ASSET PURCHASE AGREEMENT
by and between
GENERAL MICROWAVE ISRAEL ACQUISITION (2008) LTD.
and
EYAL MICROWAVE LTD.
and
EYAL MAG LTD.
DATED AS OF: AUGUST 1, 2008
<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE
AGREEMENT (the "Agreement") is entered into as of August 1,
2008, by and between GENERAL MICROWAVE ISRAEL ACQUISITION (2008)
LTD. ("Buyer"),
a company formed under the laws of Israel with private company
number 514167543,
and EYAL MICROWAVE LTD. ("Seller Parent"), a company formed under the laws
of
Israel with private company number 512013194, and EYAL MAG LTD. a
company formed
under the laws of Israel with private company number 512435959 and a wholly
owned subsidiary of
Seller Parent ("Seller
Sub"; Seller Parent
and Seller Sub
shall be referenced herein, jointly and severally, as
"Seller").
RECITAL
The
parties hereto desire
that Seller sell,
transfer and assign to Buyer,
and that Buyer
purchase from Seller,
all of the assets and business of Seller,
excluding only the
Retained Assets (as defined below), and assume certain
liabilities, all on
the terms and subject to the conditions set forth in this
Agreement.
In consideration of
the respective representations, warranties, covenants
and agreements
contained herein, and subject to the terms and
conditions set
forth herein,
the parties
hereto, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Specific Definitions. As used in this Agreement, the
following
terms shall have the meanings set forth below:
"Affiliate" of a
specified person
(natural or juridical)
means a person
that directly, or
indirectly through one or more intermediaries, controls, is
controlled by, or is under common Control with, the person
specified.
"Control"
in this context
means (i) ownership of more than fifty
percent (50%) of the
shares entitled
to vote for the election of directors in the case of a
corporation, and more
than fifty percent
(50%) of the voting power in the case
of a business entity other than a corporation, or (ii) the
possession,
directly
or indirectly, of the
power to affirmatively direct, or affirmatively cause the
direction of, the management and policies of a specified person,
whether through
the ownership of voting securities, by contract or otherwise.
"Assets" means all the assets, properties, rights, interests, claims and
business as of the
Closing of Seller of
every kind,
nature and
description,
wherever located,
whether now owned or hereafter acquired, whether tangible or
intangible, real,
personal or mixed, absolute or contingent, known or unknown,
including, but not limited to:
(i)
all business,
financial,
legal, regulatory, tax and other books,
records (computer or
otherwise),
files, lists and data (including complete
customer and supplier lists, files related to Business Intellectual Property),
reports, plans,
drawings and operating
records, customer service histories,
warehouse and other Inventories;
(ii)
all rights under Contracts including without limitation all
rights to
occupancy under real property leases;
<PAGE>
(iii) all manufacturing-related assets, benches, molding, machinery,
equipment, fixtures,
office furniture, tools, automobiles, other vehicles,
computers, printers,
copiers, telecopy machines and other tangible
property
held, owned or leased;
(iv)
all Inventories, spare parts, service tools, instruments and
supplies;
(v)
all causes of action,
judgments,
settlements, claims,
indemnity, or
other rights,
including all rights to all claims or other causes of action,
whether known or unknown, accrued or to accrue for past or
present infringement
or unauthorized use of Intellectual Property or otherwise with
respect to monies
or rights accruing to Seller, except for any causes of action,
claims or other
rights pertaining to the Retained Liabilities;
(vi)
all Intellectual Property, all Intellectual Property licenses
(granted
to or by Seller or its Affiliates) required to make, have made, use, modify,
sell or offer to sell any products currently commercialized by or being
developed by Seller
including, but not
limited to, the
Intellectual
Property
listed or referenced in Section 6.16 herein;
(vii) all other intangible assets, including goodwill;
(viii) all
Authorizations,
registrations, licenses, approvals,
certifications,
permits and other similar requirements used in connection
with
the Business;
(ix)
all available product brochures primarily related to products
currently commercialized by Seller;
(x)
any security
interests,
Liens or rights
to repossess products or
equipment sold by Seller; and
(xi)
all accounts receivable and notes receivable;
(xii) all cash and cash equivalent assets of Seller in Seller's
banks or on
hand (subject to Section 2.02(d)); and
(xiii) the right to
use the name "Eyal" in
connection
with the Buyer's
business.
"Business" means all of the business and operations of Seller.
"Contract" means any contract, note, evidence of indebtedness
purchase or
sale order, lease, license, instrument, commitment or other agreement to
which
Seller is a party or an assignee or other beneficiary thereof or by which the
Seller is bound.
"Current Employees"
means all persons who immediately prior to the Closing
are employees of
Seller, including
any such employee who is on short-term
or
long-term disability
or other authorized
leave of absence and is so identified
in Part 3.18 of the Disclosure Schedule.
"Employee Plans" means any health care plan or arrangement;
life insurance
or other death benefit
plan or arrangement; deferred compensation or other
pension or
retirement
plan or arrangement; stock option, bonus or other
incentive plan or arrangement; severance, change of control or
early retirement
plan or arrangement;
or other fringe or
employee benefit plan
or arrangement;
managers' insurance;
education fund [keren
hishtalmut];
or any employment
or
consulting contract or executive compensation agreement; whether the same are
written or otherwise,
formal or informal, voluntary or required by law or
by
Seller's policies or practices, for the benefit of or relating to
any present or
former employees, leased employees, consultants, agents, directors,
and/or their
2
<PAGE>
dependents, of Seller,
including,
without limitation, any pension plan or
similar plan (whether or not any of the foregoing is funded) (i) to
which Seller
is a party or by which
Seller is bound, (ii) that Seller has at any time
established or
maintained
for the benefit of or relating to any present or
former employees,
consultants, agents,
directors, and/or
their dependents, of
Seller, or (iii)
with respect to which Seller has made any payments or
contributions in any of the last seven (7) years, or otherwise has
any liability
(including any such plan or other arrangement formerly maintained
by Seller).
"Environmental Laws"
means and includes any one or more of the following:
(a) any municipal,
local or other statute, law, ordinance or regulation
that
relates to or deals with Hazardous Substances, human health or the
environment,
all as they may be amended from time to time; and all regulations
promulgated by
a regulatory body pursuant to any of the foregoing statutes,
laws, regulations,
or ordinances;
and (b) judgments, orders, decrees, injunctions, permits,
licenses or agreements, to the extent that either they
relate to safety,
human
health, the
environment
or emissions, discharges, or releases of Hazardous
Substances into the environment, or otherwise relate to Hazardous
Substances, or
wastes or the investigation, clean-up, or other remediation
thereof.
"Hazardous Substance"
means any substance
that is dangerous,
toxic, or
hazardous, or that is a pollutant, contaminant, chemical, material or
substance
defined as
hazardous or as a pollutant or contaminant in, or the use,
transportation,
storage, release or
disposal of which is regulated by, any
Environmental Laws.
"Intellectual
Property" means any or
all of the following
and all rights
in, arising out of, or
associated therewith:
(a) Israeli,
international
and
other patents and
applications
therefore and all divisions, continuations,
continuations-in-part, renewals, extensions, revisions,
reissues
and
re-examinations relative thereto, and all patents, applications, documents and
filings claiming
priority to or serving
as a basis for priority thereof; (b)
copyrights and all works of authorship including all translations,
adaptations,
combinations,
compilations and derivations of each of the foregoing, whether
or
not registered; (c)
registered and unregistered trademarks, trade names, brand
names, service marks,
service names,
trade dress,
logos and corporate
names
including all translations, adaptations, combinations and derivations
thereof,
together with all common law rights and all goodwill associated
with each of the
foregoing; (d) technology, know-how, methods, processes, systems,
trade secrets,
inventions (whether or not patentable, copyrightable or susceptible
to any other
form of legal
protection and whether
or not reduced to practice), proprietary
data, formulae,
research and
development data, and
confidential
information
(including
conceptions, ideas,
innovations,
manufacturing,
development
and
production techniques, drawings, specifications, designs, proposals, financial
and accounting data,
business and marketing plans, customer and supplier lists
and related information and documentation), in each case
irrespective of whether
in human or machine readable form; (e) computer software
(including both
source
and object code) and all related program listings and data, systems, user and
other documentation;
(f) mask works; (g)
industrial designs; (h) databases and
data collections
and all rights
therein; (i) Internet addresses, sites and
domain names and
numbers; (j) all
applications,
registrations,
renewals and
extensions for any and each of the foregoing throughout the world; and (k) any
similar or equivalent rights to any of the foregoing anywhere in the world, and
all other forms of right by which one may effectively exclude
another from using
or otherwise enjoying any and each of the foregoing.
"Interim Period" means the period commencing on July 1, 2008 and
ending on
the Closing Date.
"Inventories"
means finished
goods, raw materials and ingredients,
work-in-process,
consignment goods,
wares, merchandise, wrapping, packing
materials and similar items.
3
<PAGE>
"Key
Employees" means the employees listed on Schedule 7.09.
"Kibbutz" means,
jointly
and severally: Kibbutz Eyal , registered
cooperative society
number 57-0005074, and Haklaei Hasharon Agricultural
Cooperative Society
Ltd., number 57-0003560, and Nof Ayal, limited
partnership
number 55-0008288.
"knowledge" of Seller
means actual knowledge of any of the officers
and
directors of the
Seller and the
knowledge that any of
such persons,
in such
positions, would reasonably be expected to have assuming diligent
inquiry.
"Liens" means liens,
mortgages, charges
(including fixed
and/or floating
charges), security interests, pledges or encumbrances.
"Material Adverse
Effect" means any state of facts, change, effect,
condition,
development, event
or occurrence that, individually or in the
aggregate with other related effects, is or could reasonably be expected
to be
materially adverse to the business, results of operation or
condition (financial
or otherwise) of the Purchased Assets or the Business, considered
as a whole, or
is or could reasonably
be expected to be
materially adverse to
the ability of
Buyer to conduct the Business following the Closing as the Business
is presently
conducted or presently contemplated to be conducted by Seller.
"OCS" means
Office of the Chief
Scientist of the Israeli Ministry of
Industry, Trade and Labor.
"OCS
Grants" means the grants received by the Seller or its
Affiliates in
connection with the R&D Law and/or the OCS.
"Person" means any individual and any legal entity.
"Product Liability"
means any liability,
claim or expense,
including but
not limited to attorneys' fees and medical expenses, arising in
whole or in part
out of a breach of any express or implied product warranty,
strict liability
in
tort, negligent manufacture of product, negligent provision of
services, product
recall, or any other allegation of liability arising from the design,
testing,
manufacture,
packaging, labeling
(including
instructions for use), marketing,
distribution or sale of products.
"R&D Law" means the Israeli Encouragement of Industrial and Development
Law, 5744-1984, all related regulations, orders and rules, as well as
published
OCS policy.
"Registered
Intellectual Property"
means any or all of
the following and
all rights in, arising
out of, or associated
therewith:
(a) Israeli,
United
States, international
and other patents and applications therefore and all
divisions,
continuations, continuations-in-part,
renewals,
extensions,
revisions, reissues
and re-examinations relative thereto, and all patents,
applications,
documents and filings claiming priority to or serving as a
basis
for priority thereof;
(b) registered trademarks, trade names, brand names,
service marks, service
names, trade dress,
logos and corporate names including
all translations,
adaptations,
combinations
and derivations thereof (but
excluding any common
law rights and all
goodwill associated
with each of the
foregoing); and (c) Internet addresses, sites and domain names.
"Securities" means
shares, stock, options, phantom stock, warrants,
convertible securities or other rights to acquire stock of
Seller.
"Taxes" (and "Tax") means all taxes, additions to tax, penalties,
interest,
linkage differentials
[hefreshei
hatzmada],
fines,
duties, withholdings,
assessments, and
charges assessed or
imposed by any
governmental or municipal
authority, including but not limited to all Israeli and foreign
income, profits,
gross receipts,
import, real and personal property, value added, stamp,
4
<PAGE>
transfer, withholding,
employment,
excise, custom, duty,
and any other taxes,
obligations and assessments of any kind whatsoever; the foregoing
shall include,
but not be limited to, any liability arising as a result of being
(or ceasing to
be) a member of any affiliated, consolidated, combined, or unitary
group as well
as any liability under any Tax allocation, Tax sharing, Tax
indemnity or similar
agreement.
"Transfer and
Sales Taxes" means all use taxes, stamp duty taxes,
conveyance taxes,
transfer taxes, filing fees, recording fees, prepayment fees
or penalties,
reporting fees and other similar duties, taxes and fees, if any,
imposed upon, or
resulting from,
the transfer of the
Purchased Assets or
the
Assumed Liabilities hereunder and the filing of any instruments
relating to such
transfer, including any sales tax, but not including VAT.
SECTION 1.02 Additional Definitions. The following table sets forth
certain
other defined
terms and the Section
of the Agreement
in which the meaning
of
each such term appears:
<TABLE>
<CAPTION>
Term
Definition in section:
<S>
<C>
Accounts Receivable Deadline
2.04(d)(i)
Agreement
Preamble
Approved Enterprise Status
5.08
Assumed Liabilities
2.03(a)
Audited FS 2007
7.13
Authorizations
3.09
Basic Consideration
2.04(a)(i)
Business Intellectual Property
3.16(g)
Buyer
Preamble
Change in Control Payments
5.09
Claim
9.04
Closing
2.06(a)
Closing Date
2.06(a)
Closing Date Assumed Liabilities
2.04(c)(i)
Closing Date Balance Sheet
2.04(c)(i)
Closing Date Net Assets
2.04(c)(i)
Closing Date Net Asset Value
2.04(c)(i)
Defaulted Accounts Receivable
2.04(d)(i)
Delayed Schedule
7.12
Direct Claim
9.03(b)
Disclosure Schedule
Article III
Dollars
1.03
Employment Offers
6.01
Loan Repayment Amount
2.04(b)(iii)
Government Grants
3.23(a)
Indemnifiable Losses
9.01
Indemnitee(s)
9.01
Interest
2.04(a)(ii)
Interim Balance Sheet
3.05
Interim Financial Statements
3.05
Interim Income Statement
3.05
Interim Period Cash Flow Statement
2.04(c)
Interim Period Reduction
2.04(c)
5
<PAGE>
Kibbutz Personnel
6.04(b)
Kibbutz Services Agreement
6.04
Manufacturing Documentation
3.14
New Buyer's Employees
6.05
NIS
1.03
Non-competition Period
5.05
Purchase Price
2.04(a)
Purchased Assets
2.01
Representative Rate
2.04(b)(ii)
Retained Assets
2.02
Retained Liabilities
2.03(b)
Seller
Preamble
Seller Audited Financial Statements
3.05
Seller Databases
3.16(l)
Seller Parent
Preamble
Seller Product
3.16(a)
Seller Software
3.16(l)
Seller Sub
Preamble
Seller's Financial Statements
3.05
Standard Form Agreement
3.16(f)
Surveyed Interim Financial Statements
7.13
Terminated Employees
6.03
Third Party Claim
9.03(a)
Transaction Expenses
5.09
Transaction Bonus Payments
5.09
VAT
2.05(b)
</TABLE>
SECTION 1.03
Other Definitional Provisions; Interpretation. The words
"hereof," "herein,"
and "hereunder" and
words of similar import, when used in
this Agreement,
shall refer to this Agreement as a whole and not to any
particular provisions of this Agreement. The terms defined in the
singular shall
have a comparable meaning when used in the plural, and vice versa.
References to
an "Exhibit" or to a "Schedule" are, unless otherwise specified, to one of the
Exhibits or
Schedules attached to or referenced in this Agreement, and
references to an "Article" or a "Section" are, unless otherwise specified, to
one of the Articles or Sections of this Agreement. The term "person" includes
any individual,
partnership,
joint venture,
corporation,
limited liability
company, trust,
unincorporated
organization or government or any department or
agency thereof and will also include its permitted successors and assigns.
The
term "Dollars"
or "$" shall
refer to the
currency of the United States of
America, and the term
"NIS" shall refer to the currency of the State of Israel.
All references to time shall refer to Tel Aviv, Israel time.
Whenever the words
"include", "includes"
or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". The term "or" is not
exclusive. The word
"extent" in the phrase
"to the extent" means the degree to
which a subject or other thing extends, and such phrase shall not mean simply
"if". Any agreement or instrument defined or referred to herein or in any
agreement or
instrument
that is referred to
herein means such
agreement or
instrument as
from time to time amended, modified or supplemented. This
Agreement shall be
construed without
regard to any
presumption or other
rule
requiring construction
hereof against the party causing this
Agreement to be
6
<PAGE>
drafted. Other terms
may be defined elsewhere in the text of this Agreement and
shall have the meaning indicated throughout this Agreement
ARTICLE II
PURCHASE AND SALE OF ASSETS
SECTION 2.01 Purchased Assets. Upon the terms and subject to the
conditions
set forth in this Agreement, effective as of the Closing,
Seller hereby
sells,
transfers, assigns and
conveys to Buyer, and Buyer hereby purchases, all of the
Assets, other than the Retained Assets (the "Purchased Assets"),
free and clear
of all Liens. For
avoidance of doubt, any cash included in the Purchased Assets
shall be deposited
by Seller into a bank account specified by Buyer on the
Closing.
SECTION 2.02 Retained
Assets. Seller hereby
retains all of its respective
right, title and
interest in and to,
and there shall be
excluded from sale,
assignment or transfer to Buyer hereunder, the following assets of Seller as
of
the Closing (the "Retained Assets"):
(a)
this Agreement and the amounts to be received by Seller
hereunder;
(b)
all Contracts not
specifically
assumed by Buyer
pursuant to
Section
2.03(a), provided
however, that in the event a Contract was
not disclosed to
Buyer prior to the date hereof, and Buyer concludes at its sole
discretion that
such Contract
is necessary for the conduct of the
Business, then Buyer may
notify Seller of its intention to assume such Contract and Seller
shall take any
action necessary to facilitate such assumption;
(c)
the originals of Seller's minute books, share ledgers, share transfer
records and tax
returns, which,
however, shall be available for review and
copying by Buyer immediately upon request;
(d)
cash in the Sellers bank accounts as of June 30, 2008 in the
approximate amount of
NIS 3,771,000,
as expressly specified in the Interim
Balance Sheet;
less (a) the amount of
NIS 1,400,000 which
was received by the
Seller prior to June 30, 2008 as advance payments from customers, and (b) an
amount equal to the Interim Period Reduction, and provided that all cash or
other assets
accruing or paid to Seller during the Interim Period shall be
included in the Purchased Assets;
(e)
shares held by Seller Parent in Eyal Mag Ltd. and Eyal Gal
Ltd.;
(f)
any assets of Eyal Gal Ltd.; and
(g)
(for avoidance of doubt) carry-forward losses of Seller.
SECTION 2.03 Assumed Liabilities; Retained Liabilities.
(a)
Assumed Liabilities.
Upon the terms and
subject to the conditions set
forth in this
Agreement, effective
as of the Closing,
Seller hereby
assigns,
transfers, and conveys
to Buyer, and Buyer hereby assumes and agrees to pay and
perform
according to
their respective terms only those liabilities and
obligations of Seller
which are listed on
Schedule 2.03(a) of
this Agreement
(collectively, the "Assumed Liabilities").
7
<PAGE>
(b)
Retained Liabilities. The parties agree that Buyer is not, nor
shall be
considered, the
successor to Seller, and that Buyer does not hereby
agree to
assume or become liable to pay, perform or discharge any obligation
or liability
whatsoever of Seller
or relating to the Assets or any former or present
employees of
Seller, including those that may be hired by Buyer,
except as
expressly provided for in Section 2.03(a). Seller shall retain any liability
or
obligation of, or responsibility for any claim against,
Seller or the
Business,
direct or indirect,
known or unknown,
absolute or contingent, not included in
the Assumed
Liabilities (the
"Retained Liabilities"), and, notwithstanding
anything to the
contrary in the Agreement, none of the following shall be
Assumed Liabilities
(and each shall be
included in the definition of "Retained
Liabilities"):
(i)
the obligations of Seller under this Agreement;
(ii)
any obligation,
liability or claim that constitutes or arises from a
breach by Seller of any representation, warranty, covenant or agreement
contained in this Agreement;
(iii) any obligation,
liability or claim that may arise from any lawsuits,
actions or proceedings against Seller;
(iv)
any obligation,
liability or claim
that may arise from any employee,
or consultant (or any former employee or consultant), for any
reason or actions,
including, (i) any
claim or demand of a current or former employee relating to
or arising as a result of employment, termination by Seller of the
employment of
such employee or consultants (or former employee or consultant)
including,
for
this purpose, with
respect to any Person
claiming entitlements
or benefits on
the basis of a claimed
employer-employee
relationship between
Seller and such
Person, (ii) any
liability under any Employee Plan at any time maintained,
contributed to or
required to be contributed to by or with respect to Seller or
its Affiliates or under which Seller or its Affiliates may incur
liability,
or
any contributions,
benefits or
liabilities
therefor, or any liability with
respect to Seller's or its Affiliates' withdrawal or partial withdrawal
from or
termination of any
Employee Plan,
(iii) subject to the
provisions of
Section
6.03, any liability of
Seller or its
Affiliates for
severance and/or
accrued
vacation days
(beyond the liability for vacation days and severance pay
allocated in the Surveyed Interim Financial Statements) and/or mandatory or
customary payment
and/or benefit and/or
entitlement for employees of Seller or
its Affiliates, (iv) any claim of an unfair and/or discriminatory
labor practice
based on acts or omissions by Seller; (v) any settlement or similar
amounts paid
to a Current Employee or former employee of the Seller.
(v)
Seller's Transaction Expenses;
(vi)
Transaction Bonus Payments and Change in Control Payments);
(vii) any other liability or obligation of, or claim against,
Seller or the
Business, of any kind or nature whatsoever, whether known or unknown,
fixed or
contingent, determined
or determinable, due
or not yet due, or otherwise, that
is not expressly assumed by Buyer under this Agreement;
(viii) any liability
of Seller or its
Affiliates with
respect to any Tax
attributable to the
Purchased Assets or the Business with respect to any
pre-Closing Tax
period, including any
liability for the breach of the terms of
any "approved
enterprise" programs received by the Company under the Law of
the
Encouragement of
Capital Investments, 1959, which may result from the
transactions contemplated by this Agreement;
8
<PAGE>
(ix)
any liability to the extent arising from any injury to or death of
any
person or damage to or destruction of any property, whether based
on negligence,
strict liability,
enterprise
liability or any other
legal or equitable theory
arising from
defects in or use or misuse of
products sold by Seller or from
services performed by or on behalf of Seller;
(x)
except as expressly provided in this Agreement, any liability of
Seller
to the extent resulting from entering into, performing its obligations
pursuant
to or consummating the transactions contemplated by this
Agreement;
(xi)
any liability
of Seller or its Affiliates that arises out of or
relates to any Retained Asset;
(xii) (for avoidance of doubt) any liability of Eyal Gal Ltd.;
and
(xiii) any liability
of Seller for the
payment of fees or expenses of any
broker or finder in connection with the origin, negotiation or
execution of this
Agreement or in connection with any transaction contemplated
hereby.
SECTION 2.04 Purchase Price; Payment.
(a)
Purchase Price. The total consideration for the Purchased Assets (the
"Purchase Price") shall be:
(i)
Consideration. The
amount of $30,000,000 (Thirty Million Dollars) less
any amount
of the Interim Period Reduction which was not included in the
Purchased Assets
in accordance with Section 2.02(d) above (the "Basic
Consideration");
(ii)
Interest. The amount of $2,740 (Two
Thousand Seven Hundred Forty
Dollars) multiplied by
the number of days which shall elapse between August 1,
2008 and the Closing
Date (for example, if the Closing Date shall occur on
August 20,
2008, then the amount of $52,060 shall be paid [19 x $2,740 =
$52,060]) (the "Interest");
(iii) Assumption
of Liabilities. Buyer's assumption of the Assumed
Liabilities pursuant to Section 2.03(a).
Schedule 2.04(a)
allocates the Purchase
Price among the Purchased Assets
and Seller's other undertakings hereunder. This allocation has been
agreed to by
Seller and Buyer after arm's-length negotiations.
(b)
Payment of Purchase
Price. The Basic
Consideration
and the Interest
shall be payable as follows:
(i)
Closing Cash
Consideration. At the
Closing, Buyer shall
transfer the
Basic Consideration and the Interest to one or two bank accounts in
the Seller's
name and designated by Seller.
(ii)
Currency; Conversion.
The Basic
Consideration and the Interest shall
be payable
in either US dollars or in New Israeli Shekels calculated in
accordance with the
representative
rate of exchange
published by the Bank
of
Israel most
recently prior to the date and time of actual payment (the
"Representative Rate")
or partially in US dollars and partially in New Israeli
Shekels (per the
Representative
Rate as aforesaid), at the election of the
Buyer. However,
in the event that the
Representative Rate
shall be lower than
$1=NIS 3.40 (i.e., whereby $1 shall be exchangeable into less than
3.40), then:
9
<PAGE>
(A)
any portion of the Cash Payment paid in US dollars shall be increased
by the ratio of 3.40 to the Representative Rate (for example, in the event
that
that $1,000,000 of the
Total Cash
Consideration is paid
in US Dollars and the
Representative Rate is $1=3.35, then an additional amount of
$14,925.37 shall be
paid [$1,000,000 x (3.40/3.35) = $1,014,925.37]); and
(B)
any portion of the
Cash Payment
paid in NIS shall be
calculated
in
accordance with the rate of $1=3.40 regardless of the actual
Representative Rate
(for example, in the
event that that $1,000,000 of the Total Cash Consideration
is paid in NIS and the
Representative Rate is
$1=3.35, then such US Dollar
amount shall be converted into NIS 3,400,000 [$1,000,000 x 3.40 =
3,400,000]);
(c)
Cash Flow Examination. At least three business days prior to the
Closing Date, Seller
shall deliver to Buyer a cash flow statement with respect
to the Seller Parent and Seller Sub, relating to the period
commencing on July
1, 2008 and ending on the Closing Date, detailing any individual expenditure
which exceeds the amount of $5,000 (the "Interim Period Cash Flow Statement").
The "Interim Period Reduction" shall mean the total of:
(i)
any expenditures
(whether or not
appearing in the Interim Period Cash
Flow Statement),
save for the payment
of interest on the
Seller's bank
loans
accruing between July
1, 2008 and July 31, 2008, which (a) were made during the
Interim Period on account of Retained Liabilities, including without limitation
payment of
principal and interest on loans which constitute Retained
Liabilities, and/or
(b) were made to, for
or on account of any other company,
including without limitation Eyal Gal Ltd., and/or (c) were made in
violation of
the provisions of
Sections 5.02 and/or 3.07 below, and/or (d) were made to (or
on account of obligations to) the previous GM of the Company;
and
(ii)
the negative
adjustment in the net
assets (except for
fixed assets,
Inventories, and
depreciation)
shown
in the Surveyed Interim Financial
Statements and the
Audited FS 2007, as
such terms are defined in Section 7.09
below, from the
figures presented in
the Interim Financial
Statement and the
unaudited financial
statements of the Seller for the period ending December 31,
2007 and the statement
of earnings relating thereto, attached as Schedule
3.05(i), provided that such amounts are in excess of $30,000;
(d)
Defaulted Accounts Receivables Adjustment of Purchase Price.
(i)
Schedule 2.04(d)
contains a list of the Seller's accounts receivable
included in the
Purchased Assets as of
the date hereof.
"Defaulted
Accounts
Receivable" shall mean
those accounts
receivable
included in the Purchased
Assets which shall not be remitted by the debtor in each case, to
Seller if paid
before the Closing Date, or to Buyer if paid following the Closing Date, by
the
expiration of one
hundred twenty
(120) days
following the Closing Date (the
"Accounts Receivable Deadline").
(ii)
Within 30 days following the Accounts Receivable Deadline, Buyer may
assign to Seller any remaining Defaulted Accounts Receivable,
by written notice
to Seller, and the
Purchase Price shall
then be decreased by the amount of the
Defaulted Accounts Receivable so assigned by Buyer to Seller,
provided that such
decrease shall apply only to aggregate Defaulted Accounts Receivable in excess
of NIS 1,100,000. Any
such decrease shall be immediately refunded by the Seller
to the Buyer, and,
without derogating from Seller's obligation under this
section, shall be
secured by the Bank
Guarantee, as defined
below in Section
9.09.
10
<PAGE>
(iii) In the event
Seller shall
desire to enforce an
assigned Defaulted
Account Receivable,
then Seller and Buyer
shall discuss the consequences, and
shall resolve in good faith whether such enforcement shall be
permitted, taking
into account
Buyer's commercial imperatives and its necessity to maintain
positive relationships with its customers.
SECTION 2.05 Taxes.
(a)
Transfer and Sales
Taxes. Seller shall
promptly pay all
Transfer and
Sales Taxes.
(b)
Israeli Value Added Tax. The Purchase Price is exclusive of Value
Added
Tax ("VAT").
No later than the 15th
day of the month (or such other statutory
VAT payment date)
occurring after the
Closing Date, VAT
shall be paid by wire
transfer with respect
to the Purchase Price
against the delivery
by Seller to
Buyer of a valid VAT invoice for such amount. VAT shall be paid in
NIS.
(c)
Withholding.
Buyer shall be
entitled to deduct and withhold from the
consideration
otherwise payable
pursuant to this Agreement to Seller such
amounts as the Buyer is required to deduct and withhold under applicable Tax
law, with respect to the making of such payment. To the extent that amounts are
so withheld
by Buyer, such withheld amounts shall be paid by Buyer to the
applicable Tax
Authority and, upon such payment, shall be treated for all
purposes of this Agreement as having been paid to Seller. Buyer
will not pay any
such withheld
amounts to the
applicable
Tax Authority earlier than one (1)
business day prior to the date such amounts are required to be paid.
If, prior
to or at the Closing,
Seller delivers to
Buyer a certificate
from the Israeli
Tax Authority
evidencing an exemption from withholding of Taxes, or a reduced
rate of withholding,
which shall be
applicable, valid and
in effect as of the
Closing, Buyer shall honor such withholding tax exemption or
reduction.
SECTION 2.06 Closing.
(a)
The consummation
of the purchase and sale of the Purchased Assets
provided for herein (the "Closing") shall take place at 10:00 a.m.
(local time)
on September 15, 2008, subject to the conditions to closing set
forth in Article
VII and Article
VIII having been
satisfied or waived in writing, or on such
other date and/or at such other time as the parties hereto may agree upon (the
"Closing Date"). The
Closing shall take place (i) at the offices of Yigal Arnon
& Co., 1 Azrieli Center, Tel Aviv, Israel or (ii) on the mutual
agreement of the
parties, by delivery
via facsimile or email
transmission (with
originals sent
via overnight courier
service) of the
documents to be delivered at the Closing
and wire transfer of the payments to be made in accordance with
Section 2.04(b),
or (iii) at such other place or in such other manner as the parties hereto may
agree.
(b)
All proceedings taken
and all documents
executed and delivered by the
parties hereto at the
Closing shall be
deemed to have been taken and executed
simultaneously and no
proceedings
shall be deemed taken nor any documents
executed or delivered until all have been taken, executed and
delivered.
11
<PAGE>
SECTION 2.07 Alternative Arrangements. Notwithstanding anything
contained
herein, this Agreement shall not constitute an agreement to assign
any Contract,
permit or any claim or right or any benefit arising thereunder or resulting
therefrom if an
attempted assignment
thereof, without the consent of a third
party thereto,
would constitute a default thereof. If such consent is not
obtained, or if an
attempted assignment
thereof would be
ineffective or would
affect the rights
thereunder so that
Buyer would not receive all such rights,
Seller shall, at the expense of Buyer, use commercially reasonable efforts to
effect alternative arrangements in the form of a license, sublease,
or operating
agreement in form and
substance reasonably satisfactory to Buyer and Seller
until such time as such consent or approval has been
obtained that results in
Buyer receiving
substantially
all of the
benefits under and bearing all the
ordinary course costs,
liabilities and other
obligations
with respect to
any
such Contract or
permit. Upon
obtaining the requisite third party consent
thereto, each such
non-assignable
Contract or permit
shall be transferred and
assigned to Buyer.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth on the disclosure schedule (the "Disclosure
Schedule"),
Seller represents
and warrants to Buyer as set forth in this Article III.
Notwithstanding any
other provision of this Agreement or such Disclosure
Schedule, each
exception set forth in the Disclosure Schedule will be deemed
to
qualify only each
representation and
warranty set forth in this Agreement (i)
that is specifically identified (by cross-reference or otherwise) in the
Disclosure Schedule as
being qualified by such exception, or (ii) with respect
to which the relevance of such exception is readily apparent on the face of the
disclosure of such exception set forth in the Disclosure
Schedule.
SECTION 3.01
Listing of Certain Assets and Data. Attached hereto as
Schedule 3.01(a)
through Schedule 3.01(g) are true and complete
lists of the
matters set forth in the following subsections of this Section 3.01,
including
in each case all written or oral agreements or understandings and
all amendments
and modifications, if
any, to each such Contract, document or other instrument
referenced or described (including, in the case of oral
arrangements, a
written
description of all material terms thereof).
(a)
Real Property.
Schedule 3.01(a) sets forth a description
of all real
property owned,
leased or subject to option by Seller or
otherwise used by
Seller in the
conduct of its business, as well as a list of all purchase
agreements, finance
agreements, leases,
options, title
abstracts,
insurance,
licenses, permits,
and other material
documents relating to such real property
that it has in its possession or control.
(b)
Equipment. Schedule 3.01(b) sets forth (a) a list of all material
items
of machinery,
equipment vehicles and other similar property and assets owned
or
leased by Seller or used in the conduct of the Business, setting forth with
respect to all such listed property a summary description of all Liens
relating
thereto (except
if registered as of the date hereof at the Registrar of
Companies),
specifically
identifying and describing those items with remaining
total lease or
conditional sales
payments or other
payments due by Seller
in
excess of $20,000,
identifying the parties thereto, the rental or other payment
terms, expiration date
and cancellation
and renewal terms
thereof, and (b) a
list of the quantities
of Inventories
possessed by the
Company as of June 30,
2008.
12
<PAGE>
(c)
Certain Agreements,
etc. Schedule 3.01(c) sets forth a list of each of
the following Contracts, written or otherwise, to which
Seller is a party or by
which it is bound (other than Contracts furnished pursuant to other
subsections
of this Section 3.01):
(i)
any research and development agreement, joint development agreement,
OEM, or other supply
agreement whereby
products or components are developed or
made by or for Seller;
(ii)
any joint venture or franchise agreement, and any purchase or
disposition
agreement and
related significant agreements involving the
acquisition or disposition of any products or process, or business
by Seller;
(iii) any Contract for the purchase of any services, raw materials,
supplies or equipment or other goods, including outstanding purchase orders,
involving remaining
payments estimated at
more than $20,000 (provided that all
of such non-listed Contracts with an estimated payment of $20,000
or less do not
in the aggregate represent estimated payments in excess of
$50,000);
(iv)
any Contract for the sale of assets, products or services that is in
any way not yet
performed and involving remaining payments estimated at more
than $20,000 (provided
that all of such non-listed Contracts with an estimated
payment of $20,000 or less do not in the aggregate represent estimated payments
in excess of $50,000);
(v)
any dealer, distributor, broker, agent, sales representative or
similar
Contract by Seller for the sale of any products, identifying which Contracts
might create any liability to Buyer or Seller if the right to sell
or distribute
new products is not offered by Seller or Buyer pursuant
thereto or which
cannot
be terminated upon less than 90 days' notice, without cause, by Seller or
Buyer
without liability to Seller or Buyer;
(vi)
any Contract not made in the ordinary course of business of Seller,
or
any other Contract
that has or could
reasonably be expected to have a Material
Adverse Effect;
(vii) any Contract (A) restricting Seller from engaging,
participating, or
competing with any other Person, in any line of business,
market or
geographic
area, or to make use of any Intellectual Property; (B) granting "most favored"
pricing, exclusive
sales, distribution,
marketing or other
exclusive rights,
rights of first refusal or rights of first negotiation to any other Person;
or
(C) otherwise limiting
or conditioning the right of Seller to sell, distribute
or manufacture any products or services related thereto;
(viii) any Contract of
indemnification or
warranty, other than
(A) under
Seller's unmodified
forms of standard
customer/distribution
agreements,
the
forms of which have been made available to Buyer, or (B) warranties implied by
Law;
(ix)
any Contract
pursuant to which Seller has acquired or divested a
business or entity, or
all or substantially
all of the assets of a business or
entity, whether by way of merger, consolidation, purchase of stock, purchase or
sale of assets, license or otherwise;
(x)
any Contract between
Seller and, or
undertaking issued by
Seller to,
any governmental entity.
Prior to the Closing
Date, Seller shall delivered to Buyer true and
complete copies of all
Contracts identified
in Schedule 3.01(c).
Such copies
13
<PAGE>
contain all the terms of the agreements, understandings and
arrangements between
the parties thereto with respect to the subject matter thereof.
(d)
Permits, Licenses, Etc. Schedule 3.01(d) sets forth a list of all
Authorizations,
permits, licenses, notifications, registrations, approvals or
similar permissions.
Prior to the date of this Agreement, Seller has delivered
to Buyer true and
complete copies of all permits, licenses, notifications,
registrations, approvals or other documents identified in Schedule
3.01(d).
(e)
Loans and Credit Agreements, Etc. Schedule 3.01(e) sets forth a
list of
all outstanding notes,
bonds, debentures,
loans or other credit
agreements or
arrangements, escrow agreements, security agreements, mortgages,
deeds of trust,
guaranties, pledges,
conditional or installment purchase agreements, letters of
credit and any other instruments evidencing indebtedness,
written or
otherwise,
to which Seller is a party (as lender, borrower, or guarantor) or which affect
or relate to its property or Assets. Prior to the date of this
Agreement, Seller
has delivered to Buyer true and complete copies of all documents
identified in
Schedule 3.01(e).
(f)
Insurance Policies and
Claims. Schedule
3.01(f) sets forth a
list of
all policies
of insurance maintained by or for the benefit of Seller with
respect to Seller and
covering its
officers, directors, employees, agents,
properties, buildings,
machinery, equipment,
furniture, fixtures or operations
and a description
of each claim made by
or for the benefit of Seller under any
such policy of insurance within the past three years, describing such claim and
the amount thereof. Prior to the date of this Agreement, Seller has
delivered to
Buyer true and
complete copies of all
policies of insurance identified in
Schedule 3.01(f), and
true and complete copies of all documentation regarding
claims made
thereunder. Within the
past three years, no
insurer has failed to
renew any such policy, and in the opinion of Seller the coverage
provided by the
policies of insurance listed in Schedule 3.01(f) conform to
customary
practices
in Israel for companies engaged in businesses similar to the that
of the Seller.
(g)
Employee Plans. Seller shall provide to Buyer, upon request, all
necessary information
with respect to Employee Plans and any related insurance
or other contracts and trust and custodial agreements.
SECTION 3.02
Organization.
Seller is a limited private company duly
organized, and validly
existing under the
laws of the State of Israel. Seller
has all necessary
power and authority to own its properties and assets and
conduct the business presently being conducted by it.
SECTION 3.03
Subsidiaries. Except
as set forth in Schedule 3.03, Seller
does not have any interest, direct or indirect, in any other business,
corporation, joint venture, partnership, proprietorship or other entity.
Except
as set forth in
Schedule 3.03,
none of the
business of Seller is conducted
through, and none of
the Purchased Assets is owned by or through, any direct or
indirect subsidiary or Affiliate of Seller.
SECTION 3.04
Authority. Seller has
full power and authority to enter into
this Agreement
and to perform its
obligations
hereunder.
The execution and
delivery by Seller of this Agreement and other agreements
contemplated hereby to
which Seller is a
party, and the
consummation
by Seller of the
transactions
hereby and thereby, shall, by the Closing, have been duly and
validly authorized
by Seller's Board of
Directors and
shareholders,
no other action of
Seller's
14
<PAGE>
Board of Directors or
shareholders, or
corporate proceedings on the part of
Seller or its Affiliates, shall be necessary to authorize
this Agreement and no
other action of Seller's Board of Directors or shareholders, or
corporate action
on the part of Seller or its Affiliates, shall be necessary to consummate
the
transactions
contemplated hereby.
This Agreement has
been duly authorized
by
Seller and duly executed and delivered by Seller, and constitutes a
legal, valid
and binding agreement
of Seller enforceable
against it in
accordance with its
terms. Except as
disclosed in Schedule 3.04 or Schedule 3.11, neither the
execution and delivery of this Agreement nor compliance by Seller
with its terms
and provisions will
violate (i) any provision of the articles of association or
other governing
instruments of Seller,
(ii) any Contract to
be transferred to
Buyer or any permit or license of Seller, or (iii) any law,
statute, regulation,
or, to the best of
Seller's knowledge, injunction, order or decree of any
government agency or
authority or court to which Seller or any of the Purchased
Assets is subject.
SECTION 3.05 Financial Statements. Attached hereto as Schedule
3.05(i) are
true and complete copies of audited financial statements of Seller, including
balance sheets at
December 31, 2005 and
December 31, 2006 and
statements
of
earnings for
the fiscal years then ended ("Seller Audited Financial
Statements"); the
unaudited financial statements of the Seller for December 31,
2007 and the statement of earnings, and a balance sheet (the "Interim Balance
Sheet") at June 30,
2008 (a copy of
which is attached hereto as Schedule
3.05(ii)) and statement of earnings for the six (6) month period
then ended (the
"Interim Income
Statement" and
together with the Interim Balance Sheet, the
"Interim Financial Statements") (all of the above financial
statements, together
with the Interim Cash Flow Statement collectively referred to as the "Seller's
Financial
Statements"). The
Seller Audited Financial Statements have been
prepared in
accordance
with
generally
accepted
accounting
principles
consistently applied. All the Seller's Financial Statements are
true and correct
in all material respects and fairly and accurately present the assets,
liabilities (including
all reserves) and financial position of the Seller as of
the dates thereof and the results of operations, shareholders' equity (deficit)
and changes in cash flows of the Seller for the periods then ended,
except that
the un-audited
Interim Financial Statements do not contain footnotes or
comparisons to the financial results of prior periods and are
subject to normal
year-end adjustments
which shall not be material. The Seller's Financial
Statements are in accordance with the books and records of Seller.
The books and
records of the Company are stated in reasonable detail and
accurately reflect in
all material respects
all information
relating to the
Business, the nature,
acquisition, disposition, maintenance, location and collection of
its assets and
properties, and the
nature of all transactions giving rise to its
obligations,
including accounts payable, and rights, including accounts receivable. There
were no changes in the method of application of the Seller's
accounting policies
or changes in the
method of applying
the Seller's use of estimates in the
preparation of the un-audited Interim Financial Statements.
SECTION 3.06
Absence of Undisclosed Liabilities. There are no debts,
liabilities, or
obligations,
of any nature,
of Seller,
the Business or the
Purchased Assets,
except to the extent
expressly set forth or reserved against
in the Seller's
Financial Statements.
Since the date of the
Interim Financial
Statements, there has not been any Material Adverse Effect.
SECTION 3.07 Absence of Certain Changes and Events. Since the date of the
Interim Financial Statements, Seller has not:
(a)
made any material
change in the
accounting
methods or
practices it
follows other than as required by Law or GAAP;
15
<PAGE>
(b)
made any capital
expenditures
or commitments exceeding $5,000 per
expenditure or
commitment,
or $20,000 in the aggregate in respect of the
Business;
(c)
sold, assigned,
transferred or licensed any patents, trademarks, trade
names, copyrights,
trade secrets or other
intangible assets, in each case used
in connection with the Business, except nonexclusive licenses in the ordinary
course of business consistent with past practice;
(d)
sold, leased,
licensed, transferred,
or otherwise disposed
of any of
its properties or assets primarily used in the Business, except
Inventories sold
or transferred in the ordinary course of business consistent with past practice
and obsolete or worn out equipment sold or otherwise disposed of in a manner
consistent with past practice which was not otherwise material
(individually or
in the aggregate) to
the Business,
or canceled any
material indebtedness
or
waived any material claims or rights of material value;
(e)
suffered any damage to
or destruction
or casualty of
(whether or not
covered by insurance) any asset individually or in the aggregate
material to the
operation of the Business;
(f)
failed to pay any creditor any amount arising from the operation of
the
Business owed to such
creditor when due, other than good faith disputes and
trade payables arising
in the ordinary course of business and not past due more
than sixty (60) days;
(g)
failed to discharge or satisfy any Lien on any of the Purchased
Assets,
at or prior to the time that the obligation with respect to such Lien became
due;
(h)
defaulted on any material obligation relating to the conduct or
operation of the Business without curing such default;
(i)
granted any
allowances
or discounts with respect to the Business
outside the ordinary
course of business
consistent with past
practice or sold
Inventories materially in excess of reasonably anticipated consumption for the
near term outside the ordinary course of business consistent with
past practice;
(j)
incurred or assumed any liabilities with respect to the Business
other
than in the ordinary
course of business consistent with past practice and
liabilities that are not Assumed Liabilities;
(k)
amended, cancelled or
terminated any Contract or Authorization that is
a Purchased Asset or
entered into any
Contract or obtained
any Authorization
primarily related to the Business, other than in the ordinary
course of business
and consistent with past practices;
(l)
failed to carry on the Business in the ordinary course and consistent
with past practices so as to preserve the Purchased Assets and the Business and
the goodwill
of the suppliers, customers, distributors and others having
business relations with the Business;
(m)
dismissed or provided notice of termination of the employment to
any of
the Current Employees; or
16
<PAGE>
(n)
distributed
any dividend nor made any other type of distribution,
regardless of the record date thereof;
(o)
entered into any agreement or commitment, whether in writing or
otherwise, to do any of foregoing.
SECTION 3.08
Litigation.
There are no
actions, suits, or proceedings
pending or, to the
knowledge of Seller, threatened against or by Seller in,
before, or by any court, arbitrator, or governmental agency or
authority. There
are no unsatisfied
judgments or outstanding orders, injunctions, decrees,
stipulations or awards (whether rendered by a court or
administrative agency
or
by arbitration)
against or affecting
Seller or the Business
or against any of
the Purchased
Assets. Prior to the date of this
Agreement,
Seller has made
available to Buyer for review all complaint and litigation files of
Seller.
SECTION 3.09
Compliance
with Law. To the
knowledge of the Seller, the
Business has
not violated and is not in violation of any applicable law,
ordinance or
regulation
of any governmental entity, including, without
limitation, the
R&D Law and any
legal obligations
applicable
to Seller in
connection with tax benefits approved by the Investment
Center at the
Ministry
of Labor, Industry and
Trade. To the knowledge of the Seller, all governmental,
municipal and other approvals, registrations, notifications, permits, licenses
and other permissions or authorizations (collectively, "Authorizations")
required in connection
with the conduct of
the Business have been obtained and
are in full force
and effect and are being complied with. Seller has not
received any
notification
of any asserted past or present violation in
connection with the conduct of the Business of any applicable law,
ordinance or
regulation, or any
written complaint,
inquiry or request for
information from
any governmental
entity relating
thereto. Neither
Seller nor the Business nor
any of the Purchased
Assets is the subject of any Israeli or other enforcement
action or, to the knowledge of Seller, other investigation, including but not
limited to those relating to Environmental Laws.
SECTION 3.10 Taxes.
Seller has timely filed all Tax or assessment reports
and Tax returns
(including any
applicable
information
returns) that may be
required by any law or
regulation
of any jurisdiction to be filed by or on
behalf of Seller or any of its Affiliates, and all such reports and returns
are
true, correct and
complete in all material respects. Seller has duly paid,
deposited or accrued
on its books of account, all Taxes (including estimated
Taxes) pursuant to
such reports and returns, or assessed against Seller, or
which Seller or its
Affiliates is
obligated to withhold
from amounts owing to
any employee, service
provider, supplier, or
any other third party. Seller has
no liability
for any Taxes in excess of the amounts stated in the Interim
Balance Sheet with respect to all time periods or portions
thereof ending on
or
before the date set forth therein. Neither the assessment of any additional
Taxes that by law
should have been reported or paid or in accordance with
generally accepted
accounting
principles
should have been
accrued, nor any
investigation or
audit, is pending or, to the best of Seller's knowledge,
threatened or
expected. No Taxing or
assessment
authority has indicated to
Seller any intent to conduct an audit or other investigation or asserted any
unresolved
deficiencies with
respect to Tax liabilities of Seller for any
period, and to the
knowledge of Seller there are no facts or circumstances that
would give rise
thereto. Seller has
not waived any statute of limitations in
respect of Israeli or
foreign Taxes or agreed to any
extension of time with
respect to an assessment of deficiency with respect to such
Taxes.
17
<PAGE>
SECTION 3.11 Consents.
No consent, approval,
waiver or authorization is
legally or
contractually
required on the part of Seller to duly and
validly
transfer or assign any of the Purchased Assets as contemplated
hereby.
SECTION 3.12 Title to and Condition of the Purchased Assets. Seller has
full right, title and
interest to the Purchased Assets and good and marketable
title to the Purchased Assets, free and clear of all Liens, except
for the Liens
listed (together
with the amount
secured by each such
Lien) on Schedule 3.12,
which shall be discharged in full by Seller at the Closing. The
Purchased Assets
include all assets, properties, rights, interests, claims and
business necessary
for or relating to the conduct of the Business as presently
conducted by
Seller
or as currently proposed to be conducted. The Purchased Assets are suitable
for
the uses for which
they are presently
used by Seller, in normal operating
condition and free from any defects. All of the Purchased Assets are
located at
the facilities
of Seller (except for certain equipment located in Korea as
disclosed to
Buyer). This Section 3.12 does not apply to the Seller's
Intellectual Property;
representation and
warranties relating to
the Seller's
Intellectual Property are set forth in Section 3.16 below.
SECTION 3.13 Contracts. Each Contract required to be listed on any
Schedule
to this Agreement is,
to the knowledge of Seller, valid and s
