Document:

20-F

Exhibit 10.1  

Consent
of Independent Registered Public Accounting Firm

We hereby consent to the
incorporation by reference in the Registration Statements on Form S-8 (No. 333-10008 and
No. 333-13770), and Form F-3/A (No. 333-116044) of our report dated March 30, 2005, with
respect to the financial statements of BluePhoenix Solutions Ltd. included in this annual
report on Form 20-F for the year ended December 31, 2004. 

			

/s/ Ziv Haft
——————————————

Ziv Haft

Certified Public Accountants (Isr.)
BDO Member Firm

Tel-Aviv, Israel 
March 30,
2005EXHIBIT
4.28

BUSINESS TRANSFER AGREEMENT

THIS
BUSINESS TRANSFER AGREEMENT (this “Agreement”),
made and entered into as of August [dd], 2004, by and between Toyo Ink Mfg. Co., Ltd. (“Toyo”), a company incorporated under the
laws of Japan and having its principal office at 3-13, Kyobashi 2-chome,
Chuo-ku, Tokyo, 104-8377 Japan, and Top Image
Systems, Ltd. (“TIS”),
a company incorporated under the laws of Israel and having its principal office
at 2 Habarzel St. Ramat-Hahayal, Tel-Aviv, 69710 Israel. 

WITNESSETH :

	
  Whereas:
	
  TIS is a leading innovator
  of enterprise solutions for managing and validating the flow of information
  between an enterprise and its customers and employees;

	
   
	
   
	
   
	
   

	
  Whereas:
	
  Toyo is a Japanese
  exclusive distributor of products of TIS (the “ TIS Products”) pursuant to the Exclusive Software
  Distribution Agreement dated June 28 1996 between Toyo and TIS, as amended
  (the “OLD EDA”), and has been
  conducting business relating to TIS Products in Japan;

	
   
	
   
	
   
	
   

	
  Whereas:
	
  Toyo and TIS are desirous
  of transferring the complete business and assets of Toyo relating to TIS
  Products and related services, as further detailed herein and in Section
  2.1(a) (i) through 2.1(a)(viii) bellow (the “Transferred Business”) to TIS (the “Business Transfer”);

	
   
	
   
	
   
	
   

	
  Whereas:
	
  Toyo and TIS are desirous
  of terminating the OLD EDA, and TIS is interested in acquiring the
  Transferred Business in order to continue and expand its activity in Japan
  through TIS’ Japanese subsidiary, Top Imaging Systems Japan Co., Ltd. (“TISJ”);

	
   
	
   
	
   
	
   

	
  Whereas:
	
  TISJ will negotiate a
  sub-distributorship agreement with Toyo Officemation Inc. (“TOM”), a Japanese corporation, by which
  TOM will sell and distribute the TIS Products to the customers relating the
  Transferred Business in Japan;

NOW,
THEREFORE, the parties hereto hereby agree as follows: 

ARTICLE I

DEFINITIONS

1.1.     Interpretation.  The terms defined in this Agreement shall
mean and include the plural as well as the singular.  Pronouns of the masculine gender shall mean and include
corresponding words of the feminine and neuter gender, and vice versa.  References to Articles, Sections, Exhibits
and Schedules and subdivisions thereof shall, unless otherwise specifically set
forth, be references to the Articles of, Sections of, Exhibits and Schedules to
this Agreement and the subdivisions thereof, respectively.  The word “including” shall be deemed to be
followed by the words “without limitation.” 
A facsimile copy shall, unless otherwise specifically set forth, be
deemed to satisfy the requirement of “in writing,” “written” and so on. 

1.2.
     Headings. 
The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the interpretation of any of the terms or
provisions of this Agreement. 

ARTICLE II

SALE AND PURCHASE OF THE TRANSFERRED ASSETS

2.1.
     Sale and Purchase of the Transferred Assets.

	
  (a)
	
  At the Closing (as defined
  in Section 8.1 hereof), on the terms and subject to the conditions contained
  in this Agreement, Toyo shall sell and transfer to TIS and TIS shall
  purchase, on as-is-basis, the following assets with respect to the
  Transferred Business, the detailed of which are provided in Schedules
  2.1(a)(i) through 2.1(a)(viii) (collectively, the “Transferred Assets”) including:

	
   
	
  (i)
	
  the Japanese registered
  trademark “FormCatcher”, “FormCATCHER-Integra”, “FormOUT” and “AfterScan”.
  Toyo declares that there are no other registered trademarks relating to the
  Transferred Business aside from the above trademarks;

	
   
	
   
	
   

	
   
	
  (ii)
	
  the maintenance agreements
  and any other agreements regarding the TIS Products and related services
  between Toyo and its customers which are listed in Schedule 2.1(a)(ii),
  subject, where required, to obtaining the customers’ prior consent
  (“Transferred Agreements”);

- 2 -

	
   
	
  (iii)
	
  customer information
  regarding the Transferred Business which is listed in Schedule 2.1(a)(iii);

	
   
	
   
	
   

	
   
	
  (iv)
	
  Japanese language versions
  (localized versions) of the TIS Products and 
  its source codes thereof, which are listed in Schedule 2.1(a)(iv);

	
   
	
   
	
   

	
   
	
  (v)
	
  All intellectual property
  rights including copyright of customized and/or derivative software and any
  other material, know how and proprietary information regarding the TIS
  Products and related services, which are listed in Schedule 2.1(a)(v). Toyo
  declares that there are no other intellectual property rights used
  specifically for the conduct of Transferred Business which Toyo has right to
  assign. The intellectual property rights, which (i) are used in the conduct
  of the Transferred Business and are licensed to Toyo from third parties
  (except for standard software licenses generally available to the public) and
  (ii) the intellectual property rights which are jointly owned by Toyo with a
  third party and used specifically for the conduct of the Transferred
  Business, which Toyo does not have the right to assign are listed in Schedule
  2.1(a)(v)(i); It is clarified that Toyo is not required hereunder to include
  in the said schedules rights with respect to the trademark, trade name and
  other intellectual property rights generally used by other divisions of the
  Toyo and not specifically required for the conduct of the Transferred Business.

	
   
	
   
	
   

	
   
	
  (vi)
	
  catalogs and any and all
  the other sales promotion material of the TIS Products, which are listed in
  Schedule 2.1(a)(vi);

	
   
	
   
	
   

	
   
	
  (vii)
	
  goodwill of the
  Transferred Business; and

	
   
	
   
	
   

	
   
	
  (viii)
	
  fixed assets used solely
  for Transferred Business that TIS requested and Toyo agreed to transfer which
  are listed in Schedule 2.1(a)(viii).

Toyo
represents that the foregoing are all of the material assets used by Toyo for
the operation of the Transferred Business. In the event that an asset, which is
a material and inherent asset of the Transferred Business, should not appear in
Schedule 2.1 (a)(i) through 2.1(a)(viii) or Article 2.1 (a) except when TIS had
already made its clear written indication that such asset should not to be
transferred, TIS shall be entitled to require Toyo to transfer such asset to
TIS for no additional consideration and Toyo declares that it  shall transfer such asset to TIS accordingly.

- 3 -

(b)
     The parties hereto agree that TIS shall succeed
from Toyo, upon the Closing, solely the 
Transferred Agreements.  Toyo
represents that TIS does not succeed any outstanding obligations and
liabilities under the Transferred Agreements which are incurred by Toyo before
the Closing Date. TIS hereby agrees to accept and perform the Transferred
Agreements following the Closing. 

2.2.
     Purchase Price.  The parties hereto agree that the price for the Transferred
Assets (the “Upfront Purchase Price”)
is one million and five hundred thousand US dollars ($1,500,000), which shall
be paid by TIS to Toyo upon the Closing. Further, TIS agree to annually pay to
Toyo, in Japanese yen, the amount equivalent to five percent (5%) of the total
annual sales of TISJ in Japan derived from licensing of TIS Products and
customization to customers transferred to TISJ by Toyo for two (2) years from
the Closing (the “Annual Payment”,
“Payment Term”). The calculation
of the Annual Payment shall include income received by TISJ from licensing of
TIS Products and customization to customers transferred to TISJ by Toyo, by any
third party distributors or dealers. The Annual Payment shall be made within
sixty (60) days after the end of each twelve calendar months; provided,
however, that the Annual Payment regarding the period from January 1, 2006 to
August 31, 2006 shall be made within sixty (60) days after the end of August
31, 2006. The Annual Payment shall be made based solely on amounts collected
minus returns.  With respect to each
twelve (12) months calendar period, during the Payment Term, TIS shall provide
Toyo written reports specifying sales for each customer and the total sales and
annual financial statements of TIS and TISJ certified by a well-known firm of
independent certified public accountants. 
TIS shall also provide Toyo, upon request made not more than once per
year and no later than three (3) months following delivery of financial statements
for a year, with the information required by Toyo, necessary or appropriate to
certify the report and/or total annual sales of TISJ. Any reports and/or
information provided to Toyo hereunder shall be subject to the provisions of
Section 10.1 and Toyo shall not be entitled to make any use of such reports
and/or information other than for the purposes of this Section 2.2. TIS may
assign TISJ to pay such Annual Payment to Toyo on behalf of TIS. 

2.3.     Payment
of Upfront Purchase Price.  On the
Closing Date, TIS shall pay to Toyo the Upfront Purchase Price TIS shall remit
the Upfront Purchase Price to the following bank account of Toyo.  The remittance charge shall be borne by TIS. 

          Bank
and branch name: Mitsubishi-Tokyo Bank, Kyobashi branch

          Type
of account: current bank account (“toza yokin”) 

- 4 - 

          Number
of account: 2594302 

2.4.     Fulfilment
of Obligations.  TIS or TISJ as the
case may be, shall perform any and all obligations in accordance with Section
2.1(b) above except for those as separately agreed by Toyo and TIS.  

2.5.     Termination
of OLD EDA.  TIS and Toyo agree that
the OLD EDA shall be terminated upon the Closing and that notwithstanding the
provisions of the OLD EDA, there is no right or obligation between TIS and Toyo
other than as provided for herein. Notwithstanding the above, sections 7 and 8
of the OLD EDA shall survive termination.  

ARTICLE III

TREATMENET OF THE PURCHASE ORDER

3.1.
     Treatment of the Purchase Order.  Notwithstanding Section 2.4 hereof, with
respect to the sale of the TIS Products and the related services (including
customization, development and software solution of the TIS Products) (the
“Related Services”), which will be ordered by the customer from Toyo before the
Closing Date which are listed in Schedule 3.1 (including all the information
detailed in Section 3.1(a) hereto) and will be delivered by TISJ to the
ordering customer after the Closing Date;  

	
  (a)
	
  Toyo shall assign the
  Purchase Order to TIS or TISJ and TIS or TISJ shall be the seller and the
  supplier of such TIS Products and the Related Services subject to the
  ordering customer’s consent.  In this
  case, TIS or TISJ shall reimburse to Toyo the cost equivalent to gross cost
  of sales of such TIS Products and the Related Services, including the labor
  cost and the overhead cost, the amount of which shall be reasonably
  acceptable to TIS.  Toyo shall provide
  TIS with information relating to the process flow, period, total number of
  man-days, labor and unit cost and any additional information which is
  reasonably necessary for TIS to assess the cost associated with such TIS
  Products and Related Services. 
  Further, the Gross Profit, from selling and supplying such TIS
  Products and the Related Services shall be allocated on pro-rata basis
  according to the degree of the contribution to selling and supplying such TIS
  Products and the Related Services between Toyo and TIS.  

	
   
	
   

	
   
	
  The Gross Profit

	
   
	
  = (the total sales) – (the
  cost of goods sold including license fees, labor cost and customization).

- 5 -

	
  (b)

  	
  In the case that the
  ordering customer does not consent that TIS or TISJ will be the seller and
  the supplier of such TIS Products and Related Services, Toyo will be the
  seller and the supplier of such TIS Products and Related Services, and TIS
  shall reasonably cooperate with Toyo for such sale. Toyo shall pay TIS the
  cost equivalent to gross cost of sales of such TIS Products and Related
  Services, including the labor cost and the overhead cost, the amount of which
  shall be reasonably acceptable to Toyo. 
  TIS shall provide Toyo with information relating to the process flow,
  period, total number of man-days, labor and unit cost and any additional
  information which is reasonably necessary for Toyo to assess the costs
  associated with such TIS Products and Related Services. The Gross Profit from
  selling and supplying such TIS Products and the Related Services shall be
  allocated on pro-rata basis according to the degree of the contribution to
  selling and supplying such TIS Products and the Related Services between Toyo
  and TIS. 

	
   
	
   

	
  (c)
	
  In the case when TIS or
  TISJ designates TOM to be the seller and the supplier of such TIS Products
  and Related Services, Section 3.1(a) shall be applied mutatis mutandis.  In the case of this Section 3.1(c), TIS
  and TISJ shall be, jointly and severally liable with TOM, for the
  reimbursement of the costs to Toyo, as set forth in Section 3.1(b). 

	
   
	
   

	
  (d)
	
  The contribution of Toyo
  and TIS or TISJ shall be decided by mutual consultation between Toyo and TIS
  or TISJ separately on a case-by-case basis. 
  

	
   
	
   

	
  (e)
	
  Income derived from
  customers under the provisions of this Section 3.1 shall not be subject to
  the Annual Payment under Section 2.2 above. Prior to the Closing, Toyo shall
  provide TIS the estimation of the costs and fees with respect to Purchase
  Orders referred to in this Section and Transferred Agreements (i.e.
  maintenance fees) and appropriate adjustments and payments made. 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

4.1.      Representations
and Warranties of Toyo.  As of the date
hereof and the Closing Date, Toyo represents and warrants to TIS as follows: 

	
  (a)
	
  Incorporation and Valid
  Legal Existence of Toyo.  Toyo is a corporation duly
  organized and validly existing under the laws of Japan and has all necessary
  power and authority to own, lease and operate its assets and properties,
  including the Transferred Assets, and to carry on its business, including the
  Transferred Business, as presently conducted.

- 6 - 

	
  (b)
	
  Execution of and
  Performance under this Agreement.  Toyo has all necessary power
  and authority to execute and deliver this Agreement and to perform fully its
  obligations hereunder and to consummate the transactions contemplated
  hereby.  The execution and delivery of
  this Agreement by Toyo, the performance of the obligations of Toyo hereunder
  and the consummation of the transactions contemplated hereby on its part have
  been duly and validly authorized by the appropriate corporate actions of Toyo
  and does not conflict with the organizational or governing instruments of
  Toyo or any agreement or law to which Toyo is a party or by which Toyo or its
  assets are bound. 

	
   
	
   

	
  (c)
	
  Full
  Disclosure.  Neither this Agreement (including the
  Schedules attached hereto) nor any certificates made or delivered in
  connection herewith contain any untrue statement of a material fact. There is
  no material fact or information relating to the business, condition
  (financial or otherwise), affairs, operations, or assets connected to the
  Transferred Business that has not been disclosed to TIS by Toyo.  

	
   
	
   

	
  (d)
	
  No
  Breach.  Neither the execution and delivery of this
  Agreement nor compliance by Toyo with the terms and provisions hereof will
  conflict with, or result in a breach or violation of, any of the terms,
  conditions and provisions of: (i)  any
  judgment, order, injunction, decree, or ruling of any court or governmental
  authority, domestic or foreign, (ii) any agreement, contract, lease, license
  or commitment to which Toyo is a party or to which it is subject and which
  would impair the ability of Toyo to execute, deliver or perform this
  Agreement. The execution, delivery and compliance of Toyo with this Agreement
  will not  (a) give to others any
  rights, including rights of termination, cancellation or acceleration, in or with
  respect to any agreement, contract or commitment referred to in this
  paragraph, or to any of Toyo’s properties or (b) otherwise require the
  consent or approval of any person, which consent or approval has not
  heretofore been obtained (except for requirements of customer’s agreement as
  provided in this Agreement).  

	
   
	
   

	
  (e)
	
  Consents. No consent, approval, order, license,
  permit, action by, or authorization of or designation, declaration, or filing
  with any governmental authority on the part of Toyo is required that has not
  been, or will not have been, obtained by Toyo prior to the Closing in
  connection with the valid execution, delivery and performance of this
  Agreement. 

- 7 - 

	
  (f)

  	
  Ownership
  of Transferred Business. Toyo is the sole owner, free and clear of any rights of any third
  party, of all Transferred Assets.  

	
   
	
   

	
  (g)
	
  Contracts. Schedule 2.1(a)(ii) contains a true and
  complete list of all material contracts and agreements related to the
  Transferred Business, to which Toyo is a party or by which its property is
  bound and which TIS desired and agreed to be transferred and obligated by.
  Each of such contracts and agreements is in full force and effect, and
  neither Toyo nor, to the knowledge of Toyo, any other party thereto is in
  breach thereof. True and correct copies of all such contracts have been
  delivered to TIS. 

	
   
	
   

	
  (f)
	
  Debts to
  Employees. Toyo
  have paid, or will pay, until the Closing, all amounts due under any
  applicable law or agreement to the Seconded Employees until the Closing date
  and made the required provision with respect to any severance pay to be paid
  to the Seconded Employees upon termination of their services by Toyo,
  including all amounts due as salary and social benefits. 

	
   
	
   

	
  4.2.
	
  Representations and
  Warranties of TIS.  As of the date hereof and the Closing
  Date, TIS represents and warrants to Toyo as follows:

	
   
	
   

	
  (a)
	
  Incorporation and Valid
  Legal Existence of TIS.  TIS is a corporation duly organized and
  validly existing under the laws of Israel and has all necessary power and
  authority to own, lease and operate its assets and properties, including the
  Transferred Assets, and to carry on its business, including the Transferred
  Business, as presently conducted.

	
   
	
   

	
  (b)
	
  Execution of and
  Performance under this Agreement.  TIS has all necessary power
  and authority to execute and deliver this Agreement to which it is a party
  and to perform fully its obligations hereunder and to consummate the
  transactions contemplated hereby.  The
  execution and delivery by TIS of this Agreement to which it is a party, the
  performance of the obligations of TIS hereunder and the consummation of the
  transactions contemplated hereby on its part have been duly and validly
  authorized by the appropriate corporate actions of TIS and does not conflict
  with the organizational or governing instruments of TIS or any agreement or
  law to which TIS is a party or by which TIS or its assets are bound. 

	
   
	
   

- 8 -

	
  (c)

  	
  No Breach. 
  Neither the execution and delivery of this Agreement nor compliance by
  TIS with the terms and provisions hereof will conflict with, or  result in a breach or violation of, any of
  the terms, conditions and provisions of: (i) any judgment, order, injunction,
  decree, or ruling of any court or governmental authority, domestic or
  foreign, (ii) any agreement, contract, lease, license or commitment to which
  TIS is a party or to which it is subject and which would impair the ability
  of TIS to execute, deliver or perform this Agreement. The execution, delivery
  and compliance of TIS with this Agreement will not  (a) give to others any rights, including rights of termination,
  cancellation or acceleration, in or with respect to any agreement, contract
  or commitment referred to in this paragraph, or to any of TIS’s properties or
  (b) otherwise require the consent or approval of any person, which consent or
  approval has not heretofore been obtained (except for requirements of
  customer’s agreement as provided in this Agreement).

	
   
	
   

	
  (d)
	
  Consents. 
  No consent, approval, order, license, permit, action by, or
  authorization of or designation, declaration, or filing with any governmental
  authority on the part of TIS is required that has not been, or will not have
  been, obtained by TIS prior to the Closing in connection with the valid
  execution, delivery and performance of this Agreement. 

4.3.      Effect
of Due Diligence Review.  No due
diligence review conducted by any of the parties hereto shall affect in any
manner whatsoever the validity or effect of the representations and warranties
contained herein. 

4.4.
      Survival of Representations and
Warranties.

	
  (a)
	
  Each party hereto has the
  right to rely fully upon the representations and warranties of the other
  party contained in or made pursuant to this Agreement and its annexes and
  attachments.  All such representations
  and warranties shall survive the Closing for a period of two (2) year after
  the Closing Date (the “Survival Period”).

	
   
	
   

	
  (b)
	
  Any right pursuant to this
  Agreement with respect to a claimed breach of a representation or warranty
  shall expire at the end of the Survival Period, as set forth in Section
  4.4(a) above, of the relevant representation or warranty claimed to be
  breached unless, on or prior to such expiration date, written notice
  asserting such breach has been given to the party from whom indemnification
  or any other remedy is sought.

- 9 - 

ARTICLE V

ACTIONS TO OCCUR PRIOR TO CLOSING

5.1.
     Operation of Transferred Business.  Except as contemplated in this Agreement or
as otherwise approved by TIS in writing, during the period from the date hereof
to the Closing, Toyo shall conduct the Transferred Business only in the
ordinary course of its business and consistent with past practice. Toyo shall
promptly report to TIS any event that could have a material adverse effect on
the business, properties, or condition (financial or otherwise) of the
Transferred Business. 

5.2.
     Consents to Transfer of Agreements.  Toyo shall use  best efforts to obtain consents to the transfer of the
Transferred Agreements from the other parties thereto and to have all customers
for TIS Products and Related Services to agree to have the products and
services supplied directly by TiS/TISJ and/or TOM. 

5.3.
      Seconded Employees. 

	
  (a)
	
  Toyo shall second to TISJ
  Toyo’s employees and employees of TOYO MANAGEMENT SERVICE CO., LTD. (“TMS”),
  a wholly owned subsidiary of Toyo (the “Seconded Employees”) as set forth in
  Schedule 5.3 attached hereto, for two (2) years after the Closing Date,
  subject to the consent of such Seconded Employees and occurrence of the
  Closing. Toyo hereby represent that the Seconded Employees, to the best
  knowledge of Toyo, have agreed to their secondment to TISJ. The detailed
  terms and conditions of such secondment shall be provided in each secondment
  agreement to be entered into between Toyo and TISJ, and between TMS and TISJ,
  separately. 

	
   
	
   

	
  (b)
	
  TIS may recruit such
  employees, and Toyo shall not make any objections to TIS’ recruitment and
  shall reasonably cooperate with TIS in such efforts.  

	
   
	
   

	
  (c)
	
  TIS agrees to ensure that
  the terms and conditions of employment including, but not limited to, work on
  a regular day off, and working hours of the Seconded Employees shall be not
  unfavorable to employees compared to the current terms and conditions of
  employment thereof. 

	
   
	
   

	
  (d)
	
  Notwithstanding the
  provisions in Section 2.2 hereof, in the case that two (2) or more system
  engineers, who are seconded from Toyo to TISJ, out of Hiroyuki Ishibashi,
  Shingo Kado, Shinichi Nakao and Kouichi Suzuki, retire from or otherwise
  terminate their secondment with TISJ within twelve (12) months from the commencement
  date of their secondment for TISJ, TIS thereafter need not pay to Toyo the
  Annual Payment of five percent (5%) of the total annual sale of  TISJ as set forth in Section 2.2 hereof.

- 10 - 

	
  (e)

  	
  TIS may have any Seconded
  Employees return to Toyo and/or TMS by sending a three (3) month prior
  written notice to Toyo and/or TMS under the terms and conditions agreed with
  Toyo and/or TMS, and Toyo shall be obligated to accept any such employees
  from Toyo.  Section 5.3 (d) above
  shall not be affected by such return provided that none of such returned
  employees shall be deemed to be one of the retired or terminated employees
  under Section 5.3(d), and TIS’ obligations in respect of the Annual Payment
  as set forth in Section 2.2 hereof shall not change.

	
   
	
   

	
  (f)
	
  TIS shall pay and bear the
costs and expenses (including, without limitation, salary, bonuses and
benefits) incurred with respect to the Seconded Employees (the “Seconded
Employees Costs”). Toyo shall provide TIS with the current costs of the
Seconded Employees separately and in accordance with the letter provided to
Mr. Nakar.  TIS need not pay any
margin or commission to Toyo.   It is
the intention of both parties that the salary level of the seconded employees
shall not be affected by their secondment to TISJ.  Toyo agrees that the average of total base salaries of Seconded
Employees which is controllable by Toyo (inclusive of bonuses and monthly
salaries but exclusive of any other costs such as overtime wages, pension and
other social benefits) (the “Base Salaries”) will  not be increased by more than seven percent (7%) per annum and
(ii) the Base Salaries of each Seconded Employees will not be increase by
more than twenty percent (20%) per annum.   
TIS agrees that the amount of the Base Salaries may be increased
without a consent of TIS or TISJ in the case that the increase is a result of
(i) governmental legislation or regulation, (ii) Toyo’s personnel policy or
system, including the promotion systems that applies to the entire personnel
of Toyo, or (iii) agreement with a labor union of Toyo that applies to the
entire personnel of Toyo.  The
increase of the Base Salaries resulting from any other events shall be made
only with the prior consent of TIS or TISJ. 
It is clarified that all payment shall relate solely to the period
commencing on the secondment date and that in no event shall TIS be requested
to make any payments on account of employment or service periods prior to
that date.  

ARTICLE VI

CONDITIONS PRECEDENT TO TIS’ OBLIGATION

The
obligation of TIS to consummate the transactions contemplated by this Agreement
is subject to the satisfaction of each of the following conditions: 

- 11 - 

6.1
     Accurate Representations and Warranties.  All representations and warranties of Toyo
contained in this Agreement shall be true and accurate in all material aspect
as of the Closing Date.  

6.2
     Performance by Toyo.  Toyo shall have performed and complied with all agreements,
covenants and conditions required by this Agreement to be performed and complied
with by it at or prior to the Closing.  

6.3
     Permits and Consents.  The consents and permits from any governmental agency or
otherwise required by any Japanese law or regulations, if any, shall have been
obtained.   

6.4
     Customer Consent. Toyo shall make the commercial
best efforts to obtain customers’ consents to the transfer of Transferred
Agreements to TISJ after signing this Agreement.  

6.5
     No Injunction. 
No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction that prohibits the
consummation of the transaction contemplated by this Agreement.  

ARTICLE VII

CONDITIONS PRECEDENT TO TOYO’S OBLIGATION

The
obligation of Toyo to consummate the transactions contemplated by this
Agreement is subject to the satisfaction of each of the following conditions: 

7.1.
     Accurate Representations and Warranties.  All representations and warranties of TIS
contained in this Agreement shall be true and accurate in material aspect as of
the Closing Date.  

7.2.
     Performance by TIS.  TIS shall have performed and complied with all agreements,
covenants and conditions required by this Agreement to be performed and complied
with by it at or prior to the Closing.  

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

- 12 - 

ARTICLE VIII

CLOSING

8.1.      Time and Place of the
Closing.  The closing process of the
transactions contemplated hereunder (the “Closing”)
shall take place at the office of Toyo, commencing at 10:00 a.m. on September
1st, 2004, Tokyo time, or such other time, date or place as may be agreed upon
between the parties hereto (the “Closing Date”).  Subject to the completion of the actions set
forth in Section 8.2 below, the transfer of the Transferred Business and the
Transferred Assets shall be deemed to have taken place as at 00:01 a.m. of the
Closing Date. 

8.2.       Actions at the Closing.  At the Closing, the parties hereto shall
take the following actions: 

	
  (a)
	
  Toyo shall
  deliver to TIS all the business documents and electronic documents and/or
  data required to consummate the transaction and complete and accurate copies
  of such corporate books and records including accounting of Toyo with respect
  to the Transferred Business as TIS reasonably requests including the
  following documents:

	
   
	
  (i)
	
  Duly
  executed Deed of Transfer of all Transferred Assets; 

	
   
	
  (ii)
	
  Original
  copies of all the Transferred Agreements, for which Toyo has obtained consent
  from the other party prior to the Closing; 

	
   
	
  (iii)
	
  Copies of
  all the notices of assignment approved by the customers  and status report of  all consents and refusals of customers TIS
  has agreed to assume responsibility for; 

	
   
	
  (iv)
	
  CD-ROM
  including Japanese language versions of TIS Products; 

	
   
	
  (v)
	
  All notices
  and documents required to perfect the assignment and registration in the name
  of TIS of any intellectual property included in Section 2.1(a)(v);

	
   
	
  (vi)
	
  A hard copy
  of each item of the promotional materials listed in Schedule 2.1(a)(vi) or
  all reproducible copies of such promotional materials, if any; and 

	
   
	
  (vii)
	
  The
  estimations under Section 3.1(e).

	
  (b)

  	
  TIS shall
  pay the Upfront Purchase Price to Toyo; and 

	
   
	
   

	
  (c)
	
  such other
  actions as Toyo or TIS may reasonably request in order to consummate the
  transactions contemplated under this Agreement. 

- 13 - 

ARTICLE IX

COVENANTS

9.1.
     Post Closing Actions.   At any time and from time to time after the
Closing, Toyo and TIS shall take such further actions (and execute such
documents) as are reasonably necessary or appropriate to consummate the
transfer of the Transferred Assets and Transferred Business from Toyo to TIS
and the transactions contemplated by this Agreement. Toyo shall use its best
efforts to receive the consent of KK Ricoh to the assignment of Toyo’s rights
to TIS pursuant to the licensing agreement dated December 1, 1999 and the
software support agreement dated February 20, 2003. 

ARTICLE X

SECRECY AND NON-COMPETITION

10.1.
    Secrecy. 

	
  (a)
	
  The parties hereto agree
  to maintain, and cause their officers, directors, statutory auditors, agents,
  employees, advisors (including legal counsels, tax experts, certified public
  accountants and other professional advisors) (collectively, the “Representatives”) to maintain, any
  information (including all written, electronic or oral information and
  material which is provided, directly or indirectly, by either party to the
  other party) (collectively, the “Information”) in confidence and to use the
  Information for the sole and exclusive purpose of executing the parties
  respective obligations pursuant to this Agreement.  Each party agrees not to disclose or reveal to any person
  (other than the Representatives) any information with respect to the Business
  Transfer or the terms, conditions or other facts relating thereto or the
  status thereof, or the fact that the Information has been made available to
  them and their Representatives, without the prior written consent of the
  other party.  

	
   
	
   

	
   
	
  Information shall include
  any and all information disclosed under by either party to the other party
  under the Letter of Intent dated April 14, 2004 entered into by Toyo and TIS
  (the “LOI”) and any information
  or reports disclosed pursuant to Section 2.2 above. 

	
   
	
   

	
   
	
  The restrictions herein
  concerning use and disclosure shall not apply to any Information which:

- 14 - 

	
   
	
  (i)
	
  at or prior to the time of
  its disclosure to the receiving party is or was in the public domain; 

	
   
	
   
	
   

	
   
	
  (ii)
	
  subsequent to the time of
  its disclosure to the receiving party, becomes part of the public domain
  other than by publication or other means, except by breach of this provision
  by such receiving party or its Representatives;  

	
   
	
   
	
   

	
   
	
  (iii)
	
  subsequent to its
  disclosure to the receiving party, becomes or is made available to the
  receiving party by a third party who is not under any obligation of
  confidentiality with respect to such Information; or 

	
   
	
   
	
   

	
   
	
  (iv)
	
  is or becomes required to
  be disclosed by the receiving party by operation of law or statute or
  regulation, including the rule of the relevant stock exchange.

	
   
	
   
	
   

	
  (b)
	
  The confidentiality
  obligations under this Section 10.1 shall remain in effect even after the
  termination of this Agreement for two (2) years thereafter. 

	
   
	
   

	
  (c)
	
  Each party hereto agree
  that all Information provided by the other party in any form whatsoever shall
  remain such providing party’s sole property. 
  Upon the request of the providing party, the receiving party shall
  promptly return to the providing party the Information, including any and all
  copies thereof, or data derived therefrom. 

	
   
	
   

	
  (d)
	
  The parties hereto agree
  that any press release or public announcement of the Business Transfer shall
  be made by each party only as agreed by Toyo and TIS separately. 

	
   
	
   

	
  (e)
	
  Toyo and TIS hereby acknowledge
  that as Toyo and TIS are public companies and are subject to strict rules and
  regulation regarding disclosure of information to the public, any disclosure
  or publication regarding this Agreement their execution or their content
  should be coordinated with both parties prior to any such disclosure.  

10.2.
    Non-competition.  Toyo shall not engage in any business competing with TIS Products
and/or Services relating to TIS Products actually to be offered by TIS or by
TISJ for two (2) years from the Closing of the Business Transfer. “TIS
Products” and “Services relating to TIS Products” herein shall mean automated
data capture solutions that improve enterprise business process by integrating
data from multiple sources and of different types, such as invoices, freight
and shipping bills, purchase orders and others. Such solutions seamlessly
deliver the extracted data to enterprise applications such as document and
content management, ERP or CRM.

- 15 -

ARTICLE XI

INDEMNIFICATION

11.1.
     Indemnity by Toyo.  Toyo shall indemnify, defend and hold
harmless TIS from and against any and all damages, losses, costs and expenses
incurred by TIS, based upon, arising out of or in connection with the breach of
any representation or warranty, or the non-performance partial or total, of any
covenant or obligation or agreement of Toyo contained in this Agreement.  

11.2.
     Indemnity by TIS.  TIS shall indemnify, defend, and hold
harmless Toyo from and against any and all damages, losses, costs and expenses
incurred by Toyo, based upon, arising out of or in connection with the breach
of any representation or warranty, or the non-performance, partial or total, of
any covenant or obligation or agreement of TIS contained in this Agreement. 

11.3
     Limitation of Liability.  Toyo and TIS agree that Toyo shall in no
event bear any obligation or liability, including without limitation, indemnity
as set forth in Section 11.1 above, no more than the amount of one million and
five hundred thousand US dollars ($1,500,000) with respect to this Agreement or
the transactions contemplated hereby. 
Toyo and TIS agree that other than as expressly provided for herein,
neither party has made or is making any representations and warranties to the
other party regardless any provision of the applicable laws.  In no event shall either party be liable to
the other party for any indirect, incidental, special, consequential, exemplary
or punitive damages nor for any manner of economic loss, such as but not
limited to lost profits, without regard to whether such party shall have been
advised of the possibility of such damages. 

ARTICLE XII

TERMINATION

12.1.
     Automatic Termination.  If the Closing does not take place on or
before December 31, 2004, unless otherwise agreed in writing between the
parties hereto through good faith discussions, this Agreement shall
automatically terminate as of December 31, 2004. 

- 16 - 

12.2.
     Effect of Termination.  If this Agreement shall terminate pursuant
to Section 12.1 above, such termination shall be without cost or liability to
any party other than cost or liability for breach of any representation,
warranty, covenant or agreement contained in or made pursuant to this
Agreement.  Articles I, X, XI, XII, XIII
and XIV hereof shall survive the termination of this Agreement. 

ARTICLE XIII

GENERAL PROVISIONS

13.1.
     Notices. 
Any notice or other communication required or permitted to be given
under this Agreement shall be in the English language and in writing and shall
be delivered personally, transmitted by facsimile (followed by confirmation
delivered by registered and express mail or registered and express air mail, if
applicable) or sent by registered and express mail (or registered and express
air mail, if applicable), postage prepaid, and shall be deemed given when so
delivered personally, or if transmitted by facsimile, one (1) business day
after the date of such facsimile (subject to subsequent confirmation by mail as
provided above), or if mailed, five (5) business days after the date of mailing,
to the parties at the following addresses (or to such other address for a party
as shall be specified by like notice from such party): 

	
   
	
  (i)
	
  if to TIS to:

	
   
	
   
	
   
	
   

	
   
	
   
	
   
	
  Attention:

	
   
	
   
	
   
	
  Telephone:

	
   
	
   
	
   
	
  Facsimile:

	
   
	
   
	
   
	
   

	
   
	
  (ii)
	
  if to Toyo to:  

	
   
	
   
	
   
	
   

	
   
	
   
	
   
	
  Toyo Ink Mfg. Co., Ltd.

	
   
	
   
	
   
	
  3-13, Kyobashi
  2-chome  

	
   
	
   
	
   
	
  Chuo-ku, Tokyo 104-8377

	
   
	
   
	
   
	
  Japan

	
   
	
   
	
   
	
  Attention:

	
   
	
   
	
   
	
  Telephone:

	
   
	
   
	
   
	
  Facsimile:

- 17 -

13.2.
      Payment Method.  Except as otherwise provided in this
Agreement, all payments under this Agreement shall be made by wire-transfer (denshin-sokin) of the relevant amount in
either Japanese yen or US dollars to a bank account in Japan to be designated
by the receiving party; provided that the receiving party shall designate such
bank  account and notify the paying
party of it in writing no later than five (5) days prior to the date of the
relevant transfer. TIS and Toyo further agree that payment of the Upfront
Purchase Price as set forth in Section 2.2 hereof shall be in US Dollars and
payment of the Annual Payment of five percent (5%) of the total annual sale of
TISJ as set forth in Section 2.2 hereof shall be in Japanese yen. 

13.3.      Default
Interest.  Any amount payable under
this Agreement, but not paid when due, shall bear interest the rate of six
percent (6%) per annum, which shall accrue on a daily basis until such amounts
are paid. 

13.4.
     Right of Set-Off.  Nothing contained in this Agreement shall
prohibit or restrict any party from setting off (a) its claims against the
other party and (b) its obligations owed to such other party in connection with
the transactions contemplated hereby and thereby, in accordance with applicable
laws. 

13.5.
       Waivers and Amendments.  This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived only by a written instrument signed by the parties or, in the
case of a waiver, the party waiving compliance.  No delay on the part of any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof, nor shall any waiver
on the part of any party of any right, power or privilege hereunder, nor any
single or partial exercise of any right, power or privilege hereunder, preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder.   

13.6.
     Remedies. 
Except as specifically provided for otherwise in this Agreement, the
rights and remedies provided herein and therein are exclusive of any rights or
remedies which any party may otherwise have. 

13.7.
     Binding Effect.  This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective successors and permitted assigns. 

13.8.
     Disclaimer of Partnership or Agency.  Nothing contained or implied in this
Agreement shall constitute or be deemed to constitute a partnership between the
parties nor shall this Agreement constitute any party as the legal
representative, agent or fiduciary of any other, nor shall any party have the
right or authority to assume, create or incur any commitment, liability or
obligation of any kind, express or implied, against or in the name of or on
behalf of any other party.  

.  

- 18 - 

13.9.
     Taxes Directly Related to Transaction.  Each party shall bear the stamp duty payable
with respect to the originals of this Agreement to be retained by such party.
Except as otherwise specifically set forth in this Agreement, each party shall
bear any taxes which such party is obligated to pay to the relevant tax
authorities in respect of the execution of this Agreement and in respect of the
transactions contemplated hereunder and thereunder pursuant to applicable laws.

13.10.
     Expenses. 
Except as otherwise specifically set forth in this Agreement, Toyo and
TIS shall bear their respective expenses incurred in connection with the
preparation, execution and performance of this Agreement and the transactions
contemplated hereby or thereby, including all fees and expenses of agents,
representatives, counsel and accountants, interpreters and consultants. 

13.11.
     Counterparts.  This Agreement may be executed in 2 or more counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same instrument. 

13.12.
     Assignment.  This Agreement or any right or obligation hereunder may not be
transferred or assigned by any party without the prior written consent of the
other party. 

13.13.     
Separability.  Any term or
provision of this Agreement that is invalid or unenforceable shall be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement.   

13.14.
     Entire Agreement.  This Agreement constitute the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and all other previous oral or written agreements or
understandings or other arrangements of any kind with respect to the said
subject matter (including, the LOI and the Memorandum dated April 13, 2004)
shall be cancelled and superseded completely by this Agreement as of the date
hereof.   

13.15.
     Force Majeure.  A party shall not be liable to the other party hereto for any
loss, injury, delay, damage, or other casualty suffered or incurred by the
latter due to strikes, riots, storms, fires, explosions, acts of God, war,
action of any government or any other cause which is beyond the control of the
former, and any failure or delay by each party in the performance of its
obligations under this Agreement due to one or more of the foregoing causes
shall not be considered a breach of this Agreement. 

ARTICLE XIV

LANGUAGE, GOVERNING LAW AND DISPUTE RESOLUTION

- 19 - 

14.1.
     Language. 
This Agreement shall be executed in the English language which shall be
the official text hereof.  Any
translation of this Agreement into any other language shall be used only for
the purpose of convenience and shall not affect the interpretation of the
provisions of this Agreement. 

14.2.
     Governing Law and Dispute Resolution.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.  Any disputes or claims arising out of or in
relation to this Agreement or the breach hereof shall be finally settled under
the Rules of Conciliation and Arbitration of the International Chamber of
Commerce by one or more arbitrators appointed in accordance with those
Rules.  The arbitration proceedings
shall be conducted in New York City, New York, U.S.A.  

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

	
   
	
  TOYO INK MFG. CO., LTD. 

	
   
	
   

	
   
	
   

	
   
	
  /s/ Masaru Suzuki 

	
   
	
  

	
   
	
  Masaru Suzuki

	
   
	
  Director of Finance

	
   
	
   

	
   
	
  TOP IMAGE SYSTEMS, LTD. 

	
   
	
   

	
   
	
   

	
   
	
  /s/ Izhak Nakar

	
   
	
  

	
   
	
  Izhak Nakar

	
   
	
  Founder 

	
   
	
   

	
   
	
   

	
   
	
  /s/ IdoSchechter

	
   
	
  

	
   
	
  Ido Schechter

	
   
	
  CEO & President

- 20 -

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