Document:

ex1029_s1a2-333161778.htm

 

 

 

Exhibit 10.29

 

 

 

 

PURCHASE AGREEMENT

 

 

THIS AGREEMENT is made as of the 24 day of June, 2009, by and between Ophthalmic Imaging Systems (the “Company”), a corporation organized under the laws of the State of California, with its principal offices at 221 Lathrop Way, Suite I, Sacramento, CA 95815 and the purchaser whose name and address is set forth on the signature page hereof (the “Purchaser”).

 

IN CONSIDERATION of the mutual covenants contained in this Agreement, the Company and the Purchaser agree as follows:

 

SECTION 1.     Authorization of Sale of the Shares and Warrants. Subject to the terms and conditions of this Agreement, the Company has authorized the issuance and sale of up to 13,214,317 shares of common stock, no par value (the “Common Stock”), of the Company, and warrants to purchase up to 4,404,772 shares of Common Stock, in one or more transactions that are exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), provided by Section 4(2) thereof and Rule 506 of Regulation D thereunder.

 

SECTION 2.     Agreement to Sell and Purchase the Shares and the Warrants.

 

2.1       Closing. At the Closing (as defined in Section 3.1), the Company will, subject to the terms of this Agreement, issue and sell to the Purchaser, and the Purchaser will buy from the Company, upon the terms and conditions hereinafter set forth:

 

(a)       9,633,228 shares of Common Stock (the “1st Installment Shares”) for a purchase price per share equal to $0.41522 resulting in an aggregate purchase price of $3,999,908.90 (the “1st Installment”), which reflects a pre-money valuation of the Company of $7,200,000 as of the Closing Date, taking into account all outstanding shares of the Company and assuming the conversion or exercise of all outstanding notes and warrants (calculating their conversion at the maximum number of underlying shares), options, convertible securities or loans, which in any event, can only be exercised on a price per share lower than $0.41522 (such calculation shall be referred as the “Fully Diluted Basis”); at the Closing, the 1st Installment Shares shall represent 36.35% of the Company’s issued and outstanding shares on a Fully Diluted Basis; and

 

(b)       a warrant to purchase up to 3,211,076 shares of Common Stock (i.e., 33% of the 1st Installment Shares) (the “1st Installment Warrant Shares”) exercisable at $1.00 per share for a period of three years commencing upon the Closing Date (the “1st Installment Warrant”), which warrant shall be substantially in the form set forth in Exhibit A-1 hereto.

 

2.2       Deferred Closing. At the Deferred Closing (as defined in Section 3.2), the Company will, subject to the terms of this Agreement, issue and sell to the Purchaser, and the Purchaser will buy from the Company, upon the terms and conditions hereinafter set forth:

 

(a)       3,581,089 shares of Common Stock (the “2nd Installment Shares” and, together with 1st Installment Shares, the “Shares”) for a purchase price per share equal to $0.55848 (subject to adjustment for reverse and forward stock splits and similar transactions) resulting in an aggregate purchase price of $1,999,966.50 (the “2nd Installment”), which reflects

 

 

  

  

  

 

a pre-money valuation of the Company of $10,800,000 as of the Deferred Closing Date, on a Fully Diluted Basis; and

 

(b)       a warrant to purchase up to 1,193,696 shares of Common Stock (i.e., 33% of the 2nd Installment Shares) (the “2nd Installment Warrant Shares” and, together with the 2nd Installment Warrant Shares, the “Warrant Shares”) exercisable at $1.00 per share, for a period of three years from the Closing Date (the “2nd Installment Warrant” and, together with the 1st Installment Warrant, the “Warrants”,and the Shares, the Warrants and the Warrant Shares shall be collectively referred to as, the “Securities”), which warrant shall be substantially in the form set forth in Exhibit A-2 hereto.

 

(c)       If at the time of the Deferred Closing Date, the Company’s Board of Directors determines in good faith that the Company’s financial situation requires the Company to raise additional funds in a capital raising transaction (in addition to 2nd Installment), the Purchaser (in its capacity as a shareholder in the Company) hereby agrees not to object to such capital raising transaction and will agree to waive its participation right (as set forth in Section 8.14 below) in connection therewith; provided, that such capital raising transaction is with Persons who are shareholders of MediVision Medical Imaging Ltd., the parent entity of the Company (“MediVision”), on the date hereof, in an aggregate amount not to exceed $1,500,000, at a price per share not less than $0.55848 (subject to adjustment for reverse and forward stock splits and similar transactions), and without the provision of any special rights to such investors. For avoidance of doubt, nothing herein shall be deemed as an obligation of any Purchaser Director (as defined below) to vote in any manner at any meeting of the Company’s Board of Directors (the “Board”) concerning this matter and each such director shall serve his duties in accordance with applicable law.

 

	  	
SECTION 3.

	
Delivery of the Shares at the Closing and at the Deferred Closing.

	  	
3.1

	
Closing

 

(a)       The completion of the purchase and sale of the 1st Installment Shares (the “Closing”) shall occur at the offices of Troutman Sanders LLP, 405 Lexington Avenue, New York, New York 10174 as soon as practicable and as agreed to by the parties hereto, within three business days following the execution of this Agreement, or on such later date or at such different location as the parties shall agree in writing, but not prior to the date that the conditions for Closing set forth in Sections 3.1(b) and 3.1(c) below have been satisfied or waived by the appropriate party (the “Closing Date”).

 

(b)       The Company’s obligation to complete the purchase and sale of the 1st Installment Shares and deliver such stock certificate to the Purchaser at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company:

	  	
(i)

	
receipt by the Company of the 1st Installment; and

 

(ii)       each of the representations and warranties of the Purchaser made herein shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date as though made at that time.

 

(c)       The Purchaser’s obligation to accept delivery of the 1st Installment Shares, such stock certificate and the 1st Installment Warrant, and to pay the 1st Installment at the

 

 

  

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Closing shall be subject to the following conditions, any one or more of which may be waived by the Purchaser:

 

(i)        the delivery to the Purchaser by counsel to the Company of a legal opinion dated as of the Closing Date in the form set forth in Exhibit B;

 

(ii)       each of the representations and warranties of the Company set forth herein are true and correct in all respects as of the date of this Agreement and as of such Closing Date as though made at that time and that the Company shall have complied in all respects with all the agreements and satisfied in all respects all the conditions herein on its part to be performed or satisfied on or prior to such Closing Date, and the Purchaser shall have received a certificate executed by the chief executive officer and chief financial officer of the Company, dated as of the Closing Date, to the foregoing effect, in the form set forth in Exhibit C-1;

 

(iii)      the execution by the Company of a written agreement (copy of each shall be delivered to the Purchaser at the Closing) with each of the Company’s lenders, United Mizrachi Bank (“United Bank”) and The Tail Wind Fund Ltd. (“Tail Wind”) which agreement is binding on the parties thereto, and pursuant to which each of United Bank and Tail Wind agree to forgo any principal payments payable by the Company (or any of its subsidiaries) under any United Bank or Tail Wind indebtedness outstanding on the Closing Date until January 1, 2011, and in the case of United Bank, the United Bank consents to and approves the MediVision Assets Transaction (as defined below) and the transaction contemplated thereunder. Notwithstanding the foregoing, if the Company makes a principal payment to United Bank in 2010 in amount higher than the Company’s Earnings Before Interest, Taxes and Amortization (“EBITDA”) for the year ended December 31, 2010, then within three business days after the filing with the SEC (as defined below) of the Company’s audited financial statements for the year ended December 31, 2010, the Company will issue shares of Common Stock to the Purchaser free of charge and without payment of any consideration by the Purchaser, in an amount equal to the amount of principal payments made to United Bank minus EBITDA divided by 0.41522 (the “Additional Shares”); the provisions of Section 7.1 shall apply, mutatis mutandis, to the Additional Shares, and the Company shall take all required actions set forth in Section 7.1 in order to register the Additional Shares;

 

(iv)      the execution by the Company and MediVision of a written agreement (a copy of which shall be delivered to the Purchaser at the Closing) (the “Assets Purchase Agreement”), which agreement is binding on the Company and the parties thereto, for the purchase of certain assets of MediVision in a manner and under terms reasonably satisfactory to the Purchaser (the “MediVision Assets Transaction”);

 

(v)       the deposit by MediVision of 3,793,452 shares of Common Stock, currently owned by MediVision, in escrow with Stephen L. Davis, Esq. and the execution of the escrow agreement by all parties thereto (copy of which shall be delivered to the Purchaser at the Closing), pursuant to the terms of Section 8.7(b) herein;

 

(vi)      the execution by MediVision and the receipt by the Purchaser at the Closing of a copy of a binding and irrevocable proxy, substantially in the form set forth in Exhibit D, appointing Gil Allon as its true and lawful attorney-in-fact and proxy with respect to all shares of Common Stock owned by MediVision (i.e, 9,380,843 shares) to vote FOR the Stockholder Approvals (as defined below) at the Company’s 2010 Annual Meeting of

 

 

  

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Shareholders; provided that MediVision may transfer up to 2,000,000 shares of Common Stock free and clear of this irrevocable proxy; and

 

(vii)     the execution by Agfa Gevaert N.V., Delta Trading and Services (1986) Ltd, Gil Allon, Noam Allon, Ariel Shenhar and Yuval Shenhar (collectively, the “Principal MV Shareholders,” and together with MediVision, the “MediVision/Principal MV Shareholders Group”) and the receipt by the Purchaser at the Closing of copies of binding and irrevocable proxies, substantially in the form of set forth in Exhibit E, appointing Noam Allon as their true and lawful attorney-in-fact and proxy with respect to all shares of MediVision owned by such entities or persons to vote FOR the MediVision Assets Transaction and any other matters for which MediVision’s shareholders are asked to grant their vote or consent in connection with the consummation of the MediVision Assets Transaction.

 

(viii)    the receipt by the Purchaser from the Company of a copy of resolutions adopted by the Board approving the execution of the Transaction Documents, the consummation of the transactions contemplated therein, the appointment of Uri Geiger and Moshe Arkin to the Board as of the Closing and the delivery of a director indemnification agreement to each of them.

 

(ix)      the delivery to the Purchaser of a duly executed secretary certificate, dated as of the Closing Date, in the form of Exhibit F-1.

	  	
3.2

	
Deferred Closing.

 

(a)       The completion of the purchase and sale of the 2nd Installment Shares (the “Deferred Closing”) shall occur at the offices of Troutman Sanders LLP, 405 Lexington Avenue, New York, New York 10174 as soon as practicable and as agreed to by the parties hereto, within 14 days from the Company’s filing with the United States Securities and Exchange Commission (the “SEC”) of its Form 10-Q for the fiscal quarter ended March 31, 2010 (the “Q1 Financial Statements”), or on such later date or at such different location as the parties shall agree in writing, but not prior to the date that the conditions for Deferred Closing set forth in Sections 3.2(b) and 3.2(c) below have been satisfied or waived by the appropriate party (the “Deferred Closing Date”).

 

(b)       The Company’s obligation to complete the purchase and sale of the 2nd Installment Shares and the 2nd Installment Warrant, and deliver the stock certificate and the 2nd Installment Warrant to the Purchaser at the Deferred Closing shall be subject to the following conditions, any one or more of which may be waived by the Company:

	  	
(i)

	
receipt by the Company of the 2nd Installment; and

 

(ii)       each of the representations and warranties of the Purchaser made herein shall be true and correct in all material respects (except for those representations and warranties that are qualified by Material Adverse Effect, which shall be true and correct in all respects) as of the Deferred Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date.

 

(c)       The Purchaser’s obligation to accept delivery of the 2nd Installment Shares, the stock certificate and the 2nd Installment Warrant, and to pay the 2nd Installment at the Deferred Closing, shall be subject to the completion of the Closing in all respects, and to the following conditions, any one or more of which may be waived by the Purchaser:

 

 

  

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(i)        The Company shall have generated, for the period from January 1, 2009 to March 31, 2010, consolidated aggregate revenues (calculated in accordance with “generally accepted accounting principles” as shall be defined in the Q1 Financial Statements) of at least $2,000,000 from the sale of EMR Products (as defined below), of which at least $1,000,000 is generated (as shall be evidenced in writing to the Purchaser prior to the Deferred Closing Date) from sales of the Company (excluding sales by Abraxas Medical Solutions Ltd., a subsidiary of the Company (“Abraxas Medical”)) to the ophthalmology segment (the “Milestone”). If the Milestone shall not be achieved in full, the Purchaser shall not be obligated to invest any portion of the 2nd Installment; provided, that the Purchaser shall be entitled at its sole discretion to invest all or any portion of the 2nd Installment on the terms set forth herein. For the purpose of this Section 3.2, “EMR Product” shall mean all software, installation training, service and maintenance of the Electronic Medical Records and Practice Management;

 

(ii)       the delivery to the Purchaser by counsel to the Company of a legal opinion dated as of the Deferred Closing Date in the form set forth in Exhibit B; and

 

(iii)      each of the representations and warranties of the Company set forth herein shall be true and correct in all material respects (except for those representations and warranties that are qualified by Material Adverse Effect, which shall be true and correct in all respects) as of the Deferred Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date) and that the Company has complied in all respects with all the agreements and satisfied in all respects all the conditions herein on its part to be performed or satisfied on or prior to such Deferred Closing Date, and the Purchaser shall have received a certificate executed by the chief executive officer and chief financial officer of the Company, dated as of the Deferred Closing Date, to the foregoing effect in the form set forth in Exhibit C-2.

 

(iv)      the delivery to the Purchaser of a duly executed secretary certificate, dated as of the Deferred Closing Date, in the form of Exhibit F-2.

 

3.3       At each of the Closing and the Deferred Closing, the Purchaser shall deliver, in immediately available funds, the full amount of the purchase price for the Shares being purchased hereunder by wire transfer to an account designated by the Company, and the Company shall deliver to the Purchaser one or more stock certificates and Warrants registered in the name of the Purchaser, or in such nominee name(s) as designated by the Purchaser in writing, representing the number of Shares and the number of the Warrant Shares set forth in Section 2 above and bearing an appropriate legend referring to the fact that the Shares and the Warrants were sold in reliance upon the exemption from registration under the Securities Act provided by Section 4(2) thereof and Rule 506 of Regulation D promulgated thereunder. The name(s) in which the stock certificates are to be registered are set forth in the Stock Certificate Questionnaire attached hereto as part of Appendix I.

 

SECTION 4.   Representations, Warranties and Covenants of the Company. The Company hereby represents and warrants to, and covenants with, the Purchaser as follows:

 

 

  

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4.1       Organization and Qualification. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation with corporate power and authority to own or lease its properties and conduct its business in all material respects as described in the SEC Reports (as defined below) and the Company is qualified to do business as a foreign corporation in each jurisdiction in which qualification is required, except where failure to so qualify would not have a Material Adverse Effect (as defined herein). The Company’s subsidiaries (each a “Subsidiary” and collectively the “Subsidiaries”) are listed on Exhibit G to this Agreement and are the only subsidiaries, direct or indirect, of the Company. Each Subsidiary is a direct or indirect wholly owned subsidiary of the Company (except as otherwise set forth in Exhibit G). Each Subsidiary is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, with corporate power and authority to own or lease its properties and conduct its business, and is qualified to do business as a foreign corporation in each jurisdiction in which qualification is required, except where failure to so qualify would not have a Material Adverse Effect.

 

4.2       Reporting Company; Registration Statement. The Company is not an “ineligible issuer” (as defined in Rule 405 promulgated under the Securities Act) and is eligible to register the Shares and the Warrant Shares for resale by the Purchaser on a registration statement under the Securities Act.

 

4.3       Authorized Capital Stock. The Company has the authorized and the issued and outstanding capitalization as set forth on Schedule 4.3(i); all of the issued and outstanding securities of the Company have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and conform in all material respects to the description thereof contained in the SEC Reports. Except as set forth on Schedule 4.3(ii), the Company does not have outstanding any options to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any such options, rights, convertible securities or obligations. With respect to each of the Subsidiaries (i) all the issued and outstanding shares of such Subsidiary’s capital stock is owned and held by the Company, and have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and (ii) there are no outstanding options to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of such Subsidiary’s capital stock or any such options, rights, convertible securities or obligations.

 

4.4       Issuance, Sale and Delivery of the Shares. The Shares and the Warrants issuable on each of the Closing Date and the Deferred Closing Date, as the case may be, have been duly authorized and, when issued, delivered and paid for in the manner set forth in this Agreement, will be validly issued, fully paid and nonassessable, and will conform in all material respects to the description of the Common Stock set forth in the Company’s Form 8-A filed with the Commission on May 13, 1993 (the “Form 8-A”). No preemptive rights or other rights to subscribe for or purchase any shares of Common Stock of the Company exist with respect to the

 

 

  

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issuance and sale of the Shares and Warrant Shares by the Company pursuant to this Agreement. The Warrant Shares have been duly authorized and, upon exercise in accordance with the applicable Warrants, the Warrant Shares will be validly issued, fully paid and nonassessable, and will conform in all material respects to the description of the Common Stock set forth in the Form 8-A. No stockholder of the Company has any right (which has not been waived or has not expired by reason of lapse of time following notification of the Company’s intention to file the Registration Statement (as hereinafter defined)) to require the Company to register the sale of any capital stock owned by such stockholder under the Registration Statement (other than rights granted to the Tail Wind Fund, Ltd. and Solomon Strategic Holdings, Inc.).

 

4.5       Due Execution, Delivery and Performance of the Agreements; No Conflicts; No Consents. The Company has the requisite corporate power and authority to enter into this Agreement, the Voting Agreement and the Warrants (collectively, the “Transaction Documents”) and to consummate the transactions contemplated hereby and thereby. The Transaction Documents have been duly authorized and when delivered in accordance with the terms of this Agreement, will be duly executed and delivered by the Company, and will constitute legal, valid and binding agreements of the Company, enforceable against the Company in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application relating to or affecting the enforcement of creditors’ rights and the application of equitable principles relating to the availability of remedies, and except as rights to indemnity or contribution, including but not limited to, indemnification provisions set forth in Sections 7.4 and 8.7 below, this Agreement may be limited by federal or state securities law or the public policy underlying such laws. The execution and performance of the Transaction Documents by the Company and the consummation of the transactions herein and therein contemplated (including the issuance of the Shares, the Warrants and the Warrant Shares) will not: (i) violate any provision of the articles of incorporation or bylaws of the Company or the organizational documents of any Subsidiary; (ii) result in the creation of any lien, charge, security interest or encumbrance upon any assets of the Company or any Subsidiary pursuant to the terms or provisions of, or will not conflict with, result in the breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a default under any agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which any of the Company or any Subsidiary is a party or by which any of the Company or any Subsidiary or their respective properties may be bound; or (iii) result in a violation of any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other governmental agency or body applicable to the Company or any Subsidiary or any of their respective properties, except in the case of (ii) and (iii), such as could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. No consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental agency or body is required for the execution and delivery of the Transaction Documents or the consummation of the transactions contemplated herein or therein, except for compliance with the Blue Sky laws and federal securities laws applicable to the offering of the Securities. For the purposes of this Agreement, the term “Material Adverse Effect” shall mean a material adverse effect on the condition (financial or otherwise), properties, business, prospects or results of operations of the Company and/or its Subsidiaries, individually or taken as a whole.

 

 

  

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4.6       Accountants. Perry-Smith LLP, who has expressed its opinion with respect to the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, which will be incorporated by reference into the Registration Statement and the Prospectus (as defined herein) that forms a part thereof, are registered independent public accountants as required by the Securities Act and the rules and regulations promulgated thereunder (the “1933 Act Rules and Regulations”) and by the rules of the Public Accounting Oversight Board.

 

4.7       Contracts. The material contracts to which the Company is a party that are filed with, or incorporated by reference to, the Company’s Annual Report on Form 10-K or and Exchange Act report filed by the Company with the Commission after December 31, 2008 have been duly and validly authorized, executed and delivered by the Company and constitute the legal, valid and binding agreements of the Company, enforceable by and against the Company in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to enforcement of creditors’ rights generally, and general equitable principles relating to the availability of remedies, and except as rights to indemnity or contribution may be limited by federal or state securities laws and the public policy underlying such laws.

 

4.8       No Actions. Except as disclosed in the SEC Reports, there are no legal or governmental actions, suits or proceedings pending or, to the Company’s knowledge, threatened against the Company or any Subsidiary before or by any court, regulatory body or administrative agency or any other governmental agency or body, domestic, or foreign, which actions, suits or proceedings, individually or in the aggregate, might reasonably be expected to have a Material Adverse Effect; and no labor disturbance by the employees of the Company exists or is imminent, that might reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Subsidiary is a party to or subject to the provisions of any injunction, judgment, decree or order of any court, regulatory body, administrative agency or other governmental agency or body that might have a Material Adverse Effect.

 

4.9       Properties. Except as disclosed in the SEC Reports, the Company and each Subsidiary have good and marketable title to all the properties and assets described as owned by it in the consolidated financial statements included in the SEC Reports, free and clear of all liens, mortgages, pledges, or encumbrances of any kind except (i) those, if any, reflected in such consolidated financial statements, or (ii) those that are not material in amount and do not adversely affect the use made and proposed to be made of such property by the Company or its Subsidiaries. Except as disclosed in the SEC Reports, the Company and each Subsidiary holds its leased properties under valid and binding leases. The Company and any Subsidiary owns or leases all such properties as are necessary to their respective operations as described in the SEC Reports.

 

4.10     No Material Adverse Change. Since December 31, 2008: (i) the Company and its Subsidiaries have not incurred any material liabilities or obligations, indirect, or contingent, or entered into any material agreement or other transaction that is not in the ordinary course of business or that could reasonably be expected to result in a material reduction in the future earnings of the Company; (ii) the Company and its Subsidiaries have not sustained any material loss or interference with their businesses or properties from fire, flood, windstorm, accident or other calamity not covered by insurance; (iii) the Company and its Subsidiaries have

 

 

  

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not paid or declared any dividends or other distributions with respect to their capital stock and none of the Company or any Subsidiary is in default in the payment of principal or interest on any outstanding debt obligations; (iv) there has not been any change in the capital stock of the Company or its Subsidiaries other than the sale of the Shares hereunder and shares or options issued pursuant to employee equity incentive plans or purchase plans approved by the Company’s Board of Directors, or indebtedness material to the Company or its Subsidiaries (other than in the ordinary course of business and any required scheduled payments); and (v) there has not occurred any event that has caused or could reasonably be expected to cause a Material Adverse Effect.

 

4.11     Intellectual Property. Except as disclosed in the SEC Reports, (i) the Company and each Subsidiary owns or has obtained valid and enforceable licenses or options for the inventions, patent applications, patents, trademarks (both registered and unregistered), trade names, copyrights and trade secrets necessary for the conduct of its respective business as described in the SEC Reports (collectively, the “Intellectual Property”); and (ii) (a) there are no third parties who have any ownership rights to any Intellectual Property that is owned by, or has been licensed to, the Company or each Subsidiary for the products described in the SEC Reports that would preclude the Company or any Subsidiary from conducting its business as currently conducted and have a Material Adverse Effect, except for the ownership rights of the owners of the Intellectual Property licensed or optioned by the Company or any Subsidiary; (b) to the Company’s knowledge, there are currently no sales of any products that would constitute an infringement by third parties of any Intellectual Property owned, licensed or optioned by the Company or any Subsidiary, which infringement would have a Material Adverse Effect; (c) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the rights of the Company or any Subsidiary in or to any Intellectual Property owned, licensed or optioned by the Company or any Subsidiary, other than claims which could not reasonably be expected to have a Material Adverse Effect; (d) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the validity or scope of any Intellectual Property owned, licensed or optioned by the Company or any Subsidiary, other than non-material actions, suits, proceedings and claims; and (e) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others that the Company or any of any Subsidiaries infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary right of others, other than non-material actions, suits, proceedings and claims.

 

4.12     Compliance. None of the Company nor its Subsidiaries has been advised, nor do any of them have any reason to believe, that it is not conducting business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, including, without limitation, all applicable local, state and federal environmental laws and regulations, except where failure to be so in compliance would not have a Material Adverse Effect.

 

4.13     Taxes. The Company and each Subsidiary has filed on a timely basis (giving effect to extensions) all federal, state and foreign income and franchise tax returns and has paid or accrued all taxes that shown as due thereon, and the Company has no knowledge of a tax deficiency that has been or might be asserted or threatened against it that could have a Material Adverse Effect. All tax liabilities accrued through the date hereof have been adequately provided for on the books of the Company.

 

 

  

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4.14     Transfer Taxes. On the Closing Date, all stock transfer or other taxes (other than income taxes) that are required to be paid in connection with the sale and transfer of the Shares to be sold to the Purchaser hereunder will have been, fully paid or provided for by the Company and all laws imposing such taxes will have been fully complied with.

 

4.15     Investment Company. The Company is not an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for an investment company, within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission promulgated thereunder.

 

4.16     Insurance. The Company maintains insurance underwritten by insurers of recognized financial responsibility, of the types and in the amounts that the Company reasonably believes is adequate for its business, including, but not limited to, insurance covering all real and personal property owned or leased by the Company against theft, damage, destruction, acts of vandalism and all other risks customarily insured against, with such deductibles as are customary for companies in the same or similar business, all of which insurance is in full force and effect.

 

4.17     Additional Information. In the past 12 calendar months, the Company has filed all documents required to be filed by it prior to the date hereof with the Commission pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (all of the foregoing filed prior to the Closing Date and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Reports”). The Company has made available to the Purchaser or its representatives true, correct and complete copies of the SEC Reports not available on the SEC’s EDGAR system, if any. As of their respective filing dates, the SEC Reports complied in all material respects with the requirements of the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder (the “1934 Act Rules and Regulations” and, together with the 1933 Act Rule and Regulations, the “Rules and Regulations”) applicable to the SEC Reports, and none of the SEC Reports, at the time they were filed with the Commission, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

4.18     Price of Common Stock. The Company has not taken, and will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or that might reasonably be expected to constitute, the stabilization or manipulation of the price of the shares of the Common Stock to facilitate the sale or resale of the Securities.

 

4.19     Use of Proceeds. The Company shall use the proceeds from the sale of the Securities pursuant to the Company’s budget and a strategic work plan in the form attached on Schedule 4.19.

 

4.20     Non-Public Information. The Company has not disclosed to the Purchaser information that would constitute material non-public information as of the Closing Date other than the existence of the transaction contemplated hereby.

 

4.21     Use of Purchaser Name. Except as otherwise required by applicable law or regulation, the Company shall not use the Purchaser’s name or the name of any of its affiliates in any advertisement, announcement, press release or other similar public communication unless it

 

 

 

  

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has received the prior written consent of the Purchaser for the specific use contemplated which consent shall not be unreasonably withheld.

 

4.22     Related Party Transactions. No transaction has occurred between or among the Company, on the one hand, and its affiliates, officers or directors on the other hand, that is required to have been described under applicable securities laws in its SEC Reports and is not so described in such reports.

 

4.23     Off-Balance Sheet Arrangements. There is no transaction, arrangement or other relationship between the Company and an unconsolidated or other off-balance sheet entity that is required to be disclosed by the Company in its SEC Reports and is not so disclosed or that otherwise would be reasonably likely to have a Material Adverse Effect. There are no such transactions, arrangements or other relationships with the Company that may create contingencies or liabilities that are not otherwise disclosed by the Company in its SEC Reports.

 

4.24     Governmental Permits, Etc. The Company and each Subsidiary has all franchises, licenses, certificates and other authorizations from such federal, state or local government or governmental agency, department or body that are currently necessary for the operation of the business of the Company as described in the SEC Reports, except where the failure to posses currently such franchises, licenses, certificates and other authorizations is not reasonably expected to have a Material Adverse Effect. Neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any such permit that, if the subject of an unfavorable decision, ruling or finding, could reasonably be expected to have a Material Adverse Effect.

 

4.25     Financial Statements. The consolidated financial statements of the Company and the related notes and schedules thereto included in the SEC Reports fairly present the financial position, results of operations, stockholders’ equity and cash flows of the Company and its consolidated Subsidiaries at the dates and for the periods specified therein. Such financial statements and the related notes and schedules thereto have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved (except as otherwise noted therein) and all adjustments necessary for a fair presentation of results for such periods have been made; provided, however, that the unaudited financial statements are subject to normal year-end audit adjustments (which are not expected to be material) and do not contain all footnotes required under generally accepted accounting principles.

 

4.26     Internal Accounting Controls. The Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under the Exchange Act) that are designed to ensure that material information relating to the Company is made known to the Company’s principal executive officer and the Company’s principal financial officer or persons performing similar functions. The Company is otherwise in compliance in all material respects

 

 

 

  

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with all applicable provisions of the Sarbanes-Oxley Act of 2002, as amended and the rules and regulations promulgated thereunder.

 

4.27     Foreign Corrupt Practices. Neither the Company, nor any Subsidiary, nor, to the knowledge of the Company, any director, officer, agent, employee or other Person acting on behalf of the Company or any Subsidiary has, in the course of its actions for, or on behalf of, the Company: (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

 

4.28     Employee Relations. Neither the Company nor any Subsidiary is a party to any collective bargaining agreement or employs any member of a union. The Company and each Subsidiary believe that their relations with their employees are good. The Company is not engaged in any unfair labor practice except for matters which would not, individually or in the aggregate, have a Material Adverse Effect, (i) there is (A) no unfair labor practice complaint pending or, to the Company’s knowledge, threatened against the Company before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under collective bargaining agreements is pending or threatened, (B) no strike, labor dispute, slowdown or stoppage pending or, to the Company’s knowledge, threatened against the Company and (C) no union representation dispute currently existing concerning the employees of the Company, and (ii) to the Company’s knowledge, (A) no union organizing activities are currently taking place concerning the employees of the Company and (B) there has been no violation of any federal, state, local or foreign law relating to discrimination in the hiring, promotion or pay of employees or any applicable wage or hour laws. No executive officer of the Company (as defined in Rule 501(f) promulgated under the Securities Act) has notified the Company that such officer intends to leave the Company or otherwise terminate such officer’s employment with the Company. No executive officer of the Company is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company or any Subsidiary to any liability with respect to any of the foregoing matters.

 

4.29     ERISA. The Company is in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder (herein called “ERISA”); no “reportable event” (as defined in ERISA) has occurred with respect to any “pension plan” (as defined in ERISA) for which the Company would have any liability; the Company has not incurred and does not expect to incur liability under: (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “pension plan”; or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the “Code”); and each “Pension Plan” for which the Company would have liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification.

 

 

  

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4.30     Environmental Matters. There has been no storage, disposal, generation, manufacture, transportation, handling or treatment of toxic wastes, hazardous wastes or hazardous substances by the Company or to its knowledge, any Subsidiary (or, to the knowledge of the Company, any of their predecessors in interest) at, upon or from any of the property now or previously owned or leased by the Company or any Subsidiary in violation of any applicable law, ordinance, rule, regulation, order, judgment, decree or permit or that would require remedial action under any applicable law, ordinance, rule, regulation, order, judgment, decree or permit; there has been no material spill, discharge, leak, emission, injection, escape, dumping or release of any kind into such property or into the environment surrounding such property of any toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous substances due to or caused by the Company or any Subsidiary or with respect to which the Company or any Subsidiary have knowledge; the terms “hazardous wastes,” “toxic wastes,” “hazardous substances,” and “medical wastes” shall have the meanings specified in any applicable local, state, federal and foreign laws or regulations with respect to environmental protection.

 

4.31     Integration; Other Issuances of Shares. Neither the Company nor its subsidiaries or any affiliates, nor any person acting on its or their behalf, has issued any shares of Common Stock or shares of any series of preferred stock or other securities or instruments convertible into, exchangeable for or otherwise entitling the holder thereof to acquire shares of Common Stock which would be integrated with the sale of the Securities to the Purchaser for purposes of the Securities Act or of any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated, nor will the Company or its subsidiaries or affiliates take any action or steps that would require registration of any of the Securities under the Securities Act or cause the offering of the Securities to be integrated with other offerings. Assuming the accuracy of the representations and warranties of the Purchaser, the offer and sale of the Securities by the Company to the Purchaser pursuant to this Agreement will be exempt from the registration requirements of the Securities Act.

 

4.32     Money Laundering Laws. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its Subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened, except, in each case, as would not reasonably be expected to have a Material Adverse Effect.

 

4.33     Foreign Assets Controls. Neither the Company nor any of its Subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

 

 

  

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4.34     Shareholders Rights Plan. No claim will be made or enforced by the Company that the Purchaser is an “Acquiring Person” under any shareholders rights plan or similar plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving the Securities.

 

4.35     No General Solicitation; Offering Materials. Neither the Company nor, to the Company’s knowledge, any person acting on behalf of the Company, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities. Each of the Company, its directors and officers has not distributed and will not distribute prior to the Closing Date or the Deferred Closing Dates any offering material, including any “free writing prospectus” (as defined in Rule 405 promulgated under the Securities Act), in connection with the offering and sale of the Shares other than the SEC Reports or any amendment or supplement thereto.

 

SECTION 5.   Representations, Warranties and Covenants of the Purchaser. The Purchaser represents and warrants to, and covenants with, the Company that:

 

5.1       Investment Experience. The Purchaser can bear the economic risk and complete loss of its investment in the Securities and is knowledgeable, sophisticated and experienced in financial and business maters, in making, and is qualified to make, decisions with respect to investments representing an investment decision like that involved in the purchase of the Securities.

 

5.2       Investment Intent. The Purchaser is acquiring the Securities in the ordinary course of its business and for its own account for investment only not with a view to distribution (within the meaning of Section 2(11) of the Securities Act) (this representation and warranty not limiting the Purchaser’s right to sell pursuant to the Registration Statement or in compliance with the Securities Act and the Rules and Regulations, or, other than with respect to any claims arising out of a breach of this representation and warranty, the Purchaser’s right to indemnification under Section 7.4). Prior to the Closing, the Purchaser was not an affiliate of the Company. Neither the Purchaser nor any of its affiliates is a registered broker dealer or an entity engaged in the business of being a broker dealer. The Purchaser does not have any agreement or understanding, directly or indirectly, with any person to distribute the Securities.

 

5.3       Shareholder Questionnaire. The Purchaser has completed or caused to be completed the Registration Statement Questionnaire attached hereto as part of Appendix I, for use in preparation of the Initial Registration Statement (as defined below), and the answers thereto are true and correct as of the date hereof and will be true and correct as of the effective date of the Registration Statement and the Purchaser will notify the Company immediately of any material change in any such information provided in the Registration Statement Questionnaire until such time as the Purchaser has sold all of its Shares and Warrant Shares or until the Company is no longer required to keep the Initial Registration Statement effective.

 

5.4       Disclosure of Information. The Purchaser has had an opportunity to receive documents related to the Company and to ask questions of and receive answers from the Company regarding the Company, its business, finances and operations and the terms and conditions of the offering of the Securities. Neither such inquiries nor any other due diligence investigation conducted by the Purchaser (or on its behalf) shall modify, amend, limit or affect

 

 

 

  

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the Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or made pursuant to this Agreement or the Company’s obligation to indemnify the Purchaser indemnitees pursuant to Section 8.7 herein. The Purchaser has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.

 

5.5       Accredited Investor. At the time the Purchaser was offered the Shares and Warrants it was, at the date hereof it is, on each of the Closing Date and Deferred Closing Date it will be, and on each date on which it exercises Warrants it will be, either (i) an “accredited investor” within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A promulgated under the Securities Act.

 

5.6       General Solicitation. The Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

 

5.7       Governmental Review. The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

 

5.8       Brokers and Finders. The Purchaser has not retained any finder, broker or like agent in connection with the transactions contemplated by this Agreement.

 

5.9       Reliance on Exemptions. The Purchaser understands that the Securities are being offered and sold to it in reliance upon specific exemptions from the registration requirements of the Securities Act, the Rules and Regulations and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Securities.

 

5.10     Confidentiality. For the benefit of the Company, the Purchaser previously agreed with the Company to keep confidential all information concerning this private placement. The Purchaser acknowledges that it is prohibited from reproducing or distributing this Agreement or any other offering materials or other information provided by the Company in connection with the Purchaser’s consideration of its investment in the Company, in whole or in part, or divulging or discussing any of their contents, except to its partners, officers, directors, or financial, investment, business or legal advisors in connection with its proposed investment in the Securities. Further, the Purchaser understands that the existence and nature of all conversations and presentations, if any, regarding the Company and this offering must be kept strictly confidential. The Purchaser understands that the federal securities laws impose restrictions on trading based on information regarding this offering. In addition, the Purchaser hereby acknowledges that unauthorized disclosure of information regarding this offering may result in a violation of Regulation D. This obligation will terminate upon the filing by the Company of a Current Report on Form 8-K in accordance with Section 7.1 hereof describing this

 

 

  

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offering. In addition to the above, the Purchaser shall maintain in confidence the receipt and content of any notice of a Suspension (as defined in Section 5.17 below). The foregoing agreements shall not apply to any information that is or becomes publicly available through no fault of the Purchaser, or that the Purchaser is legally required to disclose; provided, however, that if the Purchaser is requested or ordered to disclose any such information pursuant to any court or other government order or any other applicable legal procedure, it shall use commercially reasonable efforts to provide the Company with prompt notice of any such request or order in time sufficient to enable the Company to seek an appropriate protective order.

 

5.11     Investment Decision. The Purchaser understands that nothing in the Agreement or any other materials presented to the Purchaser in connection with the purchase and sale of the Securities constitutes legal, tax or investment advice. The Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Securities.

 

5.12     Restricted Securities. The Purchaser understands that the Securities are “restricted securities” under the U.S. federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable state laws and regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances. The Purchaser understands that the Securities have not been and, except as contemplated in Section 7 hereof, are not required to be, registered for resale under the Securities Act or any state securities laws, and may not be offered for resale, assigned or transferred unless (A) subsequently registered thereunder or (B) pursuant to an exemption from such registration, to the extent reasonably requested, including pursuant to Section 4(1) under the Securities Act or Rule 144 promulgated under the Securities Act, as amended, or a successor rule thereto (“Rule 144”).

 

5.13     Legend. The Purchaser understands that, except as set forth in Section 5.14, the certificates representing the Shares or Warrant Shares will bear a restrictive legend in substantially the following form:

 

“[NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED] WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.” 

 

 

 

  

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The Purchaser understands that the Warrants will bear a restrictive legend in substantially the same form.

 

5.14     Removal of Legend; Transfer Agent Instructions. The Company hereby covenants with the Purchaser to, no later than three trading days following the delivery by the Purchaser to the Company of a legended certificate representing Shares or Warrant Shares (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer), and either (i) Purchaser’s Certificate of Subsequent Sale (A) in the form of Appendix II hereto, (B) executed by an officer of, or other authorized person designated by, the Purchaser, and (C) to the effect that the Shares or Warrant Shares have been sold in accordance with a Registration Statement or in a transaction exempt from the registration requirements of the Securities Act and any applicable state securities or Blue Sky laws or (ii) an opinion of counsel reasonably satisfactory to the Company that the Shares or Warrant Shares are freely transferable and that the legend is no longer required on such stock certificate, deliver or cause the Company’s transfer agent to deliver to the transferee of the Shares or Warrant Shares or to the Purchaser, as applicable, a new stock certificate representing such Shares or Warrant Shares that is free from all restrictive and other legends. The Company acknowledges that the remedy at law for a breach of its obligations under this Section 5.14 may be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 5.14, that the Purchaser shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required.

 

5.15     Stop Transfer. The certificates representing the Shares and Warrant Share will be subject to a stop transfer order with the Company’s transfer agent that restricts the transfer of such shares except upon receipt by the transfer agent of a written confirmation from the Purchaser to the effect that the Purchaser has satisfied its prospectus delivery requirements, in the form attached as Appendix II hereto.

 

5.16     Residency. The Purchaser’s principal executive offices are in the jurisdiction set forth immediately below the Purchaser’s name on the signature pages hereto.

 

5.17     Public Sale or Distribution. The Purchaser hereby covenants with the Company not to make any sale of the Shares or Warrant Shares under any Registration Statement without complying with the provisions of this Agreement and without effectively causing the prospectus delivery requirement under the Securities Act to be satisfied (whether physically or through compliance with Rule 172 under the Securities Act or any similar rule), and the Purchaser acknowledges and agrees that such Shares or Warrant Shares are not transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate Purchaser’s Certificate of Subsequent Sale: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares or Warrant Shares have been sold in accordance with the Registration Statement, the Securities Act and any applicable state securities or Blue Sky laws and (B) the prospectus delivery requirement effectively has been satisfied. The

 

 

 

  

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Purchaser acknowledges that there may occasionally be times when the Company must suspend the use of the prospectus (the “Prospectus”) forming a part of the Registration Statement (a “Suspension”) until such time as an amendment to the Registration Statement has been filed by the Company and declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. Without the Company’s prior written consent, which consent shall not be unreasonably withheld or delayed, the Purchaser shall not use any written materials to offer the Shares for resale other than the Prospectus, including any “free writing prospectus” as defined in Rule 405 under the Securities Act. The Purchaser covenants that it will not sell any Shares or Warrant Shares pursuant to said Prospectus during the period commencing at the time when Company gives the Purchaser written notice of the suspension of the use of said Prospectus and ending at the time when the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said Prospectus. Notwithstanding the foregoing, the Company agrees that no Suspension shall be for a period of longer than 60 consecutive days, and no Suspension shall be for a period longer than 90 days in the aggregate in any 365 day period. The Purchaser further covenants to notify the Company promptly of the sale of all of its Shares or Warrant Shares.

 

5.18     Organization; Validity; Enforcements. The Purchaser further represents and warrants to, and covenants with, the Company that: (i) the Purchaser has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement; (ii) the making and performance of this Agreement by the Purchaser and the consummation of the transactions herein contemplated will not violate any provision of the organizational documents of the Purchaser or conflict with, result in the breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a default under any material agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which the Purchaser is a party or, any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other governmental agency or body applicable to the Purchaser; (iii) no consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental agency or body is required on the part of the Purchaser for the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement; (iv) upon the execution and delivery of this Agreement, this Agreement shall constitute a legal, valid and binding obligation of the Purchaser, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application relating to or the enforcement of creditor’s rights and the application of equitable principles relating to the availability of remedies, and except as rights to indemnity or contribution, including, but not limited to, the indemnification provisions set forth in Section 7.3 and 8.7 of this Agreement, may be limited by federal or state securities laws or the public policy underlying such laws; and (v) there is not in effect any order enjoining or restraining the Purchaser from entering into or engaging in any of the transactions contemplated by this Agreement.

 

5.19     Short Sales. Prior to the date hereof, the Purchaser has not taken, and prior to the public announcement of the transaction after the Closing the Purchaser shall not take, any action that has caused or will cause the Purchaser to have, directly or indirectly, sold or agreed to sell any shares of Common Stock, effected any short sale, whether or not against the box,  established any “put equivalent position” (as defined in Rule 16a-1(h) under the Exchange Act with respect to the Common Stock, granted any other right (including, without limitation, any put or call option) with respect to the Common Stock or with respect to any security that includes, relates to or derived any significant part of its value from the Common Stock.

 

 

 

  

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SECTION 6.   Survival of Agreements; Survival of Company Representations and Warranties. Notwithstanding any investigation made by any party to this Agreement, all covenants and agreements made by the Company and the Purchaser herein and in the certificates for the Shares and the Warrants delivered pursuant hereto shall survive the execution of this Agreement, the Closing and the Deferred Closing (as the case may be), the delivery to the Purchaser of the Shares and Warrants being purchased and the payment therefor. All representations and warranties, made by the Company and the Purchaser herein and in the certificates for the Shares and Warrants delivered pursuant hereto shall survive (a) with respect to the transaction consummated at the Closing - for a period of two years following the later of the execution of this Agreement, the delivery to the Purchaser of the 1st Installment Shares and 1st Installment Warrant being purchased at the Closing and the payment therefor, and (b) with respect to the transaction consummated at the Deferred Closing - for a period of two years following the later of the Deferred Closing, the delivery to the Purchaser of the 2nd Installment Shares and 2nd Installment Warrant being purchased at the Deferred Closing and the payment therefor.

 

	  	
SECTION 7.

	
Registration of the Shares; Compliance with the Securities Act.

	  	
7.1

	
Registration Procedures and Expenses. The Company shall:

 

(a)       as soon as practicable, but in no event later than 60 days following the Closing Date (the “Initial Registration Statement Filing Deadline”), prepare and file with the Commission a Registration Statement on Form S-1 or Form S-3 (or such other form appropriate for such purpose) (the “Initial Registration Statement”), relating to the resale of the 1st Installment Shares, the 1st Installment Warrant Shares and any shares of Common Stock issued or issuable, directly or indirectly upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing by the Purchaser from time to time.

 

(b)       as soon as practicable, but in no event later than 60 days following the Deferred Closing Date (the “Deferred Closing Filing Deadline”), prepare and file with the Commission a Registration Statement on Form S-1 or Form S-3 (or such other form appropriate for such purpose) (the “Deferred Closing Registration Statement”), relating to the resale of the 2nd Installment Shares, the 2nd Installment Warrant Shares and any shares of Common Stock issued or issuable, directly or indirectly upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing by the Purchaser from time to time. For purposes of this Agreement, the term, “Registration Statement” shall include each of the Initial Registration Statement, the Deferred Closing Registration Statement and any registration Statement filed pursuant to Section 7.2 and the term “Registrable Securities” shall mean, collectively, 1st Installment Shares, the 1st Installment Warrant Shares, 2nd Installment Shares, the 2nd Installment Warrant Shares and any shares of Common Stock issued or issuable, directly or indirectly upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing.

 

 

  

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(c)       use its commercially reasonable efforts, subject to receipt of necessary information from the Purchaser, to cause the Commission to declare each of the Initial Registration Statement and the Deferred Closing Registration Statement effective within 180 days after the Closing Date or the Deferred Closing Date (as the case may be) (the “Effectiveness Deadline”);

 

(d)       promptly prepare and file with the Commission such amendments and supplements to each Registration Statement and the prospectus used in connection therewith as may be necessary to keep each Registration Statement effective until such time as all of the Registrable Securities covered by the Registration Statement become eligible for resale by the Purchaser without any volume or other restrictions under Rule 144 or any other rule of similar effect; provided, that for the avoidance of doubt, in no event shall the Company have any obligation to keep any Registration Statement effective after such time as all of the Registrable Securities covered by such Registration Statement have been sold pursuant to the Registration Statement or Rule 144;

 

(e)       furnish to the Purchaser with respect to the Registrable Securities registered under any Registration Statement (and to each underwriter, if any), such number of copies of prospectuses and such other documents as the Purchaser may reasonably request, in order to facilitate the public sale or other disposition of all Registrable Securities under such Registration Statement by the Purchaser (or its valid transferees);

 

(f)        file documents required of the Company for normal Blue Sky clearance in states specified in writing by the Purchaser; provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented;

 

(g)       bear all expenses in connection with the procedures in paragraphs (a) through (f) of this Section 7.1 and the registration of the Registrable Securities pursuant to any Registration Statement, other than fees and expenses, if any, of counsel or other advisers to the Purchaser or underwriting discounts, brokerage fees and commissions incurred by the Purchaser, if any, in connection with the offering of the Registrable Securities pursuant to any Registration Statement;

 

(h)       file a Form D with respect to the 1st Installment Shares and the 1st Warrants and the 2nd Installment Shares and the 2nd Installment Warrants (as the case may be) as required under Regulation D;

 

(i)        file a Current Report on Form 8-K with the Commission describing the transactions contemplated by this Agreement on each of the Closing Date and the Deferred Closing Date (as the case may be); and

 

(j)        in order to enable the Purchaser to sell the Registrable Securities under Rule 144 under the Securities Act, use its commercially reasonable efforts to comply with the requirements of Rule 144, including without limitation, use its commercially reasonable efforts to comply with the requirements of Rule 144(c)(1) with respect to current public information about the Company and to timely file all reports required to be filed by the Company under the Exchange Act until the Purchaser is no longer an affiliate of the Company, but in any

 

 

 

  

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event for at least one year from the Closing Date or the Deferred Closing Date (as the case may be).

 

The Company understands that the Purchaser disclaims being an underwriter, but the Purchaser being deemed an underwriter shall not relieve the Company of any obligations it has hereunder. A draft of the proposed Registration Statement Questionnaire to be completed by the Purchaser is attached hereto as Appendix I.

 

	  	
7.2

	
Commission Comments.

 

(a)       If the Commission informs the Company that all of the Registrable Securities required to be registered under any Registration Statement cannot be included in such Registration Statement due to Commission Comments (as defined below), then the Company shall, from, time to time, (i) inform the Purchaser of the receipt of the Commission Comments and use its commercially reasonable efforts to file amendments to such Registration Statement as required by the Commission and/or (ii) withdraw such Registration Statement and file a new registration statement (a “New Registration Statement”), in either case covering the maximum number of Registrable Securities permitted to be registered by the Commission, on Form S-1 or S-3 or such other form available to register for resale the Registrable Securities as a secondary offering; provided, however, that prior to filing such amendment or New Registration Statement, the Company shall be obligated to use its commercially reasonable efforts to advocate with the Commission for the registration of all of the Registrable Securities in accordance with the Commission Comments. Notwithstanding any other provision of this Agreement, if any Commission Comments sets forth a limitation of the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the Commission for the registration of all or a greater number of Registrable Securities), unless otherwise directed in writing by the Purchaser as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will first be reduced by Warrant Shares. In the event the Company amends a Registration Statement or files a New Registration Statement, as the case may be, under clauses (i) or (ii) above, the Company will use its commercially reasonable efforts to file with the Commission, as promptly as allowed by the Commission or Commission Comments provided to the Company or to registrants of securities in general, one or more registration statements on Form S-1 or Form S-3 or such other form available to register for resale those Registrable Securities that were not registered for resale on the Registration Statement, as amended, or the New Registration Statement.

 

(b)       For purposes of this Agreement, “Commission Comments” means written comments pertaining solely to Rule 415 under the Securities Act which are received by the Company from the Commission with respect to a filed Registration Statement which requires the Company to limit the amount of Registrable Securities which may be included therein to a number of shares which is less than such amount sought to be registered under such Registration Statement.

 

(c)       For purposes of this Agreement, the Filing Deadline of any Registration Statement filed pursuant to this Section 7.2, shall be 30 days after the receipt of the Commission Comments which required the filing of such Registration Statement.

 

 

  

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(d)       For purposes of this Agreement, the Effectiveness Deadline of any Registration Statement filed pursuant to this Section 7.2, shall be 90 days after the receipt of the Commission Comments which required the filing of such Registration Statement.

 

(e)       The Company agrees that it will, subject to receipt of necessary information from the Purchaser, file each New Registration Statement as soon as practicable after it becomes aware that the filing of such New Registration Statement will be required, but in any event by its Filing Deadline, and it will use commercially reasonable efforts to cause the Commission to declare each New Registration Statement effective within by its respective Effectiveness Deadline.

 

(f)        The Company agrees that it will use commercially reasonable efforts to respond to any comments received from the SEC with respect to any Registration Statement, including but not limited to Commission Comments, as soon as practical but in any event within 14 business days (United States) from the receipt thereof.

 

	  	
7.3

	
Transfer of Shares After Registration.

 

(a)       The Purchaser agrees that it will not effect any disposition of the Shares or Warrant Shares or its right to purchase the Shares or Warrant Shares that would constitute a sale within the meaning of the Securities Act or pursuant to any applicable state securities laws, except as contemplated in the Registration Statement referred to in Section 7.1 or as otherwise permitted by law, and that it will promptly notify the Company of any changes in the information set forth in the Registration Statement regarding the Purchaser or its plan of distribution.

 

(b)       The Company acknowledges and agrees that the Purchaser may from time to time pledge, and/or grant a security interest in, some or all of the legended Shares and Warrant Shares in connection with applicable securities laws, pursuant to a bona fide margin agreement in compliance with a bona fide margin loan. Such a pledge would not be subject to approval or consent of the Company and no legal opinion of legal counsel to the pledgee, secured party or pledgor shall be required in connection with the pledge, but such legal opinion shall be required in connection with a subsequent transfer or foreclosure following default by the Purchaser transferee of the pledge. No notice shall be required of such pledge, but Purchaser’s transferee shall promptly notify the Company of any such subsequent transfer or foreclosure. The Purchaser acknowledges that the Company shall not be responsible for any pledges relating to, or the grant of any security interest in, any of the Shares or Warrant Shares or for any agreement, understanding or arrangement between the Purchaser and its pledgee or secured party. At the Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Shares or Warrant Shares may reasonably request in connection with a pledge or transfer of the Shares, including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders thereunder. Each Purchaser acknowledges and agrees that, except as otherwise provided in Section 5.17 and in this Section 7.3, any Shares or Warrant Shares subject to a pledge or security interest as contemplated by this Section 7.3(b) shall continue to bear the legend set forth in Section 5.13 and be subject to the restrictions on transfer set forth in Section 5.17 and in this Section 7.3.

 

	  	
7.4

	
Indemnification.  For the purpose of this Section 7.4:

 

 

  

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(i)        the term “Purchaser/Affiliate” shall mean any affiliate of the Purchaser, including a transferee who is an affiliate of the Purchaser, and any person who controls the Purchaser or any affiliate of the Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act; and

 

(ii)       the term “Registration Statement” shall include any preliminary prospectus, final prospectus, free writing prospectus, exhibit, supplement or amendment included in or relating to, and any document incorporated by reference in, any Registration Statement referred to in Section 7.1 and 7.2.

 

(a)       The Company agrees to indemnify and hold harmless the Purchaser and each Purchaser/Affiliate, against any losses, claims, damages, liabilities or expenses, joint or several, to which the Purchaser or Purchaser/Affiliates may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, including the Prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the Registration Statement, including any information deemed to be a part thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rules 430B, 430C or 434, of the Rules and Regulations, or the Prospectus, in the form first filed with the Commission pursuant to Rule 424(b) of the Regulations, or filed as part of the Registration Statement at the time of effectiveness if no Rule 424(b) filing is required or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in the Registration Statement or any amendment or supplement thereto not misleading or in the Prospectus or any amendment or supplement thereto not misleading in light of the circumstances under which they were made, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, and will promptly reimburse the Purchaser and each Purchaser/Affiliate for any legal and other expenses as such expenses are reasonably incurred by the Purchaser or such Purchaser/Affiliate in connection with investigating, defending or preparing to defend, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable for amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, and the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Purchaser expressly for use therein, or (ii) the failure of such Purchaser to comply with the covenants and agreements contained in Sections 5.17 or 7.3 hereof respecting the sale of the Shares or Warrant Shares, or (iii) the inaccuracy of any representation or warranty made by such Purchaser herein or (iv) any statement or omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser prior to the pertinent sale or sales by the Purchaser.

 

 

 

  

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(b)       Each Purchaser will indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, against any losses, claims, damages, liabilities or expenses to which the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, but only if such settlement is effected with the written consent of such Purchaser) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon: (i) any failure to comply with the covenants and agreements contained in Sections 5.10 or 7.2 hereof respecting the sale of the Shares; (ii) the inaccuracy of any representation or warranty made by such Purchaser herein; or (iii) any untrue or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements in the Registration Statement or any amendment or supplement thereto not misleading or in the Prospectus or any amendment or supplement thereto not misleading in the light of the circumstances under which they were made, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Purchaser expressly for use therein; and will reimburse the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person for any legal and other expense reasonably incurred by the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that each Purchaser’s aggregate liability under this Section 7 shall not exceed the amount of proceeds received by such Purchaser on the sale of the Shares pursuant to the Registration Statement.

 

(c)       Promptly after receipt by an indemnified party under this Section 7.4 of notice of the threat or commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 7.4 promptly notify the indemnifying party in writing thereof, but the omission to notify the indemnifying party will not relieve it from any liability that it may have to any indemnified party for contribution or otherwise under the indemnity agreement contained in this Section 7.4 to the extent it is not prejudiced as a result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party, and the indemnifying party and the indemnified party shall have reasonably concluded, based on an opinion of counsel reasonably satisfactory to the indemnifying party, that there may be a conflict

 

 

 

  

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of interest between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 7.4 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless: (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, reasonably satisfactory to such indemnifying party, representing all of the indemnified parties who are parties to such action); or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party. The indemnifying party shall not be liable for any settlement of any action without its written consent. In no event shall any indemnifying party be liable in respect of any amounts paid in settlement of any action unless the indemnifying party shall have approved in writing the terms of such settlement; provided, that such consent shall not be unreasonably withheld. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnification could have been sought hereunder by such indemnified party from all liability on claims that are the subject matter of such proceeding.

 

(d)       If the indemnification provided for in this Section 7.4 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under paragraphs (a), (b) or (c) of this Section 7.4 in respect to any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein: (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Purchaser from the private placement of Common Stock hereunder; or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but the relative fault of the Company and the Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties in this Agreement and/or the Registration Statement that resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Purchaser on the other shall be deemed to be in the same proportion as the amount paid by the Purchaser to the Company pursuant to this Agreement for the Shares purchased by the Purchaser that were sold pursuant to the Registration Statement bears to the difference (the “Difference”) between the amount the Purchaser paid for the Shares that were sold pursuant to the Registration Statement and the amount received by such Purchaser from such sale. The relative fault of the Company on the one hand and the Purchaser on the other shall

 

 

 

  

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be determined by reference to, among other things, whether the untrue or alleged statement of a material fact or the omission or alleged omission to state a material fact or the inaccurate or the alleged inaccurate representation and/or warranty relates to information supplied by the Company or by the Purchaser and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in paragraph (c) of this Section 7.4, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in paragraph (c) of this Section 7.4 with respect to the notice of the threat or commencement of any threat or action shall apply if a claim for contribution is to be made under this paragraph (d); provided, however, that no additional notice shall be required with respect to any threat or action for which notice has been given under paragraph (c) for purposes of indemnification. The Company and the Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 7.4 were determined solely by pro rata allocation (even if the Purchaser were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 7.4, the Purchaser shall not be required to contribute any amount in excess of the amount by which the Difference exceeds the amount of any damages that the Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

 

7.5       Information Available. The Company, upon the reasonable request of the Purchaser, shall make available for inspection during normal business hours by the Purchaser, any underwriter participating in any disposition pursuant to any Registration Statement and any attorney, accountant or other agent retained by the Purchaser or any such underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, employees and independent accountants to supply all information reasonably requested by the Purchaser or any such underwriter, attorney, accountant or agent in connection with any Registration Statement.

 

7.6       Assignment of Registration Rights. The right to cause the Company to register Registrable Securities granted to the Purchaser by the Company under this Agreement may be assigned in full by the Purchaser (or a subsequent holder of any Registrable Securities (a “Holder”)) in connection with a transfer by the Purchaser or a Holder of its Registrable Securities, but only if: (i) such transfer may otherwise be effected in accordance with applicable securities laws; (ii) the Purchaser or the Holder gives written notice of the proposed transfer to the Company including the name and address of such transferee and a copy of the transfer documents and agreements; and (iii) such transfer is otherwise in compliance with this Agreement.

 

	 	
SECTION 8.

	
Covenants.

	  	
8.1

	
Proxy Statement.

 

(a)       In connection with (i) the Company’s 2010 Annual Meeting of Shareholders or (ii) or any other special meeting of the Company’s shareholders duly convened prior to the Company’s 2010 Annual Meeting of Shareholders, the Company shall prepare and file with the Commission a proxy statement

 

 

 

  

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meeting in accordance with the requirements of Section 14 of the Exchange Act and the related rules and regulations thereunder promulgated by the Commission (the “Proxy Statement”) to solicit the approval by stockholders holding a majority of the outstanding voting stock of the Company present, in person or by proxy, at the Stockholders’ Meeting (as defined below) of an amendment to the Company’s articles of incorporation providing for an increase in the amount of authorized Common Stock equal to 100,000,000 shares or in any greater amount such that in any event, the Company shall have at the Deferred Closing sufficient amount of authorized Common Stock to enable it to perform its obligations under this Agreement (the “Stockholder Approval[s]”). The Company shall use its best efforts to (i) file the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 (the “2009 10-K”) as soon as possible after such date, (ii) file the Proxy Statement immediately after it files the 2009 10-K, (iii) cause the Proxy Statement to be declared effective under the Exchange Act as soon as possible promptly as reasonably practicable after such filing (if the first filing is a preliminary proxy statement) and (iv) mail the Proxy Statement to the stockholders of the Company as soon as practicable.

 

(b)       The Company shall keep the Purchaser apprised of the status of matters relating to the Proxy Statement and the Stockholders’ Meeting, including promptly furnishing the Purchaser and its counsel with copies of notices or other communications related to the Proxy Statement and the Stockholders’ Meeting received by the Company from the Commission or any other third party.

 

8.2       Stockholders’ Meeting. The Company shall, in accordance with the laws of the State of California and the Company’s articles of incorporation and bylaws, use its commercially reasonable efforts to convene a meeting of holders of Common Stock to consider and vote upon giving the Stockholder Approval (the “Stockholders’ Meeting”) as soon as practicable after the filing of a definitive proxy statement in connection with the Stockholders’ Meeting, but in any event by May 15, 2010. Subject to fiduciary obligations under applicable law, the Board shall recommend such Stockholder Approval, shall not withdraw or modify such recommendation and shall solicit such Stockholder Approval. Without limiting the generality of the foregoing, if the Board withdraws or modifies its recommendation, the Company shall nonetheless cause the Stockholders’ Meeting to be convened and a vote to be taken, and the Board may communicate to the Company’s stockholders its basis for such withdrawal or modification.

 

8.3       Election of Directors.

 

(a)       The Company shall take all necessary actions (including, if necessary, amend its by-laws) following the Closing to adjust the size of the Board to nine members, to elected as follows:

 

(i)        two “Independent Directors” as defined under the listing standards of The Nasdaq Capital Market, regardless of whether the Common Stock is then listed on the Nasdaq Capital Market, the identity of one shall be nominated by the Purchaser, and the identity of the other shall be nominated by the MediVision/Principal MV Shareholders Group (which two directors are currently Mr. William Greer and Mr. Jonathan R. Phillips);

 

(ii)       three directors to be nominated by the Purchaser (the “Purchaser Directors”). One of the Purchaser Directors shall be appointed as the Chairman of  the Company’s Audit Committee. The Company shall ensure the appointment of the Purchaser Directors at the Closing, and shall use its commercially reasonable efforts to cause (i) the Purchaser Directors to be nominated and elected to the Board in each election of directors and (ii) if any Purchaser Director who has been so elected to the Board shall cease for any reason to be a member of the Board during such person’s term as a director, the Company shall use its best efforts, subject to applicable laws and regulations, to cause such vacancy to be filled by a replacement designated by the Purchaser;

 

 

  

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(iii)      three directors to be nominated by MediVision or the Principal MV Shareholders (the “MediVision Directors”); and

 

(iv)     one director to be nominated by the Purchaser and MediVision or the Principal MV Shareholders who shall be a reputable individual from the Company’s industry, and who shall act as the Chairman of the Board;

 

provided, that at the first annual meeting of the Company’s shareholders following the execution of this Agreement, (1) the Purchaser shall nominate Mr. Ariel Shenhar, pursuant to Section 8.3(a)(ii), to serve as a director until the next annual meeting, subject to his continuance service as the Company’s chief financial officer during such period and (ii) MediVision or the Principal MV Shareholders shall nominate Mr. Gill Allon, pursuant to Section 8.2(a)(iii), to serve as a director until the next annual meeting, subject to his continuance service as the Company’s chief executive officer during such period.

 

In addition, Noam Allon, in the sole discretion of the Board of Directors of the Company, shall attend all meetings of the Board of Directors as an observer (the “Representative”) and, in this respect, the Company shall give the Representative copies of all notices, minutes, consents, and other materials that it provides to its directors; provided, however, that such representative shall agree to hold in confidence and trust and to act in a fiduciary manner with respect to all information so provided; and provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets or a conflict of interest.

 

8.4       D&O Insurance. Promptly following the date hereof and prior to the applicable appointment, the Company shall cause each director appointed or elected to the Board pursuant to Section 8.3 to be fully covered by the Company’s existing directors’ and officers’ liability insurance, in an amount reasonably acceptable to the Purchaser to be not less than $10,000,000. The Company shall provide the Purchaser with a written approval of its insurance agent to the foregoing effect. The Company shall maintain such insurance valid and in place in all times thereafter during which the Purchaser is entitled to elect members of the Board.

 

8.5       Indemnification Agreements. At the Closing, the Company shall execute and deliver indemnification agreements substantially in the form attached hereto as Exhibit H (the “Indemnification Agreements”) with each of the Purchaser Directors.

 

8.6       Board of Directors; Powers; Committees. As of the Closing Date, the bylaws of the Company will have been amended in accordance with its terms, to provide the following:

 

 

  

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(a)       The Board will have nine members.

 

(b)       The Board shall have an audit committee, the composition and duties of which shall be in compliance with all applicable federal and state securities laws and the rules of the OTC Bulletin Board, and which shall consist of at least three members of the Board. One of the Purchaser Directors shall be appointed as the Chairman of the Company’s Audit Committee.

 

(c)       The Board shall have a compensation committee, the composition and duties of which shall be in compliance with all applicable federal and state securities laws and rules of the OTC Bulletin Board, and which shall consist of three members of the Board. The duties of the compensation committee will include (i) authorizing the compensation of any executive officer, (ii) setting number of shares reserved under the Company’s option pool, and (iii) setting employee compensation guidelines. The Purchaser Director shall have a veto right with respect to any resolution adopted by the compensation committee with regards to any issuance of Abraxas options (as set forth in Section 8.17 below).

 

(d)       The Purchaser and MediVision shall have the right, but not the obligation, to cause one Purchaser Director and one MediVision Director to serve on each of the Audit Committee, the Compensation Committee and any other committee of the Board or any other committee of the Board of any subsidiary of the Company (if any).

	  	
8.7

	
Indemnification.

 

(a)       Indemnification for breach representations, warranties or covenants. The Company will, to the fullest extent permitted by law, defend the Purchaser, and each of its Affiliates, directors, officers, agents and employees (the “Purchaser Indemnitees”) or settle (provided that the Company will not agree to any settlement without the applicable Purchaser Indemnitee’s prior written consent, which consent shall not be unreasonably withheld or delayed) at the Company’s expense any Action or Proceeding and indemnify them for all Losses and Expenses (both as defined below) arising out of or in connection with a breach of any representations, warranties or covenants of the Company in this Agreement. The Company will indemnify and hold harmless the Purchaser Indemnitees from and against any and all damages, costs, liabilities and attorneys’ fees, incurred in defending and/or resolving such Action or Proceeding; provided, that (i) the Company is promptly notified in writing of such Action or Proceeding (provided, that any failure to deliver such notice will not relieve the Company of liability under this Section 8.7), (ii) the Company will have the sole control of the defense and/or settlement thereof (provided, that if representation of the Purchaser Indemnitees by counsel retained by the Company would be inappropriate due to any actual or potential differing interest between the Purchaser Indemnitee and the Company or any third party represented by such counsel, the Purchaser Indemnitees will have the right to retain one separate counsel, with reasonable fees and expenses to be paid by the Company), (iii) the Purchaser Indemnitees furnish to the Company, on request, information available to the Purchaser Indemnitees for such defense, and (iv) the Purchaser Indemnitees reasonably cooperate in any defense and/or settlement thereof as long as the Company pays all of the Purchaser Indemnitees’ reasonable out of pocket expenses and attorneys’ fees. The Purchaser Indemnitees will not admit any such Action or Proceeding or any allegations made in such Action or Proceeding without, to the extent practicable, the prior written consent of the Company (which will not be unreasonably withheld or delayed). For purposes of this Agreement, an “Action or Proceeding” means any claim,

 

 

  

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action, suit, judgments, settlements, litigation, proceeding, mediation, arbitration or investigation or audit by any Person, and “Losses and Expenses,” means damages, expenses, losses, costs, liabilities (including without limitation, incident to any Action or Proceeding.

 

(b)       Special Indemnification for the MediVision Assets Transaction. The Company will, to the fullest extent permitted by law, defend the Purchaser Indemnitees or settle (provided that the Company will not agree to any settlement without the applicable Purchaser Indemnitee’s prior written consent, which consent shall not be unreasonably withheld or delayed) at the Company’s expense any Action or Proceeding and indemnify them for all Losses and Expenses (both as defined below) arising out of or in connection with any liability, indebtedness, restriction or obligation imposed on the Company or any subsidiary of the Company or any Material Adverse Effect suffered by the Company or any subsidiary of the Company as a result of or in connection with the MediVision Assets Transaction (including without limitation, any liability related to the obligations of MediVision to the Israeli Office of the Chief Scientist (the “OCS Claims”) or any approval required to be provided by it in connection with such transaction (the “OCS Approval”). In order to secure certain obligations of MediVision to the Company under the Asset Purchase Agreement and to secure the indemnification obligation of the Company to the Purchaser set forth in this Section 8.7(b), MediVision shall comply with the escrow provisions set forth in Section 10.5 of the Asset Purchase Agreement. The Company hereby undertakes to take all required actions and to enforce any and all rights and remedies granted to it or to which it is entitled under the Assets Purchase Agreement, by applicable law, or otherwise, in order to perform its indemnification obligation set forth in this Section 8.7(b), including without limitation, (i) Company’s right to purchase and sell certain shares of Common Stock for the repayment of the Elop Debt (as such term is defined and as further described Section 8.14 of the Asset Purchase Agreement), (ii) Company’s right to purchase and cancel and/or reclassify certain shares of Common Stock into treasury shares entitling their holder to no rights, in connection with the Untied Mizrachi Bank Loan (as such term is defined and as further described in Section 8.15 of the Asset Purchase Agreement); The Board of the Company shall adopt, on or prior to the Closing Date, a resolution (a copy of which shall be delivered to the Purchaser at the Closing) approving such cancellation and/or reclassification, subject to the occurrence of the relevant conditions, and (iii) Company’s rights purchase and sell certain shares of Common Stock for the repayment of the OCS Debt and Obligations (as such term is defined and as further described Section 8.16 of the Asset Purchase Agreement).

 

8.8       Voting Agreement. At the Closing, MediVision and certain of its stockholders shall execute a voting agreement with the Purchaser pursuant to which they will undertake to vote all their shares in the Company for the appointment of the Purchasers Directors (as defined above) and will agree on other terms customary in such agreements.

 

8.9       Management Fee. In consideration for the Purchaser’s service on the Board (through its Purchasers Directors) and strategic consulting services, the Company shall pay the Purchaser an annual management fee of $20,000 plus VAT (to the extent applicable) per each director appointed by it which is not an employee of the Company.

 

8.10     Operation of Business. The Company agrees that, between the date of this Agreement and the earlier of the termination of this Agreement and the Closing Date, except as expressly contemplated by any provision of this Agreement, (i) the business of the Company

 

 

 

  

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shall be conducted only in, and the Company shall not take any action except in, the ordinary course of business consistent with past practice, and (ii) the Company shall use its commercially reasonable efforts to preserve its business organization intact, to keep available the services of its current officers and employees, and to maintain its existing relations with suppliers, creditors, business partners and others having business dealings with the Company, to the end that the Company’s goodwill and ongoing business shall be unimpaired at the Closing.

 

8.11     Exclusivity; Break-Up Fee. Until the Closing Date, the Company shall not, directly or indirectly, and shall direct its directors, officers, employees, representatives, Affiliates and agents, including investment bankers, financial advisors, attorneys and accountants (collectively, the “Representatives”) not to, directly or indirectly, solicit or encourage any offers, engage in any discussions (other than to inform any initiating party that it is subject to this provision) or enter into any agreements or commitments with respect to the purchase of, or the sale or transfer or issuance (whether by merger, consolidation or otherwise) of, (i) any shares of capital stock of the Company or another entity organized by affiliates or any securities convertible into or exchangeable for any such stock for the primary purpose of raising capital or (ii) all or substantially all of the assets, or any material assets, of the Company or any subsidiary thereof (“Acquisition Proposals”); provided, however, that nothing contained in this Section 8.11 shall prohibit the Board from providing information in connection with, and negotiating, another unsolicited, bona fide written proposal regarding an Acquisition Proposal that the Board shall have determined in good faith, after considering applicable law, and after consulting with independent outside counsel, that such action is required in order for the Board to comply with its fiduciary duties to the Company’s stockholders under applicable law; provided, further, that if (a) the Board determines to enter into an Acquisition Proposal prior to the Closing, (b) the Stockholder Approvals are not obtained prior to the Deferred Closing Date, the Closing is not consummated due to failure to obtain any consent of any third party on part of the Company (including any governmental approvals), (c) the Stockholder Approvals are not obtained prior to the Deferred Closing Date, or (d) the Company breaches its exclusivity undertaking above, the Company shall pay to the Purchaser a break-up fee equal to $100,000 within seven days of the Purchaser’s written request. The Company shall notify the Purchaser promptly if any proposal or offer, or any inquiry or contact with any Person with respect thereto, regarding an Acquisition Proposal is made, such notice to include the identity of the Person making such proposal, offer, inquiry or contact, and the terms of such Acquisition Proposal. In addition, if the Company receives an Acquisition Proposal that would require the Board, in exercising its fiduciary duties as described above, to determine not to consummate the transactions contemplated hereby prior to the Closing, the Company shall endeavor to negotiate with the Purchaser, for a period not to exceed 10 days, a new transaction with the Purchaser that is comparable to such Acquisition Proposal.

 

8.12     Reasonable Efforts; Notification; Representations. Subject to the other terms and conditions of this Agreement, each of the parties to this Agreement shall use reasonable efforts to take promptly, or cause to be taken, all actions, and to do promptly, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement, including the issuance of Warrant Shares upon the exercise of Warrants. Each party to this Agreement shall give prompt notice to each other party to this Agreement upon becoming aware that any representation or warranty made by such party in this Agreement has become untrue or

 

 

  

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inaccurate or that such party has failed to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by such party under this Agreement, in each case such that the conditions set forth in this Agreement would not be satisfied. No party to this Agreement shall take any action that would cause any representation or warranty made by such party in this Agreement to be untrue if made at Closing.

 

8.13     Approval Rights. For so long as the Purchaser owns more than 20% of the issued and outstanding shares of Common Stock (giving effect to the Warrant Shares underlying the Warrants held by the Purchaser) the Company must obtain prior written approval from the Purchaser to:

 

(i)        Merge into or consolidate with any other person or entity or permit any other person or entity to merge or consolidate with it; sell all or substantially all of the assets of the Company; liquidate, dissolve or wind-up the Company; acquire any interest in any business from any person or entity; sell, transfer, lease or otherwise dispose of (in one or more transactions) any of its material assets; purchase, lease or otherwise acquire (in one or more transactions) any material asset or more;

 

(ii)       Authorize, offer, sell or issue any (a) security or security converted into equity for a purchase price or exercise price, as the case may be, lower than the average purchase price to be paid by the Purchaser for the two installments (or lower than the 1st Installment purchase price, if the 2nd Installment was not paid), and (b) debt security, provided that following two years from the Closing, the Company may issue debt security in an aggregate amount lower than $2,000,000 per year without the Purchaser’s consent, and in any event, excluding the issuance of options to employees, including directors;

 

(iii)      Incur indebtedness for borrowed money or guarantee or act as a surety for any debt from financial institutions in excess of $100,000 other then in the ordinary course of business;

 

(iv)      Grant a security interest in an asset or combination of assets of the Company valued individually or in the aggregate at $250,000 or more;

 

(v)       Sell, lease, sublease, license or otherwise transfer any of the rights, title and interest in any Company intellectual property valued individually or in the aggregate at $250,000 or more;

 

(vi)      Purchase, license or otherwise acquire any of the rights, title or interest in any intellectual property of any third party valued individually or in the aggregate at $250,000 or more;

 

(vii)     Any deviation of $250,000 or more from the Company’s budget for 2009 and 2010 as disclosed to the Purchaser prior to the Closing (the 2010 budget can only be approved with the Purchaser’s consent); or

 

(viii)    Hire or terminate any executive officer of the Company, including the Chief Executive Officer and Chief Financial Officer; or

 

(ix)      Approval of interested parties transaction(s) (excluding grant of options), to include without limitation, transactions, directly or indirectly, between the

 

 

  

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Company and any of its directors and officers and any transaction with MediVision (including its directors and officers).

 

8.14     Participation Rights. The Purchaser, for so long as it holds a number of shares of Common Stock equal to 15% or more of the 1st Installment Shares it purchased pursuant to this Agreement, will have the right to purchase its pro rata share (based on the Purchaser’s beneficial ownership of the Company’s outstanding shares of Common Stock on a fully diluted basis, including the Warrant(s) or the Warrant(s) Shares (as the case may be) of any future equity offering by the Company.

 

8.15     Most Favorite Nation. In the event that any current or future investor in the Company shall be granted more favorable rights than or in preference over the Purchaser (including but not limited to issuance of superior type of shares or rights for liquidation preference, anti dilution protection, board nomination, voting, registration of securities, approval rights, participation rights, or management fee), the purchaser shall receive rights or parity with such rights and the terms applicable to the Securities shall be amended accordingly, only for so long as the Purchaser beneficially owns at least 20% of the Company’s issued and outstanding Common Stock on a fully diluted basis (including the Warrant Shares). This Section 8.15 will not apply if the terms granted to a future investor were agreed by the Purchaser in its capacity as a stockholder, and the Purchaser waived its Most Favorite Nation right in connection therewith.

 

8.16     Access Rights. From the date hereof until the Closing, the Company will permit access to, and will make available to the Purchaser’s representatives, consultants and their respective counsels for inspection, such information and documents as the Purchaser reasonably request, and will make available at reasonable times and to a reasonable extent officers and employees of the Company to discuss the business and affairs of the Company.

 

8.17     Abraxas Options. All options promised to Gil Allon and/or Ariel Shenhar for shares of Abraxas shall be re-discussed at the compensation committee of the Board of Directors of the Company at its first meeting of the compensation committee following the Closing and in any event no later than thirty days following the Closing Date, with the participation of the Purchaser Directors. It is agreed that the Purchaser shall have a veto right with regards to any such issuance of Abraxas options.

 

8.18     Company’s Auditors. The Company shall appoint, no later than thirty days following the Closing Date, Ernst & Young (Israel office) as channel II accountant for the Company and its subsidiaries.

 

SECTION 9.   Notices. All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed by first-class registered or certified airmail, e-mail, confirmed facsimile or nationally recognized overnight express courier postage prepaid, and shall be deemed given when so mailed and shall be delivered as addressed as follows:

 

 

 

  

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(a)

	
if to the Company, to:

 

	 	
Ophthalmic Imaging Systems

221 Lathrop Way, Suite 1

Sacramento, CA 95815

Attention: Gil Allon

Facsimile: 916-646-0207

Email: Info@oisi.com

 

	 	
with a copy to:

 

	 	
Troutman Sanders LLP

405 Lexington Avenue

New York, New York 10174

Attention: Henry I. Rothman

Facsimile: 212-704-5950

E-mail: Henry.rothman@troutmansanders.com

 

 

or to such other person at such other place as the Company shall designate to the Purchaser in writing; and

 

(b)       if to the Purchaser, at its address as set forth at the end of this Agreement, or at such other address or addresses as may have been furnished to the Company in writing.

 

SECTION 10. Changes. This Agreement may not be modified or amended except pursuant to an instrument in writing signed by the Company and the Purchaser. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding, each future holder of all such securities, and the Company.

 

SECTION 11. Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

 

SECTION 12. Severability. In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

 

SECTION 13. Governing Law; Venue. This Agreement is to be construed in accordance with and governed by the federal law of the United States of America and the internal laws of the State of California without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of California to the rights and duties of the parties. Each of the Company and the Purchaser submits to the exclusive jurisdiction of the state and federal courts sitting in the city of Sacramento, State of California, for purposes of all legal proceedings arising out of or relating to this Agreement and the transactions contemplated hereby. Each of the Company and the Purchaser irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.

 

 

  

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SECTION 14. Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties. Facsimile signatures shall be deemed original signatures.

 

SECTION 15. Entire Agreement. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Purchaser makes any representation, warranty, covenant or undertaking with respect to such matters. Each party expressly represents and warrants that it is not relying on any oral or written representations, warranties, covenants or agreements outside of this Agreement.

 

SECTION 16. Fees and Expenses. The Company shall reimburse the Purchaser, at the Closing Date, for all expenses incurred by the Purchaser in connection with this Agreement, including financial and legal due diligence and negotiation of the transaction, financial and legal due diligence and negotiation of the MediVision Assets Transaction, and other professional services retained by the Purchaser, in an aggregate amount equal to $100,000 plus VAT (to the extent applicable); provided, however, that the Purchaser hereby acknowledges that as of the date of this Agreement, the Company has reimbursed the Purchaser $40,000 pursuant to this Section 16 and at the Closing Date, the Company is only required to reimburse the Purchaser $60,000 plus VAT (to the extent applicable) for all expenses incurred by the Purchaser in connection with this Agreement.

 

SECTION 17. Parties. This Agreement is made solely for the benefit of and is binding upon the Purchaser and the Company and to the extent provided in Section 7.4, any person controlling the Company or the Purchaser, the officers and directors of the Company, and their respective executors, administrators, successors and assigns and subject to the provisions of Section 7.4, no other person shall acquire or have any right under or by virtue of this Agreement. The term “successor and assigns” shall not include any subsequent purchaser, as such purchaser, of the Shares sold to the Purchaser pursuant to this Agreement. Notwithstanding the foregoing, the obligation of the Company to register the Shares and the Warrant Shares granted to the Purchaser under this Agreement may be assigned in full by the Purchaser in connection with a valid transfer by the Purchaser of its Shares and the Company agrees to promptly file any required prospectus supplement electing such transfer and naming the transferee as a selling stockholder therein, if applicable, enabling the transferee to sell all Shares required by it; provided, however, that (i) such transfer may otherwise be expected in accordance with applicable securities laws; (ii) such Holder gives prior written notice to the Company; and (iii) such transferee agrees to comply with the terms and provisions of this Agreement to the extent applicable, and such transfer is otherwise in compliance with this Agreement.

 

SECTION 18. Further Assurances. Each party agrees to cooperate fully with the other parties and to execute such further instruments, documents and agreements and to give such further written assurance as may be reasonably requested by any other party to evidence and reflect the transactions described herein and contemplated hereby and to carry into effect the intents and purposes of this Agreement.

 

 

[Remainder of Page Left Intentionally Blank]

 

 

 

  

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

 

	
OPHTHALMIC IMAGING SYSTEMS

	
By:

	
/s/ Gil Allon

	  	
Name:

	
Gil Allon

	  	
Title:

	
Chief Executive Officer

 

 

 

	
By:

	
/s/ Ariel Shenhar

	  	
Name:

	
Ariel Shenhar

	  	
Title:

	
Chief Financial Officer

 

 

 

 

	
U. M. ACCELMED, LIMITED PARTNERSHIP

	  
	
by A.M ACCELMED MANAGEMENT G(2009) LTD.,

its General Partner

	
By:

	
/s/ Uri Geiger

	  	
Name:

	
Uri Geiger

	  	
Title:

	
Chairman

 

 

	
6 Hachoshlim St.

Herzliya Pituach

46120, Israel

P.O.Box 12006

Attention: Dr. Uri Geiger

Facsimile: 972-9-9588594

E-mail: Uri@accelmed.co.il

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

	
Shenhav & Co. Law Offices

4 Ha’nechoshet St., Ramat Ha’chayal, Tel Aviv 69710, Israel

Attention: Dr. Ayal Shenhav, Adv.

Facsimile: 972-3-6110788

E-mail: ayal@shenhavlaw.co.il

 

 

Signature Page to Purchase Agreement

  

36

  

 

 

 

List of Exhibits, Appendices and Schedules

 

Exhibits

 

Exhibit A-1 and Exhibit A-2 – Form of Warrants

 

Exhibit B – Legal Opinion

 

Exhibit C-1 and Exhibit C-2 – Officer Certificates

 

Exhibit D – Form of Irrevocable Proxy by MediVision

 

Exhibit E – Form of Irrevocable Proxy by MediVision shareholders

 

Exhibit F-1 and Exhibit F-2 – Secretary Certificates

 

Exhibit G – List of Subsidiaries

 

Exhibit H – Director Indemnification Agreements

 

Exhibit I – Escrow Agreement

 

 

 

Appendices

 

Appendix I – Stock Certificate Questionnaire

 

Appendix II – Certificate of Subsequent Sale

 

 

 

Schedules

 

Schedule 4.3(i) – Outstanding Capitalization

 

Schedule 4.3(ii) – Outstanding Options to Purchase, Preemptive Rights and Other Rights

 

Schedule 4.19 – Company Budget and Strategic Work Plan

 

 

 

 

 

  

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EXHIBIT A-1

 

FORM OF 1st WARRANTS

 

 

 

NEITHER THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.  SUCH SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED (A) EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND THE SECURITIES LAWS OF OTHER JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH OTHER APPLICABLE LAWS, OR (B) UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES ACT.  NOTWITHSTANDING THE FOREGOING, SUCH SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.

 

OPHTHALMIC IMAGING SYSTEMS

 

WARRANT

 

Warrant No. [__] Dated:  [_______ __], 2009

 

Ophthalmic Imaging Systems, a California corporation (the “Company”), hereby certifies that, for value received, U.M. Accelmed, Limited Partnership or its registered assigns (the “Holder”), is entitled to purchase from the Company up to a total of 3,211,076 shares of common stock, no par value (the “Common Stock”), of the Company (each such share, a “Warrant Share” and all such shares, the “Warrant Shares”) at an exercise price equal to $1.00 per share (as adjusted from time to time as provided in Section 9, the “Exercise Price”), at any time and on or after the date hereof (the “Initial Exercise Date”) and through and including the date that is 36 (thirty-six) months from the date hereof (being June [l], 2012) (the “Expiration Date”), subject to the following terms and conditions. This Warrant (this “Warrant”) was issued pursuant to that certain Purchase Agreement, dated as of June [l], 2009, by and among the Company and the Holder (the “Purchase Agreement”).

 

SECTION 1.                         Definitions.  In addition to the terms defined below and elsewhere in this Warrant, capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Purchase Agreement.

 

  

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SECTION 2.             Registration of Warrant.  The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of record of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

SECTION 3.             Registration of Transfers.  The Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto duly completed and signed, to the Company at its address specified in the Purchase Agreement.  Upon any such registration of transfer, a new warrant to purchase Common Stock, in substantially the form of this Warrant (any such new warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder.  The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant.

 

SECTION 4.             Exercise and Duration of Warrants.

 

4.1.               This Warrant shall be exercisable by the registered Holder at any time and from time to time on or after the Initial Exercise Date and including the Expiration Date.  At 6:30 P.M., New York City time on the Expiration Date, the portion of this Warrant not exercised prior thereto shall be and become void and of no value.

 

4.2.               A Holder may exercise this Warrant by delivering to the Company (i) an exercise notice, in the form attached hereto (the “Exercise Notice”), appropriately completed and duly signed, and (ii) payment of the Exercise Price for the number of Warrant Shares as to which this Warrant is being exercised (which may take the form of a “cashless exercise” if so indicated in the Exercise Notice), and the date such items are delivered to the Company (as determined in accordance with the notice provisions hereof) is an “Exercise Date.”  The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder.  Execution and delivery of the Exercise Notice shall have the same effect as cancellation of the original Warrant and issuance of a New Warrant evidencing the right to purchase the remaining number of Warrant Shares.

 

SECTION 5.             Delivery of Warrant Shares.

 

5.1.               Upon exercise of this Warrant, the Company shall promptly issue or cause to be issued and cause to be delivered to or upon the written order of the Holder and in such name or names as the Holder may designate, a certificate for the Warrant Shares issuable upon such exercise, free of restrictive legends unless a legend is required to be placed on the certificate pursuant to the Purchase Agreement.  The Holder, or any Person so designated by the Holder to receive Warrant Shares, shall be deemed to have become the holder of record of such Warrant Shares as of the Exercise Date.  The Company shall, upon the written request of the Holder and provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, use its

 

  

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commercially reasonable efforts, to credit such aggregate number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system (“DWAC”); provided, that the Holder provides the Company the reasonably necessary details to effect the foregoing DWAC delivery.

 

5.2.               This Warrant is exercisable, either in its entirety or, from time to time, for a portion of the number of Warrant Shares.  Upon surrender of this Warrant following one or more partial exercises, the Company shall issue or cause to be issued, at its expense, a New Warrant evidencing the right to purchase the remaining number of Warrant Shares.

 

5.3.               If within three Trading Days after the Company's receipt of an Exercise Notice the Company shall fail to issue and deliver a certificate to the Holder and register the shares of Common Stock issuable pursuant to the Exercise Notice on the Company's share register or credit the Holder's balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such exercise, and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three Trading Days after the Holder's request and in the Holder's discretion, either (i) pay cash to the Holder in an amount equal to the Holder's total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company's obligation to deliver such certificate (and to issue such shares of Common Stock) or credit such Holder's balance account with DTC shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such shares of Common Stock or credit such Holder's balance account with DTC and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Bid Price on the date of exercise.  For purposes of this Warrant, “Closing Bid Price” shall mean, for any security as of any date, the last closing bid price for such security on the Trading Market, as reported by the Bloomberg Financial Markets (“Bloomberg”), or, if the Trading Market begins to operate on an extended hours basis and does not designate the closing bid price, then the last bid price of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg, or, if the Trading Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the Eligible Market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).  If the Closing Bid Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.  “Principal Market” means the OTC Bulletin Board® or, at any time that the Common Stock is not quoted on the OTC Bulletin Board, the Eligible Market on which the Common Stock is listed or quoted for trade.  “Eligible Market” means the Principal Market,

 

  

40

  

the American Stock Exchange, The New York Stock Exchange, Inc., The NASDAQ Capital Market, The NASDAQ Global Market or The NASDAQ Global Select Market.

 

5.4.               The Company's obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares.  Nothing herein shall limit a Holder's right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates representing shares of Common Stock upon exercise of this Warrant  as required pursuant to the terms hereof.

 

SECTION 6.             Charges, Taxes and Expenses.  Issuance and delivery of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder.  The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

 

SECTION 7.             Replacement of Warrant.  If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable bond or indemnity, if requested.  Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe.  If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the Company as a condition precedent to the Company’s obligation to issue the New Warrant.

 

SECTION 8.             Reservation of Warrant Shares.  The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of persons other than the Holder (after giving effect to the adjustments and restrictions of Section 9, if any).  The Company covenants that all Warrant Shares so issuable and deliverable shall,

 

  

41

  

upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable.  The Company will take all such action as may be necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any securities exchange or automated quotation system upon which the Common Stock may be listed.

 

SECTION 9.             Certain Adjustments.  The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 9.

 

9.1.               Stock Dividends and Splits.  If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock (which for the avoidance of doubt, shall not include shares of Common Stock issued by the Company pursuant to this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event.  Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination.

 

9.2.               Fundamental Transactions.  If any capital reorganization, reclassification of the capital stock of the Company, consolidation or merger of the Company with another corporation, or sale, transfer or other disposition of all or substantially all of the Company’s assets to another corporation shall be effected (each a “Fundamental Transaction”), then, as a condition of such Fundamental Transaction, lawful and adequate provision shall be made whereby the Holder shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions herein specified and in lieu of the Warrant Shares immediately theretofore issuable upon exercise of the Warrant, such shares of stock, securities or assets as would have been issuable or payable with respect to or in exchange for a number of Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable upon exercise of the Warrant, had such Fundamental Transaction not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of the Holder to the end that the provisions hereof (including, without limitations, provision for adjustment of the Exercise Price) shall thereafter be applicable, as nearly equivalent as may be practicable in relation to any shares of stock, securities or properties thereafter deliverable upon the exercise hereof. The Company shall not effect any such Fundamental Transaction unless prior to or simultaneously with the consummation thereof the successor corporation (if other than the Company) resulting from such consolidation or merger, or the corporation purchasing or otherwise acquiring such assets or other appropriate corporation or entity shall assume, by written instrument executed and delivered to the Company (a copy of which shall be

 

  

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delivered to the Holder), the obligation to deliver to the holder of the Warrant such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to purchase and the other obligations under this Warrant. The provisions of this paragraph (b) shall similarly apply to successive Fundamental Transactions.

 

9.3.               Subsequent Equity Sales.  If the Company at any time while this Warrant is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise issue any Common Stock or Common Stock Equivalents (as defined below) entitling any person to acquire shares of Common Stock, at an effective price per share less than $1.00 per share of Common Stock (each such issuance, a “Dilutive Issuance”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than $1.00 per share of Common Stock, such issuance shall be deemed to have occurred for less than $1.00 per share of Common Stock on such date of the Dilutive Issuance), then if such Dilutive Issuance shall occur, the Exercise Price shall be reduced to be equal to the product of (A) the Exercise Price in effect immediately prior to such Dilutive Issuance and (B) the quotient determined by dividing (1) the sum of (I) the product derived by multiplying the Exercise Price in effect immediately prior to such Dilutive Issuance and the number of outstanding shares of Common Stock immediately prior to such Dilutive Issuance plus (II) the consideration, if any, received by the Company upon such Dilutive Issuance, by (2) the product derived by multiplying (I) the Exercise Price in effect immediately prior to such Dilutive Issuance by (II) the number of shares of Common Stock outstanding immediately after such Dilutive Issuance.

 

The following formula illustrates the foregoing:

 

NP = OP x (OP x CS + C) / (OP x CSA)

 

WHERE

 

NP = the adjusted Exercise Price (after the Dilutive Issuance)

 

OP = Exercise Price in effect immediately prior to such Dilutive Issuance

 

CS = the number of outstanding shares of Common Stock immediately prior to such Dilutive Issuance

 

C = the consideration, if any, received by the Company upon such Dilutive Issuance

 

CSA = the number of outstanding shares of Common Stock immediately after such Dilutive Issuance

 

Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 9(c) in respect of an Exempt Issuance.  For purposes of this Warrant: “Common

 

  

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Stock Equivalents” shall mean securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, shares of Common Stock, or Preferred Stock; and “Exempt Issuance” shall mean the issuance of: (a) shares of Common Stock or Common Stock Equivalents to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose by the Board of Directors or a majority of the members of a committee established for such purpose by the Board of Directors; (b) securities upon the exercise of this Warrant (and any other securities issued pursuant to the Purchase Agreement) and/or the exercise or conversion of Common Stock Equivalents issued and outstanding on the date of this Warrant (as set forth in Schedule 4.3(i) of the Purchase Agreement); provided, that such securities have not been amended since the date of this Warrant to increase the number of such securities or to decrease the exercise, exchange or conversion price of such securities; or (c) securities issued in connection with any stock split, stock dividend, recapitalization or similar transaction by the Company.

 

9.4.               Number of Warrant Shares.  Simultaneously with any adjustment to the Exercise Price pursuant to Section 9(a), the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be adjusted proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the increased or decreased number of Warrant Shares, as applicable, shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment.

 

9.5.               Calculations.  All calculations under this Section 9 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable.  The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.

 

9.6.               Notice of Adjustments.  Upon the occurrence of each adjustment pursuant to this Section 9, the Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based.  Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Transfer Agent.

 

9.7.               Notice of Corporate Events.  If the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Common Stock, including without limitation any granting of rights or warrants to subscribe for or purchase any capital stock of the Company or any Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating or solicits stockholder approval for any Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms and conditions of such transaction, at least ten calendar days prior to the applicable record or effective date on which a Person would need to hold Common Stock in order to participate in or vote with respect to such transaction, and the Company will take all steps reasonably necessary in order to insure that the Holder is given

 

  

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the practical opportunity to exercise this Warrant prior to such time so as to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice.

 

SECTION 10.           Payment of Exercise Price.  The Holder shall pay the Exercise Price (i) in cash in immediately available funds or (ii) through a “cashless exercise,” in which event the Company shall issue to the Holder the number of Warrant Shares determined as follows:

 

	  	
X = Y [(A-B)/A]

	
where:

	  
	  	
X = the number of Warrant Shares to be issued to the Holder.

	  	  
	  	
Y = the number of Warrant Shares with respect to which this Warrant is being exercised.

	  	  
	  	
A = the average of the Closing Prices for the five Trading Days immediately prior to (but not including) the Exercise Date.

	  	  
	  	
B = the Exercise Price.

 

Notwithstanding anything in this Warrant to the contrary, the Holder may only exercise this Warrant through a cashless exercise if no Registration Statement (as defined in the Purchase Agreement) is effective for more than 30 consecutive days that covers the Warrant Shares issuable upon the exercise of this Warrant.

 

For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued pursuant to the Purchase Agreement.

 

SECTION 11.           Fractional Shares.  The Company shall not be required to issue or cause to be issued fractional Warrant Shares on the exercise of this Warrant.  If any fraction of a Warrant Share would, except for the provisions of this Section, be issuable

 

  

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upon exercise of this Warrant, the number of Warrant Shares to be issued will be rounded up to the nearest whole share.

 

SECTION 12.           Notices.  Any and all notices or other communications or deliveries hereunder (including without limitation any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in the Purchase Agreement prior to 6:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in the Purchase Agreement on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.  The address for such notices or communications shall be as set forth in the Purchase Agreement with respect to the Company and, with respect to the Holder, the Holder’s last address as shown on the Warrant Register.

 

SECTION 13.           Warrant Agent.  The Company shall serve as warrant agent under this Warrant.  Upon 10 days’ notice to the Holder, the Company may appoint a new warrant agent.  Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or stockholder services business shall be a successor warrant agent under this Warrant without any further act.  Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last address as shown on the Warrant Register.

 

SECTION 14.           Investment Intent; Limited Transferability.

 

14.1.               If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder furnish to the Company a legal opinion of counsel to the Holder to such effect, the substance of which shall be reasonably acceptable to the Company and (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company representing that they are acquiring such Warrant Shares for investment purposes and that they are an accredited investor as defined in Rule 501(a) under the Securities Act.  The Holder understands that it must bear the economic risk of its investment in this Warrant and any securities obtainable upon exercise of this Warrant for an indefinite period of time, as this Warrant and such securities have not been registered under Federal or state securities or blue sky laws.

 

14.2.               The Holder represents that it has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of this Warrant or the

 

  

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exercise of the Warrant and the finance operations and business of the Company; and (ii) the opportunity to request such additional information which the Company possesses or can acquire without unreasonable effort or expense.  Nothing contained in this Section 14(b) shall alter, amend or change the Holder’s reliance on the representations, covenants or warranties contained herein.

 

14.3.               The Holder represents that it is an “accredited investor” within the meaning of Regulation D promulgated under the Securities Act and that it is acquiring the Warrants for its own account and not with a present view to, or for sale in connection with, any distribution thereof in violation of the registration requirements of the Securities Act, without prejudice, however, to such Holder’s right, subject to the provisions of this Warrant, at all times to sell or otherwise dispose of all or any part of the Warrant and Warrant Shares.

 

14.4.               The Holder represents that it, either by reason of such Holder’s business or financial experience or the business or financial experience of its professional advisors (who are unaffiliated with and who are not compensated by the Company or any affiliate, finder or selling agent of the Company, directly or indirectly), has such sophistication, knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment in the Company and the capacity to protect such Holder’s interests in connection with the transactions contemplated by this Warrant and the Purchase Agreement.

 

14.5.               The Holder represents that it has the ability to bear the economic risks of its investment for an indefinite period of time and could afford a complete loss of its investment.

 

14.6.               The Holder agrees and acknowledges that the representations made by the Holder in this Section 14 are conditions to the exercise of this Warrant.

 

SECTION 15.           Miscellaneous.

 

15.1.               Subject to the restrictions on transfer set forth on the first page hereof, this Warrant may be assigned by the Holder.  This Warrant may not be assigned by the Company except to a successor in the event of a Fundamental Transaction (subject to the provisions of Section 9(b) hereof).  This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns.  Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant.  This Warrant may be amended only in writing signed by the Company and the Holder and their successors and assigns.

 

15.2.               The Company will not, by amendment of its governing documents or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment.  Without limiting

 

  

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the generality of the foregoing, the Company (i) will not increase the par value of any Warrant Shares above the amount payable therefor on such exercise, (ii) will take all such action as may be reasonably necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares on the exercise of this Warrant, and (iii) will not close its stockholder books or records in any manner which interferes with the timely exercise of this Warrant.

 

15.3.               All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the laws of the State of California.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the city of Sacramento, State of California, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the transaction documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, or that such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under Section 12 hereof and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  The Company hereby waives all rights to a trial by jury.

 

15.4.               The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.

 

15.5.               In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

 

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE FOLLOWS

 

  

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as of the date first indicated above.

 

	  
	
OPHTHALMIC IMAGING SYSTEMS

 

	  
	
By:    ____________________________                                                  

	
       Name:

	
       Title:

  

49

  

 

 

FORM OF EXERCISE NOTICE

 

(To be executed by the Holder to exercise the right to purchase shares of

Common Stock under the foregoing Warrant)

 

To Ophthalmic Imaging Systems:

 

The undersigned is the Holder of Warrant No. _______ (the “Warrant”) issued by Ophthalmic Imaging Systems, a California corporation (the “Company”).  As a condition to this exercise, the undersigned Holder hereby represents and warrants to the Company that the representations and warranties set forth in Section 14 of the Warrant are true and correct as of the date hereof as if they had been made on such date with respect to the Warrant Shares.  The undersigned Holder further acknowledges that the sale, transfer, assignment or hypothecation of the Warrant Shares to be issued upon exercise of this Warrant is subject to the terms and conditions contained in Section 14 of this Warrant.  Capitalized terms used herein and not otherwise defined have the respective meanings set forth in the Warrant.

 

(1)      The Warrant is currently exercisable to purchase a total of ______________ Warrant Shares.

 

(2)      The undersigned Holder hereby exercises its right to purchase _________________ Warrant Shares pursuant to the Warrant.

 

(3)      The Holder intends that payment of the Exercise Price shall be made as (check one):

 

____           “Cash Exercise” under Section 10

 

____           “Cashless Exercise” under Section 10

 

(4)      If the holder has elected a Cash Exercise, the holder shall pay the sum of $____________ to the Company in accordance with the terms of the Warrant.

 

(5)      Pursuant to this exercise, the Company shall deliver to the holder _______________ Warrant Shares in accordance with the terms of the Warrant.

 

(6)      Following this exercise, the Warrant shall be exercisable to purchase a total of ______________ Warrant Shares.

 

	  	  	  
	  	  	  
	
Dated:   ______________, ___________

	  	
Name of Holder:

	  	  	  

  

50

  

 

	  	  	  
	  	  	
(Print)      ________________________________

	  	  	  
	  	  	
By:           ________________________________

	  	  	
Name:      ________________________________

	  	  	
Title:        ________________________________

	  	  	  
	  	  	
(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

	 	 	 
	 	 	__________________________________ 
	  	  	
Taxpayer Identification Number

	
ACKNOWLEDGED AND AGREED TO this ___ day of ___________, 20__

 

OPHTHALMIC IMAGING SYSTEMS

 

 

By:

Name:   ______________________

Title:     ______________________

	  	  

 

 

 

 

  

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FORM OF ASSIGNMENT

 

[To be completed and signed only upon transfer of Warrant]

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ________________________________ the right represented by Warrant to purchase ____________ shares of Common Stock of Ophthalmic Imaging Systems to which the Warrant relates and appoints ________________ attorney to transfer said right on the books of Ophthalmic Imaging Systems with full power of substitution in the premises.  As a condition to this assignment, the Holder acknowledges that its assignee must deliver a written instrument to the Company that the representations and warranties of Section 14 of the Warrant are true and correct as of the date hereof as if they had been made by such assignee on such date with respect to the Warrants.

 

	  	  
	  	  
	
Dated:                          ,

	  
	  	  
	  	                  ______________________________________
	  	
(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

	  	  
	  	                 ______________________________________
	  	
Address of Transferee

	  	  
	  	                  ______________________________________
	  	  
	  	                  ______________________________________
	  	  
	 	 
	 	                 ______________________________________
	 	
                 Taxpayer Identification Number

	
In the presence of:

	  
	  	  
	  	  
	  	  

 

  

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EXHIBIT A-2

 

FORM OF 2nd WARRANTS

 

NEITHER THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.  SUCH SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED (A) EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND THE SECURITIES LAWS OF OTHER JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH OTHER APPLICABLE LAWS, OR (B) UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES ACT.  NOTWITHSTANDING THE FOREGOING, SUCH SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.

 

OPHTHALMIC IMAGING SYSTEMS

 

WARRANT

 

Warrant No. [__] Dated:  [_______ __], 2010

 

Ophthalmic Imaging Systems, a California corporation (the “Company”), hereby certifies that, for value received, U.M. Accelmed, Limited Partnership or its registered assigns (the “Holder”), is entitled to purchase from the Company up to a total of 1,193,696 shares of common stock, no par value (the “Common Stock”), of the Company (each such share, a “Warrant Share” and all such shares, the “Warrant Shares”) at an exercise price equal to $1.00 per share (as adjusted from time to time as provided in Section 9, the “Exercise Price”), at any time and on or after the Initial Exercise Date (as defined below) and through and including the date that is 36 (thirty-six) months from the date hereof (being June [l], 2012) (the “Expiration Date”), subject to the following terms and conditions. This Warrant (this “Warrant”) was issued pursuant to that certain Purchase Agreement, dated as of June [l], 2009, by and among the Company and the Holder (the “Purchase Agreement”).

 

SECTION 16.           Definitions.  In addition to the terms defined below and elsewhere in this Warrant, capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Purchase Agreement.

 

“Initial Exercise Date” shall mean the date that any of the following occurs: (i) the date that the Company consummates a merger with and into another corporation or the date the Company consummates a sale, transfer or other disposition of all or substantially all of its assets,

  

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(ii) the date that the average closing price per share of the Company’s Common Stock on the OTC Bulletin Board (or wherever the Common Stock is listed or quoted for trading on the date in question) for 10 consecutive Trading Days exceeds $2.00; (iii) the date the Company’s Board  of Directors authorizes a transaction pursuant to which the Company will raise at least $1,500,000 in capital raising transaction with persons who are shareholders of MediVision Medical Imaging Ltd., the parent entity of the Company, on the date hereof; and (iv) March __, 2012.

 

SECTION 17.           Registration of Warrant.  The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of record of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

SECTION 18.           Registration of Transfers.  The Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto duly completed and signed, to the Company at its address specified in the Purchase Agreement.  Upon any such registration of transfer, a new warrant to purchase Common Stock, in substantially the form of this Warrant (any such new warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder.  The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant.

 

SECTION 19.           Exercise and Duration of Warrants.

 

19.1.               This Warrant shall be exercisable by the registered Holder at any time and from time to time on or after the Initial Exercise Date and including the Expiration Date.  At 6:30 P.M., New York City time on the Expiration Date, the portion of this Warrant not exercised prior thereto shall be and become void and of no value.

 

19.2.               A Holder may exercise this Warrant by delivering to the Company (i) an exercise notice, in the form attached hereto (the “Exercise Notice”), appropriately completed and duly signed, and (ii) payment of the Exercise Price for the number of Warrant Shares as to which this Warrant is being exercised (which may take the form of a “cashless exercise” if so indicated in the Exercise Notice), and the date such items are delivered to the Company (as determined in accordance with the notice provisions hereof) is an “Exercise Date.”  The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder.  Execution and delivery of the Exercise Notice shall have the same effect as cancellation of the original Warrant and issuance of a New Warrant evidencing the right to purchase the remaining number of Warrant Shares.

 

  

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SECTION 20.           Delivery of Warrant Shares.

 

20.1.               Upon exercise of this Warrant, the Company shall promptly issue or cause to be issued and cause to be delivered to or upon the written order of the Holder and in such name or names as the Holder may designate, a certificate for the Warrant Shares issuable upon such exercise, free of restrictive legends unless a legend is required to be placed on the certificate pursuant to the Purchase Agreement.  The Holder, or any Person so designated by the Holder to receive Warrant Shares, shall be deemed to have become the holder of record of such Warrant Shares as of the Exercise Date.  The Company shall, upon the written request of the Holder and provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, use its commercially reasonable efforts, to credit such aggregate number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system (“DWAC”); provided, that the Holder provides the Company the reasonably necessary details to effect the foregoing DWAC delivery.

 

20.2.               This Warrant is exercisable, either in its entirety or, from time to time, for a portion of the number of Warrant Shares.  Upon surrender of this Warrant following one or more partial exercises, the Company shall issue or cause to be issued, at its expense, a New Warrant evidencing the right to purchase the remaining number of Warrant Shares.

 

20.3.               If within three Trading Days after the Company's receipt of an Exercise Notice the Company shall fail to issue and deliver a certificate to the Holder and register the shares of Common Stock issuable pursuant to the Exercise Notice on the Company's share register or credit the Holder's balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such exercise, and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three Trading Days after the Holder's request and in the Holder's discretion, either (i) pay cash to the Holder in an amount equal to the Holder's total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company's obligation to deliver such certificate (and to issue such shares of Common Stock) or credit such Holder's balance account with DTC shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such shares of Common Stock or credit such Holder's balance account with DTC and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Bid Price on the date of exercise.  For purposes of this Warrant, “Closing Bid Price” shall mean, for any security as of any date, the last closing bid price for such security on the Trading Market, as reported by the Bloomberg Financial Markets (“Bloomberg”), or, if the Trading Market begins to operate on an extended hours basis and does not designate the closing bid price, then the last bid price of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg, or, if the Trading Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the Eligible Market where such security is listed or traded as reported by Bloomberg, or if the foregoing

 

  

55

  

do not apply, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).  If the Closing Bid Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.  “Principal Market” means the OTC Bulletin Board® or, at any time that the Common Stock is not quoted on the OTC Bulletin Board, the Eligible Market on which the Common Stock is listed or quoted for trade.  “Eligible Market” means the Principal Market, the American Stock Exchange, The New York Stock Exchange, Inc., The NASDAQ Capital Market, The NASDAQ Global Market or The NASDAQ Global Select Market.

 

20.4.               The Company's obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares.  Nothing herein shall limit a Holder's right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates representing shares of Common Stock upon exercise of this Warrant  as required pursuant to the terms hereof.

 

SECTION 21.           Charges, Taxes and Expenses.  Issuance and delivery of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder.  The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

 

SECTION 22.           Replacement of Warrant.  If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable bond or indemnity, if requested.  Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe.  If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the Company as a condition precedent to the Company’s obligation to issue the New Warrant.

 

  

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SECTION 23.           Reservation of Warrant Shares.  The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of persons other than the Holder (after giving effect to the adjustments and restrictions of Section 9, if any).  The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable.  The Company will take all such action as may be necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any securities exchange or automated quotation system upon which the Common Stock may be listed.

 

SECTION 24.           Certain Adjustments.  The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 9.

 

24.1.               Stock Dividends and Splits.  If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock (which for the avoidance of doubt, shall not include shares of Common Stock issued by the Company pursuant to this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event.  Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination.

 

24.2.               Fundamental Transactions.  If any capital reorganization, reclassification of the capital stock of the Company, consolidation or merger of the Company with another corporation, or sale, transfer or other disposition of all or substantially all of the Company’s assets to another corporation shall be effected (each a “Fundamental Transaction”), then, as a condition of such Fundamental Transaction, lawful and adequate provision shall be made whereby the Holder shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions herein specified and in lieu of the Warrant Shares immediately theretofore issuable upon exercise of the Warrant, such shares of stock, securities or assets as would have been issuable or payable with respect to or in exchange for a number of Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable upon exercise of the Warrant, had such Fundamental Transaction not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of the Holder to the end that the provisions hereof

 

  

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(including, without limitations, provision for adjustment of the Exercise Price) shall thereafter be applicable, as nearly equivalent as may be practicable in relation to any shares of stock, securities or properties thereafter deliverable upon the exercise hereof. The Company shall not effect any such Fundamental Transaction unless prior to or simultaneously with the consummation thereof the successor corporation (if other than the Company) resulting from such consolidation or merger, or the corporation purchasing or otherwise acquiring such assets or other appropriate corporation or entity shall assume, by written instrument executed and delivered to the Company (a copy of which shall be delivered to the Holder), the obligation to deliver to the holder of the Warrant such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to purchase and the other obligations under this Warrant. The provisions of this paragraph (b) shall similarly apply to successive Fundamental Transactions.

 

24.3.               Subsequent Equity Sales.  If the Company at any time while this Warrant is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise issue any Common Stock or Common Stock Equivalents (as defined below) entitling any person to acquire shares of Common Stock, at an effective price per share less than $1.00 per share of Common Stock (each such issuance, a “Dilutive Issuance”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than $1.00 per share of Common Stock, such issuance shall be deemed to have occurred for less than $1.00 per share of Common Stock on such date of the Dilutive Issuance), then if such Dilutive Issuance shall occur, the Exercise Price shall be reduced to be equal to the product of (A) the Exercise Price in effect immediately prior to such Dilutive Issuance and (B) the quotient determined by dividing (1) the sum of (I) the product derived by multiplying the Exercise Price in effect immediately prior to such Dilutive Issuance and the number of outstanding shares of Common Stock immediately prior to such Dilutive Issuance plus (II) the consideration, if any, received by the Company upon such Dilutive Issuance, by (2) the product derived by multiplying (I) the Exercise Price in effect immediately prior to such Dilutive Issuance by (II) the number of shares of Common Stock outstanding immediately after such Dilutive Issuance.

 

The following formula illustrates the foregoing:

 

NP = OP x (OP x CS + C) / (OP x CSA)

 

WHERE

 

NP = the adjusted Exercise Price (after the Dilutive Issuance)

 

OP = Exercise Price in effect immediately prior to such Dilutive Issuance

 

CS = the number of outstanding shares of Common Stock immediately prior to such Dilutive Issuance

 

  

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C = the consideration, if any, received by the Company upon such Dilutive Issuance

 

CSA = the number of outstanding shares of Common Stock immediately after such Dilutive Issuance

 

Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 9(c) in respect of an Exempt Issuance.  For purposes of this Warrant: “Common Stock Equivalents” shall mean securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, shares of Common Stock, or Preferred Stock; and “Exempt Issuance” shall mean the issuance of: (a) shares of Common Stock or Common Stock Equivalents to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose by the Board of Directors or a majority of the members of a committee established for such purpose by the Board of Directors; (b) securities upon the exercise of this Warrant (and any other securities issued pursuant to the Purchase Agreement) and/or the exercise or conversion of Common Stock Equivalents issued and outstanding on the date of this Warrant (as set forth in Schedule 4.3(i) of the Purchase Agreement); provided, that such securities have not been amended since the date of this Warrant to increase the number of such securities or to decrease the exercise, exchange or conversion price of such securities; or (c) securities issued in connection with any stock split, stock dividend, recapitalization or similar transaction by the Company.

 

24.4.               Number of Warrant Shares.  Simultaneously with any adjustment to the Exercise Price pursuant to Section 9(a), the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be adjusted proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the increased or decreased number of Warrant Shares, as applicable, shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment.

 

24.5.               Calculations.  All calculations under this Section 9 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable.  The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.

 

24.6.               Notice of Adjustments.  Upon the occurrence of each adjustment pursuant to this Section 9, the Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based.  Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Transfer Agent.

 

24.7.               Notice of Corporate Events.  If the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Common Stock, including without limitation any granting of rights or warrants to subscribe

 

  

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for or purchase any capital stock of the Company or any Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating or solicits stockholder approval for any Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms and conditions of such transaction, at least ten calendar days prior to the applicable record or effective date on which a Person would need to hold Common Stock in order to participate in or vote with respect to such transaction, and the Company will take all steps reasonably necessary in order to insure that the Holder is given the practical opportunity to exercise this Warrant prior to such time so as to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice.

 

SECTION 25.           Payment of Exercise Price.  The Holder shall pay the Exercise Price (i) in cash in immediately available funds or (ii) through a “cashless exercise,” in which event the Company shall issue to the Holder the number of Warrant Shares determined as follows:

 

	  	
X = Y [(A-B)/A]

	
where:

	  
	  	
X = the number of Warrant Shares to be issued to the Holder.

	  	  
	  	
Y = the number of Warrant Shares with respect to which this Warrant is being exercised.

	  	  
	  	
A = the average of the Closing Prices for the five Trading Days immediately prior to (but not including) the Exercise Date.

	  	  
	  	
B = the Exercise Price.

 

Notwithstanding anything in this Warrant to the contrary, the Holder may only exercise this Warrant through a cashless exercise if no Registration Statement (as defined in the Purchase Agreement) is effective for more than 30 consecutive days that covers the Warrant Shares issuable upon the exercise of this Warrant.

 

For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed

 

  

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to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued pursuant to the Purchase Agreement.

 

SECTION 26.           Fractional Shares.  The Company shall not be required to issue or cause to be issued fractional Warrant Shares on the exercise of this Warrant.  If any fraction of a Warrant Share would, except for the provisions of this Section, be issuable upon exercise of this Warrant, the number of Warrant Shares to be issued will be rounded up to the nearest whole share.

 

SECTION 27.           Notices.  Any and all notices or other communications or deliveries hereunder (including without limitation any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in the Purchase Agreement prior to 6:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in the Purchase Agreement on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.  The address for such notices or communications shall be as set forth in the Purchase Agreement with respect to the Company and, with respect to the Holder, the Holder’s last address as shown on the Warrant Register.

 

SECTION 28.           Warrant Agent.  The Company shall serve as warrant agent under this Warrant.  Upon 10 days’ notice to the Holder, the Company may appoint a new warrant agent.  Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or stockholder services business shall be a successor warrant agent under this Warrant without any further act.  Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last address as shown on the Warrant Register.

 

SECTION 29.           Investment Intent; Limited Transferability.

 

29.1.               If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder furnish to the Company a legal opinion of counsel to the Holder to such effect, the substance of which shall be reasonably acceptable to the Company and (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company representing that they are acquiring such Warrant Shares for investment purposes and that they are an accredited investor as defined in Rule 501(a) under the Securities Act.  The Holder understands that it must bear the economic risk of its

 

  

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investment in this Warrant and any securities obtainable upon exercise of this Warrant for an indefinite period of time, as this Warrant and such securities have not been registered under Federal or state securities or blue sky laws.

 

29.2.               The Holder represents that it has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of this Warrant or the exercise of the Warrant and the finance operations and business of the Company; and (ii) the opportunity to request such additional information which the Company possesses or can acquire without unreasonable effort or expense.  Nothing contained in this Section 14(b) shall alter, amend or change the Holder’s reliance on the representations, covenants or warranties contained herein.

 

29.3.               The Holder represents that it is an “accredited investor” within the meaning of Regulation D promulgated under the Securities Act and that it is acquiring the Warrants for its own account and not with a present view to, or for sale in connection with, any distribution thereof in violation of the registration requirements of the Securities Act, without prejudice, however, to such Holder’s right, subject to the provisions of this Warrant, at all times to sell or otherwise dispose of all or any part of the Warrant and Warrant Shares.

 

29.4.               The Holder represents that it, either by reason of such Holder’s business or financial experience or the business or financial experience of its professional advisors (who are unaffiliated with and who are not compensated by the Company or any affiliate, finder or selling agent of the Company, directly or indirectly), has such sophistication, knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment in the Company and the capacity to protect such Holder’s interests in connection with the transactions contemplated by this Warrant and the Purchase Agreement.

 

29.5.               The Holder represents that it has the ability to bear the economic risks of its investment for an indefinite period of time and could afford a complete loss of its investment.

 

29.6.               The Holder agrees and acknowledges that the representations made by the Holder in this Section 14 are conditions to the exercise of this Warrant.

 

SECTION 30.           Miscellaneous.

 

30.1.               Subject to the restrictions on transfer set forth on the first page hereof, this Warrant may be assigned by the Holder.  This Warrant may not be assigned by the Company except to a successor in the event of a Fundamental Transaction (subject to the provisions of Section 9(b) hereof).  This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns.  Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant.  This Warrant may be amended only in writing signed by the Company and the Holder and their successors and assigns.

 

  

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30.2.               The Company will not, by amendment of its governing documents or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment.  Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any Warrant Shares above the amount payable therefor on such exercise, (ii) will take all such action as may be reasonably necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares on the exercise of this Warrant, and (iii) will not close its stockholder books or records in any manner which interferes with the timely exercise of this Warrant.

 

30.3.               All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the laws of the State of California.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the city of Sacramento, State of California, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the transaction documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, or that such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under Section 12 hereof and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  The Company hereby waives all rights to a trial by jury.

 

30.4.               The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.

 

30.5.               In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

 

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE FOLLOWS

 

  

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as of the date first indicated above.

 

	  
	
OPHTHALMIC IMAGING SYSTEMS

 

	  
	
By: ___________________________                                                  

	
       Name:

	
       Title:

  

64

  

FORM OF EXERCISE NOTICE

 

(To be executed by the Holder to exercise the right to purchase shares of

Common Stock under the foregoing Warrant)

 

To Ophthalmic Imaging Systems:

 

The undersigned is the Holder of Warrant No. _______ (the “Warrant”) issued by Ophthalmic Imaging Systems, a California corporation (the “Company”).  As a condition to this exercise, the undersigned Holder hereby represents and warrants to the Company that the representations and warranties set forth in Section 14 of the Warrant are true and correct as of the date hereof as if they had been made on such date with respect to the Warrant Shares.  The undersigned Holder further acknowledges that the sale, transfer, assignment or hypothecation of the Warrant Shares to be issued upon exercise of this Warrant is subject to the terms and conditions contained in Section 14 of this Warrant.  Capitalized terms used herein and not otherwise defined have the respective meanings set forth in the Warrant.

 

(1)      The Warrant is currently exercisable to purchase a total of ______________ Warrant Shares.

 

(2)      The undersigned Holder hereby exercises its right to purchase _________________ Warrant Shares pursuant to the Warrant.

 

(3)      The Holder intends that payment of the Exercise Price shall be made as (check one):

 

____           “Cash Exercise” under Section 10

 

____           “Cashless Exercise” under Section 10

 

(4)      If the holder has elected a Cash Exercise, the holder shall pay the sum of $____________ to the Company in accordance with the terms of the Warrant.

 

(5)      Pursuant to this exercise, the Company shall deliver to the holder _______________ Warrant Shares in accordance with the terms of the Warrant.

 

(6)      Following this exercise, the Warrant shall be exercisable to purchase a total of ______________ Warrant Shares.

 

	  	  	  
	  	  	  
	
Dated:   ______________, ___________

	  	
Name of Holder:

	  	  	  

 

 

  

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(Print)      ________________________________

	  	  	  
	  	  	
By:           ________________________________

	  	  	
Name:      ________________________________

	  	  	
Title:        ________________________________

	  	  	  
	  	  	
(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

	 	 	 
	 	 	__________________________________ 
	  	  	
Taxpayer Identification Number

	
ACKNOWLEDGED AND AGREED TO this ___ day of ___________, 20__

 

OPHTHALMIC IMAGING SYSTEMS

 

 

By:

Name:   ______________________

Title:     ______________________

	  	  

 

 

  

66

  

++

FORM OF ASSIGNMENT

 

[To be completed and signed only upon transfer of Warrant]

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ________________________________ the right represented by Warrant to purchase ____________ shares of Common Stock of Ophthalmic Imaging Systems to which the Warrant relates and appoints ________________ attorney to transfer said right on the books of Ophthalmic Imaging Systems with full power of substitution in the premises.  As a condition to this assignment, the Holder acknowledges that its assignee must deliver a written instrument to the Company that the representations and warranties of Section 14 of the Warrant are true and correct as of the date hereof as if they had been made by such assignee on such date with respect to the Warrants.

 

 

	  	  
	  	  
	
Dated:                          ,

	  
	  	  
	  	                  ______________________________________
	  	
(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

	  	  
	  	                 ______________________________________
	  	
Address of Transferee

	  	  
	  	                  ______________________________________
	  	  
	  	                  ______________________________________
	  	  
	 	 
	 	                 ______________________________________
	 	
                 Taxpayer Identification Number

	
In the presence of:

	  
	  	  
	  	  
	  	  

 

 

 

 

  

67

  

EXHIBIT B

 

FORM OF LEGAL OPINION

 

1.           The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of California, with authority to own, lease and operate its properties and conduct its business as described in the SEC Reports. The Company is duly qualified to transact business as a foreign corporation and to own, lease and operate its properties in such states as required, except for such jurisdictions where the failure to so qualify would not, individually or in the aggregate, have a Material Adverse Effect.

 

2.           The Transaction Documents have been duly authorized, executed and delivered by the Company and constitute the legal, valid and binding obligations of the Company.

 

3.           The Company has the corporate power and authority to enter into and perform its obligations under the Transaction Documents, including, without limitation, to issue, sell and deliver the Securities as contemplated by the Transaction Documents.

 

4.           The Shares and Warrants have been duly authorized and, when paid for as provided in the Purchase Agreement, will be validly issued, fully paid and nonassessable free of any preemptive or similar rights contained in (i) the Articles of Incorporation or Bylaws of the Company or (ii) in any agreement filed as an exhibit to the SEC Reports.  The Warrant Shares have been duly authorized, and when issued and delivered in accordance with the terms of the respective Warrants, will be validly issued, fully paid, non-assessable and free of any preemptive or similar rights contained in (a) the Articles of Incorporation or Bylaws of the Company or (b) in any agreement filed as an exhibit to the SEC Reports.

 

5.           The Company has an authorized capitalization as set forth in Section ___of the Purchase Agreement.

 

6.           The Common Stock of the Company, including the Shares, conform in all material respects to the description thereof contained under the Company’s Form 8-A filed with the Commission on May 13, 1993.

 

7.           The execution and delivery of the Purchase Agreement by the Company and the performance by the Company of its obligations thereunder: (i) will not result in any violation of the provisions of the Articles of Incorporation or By-laws of the Company; (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of any agreement filed as an exhibit to the SEC Reports, or (iii) any federal, New York or California law, applicable to the Company and applicable for transactions of the type contemplated by the Purchase Agreement.

 

  

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8.           The execution and delivery of the Purchase Agreement by the Company and the performance by the Company of its obligations thereunder will not require any authorization, approval or consent of any court or governmental authority or agency or filing with any federal, New York or California government or regulatory commission, board, authority or agency, or with any self-regulatory organization or other non-governmental regulatory authority, or approval of the stockholders of the Company, except (i) the filing of the Registration Statements pursuant to Section 7 of the Purchase Agreement, (ii) the filing of a Current Report on Form 8-K with the Commission, (iii) the filing of a Form D in accordance with Regulation D under the Securities Act and (iv) as required by state securities laws.

 

9.           Assuming the continued accuracy and completeness of the representations, warranties and covenants of the Company and the Purchaser contained in the Purchase Agreement at the time of issuance of the relevant securities, the Company’s offer, sale and issuance of the Shares, Warrants and Warrant Shares in the manner contemplated by the Transaction Documents, will be exempt from the registration requirements of the Securities Act.

 

10.           The Company is not, and, immediately after giving effect to the offering and sale of the Shares, will not be an “investment company” as such term is defined in the Investment Company Act.

 

11.           To our knowledge, there are no rights to have securities of the Company registered under the Registration Statement contemplated by the Purchase Agreement which have not been waived by the holders of such rights or which have not expired by reason of lapse of time or otherwise.

 

 

 

  

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EXHIBIT C-1

 

FORM OF OFFICER CERTIFICATE

 

 

 

OPHTHALMIC IMAGING SYSTEMS

 

OFFICER’S CERTIFICATE

 

The undersigned, Chief Executive Officer and Chief Financial Officer of Ophthalmic Imaging Systems, a California corporation (the “Company”), pursuant to Section 3.1(c)(ii) of the Purchase Agreement, dated as of June ___, 2009 (the "Purchase Agreement"), by and between the Company and U.M. AccelMed, Limited Partnership. (the “Purchaser”), hereby represents, warrants and certifies to the Purchaser as follows (capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Purchase Agreement):

 

 

1.           Each of the representations and warranties of the Company set forth in the Purchase Agreement were true and correct in all respects when made and are true and correct in all respects as of the date hereof as though made at that time; and

 

2.           The Company has complied in all respects with all the agreements and satisfied in all respects all the conditions in the Purchase Agreement on its part to be performed or satisfied on or prior to the Closing Date

 

 

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this ___ day of June, 2009.

 

 

 

 

	
  

	
Gil Allon

	
  

	
Chief Executive Officer

 

 

 

 

	
  

	
Ariel Shenhar

	
  

	
Chief Financial Officer

  

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EXHIBIT C-2

 

FORM OF OFFICER CERTIFICATE

 

 

 

OPHTHALMIC IMAGING SYSTEMS

 

OFFICER’S CERTIFICATE

 

 

The undersigned, Chief Executive Officer and Chief Financial Officer of Ophthalmic Imaging Systems, a California corporation (the “Company”), pursuant to Section 3.2(c)(iii) of the Purchase Agreement, dated as o ___, 2010 (the "Purchase Agreement"), by and between the Company and U.M. AccelMed, Limited Partnership (the “Purchaser”), hereby represents, warrants and certifies to the Purchaser as follows (capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Purchase Agreement):

 

 

1.           Each of the representations and warranties of the Company set forth in the Purchase Agreement are true and correct in all material respects (except for those representations and warranties that are qualified by Material Adverse Effect, which shall be true and correct in all respects) as of the Deferred Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date).

 

2.           The Company has complied in all respects with all the agreements and satisfied in all respects all the conditions in the Purchase Agreement on its part to be performed or satisfied on or prior to the Deferred Closing Date.

 

 

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this ___ day of __________, 20___.

 

 

	
  

	
____________________________________

Gil Allon

	
  

	
Chief Executive Officer

 

 

 

 

	
  

	
____________________________________

Ariel Shenhar

	
  

	
Chief Financial Officer

 

 

 

 

  

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EXHIBIT D

 

FORM OF MV PROXY

 

IRREVOCABLE PROXY

 

MediVision Medical Imaging Ltd. (the “Stockholder”), an Israeli corporation and a stockholder of Ophthalmic Imaging Systems, a California corporation (the “Company”), hereby irrevocably (to the fullest extent permitted by law) appoints and constitutes Gil Allon (the “Proxy Holder”), a resident of the State of California, as a true and lawful attorney-in-fact and proxy of the Stockholder, with full power and authority to act, including full power of substitution, in the name, place and stead of the Stockholder, and on behalf and for the use and benefit of the Stockholder, to the full extent of the Stockholder’s rights with respect to __________ shares of the Company’s common stock, no par value (the “Common Stock”), owned by the Stockholder as of the date of this proxy and with respect to any and all shares of the Common Stock hereafter and prior to the 2010 Annual Meeting (as defined below) purchased by the Stockholder (the “Shares”).

 

Upon the execution hereof, all prior proxies given by the Stockholder with respect to any of the Shares are hereby revoked, and no subsequent proxies will be given with respect to any of the Shares so long as this proxy is in full force and effect.

 

At the 2010 annual meeting of the stockholders of the Company (the “2010 Annual Meeting”), to be held at 221 Lathrop Way, Suite I, Sacramento, California 95815, or at any other location selected by the Company’s Board of Directors, the Proxy Holder has the full power and authority to and is hereby instructed to act, in the name, place and stead of the Stockholder, and on behalf and for the use and benefit of the Stockholder, to vote the Shares FOR the approval of an amendment to the Company’s restated articles of incorporation providing for an increase in the amount of authorized Common Stock equal to 100,000,000 shares (the “Proposal”).

 

This proxy shall terminate immediately following the later of (x) the conclusion of the meeting at which the Company acts with respect to the Proposal and in which the Proposal has been approved by the Company’s stockholders or (y) any adjournments thereof.

 

This proxy shall be binding upon the heirs, estate, executors, personal representatives and assigns of the Stockholder (including any transferee of any of the Shares).  No Shares shall be transferred, assigned or pledged by the Stockholder prior to the termination of this Proxy unless such transferee or assignee has executed and delivered to the U.M. Accelmed, Limited Partnership (the “Purchaser”) a duly executed proxy in the form and substance set forth herein with respect to the purchased Shares.

 

The Stockholder, the Company’s largest stockholder, hereby affirms that this power of attorney is given in consideration for, among other things, the Purchaser’s execution and delivery of the Purchase Agreement.  THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE.

 

  

72

  

This proxy shall be interpreted in accordance with the internal laws of the State of California, without giving effect to principles or conflicts of law.

 

 

	 	MEDIVISION MEDICAL IMAGING LTD.	 
	 	 	 	 
	
DATED: June ___, 2009

	
By: 

	 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 

 

 

  

73

  

 

 

EXHIBIT E

 

Exhibit E –Form of Irrevocable Proxy by MediVision shareholders

IRREVOCABLE PROXY

The Undersigned does hereby irrevocably make, constitute and appoint any one of Messrs, Yigal Berman and/or Noam Allon, (in any such case, the “Proxyholder”), as the attorney and proxy of the Undersigned, with full power of substitution, including to receive notice on behalf of the Undersigned, to attend on behalf of the Undersigned, represent and vote, on his sole discretion, and/or to execute, on behalf of the Undersigned, any written resolution of MediVision Medical Imaging Ltd’s (the “Company”) shareholders, for all shares of the Company that the Undersigned holds of record, as indicted in the Company’s shareholders convened in order to approve the signing of the Asset Purchase Agreement between the Company and Ophthalmic Imaging Systems (the “APA”) and all schedules of an ancillary documents to the APA (the “Meeting”).

Proxyholder shall cast the votes which the Shares are entitled in favor of approval of the abovementioned APA and schedules.

The Undersigned agrees that this Irrevocable Proxy is made irrevocable by him and coupled with an interest by the Proxyholder in the Shares, all in accordance with the provisions of Israeli law.

The receipt of notice, attendance, vote and signature of the Proxy shall be deemed, for all intent and purpose, receipt of notice by, attendance of, vote and signature by the Undersigned, and shall have full force and effect as if received, attended, voted and executed by the Undersigned.

This Irrevocable Proxy shall automatically terminate in its entirety and be of no further force or effect immediately following the conclusion of the Meeting.

The Undersigned executes this Irrevocable Proxy this ____ day of June 2009.

Print Name _______________________

  

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EXHIBIT F-1

 

FORM OF SECRETARY CERTIFICATE

 

 

 

OPHTHALMIC IMAGING SYSTEMS

 

SECRETARY’S CERTIFICATE

 

The undersigned hereby certifies that he is the duly elected, qualified and acting Secretary of OPHTHALMIC IMAGING SYSTEMS, a California corporation (the “Company”), and that as such he is authorized to execute and deliver this certificate in the name and on behalf of the Company and in connection with the Purchase Agreement, dated as of___, 2009 (the “Purchase Agreement”), by and between the Company and ACCELMED L.P., and further certifies in his official capacity, in the name and on behalf of the Company, the items set forth below.  Capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Purchase Agreement.

 

	
(b)

	
Attached hereto as Exhibit A is a true, correct and complete copy of the resolutions duly adopted by the Board of Directors of the Company at a meeting of the Board of Directors held on May ___, 2010.  Such resolutions have not in any way been amended, modified, revoked or rescinded, have been in full force and effect since their adoption to and including the date hereof and are now in full force and effect.

 

	
(c)

	
Attached hereto as Exhibit B is a true, correct and complete copy of the Restated Articles of Incorporation of the Company, together with any and all amendments thereto, and no action has been taken to further amend, modify or repeal such Restated Articles of Incorporation, the same being in full force and effect in the attached form as of the date hereof.

 

	
(d)

	
Attached hereto as Exhibit C is a true, correct and complete copy of the Amended and Restated Bylaws of the Company and any and all amendments thereto, and no action has been taken to further amend, modify or repeal such Amended and Restated Bylaws, the same being in full force and effect in the attached form as of the date hereof.

 

	
(e)

	
The following persons are the duly elected officers of the Company occupying the offices set forth opposite their respective names, each such officer is authorized to execute on behalf of the Company the Transaction Documents and any other documents required to be executed or delivered in connection therewith, and the signature set forth opposite each such officer’s respective name is his true signature.

 

	
Name

	
Office

	
Signature

	
 

Ariel Shenhar

	
 

Chief Financial Officer and Secretary

 

	
 

________________________

	
 

Gil Allon

	
 

Chief Executive Officer

	
 

________________________

 

 

  

75

  

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this ___ day of May 2010.

 

 

 

 

	
  

	
_______________________________

Name: Ariel Shenhar

	
  

	
Title:  Secretary

 

 

I, Gil Allon, in my capacity as Chief Executive Officer of Ophthalmic Imaging Systems, a California corporation (the “Company”), hereby certify that Ariel Shenhar is the duly elected, qualified and acting Secretary of the Company and that the signature appearing above is his genuine signature.

 

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this ___ day of May 2010.

 

 

	
  

	
_______________________________

Name: Gil Allon

	
  

	
Title:  Chief Executive Officer

 

 

  

76

  

EXHIBIT F-2

 

FORM OF SECRETARY CERTIFICATE

 

 

 

OPHTHALMIC IMAGING SYSTEMS

 

SECRETARY’S CERTIFICATE

 

The undersigned hereby certifies that he is the duly elected, qualified and acting Secretary of OPHTHALMIC IMAGING SYSTEMS, a California corporation (the “Company”), and that as such he is authorized to execute and deliver this certificate in the name and on behalf of the Company and in connection with the Purchase Agreement, dated as of___, 2009 (the “Purchase Agreement”), by and between the Company and ACCELMED L.P., and further certifies in his official capacity, in the name and on behalf of the Company, the items set forth below.  Capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Purchase Agreement.

 

	
(f)

	
Attached hereto as Exhibit A is a true, correct and complete copy of the resolutions duly adopted by the Board of Directors of the Company at a meeting of the Board of Directors held on May ___, 2010.  Such resolutions have not in any way been amended, modified, revoked or rescinded, have been in full force and effect since their adoption to and including the date hereof and are now in full force and effect.

 

	
(g)

	
Attached hereto as Exhibit B is a true, correct and complete copy of the Restated Articles of Incorporation of the Company, together with any and all amendments thereto, and no action has been taken to further amend, modify or repeal such Restated Articles of Incorporation, the same being in full force and effect in the attached form as of the date hereof.

 

	
(h)

	
Attached hereto as Exhibit C is a true, correct and complete copy of the Amended and Restated Bylaws of the Company and any and all amendments thereto, and no action has been taken to further amend, modify or repeal such Amended and Restated Bylaws, the same being in full force and effect in the attached form as of the date hereof.

 

	
(i)

	
The following persons are the duly elected officers of the Company occupying the offices set forth opposite their respective names, each such officer is authorized to execute on behalf of the Company the Transaction Documents and any other documents required to be executed or delivered in connection therewith, and the signature set forth opposite each such officer’s respective name is his true signature.

 

	
Name

	
Office

	
Signature

	
 

Ariel Shenhar

	
 

Chief Financial Officer and Secretary

 

	  
	
 

Gil Allon

	
 

Chief Executive Officer

	
 

________________________

 

 

  

77

  

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this ___ day of May 2010.

 

 

 

	
  

	
_______________________________

Name: Ariel Shenhar

	
  

	
Title:  Secretary

 

I, Gil Allon, in my capacity as Chief Executive Officer of Ophthalmic Imaging Systems, a California corporation (the “Company”), hereby certify that Ariel Shenhar is the duly elected, qualified and acting Secretary of the Company and that the signature appearing above is his genuine signature.

 

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this ___ day of May 2010.

 

 

 

 

	
  

	
_______________________________

Name: Gil Allon

	
  

	
Title:  Chief Executive Officer

 

  

78

  

EXHIBIT G

 

LIST OF SUBSIDIARIES

 

 

	
 

Name of Subsidiary

	
State or Other Jurisdiction of Incorporation/Organization

	  	  
	
Abraxas Medical Solutions Ltd.

 

	
Delaware

	
OIS Global Ltd.

	
Israel

	  	  

 

  

79

  

EXHIBIT H

 

FORM OF INDEMNIFICATION AGREEMENT

 

INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (the “Agreement”), is made and entered into as of the ____ day of ____________, 2009, between Ophthalmic Imaging Systems, Inc., a California corporation (“Corporation”), and __________________ (“Director”).

 

WHEREAS, Director will be a member of the Board of Directors of Corporation, and in such capacity, will perform a valuable service for Corporation;

 

WHEREAS, in accordance with the authorization provided by subsections (a)(10) and (a)(11) of Section 204 of the California General Corporation Code, as amended (“Code”), Article Four and Five of the Corporation’s Amended and Restated Articles of Incorporation (the “Articles”) provides that the liability of directors of Corporation for monetary damages shall be eliminated to the fullest extent permissible under California law and authorizes Corporation to provide indemnification to members of its Board of Directors through agreements with such members in excess of the indemnification otherwise permitted by Section 317 of the Code;

 

WHEREAS, Corporation recognizes that the indemnification provided by this Agreement is of great importance in attracting highly qualified individuals, such as Director, to serve as members of its Board of Directors; and

 

WHEREAS, in order to induce Director to serve as a member of the Board of Directors of Corporation, Corporation has determined and agreed to enter into this Agreement with Director for the purpose of fully implementing the provisions of Section 204 and Section 317 of the Code and Article Four and Five of the Articles.

 

NOW, THEREFORE, in consideration of Director’s service as a director after the date hereof, the parties hereto agree as follows:

 

Section 1.       Indemnity of Director.    Corporation hereby agrees to hold harmless and indemnify Director to the fullest extent authorized by the provisions of Section 317 of the Code, as it may be amended from time to time.

 

Section 2.       Additional Indemnity.   Subject only to the limitations set forth in Section 3 hereof, Corporation hereby further agrees to hold harmless and indemnify Director:

 

(a)           against any and all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by Director in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including an action by or in the right of Corporation) to which Director is, was or at any time becomes a party, or is threatened to be made a party, by reason of the fact that Director is, was or at any time becomes a director, officer, employee or agent of Corporation, or is or was serving or at any time serves at the request of Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise; and

 

(b)           otherwise to the fullest extent as indemnification may be provided to Director by Corporation under the provisions of Article V of the Articles and Sections 204(a)(11) and 317 of the Code.

 

  

80

  

Section 3.       Limitations on Additional Indemnity.

 

(a)           No indemnification pursuant to Section 2 hereof shall be paid by Corporation for any of the following:

 

(i)           to the extent that Director is or has been indemnified or reimbursed pursuant to Section 1 hereof or any Directors and Officers Liability Insurance purchased and maintained by Corporation;

 

(ii)           with respect to remuneration paid to Director if it shall be determined by a final judgment or other final adjudication that such remuneration was in violation of applicable law;

 

(iii)           on account of any suit pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, and amendments thereto or similar provisions of any federal, state or local statutory law in which judgment is rendered against Director for an accounting of profits made from the purchase or sale by Director of securities of Corporation;

 

(iv)           if a final decision by a court having jurisdiction in the matter shall determine that such indemnification is not lawful under applicable law; or

 

(v)           on account of any action, suit or proceeding (other than a proceeding referred to in Section 8(b) hereof) commenced by the Director against Corporation or against any officer, director or shareholder of Corporation unless authorized in the specific case by action of the Board of Directors;

 

(b)           In addition to those limitations set forth above in paragraph (a) of this Section 3, no indemnification pursuant to Section 2 hereof in an action brought by or in the right of Corporation for breach of the Directors duties to Corporation and its shareholders shall be paid by Corporation for any of the following:

 

(i)           on account of Director’s acts or omissions that involve intentional misconduct or a knowing and culpable violation of law, unless Director had reasonable cause to believe his conduct was lawful or had no reasonable cause to believe his conduct was unlawful;

 

(ii)           on account of acts or omissions that Director believes to be contrary to the best interests of Corporation or its shareholders or that involve the absence of good faith on the part of Director;

 

(iii)           to the extent prohibited by Section 310 of the Code (contracts in which a director has material financial interest);

 

(iv)           to the extent prohibited by Section 316 of the Code (corporate actions subjecting directors to joint and several liability for prohibited distributions, loans and guarantees); or,

 

(v)           in any circumstances in which indemnity is expressly prohibited by Section 317 of the Code;

 

(c)           Notwithstanding the foregoing, Corporation hereby acknowledges that Director may have certain rights to indemnification, advancement of expenses and/or insurance provided by AccelMed, L.P. or its affiliates (“AccelMed”)  Corporation hereby agrees that it (i) is, relative to AccelMed, the indemnitor of first resort (i.e., Corporation’s obligations to Director under this Agreement

 

  

81

  

are primary and any duplicative, overlapping or corresponding obligations of AccelMed are secondary), (ii) shall be required to make all advances and other payments under this Agreement, and shall be fully liable therefor, without regard to any rights Director may have against AccelMed, and (iii) irrevocably waives, relinquishes and releases AccelMed from any and all claims against AccelMed for contribution, subrogation or any other recovery of any kind in respect thereof.  Corporation further agrees that no advancement or payment by AccelMed on behalf of Director with respect to any claim for which Director has sought indemnification from Corporation shall affect the foregoing and AccelMed shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Director against Corporation.  Corporation and Director agree that AccelMed is an express third party beneficiary of the terms of this Section 3(c).

 

Section 4.       Contribution.   If the indemnification provided in Sections 1 and 2 is unavailable and may not be paid to Director for any reason other than those set forth in Section 3 (excluding Section 3(b)(v)), then in respect of any threatened, pending or completed action, suit or proceeding in which Corporation is jointly liable with Director (or would be if joined in such action, suit or proceeding), Corporation shall contribute to the amount of expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Director in such proportion as is appropriate to reflect (i) the relative benefits received by Corporation on the one hand and Director on the other hand from the transaction from which such action, suit or proceeding arose, and (ii) the relative fault of Corporation on the one hand and of Director on the other in connection with the events which resulted in such expenses, judgments, fines or settlement amounts, as well as any other relevant equitable considerations. The relative fault of Corporation on the one hand and of Director on the other shall be determined by reference to, among other things, the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent the circumstances resulting in such expenses, judgments, fines or settlement amounts. Corporation agrees that it would not be just and equitable if contribution pursuant to this Section 4 were determined by pro rata allocation or any other method of allocation that does not take account of the foregoing equitable considerations.

 

Section 5.       Continuation of Obligations.   All agreements and obligations of Corporation contained herein shall continue during the period Director is a director of Corporation (or is or was serving at the request of Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as Director shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal or investigative, by reason of the fact that Director was a director of Corporation or serving in any other capacity referred to herein.

 

Section 6.               Notification and Defense of Claim.    Promptly after receipt by Director of notice of the commencement of any action, suit or proceeding, Director will, if a claim in respect thereof is to be made against Corporation under this Agreement, notify Corporation of the commencement thereof; but the omission so to notify Corporation will not relieve it from any liability which it may have to Director otherwise than under this Agreement. With respect to any such action, suit or proceeding as to which Director notifies Corporation of the commencement thereof:

 

(a)       Corporation will be entitled to participate therein at its own expense;

 

(b)       Except as otherwise provided below, to the extent that it may wish, Corporation jointly with any other indemnifying party similarly notified will be entitled to assume the defense thereof, with counsel satisfactory to Director (such consent not to be unreasonably withheld). After notice from Corporation to Director of its election to assume the defense thereof, Corporation will not be liable to Director under this Agreement for any legal or other expenses subsequently incurred by Director in connection with the defense thereof other than reasonable costs of investigation or as otherwise provided

  

82

  

below. Director shall have the right to employ counsel in such action, suit or proceeding but the fees and expenses of such counsel incurred after notice from Corporation of its assumption of the defense thereof shall be at the expense of Director unless (i) the employment of counsel by Director has been authorized by Corporation, (ii) Director shall have reasonably concluded that there may be a conflict of interest between Corporation and Director in the conduct of the defense of such action, or (iii) Corporation shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel shall be at the expense of Corporation. Corporation shall not be entitled to assume the defense of any action, suit or proceeding brought by or on behalf of Corporation or as to which Director shall have made the conclusion provided for in (ii) above; and

 

(c)       Corporation shall not be liable to indemnify Director under this Agreement for any amounts paid in settlement of any action or claim effected without its written consent. Corporation shall not settle any action or claim in any manner that would impose any penalty or limitation on Director without Director’s written consent. Neither Corporation nor Director will unreasonably withhold or delay its consent to any proposed settlement.

 

Section 7.               Advancement and Repayment of Expenses.

 

(a)       In the event that Director employs his or her own counsel pursuant to Section 6(b)(i) through (iii) above, Corporation shall advance to Director, prior to any final disposition of any threatened or pending action, suit or proceeding, whether civil, criminal, administrative or investigative, any and all reasonable expenses (including legal fees and expenses) incurred in investigating or defending any such action, suit or proceeding within ten (10) days after receiving copies of invoices presented to Director for such expenses; and

 

(b)       Director agrees that Director will reimburse Corporation for all reasonable expenses paid by Corporation in defending any civil or criminal action, suit or proceeding against Director in the event and only to the extent it shall be ultimately determined by a final judicial decision (from which there is no right of appeal) that Director is not entitled, under applicable law, the Articles or the Corporation’s Bylaws or this Agreement, to be indemnified by Corporation for such expenses.

 

Section 8.               Enforcement

 

(a)       Corporation expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on Corporation hereby in order to induce Director to serve as a director of Corporation, and acknowledges that Director is relying upon this Agreement in serving in such capacity.

 

(b)       In the event Director is required to bring any action to enforce rights or to collect moneys due under this Agreement and is successful in such action, Corporation shall reimburse Director for all of Director’s reasonable fees and expenses in bringing and pursuing such action.

 

Section 9.               Severability.   Each of the provisions of this Agreement is a separate and distinct agreement and independent of the others, so that if any provision hereof shall be held to be invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of the other provisions hereof.

 

Section 10.             Non-Exclusivity of Rights.   The rights conferred on Director by this Agreement shall not be exclusive of any other right which Director may have or hereafter acquire under any statute, provision of the Articles, Corporation’s Bylaws, agreement, vote of shareholders or directors, or otherwise, both as to action in Director’s official capacity and as to action in another capacity while

  

83

  

holding office; provided, that this Agreement shall supersede any prior agreements or understandings, both written and oral, between Director and  Corporation, with respect to the subject matter hereof; provided, further, that, notwithstanding the foregoing proviso, and in light of the fact that this Agreement is generally intended to provide for indemnification to the fullest extent possible except as prohibited by law, this Agreement shall not be construed to deprive Director of any indemnification permitted by applicable law with respect to an act or omission to which Director would otherwise have been entitled under any such prior agreement.  To the extent that a change in the California Code permits greater indemnification by agreement than would be afforded currently under Corporation’s Articles of Incorporation and Bylaws and this Agreement, it is the intent of the parties hereto that Director shall enjoy by this Agreement the greater benefits so afforded by such change.  Corporation will not adopt any amendment to any of the corporate documents the effect of which would be to deny, diminish or encumber Directors’s right to indemnification under this Agreement.

 

Section 11.              Effective Date.  This Agreement shall apply beginning on Director’s first date of being elected as a director of Corporation.

 

Section 12.             Governing Law.   This Agreement shall be interpreted and enforced in accordance with the laws of the State of California.

 

Section 13.             Binding Effect.   This Agreement shall be binding upon Director and upon Corporation, and their respective successors and assigns, and shall inure to the benefit of Director, his or her heirs, personal representatives and assigns and to the benefit of Corporation, its successors and assigns.

 

Section 14.             Amendment and Termination.  No amendment, modification, termination or cancellation of this Agreement shall be effective unless in writing signed by both parties hereto.

 

Section 15.             Subrogation.   In the event of payment under this Agreement, Corporation shall be subrogated to the extent of such payment to any right Director may have for recovery of the amounts so paid from any third party. Director agrees to execute all documents required and do all other acts necessary to effect the foregoing provisions and permit Corporation to enforce the rights so subrogated..

 

 

 

  

84

  

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.

 

 

 

	
OPHTHALMIC IMAGING SYSTEMS, INC.

	
By:

	  
	  	
Name:

	
Gil Allon

	  	
Title:

	
Chief Executive Officer

 

 

	
By:

	  
	  	
Name:

	
Ariel Shenhar

	  	
Title:

	
Chief Financial Officer

 

 

DIRECTOR:

 

 

_________________________

 Name:

 

 

 

 

  

85

  

APPENDIX I

 

SUMMARY INSTRUCTION SHEET FOR PURCHASER

 

(to be read in conjunction with the entire

Purchase Agreement which follows)

 

A.           Complete the following items on BOTH Purchase Agreements (Sign two originals):

 

1.           Signature Page:

 

	
  

	
(i)

	
Name of Purchaser (Individual or Institution)

 

	
  

	
(ii)

	
Name of Individual representing Purchaser (if an Institution)

 

	
  

	
(iii)

	
Title of Individual representing Purchaser (if an Institution)

 

	
  

	
(iv)

	
Signature of Individual Purchaser or Individual representing Purchaser

 

	
  

	
2.

	
Appendix I - Stock Certificate Questionnaire/Registration Statement Questionnaire:

 

Provide the information requested by the Stock Certificate Questionnaire and the Registration Statement Questionnaire.

 

	
  

	
3.

	
Return BOTH properly completed and signed Purchase Agreements including the properly completed Appendix I to (initially by facsimile with original by overnight delivery):

 

	
[Street Address]

[City, State ZIP]

Attention:

Facsimile:

 

B.           Instructions regarding the transfer of funds for the purchase of Shares will be sent by facsimile to the Purchaser by the Company at a later date.

 

C.           Upon the resale of the Shares by the Purchaser after the Registration Statement covering the Shares is effective, as described in the Purchase Agreement, the Purchaser:

 

	
  

	
(i)

	
must deliver a current prospectus of the Company to the buyer (prospectuses must be obtained from the Company at the Purchaser’s request); and

 

	
  

	
(ii)

	
must send a letter in the form of Appendix II to the Company so that the Shares may be properly transferred.

 

  

86

  

Appendix I

(Page 1 of 3)

 

 

OPHTHALMIC IMAGING SYSTEMS

 

STOCK CERTIFICATE QUESTIONNAIRE

 

Pursuant to Section 3 of the Agreement, please provide us with the following information:

 

	
1.

	
The exact name that your Shares are to be registered in (this is the name that will appear on your stock certificate(s)).  You may use a nominee name if appropriate:

 

	
 

 

 

_____________________________

 

	
2.

	
The relationship between the Purchaser of the Shares and the Registered Holder listed in response to item 1 above:

 

	
 

 

_____________________________

 

	
3.

	
The mailing address of the Registered Holder listed in response to item 1 above:

	
 

_____________________________

_____________________________

_____________________________

_____________________________

 

	
4.

	
The Social Security Number or Tax Identification Number of the Registered Holder listed in response to item 1 above:

 

	
 

 

_____________________________

 

  

87

  

Appendix I

(Page 2 of 3)

 

 

OPHTHALMIC IMAGING SYSTEMS

 

REGISTRATION STATEMENT QUESTIONNAIRE

 

In connection with the preparation of the Registration Statement, please provide us with the following information:

 

SECTION 1.      Pursuant to the “Selling Stockholder” section of the Registration Statement, please state your or your organization’s name exactly as it should appear in the Registration Statement:

 

	  

 

 

SECTION 2.      Please provide the number of shares that you or your organization will own immediately after Closing, including those Shares purchased by you or your organization pursuant to this Purchase Agreement and those shares purchased by you or your organization through other transactions and provide the number of shares that you have or your organization has the right to acquire within 60 days of Closing:

 

	  
	  

 

 

SECTION 3.      Have you or your organization had any position, office or other material relationship within the past three years with the Company or its affiliates? 

 

_____ Yes         _____ No

 

If yes, please indicate the nature of any such relationships below:

 

	  
	  
	  
	  

 

 

SECTION 4.      Are you (i) FINRA Member (see definition), (ii) a Controlling (see definition) shareholder of FINRA Member, (iii) a Person Associated with a Member of FINRA (see definition), or (iv) an Underwriter or a Related Person (see definition) with respect to the

 

  

88

  

proposed offering; or (b) do you own any shares or other securities of any FINRA Member not purchased in the open market; or (c) have you made any outstanding subordinated loans to any FINRA Member?

 

Answer:  o Yes    o No                                                      If “yes,” please describe below

 

	  
	  
	  
	  

 

 

SECTION 5.      If the Selling Stockholder is an entity, please disclose:

 

	
(i)

	
who for the entity has the sole or shared power to vote or direct the vote of any such securities?

 

	
  

	
________________________________

 

	
(ii)

	
who for the entity has the sole or shared power the dispose or direct the disposition of any such securities?

 

	
  

	
________________________________

 

	
(iii)

	
do any of the foregoing persons disclaim beneficial ownership of such securities

 

	
Answer:  o Yes    o No

	
If so, who?

 

  

89

  

Appendix I

(Page 3 of 3)

 

 

 

FINRA Member.  The term “FINRA member” means either any broker or dealer admitted to membership in the Financial Industry Regulatory Authority, Inc. (“FINRA”).  (FINRA Manual, By-laws of FINRA Regulation, Inc. Article I, Definitions)

 

Control.  The term “control” (including the terms “controlling,” “controlled by” and “under common control with”) means the possession, direct or indirect, of the power, either individually or with others, to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.  (Rule 405 under the Securities Act of 1933, as amended)

 

Person Associated with a member of FINRA.  The term “person associated with a member of FINRA” means every sole proprietor, partner, officer, director, branch manager or executive representative of any FINRA Member, or any natural person occupying a similar status or performing similar functions, or any natural person engaged in the investment banking or securities business who is directly or indirectly controlling or controlled by a FINRA Member, whether or not such person is registered or exempt from registration with FINRA pursuant to its bylaws.  (FINRA Manual, By-laws of FINRA Regulation, Inc. Article I, Definitions)

 

Underwriter or a Related Person.  The term “underwriter or a related person” means, with respect to a proposed offering, underwriters, underwriters’ counsel, financial consultants and advisors, finders, members of the selling or distribution group, and any and all other persons associated with or related to any of such persons.  (FINRA Interpretation)

 

  

90

  

APPENDIX II

 

CERTIFICATE OF SUBSEQUENT SALE

 

 

[Transfer Agent]

 

[Address]

 

Attention:

 

 

 

PURCHASER’S CERTIFICATE OF SUBSEQUENT SALE

 

 

 

	  

The undersigned, [an officer of, or other person duly authorized by]

_____________________________________________________________ hereby certifies

[fill in official name of individual or institution]

that he/she [said institution] is the Purchaser of the shares evidenced by the attached certificate,

and as such, sold such shares on _______________ in accordance with the terms of the

[date]

Purchase Agreement and in accordance with Registration Statement

number ____________________________________________ or otherwise in accordance with

           [fill in the number of or otherwise identify Registration Statement]

the Securities Act of 1933, as amended, and, in the case of a transfer pursuant to the Registration

Statement, the requirement of delivering a current prospectus by the Company has been

complied with in connection with such sale.

 

 

	 Print or Type:	 	 
	 	 	 
	 	 	 
	
Name of Purchaser

(Individual or

 Institution):

	  	 
	  	 
	
Name of Individual

representing

Purchaser (if an

Institution)

	  	 
	  	 
	
Title of Individual

representing

Purchaser (if an

Institution):

	  	 
	
Signature by:

	 
	
Individual Purchaser

or Individual repre-

senting Purchaser:

	  	 

 

 

 

 

  

91

  

 

SCHEDULE 4.3(i) and 4.3(ii)

 

OUTSTANDING CAPITALIZATION

AND

OUTSTANDING OPTIONS TO PURCHASE RIGHTS AND OTHER RIGHTS

 

	
Form

	
Source

	 	

Exercise

Price

	

Issue

Date

	

Expiration

Date

	

Current

Issued

	
%

	

Options

& Warrants

Granted

	

Available

For Grant

	

Convertible

Note

	

Agreements

Pending

Approval

	

Fully

Diluted

	  
	  	  	 	  	  	  	  	  	  	  	  	  	  	  
	
Shares

	
Currently outstanding-MediVIsion

	 	  	  	  	
            9,380,843

	
55.6%

	  	  	  	  	
               9,380,843

	
40.2%

	  	
Currently outstanding - Open market

	 	  	  	  	
            7,485,988

	
44.4%

	  	  	  	  	
               7,485,988

	
32.1%

	  	  	 	  	  	  	  	  	  	  	  	  	  	  
	
Options

	
2000 Non Statutory Stock Option Plan

	$ 	
                          0.4060

	
9/6/2001

	
9/6/2011

	  	  	
150,000

	  	  	  	
                    150,000

	
0.6%

	  	  	$ 	
                       0.4060

	
10/23/2002

	
10/23/2012

	  	  	
80,000

	  	  	  	
                     80,000

	
0.3%

	  	  	$ 	
                      0.4060

	
4/10/2003

	
4/10/2013

	  	  	
590,000

	  	  	  	
                   590,000

	
2.5%

	  	  	$ 	
                    0.1000

	
1/2/2002

	
1/2/2012

	  	  	
20,000

	  	  	  	
                     20,000

	
0.1%

	  	  	$ 	
                      2.8300

	
3/7/2007

	
3/7/2017

	  	  	
8,000

	  	  	  	
                        8,000

	
0.0%

	  	  	$ 	
                       0.1600

	
1/6/2009

	
1/6/2019

	  	  	
312,836

	  	  	  	
                    312,836

	
1.3%

	  	  	 	  	  	  	  	  	  	  	  	  	
                               -

	
0.0%

	
Options

	
2003 Stock Option Plan

	$ 	
                        0.6810

	
10/24/2004

	
10/24/2014

	  	  	
284,167

	  	  	  	
                    284,167

	
1.2%

	  	  	$ 	
                        1.9600

	
3/3/2006

	
3/3/2016

	  	  	
20,000

	  	  	  	
                     20,000

	
0.1%

	  	  	$ 	
                        1.8300

	
6/14/2006

	
6/14/2016

	  	  	
103,000

	  	  	  	
                    103,000

	
0.4%

	  	  	$ 	
                        0.1600

	
1/6/2009

	
1/6/2019

	  	  	
144,664

	  	  	  	
                    144,664

	
0.6%

	  	  	 	  	  	  	  	  	  	  	  	  	
                               -

	
0.0%

	
Options

	
2005 Stock Option Plan

	$ 	
                        0.8200

	
12/19/2007

	
12/19/2015

	  	  	
335,000

	  	  	  	
                   335,000

	
1.4%

	  	  	$ 	
                        1.0500

	
12/19/2007

	
12/19/2015

	  	  	
335,000

	  	  	  	
                   335,000

	
1.4%

	  	  	$ 	
                        0.1600

	
1/6/2009

	
1/6/2019

	  	  	
80,000

	  	  	  	
                     80,000

	
0.3%

	  	  	 	  	  	  	  	  	  	  	  	  	
                               -

	
0.0%

	
Options

	
2009 Stock Option Plan

	 	
 No options granted from this plan to date

	  	  	  	
        750,000

	  	  	
                   750,000

	
3.2%

	  	  	 	  	  	  	  	  	  	  	  	  	
                               -

	
0.0%

	
Warrants

	
The Tail Wind Fund

	$ 	
                        1.8700

	
10/29/2007

	
12/10/2012

	  	  	
526,973

	  	  	  	
                   526,973

	
2.3%

	
Warrants

	
Solomon Strategic Holdings, Inc.

	$ 	
                        1.8700

	
10/29/2007

	
12/10/2012

	  	  	
89,698

	  	  	  	
                     89,698

	
0.4%

	
Ratchet on Warrants

	
The Tail Wind Fund

	$ 	
                        1.1528

	
10/29/2007

	
12/10/2012

	  	  	
244,452

	  	  	  	
                   244,452

	
1.0%

	
Ratchet on Warrants

	
Solomon Strategic Holdings, Inc.

	$ 	
                        1.1528

	
10/29/2007

	
12/10/2012

	  	  	
41,609

	  	  	  	
                      41,609

	
0.2%

	  	  	 	  	  	  	  	  	  	  	  	  	
                               -

	
0.0%

	
Convertible note

	
The Tail Wind Fund

	$ 	
                         1.6500

	
10/29/2007

	  	  	  	  	  	
                   712,121

	  	
                      712,121

	
3.1%

	
Convertible note

	
Solomon Strategic Holdings, Inc.

	$ 	
                         1.6500

	
10/29/2007

	  	  	  	  	  	
                   121,212

	  	
                      121,212

	
0.5%

	
Ratchet on Convertible note

	
The Tail Wind Fund

	$ 	
                         0.9220

	
10/29/2007

	  	  	  	  	  	
                468,082

	  	
                   468,082

	
2.0%

	
Ratchet on Convertible note

	
Solomon Strategic Holdings, Inc.

	$ 	
                         0.9220

	
10/29/2007

	  	  	  	  	  	
                  79,674

	  	
                     79,674

	
0.3%

	  	  	 	  	  	  	  	  	  	  	  	  	  	  
	
Warrants

	
The Tail Wind Fund

	$ 	
                          1.0000

	
No signed agreement yet

	  	  	  	  	
                          427,273

	
                   427,273

	
1.8%

	
Warrants

	
Solomon Strategic Holdings, Inc.

	$ 	
                          1.0000

	
No signed agreement yet

	  	  	  	  	
                            72,727

	
                     72,727

	
0.3%

	
Warrants

	
United Mizrahi Bank

	$ 	
                         1.0000

	
No signed agreement yet

	  	  	  	  	
                          350,000

	
                   350,000

	
1.5%

	
Warrants

	
Broker

	$ 	
                          0.0100

	
No signed agreement yet

	  	  	  	  	
                           123,457

	
                    123,457

	
0.5%

	  	  	 	  	  	  	  	  	  	  	  	  	
                               -

	
0.0%

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	  	
Totals

	 	  	  	  	
    16,866,831

	
100.0%

	
    3,365,399

	
  750,000

	
      1,381,089

	
              973,457

	
    23,336,775

	
100.0%

	  	  	 	  	  	  	  	  	  	  	  	  	  	
100.0%

	  	  	 	  	  	  	  	  	  	  	  	
AccelMed

	
               9,633,228

	  
	  	  	 	  	  	  	  	  	  	  	  	
AccelMed warrants

	
                 3,211,076

	  
	  	  	 	  	  	  	  	  	  	  	  	  	
              12,844,304

	  
	  	
Extra 25% for tailwind

	
362,501

	  	  	  	  	  	  	  	  	  	  
	  	  	 	  	  	  	  	  	  	  	  	
Fully Diluted

	
36,181,079

	  
	  	  	 	  	  	  	  	  	  	  	  	  	  	  
	  	  	 	  	  	  	    Reduce cap limitation as Tailwind caped at 1.4M shares	  	
(1,383,821)

	  
	  	  	 	  	  	  	  	  	  	  	  	
Total cap reserve

	
34,797,259

	  
	  	  	 	  	  	  	  	  	  	  	  	
Autorized

	
35,000,000

	  
	  	  	 	  	  	  	  	  	  	  	  	
Left over

	
202,741

	  

  

92

  

SCHEDULE 4.19

 

Company Budget and Strategic Work Plan

	  	  	  	  	
Confidential Treatment Requested under 17 C.F.R. Sections 200.80(B)(4), 200.83 and 200.406

 

Certain portions of this Sechedule 4.19 have been redacted and a request for Confidential Treatment therefore has been requested.

	
Strictly Private and Confidential

	  	  	  	  	  	  
	
 Schedule 4.19

	  	  	  	  	  	  	  
	
Flag

	  	
Total

	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	
OIS/MDV projection 2010

	  	  	  	  	  	  
	  	  	  	
2009

	
Q1 2010

	
Q2 2010

	
Q3 2010

	
Q4 2010

	
2010

	  	
No.

	
Cash-Flow component

	
6

	  	  	  	  	
7

	
1

	
WinStation

	  	
S

	
Total Sales (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
M

	
Manufacturing Cost (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Gross Margin (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Gross Margin (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
G&A (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
S&M (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
O

	
Sustained R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	D Extra R&D (K$)	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Total R&D  Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Total R&D  Expenses (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Operating Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
C

	
Capital Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
E

	
Depreciation (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
I

	
EBIT (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	  	
*

	
*

	
*

	
*

	
*

	
*

	
0

	
IRI 1

	  	
S

	
Total Sales (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
M

	
Manufacturing Cost (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Gross Margin (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Gross Margin (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
G&A (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
S&M (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Sustained R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
D

	
Extra R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Total R&D  Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Total R&D  Expenses (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Operating Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
C

	
Capital Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
E

	
Depreciation (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
I

	
EBIT (K$)

	
*

	
*

	
*

	
*

	
*

	
*

 

	
0

	
IRI 2_Canon CR1+WS

	  	
S

	
Total Sales (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
M

	
Manufacturing Cost (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Gross Margin (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Gross Margin (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
G&A (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
S&M (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Sustained R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
D

	
Extra R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Total R&D  Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Total R&D  Expenses (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Operating Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
C

	
Capital Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
E

	
Depreciation (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
I

	
EBIT (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	  	  	  	  	  	  	  

 

  

93

  

 

	  	  	  	
2009

	
Q1 2010

	
Q2 2010

	
Q3 2010

	
Q4 2010

	
2010

	  	
No.

	
Cash-Flow component

	
6

	  	  	  	  	
7

 

	
1

	
Symphony 

	  	
S

	
Total Sales (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
M

	
Manufacturing Cost (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Gross Margin (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Gross Margin (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
G&A (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
S&M (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Sustained R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
D

	
Extra R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Total R&D  Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Total R&D  Expenses (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Operating Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
C

	
Capital Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
E

	
Depreciation (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
I

	
EBIT (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	  	
*

	
*

	
*

	
*

	
*

	
*

	 	 
	
1

	
EMR&PM

	  	
S

	
Total Sales (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
M

	
Manufacturing Cost (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Gross Margin (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Gross Margin (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
G&A (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
S&M (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Sustained R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
D

	
Extra R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Total R&D  Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Total R&D  Expenses (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Operating Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
C

	
Capital Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
E

	
Depreciation (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
I

	
EBIT (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	  	
*

	
*

	
*

	
*

	
*

	
*

	
1

	
EyeScan

	  	
S

	
Total Sales (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
M

	
Manufacturing Cost (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Gross Margin (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Gross Margin (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Royalties (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
G&A (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
S&M (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Sustained R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
D

	
Extra R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Total R&D  Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Total R&D  Expenses (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Operating Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
C

	
Capital Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
E

	
Depreciation (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
I

	
EBIT (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	 	  	  	
*

	
*

	
*

	
*

	
*

	
*

 

  

94

  

 

	  	  	  	
2009

	
Q1 2010

	
Q2 2010

	
Q3 2010

	
Q4 2010

	
2010

	  	
No.

	
Cash-Flow component

	
6

	  	  	  	  	
7

 

	
0

	
DIH

	  	
S

	
Total Sales (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
M

	
Manufacturing Cost (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Gross Margin (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Gross Margin (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
G&A (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
S&M (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Sustained R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
D

	
Extra R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Total R&D  Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Total R&D  Expenses (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Operating Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
C

	
Capital Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
E

	
Depreciation (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
I

	
EBIT (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
P&L View

	  	  	
Growth

	
*

	
*

	
*

	
*

	
*

	
*

	  	
S

	
Total Sales (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
M

	
Manufacturing Cost (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Gross Margin (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Gross Margin (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Royalties (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
O

	
G&A (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
G&A (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
S&M (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
S&M (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Sustained R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Sustained R&D (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
D

	
Amortization of R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Extra R&D (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Total R&D Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
R&D Expenses (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Operating Expenses + Extra R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Operating Expenses + Extra R&D (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
I

	
EBIT (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
EBIT (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Financial Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Other Income ($K)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
T2

	
Taxable Income (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
T%

	
Income Tax Rate (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
T

	
Income Tax (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
OF

	
Net Operating Income (K$/Yr.)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	
Cash Flow View

	  	
E

	
Depreciation (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Amortization (R&D)$

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Non-Cash Extraordinary Item (APA)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
W%

	
Working Capital (% of sales change)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
W

	
Working  Capital Change (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
C

	
Capital Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Repayment of loans (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
New loans or capital raise (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Loans at the end of the year ($K)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	  	  	  	  	  	  	  
	  	
V

	
Residual Value of Assets

	
*

	
*

	
*

	
*

	
*

	
*

	  	
AF

	
Total Cash Flow (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
CF

	
Total Cumulative Cash Flow (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
R

	
Annual Discount Rate (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
DAF

	
Annual Discounted Cash Flow (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
DCF

	
Cumulative Discounted Cash Flow (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	
IRR

	
Internal Rate of Return (%)

	
*

	
*

	
*

	
*

	
*

	
*

 

  

95

  

 

	  	  	  	
2009

	
Q1 2010

	
Q2 2010

	
Q3 2010

	
Q4 2010

	
2010

	  	
No.

	
Cash-Flow component

	
6

	  	  	  	  	
7

 

	  	
R&D Breakdown

	  	  	
WinStation

	  	  	  	  	  	  
	  	  	
   Sustained R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Extra R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Total Development  Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Total Development  Expenses (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
IRI 1

	  	  	  	  	  	  
	  	  	
   Sustained R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Extra R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Total Development  Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Total Development  Expenses (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
IRI 2_Canon CR1+WS

	  	  	  	  	  	  
	  	  	
   Sustained R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Extra R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Total Development  Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Total Development  Expenses (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Symphony

	  	  	  	  	  	  
	  	  	
   Sustained R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Extra R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Total Development  Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Total Development  Expenses (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
EMR&PM

	  	  	  	  	  	  
	  	  	
   Sustained R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Extra R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Total Development  Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Total Development  Expenses (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
EyeScan

	  	  	  	  	  	  
	  	  	
   Sustained R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Extra R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Total Development  Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Total Development  Expenses (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
Total R&D

	  	  	  	  	  	  
	  	  	
   Sustained R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Extra R&D (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Total Development  Expenses (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Total Development  Expenses (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	  	  	  	  	  	  	  
	  	  	
   Total Capitalized Development Exp (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Total Capitalized Development Exp (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	  	  	  	  	  	  	  
	  	  	
   Total Real Development Exp (K$)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	
   Total Real Development Exp (%)

	
*

	
*

	
*

	
*

	
*

	
*

	  	  	  	  	  	  	  	  	  

 

 

96ex1031_s1a2-333161778.htm

Exhibit 10.31

 

 

 

 

 

 

 

ASSET PURCHASE AGREEMENT

 

Among

 

OPHTHALMIC IMAGING SYSTEMS

 

and

 

MEDIVISION MEDICAL IMAGING LTD.

 

Dated as of June 24, 2009

 

 

 

 

 

	
Article 1.

	
DEFINITIONS

	
1

	
1.1

	
Certain Definitions

	
1

	
1.2

	
Terms Defined Elsewhere in this Agreement

	
7

 

	
Article 2.

	
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES

	
8

	
2.1

	
Purchase and Sale of Assets

	
8

	
2.2

	
Excluded Assets

	
10

	
2.3

	
Assumption of Liabilities

	
11

	
2.4

	
Excluded Liabilities

	
12

	
2.5

	
Further Conveyances and Assumptions; Consent of Third Parties

	
12

	
2.6

	
Purchase Price Allocation

	
13

 

	
Article 3.

	
SALE AND PURCHASE OF CAPITAL STOCK

	
13

	
3.1

	
Sale and Purchase of Shares

	
13

 

	
Article 4.

	
CONSIDERATION

	
13

	
4.1

	
Consideration

	
13

 

	
Article 5.

	
CLOSING AND TERMINATION

	
13

	
5.1

	
Closing Date

	
13

	
5.2

	
Termination of Agreement

	
14

	
5.3

	
Procedure upon Termination

	
15

	
5.4

	
Effect of Termination

	
15

 

	
Article 6.

	
REPRESENTATIONS AND WARRANTIES OF SELLER

	
15

	
6.1

	
Organization of Seller and its subsidiaries

	
16

	
6.2

	
Corporate Authority; Approval and Fairness

	
16

	
6.3

	
Consents of Third Parties; No Violations

	
17

	
6.4

	
Financial Statements

	
18

	
6.5

	
Accounts Receivable

	
20

	
6.6

	
Title to Purchased Assets; Intellectual Property

	
20

	
6.7

	
Ownership and Transfer of Shares

	
20

	
6.8

	
Intellectual Property

	
21

	
6.9

	
Seller Material Agreements and Governmental Contracts

	
22

	
6.10

	
Absence of Certain Developments

	
25

	
6.11

	
Litigation

	
26

	
6.12

	
Financial Advisors

	
27

	
6.13

	
Environmental Matters

	
27

	
6.14

	
Tax Returns and Payments

	
27

	
6.15

	
Tax Matters

	
29

	
6.16

	
Encryption and Other Restricted Technology

	
30

	
6.17

	
Warranties/Product Liability

	
30

	
6.18

	
Product certifications

	
30

	
6.19

	
Completeness of Disclosure

	
31

 

 

 

i

 

  

  

  

 

	
Article 7.

	
REPRESENTATIONS AND WARRANTIES OF PURCHASER

	
31

	
7.1

	
Organization and Good Standing

	
31

	
7.2

	
Authorization of Agreement

	
31

	
7.3

	
Conflicts; Consents of Third Parties

	
32

	
7.4

	
Litigation

	
32

	
7.5

	
Financial Advisors

	
32

	
7.6

	
Condition of the Business; Disclaimer of Reliance

	
32

	
7.7

	
Restriction on Activities

	
33

	
7.6

	
Completeness of Disclosure

	
33

 

	
Article 8.

	
COVENANTS

	
33

	
8.1

	
Access to Information

	
33

	
8.2

	
Conduct of the Business Pending the Closing

	
34

	
8.3

	
Consents

	
37

	
8.4

	
Further Assurances

	
38

	
8.5

	
Confidentiality

	
38

	
8.6

	
Non Competition

	
38

	
8.7

	
Preservation of Records

	
39

	
8.8

	
Publicity

	
39

	
8.9

	
Disclosure Schedules; Supplementation and Amendment of Schedules

	
40

	
8.10

	
Control of Business

	
40

	
8.11

	
Foreign Tax Declarations

	
40

	
8.12

	
Exclusivity

	
40

	
8.12

	
Good Standing Certificates

	
40

	
8.12

	
Elop Payment

	
40

	
8.13

	
United Mizrachi Bank Loan

	
42

 

	
Article 9.

	
CONDITIONS TO CLOSING

	
41

	
9.1

	
Conditions Precedent to Obligations of Purchaser

	
41

	
9.2

	
Conditions Precedent to Obligations of Seller

	
42

	
9.3

	
Frustration of Closing Conditions

	
43

 

	
Article 10.

	
SURVIVAL

	
44

	
10.1

	
Survival of Representations and Warranties

	
44

	
10.2

	
Indemnification by Seller

	
44

	
10.3

	
Indemnification by Purchaser

	
45

	
10.4

	
Indemnification Procedures

	
46

	
10.4

	
Escrow

	
46

	
10.5

	
Exclusive Remedy

	
58

 

	
Article 11.

	
TAXES

	
48

	
11.1

	
Payment of Sales, Use or Similar Taxes

	
48

	
11.2

	
Cooperation on Tax Issues

	
48

	
11.3

	
Tax Refunds; Tax Benefit Amounts

	
51

	
11.4

	
Tax Matters

	
49

 

 

 

ii

 

  

  

  

 

	
Article 12.

	
MISCELLANEOUS

	
51

	
12.1

	
Modification or Amendment

	
51

	
12.2

	
Waiver of Conditions

	
51

	
12.3

	
Counterparts

	
51

	
12.4

	
Governing Law; Waiver of Jury Trial; Specific Performance

	
51

	
12.5

	
Dispute Resolution

	
52

	
12.6

	
Notices

	
52

	
12.7

	
Entire Agreement

	
54

	
12.8

	
No Third Party Beneficiaries

	
54

	
12.9

	
Obligations of OIS and MediVision

	
54

	
12.10

	
Transfer taxes

	
54

	
12.11

	
Severability

	
54

	
12.12

	
Interpretation; Construction

	
54

	
12.13

	
Assignment

	
55

 

iii

 

 

  

  

  

 

ASSET PURCHASE AGREEMENT

 

 

This ASSET PURCHASE AGREEMENT (hereinafter called this “Agreement”), dated June 24, 2009, among OPHTHALMIC IMAGING SYSTEMS, a California corporation (“OIS” or “Purchaser”), and MEDIVISION MEDICAL IMAGING LTD., an Israeli company (“MediVision” or “Seller”).

 

RECITALS

 

 

WHEREAS, Seller presently conducts the Business;

 

 

WHEREAS, Seller desires to sell, transfer and assign to Purchaser, and Purchaser desires to acquire and assume from Seller, all of the Purchased Assets and all of the Assumed Liabilities, all as more specifically provided herein;

 

 

WHEREAS, certain terms used in this Agreement are defined in Section 1.1; and

 

 

WHEREAS, Seller currently owns approximately 56% of the issued and outstanding shares of common stock of Purchaser.

 

 

NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows:

 

ARTICLE 1.

 

DEFINITIONS

 

 

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

 

 

“Agreement” means any written Agreement, agreement, indenture, note, bond, mortgage, loan, instrument, lease or license.

 

 

“Affiliate” has the meaning defined in Rule 2b-2 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

 

“BDO Fairness Opinion” means the opinion of BDO Seidman Ziv Haft Consulting Group obtained by MediVision as part of its assessment of the transactions contemplated by this Agreement, to the effect that the consideration to be received by MediVision under this Agreement is fair from a financial point of view, as of the date of such opinion. It is agreed and understood that this BDO Fairness Opinion is relied upon by MediVision and OIS.

 

 

“Business” means (i) the activities, agreements, business, assets, operations and Intellectual Property of Seller directly related to IRI, including, without limitation, any activities, agreements, business. Assets, operations and Intellectual Property relating to the EyeScan products, if any, (ii) the activities, agreements, business, assets and operations of Seller’s branch

 

 

 

  

  

  

in Belgium (the “Belgium Activities”), and (iii) all rights of Seller under each of the Purchased Agreements.

 

 

“Business Day” means any day (other than Friday, Saturday or Sunday) of the year on which national banking institutions in New York are open to the public for conducting business and are not required or authorized to close.

 

 

“Cash” means cash, cash equivalents, bank deposits and similar cash items, excluding cash deposits which constitute Purchased Assets pursuant to Section 2.1(h).

 

 

“CCS” means CCS Pawlowski GmbH.

 

 

“CCS Deed” means a notarial deed of transfer of the Purchased Shares of CCS by Seller and Purchaser before a German civil law notary.

 

 

“Code” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

 

 

“Commercially Reasonable Efforts” means the efforts, time and costs a prudent person desirous of achieving a result would use, expend or incur in similar circumstances to achieve such results as expeditiously as possible, provided that such person is not required to expend funds or assume liabilities beyond those that are reasonable in nature and amount in the context of the transaction.

 

 

“Confidential Information” means any (i) confidential and non-public information, whether visually, in writing or otherwise concerning the strategies, ideas, policies, sub-contractors, suppliers, customers, vendors, competitors, business and affairs of the applicable Person, graphs, samples, inventions and ideas, past, current and planned marketing methods, processes, strategies and materials, supplier and customer lists, price lists, pricing policies and strategies, market studies, business plans, agreements with any Person, proposals, equipment purchase strategies, names or other information, strategies for business plans, plans, ideas, concepts, designs, drawings, specifications, techniques, models, data, Documentation, diagrams, flow charts, research, discoveries, development, processes, procedures and “know how”, and any information, however documented, that is proprietary, confidential and non-public, whether or not such information would be deemed a trade secret under applicable Law; (ii) confidential and non-public information concerning the business and affairs of the applicable Person and its respective Affiliates (which includes financial statements, financial projections and budgets, historical and projected sales, capital spending budgets and plans, the names and backgrounds of key personnel, proposed personnel and personnel training techniques and materials), however documented; and (iii) confidential and non-public information contained in all notes, analyses, compilations, studies, summaries and all other material prepared by the applicable Person or its respective representatives containing or based, in whole or in part, on any information included in any of the foregoing clauses (i) and (ii). Notwithstanding anything to the contrary contained herein, Confidential Information of any party hereto shall not include any information that (A) is or was in the public domain at the time of its receipt, or subsequently came into the public domain through no fault of the receiving party; (B) was received by any party hereto from an unrelated third party, free of any obligation of confidence to the disclosing  party; (C) was already in the possession of the receiving party prior to receipt thereof, directly or indirectly, from such disclosing party; (D) is independently acquired or developed by the receiving party without violating any of its obligations to such other party under this Agreement or (E) is required to be disclosed by applicable Law.

 

 

	  	
2

	  

 

 

  

  

  

 

 

“Damages” means, collectively, any and all Liabilities, deficiencies, expenses, damages, Orders, costs and expenses, including reasonable attorneys’ fees and expert witness and consultant fees; provided, however, “Damages” shall not include any punitive or exemplary damages (collectively, “Extraordinary Damages”), except to the extent such Extraordinary Damages result from a Third Party Claim.

 

 

“Documentation” means files, documents, instruments, papers, books, reports, records, tapes, microfilms, photographs, letters, budgets, forecasts, ledgers, journals, title policies, customer and supplier lists, regulatory filings, operating data and plans, technical documentation (including design specifications, functional requirements, operating instructions, logic manuals, flow charts, etc.), user documentation (including installation guides, user manuals, training materials, release notes, working papers, etc.), marketing documentation (including sales brochures, flyers, pamphlets, web pages, etc.), and other similar materials directly related to the Business and the Purchased Assets in each case whether or not in electronic form; provided, however, that “Documentation” shall not include duplicate copies of such Documentation retained by Seller or its Affiliates subject to the obligations relating to the use and disclosure thereof set forth in this Agreement.

 

 

“Environment” means the natural and man-made environment, including all or any of the following media, namely air, water and land (including air within buildings and other material or man-made structures above or below the ground) and any living organisms (including man) or systems supported by those media.

 

 

“Environmental Law” means any Law relating to the protection of the environment or human health and safety.

 

 

“ERISA” means the Employment Retirement Income Security Act of 1974, as amended.

 

 

“Excluded Agreements” means, except for the Purchased Agreements, each of the Agreements to which Seller is a party, including, for the avoidance of doubt, this Agreement and the rights of Seller pursuant hereto.

 

 

“Former Employee” means any Employee who has separated from service with MediVision or any of its Subsidiaries prior to the Closing.

 

 

“GAAP” means generally accepted accounting principles in the United States as of the date hereof.

 

 

“Governmental Body” means any government or governmental or regulatory body thereof, or political subdivision thereof, whether foreign, federal, state, or local, or any agency, commission, instrumentality or authority thereof, or any quasi governmental or private body exercising any regulatory or Taxing Authority thereunder or any court, tribunal, judicial body, administrative officer, magistrate or panel, or arbitrator (public or private).

 

 

	  	
3

	  

 

 

  

  

  

 

 

“Hazardous Material” means any mixture or material containing any material that is listed, classified or regulated by any government authority or any Environmental Law, including any petroleum products, asbestos or polychlorinated biphenyls.

 

 

“Indebtedness” of any Person means, without duplication, (i) the principal of and, accreted value and accrued and unpaid interest in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments the payment of which such Person is responsible or liable; (ii) all obligations of such Person issued or assumed as the deferred purchase price of property or services, all conditional sale obligations of such Person, and all obligations of such Person under any title retention agreement (but excluding trade accounts payable and other accrued current liabilities incurred in the Ordinary Course of Business) and all obligations of such Person as lessee under leases that have been or should be, in accordance with GAAP, recorded as capital leases; (iii) all obligations of the type referred to in clauses (i) and (ii) of any other Persons the payment of which such Person is responsible or liable, directly or indirectly, as obligor, guarantor, surety or otherwise; and (iv) all obligations of the type referred to in clauses (i) through (iii) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person).

 

 

“Indemnified Party” means any Person claiming indemnification under any provision of Article 10.

 

 

“Indemnifying Party” means any Person against whom a claim for indemnification is being asserted under any provision of Article 10.

 

 

“Intellectual Property” means (i)(A) trademarks, service marks, brand names, certification marks, collective marks, d/b/a’s, Internet domain names, logos, trade names, and other indicia of origin, all applications and registrations for the foregoing; (B) all patents, registrations, invention disclosures and applications therefor, including divisions, continuations, continuations-in-part and renewal applications, and including renewals, extensions and reissues; (C) copyrightable published works of authorship including without limitation databases and other compilations of information), copyrights therein and thereto, and registrations and applications therefor, and all renewals, extensions, restorations and reversions thereof; and (D) all know-how, trade secrets, confidential or proprietary information, customer lists, technical information, plans drawings and blue prints; and (ii) all rights referred to in clauses (A) through (D) whether registered or not registered.

 

 

“Intentional Misrepresentation” means an intentional misrepresentation (including the intentional omission of a material fact) made (i) in Article 6, which any of the Persons identified on Schedule 1.1(a) actually knew to be false on the date hereof, or (ii) in the certificate(s) delivered to Purchaser pursuant to Section 9.1(c) hereof, which any of the Persons identified on Schedule 1.1(a) actually knew to be false on the Closing Date or (iii) in Article 7, which any of the Persons identified on Schedule 1.1(b) actually knew to be false on the date hereof, or (iv) in the certificate(s) delivered to Purchaser pursuant to Section 9.2(c) hereof, which any of the Persons identified on  Schedule 1.1(b) actually knew to be false on the Closing Date.

 

 

	  	
4

	  

 

 

  

  

  

 

“IRI” means the Integrated Retina Imager.

 

 

“IRS” means the United States Internal Revenue Service and, to the extent relevant, the United States Department of Treasury.

 

 

“Knowledge of Purchaser” means the actual knowledge of each Person identified on Schedule 1.1(b).

 

 

“Knowledge of Seller” means the actual knowledge of each Person identified on Schedule 1.1(a).

 

 

“Law” means any foreign, federal, state, provincial or local law, statute, code, ordinance, rule, regulation, order, requirement or rule of law (including common law), by-laws, legislations, directives, treaties, decisions of court or tribunal and judgments.

 

 

“Legal Proceeding” means any judicial, administrative or arbitral actions, suits or proceedings (public or private) by or before a Governmental Body.

 

 

“Liability” means any debt (including Indebtedness), liability or obligation (whether direct or indirect, secured or unsecured, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due), and including all costs and expenses relating thereto.

 

 

“Lien” means any lien, encumbrance, pledge, mortgage, deed of trust, security interest, claim, lease, charge, option, right of pre-emption, right to acquire, covenant, right of first offer or refusal, easement, assignment, retention or other security agreement or arrangement, servitude or transfer restriction or other encumbrance.

 

 

“OCS” means the office of the Chief Scientist of the Israeli Ministry of Industry, Trade & Labor.

 

 

“OCS Debt” means all Seller’s (directly or through any subsidiary) Indebtedness owed to OCS having an outstanding balance ($1,800,000) together with any and all ancillary amounts thereon (interest, fees, fine, levies, adjustments, etc.).

 

 

“OIS Loan” means all Seller’s Indebtedness owed to Purchaser having an outstanding balance not to exceed Four Million Two Hundred Thousand Dollars ($4,200,000) in principal amount immediately prior to the Closing Date, as described in Section 2.3(a).

 

 

“Order” means any order, injunction, judgment, decree, ruling, writ, assessment, award or other decision issued, promulgated or entered by or with any Governmental Body of competent jurisdiction.

 

 

“Ordinary Course of Business” means the ordinary and usual course of normal day-to-day operations of the Business, as conducted by Seller or its subsidiaries.

 

 

	  	
5

	  

 

 

  

  

  

 

 

“Permits” means the approvals, authorizations, consents, licenses, permits or certificates of a Governmental Body.

 

 

“Permitted Exceptions” means (i) statutory Liens for current Taxes, assessments or other governmental charges not yet delinquent or the amount or validity of which is being contested in good faith by appropriate proceedings; (ii) mechanics’, carriers’, worker’s, repairers’ and similar Liens arising or incurred in the Ordinary Course of Business; (iii) zoning, entitlement and other land use regulations by any Governmental Body; (iv) title of a lessor under a capital or operating lease; and (v) such other imperfections in title, charges, easements, restrictions and encumbrances which would not be material to the Business of Seller or its subsidiaries.

 

 

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

 

 

“Products” means the products or services developed, manufactured, marketed, provided or sold by either Seller, as it relates to the Business, or by any Subsidiary, including those set forth on Schedule 1.1(b).

 

 

“Purchased Agreements” refers to the Distributor Agreements, service agreements and other agreements as specified in Schedule 2.1(a).

 

 

“Purchased Intellectual Property” means all the Intellectual Property of IRI, including all the know-how and prototypes associated thereto and including the know-how accumulated by Seller during the IRI Project set forth on Schedule 2.1(d) that shall be transferred by Seller to Purchaser under this Agreement; provided however, that “Purchased Intellectual Property” shall not include any OCS Funded Technology.

 

 

“Purchaser Material Adverse Effect” means the ability of Purchaser to perform its obligations under this Agreement or to consummate the transactions contemplated hereby.

 

 

“Reference Date” means June 24, 2009.

 

 

“Software” means any and all (i) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code; and (ii) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise.

 

 

“Subsidiary” has the meaning ascribed thereto in Section 6.1.

 

 

“Tax” or “Taxes” means any and all taxes, charges, levies, deficiencies or other assessments of whatever kind or nature including, without limitation, all net income, gross income, profits, gross receipts, excise, real or personal property, sales, ad valorem, goods and services, withholding, social security, retirement, excise, employment, unemployment, minimum, estimated, severance, stamp, property, occupation, environmental, recycling, waste disposal, windfall profits, use, service, net worth, payroll, franchise, license, gains, customs, transfer, recording and other taxes, customs duty, assessments or charges of any kind whatsoever, imposed by any Taxing Authority, together with any interest, penalties or additions to tax relating thereto.

 

 

	  	
6

	  

 

 

  

  

  

 

“Taxing Authority” means the IRS, Israel Tax Authority and any other Governmental Body responsible for the administration or collection of any Tax.

 

 

“Third Party Claim” means any claim or the commencement of any Legal Proceeding by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement.

 

 

“Transfer Documents” means the Bill of Sale, in such form as attached as Exhibit A hereto, the Assignment and Assumption Agreement, in such form as attached as Exhibit B hereto, and the CCS Deed.

 

 

“Treasury Regulations” means the United States Treasury Regulations (including Temporary and Proposed Regulations) promulgated by the Internal Revenue Service, as such regulations may be amended from time to time (including corresponding provisions of succeeding Regulations).

 

 

“United Mizrachi Bank Loan” means Seller’s Indebtedness owed to United Mizrachi Bank having an outstanding balance of One and a Half Million Dollars ($1,500,000) in principal amount immediately prior to the Closing Date.

 

 

1.2       Terms Defined Elsewhere in this Agreement. For purposes of this Agreement, the following terms have meanings set forth in the sections indicated:

 

 

	
Term

	
Section

	
AAA

Accounts Receivable

	
12.5

2.1(i)

	
Agreement

	
Preamble

	
Arbitrator

	
12.5

	
Assumed Liabilities

	
2.3

	
Belgian Activities

	
1.1 (in Business definition)

	
Closing

	
5.1(a)

	
Closing Date

	
5.1(a)

	
Confidentiality Agreement

	
12.7

	
Covenant Survival Period

	
10.1(b)

	
Decision

Disputes

Elop

	
12.5

12.5

6.8(ii)

	
Escrow Agent

	
10.5

	
Escrow Agreement

	
10.5

	
Escrow Fund

	
10.5

	
Exchange Act

	
1.1 (in Affiliate definition)

	
Excluded Assets

	
2.2

 

 

	  	
7

	  

 

  

  

  

 

	
Excluded Liabilities

	
2.4

	
Extraordinary Damages

Financial Statements

	
1.1 (in Damages definition)

6.4(a)

	
Foreign Tax Withholding Certificate

	
8.11

	
IAS

	
6.4(v)

	
Indemnification Claim

	
10.4(b)

	
IRI Project

	
6.8(ii)

	
ISA

	
6.4(iii)

	
MediVision ESE Report

	
6.4(i)

	
MediVision Product

	
6.17

	
MediVision Product Certifications

	
6.18

	
MediVision Recommendation

	
6.2(ii)

	
OCS Funded Technology

	
6.15(i)

	
Post-Closing Covenants

	
10.1(b)

	
Pre-Closing Covenants

	
10.1(b)

	
Pre-Closing Tax Period

	
11.3(a)

	
Purchased Assets

	
2.1

	
Purchased Shares

	
3.1

	
Purchased Trade Secrets

	
6.8(iii)

	
Purchaser

	
Preamble

	
Purchaser Documents

	
7.2(i)

	
Purchaser Indemnified Parties

	
10.2(a)

	
Seller

	
Preamble

	
Seller Disclosure Letter

	
6

	
Seller Documents

	
6.2(i)

	
Seller Indemnified Parties

	
10.3(a)

	
Seller Material Adverse Effect

	
6.1

	
Seller Material Agreements

	
6.9(iii)

	
Software Products

	
6.8(vi)

	
Subsidiary

	
6.1

	
Survival Period

	
10.1(b)

	
Tax

	
6.16

	
Tax Claim

	
11.4(b)

	
Tax Return

	
6.16

	
Termination Date

	
5.2(a)

	
Total Consideration

	
4.1

	
Transaction Documents

	
7.2(i)

	
Transfer Taxes

	
11.1

	
Warranty Survival Period

	
10.1(a)

 

 

	  	
8

	  

 

 

  

  

  

 

ARTICLE 2.

 

PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES

 

 

2.1       Purchase and Sale of Assets. On the terms and subject to the conditions set forth in this Agreement, at the Closing, Purchaser shall purchase, acquire and accept from Seller, and Seller shall sell, transfer, assign, convey and deliver to Purchaser all of Seller’s right, title and interest in, to and under the Purchased Assets free and clear of any Liens or Liabilities other than Permitted Exceptions and Assumed Liabilities. “Purchased Assets” shall mean the following assets and rights of Seller:

 

 

(a)       all rights of Seller under each of the Purchased Agreements;

 

 

(b)       the Purchased Shares.

 

 

(c)       Seller’s Belgium Activities;

 

 

(d)       the Purchased Intellectual Property as set forth on Schedule 2.1(d), including ownership and all other rights Seller may have with respect to the Purchased Intellectual Property;

 

 

(e)       all Documentation and know-how accumulated by Seller during the IRI Project, in connection with the Purchased Intellectual Property, including Documentation relating to the IRI Project; and a non-exclusive non-transferrable license to Purchaser to use any of Seller’s Intellectual Property which is not Purchased Intellectual Property solely to the extent necessary to conduct the Buisness;

 

 

(f)        the rights of Seller under non-disclosure or confidentiality, non-compete, or non-solicitation agreements with third parties or with Employees or Former Employees of Seller or Subsidiary, in each case to the extent directly related to the Business as of the Closing Date;

 

 

(g)       the rights of Seller under or pursuant to all warranties, representations and guarantees made by suppliers, manufacturers and contractors to the extent directly related to the Business as of the Closing Date;

 

 

(h)       all Cash generated by the operation of the Purchased Assets at and after the Closing Date;

 

 

(i)        the accounts receivable of Seller directly related to the Business as of the Closing Date (“Accounts Receivable”) and all rights of Seller to collect (and retain) from customers of the Business, all fees and other amounts payable to Seller, or that may become payable after the Closing Date as set forth on Schedule 2.1(i).

 

 

(j)        all of Seller’s causes of action, claims, credits, demands or rights of set-off against third parties, directly related to the Business as of the Closing Date;

 

 

	  	
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(k)       all goodwill associated with the Business as of the Closing Date, together with the right to represent to third parties that Purchaser is the owner of the Business as of the Closing Date;

 

 

(l)        all of Seller’s computer, Software, telecommunications, fixtures, fittings, machinery and other fixed assets as set forth on Schedule 2.1(l); and

 

 

(m)      all proceeds received or receivable by Seller under insurance policies as a result of any damage to or destruction of any Purchased Asset that occurs during the period between the Reference Date and the Closing Date to the extent Seller has not used such proceeds to repair or replace such damaged or destroyed Purchased Asset.

 

 

Notwithstanding the foregoing, the transfer of the Purchased Assets pursuant to this Agreement shall not include the assumption of any Liability related to the Purchased Assets unless Purchaser expressly assumes such Liability pursuant to Section 2.3.

 

 

2.2       Excluded Assets. Nothing herein contained shall be deemed to sell, transfer, assign or convey the Excluded Assets to Purchaser, and Seller shall retain all right, title and interest to, in and under the Excluded Assets. “Excluded Assets” shall mean all assets, properties, interests and rights of Seller other than the Purchased Assets, including without limitation each of the following assets:

 

 

(a )      the Excluded Agreements;

 

 

(b)       all Cash of Seller directly related to the Business and held by Seller prior to the Closing Date other than Cash generated by the operation of the Purchased Assets at and after the Closing Date;

 

 

(c)       all minute books, organizational documents, stock registers and such other books and records of Seller as pertains to ownership, organization or existence of Seller and duplicate copies of such records as are necessary to enable Seller to file Tax returns and reports;

 

 

(d)       any Intellectual Property rights of Seller, except for the Purchased Intellectual Property;

 

 

(e)       [Reserved]

 

 

(f)       ownership and other rights with respect to all Seller’s benefit plans;

 

 

(g)       any other books and records that Seller reasonably demonstrates that are required by Law or Order to retain the original thereof, provided that, if permitted by Law or Order, Seller shall provide Purchaser with copies of such books and records that relate to the Business;

 

 

(h)       any bank accounts of Seller;

 

 

(i)        any claim, right or interest of Seller in or to any refund, rebate, abatement or other recovery for Taxes attributable to the ownership or operation of the Purchased Assets for any period ending prior to the Closing Date or for Taxes attributable to the ownership or operation of the Excluded Assets for any period, together with any interest due thereon or penalty rebate arising therefrom;

 

 

	  	
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(j)        other than as described in Section 2.1(m), all insurance policies or rights to proceeds thereof relating to the assets, properties, business or operations of Seller, other than those relating to the Purchased Assets and Assumed Liabilities;

 

 

(k)       any rights, claims or causes of action of Seller against third parties relating to assets, properties, business or operations of Seller not directly related to the Purchased Assets;

 

 

(l)        all Tax returns and financial statements of Seller and the Business and all records (including working papers) directly related thereto; provided, that upon request Seller shall provide Purchaser with copies of the portions of such Tax returns, financial statements and records that relate solely to Subsidiary;

 

 

(m)      all of Seller’s causes of action, claims, credits, demands or rights of set-off against third parties, to the extent related to any Excluded Asset;

 

 

(n)      all rights that accrue to Seller under this Agreement;

 

 

(o)      all OCS Funded Technology;

 

 

(p)       the following products of Seller (i) AngioVision product line, including AngioVision 1000 and AngioVision 2000; (ii) DigiPhoto Product line, including DigiPhoto 640 and DigiPhoto 780; (iii) CamVision Product line, including CamVision 1000 and CamVision 2000; (iv) SpotVision; (v); RadVision; and (vi) Seller’s interest in the CGLT product; and

 

 

(q)       all rights, powers and assets not included in the Purchased Assets.

 

 

2.3       Assumption of Liabilities. On the terms and subject to the conditions set forth in this Agreement, at the Closing, Purchaser shall assume, effective as of the Closing, and shall timely perform, pay and discharge in accordance with their respective terms only the following Liabilities (collectively, the “Assumed Liabilities”):

 

 

(a)       Liabilities of Seller under the United Mizrachi Bank Loan not to exceed $1,500,000 in principal amount and the OIS Loan not to exceed $4,200,000 in principal amount (the material terms of which, including their respective interests rates, are as set forth in Schedule 2.3(a));

 

 

(b)       Liabilities of Seller under the Purchased Agreements (other than for previously paid performance required to have been made prior to the Closing Date);

 

 

(c)       Liabilities of Seller in connection with the Belgian Activities as set forth on Schedule 2.3(c);

 

 

(d)       [Reserved]

 

 

 

 

	  	
11

	  

 

 

  

  

  

 

(e)       Liabilities arising at or after the Closing Date from sales at and after the Closing Date of the Purchased Assets pursuant to product warranties, product returns and rebates;

 

 

(f)        Liabilities arising from claims or lawsuits related to events arising in connection with the Purchased Assets at or after the Closing Date;

 

 

(g)       One-half of Transfer Taxes applicable to the transfer of the Purchased Assets pursuant to this Agreement;

 

 

(h)       Liabilities for Taxes relating to the Purchased Assets for all taxable periods beginning at or after the Closing Date;

 

 

(i)        Liabilities and obligations of Seller directly relating to the Purchased Intellectual Property, as set forth on Schedule 2.3(i);

 

 

(j)        Liabilities and obligations of Seller arising at or after the Closing Date from an event occurring at or after the Closing Date under non-disclosure or confidentiality, non-compete, or non-solicitation agreements with third parties or with Employees or Former Employees of Seller or any Subsidiary, in each case to the extent directly related to the Business as of the Closing Date as set forth on Schedule 2.1(j); and

 

 

(k)       Liabilities of Seller under or pursuant to all warranties, representations and guarantees made by suppliers, manufacturers and contractors to the extent directly related to the Business as of the Closing Date as set forth on Schedule 2.1(k).

 

 

2.4       Excluded Liabilities. Purchaser will not assume or be liable for any Excluded Liabilities. “Excluded Liabilities” shall mean all Liabilities of Seller other than the Assumed Liabilities. Excluded Liabilities shall include Liabilities existing on or attributable to an act, omission or circumstance that occurred or existed prior to the Closing Date in respect of the Business, other than (i) the obligation to perform under the Purchased Agreements on or after Closing, and (ii) the Assumed Liabilities as otherwise specifically provided herein, and the following Liabilities:

 

 

(a)       all Liabilities arising out of Excluded Assets, including Excluded Agreements;

 

 

(b)       except as otherwise provided in Section 2.3(g), all Liabilities for Taxes (i) for all taxable periods of Seller, in the case of Taxes relating to the Excluded Assets, (ii) for all taxable periods ending prior to the Closing Date, in the case of Taxes relating to the Purchased Assets and (iii) under any Tax allocation, sharing or similar agreement;

 

 

(c)       one-half of all Transfer Taxes applicable to the transfer of the Purchased Assets pursuant to this Agreement;

 

 

(d)       all Liabilities relating to amounts required to be paid or assumed by Seller hereunder; and

 

 

	  	
12

	  

 

 

  

  

  

 

(e)       Liabilities arising under or pursuant to Environmental Laws directly related to the Business or the Purchased Assets, whether known or unknown, contingent or reserved, including but not limited to Liabilities arising out of or directly related to the presence, use, storage, disposal, treatment or release of Hazardous Materials by the Business or at any of the Purchased Assets;

 

 

2.5       Further Conveyances and Assumptions; Consent of Third Parties. From time to time following the Closing, Seller and Purchaser shall execute, acknowledge and deliver all such further conveyances, notices, assumptions, releases and acquittances and such other instruments, and shall take such further actions, as may be reasonably necessary or appropriate to assure fully to Purchaser and its successors or assigns, all of the rights, titles and interests intended to be conveyed to Purchaser under this Agreement, the Transfer Documents and the Escrow Agreement and to assure fully to Seller and its Affiliates and their successors and assigns, the assumption of the liabilities and obligations intended to be assumed by Purchaser under this Agreement, the Transfer Documents and the Escrow Agreement, and to otherwise make effective the transactions contemplated hereby and thereby.

 

ARTICLE 3.

 

SALE AND PURCHASE OF CAPITAL STOCK

 

 

3.1       Sale and Purchase of Shares. Upon the terms and subject to the conditions contained herein, on the Closing Date, Seller shall sell, assign, transfer, convey and deliver to Purchaser, free and clear of any Lien except Permitted Exceptions, and Purchaser shall purchase from Seller, all of the shares of CCS which are issued and outstanding and which are owned by Seller, which constitute sixty three percent (63%) of the issued and outstanding shares of CCS (the “Purchased Shares”).

 

ARTICLE 4.

 

CONSIDERATION

 

 

4.1       Consideration. The aggregate consideration (“Total Consideration”) for the Purchased Assets shall be as follows:

 

 

(a)       In full payment of the purchase price for the Purchased Intellectual Property, Purchaser shall deem satisfied the inter-company Indebtedness owed by Seller to Purchaser under the OIS Loan and, as of the Closing Date, Purchaser will fully release and forever discharge Seller and/or its Affiliates from any and all liens, charges, pledges, security interests, debts, liabilities, claims, demands, obligations and other encumbrances arising from or related to such inter-company Indebtedness, including but not limited to principal and interest of the OIS Loan, which thereafter shall be deemed fully paid and discharged and all agreements relating thereto terminated. Without derogating from the forgoing, Purchaser shall sign all instruments required in order to cancel any pledge or other security interest registered upon or otherwise applicable to OIS shares owned by Seller and/or any Seller Intellectual Property or other assets, as security for repayment of such indebtedness, all of which shall be deemed terminated and discharged as of the Closing.

 

 

	  	
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(b)       In full payment of the purchase price of the Purchased Agreements, the Purchased Shares and the Belgian Activities, Purchaser shall assume, pursuant to an assignment and assumption agreement, the Indebtedness owed by Seller to United Mizrachi Bank under the United Mizrachi Bank Loan, and fully release and forever discharge Seller from any and all liens, charges, pledges security interests, debts, liabilities, claims, demands, obligations and other encumbrances arising from or related to such Indebtedness. Without derogating from the forgoing, Purchaser shall sign all instruments required in order to cancel any pledge or other security interest registered upon or otherwise applicable to OIS shares owned by Seller and/or any Seller Intellectual Property or other assets, as security for repayment of such indebtedness, all of which shall be deemed terminated and discharged as of the Closing.

 

ARTICLE 5.

 

CLOSING AND TERMINATION

 

 

5.1       Closing Date.

 

 

(a)       The consummation of the purchase, sale of the Purchased Assets and the assumption of the Assumed Liabilities provided for in Article 2 hereof (the “Closing”) shall take place at the offices of Troutman Sanders LLP, 405 Lexington Avenue, New York, New York 10174 (or at such other place as the parties may designate in writing) at 10:00 a.m. (Eastern standard time) on a date to be specified by the parties (the “Closing Date”), which date shall be no later than the Termination Date (as defined below); provided, that the satisfaction or waiver of the conditions set forth in Article 9 (other than conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at such time) shall have occurred, unless another time, date or place is agreed to in writing by the parties hereto. Notwithstanding anything in the foregoing to the contrary, the parties hereto agree that the Closing may be conducted by electronic exchange (by facsimile, .pdf transmission or similar means of electronic transmission) and telephonic confirmation of all relevant closing deliveries, except to the extent necessary to transfer title to the Purchased Shares.

 

 

(b)       On the Closing Date, the Purchased Shares shall be transferred by Seller to Purchaser by means of the execution of the CCS Deed. The fees and expenses of such German civil law notary shall be split equally between Seller and Purchaser.

 

 

(c)       On the Closing Date, Seller shall deliver or cause to be delivered to Purchaser the following documents and evidence:

 

	  	
(i)

	
written statements signed by Seller, executing the sale, transfer, assignment, conveyance and delivery, to Purchaser, of the Purchased Intellectual Property, Purchased Shares, Purchased Agreements and all documentation associated with the Belgian Activities;

	  	
(ii)

	
in relation to CCS, the statutory registers and minute books (written up to the time of Closing), certificate of incorporation; and

 

	  	
14

	  

 

 

  

  

  

 

 

	  	
(iii)

	
Officer Certificate of a qualified officer of United Mizrachi Bank indicating the balance due on the United Mizrachi Bank Loan and the terms of the loan (interest payment dates, maturity date, collateral).

 

(d)       From and after the Closing Date, Purchaser will receive the benefit of the Purchased Assets and Purchased Shares and shall accrue the obligation of the Assumed Liabilities, and as of such time, the risk of loss of the Purchased Assets and Purchased Shares shall be deemed transferred from Seller to Purchaser.

 

 

(e)       On the Closing Date, Purchaser shall deliver or cause to be delivered to Seller an Officer Certificate of a qualified officer of Purchaser indicating the balance due on the OIS Loan and the terms of the loan, including, the interest payment dates, maturity date, and collateral).

 

 

5.2       Termination of Agreement. This Agreement may be terminated prior to the Closing as follows:

 

 

(a)       At the election of Seller or Purchaser on or after October 22, 2009 (such date, as it may be extended under this Section 5.2(a), the “Termination Date”), if the Closing shall not have occurred by the close of business on such date, provided that the terminating party is not in breach in any material respect of any of its obligations hereunder; and provided, further, that upon the mutual written agreement of Purchaser and Seller, the Termination Date may be extended for agreed upon additional periods of time;

 

 

(b)       by mutual written consent of Seller and Purchaser;

 

 

(c)       by Seller or Purchaser if there shall be in effect a final nonappealable Order of a Governmental Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby; provided, however, that the right to terminate this Agreement under this Section5.2(c)  shall not be available to a party if such Order was primarily due to the failure of such party to perform any of its obligations under this Agreement; or

 

 

(d)       by Purchaser if (i)  Seller shall be in material violation of any of its obligations hereunder, and if such violation (if curable) is not cured within twenty (20) days after the giving of written notice by Purchaser to Seller or (ii) there has been any event, change, occurrence or circumstance that renders any of the conditions set forth in Article 9 incapable of being satisfied by the Termination Date.

 

 

(e)       by Seller if (i) Purchaser shall be in material violation of any of its obligations hereunder, and if such violation (if curable) is not cured within twenty (20) days after the giving of written notice by Seller to Purchaser, or (ii) there has been any event, change, occurrence or circumstance that renders any of the conditions set forth in Article 9 incapable of being satisfied by the Termination Date.

 

 

	  	
15

	  

 

 

  

  

  

 

5.3       Procedure upon Termination. In the event of termination and abandonment by Purchaser or Seller pursuant to Section 5.2 hereof, written notice thereof shall forthwith be given to the other party or parties, and this Agreement shall terminate, and the transactions contemplated hereunder shall be abandoned, without further action by Purchaser or Seller.

 

 

5.4       Effect of Termination.

 

 

(a)       In the event that this Agreement is validly terminated in accordance with Sections 5.2 and 5.3, then each of the parties shall be relieved of their duties and obligations arising under this Agreement after the date of such termination and such termination shall be without liability to Purchaser or Seller; provided, that no such termination shall relieve any party hereto from liability for any willful breach of this Agreement and; provided, further, that the obligations of the parties set forth in Sections 5.4, 8.5, 8.6, and 12.2 through 12.10 hereof shall survive any such termination and shall be enforceable hereunder.

 

 

(b)       Nothing in this Section 5.4 shall relieve Purchaser or Seller of any liability for a breach of any of its covenants or agreements or breach of its representations and warranties contained in this Agreement prior to the date of termination. The Damages recoverable by the non-breaching party shall include all attorneys’ fees reasonably incurred by such party in connection with the transactions contemplated hereby.

 

 

(c)       Nothing in this Section 5.4 shall relieve Purchaser or Seller of their obligations under Section 8.5, and such obligations shall survive any termination of this Agreement. If this Agreement is terminated pursuant to Section 5.2 hereof, Purchaser and Seller shall promptly destroy any Confidential Information of the other in its possession.

 

ARTICLE 6.

 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Except as set forth in the corresponding sections or subsections of the disclosure letter delivered to Purchaser by Seller concurrently with the execution and delivery of this Agreement (the “Seller Disclosure Letter”), Seller hereby represents and warrants to Purchaser that:

 

 

6.1       Organization. Each of Seller and Subsidiary (as defined below) is a legal entity duly organized and validly existing under the laws of the jurisdiction of its incorporation or organization and has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as it is now being conducted, and is qualified to do business as a foreign corporation in each jurisdiction where the ownership, leasing or operation of its assets or properties or the conduct of its business requires such qualification, except where the failure to be so organized, qualified or to have such power or authority, individually or in the aggregate, has not had and would not reasonably be expected to have a Seller Material Adverse Effect (as defined below). Seller has made available to Purchaser complete and correct copies of Seller’s and Subsidiary’s charter or comparable governing documents, each as amended to the date hereof, and each as so delivered is in full force and effect. Neither Seller nor Subsidiary is in violation of any provisions of its Articles of

 

 

	  	
16

	  

 

 

  

  

  

 

 

Association or comparable governing documents. No dissolution, revocation or forfeiture proceedings regarding Seller or Subsidiary have been commenced. The minute books of Seller and Subsidiary made available to Purchaser or its representatives contain accurate records of all meetings of their boards of directors, all committees of the boards of directors and all of their shareholders’ meetings in the last five years. Section 6.1 of the Seller Disclosure Letter contains a correct and complete list of each jurisdiction where Seller and Subsidiary are organized and qualified to do business. As used in this Agreement, the term (i) “Subsidiary” shall refer to CCS; and (ii) “Seller Material Adverse Effect” means (i) an event, occurrence, fact, condition, change or effect that has a material adverse effect on the Purchased Assets (taken as a hole), or the operations, condition (financial or otherwise) or results of operations or prospects of the Business, or (ii) preventing, materially delaying or materially impairing Seller’s or Subsidiary’s ability to consummate the transactions contemplated by this Agreement.

 

 

6.2       Corporate Authority; Approval and Fairness.

 

 

(i)        Seller has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and each other agreement, document, instrument or certificate contemplated by this Agreement or to be executed by Seller in connection with the consummation of the transactions contemplated by this Agreement (the “Seller Documents”), to perform its respective obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby and no other corporate proceedings on the part of Seller are necessary to authorize this Agreement or any Seller Document to which it is a party or to consummate the transactions contemplated by this Agreement. The execution, delivery and performance of this Agreement and each of the Seller Documents and the consummation of the transactions contemplated hereby and thereby have been duly authorized and approved by all requisite corporate action on the part of Seller. This Agreement has been, and each of the Seller Documents will be at or prior to the Closing, duly and validly executed and delivered by Seller and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each of the Seller Documents when so executed and delivered will constitute, legal, valid and binding obligations of Seller, enforceable against Seller in accordance with its respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity.

 

 

(ii)       (A) Each of the audit committee and the board of directors of MediVision has: (I) unanimously determined that this Agreement and the transactions contemplated by this Agreement are fair to, and in the best interests of, MediVision and its shareholders; (II) approved this Agreement and the transactions contemplated hereby; and (III) made all other affirmative determinations required to be made by it in connection with this Agreement and the transactions contemplated hereby under the Israeli Companies Law; and (B) the board of directors of MediVision has: (I) resolved to recommend approval of this Agreement and the transactions contemplated hereby to the general meeting of MediVision’s shareholders (the “MediVision Recommendation”) and directed that this Agreement be submitted to the general meeting of MediVision’s

 

 

	  	
17

	  

 

 

  

  

  

 

 

shareholders for their approval; and (II) received the BDO Fairness Opinion, to the effect that the consideration to be received by MediVision under this Agreement is fair from a financial point of view, as of the date of such opinion, to MediVision.

 

 

6.3       Consent of Third Parties; No Violations.

 

 

(i)        Except as set for in Section 6.3(i) of the Seller Disclosure Letter, no consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Person or any Governmental Bodyis required on the part of Seller in connection with the execution and delivery of this Agreement, the compliance by Seller with any of the provisions hereof, the consummation of the transactions contemplated hereby, and except such other consents, waivers, approvals, Orders, Permits or authorizations the failure of which to obtain would not have a Seller Material Adverse Effect.

 

(ii)       Other than as set forth in Section 6.3(ii) of the Seller Disclosure Letter, and/or other than Permitted Exceptions, execution, delivery and performance of this Agreement by Seller does not constitute or result in the creation of imposition of any Lien on any of the Business or the Purchased Assets or conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination or cancellation under, any provision of (i) the certificate of incorporation and bylaws or comparable organizational documents of Seller or Subsidiary; (ii) any Seller Material Agreement or material Permit to which Seller or Subsidiary is a party or by which any of the Business or the Purchased Assets are subject; (iii) any Order of any Governmental Body by which any of the Business or the Purchased Assets may be subject; or (v) any applicable Law. Section 6.3(ii) of the Seller Disclosure Letter sets forth a correct and complete list of Seller Material Agreements pursuant to which consents or waivers are or may be required prior to consummation of the transactions contemplated by this Agreement.

 

 

(iii)      Other than as described in Section 6.3(iii) of the Seller Disclosure Letter, except for: (A) relationships with Seller or Subsidiary as an officer, director, or employee thereof (and compensation by Seller or Subsidiary in consideration of such services) in accordance with the terms of their employment; and (B) relationships with Seller as shareholders or option holders therein, to the Knowledge of Seller, none of the directors or officers, or the shareholders of Seller, or any known member of any of their families or Affiliates, are presently a party to, or have been a party to during the year preceding the date of this Agreement, any transaction, agreement or arrangement with Seller or Subsidiary. To the Knowledge of Seller none of the officers, directors or shareholders of Seller have any known interest in any property, real or personal, tangible or intangible, including inventions, copyrights, trademarks, or trade names, used in or pertaining to the business, or any supplier, distributor, or customer of Seller, except for the normal rights of a shareholder or option holder or Seller. Other than as described in Section 6.3(iii) of the Seller Disclosure Letter, Seller and Subsidiary have not, since July 1, 2004, (x) extended or maintained credit, arranged for the extension of credit or renewed an extension of credit in the form of a personal loan to or for any director or executive officer of Seller or (y) materially modified any term of any such extension or maintenance of credit.

 

 

	  	
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6.4       MediVision Reports; Financial Statements.

 

(i)        To the Knowledge of Seller, as of their respective dates (or, if amended prior to the date hereof, as of the date of such amendment) all forms, statements, reports and documents filed with or furnished to the Euronext Stock Exchange (the “MediVision ESE Reports”) did not and will 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 made therein, in light of the circumstances in which they were made, not misleading. Each English language translation of a non-English language document filed as an exhibit to, or incorporated by reference into, any MediVision ESE Report constitutes a true, correct and complete translation of the original document in all material respects.

 

(ii)       MediVision does not maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by MediVision is recorded and reported on a timely basis to the individuals responsible for the preparation of MediVision’s filings with the Euronext Stock Exchange and other public disclosure documents. MediVision and Subsidiary maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are generally executed in accordance with management’s general or specific authorizations; (ii) transactions are generally recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is generally permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any material differences. MediVision’s management has disclosed to MediVision’s auditors and the audit committee of MediVision’s board of directors (A) any significant deficiencies in the design or operation of its internal controls over financial reporting that are reasonably likely to materially adversely affect MediVision’s ability to record, process, summarize and report financial information and has identified for MediVision’s auditors and audit committee of MediVision’s board of directors any material weaknesses in internal control over financial reporting and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in MediVision’s internal control over financial reporting. MediVision has made available to OIS (i) the material information relating to any such disclosure made by management to MediVision’s auditors and audit committee since December 31, 2000 and (ii) any material communication since December 31, 2000 made by management or MediVision’s auditors to its audit committee. Since December 31, 2000, no material complaints from any source regarding accounting, internal accounting controls or auditing matters, and no material concerns from MediVision employees regarding questionable accounting or auditing matters, have been received by MediVision. MediVision has made available to OIS the material information relating to all such material complaints or concerns relating to other matters made since December 31, 2000 and through the date hereof. No attorney representing MediVision or Subsidiary, whether or not employed by MediVision or Subsidiary, has reported to MediVision any evidence of a violation of securities Laws, breach of fiduciary duty or similar violation by MediVision or any of its officers, directors, employees or agents to MediVision’s chief legal officer, audit committee (or other committee designated for the purpose) of the board of directors.

 

 

	  	
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(iii)      Each of the consolidated balance sheets included in or incorporated by reference into any MediVision ESE Reports (including the related notes and schedules) fairly presents in all material respects the consolidated financial position of MediVision and its consolidated subsidiaries as of its date and each of the consolidated statements of income, changes in shareholders’ equity (deficit) and cash flows included in or incorporated by reference into MediVision ESE Reports (including any related notes and schedules) fairly presents in all material respects the results of operations, retained earnings (loss) and changes in financial position, as the case may be, of such companies for the periods set forth therein (subject, in the case of unaudited statements, to notes and normal year-end audit adjustments that will not be material in amount or effect), in each case in accordance with International Accounting Standards (“IAS”) consistently applied during the periods involved, except as may be noted therein.

 

 

(iv)      MediVision has previously furnished to OIS a complete and correct copy of any material amendments or modifications, which have not yet been filed with the Euronext Stock Exchange but which are required to be filed, to agreements, documents or other instruments which previously had been filed by MediVision with the Euronext Stock Exchange.

 

 

(v)       MediVision has made available to OIS all material position papers with respect to accounting policies and practices, including any quarterly position made available to MediVision’s principal financial and accounting officer, its audit committee or its independent registered public accounting firm; MediVision’s revenue recognition policies and practices are and have been in compliance in all material respects with all applicable rules, regulations and statements of the Euronext Stock Exchange with respect thereto; and MediVision’s controls over its revenue recognition policies and practices have been communicated to and applied in all material respects by its sales organization.

 

 

(vi)      Neither MediVision nor any of its subsidiaries has any liabilities (absolute, accrued, contingent or otherwise) of a nature required to be disclosed in a MediVision ESE Report or on a consolidated balance sheet or in the related notes to consolidated financial statements prepared in accordance with IAS and the rules of the Euronext Stock Exchange and which are not so reported and which are, individually or in the aggregate, material to the business, results of operations, assets or financial condition of MediVision and its Subsidiaries taken as a whole, except liabilities permitted to be incurred under this Agreement.

 

 

6.5       Accounts Receivable. All Accounts Receivable: (i) have arisen from bona fide transactions in the Ordinary Course of Business consistent with past practice and are payable on ordinary trade terms, (ii) to the Knowledge of Seller, are legal, valid and binding obligations of  the respective debtors enforceable in accordance with their terms, and (iii) are not subject to any valid counterclaim. All Accounts Receivable of Seller and its subsidiaries reflected on the balance sheet are good and fully collectible at the aggregate recorded amounts thereof, net of any applicable reserve for returns or doubtful accounts reflected thereon.

 

 

	  	
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6.6       Title to Purchased Assets, Intellectual Property.

 

 

(i)        Except as set forth in Schedule 6.6(i), Seller owns and has good and marketable title to each of the Purchased Assets, free and clear of all Liens (other than Permitted Exceptions).

 

 

(ii)       Except as set forth on Schedule 6.4(ii), Seller exclusively owns and has rights to use all Purchased Intellectual Property, free and clear of any Liens (other than Permitted Exceptions). Except as set forth on Schedule 6.4(ii), to the Knowledge of Seller, (i) none of the Purchased Intellectual Property infringes or results from the misappropriation of any Intellectual Property of any third Person, (ii) no third Person is infringing or misappropriating any Purchased Intellectual Property, and (iii) none of the Purchased Intellectual Property is the subject of any current claim of infringement or misappropriation received by Seller or Subsidiary in writing.

 

 

6.7       Ownership and Transfer of Purchased Shares. Seller is the record and beneficial owner of the Purchased Shares, which constitute sixty three percent (63%) of the issued and outstanding shares of CCS free and clear of any and all Liens (other than Permitted Exceptions). To the Knowledge of Seller, CCS has no shares reserved for issuance for any outstanding share option plan as of the date hereof. Seller has the corporate power and authority to sell, transfer, assign and deliver the Purchased Shares being sold by it as provided in this Agreement, and such delivery will convey to Purchaser good and marketable title to the Purchased Shares, free and clear of any and all Liens (other than Permitted Exceptions).

 

 

6.8       Intellectual Property.

 

 

(i)        Seller owns or has a valid right to use the Purchased Intellectual Property used in its business as presently conducted, except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Seller Material Adverse Effect. Section 6.8(i) of the Seller Disclosure Letter sets forth the (x) Purchased Intellectual Property owned by Seller, indicating for each registered item the registration or application number and the applicable filing jurisdiction and (y) material Intellectual Property Agreements to which Seller or Subsidiary is a party, or is bound by or has rights under associated with the Purchased Intellectual Property. Except as set forth in Section 6.8(i) of the Seller Disclosure Letter, Seller has exclusive ownership of the Purchased Intellectual Property owned by it, free and clear of all Liens (other than Permitted Exceptions), exclusive licenses and non-exclusive licenses other than those granted in connection with the sale of products in the Ordinary Course of Business. The Purchased Intellectual Property owned by Seller is to the Knowledge of Seller valid, subsisting and enforceable, and is not subject to any outstanding order, judgment, decree or agreement (other than Permitted Exceptions) adversely affecting Seller’s or Subsidiary’s use thereof or its rights thereto. Seller is aware of no facts that would

 

	  	
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materially adversely affect its or Subsidiary’s ability to utilize the Purchased Intellectual Property as intended, including any patents or other Intellectual Property of others (other than Permitted Exceptions) that could be infringed by the manufacture, use, or sale of products derived from the Purchased Intellectual Property. To the Knowledge of Seller, neither Seller nor Subsidiary has infringed or otherwise violated the Intellectual Property rights, related to the Purchased Intellectual Property, of any third party, and, except as set forth in Section 6.8(i) of the Seller Disclosure Letter, neither Seller nor Subsidiary has received any notice or claim challenging ownership of the Purchased Intellectual Property owned by Seller or Subsidiary or claiming that Seller or Subsidiary infringes or misappropriates the Intellectual Property of any third party related to the Purchased Intellectual Property (other than Permitted Exceptions).

 

 

(ii)       Without limiting the foregoing, except as set forth in Section 6.8(ii) of the Seller Disclosure Letter, Seller owns all Intellectual Property directly related to the IRI. Section 6.8(ii) of the Seller Disclosure Letter sets forth all Agreements to which Seller or Subsidiary is a party, or is bound by or has rights under, directly relating to the IRI, its development, or the Intellectual Property directly related thereto (“IRI Project”). Except as set forth in Section 6.8(ii) of the Seller Disclosure Letter, Seller has exclusive ownership of all Intellectual Property directly related to the IRI, free and clear of all Liens (other than Permitted Exceptions), exclusive licenses and non-exclusive licenses other than those granted in connection with the sale of products in the ordinary course of business. The Intellectual Property directly relating to the IRI is valid, subsisting and enforceable and is not subject to any outstanding order, judgment or decree (other than Permitted Exceptions) adversely affecting Seller’s use thereof or its rights thereto. Except for a settlement agreement, dated as of _______, (the “Elop Settlement Agreement”) entered into by Seller and Elbit Systems Electro-Optics Elop Ltd. (“Elop”) and the agreements set forth in Section 6.8(ii) of the Seller Disclosure Letter, there are no agreements (other than Permitted Exceptions) adversely affecting Seller’s use of the IRI Project or the Intellectual Property rights related thereto. Seller is aware of no facts that would adversely affect its ability to utilize such Intellectual Property as intended, including any patents or other Intellectual Property of others (other than Permitted Exceptions) that could be infringed by the manufacture, use, or sale of products derived from such Intellectual Property.

 

 

(iii)      Seller and Subsidiary have taken reasonable and customary measures to protect the confidentiality and value of all trade secrets related to the Purchased Intellectual Property, that are owned, used or held by Seller or Subsidiary (“Purchased Trade Secrets”), and to the Knowledge of Seller, such Purchased Trade Secrets (other than Permitted Exceptions) have not been used, disclosed to or discovered by any person except pursuant to valid and appropriate non-disclosure and/or license agreements which have not been breached. To the Knowledge of Seller, no Employee has any patents issued or applications pending for any device, process, design or invention of any kind now used or currently known to be needed by Seller or Subsidiary in connection with the Purchased Intellectual Property, in the furtherance of its business, which patents or applications have not been assigned to Seller or Subsidiary. All current Employees and all Former Employees that were involved in the development of Seller Products or

 

 

 

 

	  	
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Intellectual Property have executed valid intellectual property and confidentiality agreements for the benefit of Seller or Subsidiary in a form that Seller has prior to the date of this Agreement provided to Purchaser. Every agreement, under which Intellectual Property was developed, created or otherwise made, for Seller or Subsidiary, assigns all rights to such Intellectual Property to Seller or to Subsidiary.

 

 

(iv)      Neither Seller nor Subsidiary has granted any licenses or other rights to third parties to use the Purchased Intellectual Property other than non-exclusive licenses granted in the ordinary course of business pursuant to customary terms that have been previously provided to Purchaser.

 

 

(v)       Seller has source code for each version of software which is part of the Purchased Intellectual Property, owned by it or Subsidiary and used in the past five (5) years. The source code for such software will compile into object code or otherwise is capable of being installed and operated. Once compiled and/or installed, such software in all material respects will have the features, functions and performance described in the documentation pertaining to it and will execute on the computer platforms for which it is designed. To the Knowledge of Seller, except as set forth in Section 6.8(v) of the Seller Disclosure Letter, none of the software owned by Seller or Subsidiary which is Purchased Intellectual Property contains any shareware, open source code, or other software whose use requires disclosure or licensing of Intellectual Property, including any GNU or GPL libraries or code.

 

 

(vi)      Section 6.8(vi) of the Seller Disclosure Letter contains a list of all software that is sold, licensed, leased or otherwise distributed by Seller or Subsidiary or resellers (the “Software Products”), in connection with the Purchased Intellectual Property, indicating, in each case, the name, owner and most recent version of the Software Product and information regarding any third-party code that is embedded in such Software Product. For the avoidance of doubt, software that is obtained under a “limited license” or open source license shall be considered “third-party code.”

 

 

6.9       Seller Material Agreements and Governmental Contracts.

 

 

(i)        Each Seller Material Agreement (as defined below) disclosed or required to be disclosed in Schedule 6.9(i) is in full force and effect and constitutes a legal, valid and binding agreement of, enforceable in accordance with its terms against, Seller or Subsidiary, as the case may be, as a party thereto and, to the Knowledge of Seller, the other party thereto. Neither Seller nor Subsidiary, as the case may be, nor, to the Knowledge of Seller, any other party to any Seller Material Agreement, is in violation or breach of or default under, in any respect, any such Seller Material Agreement (or, with notice or lapse of time or both, would be in violation or breach of or default under, in any material respect, any such Seller Material Agreement). Neither Seller nor Subsidiary, as the case may be, has received any written notice from any other party to any Seller Material Agreement to the termination or non-renewal of such Seller Material Agreement.

 

 

	  	
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(ii)       Except as set forth on Schedule 6.9(ii), neither Seller nor Subsidiary has received any written notice of any default or event that with notice or lapse of time or both would constitute a default by Seller or Subsidiary under any Seller Material Agreement.

 

 

(iii)      Schedule 6.9(i) sets forth all of the following Agreements to which Seller or Subsidiary is a party or by which they are bound and that are directly related to the Purchased Assets or by which the Purchased Assets may be bound or affected:

 

 

(A)      (i) any Agreement for the purchase of raw materials that is reasonably likely to require payments of One Hundred Thousand Dollars ($100,000) or more in any year; (ii) any Agreement for the acquisition of or investment in capital equipment for an aggregate purchase price or investment value of One Hundred Thousand Dollars ($100,000) or more; (iii) any Agreement authorizing the distribution or resale by any Person of any of Seller’s products or services or (iv) any Agreement for the sale or rental of products or services that is reasonably likely to result in payments to Seller and Subsidiary of One Hundred Thousand Dollars ($100,000) or more in any year;

 

 

(B)      any partnership, joint venture or other similar agreement or arrangement relating to the formation, creation, operation, management or control of any partnership or joint venture material to Seller or Subsidiary or in which Seller owns more than a five percent (5%) voting or economic interest, or any interest valued at more than One Hundred Thousand Dollars ($100,000) without regard to percentage voting or economic interest;

 

 

(C)      any Agreement relating to indebtedness for borrowed money or the deferred purchase price of property (in either case, whether incurred, assumed, guaranteed or secured by any asset) in excess of One Hundred Thousand Dollars ($100,000);

 

 

(D)      any non-competition Agreement or other Agreement that (i) purports to limit in any material respect either the type of business in which Seller or Subsidiary may engage or the manner or locations in which any of them may so engage in any business, (ii) could require the disposition of any material assets, line of business or product line of Seller or Subsidiary, (iii) grants “most favored nation” status, including Seller and Subsidiary or (iv) prohibits or limits the rights of Seller or Subsidiary in any material respect to make, sell or distribute any products or services, or use, transfer, license, distribute or enforce any of their respective Intellectual Property rights;

 

 

(E)       any Agreement to which Seller or Subsidiary is a party containing a standstill or similar agreement pursuant to which the party has agreed not to acquire assets or securities of the other party or any of its Affiliates;

 

 

(F)       any Agreement between Seller or Subsidiary and any director or officer of Seller or any Person beneficially owning five percent (5%) or more of the outstanding shares;

 

 

	  	
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(G)      any Agreement providing for indemnification by Seller or Subsidiary of any Person, except for any such Agreement that is (x) not material to Seller and Subsidiary and (y) entered into in the ordinary course of business;

 

 

(H)      any dealer, distributor, joint marketing or development Agreement currently in force under which Seller or Subsidiary has continuing material obligations to jointly market any product, technology or service and which may not be canceled without penalty upon notice of ninety (90) days or less, or any Agreement pursuant to which Seller or Subsidiary has continuing material obligations to jointly develop any Intellectual Property that will not be owned, in whole or in part, by Seller or Subsidiary and which may not be canceled without penalty upon notice of ninety (90) days or less;

 

 

(I)        any Agreement or commitment currently in force to license any third party to manufacture or reproduce any Seller Product, service or technology or any Agreement or commitment currently in force to sell or distribute any Seller Products, service or technology involving amounts in excess of Two Hundred Fifty Thousand Dollars ($250,000) per annum, except agreements with distributors or sales representatives in the ordinary course of business cancelable without penalty upon notice of ninety (90) days or less;

 

 

(J)       any mortgages, indentures, guarantees, loans or credit agreements, security agreements or other agreements or instruments relating to the borrowing of money or extension of credit, other than trade payables incurred and extensions of credit to customers granted in the ordinary course of business;

 

 

(K)      any settlement agreement under which Seller or Subsidiary has material ongoing obligations;

 

 

(L)       all Agreements relating to the governance or shareholding of CCS, including any Agreements between Seller and the other shareholder of CCS that affect or may affect such governance or shareholding;

 

 

(M)     all Agreements relating to the development or ownership of the IRI or the Intellectual Property relating thereto;

 

 

(N)      any Agreement or commitment not otherwise disclosed pursuant to one of the other clauses of this Section 6.7(i) involving in excess of One Hundred Thousand Dollars ($100,000) being paid by or to Seller or Subsidiary in any twelve (12) month period;

 

 

(O)      any other Agreement or group of related Agreements that, if terminated or subject to a default by any party thereto, would, individually or in the aggregate, be reasonably likely to have a Seller Material Adverse Effect (the Agreements described in clauses (A)-(Q), together with all exhibits and schedules to such Agreements, being the “Seller Material Agreements”).

 

 

(iv)      A true and correct copy of each Seller Material Agreement has previously been delivered to Purchaser and neither Seller, Subsidiary nor, to the Knowledge of Seller, any other party thereto is in default with respect to a material obligation under or material breach in any respect under the terms of any such Seller Material Agreement.

 

 

	  	
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(v)       Except as set forth on Schedule 6.9(v), neither Seller nor Subsidiary is party to any material Agreement to which the other ultimate contracting party is a Governmental Body (including any subcontract with a prime contractor or other subcontractor who is a party to any such Agreement)

 

 

6.10     Absence of Certain Developments. Except as expressly contemplated by this Agreement or as set forth on Schedule 6.10, since December 31, 2008, Subsidiary and the Business has been conducted only in the Ordinary Course of Business, and, with respect to the Business, the Purchased Assets and Subsidiary, there has not been:

 

 

(a)       any event, change or circumstance which has had, or is reasonably likely to have, a Seller Material Adverse Effect;

 

 

(b)       any material damage (normal wear and tear excepted), destruction, eminent domain taking or other casualty loss (whether or not covered by insurance) affecting Subsidiary or the Business or any Purchased Asset in any material respect;

 

 

(c)       any purchase, sale, mortgage, pledge, lease, or creation or other incurrence of any Lien on the Business, any Purchased Asset or asset of Subsidiary, other than purchases, sales or leases of assets in the Ordinary Course of Business or the creation or incurrence of Permitted Exceptions;

 

 

(d)       any material change in any method of accounting or accounting practice with respect to the Business or Subsidiary;

 

 

(e)       any entry into, termination, amendment, cancellation, or other modification of any Agreement or any waiver of, or agreement with respect to, any rights or obligations set forth therein, other than in the Ordinary Course of Business;

 

 

(f)        any material settlement, waiver or agreement with respect to any Legal Proceeding, Liability, or other right;

 

 

(g)       any incurrence or assumption of any Indebtedness in an aggregate amount greater than Fifty Thousand Dollars ($50,000);

 

 

(h)       any (i) delay or postponement of the payment of any accounts payable or any change in the methodology employed by Seller or Subsidiary with respect to the payment thereof, (ii) acceleration of the collection of Accounts Receivable or any change in the methodology employed by Seller or Subsidiary with respect to the payment thereto, (iii) turnover of inventory, or (iv) incurrence of other Liabilities outside of the Ordinary Course of Business, which in the case of (i)-(iv) above, exceeds in the aggregate an amount greater than Fifty Thousand Dollars ($50,000);

 

 

	  	
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(i)        any transaction with any Affiliate outside of the Ordinary Course of Business;

 

 

(j)        any declaration, setting aside or payment of any dividend or other distribution in respect of the capital stock (or other applicable equity or beneficial interest) of Subsidiary, or any direct or indirect redemption, purchase or other acquisition by Seller or its Affiliates of any such capital stock (or other applicable equity or beneficial interest), or any Option with respect to, Subsidiary;

 

 

(k)       any authorization, issuance, sale or other disposition by Subsidiary of any shares of capital stock (or other applicable equity or beneficial interest) of, or option with respect to, Subsidiary, or any modification or amendment of any right of any holder of any outstanding shares of capital stock (or other applicable equity or beneficial interest) of, or option with respect to, Subsidiary;

 

 

(l)        any (A) reorganization, liquidation or dissolution of Seller or Subsidiary or (B) business combination involving Seller or Subsidiary and any other Person;

 

 

(m)      any amendment to the organizational documents of Subsidiary or the taking of any action with respect to any such amendment;

 

 

(n)       except as set forth on Schedule 6.10(n), any violation, breach or default under, or the taking or failure to take any action that (with or without notice or lapse of time or both) would constitute a violation or breach of, or default under, any term or provision of any Permit held or used by Subsidiary or Seller and relating to the Business or the Purchased Assets; or

 

 

(o)       any entering into of an agreement to do or engage in any of the foregoing.

 

 

6.11     Litigation. Except as set forth in Schedule 6.11 of the Seller Disclosure Letter, there are no (A) civil, criminal or administrative actions, suits, claims, hearings, arbitrations, investigations or other proceedings pending or, to the Knowledge of Seller, threatened against Seller or Subsidiary that relates to or may affect the Business, the Purchased Assets or Seller’s or Subsidiary’s obligations under this Agreement, except for those that would not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse Effect or (B) obligations or liabilities of Seller or Subsidiary, whether or not accrued, contingent or otherwise, and whether or not required to be disclosed in Seller’s Financial Statements, or any other facts or circumstances known to Seller that could reasonably be expected to result in any claims against, or obligations or liabilities of, Seller or Subsidiary that relates to or may affect the Business, the Purchased Assets or Seller’s or Subsidiary’s obligations under this Agreement, including those relating to environmental and occupational safety and health matters, except for those that, individually or in the aggregate, have not had and would not reasonably be expected to have a Seller Material Adverse Effect. Neither Seller nor Subsidiary is a party to or subject to the provisions of any judgment, order, writ, injunction, decree or award of any Governmental Body that relates to or may affect the Business, the Purchased Assets or Seller’s or Subsidiary’s obligations under this Agreement which, individually or in the aggregate, has had, or would reasonably be expected to have, a Seller Material Adverse Effect.

 

 

	  	
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6.12     Financial Advisors. No Person has acted, directly or indirectly, as a broker, finder or financial advisor for Seller in connection with the transactions contemplated by this Agreement and no Person is entitled to any fee or commission or like payment in respect thereof. Seller shall be solely obligated for the payment of all fees and expenses of any such broker, finder, or financial advisor.

 

 

6.13     Environmental Matters. Except as may not have a Seller Material Adverse Effect, (i) Seller and its Subsidiaries are not in violation of any Environmental Law; (ii) no real property currently or, to the Knowledge of Seller, formerly owned or operated by Seller or Subsidiary is, or with respect to formerly owned or operated properties, to the Knowledge of Seller is, contaminated with any Hazardous Material or requires remediation under any Environmental Law; (iii) Seller and Subsidiary do not have knowledge of being subject to liability for any off-site disposal or contamination; (iv) Seller and its Subsidiaries have not received any claims or notices alleging liability under any Environmental Law; and (v) to the Knowledge of Seller, there are no circumstances involving Seller or Subsidiary that could result in any claims, liabilities, costs or restrictions on the ownership, use or transfer of any property pursuant to any Environmental Law.

 

 

6.14     Tax Returns and Payments.

 

 

(i)        Each of Seller and Subsidiary (w) has prepared in good faith and duly and timely filed (taking into account any extension of time within which to file) all material Tax Returns (as defined below) required to be filed by it, and all such Tax Returns are complete and accurate in all material respects and prepared in substantial compliance with all applicable Laws; (x) with respect to any Tax Returns that are required to be filed after the date hereof but prior to the Closing Date, each of Seller and Subsidiary shall prepare in good faith and duly and timely file (taking into account any extension of time within which to file) all such Tax Returns and such Tax Returns shall be complete and accurate in all material respects and prepared in substantial compliance with all applicable Laws; (y) has paid all Taxes (as defined below) relating to Purchased Assets that it is (or was) required to pay, whether or not shown as due on such Tax Returns, and has withheld all Taxes it has been obligated to withhold from amounts owing to any employee, creditor or third party, except with respect to matters contested in good faith for which adequate reserves have been established and which are set forth in Section 6.14(i) of the Seller Disclosure Letter; and (z) has not waived any statute of limitations with respect to Taxes relating to Purchased Assets or agreed to any extension of time with respect to a Tax assessment or deficiency. Seller and Subsidiary have complied in all material respects with all applicable Laws relating to Taxes relating to Purchased Assets. Except as set forth in Section 6.14(i) of the Seller Disclosure Letter, there are no pending, or to the Knowledge of Seller, threatened audits, examinations, investigations or other proceedings in respect of Taxes or Tax matters relating to Purchased Assets involving Seller or Subsidiary. Seller has made available to Purchaser true and correct copies of the Israeli Tax Returns and German income and VAT Tax Returns filed by Seller and Subsidiary for each of the fiscal years ended December 31, 2006, 2005 and 2004; neither Seller nor Subsidiary has filed (and was not required to file) any income or VAT Tax Returns in any jurisdictions other than Israel and Germany for

 

 

	  	
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such fiscal periods, and no claims have been made relating to Purchased Assets by any other jurisdiction that Seller and/or Subsidiary is or may be subject to income or VAT taxation by that jurisdiction. The unpaid Taxes of Seller and Subsidiary (A) did not, as of the date hereof, exceed the reserves for Tax liabilities (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) and (B) will not exceed such reserves as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of Seller and Subsidiary in filing their Tax Returns. Neither Seller nor Subsidiary has incurred any liability for Taxes relating to Purchased Assets outside the ordinary course of business consistent with past custom and practice. Seller and Subsidiary are in compliance in all material respects with all terms and conditions of any Tax exemptions, Tax incentive, Tax holiday or other Tax reduction agreement, approval or order of any Governmental Body relating to Purchased Assets and, to the Knowledge of Seller, subject to receipt of the Approvals required herein, the execution of this Agreement will not have any adverse effect on the validity and effectiveness of any such Tax exemptions, Tax incentive, Tax holiday or other Tax reduction agreement or order.

 

 

(ii)       There are no Tax sharing agreements or similar agreements relating to Purchased Assets under which Seller or Subsidiary could be liable for the Taxes of any Person that is neither Seller nor Subsidiary of Seller. There are no material Liens for Taxes on Purchased Assets except for Taxes not yet due or payable. Except as would not reasonably be expected to have a Seller Material Adverse Effect, all inter-company transactions and charges between and among Seller and Subsidiary or Purchaser or any of its subsidiaries relating to Purchased Assets are at arm’s-length terms or other terms permitted by applicable Laws with respect to Taxes.

 

 

(iii)      No elections have been made under U.S. Treasury regulations Section 301.7701-3 with respect to Seller or Subsidiary.

 

 

(iv)      Neither Seller nor Subsidiary is (or has been) a “controlled foreign corporation” within the meaning of Code Section 957.

 

 

(v)       Neither Seller nor Subsidiary has been (or held, directly or indirectly, an interest in) a United States real property corporation within the meaning of Code Section 897(c)(2).

 

 

(vi)      Neither Seller nor Subsidiary is “engaged in trade or business within the United States” within the meaning of Code Section 882 or otherwise subject to U.S. federal income tax on a net income basis.

 

 

As used in this Agreement, (A) the term “Tax” (including, with correlative meaning, the term “Taxes”) includes all United States, federal, state, local and foreign (including, without limitation, Israeli and German) income, profits, franchise, gross receipts, environmental, customs duty, share capital, severance, stamp, payroll, sales, employment, social security (or similar), unemployment, disability, use, property, withholding, excise, production, value added, occupancy, alternative or add-on minimum and other taxes, duties or assessments of any nature whatsoever relating to Purchased Assets, together with all interest, indexation

 

 

	  	
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penalties and other penalties and additions imposed with respect to such amounts and any interest in respect of such penalties and additions, and (B) the term “Tax Return” includes all returns and reports (including elections, declarations, disclosures, amendments, schedules, estimates and information returns) required to be supplied, or supplied, to a Tax authority relating to Taxes.

 

 

6.15     Tax Matters.

 

(i)        Neither the Buisness nor the Purchased Assets, directly or indirectly, use any technology that was developed using funding provided by the OCS (“OCS Funded Technology”), or the Investment Center of the Israeli Ministry of Industry, Trade & Labor, nor is any of the technology contained in any of the Purchased Assets is based on the OCS Funded Technology. To the Knowledge of Seller, there has been no indication from any Israeli Tax authority that the execution of this Agreement would adversely affect Seller’s ability to set off for Israeli Tax purposes in the future any and all losses accumulated by Seller as of the Closing Date.

 

(ii)       Neither Seller nor Subsidiary, with resepct to the Business or the Purchased Assets, are a party to or bound by any Tax indemnity, Tax sharing or Tax allocation agreement.

 

 

(iii)      Neither Seller nor Subsidiary, with respect to the Business or the Purchased Assets, have made any payments, are obligated to make any payments, or are a party to any agreement that under certain circumstances could obligate Seller or Subsidiary to make any payments that are not deductible under Code Section 280G (or any corresponding or similar provision or administrative rule of federal, state, local, or foreign law). Subsequent to the Closing Date.

 

 

(iv)      There is no outstanding request for ruling from any Taxing Authority, or closing agreement (within the meaning of Code Section 7121 or any analogous provision of applicable Law) relating to any Tax for which Seller or Subsidiary, with respect to the Business or the Purchased Assets, is or may be liable or with respect to Seller’s or Subsidiary’s income, assets or business, power of attorney or adjustment related to, or in connection with, any Tax that could result in a Lien on any Purchased Assets or Purchased Shares.

 

 

(v)       CCS is and has always been classified as corporation within the meaning of Treasury Regulation Section 301.7701-2(b), and has not made an election pursuant to Treasury Regulation Section 301.7701-2(a), from the date of its respective organization through and including the Closing Date.

 

 

(vi)      Subsidiary is not a “passive foreign investment company within the meaning of Section 1297(a) of the Code nor has it made an election pursuant to Section 1295 of the Code to be treated as a “qualified electing fund” or has made a “mark-to-market” election pursuant to Section 1296 of the Code.

 

 

	  	
30

	  

 

 

  

  

  

 

(vii)     None of Seller or Subsidiary has participated in or cooperate with a boycott within the meaning of Section 999(b)(3) of the Code.

 

 

6.16     Encryption and Other Restricted Technology. Seller’s and Subsidiary’s Business directly related to the Purchased Assets as currently conducted does not involve the use or development of, or engagement in, technology whose development, commercialization or export is restricted under Israeli Law, and Seller’s and Subsidiary’s Business directly related to the Purchased Assets as currently conducted does not require Seller or Subsidiary to obtain a license from the Israeli Ministry of Defense or an authorized body thereof pursuant to Section 2(a) of the Control of Products and Services Declaration (Engagement in Encryption), 1974 or other legislation regulating the development, commercialization or export of technology

 

 

6.17     Warranties/Product Liability. Except as set forth on Section 6.17 of the Seller Disclosure Letter and except as specifically reflected, reserved against or otherwise disclosed in Seller’s financial statements or incurred since the date thereof in the ordinary course of business except as does not constitute a Seller Material Adverse Effect, (i) there is no notice, demand, claim, action, suit, inquiry, hearing, proceeding, notice of violation or investigation from, by or before any Governmental Body relating to any Product, including the packaging and advertising related thereto, designed, formulated, manufactured, processed, sold or placed in the stream of commerce by Seller or Subsidiary or any services provided by Seller or Subsidiary, or claim or lawsuit involving a Product that is pending or, to the Knowledge of Seller, threatened, by any Person, and (ii) there has not been, nor is there under consideration by Seller or Subsidiary, any Product recall or post-sale warning of a material nature concerning any Product. All Products comply in all material respects with applicable Governmental Authorizations and Laws, and there have not been and there are no material defects or deficiencies in such Products.

 

 

6.18     Product Certifications. The product certifications (“MediVision Product Certifications”) given or granted by manufacturers, manufacturers associations, technical associations, or similar bodies, or by any Governmental Body, in each case with respect to Products, are all the MediVision Product Certifications relating to Business or the Purchased Assets, and constitute all the MediVision Product Certifications necessary for Seller and Subsidiary, in connection with the Buisness or the Purchased Assets, to conduct their respective businesses as currently conducted, and are listed in Section 6.18 of the Seller Disclosure Letter, except as does not constitute a Seller Material Adverse Effect. Seller has not made any material modifications or updates to the Products which would require MediVision Product Certifications different from or in addition to those set forth on Section 6.18 of the Seller Disclosure Letter and, other than as set forth on Section 6.18 of the Seller Disclosure Letter, to the Knowledge of Seller, none of the MediVision Product Certifications would be terminated, rescinded or modified as a result of the execution of this Agreement.

 

 

6.19     Completeness of Disclosure. No representation or warranty by Seller in this Agreement contains or on the Closing Date will contain an untrue statement of material fact or omits or on the Closing Date will omit to state a material fact required to be stated therein or necessary to make the statements made therein not misleading.

 

 

	  	
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ARTICLE 7.

 

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

 

Except as set forth in the corresponding sections or subsections of the disclosure letter delivered to Seller by Purchaser concurrently with the execution and delivery of this Agreement (the “Purchaser Disclosure Letter”), Purchaser hereby represents and warrants to Seller that:

 

 

7.1       Organization and Good Standing. Purchaser is a legal entity duly organized, validly existing and in good standing under the Laws of California and has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as it is now being conducted, and is qualified to do business as a foreign corporation in each jurisdiction where the ownership, leasing or operation of its assets or properties or the conduct of its business requires such qualification, except where the failure to be so organized, qualified or to have such power or authority, individually or in the aggregate, has not had and would not reasonably be expected to have a Purchaser Material Adverse Effect.

 

 

7.2       Authorization of Agreement.

 

 

(i)        Purchaser has all requisite power and authority to execute and deliver this Agreement and each other agreement, document, instrument or certificate contemplated by this Agreement or to be executed by Purchaser in connection with the consummation of the transactions contemplated hereby and thereby (the “Purchaser Documents” and, collectively with the Seller Documents, the “Transaction Documents”) and to consummate the transactions contemplated hereby and thereby and no other corporate proceedings on the part of Purchaser is necessary to authorize this Agreement or any Purchaser Document to which it is a party or to consummate the transactions contemplated by this Agreement. The execution, delivery and performance by Purchaser of this Agreement and each Purchaser Document have been duly authorized by all requisite company action on behalf of Purchaser. This Agreement has been, and each Purchaser Document will be at or prior to the Closing, duly executed and delivered by Purchaser and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each Purchaser Document when so executed and delivered will constitute, the legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity.

 

 

(ii)       Each of the audit committee and the board of directors of Purchaser has: (I) unanimously determined that this Agreement and the transactions contemplated by this Agreement are fair to, and in the best interests of, Purchaser and its shareholders; and (II) approved this Agreement and the transactions contemplated hereby.

 

 

	  	
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7.3      Conflicts; Consents of Third Parties.

 

 

(a)       Except as set forth in Section 7.3(a) of the Purchaser Disclosure Letter, none of the execution and delivery and performance by Purchaser of this Agreement, the consummation of the transactions contemplated hereby, or the compliance by Purchaser with any of the provisions hereof will conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination or cancellation under, any provision of (i) the articles of incorporation of Purchaser, (ii) any material Agreement or Permit to which Purchaser is a party or by which Purchaser or its properties or assets are bound, (iii) any Order of any Governmental Body applicable to Purchaser or by which any of the properties or assets of Purchaser are bound or (iv) any applicable Law, other than, in the case of clauses (ii), (iii) and (iv), such conflicts, violations, defaults, terminations or cancellations that would not have a Purchaser Material Adverse Effect.

 

 

(b)       Except as set for in Section 7.3(b) of Purchaser Disclosure Letter, no consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Body is required on the part of Purchaser in connection with the execution and delivery of this Agreement, the compliance by Purchaser with any of the provisions hereof, the consummation of the transactions contemplated hereby, and except such other consents, waivers, approvals, Orders, Permits or authorizations the failure of which to obtain would not have a Purchaser Material Adverse Effect.

 

 

7.4       Litigation. There is no suit, claim, action, arbitration, proceeding pending or, to the Knowledge of Purchaser, investigation pending or, to the Knowledge of Purchaser, threatened against Purchaser, or to which Purchaser is otherwise a party before any Governmental Body, that if adversely determined, would reasonably be expected to adversely affect the consummation of Purchaser’s obligations under this Agreement.

 

 

7.5       Financial Advisors. No Person has acted, directly or indirectly, as a broker, finder or financial advisor for Purchaser in connection with the transactions contemplated by this Agreement and no Person is entitled to any fee or commission or like payment in respect thereof. Purchaser shall be solely obligated for the payment of all fees and expenses of any such broker, finder, or financial advisor.

 

 

7.6       Condition of the Business; Disclaimer of Reliance. Notwithstanding anything contained in this Agreement to the contrary, Purchaser acknowledges and agrees that Seller is not making any representations or warranties whatsoever, express or implied, beyond those expressly given by Seller in Article 6 hereof (as modified by the Schedules hereto), and Purchaser acknowledges and agrees that, except for the representations and warranties contained therein, the Business, the Purchased Assets and the Purchased Shares are being transferred on a “where is” and, as to condition, “as is” basis. Any claims Purchaser may have for breach of representation or warranty shall be based solely on the representations and warranties of Seller set forth in Article 6 hereof (as modified by the Schedules hereto). Purchaser further represents that Seller, any of its Affiliates or any other Person has not made any representation or warranty, express or implied, as to the accuracy or completeness of any information regarding Seller, the Business, the Purchased Assets, the Purchased Shares, or the transactions contemplated by this Agreement not expressly set forth in this Agreement. Purchaser specifically disclaims that it is

 

 

	  	
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relying upon or has relied upon any such other representations or warranties. Purchaser acknowledges that it has conducted to its satisfaction, its own independent investigation of the Buisness, the Purchased Assets and the Purchased Shares and has been provided access and an opportunity to review information in respect of the Business and the Purchased Assets requested by Purchaser and, in making the determination to proceed with the transactions contemplated by this Agreement, Purchaser has relied on the results of its own independent investigation.

 

 

7.7       Restriction on Activities. There is no agreement, commitment, judgment, injunction, order or decree binding upon Purchaser to which Purchaser is a party which prohibits or impairs Purchaser’s ability to consummate the transactions contemplated by this Agreement, except as would not, individually or in the aggregate, reasonably be expected to have a Purchaser Material Adverse Effect.

 

 

7.8       Completeness of Disclosure. No representation or warranty by Purchaser in this Agreement contains or on the Closing Date will contain an untrue statement of material fact or omits or on the Closing Date will omit to state a material fact required to be stated therein or necessary to make the statements made therein not misleading.

 

ARTICLE 8.

 

COVENANTS

 

 

8.1       Access to Information.

 

 

(a)       Seller agrees that, prior to the Closing, Purchaser shall be entitled, through its officers, employees and representatives (including its legal advisors and accountants), to make such investigation of the properties, businesses and operations of Seller or Subsidiary in connection with the Purchased Assets, and such examination of the Documentation relating to the Purchased Assets, Subsidiary, the Purchased Shares and the Assumed Liabilities as it reasonably requests and to make extracts and copies of such Documentation. Any such investigation and examination shall be conducted during regular business hours upon reasonable advance notice and under reasonable circumstances and shall be subject to restrictions under applicable Law. Seller shall cause the officers, employees, consultants, agents, accountants, attorneys and other representatives of Seller and Subsidiary to cooperate with Purchaser and Purchaser’s representatives in connection with such investigation and examination, and Purchaser and its representatives shall cooperate with Seller, Subsidiary, and their representatives and shall use their Commercially Reasonable Efforts to minimize any disruption to the Business. Notwithstanding anything herein to the contrary, no such investigation or examination shall be permitted to the extent that it would require Seller or Subsidiary to disclose information subject to attorney-client privilege or conflict with any written confidentiality obligations to which Seller or Subsidiary is bound; provided, however, that such information subject to attorney-client privilege or confidentiality obligations shall be disclosed to Purchaser in the event that the underlying subject matter relates primarily to the Purchased Assets or relates to Subsidiary. Except as otherwise set forth in this Agreement, prior to the Closing, without the prior written consent of Seller, which may be withheld for any reason, (i) Purchaser shall not contact any suppliers to, or customers of, Seller or Subsidiary, and (ii) Purchaser shall have no

 

 

	  	
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right to perform invasive or subsurface investigations of the properties or facilities of Seller or Subsidiary.

 

 

(b)       Seller and Purchaser shall, upon reasonable advance notice, use Commercially Reasonable Efforts to make such records held by it or their Affiliates relating to the Purchased Assets available to the other party (during normal business hours and subject to restrictions under applicable Laws) as may be reasonably requested by the other party in connection with (i) the preparation of financial statements (including the Final Closing Statement) or regulatory filings in respect of periods ending prior to Closing; (ii) any insurance claims by, Legal Proceedings against, disputes relating to any indemnification obligation under Article 10 (Indemnification) between, or governmental investigations of Seller, Subsidiary or Purchaser or any of their Affiliates; or (iii) in order to enable Seller or Purchaser to comply with their respective obligations under this Agreement and each other agreement, document or instrument contemplated hereby or thereby. Seller and Purchaser shall be entitled, at their sole cost and expense, to make copies of the books and records to which they are entitled to access pursuant to this Section 8.1(b).

 

 

(c)       Notwithstanding anything in this Agreement to the contrary, the respective obligations and rights of Purchaser and Seller pursuant to Section 8.1(b) shall apply during the pendency of any Legal Proceeding between any of Purchaser or its Affiliates (including its subsidiaries) or their respective officers, directors, employees, equity holders, agents, representatives, successors and permitted assigns, on the one hand, and Seller or its Affiliates or their respective officers, directors, employees, equity holders, agents, representatives, successors and permitted assigns, on the other hand, so long as such Legal Proceeding does not primarily relate to the subject matter of the records described in Section 8.1(b). In the event that such Legal Proceeding does primarily relate to the subject matter of the records described in Section 8.1(b), applicable rules of discovery shall govern.

 

 

8.2       Conduct of the Business Pending the Closing.

 

 

(a)       Prior to the Closing, except (i) as set forth on Section 8.2(a) of the Seller Disclosure Letter, (ii) as required by applicable Law, (iii) as otherwise contemplated by this Agreement or (iv) with the prior written consent of Purchaser, Seller shall, solely as relates to the Business, and shall cause Subsidiary to:

 

	  	
(i)

	
conduct the Business and the business of Subsidiary only in the Ordinary Course of Business; and

	  	
(ii)

	
use its Commercially Reasonable Efforts to (A) preserve the present business operations, organization and goodwill of Seller (as they relate to the Business or the Purchased Assets) and Subsidiary and (B) preserve the present relationships with customers and suppliers of Seller (as they relate to the Business or the Purchased Assets) and Subsidiary.

 

(b)       Except (i) as set forth on Schedule 8.2(b) of the Seller Disclosure Letter, (ii) as required by applicable Law, (iii) as otherwise contemplated by this Agreement or (iv) with the prior written consent of Purchaser, Seller shall not, solely as relates to the Purchased Assets, and shall not permit Subsidiary to:

 

 

	  	
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(i)

	
subject any of the Buisness or the Purchased Assets or any of the assets of Subsidiary, to any Lien, except for Permitted Exceptions, or subject the Purchased Shares to any Lien;

	  	
(ii)

	
acquire assets outside the Ordinary Course of Business from any other Person (except pursuant to an existing Agreement or inventory in the Ordinary Course of Business ) or sell, assign, license, transfer, convey, lease or otherwise dispose of any portion of the Business or the Purchased Assets (except pursuant to an existing Agreement or inventory in the Ordinary Course of Business or for the purpose of disposing of obsolete or worthless assets) in each case, with an aggregate value in excess of One Hundred Thousand Dollars ($100,000);

	  	
(iii)

	
cancel or compromise any debt or claim or waive or release any right of Subsidiary or Seller that constitutes a Purchased Asset except in the Ordinary Course of Business;

	  	
(iv)

	
merge or consolidate with any other Person, except for any such transactions among Seller’s wholly-owned subsidiaries, or restructure, reorganize or completely or partially liquidate or otherwise enter into any agreements or arrangements imposing material changes or restrictions on its assets, operations or businesses;

	  	
(v)

	
declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to the Purchased Shares;

	  	
(vi)

	
issue (other than on exercise of options of Seller or rights of Seller set forth in the Seller Disclosure Letter), sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any shares of its or Subsidiary’s capital stock, or securities or rights convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities, including any options of Seller or rights of Seller;

	  	
(vii)

	
reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of Subsidiary’s capital stock or securities convertible or exchangeable into or exercisable for any shares of Subsidiary’s capital stock;

 

	  	
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(viii)

	
adopt or propose any change in its articles of association or other applicable governing instruments of Seller or Subsidiary that would adversely affect the Business or the Purchased Assets or Seller’s ability to perform its obligations under this Agreement;

	  	
(ix)

	
make any material Tax election, make any change in any method of accounting for Tax purposes or make any application with any Governmental Body or seek any Tax ruling from a Governmental Body, if there is a risk that such ruling may result in any terms, restrictions, liabilities or obligations being imposed on the Business or the Purchased Assets;

	  	
(x)

	
incur any Indebtedness for borrowed money or guarantee such Indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to acquire any of its or Subsidiary’s debt securities, except for (A) Indebtedness for borrowed money incurred in the Ordinary Course of Business consistent with past practices (x) not to exceed One Hundred Thousand Dollars ($100,000) in the aggregate or (y) in replacement of existing Indebtedness for borrowed money on terms substantially consistent with or more beneficial than the indebtedness being replaced, or (B) guarantees by Seller of Indebtedness of its wholly-owned subsidiaries incurred in compliance with this Section 8.2 or (C) interest rate swaps on customary commercial terms consistent with past practice and in compliance with its risk management policies in effect on the date of this Agreement and not to exceed One Hundred Thousand Dollars ($100,000) of notional debt in the aggregate;

	  	
(xi)

	
make any loans, advances or capital contributions to or investments in any Person (other than between itself and any of its direct or indirect wholly-owned Subsidiaries);

	  	
(xii)

	
modify, other than in an immaterial manner, any policy or procedure with respect to the collection of receivables or payment of payables directly related to the Buisness or the Purchased Assets;

	  	
(xiii)

	
pay, discharge or satisfy before it is due any material claim or Liability directly related to the Buisness or the Purchased Assets or fail to pay any such item in a timely manner directly related to the Business or the Purchased Assets, in each case except in accordance with the Ordinary Course of Business;

	  	
(xiv)

	
make any changes with respect to accounting policies or procedures that adversely affects the Buisness or the Purchased Assets, except as required by changes in applicable generally accepted accounting principles;

 

	  	
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(xv)

	
except in the Ordinary Course of Business, amend, waive, surrender or terminate or agree to the amendment, waiver, surrender or termination of any Seller Material Agreement or any material Permit that adversely affects the Business or the Purchased Assets;

	  	
(xvi)

	
except in the Ordinary Course of Business, exercise any right or option under or extend or renew any Seller Material Agreement that adversely affects the Business or the Purchased Assets;

	  	
(xvii)

	
except in the Ordinary Course of Business enter into or engage in any transaction with its Affiliates that adversely affects the Business or the Purchased Assets;

	  	
(xviii)

	
pay any management charge to Seller or any entity other than Subsidiary;

	  	
(xix)

	
take any action that would reasonably be expected to result in a material increase in Tax liability (or a corresponding loss of Tax attributes) relating to the Business or the Purchased Assets other than in the Ordinary Course of Business;

	  	
(xx)

	
agree, commit or offer (in writing or otherwise) to take any of the actions described in clauses “(i)” through “(xix)” of this Section 8.2(b).

 

8.3       Consents.

 

 

(a)       Seller shall (and shall cause its respective Affiliates to) use its Commercially Reasonable Efforts, and Purchaser shall (and shall cause its Affiliates to) cooperate with Seller, to obtain at the earliest practicable date all consents and approvals required to consummate the transactions contemplated by this Agreement; provided however, that Seller, Subsidiary and Purchaser shall not be obligated to pay any consideration therefor to any third party from whom consent or approval is requested.

 

 

(b)       Purchaser shall (and shall cause its respective Affiliates to) use its Commercially Reasonable Efforts, and Seller shall (and shall cause its Affiliates to) cooperate with Purchaser, to obtain at the earliest practicable date all consents and approvals required to consummate the transactions contemplated by this Agreement; provided however, that Purchaser, Subsidiary and Seller shall not be obligated to pay any consideration therefor to any third party from whom consent or approval is requested.

 

 

8.4       Further Assurances. Subject to, and not in limitation of, Sections 8.3(a) and (b), Seller and Purchaser shall each use its Commercially Reasonable Efforts to (A)(i) furnish upon

 

 

	  	
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request such further information, (ii) execute and deliver to each other such other documents and (iii) take all actions necessary or appropriate to consummate the transactions contemplated by this Agreement, and (B) cause the fulfillment at the earliest practicable date of all of the conditions to their respective obligations to consummate the transactions contemplated by this Agreement.

 

 

8.5       Confidentiality.

 

 

(a)       Seller Confidentiality. Seller shall keep confidential, and cause its respective Affiliates and each of their respective officers, directors, employees, representatives and advisors to keep confidential (i) from the date hereof, all Confidential Information being provided to Seller by or on behalf of Purchaser regarding Purchaser, any of its Affiliates, and any of its or their businesses in connection with the transactions contemplated by this Agreement and (ii) after the Closing Date and subject to the consummation of the Closing, all Confidential Information regarding the Buisness, Purchased Assets, Assumed Liabilities, and Subsidiary.

 

 

(b)       Purchaser Confidentiality. Purchaser shall keep confidential, and cause its Affiliates and each of their respective officers, directors, employees, representatives and advisors to keep confidential from the date hereof, all Confidential Information being provided to Purchaser by or on behalf of Seller regarding Seller, any of its respective Affiliates, and any of their respective businesses; provided, however, that after the Closing Date and subject to the consummation of the Closing, Purchaser shall only be required to keep confidential, and cause its Affiliates and each of their respective officers, directors, employees, representatives and advisors to keep confidential all Confidential Information provided to Purchaser by or on behalf of Seller that is not related to the Business, the Purchased Assets, Assumed Liabilities or Subsidiary.

 

 

8.6       Non Competition.

 

 

(a)       As an inducement for Purchaser to consummate the transactions set forth in this Agreement, Seller (and its respective Affiliates) agrees that, for a period of three (3) years following the Closing Date, it shall not, directly or indirectly, engage or invest in, own, manage, join, operate, finance, control, or participate in the ownership, management, operation, financing or control of, or loan any money to, or have any financial interest in, or acquire any right to share in the profits of, be employed by, associated with, or in any manner connected with, lend its name or credit to, or render services or advice to, any business or Person whose products, services or activities compete, in whole or in part, or in any way interfere, with the Business, the Purchased Assets or Subsidiary anywhere within the world; provided, however, Seller may purchase or otherwise acquire, in the aggregate, up to five percent (5%) of the outstanding voting shares of any publicly held company and any amount of OIS shares of capital stock (but without otherwise participating in the business activities of such company) without otherwise violating the provisions of this Section 8.6.

 

 

(b)       Seller acknowledges that the provisions of this Section 8.6 and the period of time, scope and type of restrictions on Seller’s activities set forth herein are reasonable and necessary for the protection of Purchaser, which is paying substantial monies and other benefits to Seller, and are an essential inducement to Purchaser’s entering into and performing this Agreement and the Transaction Documents to which Purchaser is party. If any covenant

 

 

	  	
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contained in this Section 8.6 shall be determined by any Governmental Body to be invalid or unenforceable by reason of its extending for too great a period of time or by reason of its being too extensive in any other respect, (x) such covenant shall be interpreted to extend over the maximum period of time for which it may be enforceable and/or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such Governmental Body making such determination, and (y) in its reduced form, such covenant shall then be enforceable, but such reduced form of covenant shall only apply with respect to the operation of such covenant in the particular jurisdiction in or for which such adjudication is made. It is the intention of the parties hereto that the provisions of this Section 8.6 shall be enforceable to the maximum extent permitted by applicable Law.

 

 

(c)       Seller acknowledges that any breach or threatened breach of the covenants contained in this Section 8.6 will likely cause Purchaser material and irreparable damage, the exact amount of which will be difficult to ascertain, and that the remedies at Law for any such breach will likely be inadequate. Accordingly, to the extent permitted by applicable Law, Purchaser shall, in addition to all other available rights and remedies (including, but not limited to, seeking such Damages as it can show it has sustained by reason of such breach), be entitled to seek specific performance and injunctive relief in respect of any breach or threatened breach of this covenant, without being required to post bond or other security and without having to prove the inadequacy of the available remedies at Law.

 

 

8.7       Preservation of Records. Seller and Purchaser agree that each of them shall preserve and keep the records held by it or their Affiliates relating to the Business or the Purchased Assets for a period of seven (7) years from the Closing Date and shall make such records through the period ending on the Closing Date available to the other as may be reasonably required by such party in connection with, any insurance claims by, Legal Proceedings or Tax audits against or governmental investigations of Seller, Subsidiary or Purchaser or any of their Affiliates or in order to enable Seller or Purchaser to comply with their respective obligations under this Agreement and each other agreement, document or instrument contemplated hereby or thereby. In the event Seller or Purchaser wish to destroy such records prior to such time, such party shall first give thirty (30) days prior written notice to the other and such other party shall have the right at its option and expense, upon prior written notice given to such party within that thirty (30) day period, to take possession of the records within sixty (60) days after the date of such notice.

 

 

8.8       Publicity.

 

 

(a)       None of Seller or Purchaser shall, and they shall cause their respective Affiliates not to, issue any press release or public announcement concerning this Agreement or the transactions contemplated hereby without obtaining the prior written approval of the other parties hereto, which approval will not be unreasonably withheld or delayed, unless, in the sole judgment of Purchaser or Seller, as applicable, disclosure is otherwise required by applicable Law or by the applicable rules of any stock exchange on which Purchaser or Seller list securities, provided that, to the extent required by applicable Law, the party intending to make such release shall use its Commercially Reasonable Efforts consistent with such applicable Law to consult with the other party with respect to the timing and content thereof.

 

 

	  	
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(b)       Purchaser and Seller each agree that the terms of this Agreement shall not be disclosed or otherwise made available to the public and that copies of this Agreement shall not be publicly filed or otherwise made available to the public, except where such disclosure, availability or filing is required by applicable Law and only to the extent required by such Law. In the event that such disclosure, availability or filing is required by applicable Law, Purchaser and Seller (as applicable) each agree to use their Commercially Reasonable Efforts to obtain “confidential treatment” of this Agreement with the U.S. Securities and Exchange Commission (or the equivalent treatment by any other Governmental Body) and to redact such terms of this Agreement as the other party shall reasonably request.

 

 

8.9       Disclosure Schedules; Supplementation and Amendment of Schedules. Seller shall promptly supplement or amend the Schedules until the Closing with respect to any matter hereafter arising or discovered that would have been required to be set forth or described in the Schedules; provided that no such supplement or amendment shall have any effect on the satisfaction of the condition to Closing set forth in Section 9.1(a) or for purposes of determining whether Purchaser is entitled to indemnification pursuant to Article 10.

 

 

8.10     Control of Business. Notwithstanding anything in this Agreement to the contrary, Purchaser acknowledges on behalf of itself and its Affiliates and its and their directors, officers, employees, Affiliates, agents, representatives, successors and assigns that the operation of the Business remains in the dominion and control of Seller and Subsidiary until the Closing and that none of the foregoing Persons will provide, directly or indirectly, any directions, orders, advice, aid, assistance or information to any director, officer or employee of Seller, except as specifically contemplated or permitted by Article 8 including, without limitation, Section 8.3 or as otherwise consented to in advance by an officer of Seller.

 

 

8.11     Foreign Tax Declarations. Seller shall provide Purchaser, on or prior to the Closing Date, with any certificates required under applicable foreign Law to avoid foreign Tax withholding with respect to the purchase of the Purchased Shares or Purchased Assets (a “Foreign Tax Withholding Certificate”).

 

 

8.12     Exclusivity.    From the date of this Agreement until the Closing or the termination of this Agreement in accordance with Section 5.2, Seller will not (and will not permit its respective Affiliates or any of its Affiliates’ representatives to) directly or indirectly: (a) solicit, initiate, or encourage the submission of any proposal or offer from any Person relating to, or enter into or consummate any transaction relating to, the acquisition of the Purchased Assets or the Subsidiary or any merger, recapitalization, share exchange, sale of substantial assets (other than sales of inventory in the Ordinary Course of Business) or any similar transaction or alternative to the contemplated transactions hereunder or (b) participate in any discussions or negotiations regarding, furnish any information with respect to, assist or participate in, or facilitate in any other manner any effort or attempt by any Person to do or seek any of the foregoing, except as may be required under the laws of Israel. Seller will notify Purchaser immediately if any Person makes any proposal, offer, inquiry or contact with respect to any of the foregoing (whether solicited or unsolicited).

 

 

8.13     Belgian and German Approvals.

 

 

	  	
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(a)        Each party to this Agreement shall use all reasonable efforts to deliver and file, as promptly as practicable after the date of this Agreement, each notice, report or other document required to be delivered by such party to, or filed by such party with, any Belgian and/or German Governmental Entity with respect to this Agreement. MediVision and OIS shall use all reasonable efforts to obtain, as promptly as practicable after the date of this Agreement, any consents and approvals that may be required pursuant to Belgian and/or German legal requirements in connection with this Agreement.

 

 

(b)       MediVision and OIS each shall: (i) give the other parties prompt notice of the commencement of any legal proceeding by or before any Belgian and/or German Governmental Entity with respect to this Agreement or any of the other transactions contemplated by this Agreement; (ii) keep the other parties informed as to the status of any such legal proceeding; and (iii) promptly inform the other parties of any communication to any Governmental Entity regarding this Agreement. MediVision and OIS will consult and cooperate with one another, and will consider in good faith the views of one another, in connection with any analysis, appearance, presentation, memorandum, brief, argument, opinion or proposal made or submitted in connection with any Belgian and/or German legal proceeding relating to this Agreement. In addition, except as may be prohibited by any Belgian and/or German Governmental Entity or by any Belgian and/or German Legal Requirement, MediVision and OIS will permit authorized representatives of the other party to be present at each meeting or conference relating to any such legal proceeding and to have access to and be consulted in connection with any document, opinion or proposal made or submitted to any Belgian and/or German Governmental Entity in connection with any such legal proceeding.

 

 

8.14     Elop Payment. Seller agrees that, by April 15, 2011, it will use its best efforts to satisfy and discharge all of its obligations under the Elop Settlement Agreement, including, without limitation, paying any and all amounts that are owed by Seller to Elop pursuant to the Elop Settlement Agreement, in an amount not to exceed US$250,000 (the “Elop Debt”), and Seller shall provide written evidence, reasonably satisfactory to Purchaser, that all of Seller’s obligations under the Elop Settlement Agreement have be satisfied and discharged; provided that if the Elop Debt is not paid by April 15, 2011, Purchaser and Seller hereby agree that Purchaser shall pay the Elop Debt directly to Elop. In order to facilitate such payment by Purchaser, Purchaser shall be entitled to instruct (in accordance with the escrow agreement substantially in the form attached hereto as Exhibit C) the Escrow Agent (as defined below) to disburse from the Escrow Reserve (as defined below) to Purchaser, free of any charge or consideration, either (i) an appropriate number of shares of common stock of Purchaser (or an amount of cash held with the Escrow Agent, if such exist at such time), as shall be determined by Purchaser in accordance with the escrow agreement (the “Elop Debt Released Shares”), or (ii) the cash proceeds from the sale of the number of shares of Common Stock of Purchaser in the Escrow Reserve equal to the amount paid by Purchaser in accordance with the escrow agreement and Purchaser may use the proceeds to pay the Elop Debt. The Seller further agrees that upon the satisfaction and discharge of its obligations under the Elop Settlement Agreement, or the satisfaction of such obligations by Purchaser, as the case may be, it will promptly assign to Purchaser the patent No. PCT/IL2005/00086 with the title of “Integrated Retinal Imager and Method” (i.e., the “IRI Patent “) that is the subject of the Elop Settlement Agreement. A signed conditional assignment letter for the assignment of the IRI Patent to Purchaser shall be delivered to Purchaser at the Closing.

 

 

	  	
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8.15     United Mizrachi Bank Loan. If the Closing shall not have occurred by the close of business on October 22, 2009 (i.e., 120 days from the date of this Agreement), Purchaser shall be entitled, at its sole discretion and without the need for any consent, approval or notice to Seller, to instruct (in accordance with the escrow agreement substantially in the form attached hereto as Exhibit C) the Escrow Agent to disburse from the Escrow Reserve to Purchaser, free of any charge or consideration all of the shares in the Escrow Reserve (the “Mizrachi Loan Released Shares”) or the proceeds from the sale of all of the shares in the Escrow Reserve. Purchaser shall be entitled, at its sole discretion and without the need for any consent, approval or notice to Seller, as the exclusive owner of the Mizrachi Loan Released Shares, to adopt appropriate corporate resolutions and to take any other action for the cancellation of the Mizrachi Loan Released Shares and/or their reclassification as treasury shares entitling their holder to no rights.

 

 

8.16     OCS Debt. Seller agrees that it will use its best efforts to pay the OCS Debt to the OCS and to satisfy and discharge all other obligations of Seller to the OCS in connection with the transactions contemplated herein (collectively, the “OCS Debt and Obligations”), and Seller shall provide written evidence, reasonably satisfactory to Purchaser, that all of Seller’s OCS Debt and Obligations have be satisfied and discharged; provided that Purchaser may pay the OCS Debt and Obligations directly to the OCS if Seller agrees to such payment. If Purchaser makes such payment to the OCS, Purchaser shall be entitled to instruct (in accordance with the escrow agreement substantially in the form attached hereto as Exhibit C) the Escrow Agent (as defined below) to disburse from the Escrow Reserve to Purchaser, free of any charge or consideration, either (i) an appropriate number of shares of common stock of Purchaser (or an amount of cash held with the Escrow Agent, if such exist at such time), as shall be determined by Purchaser in accordance with the escrow agreement (the “OCS Debt Released Shares”), or (ii) the cash proceeds from the sale of the number of shares of the Common Stock of Purchaser in the Escrow Reserve equal to the amount paid by Purchaser and Purchaser may use the proceeds to pay the OCS Debt and Obligations.

 

ARTICLE 9.

 

CONDITIONS TO CLOSING

 

 

9.1       Conditions Precedent to Obligations of Purchaser. The obligation of Purchaser to consummate the transactions contemplated by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by Purchaser in whole or in part to the extent permitted by applicable Law):

 

 

(a)       the representations and warranties of Seller set forth in this Agreement and in each of the Transaction Documents shall be true and correct in all material respects as of the Closing Date as though made on and as of the Closing Date, except that those representations and warranties that are modified as to materiality or contain a qualification referring to a “Material Adverse Effect” or any similar modification or qualification shall be true and correct in all respects as of said dates;

 

 

	  	
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(b)       Seller shall have performed and complied in all material respects with all obligations and agreements required in this Agreement to be performed or complied with by them prior to the Closing Date;

 

 

(c)       Purchaser shall have received a certificate signed by an authorized officer of Seller, dated the Closing Date, certifying that the conditions contained in Sections 9.1(a)  and 9.1(b) have been fulfilled;

 

 

(d)       there shall not be in effect on the Closing Date any Order or Law restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement or any of the Transaction Documents or that could reasonably be expected to otherwise result in a material diminution of the benefits of the transactions contemplated by this Agreement or any of the Transaction Documents to Purchaser, and there shall not be pending or threatened on the Closing Date any action in, before or by any Governmental Body that could reasonably be expected to result in the issuance of any such Order or the enactment, promulgation or deemed applicability of any such Law to Purchaser or the transactions contemplated by this Agreement or any of the Transaction Documents;

 

 

(e)       there shall not be any action, suit, or proceeding pending or threatened before any Governmental Body that could reasonably be expected to (i) prevent consummation of any of the transactions contemplated by this Agreement or the Transaction Documents, (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation, or (iii) have a Seller Material Adverse Effect on the right of Purchaser to own the Purchased Shares or to own and operate the Purchased Assets (and no such Order shall be in effect);

 

 

(f)       [Reserved];

 

 

(g)       Reserved

 

 

(h)       The consents and approvals set forth on Schedule 9.1(h) shall have been obtained;

 

 

(i)        Since December 31, 2008, there shall not have been any event, change, effect or development that, individually or in the aggregate, has had, or would be reasonably expected to have, a Seller Material Adverse Effect;

 

 

(j)        Seller shall have delivered, or caused to be delivered, to Purchaser a legal opinion of Eitan-Mehulal Law Group, dated as of the Closing Date, in the form of Exhibit D hereto;

 

 

(k)       Seller shall have delivered, or caused to be delivered, to Purchaser a duly executed Bill of Sale in the form of Exhibit A hereto;

 

 

(l)        Seller shall have delivered, or caused to be delivered, to Purchaser a duly executed Assignment and Assumption Agreement in the form of Exhibit B hereto;

 

 

	  	
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(m)      Seller shall have delivered, or caused to be delivered, to Purchaser a duly executed Escrow Agreement in the form of Exhibit C;

 

 

(n)       Seller shall have delivered (A) copies of resolutions of the board of directors and the shareholders of Seller authorizing and approving this Agreement, the Transaction Documents and the transactions contemplated hereby and thereby and all of the transactions and agreements contemplated hereby and thereby; (B) the certificate of incorporation, as amended, and bylaws, as amended, of Seller; and (C) the names of the officer or officers of Seller authorized to execute this Agreement, the Transaction Documents and the transaction contemplated herein and therein, all certified by any authorized representative of Seller, to be true, correct, complete and in full force and effect and unmodified as of the Closing Date;

 

 

(o)       Seller shall have delivered certified organizational documents of Seller and Subsidiary, including all amendments thereto;

 

 

(p)       Seller, shall have delivered, or caused to be delivered, to Purchaser share certificate(s) representing the Purchased Shares, duly endorsed in blank or accompanied by properly executed share transfer powers, and a duly executed CCS Deed; and

 

 

(q)       Seller shall have delivered such other documents or instruments reasonably requested by Purchaser or its agents to confirm or carry out performance of the covenants and satisfaction of the conditions required by this Agreement, the Transaction Documents and the documents contemplated hereby and thereby.

 

 

9.2       Conditions Precedent to Obligations of Seller. The obligations of Seller to consummate the transactions contemplated by this Agreement are subject to the fulfillment, prior to or on the Closing Date, of each of the following conditions (any or all of which may be waived by Seller in whole or in part to the extent permitted by applicable Law):

 

 

(a)       the representations and warranties of Purchaser set forth in this Agreement and in each of the Transaction Documents shall be true and correct in all material respects as of the Closing Date as though made on and as of the Closing Date, except that those representations and warranties that are modified as to materiality or contain a qualification referring to a “Material Adverse Effect” or any similar modification or qualification shall be true and correct in all respects as of said dates;

 

 

(b)       Purchaser shall have performed and complied in all material respects with all obligations and agreements required by this Agreement to be performed or complied with by Purchaser on or prior to the Closing Date;

 

 

(c)       Seller shall have received a certificate signed by an authorized officer of Purchaser, dated the Closing Date, certifying that the conditions contained in Sections 9.1(a) and 9.1(b) have been fulfilled;

 

 

(d)       Purchaser shall have delivered (A) copies of resolutions of the board of directors of Purchaser authorizing and approving this Agreement, the Transaction Documents

 

 

	  	
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and the transactions contemplated hereby and thereby and all of the transactions and agreements contemplated hereby and thereby; (B) the certificate of incorporation, as amended, and bylaws, as amended, of Purchaser; and (C) the names of the officer or officers of Purchaser authorized to execute this Agreement, the Transaction Documents and the transaction contemplated herein and therein, all certified by any authorized representative of Purchaser, to be true, correct, complete and in full force and effect and unmodified as of the Closing Date;

 

 

(e)       there shall not be in effect on the Closing Date any Order or Law restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement or any of the Transaction Documents or that could reasonably be expected to otherwise result in a material diminution of the benefits of the transactions contemplated by this Agreement or any of the Transaction Documents to Seller, and there shall not be pending or threatened on the Closing Date any action in, before or by any Governmental Body that could reasonably be expected to result in the issuance of any such Order or the enactment, promulgation or deemed applicability of any such Law to Seller or the transactions contemplated by this Agreement or any of the Transaction Documents;

 

 

(f)        Seller shall have received consent from the United Mizrachi Bank to Purchaser’s assumption of Liabilities of Seller under the United Mizrachi Bank Loan;

 

 

(g)       Purchaser shall have delivered, or caused to be delivered, to Seller a duly executed Assignment and Assumption Agreement in the form attached hereto as Exhibit B hereto;

 

 

(h)       Purchaser shall have delivered, or caused to be delivered, to Seller a duly executed Escrow Agreement; and

 

 

9.3       Frustration of Closing Conditions. None of Seller or Purchaser may rely on the failure of any condition set forth in Sections 9.1 or 9.2, as the case may be, if such failure was caused by such party’s failure to comply with any provision of this Agreement.

 

ARTICLE 10.

 

SURVIVAL

 

 

10.1       Survival of Representations and Warranties.

 

 

(a)       The representations and warranties of the parties hereto contained in this Agreement shall survive the Closing until the twenty-four (24) month anniversary of the Closing Date (the “Warranty Survival Period”).

 

 

(b)       All of the covenants or other agreements of the parties hereto contained in this Agreement shall survive until fully performed or fulfilled, unless and to the extent only that non-compliance with such covenants or agreements is waived in writing by the party entitled to such performance. No claim for a breach of a covenant or other agreement set forth in this Agreement that (i) by its nature is required to be performed by or prior to Closing (the “Pre-Closing Covenants”) may be made or brought by any party hereto after the first anniversary of

 

 

	  	
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the Closing Date, and (ii) by its nature is required to be performed after Closing (the “Post-Closing Covenants”) may be made or brought by any party hereto after the first anniversary of the last date on which each such Post-Closing Covenant was required to be performed (in each case, a “Covenant Survival Period” and collectively with the Warranty Survival Period, the “Survival Period”).

 

 

(c)       Notwithstanding Sections 10.1(a) hereof, any breach of any representation or warranty in respect of which indemnity may be sought under this Agreement shall survive the applicable Survival Period if notice in writing of the inaccuracy or breach thereof giving rise to such right of indemnity shall have been given to the party against whom such indemnity may be sought prior to such time. Any claim not asserted in accordance with this Article 10.1 on or prior to the expiration of the applicable Survival Period will be irrevocably and unconditionally released and waived except in cases of Intentional Misrepresentation.

 

 

10.2       Indemnification by Seller.

 

 

(a)       Seller hereby agrees to indemnify and hold Purchaser and its directors, officers, employees, Affiliates, stockholders, agents, attorneys, representatives, successors and permitted assigns (collectively, the “Purchaser Indemnified Parties”) harmless from and against any and all Damages to the extent based upon or resulting from or incurred in connection with:

 

	  	
(i)

	
any breach of, or inaccuracy in, any representation or warranty made by Seller in this Agreement or in any document, schedule, instrument or certificate delivered hereunder or in respect of a claim made based upon alleged facts that if true could constitute any such breach or inaccuracy;

	  	
(ii)

	
any breach or violation of any Pre-Closing Covenant or Post-Closing Covenant by Seller;

	  	
(iii)

	
any Accounts Receivable set forth on Seller balance sheet as of the Closing Date which are not fully collected within one (1) year after the Closing Date, net of any applicable reserve for returns or doubtful accounts reflected thereon.

	  	
(iv)

	
any Excluded Liability; and

	  	
(v)

	
any pending litigation on or before the Closing Date related to the Business, the Purchased Assets, the Assumed Liabilities, or Subsidiary;

 

In the event that Seller may be obligated to indemnify Purchaser Indemnified Parties under both subsections (i) or (ii) and any of subsections (iii)-(v) of this Section 10.2, Seller’s obligations under any of subsections (iii)-(v) shall be controlling and the limitations provided in Sections 10.1 shall not apply.

 

 

	  	
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(b)       Purchaser shall take and shall cause its Affiliates to take all reasonable steps to mitigate any Damages upon becoming aware of any event which would reasonably be expected to, or does, give rise thereto.

 

 

(c)       Seller shall have no liability (for indemnification or otherwise) with respect to claims under Sections 10.2(a), until the total of all Damages with respect to such matters exceeds Fifty Thousand Dollars ($50,000), and then for the total amount of Damages.

 

 

10.3       Indemnification by Purchaser.

 

 

(a)       Purchaser hereby agrees to indemnify and hold Seller and its directors, officers, employees, Affiliates, agents, attorneys, representatives, successors and permitted assigns (collectively, the “Seller Indemnified Parties”) harmless from and against, and pay to the applicable Seller Indemnified Parties the amount of, any and all Damages based upon or resulting from:

 

	  	
(i)

	
any breach of, or inaccuracy in, any representation or warranty made by Purchaser in this Agreement or in any other document, schedule, instrument or certificate delivered hereunder or in respect of a claim made based upon alleged facts that if true could constitute any such breach or inaccuracy;

	  	
(ii)

	
any breach or violation of any Pre-Closing Covenant or Post-Closing Covenant by Purchaser;

	  	
(iii)

	
based upon or arising directly from any Assumed Liability; and

	  	
(iv)

	
based upon or arising directly from Purchaser’s operation of the Purchased Assets after the Closing Date;

 

(b)       Seller shall take and cause their Affiliates to take all reasonable steps to mitigate any Damages upon becoming aware of any event which would reasonably be expected to, or does, give rise thereto.

 

 

(c)       Purchaser shall have no liability (for indemnification or otherwise) with respect to claims under Sections 10.2(a), until the total of all Damages with respect to such matters exceeds Fifty Thousand Dollars ($50,000), and then for the total amount of Damages.

 

 

10.4        Indemnification Procedures.

 

 

(a)       A claim for indemnification for any matter not involving a third-party claim may be asserted by notice to the party from whom indemnification is sought.

 

 

(b)       In the event that any Legal Proceeding shall be instituted or that any claim or demand shall be asserted by any third party in respect of which payment may be sought under Sections 10.2 and 10.3 hereof (an “Indemnification Claim”), the Indemnified Party shall promptly cause written notice of the assertion of any Indemnification Claim of which it has knowledge which is covered by this indemnity to be forwarded to the Indemnifying Party. The

 

 

	  	
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failure of the Indemnified Party to give reasonably prompt notice of any Indemnification Claim shall not release, waive or otherwise affect the Indemnifying Party’s obligations with respect thereto except to the extent that the Indemnifying Party is irreparably and materially prejudiced as a result of such failure in which case such indemnification shall be reduced but only to the extent of such irreparable and material prejudice. The Indemnifying Party shall have the right, at its sole option and expense, to select counsel of its choice to defend the Indemnifying Party, which must be reasonably satisfactory to the Indemnified Party, and to vigorously and diligently defend against, negotiate, settle (subject to subsection (c)) any Indemnification Claim which relates to any Damages indemnified against by it hereunder; provided, however, that the Indemnified Party may, at the sole cost and expense of the Indemnifying Party, at any time after the Indemnified Party’s delivery of the notice referred to in the first sentence of this clause (b) and before such Indemnifying Party’s written response to the Indemnified Party, file any motion, answer or other pleadings or take any other action that the Indemnified Party reasonably believes to be necessary or appropriate to protect its interests. If the Indemnifying Party elects to defend against, negotiate or settle any Indemnification Claim which relates to any Damages indemnified by it hereunder, it shall, within thirty (30) days (or sooner if the nature of the Indemnification Claim so requires), notify the Indemnified Party of its intent to do so and provide reasonable assurance of its ability to pay the Indemnification Claim; provided that if the Indemnifying Party elects not to defend against, negotiate, or settle any Indemnification Claim which relates to any Damages indemnified against hereunder, the Indemnified Party may defend against, negotiate or settle such Indemnification Claim at the sole cost and expense of the Indemnifying Party. If the Indemnifying Party shall assume the defense of any Indemnification Claim, the Indemnified Party may participate, at its or their own expense, in the defense of such Indemnification Claim; provided, however, that such Indemnified Party shall be entitled to participate in any such defense with separate counsel at the expense of the Indemnified Party; and provided, further, that the Indemnifying Party shall not be required to pay for more than one such counsel (plus any appropriate local counsel) for all indemnified parties in connection with any Indemnification Claim. The parties hereto agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such Indemnification Claim.

 

 

(c)       Notwithstanding anything in Section 10.4(b) to the contrary, neither the Indemnifying Party nor the Indemnified Party shall, without the written consent of the other party, settle or compromise any Indemnification Claim or permit a default or consent to entry of any judgment unless the claimant provides to the Indemnified Party an unqualified release from all liability in respect of the Indemnification Claim. Notwithstanding the foregoing, if a settlement offer solely for money damages is made by the applicable third party claimant with a release as per the preceding sentence, and the Indemnifying Party notifies the Indemnified Party in writing of the Indemnifying Party’s willingness to accept the settlement offer and pay the amount called for by such offer, and the Indemnified Party declines to accept such offer, the Indemnified Party may continue to contest such Indemnification Claim, free of any participation by the Indemnifying Party, and the amount of any ultimate liability with respect to such Indemnification Claim that the Indemnifying Party has an obligation to pay hereunder shall be limited to the lesser of (A) the amount of the settlement offer that the Indemnified Party declined to accept plus the Damages of the Indemnified Party relating to such Indemnification Claim through the date of its rejection of the settlement offer, or (B) the aggregate Damages of the Indemnified Party with respect to such Indemnification Claim.

 

 

	  	
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(d)       In the event any Indemnified Party should have a claim under Sections  10.2 or 10.3, as applicable, against any Indemnifying Party that does not involve a third party claim, the Indemnified Party shall deliver a written notice with reasonable promptness to the Indemnifying Party. The failure by any Indemnified Party to give such notice shall not impair such party’s rights hereunder except to the extent that an Indemnifying Party demonstrates that it has been irreparably and materially prejudiced thereby in which case such indemnification shall be reduced but only to the extent of such irreparable and material prejudice. If the Indemnifying Party notifies the Indemnified Party that it does not dispute the claim described in such notice or fails to notify, in writing, the Indemnified Party within thirty (30) days thereafter whether the Indemnifying Party disputes the claim described in such notice, the Damages in the amount specified in such written notice shall be conclusively deemed a liability of the Indemnifying Party and the Indemnifying Party shall pay the amount of such Loss to the Indemnified Party on demand. If the Indemnifying Party has timely disputed its liability with respect to such claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith to attempt to negotiate a resolution of such dispute within thirty (30) days.

 

 

(e)       After any final decision, judgment or award shall have been rendered by a Governmental Body of competent jurisdiction and the expiration of the time in which to appeal therefrom, or a settlement shall have been consummated, or the Indemnified Party and the Indemnifying Party shall have arrived at a mutually binding agreement with respect to an Indemnification Claim hereunder, the Indemnified Party shall forward to the Indemnifying Party notice of any sums due and owing by the Indemnifying Party pursuant to this Agreement with respect to such matter.

 

 

(f)        This Section 10.4 shall not apply to any Claims made in respect of Taxes, which shall be specifically governed by Section 11.4.

 

 

(g)       This Section 10.4 shall not apply to any actions taken pursuant to Sections 8.14, 8.15 and/or 8.16, which shall be specifically governed by their respective terms

 

 

10.5     Escrow. On the earlier of (i) the date of execution of a Purchase Agreement between Purchaser U.M AccelMed, Limited Partnership (“AccelMed”), or (ii) the date of execution of this Agreement, Seller shall deposit 3,793,452 shares of common stock of Purchaser beneficially owned by Seller, free of any third parties rights, into an escrow account, and (ii) on the Closing Date, Seller shall deposit additional 2,000,000 shares of common stock of Purchaser, beneficially owned by Seller free of any third parties rights, into an escrow account (all such securities, together with any and all proceeds of disposal of such securities by Seller (if and to the extent such disposal was consummated prior to the lapse of the Escrow Period), the “Escrow Reserve”), in each case held by Stephen L. Davis, as escrow agent (the “Escrow Agent”), and governed by an agreement to be executed by the applicable parties substantially in the form attached hereto as Exhibit C; provided, that Seller shall have no obligation to deposit the 2,000,000 shares of common stock of Purchaser in the escrow account on the Closing Date if Seller has satisfied and discharged all of its OCS Debt and Obligations prior to the Closing Date. The Escrow Reserve shall be retained by the Escrow Agent until the earlier of (1) date of the termination of this Agreement, or (2) the later of (A) the 24 month anniversary of the Closing Date or (B) the satisfaction and discharge by Seller of the OCS Debt and Obligations (the “Escrow Period”) in order to (a) secure the indemnification obligations of Seller pursuant to

 

 

	  	
50

	  

 

 

  

  

  

 

Section 10.2 ; (b) secure the obligations of Seller and to enable the provision of remedies to Purchaser pursuant to Section 8.14, (c) secure the obligations of Seller and to enable the provision of remedies to Purchaser pursuant to Section 8.15, and (d) secure the obligations of Seller and to enable the provision of remedies to Purchaser pursuant to Section 8.16. Any amounts remaining in the Escrow Reserve after satisfaction of the obligations hereof shall be disbursed in accordance with the escrow agreement.

 

 

10.6     Exclusive Remedy. From and after the Closing, the sole and exclusive remedy for any breach or failure to be true and correct, or alleged breach or failure to be true and correct, of any representation or warranty or any covenant or agreement in this Agreement, shall be indemnification in accordance with this Section 10. For avoidance of doubt, it is acknowledged that the indemnification of Purchaser under Section 10 shall not be limited to the Escrow Reserve and Purchaser shall be entitled to recover from and to be indemnified for all Damages regardless of the value or amount of the Escrow Reserve. Notwithstanding the foregoing, this Section 10.6 shall not operate to limit the rights of the parties to seek equitable remedies (including specific performance or injunctive relief).

 

ARTICLE 11

 

TAXES

 

 

11.1     Payment of Sales, Use or Similar Taxes. Purchaser and Seller shall each be responsible for any federal, state, local or foreign sales Taxes applicable in their respective jurisdictions to the Purchased Assets and Purchased Shares and all other applicable sales, use, value-added, stamp, documentary, filing, recording, real estate transfer, stock transfer, gross receipts, registration, duty, securities transactions, transfer or similar fees or Taxes or governmental charges (including real property transfer gains Taxes, UCC3 filing fees, FAA, ICC, DOT, real estate and motor vehicle registration, title recording or filing fees and other amounts payable in respect of transfer filings) in connection with the transactions contemplated by this Agreement (other than Taxes measured by or with respect to income imposed on Seller or its Affiliates) (collectively, “Transfer Taxes”). Purchaser shall file all necessary documents (including all Tax Returns) with respect to all such amounts in a timely manner. To the extent Seller has any Liability for any Transfer Taxes under this Section 11.1.

 

 

11.2      Cooperation on Tax Issues.

 

 

(a)       Purchaser and Seller shall furnish or cause to be furnished to each other, as promptly as practicable, such information and assistance relating to the Purchased Assets, Purchased Shares and the Assumed Liabilities as is reasonably necessary for the preparation and filing of any Tax Return, claim for refund or other filings relating to Tax matters, for the preparation for any Tax audit, for the preparation for any Tax protest, for the prosecution or defense of any suit or other proceeding relating to Tax matters. Such cooperation shall include the retention and (upon the other party’s request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Seller agrees (A) to retain all books and records with respect to Tax matters pertinent to Subsidiary relating to any taxable period beginning at or before the

 

 

	  	
51

	  

 

 

  

  

  

 

Closing Date until the expiration of the statute of limitations (and, to the extent notified by Purchaser, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any Governmental Body, and (B) to give the other party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other party so requests, Seller shall allow the other party to take possession of such books and records.

 

 

(b)       Seller and Purchaser further agree, upon request, to use their reasonable efforts to obtain any certificate or other document from any Governmental Body or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby). The reasonable costs incurred by Seller and Purchaser during the process of obtaining said certificate or other document shall be borne by the party that benefits of the mitigation, reduction or elimination of any Tax.

 

 

11.3      Tax Refunds; Tax Benefit Amounts.

 

 

(a)       Any refunds or credits of Taxes of Subsidiary attributable to any period (or portion thereof) ending at or before the Closing Date (a “Pre-Closing Tax Period”) which is an Excluded Asset shall be for the benefit of, and promptly paid to, Seller to the extent not reflected as an asset in the balance sheet or the Total Consideration; provided, however, if the Tax being refunded shall have been paid by Purchaser or an Affiliate of Purchaser after the Closing Date, such refund shall be paid to Purchaser or such Affiliate. Purchaser shall forward or reimburse to Seller any such Tax refunds or credits received within five (5) days after receipt thereof (but no earlier than two (2) Business Days after the deposit of any such payment made by check has cleared) reduced by any reasonable out-of-pocket expenses incurred by Purchaser or Subsidiary to collect such refund or credit.

 

 

(b)       Neither Purchaser nor any of its Affiliates shall amend, refile, revoke or otherwise modify any Tax Return or Tax election of Subsidiary with respect to a Pre-Closing Tax Period without the prior written consent of Seller. Neither Purchaser nor any of its Affiliates shall make or cause Subsidiary to make an election under Section 338 of the Code or any comparable or similar election under any provision of state, local or foreign Tax Law with respect to the Purchased Shares.

 

 

11.4       Tax Matters.

 

 

(a)       Tax Indemnification.

 

	  	
(i)

	
Except as otherwise contemplated in this Agreement, Seller hereby agrees to be liable for and to indemnify and hold Purchaser harmless from and against all Taxes of Subsidiary for any taxable period ending at or before the Closing Date.

	  	
(ii)

	
Seller hereby agrees to be liable for and to indemnify and hold Purchaser harmless from and against all Excluded Liabilities set forth in Sections 2.4(b) and 2.4(c).

 

	  	
52

	  

 

 

 

  

  

  

 

 

	  	
(iii)

	
Purchaser hereby agrees to be liable for and to indemnify and hold Seller harmless from and against all Taxes of Subsidiary for any taxable period beginning after the Closing Date.

	  	
(iv)

	
Purchaser hereby agrees to be liable for and to indemnify and hold Seller harmless from and against all Assumed Liabilities set forth in Sections 2.3(g) and 2.3(h).

 

 

(b)       Tax Audits.

 

	  	
(i)

	
If notice of any action, suit, investigation or audit with respect to Taxes of Subsidiary (a “Tax Claim”) shall be received by either party for which the other party may reasonably be expected to be liable pursuant to this Agreement, the notified party shall notify the other party in writing of such Tax Claim. Failure to notify the other party of the Tax Claim will not relieve the other party of any liability that it may have to the notified party, except to the extent that the other party demonstrates that the defense of such Tax Claim is prejudiced by the notified party’s failure to give such notice.

	  	
(ii)

	
To the extent the Tax Claim relates to a Pre-Closing Tax Period, Seller will have the right to assume control of the defense of the Tax Claim with counsel of their choice at any time within thirty (30) days after Seller has received notice of the Tax Claim. If Seller assumes such defense, Subsidiary and/or Purchaser shall have the right to participate in the defense thereof and to employ at their own expense counsel reasonably acceptable to Seller separate from the counsel employed by Seller. So long as Seller has assumed and is conducting the defense of the Tax Claim in accordance with the above, Subsidiary and/or Purchaser will not consent to the entry of any judgment on or enter into any settlement with respect to the Tax Claim without the prior written consent of Seller. In the event that Seller refuse to assume the defense of the Tax Claim as provided above, Subsidiary and/or Purchaser may defend against the Tax Claim; provided, however, that neither Subsidiary nor Purchaser may consent to the entry of any judgment on or enter into any settlement with respect to the Tax Claim without the prior written consent of Seller.

 

(c)       Disputes. Any dispute as to any matter covered hereby shall be resolved by Purchaser and Seller in good faith. The fees and expenses of such accounting firm shall be borne equally by Seller, on the one hand, and Purchaser on the other. If any dispute with respect to a Tax Return is not resolved prior to the due date of such Tax Return, such Tax Return shall be filed in the manner which the party responsible for preparing such Tax Return deems correct.

 

 

	  	
53

	  

 

 

  

  

  

 

(d)       Time Limits. Any claim under this Section 11.4  may only be made until (a) the third anniversary of the filing of the relevant Tax Return with respect to any Tax for a Pre-Closing Period filed with a United States federal, state or local Taxing Authority, and (b) the relevant statute of limitations under applicable Tax Law for any Tax Return filed with a foreign Taxing Authority.

 

ARTICLE 12.

 

MISCELLANEOUS AND GENERAL

 

 

12.1     Modification or Amendment. Subject to any limitations under applicable Law, at any time prior to the Closing Date, this Agreement may be amended, modified or supplemented in writing by the parties hereto, by action of the board of directors of the respective parties.

 

 

12.2     Waiver of Conditions. The conditions to each of the parties’ obligations to execute this Agreement are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable Law.

 

 

12.3     Counterparts. This Agreement may be executed in any number of counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement.

 

 

12.4     Governing Law; Waiver of Jury Trial; Specific Performance.

 

 

(a)       Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION, EXCEPT FOR MATTERS INVOLVING CORPORATE AFFAIRS OF MEDIVISION.

 

 

(b)       Waiver. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 12.4.

 

 

	  	
54

	  

 

 

 

  

  

  

 

(c)       Injunctive Relief. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which such party is entitled at law or in equity

 

 

12.5     Dispute Resolutions. The parties shall use their best efforts to resolve amicably any and all disputes, controversies, claims or differences (“Disputes”) relating to this Agreement. If either party gives written notice to the other party that a Dispute has arisen, and the parties are unable within five (5) business days of such written notice to resolve the Dispute, then it shall be resolved by binding arbitration, which shall be administered by the American Arbitration Association (“AAA”) and shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the “Rules”), as such Rules may be amended from time to time, with the hearing locale to be Sacramento, California. A single neutral arbitrator (the “Arbitrator”) shall preside over the arbitration and decide the Dispute (the “Decision”). The AAA shall use its normal procedures pursuant to the Rules for selection of the Arbitrator. The Decision shall be binding, and the prevailing party may enforce such decision in any court of competent jurisdiction. The parties shall cooperate with each other in causing the arbitration to be held in as efficient and expeditious a manner as practicable and, in this connection, to furnish such documents and make available such Persons as the Arbitrator may request. All proceedings and decisions of the Arbitrator shall be maintained in confidence, to the extent legally permissible, and shall not be made public by any party or any Arbitrator without the prior written consent of all parties to the arbitration, except as may be required by law. The expenses of the arbitration shall be borne by the non-prevailing party to the arbitration, including, but not limited to, the cost of experts, evidence and legal counsel.

 

 

12.6     Notices. Any notice, request, instruction or other document to be given hereunder by any party to the others shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, or by facsimile:

 

 

	
if to Purchaser:

	
Ophthalmic Imaging Systems

221 Lathrop Way, Suite 1

Sacramento, CA 95815

Attn: Gil Allon, Chief Executive Officer

Phone: 916-646-2020

Fax: 916-646-0207

Email: Info@oisi.com

 

 

	  	
55

	  

 

 

 

  

  

  

 

	
with a copy to:

	
Troutman Sanders LLP

The Chrysler Building

405 Lexington Avenue

New York, NY 10174

Attn: Henry I. Rothman, Esq.

Phone: 212-704-6000

Fax: 212-704-6288

Email: henry.rothman@troutmansanders.com

 

	
if to Seller:

	
MediVision Medical Imaging, Ltd.

Hermon Building, Industrial Park

PO Box 45

Yokneam Elit 20692, Israel

Attn: Noam Allon, President & CEO

Phone: 011-972-4-989-4884

Fax: 011-972-4-989-4883

Email: general@medivision-ois.com

 

	
with a copy to:

	
Eitan-Mehulal Law Group

10 Abba Eban Blvd.

PO Box 2081

Herzlia 46120, Israel

Attn: Nir Weissberger

Tel +972-9-972-6000

Fax +972-9-972-6001

Email: nirweissberger@israelilaw.com

 

	
If to Escrow Agent:

	
Stephen L. Davis

c/o Davis & Leonard LLP

8880 Cal Center Drive

Suite 180

Sacramento, CA 95826

Tel (916) 362-9000

Fax (916) 362-9066

Email: sdavis@davisandleonard.com

 

 

or to such other persons or addresses as may be designated in writing by the party to receive such notice as provided above. Any notice, request, instruction or other document given as provided above shall be deemed given to the receiving party upon actual receipt, if delivered personally; three (3) Business Days after deposit in the mail, if sent by registered or certified mail; upon confirmation of successful transmission if sent by facsimile (provided that if given by facsimile such notice, request, instruction or other document shall be followed up within one (1) Business

 

 

	  	
56

	  

 

 

  

  

  

 

Day by dispatch pursuant to one of the other methods described herein); or on the next Business Day after deposit with an overnight courier, if sent by an overnight courier.

 

 

12.7     Entire Agreement. This Agreement (including any exhibits hereto), Seller Disclosure Letter and Purchaser Disclosure Letter (the “Confidentiality Agreement”) constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties both written and oral, among the parties, with respect to the subject matter hereof.

 

 

12.8     No Third-Party Beneficiaries. OIS and MediVision hereby agree that their respective representations, warranties and covenants set forth herein are solely for the benefit of the other party hereto, in accordance with and subject to the terms of this Agreement and this Agreement is not intended to, and does not, confer upon any Person other than the parties hereto any rights or remedies hereunder, including, without limitation, the right to rely upon the representations and warranties set forth herein. The representations and warranties in this Agreement are the product of negotiations among the parties hereto and are for the sole benefit of the parties hereto. Any inaccuracies in such representations and warranties are subject to waiver by the parties hereto without notice or liability to any other Person. In some instances, the representations and warranties in this Agreement may represent an allocation among the parties hereto of risks associated with particular matters regardless of the knowledge of any of the parties hereto. Consequently, Persons other than the parties hereto may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.

 

 

12.9     Obligations of OIS and of MediVision. Whenever this Agreement requires a Subsidiary of OIS to take any action, such requirement shall be deemed to include an undertaking on the part of OIS to cause such Subsidiary to take such action. Whenever this Agreement requires a Subsidiary of MediVision to take any action, such requirement shall be deemed to include an undertaking on the part of MediVision to cause such Subsidiary to take such action.

 

 

12.10   Transfer Taxes. All transfer, documentary, sales, use, stamp, registration and other such Taxes and fees (including penalties and interest) incurred in connection with the execution of this Agreement shall be paid when due.

 

 

12.11   Severability. The provisions of this Agreement shall be deemed severable, and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

 

 

12.12   Interpretation; Construction.

 

 

 

	  	
57

	  

 

 

  

  

  

 

(a)       Headings, etc. The table of contents and headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section or Exhibit, such reference shall be to a Section of or Exhibit to this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

 

 

(b)       No Presumption. The parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

 

 

(c)       Disclosure Letters. Each party hereto has or may have set forth information in its respective Disclosure Letter in a section thereof that corresponds to the section of this Agreement to which it relates. The fact that any item of information is disclosed in a Disclosure Letter to this Agreement shall not be construed to mean that such information is required to be disclosed by this Agreement.

 

 

(d)       Calculation of Time Period. When calculating the period of time before which, within which or following which, any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.

 

 

(e)       Dollars. Any reference in this Agreement to $ shall mean U.S. dollars.

 

 

(f)        Exhibits/Schedules. The Exhibits and Schedules to this Agreement are hereby incorporated and made a part hereof and are an integral part of this Agreement. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any matter or item disclosed on one Schedule shall be deemed to have been disclosed on each other Schedule if its relevance to such other Schedules is clearly apparent. Disclosure of any item on any Schedule shall not constitute an admission or indication that such item or matter is material or would have a Material Adverse Effect. No disclosure on a Schedule relating to a possible breach or violation of any Agreement, Law or Order shall be construed as an admission or indication that breach or violation exists or has actually occurred. Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein shall be defined as set forth in this Agreement.

 

 

(g)       Reflected On or Set Forth In. An item arising with respect to a specific representation or warranty shall be deemed to be “reflected on” or “set forth in” a balance sheet or other financial statement, to the extent any such phrase appears in such representation or warranty, if (a) there is a reserve, accrual or other similar item underlying a number on such balance sheet or other financial statement that related to the subject matter of such representation that is clearly apparent, (b) such item is otherwise specifically set forth on the balance sheet or other financial statement or (c) is specifically set forth in the notes thereto.

 

 

	  	
58

	  

 

 

 

  

  

  

 

12.13   Assignment. This Agreement shall not be assignable by operation of law or otherwise. Any purported assignment in violation of this Agreement is void.

 

 

	  	
59

	  

 

 

 

  

  

  

 

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the date first written above.

 

 

	  	
OPHTHALMIC IMAGING SYSTEMS

 

	 	
By:

	/s/ Gil Allon	
 

	 	 	
Name: Gil Allon 

Title: Chief Executive Officer

 

	 	 By:  	/s/ Ariel Shenhar 	  
	  	 	
Name: Ariel Shenhar

Title: Chief Financial Officer

 

 

	 	
MEDIVISION MEDICAL IMAGING LTD.

 

	 	
By:

	/s/ Noam Allon   	
 

	 	 	
Name: Noam Allon

Title:  President and Chief Executive Officer

	 	 
	AGREED AS TO ARTICLE 10 BY ESCROW AGENT 	 
	 	 
	
By:

	
/s/ Stephen Davis 

	
 

	 
	 	
Name:      Stephen Davis

Title:        Escrow Agent

	 

 

 

 

	  	
S-1

	  

 

 

    

    

    

 Exhibit A 

 

 BILL OF SALE 

 

 THIS BILL OF SALE (this “Bill of Sale”) is made and delivered as of October ___, 2009 by and between MediVision Medical Imaging Ltd., an Israeli company ("Seller"), and Ophthalmic Imaging Systems, a California corporation ("Purchaser"). 

 

 Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Asset Purchase Agreement (as defined below). 

 

 WHEREAS, Seller and Purchaser have entered into that certain Asset Purchase Agreement dated as of June 24, 2009 (the “Asset Purchase Agreement”), the terms of which are incorporated herein by reference, which provides, among other things, for the sale and assignment by Seller to Purchaser of the Purchased Assets. 

 

 NOW, THEREFORE, in consideration of the mutual promises contained in the Purchase Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Seller, and subject to the terms and conditions of the Purchase Agreement: 

 

 1.           Seller does hereby bargain, sell, grant, assign, transfer, convey and deliver unto Purchaser, and its successors and assigns, forever, and subject to Sections 5.2, 5.3 and 5.4 of the Asset Purchase Agreement, all of Seller’s right, title and interest in and to the Purchased Assets listed on Exhibit A hereto (the “Sale Assets”), free and clear of any Liens or Liabilities other than the Permitted Exceptions and the Assumed Liabilities, TO HAVE AND TO HOLD such Sale Assets with all appurtenances thereto, unto Purchaser, and its successors and assigns, for its use forever. 

 

 2.           Seller covenants and agrees to execute and deliver, at the request of Purchaser, such further instruments of transfer and assignment and to take such other action as Purchaser may reasonably request to more effectively consummate the assignments contemplated by this Bill of Sale. 

 

 3.           This Bill of Sale shall inure to the benefit of and be binding upon Seller and the Purchaser and their respective successors and assigns and such successors and permitted assigns will be deemed to be a party hereto for all purposes hereof.  None of Seller or Purchaser may assign, delegate or otherwise transfer either this Bill of Sale or any of the rights, interests or obligations hereunder without the prior written approval of the other; provided, however, that Purchaser may assign this Bill of Sale to one or more of its Affiliates. 

 

 3.           Nothing in this Bill of Sale, express or implied, is intended to or shall be construed to modify, expand or limit in any way the terms of the Purchase Agreement.  To the extent that any provision of this Bill of Sale conflicts or is inconsistent with the terms of the terms of the Purchase Agreement, the Asset Purchase Agreement shall govern. 

 

 4.           This Bill of Sale is executed and delivered pursuant to the Asset Purchase Agreement. 

    

    

    

 5.           Assignments under this Bill of Sale are subject to, and shall confirm with, Section 12.13 of the Asset Purchase Agreement 

 

 6.           This Bill of Sale shall be governed by, and construed in accordance with, the laws of the State of California, as applied to contracts made and performed entirely in such State without giving effect to the choice of law principles of such State that would require or permit the application of the laws of another jurisdiction.  The Federal and State courts sitting in Sacramento County, California shall have exclusive jurisdiction over all disputes and other matters relating to the interpretation and enforcement of this Bill of Sale, and Seller shall expressly consent to and agree not to contest such exclusive jurisdiction. 

 [signature page follows] 

    

    

    

 IN WITNESS WHEREOF, and intending to be legally bound hereby, Seller have caused this Bill of Sale to be executed and delivered as of the day and year first above written. 

 

 

	    	
 PURCHASER: 

 

 OPHTHALMIC IMAGING SYSTEMS 

 

	   	
 By: 

	 /s/ Gil Allon 	
 

	   	
 Name: Gil Allon 

 Title: Chief Executive Officer 

 

	   	  By:   	 /s/ Ariel Shenhar  	    
	    	
 Name: Ariel Shenhar 

 Title: Chief Financial Officer 

 

 

	   	
 SELLER: 

 

 MEDIVISION MEDICAL IMAGING LTD. 

 

	   	
 By: 

	   	
 

	   	
 Name: 

 Title:   

    

    

    

 EXHIBIT A 

 

 List of Assets 

 

	
 1.   

	
 Fixed assets listed in the Schedule 2.1(l), attached to the Asset Purchase Agreement. 

 

	
 2.   

	
 37,800 shares par value 1.00 Euro, which constitute 63% of the total shares of CCS Pawlowski GmbH, which are registered under the name of Ophthalmic Imaging Systems as of January 5, 2009. 

 

	
 3.   

	
 Distributors’ Agreements as defined in Schedule 2.1(a) attached to the Asset Purchase Agreement, listed as numbers 1-4. 

  

	
 4.   

	
 IRI Project: 

	
 4.1   

	
 IRI Patent in accordance with Schedule 2.1(d) attached to the Asset Purchase Agreement, Document 2. 

	
 4.2   

	
 IRI know-how. 

    

    

    

 Exhibit B 

      

 ASSIGNMENT AND ASSUMPTION AGREEMENT 

 

 This Assignment and Assumption Agreement (this "Agreement") is made as of June 24, 2009 by and between MediVision Medical Imaging Ltd., an Israeli company ("Seller"), and Ophthalmic Imaging Systems, a California corporation ("Purchaser"). 

 

 Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Asset Purchase Agreement (as defined below). 

 

 R E C I T A L S: 

 

  WHEREAS, Seller and Purchaser are parties to an Asset Purchase Agreement, dated as of June 24, 2009 (the “Asset Purchase Agreement”), providing for, among other things, the sale by Seller to Purchaser of the Purchased Assets and the assumption by Purchaser of the Assumed Liabilities; and 

 

 WHEREAS, in accordance with the terms of the Asset Purchase Agreement, Seller and Purchaser have agreed to enter into this Agreement, providing for (a) the assignment from Seller to Purchaser of all of Seller’s right, title and interest in, under and to the Purchased Agreements, the agreements listed in Exhibit A hereto, and those assets set forth in Section 2.1 of the Asset Purchase Agreement (collectively, the “Assumed Assets”), from and after the Closing, on and subject to the terms of this Agreement, and (b) the acceptance by Purchaser of such assignment and the assumption by Purchaser of the Assumed Liabilities. 

 

 NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows: 

 

 1.           Assignment.  In accordance with and subject to the terms of the Asset Purchase Agreement, Seller hereby sells, assigns, transfers and conveys to Purchaser, to the extent that such are legally assignable and any necessary consents to assignment have been obtained, all of Seller’s right, title and interest in, under and to the Assumed Assets, free and clear of any Liens or Liabilities other than the Permitted Exceptions and Assumed Liabilities, from and after the Closing. 

 

 2.           Acceptance and Assumption.  In accordance with and subject to the terms of the Asset Purchase Agreement, Purchaser hereby (a) purchases and accepts the assignment, transfer and conveyance, to the extent that such are legally assignable and necessary consents to assignment have been obtained, of Seller’s right, title and interests in, under and to the Assumed Assets; and (b) unconditionally and irrevocably assumes, undertakes and agrees to be bound by and promptly to perform or cause to be performed the terms, conditions and covenants, agreed to be done, kept and performed by Seller with respect to the Assumed Liabilities and arising under the Assumed Assets including but not limited to pay, satisfy, perform and discharge in full, as and when due, and release and discharge Sellers and their successors and assigns completely and forever from, all of the Assumed Liabilities.  Notwithstanding anything to the contrary herein or in any other writing delivered in connection herewith, Purchaser will not assume any Excluded Liabilities. 

    

    

    

 3.           Further Actions.  Each of the parties hereto covenants and agrees to execute and deliver, at the request of any other party hereto, such further instruments of transfer, assignment and assumption and to take such other action as such other party may reasonably request to more effectively consummate the assignments and assumptions contemplated by this Agreement. 

 

 4.           Conflict with Asset Purchase Agreement.  Nothing in this Agreement, express or implied, is intended to or shall be construed to modify, expand or limit in any way the terms of the Asset Purchase Agreement.  To the extent that any provision of this Agreement conflicts or is inconsistent with the terms of the terms of the Asset Purchase Agreement, the Asset Purchase Agreement shall govern. 

 

 5.           Parties in Interest.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. 

 

 6.           Counterparts.  This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, and all of which together shall constitute one and the same instrument. 

 

 7.           Governing Law.  This Agreement and the rights and obligations of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State of California, as applied to contracts made and performed entirely in such State without giving effect to the choice of law principles of such State that would require or permit the application of the laws of another jurisdiction.  The Federal and State courts sitting in Sacramento County, California shall have exclusive jurisdiction over all disputes and other matters relating to the interpretation and enforcement of this Agreement, and Seller and Purchaser shall expressly consent to and agree not to contest such exclusive jurisdiction. 

 

 8.           Succession and Assignment.  Subject to the immediately following sentence, this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, and such successors and permitted assigns will be deemed to be a party hereto for all purposes hereof.  No party may assign, delegate or otherwise transfer either this Agreement or any of the rights, interests or obligations hereunder without the prior written approval of all other parties. 

 

 [signature page follows] 

    

    

    

 IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the date first written above. 

 

 

 

	    	
 PURCHASER: 

 

 OPHTHALMIC IMAGING SYSTEMS 

 

	   	
 By: 

	 /s/ Gil Allon 	
 

	   	
 Name: Gil Allon 

 Title: Chief Executive Officer 

 

	   	  By:   	 /s/ Ariel Shenhar  	    
	    	
 Name: Ariel Shenhar 

 Title: Chief Financial Officer 

 

 

	   	
 SELLER: 

 

 MEDIVISION MEDICAL IMAGING LTD. 

 

	   	
 By: 

	   	
 

	   	
 Name: 

 Title:   

    

    

    

 Exhibit C 

 ESCROW AGREEMENT 

 

 This Escrow Agreement (this “Agreement”) is made and entered into this 24 th day of June, 2009, by and among OPHTHALMIC IMAGING SYSTEMS (the “ Purchaser ”), MEDIVISION MEDICAL IMAGING LTD. (the “ Seller ”), and STEPHEN L. DAVIS , ESQ. (the “ Escrow Agent ”). Capitalized terms used in this Agreement not otherwise defined herein shall have their respective meanings given to them in the Asset Purchase Agreement (as defined below). 

 

 R E C I T A L S 

 

 WHEREAS, the Purchaser and the Seller are parties to that certain Asset Purchase Agreement, dated June 24, 2009 (the “ Asset Purchase Agreement ”); and 

 

 WHEREAS, the Purchaser and the Seller have agreed that (i) 3,793,452 shares (the “ Initial Escrow Shares ”) of common stock, no par value (the “ Common Stock ”), of the Purchaser beneficially owned by the Seller will be deposited into an escrow account on the closing date (the “ PA Closing Date ”) of the sale by the Purchaser to U.M AccelMed, Limited Partnership (“ AccelMed ”) of 9,633,228 shares of Common Stock and warrants to purchase 3,211,076 shares of Common Stock pursuant to that certain Purchase Agreement, dated June __, 2009, between the Purchaser and AccelMed and (ii) 2,000,000 shares (the “ Remaining Escrow Shares ,” and collectively with the Initial Escrow Shares, the “ Escrow Shares ”) of Common Stock will be deposited in an escrow account on the closing date (the “ APA Closing Date ”) of the Asset Purchase Agreement, in each case pursuant to Section 10.5 of the Asset Purchase Agreement; provided , that the Seller shall have no obligation to deposit the Remaining Escrow Shares into the Escrow Account (as defined below) if the Seller has satisfied and discharged all of its OCS Debt and Obligations (as defined in the Asset Purchase Agreement) prior to the APA Closing Date. 

 

 NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties agree as follows: 

 

 ARTICLE 1 

 ESCROW SHARES 

 

 1.1     Delivery .     (i) On the PA Closing Date, the Seller shall deposit with the Escrow Agent, to be held by the Escrow Agent pursuant to the terms of this Agreement, certificates representing the Initial Escrow Shares and the stock powers executed in blank with respect to such Initial Escrow Shares (the “ Initial Escrow Materials ”) and the Escrow Agent shall deliver the Purchaser on or about such date, a written confirmation of his receipt of the Initial Escrow Materials; and 

 

 (ii) on the APA Closing Date, the Seller shall deposit with the Escrow Agent, to be held by the Escrow Agent pursuant to the terms of this Agreement, certificates representing the Remaining Escrow Shares and the stock powers executed in blank with respect to such Remaining Escrow Shares (the “ Remaining Escrow Materials ”) and the Escrow Agent shall deliver the Purchaser on or about such date, a written confirmation of his receipt of the Initial Escrow Materials; provided , that the Seller shall have no obligation to deposit the Remaining Escrow Shares into the Escrow Account (as defined below) if the Seller has satisfied and discharged all of its OCS Debt and Obligations prior to the APA Closing Date. The Remaining Escrow Materials shall be deposited together with an irrevocable power of attorney authorizing the Escrow Agent to release the Remaining Escrow Shares from the Pledge (as defined below), to file a release notice with the Israeli Registrar of Pledges and to take any other reasonable action required to implement such release (without the need for any further consent from the Lenders (as defined below)) immediately prior to any event on which the Escrow Agent shall be entitled to dispose the Remaining Escrow Shares pursuant this Agreement, resulting in the Remaining Escrow Shares being free and clear of any third party charge or rights (as shall be evidenced in writing Israeli Registrar of Pledges’ printout); provided , further that, in the case of (i) and (ii) above, the Seller may, at any time and in its sole discretion (subject to the 

    

    

    

 terms herein), replace the Escrow Shares with an autonomous bank guarantee of a reputable Israeli or US bank, the identity of which should be approved in advance by the Purchaser (the “ Guarantee ”) reflecting the Fair Market Value (as defined herein) of the Escrow Shares, by depositing the Guarantee with the Escrow Agent, whereupon the Escrow Agent shall confirm receipt of such Guarantee to the Purchaser and shall immediately release the appropriate amount of the Escrow Shares to the Seller. The terms and conditions of the Guarantee shall be subject to the prior approval of the Purchaser, which shall not be unreasonably withheld, provided, further that the terms and conditions of the Guarantee (including the conditions and procedure for the realization of the Guarantee) shall not be less favorable to the Purchaser than the rights and remedies granted to the Purchaser and/or the Purchaser’s ability to recover from the Escrow Property (as defined below) under this Agreement. The Escrow Property shall be held in escrow until the earlier of (i) date of the termination of the Asset Purchase Agreement, or (ii) the later of (A) the 24 month anniversary of the date of the APA Closing Date or (B) the satisfaction and discharge by the Seller of the OCS Debt and Obligations (the “ Termination Date ”). 

 

 For purposes of this Section 1.1(ii) “ Pledge ” shall mean that certain security and pledge rights granted to the Lenders under that certain convertible loan agreement between the Purchaser, Seller, the Lenders and Delta Trading And Services (1986) Ltd, dated January 12, 2009 with respect to an aggregate of 4,837,391 shares of Common Stock of the Purchaser which are owned by MediVision, out of which 2,000,000 shares of Common Stock of the Purchaser are pledged to the Lenders and “ Lenders ” shall mean Noam Allon, Gill Allon and Ariel Shenhar. 

 

 1.2        Receipt; Escrow Account . The Escrow Agent hereby agrees (i) to accept delivery of the Escrow Shares or the Guarantee (subject to the Purchaser’s approval set forth above) and process such delivery based on instructions given to the Escrow Agent and (ii) to hold the Escrow Shares or the Guarantee in an escrow account (the “ Escrow Account ”) in accordance with the terms and conditions of this Agreement and for the uses and purposes stated herein. The Escrow Account, unless it holds cash, shall not be an interest bearing account. Cash, if any, held in the Escrow Account shall be invested in a money market account mutually acceptable to the Purchaser and the Seller, as specified in written instructions from the Purchaser and the Seller to the Escrow Agent. In no event shall any part of the Escrow Shares or the Guarantee be commingled with any other securities held by the Escrow Agent. The Escrow Account shall not be subject to any lien or attachment by any creditor of either party hereto and shall be used solely for the purposes set forth in this Agreement and the Asset Purchase Agreement. The Escrow Shares or the Guarantee and any amounts in the Escrow Account shall not be used by the Escrow Agent to offset any obligations that either the Purchaser or the Seller might have to the Escrow Agent or any of its affiliates, whether under this Agreement or under any other agreement or arrangement in any other capacity, nor shall the Escrow Agent have any lien or claim upon the assets in any form whatsoever. 

 

 1.3        Distribution and Dividends . All cash dividends on the Escrow Shares, when and if received by the Escrow Agent, shall be remitted and paid by the Escrow Agent directly to the Seller and shall not be subject to this Agreement. Additional shares of capital stock issued on or with respect to the Escrow Shares as a result of stock splits, stock dividends or other similar capital adjustments to, or recapitalizations on, the Escrow Shares or all other distributions (other than cash dividends) thereof (the “ Additional Distributions ”) shall be delivered directly by the Purchaser (through its stock transfer agent) to the Escrow Agent and shall not be issued to the Seller, and shall be retained in the Escrow Account subject to the terms hereof and shall constitute Escrow Property. The Escrow Agent hereby agrees to accept delivery of the Additional Distributions and to hold the Additional Distributions in accordance with the terms and conditions of this Agreement. The Escrow Agent shall deliver the Purchaser on or about such date, a written confirmation of his receipt of the Additional Distributions. The Seller shall be treated as the beneficial owner of the Escrow Property for tax purposes. 

 

 1.4        Voting of Shares . All voting rights with respect to the Escrow Shares shall be exercised by the Seller. 

 

    

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 1.5        Transferability; Sale . The interest of the Seller in the Escrow Shares and any other property comprising the Escrow Account (the “ Escrow Property ”) shall not be offered for sale, sold, pledged, assigned, transferred (including by operation of law) or otherwise disposed of, directly or indirectly, or be subject to a transaction which would have the same effect, or be subject to any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Escrow Property, whether any such aforementioned transaction is to be settled by delivery of the Escrow Property, in cash or otherwise, so long as such Escrow Property is held by the Escrow Agent hereunder; provided , however , that the Escrow Agent may sell, transfer, or otherwise dispose of the Escrow Property pursuant to Sections 2.1 and 2.2 hereof, and as otherwise provided in this Agreement. 

 

 1.6       Nothing in this Agreement shall limit or restrict the Seller from entering into an agreement with AccelMed and the other parties named therein for the election of directors of the Company and vote of the Escrow Shares and the performance of its obligations thereunder. 

 

 ARTICLE 2 

 DISBURSEMENTS 

 

 2.1        Disbursement Request . At any time prior to the Termination Date, upon written certification by the Purchaser to the Escrow Agent (i) that an amount is due and payable by the Seller to the Purchaser pursuant to Section 10.2 of the Asset Purchase Agreement (an “ Indemnification Claim Amount ”) and such amount has not been paid, (ii) that an amount is due and payable by the Seller to the Purchaser pursuant to Section 8.14 of the Asset Purchase Agreement (an “ Elop Claim Amount ”), and such amount has not been paid; (iii) that an amount in is due and payable by the Seller to the Purchaser pursuant to Section 8.15 of the Asset Purchase Agreement (an “ United Mizrachi Bank Claim Amount ”) and such amount has not been paid, or (iv) that an amount is due and payable by the Seller to the Purchaser pursuant to Section 8.16 of the Asset Purchase Agreement (an “ OCS Claim Amount ”), and such amount has not been paid, the Purchaser (on its own behalf or on behalf of any other Person to whom such amount is to be paid) may request a disbursement, subject to Article 3 hereof, from the Escrow Account in payment of such amount, or a portion thereof, if any, by delivering to the Escrow Agent and the Seller a written notice (a “ Purchaser Payment Request ”) which specifies the Indemnification Claim Amount, the Elop Claim Amount, the United Mizrachi Bank Claim Amount or the OCS Claim Amount, as the case may be, and which may include instructions to the Escrow Agent to sell Escrow Shares on behalf of the Seller in customary broker transactions on the OTC Bulletin Board (or wherever the Common Stock is then listed or quoted for trading) in an amount equal to the Indemnification Claim Amount, the Elop Claim Amount, United Mizrachi Bank Claim Amount or the OCS Claim Amount, as the case may be, and to wire the proceeds from such sale to the account of the Purchaser set forth in the Purchaser Payment Request. Each Purchaser Payment Request shall be accompanied by a representation to the Escrow Agent that a copy of such Purchaser Payment Request has been provided to the Seller. 

 

 2.2        Distribution of the Escrow Fund . 

 (a)        Disbursements upon Joint Instructions . The Escrow Agent will distribute the Escrow Property, or any portion thereof, having a Fair Market Value equal to the Indemnification Claim Amount, the Elop Claim Amount, the United Mizrachi Bank Claim Amount, or the OCS Claim Amount, as the case may be (or such lesser amount of Escrow Property as is then held in the Escrow Account), in accordance with, and upon receipt of, the instructions of the Purchaser and the Seller. 

 

 (b)        Disbursements upon Purchaser Payment Request . (1) Subject to the provisions of Article 3, on the tenth (10th) Business Day after receipt from the Purchaser of a Purchaser Payment Request with respect to an Indemnification Claim, the Escrow Agent will distribute to the Purchaser (for the account of the Purchaser or another Person, as the case may be) the Escrow Property, or any portion thereof, (i) in the case of Escrow Shares, having a Fair Market Value equal to the Indemnification Claim Amount, or (ii) in the case of cash, equal to the Indemnification Claim Amount (or in each case, such lesser amount of Escrow Property as is then held in the Escrow Account). 

 

    

 3 

    

 (2)       Subject to the provisions of Section 3.2, on the tenth (10th) Business Day after receipt from the Purchaser of a Purchaser Payment Request with respect to an Elop Claim Amount, the Escrow Agent will distribute to the Purchaser (for the account of the Purchaser or another Person, as the case may be) the Escrow Property, or any portion thereof, (i) in the case of Escrow Shares, having a Fair Market Value equal to the Elop Claim Amount, or (ii) in the case of cash, equal to the Elop Claim Amount (or in each case, such lesser amount of Escrow Property as is then held in the Escrow Account); and following such distribution to the Purchaser, the Escrow Agent shall distribute to the Seller, if applicable, Escrow Shares in an amount equal to 602,409 minus the shares used to satisfy the Elop Claim Amount. 

 (3)       Subject to the provisions of Section 3.2, on the tenth (10th) Business Day after receipt from the Purchaser of a Purchaser Payment Request with respect to an United Mizrachi Bank Claim Amount, the Escrow Agent will distribute to the Purchaser (for the account of the Purchaser or another Person, as the case may be) all of the Escrow Shares or cash from the sale of all the Escrow Shares. 

 

 (4)       Subject to the provisions of Section 3.2, on the tenth (10th) Business Day after receipt from the Purchaser of a Purchaser Payment Request with respect to an OCS Claim Amount, the Escrow Agent will distribute to the Purchaser (for the account of the Purchaser or another Person, as the case may be) the Escrow Property, or any portion thereof, (i) in the case of Escrow Shares, having a Fair Market Value equal to the OCS Claim Amount, or  (ii) in the case of cash, equal to the OCS Claim Amount (or in each case, such lesser amount of Escrow Property as is then held in the Escrow Account); and following such distribution to the Purchaser, the Escrow Agent shall distribute to the Seller, Escrow Shares, if applicable, in an amount equal to either (A) if the APA Closing has occurred, 4,337,349 minus the shares used to satisfy the OCS Claim Amount, or (B) if the APA Closing has not occurred 2,337,349 minus the shares used to satisfy the OCS Claim Amount. 

 

 (c)        Disbursement upon Lapse of twelve (12) Months . On the twelve (12) month anniversary of the date of this Agreement, the Escrow Agent will distribute to the Seller 426,847 Escrow Shares. 

 

 (d)        Disbursement upon Lapse of twenty-four (24) Months . On the twenty-four (24) month anniversary of the date of this Agreement, the Escrow Agent will distribute to the Seller 426,847 Escrow Shares. 

 

 (e)        Disbursement upon Lapse of Termination Date . On the Termination Date, and subject to sixty (60) days prior written notice to the Purchaser and the Seller (a “ Termination Notice ”), the Escrow Agent will distribute to the Seller the remaining portion of the Escrow Account, or the undisputed portion thereof (if any) in the event that (i) the Purchaser has delivered any Purchaser Payment Request prior to or subsequent to the delivery of the Termination Notice, (ii) any portion of the Escrow Account is subject to a Payment Dispute (as defined below) at such time, (iii) or in the event that the Purchaser has made any other valid claim in return to the termination notice delivered to it. 

 

 It is hereby understood and agreed that any Escrow Shares to be distributed or sold, as the case may be, pursuant to this Section 2.2 that are subject to a pledge agreement in favor of Agfa Gevaert N.V., Delta Trading and Services (1986), Ltd., Gil Allon, Noam Allon, Ariel Shenhar and/or Yuval Shenhar, if to be distributed to the Seller, will be distributed prior to any other Escrow Shares that are not subject to such pledge agreement, and if to be distributed to the Purchaser or sold by the Escrow Agent will be distributed or sold after all other Escrow Shares not subject to such pledge agreement are distributed or sold. 

 

    

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 ARTICLE 3 

 DISPUTE RESOLUTION 

 

 3.1        Payment Disputes . 

 

 (a)       If, after delivery of a Purchaser Payment Request with respect to an Indemnification Claim Amount, the Seller desires to challenge the amount of the disbursement requested therein (a “ Payment Dispute ”), then the Seller must do so prior to the tenth (10th) Business Day after a Purchaser Payment Request is given by delivering to the Escrow Agent and the Purchaser written notice (a “ Dispute Notice ”) describing in reasonable detail the amount of the requested distribution to be challenged and the basis for such challenge. If the Seller delivers a Dispute Notice or any dispute otherwise arises as to the terms of the Escrow Account, the Purchaser and the Seller shall attempt to resolve the dispute and if they are unable to do so within thirty (30) days after delivery of the Dispute Notice, the dispute shall be resolved in accordance with the dispute resolution procedures contained in Section 12.5 of the Asset Purchase Agreement. If, upon final resolution of the dispute, either by mutual agreement or in accordance with the dispute resolution procedures contained in Section 12.5 of the Asset Purchase Agreement, all or a portion of the Escrow Property is determined to be payable to the Purchaser, upon receipt of (i) a joint written direction of the Purchaser and the Seller, or (ii) any final non-appealable Order directing the Escrow Agent as to the disposition of such dispute, then the Escrow Agent shall promptly release to the Purchaser the amount so determined/directed. Each party shall be responsible for its own fees and expenses in connection with a dispute of any Indemnification Claim Amount, Elop Claim Amount, United Mizrachi Bank Claim Amount or OCS Claim Amount, provided that if the final non-appealable Order direct the payment to the Purchaser of the all or substantially all the amount claimed by the Purchaser under the Purchaser Payment Request, then the Seller shall reimburse the Purchaser for all expenses incurred by the Purchasers in connection with a dispute under this Section 3.1.   

 

 (b)       It is hereby agreed and acknowledged by the Seller that any and all Purchaser Payment Requests with respect to Elop Claim Amount, United Mizrachi Bank Claim Amount or OCS Claim Amount shall not be subject to the dispute procedure set fort in Section 3.1(a) above and the Escrow Agent shall distribute Escrow Property, or any portion thereof on the tenth (10th) Business Day after receipt from the Purchaser of a Purchaser Payment Request, as set forth in Section 2.2(b). 

 

 3.2        Valuation of Escrow Property . 

 

 (a)        Fair Market Value . For purpose of this Agreement, 

 

 (i) the Fair Market Value of each Escrow Share in connection with an Indemnification Claim Amount, an United Mizrachi Bank Claim Amount and an OCS Claim Amount shall be the volume weighted average price based on the closing price per share of the Purchaser’s Common Stock on the OTC Bulletin Board (or wherever the Common Stock is listed or quoted for trading on the date in question) for the thirty-day trading period ending on the day prior to the date on which the claim was “finally determined” (as defined below), with appropriate adjustment to take into account any stock split, reverse stock split, stock dividend, recapitalization or other similar capital adjustments with respect to the Purchaser’s Common Stock 

 

 (ii) the Fair Market Value of each of the Escrow Shares in connection with an United Mizrachi Bank Claim Amount shall be $0.41522 per share, with appropriate adjustment to take into account any stock split, reverse stock split, stock dividend, recapitalization or other similar capital adjustments with respect to the Purchaser’s Common Stock, and 

 

 (iii) the Fair Market Value of each Escrow Share for the purpose of providing the Guarantee shall be the volume weighted average price based on the closing price per share of the Purchaser’s Common Stock on the OTC Bulletin Board (or wherever the Common Stock is listed or quoted for trading on the date in question) for the thirty-day trading period ending on the day prior to the date of replacing the Escrow Shares with the Guarantee. 

    

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 For purposes of this Section 3.2, the date on which a claim was “finally determined” shall mean (a) in the case of Section 2.2(a), the payment date stated in the joint written instructions; (b) in the case of Section 2.2(b), the payment date stated in the Purchaser Payment Request; provided , however , that nothing in this Section 3.2(a) shall prejudice the right of any indemnified party to seek full indemnification for any Indemnification Claim Amount, Elop Claim Amount, United Mizrachi Bank Claim Amount, or OCS Claim Amount for which the Escrow Property is not the sole recourse pursuant to the Asset Purchase Agreement. Notwithstanding anything to the contrary herein, Escrow Property to be released shall be rounded to the nearest share. 

 

 (b)        Calculation . The Fair Market Value with respect to an Indemnification Claim Amount, a Elop Claim Amount or an OCS Claim Amount shall be calculated by the Purchaser within five (5) Business Days after the date on which a claim has been “finally determined” (as defined in Section 3.2(a) above), and the results of such calculation shall be provided to the Escrow Agent in writing signed by the Purchaser (the “ Calculation Notice ”) within such 5-day period. In no event shall the Escrow Agent be required to determine the Fair Market Value of the Escrow Property. The Calculation Notice shall specify (i) the Indemnification Claim Amount, the Elop Claim Amount or the OCS Claim Amount; (ii) the Fair Market Value of Escrow Property on a per share basis; and (iii) and the exact number of shares of Escrow Shares and the amount of other Escrow Property (if any) to be released from the escrow. 

 The Escrow Agent shall have no duty whatsoever to independently verify the accuracy of the calculations provided pursuant to this Sections 3.2(b)(1) or (2) and shall be entitled to rely on the calculation provided to the Escrow Agent by the Purchaser. 

 

 ARTICLE 4 

 ESCROW AGENT 

 

 4.1        Appointment . The Purchaser and the Seller hereby appoint the Escrow Agent to serve hereunder and the Escrow Agent hereby accepts such appointment and agrees to perform all duties which are expressly set forth in this Agreement. The Seller hereby acknowledges that the Escrow Agent also serves as outside legal counsel to the Purchaser, and shall continue to serve as counsel to Purchaser. Both Seller and Purchaser expressly agree to waive any conflicts of interest arising from the Escrow Agent’s role or performance of duties under this Agreement or as counsel to Purchaser. 

 

 4.2        Duties; Limitation of Liability of Escrow Agent . 

 

 (a)       The duties and responsibilities of the Escrow Agent hereunder shall be determined solely by the express provisions of this Agreement, and no other or further duties or responsibilities shall be implied. The Escrow Agent shall not have any liability under, nor duty to inquire into, the terms and provisions of any agreement or instructions, other than as outlined in this Agreement. It is understood and agreed that should any dispute arise with respect to the payment and/or ownership or right of possession of the Escrow Property, the Escrow Agent is authorized and directed to retain in its possession, without liability to anyone, all or any part of the Escrow Property until such dispute shall have been settled either by mutual agreement by the parties concerned or by the final decision of the arbitrators in accordance with the dispute resolution procedures contained in Section 12.5 of the Asset Purchase Agreement. 

 

 

 (b)       The Escrow Agent may rely and shall be protected in acting or refraining from acting upon any written notice, instruction or request furnished to it hereunder and believed by it to be genuine and to have been signed or presented by the proper party or parties. The Escrow Agent shall be under no duty to inquire into or investigate the validity, accuracy or content of such document. The Escrow Agent shall have no duty to solicit any items which may be due it hereunder. 

 

 (c)       The Escrow Agent shall not be liable for any action taken or omitted by it in good faith unless a court of competent jurisdiction determines that the Escrow Agent’s willful misconduct or gross negligence was the primary cause of any loss to the Purchaser or the Seller. 

    

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 (d)       The Escrow Agent shall not incur any liability for following the instructions herein contained or expressly provided for, or written instructions given jointly by the Purchaser and the Seller, or by the Purchaser (to the extent that the Seller was provided with the right to dispute a payment pursuant to an in accordance with Section 3.1 above). 

 

 (e)       In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands from any party hereto which, in its opinion, conflict with any of the provisions of this Agreement, it shall be entitled to refrain from taking any action and its sole obligation shall be to keep safely all property held in escrow until it shall be directed otherwise in writing by all of the other parties hereto or by a final order or judgment of a court of competent jurisdiction. 

 

 (f)        If, in the sole opinion and discretion of the Escrow Agent, a conflict or dispute arises, and as a result of that conflict or dispute the Escrow Agent is unable to perform his duties or resolve the conflict or dispute, then the Escrow Agent may refer the matter to private arbitration by another attorney. The Escrow Agent shall notify the parties of his decision to refer the matter to arbitration, and the parties promptly shall select an arbitrator. If the parties are unable to agree on an arbitrator, or cannot choose an arbitrator within 10 days of the Escrow Agent’s notification of a conflict or dispute, then the Escrow Agent may choose the arbitrator. The arbitrator shall be an attorney in the County of Sacramento, California, licensed to practice law in the State of California. Once the arbitrator has been chosen and assigned the dispute or conflict relating to the Escrow Agent’s duties, the parties shall promptly deliver to the arbitrator all arguments and materials necessary to assist the arbitrator in rendering a decision. The arbitrator may, and shall try to, resolve the dispute or conflict within twenty days of being chosen by the parties or Escrow Agent. The decision of the arbitrator shall be final and nonappealable. 

 

 4.3        Indemnification . The Purchaser and the Seller hereby agree to jointly and severally indemnify the Escrow Agent for, and to hold it harmless against any loss, liability or expense arising out of or in connection with this Agreement and carrying out its duties hereunder, including the costs and expenses of investigating or defending itself against any claim of liability, except in those cases where the Escrow Agent has been guilty of gross negligence or willful misconduct. The costs of enforcing this indemnity shall be paid by the Purchaser and the Seller if the Escrow Agent is determined by a court of competent jurisdiction to be the prevailing party; provided , that the Purchaser, on the one hand, and the Seller, on the other hand, shall each pay one-half of such costs. This right of indemnification shall survive the termination of this Agreement and the resignation of the Escrow Agent. 

 

 4.4        Compensation/Fees to Escrow Agent . The Escrow Agent has agreed to serve without compensation for his services hereunder. Notwithstanding the foregoing, the Escrow Agent shall be entitled to be reimbursed for all costs and expenses incurred in performing his duties hereunder, and shall be compensated for time spent as Escrow Agent at his then standard hourly rate by the Purchaser. 

 

 ARTICLE 5 

 OTHER PROVISIONS 

 

 5.1        Notices . Any notice or other document to be given hereunder by any party hereto to any other party shall be give in the manner required by Section 12.6 of the Asset Purchase Agreement. 

 

 5.2        Successor Escrow Agent . In the event the Escrow Agent becomes unavailable or unwilling to continue in its capacity herewith, the Escrow Agent may resign and be discharged from its duties or obligations hereunder by giving its resignation to the parties to this Agreement, specifying a date not less than thirty (30) calendar days following such notice date of when such resignation will take effect, provided that in no event shall the Escrow Agent resign prior to appointment of a successor to ensure that the Escrow Property shall consecutively be held in escrow under the terms herein during until the termination Date. The Purchaser will designate a successor escrow agent prior to the expiration of such period by giving written notice to the Escrow Agent and the Seller. In addition, the Purchaser may appoint, at any time prior to the termination Date, a successor escrow agent with the consent of the Seller, which consent shall not be unreasonably withheld. The Escrow Agent will promptly transfer the Escrow Property to such designated successor. The terms of this Agreement shall bind any successor escrow agent. 

    

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 5.3        Governing Law .   THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. 

 

 5.4        Representation and Warranties of the Purchaser and the Seller . Each of the Purchaser and the Seller hereby represents and warrants (i) that this Agreement has been duly authorized, executed and delivered on its behalf and constitutes its legal, valid and binding obligation and (ii) that the execution, delivery and performance of this Agreement does not and will not violate any applicable law or regulation. 

 

 5.5        Further Acts and Assurances . The parties agree to execute and deliver any and all documents and to take such further action as shall be reasonably required to effectuate the provisions of this Agreement. 

 

 5.6.       Counterparts . This Agreement may be executed in any number of counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement. 

 

 5.7        Amendment; Waiver . This Agreement may be amended or modified, and any of the terms, covenants, representations, warranties, or conditions hereto may be waived, only by a written instrument executed by the parties hereto, or in the case of a waiver, by the party waiving compliance. Any waiver by any party of any condition, or of the breach of any provision, term, covenant, representation, or warranty contained in this Agreement, in any one or more instances, shall not be deemed to be nor construed as further or continuing waiver of any such condition, or of the breach of any other provision, term, covenant, representation, or warranty of this Agreement. 

 

 5.8        Severability . The provisions of this Agreement shall be deemed severable, and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any person or any circumstance, is invalid or unenforceable, (i) a suitable and equitable provision shall be substituted therefor to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (ii) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction. 

 

 5.9        Integration . This Agreement and the Asset Purchase Agreement contain the entire understanding among the parties hereto with respect to the escrow contemplated hereby and supersedes and replaces all prior and contemporaneous agreements and understandings, oral or written, with regard to such escrow. 

 

 [Signature page follows] 

 

    

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 IN WITNESS WHEREOF, the parties have executed this Escrow Agreement as of the date first written above. 

 

	    	
 Purchaser: 

 

 OPHTHALMIC IMAGING SYSTEMS 

	    	
 By: 

	
 /s/ Gil Allon 

	    	    	
 Name: Gil Allon 

 Title: Chief Executive Officer 

	    	    
	    	
 By: 

	
 /s/ Ariel Shenhar 

	    	    	
 Name: Ariel Shenhar 

 Title: Chief Financial Officer 

	    	
 

	    	
 Seller: 

 

 MEDIVISION MEDICAL IMAGING LTD. 

 

	    	
 By: 

	
 /s/ Noam Allon 

	    	    	
 Name: Noam Allon 

 Title: President and Chief Executive Officer 

	    	
 

	    	
 Escrow Agent: 

 

	
 

	    	
 /s/ Stephen L. Davis, Esq. 

	    	
 Stephen L. Davis, Esq.  

 

 

 

    

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 Exhibit D

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