ASSET PURCHASE AGREEMENT

Exhibit 10.6

 

 

 

ASSET PURCHASE AGREEMENT

Among

OPHTHALMIC IMAGING SYSTEMS

and

MEDIVISION MEDICAL IMAGING LTD.

Dated as of June 24, 2009

 

 

Article 1.	DEFINITIONS	1
1.1	Certain Definitions	1
1.2	Terms Defined Elsewhere in this Agreement	7
Article 2.	PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES	8
2.1	Purchase and Sale of Assets	8
2.2	Excluded Assets	10
2.3	Assumption of Liabilities	11
2.4	Excluded Liabilities	12
2.5	Further Conveyances and Assumptions; Consent of Third Parties	12
2.6	Purchase Price Allocation	13
Article 3.	SALE AND PURCHASE OF CAPITAL STOCK	13
3.1	Sale and Purchase of Shares	13
Article 4.	CONSIDERATION	13
4.1	Consideration	13
Article 5.	CLOSING AND TERMINATION	13
5.1	Closing Date	13
5.2	Termination of Agreement	14
5.3	Procedure upon Termination	15
5.4	Effect of Termination	15
Article 6.	REPRESENTATIONS AND WARRANTIES OF SELLER	15
6.1	Organization of Seller and its subsidiaries	16
6.2	Corporate Authority; Approval and Fairness	16
6.3	Consents of Third Parties; No Violations	17
6.4	Financial Statements	18
6.5	Accounts Receivable	20
6.6	Title to Purchased Assets; Intellectual Property	20
6.7	Ownership and Transfer of Shares	20
6.8	Intellectual Property	21
6.9	Seller Material Agreements and Governmental Contracts	22
6.10	Absence of Certain Developments	25
6.11	Litigation	26
6.12	Financial Advisors	27
6.13	Environmental Matters	27
6.14	Tax Returns and Payments	27
6.15	Tax Matters	29
6.16	Encryption and Other Restricted Technology	30
6.17	Warranties/Product Liability	30
6.18	Product certifications	30
6.19	Completeness of Disclosure	31

 

 

 

i

 

 

 

Article 7.	REPRESENTATIONS AND WARRANTIES OF PURCHASER	31
7.1	Organization and Good Standing	31
7.2	Authorization of Agreement	31
7.3	Conflicts; Consents of Third Parties	32
7.4	Litigation	32
7.5	Financial Advisors	32
7.6	Condition of the Business; Disclaimer of Reliance	32
7.7	Restriction on Activities	33
7.6	Completeness of Disclosure	33
Article 8.	COVENANTS	33
8.1	Access to Information	33
8.2	Conduct of the Business Pending the Closing	34
8.3	Consents	37
8.4	Further Assurances	38
8.5	Confidentiality	38
8.6	Non Competition	38
8.7	Preservation of Records	39
8.8	Publicity	39
8.9	Disclosure Schedules; Supplementation and Amendment of Schedules	40
8.10	Control of Business	40
8.11	Foreign Tax Declarations	40
8.12	Exclusivity	40
8.12	Good Standing Certificates	40
8.12	Elop Payment	40
8.13	United Mizrachi Bank Loan	42
Article 9.	CONDITIONS TO CLOSING	41
9.1	Conditions Precedent to Obligations of Purchaser	41
9.2	Conditions Precedent to Obligations of Seller	42
9.3	Frustration of Closing Conditions	43
Article 10.	SURVIVAL	44
10.1	Survival of Representations and Warranties	44
10.2	Indemnification by Seller	44
10.3	Indemnification by Purchaser	45
10.4	Indemnification Procedures	46
10.4	Escrow	46
10.5	Exclusive Remedy	58
Article 11.	TAXES	48
11.1	Payment of Sales, Use or Similar Taxes	48
11.2	Cooperation on Tax Issues	48
11.3	Tax Refunds; Tax Benefit Amounts	51
11.4	Tax Matters	49

 

 

 

ii

 

 

Article 12.	MISCELLANEOUS	51
12.1	Modification or Amendment	51
12.2	Waiver of Conditions	51
12.3	Counterparts	51
12.4	Governing Law; Waiver of Jury Trial; Specific Performance	51
12.5	Dispute Resolution	52
12.6	Notices	52
12.7	Entire Agreement	54
12.8	No Third Party Beneficiaries	54
12.9	Obligations of OIS and MediVision	54
12.10	Transfer taxes	54
12.11	Severability	54
12.12	Interpretation; Construction	54
12.13	Assignment	55

 

iii

 

 

ASSET PURCHASE AGREEMENT

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

RECITALS

WHEREAS , Seller presently conducts the Business;

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

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

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

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

ARTICLE 1.

DEFINITIONS

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

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

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

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

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

 

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

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

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

“ CCS ” means CCS Pawlowski GmbH.

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

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

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

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

 

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

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

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

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

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

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

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

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

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

 

 

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

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

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

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

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

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

 

 

“ IRI ” means the Integrated Retina Imager.

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

“ Reference Date ” means June 24, 2009.

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

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

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

 

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

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

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

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

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

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

 

Term	Section
AAA Accounts Receivable	12.5 2.1(i)
Agreement	Preamble
Arbitrator	12.5
Assumed Liabilities	2.3
Belgian Activities	1.1 (in Business definition)
Closing	5.1(a)
Closing Date	5.1(a)
Confidentiality Agreement	12.7
Covenant Survival Period	10.1(b)
Decision Disputes Elop	12.5 12.5 6.8(ii)
Escrow Agent	10.5
Escrow Agreement	10.5
Escrow Fund	10.5
Exchange Act	1.1 (in Affiliate definition)
Excluded Assets	2.2

 

 

 

Excluded Liabilities	2.4
Extraordinary Damages Financial Statements	1.1 (in Damages definition) 6.4(a)
Foreign Tax Withholding Certificate	8.11
IAS	6.4(v)
Indemnification Claim	10.4(b)
IRI Project	6.8(ii)
ISA	6.4(iii)
MediVision ESE Report	6.4(i)
MediVision Product	6.17
MediVision Product Certifications	6.18
MediVision Recommendation	6.2(ii)
OCS Funded Technology	6.15(i)
Post-Closing Covenants	10.1(b)
Pre-Closing Covenants	10.1(b)
Pre-Closing Tax Period	11.3(a)
Purchased Assets	2.1
Purchased Shares	3.1
Purchased Trade Secrets	6.8(iii)
Purchaser	Preamble
Purchaser Documents	7.2(i)
Purchaser Indemnified Parties	10.2(a)
Seller	Preamble
Seller Disclosure Letter	6
Seller Documents	6.2(i)
Seller Indemnified Parties	10.3(a)
Seller Material Adverse Effect	6.1
Seller Material Agreements	6.9(iii)
Software Products	6.8(vi)
Subsidiary	6.1
Survival Period	10.1(b)
Tax	6.16
Tax Claim	11.4(b)
Tax Return	6.16
Termination Date	5.2(a)
Total Consideration	4.1
Transaction Documents	7.2(i)
Transfer Taxes	11.1
Warranty Survival Period	10.1(a)

 

 

ARTICLE 2.

 

PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES

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

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

(b)       the Purchased Shares.

(c)       Seller’s Belgium Activities;

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

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

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

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

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

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

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

 

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

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

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

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

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

(a )      the Excluded Agreements;

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

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

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

(e)       [Reserved]

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

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

(h)       any bank accounts of Seller;

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

 

 

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

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

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

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

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

(o)      all OCS Funded Technology;

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

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

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

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

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

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

(d)       [Reserved]

 

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

ARTICLE 3.

SALE AND PURCHASE OF CAPITAL STOCK

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

ARTICLE 4.

CONSIDERATION

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

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

 

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

ARTICLE 5.

 

CLOSING AND TERMINATION

5.1        Closing Date .

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

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

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

(i)

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

 

(ii)

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

 

(iii)

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

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

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

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

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

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

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

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

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

 

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

5.4        Effect of Termination .

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

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

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

ARTICLE 6.

 

REPRESENTATIONS AND WARRANTIES OF SELLER

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

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

 

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

6.2        Corporate Authority; Approval and Fairness .

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

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

 

 

 

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

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

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

 

 

 

 

6.4        MediVision Reports; Financial Statements .

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

 

 

 

 

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

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

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

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

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

 

 

 

 

6.6        Title to Purchased Assets, Intellectual Property .

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

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

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

6.8        Intellectual Property .

 

 

 

 

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

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

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

 

 

 

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

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

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

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

6.9        Seller Material Agreements and Governmental Contracts .

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

 

 

 

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

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

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