<PAGE> 1
EXHIBIT 2.1
SOFTWARE AND ASSET PURCHASE AGREEMENT
AMONG
BACKWEB TECHNOLOGIES LTD.,
MOBIX COMMUNICATIONS LTD.
AND
ESTER HEMLI
<PAGE> 2
SOFTWARE AND ASSET PURCHASE AGREEMENT
THIS SOFTWARE AND ASSET PURCHASE AGREEMENT (this "Agreement"), dated as
of the 4th day of June 2000, by and among BACKWEB TECHNOLOGIES LTD., a Company
organized under the laws of the State of Israel ("BackWeb" or the "Purchaser"),
MOBIX COMMUNICATIONS LTD., a company organized under the laws of the State of
Israel (the "Company" or the "Seller"), and Ester Hemli (the "Principal
Shareholder").
RECITALS
A. Seller is engaged in the business of developing, manufacturing and
marketing software technologies providing wireless data solutions (the
"Business");
B. Purchaser wishes to purchase and acquire from Seller, and Seller
wishes to sell, assign and transfer to Purchaser, the software and all the
intellectual property owned, licensed or developed by the Company and all
tangible assets embodying such property, as more fully detailed in Exhibit B
hereto (the "Intellectual Property" or "Purchased Assets"), all for the purchase
price, and upon the terms and subject to the conditions herein set forth;
C. Purchaser wishes to retain the services of certain Key Employees and
certain Retained Employees, whose names are listed on Schedule 1.4.2 hereto (the
"Retained Employees") of the Seller, and Seller agrees to such retention.
D. Purchaser agrees to assist the Company in performing the Company's
obligations under certain agreements between the Company and certain third
parties for which the use of the Intellectual Property is required, solely in
the form of licensing such Intellectual Property to the Seller, under the terms
and conditions of the License Agreement attached as Schedule 2.8 hereto;
E. The Company agrees, for the consideration that shall be paid by
BackWeb pursuant to this Agreement and certain other undertakings of BackWeb
hereunder, to refrain from competitive activities as provided for in this
Agreement.
F. Capitalized terms used herein without separate definitions have the
meanings ascribed to them in Exhibit A.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein set forth, the parties hereto hereby agree as
follows:
ARTICLE 1
SALE AND PURCHASE OF ASSETS; RETENTION OF KEY AND REQUIRED EMPLOYEES
1.1 PURCHASED ASSETS. Subject to the terms and upon the conditions set
forth in this Agreement, at the Closing Seller shall sell, assign, transfer,
convey and deliver to Purchaser, and
1.
<PAGE> 3
Purchaser shall purchase and acquire from Seller, all right, title and interest
in the Purchased Assets free and clear of all Liens.
1.2 UNASSUMED LIABILITIES. Purchaser shall not assume, pay, incur or in
any way be liable or responsible for any of the Company's debts, liabilities or
obligations, including, without limitation:
(a) any liabilities and obligations of Seller to any of its clients,
licensees, sub-contractors, distributors, agents, consultants, etc., under any
Contract;
(b) any wages, salary, severance, bonuses, retention bonuses,
commissions, vacation or holiday pay, post retirement medical benefits, fringe
benefits, long-term disability benefits, life insurance benefits, any duties,
obligations or liabilities arising under any Company sponsored employee benefit
plan, policy or practice, relating to the employees of the Company or other
amounts due to any employees or former employees of the Company which accrue on
or prior to the Closing Date (as defined below);
(c) any liabilities and obligations under the Company's share option
plan;
(d) any liabilities and obligations of Seller for any Israeli, U.S.
federal, state, local or foreign income, excise, sales, value added, stamp,
personal, payroll or other taxes of any kind whatsoever;
(e) any tax (including, without limitation, income, franchise,
sales, transfer, recording, documentary or other tax) imposed upon or incurred
by Seller arising out of or in connection with the negotiation and preparation
of this Agreement and the consummation and performance of the transactions
contemplated hereby; and
(f) any liability or obligation relating to, resulting from, caused
by, or arising out of the ownership, operations or control of the Company's
Business through the Closing Date, including any losses derived from third party
product liability claims or any indebtedness for borrowed money.
1.3 NONASSIGNABLE CONTRACTS AND AUTHORIZATIONS. To the extent that the
assignment of the Purchased Assets causes any infringement upon the Company's
obligations pursuant to any license, permit, approval or instrumentality granted
to the Company by any third party, in connection with, or any Contract which
provides for joint ownership of, the Purchased Assets (or any part thereof),
this Agreement shall not constitute a contract to assign the same. Seller shall
cooperate with Purchaser (as expeditiously as possible) in any commercially
feasible arrangement requested by Purchaser which shall provide to Purchaser the
benefits under any such Contract, license, permit, approval or instrumentality,
including enforcement of any and all rights of Seller against the other party
thereto arising out of breach or cancellation thereof by such other party or
otherwise.
1.4 RETENTION OF KEY EMPLOYEES AND RETAINED EMPLOYEES.
2.
<PAGE> 4
1.4.1 Subject to and upon the terms and conditions set forth in this
Agreement, at or prior to the Closing, Purchaser shall sign employment contracts
with the Key Employees, in a form agreed by Purchaser and the Key Employees.
Such employment shall be for a minimal period of two years beginning on the
Closing (as defined hereunder). In addition, and as a condition to the Closing,
Purchaser shall enter into Agreements with each of Eli Gur and Israel Ganor, in
the forms attached hereto as Exhibits G and H, respectively (the "Gur-Ganor
Agreements").
1.4.2 Prior to or at the Closing, Purchaser may seek the retention
of any of the Retained Employees, whose names are listed on Schedule 1.4.2
hereto. Seller shall not oppose to such retention and shall provide any
reasonable assistance requested by BackWeb in order to enable such retention.
1.4.3 Seller shall solely be responsible for providing and making
payment under complete severance packages, as required by law and under the
relevant employment contracts, to each of the Key Employees and the Retained
Employees, upon termination of their employment with the Seller.
1.4.4 For a period of six (6) months following the Closing, in the
event that Seller shall require the assistance of any of the Key Employees and
the Retained Employees in order to support existing (as of the date hereof)
clients under existing support contracts, it shall notify BackWeb of such need,
at least 7 days in advance, and BackWeb shall make its best efforts in order to
make such employees available for Seller; provided that: (i) no such employee
shall spend more than 30 hours on such support activities (averaging, to the
extent possible, 5 hours per month); (ii) all coordination shall be made through
BackWeb, and Seller shall not contact any of the employees directly; and (iii)
BackWeb will charge Seller for such services, based on an hourly rate to be
provided by BackWeb.
ARTICLE 2
CLOSING; PURCHASE PRICE; LICENSE
2.1 PLACE AND DATE. The closing of the sale and purchase of the
Purchased Assets (the "Closing") shall take place at the offices of Naschitz,
Brandes & Co., 5 Tuval Street, Tel-Aviv 67897, Israel at 10:00 a.m., on June 19,
2000 or such later business day on which all the conditions set forth in
Sections 7.1 and 7.2 have been fulfilled or waived, or such other time, date and
place as may be mutually agreeable to the parties hereto (the "Closing Date").
At the Closing, the Seller shall deliver to BackWeb one or more instruments
representing the Seller's ownership of the Purchased Assets and their delivery
to BackWeb, and BackWeb (i) shall pay the Cash Payment (as defined below) to the
Seller, (ii) shall issue the Acquisition Shares (as defined below) and shall
deposit the Acquisition Shares with the Escrow Agent, and (iii) shall deposit
the Escrow Payment (as defined below) with the Escrow Agent.
3.
<PAGE> 5
2.2 PURCHASE CONSIDERATION. As consideration for the sale of the
Purchased Assets to Purchaser, at the Closing Purchaser (i) shall pay to the
Seller a total amount of $9,600,000 (the "Cash Payment"); (ii) shall issue the
number of Ordinary Shares of Purchaser (the "Acquisition Shares") equal to
$2,900,000 in value, calculated using the average daily closing price of BackWeb
Ordinary Shares for the 15 consecutive trading days immediately preceding the
Closing Date. The Acquisition Shares shall be deposited with the Escrow Agent to
be held in the Escrow Fund and shall be available to satisfy the indemnification
obligations as provided in Section 9 below and to secure the retention of the
Key Employees for the employment period set forth in Section 1.4.1. The
Acquisition Shares shall bear an appropriate restrictive legend referring to the
fact that the Acquisition Shares are being sold in reliance upon the exemption
from registration under the Securities Act provided by Section 4(2) thereof and
Rule 506 thereunder; and (iii) shall deposit a total amount of $2,400,000 (the
"Escrow Payment"), with the Escrow Agent to be held in the Escrow Fund to be
available to satisfy the indemnification obligations as provided in Section 9
below and to secure the retention of the Key Employees for the employment period
set forth in Section 1.4.1 above (the Cash Payment, the Acquisition Shares and
the Escrow Payment shall collectively be referred to as the "Purchase
Consideration"). For clarifying purposes, the total Purchase Consideration set
forth above equals $14,900,000. Value Added Tax with respect to the Purchase
Consideration shall be paid by the Purchaser by means of a post-dated check to
the date on which such VAT is to be paid by the Seller to the Israeli tax
authorities.
2.3 ALLOCATION. Following the Closing, Purchaser shall deliver to Seller
a statement setting forth Purchaser's good faith determination of the manner in
which the Purchase Consideration is to be allocated among the Purchased Assets.
The allocation prescribed by such statement shall be conclusive and binding upon
the Seller for all purposes, and Seller shall not file any Return or other
document with, or make any statement or declaration to, any governmental body
that is inconsistent with such allocation.
2.4 TRANSACTION COSTS. Each party shall bear its own fees, costs and
expenses in connection with the transactions contemplated by this Agreement.
2.5 DELIVERIES. At the Closing, Seller shall deliver to Purchaser such
assignments and other good and sufficient instruments of transfer as shall be
satisfactory in form and substance to Purchaser, and shall be effective to vest
in Purchaser good and marketable title, free and clear of any Liens and
Encumbrances or rights and claims of others, to all of the Purchased Assets. The
Company shall pay all sales, capital, franchise income, use, transfer or other
taxes, payable by the Seller by reason of the sale hereunder.
2.7 FURTHER ASSURANCES. Each party agrees, at any time and from time to
time after the Closing Date, upon reasonable request from the other party, to
do, execute, acknowledge and deliver, as appropriate, such further acts, deeds,
assignments, transfers, conveyances and powers of attorney as may reasonably be
required for the better assigning, transferring, granting, conveying, assuring
and confirming to such other party, or its successors and assigns, of any of the
assets or liabilities to be assigned to it or retained by such party as provided
herein.
4.
<PAGE> 6
2.8 LICENSE OF PURCHASED ASSETS TO THE COMPANY. Purchaser shall grant
the Company a license to use the Purchased Assets, under the terms and
conditions of the License Agreement attached hereto as Schedule 2.8, which shall
be executed by the parties on the Closing Date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER AND PRINCIPAL SHAREHOLDER
3.1 REPRESENTATIONS AND WARRANTIES OF SELLER AND PRINCIPAL SHAREHOLDER.
Seller and the Principal Shareholder, hereby represent and warrant to Purchaser
as follows:
3.1.1 CORPORATE ORGANIZATION AND STANDING. Seller is a corporation
duly organized and validly existing under the laws of the State of Israel and
has all corporate power and authority to conduct the Business in the manner in
which the Business is presently conducted and to own and use the Purchased
Assets in the manner in which the Purchased Assets are currently owned and used.
3.1.2 MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION. Copies
of the Memorandum of Association and Articles of Association or other
organizational documents of Seller have been made available to Purchaser, and
each such copy is true, correct and complete.
3.1.3 CORPORATE AUTHORIZATION; BINDING AGREEMENT. Seller has full
right, power and authority to enter into this Agreement and to perform fully its
obligations hereunder. The execution and delivery of this Agreement and all
other documents and instruments executed or to be executed by Seller pursuant to
this Agreement, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate and other action
on the part of Seller including the approval of the Board of Directors of the
Company. This Agreement and all other documents and instruments executed or to
be executed by Seller pursuant to this Agreement have been, or will have been,
at the time of their respective execution and deliveries, duly executed and
delivered by a duly authorized officer of Seller. This Agreement constitutes the
valid and legally binding obligation of Seller, enforceable in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, arrangement, moratorium or similar laws relating to
or affecting the rights of creditors generally.
3.1.4 NO CONFLICT. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (a)
result in the acceleration of, or the creation in any party of any right to
accelerate, terminate, modify or cancel any material indenture, Contract, lease,
sublease, loan agreement, note or other obligation or liability to which Seller
is a party or by which it is bound or to which any of its assets is subject, (b)
conflict with or result in a breach of or constitute a default under any
provision of the Articles of Association of Seller, or a default under or
violation of any material restriction, Lien, Encumbrance, indenture, Contract,
lease, sublease, loan agreement, note or other obligation or liability to which
5.
<PAGE> 7
it is a party or by which it is bound or to which any of its assets is subject
or result in the creation of any Lien or Encumbrance upon any of said assets, or
(c) violate or result in a breach of or constitute a default under any judgment,
order, decree, rule or regulation of any court or governmental agency to which
Seller is subject, and which, in each of clauses (a), (b) and (c) above, would
have a Material Adverse Effect.
3.1.5 FINANCIAL INFORMATION.
(a) The Company has delivered to BackWeb the following financial
statements and notes (collectively, the "Financial Statements"):
(i) The audited financial statements of the Company as of
December 31, 1999, 1998, and 1997, and the related audited statements of
operations, statements of shareholders' equity and statements of cash flows of
the Company for the years then ended, together with the notes thereto and the
unqualified report and opinion of a recognized firm of independent certified
public accountants relating thereto; and
(ii) The unaudited balance sheet of the Company as of [March 31,
2000], and the related unaudited statements of operations, statements of
shareholders' equity and statements of cash flows of the Company for the period
then ended (the "Interim statements").
(b) The Financial Statements and the Interim Statements are accurate
and complete in all material respects and present fairly the financial position
of the Company as of the respective dates thereof and the results of operations
and cash flows of the Company for the periods covered thereby. The Financial
Statements and the Interim Statements have been prepared in accordance with
generally accepted accounting principles consistently applied in Israel
throughout the periods covered (except that the Interim Statements do not
contain footnotes and are subject to normal and recurring year-end audit
adjustments, which will not, individually or in the aggregate, be material in
magnitude) and comply with the requirements of all applicable Israeli
regulations.
(c) All proper and necessary books of account, minute books,
registers and records have been maintained by the Company, are in its possession
and contain accurate information relating to all material transactions to which
the Company has been a party, except where the failure to maintain such books of
account, minute books, registers and records would not have a Material Adverse
Effect on the Company.
3.1.6 INSURANCE. Seller has in full force and effect policies of
insurance in amounts generally maintained by companies engaged in businesses
similar to that of the Business, and will cause such policies to remain in full
force and effect until the Closing Date.
3.1.7 LITIGATION. There are no actions, suits, proceedings or
governmental investigations pending or, to Seller's and Principal Shareholder's
best knowledge, threatened against Seller, before any court, governmental
department, commission, board, agency, authority or instrumentality, domestic or
foreign, or that have been settled, dismissed or resolved. Seller is
6.
<PAGE> 8
not subject to any judgment, stipulation, order or decree arising from any
action, suit, proceeding or investigation.
3.1.8 LICENSES AND PERMITS; COMPLIANCE WITH LAWS. Seller owns, holds
or possesses in its own name all licenses and permits necessary to entitle it to
carry on and conduct the Business and its operations as presently conducted,
except for such licenses and permits the absence of which would not, in the
aggregate, have a Material Adverse Effect. Seller is not in violation of or
default under any licenses and permits or any judgment, order, writ, injunction
or decree of any court or administrative agency issued against it or any
statute, law, ordinance, rule or regulation applicable to it, which would,
individually or in the aggregate, have a Material Adverse Effect or which would,
individually or in the aggregate, interfere materially with the consummation of
the transactions contemplated by this Agreement.
3.1.10 SELLER CONTRACTS.
(a) Schedule 3.1.10(a) attached hereto identifies each Seller
Contract. Seller has delivered to or made available to Purchaser accurate and
complete copies of all Seller Contracts identified in Schedule 3.1.10(a)
attached hereto. No material change has been made to any of the terms and
conditions of any of the Seller Contracts. Each Seller Contract is valid and in
full force and effect.
(b) No Person has violated or breached, or declared or committed
any default under, any Seller Contract. No event has occurred, and no
circumstance or condition exists, that might (with or without notice or lapse of
time) (i) result in a violation or breach of any of the provisions of any Seller
Contract, (ii) give any Person the right to declare a default or exercise any
remedy under any Seller Contract, (iii) give any Person the right to accelerate
the maturity or performance of any Seller Contract, or (iv) give any Person the
right to cancel, terminate or modify any Seller Contract. Seller has not
received any written or oral communication regarding any actual, alleged,
possible or potential violation or breach of, or default under, any Seller
Contract. Seller has not waived any right under any Seller Contract.
(c) To the best of the knowledge of Seller and Principal
Shareholder, each Person against which Seller has or may acquire any rights
under any Seller Contract is solvent and is able to satisfy all of such Person's
current and future monetary obligations and other obligations and liabilities
thereunder.
(d) The performance of the Seller Contracts will not result in
any violation of or failure to comply with any Legal Requirement.
(e) No Person is renegotiating, or has the right to renegotiate,
any amount paid or payable to Seller under any Seller Contract or any other term
or provision of any Seller Contract.
7.
<PAGE> 9
(f) Seller and Principal Shareholder have no knowledge of any
basis upon which any party to any Seller Contract may object to the assignment
to Purchaser of any rights under such Seller Contract or the delegation to or
performance by Purchaser of any obligations under such Seller Contract.
(g) The Seller Contracts identified in Schedule 3.1.10(a)
attached hereto constitute all of the Seller Contracts necessary to enable
Seller to conduct the Business in the manner in which it is currently being
conducted.
3.1.11 TITLE TO PURCHASED ASSETS.
(a) (i) The Company owns or has the right to use, free and clear of
all Liens and Encumbrances, the Purchased Assets, (ii) the Company has the right
to transfer the Purchased Assets to the Purchaser, free and clear of any Liens
and Encumbrances, and (iii) the Intellectual Property does not infringe upon or
violate any right, Lien or Encumbrance of others, including without limitation
of its present or former employees or the former employers of all such persons.
The Company is not currently obligated or under any liability whatsoever to make
any payments by way of royalties, fees or otherwise to any owner or licensee of,
or other claimant to, any patent, trademark, service mark, trade name,
copyright, trade secret right or other intangible asset or intellectual property
right, with respect to the use thereof or in connection with the conduct of the
Business or otherwise.
(b) Subject to Schedule 3.1.11 (b) attached hereto, any and all
Intellectual Property of any kind which has been developed, or is currently
being developed, by the Company or any employees of the Company is the property
solely of the Company. The Company has taken security measures to protect the
secrecy, confidentiality and value of all the Intellectual Property, which
measures are reasonable and customary in the industry in which the Company
operates. Each person who, either alone or in concert with others, developed,
invented, discovered, derived, programmed or designed any portion of the
Intellectual Property, or who has knowledge of or access to information about
the Intellectual Property, has entered into an adequate, written non-disclosure
and assignment of proprietary rights agreement with the Company regarding
ownership and treatment of the Intellectual Property.
(c) Neither the Company nor any of its directors, officers or
employees has received any communications alleging that the Company has
violated, or by conducting its business as currently conducted would violate,
any of the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity. Neither the
Company nor any of its directors, officers or employees has received notice nor
is it otherwise aware of any infringement of or conflict with asserted rights of
others, with respect to any of the Intellectual Property, or of any facts, or
assertion of any facts, which would render any of the Intellectual Property
invalid or unenforceable.
(d) To the best knowledge of Seller and Principal shareholder, none
of the Key Employees and Retained Employees are obligated under any contract
(including licenses,
8.
<PAGE> 10
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of such persons' best efforts to promote the interests of
BackWeb or that would conflict with the BackWeb's business.
(e) The Intellectual Property owned by the Company constitutes all
of the Intellectual Property necessary to enable the Company to conduct its
business in the manner in which such business has been and is being conducted.
Subject to Schedule 3.1.11 (e) attached hereto, the Company has not licensed any
of the Company's Intellectual Property to any Person on an exclusive basis, nor
has the Company entered into any covenant not to compete or Contract limiting
its ability to exploit fully any of its Intellectual Property or to transact
business in any market or geographical area or with any Person.
(f) No third party has the right to receive the Intellectual
Property (or any part thereof), other than as provided in certain Contracts,
listed in Schedule 3.1.11(f) attached hereto, which provide for the deposition
in escrow of certain source codes which are part of the Intellectual Property
(the "Escrow Deposition").
(g) No third party shall be entitled to exercise its rights with
respect to the Escrow Deposition unless the Company ceases from providing
service and support to such third party with respect to software licensed by
such third party from the Company.
(h) In the event that any third party exercises his right with
respect to the Escrow Deposition, the sole right that such third party shall
acquire is to use the Escrow Deposition for the purpose of internal support and
maintenance to software licensed by it from the Company.
3.1.12 NO CONSENT. No consent, approval, authorization order,
filing, registration or qualification of or with any court, governmental
authority or third party is required to be made or obtained by Seller in
connection with the execution and delivery of this Agreement by Seller or the
consummation by Seller of the transactions contemplated hereby, except for (i)
the consent of the Investment Center of the Israeli Ministry of Industry and
Trade, (ii) the consent of the Office of the Chief Scientist of the Israeli
Ministry of Industry and Trade, (iii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal and state securities laws.
3.1.13 ABSENCE OF CHANGES. Since December 31, 1999:
(a) there has not been any Material Adverse Change in, and no
event has occurred that might have a material adverse effect on, the Business of
the Seller or the Purchased Assets.
(b) there has not been any loss, damage or destruction to, or
any interruption in the use of the Purchased Assets (whether or not covered by
insurance);
9.
<PAGE> 11
(c) Seller has not sold or otherwise transferred, or leased or
licensed, any of the Purchased Assets to any other Person;
(d) Seller has not (i) established or adopted any Employee
Benefit Plan, or (ii) paid any bonus or made any profit-sharing or similar
payment to, or increased the amount of the wages, salary, commissions, fees,
fringe benefits or other compensation or remuneration payable to, any of its
directors, officers, employees or independent contractors;
(e) no Contract by which Seller or any of the Purchased Assets
is or was bound, has been amended; and
(f) Seller has not agreed, committed or offered (in writing or
otherwise) to take any of the actions referred to in clauses "(c)" through "(e)"
above.
3.1.14 BENEFIT PLANS. Schedule 3.1.14 attached hereto lists each
employee pension, profit sharing, deferred compensation, severance, stock
option, stock purchase, incentive, golden parachute, bonus, group or individual
medical, welfare, insurance or other employee benefit plan, program or
arrangement which is maintained by Seller or to which Seller is required to
contribute on behalf of employees of Seller, all with respect to the Key
Employees and the Retained Employees. Except as set forth in Schedule 3.1.14
attached hereto, Seller does not maintain and has not maintained or made any
contributions to any employee pension benefit plan or employee welfare benefit
plan with respect to such employees. As applicable with respect to each Plan,
Seller has provided to Purchaser copies of all Plan documents and amendments
thereto, trust agreements and contracts relating to Plan administration.
3.1.15 INVESTMENT REPRESENTATIONS. Each of the Company and the
Principal shareholder (collectively referred to in this Section 3.1.15 as
"INVESTOR") represents and warrants, with respect to the Escrow Shares acquired
under this Agreement, as follows:
(a) INVESTMENT PURPOSE. Investor is acquiring the Escrow Shares
for its own account for investment, and not with a view to, or for sale in
connection with, any distribution of any of the Escrow Shares.
(b) NO TRANSFER. Investor will not sell or otherwise transfer
any of the Escrow Shares except in accordance with the United States Securities
Act of 1933, as amended (the "1933 Act"), and all applicable Israeli and United
States securities laws and BackWeb's Articles of Association, and prior to any
transfer (other than sales pursuant to an effective registration under the 1933
Act or sales in accordance with an applicable exception thereto. Accordingly,
Investor acknowledges that it must bear the economic risk of its investment in
the Escrow Shares for an indefinite period.
(c) SOPHISTICATED INVESTOR. Investor is an "ACCREDITED INVESTOR"
as that term is defined in Rule 501(a) of Regulation D under the 1933 Act, and
has had substantial experience in business and financial matters and in making
high risk investments of the type contemplated by this Agreement; the
information about Investor furnished to BackWeb by Investor is accurate;
Investor has been furnished access to the business records of BackWeb and
10.
<PAGE> 12
such additional documents and information as the Investor has requested, and has
been given the opportunity to meet with BackWeb officers and to have them answer
questions to its satisfaction regarding BackWeb's affairs and condition;
Investor has received all information that it considers necessary or appropriate
for the purpose of deciding whether to purchase the Escrow Shares; and Investor
is capable of evaluating the merits and risks of its purchase of the Escrow
Shares and is able to bear the economic risk of thereof.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
4.1 REPRESENTATIONS AND WARRANTIES. Purchaser represents and warrants to
Seller as follows:
4.1.1 ORGANIZATION AND STANDING. Purchaser is a corporation duly
organized and validly existing under the laws of the State of Israel and has all
corporate power and authority to carry on the business in which it is engaged
and to own or lease and operate its properties.
4.1.2 AUTHORIZATION. All corporate and other proceedings required to
be taken on the part of Purchaser to authorize Purchaser to enter into and carry
out this Agreement and to purchase the Purchased Assets have been, or prior to
the Closing will be, duly and properly taken. This Agreement has been duly
executed and delivered by Purchaser and is the valid and binding obligation of
Purchaser enforceable against it in accordance with its terms, except as
enforcement may be limited by equitable principles limiting the right to obtain
specific performance or other equitable remedies, or by applicable bankruptcy or
insolvency laws and related decisions affecting creditors' rights generally.
4.1.3 COMPLIANCE. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby, upon satisfaction of
the conditions set forth in Article 8 herein, will not:
(a) result in the breach of any of the terms or conditions of,
or constitute a default under or violate, as the case may be, the memorandum of
association or articles of association of Purchaser; or
(b) violate or result in a breach of or constitute a default
under any judgment, order, decree, rule or regulation of any court or
governmental agency to which Purchaser is subject, and which, in each of clause
(a) above and this clause (b), would have a material adverse effect on
Purchaser's business.
4.1.4 LITIGATION. There are no actions, suits, proceedings,
arbitrations, or investigations pending, or to the Purchaser's knowledge,
threatened, which question the validity of this Agreement or any actions taken
or to be taken in connection herewith or the consummation of the transactions
contemplated herein.
11.
<PAGE> 13
4.1.5 APPROVALS, ETC. All consents, approvals, authorizations and
orders (corporate, governmental or otherwise) necessary for the due
authorization, execution and delivery by Purchaser of this Agreement and the
consummation of the transactions contemplated hereby have been obtained or will
be obtained prior to the Closing Date.
ARTICLE 5
COVENANTS AND AGREEMENTS OF SELLER
5.1 CONDUCT OF BUSINESS. During the period between the date of this
Agreement and the Closing Date (the "Pre-Closing Period"), except as
contemplated by this Agreement, and except as may be necessary to carry out the
transactions contemplated by this Agreement, Seller shall not:
(a) voluntarily permit to be incurred any Lien or Encumbrance on any
of the Purchased Assets;
(b) increase the rate of compensation for any of the Company's
Employees, except for increases in the ordinary course and consistent with past
practices, or otherwise enter into or alter any employment, consulting, or
service agreement respecting the Business;
(c) commence, enter into, or alter any profit sharing, deferred
compensation, bonus, stock purchase, pension, retirement, or incentive plan or
any fringe benefit plan for the Company Employees;
(d) sever or terminate any of the Company Employees except for cause
in the ordinary course of the Business, and pursuant to Section 5.3;
(e) dispose of any of the Purchased Assets, or enter into any
arrangements that could result in the transfer of, or otherwise affect, the
Purchased Assets;
(f) enter into any transaction in connection with the Purchased
Assets, other than transactions in the ordinary course of business which have
been pre-approved by Purchaser;
(g) enter into or commit to any joint venture, teaming arrangement
or similar arrangement relating to the Business;
(h) commence any material legal proceeding with respect to the
Business; or
(i) agree or commit to take any of the actions described in the
foregoing clauses.
5.2 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE.
(a) During the Pre-Closing Period, the Seller shall promptly notify
BackWeb in writing of:
12.
<PAGE> 14
(i) the discovery by the Company of any event, condition, fact
or circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes a material inaccuracy in or breach of
any representation or warranty made by the Seller in this Agreement;
(ii) any breach of any covenant or obligation of the Company;
and
(iii) the discovery by the Seller of any event, condition, fact
or circumstance that would make the timely satisfaction of any of the conditions
set forth in Section 7.1 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is required
to be disclosed pursuant to Section 5.2(a) requires any change in the Disclosure
Schedule attached hereto, or if any such event, condition, fact or circumstance
would require such a change assuming the Disclosure Schedule were dated as of
the date of the occurrence, existence or discovery of such event, condition,
fact or circumstance, then the Company shall promptly deliver to BackWeb an
update to the Disclosure Schedule specifying such change. No such update shall
be deemed to supplement or amend the Disclosure Schedule for the purpose of (i)
determining the accuracy of any of the representations and warranties made by
the Seller in this Agreement, or (ii) determining whether any of the conditions
set forth in Section 7.1 has been satisfied.
5.3 TERMINATION OF EMPLOYMENT OF EMPLOYEES. Seller will terminate the
employment of each of the Company's Employees identified on Exhibit C
immediately prior to the Closing in conjunction with Purchaser's offer of
employment to each of such Employees.
5.4 EMPLOYMENT AND NONCOMPETITION AGREEMENTS. Seller shall use
commercially reasonable efforts to cause each of the Retained Employees that
Purchaser shall point out to execute and deliver to BackWeb, at the Closing or
after the Closing, as the case may be, an employment agreement and a
confidentiality, non-competition and proprietary rights agreement, in the form
to be provided by BackWeb.
5.5 SELLER RECORDS AND INFORMATION.
5.5.1 Seller agrees that all documents that are retained by Seller
after the Closing Date and that are related to the Purchased Assets (whether or
not previously provided to BackWeb), including, without limitations, all
cd-roms, diskettes, tapes and any other media containing the source and object
codes for any software included in the Purchased Assets (and specifications for
access) and any related working papers, books, white papers and other
documentation, shall be open for inspection by representatives of Purchaser at
any time during regular business hours until such time as documents are
destroyed or possession thereof is given up to the Purchaser as provided for in
Section 5.5.2 herein and that Purchaser may during such period at its expense
make such copies thereof as it may reasonably request.
5.5.2 Without limiting the generality of Section 5.5.1, for a period
ending on the sixth anniversary of the Closing Date, Seller shall not destroy or
give up possession of any item
13.
<PAGE> 15
referred to in Section 5.5.1 hereof without first offering to the Purchaser the
opportunity, at Purchaser's expense (but without any other payment), to obtain
the same.
5.6 COVENANT NOT TO COMPETE.
(a) Seller and Principal Shareholder agree that, as part of the
consideration for the payment by Purchaser of the Purchase Consideration, for a
period of three years immediately following the Closing Date, neither Seller and
Principal Shareholder nor any of their respective subsidiaries or affiliates,
will, directly or indirectly, operate, perform, have any interest in or
otherwise be engaged in or concerned with a business which develops,
manufactures, prepares, sells, installs or distributes products or performs
services in competition with the Business of the Company as conducted on the
Closing Date. For these purposes, ownership of securities of a company whose
securities are publicly traded on a recognized securities exchange not in excess
of 5% of any class of such securities shall not be considered to be competition
with the Business of the Company. For avoidance of doubt, the fulfillment of
Seller's obligations arising out of the agreements described in Section 2.8
hereof, shall not be considered as competition with the Business of the Company.
(b) Seller and Principal Shareholder acknowledge that the
restrictions on their activities under Section 5.6(a) are necessary for the
reasonable protection of Purchaser and constitute a material inducement to
Purchaser's entering into and performing this Agreement. Seller and Principal
Shareholder further acknowledge, stipulate and agree that a breach of any such
obligations and agreements will result in irreparable harm and continuing damage
to Purchaser for which there will be no adequate remedy at law and further agree
that in the event of any breach of said obligations and agreements, Purchaser
shall be entitled to injunctive relief and to such other relief as is proper
under the circumstances.
(c) For avoidance of doubt, nothing in this Section 5 or this
Agreement shall prevent the Seller or Principal Shareholder from conducting
business relating to vending machines for food/drinks, parking meters, pre-paid
card machines, automatic meter reading for electricity, gas, temperature and
water, and security alarm systems, all subject to the terms and conditions of
the License Agreement.
ARTICLE 6
ADDITIONAL COVENANTS OF THE PARTIES
6.1 REASONABLE EFFORTS TO CLOSE. During the period commencing on the
date of the execution of this Agreement and continuing until the Closing Date,
Purchaser and Seller shall use their reasonable efforts to comply promptly with
all requests or requirements which applicable law or governmental officials may
impose on them with respect to the transactions which are the subject of this
Agreement, and to consummate such transactions as promptly as practicable. The
reasonable efforts of Purchaser and Seller shall include, without limitation,
good faith response, in cooperation with each other, to all requests for
information, documentary or otherwise, by any governmental agency.
14.
<PAGE> 16
6.3 DISCLOSURES, PRESS RELEASES. At all times, the parties shall remain
subject to the terms of that certain [Non-Disclosure Agreement between the
Purchaser and the Seller dated as of May __, 2000]. Purchaser and Seller will
keep the terms of this Agreement and the transactions contemplated hereunder
strictly confidential. Accordingly, except as required by law, neither Seller
(at any time) nor Purchaser (only prior to the date of this Agreement), without
the prior written consent of the other, will make any press release or any
similar public announcement concerning the transactions contemplated hereby,
provided that following the date of this Agreement, Purchaser shall be entitled
to make any such publications as it deems fit, but shall notify Seller (and
provide Seller with the draft publication and its final version) of such
publication in advance. In addition, other than as necessary to obtain any
consent required to consummate the transactions contemplated hereunder or as
required by law, no written or oral announcement or private disclosure with
respect to the transactions contemplated hereby will be made to any person
unrelated to Seller or Purchaser unless jointly approved by Seller and
Purchaser. If disclosure is required by law, the disclosing party shall consult
in advance with the other party and attempt in good faith to reflect such other
party's concerns in the required disclosure.
6.4 NON-SOLICITATION. Seller agrees that it shall not, for a period of
three years from the Closing Date, directly or indirectly hire or solicit for
employment any former employee of Seller hired by BackWeb on or after the
Closing Date.
ARTICLE 7
CLOSING CONDITIONS AND TRANSACTIONS
7.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER. The
obligations of Purchaser under this Agreement are subject to the fulfillment by
Seller prior to or at the Closing of each of the following conditions, any one
or more of which may be waived by Purchaser:
7.1.1 NO INJUNCTIVE PROCEEDINGS. No preliminary or permanent
injunction or other order (including a temporary restraining order) of any court
or other governmental agency which prevents the consummation of the transactions
which are the subject of this Agreement or prohibits Purchaser's ownership of
the Purchased Assets shall have been issued and remain in effect.
7.1.2 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by the Seller in this Agreement and in each of the other
agreements and instruments delivered to BackWeb in connection with the
transactions contemplated by this Agreement shall have been accurate in all
material respects as of the date of this Agreement, and shall be accurate in all
material respects as of the Closing Date as if made on the Closing Date.
15.
<PAGE> 17
7.1.3 PERFORMANCE OF COVENANTS. All of the covenants and obligations
that the Seller is required to comply with or to perform at or prior to the
Closing shall have been complied with and performed in all respects; provided
however that any noncompliance or nonperformance that results from BackWeb's
activities related to the operations of the Business during the Pre-Closing
Period shall not constitute noncompliance or nonperformance by the Seller for
the purposes of this Section 7.1.3.
7.1.4 CONSENTS AND APPROVALS. All consents and approvals required to
be obtained in connection with this Agreement and the transactions contemplated
by this Agreement (including, without limitation, the approvals referred to in
Section 7.1.5 hereunder) shall have been obtained and shall be in full force and
effect, other than those consents that, if not obtained and in full force and
effect, would not result in a Material Adverse Effect or would not prevent the
consummation of the transactions contemplated hereunder.
7.1.5 AGREEMENTS AND DOCUMENTS. BackWeb shall have received the
following agreements and documents, each of which shall be in full force and
effect:
(a) Copies of resolutions of the Board of Directors of Seller,
authorizing the execution, delivery and performance of this Agreement and the
transactions contemplated hereby.
(b) The Employment Agreements in the form of Exhibit D, executed
by the individuals identified on Exhibit C;
(c) Non-competition Agreements in the form of Exhibit E,
executed by the individuals identified on Exhibit C;
(d) confidential invention and assignment agreements, reasonably
satisfactory in form and content to BackWeb, executed by all of the Seller's (1)
employees, (2) former employees, (3) consultants and independent contractors,
and (4) former consultants and former independent contractors that work or have
worked in the Business who have not already signed such agreement; provided that
no such agreements will be required of the Persons identified in clauses (2),
(3) and (4) whose jobs or services provided did not materially relate to the
Purchased Assets;
(e) fully executed Escrow Agreement (the "ESCROW AGREEMENT") in
form and substance reasonably satisfactory to counsel for BackWeb and counsel
for the Seller, which shall contain, without limitation, provisions regarding
the following: (i) the release of the Escrow Payment and of $1,350,000 worth of
shares of the Escrow Shares upon the termination of a twelve (12) month period
commencing on the Closing Date, provided that (a) the Purchaser has successfully
retained the services of the Key Employees for such period (unless either of the
Key Employees has become incapacitated at any time following the Closing, in
which case this condition shall be deemed to have been satisfied with respect to
such Key Employee), and (b) no claim for indemnification has been filed (unless
being already settled) with the Escrow Agent during such period; (ii) the
release of the remaining $1,550,000 worth of shares of the Escrow Shares upon
termination of a 24 month period commencing on the Closing Date, provided that
16.
<PAGE> 18
the Purchaser has successfully retained the services of the Key Employees for
such period (unless either of the Key Employees has become incapacitated at any
time after 12 months following the Closing, in which case this condition shall
be deemed to have been satisfied with respect to such Key Employee); (iii)
provisions enabling the Seller to instruct the Escrow Agent as to the sale of
the Escrow Shares (with the proceeds of such sale(s) to be deposited in the
Escrow in lieu of the Escrow Shares); and (iv) such other terms and conditions
as are standard and customary in transactions of this nature;
(f) a legal opinion of Fischer, Behar, Chen & Co., dated as of
the Closing Date, in the form of Exhibit F; and
(g) a compliance certificate, dated as of the Closing Date,
executed by Seller's duly authorized representative certifying that: (1) each of
the representations and warranties set forth in Section 3 is accurate in all
respects as of the Closing Date as if made on the Closing Date and (2) the
conditions set forth in Sections 7.1.2, 7.1.3, 7.1.4, 7.1.6 and 7.1.7 hereof
have been duly satisfied.
(h) a letter from the Office of the Chief Scientist of Israel
consenting to the transactions contemplated by this Agreement on terms and
conditions acceptable to Purchaser. Seller shall bear and pay all royalties,
taxes and other payments due to the Chief Scientist arising out of or with
respect to the transactions contemplated by this Agreement; without limiting the
generality of the foregoing, Seller shall pay (or there shall be deducted from
the Purchase Consideration) such amount as is necessary, together with all
royalty payments previously made by Seller to the Chief Scientist, to repay 100%
of all grant amounts received by Seller from the Chief Scientist together with
any applicable interest. BackWeb is aware of the fact that it may be required to
sign an obligation to obey to certain laws and regulations, as required buy the
Office of the Chief Scientist.
(i) a letter from the Investment Center of canceling all current
investment programs of the Company, such that neither the Company nor the
Purchaser shall have any actual or contingent obligation towards the Investment
Center, or alternatively, in the event that the Company can not receive such
letter prior to the Closing, it shall provide the Purchaser, on or prior to the
Closing, an officer's certificate stating that the principal approval of the
Investment Center, as set forth above, was reached, but the official document
was not yet received. The official letter from the Investment Center will then
be provided to the Purchaser by no later than 45 days following the Closing.
Seller shall bear and pay all royalties, taxes and other payments due to the
Investment Center arising out of or with respect to the transactions
contemplated by this Agreement.
7.1.6 DELIVERY OF THE PURCHASED ASSETS. BackWeb shall have received,
in appropriate transfer instruments satisfactory to BackWeb, the Purchased
Assets, including, without limitations, all cd-roms, diskettes, tapes and any
other media containing the source and object codes for any software included in
the Purchased Assets (and specifications for access)
17.
<PAGE> 19
and any working papers, books, white papers and other documentation (including
in electronic formats) relating to the Purchased Assets.
7.1.7 CLOSING OF GUR-GANOR AGREEMENTS. The Gur-Ganor Agreements have
been executed, all conditions to their closing have been duly satisfied, and the
closings under such agreements shall have occurred.
7.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER. The
obligations of Seller under this Agreement are subject to the fulfillment by
Purchaser prior to the Closing of each of the following conditions, any one or
more of which may be waived by Seller:
7.2.1 NO INJUNCTIVE PROCEEDINGS. No preliminary or permanent
injunction or other order (including a temporary restraining order) of any state
or federal court or other governmental agency which prevents the consummation of
the transactions which are the subject of this Agreement or prohibits
Purchaser's ownership of the Purchased Assets shall have been issued and remain
in effect.
7.2.2 REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by the Purchaser in this Agreement and in each of the other
agreements and instruments delivered to Seller in connection with the
transactions contemplated by this Agreement shall have been accurate in all
material respects as of the date of this Agreement, and shall be accurate in all
material respects as of the Closing Date as if made on the Closing Date except
for items specifically permitted by this Agreement or consented to in writing by
the Seller.
7.2.3 CONSENTS, ETC. All consents and approvals required to be
obtained in connection with this Agreement and the transactions contemplated by
this Agreement shall have been obtained and shall be in full force and effect,
other than those consents that, if not obtained and in full force and effect,
would not result in a Material Adverse Effect or would not prevent the
consummation of the transactions contemplated hereunder.
7.2.4 PERFORMANCE OF AGREEMENTS. Purchaser shall have fully
performed in all material respects all obligations, agreements, conditions and
commitments required to be fulfilled by Purchaser on or prior to the Closing
Date and shall have delivered to Seller the documents, instruments and
certificates listed below or required by Article 8 herein.
7.3 NON-COMPLIANCE WITH AND TERMINATION OF THIS AGREEMENT.
(a) Each of the parties hereto agrees to use its best efforts to
bring about the satisfaction of the conditions required to be performed by it
hereunder prior to and at the Closing, including, without limitation, compliance
with the requirements of Section 6.2 hereof.
(b) This Agreement may be terminated at any time prior to the
Closing without any liability of either party to the other:
18.
<PAGE> 20
(i) by the mutual agreement of BackWeb and the Seller,
provided such termination is set forth in writing and executed by both parties;
(ii) by BackWeb if BackWeb reasonably determines that the
timely satisfaction of any condition set forth in Section 7.1 has become
impossible (other than as a result of any failure on the part of BackWeb to
comply with or perform any covenant or obligation of BackWeb set forth in this
Agreement);
(iii) by the Seller if the Seller reasonably determines that
the timely satisfaction of any condition set forth in Section 7.2 has become
impossible (other than as a result of any failure on the part of the Company to
comply with or perform any covenant or obligation set forth in this Agreement or
in any other agreement or instrument delivered to BackWeb);
(iv) by BackWeb if the Closing has not taken place on or
before _______, 2000 (other than as a result of any failure on the part of
BackWeb to comply with or perform any covenant or obligation of BackWeb set
forth in this Agreement).
ARTICLE 8
CLOSING DOCUMENTS
8.1 SELLER'S OBLIGATIONS. On the Closing Date, in addition to the
agreements, documents and certificates required pursuant to Section 7.1.5
hereof, Seller shall deliver to Purchaser physical possession of all tangible
material connected with the Purchased Assets and shall execute and/or deliver to
Purchaser all of the following:
8.1.1 RESOLUTIONS. Copies of resolutions of the Board of Directors
of Seller, certified by the attorney of Seller authorizing the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby.
8.1.2 BILL OF SALE. A bill of sale, duly executed by Seller, in form
and substance reasonably satisfactory to counsel for Purchaser, sufficient to
convey, transfer and assign to Purchaser all right, title and interest of Seller
in and to the Purchased Assets free and clear of Liens, claims, Encumbrances and
security interests in accordance with this Agreement.
8.1.3 ASSIGNMENTS. Assignments of the Purchased Assets, including
Licenses and Permits, duly executed by Seller, in form and substance reasonably
satisfactory to counsel for Purchaser, and all consents which Seller is able to
obtain therefor, or permitted alternate arrangements with respect thereto.
19.
<PAGE> 21
8.2 JOINT OBLIGATIONS. The parties will deliver each to the other the
certificates, records, schedules, and the other documents required by the terms
of this Agreement.
ARTICLE 9
INDEMNIFICATION
9.1 SURVIVAL OF REPRESENTATIONS, ETC.
(a) The representations and warranties made by the Seller and the
Principal Shareholder (including the representations and warranties set forth in
the Company Closing Certificate) shall survive the Closing until the end of
twenty-four (24) months following the Closing Date, provided that
representations and warranties with respect to intellectual property rights
(including any rights of third parties in or to the Purchased Assets) shall
survive for a period of five (5) years following the Closing Date, if made by
the Seller, and for a period of three (3) years following the Closing Date, if
made by the Principal Shareholder (the "Survival Period"); provided, however,
that if, at any time prior to the Survival Period, any Indemnitee (acting in
good faith) delivers to the Seller and/or to a Principal Shareholder (as
applicable) a written notice alleging the existence of an inaccuracy in or a
breach of any of the representations and warranties made by the Company and/or
the Principal Shareholder (and setting forth in reasonable detail the basis for
such Indemnitee's belief that such an inaccuracy or breach may exist) and
asserting a claim for recovery under Section 9.2 based on such alleged
inaccuracy or breach, then the claim asserted in such notice shall survive the
Survival Period until such time as such claim is fully and finally resolved.
(b) The representations, warranties, covenants and obligations of
the Company and the Principal Shareholder, and the rights and remedies that may
be exercised by the Indemnitees, shall not be limited or otherwise affected by
or as a result of any information furnished to, or any investigation made by or
knowledge of, any of the Indemnitees.
(c) For purposes of this Agreement, each statement or other item of
information set forth in the Disclosure Schedule or in any update to the
Disclosure Schedule shall be deemed to be a representation and warranty made by
the Seller and the Principal Shareholder in this Agreement.
9.2 INDEMNIFICATION. From and after the Closing Date (but subject to
Section 9.1(a)), the Indemnitees may seek indemnification first from the Escrow
Fund, second from the Seller, and only thereafter from the Principal
Shareholder, for any Damages that are directly suffered or incurred by any of
the Indemnitees or to which any of the Indemnitees may otherwise become subject
(regardless of whether or not such Damages relate to any third-party claim) and
which are from or as a result of, or are directly connected with: (i) any
inaccuracy in or breach of any representation or warranty of Seller and/or
Principal Shareholder in this Agreement; (ii) the non fulfillment of any
covenant, undertaking, agreement or other obligation of Seller under this
Agreement; (iii) any Legal Proceeding relating to any inaccuracy or breach of
the type referred to in clause "(i)" through "(ii)" above (including any Legal
Proceeding commenced by any Indemnitee for the purpose of enforcing any of its
rights under this Section 9). Nothing in this
20.
<PAGE> 22
Section shall be construed as preventing the Indemnitees from filing joint
claims against the Escrow Fund and/or the Seller and/or the Principal
Shareholder (as the case may be), provided that no collection shall be sought
from the Principal Shareholder unless reasonable collection steps were first
taken against the Escrow Fund and/or the Seller, but the Damages were not
covered in full.
9.3 DEFENSE OF THIRD PARTY CLAIMS. In the event of the assertion or
commencement by any Person of any claim or Legal Proceeding (whether against the
Sellers, against BackWeb or against any other Person) with respect to which any
of the Indemnitees shall have the right to seek indemnification pursuant to this
Section 9, BackWeb shall have the right, at its election, to proceed with the
defense of such claim or Legal Proceeding on its own. If BackWeb so proceeds
with the defense of any such claim or Legal Proceeding:
(a) all reasonable expenses (including attorneys' fees) relating to
the defense of such claim or Legal Proceeding shall be borne and paid out of the
Escrow Fund;
(b) BackWeb shall have the right to settle, adjust or compromise
such claim or Legal Proceeding with the consent of the Seller and Principal
Shareholder, as applicable; provided, however, that such consent shall not be
unreasonably withheld.
BackWeb shall give the Seller and Principal Shareholder, as applicable, prompt
notice of the commencement of any such Legal Proceeding against BackWeb;
provided, however, that any failure on the part of BackWeb to so notify the
Seller and Principal Shareholder shall not limit any of the rights of the
Indemnitees under this Section 9 (except to the extent such failure materially
prejudices the defense of such Legal Proceeding).
9.4 EXERCISE OF REMEDIES BY INDEMNITEES OTHER THAN BACKWEB. No
Indemnitee (other than BackWeb or any successor thereto or assign thereof) shall
be permitted to assert any indemnification claim or exercise any other remedy
under this Agreement unless BackWeb (or any successor thereto or assign thereof)
shall have consented to the assertion of such indemnification claim or the
exercise of such other remedy.
9.5 LIMITATIONS ON INDEMNIFICATION.
(a) Except as specifically set forth herein, the maximum amount of
indemnifiable Damages that may be recovered, arising out of or resulting from
Section 9.2(a) shall be an amount equal to the Purchase Consideration, when such
indemnifiable Damages are recovered from the Seller, and an amount of up to
eight million Dollars ($8,000,000), when such indemnifiable Damages are
recovered from the Principal Shareholder.
(b) Notwithstanding anything to the contrary contained in this
Agreement, no Indemnitee shall be entitled to seek indemnification from the
Seller and Principal Shareholder under this Agreement with respect to any
Damages arising out of or resulting from Section 9.2, until the aggregate amount
of such Damages exceeds twenty five thousand US dollars ($25,000), and where
such damages exceed twenty five thousand US dollars ($25,000), the Indemnitees
shall be entitled to indemnification in full (with no deduction of the twenty
five thousand US
21.
<PAGE> 23
dollars ($25,000)), subject to the provisions of Section 9.5(a).
9.6 EXCLUSIVE REMEDIES. BackWeb acknowledges and agrees that its sole
and exclusive remedy (except in the case of fraud, in which case BackWeb
reserves all rights available to it under the law with respect to the party
committing such fraud) with respect to any and all claims relating to the
subject matter of this Agreement and the other agreements, documents and
certificates specifically contemplated by this Agreement shall be pursuant to
the indemnification provisions set forth in this Section 9 and specific
performance as contemplated by Section 10.4 below.
ARTICLE 10
MISCELLANEOUS
10.1 ATTORNEYS' FEES. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
10.2 NOTICES. All notices, requests, demands and other communications
given hereunder (collectively, "Notices") shall be in writing and personally
delivered, sent by facsimile or mailed by registered or certified mail, postage
prepaid, as follows:
(a) If to Purchaser at:
BackWeb Technologies Ltd.
3 Abba-Hillel Street
Ramat-Gan 52136
Israel
Attn.:
Facsimile:
with a copy to:
Naschitz, Brandes & Co.
5 Tuval Street
Tel Aviv 67897
Israel
Attn.: Hanina Brandes
Facsimile: (972)-3-6235005
(b) If to Seller at:
22.
<PAGE> 24
Mobix Communications Ltd.
88 Gisin St.
Petah-Tikva 49170
Israel
Attn.: Ester Hemli
Facsimile: (972)-3-9213482
with a copy to:
Fischer Behar Chen and Co.
3 Daniel Frish St.
Tel-Aviv
Israel
Attention: Reuven Behar Adv.
Facsimile:
(c) If to Principal Shareholder at:
-----------------------------------
-----------------------------------
-----------------------------------
Israel
Attn.:
Facsimile:
with a copy to:
-----------------------------------
-----------------------------------
-----------------------------------
Attention:
Facsimile:
(d) All notices shall be deemed delivered when actually received if
personally delivered or sent by facsimile or three days after having been placed
in the mail, addressed in accordance with Sections 10.2(a), 10.2(b) or 10.2(c)
hereof, as the case may be, provided that any notice sent by facsimile must
immediately be placed in the mail. Each of the parties shall hereafter notify
the other in accordance with this Section 10.2 of any change of address to which
notice is required to be mailed.
23.
<PAGE> 25
10.3 ASSIGNMENT AND AMENDMENT OF AGREEMENT. This Agreement shall be
binding upon the respective successors and assigns of the parties hereto. This
Agreement may be amended only by written agreement of the parties hereto, duly
executed by an authorized representative of each of the parties hereto.
Notwithstanding the forgoing, BackWeb may freely assign any or all of its rights
under this Agreement (including its indemnification rights under Section 9), in
whole or in part, to any other Person without obtaining the consent or approval
of any other party hereto or of any other Person. None of the rights hereunder
may be assigned by the Seller without prior written consent of BackWeb.
10.4 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and remedies
of the parties hereto shall be cumulative (and not alternative). The parties to
this Agreement agree that, in the event of any breach or threatened breach by
any party to this Agreement of any covenant, obligation or other provision set
forth in this Agreement for the benefit of any other party to this Agreement,
such other party shall be entitled (in addition to any other remedy that may be
available to it) to (a) a decree or order of specific performance or mandamus to
enforce the observance and performance of such covenant, obligation or other
provision, and (b) an injunction restraining such breach or threatened breach.
10.5 WAIVER.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising out
of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
10.6 GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Israel
(without giving effect to the conflict of laws principles). Each party to this
Agreement consents to the exclusive jurisdiction and venue of the appropriate
court in Tel-Aviv - Jaffa in the state of Israel.
10.7 FURTHER ASSURANCES. Each party agrees that it will execute and
deliver, or cause to be executed and delivered, on or after the date of this
Agreement, all such other instruments and will take all reasonable actions as
may be necessary to transfer and convey the Purchased Assets to Purchaser, on
the terms herein contained, and to consummate the transactions herein contained
to effectuate the provisions and purposes hereof.
10.8 NO THIRD PARTY RIGHTS. This Agreement is not intended and shall not
be construed to create any rights in any parties other than Seller and Purchaser
and no person shall
24.
<PAGE> 26
have any rights as a third party beneficiary hereunder, including, without
limitation, any rights with respect to the provisions of Section 5 hereof.
10.9 SEVERABILITY. The invalidity of any provision of this Agreement or
portion of a provision shall not affect the validity of any other provision of
this Agreement or the remaining portion of the applicable provision.
10.10 COUNTERPARTS. This Agreement may be executed simultaneously in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.11 ENTIRE AGREEMENT. This Agreement, including the schedules and
exhibits attached hereto, constitutes the entire agreement between the parties
and supersedes any prior understandings, agreements, or representations by or
among the parties, written or oral, to the extent they related in any way to the
subject matter hereof; provided, however, that the [Non-Disclosure Agreement
between BackWeb and the Company dated as of _______, 2000 and the No-Shop letter
between BackWeb and the Company dated as of _______, 2000] shall not be
superseded by this Agreement and shall remain in effect in accordance with their
respective terms until the earlier of (a) the Closing Date, or (b) the date on
which such agreement or letter is terminated in accordance with their respective
terms.
10.12 HEADINGS. The headings contained in this Agreement and in the
schedules attached hereto are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
10.13 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
Except as otherwise indicated, all references in this Agreement to
"Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
25.
<PAGE> 27
IN WITNESS WHEREOF, Seller, Purchaser and the Principal shareholder have
duly executed and delivered this Agreement as of the day and year first above
written.
BACKWEB TECHNOLOGIES LTD.
By: /s/ HANAN HIRON
------------------------------
[name] Hanan Hiron
[office] CFO
MOBIX COMMUNICATIONS LTD.
By: /s/ ESTER HEMLI
------------------------------
[name] Ester Hemli
[office] CEO
/s/ ESTER HEMLI
---------------------------------
ESTER HEMLI
26.
<PAGE> 28
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
AGREEMENT. "Agreement" shall mean the Asset Purchase Agreement to which this
Exhibit A is attached (including the Disclosure Schedule), as it may be amended
from time to time.
COMPANY EMPLOYEES. "Company Employees" shall mean all employees of the Company,
both salaried and hourly, who are employees of the Company on the Closing Date.
CONSENT. "Consent" shall mean any approval, consent, ratification, permission,
waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written, oral or other agreement, contract,
subcontract, lease, instrument, note, warranty, insurance policy, benefit plan
or legally binding commitment or undertaking of any nature.
DAMAGES. "Damages" shall include any loss, damage, injury, decline in value,
liability, settlement, judgment, award, fine, penalty, Tax, fee (including
reasonable attorneys' fees), charge, cost (including costs of investigation) or
expense of any nature.
DISCLOSURE SCHEDULE. "Disclosure Schedule" shall mean the schedule (dated as of
the date of the Agreement) delivered to BackWeb on behalf of the Seller. Any
disclosure in any Schedule of the Disclosure Schedule shall be treated as an
exception to each and all of the representations, warranties and covenants of
the Agreement to which they relate.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation, charge,
mortgage, security interest, encumbrance, claim, infringement, interference,
option, right of first refusal, preemptive right, community property interest or
restriction of any nature (including any restriction on the voting of any
security, any restriction on the transfer of any security or other asset, any
restriction on the receipt of any income derived from any asset, any restriction
on the use of any asset and any restriction on the possession, exercise or
transfer of any other attribute of ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company).
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean any: (a)
permit, license, certificate, franchise, permission, clearance, registration,
qualification or authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Body; or (b) right under
any Contract with any Governmental Body.
1.
<PAGE> 29
GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).
INDEMNITEES. "Indemnitees" shall mean the following Persons: (a) BackWeb; (b)
BackWeb's current and future affiliates; (c) the respective Representatives of
the Persons referred to in clauses "(a)" and "(b)" above; and (d) the respective
successors and assigns of the Persons referred to in clauses "(a)", "(b)" and
"(c)" above; provided, however, that the Seller shall not be deemed to be an
"Indemnitee."
KEY EMPLOYEES. "Key Employees" shall mean Messrs. Israel Ganor and Eli Gur.
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding), hearing, material inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any domestic, foreign or other
law, statute, constitution, principle of common law, resolution, ordinance,
code, edict, decree, rule, regulation, ruling or requirement issued, enacted,
adopted, promulgated, implemented or otherwise put into effect by or under the
authority of any Governmental Body.
LIENS. "Liens" means liens, charges, claims, pledges, security interests, third
party rights and encumbrances of any nature whatsoever.
MATERIAL ADVERSE EFFECT. "Material Adverse Effect" means any change, effect or
circumstance that, individually or when taken together with all other changes,
effects or circumstances that have occurred prior to the date of determination
of the occurrence of the material adverse effect (considered together with all
other matters that would constitute exceptions to the representations and
warranties set forth in the Agreement or in the Seller's compliance certificate
but for the presence of the "Material Adverse Effect" or other materiality
qualifications, or any similar qualifications, in such representations and
warranties), is materially adverse to the Purchased Assets or to the financial
condition or results of operation of the Business.
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
REPRESENTATIVES. "Representatives" shall mean officers, directors, employees,
agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange Commission.
2.
<PAGE> 30
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933, as
amended.
SELLER CONTRACT. "Seller Contract" shall mean any Contract: (a) to which the
Seller is a party with respect to the Purchased Assets either directly or
indirectly; (b) by which any of the Purchased Assets is or may become bound or
under which the Seller has, or may become subject to, any obligation with
respect to the Purchased Assets either directly or indirectly; or (c) under
which the Seller has or may acquire any right or interest with respect to the
Purchased Assets either directly or indirectly.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax, capital
gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad valorem
tax, transfer tax, stamp tax, sales tax, use tax, property tax, business tax,
withholding tax or payroll tax), levy, assessment, tariff, duty (including any
customs duty), deficiency or fee, and any related charge or amount (including
any fine, penalty or interest), imposed, assessed or collected by or under the
authority of any Governmental Body.
TAX RETURN. "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
3.
<PAGE> 31
EXHIBIT B
PURCHASED ASSETS
All registered patents, designs and trademarks, all applications for
registration thereof, and all computer programs including, but not limited to,
computer programs embedded in several hardware platforms and related
flow-charts, updates and data, whether in object or source code form, developed,
or used in connection with the business of the Company, and all hardware,
algorithms, utilities, flowcharts, documentation, processes, formulations,
ideas, data, experimental methods, or results, descriptions, scientific plans,
depictions, written, printed or electronically stored materials or information,
including specifications, pricing plans, data, engineering drawings,
specifications for products and/or processes and/or software, test protocols,
and all other materials relating thereto, and copies thereof in any storage
media, and all other works of authorship, inventions, concepts, ideas, and
discoveries developed, discovered, conceived, created, made, reduced to
practice, or used by the Company and all intellectual property rights therein,
including, without limitation, all copyrights in the United States, Israel and
elsewhere, including all rights of registration and publication, rights to
create derivative works, and all other rights incident to copyright ownership,
for the residue now unexpired of the present term of any and all such copyrights
and any term thereafter granted during which such information is entitled to
copyright, for the longest period of protection accorded to such interests under
applicable law. Without limiting the foregoing, the Purchased Assents shall
include also training material and technical presentations and the following
elements:
4.
<PAGE> 32
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
DEVELOPMENT CONFIGURATION,
ENVIRONMENT, MONITORING,
SOURCE OPERATING C COMPILER, TESTS AND
CODE SYSTEM MAKEFILES DOCUMENTATION SIMULATIONS
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gateway, 95 for Mobitex Windows NT/95/98 Microsoft Visual C++, Overview, GW_guide Configuration Tool, IP
Visual Basic monitor, License
Generator, License
Library
------------------------------------------------------------------------------------------------------------------------------
MobiLink Windows NT/95/98 Microsoft Visual C++ User Guide, SRS
------------------------------------------------------------------------------------------------------------------------------
IP Server for Mobitex Windows NT/95/98 Microsoft Visual C++ Release Notes IP monitor
------------------------------------------------------------------------------------------------------------------------------
WinSock Interface Windows NT/95/98 Microsoft Visual C++ Demo Guide
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
SOURCE INSTALLATION DEMONSTRATION
CODE PROCEDURES APPLICATION
----------------------------------------------------------------------------
<S> <S> <C>
Gateway, 95 for Mobitex Install Shield SignHost, Tele_host,
Appwww
----------------------------------------------------------------------------
MobiLink
----------------------------------------------------------------------------
IP Server for Mobitex Install Shield FileTransfer, Chat
----------------------------------------------------------------------------
WinSock Interface None SignCDPD, SignCDMA
----------------------------------------------------------------------------
</TABLE>
5.
<PAGE> 33
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
DEVELOPMENT
ENVIRONMENT, CONFIGURATION,
C COMPILER, MONITORING,
SOURCE CODE OPERATING SYSTEM MAKEFILES DOCUMENTATION TESTS AND SIMULATIONS
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GATEWAY, 95 FOR Windows NT/95/98 Microsoft Visual C++ Overview, Test_doc, GSM_test, License
GSM User Guide, Demo Guide Library
---------------------------------------------------------------------------------------------------------------------------------
CE Windows CE Microsoft Visual C++ Overview, Demo Guide, License Library,
User Guide, SRS Configuration
---------------------------------------------------------------------------------------------------------------------------------
IP CLIENT Windows CE Microsoft Visual C++ Overview Preliminary
Documentation, Release Notes
---------------------------------------------------------------------------------------------------------------------------------
Palm (Pilot) Palm OS Metroworks Codewarrior Overview, Demo Guide, PiloTest, cmp_mob,
User Guide License Library
---------------------------------------------------------------------------------------------------------------------------------
Interactive Pager 950 RIM Microsoft Visual C++ User Guide Test_tool
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------
INSTALLATION DEMONSTRATION
PROCEDURES APPLICATION
--------------------------------------------------
<S> <C>
Install Shield SignHost,
VendingMachine,
VendingTools
--------------------------------------------------
Install Shield Tele_mob, PalmSign
--------------------------------------------------
Install Shield Mail Client,
FileTransfer, Chat
--------------------------------------------------
Install Shield PiloSign, PiloMetric,
PilosignGSM,
PiloMetricGSM,
PiloSignTCP
--------------------------------------------------
None VendingApp
--------------------------------------------------
</TABLE>
6.
<PAGE> 34
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
DEVELOPMENT CONFIGURATION,
ENVIRONMENT, MONITORING,
OPERATING C COMPILER, TESTS AND
SOURCE CODE SYSTEM MAKEFILES DOCUMENTATION SIMULATIONS
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RT (Embedded Radio Portable, DOS Microsoft C, Borland Overview, User Guide, License Library,
Terminal) for Mobitex C, Keil C51, Others, Porting Guide, Design cmp_mob
Lint scripts Papers, CMP Design
------------------------------------------------------------------------------------------------------------------------------
RT (Embedded Radio Portable, DOS Microsoft C, Borland Overview, User Guide Cmp_mob
Terminal) for GSM C, Keil C51, Others,
Lint scripts
------------------------------------------------------------------------------------------------------------------------------
RM (Embedded Radio Modem) RTXC, DOS (as Borland C, IAR, Overview, Integrator MCT
Reference) Others, Lint scripts Guide, API Reference,
Test document, Design
Papers
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------
INSTALLATION DEMONSTRATION
PROCEDURES APPLICATION
--------------------------------------------------
<S> <C>
DOS scripts RT_demo
--------------------------------------------------
DOS scripts RT_demo
--------------------------------------------------
DOS scripts
--------------------------------------------------
</TABLE>
7.
