              1.

            	
              Authorisations
                

            

    

     

    The
      Vendor has obtained all corporate authorisations and all other applicable
      governmental, statutory, regulatory or other consents, licences, authorisations,
      waivers or exemptions required to empower it to enter into and perform its
      obligations under this Agreement.

     

    
      	
              2.

            	
              The
                shares

            

    

     

    All
      of
      the Shares are fully-paid, or properly credited as fully-paid, and the Vendor
      is
      the sole legal and beneficial owner of the Shares free from all security
      interests, options, equities, claims or other third party rights (including,
      without limitation, rights of pre-emption) of any nature whatsoever. The Vendor
      has the legal right to dispose of the Shares.

     

    
      	
              3.

            	
              Adequacy
                of assets

            

    

     

    
      	
            	
              1.1

            	
              The
                assets of the Company and the facilities and services to which the
                Company
                has a contractual right include all rights, properties, assets, facilities
                and services necessary for the carrying on of the business of the
                Company
                in the manner in which it is currently carried
                on.

            

    

     

    
      	
            	
              1.2

            	
              All
                of the assets owned by the Company, or in respect of which the Company
                has
                a right of use, are in the possession or under the control of the
                Company

            

    

     

    
      	
              4.

            	
              Taxes

            

    

     

    
      	
            	
              1.1

            	
              All
                local and national taxes and social security contributions whether
                direct
                or indirect, and any penalties, interest and other levies in respect
                thereof (“Taxes”) for which the Company at the date of Closing or at any
                time thereaf-ter may become liable to be assessed in respect of any
                period
                ending on or before the date of Closing have either been paid in
                full or are adequa-tely provided for in the Company’s financial
                statements. There are no facts or circumstances, which could give
                rise to
                any additio-nal liability to Taxes over and above that already paid
                or
                provided for.

            

    

     

    
      	
            	
              1.2

            	
              All
                filings which had ought to have been made or filed before the date
                of
                Closing have been properly and duly submitted by the Company and
                were true
                accurate and complete.

            

    

     

    
      	
              5.

            	
              Disputes

            

    

     

    
      	
            	
              1.1.

            	
              The
                Company is not engaged in any and there are no pending or threatened
                legal
                proceedings, or any other action from which damages or losses for
                the
                Company could arise and it is not aware of any circumstances that
                could
                result in the above.

            

    

     

    
      	
            	
              1.2.

            	
              There
                are no inves-tigati-ons or enquiries (whether pending or threatened)
                by,
                or on behalf of, any govern-mental or other body in respect of the
                affairs
                of the Company. 

            

    

     

     

    
      
         

      

      
        10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}]]