Document:

exhibit_10-2.htm

Exhibit 10.2

 

SHARE PURCHASE AGREEMENT

 

This Share Purchase Agreement (the "Agreement"), is dated as of January 13, 2014, between Pointer Telocation Ltd. ("Pointer"), a public company, incorporated under the laws of the State of Israel, company number 520041476, and the sellers whose names are set forth in Schedule A hereunder (each a "Seller" and collectively the "Sellers").

 

R E C I T A L S

 

WHEREAS, Pointer and the Sellers are each shareholders of Shagrir Systems Ltd. ("Shagrir"), a private company, incorporated under the laws of the State of Israel, company number 511767832; and

 

WHEREAS,                      the Sellers wish to sell to Pointer 38,479 Ordinary Shares of Shagrir, par value NIS 1.00 each (the "Shagrir Shares"), constituting in the aggregate 41.8% of the issued share capital of Shagrir, on a fully diluted basis; and

 

WHEREAS,                      Pointer wishes to purchase from the Sellers all of their shares in Shagrir in consideration for the issuance of Ordinary Shares of Pointer, par value NIS 3.00 each, and cash consideration as more fully set forth herein.

 

NOW THEREFORE, Pointer and the Sellers, intending to be legally bound, agree to the terms set forth below:

 

	
  

	
1.

	
Sale of Shagrir Shares Against the Shagrir Consideration.

 

	 	
  

	
Subject to and in accordance with the terms and conditions of this Agreement, in consideration for the sale by the Sellers of the Shagrir Shares in the amounts set forth opposite their names in Schedule A attached hereto, Pointer shall (i) issue to the Sellers, an aggregate of 914,000 Ordinary Shares of Pointer, par value NIS 3.00 each (the "Pointer Shares"); and (ii) pay an aggregate cash consideration of NIS 24,815,772 (the "Cash Consideration" and together with the Pointer Shares, the "Shagrir Consideration").  The specific amount of Pointer Shares to be issued to each Seller and the respective Cash Consideration amounts to be paid to each Seller is set forth in Schedule A attached hereto.

 

	 	
2.

	
Closing.

 

	 	
2.1

	
Closing Date.  Subject to the conditions set forth in Section ‎8 below, the consummation of the transaction contemplated hereby (hereinafter, the “Closing”) shall take place  at the offices of Yigal Arnon & Co., 1 Azrieli Center, Round Building, 46th Floor, Tel Aviv, Israel, upon fulfillment of all conditions to Closing (“hereinafter, the Closing Date”). The Closing Date is anticipated to take place no later than March 31, 2014.  Should the Closing not take place by March 31, 2014, this Agreement shall be cancelled and be null and void and no party shall have any claim against the other party in connection thereto.

 

  

  

  

 

	
  

	
2.2

	
Closing Deliveries.

 

The following instruments, agreements and documents shall be executed and delivered at the Closing and all such documents shall be deemed delivered simultaneously and all transactions contemplated hereby and thereby shall be deemed to take place simultaneously, and no such document shall be deemed delivered until all such transactions are completed and all such documents are delivered:

 

	
  

	
2.2.1

	
The following deliveries will be made by each Seller to Pointer at the Closing:

 

	
  

	
2.2.1.1

	
Resolution of the Board of Directors of each Seller, substantially in the form attached hereto as Exhibit ‎2.2.1.1, authorizing the sale and transfer of the respective Shagrir Shares in consideration for the applicable portion of the Shagrir Consideration;

 

	
  

	
2.2.1.2

	
A duly executed shares transfer deed regarding the sale and transfer of the Seller's portion of the Shagrir Shares, in the form attached hereto as Exhibit ‎2.2.1.2;

 

	
  

	
2.2.1.3

	
Notice of resignation of the directors appointed by the Sellers to the Board of Directors of Shagrir, in the form attached hereto as Exhibit ‎2.2.1.3.

 

	
  

	
2.2.1.4

	
Certificate of exemption of withholding tax at source, or providing for a specific percentage of withholding, in respect of the Shagrir Consideration.  Should no certificate of exemption be provided, or a certificate providing for a specific percentage of withholding, Pointer shall withhold tax at source, to be deducted from the Cash Consideration, at the highest rate set by law.

 

	
  

	
2.2.1.5

	
a certificate executed by an officer of each of the Sellers in the form attached hereto as Exhibit 2.2.1.5 certifying that each of the representations and warranties of such Seller under this Agreement are true and accurate as of the Closing Date as if made on the Closing Date.

 

	
  

	
2.2.2

	
The following deliveries will be made by Pointer to the Sellers at the Closing:

 

	
  

	
2.2.2.1

	
Resolution of the Board of Directors of Pointer, substantially in the form attached hereto as Exhibit ‎2.2.2.1, authorizing the Shagrir Consideration;

 

	
  

	
2.2.2.2

	
Issuance of Share Certificates in respect of the Pointer Shares;

 

  

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2.2.2.3

	
Transfer of the Cash Consideration to the bank accounts of the Sellers by way of immediately available funds wire transfer, per the details attached in Schedule A.

 

	
  

	
2.2.2.4

	
a certificate executed by an officer of Pointer in the form attached hereto as Exhibit 2.2.2.4 certifying that each of the representations and warranties of Pointer under this Agreement are true and accurate as of the Closing Date as if made on the Closing Date.

 

	
  

	
3.

	
Representations and Warranties of Each Seller.

 

Each Seller makes the following representations and warranties to Pointer:

 

	
  

	
3.1

	
Shagrir Shares. The Shagrir Shares to be sold and transferred are free and clear of all liens, charges, restrictions, claims, encumbrances or any third party rights.

 

	
  

	
3.2

	
No Rights or Claims. As of the Closing no Seller shall have any rights in Shagrir (other than by virtue of their holdings of the Pointer Shares) and any and all such rights previously granted to the Seller shall be terminated.  Each Seller hereby irrevocably waives, on its behalf and on behalf of any of its shareholders, directors and representatives, any right and/or claim and/or demand whatsoever against Shagrir.

 

	
  

	
3.3

	
Authority. Each Seller has full right and power to enter into and perform pursuant to this Agreement and sell and transfer to Pointer its portion of the Shagrir Shares, and this Agreement constitutes each Seller’s valid and legally binding obligation, enforceable in accordance with its terms. Each Seller is authorized and otherwise duly qualified to receive the Shagrir Consideration and to enter into this Agreement.

 

	
  

	
3.4

	
Purchase for Investment.  The Seller is acquiring all of the Pointer Shares to be acquired by it hereunder for its own account for investment and without a view to the distribution or resale of such Pointer Shares, it being understood that this Section ‎3.4 shall not prevent the Seller from selling or otherwise disposing of any of the Pointer Shares, at its sole discretion, in any transaction which does not violate the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the "Securities Act").

 

	
  

	
3.5

	
U.S. Federal Securities Laws. The Seller understands that the Pointer Shares have not been registered under the Securities Act and that the issuance contemplated hereby is being made in reliance on an exemption from registration under the Securities Act for nonpublic offerings.

 

	
  

	
3.6

	
Purchaser Status.  At the time such Seller was offered the Pointer Shares, it was, and is as of the date hereof,  an “accredited investor” as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

 

  

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3.7

	
Receipt of Information. It acknowledges that it and/or its representatives have had a reasonable opportunity to ask questions and receive answers from management of Pointer, or a person or persons acting on its behalf concerning the Pointer Shares, and all such questions have been answered to the full satisfaction of the Seller. Except for the representations regarding the Pointer Shares provided herein, each Seller is purchasing the Pointer Shares AS IS, has reached its own investment decision and waives any and all claims it may have against Pointer for nondisclosure of any information.

 

	
  

	
3.8

	
Investment Experience. Each Seller has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the receipt of the Pointer Shares pursuant to the terms of this Agreement and of protecting its interests in connection therewith. Such Seller is able to bear the economic risk of this transaction.

 

	
  

	
3.9

	
Restricted Securities. Each Seller understands that the Pointer Shares are restricted securities and agrees that if it decides to transfer any of such securities, it will not do so, directly or indirectly, except (i) to Pointer; (ii) pursuant to a registration statement under the Securities Act; (iii) pursuant to Rule 144 under the Securities Act; (iv) outside the United States in a transaction meeting the requirements of Regulation S under the Securities Act and in compliance with applicable local laws and regulations of the jurisdiction(s) in which such sale is made or (v) pursuant to another transaction that is exempt from registration under the Securities Act and applicable state securities laws and the Seller has provided a legal opinion reasonably satisfactory to Pointer, that such registration is not required under the Securities Act.

 

	
  

	
3.10

	
Legend on Shares. The Seller is aware that the certificate representing the Pointer Shares shall be stamped or otherwise imprinted on its face with a legend in the following form:

 

"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  THE HOLDER HEREOF, MAY OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THE SHARES ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) PURSUANT TO RULE 144 UNDER THE SECURITIES ACT (D) OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE REQUIREMENTS OF REGULATION S UNDER THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS OF THE JURISDICTION(S) IN WHICH SUCH SALE IS MADE OR (E) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION AFTER PROVIDING A LEGAL OPINION REASONABLY SATISFACTORY TO COUNSEL OF THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT."

 

  

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4.

	
Lock-up Agreement

 

	
  

	
4.1

	
Each of Gandyr Investments Ltd. and Gandyr Ltd. (together, the “Gandyr Sellers”) agree that they will not, during the period ending four months after the Closing  (the “Lock-Up Period”), (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any ordinary shares of Pointer (including without limitation, ordinary shares of Pointer which may be deemed to be beneficially owned by the Gandyr Sellers in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC")), or publicly disclose the intention to make any offer, sale, pledge or disposition or (2) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the ordinary shares or such other securities of Pointer. Notwithstanding the above, nothing herein shall prevent the Gandyr Sellers from selling, during the Lock-Up Period, any of the Pointer Shares purchased by the Gandyr Sellers to (a) any company controlled by or under common control with the Gandyr Sellers, or (b) Mr. Joanthan Irroni, Ms. Ifat Dvir or companies under their control (together the "Gandyr Group"), provided that the Gandyr Sellers shall not sell to Mr. Irroni or Ms. Dvir more than 10% of the Pointer Shares purchased by the Gandyr Sellers under this Agreement and further provided that each of the Gandyr Group entities shall undertake to be bound by the provisions of this Agreement.

 

	
  

	
4.2

	
During the period ending 12 months after the Closing, in the event of a public underwritten offering, if DBSI Investments Ltd. executed a lock-up agreement in favor of the underwriter(s), each of the Gandyr Sellers agrees for as long as they, together with any affiliated entities, hold at least 5% of Pointer shares, to also execute a lock-up agreement in favor of the underwriter(s) in the same form and substance as executed by DBSI Investments Ltd. provided that (a) such lock-up period shall not exceed 180 days, and (b) that any exemption or release from such lock-up applicable to DBSI Investments Ltd. shall apply also to the Gandyr Sellers.

 

	
  

	
5.

	
Representations and Warranties of Pointer.

 

Pointer makes the following representations and warranties to each of the Sellers:

 

	
  

	
5.1

	
Corporate Action. This Agreement has been duly authorized, executed and delivered by Pointer and constitutes the legal, valid and binding obligations of Pointer, enforceable against Pointer in accordance with its terms.   The issuance and delivery of the Pointer Shares and the payment of the Cash Consideration have been duly authorized by all required corporate action on the part of Pointer and do not violate any applicable law or the provision of the Articles of Association of Pointer or any other constitutional documents thereof.

 

  

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5.2

	
Documents.  Pointer has filed all reports required to be filed by it under the Securities Exchange Act of 1934, as amended, including pursuant to Section 13(a) or 15(d) thereof, for the six months preceding the date hereof.

 

	
  

	
5.3

	
Filings, Consents and Approvals.  Other than such notifications as may be required by Nasdaq, Pointer is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other person in connection with the execution, delivery and performance by it of this Agreement, other than the filing with the United States Securities and Exchange Commission of the Registration Statement in accordance with the Section 6 herein.

 

	
  

	
5.4

	
Pointer Shares. The Pointer Shares when issued and against receipt of the Shagrir Shares, will be validly issued and will be free and clear of all liens, charges, restrictions, claims, encumbrances or third party rights.

 

	
  

	
5.5

	
Shagrir Shares. Except for the representations regarding the Shagrir Shares provided herein, Pointer is purchasing the Shagrir Shares AS IS and has reached its own investment decision and waives any and all claims it may have against the Sellers for nondisclosure of information.

 

	
  

	
6.

	
Registration Rights.

 

	
  

	
6.1

	
F-3 Registration Statement. Pointer shall use its best efforts to prepare and file with the SEC, within 60 days of the date of Closing (such period to be extended if the Sellers have not provided all requested information in writing as set forth below), a registration statement on Form F-3 (the "Registration Statement") registering the Pointer Shares and will use its best efforts to have such Registration Statement declared effective by the Securities and Exchange Commission as soon as practicable. In the event that the Form F-3 is unavailable under the applicable eligibility standards, the Pointer shall use such other form as is available for such a registration.

 

It shall be a condition precedent to the obligations of Pointer to complete the Registration Statement pursuant to this Agreement with respect to the Pointer Shares of the Sellers that each Seller furnish to Pointer such information regarding itself, the Pointer Shares held by it and the intended method of disposition of the Pointer Shares held by it as shall be reasonably required to effect the effectiveness of the registration of such Pointer Shares and shall execute such documents in connection with such registration as Pointer may reasonably request. All information provided to the Company by the Buyer pursuant to this section shall be in writing, and such writing shall expressly acknowledge that the information is being provided for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto. The Sellers agree to cooperate with Pointer as reasonably requested by Pointer in connection with the preparation and filing of the Registration Statement hereunder, unless the Seller has notified the Company in writing of its election to exclude all of its Pointer Shares from such Registration Statement.

 

  

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6.2

	
Pointer's Obligations. At such time as Pointer is obligated to file a Registration Statement with the SEC pursuant to this Agreement, Pointer shall, use its best efforts to effect the registration of the Pointer Shares and without derogation from its undertakings and obligations herein shall have the following obligations:

 

	
  

	
6.2.1

	
Pointer shall submit to the SEC, promptly after it learns that no review of a particular Registration Statement will be made by the staff of the SEC or that the staff of the SEC has no further comments on a particular Registration Statement, as the case may be, and after receiving the approval of the Sellers pursuant to section 6.2.3 below, a request for acceleration of effectiveness of such Registration Statement to a time and date not later than 96 hours after the submission of such request. Pointer shall keep each Registration Statement effective at all times until the earlier of (i) the date as of which the Sellers may sell all of the Pointer Shares without restriction pursuant to Rule 144 (or successor thereto) promulgated under the 1933 Act or (ii) the date on which the Sellers shall have sold all the Pointer Shares (the "Registration Period"). Pointer shall ensure that each Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein (in the case of prospectuses, in the light of the circumstances in which they were made) not misleading.

 

	
  

	
6.2.2

	
Pointer shall prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection with such Registration Statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement.

 

	
  

	
6.2.3

	
Pointer shall permit Sellers to review and comment upon (i) a Registration Statement at least five (5) business days prior to its filing with the SEC and (ii) all amendments and supplements to all Registration Statements (except for amendments and supplements relating to Annual Reports on Form 20-F, and Current Reports on Form 6-K and any similar or successor reports) if practicable prior to their filing with the SEC. Pointer shall not submit a request for acceleration of the effectiveness of a Registration Statement without the prior approval of the Sellers, which consent shall not be unreasonably withheld, conditioned or delayed. 

 

	
  

	
6.2.4

	
Pointer shall notify the Sellers in writing of the happening of any event, as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, nonpublic information), and, promptly prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission. Pointer shall also promptly notify the Sellers in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to the Sellers promptly after the date of effectiveness), (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of Pointer's reasonable determination that a post-effective amendment to a Registration Statement would be appropriate.

 

  

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6.2.5

	
Pointer shall use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Pointer Shares for sale in any jurisdiction and, if such an order or suspension is issued, to use its best efforts to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify the Seller who holds Pointer Shares being sold of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.

 

	
  

	
6.2.6

	
Pointer shall hold in confidence and not make any disclosure of information concerning the Sellers provided to it unless (i) disclosure of such information is necessary to comply with federal or state securities laws or other applicable rules and regulations, (ii) the disclosure of such information is necessary or desirable to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement. Pointer agrees that it shall, upon learning that disclosure of such information concerning the Seller is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to the Sellers and allow the Sellers, solely at the their expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

 

  

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6.2.7

	
Pointer shall cooperate with the Sellers and, to the extent applicable, facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Pointer Shares to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Seller may reasonably request.

 

	
  

	
6.2.8

	
Pointer shall otherwise use its best efforts to comply with all applicable rules and regulations of the SEC in connection with the registration hereunder.

 

	
  

	
6.2.9

	
Promptly after the Registration Statement (which covers the Pointer Shares) is ordered effective by the SEC, the Pointer  shall deliver, and shall cause its legal counsel to deliver, to the transfer agent for such shares (with copies to the Seller whose shares are included in such Registration Statement) confirmation that such Registration Statement has been declared effective by the SEC.

 

	
  

	
6.2.10

	
Notwithstanding anything to the contrary herein, at any time after the Registration Statement has been declared effective by the SEC, Pointer may delay the disclosure of material non-public information concerning Pointer the disclosure of which at the time is not, in the good faith opinion of the Board of Directors of Pointer and its counsel, in the best interest Pointer and, in the opinion of counsel to Pointer, otherwise required (a "Grace Period"); provided, that Pointer shall promptly (i) notify the Sellers in writing of the existence of a Grace Period in conformity with the provisions of this Section ‎6.2.10 (provided that in each notice Pointer will not disclose the content of such material non-public information to the Sellers) and the date on which the Grace Period will begin, and (ii) notify the Sellers in writing of the date on which the Grace Period ends; and, provided further, that no Grace Period shall exceed ten (10) consecutive days and during any three hundred sixty five (365) day period such Grace Periods shall not exceed an aggregate of thirty (30) days and the first day of any Grace Period must be at least two (2) trading days after the last day of any prior Grace Period (each, an "Allowable Grace Period"). For purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include the date the Sellers receive the notice referred to in clause (i) and shall end on and include the later of the date the Sellers receive the notice referred to in clause (ii) and the date referred to in such notice. The provisions of Section 6.2.4 hereof shall not be applicable during the period of any Allowable Grace Period. Upon expiration of the Grace Period, Pointer shall again be bound by the first sentence of Section 6.2.4 with respect to the information giving rise thereto unless such material non-public information is no longer applicable.

 

  

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6.2.11

	
All obligations under this Section 6 shall cease and be of no further effect on the earlier of such date that (i) each Seller may sell all of the Pointer Shares without restriction pursuant to Rule 144 (or successor thereto) under the 1933 Act or (ii) the date on which the Sellers shall have sold all the Pointer Shares.

 

	
  

	
6.3

	
Registration Expenses.  Pointer shall be responsible for all registration expenses incurred in connection with the transactions described in this Section ‎6. Registration expenses include all expenses incident or ancillary to Pointer's performance of or compliance with this Agreement, including without limitation expenses incurred in connection with the preparation of a prospectus, filing and qualification fees, printers' and accountant fees but not including any legal fees incurred by the Sellers.

 

	
  

	
6.4

	
No Earlier Registration.  Pointer undertakes to the Sellers that it shall not register for resale any other securities of Pointer purchased by any third parties or otherwise issued by it, prior to the filing date of the Registration Statement. For purposes of clarity, the Sellers acknowledge that Pointer may offer and sell securities under its existing shelf registration statements, on Form F-3, at any time.

 

	
  

	
6.5

	
Pointer Indemnity. Pointer hereby agrees to indemnify and hold harmless each Seller, and its directors, officers, employees and agents for such Seller and controlling persons (the “Indemnified Person”) (within the meaning of section 15 of the Securities Act or Section 20(a) of the Exchange Act of 1934, as amended (the “Exchange Act”)), from and against any and all claims, liabilities, losses, damages and expenses (including reasonable attorneys’ fees and disbursements) asserted against or incurred by any such Indemnified Person which shall be caused by (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, not misleading, or (ii) any untrue statement or alleged untrue statement of a material fact contained in the prospectus or any amendment or supplement thereto, or caused by any omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except insofar as such losses, claims, damages, liabilities and expenses shall be caused by any untrue statement or omission based upon information furnished in writing to Pointer by the Sellers or on the Sellers’ behalf for use therein. In no event shall the liability of Pointer hereunder be greater in amount than the dollar amount of the net proceeds received by the Seller upon the sale of the Pointer Shares giving rise to such indemnification obligation.

 

  

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6.6

	
Seller Indemnity. Each Seller will indemnify and hold harmless Pointer, its directors, officers, employees, any underwriter for Pointer and each person, if any, who controls Pointer (within the meaning of section 15 of the Securities Act or Section 20(a) of the Exchange Act) or such underwriter, from and against any and all losses, damages, claims, liabilities, costs or expenses (including any amounts paid in any settlement effected with such Seller's consent) asserted against or incurred by Pointer, its directors, officers, employees, any such underwriter or any such controlling person which shall be caused by (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, not misleading, or (ii) any untrue statement or alleged untrue statement of a material fact contained in the prospectus (or any amendment or supplement thereto), or caused by any omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and the Seller will reimburse Pointer, its directors, officers, employees, any such underwriter and each such controlling person of Pointer or any such underwriter, promptly upon demand, for any reasonable legal or other expenses incurred by them in connection with investigating, preparing to defend or defending against or appearing as a third-party witness in connection with such loss, claim, damage, liability, action or proceeding; in each case to the extent, that such untrue statement or omission is contained in any information so furnished in writing by the Seller to Pointer for inclusion in the Registration Statement or such prospectus; provided, however, that the indemnity agreement contained in this Section ‎6.6 shall not apply to amounts paid in settlement of any losses if such settlement is effected without the prior written consent of the Seller.  In no event shall the liability of the Seller hereunder be greater in amount than the dollar amount of the net proceeds received by the Seller upon the sale of the Pointer Shares giving rise to such indemnification obligation.

 

	
  

	
7.

	
Board of Directors.

 

The Gandyr Group shall be entitled to nominate one member to the Board of Directors of Pointer as long as they collectively hold at least 9% of the issued share capital of Pointer (the "Gandyr Director").

 

Should the Gandyr Group elect to exercise its right to nominate the Gandyr Director, Pointer shall promptly take all actions and adopt any resolution required in order to effectuate such nomination.

 

The Gandyr Group covenants to promptly notify Pointer in writing at such time that they own less than 9% of the issued share capital of Pointer.

 

	
  

	
8.

	
Conditions to Closing.

 

	
  

	
8.1

	
The obligation of the Sellers to sell and transfer the Shagrir Shares to  Pointer is subject to the fulfillment on or before the Closing, of the following conditions precedent:

 

  

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8.1.1

	
The representations and warranties of Pointer contained in Section ‎5 shall be true and correct when made and shall be true and correct at the date of the Closing as though such representations and warranties had been made on and of the date of the Closing.

 

	
  

	
8.1.2

	
All deliverables to be provided to the Sellers by Pointer in accordance with Section ‎2.2.2 shall be provided in form satisfactory to Sellers.

 

	
  

	
8.2

	
The obligation of Pointer to provide the Shagrir Consideration to the Sellers are subject to the fulfillment on or before the Closing, of each of the following conditions precedent:

 

	
  

	
8.2.1

	
The representations and warranties of each of the Sellers contained in Section ‎3 shall be true and correct when made and shall be true and correct at the date of the Closing as though such representations and warranties had been made on and of the date of the Closing.

 

	
  

	
8.2.2

	
Pointer shall have received funding from banking institutions for payment of the Cash Consideration.

 

	
  

	
8.2.3

	
All deliverables to be provided to Pointer by the Sellers in accordance with Section ‎2.2.1 shall be provided in form satisfactory to Pointer.

 

	
  

	
9.

	
Miscellaneous.

 

	
  

	
9.1

	
Entire Agreement.  This Agreement constitutes the sole understanding of the parties with respect to the subject matter hereof and it supersedes any previous agreement among the parties with respect to such subject matter. No amendment, modification or alteration of the terms or provisions of this Agreement shall be binding unless the same shall be in writing and duly executed by Pointer and the Sellers. Furthermore, each party acknowledges that it has not been induced to enter into this Agreement by any representation or warranty other than the statements contained or referred to herein.

 

	
  

	
9.2

	
Successors and Assigns.  The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors of the parties hereto; provided, however, that this Agreement may not be assigned by any party without the prior written consent of the other party hereto, except for assignments by the Sellers to any corporate entity which controls, is controlled by, or is under common control with such Seller, in each case provided that such assignee agrees in writing with Pointer to be bound by the terms of this Agreement.

 

  

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9.3

	
Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument.

 

	
  

	
9.4

	
Headings. The headings of the Sections and paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction hereof.

 

	
  

	
9.5

	
No Waiver.  No action taken pursuant to this Agreement, including any investigation by or on behalf of any party hereto, will be deemed to constitute a waiver by the party taking any action of compliance with any representation, warranty or agreement contained herein.  The waiver by any party hereto of any condition or of a breach of any other provision of this Agreement will not operate or be construed as a waiver of any other condition or subsequent breach.  The waiver by any party of any of the conditions precedent to its obligations under the Agreement will not preclude it from seeking redress for breach of this Agreement other than with respect to the condition so waived.

 

	
  

	
9.6

	
No Broker. Each of the parties represents, as to itself, its subsidiaries and its affiliates, that no agent, broker, investment banker or other firm or person, is or shall be entitled to any broker’s or finder’s fee or any other commission or similar fee in connection with this Agreement.

 

	
  

	
9.7

	
Expenses. Each party shall bear the expenses incurred by it in connection with this Agreement.

 

	
  

	
9.8

	
Notices.  Any notice, request, instruction or other document (each, a "notice") to be given hereunder by any party hereto to any other party hereto shall be in writing and delivered personally, sent by registered or certified mail, postage prepaid.

 

If to Pointer to:

 

14 Hamleacha Street

Park Afek, Rosh Ha'ayin

48091, Israel

Attn: Zvi Fried

e-mail: zvif@pointer.com

 

With a copy to:

 

Yigal Arnon & Co.,

1 Azrieli Center, Tel Aviv

67021, Israel

Attn. Orly Tsioni, Adv.

orly@arnon.co.il

 

  

13

  

 

If to the Sellers, as set forth in Schedule A attached hereto, with a copy to:

 

Gornitzky & Co.,

45 Rothschild Blvd, Tel Aviv

65784, Israel

Attn. Timor Belan, Adv.

timorb@gornitzky.co.il

 

	
  

	
9.9

	
Remedies; Severability. All remedies, either under this Agreement or by law or otherwise afforded to any of the parties, shall be cumulative and not alternative. If any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable under applicable law, then such provision shall be excluded from this Agreement and the remainder of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms; provided, however, that in such event this Agreement shall be interpreted so as to give effect, to the greatest extent consistent with and permitted by applicable law, to the meaning and intention of the excluded provision as determined by such court of competent jurisdiction.

 

	
  

	
9.10

	
Governing Law. The Laws of the State of Israel shall govern the validity, performance and enforcement of this Agreement. The parties hereto irrevocably submit to the exclusive jurisdiction of the Courts of Tel-Aviv in respect of any dispute or matter arising out of or connected with this Agreement.

 

-Remainder of Page Left Blank-

 

  

14

  

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed on its behalf as of the date first above written.

 

	
POINTER TELOCATION LTD.

 

By:           _______________

Title:        _______________

Name:      _______________

 

	  	
GANDYR LTD.

 

By:           _______________

Title:        _______________

Name:       _______________

 

	
GANDYR INVESTMENTS LTD.

 

By:           _______________

Title:         _______________

Name:        _______________

 

 

	  	
SULAM FINANCIAL HOLDINGS LTD.

 

By:           _______________

Title:         _______________

Name:       _______________

 

 

  

15

  

 

SCHEDULE A

 

	
Name of Seller

	 	
Address

	 	
# of Shagrir Shares Transferred

	 	 	
# of Pointer Shares to be Issued

	 	 	
Cash Consideration in NIS

	 	
Bank Account Details

	
Gandyr Investments Ltd.

	 	
89 Medinat Heyedudim, Herzeliya

e-mail: _____________

	 	 	27,448	 	 	 	804,234	 	 	 	12,012,659	 	  
	
Gandyr Ltd.

	 	
89 Medinat Heyedudim, Herzeliya

e-mail: _____________

	 	 	1,835	 	 	 	53,766	 	 	 	803,091	 	  
	
Sulam Financial Holdings Ltd.

	 	
85 Medinat Heyedudim, Herzeliya

e-mail: _____________

	 	 	9,196	 	 	 	56,000	 	 	 	12,000,022 	 	  
	
TOTAL

	 	  	 	 	38,479	 	 	 	914,000	 	 	 	24,815,772	 	  

  

16

  

 

Exhibit ‎2.2.1.1

 

Board of Directors Resolutions of Each Seller

 

[Please provide]

 

  

17

  

 

Exhibit ‎2.2.1.2

 

SHARE TRANSFER DEED

 

The undersigned, Gandyr Investments Ltd., company number 510374341 (the "Transferor"), hereby transfers to Pointer Telocation Ltd., company number 520041476 (the "Transferee"), 27,448 Ordinary Shares, par value NIS 1.00 each, of Shagrir  Systems Ltd., a private company incorporated under the laws of the State of Israel, company number 511767832, (the "Shares"), free and clear of all liens, charges, restrictions, claims, encumbrances or any third party rights, so that the Transferee shall hold the same in accordance with the terms upon which the Transferor held the Shares immediately prior to signature of this deed, and the Transferee agrees to receive the Shares upon the abovementioned terms.

 

In witness whereof we have hereunto set our hands this __________________, 2014.

 

	 	 	 	 
	Gandyr Investments Ltd.	 	Pointer Telocation Ltd.	 

 

	 	 	 	 
	Witness	 	Witness	 

  

18

  

 

SHARE TRANSFER DEED

 

The undersigned, Gandyr Ltd., company number 512915034 (the "Transferor"), hereby transfers to Pointer Telocation Ltd., company number 520041476 (the "Transferee"), 1,835 Ordinary Shares, par value NIS 1.00 each, of Shagrir  Systems Ltd., a private company incorporated under the laws of the State of Israel, company number 511767832, (the "Shares"), free and clear of all liens, charges, restrictions, claims, encumbrances or any third party rights, so that the Transferee shall hold the same in accordance with the terms upon which the Transferor held the Shares immediately prior to signature of this deed, and the Transferee agrees to receive the Shares upon the abovementioned terms.

 

In witness whereof we have hereunto set our hands this __________________, 2014.

 

	 	 	 	 
	Gandyr Ltd	 	Pointer Telocation Ltd.	 

 

	 	 	 	 
	Witness	 	Witness	 

  

19

  

 

SHARE TRANSFER DEED

 

The undersigned, Sulam Financial Holdings Ltd., company number 510374291 (the "Transferor"), hereby transfers to Pointer Telocation Ltd., company number 520041476 (the "Transferee"), 9,196 Ordinary Shares, par value NIS 1.00 each, of Shagrir  Systems Ltd., a private company incorporated under the laws of the State of Israel, company number 511767832, (the "Shares"), free and clear of all liens, charges, restrictions, claims, encumbrances or any third party rights, so that the Transferee shall hold the same in accordance with the terms upon which the Transferor held the Shares immediately prior to signature of this deed, and the Transferee agrees to receive the Shares upon the abovementioned terms.

 

In witness whereof we have hereunto set our hands this __________________, 2014.

 

	 	 	 	 
	Sulam Financial Holdings Ltd.	 	Pointer Telocation Ltd.	 

 

	 	 	 	 
	Witness	 	Witness	 

  

20

  

 

 

Exhibit ‎2.2.1.3

 

Form of Notice of Resignation

 

__________, 2014

 

 

To: Shagrir Systems Ltd.

 

Dear Sirs,

 

Re:           Notice of Resignation from the Board of Directors

 

Notice is hereby given of my resignation, effective immediately, of my office as director in Shagrir Systems Ltd.

 

Sincerely,

 

[Name of Director]

 

  

21

  

 

Exhibit 2.2.1.5

 

Date:  ____________

 

To:

 

Pointer Telocation Ltd.

 

Dear Sirs,

 

COMPLIANCE CERTIFICATE

 

In connection with the Share Purchase Agreement dated January __, 2014 (the "SPA") by and among Pointer Telocation Ltd. (“Pointer”) the undersigned, _____________ (the "Seller") and other sellers and pursuant to Section ‎2.2.1.5 thereto, the undersigned, the _____________ of the Seller, hereby confirms that:

 

The representations and warranties of the Seller set forth in Section 3 of the SPA were true, complete and correct as of the date of execution of the SPA and are true and correct as of the date hereof.

 

Further, the undersigned hereby declares that the Management Agreement entered into between the undersigned and Shagrir Systems Ltd., dated November 16, 2004, as amended, is hereby terminated and is null and void, and the undersigned is not entitled to any management fees.

 

____________________

 

[Name of Seller] Ltd.

 

Name:

 

Title:

 

  

22

  

 

Exhibit ‎2.2.2.1

 

Resolutions of the Board of Directors of Pointer

 

  

23

  

 

Exhibit ‎2.2.2.4

 

Date:  ____________

To:

 

Gandyr Investments Ltd.

 

Gandyr Ltd.

 

Sulam Financial Holdings Ltd.

 

Dear Sirs,

 

COMPLIANCE CERTIFICATE

 

In connection with the Share Purchase Agreement dated January __, 2014 (the "SPA") by and among Pointer Telocation Ltd. (“Pointer”) Gandyr Investments Ltd., Gandyr Ltd. and Sulam Financial Holdings Ltd. (the "Sellers") and pursuant to Section ‎2.2.2.4 thereto, the undersigned, the Chief Executive Officer of Pointer, hereby confirms to the Sellers that:

 

The representations and warranties of Pointer set forth in Section ‎5 of the SPA were true, complete and correct as of the date of execution of the SPA and are true and correct as of the date hereof.

 

____________________

 

Pointer Telocation Ltd.

 

Name:         David Mahlab

 

Title:           Chief Executive Officer

 

24ex10-1.htm

Exhibit 10.1

 

SETTLEMENT AGREEMENT AND STIPULATION

THIS SETTLEMENT AGREEMENT and STIPULATION dated as of March __, 2014 by and between Drinks Americas Holdings, Ltd. (“Drinks” or the “Company”), a corporation formed under the laws of the State of Delaware, and IBC Funds, LLC (“IBC”), a Nevada Limited Liability Company.

 

BACKGROUND:

 

WHEREAS, there are bona fide outstanding liabilities of the Company in the principal amount of not less than $455,000.00; and

 

WHEREAS, these liabilities are past due; and

 

WHEREAS, IBC acquired such liabilities on the terms and conditions set forth in the annexed Notes, Note Purchase Agreements, Note Amendments and related documents, subject however to the agreement of the Company and compliance with the provisions hereof; and

 

WHEREAS, IBC and Drinks desire to resolve, settle, and compromise among other things the liabilities as more particularly set forth on Schedule A annexed hereto (hereinafter collectively referred to as the “Claims”).

 

NOW, THEREFORE, the parties hereto agree as follows:

 

1.           Defined Terms.    As used in this Agreement, the following terms shall have the following meanings specified or indicated (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

 

"AGREEMENT" shall have the meaning specified in the preamble hereof.

 

“CLAIM AMOUNT” shall mean $455,000.00.

 

  

1

  

 

"COMMON STOCK" shall mean the Company's common stock, $.001 par value per share, and any shares of any other class of common stock whether now or hereafter authorized, having the right to participate in the distribution of dividends (as and when declared) and assets (upon liquidation of the Company).

 

"COURT" shall mean the Circuit Court within Sarasota County, Florida.

 

"DTC" shall have the meaning specified in Section 3b.

 

"DWAC" shall have the meaning specified in Section 3b.

 

"FAST" shall have the meaning specified in Section 3b.

 

"MARKET PRICE" on any given date shall mean the lowest Sale Price during the Valuation Period.

 

"PRINCIPAL MARKET" shall mean the Nasdaq National Market, the Nasdaq SmallCap Market, the Over the Counter Bulletin Board, QB marketplace, the American Stock Exchange or the New York Stock Exchange, whichever is at the time the principal trading exchange or market for the Common Stock.

 

"PURCHASE PRICE" shall mean the Market Price during the Valuation Period (or such other date on which the Purchase Price is calculated in accordance with the terms and conditions of this Agreement) less the product of the Discount and the Market Price.

 

"SELLER" shall mean any individual or entity listed on Schedule A, who originally owned the Claims.

 

"TRADING DAY" shall mean any day during which the Principal Market shall be open for business.

 

"TRANSFER AGENT" shall mean the transfer agent for the Common Stock (and to any substitute or replacement transfer agent for the Common Stock upon the Company's appointment of any such substitute or replacement transfer agent).

 

  

2

  

 

"VALUATION PERIOD" shall mean the ten (10) day trading period preceding the share request inclusive of the day of any Share Request pursuant to this agreement (the “trading period”); provided that the Valuation Period shall be extended as necessary in the event that (1) the Initial Issuance is delivered in more than one tranches pursuant to Sections 3(a) and 3(e), and/or (2) one or more Additional Issuances is required to be made pursuant to Section 3(d) below, in which case the Valuation Period for each issuance shall be extended to include additional trading days pursuant to such issuance.  The Valuation Period shall begin on the date of any Share Request pursuant to this Agreement, but shall be suspended to the extent that any subsequent Initial Issuance tranche and/or Additional Issuance is due to be made until such date as such Initial Issuance tranche and/or Additional Issuance is delivered to IBC pursuant to Section 3(b)(iii). Any period of suspension of the Valuation Period shall be established by means of a written notice from IBC to the Company.

 

2.           Fairness Hearing.   Upon the execution hereof, Company and IBC agree, pursuant to Section 3(a)(10) of the Securities Act of 1933 (the “Act”), to immediately submit the terms and conditions of this Agreement to the Court for a hearing on the fairness of such terms and conditions, and the issuance exempt from registration of the Settlement Shares.  This Agreement shall become binding upon the parties only upon entry of an order by the Court substantially in the form annexed hereto as Exhibit A (the “Order”).

 

3.           Settlement Shares.   Following entry of an Order by the Court in accordance with Paragraph 2 herein and the delivery by IBC and Company of the Stipulation of Dismissal (as  defined below), Company shall issue and deliver to IBC shares of its Common Stock (the “Settlement Shares”) as follows:

 

  

3

  

 

a.           In settlement of the Claims, Company shall initially issue and deliver to IBC, in one or more tranches as necessary subject to paragraph 3(f) herein, shares of Common Stock (the “Initial Issuance”), subject to adjustment and ownership limitations as set forth below, sufficient to satisfy the compromised amount at a seventy five percent (75%) discount to market (the total amount of the claims multiplied by 25%) based on the market price during the valuation period as defined herein through the issuance of freely trading securities issued pursuant to Section 3(a)(10) of the Securities Act (the “settlement shares”).

 

b.           No later than the first business day following the date that the Court enters the Order, time being of the essence, Company shall: (i) cause its legal counsel to issue an opinion to Company’s transfer agent, in form and substance reasonably acceptable to IBC and such transfer agent, that the shares of Common Stock to be issued as the Initial Issuance, Additional Issuance (as defined below) and shares issued as a settlement fee , if applicable are legally issued, fully paid and non-assessable, are exempt from registration under the Securities Act, may be issued without restrictive legend, and may be resold by IBC without restriction; (ii) transmit via email, facsimile and overnight delivery an irrevocable and unconditional instruction to Company’s stock transfer agent; and (iii) within three (3) days thereof, issue and deliver to IBC, Settlement Shares along with settlement fee shares in one or more traunches as necessary, without any legands or restrictions on transfer, sufficient to satisfy the compromised amount along with settlement fee shares, if applicable through the issuance at freely trading securities issued pursuant to Section 3(a)(10) of the Securities Act.  Pursuant to this Agreement, IBC Funds, LLC may deliver a request to Drinks which states the dollar amount (designated in U.S. Dollars) of Common Stock along with any shares issued as a settlement fee to be issued to IBC Funds, LLC (the “Share Request”).  The date upon which the first tranche of the Initial Issuance shares along with any shares issued as a settlement fee have been received into IBC’s account and are available for sale by IBC shall be referred to as the “Issuance Date”. In the event that Company is delinquent on issuance of shares of stock to IBC pursuant to the terms and conditions of this Section 3 within three (3) business days of a request for issuance of shares pursuant to Court Order Granting Approval of this Settlement Agreement, then upon demand of IBC, Company shall be responsible for payment of a penalty of $1,000.00 per day, payable to IBC, until said delinquency is cured.

 

  

4

  

 

c.           During the Valuation Period, the Company shall deliver to IBC, through the Initial Issuance and any required Additional Issuance subject to paragraph 3(f) herein, along with any shares issued as a settlement fee, that number of shares (the “Final Amount”) with an aggregate value equal to (A) the sum of the Claim Amount, divided by (B) the Purchase Price.  The parties acknowledge that the number of Settlement Shares along with any shares issued as a settlement fee to be issued pursuant to this Agreement is indeterminable as of the date of its execution, and could well exceed the current existing number of shares outstanding as of the date of its execution.

 

d.           If at any time during the Valuation Period the Market Price is below 90% of the Market Price on the day before the Issuance Date, Company will immediately cause to be issued and delivered to IBC in accordance with the provisions of Section 3(b) herein, such additional shares as may be required to effect the purposes of this Settlement Agreement (each, an “Additional Issuance”), subject to the limitation in the paragraph below.  At the end of the Valuation Period, if the sum of the Initial Issuance and any Additional Issuance is greater than the Final Amount, IBC shall promptly deliver any remaining shares to Company or its transfer agent for cancellation.

 

e.           Notwithstanding anything to the contrary contained herein, it is the intention of the parties that the Settlement Shares along with any shares issued as a settlement fee beneficially owned by IBC at any given time shall not exceed the number of such shares that, when aggregated with all other shares of Company then beneficially owned by IBC, or deemed beneficially owned by IBC, would result in IBC owning more than 9.99% of all of such Common Stock as would be outstanding on such date, as determined in accordance with Section 16 of the Exchange Act and the regulations promulgated thereunder.  In compliance therewith, the Company agrees to deliver the Initial Issuance and any Additional Issuances in one or more traunches.

 

  

5

  

 

f.            For the avoidance of doubt, the price used to determine the number of shares of Common Stock to be delivered pursuant to any Share Request shall be rounded up to the nearest decimal place that is one-tenth of the par value of the Common Stock, but in no event less than par value of the Common Stock.

 

4.           Necessary Action.   At all times after the execution of this Agreement and entry of the Order by the Court, each party hereto agrees to take or cause to be taken all such necessary action including, without limitation, the execution and delivery of such further instruments and documents, as may be reasonably requested by any party for such purposes or otherwise necessary to effect and complete the transactions contemplated hereby.

 

5.           Releases.   Upon receipt of all of the Settlement Shares  and settlement fee shares for and in consideration of the terms and conditions of this Agreement, and except for the obligations, representations and covenants arising or made hereunder or a breach hereof, the parties hereby release, acquit and forever discharge the other and each, every and all of their current and past officers, directors, shareholders, affiliated corporations, subsidiaries, agents, employees, representatives, attorneys, predecessors, successors and assigns (the “Released Parties”), of and from any and all claims, damages, cause of action, suits and costs, of whatever nature, character or description, whether known or unknown, anticipated or unanticipated, which the parties may now have or may hereafter have or claim to have against each other with respect to the Claims.  Nothing contained herein shall be deemed to negate or affect IBC’s right and title to any securities heretofore issued to it by Company or any subsidiary of Company.

 

  

6

  

 

6.           Representations.     Company hereby represents, warrants and covenants to IBC as follows:

 

a.           There are Nine Hundred Million (900,000,000) shares of Common Stock of the Company authorized, of which approximately Two Hundred Forty Five Million Nine Hundred Ninety Eight Thousand Three Hundred Seventy Three (245,998,373) Shares of Common Stock are issued and oustanding; and approximately Six Hundred Fifty Four Million One Thousand Six Hundred Twenty Seven (654,001,627) Shares of Common Stock are available for issuance pursuant hereto;

 

b.           The shares of Common Stock to be issued pursuant to the Order are duly authorized, and when issued will be duly and validly issued, fully paid and non-assessable, free and clear of all liens, encumbrances and preemptive and similar rights to subscribe for or purchase securities;

 

c.           The shares will be exempt from registration under the Securities Act and issuable without any restrictive legend;

 

d.           The Company has reserved from its duly authorized capital stock a number of shares of Common Stock at least equal to the greater of the number of shares that could be issued pursuant to the terms of the Order and that it shall reserve at its transfer agent, at a minimum, Four Hundred Fifty Five Million  (455,000,000) during the Valuation Period in order to ensure that it can properly carry out the terms of this agreement, which may only be released to Company once all of the settlement shares have been delivered and converted pursuant to this agreement and Company’s obligations are otherwise fully satisfied or there has otherwise been a default pursuant to the terms of this agreement;

 

e.           If at any time it appears reasonably likely that there may be insufficient authorized shares to fully comply with the Order, Company shall promptly increase its authorized shares to ensure its ability to timely comply with the Order;

 

  

7

  

 

f.            The execution of this Agreement and performance of the Order by Company and IBC will not (1) conflict with, violate or cause a breach or default under any agreements between Company and any creditor (or any affiliate thereof) related to the account receivables comprising the Claims, or (2) require any waiver, consent, or other action of the Company or any creditor, or their respective affiliates, that has not already been obtained;

 

g.           Without limitation, the Company hereby waives any provision in any agreement related to the account receivables or notes comprising the Claims requiring payments to be applied in a certain order, manner, or fashion, or providing for exclusive jurisdiction in any court other than this Court;

 

h.           The Company has all necessary power and authority to execute, deliver and perform all of its obligations under this Agreement;

 

i.            The execution, delivery and performance of this Agreement by Company has been duly authorized by all requisite action on the part of Company and its Board of Directors (including a majority of its independent directors), and this Agreement has been duly executed and delivered by Company;

 

j.            Company did not enter into the transaction giving rise to the Claims in contemplation of any sale or distribution of Company’s common stock or other securities;

 

k.           There has been no modification, compromise, forbearance, or waiver entered into or given with respect to the Claims.  There is no action based on the Claims that is currently pending in any court or other legal venue, and no judgments based upon the Claims have been previously entered in any legal proceeding;

 

  

8

  

 

l.            There are no taxes due, payable or withholdable as an incident of Seller’s provision of goods and services, and no taxes will be due, payable or withholdable as a result of settlement of the Claims;

 

m.          Seller was not and within the past ninety (90) days has not been directly or indirectly through one or more intermediaries in control, controlled by, or under common control with, the Company and is not an affiliate of the Company as defined in Rule 144 promulgated under the Act;

 

n.           To the best of the Company’s knowledge, Seller is not, directly or indirectly, utilizing any of the proceeds received from IBC for selling the Claims to provide any consideration to or invest in any manner in the Company or any affiliate of the Company;

 

o.           Company has not received any notice (oral or written) from the SEC or Principal Market regarding a halt, limitation or suspension of trading in the Common Stock; and

 

p.           Seller will not, directly or indirectly, receive any consideration from or be compensated in any manner by, the Company, or any affiliate of the Company, in exchange for or in consideration of selling the Claims;

 

q.           Company represents that none of the services provided or to be provided which gave rise to the Claims were or are services related to promoting the Company’s Securities or that may be considered relations services;

 

r.            Company represents that each Claim being purchased pursuant hereto is a bona-fide Claim against the Company and that the invoices or written contract(s)/promissory notes underlying each Claim are accurate representations of the nature of the debt and the amounts owed by the Company to Seller;

 

  

9

  

 

s.           Company acknowledges that IBC or its affiliates may from time to time, hold outstanding securities of the Company which may be convertible in shares of the Company’s common stock at a floating conversion rate tied to the current market price for the stock.  The number of shares of Common Stock issuable pursuant to this Agreement may increase substantially in certain circumstances, including, but not necessarily limited to the circumstance wherein the trading price of the Common Stock declines during the Valuation Period. The Company’s executive officers and directors have studied and fully understand the nature of the transaction contemplated by this Agreement and recognize that they have a potential dilutive effect.  The board of directors of the Company has concluded in its good faith business judgment that such transaction is in the best interests of the Company.  The Company specifically acknowledges that its obligation to issue the Settlement Shares is binding upon the Company and enforceable regardless of the dilution such issuance may have on the ownership interests of other shareholders of the Company.  The Board of Directors of the Company has further given its consent for each conversion of shares of stock pursuant to this agreement.

 

t.            None of the transactions agreements or proceedings described above is party of a plan or scheme to evade the registration requirements of the Securities Act and Drinks and IBC are acting and has acted in an arms length capacity.

 

7.           Continuing Jurisdiction.   Simultaneously with the execution of this Agreement, the attorneys representing the parties hereto will execute a stipulation of dismissal substantially in the form annexed hereto as Exhibit B (the “Stipulation of Dismissal”).  In order to enable the Court to grant specific enforcement or other equitable relief in connection with this Agreement, (a) the parties consent to the jurisdiction of the Court for purposes of enforcing this Agreement, and (b) each party to this Agreement expressly waives any contention that there is an adequate remedy at law or any like doctrine that might otherwise preclude injunctive relief to enforce this Agreement.

 

  

10

  

 

8.           Conditions Precedent/ Default.

 

a.           If Company shall default in promptly delivering the Settlement Shares to IBC in the form and mode of delivery as required by Paragraphs 2, 3, 4 and 6 herein or otherwise fail in any way to fully comply with the provisions thereof;

 

b.           If the Order shall not have been entered by the Court on or prior to ninety (90) days after execution of this agreement;

 

c.           If the Company shall fail to comply with the Covenants set forth in Paragraph 14 hereof;

 

d.           If Bankruptcy, dissolution, receivership, reorganization, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors or other legal proceedings for any reason shall be instituted by or against the Company; or if the trading of the Common Stock shall have been halted, limited, or suspended by the SEC or on the Principal Market; or trading in securities generally on the Principal Market shall have been suspended or limited;  or, minimum prices shall been established for securities traded on the Principal Market or eligible for delivery via DTC or DWAC;  or the Common Stock is not eligible or unable to be deposited for trade on the Principal Market; or the Common Stock is no longer eligible for book transfer delivery via DWAC;  or the Company is delinquent or has not made its required Securities and Exchange Commission filings; or there shall have been any material adverse change (i) in the Company’s finances or operations, or (ii) in the financial markets such that, in the reasonable judgment of the IBC, makes it impracticable or inadvisable to trade the Settlement Shares; and such suspension, limitation or other action is not cured within ten (10) trading days; then the Company shall be deemed in default of the Agreement and Order and this Agreement shall be voidable in the sole discretion of IBC;

 

  

11

  

 

e.           In the event that the Company fails to fully comply with the conditions precedent as specified in paragraph 8 a. through d. herein, then the Company shall be deemed in default of the agreement and IBC, at its option and in its sole discretion, may declare Company to be in default of the Agreement and Order, and this Agreement shall be voidable in the sole discretion of IBC.  In said event, IBC shall have no further obligation to comply with the terms of this.

 

9.           Information.   Company and IBC each represent that prior to the execution of this Agreement, they have fully informed themselves of its terms, contents, conditions and effects, and that no promise or representation of any kind has been made to them except as expressly stated in this Agreement.

 

10.         Ownership and Authority.   Company and IBC represent and warrant that they have not sold, assigned, transferred, conveyed or otherwise disposed of any or all of any claim, demand, right, or cause of action, relating to any matter which is covered by this Agreement, that each is the sole owner of such claim, demand, right or cause of action, and each has the power and authority and has been duly authorized to enter into and perform this Agreement and that this Agreement is the binding obligation of each, enforceable in accordance with its terms.

 

11.         No Admission.   This Agreement is contractual and it has been entered into in order to compromise disputed claims and to avoid the uncertainty and expense of the litigation.  This Agreement and each of its provisions in any orders of the Court relating to it shall not be offered or received in evidence in any action, proceeding or otherwise used as an admission or concession as to the merits of the Action or the liability of any nature on the part of any of the parties hereto except to enforce its terms.

 

12.         Binding Nature.  This Agreement shall be binding on all parties executing this Agreement and their respective successors, assigns and heirs.

 

  

12

  

 

13.         Authority to Bind.   Each party to this Agreement represents and warrants that the execution, delivery and performance of this Agreement and the consummation of the transactions provided in this Agreement have been duly authorized by all necessary action of the respective entity and that the person executing this Agreement on its behalf has the full capacity to bind that entity.  Each party further represents and warrants that it has been represented by independent counsel of its choice in connection with the negotiation and execution of this Agreement, and that counsel has reviewed this Agreement.

 

14.         Covenants.

 

a.           For so long as IBC or any of its affiliates holds any shares of Common Stock, neither Company nor any of its affiliates shall  vote any shares of Common Stock owned or controlled by it (unless voting in favor of a proposal approved by a majority of Company’s Board of Directors), or solicit any proxies or seek to advise or influence any person with respect to any voting securities of Company; in favor of (1) an extraordinary corporate transaction, such as a reorganization or liquidation, involving Company or any of its subsidiaries, (2) a sale or transfer of a material amount of assets of Company or any of its subsidiaries, (3) any material change in the present capitalization or dividend policy of Company, (4) any other material change in Company’s business or corporate structure, (5) a change in Company’s charter, bylaws or instruments corresponding thereto (6) causing a class of securities of Defendant to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association, (7) causing a class of equity securities of Company to become eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended, (8) terminating its Transfer Agent (9) taking any action which would impede  the purposes and objects of this Settlement Agreement  or (10) taking any action, intention, plan or arrangement similar to any of those enumerated above.  Nothing in this section shall be deemed to exclude strategic decisions by Company made in an effort to expand the Company except as expressly stated herein.  The provisions of this paragraph may not be modified or waived without further order of the Court.

 

  

13

  

 

b.           Immediately upon the signing of the Settlement Order by the Court, the Company shall cause to be filed a Form 8-K with the Securities and Exchange Commission disclosing the settlement. The Company shall file such additional SEC filings as may be required in respect of the transactions.

 

15.         Indemnification.   Company shall indemnify, defend and hold IBC and its affiliates harmless with respect to all obligations of Company arising from or incident or related to this Agreement, including, without limitation, any claim or action brought derivatively or by the Seller or shareholders of Company.

 

16.         Legal Effect.   The parties to this Agreement represent that each of them has been advised as to the terms and legal effect of this Agreement and the Order provided for herein, and that the settlement and compromise stated herein is final and conclusive forthwith, subject to the conditions stated herein, and each attorney represents that his or her client has freely consented to and authorized this Agreement after have been so advised.

 

17.         Waiver of Defense.     Each party hereto waives a statement of decision, and the right to appeal from the Order after its entry.  Company further waives any defense based on the rule against splitting causes of action.  The prevailing party in any motion to enforce the Order shall be awarded its reasonably attorney fees and expenses in connection with such motion.  Except as expressly set forth herein, each party shall bear its own attorneys’ fees, expenses and costs.

 

  

14

  

 

18.         Signatures.   This Agreement may be signed in counterparts and the Agreement, together with its counterpart signature pages, shall be deemed valid and binding on each party when duly executed by all parties. Facsimile and electronically scanned signatures shall be deemed valid and binding for all purposes.  This Agreement may be amended only by an instrument in writing signed by the party to be charged with enforcement thereof. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof.

 

19.         Choice of Law, Etc.   Notwithstanding the place where this Agreement may be executed by either of the parties, or any other factor, all terms and provisions hereof shall be governed by and construed in accordance with the laws of the State of Florida, applicable to agreements made and to be fully performed in that State and without regard to the principles of conflicts of laws thereof.  Any action brought to enforce, or otherwise arising out of this Agreement shall be brought only in State Court sitting in Sarasota County, Florida.

 

20.         Exclusivity.   For a period of the later of one hundred eighty (180) days from the date of the execution of this Agreement or upon IBC’s final sale of all shares of stock issued pursuant hereto subsequent to final adjustment; (a) Company and its representatives shall not enter into any exchange transaction under Section 3(a)(10) of the Securities Act nor directly or indirectly discuss, negotiate or consider any proposal, plan or offer from any other party relating to any liabilities, or any financial transaction having an effect or result similar to the transactions contemplated hereby, and (b) IBC shall have the exclusive right to negotiate and execute definitive documentation embodying the terms set forth herein and other mutually acceptable terms.

 

  

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21.         Inconsistency.   In the event of any inconsistency between the terms of this Agreement and any other document executed in connection herewith, the terms of this Agreement shall control to the extent necessary to resolve such inconsistency.

 

22.         NOTICES.  Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively given on the earliest of

(a)  the date delivered, if delivered by personal delivery as against written receipt therefore or by confirmed facsimile or e-mail transmission,

(b)  the seventh business day after deposit, postage prepaid, in the United States Postal Service by registered or certified mail, or

(c)  the second business day after mailing by domestic or international express courier, with delivery costs and fees prepaid,

in each case, addressed to each of the other parties thereunto entitled at the following addresses (or at such other addresses as such party may designate by ten (10) days’ advance written notice similarly given to each of the other parties hereto):

Company:

Drinks Americas Holdings, Ltd.

J. Patrick Kenny

372 Danbury Road

Suite 163,

WILTON CT 06897

Phone: (203) 762-7000

Fax: (203) 762-8992

 

with a copy to:

Michael G. Brown, Esquire

P.O. Box 19702

Sarasota, Florida 34237

941-780-1300 (phone)

941-296-7500 (fax)

Florida Bar No. 0148709

 

  

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IBC Funds, LLC

Attn: Samuel Oshana

1170 Kane Concourse, Suite 404

Bay Harbor, Florida 33154

Telephone: 305-647-0729

samueloshana@ibcfunds.com

and

Charles N. Cleland, Jr., P.A.

2127 Ringling Boulevard, Suite 104

Sarasota, Florida 34237

(941) 955-1595 phone

(941) 953-7185 facsimile

Florida Bar No. 0896195

ccleland@clelandpa.com email

  

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IN WITNESS WHEREOF, the parties have duly executed this Settlement Agreement and Stipulation as of the date first indicated above.

IBC Funds, LLC

By: ___________________________

Name: __________________

Title: ___________________

Drinks Americas Holdings, Ltd.

By: ____________________________

Name: ____________________

Title: _____________________

  

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Affiliates

 

 

 

 

 

 

  

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EXHIBIT A

IN THE CIRCUIT COURT IN THE TWELFTH JUDICIAL CIRCUIT

IN AND FOR SARASOTA COUNTY, FLORIDA

                                                                           CIVIL ACTION NO.

IBC Funds, LLC,

a Nevada Limited Liability Company,

Plaintiff,

-against-

 

 

Drinks Americas Holdings, Ltd,

a Delaware Corporation,

Defendant.

____________________________________/

 

ORDER GRANTING APPROVAL OF

SETTLEMENT AGREEMENT AND STIPULATION

This matter having come on for a hearing on the ____ day of ____________, 2014, to approve the Settlement Agreement entered into as of ___________ , 2014 between Plaintiff, IBC Funds, LLC (“Plaintiff”) and Defendant, Drinks Americas Holdings, Ltd. (“Defendant” and collectively with Plaintiff, the “Parties”), and the Court having held a hearing as to the fairness of the terms and conditions of the Settlement Agreement and Stipulation and being otherwise fully advised in the premises, the Court hereby finds as follows:

 

1.           The Court has been advised that the Parties intend that the sale of the Shares (as defined by the Settlement Agreement and, hereinafter, the “Shares”) to and the resale of the Shares by Plaintiff in the United States, assuming satisfaction of all other applicable securities laws and regulations, will be exempt from registration under the Securities Act of 1933 (the “Securities Act”) in reliance upon Section 3(a)(10) of the Securities Act based upon this Court’s finding herein that the  terms and conditions of the issuance of the Shares by Defendant to Plaintiff are fair to Plaintiff;

 

  

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2.           The hearing having been scheduled upon the consent of Plaintiff and Defendant, Plaintiff has had adequate notice of the hearing and Plaintiff is the only party to whom Shares will be issued pursuant to the Settlement Agreement;

 

3.           The terms and conditions of the issuance of the Shares in exchange for the release of certain claims as set forth in the Settlement Agreement are fair to Plaintiff, the only party to whom the Shares will be issued;

 

4.           The fairness hearing was open to Plaintiff.  Plaintiff was represented by counsel at the hearing who acknowledged that adequate notice of the hearing was given and consented to the entry of this Order.

 

It is hereby ORDERED AND ADJUDGED that the Settlement Agreement and Stipulation is hereby approved as fair to the party to whom the Shares will be issued, within the meaning of Section 3(a)(10) of the Securities Act and that the sale of the Shares to Plaintiff and the resale of the Shares in the United States by Plaintiff, assuming satisfaction of all other applicable securities laws and regulations, will be exempt from registration under the Securities Act of 1933. The Settlement Agreement and Stipulation entered into between the parties is hereby approved and the parties are ordered to comply with same. The Circuit Court of the Twelfth Judicial Circuit in and for Sarasota County, Florida reserves jurisdiction over the parties to this action as well as the subject matter herein for purposes of contempt and enforcement of the Settlement Agreement and Stipulation as well as for such other purposes as allowed by law.

 

  

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SO ORDERED, this ___ day of ___________, 2014.

 

 

 

____________________________________

The Honorable _________________

Conformed copies to:

Charles N. Cleland, Jr., Esq.

Michael G. Brown, Esq.

 

 

 

  

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IN THE CIRCUIT COURT IN THE TWELFTH JUDICIAL CIRCUIT

IN AND FOR SARASOTA COUNTY, FLORIDA

                                                                           CIVIL ACTION NO.

IBC Funds, LLC,

a Nevada Limited Liability Company,

Plaintiff,

-against-

 

 

Drinks Americas Holdings, Ltd.,

a Florida Corporation,

Defendant.

____________________________________/

STIPULATION OF DISMISSAL

 

IT IS HEREBY STIPULATED AND AGREED, by and between the undersigned, the attorneys of record for all the parties to the above-entitled action, pursuant to the Florida Rules of Civil Procedure, that whereas no party hereto is an infant or incompetent person for whom a committee has been appointed or conservatee and no person not a party has an interest in the subject matter of the action, the above-entitled action be, and the same hereby is, dismissed, each party to bear its own costs.

 

This Stipulation may be filed without further notice with the Clerk of the Court.

Dated: _______________________, 2014

 

	
__________________________________

	
___________________________________

	
Charles N. Cleland, Jr., Esq.

	
Michael G. Brown, Esquire

	
CHARLES N. CLELAND, JR., P.A.

	
P.O. Box 19702

	
Florida Bar No. 0896195

	
Sarasota, Florida 34237

	
2127 Ringling Blvd., Suite 104

	
941-780-1300 (phone)

	
Sarasota, Florida 34237

	
941-296-7500 (fax)

	
(941) 955-1595 phone

	
Florida Bar No. 0148709

	
(941) 953-7185 facsimile

	
Attorney for Defendant

	
Attorney for Plaintiff

	  

 

SO ORDERED:                                                                     ___________________________________

The Honorable _______________________

 

 

  

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SCHEDULE A

8% Convertible Unsecured Promissory Note                                                                                                                     $35,800.00

Assignment

Note Purchase Agreement

First Amendment to Convertible Promissory Note

Second Amendment to Convertible Promissory Note

8% Convertible Unsecured Promissory Note                                                                                                                     $70,000.00

Assignment

Note Purchase Agreement

First Amendment to Convertible Promissory Note

First Amendment to Convertible Promissory Note

8% Convertible Unsecured Promissory Note                                                                                                                     $150,000.00

Assignment

Note Purchase Agreement

First Amendment to Convertible Promissory Note

Second Amendment to Convertible Promissory Note

8% Convertible Unsecured Promissory Note                                                                                                                     $200,000.00

Assignment

Note Purchase Agreement

First Amendment to Convertible Promissory Note

Second Amendment to Convertible Promissory Note

 

 

  

24

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