Stock Purchase Agreement - LivePerson Inc. and HumanClick Ltd.
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STOCK PURCHASE AGREEMENT
among
LIVEPERSON, INC.,
HUMANCLICK LTD.
and
THE SHAREHOLDERS OF
HUMANCLICK LTD
Dated as of October 12, 2000
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TABLE OF CONTENTS
PAGE
I. DEFINITIONS...............................................................1
SECTION 1.01. Certain Defined Terms....................................1
II. SALE AND TRANSFER OF COMMON SHARES; CLOSING; PURCHASE PRICE..............6
SECTION 2.01. Sale and Transfer of Company Shares......................6
SECTION 2.02. Closing..................................................6
SECTION 2.03. Delivery of Company Shares and Payment of Purchase
Price....................................................6
SECTION 2.04. Company Options..........................................7
SECTION 2.05. Fractional Shares........................................8
III. REPRESENTATIONS AND WARRANTIES AS TO THE COMPANY.......................10
SECTION 3.01. Organization and Qualification; No Subsidiaries.........10
SECTION 3.02. Memorandum and Articles of Association..................11
SECTION 3.03. Capitalization..........................................11
SECTION 3.04. Authority Relative to this Agreement....................11
SECTION 3.05. No Conflicts; Required Filings and Consents.............11
SECTION 3.06. Permits; Compliance with Laws...........................12
SECTION 3.07. Financial Statements....................................12
SECTION 3.08. Absence of Certain Changes or Events....................13
SECTION 3.09. Employee Matters........................................14
SECTION 3.10. Contracts...............................................16
SECTION 3.11. Litigation..............................................17
SECTION 3.12. Environmental Matters...................................17
SECTION 3.13. Intellectual Property...................................17
SECTION 3.14. Taxes...................................................20
SECTION 3.15. Insurance...............................................21
SECTION 3.16. Properties..............................................21
SECTION 3.17. Affiliates..............................................22
SECTION 3.18. Brokers.................................................22
SECTION 3.19. Certain Business Practices..............................22
SECTION 3.20. Business Activity Restriction...........................22
SECTION 3.21. Grants, Incentives and Subsidies........................23
SECTION 3.22. Registered Users........................................23
SECTION 3.23. Representations Complete................................23
IV. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS......................23
SECTION 4.01. Authorization of Agreements, Etc........................23
SECTION 4.02. Validity................................................24
SECTION 4.03. Title to Shares.........................................24
SECTION 4.04. Investment Representations..............................24
SECTION 4.05. Brokers.................................................26
SECTION 4.06. Tax Withholding.........................................26
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V. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER..........................26
SECTION 5.01. Organization and Qualification; Subsidiaries............26
SECTION 5.02. Capitalization..........................................26
SECTION 5.03. Authority Relative to this Agreement....................27
SECTION 5.04. No Conflict; Required Filings and Consents..............27
SECTION 5.05. SEC Filings; Financial Statements.......................28
SECTION 5.06. Absence of Certain Changes or Events....................28
SECTION 5.07. Brokers.................................................29
SECTION 5.08. Representations Complete................................29
VI. COVENANTS...............................................................29
SECTION 6.01. Conduct of Business by the Company Pending the
Closing.................................................29
SECTION 6.02. Notices of Certain Events...............................31
SECTION 6.03. Access to Information; Confidentiality..................31
SECTION 6.04. No Solicitation of Transactions.........................32
SECTION 6.05. Further Action; Consents; Filings.......................32
SECTION 6.06. Certain Tax Matters.....................................33
SECTION 6.07. Public Announcements....................................34
SECTION 6.08. Lock-up Agreement of Shareholders.......................35
SECTION 6.09. Cash on Hand; Indebtedness and Liabilities.............35
SECTION 6.10. Legend..................................................35
VII. CONDITIONS PRECEDENT...................................................35
SECTION 7.01. Conditions Precedent to the Obligations of Each
Party...................................................35
SECTION 7.02. Conditions Precedent to the Obligation of the
Purchaser...............................................36
SECTION 7.03. Conditions Precedent to the Obligations of the
Company and the Shareholders............................38
VIII. INDEMNIFICATION.......................................................38
SECTION 8.01. Survival of Representations and Warranties..............38
SECTION 8.02. Tax Indemnity...........................................39
SECTION 8.03. General Indemnity.......................................39
SECTION 8.04. Conditions of Indemnification...........................40
SECTION 8.05. Threshold for Damages...................................41
SECTION 8.06. Escrow Fund; Exclusive Remedy...........................41
SECTION 8.07. Escrow Period...........................................42
SECTION 8.08. Claims upon Escrow......................................42
SECTION 8.09. Objections to Claims....................................42
SECTION 8.10. Resolution of Conflicts; Arbitration....................43
IX. TERMINATION AND ABANDONMENT.............................................43
SECTION 9.01. Termination.............................................43
SECTION 9.02. Procedure and Effect of Termination.....................44
X. MISCELLANEOUS............................................................45
SECTION 10.01. Expenses, Etc..........................................45
SECTION 10.02. Notices................................................45
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SECTION 10.03. Waivers................................................46
SECTION 10.04. Waiver of Rights of First Refusal......................46
SECTION 10.05. Amendments, Supplements, Etc...........................46
SECTION 10.06. Governing Law..........................................46
SECTION 10.07. Waiver of Jury Trial...................................47
SECTION 10.08. Headings; Interpretation...............................47
SECTION 10.09. Counterparts...........................................47
SECTION 10.10. Entire Agreement.......................................47
SECTION 10.11. Binding Effect; Benefits...............................47
SECTION 10.12. Assignability..........................................47
Schedule Description
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I Shareholders
II Existing Convertible Securities
Exhibit Description
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A Form of Escrow Agreement
B-1 Form of Executive Employment Agreement - Eitan Ron
B-2 Form of Executive Employment Agreement - Tal Goldberg
C-1 Form of Opinion of Zellermayer, Pelossof, Adv., Israeli Counsel to
the Company
C-2 Form of Opinion of Parker Chapin LLP, U.S. Counsel to the Company
D [Intentionally Omitted]
E Form of Repurchase Option Agreement
F [Intentionally Omitted]
G Form of Opinion of Brobeck, Phleger & Harrison LLP, U.S. Counsel to the
Purchaser
H Capitalization/Vesting Schedule
I Form of Employee Proprietary Information and Intellectual Property
Agreement
J Form of Independent Contractor/Consultant Services Agreement
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of October 12, 2000, among
LIVEPERSON, INC., a Delaware corporation (the "PURCHASER"), HUMANCLICK LTD., a
private company organized under the laws of the State of Israel (the "COMPANY"),
and the shareholders of the Company named in SCHEDULE I hereto (hereinafter
sometimes referred to individually as a "SHAREHOLDER" and collectively as the
"SHAREHOLDERS").
WHEREAS, the Shareholders own all of the issued and outstanding
shares of capital stock of the Company, consisting of 1,906,512 Ordinary Shares
("COMPANY SHARES"), NIS 0.01 par value ("COMPANY CAPITAL STOCK"), of the
Company; and
WHEREAS, the Shareholders desire to sell and the Purchaser desires
to purchase the Company Shares, all on the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows:
I.
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. Unless the context otherwise
requires, the following terms, when used in this Agreement, shall have the
respective meanings specified below (such meanings to be equally applicable to
the singular and plural forms of the terms defined):
"ACTION" shall mean any legal, administrative, governmental or
regulatory proceeding or other action, suit, proceeding, claim, arbitration,
mediation, alternative dispute resolution procedure, inquiry or investigation by
or before any arbitrator, mediator, court or other Governmental Authority.
"AFFILIATE" shall mean, with respect to any Person, any other Person
that controls, is controlled by or is under common control with the first
Person.
"BUSINESS DAY" shall mean any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized by Law or executive order to close in New York or the
State of Israel ("ISRAEL").
"CAUSE" shall mean (i) the employee's willful and material breach of
the terms of his or her employment; (ii) the employee's commission of any felony
or any crime involving moral turpitude; (iii) gross negligence or willful
misconduct by the employee in connection with his or her duties; or (iv) the
employee's willful refusal to perform his or her duties.
"CLOSING PRICE" shall mean the average closing price on the Nasdaq
National Market of a share of Purchaser Common Stock as reported in the WALL
STREET JOURNAL or, if not available, such other authoritative publication as may
be reasonably selected by the Purchaser,
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for the ten consecutive trading days ending on and including the last trading
date immediately preceding the date hereof.
"COMPANY DISCLOSURE SCHEDULE" shall mean the disclosure schedule
delivered by the Company to the Purchaser prior to the execution of this
Agreement and forming a part hereof.
"COMPANY INTELLECTUAL PROPERTY" shall mean all patents (including,
without limitation, all U.S. and foreign patents, patent applications, patent
disclosures, and any and all divisions, continuations, continuations-in-part,
reissues, re-examinations and extensions thereof), design rights, trademarks,
trade names and service marks (whether or not registered), trade dress, Internet
domain names, copyrights (whether or not registered) and any renewal rights
therefor, SUI GENERIS database rights, statistical models, technology,
inventions, supplier lists, trade secrets, know-how, computer software programs
or applications in both source and object code form, databases, technical
documentation of such software programs ("TECHNICAL DOCUMENTATION"),
registrations and applications for any of the foregoing and all other
proprietary information or materials that were material to the Company's
business or are currently used in the Company's business in any product,
technology or process (i) currently being or formerly manufactured, published or
marketed by the Company or (ii) previously or currently under development for
possible future manufacturing, publication, marketing or other use by the
Company.
"COMPANY MATERIAL ADVERSE EFFECT" shall mean any change in or effect
on the business of the Company that, individually or in the aggregate (taking
into account all other such changes or effects), is, or is reasonably likely to
be, materially adverse to the business, assets, liabilities, financial condition
or results of operations of the Company; provided that continuing losses by the
Company in the ordinary course of business consistent with past practice will
not be deemed to be a Company Material Adverse Effect.
"COMPANY OPTION" shall mean options to purchase Company Capital
Stock granted and those obligations to grant such option to employees,
consultants or directors set forth on Schedule II under or subject to the terms
of the Company Option Plan or pursuant to other specific agreements approved by
the Board of Directors of the Company and set forth on Schedule II, all of which
shall be subject to the terms of the Company Option Plan on or prior to the
Closing Date (in each case, whether or not vested).
"COMPANY OPTION PLAN" means the Company's 2000 Stock Option Plan
adopted by the Company's Board of Directors on April 11, 2000 as in effect as of
the date hereof.
"COMPETING TRANSACTION" shall mean any of the following involving
the Company (other than the transactions contemplated by this Agreement):
(i) any merger, consolidation, share exchange, business
combination or other similar transaction;
(ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of 20% or more of the assets of the Company in a
single transaction or series of transactions;
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(iii) any Person having acquired beneficial ownership or the
right to acquire beneficial ownership of, or any "group" (as such term is
defined under Section 13(d) of the Exchange Act) having been formed that
beneficially owns or has the right to acquire beneficial ownership of, 20%
or more of the outstanding voting securities of the Company; or
(iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of
the foregoing.
"CONFIDENTIALITY AGREEMENT" shall mean the confidentiality agreement
dated June 6, 2000, between the Purchaser and the Company.
"CONTRACTS" shall mean, with respect to any Person, all agreements,
undertakings, contracts, obligations, arrangements, promises, understandings and
commitments (whether written or oral and whether express or implied) (i) to
which such Person is a party, (ii) under which such Person has any rights, (iii)
under which such Person has any Liability or (iv) by which such Person, or any
of the assets or properties owned or used by such Person, is bound.
"$" shall mean United States Dollars.
"ENVIRONMENTAL LAW" shall mean any Israeli Law and any enforceable
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to pollution or
protection of the environment or natural resources, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Material, as in effect as
of the date hereof.
"ENVIRONMENTAL PERMIT" shall mean any permit, approval,
identification number, license or other authorization required under or issued
pursuant to any applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"EXPENSES" shall mean, with respect to any party hereto, all
out-of-pocket expenses (including, without limitation, all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to a party
hereto and its Affiliates) incurred by such party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution and
performance of its obligations pursuant to this Agreement and the consummation
of the transactions contemplated by this Agreement, and all other matters
related to the transactions contemplated hereby.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time.
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"GOVERNMENTAL ENTITY" shall mean any United States Federal, state or
local or any foreign (including, without limitation, Israeli) governmental,
regulatory or administrative authority, agency or commission or any court,
tribunal or arbitral body.
"GOVERNMENTAL ORDER" shall mean any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Entity.
"HAZARDOUS MATERIAL" shall mean (i) any petroleum, petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials or polychlorinated biphenyls or (ii) any chemical,
material or substance defined or regulated as toxic or hazardous or as a
pollutant or contaminant or waste under any applicable Environmental Law.
"INDEBTEDNESS" of any Person shall mean, without duplication, (a)
all obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of payments not yet made for services already provided or property already owned
by the Person (excluding current accounts payable incurred in the ordinary
course of business), (f) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien on property owned or acquired by such Person, whether or
not the Indebtedness secured thereby has been assumed; (g) all guarantees by
such Person of Indebtedness of others, (h) all capital lease obligations of such
Person (other than as listed on Schedule 3.10), (i) all obligations, contingent
or otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty and (j) all obligations, contingent or otherwise, of
such Person in respect of bankers' acceptances. The Indebtedness of any Person
shall include the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor. Notwithstanding
the foregoing, the Indebtedness of any Person shall not include any obligations
of such Person with respect to penalties arising from unplanned terminations of
agreements.
"INVESTORS" shall mean those Shareholders marked as investors in
Schedule I hereto.
"ISRAELI GAAP" shall mean generally accepted accounting principles
in Israel as in effect from time to time.
"LAW" shall mean any United States Federal, state or local or
foreign statute, law, ordinance, regulation, rule, code, order, judgment,
decree, other requirement or rule of law.
"LIABILITY" shall mean any and all claims, debts, liabilities,
obligations and commitments of whatever nature, whether asserted or reasonably
expected to be asserted, fixed, absolute or contingent, matured or unmatured,
accrued or unaccrued, liquidated or unliquidated
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or due or to become due, and whenever or however arising (including those
arising out of any Contract or tort, whether based on negligence, strict
liability or otherwise) regardless of whether the same would be required by
Israeli GAAP to be reflected as a liability in financial statements or disclosed
in the notes thereto.
"LIENS" shall mean, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or of such asset, (b) the interest of a vendor or a lessor under
any conditional sale agreement, capital lease or title retention agreement (or
any financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"NIS" shall mean the New Israeli Shekel, the lawful currency of the
State of Israel.
"PERSON" shall mean an individual, corporation, partnership, private
company, limited partnership, limited liability company, limited liability
partnership, syndicate, person (including, without limitation, a "person" as
defined in Section 13(d)(3) of the Exchange Act), trust, association, entity or
government or political subdivision, agency or instrumentality of a government.
"PURCHASER COMMON STOCK" shall have the meaning attributed to such
term in Section 2.03(b).
"PURCHASER MATERIAL ADVERSE EFFECT" shall mean any change in or
effect on the business of Purchaser and the Purchaser Subsidiaries that,
individually or in the aggregate (taking into account all other such changes or
effects), is, or is reasonably likely to be, materially adverse to the business,
assets, liabilities, financial condition or results of operations of the
Purchaser and the Purchaser Subsidiaries, taken as a whole; provided that
neither (i) continuing losses by the Purchaser and the Purchaser Subsidiaries,
taken as a whole, in the ordinary course of business consistent with past
practice nor (ii) a decrease in the Purchaser's stock price will be deemed to be
a Purchaser Material Adverse Effect.
"PURCHASER SHARES" shall have the meaning attributed to such term
in Section 2.03(b).
"PURCHASER OPTIONS" shall mean options to purchase shares of
Purchaser Common Stock under the Company Option Plan after giving effect to
Section 2.03.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"SUBSIDIARY" shall mean, with respect to any Person, any
corporation, private company, partnership, limited partnership, limited
liability company, limited liability partnership, joint venture or other legal
entity of which such Person (either alone or through or
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together with any other subsidiary of such Person) owns, directly or indirectly,
a majority of the stock or other equity interests.
"TAX" shall mean (i) any and all taxes, fees, levies, duties,
tariffs, imposts and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Entity or taxing authority,
including, without limitation, taxes or other charges on or with respect to
income, franchises, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes;
license, registration and documentation fees; and customers' duties, tariffs and
similar charges; (ii) any liability for the payment of any amounts of the type
described in (i) as a result of being a member of an affiliated, combined,
consolidated or unitary group for any taxable period; and (iii) any liability
for the payment of amounts of the type described in (i) or (ii) as a result of
being a transferee of, or a successor in interest to, any Person or as a result
of an express or implied obligation to indemnify any Person.
"TAX RETURN" shall mean any return, statement or form (including,
without limitation, any estimated tax reports or return, withholding tax reports
or return and information report or return) required to be filed with respect to
any Taxes.
II.
SALE AND TRANSFER OF COMMON SHARES;
CLOSING; PURCHASE PRICE
SECTION 2.01. SALE AND TRANSFER OF COMPANY SHARES. Upon to the terms
and subject to the conditions set forth herein, each Shareholder shall sell to
the Purchaser, and the Purchaser shall purchase from such Shareholder, on the
Closing Date (as hereinafter defined), the number of Company Shares set forth
opposite the name of such Shareholder in SCHEDULE I hereto under the heading
"Company Shares."
SECTION 2.02. CLOSING. The closing of the transactions contemplated
by this Agreement (the "CLOSING") shall take place on October 12, 2000 at 4:30
P.M. at the offices of Brobeck, Phleger & Harrison LLP, 1633 Broadway, New York,
New York 10019 or at such other place as the Purchasers and the Shareholders may
mutually agree (the date and time of the Closing is herein called the "CLOSING
DATE").
SECTION 2.03. DELIVERY OF COMPANY SHARES AND PAYMENT OF PURCHASE
PRICE. (a) At the Closing, each Shareholder shall deliver to the Purchaser, free
and clear of any Liens, a certificate or certificates in definitive form,
registered in the name of such Shareholder, evidencing the Company Shares being
sold by such Shareholder hereunder, accompanied by stock transfer deeds duly
signed.
(b) Subject to the terms and conditions set forth herein, in
consideration for the sale, assignment, conveyance, transfer and delivery of the
Company Shares being sold, conveyed, transferred, assigned and delivered
hereunder, as soon as reasonably practicable after
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the Closing Date, Purchaser will deliver, subject to Section 2.05, to each
Shareholder stock certificates duly registered in the name of such Shareholder
representing that number of shares ("PURCHASER SHARES") of common stock, $0.001
par value per share, of the Purchaser ("PURCHASER COMMON STOCK") equal to the
product of (i) the number of Company Shares owned by such Shareholder
immediately prior to the Closing, multiplied by (ii) a fraction, (x) the
numerator of which shall equal 4,500,000 shares and (y) the denominator of which
shall be the Fully Diluted Share Number (the resultant quotient being referred
to herein as the "Per Share Closing Payment).
A portion of the total number of Purchaser Shares equal to twenty-five percent
(25%) of each Shareholder's Purchaser Shares (the "ESCROW FUND"), as set forth
in Schedule I under the heading "Shares in Escrow", shall be deposited in an
escrow account pursuant to the Escrow Agreement. The Purchaser shall deliver a
certificate or certificates to each Shareholder (and with respect to the Escrow
Shares, the Escrow Agent named in the Escrow Agreement), registered in the name
of such Shareholder, representing the number of Purchaser Shares set forth
opposite the name of such Shareholder in SCHEDULE I hereto under the heading
"Purchaser Shares".
(c) As used herein, "FULLY DILUTED SHARE NUMBER" shall mean all of
the issued and outstanding Company Shares at the Closing Date, plus the number
of shares of Company Shares issuable upon exercise, exchange or conversion of
all options, warrants, convertible securities or other rights or obligations of
the Company outstanding at the Closing Date that may, at any time, require the
Company to issue shares of its capital stock.
SECTION 2.04. COMPANY OPTIONS. Subject to the terms and conditions
set forth herein, each Company Option outstanding on the Closing Date will
automatically, without any further action on the part of the holder of such
Company Option (an "OPTION HOLDER"), be converted into and be deemed to be,
without the need for amendment or modification to any Contract under which such
Company Option has been granted, a Purchaser Option (each such converted
Purchaser Option, a "Converted Option"). The number of shares of Purchaser
Common Stock subject to the Purchaser Options will equal the number of Company
Shares subject to such Company Option being converted immediately prior to the
Closing, multiplied by the Per Share Closing Payment, rounded to the nearest
whole share, without any payment for fractional shares, if any, other than as
provided in Section 2.05. The per share exercise price of each such Company
Option will equal the per Common Share exercise price of such Company Option
being converted immediately prior to the Closing, multiplied by the reciprocal
of the Per Share Closing Payment, rounded up to the nearest whole cent. Each
such Purchaser Option will have substantially the same terms and conditions as
the corresponding Company Option being converted. Notwithstanding the current
terms of the Company Options, in the event that the engagement of any Option
Holder with the Company is terminated by the Company without Cause (i) prior to
the date that is the six month anniversary of the Closing Date, all such Option
Holder's Converted Options shall be deemed to have vested immediately prior to
such termination, (ii) after the date that is the six moth anniversary of the
Closing Date but prior to the twelve month anniversary of the Closing Date, the
Converted Options held by such Option Holder that are scheduled to vest on the
next applicable vesting date shall be deemed to have vested immediately prior to
such termination.
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SECTION 2.05. FRACTIONAL SHARES. With respect to any payment by
Purchaser to be made by delivery of Purchaser Shares pursuant to Section 2.03,
no fractional shares of Purchaser Shares will be issued and any holder of
Company Shares entitled pursuant to this Agreement to receive a fraction of a
share of Purchaser Shares but for this Section 2.05 will be entitled only to
receive the number of shares of Purchaser Shares to be issued to each such
Shareholder rounded to the nearest whole share. With respect to any delivery of
Purchaser Shares to Option Holders upon the exercise of Purchaser Options, no
fractional shares of Purchaser Shares will be issued and any Option Holder
entitled to receive a fraction of a share of Purchaser Shares but for this
Section 2.05 will be entitled only to receive the number of shares of Purchaser
Shares to be issued upon such exercise rounded to the nearest whole share.
SECTION 2.06. (a) PIGGY-BACK REGISTRATION. If, after the Closing
Date Purchaser proposes to register any Purchaser Common Stock under the
Securities Act for sale to the public, whether for its own account or for the
account of other security holders or both (except pursuant to a registration
statement on Form S-4 or S-8 (or any substitute form adopted by the SEC) or any
other form that does not permit the inclusion of shares by its security
holders), Purchaser will give written notice to the Investors of its intention
to do so and, upon the written request of any such Investor given within ten
(10) days after receipt of any such notice (which request shall specify the
number of Purchaser Shares intended to be sold or disposed of by such Investor
up to the maximum number of shares set forth opposite the name of such Investor
on SCHEDULE I hereto under the heading "Registrable Shares"), Purchaser will use
its commercially reasonable efforts to cause up to 250,000 Purchaser Shares that
such Investors shall have requested the registration of to be included in such
notification or the registration statement proposed to be filed by Purchaser;
provided, however, that nothing herein shall prevent Purchaser from, at any
time, abandoning, delaying or suspending the effectiveness of any such
registration; and provided further, however, that nothing contained herein shall
require Purchaser to take any action which would violate the provisions of any
existing agreements relating to registration rights. If any such registration
shall be underwritten in whole or in part, Purchaser may require the Purchaser
Shares requested for inclusion pursuant to this Section 2.06 to be included in
the underwriting on the same terms and conditions as the securities otherwise
being sold through the underwriters. The number of Purchaser Shares to be
included in such an underwriting may be reduced (pro rata among the requesting
holders (other than Purchaser and any other persons demanding registration
pursuant to currently existing rights who are entitled to be protected against
any such reduction) based upon the number of shares so requested to be
registered; provided that, solely for the purposes of calculating the pro rata
reduction, the number of shares requested to be registered by the Investors
shall be deemed to be 4,000,000) if and to the extent that (1) the total number
of shares requested to be registered in such registration exceeds 250,000 or (2)
the managing underwriter shall be of the good faith opinion that such inclusion
would adversely affect the marketing of the securities to be sold by Purchaser.
All expenses of such offering, except the brokers' commissions or underwriting
discounts payable by the Investors, shall be borne by Purchaser.
(b) INDEMNIFICATION. (i) In connection with any such registration
effected pursuant to Section 2.06(a) hereof, to the extent permitted by
law, Purchaser will, and hereby does, indemnify and hold harmless, each
Investor (such term to include each director and officer of such Investor
and each other person, if any, who controls such Investor within the
meaning of the Securities Act or the Exchange Act solely for
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purposes of this Section 2.06(b)(i)) against any losses, claims, damages
or liabilities to which such Investor may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened,
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any
registration statement under which such securities are registered under
the Securities Act, and preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein in the light of the circumstances under which they were made not
misleading, and Purchaser will reimburse each of the Investors for any
legal or any other expenses reasonably incurred by it in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided, however, that Purchaser shall not be liable in any
such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with written information furnished to
Purchaser through an instrument duly executed by or on behalf of the
Investors specifically stating that it is for use in the preparation
thereof; and provided further, however, that Purchaser shall not be liable
to any of the Investors, in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of such Shareholder's failure to send or
give a copy of the final prospectus, as the same may be then supplemented
or amended, to the person asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of Purchaser Shares to such person if such
statement or omission was corrected in such final prospectus and copies of
such final prospectus were delivered to the Investors prior to the written
confirmation of the sale of Purchaser Shares to such person asserting an
untrue statement or alleged untrue statement or omission or alleged
omission. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Investors and shall
survive the transfer of such securities by the Investors.
(ii) Purchaser may require, as a condition to including any
Purchaser Shares in any registration statement filed pursuant to this
Section 2.06, that Purchaser shall have received an undertaking
satisfactory to it from the Investors holding such Purchaser Shares, to
indemnify and hold harmless (in the same manner and to the same extent as
set forth in this Section 2.06) Purchaser, each director of Purchaser,
each officer of Purchaser and each other person, if any, who controls
Purchaser within the meaning of the Securities Act or the Exchange Act,
with respect to any statement or alleged statement in or omission or
alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or
any amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to Purchaser through an
instrument duly executed by the Investors specifically stating that it was
for use in the preparation of such registration statement,
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preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement; provided, however, that the amount of any claim by Purchaser
against any Investor for indemnification under this Section 2.06(b)(ii)
shall be limited to the net proceeds received by such Investor from the
sale of the Purchaser Shares included in such registration. Such indemnity
shall remain in full force and effect, regardless of any investigation
made by or on behalf of Purchaser or any such director, officer or
controlling person and shall survive the transfer of such securities by
the Investors.
(c) CONTRIBUTION. If for any reason the foregoing indemnity is
unavailable, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other, or (ii) if the allocation provided by
subdivision (i) above is not permitted by applicable law or provides a lesser
sum to the indemnified party than is appropriate to reflect not only the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other but also the relative fault of the indemnifying
party and the indemnified party as well as any other relevant equitable
considerations, then in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party as well as
any other equitable considerations. Notwithstanding the foregoing, neither party
shall be required to contribute any amount in excess of the amount the
indemnifying party would have been required to pay to an indemnified party if
the indemnity under this Section 2.06 was available. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
III.
REPRESENTATIONS AND WARRANTIES AS TO
THE COMPANY
The Company represents and warrants to the Purchaser, subject to the
exceptions specifically disclosed in writing in the Company Disclosure Schedule,
all such exceptions to be referenced to a specific representation set forth in
this Article III, that:
SECTION 3.01. ORGANIZATION AND QUALIFICATION; NO SUBSIDIARIES. (a)
The Company has been duly organized and is validly existing under the Laws of
the jurisdiction of its incorporation and there are no proceedings to strike the
Company from the Registrar of Companies and the Company has the requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted (the "BUSINESS"). The Company
is duly qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good
standing that could not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(b) The Company does not own an equity interest in any corporation,
partnership or joint venture arrangement or other business entity.
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SECTION 3.02. MEMORANDUM AND ARTICLES OF ASSOCIATION. True, complete
and correct copies of the Company's memorandum of association or other
organizational documents (the "CHARTER") and its articles of association (the
"BYLAWS"), each as amended, are included in Section 3.02 of the Company
Disclosure Schedule. Such Charter and Bylaws are in full force and effect. The
Company is not in violation of any of the provisions of its Charter or Bylaws.
SECTION 3.03. CAPITALIZATION. The authorized capital stock of the
Company consists of 3,800,000 shares of Company Capital Stock. As of the date
hereof, 1,906,512 shares of Company Capital Stock are issued and outstanding,
all of which are duly authorized, validly issued, fully paid and nonassessable.
Except for the Company Capital Stock, there are no shares of capital stock or
other equity securities of the Company outstanding. Except as set forth on
Schedule 3.03, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character to which the Company is a party or
by which the Company is bound relating to the issued or unissued capital stock
of the Company or obligating the Company to issue or sell any shares of capital
stock of, or other equity interests in, the Company. There are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any shares of Company Capital Stock. There are no material outstanding
contractual obligations of the Company to provide funds to, or make any material
investment (in the form of a loan, capital contribution or otherwise) in, any
other Person.
SECTION 3.04. AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has
all necessary corporate power and authority to execute and deliver this
Agreement and all other instruments, certificates and agreements delivered or
required to be delivered by the Shareholders, the Company, the Purchaser or any
of their representatives pursuant to this Agreement (the "TRANSACTION
Documents") to which the Company is a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the other
Transaction Documents to which it is a party by the Company and the consummation
by the Company of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary corporate action, and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or such Transaction Documents or to consummate the transactions
contemplated hereby and thereby. This Agreement and the other Transaction
Documents to which it is a party have been duly and validly executed and
delivered by the Company. Assuming the due authorization, execution and delivery
by the other parties hereto and thereto, each of this Agreement and the other
Transaction Documents to which it is a party constitutes the legal, valid and
binding obligation of the Company, enforceable against it in accordance with its
terms, except to the extent that its enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other Laws affecting the enforcement
of creditors' rights generally or by general equitable principles.
SECTION 3.05. NO CONFLICTS; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement and the other Transaction Documents to
which it is a party by the Company do not, and the performance by the Company of
its obligations hereunder and thereunder, and the consummation of the
transactions contemplated hereby and thereby will not, (i) conflict with or
violate any provision of the Charter or Bylaws of the Company, (ii) conflict
with or violate any Law applicable to the Company or by which any property or
asset of the Company is bound or affected or (iii) except as disclosed on
Section 3.05(a) of the Company
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Disclosure Schedule, result in any breach of or constitute a default (or an
event which with the giving of notice or lapse of time or both could reasonably
be expected to become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any material property or asset of the
Company pursuant to, any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation.
(b) Other than the filing of a Share Transfer Report with the
Companies Registrar of the State of Israel following the Closing, no filing or
registration with, or notification to, and no permit, authorization, consent or
approval of, any Government Entity (including, but not limited to, the consent
of the Office of the Chief Scientist of the Israeli Ministry of Industry and
Trade) is necessary for the execution and delivery of this Agreement by the
Company or the consummation by the Company of the transactions contemplated by
this Agreement except such filings, registrations, notices, permits,
authorizations, consents and approvals that if not obtained, made or given would
not, individually or in the aggregate, have a Company Material Adverse Effect or
impair the Company's ability to consummate the transactions contemplated hereby.
(c) Except as set forth in Section 3.05(c) of the Company
Disclosure Schedule, no consent of any third party is required by reason of the
transactions contemplated by this Agreement.
SECTION 3.06. PERMITS; COMPLIANCE WITH LAWS. Except as set forth in
Section 3.06 of the Company Disclosure Schedule, the Company is in possession of
all material franchises, grants, authorizations, licenses, establishment
registrations, product listings, permits, easements, variances, exceptions,
consents, certificates, identification and registration numbers, approvals and
orders of any Governmental Entity necessary for the Company to own, lease and
operate its properties or to offer or perform its services or to develop,
produce, store, distribute and market its products or otherwise to carry on its
business as it is now being conducted (collectively, the "COMPANY Permits"),
and, as of the date of this Agreement, none of the Company Permits has been
suspended or cancelled nor is any such suspension or cancellation pending or, to
the knowledge of the Company and each of the Shareholders, threatened. The
Company is not in conflict with, or in default or violation of, (i) any material
Law applicable to the Company or by which any property or asset of the Company
is bound or affected or (ii) any Company Permits. Section 3.06 of the Company
Disclosure Schedule sets forth, as of the date of this Agreement, all actions,
proceedings, investigations or surveys pending or, to the knowledge of the
Company and each of the Shareholders, threatened against the Company or the
Business that could reasonably be expected to result in the suspension or
cancellation of any other Company Permit. The Company has not received from any
Governmental Entity any written notification with respect to possible conflicts,
defaults or violations of Laws. The transactions contemplated hereby will not
result in the suspension or cancellation of any Company Permit.
SECTION 3.07. FINANCIAL STATEMENTS. (a) Section 3.07 of the Company
Disclosure Schedule includes copies of (i) the audited balance sheet of the
Company at December 31, 1999, together with the related statement of operations,
shareholders' equity and cash flows for the year ended December 31, 1999 and the
notes thereto and (ii) the unaudited interim balance sheet of the Company at
June 30, 2000, together with the related statement of
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operations, shareholders' equity and cash flows for the six months ended June
30, 2000 and the notes thereto along with a review report, reasonably
satisfactory in form and substance to the Purchaser, from the Company's
independent public accountants (the "COMPANY FINANCIAL STATEMENTS"). The Company
Financial Statements: (i) were prepared in accordance with Israeli GAAP applied
on a consistent basis throughout the periods covered thereby; (ii) present
fairly the financial position, results of operations and cash flows of the
Company as of such dates and for the periods then ended (subject, in the case of
unaudited statements, to normal and recurring immaterial year-end adjustments);
and (iii) are correct and complete in all material respects, and can be
reconciled with the books of account and records of the Company. The Company
maintains and will continue to maintain until the Closing an adequate system of
internal controls established and administered in accordance with Israeli GAAP.
(b) Except as and to the extent set forth or reserved against on the
balance sheets of the Company as reported in the Company Financial Statements,
the Company does not have any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on a balance sheet or in notes thereto prepared in accordance with
Israeli GAAP, except for liabilities or obligations incurred in the ordinary
course of business consistent with past practice since June 30, 2000.
SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth in Section 3.08 of the Company Disclosure Schedule or as stated on the
unaudited interim balance sheet of the company at June 30, 2000, since December
31, 1999, the Company has conducted its business only in the ordinary course
consistent with past practice and, since such date, there has not been (i) any
Company Material Adverse Effect, (ii) any event that could reasonably be
expected to prevent or materially delay the performance of the Company's
obligations pursuant to this Agreement and the consummation of the transactions
contemplated hereby by the Company, (iii) any change by the Company in its
accounting methods, principles or practices, (iv) any declaration, setting aside
or payment of any dividend or distribution in respect of the shares of Company
Capital Stock or any redemption, purchase or other acquisition of any of the
Company's securities, (v) any increase in the compensation or benefits or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other employee
benefit plan, or any other increase in the compensation payable or to become
payable to any employees, officers, consultants or directors of the Company,
(vi) any issuance or sale of any stock, notes, bonds or other securities, or
entering into any agreement with respect thereto, (vii) any amendment to the
Company's Charter or Bylaws, (viii) other than in the ordinary course of
business consistent with past practice, any (x) purchase, sale, assignment or
transfer of any material assets, (y) mortgage, pledge or existence of any lien,
encumbrance or charge on any material assets or properties, tangible or
intangible, except for liens for Taxes not yet delinquent and such other liens,
encumbrances or charges which do not, individually or in the aggregate, have a
Company Material Adverse Effect, or (z) waiver of any rights of material value
or cancellation or any material debts or claims, (ix) any incurrence of any
material liability (absolute or contingent), except for current liabilities and
obligations incurred in the ordinary course of business consistent with past
practice, (x) any incurrence of any damage, destruction or similar loss, whether
or not covered by insurance, materially affecting the business or properties of
the Company, (xi) any entering into any transaction of a material nature other
than in the
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ordinary course of business, consistent with past practice, or (xii) any current
negotiation (or, with respect to clauses (ii), (iii), (iv) or (vii) any
negotiation, whether past or current) or any agreement by the Company to do any
of the things described in the preceding clauses (i) through (xi).
SECTION 3.09. EMPLOYEE MATTERS. (a) The Company is not party to any
Contract regarding collective bargaining or other Contract with any labor or
trade union or collective bargaining group representing any employee of the
Company, nor does any labor or trade union or collective bargaining agent
represent any employee of the Company. No Contract regarding collective
bargaining has been requested by, or is under discussion between management of
the Company (or any management group or association of which the Company is a
member or otherwise a participant) and any group of employees of the Company,
nor are there any representation proceedings or petitions seeking a
representation proceeding presently pending against the Company, nor, to the
knowledge of the Company and the Shareholders, are there any other current
activities to organize any employees of the Company into a collective bargaining
unit. The Company is not subject to, nor do any of its employees benefit from,
any collective bargaining agreement by way of any applicable employment laws and
regulations and extension orders ("TZAVEI HARCHAVA"), other than tzavei harchava
applying generally to all employers in Israel or to all employees in the
Company's field of business. Except as set forth in Section 3.09(a) of the
Company Disclosure Schedule, the Company has no custom with respect to
termination of employment. There are no unfair labor practice charges or
complaints pending or, to the knowledge of the Company and the Shareholders,
threatened against the Company.
(b) Schedule 3.09(b) sets forth a true, accurate and complete list
of the Company's directors, officers, employees, consultants and independent
contractors, and includes a listing of each of such director's, officer's and
employee's compensation terms (including, but not limited to date of
commencement of employment, salary, bonuses, stock options and warrants (if
any), fringe benefits and accrued vacation). All the employees of the Company
reside and work in Israel. The Company is not delinquent in any material payment
to any of its employees for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed by any such employees. Except as
indicated in Schedule 3.09(b), upon termination of the employment of any
employees, neither the Company nor the Purchaser will by reason of the
transaction contemplated pursuant to this Agreement or anything done prior to
the Closing Date be liable to any of such directors, officer or employees for
severance pay or any other payments beyond any amounts reserved for on the
Company Financial Statements.
(c) The Company has previously delivered to Purchaser true and
complete copies of all employment, consulting, termination and severance
Contracts (whether written or oral) with or for the benefit of, or otherwise
relating to, any directors, officers, employees, consultants or independent
contractors of the Company. Except as set forth on Schedule 3.09(c), none of the
execution, delivery or performance of any Transaction Document or the
consummation of the transactions contemplated hereby or thereby will result in
any obligation to pay any directors, officers, employees, consultants,
independent contractors, former directors, officers, employees, consultants or
independent contractors of the Company severance pay or termination, retention
or other benefits.
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(d) Except as set forth on Schedule 3.09(d), no employee has given
notice to, or received notice from, the Company or any of its Representatives
that any such employee's employment or service may be terminated or advised the
Company of an intention to give such notice to, or is expected to receive notice
from, the Company or any of its Representatives that any such employee's
employment or service may be terminated.
(e) Each compensation and benefit plan required to be maintained
or contributed to by the law or applicable custom or rule of the relevant
jurisdiction outside of the United States (the "PLANS") is listed in Schedule
3.09(f) of the Company Disclosure Schedule. As regards each such plan, unless
disclosed in such Schedule 3.09(f), (i) each of the Plans is in material
compliance with the provisions of the laws of each jurisdiction in which each
such Plan is maintained, to the extent those laws are applicable to the Plans;
(ii) all material contributions to, and material payments from, the Plans which
may have been required to be made in accordance with the terms of any such Plan,
and, when applicable, the law of the jurisdiction in which such Plan is
maintained, have been timely made or shall be made by the Closing Date, and all
such contributions to the Plans, and all payments under the Plans, for any
period ending before the Closing Date that are not yet, but will be, required to
be made, are reflected as an accrued liability on the balance sheets, included
in the Company Financial Statements, or disclosed to Purchaser in Schedule
3.09(f) of the Company Disclosure Schedule; (iii) the Company has materially
complied with all applicable reporting and notice requirements, and all of the
Plans have obtained from the governmental body having jurisdiction with respect
to such plans any required determinations, if any, that such Plans are in
compliance with the laws of the relevant jurisdiction if such determinations are
required in order to give effect to the Plan; (iv) each of the Plans has been
administered in all material respects at all times in accordance with its terms
and applicable law and regulations; (v) to the knowledge of the Company or the
Shareholders, there are no pending investigations by any governmental body
involving the Plans, and no pending claims (except for claims for benefits
payable in the normal operation of the Plans), and (vi) the consummation of the
transactions contemplated by this Agreement will not by itself create or
otherwise result in any liability with respect to any Plan other than the
triggering of payment to participants.
(f) The Company has delivered or made available to Purchaser
current, accurate and complete copies of (i) each Plan that has been reduced to
writing and all amendments thereto and (ii) all trust agreements, insurance
contracts, investment management agreements, investment advisory agreements,
administrative services agreements or similar agreements maintained in
connection with any Plan.
(g) No person previously employed by the Company has now or may
have a right to return to work or a right to be reinstated or re-engaged by any
applicable Law. The Company has at all relevant times complied in all material
respects with all its obligations under Law with respect to any aspect of the
employment of their employees, including with respect to the health and safety
at work of their employees, and there are no claims pending or, to the knowledge
of the Company, capable of arising or threatened by any party in respect of any
accident or injury which are not fully covered by insurance of the Company in
respect of any accident or injury.
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(h) To the knowledge of the Company and each of the Shareholders,
no employees of the Company are in violation of any term of any employment
contract, non-disclosure agreement, noncompetition agreement, or any restrictive
covenant to a former employer relating to the right of any such employee to be
employed by the Company because of the nature of the business conducted or
presently proposed to be conducted by the Company or to the use of trade secrets
or proprietary information of others. No employees of the Company have given
notice to the Company, nor is the Company or any Shareholder otherwise aware,
that any such employee intends to terminate his or her employment with the
Company.
SECTION 3.10. CONTRACTS. Except for the Contracts described in
Section 3.10 of the Company Disclosure Schedule (collectively, the "MATERIAL
CONTRACTS"), the Company is not a party to or bound by any material Contract,
including without limitation:
(a) any sales, advertising or agency contract in excess of $10,000
over the life of the contract;
(b) any continuing contract for the purchase of materials,
supplies, equipment or services involving in the case of any such contact more
than $10,000 over the life of the contract;
(c) any contract that expires or may be renewed at the option of
any Person other than the Company so as to expire more than one year after the
date of this Agreement;
(d) any trust indenture, mortgage, promissory note, loan agreement
or other contract for the borrowing of money, any currency exchange, commodities
or other hedging arrangement or any leasing transaction of the type required to
be capitalized in accordance with GAAP;
(e) any contract for capital expenditures in excess of $10,000 in
the aggregate;
(f) any contract limiting the freedom of the Company to engage in
any line of business or to compete with any other corporation, partnership,
limited liability company, trust, individual or other entity, or any
confidentiality, secrecy or non-disclosure contract;
(g) any contract pursuant to which the Company is a lessor or
lessee of any machinery, equipment, motor vehicles, office furniture, fixtures
or other personal property, pursuant to which payments in excess of $10,000
remain outstanding;
(h) any contract with an Affiliate;
(i) any agreement of guarantee, support, indemnification,
assumption or endorsement of, or any similar commitment with respect to, the
obligations, liabilities (whether accrued, absolute, contingent or otherwise) or
indebtedness of any other Person;
(j) any foreign currency forward exchange contracts;
(k) any distribution contract; or
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(l) any employment contract, arrangement or policy (including
without limitation any collective bargaining contract or union agreement) which
may not be immediately terminated without penalty (or any augmentation or
acceleration of benefits).
The Company has performed all of the material obligations required
to be performed by it and is entitled to all material benefits under, and,
except as disclosed in Section 3.10 of the Company Disclosure Schedule, is not
alleged to be in default in respect of any Material Contract. Each of the
Material Contracts is valid and binding and in full force and effect, and there
exists no default or event of default or event, occurrence, condition or act,
with respect to the Company, or to the knowledge of the Company and each of the
Shareholders, with respect to the other contracting party, which, with the
giving of notice, the lapse of the time or the happening of any other event or
conditions, would become a default or event of default under any Material
Contract. True, correct and complete copies of all Material Contracts have been
delivered to the Purchaser.
SECTION 3.11. LITIGATION. Except as described in Section 3.11 of the
Company Disclosure Schedule, there is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the knowledge of the Company and each
of the Shareholders, threatened against the Company or any of its properties or
any of its officers or directors (in their capacities as such) or relating to
the Business. Neither the Company nor any of the Shareholders are aware of any
facts or circumstances relating to parties with whom the Company has contractual
relationships or relating to such contracts that could result in any suit,
proceeding, claim or arbitration. Neither the Company nor any of the
Shareholders are aware of any facts or circumstances which could reasonably be
expected to result in the denial of insurance coverage under policies issued to
the Company in respect of such suits, claims, actions, proceedings and
investigations. There is no judgment, decree or order against the Company or, to
the knowledge of the Company and each of the Shareholders, any of its directors
or officers (in their capacities as such), that could prevent, enjoin, or
materially alter or delay any of the transactions contemplated by this
Agreement, or that could reasonably be expected to have a Company Material
Adverse Effect. Section 3.11 of the Company Disclosure Schedule lists any
litigation that the Company has pending against other parties.
SECTION 3.12. ENVIRONMENTAL MATTERS. The Company is in compliance
with all applicable Environmental Laws and all Company Permits required by
Environmental Laws. All past noncompliance, if any, of the Company with
Environmental Laws or Environmental Permits has been resolved without any
pending, ongoing or future obligation, cost or liability. The Company has not
released a Hazardous Material at, or transported a Hazardous Material to or
from, any real property currently or formerly owned, leased or occupied by the
Company, in violation of any Environmental Law.
SECTION 3.13. INTELLECTUAL PROPERTY. (a) Section 3.13(a) of the
Company Disclosure Schedule contains a true, accurate and complete list of
Company's United States, foreign or international patents, patent applications,
invention registrations, and invention disclosures (collectively, "PATENTS");
trademarks and service marks (whether registered or unregistered), trademark and
service mark applications, trade names, Internet domain names, and Internet
domain name registrations and applications therefor (collectively,
"TRADEMARKS");
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registered copyrights (collectively, "COPYRIGHTS"); and any other filings or
registrations made, or other formal actions taken, pursuant to Federal, state,
local, foreign or international laws by the Company to protect its interests in
the Company Intellectual Property.
(b) Except as provided in Section 3.13(b)(1) of the Company
Disclosure Schedule, each component of the Company Intellectual Property
(including without limitation the items set forth in Section 3.13(a) of the
Company Disclosure Schedule) is: (i) owned solely and exclusively by Company,
free and clear of any and all mortgages, pledges, liens, security interests,
conditional sale agreements, encumbrances or charges of any kind; or (ii)
rightfully used or otherwise enjoyed by Company pursuant to a valid and
enforceable license or other agreement or otherwise (a "COMPANY LICENSE-IN
AGREEMENT"), including, without limitation, software license agreements. A true,
accurate and complete list of all Company License-In Agreements is set forth in
Section 3.13(b)(2) of the Company Disclosure Schedule. With respect to software
programs that are licensed to the Company, to the best of the Company's
knowledge, such software programs (i) have been designed to ensure year 2000
compatibility, which includes, but is not limited to, date data century
recognition, and calculations that accommodate same century and multi-century
formulas and date values; (ii) operate in accordance with their specifications
prior to, during and after the calendar year 2000 AD; and (iii) do not end
abnormally or provide invalid or incorrect results as a result of date data,
specifically including date data which represents or references different
centuries or more than one century. Without limiting the foregoing, the Company
has all rights in the Company Intellectual Property necessary to carry out the
activities currently conducted, or currently planned to be conducted, by the
Company.
(c) The Company is not in material breach, violation or default of
any Company License-In Agreement or other license, sublicense, instrument or
agreement relating to the Company Intellectual Property to which the Company is
a party or otherwise bound, nor will execution or delivery of this Agreement, or
performance of the Company's obligations hereunder, result in such a default nor
cause the diminution, termination or forfeiture of any the Company Intellectual
Property, other than such breaches, defaults, violations, diminution,
termination or forfeitures that could not reasonably be expected to have a
Company Material Adverse Effect.
(d) Neither the manufacture, use, sale, reproduction,
modification, adaptation, creation of derivative works, translation,
distribution, transmission, display, performance, or other exercise of rights
under, nor the licensure of, any of the Company Intellectual Property, nor the
conduct of the Company's businesses in the manner currently conducted or
currently planned to be conducted, breaches or otherwise violates any Company
License-In Agreement or other license or other agreement to which the Company is
a party, or, to the best of the Company's and the Shareholders' knowledge,
conflicts with or infringes on any intellectual property or other right of any
person anywhere in the world, other than such breaches, defaults or violations
that could not reasonably be expected to have a Company Material Adverse Effect.
No allegation of such a violation or infringement has been made prior to the
date of this Agreement, and to the best of the Company's and the Shareholders'
knowledge, there is no colorable basis for any such claim. Except as set forth
in Schedule 3.13(d) of the Company Disclosure Schedule, the Company has not
asserted any claim of infringement, misappropriation, or misuse against any
Person within the past three (3) years and, to the best of the Company's and the
Shareholders'
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knowledge, no Person has infringed, misappropriated, or misused any of the
Company Intellectual Property.
(e) Section 3.13(e) of the Company Disclosure Schedule contains a
true, accurate and complete list of each agreement under which the Company
grants rights or licenses under any of the Company Intellectual Property (each a
"COMPANY LICENSE-OUT AGREEMENT"), including, without limitation, software
license agreements. All source code and system documentation relating to
software programs that Company owns have been maintained in strict confidence
and (i) have been disclosed by Company only to those of their respective
employees who have a "need to know" the contents thereof in connection with the
performance of their duties to Company and who have executed a written
nondisclosure undertaking with Company substantially in the form provided in
Section 3.12(e)(1) of the Company Disclosure Schedule, and (ii) have been
disclosed only to those third parties who have executed a nondisclosure
agreement with the Company. The software programs that Company created (i) have
been designed to ensure year 2000 compatibility, which includes, but is not
limited to, date data century recognition, and calculations that accommodate
same century and multi-century formulas and date values; (ii) operate in
accordance with their specifications prior to, during and after the calendar
year 2000 AD; and (iii) do not end abnormally or provide invalid or incorrect
results as result of date data, specifically including date data which
represents or references different centuries or more than one century.
(f) Except as set forth in Section 3.13(f) of the Company
Disclosure Schedule, the Company has not entered into or is not otherwise bound
by any consent, forbearance to sue, settlement agreement or other agreement
which limits the Company's rights to use, reproduce, display, perform, modify,
adapt, distribute, license, sell or otherwise exploit any of the Company
Intellectual Property.
(g) All of the Company's Patents, Trademarks, Copyrights and other
registrations and applications included in the Company Intellectual Property are
(i) standing in the name of the Company, which ownership has been properly
recorded where and as required to secure or ensure full rights to the same, (ii)
valid, subsisting and in good standing without any fees or filings due with
respect thereto, and (iii) not subject to any pending or actual or threatened
interference, opposition, cancellation or other proceeding before any court or
registration authority. To the best of the Company's and the Shareholders'
knowledge, no facts or circumstances exist which could render any of the Company
Intellectual Property invalid, unenforceable, unprotectable or otherwise
ineffectual.
(h) The Company has taken all reasonably necessary steps to
maintain and protect the Company Intellectual Property. In particular, and
without limiting the foregoing, all employees, agents, consultants, contractors
and other Persons who have contributed to or participated in the creation,
conception or development of the Company Intellectual Property (the "COMPANY
INTELLECTUAL PROPERTY DEVELOPMENT PERSONNEL") have executed agreements
obligating them to maintain the Company Intellectual Property in confidence.
Except as set forth in Section 3.13(h)(1) of the Company Disclosure Schedule,
each of the Company Intellectual Property Development Personnel has executed an
agreement, in a form substantially as provided in Section 3.13(h)(2) of the
Company Disclosure Schedule in all material respects, assigning to the Company
any rights or claims they may have to any Company Intellectual Property.
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(i) Except as set forth in Section 3.13(i) of the Company
Disclosure Schedule, the Company does not owe or will not owe any royalties or
fees or other payments to third parties in respect of any Company Intellectual
Property or any use thereof. All royalties, fees or other payments that have
accrued prior to the Closing will have been timely paid by the Company prior to
the Closing Date.
(j) The Company Software Programs do not contain any program,
routine, device, or other undisclosed feature that is designed to, in an
unauthorized manner: delete, disable, deactivate, enable unauthorized access to,
interfere with or otherwise harm the Company Software Programs or any system in
which the Company Software Programs may operate, including without limitation a
bomb, virus, software lock, drop-dead device, malicious logic, worm, trojan
horse, robot, clock, timer, back door or trap door.
SECTION 3.14. TAXES. (a) All material Tax Returns required to be
filed by or on behalf of the Company or any of its predecessor corporations, or
any consolidated, combined, affiliated or unitary group of which the Company is
or has ever been a member, have been timely filed with the appropriate tax
authorities or requests for extensions have been timely filed and any such
extensions have been granted and have not expired. All such Tax Returns were
correct and complete in all material respects, except as otherwise set forth,
reflected in, reserved against or disclosed in the Company Financial Statements.
(b) All Taxes with respect to taxable periods or portions thereof
covered by such Tax Returns and all other material Taxes (without regard to
whether a Tax Return was or is required) for which the Company is otherwise
liable that are due have been paid in full or are being contested in good faith
(and such contest is disclosed on Schedule 3.14(b)) and, to the extent the
liabilities for such Taxes are not due or are being contested in good faith,
adequate reserves have been established on the Company Financial Statements in
accordance with Israeli GAAP.
(c) To the knowledge of the Company or any of the Shareholders,
there are no material Liens on any of the assets of the Company that arose in
connection with any failure (or alleged failure) to pay any Tax.
(d) The Company has timely withheld proper and accurate amounts
from its employees, customers, shareholders and others from whom it is or was
required to withhold Taxes, including social security, in compliance in all
material respects with all applicable Laws and has timely paid all such withheld
amounts to the appropriate taxing authorities.
(e) There are no Actions pending with respect to any Taxes for
which the Company is or might otherwise be liable. There is no dispute or claim
concerning any Liability for Taxes of the Company that has been claimed or
raised by any Governmental Authority in writing. No tax return of the Company is
currently the subject of an audit by any taxing authority and no written notice
of such an audit has been received.
(f) The Company has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
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(g) The Company has in its possession or can obtain receipts for
any Taxes paid to any tax authority.
(h) The Company has no "U.S. Real Property Interests" within the
meaning of Section 897(c) of the United States Internal Revenue Code of 1986, as
amended (the "CODE").
(i) No claim or notice has ever been submitted by a tax authority
in a jurisdiction where the Company has not filed Tax Returns that the Company
is or may be subject to taxation by that jurisdiction.
(j) The Company is not a party to any Tax sharing, Tax allocation
or similar agreement nor does the Company have any liability or potential
liability to another party under any such agreement.
(k) Except as set forth in Section 3.14(l) of the Company
Disclosure Schedule, no power of attorney has been granted by the Company with
respect to any matters relating to Taxes that is currently in effect.
(l) The Company has not settled any claim, audit or administrative
or court proceeding with respect to Taxes.
(m) The Company is an accrual basis taxpayer.
SECTION 3.15. INSURANCE. The Company is presently insured, and since
inception has been insured, against such risks as companies engaged in a similar
business would, in accordance with good business practice, customarily be
insured. The policies of fire, theft, liability and other insurance maintained
with respect to the assets or businesses of the Company provide adequate
coverage against loss. There is no material claim pending under any of such
policies as to which coverage has been questioned, denied or disputed by the
underwriters of such policies. The Company has heretofore furnished to the
Purchaser a complete and correct list as of the date hereof of all insurance
policies maintained by the Company, and has made available to the Purchaser
complete and correct copies of all such policies, together with all riders and
amendments thereto. All such policies are in full force and effect and all
premiums due thereon have been paid to the date hereof. The Company has complied
in all material respects with the terms of such policies. Neither the Company
nor any of the Shareholders has knowledge of any threatened termination of, or
material premium increase with respect to, any of such policies.
SECTION 3.16. PROPERTIES. The Company has good and marketable title,
free and clear of all material mortgages, liens, pledges, charges or other
encumbrances to all its properties and assets, whether tangible or intangible,
real, personal or mixed, reflected in the Company Financial Statements as being
owned by the Company and as of the date thereof, other than (i) any properties
or assets that have been sold or otherwise disposed of in the ordinary course of
business since the date of such financial statements, (ii) liens disclosed in
the notes to such financial statements and (iii) liens arising in the ordinary
course of business after the date of such financial statements. All properties
used in the Company's operations are reflected in the balance sheets included in
the Company Financial Statements to the extent Israeli GAAP require the same to
be reflected. All buildings, and all fixtures, equipment and other property and
assets
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that are material to its business on a consolidated basis, held under leases or
sub-leases by the Company are held under valid instruments enforceable in
accordance with their respective terms, subject to applicable Laws of
bankruptcy, insolvency or similar Laws relating to creditors' rights generally
and to general principles of equity (whether applied in a proceeding in law or
equity). Substantially all of the Company's equipment in regular use has been
reasonably maintained and is in serviceable condition, reasonable wear and tear
excepted. The Company owns or has the valid and subsisting right to use all
assets and properties necessary or advisable to operate the Company's business
in the manner presently conducted.
SECTION 3.17. AFFILIATES. Section 3.17 of the Company Disclosure
Schedule sets forth the names and addresses of each Person who is, in the
Company's reasonable judgment, an affiliate (as such term is used in Rule 145
under the Securities Act or under applicable SEC accounting releases with
respect to pooling of interests accounting treatment) of the Company. The
Company is not indebted to, nor does it owe any contractual commitment or
arrangement to, with or for the benefit of, any director, officer, employee,
affiliate or agent of the Company (except for amounts due as ordinary
compensation, normal salaries and bonuses and in reimbursement of ordinary
expenses). To the best knowledge of the Company and the Shareholders, no current
or former director, officer, employee, affiliate or agent of the Company is
presently or at the Closing Date shall be, or, in the last three years has been,
the direct or indirect owner of an interest in any corporation, firm,
association, or business organization which is a present (or potential)
competitor, supplier or customer of the Company. Except for normal salaries,
compensation and bonuses and reimbursement of ordinary expenses, since June 24,
1999, the Company has not made any payments, loans or advances of any kind, or
paid any dividends or distributions of any kind, to or for the benefit of the
Shareholders, or any of their respective affiliates, associates or family
members.
SECTION 3.18. BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or on
behalf of the Company.
SECTION 3.19. CERTAIN BUSINESS PRACTICES. Neither the Company nor
any directors, officers, agents or employees of the Company (in their capacities
as such) has (i) used any funds for unlawful contributions, gifts, entertainment
or other unlawful expenses relating to political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns or violated any provision of
the Foreign Corrupt Practices Act of 1977, as amended, or (iii) made any other
unlawful payment.
SECTION 3.20. BUSINESS ACTIVITY RESTRICTION. Except as set forth in
Section 3.20 of the Company Disclosure Schedule, there is no non-competition or
other similar agreement, commitment, judgment, injunction, order or decree to
which the Company is a party or subject to that has or could reasonably be
expected to have the effect of prohibiting or impairing the conduct of business
by the Company. Except as set forth in Section 3.20 of the Company Disclosure
Schedule, the Company has not entered into any agreement under which the Company
is restricted from selling, licensing or otherwise distributing any of its
technology or products to, or providing services to, customers or potential
customers or any class of customers,
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in any geographic area, during any period of time or in any segment of the
market or line of business.
SECTION 3.21. GRANTS, INCENTIVES AND SUBSIDIES. The Company has not
received any grants, incentive and subsidy programs ("GRANTS") from any
Governmental Authority, including but not limited to (a) Approved Enterprise
Status granted by the Investment Center of the Israeli Ministry of Industry and
Trade, (b) Grants under Certificates of Approval of the Chief Scientist of the
Israeli Ministry of Industry and Trade, and (c) Grants from the Israeli Fund for
the Promotion of Marketing. The Company has not paid to date any royalties to
the Office of the Chief Scientist on account of any Grants and the Company is
not subject to any obligation to pay royalties in connection with sales,
licenses or other dispositions of its products.
SECTION 3.22. REGISTERED USERS. All of the information provided by
the Company or its agents or representatives to the Purchaser or any of its
agents or representatives with respect to verification of (i) the number of
registered users in the Company database; and (ii) the number of actual websites
at which the Company's product is in use as of the date of providing the
information, was accurate and complete in all material respects.
SECTION 3.23. REPRESENTATIONS COMPLETE. None of the representations
or warranties made by the Shareholders or the Company herein or in any Company
Disclosure Schedule hereto, or certificate furnished by the Shareholders or the
Company pursuant to this Agreement, when all such documents are read together in
their entirety, contains or will contain at the Closing Date any untrue
statement of a material fact, or omits or will omit at the Closing Date to state
any material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not misleading.
IV.
REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDERS
Each Shareholder, severally but not jointly, represents and warrants
to the Purchaser as follows:
SECTION 4.01. AUTHORIZATION OF AGREEMENTS, ETC. (a) Such
Shareholder has full legal capacity and unrestricted power to execute and
deliver each Transaction Document to which such Shareholder is a party, and to
perform his or her obligations hereunder and thereunder.
(b) The execution and delivery by each Shareholder of this
Agreement and each Transaction Document to which such Shareholder is a party,
and the performance by each Shareholder of his or her obligations hereunder and
thereunder, have been duly authorized by all requisite action, and will not
violate any provision of Law, any order of any court or other agency of
government, any judgment, award or decree or any provision of any indenture,
agreement or other instrument to which such Shareholder is a party, or by which
such Shareholder or any of such Shareholder's properties or assets is bound or
affected, or conflict with, result in a breach of or constitute (with due notice
or lapse of time or both) a default under
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any such indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the properties or assets of such Shareholder.
SECTION 4.02. VALIDITY. This Agreement has been duly executed and
delivered by such Shareholder and, assuming the due authorization, execution and
delivery by the other parties thereto, constitutes, and each other Transaction
Document to which such Shareholder is a party, when executed and delivered by
such Shareholder as contemplated hereby, will constitute, the legal, valid and
binding obligations of such Shareholder, enforceable against such Shareholder in
accordance with their respective terms, except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other Laws affecting the enforcement of creditors' rights
generally or by general equitable principles.
SECTION 4.03. TITLE TO SHARES. Such Shareholder is the lawful holder
of record and beneficial owner of the number of Company Shares set forth
opposite the name of such Shareholder in SCHEDULE I to this Agreement under the
heading "Company Shares," in each case free and clear of any and all pledges,
security interests, liens, charges or other encumbrances of any nature
whatsoever, other than as imposed by the Company's Bylaws and waived pursuant to
Section 10.04 hereof. The delivery by each Shareholder of certificates or
instruments and agreements evidencing the number of Company Shares set forth
opposite the name of such Shareholder as aforesaid, accompanied by stock
transfer deeds duly signed, to the Purchaser pursuant to Section 2.03(a) above,
against payment or in exchange for the securities provided pursuant to Section
2.03(b) above, together with a resolution of the Company's Board of Directors
approving such transfer of shares and registering transfer in the Company's
Registrar of Members, will transfer valid record title to and beneficial
ownership of said Company Shares to the Purchaser, free and clear of any and all
pledges, security interests, liens, charges or other encumbrances of any nature
whatsoever.
SECTION 4.04. INVESTMENT REPRESENTATIONS. (a) Each Shareholder is
acquiring the Purchaser Shares for such Shareholder's own account, for
investment, and not with a view toward the resale or distribution thereof in
violation of applicable Law.
(b) Each Shareholder understands that such Shareholder must bear
the economic risk of the Purchaser Shares for an indefinite period of time
because the Purchaser Shares are not registered under the Securities Act or any
applicable state securities Laws, and may not be resold unless subsequently
registered under the Securities Act and such other Laws or unless an exemption
from such registration is available. Each Shareholder hereby agrees and
covenants that he or she will not pledge, transfer, convey or otherwise dispose
of any of the Purchaser Shares except in a transaction that is the subject of
either (i) an effective registration statement under the Securities Act and any
applicable state securities Laws, or (ii) an opinion of counsel to the effect
that such registration is not required (which opinion and counsel shall be
reasonably satisfactory to the Purchaser, and may be relied on by the Purchaser
in making such determination).
(c) Each Shareholder is able to fend for itself in the
transactions contemplated by this Agreement and each Shareholder has the ability
to bear the economic risks of such Shareholder's investment in the Purchaser
Shares for an indefinite period of time. Each
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Shareholder has had the opportunity to ask questions of, and receive answers
from, officers of the Purchaser with respect to the business and financial
condition of the Purchaser and the terms and conditions of the offering of the
Purchaser Shares and to obtain additional information necessary to verify such
information or can acquire it without unreasonable effort or expense.
(d) Each Shareholder (other than Philippe Lang) represents and
warrants to the Purchaser that he or she:
(i) is not a U.S. person within the meaning of Rule 902(k) of
Regulation S under the Securities Act, which term includes: (A) a natural
person resident in the United States; (B) a partnership or corporation
organized or incorporated under the laws of the United States; (C) an
estate of which any executor or administrator is a U.S. person; (D) a
trust of which any trustee is a U.S. person; (E) an agency or branch of a
foreign entity located in the United States; (F) a non-discretionary
account or similar account (other than an estate or trust) held by a
dealer or other fiduciary for the benefit or account of a U.S. person; (G)
a discretionary account or similar account (other than an estate or trust)
held by a dealer or other fiduciary organized, incorporated or (if an
individual) resident in the United States; and (H) a partnership or
corporation (I) organized or incorporated under the laws of any foreign
jurisdiction and (II) formed by a U.S. person principally for the purpose
of investing in securities not registered under the Securities Act, unless
it is organized or incorporated, and owned, by accredited investors (as
defined in Rule 501(a) under the Securities Act) who are not natural
persons, estates or trusts;
(ii) has not been offered the shares of Purchaser Common Stock and
Purchaser Options in the United States and at the time of execution of
this Agreement is physically outside the United States;
(iii) has acknowledged and agreed that until the expiration of the
one-year distribution compliance period within the meaning of Rule 902(f)
of Regulation S under the Securities Act, such Shareholder will only
resell the Purchaser Common Stock or Purchaser Options acquired pursuant
to this Agreement in compliance with the provisions of Regulation S,
pursuant to registration under the Securities Act or pursuant to an
exemption from registration;
(iv) is acquiring the Purchaser Common Stock and/or Purchaser
Option for its own behalf and not on behalf or for the benefit of any U.S.
person and the sale and resale of the Purchaser Common Stock or Purchaser
Options has not been pre-arranged with any U.S. person or Purchaser Common
Stock in the United States;
(v) has acknowledged that Purchaser's transfer agent will not be
required to accept for registration of transfer any shares of Purchaser
Common Stock acquired pursuant to this Agreement, except upon presentation
of evidence satisfactory to Purchaser and the transfer agent that the
restrictions set forth in this Agreement have been complied with;
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(vi) has agreed not to engage in hedging transactions with regard
to shares of Purchaser Common Stock or Purchaser Options acquired pursuant
to this Agreement in violation of the Securities Act; and
(vii) acknowledges that Purchaser will rely upon the truth and
accuracy of the foregoing acknowledgements, representations, warranties
and agreements and agrees that if, prior to the Closing, any of the
acknowledgements, representations, warranties and agreements deemed to
have been made by the acquisition of the Purchaser Common Stock and/or
Purchaser Options by such Shareholder are no longer accurate, such
Shareholder shall promptly notify Purchaser.
SECTION 4.05. BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or on
behalf of such Shareholder.
SECTION 4.06. TAX WITHHOLDING. Amounts payable, if any, by Purchaser
to the Shareholders hereunder are not subject to any withholding or similar
Taxes imposed by a tax jurisdiction with respect to the sale or exchange of the
Company Capital Stock.
V.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company and the
Shareholders as follows:
SECTION 5.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. The
Purchaser and each directly and indirectly owned Subsidiary of the Purchaser
(the "PURCHASER SUBSIDIARIES") has been duly organized and is validly existing
and in good standing (to the extent applicable) under the Laws of the
jurisdiction of its incorporation or organization, as the case may be, and has
the requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as it is now being conducted. The Purchaser, and each Purchaser Subsidiary, is
duly qualified or licensed to do business, and is in good standing (to the
extent applicable), in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its business makes such
qualification or licensing necessary, except for such failures to be so
qualified or licensed and in good standing that could not reasonably be expected
to have, individually or in the aggregate, a Purchaser Material Adverse Effect.
SECTION 5.02. CAPITALIZATION. (a) The authorized capital stock of
the Purchaser consists of (i) 100,000,000 shares of the Purchaser Common Stock,
of which 29,453,369 shares were issued and outstanding as of June 30, 2000, and
(ii) 5,000,000 shares of Preferred Stock, par value $0.001 per share, of which
no shares are issued and outstanding. All of the outstanding shares of the
Purchaser Common Stock have been validly issued and are fully paid and
nonassessable and not subject to preemptive rights.
(b) All of the shares of the Purchaser Shares to be issued to the
Shareholders in connection with the transactions contemplated hereby, when
issued in accordance with this
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Agreement, will be validly issued, fully paid and nonassessable free and clear
of any and all pledges, security interests, liens, charges or other encumbrances
of any nature whatsoever other than pursuant to any such encumbrances imposed
pursuant to the Transaction Documents and not subject to preemptive rights or
similar contractual rights granted by the Purchaser.
(c) Except for (i) outstanding options granted by Purchaser, (ii)
the Purchaser's right to repurchase any unvested shares under its stock option
plans, and (iii) warrants to purchase Purchaser Common Stock as described in one
or more Purchaser Report, there are no outstanding rights, subscriptions,
warrants, calls, unsatisfied preemptive rights, options or other agreements or
arrangements of any kind to purchase or otherwise to receive from the Purchaser
or any Purchaser Subsidiary any shares of capital stock or any other security of
the Purchaser or any Purchaser Subsidiary, and there are no outstanding
securities of any kind convertible into or exchangeable for such capital stock.
(d) All of the Purchaser Shares underlying options to be issued to
the current Option Holders of the Company in connection with the transactions
contemplated hereby, when fully paid for and issued in accordance with the
applicable option agreement, will have been duly authorized, validly issued,
fully paid and nonassessable free and clear of any and all pledges, security
interests, Liens, charges or other encumbrances of any nature whatsoever.
SECTION 5.03. AUTHORITY RELATIVE TO THIS AGREEMENT. The Purchaser
has all necessary corporate power and authority to execute and deliver this
Agreement and each other Transaction Document to which it is a party, to perform
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and each other Transaction Document to which it is a party by the Purchaser and
the consummation by the Purchaser of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action,
and no other corporate proceedings on the part of the Purchaser are necessary to
authorize this Agreement or any other Transaction Document to which the
Purchaser is a party or to consummate such transactions. This Agreement has
been, and each other Transaction Document to which it is a party will be, duly
executed and delivered by the Purchaser. Assuming the due authorization,
execution and delivery by the Company and the Shareholders, this Agreement
constitutes, and each other Transaction Document to which it is a party will
constitute, legal, valid and binding obligations of the Purchaser, enforceable
against the Purchaser in accordance with their respective terms, except to the
extent that enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other Laws affecting the enforcement of creditors' rights
generally or by general equitable principles.
SECTION 5.04. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by the Purchaser and the execution and
delivery of each other Transaction Document to which it is a party by the
Purchaser do not, and the performance by the Purchaser of its obligations
hereunder and/or thereunder, as the case may be, and the consummation of the
transactions contemplated hereby will not, (i) conflict with or violate any
provision of the articles of incorporation or bylaws of the Purchaser or any
equivalent organizational documents of any Purchaser Subsidiary, (ii) conflict
with or violate any Law applicable to the Purchaser or any other Purchaser
Subsidiary or by which any property or asset of the Purchaser or any Purchaser
Subsidiary is bound or affected or (iii) result in any breach of
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or constitute a default (or an event which with the giving of notice or lapse of
time or both could reasonably be expected to become a default) under, or give to
others any right of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or other encumbrance on any material property
or asset of the Purchaser or any Purchaser Subsidiary pursuant to, any material
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation.
(b) Assuming the accuracy of the representations and warranties
set forth in Article III and Article IV, the execution and delivery of this
Agreement by the Purchaser do not, and the execution of each other Transaction
Document to which it is a party will not, and the performance by the Purchaser
of its obligations hereunder and the consummation of the transactions
contemplated hereby will not, require any consent, approval, authorization or
permit of, or filing by the Purchaser with or notification by the Purchaser to,
any Governmental Entity.
SECTION 5.05. SEC FILINGS; FINANCIAL STATEMENTS. (a) The Purchaser
has timely filed all forms, reports, statements and documents required to be
filed by it with the SEC and the Nasdaq National Market since April 6, 2000
(collectively, together with any such forms, reports, statements and documents
the Purchaser may file subsequent to the date hereof until the Closing Date, the
"PURCHASER REPORTS"). Each Purchaser Report (i) was prepared in accordance with
the requirements of the Securities Act, the Exchange Act or Nasdaq, as the case
may be, and (ii) did not at the time it was filed contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in the light
of the circumstances under which they were made, not misleading. No Purchaser
Subsidiary is subject to the periodic reporting requirements of the Exchange Act
or required to file any form, report or other document with the SEC, Nasdaq any
other stock exchange or any other comparable governmental entity.
(b) Except as is provided in the Purchaser Reports, each of the
consolidated financial statements (including, in each case, any notes thereto)
contained in the Purchaser Reports complied as to form in all material respects
with applicable accounting requirements, was prepared in accordance with GAAP
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each presented fairly, in all material
respects, the consolidated financial position of the Purchaser and the
consolidated Purchaser Subsidiaries as at the respective dates thereof and the
consolidated results of operations and cash flows of the Purchaser and the
consolidated Purchaser Subsidiaries for the respective periods indicated
therein, except as otherwise noted therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments).
SECTION 5.06. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the Purchaser Reports filed prior to the date of this Agreement,
since June 30, 2000, there has not been (a) any condition, event, occurrence or
development that has had or would reasonably be expected to have, individually
or in the aggregate, a Purchaser Material Adverse Effect or which could
reasonably be expected to prevent, hinder or materially delay the ability of the
Purchaser to consummate the transactions contemplated hereby, (b) any material
change by the Purchaser or any Purchaser Subsidiary in its accounting methods,
principles or practices, or (c) any event pursuant to which the Purchaser or any
Purchaser Subsidiary has incurred any material liabilities (direct, contingent
or otherwise) or engaged in any material transaction or entered into any
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material agreement, in each case, outside of the ordinary course of business
which, individually or in the aggregate, could be reasonably expected to have a
Purchaser Material Adverse Effect.
SECTION 5.07. BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or on
behalf of the Purchaser.
SECTION 5.08. REPRESENTATIONS COMPLETE. None of the representations
or warranties made by the Purchaser herein or in any certificate furnished by
the Purchaser pursuant to this Agreement, when all such documents are read
together in their entirety, contains or will contain at the Closing Date any
untrue statement of a material fact, or omits or will omit at the Closing Date
to state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading.
VI.
COVENANTS
SECTION 6.01. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
CLOSING. The Company and the Shareholders agree that, between the date of this
Agreement and the Closing Date, unless the Purchaser shall otherwise agree in
writing, (x) the businesses of the Company shall be conducted only in, and the
Company shall not take any action except in the ordinary course of business
consistent with past practice and (y) the Company shall use all reasonable
efforts to keep available the services of such of the current officers,
significant employees and consultants of the Company and to preserve the current
relationships of the Company with such of the corporate partners, customers,
suppliers and other Persons with which the Company has significant business
relations in order to preserve substantially intact its business organization.
By way of amplification and not limitation, the Company shall not, between the
date of this Agreement and the Closing Date, directly or indirectly, do, or
agree to do, any of the following without the prior written consent of the
Purchaser:
(a) amend or otherwise change its Charter or Bylaws or equivalent
organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer, lease,
license, guarantee or encumber, or authorize the issuance, sale, pledge,
disposition, grant, transfer, lease, license or encumbrance of (i) any shares of
capital stock of the Company of any class, or securities convertible into or
exchangeable or exercisable for any shares of such capital stock, or any
options, warrants or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without limitation,
any phantom interest), of the Company (unless upon the exercise of any option,
warrant or other rights existing on the date hereof and reflected on Schedule II
hereto) or (ii) any property or assets of the Company except sales of inventory
in the ordinary course of business consistent with past practice;
(c) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization or Person or any division
thereof; (ii) incur any indebtedness for borrowed money
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or issue any debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any Person for borrowed
money or make any loans or advances material to the business, assets,
liabilities, financial condition or results of operations of the Company; (iii)
terminate, cancel or request any material change in, or agree to any material
change in, any Material Contract or License Agreement; (iv) make or authorize
any capital expenditure, other than capital expenditures in the ordinary course
of business consistent with past practice that have been budgeted for fiscal
year 2000 and disclosed in writing to the Purchaser and that are not, in the
aggregate, in excess of $10,000 for the Company; or (v) enter into or amend any
contract, agreement, commitment or arrangement that, if fully performed, would
not be permitted under this Section 6.01(c);
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock;
(e) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(f) amend the terms of, repurchase, redeem or otherwise acquire,
any of its securities or any securities or propose to do any of the foregoing;
(g) increase the compensation payable or to become payable to its
directors, officers, consultants or employees, grant any rights to severance or
termination pay to, or enter into any employment or severance agreement which
provides benefits upon a change in control of the Company that would be
triggered by the transactions contemplated hereby with any director, officer,
consultant or other employee of the Company who is not currently entitled to
such benefits, establish, adopt, enter into or amend any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any director, officer, consultant or employee of the Company, except to the
extent required by applicable Law or the terms of a collective bargaining
agreement, or enter into or amend any contract, agreement, commitment or
arrangement between the Company and any of the Company's directors, officers,
consultants or employees;
(h) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of liabilities reflected or
reserved against on the balance sheet of the Company dated as of June 30, 2000
previously presented to the Purchaser and only to the extent of such reserves;
(i) make any change with respect to the Company's accounting
policies, principles, methods or procedures, including, without limitation,
revenue recognition policies, other than as required by Israeli GAAP;
(j) make any material Tax election or settle or compromise any
material Tax liability;
(k) permit any insurance policy naming it as a beneficiary or a
loss payee to be cancelled or terminated, except in the ordinary and usual
course of business;
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(l) maintain the books and records of the Company in a manner not
consistent with past business practices;
(m) take any action which would materially adversely affect the
goodwill of its suppliers, customers and others with whom it has business
relations;
(n) fail to pay and perform all of its debts, obligations and
liabilities as and when due and all leases, agreements, contracts and other
commitments to which it is a party in accordance with the terms and provisions
thereof;
(o) fail to comply in all material respects with all Laws that may
be applicable to its business; or
(p) authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing or to take any action
which would make any of the representations or warranties of the Company
contained in this Agreement untrue or incorrect or prevent the Company from
performing or cause the Company not to perform its covenants hereunder or result
in any of the conditions to the Closing set forth herein not being satisfied.
SECTION 6.02. NOTICES OF CERTAIN EVENTS. Each of the Purchaser, the
Company and the Shareholders shall give prompt notice to the other of (i) any
notice or other communication from any Person alleging that the consent of such
Person is or may be required in connection with the transactions contemplated
hereby; (ii) any notice or other communication from any Governmental Entity in
connection with the transactions contemplated hereby; (iii) any actions, suits,
claims, investigations or proceedings commenced or, to its knowledge, threatened
against, relating to or involving or otherwise affecting the Purchaser or the
Company, or that relate to the consummation of the transactions contemplated
hereby; (iv) the occurrence of a default or event that, with the giving of
notice or lapse of time or both, will become a default under any Material
Contract; and (v) any change that could reasonably be expected to have a
Purchaser Material Adverse Effect or a Company Material Adverse Effect, or to
delay or impede the ability of the Purchaser, the Company or any of the
Shareholders to perform their respective obligations pursuant to this Agreement
and to effect the consummation of the transactions contemplated hereby.
SECTION 6.03. ACCESS TO INFORMATION; CONFIDENTIALITY. (a) Except as
required pursuant to the Confidentiality Agreement or any similar agreement or
arrangement to which the Purchaser or the Company is a party or pursuant to
applicable Law or the regulations or requirements of any stock exchange or other
regulatory organization with whose rules a party hereto is required to comply,
from the date of this Agreement to the Closing Date, the Purchaser and the
Company shall (i) provide to the other (and its officers, directors, employees,
accountants, consultants, legal counsel, agents and other representatives
(collectively, "REPRESENTATIVES")) access at reasonable times upon prior notice
to its officers, employees, agents, properties, offices and other facilities and
to the books and records thereof, and (ii) furnish promptly such information
concerning its business, properties, contracts, assets, liabilities and
personnel as the other party or its Representatives may reasonably request. No
investigation conducted pursuant to this Section 6.03 shall affect or be deemed
to modify any representation or warranty made in this Agreement.
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(b) The parties hereto shall comply with, and shall cause their
respective Representatives to comply with, all of their respective obligations
under the Confidentiality Agreement with respect to the information disclosed
pursuant to this Section 6.03 or pursuant to the Confidentiality Agreement. The
Shareholders hereby agree to be bound by the terms of the Confidentiality
Agreement as if they were parties thereto.
SECTION 6.04. NO SOLICITATION OF TRANSACTIONS. The Company and the
Shareholders shall not, directly or indirectly, and shall cause the Company's
Representatives not to, directly or indirectly, solicit, initiate or encourage
(including by way of furnishing nonpublic information), any inquiries or the
making of any proposal or offer (including, without limitation, any proposal or
offer to the Shareholders) that constitutes, or may reasonably be expected to
lead to, any Competing Transaction, or enter into or maintain or continue
discussions or negotiate with any Person in furtherance of such inquiries or to
obtain a Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize or permit any of the Company's Representatives to take
any such action. Any violation of the restrictions set forth in this Section
6.04 by any Representative of the Company, whether or not such Person is
purporting to act on behalf of the Company or otherwise, shall be deemed to be a
breach of this Section 6.04 by the Company. The Company shall notify the
Purchaser promptly if any proposal or offer, or any inquiry or contact with any
Person with respect thereto, regarding a Competing Transaction is made, such
notice to include the identity of the Person making such proposal, offer,
inquiry or contact, and the terms of such Competing Transaction, and shall keep
the Purchaser apprised, on a current basis, of the status of such Competing
Transaction. The Company immediately shall cease and cause to be terminated all
existing discussions or negotiations with any parties conducted heretofore with
respect to a Competing Transaction. The Company shall not release any third
party from, or waive any provision of, any confidentiality or standstill
agreement to which it is a party.
SECTION 6.05. FURTHER ACTION; CONSENTS; FILINGS. (a) Upon the terms
and subject to the conditions hereof, each of the parties hereto shall use all
reasonable efforts to (i) take, or cause to be taken, all appropriate action,
and do, or cause to be done, all things necessary, proper or advisable under
applicable Law or otherwise to consummate and make effective the transactions
contemplated hereby, (ii) obtain from Governmental Entities any consents,
licenses, permits, waivers, approvals, authorizations or orders required to be
obtained or made by the Purchaser or the Company in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby and (iii) make all necessary filings, and
thereafter make any other required or appropriate submissions, with respect to
this Agreement and the transactions contemplated hereby required under any
applicable Laws. The parties hereto shall cooperate and consult with each other
in connection with the making of all such filings.
(b) Each of the Company and the Purchaser will give any notices to
third Persons, and use reasonable efforts to obtain any consents from third
Persons necessary, proper or advisable (as determined in good faith by the
Purchaser with respect to such notices or consents to be delivered or obtained
by the Company) to consummate the transactions contemplated by this Agreement.
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SECTION 6.06. CERTAIN TAX MATTERS. (a) TAXES. Each party will, at
its own expense, file all necessary Tax Returns and other documentation with
respect to all Taxes and fees incurred at Closing, as required by applicable
law. The Purchaser will, and will cause its Affiliates to, join in the execution
of any such Tax Returns and other documentation.
(b) TAX RETURNS. The following provisions shall govern the
allocation of responsibility as between the Purchaser and the Shareholders for
certain tax matters following the Closing Date:
(i) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE. The
Purchaser shall prepare or cause to be prepared and file or cause to be
filed all Tax Returns for the Company and its Subsidiaries for all periods
ending on or prior to the Closing Date which are filed after the Closing
Date. The Purchaser shall permit the Shareholders to review and comment on
each such Tax Return described in the preceding sentence prior to filing.
The Shareholders shall reimburse the Purchaser for Taxes of the Company
with respect to such periods within fifteen (15) days after payment by the
Purchaser or the Company of such Taxes to the extent such Taxes are not
reflected in the reserve for Tax liability (rather than any reserve for
deferred Taxes established to reflect timing differences between book and
Tax income) shown on the face of the Company's balance sheet as of June
30, 2000.
(ii) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING
DATE. The Purchaser shall prepare or cause to be prepared and file or
cause to be filed any Tax Returns of the Company for Tax periods which
begin before the Closing Date and end after the Closing Date. The
Shareholders shall pay to the Purchaser within fifteen (15) days after the
date on which Taxes are paid with respect to such periods an amount equal
to the portion of such Taxes which relates to the portion of such Taxable
period ending on the Closing Date to the extent such Taxes are not
reflected in the reserve for Tax liability (rather than any reserve for
deferred Taxes established to reflect timing differences between book and
Tax income) shown on the face of the Company's balance sheet as of June
30, 2000. For purposes of this Section, in the case of any Taxes that are
imposed on a periodic basis and are payable for a Taxable period that
includes (but does not end on) the Closing Date, the portion of such Tax
which relates to the portion of such Taxable period ending on the Closing
Date shall (x) in the case of any Taxes other than Taxes based upon or
related to income or receipts, be deemed to be the amount of such Tax for
the entire Taxable period multiplied by a fraction the numerator of which
is the number of days in the Taxable period ending on the Closing Date and
the denominator of which is the number of days in the entire Taxable
period, and (y) in the case of any Tax based upon or related to income or
receipts be deemed equal to the amount which would be payable if the
relevant Taxable period ended on the Closing Date. Any credits relating to
a Taxable period that begins before and ends after the Closing Date shall
be taken into account as though the relevant Taxable period ended on the
Closing Date. All determinations necessary to give effect to the foregoing
allocations shall be made in a manner consistent with prior practice of
the Company and its Subsidiaries.
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(iii) COOPERATION ON TAX MATTERS. The Purchaser, the Company and the
Shareholders shall cooperate fully, as and to the extent reasonably
requested by the other party, in connection with the filing of Tax Returns
pursuant to this Section and any audit, litigation or other proceeding
with respect to Taxes. Such cooperation shall include the retention and
(upon the other party's request) the provision of records and information
which are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis
to provide additional information and explanation of any material provided
hereunder. The Company, the Purchaser and the Shareholders agree (A) to
retain all books and records with respect to Tax matters pertinent to the
Company relating to any taxable period beginning before the Closing Date
until the expiration of the statute of limitations (and, to the extent
notified by the Purchaser or the Shareholders, any extensions thereof) of
the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (B) to give the
other party reasonable written notice prior to transferring, destroying or
discarding any such books and records and, if the other party so requests,
the Company, the Purchaser or the Shareholders, as the case may be, shall
allow the other party to take possession of such books and records. The
Company, the Purchaser and the Shareholders agree that the Shareholders
shall not be responsible after the Closing Date for the maintenance and
retention of the Company's books and records which are pertinent to Tax
matters and which have already been provided to, or are otherwise in the
possession of, the Company, and shall not be responsible for the Company's
books and records relating to the period after the Closing Date.
(iv) The Purchaser and the Shareholders further agree, upon
request, to use their reasonable efforts to obtain any certificate or
other document from any governmental authority or any other Person as may
be necessary to mitigate, reduce or eliminate any Tax that could be
imposed (including, but not limited to, with respect to the transactions
contemplated hereby).
(v) The Purchaser and the Shareholders further agree, upon
request, to provide the other party with all information that either party
may be required to report pursuant to Section 6043 of the Code and all
Treasury Department Regulations promulgated thereunder.
(c) TAX SHARING AGREEMENTS. All tax sharing agreements or similar
agreements with respect to or involving the Company shall be terminated as of
the Closing Date and, after the Closing Date, the Company shall not be bound
thereby or have any liability thereunder.
SECTION 6.07. PUBLIC ANNOUNCEMENTS. Until the earlier of termination
of this Agreement or the Closing Date, the Purchaser, on the one hand, and the
Company and the Shareholders, on the other hand, will consult with each other
before issuing any press release or otherwise making any public statements with
respect to the Agreement or the transactions contemplated hereby and shall not
issue any such press release or make any such public statement that is not
approved by the other party, except as may be required by Law or the rules of
the Nasdaq National Market, in which case the parties will make reasonable
efforts to consult with each other prior to the making of such public statement.
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SECTION 6.08. LOCK-UP AGREEMENT OF SHAREHOLDERS. Each Shareholder
agrees in connection with any registered underwritten public offering of the
Purchaser Common Stock in which the Investors register any shares pursuant to
Section 2.06 hereof, upon request of the underwriters managing an underwritten
public offering, not to sell, make any short sale of, loan, grant any option for
the purchase of or otherwise dispose of any shares of Purchaser Common Stock
(other than those, if any, that are included in the public offering) without the
prior written consent of the Purchaser or such underwriters, as the case may be,
for such period of time as may be requested by the underwriters, PROVIDED that
the officers and directors of the Purchaser and other shareholders of the
Purchaser selling shares in such offering shall also enter into such an
agreement.
SECTION 6.09. CASH ON HAND; INDEBTEDNESS AND LIABILITIES. As of the
Closing Date, the assets that would be reflected as cash, cash equivalents and
immediately collectible accounts receivable on the Company's balance sheet under
Israeli GAAP minus all current and long term liabilities under Israeli GAAP
(excluding liability for employee rights under retirement) and other
Indebtedness of the Company shall equal at least $500,000 minus current and long
term liabilities and other Indebtedness incurred by the Company in the ordinary
course of business between October 1, 2000 and the Closing Date, which
subtracted amount shall not exceed $75,000.
SECTION 6.10. LEGEND. Each stock certificate evidencing shares of
Purchaser Common Stock shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF (i) AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SAID
ACT OR (ii) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT."
VII.
CONDITIONS PRECEDENT
SECTION 7.01. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EACH PARTY.
The obligations of the parties hereto to consummate the transactions
contemplated by this Agreement are subject to the satisfaction or, if permitted
by applicable Law, waiver of the following conditions:
(a) no court of competent jurisdiction shall have issued or
entered any order, writ, injunction or decree, and no other Governmental Entity
shall have issued any order, which is then in effect and has the effect of
making the transactions contemplated hereby illegal or otherwise prohibiting
their consummation;
(b) all consents, approvals and authorizations legally
required to be obtained to consummate the transactions contemplated hereby shall
have been obtained from all
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Governmental Entities, except where the failure to obtain any such consent,
approval or authorization could not reasonably be expected to result in a
Purchaser Material Adverse Effect or a Company Material Adverse Effect; and
(c) the Purchaser, each Shareholder and the Escrow Agent shall
have executed and delivered an Escrow Agreement.
SECTION 7.02. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE
PURCHASER. The obligation of the Purchaser to consummate the transactions
contemplated by this Agreement is subject, at the option of the Purchaser, to
the satisfaction at or prior to the Closing Date of each of the following
conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company and each Shareholder contained in
this Agreement or in any certificate or document delivered to the Purchaser
pursuant hereto shall be true and correct in all material respects (other than
representations and warranties subject to "materiality" or "material adverse
effect" qualifiers, which shall be true and correct in all respects) both when
made and on and as of the Closing Date as though made at and as of the Closing
Date (other than representations and warranties which address matters only as of
a certain date which shall be so true and correct as of such certain date), and,
if the Closing Date shall occur on a date other than the date hereof, the
Company and each Shareholder shall have so certified to the Purchaser in
writing.
(b) COMPLIANCE WITH COVENANTS. The Company and each Shareholder
shall have performed and complied in all material respects with all terms,
agreements, covenants and conditions of this Agreement to be performed or
complied with by it at or prior to the Closing Date, and, if the Closing Date
shall occur on a date other than the date hereof, the Company and each
Shareholder shall have so certified to the Purchaser in writing.
(c) ALL PROCEEDINGS TO BE SATISFACTORY. All proceedings to be
taken by the Company and the Shareholders in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Purchaser and its counsel, and the
Purchaser and said counsel shall have received all such counterpart originals or
certified or other copies of such documents as they may reasonably request.
(d) NO MATERIAL ADVERSE CHANGE. There shall not have occurred
since December 31, 1999, any Company Material Adverse Effect, and, if the
Closing Date shall occur on a date other than the date hereof, the Company and
each Shareholder shall have so certified to the Purchaser in writing.
(e) OPINION OF COUNSEL. The Purchaser shall have received the
opinion of (i) Zellermayer, Pelossof, Adv., Israeli counsel to the Company, in
substantially the form of EXHIBIT C-1 hereto and (ii) Parker Chapin LLP, United
States counsel to the Company in substantially the form of EXHIBIT C-2 hereto.
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(f) CONSENTS AND APPROVALS. The authorizations, consents, waivers
and approvals set forth in Section 3.05(c) of the Company Disclosure Schedule,
if any, shall have been duly obtained and shall be in form and substance
satisfactory to counsel for the Purchaser.
(g) REVIEW OF THE COMPANY'S UNAUDITED FINANCIAL STATEMENTS. The
Purchaser shall have received written confirmation from Kesselman & Kesselman, a
member firm of PriceWaterhouse Coopers International Limited, that they have
conducted a review of the unaudited financial statements of the Company as of
and for the periods ended June 30, 2000.
(h) EMPLOYMENT AGREEMENTS. Employment Agreements in substantially
the form set forth in EXHIBIT B-1 and EXHIBIT B-2 hereto shall have been
executed and delivered by the Company and each of Eitan Ron and Tal Goldberg
(the "Founders"), respectively.
(i) Each of the employees of the Company shall have executed a
Proprietary Information and Intellectual Property Agreement in the form attached
as EXHIBIT I hereto and each independent contractor or consultant of the Company
shall have executed an assignment of inventions Services Agreement in the form
attached as EXHIBIT J hereto.
(j) REPURCHASE OPTION. Agreements in substantially the form set
forth in EXHIBIT E hereto shall have been executed and delivered by the
Purchaser and each of the Founders.
(k) BOARD RESIGNATIONS. The Purchaser shall have received from
each Person who is, immediately prior to the Closing Date, a director of the
Company or any of its Subsidiaries, his or her written resignation, effective as
of the Closing Date, from such position.
(l) TERMINATION OF AGREEMENTS. All agreements among the
Shareholders relating to the Business or the Company shall have been terminated
and of no further force or effect as of the Closing Date.
(m) OPTION VESTING SCHEDULE. The vesting schedule for each of the
holders of Company Options shall be as set forth on the table contained in
EXHIBIT H hereto.
(n) SUPPORTING DOCUMENTS. On or prior to the Closing Date, the
Purchaser and its counsel shall have received copies of the following supporting
documents:
(i) a certificate of an officer of the Company, dated the Closing
Date and certifying (A) that attached thereto is a true and complete copy
of the Bylaws of the Company as in effect on the date of such
certification; and (B) that the Charter of the Company has not been
amended since February 27, 2000;
(ii) a resolution of the Company's board of directors approving the
transfer of shares and registering the transfer in the Company's Registrar
of Members; and
(iii) such additional supporting documents and other information
with respect to the operations and affairs of the Company as the Purchaser
or its counsel may reasonably request.
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All such documents shall be reasonably satisfactory in form and substance to the
Purchaser and its counsel.
SECTION 7.03. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY
AND THE SHAREHOLDERS. The obligations of the Company and the Shareholders to
consummate the transactions contemplated by this Agreement are subject, at the
option of the Company and the Shareholders, to the satisfaction at or prior to
the Closing Date of each of the following conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Purchaser contained in this Agreement or
in any certificate or document delivered to the Company and the Shareholders
pursuant hereto shall be true and correct in all material respects (other than
representations and warranties subject to "materiality" or "material adverse
effect" qualifiers, which shall be true and correct in all respects) both when
made and on and as of the Closing Date as though made at and as of the Closing
Date (other than representations and warranties which address matters only as of
a certain date which shall be so true and correct as of such certain date), and,
if the Closing Date shall occur on a date other than the date hereof, the
Purchaser shall have so certified to the Company and the Shareholders in
writing.
(b) COMPLIANCE WITH COVENANTS. The Purchaser shall have performed
and complied in all material respects with all terms, agreements, covenants and
conditions of this Agreement to be performed or complied with by it at or prior
to the Closing Date, and, if the Closing Date shall occur on a date other than
the date hereof, the Purchaser shall have so certified to the Company and the
Shareholders in writing.
(c) OPINION OF COUNSEL. The Company shall have received the
opinion of Brobeck, Phleger & Harrison LLP, U.S. counsel to the Purchaser, in
substantially the form of Exhibit G hereto.
(d) ALL PROCEEDINGS TO BE SATISFACTORY. All proceedings to be
taken by the Purchaser in connection with the transactions contemplated hereby
and all documents incident thereto shall be reasonably satisfactory in form and
substance to the Company and the Shareholders and their respective counsel, and
the Company and the Shareholders and said counsel shall have received all such
counterpart originals or certified or other copies of such documents as they may
reasonably request.
All such documents shall be reasonably satisfactory in form and substance to the
Company, the Shareholders and their counsel.
VIII.
INDEMNIFICATION
SECTION 8.01. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in Articles II, III and IV, other than
Section 3.03 (CAPITALIZATION), Section 3.14 (TAXES), and Section 4.03 (TITLE TO
SHARES) which shall survive until ninety (90) days following the expiration of
the applicable statute of limitations, will
38
<PAGE>
survive until the first anniversary of the Closing Date. This Section 8.01 shall
not limit any covenants or agreements of the parties hereto that by their terms
contemplated performance after the Closing Date.
SECTION 8.02. TAX INDEMNITY. (a) The Shareholders jointly and
severally agree to and will (except, with respect to any Taxes incurred by,
imposed on or attributable to the Shareholders, the Shareholders agree to and
will, severally and not jointly) indemnify, defend and hold harmless the
Purchaser and the Company, and their respective officers, directors, advisors,
Affiliates, agents, employees and each Person, if any, who controls or may
control the Purchaser within the meaning of the Securities Act (the "PURCHASER
INDEMNIFIED GROUP") from and against any and all Taxes incurred by, imposed upon
or attributable to the Company or the Shareholders (and from and against any and
all Taxes incurred by, imposed upon or attributable to the Company or the
Shareholders as a result of the indemnity provided for in this Section 8.02),
including without limitation reasonable legal fees and expenses incurred by the
Company or any party hereto and relating thereto, for any period (or portion
thereof) prior to or ending on the Closing Date to the extent that such Taxes
were not reflected on the Company Financial Statements as a reserve for the
payment of Taxes for the period (or portion thereof) ending on or prior to the
Closing Date, including without limitation any amount due for sales and use
Taxes payable as a result of an audit conducted by state or local governmental
authorities or any amount due with respect to withholding Taxes.
(b) For purposes of this Section 8.02, any interest, penalty or
additional charge included in Taxes shall be deemed to be a Tax for the period
to which the item or event giving rise to such interest, penalty or additional
charge is attributable, and not a Tax for the period during which such interest,
penalty or additional charge accrues.
(c) The indemnity provided for in this Section 8.02 shall be
independent of any other indemnity provision hereof and, anything in this
Agreement to the contrary notwithstanding, shall survive until the expiration of
the applicable statutes of limitation, including any extensions thereof, for the
Taxes referred to herein. Any Taxes, legal fees and expenses subject to
indemnification under this Section 8.02 shall not be subject to indemnification
under Section 8.03 hereof.
SECTION 8.03. GENERAL INDEMNITY. (a) Subject to the terms and
conditions of this Article VIII, the Shareholders agree to and will, jointly and
severally (except, in the event that the amounts held in the Escrow Fund are
less than any Damages resulting from a breach of Section 4.03, as to which the
Shareholders agree to and will, severally but not jointly as to such excess,)
indemnify, defend and hold the Purchaser and its officers, directors, advisors,
Affiliates, agents, employees and each Person, if any who controls or may
control the Purchaser within the meaning of the Securities Act (each, an
"Indemnified Person") harmless from and against all demands, claims, actions or
causes of action, assessments, losses, damages, liabilities, costs and expenses,
including without limitation interest, penalties and reasonable attorneys' fees
and expenses (hereinafter collectively called "DAMAGES"), asserted against,
resulting to, imposed upon or incurred by the Company, the Purchaser or any
Indemnified Person, by reason of, resulting from or arising out of:
39
<PAGE>
(i) a breach of any representation or warranty of the Company or any
Shareholder contained in or made pursuant to this Agreement, or any facts
or circumstances constituting such a breach, except as and to the extent
that Section 8.02 above shall be applicable thereto, in which case the
provisions of said Section 8.02 shall govern;
(ii) any breach of any covenant or agreement of the Company or any
Shareholder contained in or made pursuant to this Agreement or the Escrow
Agreement; and
(iii) any facts or events described in the Company Disclosure
Schedule as specifically intended to be subject to this Article 8, whether
or not such fact or event would be deemed a breach of any representation,
warranty, covenant or agreement contained in or made pursuant to this
Agreement.
For the avoidance of doubt, the Shareholders have agreed to jointly
and severally indemnify the Indemnified Persons pursuant to this section for the
breaches described in (i) and (ii) above whether the breach is by the Company or
the Shareholder and without regard to whether the representation is made solely
by the Company or the covenant by its terms binds only the Company.
(b) Subject to the terms and conditions of this Article VIII, the
Purchaser agrees to and will indemnify, defend and hold the Shareholders and
each of their respective officers, directors, advisors, Affiliates, agents,
employees and each Person, if any who controls or may control each of the
Shareholders within the meaning of the Securities Act (each, a "Shareholder
Indemnified Person") harmless from and against all Damages asserted against,
resulting to, imposed upon or incurred by them by reason of or resulting from or
arising out of (i) a breach of any representation or warranty of the Purchaser
contained in or made pursuant to this Agreement, or any facts or circumstances
constituting such a breach, or (ii) any breach of any covenant or agreement of
the Purchaser contained in or made pursuant to this Agreement or the Escrow
Agreement.
SECTION 8.04. CONDITIONS OF INDEMNIFICATION. The respective
obligations and liabilities of the Shareholders, on the one hand, and the
Purchaser, on the other hand (herein sometimes called the "INDEMNIFYING PARTY"),
to the other or any other Indemnified Person or Shareholder Indemnified Person
(herein sometimes called the "PARTY TO BE INDEMNIFIED" or the "INDEMNIFIED
PARTY") under Section 8.03 hereof with respect to claims resulting from the
assertion of liability by third parties shall be subject to the following terms
and conditions:
(a) within 30 days (or, if earlier, by the fifteenth day preceding
the day on which an answer or other pleading must be served in order to
prevent judgment by default in favor of the Person asserting such claim,
unless an extension is available to extend such deadline) after receipt of
notice of commencement of any action or the assertion of any claim by a
third party, the party to be indemnified shall give the indemnifying party
written notice thereof together with a copy of such claim, process or
other legal pleading (provided that failure so to notify the indemnifying
party of the assertion of a claim within such period shall not affect its
indemnity obligation hereunder
40
<PAGE>
except as and to the extent that such failure shall adversely affect the
defense of such claim), and the indemnifying party shall have the right to
undertake the defense thereof by representatives of its own choosing;
(b) in the event that the indemnifying party, by the 30th day
after receipt of notice of any such claim (or, if earlier, by the tenth
day preceding the day on which an answer or other pleading must be served
in order to prevent judgment by default in favor of the Person asserting
such claim, unless an extension is available to extend such deadline),
does not elect to defend against such claim, the party to be indemnified
will (upon further notice to the indemnifying party) have the right to
undertake the defense, compromise or settlement of such claim on behalf of
and for the account and risk of the indemnifying party, subject to the
right of the indemnifying party to assume the defense of such claim at any
time prior to settlement, compromise or final determination thereof;
(c) anything in this Section 8.04 to the contrary notwithstanding,
(i) if there is a reasonable probability that a claim may materially and
adversely affect the indemnified party other than as a result of money
damages or other money payments, the indemnified party shall have the
right, at its own cost and expense, to compromise or settle such claim,
but (ii) the indemnified party shall not, without the prior written
consent of the indemnifying party, settle or compromise any claim or
content to the entry of any judgment which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to
the indemnifying party a release from all liability in respect of such
claim; and
(d) in connection with any such indemnification, the indemnified
party will cooperate in all reasonable requests of the indemnifying party.
In the event that the "indemnifying party" or the "party to be indemnified" as
described in this Section 8.04 is the Shareholders as a group, then any notices
required to be given to or by, and all other actions or decisions required to be
taken or made by, such "indemnifying party" or the "party to be indemnified" as
provided in this Section 8.04, may be given to or by, or may be taken or made
by, the Shareholder Representative (as defined in the Escrow Agreement).
SECTION 8.05. THRESHOLD FOR DAMAGES. Notwithstanding the foregoing,
an Indemnified Person or Shareholder Indemnified Person may not make a claim for
Damages until the aggregate amount of claims by Indemnified Persons exceeds
$200,000; PROVIDED, HOWEVER, that once the aggregate amount of Damages of
Indemnified Persons or Shareholder Indemnified Persons exceed such threshold
amount, then the Indemnified Persons or Shareholder Indemnified Persons shall
have the right to recover the full amounts due without regard to the threshold.
In determining the amount of any Damage attributable to a breach, any
materiality standard contained in a representation, warranty or covenant of the
Shareholders or the Company shall be disregarded.
SECTION 8.06. ESCROW FUND; EXCLUSIVE REMEDY. On the Closing Date,
the Purchaser shall deliver to the Escrow Agent the Escrow Fund. The Escrow Fund
shall be held by the Escrow Agent under the Escrow Agreement pursuant to the
terms set forth therein and shall be available to compensate Indemnified Persons
or the Purchaser Indemnified Group pursuant to
41
<PAGE>
the indemnification obligations of the Shareholders; PROVIDED, HOWEVER, that the
parties expressly agree that the Escrow Fund is intended to be the exclusive
remedy and source of recovery of the Indemnified Persons and the Purchaser
Indemnified Group in connection with any breach of any representation, warranty,
covenant or agreement made by the Company or the Shareholders under this
Agreement, and recovery under the Escrow Agreement shall be the sole and
exclusive remedy hereunder, in each case except with respect to Sections 3.03,
3.14, 4.03 and 6.06, the breach of which is not intended to be so limited as to
remedies or recovery.
SECTION 8.07. ESCROW PERIOD. The Purchaser shall release to the
Israeli Trustee (as defined in the Escrow Agreement) for the benefit of the
Shareholders on a PRO RATA basis any portion of the Escrow Fund remaining in
escrow on the first anniversary of the Closing Date (the "ESCROW PERIOD");
PROVIDED, HOWEVER, that a portion of the Escrow Fund that is necessary to
satisfy any unsatisfied claims on the Escrow Fund prior to termination of the
Escrow Period with respect to facts and circumstances existing prior to
expiration of the Escrow Period, shall remain in escrow until such claims have
been resolved.
SECTION 8.08. CLAIMS UPON ESCROW. Upon delivery to the Shareholders
on or before the last day of the Escrow Period of a certificate signed by any
officer of the Purchaser (an "OFFICER'S CERTIFICATE"):
(i) stating that Damages exist in an aggregate amount greater than
$200,000; and
(ii) specifying in reasonable detail the individual items of such
Damages included in the amount so stated, the date each such item was
paid, or properly accrued or arose, and the nature of the
misrepresentation or breach of representation, warranty, covenant or
agreement made by the Company or the Shareholders under this Agreement,
the Escrow Agent (as defined in the Escrow Agreement) shall, subject to the
provisions of Sections 8.09 and 8.10 hereof, remove for the benefit of the
Purchaser, or the benefit of the other Indemnified Persons, a portion of the
Escrow Fund having a value equal to such Damages in accordance with the Escrow
Agreement. The value of the Escrow Shares shall be deemed to be seven dollars
($7.00) per share, with appropriate adjustment to take into account any stock
split, reverse stock split, stock dividend, recapitalization or other similar
capital adjustment with respect to Purchaser Common Stock
SECTION 8.09. OBJECTIONS TO CLAIMS. At the time of delivery of any
Officer's Certificate to the Shareholders and for a period of thirty (30) days
after delivery to the Shareholders of such Officer's Certificate, the Escrow
Agent shall not remove for the benefit of any Indemnified Person any portion of
the Escrow Fund unless it shall have received written authorization from the
Shareholders to make such delivery. After the expiration of such thirty (30) day
period, the Escrow Agent shall remove for the benefit of any Indemnified Person
the appropriate portion of the Escrow Fund in accordance with Section 8.06
hereof, provided that no such delivery may be made if the Shareholders shall
object in a written statement to the claim made in the Officer's Certificate,
and such statement shall have been delivered to the Purchaser prior to the
expiration of such thirty (30) day period.
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<PAGE>
SECTION 8.10. RESOLUTION OF CONFLICTS; ARBITRATION. (a) In case the
Shareholders shall so object in writing to any claim or claims by the Purchaser
made in any Officer's Certificate, the Purchaser shall have thirty (30) days
after receipt of an objection by the Shareholders to respond in a written
statement to the objection of the Shareholders. If after such thirty (30) day
period there remains a dispute as to any claims, the Shareholders and the
Purchaser shall attempt in good faith for forty-five (45) days to agree upon the
rights of the respective parties with respect to each of such claims. If the
Shareholders and the Purchaser should so agree, a memorandum setting forth such
agreement shall be prepared and signed by both parties.
(b) If no such agreement can be reached after good faith
negotiation, either the Purchaser or the Shareholders may, by written notice to
the other, demand arbitration of the matter unless the amount of the damage or
loss is at issue in pending litigation with a third party, in which event
arbitration shall not be commenced until such amount is ascertained or both
parties agree to arbitration; and in either such event the matter shall be
settled by arbitration conducted by three arbitrators. Within fifteen (15) days
after such written notice is sent, the Purchaser and the Shareholders shall each
select one arbitrator, and the two arbitrators so selected shall select a third
arbitrator. The decision of the arbitrators as to the validity and amount of any
claim in such Officer's Certificate shall be binding and conclusive upon the
parties to this Agreement.
(c) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration shall be held in
the State of New York under the commercial rules then in effect of the American
Arbitration Association. For purposes of this Section 8.10, in any arbitration
hereunder in which any claim or the amount thereof stated in the Officer's
Certificate is at issue, the Purchaser shall be deemed to be the "Non-Prevailing
Party" unless the arbitrators award the Purchaser at least one-half (1/2) of the
amount in dispute, plus any amounts not in dispute; otherwise, the Shareholders
shall be deemed to be the Non-Prevailing Party. The Non-Prevailing Party to an
arbitration shall pay its own expenses, the fees of each arbitrator, the
administrative fee of the American Arbitration Association, and the expenses,
including without limitation, attorneys' fees and costs, reasonably incurred by
the other party to the arbitration.
IX.
TERMINATION AND ABANDONMENT
SECTION 9.01. TERMINATION. This Agreement may be terminated at any
time prior to the Closing:
(a) by the mutual consent of the Company, the Shareholders and the
Purchaser;
(b) by the Purchaser, on the one hand, or the Company and the
Shareholders, on the other hand, if the Closing shall not have occurred on
or before October 15, 2000, or such later date as may be agreed upon by
the parties hereto, PROVIDED, HOWEVER, that the right to terminate this
Agreement under this clause (b) shall not be available to any
43
<PAGE>
party (a "DEFAULTING PARTY") whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in the failure of the
Closing to occur on or before such date;
(c) by the Purchaser, upon a breach of any representation,
warranty, covenant or agreement on the part of the Company or any
Shareholder set forth in this Agreement, or if any representation or
warranty of the Company shall have become untrue, incomplete or incorrect,
in either case such that the conditions set forth in Section 7.02 would
not be satisfied (a "TERMINATING COMPANY BREACH"); PROVIDED, HOWEVER, that
if such Terminating Company Breach is curable by the Company through the
exercise of its reasonable efforts within ten (10) days and for so long as
the Company continues to exercise such reasonable efforts, the Purchaser
may not terminate this Agreement under this Section 9.01(c); or
(d) by the Company or the Shareholders, upon breach of any
representation, warranty, covenant or agreement on the part of the
Purchaser set forth in this Agreement, or if any representation or
warranty of the Purchaser shall have become untrue, incomplete or
incorrect, in either case such that the conditions set forth in Section
7.03 would not be satisfied (a "TERMINATING PURCHASER BREACH"); PROVIDED,
HOWEVER, that if such Terminating Purchaser Breach is curable by the
Purchaser through the exercise of its reasonable efforts within ten (10)
days and for so long as the Purchaser continues to exercise such
reasonable efforts, the Company or the Shareholders may not terminate this
Agreement under this Section 9.01(d).
If the Closing shall not have occurred, or this Agreement shall not have been
terminated in accordance with this Section 9.01, by October 31, 2000, this
Agreement shall automatically terminate on said date, PROVIDED, HOWEVER, that
such termination shall not affect the liability hereunder of any Defaulting
Party.
SECTION 9.02. PROCEDURE AND EFFECT OF TERMINATION. In the event of
termination of this Agreement and abandonment of the transactions contemplated
hereby by any or all of the parties pursuant to Section 9.01 above, written
notice thereof shall forthwith be given to the other parties to this Agreement
(other than in the event of an automatic termination as provided in such
Section) and this Agreement (except for this Section and Sections 9.01 and
10.01, which shall continue) shall terminate and the transactions contemplated
hereby shall be abandoned, without further action by any of the parties hereto.
If this Agreement is terminated as provided in this Agreement:
(a) the parties hereto will promptly redeliver all documents, work
papers and other material of any other party relating to the transactions
contemplated hereby, whether obtained before or after the execution
hereof, to the party furnishing the same; and
(b) no party shall have any liability or further obligation to any
other party to this Agreement pursuant to this Agreement except as
provided in this Article IX.
44
<PAGE>
X.
MISCELLANEOUS
SECTION 10.01. EXPENSES, ETC. (a) All Expenses shall be paid by the
party incurring such Expenses.
(b) The Shareholders, on the one hand, and the Purchaser, on the
other hand, will indemnify the other and hold it or them harmless from and
against any claims for finders' fees or brokerage commissions in relation to or
in connection with such transactions as a result of any agreement or
understanding between such indemnifying party and any third party.
SECTION 10.02. NOTICES. All notices which are required or may be
given pursuant to the terms of this Agreement shall be in writing and shall be
sufficient and deemed to be received if (i) delivered personally, (ii) mailed by
registered or certified mail, return receipt requested and postage prepaid,
(iii) sent via a nationally recognized overnight courier service, or (iv) sent
via facsimile or e-mail confirmed in writing to the recipient, in each case as
follows:
if to the Purchaser, to:
LivePerson, Inc.
462 Seventh Avenue, 10th Floor
New York, New York 10018
Attention: Timothy E. Bixby
with a copy to:
Brobeck, Phleger & Harrison LLP
1633 Broadway, 47th Floor
New York, New York 10019
Attention: Brian B. Margolis, Esq.
if to the Company, to:
HumanClick Ltd.
33 Bnei Zion
Israel 60910
Attention: Eitan Ron
with a copy to:
Parker Chapin LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Attention: Henry I. Rothman, Esq.
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<PAGE>
with a copy to:
Zellermayer, Pelossof, Adv.
Europe House
37 Shaul Hamelech
Tel Aviv, Israel 64928
Attention: Guy Evan Ezra, Esq.
if to any Shareholder, to the address appearing under
the name of such Shareholder in SCHEDULE I hereto;
or such other address or addresses as any party shall have designated by notice
in writing to the other parties.
SECTION 10.03. WAIVERS. Either the Shareholders, on the one hand, or
the Purchaser, on the other hand, may, by written notice to the other, (i)
extend the time for the performance of any of the obligations or other actions
of the other under this Agreement, (ii) waive any inaccuracies in the
representations or warranties of the other contained in this Agreement or in any
document delivered pursuant to this Agreement, (iii) waive compliance with any
of the conditions or covenants of the other contained in this Agreement, or (iv)
waive performance of any of the obligations of the other under this Agreement.
Except as provided in the preceding sentence, no action taken pursuant to this
Agreement, including, without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver, by the party taking such
action, of compliance with any representations, warranties, covenants or
agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.
SECTION 10.04. WAIVER OF RIGHTS OF FIRST REFUSAL. Each Shareholder
irrevocably waives any right of first refusal or any other right it may have for
acquiring the Company Shares subject to this Agreement, whether under the
Bylaws, the Charter, any agreement or otherwise and any right to receive prior
notice of such acquisition.
SECTION 10.05. AMENDMENTS, SUPPLEMENTS, ETC. At any time this
Agreement may be amended or supplemented by such additional agreements, articles
or certificates, as may be determined by the parties hereto to be necessary,
desirable or expedient to further the purposes of this Agreement, or to clarify
the intention of the parties hereto, or to add to or modify the covenants, terms
or conditions hereof or to effect or facilitate any governmental approval or
acceptance of this Agreement or to effect or facilitate the filing or recording
of this Agreement or the consummation of any of the transactions contemplated
hereby. Any such instrument must be in writing and signed by all parties hereto.
SECTION 10.06. GOVERNING LAW. This Agreement shall be governed by,
and construed and enforced in accordance with, the laws of the State of New York
other than the conflict of laws principles thereof directing the application of
any law other than that of New York. Courts within the State of New York will
have jurisdiction over all disputes between the parties hereto arising out of or
relating to this agreement and the agreements, instruments and
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documents contemplated hereby. The parties hereby consent to and agree to submit
to the jurisdiction of such courts. Each of the parties hereto waives, and
agrees not to assert in any such dispute, to the fullest extent permitted by
applicable law, any claim that (i) such party is not personally subject to the
jurisdiction of such courts, (ii) such party and such party's property is immune
from any legal process issued by such courts or (iii) any litigation commenced
in such courts is brought in an inconvenient forum.
SECTION 10.07. WAIVER OF JURY TRIAL. Each party hereto hereby
irrevocably waives all right to trial by jury in any proceeding (whether based
on contract, tort or otherwise) arising out of or relating to this Agreement or
any transaction or agreement contemplated hereby or the actions of any party
hereto in the negotiation, administration, performance or enforcement hereof.
SECTION 10.08. HEADINGS; INTERPRETATION. The descriptive headings
contained in this Agreement are included for convenience of reference only and
shall not affect in any way the meaning or interpretation of this Agreement. The
parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties,
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Agreement.
SECTION 10.09. COUNTERPARTS. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 10.10. ENTIRE AGREEMENT. This Agreement (including the
Exhibits and the Company Disclosure Schedule) and the Confidentiality Agreement
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings among the
parties with respect thereto. No addition to or modification of any provision of
this Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
SECTION 10.11. BINDING EFFECT; BENEFITS. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, expressed or implied, is
intended to confer on any Person other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
SECTION 10.12. ASSIGNABILITY. Neither this Agreement nor any of the
parties' rights hereunder shall be assignable by any party hereto without the
prior written consent of the other parties hereto, except (i) in the case of the
Purchaser, to any Person who shall acquire substantially all of the assets of
the Purchaser or a majority of the voting securities of the Purchaser, whether
pursuant to a merger, consolidation, sale of stock or otherwise, and (ii) in the
case of an individual Shareholder, to the estate of such Shareholder upon death.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the parties hereto as of the day and year first above written.
LIVEPERSON, INC.
By: /s/ ROBERT LOCASCIO
----------------------------
Name: Robert LoCascio
Title: President
HUMANCLICK LTD.
/s/ EITAN RON
By: /s/ TAL GOLDBERG
----------------------------
Name: Eitan Ron Tal Goldberg
Title: CEO President
SHAREHOLDERS:
EITAN RON
/s/ EITAN RON
----------------------------------
Eitan Ron
TAL GOLDBERG
/s/ TAL GOLDBERG
----------------------------------
Tal Goldberg
48
<PAGE>
HALAKOCH HANE'EMAN
HASHMONIM VETISHA LTD.
By: /s/ GUY EVEN EZRA
----------------------------
Name: Guy Even Ezra
Title:
J. EVEN EZRA LTD.
By: /s/ J. EVEN EZRA
----------------------------
Name: J. Even Ezra
Title:
HAD-NOA HOLDINGS LTD.
By: /s/ GUY EVEN EZRA
----------------------------
Name: Guy Even Ezra
Title:
GILBRIDGE HOLDINGS LTD.
By: /s/ OFER ELAD
----------------------------
Name: Ofer Elad
Title: General Manager
PHILIPPE LANG
/s/ PHILIPPE LANG
----------------------------------
Philippe Lang
49
<PAGE>
MAX HERZBERG
/s/ MAX HERZBERG
----------------------------------
Max Herzberg
50
<PAGE>
SCHEDULE I
COMPANY PURCHASER SHARES IN REGISTRABLE
SHAREHOLDER SHARES SHARES(1) ESCROW SHARES
--------------------------------- -------- ---------- --------- ------------
Eitan Ron* 469,100 782,149 260,717 1,042,866
1 Moshe Sne Street
Ra'anana, Israel
Tal Goldberg* 469,100 782,149 260,717 1,042,866
28 Hashushan Street
Pardesia, Israel
Halakoch Hane'eman Hashmonim 31,000 51,687 17,230 68,917
Vetisha Ltd.*
37 Shaul Hamelech Boulevard
Tel Aviv, Israel
J. Even Ezra Ltd.* 318,300 530,714 176,905 707,619
4 Kumemiut Street
Ramat Hasharon, Israel
Had-Noa Holdings Ltd.* 12,273 20,463 6,821 27,284
121 Yehuda Hanasi Street
Herzelia, Israel
Gilbridge Holdings Ltd.* 562,616 938,072 312,691 1,250,763
4 Maskit Street
Herzelia, Israel
Philippe Lang* 31,200 52,020 17,341 69,361
1006 Underhills Road
Oakland, California 94610
Max Herzberg* 12,923 21,546 7,183 28,729
3 Habosem Street
P.O. Box 15212
Ashdod, Israel
TOTALS 1,906,512 3,178,8000 1,059,605 4,238,405
----------
(1) less Escrow Shares
* Investor as used in Section 2.06
<PAGE>
SCHEDULE II
NUMBER OF COMPANY
SHARES REPRESENTED NUMBER OF PURCHASER
BY CONVERTIBLE SHARES REPRESENTED
HOLDER SECURITIES THEREBY
----------------------------- ---------------------- -------------------------
Shalom Waiss 1,300 2,890
Zvi Rosenman 7,800 17,340
Audrey 5,300 11,783
Eyal Halahmi 26,700 59,357
Chaim Salomon 3,124 6,944
Zev Rubenstein 15,600 34,681
Ben Brenner 3,512 7,808
Philippe Lang 20,092 44,667
Trevor Weick 1,756 3,904
Yael Kopelman 1,756 3,904
Michal Zuchman 3,512 7,808
Amir Zucker 3,512 7,808
Uriah Av-Ron 5,268 11,711
Joseph Mermelstein 8,780 19,519
Hamutal Fridman 4,390 9,760
Amir Kalishov 5,268 11,711
TOTALS 117,670 261,595
<PAGE>
EXHIBIT A
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "AGREEMENT") is entered into as of
October 12, 2000, by and among LivePerson, Inc., a Delaware corporation ("LP"),
First Union National Bank, as Escrow Agent (the "ESCROW AGENT"), HumanClick
Ltd., a private company organized under the laws of the State of Israel
("HUMANCLICK"), and Eitan Ron, as Shareholders' Agent, on behalf of each of the
Shareholders of HumanClick listed on Schedule A hereto (collectively, the
"SHAREHOLDERS").
WHEREAS, LP, HumanClick and the Shareholders have entered into a
Stock Purchase Agreement dated as of October 12, 2000 (the "STOCK PURCHASE
AGREEMENT");
WHEREAS, the Stock Purchase Agreement provides that an escrow
account will be established to secure various obligations of the Shareholders on
the terms and subject to the conditions set forth in the Stock Purchase
Agreement and set forth herein; and
WHEREAS, LP, Escrow Agent, HumanClick and the Shareholders' Agent
(the "PARTIES") desire to establish the terms and conditions pursuant to which
such escrow account will be established and maintained.
NOW, THEREFORE, the Parties hereto hereby agree as follows:
1. DEFINED TERMS. Capitalized terms used in this Agreement and not
otherwise defined shall have the meanings given them in the Stock Purchase
Agreement.
2. APPOINTMENTS. First Union National Bank hereby accepts its
appointment as Escrow Agent hereunder. LP hereby appoints its President and
Chief Executive Officer and its Executive Vice President, Chief Financial
Officer and Secretary to act, either jointly or individually, on behalf of LP
for all purposes hereunder (each, an "LP AGENT"). Each of the Shareholders has
heretofore appointed Eitan Ron as its agent and representative to act on behalf
of the Shareholders on all matters relating to this Agreement, upon the terms
and subject to the conditions hereinafter set forth (the "SHAREHOLDERS' AGENT").
The actions of an LP Agent or the Shareholders' Agent under or pursuant to this
Agreement shall be binding on LP and the Shareholders, respectively.
3. CONSENT OF SHAREHOLDERS. Pursuant to the Stock Purchase
Agreement, the Shareholders have consented to the establishment of this escrow
to secure certain obligations under Article VIII of the Stock Purchase Agreement
and certain other obligations in the manner set forth therein.
4. ESCROW AND INDEMNIFICATION.
(a) ESCROW OF SHARES OF PARENT COMMON STOCK. As soon as
reasonably practicable after the Effective Time, LP shall deposit, on behalf of
the Shareholders, with the Escrow Agent one or more certificates representing an
aggregate of twenty-five percent (25%) of the Purchaser Shares (the "ESCROW
SHARES") to be issued pursuant to Section 2.03 of the Stock Purchase Agreement,
issued in the name of the Escrow Agent in the respective amounts set forth on
Schedule A hereto. The Escrow Agent agrees to accept delivery of the Escrow
Shares and to hold the Escrow Shares in an escrow account (the "ESCROW
ACCOUNT"), on the terms and subject to the conditions of this Agreement. The
Escrow Account shall not be an interest bearing account.
<PAGE>
(b) DISTRIBUTIONS AND DIVIDENDS. All dividends and other
distributions on Escrow Shares or additional shares of capital stock issued on
or with respect to the Escrow Shares as a result of stock splits, stock
dividends or other similar capital adjustments to, or recapitalizations on, the
Escrow Shares shall be delivered by LP to the Escrow Agent and retained in the
Escrow Account subject to the terms hereof and shall constitute Escrow Shares.
(c) VOTING OF SHARES AND OTHER RIGHTS. All voting rights with
respect to Escrow Shares may be exercised by the Shareholders in accordance with
their proportionate interests therein, and the Escrow Agent shall from time to
time execute and deliver to the Shareholders such proxies, consents or other
documents as may be necessary to enable the Shareholders to exercise such
rights. In the absence of any exercise of such voting rights with respect to
Escrow Shares by the Shareholders, the Escrow Agent shall not vote any of the
Escrow Shares.
(d) TRANSFERABILITY; SALE. The interest of the Shareholders in
the Escrow Shares shall not be assignable or transferable so long as such Escrow
Shares are held by the Escrow Agent hereunder; PROVIDED, HOWEVER, that the
Escrow Agent may sell, transfer, or otherwise dispose of the Escrow Shares
pursuant to Sections 5 and 6 hereof, and as otherwise provided in this
Agreement.
5. RELEASE OF ESCROW SHARES.
(a) At any time, and from time to time, prior to twelve (12)
months after the Effective Date (the "TERMINATION DATE"), LP may make claims, in
the manner set forth in Section 6 hereof, for payment against the Escrow Shares
if it (or any other Indemnified Person) has paid or incurred Damages and is
entitled to indemnification under Article VIII of the Stock Purchase Agreement.
The Shareholders' Agent, on behalf of each of the Shareholders, agrees that the
Shareholders shall indemnify and hold harmless any Indemnified Person for such
Damages pursuant to Section VIII of the Stock Purchase Agreement. Any of the
Escrow Shares to be released pursuant to this Section 5(a) shall be valued in
accordance with the terms of this Agreement.
(b) As soon as possible after the Termination Date, upon
delivery of a notice executed jointly by both an LP Agent and the Shareholders'
Agent to the Escrow Agent (which notice shall not be withheld unless pursuant to
the matters provided for in Section 5(c) below), the Escrow Agent shall deliver
and/or submit for transfer, delivery and assignment to an Israeli trustee to be
designated in writing by the Shareholders' Agent within thirty days of the date
hereof (the "Israeli Trustee"), for the benefit of each of the Shareholders,
such Shareholder's pro rata portion of the Escrow Shares not subject to
outstanding Claim Notices (as defined herein).
(c) Notwithstanding the foregoing, if on the Termination Date
an LP Agent has previously given any Claim Notices (as defined herein) that have
not then been resolved in accordance with Section 6 below, the Escrow Agent
shall retain in the Escrow Account an amount of Escrow Shares having a Fair
Market Value (as defined in Section 7 hereof) equal to the aggregate Claimed
Amount (as defined herein) covered by all such Claim Notices that have not then
been resolved. Any Escrow Shares retained in escrow pursuant to this Section
5(c) shall be disbursed in accordance with the terms of the resolution of any
claims relating to any of the Escrow Shares retained hereunder.
6. ADMINISTRATION OF ESCROW ACCOUNT FOR INDEMNIFICATION CLAIMS.
With respect to indemnification claims, the Escrow Agent shall administer the
Escrow Account as follows:
(a) The release of Escrow Shares shall be applied to each
Shareholder in the proportion that the Escrow Shares of such Shareholder bears
to the sum of Escrow Shares then remaining in the Escrow. In lieu of releasing
any fractional Escrow Shares, any fraction of a released Escrow Share
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<PAGE>
that would otherwise be released shall be rounded to the nearest whole share of
Parent Common Stock (with one-half of a share being rounded upward).
(b) If an Indemnified Person has incurred or suffered Damages
for which it is entitled to indemnification by the Shareholders under the Stock
Purchase Agreement, the LP Agent shall, prior to the Termination Date, give
written notice of such claim (a "CLAIM NOTICE") to the Shareholders' Agent with
a copy to the Escrow Agent. Each Claim Notice shall state the amount of Damages
claimed (the "CLAIMED AMOUNT") and the basis for such claim.
(c) Claims for indemnification involving a claim or legal
proceeding by a third party shall be made in accordance with the procedures set
forth in the Stock Purchase Agreement and the provisions of this Section 6. For
indemnification claims not involving any claim or legal proceeding by a third
party, the procedures herein alone shall apply. Within twenty (20) business days
of receipt by the Shareholders' Agent of a Claim Notice, the Shareholders' Agent
shall provide to the party providing the Claim Notice (with a copy to the Escrow
Agent) a written response (the "RESPONSE NOTICE") in which the Shareholders'
Agent shall either: (i) agree that Escrow Shares having a Fair Market Value (as
computed pursuant to Section 7 below) equal to the full Claimed Amount may be
released from the Escrow Account to the Indemnified Person, (ii) agree that
Escrow Shares having a Fair Market Value equal to part, but not all, of the
Claimed Amount may be released from the Escrow Account to the Indemnified
Person, or (iii) contest that any of the Escrow Shares may be released from the
Escrow Account to the Indemnified Person. The Shareholders' Agent may contest
the release of Escrow Shares having a Fair Market Value equal to all or a
portion of the Claimed Amount only if the Shareholders' Agent has a good faith
belief that all or such portion of the Claimed Amount does not constitute
Damages for which the Indemnified Person is entitled to indemnification under
the Stock Purchase Agreement. If no Response Notice is delivered to, and
received by the Escrow Agent prior to twenty (20) business days of receipt of
the Claim Notice by the Shareholders' Agent, the Shareholders' Agent shall be
deemed to have agreed that Escrow Shares having a Fair Market Value equal to all
of the Claimed Amount may be released to the Indemnified Person from the Escrow
Account. Notwithstanding any terms of this Agreement to the contrary, no Claim
Notice or Response Notice shall be deemed to have been delivered to the Escrow
Agent until it is actually received by the Escrow Agent at the address set forth
in Section 12 hereof.
(d) If the Shareholders' Agent agrees (or is deemed to have
agreed) that Escrow Shares having a Fair Market Value equal to all of the
Claimed Amount may be released from the Escrow Account to the Indemnified
Person, the Escrow Agent shall promptly thereafter transfer, deliver and assign
to the Indemnified Person the Escrow Shares having a Fair Market Value equal to
the Claimed Amount (or such lesser amount of Escrow Shares as are then held in
the Escrow Account).
(e) If the Shareholders' Agent agrees that Escrow Shares having
a Fair Market Value equal to part, but not all, of the Claimed Amount (the
"PARTIAL AGREED AMOUNTS") may be released from the Escrow Account to the
Indemnified Person, the Escrow Agent promptly shall transfer, deliver and assign
to the Indemnified Person Escrow Shares having a Fair Market Value equal to the
sum of all Partial Agreed Amounts (or such lesser amount of Escrow Shares as are
then held in the Escrow Account).
(f) If the Shareholders' Agent contests the release of Escrow
Shares having a Fair Market Value equal to all or part of the Claimed Amount
(the "CONTESTED AMOUNT"), the Shareholders' Agent and the Indemnified Person or
LP Agent, as applicable, shall attempt promptly and in good faith to agree upon
the rights of the parties with respect to the Contested Amount. If the parties
should so agree, a memorandum setting forth such agreement shall be prepared and
signed by both parties and delivered to the Escrow Agent and, if such agreement
provides that all or a portion of the Contested
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<PAGE>
Amount is to be paid to the LP Agent, the Escrow Agent shall promptly transfer,
assign and deliver to the Indemnified Person from the Escrow Account an amount
of Escrow Shares having a Fair Market Value equal to the amount so agreed. If no
such agreement can be reached within 15 days, the matter shall be settled by
binding arbitration in New York City, New York. Notwithstanding the foregoing,
the parties may defer arbitration to a mutually agreeable later date. All claims
shall be settled by a single arbitrator mutually agreeable to the LP Agent and
the Shareholders' Agent, or if they cannot agree on a single arbitrator in 20
days, by three arbitrators, in accordance with the Commercial Arbitration Rules
then in effect of the American Arbitration Association (the "AAA RULES"). One of
such arbitrators shall be chosen by the LP Agent, one shall be chosen by the
Shareholders' Agent and the third shall be chosen by the first two arbitrators
selected pursuant to this sentence. The Party against whom a judgment is made or
against whom an award is entered shall pay the costs of arbitration and the
other Party's reasonable out of pocket costs and expenses, including without
limitation, reasonable attorney's fees. The arbitrator's decision shall relate
solely to whether the Indemnified Person is entitled to receive the Contested
Amount (or a portion thereof) pursuant to the applicable terms of the Stock
Purchase Agreement and this Agreement. The final decision of the arbitrator, or
a majority of the arbitrators in the case of three arbitrators, shall be
furnished to the Shareholders' Agent and the LP Agent in writing and shall
constitute a conclusive determination of the issue in question, binding upon the
Shareholders and LP, and shall not be contested by any of them. Such decision
may be used in a court of law only for the purpose of seeking enforcement of the
arbitrator's award. Either the Shareholders' Agent or an LP Agent may deliver a
memorandum to the Escrow Agent setting forth such arbitrator's decision in
accordance with the second sentence of this paragraph. The parties hereto agree
that all arbitration proceedings conducted pursuant to this Agreement shall be
held confidential.
(g) After delivery of a Response Notice that the Claimed Amount
is contested by the Shareholders' Agent, the Escrow Agent shall continue to hold
in the Escrow Account an amount of Escrow Shares having a Fair Market Value
sufficient to cover the Contested Amount (up to the amount of Escrow Shares then
available in the Escrow Account), notwithstanding the occurrence of the
Termination Date, until (i) delivery of a copy of a settlement agreement
executed by an LP Agent and the Shareholders' Agent setting forth instructions
to the Escrow Agent as to the release of Escrow Shares that shall be made with
respect to the Contested Amount or (ii) delivery of a copy of the final award of
the arbitrator, or a majority of the arbitrators in the case of three
arbitrators, and the memo referenced in the last sentence of the preceding
paragraph setting forth instructions to the Escrow Agent as to the release of
Escrow Shares that shall be made with respect to the Contested Amount. The
Escrow Agent shall thereupon release Escrow Shares from the Escrow Account (up
to the amount of Escrow Shares then available in the Escrow Account) in
accordance with such agreement or instructions.
7. VALUATION OF ESCROW SHARES. For purposes of this Agreement, the
Fair Market Value of each of the Escrow Shares shall be seven dollars ($7.00)
per share, with appropriate adjustment to take into account any stock split,
reverse stock split, stock dividend, recapitalization or other similar capital
adjustments with respect to LP's common stock. The Fair Market Value shall be
calculated as set forth above jointly by the LP Agent and the Shareholders'
Agent, and the results of such calculation shall be provided to the Escrow
Agent.
8. FEES AND EXPENSES OF THE ESCROW AGENT. LP hereby agrees to pay
the Escrow Agent's reasonable fees and expenses, including attorneys fees,
travel expenses, postal and delivery charges, and all other out-of-pocket
expenses incurred, in accepting and performing its appointment as Escrow Agent
hereunder (collectively, the "ESCROW AGENT EXPENSES").
9. GENERAL TERMS AND STANDARDS REGARDING THE ESCROW AGENT.
Notwithstanding any terms of this Agreement to the contrary, each term of this
Agreement, including without limitation
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<PAGE>
each of the stated duties and responsibilities of the Escrow Agent set forth
herein, shall be subject to the following terms and conditions:
(a) The duties, responsibilities and obligations of the Escrow
Agent shall be limited to those expressly set forth in this Agreement (and the
duty to exercise reasonable care in the physical safekeeping of any property
held in escrow hereunder), and no implied duties, responsibilities or
obligations shall be read into this Agreement against the Escrow Agent. Without
limiting the generality of the foregoing, the Escrow Agent shall have no duty to
take action to preserve or exercise rights in any property held by it hereunder
(including, without limitation, against prior parties or otherwise).
(b) The Escrow Agent shall not be subject to, bound by, charged
with notice of or be required to comply with or interpret any agreement or
document (including without limitation the Stock Purchase Agreement) between or
among the interested parties (whether or not reference to any such other
agreement or documents is expressed herein) other than this Agreement.
(c) The Escrow Agent shall in no instance be under any duty to
give any property held by it hereunder any greater degree of care than it gives
its own similar property. The Escrow Agent shall not be required to invest any
funds held hereunder, and shall not be obligated to pay interest on uninvested
funds. All amounts received by the Escrow Agent (and any credits to the Escrow
Account) shall be conditional upon collection (and actual receipt by the Escrow
Agent of final payment). In no event shall the Escrow Agent have any obligation
to advance funds.
(d) The Escrow Agent may rely upon, and shall be protected in
acting or refraining from acting upon, any written notice, instruction,
statement, request, waiver, order, judgement, certification, consent, receipt or
other paper or document furnished to it (not only as to genuineness, but also as
to its due execution and validity, the genuineness of signatures appearing
thereon and as to the truth and accuracy of any information therein contained),
which it in good faith believes to be genuine and signed or presented by the
proper person.
(e) Neither the Escrow Agent nor any of its directors, officers
or employees shall be liable to anyone for any error of judgment, or for any act
done or step taken or omitted to be taken by it or any of its directors,
officers or employees, or for any mistake of fact or law, or for anything which
it, or any of its directors, officers or employees, may do or refrain from doing
in connection with or in the administration of this Agreement, unless and except
to the extent the same constitutes gross negligence, bad faith or willful
misconduct on the part of the Escrow Agent. In no event shall the Escrow Agent
be liable for any indirect, punitive, special or consequential damages, or any
amount in excess of the value of the Escrow Shares (as of the date of the action
or omission giving rise to liability).
(f) The Escrow Agent shall not be deemed to have notice of any
fact, claim or demand with respect hereto unless actually known by an officer
charged with responsibility for administering this Agreement or unless in
writing received by the Escrow Agent and making specific reference to this
Agreement.
(g) No provision of this Agreement shall require the Escrow
Agent to expend or risk its own funds, or to take any legal or other action
hereunder which might in its judgement involve it in, or require it to incur in
connection with the performance of its duties hereunder, any expense or any
financial liability unless it shall be furnished with indemnification acceptable
to it.
(h) Any permissive right of the Escrow Agent to take any action
hereunder shall not be construed as duty.
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(i) All indemnifications contained in this Agreement shall
survive the resignation or removal of the Escrow Agent, and shall survive the
termination of this Agreement.
(j) The Escrow Agent is not responsible for the recitals
appearing in this Agreement. The recitals shall be deemed to be statements of
the interested parties to this Agreement.
(k) The Escrow Agent has no responsibility for the sufficiency
of this Agreement for any purpose. Without limiting the foregoing, if any
security interest is referred to herein, the Escrow Agent shall have no
responsibility for, and makes no representation or warranty as to, the creation,
attachment or perfection of any such security interest or the sufficiency of
this Agreement therefor.
(l) Nothing in this Agreement shall obligate the Escrow Agent
to qualify to do business or act in any jurisdiction in which it is not
presently qualified to do business, or be deemed to impose upon the Escrow Agent
the duties of a trustee. The duties of the Escrow Agent under this Agreement are
strictly ministerial in nature.
(m) In no event shall the Escrow Agent have any liability for
any failure or inability of any of the interested parties to perform or observe
his or its duties under the Agreement, or by reason of a breach of this
Agreement by either of the interested parties. In no event shall the Escrow
Agent be obligated to take any action against any of the interested parties to
compel performance hereunder.
(n) The Escrow Agent shall in no instance be obligated to
commence, prosecute or defend any legal proceedings in connection herewith. The
Escrow Agent shall be authorized and entitled, however, in any instance to
commence, prosecute or defend any legal proceedings in connection herewith,
including without limitation any proceeding it may deem necessary to resolve any
matter or dispute, to obtain a necessary declaration of rights, or to appoint a
successor upon resignation (and after failure by the interested parties to
appoint a successor, as provided in Section 13).
(o) Whenever the terms hereof call for any notice, payment or
other action on a day which is not a business day, such payment or action may be
taken, or such notice given, as the case may be, on the next succeeding business
day. As used herein, "business day" shall mean any day other than a Saturday or
Sunday, or any other day on which the Escrow Agent is closed for business.
(p) In the event of any ambiguity or uncertainty under this
Agreement, or in any notice, instruction, or other communication received by the
Escrow Agent hereunder, the Escrow Agent may, in its reasonable discretion,
refrain from taking action, and may retain the Escrow Shares, until and unless
it receives written instruction signed by all interested parties, or a decision
by a court of competent jurisdiction which eliminates such uncertainty or
ambiguity.
(q) If at any time Escrow Agent is served with any judicial or
administrative order, judgement, decree, writ or other form of judicial
administrative process which in any way relates to or affects the Escrow Shares
(including but not limited to orders of attachment or garnishment or other forms
of levies or injunctions or stays relating to the Escrow Shares), Escrow Agent
is authorized to comply therewith in any manner as it or its legal counsel
reasonably deems appropriate; and if the Escrow Agent complies with any such
judicial or administrative order, judgement, decree, writ or other form of
judicial or administrative process, Escrow Agent shall not be liable to any of
the Parties hereto or to any other person or entity notwithstanding that though
such order, judgement, decree, writ or process may be subsequently modified,
annulled, set aside, vacated, found to have been without proper jurisdiction, or
otherwise determined to have been without legal force or effect.
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(r) The Escrow Agent shall have no liability for the actions or
omissions of any transfer agent, book-entry depository, nominee, correspondent,
subagent or subcustodian, except to the extent that such action or omission of
any transfer agent, book-entry depository, nominee, correspondent, subagent or
subcustodian was caused by the Escrow Agent's own gross negligence, bad faith or
willful misconduct.
(s) The parties understand that the Escrow Shares are not
subject to an effective registration statement at the time of this Agreement,
and that the Escrow Agent shall not be responsible for fluctuations in the
market in connection with any transfer of the shares.
10. INDEMNIFICATION.
(a) GENERAL. Each of the Shareholders (jointly and severally as
a group) and LP, jointly and severally, hereby covenant and agree to indemnify
the Escrow Agent for, and to defend and hold harmless the Escrow Agent from and
against, any and every loss, liability, damage, claim, cost and expense of any
nature incurred or suffered by the Escrow Agent and arising out of or in
connection with this Agreement or the administration of this Agreement or the
performance or observance by the Escrow Agent of its responsibilities or
services under this Agreement (including but not limited to reasonable attorneys
fees and other costs and expenses of defending or preparing to defend against
any claim or liability), unless and except to the extent such loss, liability,
damage, cost or expense shall be caused by the Escrow Agent's own willful
misconduct, bad faith or gross negligence; provided, that any indemnification
payment required to be made to the Escrow Agent by the Shareholders should be
made from, and as a charge against, the Escrow Account.
(b) TAX-RELATED MATTERS. Each of the Shareholders (jointly and
severally as a group) and LP, jointly and severally, agree to assume any and all
obligations imposed now or hereafter by any applicable tax law with respect to
the payment of Escrow Shares under this Agreement, and, without limiting the
generality of Section 10(a) above, hereby agree to indemnify and hold the Escrow
Agent harmless from and against any taxes, additions for late payment, interest,
penalties and other expenses, that may be assessed against the Escrow Agent on
any such payment or other activities under this Agreement. LP and each of the
Shareholders undertake to instruct the Escrow Agent in writing with respect to
the Escrow Agent's responsibility for withholding and other taxes, assessments
or other governmental charges, certifications and governmental reporting in
connection with its acting as Escrow Agent under this Agreement. Each of the
Shareholders (severally as a group) and LP, jointly and severally, agree to
indemnify and hold the Escrow Agent harmless from any liability on account of
taxes, assessments or other governmental charges, including without limitation
the withholding or deduction of or the failure to withhold or deduct same, and
any liability for failure to obtain proper certifications or to properly report
to governmental authorities, to which the Escrow Agent may be or become subject
in connection with or which arises out of this Agreement, including costs and
expenses (including reasonable legal fees), interest and penalties. The
interested parties shall each promptly provide Escrow Agent with appropriate IRS
Forms W-9 for taxpayer identification number certifications, or Forms W-8 for
nonresident alien certifications in connection with any payments to be made to
them.
11. TERMINATION. If this Agreement is not terminated pursuant to
Section 5 above, this Agreement shall terminate upon the later of the
Termination Date or the distribution by the Escrow Agent of all of the Escrow
Account in accordance with this Agreement, provided that the provisions of
Sections 9 and 10 above shall survive such termination.
12. NOTICES. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the party to
whom notice is to be given, on the first business day following the date
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of transmittal of services via telecopy to the party to whom notice is to be
given, or on the fifth day after mailing if mailed to the party to whom notice
is to be given, by first class mail, registered or certified, postage prepaid,
or by an internationally recognized courier service, and properly addressed as
follows (or at such other address for a party as shall be specified by like
notice):
To LP at: LivePerson, Inc.
462 Seventh Avenue
New York, New York 10018
Attention: Timothy E. Bixby
With a copy to: Brobeck, Phleger & Harrison LLP
1633 Broadway, 47th Floor
New York, NY 10019
Attention: Brian Margolis, Esq.
Telecopy No.: (212) 586-7878
To the Shareholders Agent: Eitan Ron
c/o HumanClick Ltd.
P.O. Box 193
Bnei Zion, Israel 60910
Telecopier: (972) 9-741-2311
With a copy to: Zellermayer, Pelossof, Adv.
Europe House
37 Shaul Hamelech
Tel Aviv, Israel 64928
Attention: Guy Even Ezra, Esq.
Telecopier: (972) 3-695-2884
To Escrow Agent at: First Union National Bank
One World Trade Center, 47th Floor
New York, NY 10048
Attention: Corporate Trust Group
Notwithstanding anything herein to the contrary, any party may give
any notice, request, demand, claim or other communication hereunder by personal
delivery or telecopy, but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Any party may change
the address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other parties notice in the manner
herein set forth. Copies of any notice, request, demand, claim or other
communication hereunder by personal delivery or telecopy given to the Escrow
Agent by either party, shall be delivered to the other party as soon thereafter
as practicable.
13. SUCCESSOR ESCROW AGENT. In the event the Escrow Agent becomes
unavailable or unwilling to continue in its capacity herewith, the Escrow Agent
may resign and be discharged from its duties or obligations hereunder by
delivering a resignation to the parties, not less than 60 days prior to the date
when such resignation shall take effect. LP may appoint a successor Escrow Agent
with the consent of the Shareholders' Agent, which shall not be unreasonably
withheld. If, within such notice period, LP provides to the Escrow Agent written
instructions with respect to the appointment of a successor Escrow Agent and
directions for the transfer of any Escrow Shares then held by the Escrow Agent
to such successor, the Escrow Agent shall act in accordance with such
instructions and promptly transfer such
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Escrow Shares to such designated successor. If no successor is so appointed, the
Escrow Agent may apply to a court of competent jurisdiction for such
appointment.
14. GENERAL.
(a) GOVERNING LAW, ASSIGNS. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York
without regard to conflict-of-law and choice of law principles and shall be
binding upon, and inure to the benefit of, the parties and their respective
successors and assigns.
(b) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(c) ENTIRE AGREEMENT. Except for the provisions of the Stock
Purchase Agreement referenced herein, this Agreement constitutes the entire
understanding and agreement of the Parties with respect to the subject matter of
this Agreement and supersedes all prior agreements or understandings, written or
oral, between the Parties with respect to the subject matter hereof.
(d) WAIVERS. No waiver by any party hereto of any condition or
of any breach of any provision of this Escrow Agreement shall be effective
unless in writing. No waiver by any party of any such condition or breach, in
any one instance, shall be deemed to be a further or continuing waiver of any
such condition or breach or a waiver of any other condition or breach of any
other provision contained herein.
(e) AMENDMENT. This Agreement may be amended only with the
written consent of an LP Agent, the Escrow Agent and the Shareholders' Agent.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties have duly executed this Escrow
Agreement as of the day and year first above written.
LIVEPERSON, INC.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
HUMANCLICK LTD.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
FIRST UNION NATIONAL BANK,
AS ESCROW AGENT
By:_______________________________________
Name:_____________________________________
Title:____________________________________
EITAN RON,
AS SHAREHOLDERS' AGENT:
By:_______________________________________
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SCHEDULE A
ESCROW SHARES
--------------------------------------------------------------------------------
NAME OF REGISTERED HOLDER CERTIFICATE NUMBER NUMBER OF SHARES
--------------------------------------------------------------------------------
Eitan Ron 260,717
--------------------------------------------------------------------------------
Tal Goldberg 260,717
--------------------------------------------------------------------------------
Halakoch Hane'eman
Hashmonim Vetisha Ltd. 17,230
--------------------------------------------------------------------------------
J. Even Ezra Ltd. 176,905
--------------------------------------------------------------------------------
Had-Noa Holdings Ltd. 6,821
--------------------------------------------------------------------------------
Gilbridge Holdings Ltd. 312,691
--------------------------------------------------------------------------------
Philippe Lang 17,341
--------------------------------------------------------------------------------
Max Herzberg 7,183
--------------------------------------------------------------------------------
<PAGE>
EXHIBIT B-1
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), is made and entered into this
12th day of October, 2000, by and between HumanClick Ltd. a private company
organized under the laws of the State of Israel, with principal offices located
at 33 Bnei Zion, Israel 60910 (the "Company"), and Eitan Ron (the "Executive").
WITNESSETH
WHEREAS, LivePerson, Inc., (hereinafter "LivePerson") is acquiring all of
the shares of the Company pursuant to a certain Stock Purchase Agreement dated
October 12th, 2000, (referred to herein as the "Acquisition"); and
WHEREAS, the Executive served as Chief Executive Officer of the Company
prior to the Acquisition; and
WHEREAS, the Executive's continuing personal services are critical to
maintaining the value of the shares being acquired by the Company in the
Acquisition; and,
WHEREAS, the Executive and the Company desire to enter into a formal
Employment Agreement to fully recognize the contributions of Executive to the
Company and to assure continuous harmonious performance of the affairs of the
Company.
NOW, THEREFORE, in consideration of the mutual promises, terms,
provisions, and conditions contained herein, the parties agree as follows:
1. POSITION.
The Company hereby agrees to employ the Executive to serve in the role of
General Manager of the Company, subject to the limitations set forth herein. The
Executive accepts such employment upon the terms and conditions set forth
herein, and further agrees to perform to the best of his abilities the duties
generally associated with his position, as well as such other duties
commensurate with his position as General Manager as may be reasonably assigned
by the Board of Directors of the Company (the "Board"). The Executive shall, at
all times during the Term, report directly to the Board. The Executive shall
perform his duties diligently and faithfully and shall devote his full business
time and attention to such duties.
2. TERM OF EMPLOYMENT AND RENEWAL.
The term of Executive's employment under this Agreement will commence on
the date of this Agreement (the "Effective Date"). Subject to the provisions of
Section 8 of this Agreement, the term of Executive's employment hereunder shall
be for a term of three (3) years from the Effective Date (the "Term").
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3. COMPENSATION AND BENEFITS.
(a) SALARY. Commencing on the Effective Date, the Company agrees to pay
the Executive a base salary at an annual rate of One Hundred Ten Thousand
Dollars ($110,000) for the first year of the Term, payable in such installments
as is the policy of the Company (the "Salary"), but no less frequently than
monthly. Thereafter, the Company will review the Executive's Salary on an annual
basis, and, at its discretion, may increase the Executive's Salary but in no
event diminish the amount of Executive's Salary below the initial rate, or below
the increased rates unless all of the Executive's peer executives undergo
substantially equivalent decreases.
The Executive acknowledges and agrees that his position with the
Company is one that requires a special measure of personal trust as defined in
the Work and Rest Hours Law, 5711-1951, and, therefore, the provisions of such
law shall not apply to the Executive and the Executive shall not be entitled to
compensation for working more than forty-five (45) hours per week, beyond the
compensation set forth in this Section 3.
(b) BONUS. The Executive shall be eligible to receive annual bonuses at
the discretion of the Chief Executive Officer and Compensation Committee of the
Board according to performance goals appropriate for the Executive's position
and role to be issued by the Company.
(c) BENEFITS. The Executive shall be entitled to participate in all
employee benefit plans applicable for the Executive's level which the Company
provides or may establish from time to time for the benefit of its employees,
including, without limitation, group life, medical, surgical, dental and other
health insurance, short and long-term disability, deferred compensation,
profit-sharing and similar plans. The Company will pay on the Executive's behalf
at the Company's sole cost and expense a sum equal to 13 1/3% (thirteen and
one-third percent) of the Executive's Salary each month for executives'
insurance. The Executive will contribute a sum equal to 5% (five percent) of his
monthly Salary for each month for the insurance for the provident fund in
accordance with custom and practice. All payments provided for in this Section
will be made in such amounts and in such timely fashion as to guarantee the
Executive the full rights and benefits of such insurance at all times during the
Term and thereafter in accordance with law and practice. Ownership of all
accounts and insurance policies provided for in this Section shall be in the
name of the Executive and on termination of this Agreement will be released to
the Executive to be applied towards any obligation of the Company to make
severance payments to the Executive. The Company will pay, at its sole cost and
expense, a sum equal to 7 1/2% (seven and one-half percent) of the Executive's
monthly Salary on behalf of the Executive to an Advanced Study Fund in which the
Company participates. The Executive will pay a sum equal to 2 1/2% (two and
one-half percent) of his monthly Salary, at his expense, into said fund, as is
standard practice. All amounts paid to the Advanced Study Fund under this
Section will not exceed the amounts exempt from tax under the income tax
regulations applicable to payments to Advanced Study Funds. During the Term, the
Company shall extend to the Executive's use a leased car as shall be reasonably
elected by the Executive and shall bear all expenses associated with the use of
the car. The Company shall
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gross-up any tax applicable on the use of the car by the Executive according to
the then applicable law. The Executive shall be entitled to annual Recreation
Pay per year according to the then prevailing applicable law or custom at the
minimum amount required by law. The Executive shall also be entitled to fifteen
(15) business days paid vacation per year. Annual vacations may be accumulated
and/or redeemed as provided under the law. The Executive shall be entitled to
Sick Leave according to the then prevailing applicable law. The Company may
purchase one or more "key man" insurance policies on the Executive's life, each
of which will be payable to and owned by the Company. The Company, in its sole
discretion, may select the amount and type of key man life insurance purchased,
and the Executive will have no interest in any such policy. The Executive will
cooperate with the Company in securing this key man insurance, by submitting to
all required medical examinations, supplying all information and executing all
documents required in order for the Company to secure the insurance.
(d) EXPENSES. The Company shall pay or reimburse the Executive for all
reasonable out-of-pocket expenses actually incurred by him during the Term in
performing services hereunder, provided that the Executive properly accounts for
such expenses in accordance with the Company's policies.
4. NON-COMPETITION AND NON-SOLICITATION.
The Executive acknowledges that the Company has invested substantial time,
money and resources in the development and retention of its Proprietary
Information (including trade secrets) as defined in the Company's Proprietary
Information and Intellectual Property Agreement referenced in Section 10 of this
Agreement, customers, accounts and business partners, and further acknowledges
that during the course of the Executive's employment with the Company the
Executive has had and will have access to the Company's Inventions and
Confidential Information (including trade secrets), and will be introduced to
existing and prospective customers, accounts and business partners of the
Company. The Executive acknowledges and agrees that any and all "goodwill"
associated with any existing or prospective customer, account or business
partner belongs exclusively to the Company, including, but not limited to, any
goodwill created as a result of direct or indirect contacts or relationships
between the Executive and any existing or prospective customers, accounts or
business partners. The Executive expressly acknowledges that the provisions of
this Section 4 are necessary to protect the investment by the Company in
HumanClick. Additionally, the parties acknowledge and agree that Executive
possesses skills that are special, unique or extraordinary and that the value of
the Company depends upon his use of such skills on its behalf.
In recognition of this, the Executive covenants and agrees that:
(a) During the Term, and for a period of one (1) year after termination
of this Agreement, the Executive may not, without the prior written consent of
the Board, (whether as an employee, agent, servant, owner, partner, consultant,
independent contractor, representative, stockholder or in any other capacity
whatsoever) participate in any business that offers products or services
competitive in any way to those offered by the Company or that were under active
development or consideration by the Company during the Term.
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(b) During the Term, and for a period of one (1) year after termination
of this Agreement, the Executive may not entice, solicit or encourage any
Company employee to leave the employ of the Company or any independent
contractor to sever its engagement with the Company, absent prior written
consent to do so from the Board.
(c) During the Term, and for a period of one (1) year after termination
of this Agreement, the Executive may not, directly or indirectly, entice,
solicit or encourage any customer or prospective customer of the Company to
cease doing business with the Company, reduce its relationship with the Company
or refrain from establishing or expanding a relationship with the Company.
5. NON-DISPARAGEMENT.
The Executive and the Company hereby agree that during the Term, and at
all times thereafter, the Executive will not make any statement that is
disparaging about the Company, any of its officers, directors, or shareholders,
including, but not limited to, any statement that disparages the products,
services, finances, financial condition, capabilities or other aspects of the
business of the Company and the Company shall not make such statements with
respect to the Executive, including, but not limited to, any statement that
disparages his ability, services, morality standards or other aspects of his
employment. The Executive further agrees that during the same period the
Executive will not engage in any conduct that is intended to inflict harm upon
the professional or personal reputation of the Company or any of its officers,
directors, shareholders or employees.
6. PROVISIONS NECESSARY AND REASONABLE.
(a) The Executive agrees that (i) the provisions of Sections 4 and 5 of
this Agreement are necessary and reasonable to protect the Company's
Confidential Information, Inventions, and goodwill; (ii) the specific temporal,
geographic and substantive provisions set forth in Section 4 of this Agreement
are reasonable and necessary to protect the Company's business interests; and
(iii) in the event of any breach of any of the covenants set forth herein, the
Company would suffer substantial irreparable harm and would not have an adequate
remedy at law for such breach. In recognition of the foregoing, the Executive
agrees that in the event of a breach or threatened breach of any of these
covenants, in addition to such other remedies as the Company may have at law,
without posting any bond or security, the Company shall be entitled to seek and
obtain equitable relief, in the form of specific performance, and/or temporary,
preliminary or permanent injunctive relief, or any other equitable remedy which
then may be available. The seeking of such injunction or order shall not affect
the Company's right to seek and obtain damages or other equitable relief on
account of any such actual or threatened breach.
(b) If any of the covenants contained in Sections 4 and 5 hereof, or any
part thereof, are hereafter construed to be invalid or unenforceable, the same
shall not affect the remainder of the covenant or covenants, which shall be
given full effect without regard to the invalid portions.
(c) If any of the covenants contained in Sections 4 and 5 hereof, or any
part thereof, are held to be unenforceable by a court of competent jurisdiction
because of the temporal or
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geographic scope of such provision or the area covered thereby, the parties
agree that the court making such determination shall have the power to reduce
the duration and/or geographic area of such provision and, in its reduced form,
such provision shall be enforceable.
7. REPRESENTATIONS REGARDING PRIOR WORK AND LEGAL OBLIGATIONS.
(a) The Executive represents that the Executive has no agreement or
other legal obligation with any prior employer, or any other person or entity,
that restricts the Executive's ability to accept employment with, or to perform
any function for, the Company.
(b) The Executive has been advised by the Company that at no time should
the Executive divulge to or use for the benefit of the Company any trade secret
or confidential or proprietary information of any previous employer. The
Executive expressly acknowledges that the Executive has not divulged or used any
such information for the benefit of the Company.
(c) The Executive acknowledges that the Executive has not and will not
misappropriate any Invention that the Executive played any part in creating
while working for any former employer.
(d) The Executive acknowledges that the Company is basing important
business decisions on these representations, and affirms that all of the
statements included herein are true.
8. TERMINATION AND SEVERANCE.
Notwithstanding the provisions of Section 2 of this Agreement, the
Executive's employment hereunder may terminate under the following
circumstances:
(a) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate this
Agreement for Cause at any time, upon written notice to the Executive setting
forth in reasonable detail the nature of such Cause. For purposes of this
Agreement, Cause is defined as (i) the Executive's willful and material breach
of the terms of this Agreement; (ii) the Executive's commission of any felony or
any crime involving moral turpitude; (iii) gross negligence or willful
misconduct by the Executive in connection with his duties hereunder; or (iv) the
Executive's willful refusal to perform his duties hereunder. Upon the
termination for Cause of Executive's employment, the Company shall have no
further obligation or liability to the Executive other than for salary earned
under this Agreement prior to the date of termination, and any accrued but
unused vacation or other benefits.
(b) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Executive's employment
hereunder may be terminated without Cause by the Company upon written notice to
the Executive, provided, however, that if the Company terminates the Executive's
employment without Cause, or the Executive terminates his employment for Good
Reason, as defined below, the Company shall continue to pay the Executive the
Salary and shall provide health coverage, under the same conditions as exist at
the time of termination, for a six (6) month period. As a condition of receiving
severance benefits pursuant to this Agreement, the Executive shall execute
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<PAGE>
and deliver to the Company prior to his receipt of such benefits a general
release substantially in the form attached hereto as Exhibit A.
(c) TERMINATION BY THE EXECUTIVE. The Executive may terminate his
employment hereunder upon one (1) month's written notice to the Company. In the
event of termination by the Executive pursuant to this subsection 8(c), the
Company may elect to pay the Executive during the notice period (or for any
remaining portion of that period) the Salary and benefits at the rate of
compensation the Executive was receiving immediately before such notice of
termination was tendered in lieu of actual notice. The Executive may also
terminate his employment hereunder for "Good Reason," within forty (40) days of
the occurrence of any of the following events: (i) a material reduction in
salary other than an across-the-board Company action reducing base salary; (ii)
a relocation of the Executive's worksite to a location not in the State of
Israel, (iii) a change in the Executive's title, or (iv) Mr. Robert LoCascio is
no longer an active executive of LivePerson. The Executive shall give the
Company twenty (20) days' written notice and opportunity to cure prior to any
termination for Good Reason based on the grounds specified above.
(d) DEATH. In the event of the Executive's death during the Term of this
Agreement, the Executive's employment hereunder shall immediately and
automatically terminate, and the Company shall have no further obligation or
duty to the Executive or his estate or beneficiaries other than for the Salary
earned under this Agreement to the date of termination and any payments or
benefits due under Company policies or benefit plans.
(e) DISABILITY. The Company may terminate the Executive's employment
hereunder, upon written notice to the Executive, in the event that the Executive
becomes disabled during the Term through any condition of either a physical or
psychological nature and, as a result, is, with or without reasonable
accommodation, unable to perform the essential functions of the services
contemplated hereunder for (a) a period of ninety (90) consecutive days, or (b)
for shorter periods aggregating one hundred twenty (120) days during any twelve
(12) month period during the Term. Any such termination shall become effective
upon mailing or hand delivery of notice that the Company has elected its right
to terminate under this subsection 8(e), and the Company shall have no further
obligation or duty to the Executive other than for salary earned under this
Agreement prior to the date of termination and any payments or benefits due
under Company policies or benefit plans.
9. CHOICE OF LAW.
The validity, interpretation and performance of this Agreement shall be
governed by, and construed in accordance with, the internal law of the State of
Israel, without giving effect to conflict of law principles. Both parties agree
that the exclusive venue for any action, demand, claim or counterclaim relating
to the terms and provisions of Sections 4 and 5 of this Agreement, or to their
breach, shall be in the state or federal courts located in the State of Israel,
the City of Tel Aviv and that such courts shall have personal jurisdiction over
the parties to this Agreement.
10. CONFIDENTIALITY AND OTHER AGREEMENTS.
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As a condition to the Company's performance of its obligations hereunder,
Executive shall enter into and execute contemporaneously with the execution
hereof, the Company's Proprietary Information and Intellectual Property
Agreement.
11. MISCELLANEOUS.
(a) ASSIGNMENT. The Executive acknowledges and agrees that the rights
and obligations of the Company under this Agreement may be assigned by the
Company to any successors in interest. The Executive further acknowledges and
agrees that this Agreement is personal to the Executive and that the Executive
may not assign any rights or obligations hereunder.
(b) WITHHOLDING. All salary and bonus payments required to be made by
the Company to the Executive under this Agreement shall be subject to
withholding taxes, social security and other payroll deductions in accordance
with the applicable Israeli law.
(c) ENTIRE AGREEMENT. This Agreement, the Restricted Stock Option
Agreement, and the Proprietary Information and Intellectual Property Agreement
set forth the entire agreement between the parties and supersedes any prior
communications, agreements and understandings, written or oral, with respect to
the terms and conditions of the Executive's employment.
(d) AMENDMENTS. Any attempted modification of this Agreement will not be
effective unless signed by an officer of the Company and the Executive.
(e) WAIVER OF BREACH. The Executive understands that a breach of any
provision of this Agreement may only be waived by an officer of the Company. The
waiver by the Company of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach.
(f) SEVERABILITY. If any provision of this Agreement should, for any
reason, be held invalid or unenforceable in any respect by a court of competent
jurisdiction, then the remainder of this Agreement, and the application of such
provision in circumstances other than those as to which it is so declared
invalid or unenforceable, shall not be affected thereby, and each such provision
of this Agreement shall be valid and enforceable to the fullest extent permitted
by law.
(g) NOTICES. Any notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be effective when
delivered by private messenger, private overnight mail service, or facsimile as
follows (or to such other address as either party shall designate by notice in
writing to the other in accordance herewith):
If to the Company:
HumanClick, Ltd.
33 Bnei Zion
Israel 60910
Attn: Chief Executive Officer
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With a copy to:
Brobeck, Phleger & Harrison LLP
1633 Broadway, 47th Floor
New York, New York 10019
Attn: Brian B. Margolis, Esq.
If to Executive:
Eitan Ron
1 Moshe Sne Street
Ra'anana, Israel
(h) SURVIVAL. The Executive and the Company agree that certain
provisions of this Agreement shall survive the expiration or termination of this
Agreement and the termination of the Executive's employment with the Company.
Such provisions shall be limited to those within this Agreement which, by their
express and implied terms, obligate either party to perform beyond the
termination of the Executive's employment or termination of this Agreement.
(i) DISCLOSURE AND CONFIDENTIALITY. The Executive agrees to provide, and
agrees that the Company similarly may provide in its discretion, a copy of the
covenants contained in this Agreement to any business or enterprise which the
Company may directly or indirectly own, manage, operate, finance, join, control
or in which the Company participates in the ownership, management, operation,
financing or control, or with which the Company may be connected or may become
connected as an officer, director, executive, partner, principal, agent,
representative, consultant or otherwise. The Executive also agrees that the
Company may disclose a copy of this Agreement if legally required to do so, and
in connection with a partnering transaction or financing, assuming that an
appropriate confidentiality agreement is in place. The Executive further agrees
not to disclose the existence or terms of this Agreement to any person other
than the Executive's immediate family and legal, financial or accounting
professional.
(j) ARBITRATION OF DISPUTES. Any controversy, dispute or question which
may at any time in the future arise between the parties, which relates to the
correct interpretation of this Agreement or the fulfillment of this Agreement or
the rights and obligations of the parties hereunder or any aspect of the
Executive's relationship with the Company including the cessation thereof (other
than disputes with respect to alleged violations of the covenants contained in
Sections 4 and 5 hereof, and the Company's pursuit of the remedies described in
Section 6 hereof in connection therewith) will be submitted to a sole arbitrator
who shall be selected by agreement of the parties. In the event that the parties
cannot agree upon an arbitrator within seven (7) days, an arbitrator shall be
appointed by the President of the Tel Aviv District of the Israel Bar
Association. The arbitration proceedings shall be held in Tel Aviv and shall be
conducted in the English language. The arbitrator will have the power to issue
interim orders
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and to award fees to the prevailing party and will not be bound by the rules of
evidence. The signatures of the parties hereto shall be deemed as a deed of
submission to arbitration.
(k) RIGHTS OF OTHER INDIVIDUALS. This Agreement confers rights solely on
the Executive and the Company. This Agreement is not a benefit plan and confers
no rights on any individual or entity other than the undersigned.
(l) HEADINGS. The parties acknowledge that the headings in this
Agreement are for convenience of reference only and shall not control or affect
the meaning or construction of this Agreement.
(m) ADVICE OF COUNSEL. The Executive and the Company hereby acknowledge
that each party has had adequate opportunity to review this Agreement, to obtain
the advice of counsel with respect to this Agreement, and to reflect upon and
consider the terms and conditions of this Agreement. The parties further
acknowledge that each party fully understands the terms of this Agreement and
has voluntarily executed this Agreement.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
of the day and year set forth below.
EXECUTIVE HumanClick Ltd.
___________________________________ By:___________________________________
Eitan Ron
Title:________________________________
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EXHIBIT B-2
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), is made and entered into this
12th day of October, 2000, by and between HumanClick Ltd. a private company
organized under the laws of the State of Israel, with principal offices located
at 33 Bnei Zion, Israel 60910 (the "Company"), and Tal Goldberg (the
"Executive").
WITNESSETH
WHEREAS, LivePerson, Inc., (hereinafter "LivePerson") is acquiring all of
the shares of the Company pursuant to a certain Stock Purchase Agreement dated
October 12, 2000, (referred to herein as the "Acquisition"); and
WHEREAS, the Executive served as President of the Company prior to the
Acquisition; and
WHEREAS, the Executive's continuing personal services are critical to
maintaining the value of the shares being acquired by the Company in the
Acquisition; and,
WHEREAS, the Executive and the Company desire to enter into a formal
Employment Agreement to fully recognize the contributions of Executive to the
Company and to assure continuous harmonious performance of the affairs of the
Company.
NOW, THEREFORE, in consideration of the mutual promises, terms,
provisions, and conditions contained herein, the parties agree as follows:
1. POSITION.
The Company hereby agrees to employ the Executive to serve in the role of
Executive Vice President of Technology of the Company, subject to the
limitations set forth herein. The Executive accepts such employment upon the
terms and conditions set forth herein, and further agrees to perform to the best
of his abilities the duties generally associated with his position, as well as
such other duties commensurate with his position as Executive Vice President of
Technology as may be reasonably assigned by the Board of Directors of the
Company (the "Board"). The Executive shall, at all times during the Term, report
directly to the Board. The Executive shall perform his duties diligently and
faithfully and shall devote his full business time and attention to such duties.
2. TERM OF EMPLOYMENT AND RENEWAL.
The term of Executive's employment under this Agreement will commence on
the date of this Agreement (the "Effective Date"). Subject to the provisions of
Section 8 of this Agreement,
<PAGE>
the term of Executive's employment hereunder shall be for a term of three (3)
years from the Effective Date (the "Term").
3. COMPENSATION AND BENEFITS.
(a) SALARY. Commencing on the Effective Date, the Company agrees to pay
the Executive a base salary at an annual rate of One Hundred Ten Thousand
Dollars ($110,000) for the first year of the Term, payable in such installments
as is the policy of the Company (the "Salary"), but no less frequently than
monthly. Thereafter, the Company will review the Executive's Salary on an annual
basis, and, at its discretion, may increase the Executive's Salary but in no
event diminish the amount of Executive's Salary below the initial rate, or below
the increased rates unless all of the Executive's peer executives undergo
substantially equivalent decreases.
The Executive acknowledges and agrees that his position with the
Company is one that requires a special measure of personal trust as defined in
the Work and Rest Hours Law, 5711-1951, and, therefore, the provisions of such
law shall not apply to the Executive and the Executive shall not be entitled to
compensation for working more than forty-five (45) hours per week, beyond the
compensation set forth in this Section 3.
(b) BONUS. The Executive shall be eligible to receive annual bonuses at
the discretion of the Chief Executive Officer and Compensation Committee of the
Board according to performance goals appropriate for the Executive's position
and role to be issued by the Company.
(c) BENEFITS. The Executive shall be entitled to participate in all
employee benefit plans applicable for the Executive's level which the Company
provides or may establish from time to time for the benefit of its employees,
including, without limitation, group life, medical, surgical, dental and other
health insurance, short and long-term disability, deferred compensation,
profit-sharing and similar plans. The Company will pay on the Executive's behalf
at the Company's sole cost and expense a sum equal to 13 1/3% (thirteen and
one-third percent) of the Executive's Salary each month for executives'
insurance. The Executive will contribute a sum equal to 5% (five percent) of his
monthly Salary for each month for the insurance for the provident fund in
accordance with custom and practice. All payments provided for in this Section
will be made in such amounts and in such timely fashion as to guarantee the
Executive the full rights and benefits of such insurance at all times during the
Term and thereafter in accordance with law and practice. Ownership of all
accounts and insurance policies provided for in this Section shall be in the
name of the Executive and on termination of this Agreement will be released to
the Executive to be applied towards any obligation of the Company to make
severance payments to the Executive. The Company will pay, at its sole cost and
expense, a sum equal to 7 1/2% (seven and one-half percent) of the Executive's
monthly Salary on behalf of the Executive to an Advanced Study Fund in which the
Company participates. The Executive will pay a sum equal to 2 1/2% (two and
one-half percent) of his monthly Salary, at his expense, into said fund, as is
standard practice. All amounts paid to the Advanced Study Fund under this
Section will not exceed the amounts exempt from tax under the income tax
regulations applicable to payments to Advanced Study Funds. During the Term, the
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Company shall extend to the Executive's use a leased car as shall be reasonably
elected by the Executive and shall bear all expenses associated with the use of
the car. The Company shall gross-up any tax applicable on the use of the car by
the Executive according to the then applicable law. The Executive shall be
entitled to annual Recreation Pay per year according to the then prevailing
applicable law or custom at the minimum amount required by law. The Executive
shall also be entitled to fifteen (15) business days paid vacation per year.
Annual vacations may be accumulated and/or redeemed as provided under the law.
The Executive shall be entitled to Sick Leave according to the then prevailing
applicable law. The Company may purchase one or more "key man" insurance
policies on the Executive's life, each of which will be payable to and owned by
the Company. The Company, in its sole discretion, may select the amount and type
of key man life insurance purchased, and the Executive will have no interest in
any such policy. The Executive will cooperate with the Company in securing this
key man insurance, by submitting to all required medical examinations, supplying
all information and executing all documents required in order for the Company to
secure the insurance.
(d) EXPENSES. The Company shall pay or reimburse the Executive for all
reasonable out-of-pocket expenses actually incurred by him during the Term in
performing services hereunder, provided that the Executive properly accounts for
such expenses in accordance with the Company's policies.
4. NON-COMPETITION AND NON-SOLICITATION.
The Executive acknowledges that the Company has invested substantial time,
money and resources in the development and retention of its Proprietary
Information (including trade secrets) as defined in the Company's Proprietary
Information and Intellectual Property Agreement referenced in Section 10 of this
Agreement, customers, accounts and business partners, and further acknowledges
that during the course of the Executive's employment with the Company the
Executive has had and will have access to the Company's Inventions and
Confidential Information (including trade secrets), and will be introduced to
existing and prospective customers, accounts and business partners of the
Company. The Executive acknowledges and agrees that any and all "goodwill"
associated with any existing or prospective customer, account or business
partner belongs exclusively to the Company, including, but not limited to, any
goodwill created as a result of direct or indirect contacts or relationships
between the Executive and any existing or prospective customers, accounts or
business partners. The Executive expressly acknowledges that the provisions of
this Section 4 are necessary to protect the investment by the Company in
HumanClick. Additionally, the parties acknowledge and agree that Executive
possesses skills that are special, unique or extraordinary and that the value of
the Company depends upon his use of such skills on its behalf.
In recognition of this, the Executive covenants and agrees that:
(a) During the Term, and for a period of one (1) year after termination
of this Agreement, the Executive may not, without the prior written consent of
the Board, (whether as an employee, agent, servant, owner, partner, consultant,
independent contractor, representative, stockholder or in any other capacity
whatsoever) participate in any business that offers products
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or services competitive in any way to those offered by the Company or that were
under active development or consideration by the Company during the Term.
(b) During the Term, and for a period of one (1) year after termination
of this Agreement, the Executive may not entice, solicit or encourage any
Company employee to leave the employ of the Company or any independent
contractor to sever its engagement with the Company, absent prior written
consent to do so from the Board.
(c) During the Term, and for a period of one (1) year after termination
of this Agreement, the Executive may not, directly or indirectly, entice,
solicit or encourage any customer or prospective customer of the Company to
cease doing business with the Company, reduce its relationship with the Company
or refrain from establishing or expanding a relationship with the Company.
5. NON-DISPARAGEMENT.
The Executive and the Company hereby agree that during the Term, and at
all times thereafter, the Executive will not make any statement that is
disparaging about the Company, any of its officers, directors, or shareholders,
including, but not limited to, any statement that disparages the products,
services, finances, financial condition, capabilities or other aspects of the
business of the Company and the Company shall not make such statements with
respect to the Executive, including, but not limited to, any statement that
disparages his ability, services, morality standards or other aspects of his
employment. The Executive further agrees that during the same period the
Executive will not engage in any conduct that is intended to inflict harm upon
the professional or personal reputation of the Company or any of its officers,
directors, shareholders or employees.
6. PROVISIONS NECESSARY AND REASONABLE.
(a) The Executive agrees that (i) the provisions of Sections 4 and 5 of
this Agreement are necessary and reasonable to protect the Company's
Confidential Information, Inventions, and goodwill; (ii) the specific temporal,
geographic and substantive provisions set forth in Section 4 of this Agreement
are reasonable and necessary to protect the Company's business interests; and
(iii) in the event of any breach of any of the covenants set forth herein, the
Company would suffer substantial irreparable harm and would not have an adequate
remedy at law for such breach. In recognition of the foregoing, the Executive
agrees that in the event of a breach or threatened breach of any of these
covenants, in addition to such other remedies as the Company may have at law,
without posting any bond or security, the Company shall be entitled to seek and
obtain equitable relief, in the form of specific performance, and/or temporary,
preliminary or permanent injunctive relief, or any other equitable remedy which
then may be available. The seeking of such injunction or order shall not affect
the Company's right to seek and obtain damages or other equitable relief on
account of any such actual or threatened breach.
(b) If any of the covenants contained in Sections 4 and 5 hereof, or any
part thereof, are hereafter construed to be invalid or unenforceable, the same
shall not affect the remainder of the covenant or covenants, which shall be
given full effect without regard to the invalid portions.
4
<PAGE>
(c) If any of the covenants contained in Sections 4 and 5 hereof, or any
part thereof, are held to be unenforceable by a court of competent jurisdiction
because of the temporal or geographic scope of such provision or the area
covered thereby, the parties agree that the court making such determination
shall have the power to reduce the duration and/or geographic area of such
provision and, in its reduced form, such provision shall be enforceable.
7. REPRESENTATIONS REGARDING PRIOR WORK AND LEGAL OBLIGATIONS.
(a) The Executive represents that the Executive has no agreement or
other legal obligation with any prior employer, or any other person or entity,
that restricts the Executive's ability to accept employment with, or to perform
any function for, the Company.
(b) The Executive has been advised by the Company that at no time should
the Executive divulge to or use for the benefit of the Company any trade secret
or confidential or proprietary information of any previous employer. The
Executive expressly acknowledges that the Executive has not divulged or used any
such information for the benefit of the Company.
(c) The Executive acknowledges that the Executive has not and will not
misappropriate any Invention that the Executive played any part in creating
while working for any former employer.
(d) The Executive acknowledges that the Company is basing important
business decisions on these representations, and affirms that all of the
statements included herein are true.
8. TERMINATION AND SEVERANCE.
Notwithstanding the provisions of Section 2 of this Agreement, the
Executive's employment hereunder may terminate under the following
circumstances:
(a) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate this
Agreement for Cause at any time, upon written notice to the Executive setting
forth in reasonable detail the nature of such Cause. For purposes of this
Agreement, Cause is defined as (i) the Executive's willful and material breach
of the terms of this Agreement; (ii) the Executive's commission of any felony or
any crime involving moral turpitude; (iii) gross negligence or willful
misconduct by the Executive in connection with his duties hereunder; or (iv) the
Executive's willful refusal to perform his duties hereunder. Upon the
termination for Cause of Executive's employment, the Company shall have no
further obligation or liability to the Executive other than for salary earned
under this Agreement prior to the date of termination, and any accrued but
unused vacation or other benefits.
(b) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Executive's employment
hereunder may be terminated without Cause by the Company upon written notice to
the Executive, provided, however, that if the Company terminates the Executive's
employment without Cause, or the Executive terminates his employment for Good
Reason, as defined below, the Company shall continue to pay the Executive the
Salary and shall provide health coverage,
5
<PAGE>
under the same conditions as exist at the time of termination, for a six (6)
month period. As a condition of receiving severance benefits pursuant to this
Agreement, the Executive shall execute and deliver to the Company prior to his
receipt of such benefits a general release substantially in the form attached
hereto as Exhibit A.
(c) TERMINATION BY THE EXECUTIVE. The Executive may terminate his
employment hereunder upon one (1) month's written notice to the Company. In the
event of termination by the Executive pursuant to this subsection 8(c), the
Company may elect to pay the Executive during the notice period (or for any
remaining portion of that period) the Salary and benefits at the rate of
compensation the Executive was receiving immediately before such notice of
termination was tendered in lieu of actual notice. The Executive may also
terminate his employment hereunder for "Good Reason," within forty (40) days of
the occurrence of any of the following events: (i) a material reduction in
salary other than an across-the-board Company action reducing base salary; (ii)
a relocation of the Executive's worksite to a location not in the State of
Israel, (iii) a change in the Executive's title, or (iv) Mr. Robert LoCascio is
no longer an active executive of LivePerson. The Executive shall give the
Company twenty (20) days' written notice and opportunity to cure prior to any
termination for Good Reason based on the grounds specified above.
(d) DEATH. In the event of the Executive's death during the Term of this
Agreement, the Executive's employment hereunder shall immediately and
automatically terminate, and the Company shall have no further obligation or
duty to the Executive or his estate or beneficiaries other than for the Salary
earned under this Agreement to the date of termination and any payments or
benefits due under Company policies or benefit plans.
(e) DISABILITY. The Company may terminate the Executive's employment
hereunder, upon written notice to the Executive, in the event that the Executive
becomes disabled during the Term through any condition of either a physical or
psychological nature and, as a result, is, with or without reasonable
accommodation, unable to perform the essential functions of the services
contemplated hereunder for (a) a period of ninety (90) consecutive days, or (b)
for shorter periods aggregating one hundred twenty (120) days during any twelve
(12) month period during the Term. Any such termination shall become effective
upon mailing or hand delivery of notice that the Company has elected its right
to terminate under this subsection 8(e), and the Company shall have no further
obligation or duty to the Executive other than for salary earned under this
Agreement prior to the date of termination and any payments or benefits due
under Company policies or benefit plans.
9. CHOICE OF LAW.
The validity, interpretation and performance of this Agreement shall be
governed by, and construed in accordance with, the internal law of the State of
Israel, without giving effect to conflict of law principles. Both parties agree
that the exclusive venue for any action, demand, claim or counterclaim relating
to the terms and provisions of Sections 4 and 5 of this Agreement, or to their
breach, shall be in the state or federal courts located in the State of Israel,
the City of Tel Aviv and that such courts shall have personal jurisdiction over
the parties to this Agreement.
6
<PAGE>
10. CONFIDENTIALITY AND OTHER AGREEMENTS.
As a condition to the Company's performance of its obligations hereunder,
Executive shall enter into and execute contemporaneously with the execution
hereof, the Company's Proprietary Information and Intellectual Property
Agreement.
11. MISCELLANEOUS.
(a) ASSIGNMENT. The Executive acknowledges and agrees that the rights
and obligations of the Company under this Agreement may be assigned by the
Company to any successors in interest. The Executive further acknowledges and
agrees that this Agreement is personal to the Executive and that the Executive
may not assign any rights or obligations hereunder.
(b) WITHHOLDING. All salary and bonus payments required to be made by
the Company to the Executive under this Agreement shall be subject to
withholding taxes, social security and other payroll deductions in accordance
with the applicable Israeli law.
(c) ENTIRE AGREEMENT. This Agreement, the Restricted Stock Option
Agreement, and the Proprietary Information and Intellectual Property Agreement
set forth the entire agreement between the parties and supersedes any prior
communications, agreements and understandings, written or oral, with respect to
the terms and conditions of the Executive's employment.
(d) AMENDMENTS. Any attempted modification of this Agreement will not be
effective unless signed by an officer of the Company and the Executive.
(e) WAIVER OF BREACH. The Executive understands that a breach of any
provision of this Agreement may only be waived by an officer of the Company. The
waiver by the Company of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach.
(f) SEVERABILITY. If any provision of this Agreement should, for any
reason, be held invalid or unenforceable in any respect by a court of competent
jurisdiction, then the remainder of this Agreement, and the application of such
provision in circumstances other than those as to which it is so declared
invalid or unenforceable, shall not be affected thereby, and each such provision
of this Agreement shall be valid and enforceable to the fullest extent permitted
by law.
(g) NOTICES. Any notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be effective when
delivered by private messenger, private overnight mail service, or facsimile as
follows (or to such other address as either party shall designate by notice in
writing to the other in accordance herewith):
If to the Company:
HumanClick, Ltd.
33 Bnei Zion
7
<PAGE>
Israel 60910
Attn: Chief Executive Officer
With a copy to:
Brobeck, Phleger & Harrison LLP
1633 Broadway, 47th Floor
New York, New York 10019
Attn: Brian B. Margolis, Esq.
If to Executive:
Tal Goldberg
28 Hashushan Street
Pardesia, Israel
(h) SURVIVAL. The Executive and the Company agree that certain
provisions of this Agreement shall survive the expiration or termination of this
Agreement and the termination of the Executive's employment with the Company.
Such provisions shall be limited to those within this Agreement which, by their
express and implied terms, obligate either party to perform beyond the
termination of the Executive's employment or termination of this Agreement.
(i) DISCLOSURE AND CONFIDENTIALITY. The Executive agrees to provide, and
agrees that the Company similarly may provide in its discretion, a copy of the
covenants contained in this Agreement to any business or enterprise which the
Company may directly or indirectly own, manage, operate, finance, join, control
or in which the Company participates in the ownership, management, operation,
financing or control, or with which the Company may be connected or may become
connected as an officer, director, executive, partner, principal, agent,
representative, consultant or otherwise. The Executive also agrees that the
Company may disclose a copy of this Agreement if legally required to do so, and
in connection with a partnering transaction or financing, assuming that an
appropriate confidentiality agreement is in place. The Executive further agrees
not to disclose the existence or terms of this Agreement to any person other
than the Executive's immediate family and legal, financial or accounting
professional.
(j) ARBITRATION OF DISPUTES. Any controversy, dispute or question which
may at any time in the future arise between the parties, which relates to the
correct interpretation of this Agreement or the fulfillment of this Agreement or
the rights and obligations of the parties hereunder or any aspect of the
Executive's relationship with the Company including the cessation thereof (other
than disputes with respect to alleged violations of the covenants contained in
Sections 4 and 5 hereof, and the Company's pursuit of the remedies described in
Section 6 hereof in connection therewith) will be submitted to a sole arbitrator
who shall be selected by agreement of the parties. In the event that the parties
cannot agree upon an arbitrator within seven (7) days, an arbitrator shall be
appointed by the President of the Tel Aviv District of
8
<PAGE>
the Israel Bar Association. The arbitration proceedings shall be held in Tel
Aviv and shall be conducted in the English language. The arbitrator will have
the power to issue interim orders and to award fees to the prevailing party and
will not be bound by the rules of evidence. The signatures of the parties hereto
shall be deemed as a deed of submission to arbitration.
(k) RIGHTS OF OTHER INDIVIDUALS. This Agreement confers rights solely on
the Executive and the Company. This Agreement is not a benefit plan and confers
no rights on any individual or entity other than the undersigned.
(l) HEADINGS. The parties acknowledge that the headings in this
Agreement are for convenience of reference only and shall not control or affect
the meaning or construction of this Agreement.
(m) ADVICE OF COUNSEL. The Executive and the Company hereby acknowledge
that each party has had adequate opportunity to review this Agreement, to obtain
the advice of counsel with respect to this Agreement, and to reflect upon and
consider the terms and conditions of this Agreement. The parties further
acknowledge that each party fully understands the terms of this Agreement and
has voluntarily executed this Agreement.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
of the day and year set forth below.
EXECUTIVE HumanClick Ltd.
__________________________________ By:___________________________________
Tal Goldberg
Title:________________________________
9
<PAGE>
EXHIBIT C-1
[Zellermayer, Pelossof, Adv. letterhead]
October 12, 2000
LivePerson, Inc.
462 Seventh Avenue, 10th Floor
New York, New York 10018
U.S.A.
Re: HUMANCLICK LTD.
Ladies and Gentlemen:
We have acted as Israeli counsel to HumanClick Ltd., an Israeli corporation (the
"Company"), in connection with the sale of all of the outstanding capital stock
of the Company, pursuant to the Stock Purchase Agreement dated as of October 12,
2000 between LivePerson, Inc., a Delaware corporation (the "Purchaser"), the
Company and the shareholders of the Company named in SCHEDULE I thereto (the
"Shareholders") (such agreement, the "Purchase Agreement"). This opinion is
being rendered to you pursuant to Section 7.02(e) of the Purchase Agreement.
Capitalized terms used herein and not otherwise defined shall have the same
meaning given to such terms in the Purchase Agreement.
In so acting, and as a basis for the opinions herein set forth, we have
examined original, photocopied, facsimile copies or electronically transmitted
versions of only the Purchase Agreement, including all schedules and exhibits
thereto, and the other Transaction Documents, the currently in effect Memorandum
and Articles of Association of the Company, certified corporate resolutions and
shareholders register provided to us by the Company and certificates of public
officials which we have deemed relevant for the purpose of this opinion (the
"Documents"). We have assumed the due authorization, execution and delivery of
each of the Purchase Agreement and the other Transaction Documents by all
parties thereto (other than the Company) and that each such agreement
constitutes the legal, valid and binding obligation of each such party,
enforceable against it in accordance with its terms. We have further assumed,
without investigation, the legal capacity of natural persons, actual compliance
of all parties with their covenants and agreements and with all relevant laws,
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted, facsimile or electronically transmitted to us as copies and that such
documents as examined by us are true, complete and correct, are in full force
and effect and have not been amended, rescinded, supplemented or otherwise
modified. As to various questions of fact relevant to the opinions expressed
herein, we have relied exclusively upon and assumed the completeness and
accuracy of, without any independent investigation or
<PAGE>
verification, the Documents and the representations, warranties and other
statements of fact by the parties thereto as contained therein, assuming,
without verification, that such are accurate and complete and that there are no
other records or facts that may be relevant to our opinions except as set forth
therein. With your permission, all other assumptions and statements of reliance
as indicated herein have been made without any independent investigation or
verification on our part except to the extent otherwise expressly stated in this
opinion, and we express no opinion with respect to the subject matter or
accuracy of such assumptions or items relied upon.
Our opinions are limited to Israeli Laws and regulations. With regard to
the opinions expressed in Articles (3), (4) and (6) below, our opinions are
limited to a review of only those Israeli laws and regulations that, in our
experience, are normally applicable to transactions of the type contemplated by
the Purchase Agreement solely on the basis of the description of such matters in
the materials mentioned above. Our opinions specifically exclude any aspect of
intellectual property laws and private international law.
We do not opine as to the laws of all jurisdictions other than the State
of Israel as the same are in force on the date hereof, such opinions being based
on current law, therefore there can be no assurance that the views expressed in
such opinions will be accepted by the relevant administrative or judicial
authorities. We assume no obligation to update this opinion or to advise you of
any events that occur subsequent to the date of this opinion.
As used in this opinion, any use of the term "knowledge" or similar
language means that, after an examination of documents made available by the
Company to attorneys of this firm in the course of their handling the legal
affairs of the Company, but without any further independent factual
investigation, we find no reason to believe that the opinions expressed herein
are factually incorrect.
For purposes of this opinion, we are assuming that each party to the
Purchase Agreement and the other Transaction Documents (other than the Company)
has all requisite power and authority and (where applicable) has taken any and
all necessary corporate or partnership action, to execute and deliver the
Purchase Agreement and the other Transaction Documents, and that each party has
entered into the Purchase Agreement and other Transaction Documents for value,
in good faith and without notice of any adverse fact.
Based on and subject to the foregoing and the other reservations set forth
herein, we are of the opinion that:
1. The Company is a corporation duly organized and validly existing under the
laws of the State of Israel and, to our knowledge, is not the subject of
any proceedings to strike the Company from the Registrar of Companies. The
Company has the requisite corporate power and authority to own its
properties and to conduct its business as, to our knowledge, it is
presently conducted.
2. The Company has the requisite corporate power and authority to execute,
deliver and perform the Purchase Agreement and the other Transaction
Documents to which it is a party. The Company has taken all necessary
corporate action to approve and adopt the Purchase
<PAGE>
Agreement and the other Transaction Documents to which the Company is a
party and to approve and to authorize the performance of the transactions
contemplated thereby. Each of the Purchase Agreement and the other
Transaction Documents to which the Company is a party has been duly and
validly authorized by the Company and has been duly executed and delivered
by an authorized officer of the Company.
3. Neither the execution or delivery by the Company of the Transaction
Documents to which it is a party, nor the consummation by the Company at
the Closing of the transactions contemplated thereby, will (i) violate any
provision of the Memorandum of Association or the Articles of Association
of the Company, (ii) violate or be in conflict with any Israeli laws which
to our knowledge are applicable to the Company, or (iii) to our knowledge,
violate or contravene any judgment, writ, decree, injunction or order of
any Israeli court, or any arbitrator or governmental agency or authority,
having jurisdiction over the Company or its properties or by which the
Company may be bound.
4. No consents, approvals or authorizations of or filings with any
governmental authority of the State of Israel are required or necessary on
the part of the Company in connection with the execution, delivery and
performance at the Closing by the Company of the Transaction Documents,
except for such consents, approvals, authorizations or filings which have
been obtained, waived or made prior to the date hereof.
5. We have no knowledge of any private or governmental action, suit, claim,
arbitration pending before any agency, court or tribunal, foreign or
domestic, against the Company or any of its properties or any of its
officers or directors (in their capacities as such), and to our knowledge
there is no judgment, decree or order against the Company or any of its
properties or any of its officers or directors (in their capacities as
such) that could prevent, enjoin or materially alter or delay any of the
transactions contemplated by the Purchase Agreement or the other
Transaction Documents nor are we aware of any litigation pending, or
threatened in writing, against the Company by reason of the current
activities of the Company or the past employment relationships of its
officers, directors or employees.
6. Based on our review of the minute books, register of members and other
records of the Company, immediately prior to the consummation of the
transactions contemplated by the Purchase Agreement the registered share
capital of the Company consists of no preferred shares and of 3,800,000
ordinary shares, par value NIS 0.01 per share (the "Ordinary Shares") of
which 1,906,512 are issued and outstanding as of the date hereof, all of
which have been validly issued and are fully paid and, based on the
Company's Registrar of Members, are held of record by the Shareholders
named in Schedule I to the Purchase Agreement.
The opinions set forth herein are: (i) strictly confined to Israeli laws
as the same are in force on the date hereof and to Israeli matters, and no
opinion is expressed as to the effect or implication of any other law; (ii)
subject to any limitation that may be imposed by applicable bankruptcy,
insolvency, fraudulent conveyance, composition, reorganization, moratorium or
other similar laws affecting creditors' rights and remedies generally and by the
application by a
<PAGE>
court of equitable principles (regardless of whether enforcement is sought in a
proceedings in equity or at law); and (iii) are further qualified by any
limitations imposed by general principles of equity, good faith, fair dealing,
minority oppression, commercial reasonableness or upon the availability of
equitable remedies or the enforcement of provisions of any documents referred to
herein.
This opinion is furnished to you solely for your benefit in connection
with the consummation of the Closing and is not to be used, circulated, quoted
or otherwise referred to for any other purpose without our express prior written
permission.
Very truly yours,
Zellermayer, Pelossof, Advocates
<PAGE>
[Zellermayer, Pelossof, Adv. letterhead]
October 12, 2000
LivePerson, Inc.
462 Seventh Avenue, 10th Floor
New York, New York 10018
U.S.A.
Re: HUMANCLICK LTD.
Ladies and Gentlemen:
We have acted as Special Israeli counsel to _________, all Israeli corporations
(the "Shareholders"), in connection with the sale of the outstanding capital
stock of HumanClick Ltd. (the "Company"), pursuant to the Stock Purchase
Agreement dated as of October 12, 2000 between LivePerson, Inc., a Delaware
corporation (the "Purchaser"), the Company and the shareholders of the Company
including the Shareholders (such agreement, the "Purchase Agreement"). This
opinion is being rendered to you pursuant to Section 7.02(e) of the Purchase
Agreement. Capitalized terms used herein and not otherwise defined shall have
the same meaning given to such terms in the Purchase Agreement.
In so acting, and as a basis for the opinions herein set forth, we have
examined original, photocopied, facsimile copies or electronically transmitted
versions of only the Purchase Agreement, including all schedules and exhibits
thereto, and the other Transaction Documents, the currently in effect Memorandum
and Articles of Association of the Shareholders, certified corporate resolutions
and shareholders register provided to us by the Shareholders and certificates of
public officials which we have deemed relevant for the purpose of this opinion
(the "Documents"). We have assumed the due authorization, execution and delivery
of each of the Purchase Agreement and the other Transaction Documents by all
parties thereto (other than the Shareholders) and that each such agreement
constitutes the legal, valid and binding obligation of each such party,
enforceable against it in accordance with its terms. We have further assumed,
without investigation, the legal capacity of natural persons, actual compliance
of all parties with their covenants and agreements and with all relevant laws,
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted, facsimile or electronically transmitted to us as copies and that such
documents as examined by us are true, complete and correct, are in full force
and effect and have not been amended, rescinded, supplemented or otherwise
modified. As to various questions of fact relevant to the opinions expressed
herein, we have relied exclusively upon and assumed the completeness and
accuracy of, without any independent investigation or verification, the
Documents and the representations,
<PAGE>
warranties and other statements of fact by the parties thereto as contained
therein, assuming, without verification, that such are accurate and complete and
that there are no other records or facts that may be relevant to our opinions
except as set forth therein. With your permission, all other assumptions and
statements of reliance as indicated herein have been made without any
independent investigation or verification on our part except to the extent
otherwise expressly stated in this opinion, and we express no opinion with
respect to the subject matter or accuracy of such assumptions or items relied
upon.
Our opinions are limited to Israeli Laws and regulations. With regard to
the opinions expressed in Articles (2) below, our opinions are limited to a
review of only those Israeli laws and regulations that, in our experience, are
normally applicable to transactions of the type contemplated by the Purchase
Agreement solely on the basis of the description of such matters in the
materials mentioned above. Our opinions specifically exclude any aspect of
intellectual property laws and private international law.
We do not opine as to the laws of all jurisdictions other than the State
of Israel as the same are in force on the date hereof, such opinions being based
on current law, therefore there can be no assurance that the views expressed in
such opinions will be accepted by the relevant administrative or judicial
authorities. We do not express any opinion herein concerning any legal
conclusions derived from any law as to which we otherwise do not express any
opinion herein. We assume no obligation to update this opinion or to advise you
of any events that occur subsequent to the date of this opinion.
As used in this opinion, any use of the term "knowledge" or similar
language means that, after an examination of documents made available by the
Shareholders to attorneys of this firm in the course of their handling the legal
affairs of the Shareholders, but without any further independent factual
investigation, we find no reason to believe that the opinions expressed herein
are factually incorrect.
For purposes of this opinion, we are assuming that each party to the
Purchase Agreement and the other Transaction Documents (other than the
Shareholders) has all requisite power and authority and (where applicable) has
taken any and all necessary corporate or partnership action, to execute and
deliver the Purchase Agreement and the other Transaction Documents, and that
each party has entered into the Purchase Agreement and other Transaction
Documents for value, in good faith and without notice of any adverse fact.
Based on and subject to the foregoing and the other reservations set forth
herein, we are of the opinion that:
1. Each Shareholder has full right, power and authority to enter into and
to perform its obligations under the Transaction Documents to which it is a
party; the execution and delivery of each such Transaction Document by each
Shareholder has been duly authorized by such Shareholder, and each such
Transaction Document has been duly executed by or on behalf of such
Shareholders.
<PAGE>
2. To our knowledge, no consent, approval, authorization or order of or
qualification with any court, government or governmental agency in Israel is
necessary in connection with the consummation by the Shareholders of the
transactions contemplated in the Transaction Documents.
3. To our knowledge without making independent investigation and based
solely on search of the computerized system of the Registrar of Companies, there
are no liens or encumbrances over the Company Shares to be sold by the
Shareholders under the Stock Purchase Agreement.
The opinions set forth herein are: (i) strictly confined to Israeli laws
as the same are in force on the date hereof and to Israeli matters, and no
opinion is expressed as to the effect or implication of any other law; (ii)
subject to any limitation that may be imposed by applicable bankruptcy,
insolvency, fraudulent conveyance, composition, reorganization, moratorium or
other similar laws affecting creditors' rights and remedies generally and by the
application by a court of equitable principles (regardless of whether
enforcement is sought in a proceedings in equity or at law); and (iii) are
further qualified by any limitations imposed by general principles of equity,
good faith, fair dealing, minority oppression, commercial reasonableness or upon
the availability of equitable remedies or the enforcement of provisions of any
documents referred to herein.
This opinion is furnished to you solely for your benefit in connection
with the consummation of the Closing and is not to be used, circulated, quoted
or otherwise referred to for any other purpose without our express prior written
permission.
Very truly yours,
Zellermayer, Pelossof, Advocates
<PAGE>
EXHIBIT C-2
[Parker Chapin LLP Letterhead]
October 12, 2000
LivePerson, Inc.
462 Seventh Avenue, 10th Floor
New York, New York 10018
RE: STOCK PURCHASE AGREEMENT DATED AS OF OCTOBER 12, 2000
Ladies and Gentlemen:
We have acted as U.S. counsel to HumanClick, Ltd., a private company
organized under the laws of the State of Israel (the "COMPANY"), in connection
with the purchase by LivePerson, Inc., a Delaware corporation (the "BUYER"), of
all of the outstanding capital stock of the Company pursuant to a certain Stock
Purchase Agreement dated as of October 12, 2000 between the Buyer, the Company
and the shareholders of the Company named in Schedule I thereto (the
"SHAREHOLDERS") (such agreement, the "PURCHASE AGREEMENT"). Capitalized terms
used herein and not otherwise defined herein shall have the same meanings herein
as are ascribed to such terms in the Purchase Agreement.
This opinion letter is provided to you at the request of the Company
and the Shareholders in satisfaction of the condition set forth in Section
7.02(e) of the Purchase Agreement. In addition, we have examined originals or
copies of: (i) the Purchase Agreement; (ii) a certain Escrow Agreement dated as
of October 12, 2000 between the Buyer, the Company, First Union National Bank
(as Escrow Agent) and Eitan Ron (as Shareholders' Agent); (iii) a certain
Repurchase Option Agreement dated as of October 12, 2000 between the Buyer,
Eitan Ron and Tal Goldberg; and (iv) originals or copies of such corporate
resolutions of the Company as we have deemed necessary or appropriate as a basis
for the opinions hereinafter expressed. The documents listed as items (i)
through (iii) above are referred to herein as the "Transaction Documents".
In connection with the opinions expressed herein, we have made such
examination of law as we deemed necessary. In our examination, we have assumed
the genuineness of all signatures, the legal capacity of all natural persons,
the authenticity of all documents submitted to us as originals, the conformity
to original documents of all documents submitted to us as certified, facsimile
or photostatic copies and the authenticity of the originals of such copies.
In rendering the opinions set forth herein, we have also assumed:
(A) that the Transaction Documents have been duly and validly executed and
delivered by or on behalf of each party thereto other than the Company and the
Shareholders, that each party to the
<PAGE>
Transaction Documents other than the Company and the Shareholders has the power
to enter into and to perform its obligations thereunder and that the Transaction
Documents constitute legal, valid, binding and enforceable obligations of each
such party; and (B) that the representations and warranties made in the
Transaction Documents by the parties thereto other than the Company and the
Shareholders are true and correct.
Whenever a statement herein is qualified by the expressions "known
to us," "to our knowledge," "we are not aware," or a similar phrase or
expression with respect to our knowledge of matters of fact, it is intended to
mean that our knowledge is based upon the records, documents, instruments and
certificates described above and the current actual knowledge of those attorneys
within this Firm who have given substantive attention to the transactions
contemplated by the Transaction Documents, or who are presently involved in
substantive legal representation of the Company (but not including any
constructive or imputed notice of any information) and that we have not
otherwise undertaken any independent investigations for the purpose of rendering
this opinion letter. Please be advised that the Company is also represented by
other attorneys and that we do not represent the Company with respect to all
matters.
We express no opinion with respect to the Purchase Agreement or any
of the other Transaction Documents, or any right, power, privilege, remedy or
interest intended to be created thereunder, insofar as: (a) any of the rights,
powers, privileges, remedies and interests of a party thereunder may be limited
(i) by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization
or other laws affecting any rights, powers, privileges, remedies and interests
of creditors generally, (ii) by rules or principles of equity affecting the
enforcement of obligations generally, whether at law, in equity or otherwise, or
(iii) by the exercise of the discretionary powers of any court or other
authority before which may be brought any proceeding seeking equitable or other
remedies, including, without limitation, specific performance, injunctive relief
and indemnification; (b) the rights, powers, privileges, remedies and interests
of any party under the Purchase Agreement and the other Transaction Documents or
under applicable law as may be exercised or otherwise enforced in bad faith or a
commercially unreasonable manner; and (c) any term or provision of the Purchase
Agreement or any of the other Transaction Documents which purportedly permits a
party to exercise or otherwise enforce powers and privileges and pursue rights
and remedies in a manner impermissible under or otherwise inconsistent with
applicable law or public policy, from time to time in effect.
We express no opinion with respect to any provision of the Purchase
Agreement or any of the other Transaction Documents: (a) that purports to make a
choice of law of any jurisdiction as the law governing such document; (b) that
purports to designate a specific forum or venue in which disputes between the
parties are to be resolved; (c) by which a party purports to accept jurisdiction
of any court or forum; or (d) that restricts a party from competing or
soliciting customers or employees.
In rendering the opinions set forth in numbered Paragraph 5 below,
we have assumed that each of the Shareholders which is a natural person has the
legal capacity to enter
<PAGE>
into the Purchase Agreement and the Transaction Documents (although we have no
knowledge of any facts that would lead us to believe any Shareholder does not
have such legal capacity) and with respect to each of the Shareholders who are
entities, with your permission we have relied on the opinion of Zellermayer,
Pelossof, Adv. (a copy of which is attached hereto as EXHIBIT A) as to such
Shareholder's right, power and authority to enter into the Purchase Agreement
and the Transaction Documents.
Our opinions in clause (ii) of paragraph 2 below and in paragraph 3
below are limited to laws and regulations normally applicable to transactions of
the type contemplated in the Transaction Documents and do not extend to
licenses, permits and approvals necessary for the conduct of the Company's
business. In addition and without limiting the previous sentence, we express no
opinion herein with respect to the effect of any land use, environmental or
similar law, any state or federal antitrust law or any local law. Further, we
express no opinion as to the effect of or compliance with any state or federal
laws or regulations applicable to the transactions contemplated by the
Transaction Documents because of the nature of the business of any party thereto
other than the Company.
This opinion letter relates solely to the laws of the State of New
York and the applicable federal laws of the United States and we express no
opinion with respect to the effect or applicability of the laws of other
jurisdictions. Members of our firm are admitted to the Bar in the State of New
York.
Based upon and subject to the foregoing, we are of the opinion that:
1. Assuming the due authorization, execution and delivery of the
Transaction Documents by the parties thereto including the Company, each of the
Transaction Documents to which the Company is a party constitutes a legal, valid
and binding obligation of the Company enforceable by the Buyer against the
Company in accordance with its respective terms.
2. Neither the execution or delivery by the Company of the
Transaction Documents to which it is a party, nor the consummation by the
Company at the Closing of the transactions contemplated thereby, will (i)
violate or be in conflict with any United States federal or New York law that to
our knowledge is applicable to the Company or (ii) violate or contravene any
judgment, decree, injunction or order known to us of any United States federal
or New York court or any arbitrator or governmental agency or authority, having
jurisdiction over the Company or its properties or by which the Company may be
bound.
3. No consents, approvals or authorizations of or filings with
any governmental authority of the State of New York or the United States are
required or necessary on the part of the Company in connection with the
execution, delivery and performance at the Closing by the Company of the
Transaction Documents, except for such consents, approvals, authorizations or
filings which have been obtained, waived or made prior to the date hereof, and
we are not aware of any proceedings, or any threat of any proceedings, that
question the validity thereof.
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4. We are not aware of any private or governmental action, suit,
proceeding, claim, arbitration or investigation pending, or threatened in
writing, before any agency, court or tribunal against the Company or any
judgment, decree or order in each case that questions the validity of the
Transaction Documents.
5. Each of the Transaction Documents to which the Shareholders
are a party constitutes the valid and binding agreement of each such
Shareholder, enforceable in accordance with its terms, except insofar as the
indemnification provisions contained therein may be limited by applicable law.
This opinion letter is rendered as of the date hereof and is
limited to the matters stated herein and no opinion is inferred or may be
implied beyond the matters expressly stated. This opinion letter is delivered
solely to you pursuant to the terms of the Purchase Agreement, and it may not be
delivered to, or relied upon by, any other person without the prior written
consent of this firm. We assume no obligation to advise you of facts,
circumstances, events or developments which hereafter may be brought to our
attention and which may alter, affect or modify the opinions expressed herein.
Very truly yours,
PARKER CHAPIN LLP
<PAGE>
EXHIBIT E
REPURCHASE OPTION AGREEMENT
THIS AGREEMENT is made this 12th day of October 2000, between LivePerson,
Inc., a Delaware corporation (the "Company"), Eitan Ron and Tal Goldberg (each a
"Founder" and together, the "Founders"), and First Union National Bank, as
Escrow Agent (the "Escrow Agent").
WHEREAS, reference is made to the Stock Purchase Agreement, dated as of
the date hereof, by and among the Company, HumanClick Ltd. ("HumanClick") and
the shareholders listed on the signature pages thereto (the "Shareholders") (the
"Purchase Agreement"), pursuant to which the shareholders, including the
Founders, have agreed to exchange their shares of HumanClick for shares of the
Company's common stock, $0.001 par value per share (the "Common Stock"), of
which 2,085,732 shares of Common Stock will be acquired by the Founders (the
Founders' Stock);
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the transactions contemplated by the Purchase Agreement; and
WHEREAS, the parties hereto desire to agree upon the terms upon which the
Founders' Stock may be repurchased by the Company in the event a Founder's
employment with HumanClick is terminated.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
1. REPURCHASE OPTION.
(a) In the event of (i) the voluntary termination which is not Good
Reason termination, or (ii) involuntary termination for Cause, of a Founder's
employment with or services to HumanClick, the Company shall have, upon the date
of such termination (as reasonably fixed and determined by the Company), an
irrevocable, exclusive option ("Repurchase Option") for a period of ninety (90)
days (subject to Section 1(d) hereof) from such date to repurchase, at a price
equal to the lower of (i) the average closing price for a share of the Company's
Common Stock as quoted on the Nasdaq Stock Market for the 30 trading days
following the date of such termination (the "Market Price") and (ii) seven
dollars ($7.00) per share, all or any portion of such Founders' Stock that are
Unreleased Founders' Stock (as hereinafter defined). The Company may exercise
its Repurchase Option by giving written notice to the applicable Founder (with a
copy to the Escrow Agent) and, at the option of the Company, (i) by delivering
to such Founder a check in the amount of the repurchase price for the Founders'
Stock being repurchased, or (ii) by canceling such of the applicable Founder's
indebtedness to the Company equal to the repurchase price for the Founders'
Stock being repurchased, or (iii) a combination of (i) and (ii) equal to the
repurchase price for the Founders' Stock being repurchased. Upon delivery of
such notice and payment of the repurchase price, the Company shall become the
legal and beneficial owner of the Founders' Stock being repurchased (and all
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rights and interests therein or relating thereto) and shall have the right to
retain and transfer to its own name the number of shares of Founders' Stock
being repurchased.
(b) Whenever the Company shall have the right to repurchase
Founders' Stock hereunder, the Company may designate and assign one or more
employees, officers, directors or shareholders of the Company or other persons
or organizations to exercise all or a part of the Repurchase Option and purchase
all or a part of such Founders' Stock.
(c) Notwithstanding the provisions of Section 1(a) hereunder, in the
event of (a) the sale of all or substantially all of the assets of the Company,
or (b) the consummation of a consolidation or a merger in which the Company is
not the surviving entity (other than a consolidation or merger in which the
shareholders of the Company immediately before the consolidation or merger hold,
immediately after the consolidation or merger, securities representing more than
50% of the voting power and equity of the surviving entity) (such events, a
"Change-in-Control Event"), the Repurchase Option shall be exercisable by the
Company or its successors and assigns at a per share price equal to the higher
of: (i) the per share price paid in such transaction, and (ii) the lower of (x)
the Market Price and (y) seven dollars ($7.00) per share.
(d) Notwithstanding the provisions of Section 1(a) hereunder, in the
event of the (i) voluntary termination which is not for Good Reason, or (ii)
involuntary termination for Cause, of a Founder's employment with or services to
HumanClick, prior to the Termination Date (as that term is defined in that
certain Escrow Agreement, dated of even date hereof, by and among the Company,
HumanClick Ltd., First Union National Bank (as Escrow Agent), and Eitan Ron (as
Shareholders' Agent) (the "Escrow Agreement")), then the Repurchase Option
period for any Unreleased Founders' Stock that has been held in escrow pursuant
to the Escrow Agreement shall end on the later of three business days after (x)
the date on which a Founder's shares are first released pursuant to Section 5(b)
of the Escrow Agreement (the "Release Date") or (y) the date after the Release
Date on which there are no shares subject to Outstanding Claim Notices under the
Escrow Agreement or (z) the date that is 30 days after the date of such
termination.
2. RELEASE OF SHARES FROM REPURCHASE OPTION.
(a) Seventy-five percent (75%) of each Founders' Stock shall be
subject to the Company's Repurchase Option as of the Closing Date (as defined in
the Purchase Agreement) (the "Vesting Start Date"); provided that it is
understood that such portion of each Founders' Stock shall be inclusive of the
shares held in escrow pursuant to the Escrow Agreement. The Founders' Stock
subject to the Repurchase Option of each Founder shall be released from the
Company's Repurchase Option as follows: (i) the portion (if any) of each
Founder's shares subject to the Escrow Agreement which have not been released to
Indemnified Parties in satisfaction of Damages shall be released from the
Company's Repurchase Option at the first anniversary of the Vesting Start Date;
and (ii) one-third of the shares of such Founder's Founders' Stock subject to
the Repurchase Option shall be released from the Company's Repurchase Option at
the second and third anniversary of the Vesting Start Date (respectively),
provided that in each case the applicable Founder's employment by or services to
HumanClick has not been terminated voluntarily (excluding voluntary termination
for Good Reason) or for
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<PAGE>
Cause prior to the date of any such release and the Company has not exercised
its Repurchase Option pursuant to Section 1 hereunder. On the termination of the
employment of a Founder by HumanClick not for Cause or in case of termination
due to death or disability or by the Founder for Good Reason, all Unreleased
Founders' Stock held by such Founder shall be immediately released from the
Company's Repurchase Option and shall be delivered to such Founder.
(b) Any of the shares of Founders' Stock which have not yet been
released from the Company's Repurchase Option are referred to herein as
"Unreleased Founders' Stock." Unreleased Founders' Stock shall be deemed to
exclude any shares released to any Indemnified Party or subject to Claim Notices
on the Release Date under the Escrow Agreement; provided that if any shares
subject to a Claim Notice on the Release Date are to be subsequently released to
the Founders (or a trustee) pursuant to the Escrow Agreement, such released
shares shall then be deemed to be Unreleased Founders' Stock until released from
the Company's Repurchase Option pursuant to the terms of this Agreement and with
joint written direction provided to the Escrow Agent executed by both parties in
the form attached hereto as EXHIBIT A.
(c) The shares of Founders' Stock which have been released from the
Company's Repurchase Option shall be delivered to an Israeli trustee, the
identity of which shall be delivered to the Company and the Escrow Agent within
30 days of the date hereof (the "Israeli Trustee"), for the benefit of the
applicable Founder at such Founder's request.
(d) Employment with HumanClick constitutes at-will employment. This
Agreement shall not confer upon any Founder any right with respect to
continuation of employment by HumanClick, nor shall it interfere with or affect
in any manner the right or power of HumanClick, or a parent or subsidiary of
HumanClick, to terminate any Founder's employment at any time or for any reason,
with or without Cause. For purposes of this Agreement, "Cause" and "Good Reason"
shall have the meaning attributed to such term in such Founder's Employment
Agreement (as defined in the Purchase Agreement).
3. RESTRICTION ON TRANSFER. Except for the escrow described in Section
4 or transfer of the Unreleased Founders' Stock to the Company or its assignees
contemplated by this Agreement, none of the shares of Unreleased Founders' Stock
or any beneficial interest therein shall be transferred, encumbered or otherwise
disposed of in any way until the release of such Founders' Stock from the
Repurchase Option in accordance with the provisions of this Agreement.
4. ESCROW OF SHARES.
(a) The Founders' Stock subject to the Repurchase Option shall be
held by the Escrow Agent, along with stock assignments executed by each Founder
in blank, until the expiration of the Company's option to repurchase such
Founders' Stock as set forth above. The fees of the Escrow Agent shall be paid
by the Company.
(b) The Escrow Agent is hereby directed to permit transfer of the
Founders' Stock only in accordance with this Agreement or instructions signed by
both parties. In the event further instructions are desired by the Escrow Agent,
the Escrow Agent shall be entitled to rely upon directions executed by a
majority of the authorized number of the Company's Board of
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<PAGE>
Directors. The Escrow Agent shall have no liability for any act or omission
hereunder while acting in good faith in the exercise of the Escrow Agent's own
judgment. In the event the Escrow Agent is directed to transfer the Founders'
Stock to the Founders, the Escrow Agent shall transfer such shares to the
Israeli Trustee for the benefit of the applicable Founder with the joint written
direction executed by both parties in the form attached hereto as EXHIBIT A.
(c) If the Company or any assignee exercises its Repurchase Option
hereunder, the Escrow Agent, upon receipt of written notice of such option
exercise from the proposed transferee and a written evidence that the amounts
due for the shares have been paid to the Founder, shall take all steps necessary
to accomplish such transfer.
(d) When the Repurchase Option has been exercised or expires
unexercised or a portion of the Founders' Stock has been released from such
Repurchase Option, upon the applicable Founder's request the Escrow Agent shall
promptly cause a new certificate to be issued for such released Founders' Stock
and shall deliver such certificate to the Israeli Trustee for the benefit of the
applicable Founder with the joint written direction executed by both parties in
the form attached hereto as EXHIBIT A.
(e) Subject to the terms hereof, the applicable Founder shall have
all the rights of a shareholder with respect to such Founders' Stock subject to
the Repurchase Option while they are held in escrow, including without
limitation, the right to vote the shares of Founders' Stock subject to the
Repurchase Option and receive any cash dividends declared thereon. If, from time
to time during the term of the Company's Repurchase Option, there is (i) any
stock dividend, stock split or other change in the Founders' Stock subject to
the Repurchase Option, or (ii) any merger or sale of all or substantially all of
the assets of or other acquisition of the Company, any and all new, substituted
or additional securities to which each Founder is entitled by reason of the
Purchaser's ownership of the Shares shall be immediately subject to this escrow,
deposited with the Escrow Agent and included thereafter as "Founders' Stock
subject to the Repurchase Option" for purposes of this Agreement and the
Company's Repurchase Option.
5. GENERAL TERMS AND STANDARDS REGARDING THE ESCROW AGENT.
Notwithstanding any terms of this Agreement to the contrary, each term of this
Agreement, including without limitation each of the stated duties and
responsibilities of the Escrow Agent set forth herein, shall be subject to the
following terms and conditions:
(a) The duties, responsibilities and obligations of the Escrow Agent
shall be limited to those expressly set forth in this Agreement (and the duty to
exercise reasonable care in the physical safekeeping of any property held in
escrow hereunder), and no implied duties, responsibilities or obligations shall
be read into this Agreement against the Escrow Agent. Without limiting the
generality of the foregoing, the Escrow Agent shall have no duty to take action
to preserve or exercise rights in any property held by it hereunder (including,
without limitation, against prior parties or otherwise).
(b) The Escrow Agent shall not be subject to, bound by, charged with
notice of or be required to comply with or interpret any agreement or document
(including without limitation the Purchase Agreement) between or among the
interested parties (whether or not reference to any such other agreement or
documents is expressed herein) other than this Agreement.
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<PAGE>
(c) The Escrow Agent shall in no instance be under any duty to give
any property held by it hereunder any greater degree of care than it gives its
own similar property. The Escrow Agent shall not be required to invest any funds
held hereunder, and shall not be obligated to pay interest on uninvested funds.
All amounts received by the Escrow Agent (and any credits to the Escrow Account)
shall be conditional upon collection (and actual receipt by the Escrow Agent of
final payment). In no event shall the Escrow Agent have any obligation to
advance funds.
(d) The Escrow Agent may rely upon, and shall be protected in acting
or refraining from acting upon, any written notice, instruction, statement,
request, waiver, order, judgement, certification, consent, receipt or other
paper or document furnished to it (not only as to genuineness, but also as to
its due execution and validity, the genuineness of signatures appearing thereon
and as to the truth and accuracy of any information therein contained), which it
in good faith believes to be genuine and signed or presented by the proper
person.
(e) Neither the Escrow Agent nor any of its directors, officers or
employees shall be liable to anyone for any error of judgment, or for any act
done or step taken or omitted to be taken by it or any of its directors,
officers or employees, or for any mistake of fact or law, or for anything which
it, or any of its directors, officers or employees, may do or refrain from doing
in connection with or in the administration of this Agreement, unless and except
to the extent the same constitutes gross negligence, bad faith or willful
misconduct on the part of the Escrow Agent. In no event shall the Escrow Agent
be liable for any indirect, punitive, special or consequential damages, or any
amount in excess of the value of the Unreleased Founders' Stock (as of the date
of the action or omission giving rise to liability).
(f) The Escrow Agent shall not be deemed to have notice of any fact,
claim or demand with respect hereto unless actually known by an officer charged
with responsibility for administering this Agreement or unless in writing
received by the Escrow Agent and making specific reference to this Agreement.
(g) No provision of this Agreement shall require the Escrow Agent to
expend or risk its own funds, or to take any legal or other action hereunder
which might in its judgement involve it in, or require it to incur in connection
with the performance of its duties hereunder, any expense or any financial
liability unless it shall be furnished with indemnification acceptable to it.
(h) Any permissive right of the Escrow Agent to take any action
hereunder shall not be construed as duty.
(i) All indemnifications contained in this Agreement shall survive
the resignation or removal of the Escrow Agent, and shall survive the
termination of this Agreement.
(j) The Escrow Agent is not responsible for the recitals appearing
in this Agreement. The recitals shall be deemed to be statements of the
interested parties to this Agreement.
(k) The Escrow Agent has no responsibility for the sufficiency of
this Agreement for any purpose. Without limiting the foregoing, if any security
interest is referred to herein, the
5
<PAGE>
Escrow Agent shall have no responsibility for, and makes no representation or
warranty as to, the creation, attachment or perfection of any such security
interest or the sufficiency of this Agreement therefor.
(l) Nothing in this Agreement shall obligate the Escrow Agent to
qualify to do business or act in any jurisdiction in which it is not presently
qualified to do business, or be deemed to impose upon the Escrow Agent the
duties of a trustee. The duties of the Escrow Agent under this Agreement are
strictly ministerial in nature.
(m) In no event shall the Escrow Agent have any liability for any
failure or inability of any of the interested parties to perform or observe his
or its duties under the Agreement, or by reason of a breach of this Agreement by
either of the interested parties. In no event shall the Escrow Agent be
obligated to take any action against any of the interested parties to compel
performance hereunder.
(n) The Escrow Agent shall in no instance be obligated to commence,
prosecute or defend any legal proceedings in connection herewith. The Escrow
Agent shall be authorized and entitled, however, in any instance to commence,
prosecute or defend any legal proceedings in connection herewith, including
without limitation any proceeding it may deem necessary to resolve any matter or
dispute, to obtain a necessary declaration of rights, or to appoint a successor
upon resignation (and after failure by the interested parties to appoint a
successor, as provided in Section 10).
(o) Whenever the terms hereof call for any notice, payment or other
action on a day which is not a business day, such payment or action may be
taken, or such notice given, as the case may be, on the next succeeding business
day. As used herein, "business day" shall mean any day other than a Saturday or
Sunday, or any other day on which the Escrow Agent is closed for business.
(p) In the event of any ambiguity or uncertainty under this
Agreement, or in any notice, instruction, or other communication received by the
Escrow Agent hereunder, the Escrow Agent may, in its reasonable discretion,
refrain from taking action, and may retain the Unreleased Founders' Stock, until
and unless it receives written instruction signed by all interested parties, or
a decision by a court of competent jurisdiction which eliminates such
uncertainty or ambiguity.
(q) If at any time Escrow Agent is served with any judicial or
administrative order, judgement, decree, writ or other form of judicial
administrative process which in any way relates to or affects the Unreleased
Founders' Stock (including but not limited to orders of attachment or
garnishment or other forms of levies or injunctions or stays relating to the
Unreleased Founders' Stock), Escrow Agent is authorized to comply therewith in
any manner as it or its legal counsel reasonably deems appropriate; and if the
Escrow Agent complies with any such judicial or administrative order, judgement,
decree, writ or other form of judicial or administrative process, Escrow Agent
shall not be liable to any of the Parties hereto or to any other person or
entity notwithstanding that though such order, judgement, decree, writ or
process may be subsequently modified, annulled, set aside, vacated, found to
have been without proper jurisdiction, or otherwise determined to have been
without legal force or effect.
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(r) The Escrow Agent shall have no liability for the actions or
omissions of any transfer agent, book-entry depository, nominee, correspondent,
subagent or subcustodian, except to the extent that such action or omission of
any transfer agent, book-entry depository, nominee, correspondent, subagent or
subcustodian was caused by the Escrow Agent's own gross negligence, bad faith or
willful misconduct.
(s) The parties understand that the Unreleased Founders' Stock is
not subject to an effective registration statement at the time of this
Agreement, and that the Escrow Agent shall not be responsible for fluctuations
in the market in connection with any transfer of the shares.
6. INDEMNIFICATION.
(a) GENERAL. Each of the Founders (jointly and severally as a group)
and the Company, jointly and severally, hereby covenant and agree to indemnify
the Escrow Agent for, and to defend and hold harmless the Escrow Agent from and
against, any and every loss, liability, damage, claim, cost and expense of any
nature incurred or suffered by the Escrow Agent and arising out of or in
connection with this Agreement or the administration of this Agreement or the
performance or observance by the Escrow Agent of its responsibilities or
services under this Agreement (including but not limited to reasonable attorneys
fees and other costs and expenses of defending or preparing to defend against
any claim or liability), unless and except to the extent such loss, liability,
damage, cost or expense shall be caused by the Escrow Agent's own willful
misconduct, bad faith or gross negligence..
(b) TAX-RELATED MATTERS. Each of the Founders (jointly and severally
as a group) and the Company, jointly and severally, agree to assume any and all
obligations imposed now or hereafter by any applicable tax law with respect to
this Agreement, and, without limiting the generality of Section 6(a) above,
hereby agree to indemnify and hold the Escrow Agent harmless from and against
any taxes, additions for late payment, interest, penalties and other expenses,
that may be assessed against the Escrow Agent on any payment or other activities
under this Agreement. The Company and each of the Founders undertake to instruct
the Escrow Agent in writing with respect to the Escrow Agent's responsibility
for withholding and other taxes, assessments or other governmental charges,
certifications and governmental reporting in connection with its acting as
Escrow Agent under this Agreement. Each of the Founders (severally as a group)
and the Company, jointly and severally, agree to indemnify and hold the Escrow
Agent harmless from any liability on account of taxes, assessments or other
governmental charges, including without limitation the withholding or deduction
of or the failure to withhold or deduct same, and any liability for failure to
obtain proper certifications or to properly report to governmental authorities,
to which the Escrow Agent may be or become subject in connection with or which
arises out of this Agreement, including costs and expenses (including reasonable
legal fees), interest and penalties. The interested parties shall each promptly
provide Escrow Agent with appropriate IRS Forms W-9 for taxpayer identification
number certifications, or Forms W-8 for nonresident alien certifications in
connection with any payments to be made to them.
7. LEGENDS. The share certificate(s) evidencing the Founders' Stock
issued hereunder shall be endorsed with the following legends:
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(a) Any legend required to be placed thereon pursuant to the
Purchase Agreement.
(b) THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED
ONLY IN ACCORDANCE WITH THE TERMS OF A REPURCHASE AGREEMENT
BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF THE COMPANY.
(c) Any legend required to be placed thereon by applicable state
securities laws.
8. ADJUSTMENT FOR STOCK SPLIT. All references to the number of shares
of Founders' Stock and the purchase price of the shares of Founders' Stock in
this Agreement shall be appropriately adjusted to reflect any stock split, stock
dividend or other change in the Founders' Stock that may be made by the Company
after the date of this Agreement.
9. NOTICES. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given, on the first business day following the date of transmittal of
services via telecopy to the party to whom notice is to be given, or on the
fifth day after mailing if mailed to the party to whom notice is to be given, by
first class mail, registered or certified, postage prepaid, or by an
internationally recognized courier service, and properly addressed as follows
(or at such other address for a party as shall be specified by like notice):
To the Company at: LivePerson, Inc.
462 Seventh Avenue
New York, New York 10018
Attention: Timothy E. Bixby
With a copy to: Brobeck, Phleger & Harrison LLP
1633 Broadway, 47th Floor
New York, NY 10019
Attention: Brian Margolis, Esq.
Telecopy No.: (212) 586-7878
To the Founders: Eitan Ron
c/o HumanClick Ltd.
P.O. Box 193
Bnei Zion, Israel 60910
Telecopier: (972) 9-741-2311
With a copy to: Zellermayer, Pelossof, Adv.
Europe House
37 Shaul Hamelech
Tel Aviv, Israel 64928
Attention: Guy Even Ezra, Esq.
Telecopier: (972) 3-695-2884
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To Escrow Agent at: First Union National Bank
One World Trade Center, 47th Floor
New York, NY 10048
Attention: Corporate Trust Group
Notwithstanding anything herein to the contrary, any party may give any
notice, request, demand, claim or other communication hereunder by personal
delivery or telecopy, but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Any party may change
the address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other parties notice in the manner
herein set forth. Copies of any notice, request, demand, claim or other
communication hereunder by personal delivery or telecopy given to the Escrow
Agent by either party, shall be delivered to the other party as soon thereafter
as practicable.
10. SUCCESSOR ESCROW AGENT. In the event the Escrow Agent becomes
unavailable or unwilling to continue in its capacity herewith, the Escrow Agent
may resign and be discharged from its duties or obligations hereunder by
delivering a resignation to the parties, not less than 60 days prior to the date
when such resignation shall take effect. The Company may appoint a successor
Escrow Agent with the consent of the Founders, which shall not be unreasonably
withheld. If, within such notice period, the Company provides to the Escrow
Agent written instructions with respect to the appointment of a successor Escrow
Agent and directions for the transfer of any Unreleased Founders' Stock then
held by the Escrow Agent to such successor, the Escrow Agent shall act in
accordance with such instructions and promptly transfer such Unreleased
Founders' Stock to such designated successor. If no successor is so appointed,
the Escrow Agent may apply to a court of competent jurisdiction for such
appointment.
11. GENERAL PROVISIONS.
(a) This Agreement shall be governed by the internal laws of the
State of New York without reference to such State's principles of conflicts of
law. This Agreement and the Purchase Agreement (including all exhibits and
schedules thereto) represent the entire agreement between the parties with
respect to the issuance and sale of the Purchaser Shares (as defined in the
Purchase Agreement) to the Shareholders, and may only be modified or amended in
writing signed by all parties.
(b) The rights and benefits of the Company under this Agreement
shall be transferable to the Company's successor and assigns upon a
Change-in-Control Event, or to any one or more persons or entities with the
prior written consent of the Founders, and all covenants and agreements
hereunder shall inure to the benefit of, and be enforceable by, the Company's
successors and assigns. The rights and obligations of the Founders under this
Agreement may only be assigned with the prior written consent of the Company.
(c) Either party's failure to enforce any provision or provisions of
this Agreement shall not in any way be construed as a waiver of any such
provision or provisions, nor prevent that party thereafter from enforcing each
and every other provision of this Agreement. The rights granted both parties
herein are cumulative and shall not constitute a
9
<PAGE>
waiver of either party's right to assert all other legal remedies available to
it under the circumstances.
(d) The Founders agree upon request to execute any further documents
or instruments necessary or desirable to carry out the purposes or intent of
this Agreement.
(e) The Founders understand that each of the Founders (and not the
Company) shall be responsible for each Founder's own federal, state, local or
foreign tax liability and any of the Founder's other tax consequences that may
arise as a result of the transactions contemplated by this Agreement. The
Founders shall rely solely on the determinations of the Founders' tax advisors
or their own determinations, and not on any statements or representations by the
Company or any of its agents, with regard to all such tax matters.
(f) The Company undertakes to execute the joint written direction in
the form attached hereto as EXHIBIT A whenever required pursuant to the terms of
this Agreement.
10
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first set forth above.
COMPANY FOUNDERS
LivePerson, Inc. Eitan Ron
a Delaware corporation
By: __________________________________ _______________________________________
(Signature) (Signature)
______________________________________ _______________________________________
(Print Name) (Print Name)
______________________________________
(Print Title if signing on behalf of
an entity)
ESCROW AGENT Tal Goldberg
First Union National Bank
_______________________________________
(Signature)
By: ________________________________
(Signature) _______________________________________
(Print Name)
_____________________________________
(Print Name)
_____________________________________
(Print Title if signing on behalf of
an entity)
11
<PAGE>
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, ___________, hereby sell, assign and transfer unto
____________________, ________________ (_________) shares of the Common Stock of
LivePerson, Inc. standing in my name of the books of said corporation
represented by Certificate No. __________ herewith and do hereby irrevocably
constitute and appoint __________________________ attorney to transfer the said
stock on the books of the within named corporation with full power of
substitution in the premises.
Dated:______________________________ Signature:____________________________
INSTRUCTION: Please do not fill in any blanks other than the signature line. The
purpose of this assignment is to enable the Company to exercise its "Repurchase
Option" set forth in the Agreement without requiring additional signatures on
the part of the Purchaser.
<PAGE>
EXHIBIT A
[Date]
First Union National Bank
One World Trade Center, 47th Floor
New York, NY 10048
RE: First Union National Bank as Escrow Agent for LivePerson, Inc. (the
"Company") and Eitan Ron and Tal Goldberg (each, a "Founder")
Repurchase Option Agreement dated October 12, 2000 (the "Agreement")
First Union National Bank, as Escrow Agent, is hereby authorized to release to
[Israeli Trustee], [Number of Shares], pursuant to Section _____ of the
Agreement. The Company and the Founder signing below agree to said release.
Shares should be delivered to the [Israeli Trustee] in accordance with Section
___ of the Agreement.
By: LivePerson, Inc. By: [Founder]
__________________________________ ______________________________
[Name] [Name]
Authorized Representative Authorized Representative
__________________________________ ______________________________
Title Title
<PAGE>
EXHIBIT G
[Brobeck, Phleger & Harrison LLP letterhead]
October 12, 2000
HumanClick Ltd.
33 Bnei Zion
Israel 60910
Ladies and Gentlemen:
We have acted as counsel for LivePerson, Inc., a Delaware
corporation (the "Buyer"), in connection with its purchase of all of the
outstanding capital stock of HumanClick Ltd., a private company organized under
the laws of the State of Israel (the "Seller"), pursuant to the Stock Purchase
Agreement dated as of October 12, 2000 between the Buyer, the Seller and the
shareholders of the Seller named in SCHEDULE I thereto (the "Shareholders")
(such agreement, the "Purchase Agreement"). This opinion is being rendered to
you pursuant to Section 7.03(c) of the Purchase Agreement. Capitalized terms
used herein and not otherwise defined shall have the same meaning given to such
terms in the Purchase Agreement.
In connection with the opinions expressed herein, we reviewed the
following:
(i) the Purchase Agreement;
(ii) the Escrow Agreement dated as of October 12, 2000
between the Buyer, the Seller, First Union National Bank
(as Escrow Agent) and Eitan Ron (as Shareholders'
Agent);
(iii) the Repurchase Option Agreement dated as of October 12,
2000 between the Buyer, Eitan Ron and Tal Goldberg;
(iv) The Certificate of Good Standing of the Company
certified by the Secretary of State of the State of
Delaware on October 11, 2000 (the "Delaware
Certificate");
(v) The Certificates of Good Standing of the Company
certified by the Secretary of State of the States of
California and New York on October 11, 2000 (the
"Out-of-State Certificates"); and
(vi) originals or copies of such corporate documents or
records of the Buyer and such other documents as we have
deemed necessary or appropriate as a basis for the
opinions hereinafter expressed.
<PAGE>
The documents listed as items (i) though (iii) above are referred to herein as
the "Transaction Documents").
In connection with the opinions expressed herein we have made such
examination of matters of law and of fact as we considered appropriate or
advisable for purposes hereof. As to matters of fact material to the opinions
expressed herein, we have relied upon the representations and warranties as to
factual matters contained in and made by the Buyer pursuant to the Purchase
Agreement and upon certificates and statements of government officials and of
officers of the Buyer. We have assumed for the purposes of this opinion letter
the genuineness of all signatures, the legal capacity of natural persons, the
authenticity of the documents submitted to us as originals, the conformity to
the original documents of all documents submitted to us as certified, facsimile
or photostatic copies, and the authenticity of the originals of such copies.
In rendering this opinion letter we have also assumed: (A) that the
Transaction Documents have been duly and validly executed and delivered by or on
behalf of each party thereto other than the Buyer, that each party to the
Transaction Documents other than the Buyer has the power to enter into and
perform its obligations thereunder and that the Transaction Documents constitute
legal, valid, binding and enforceable obligations of each such party; (B) that
the representations and warranties made in the Transaction Documents by the
parties thereto other than the Buyer are true and correct; and (C) that each
party to the Transaction Documents other than the Buyer has filed any required
state franchise, income or similar tax returns and has paid any required state
franchise, income or similar taxes.
Whenever a statement herein is qualified by the expressions "known
to us," "to our knowledge," "we are not aware" or a similar phrase or expression
with respect to our knowledge of matters of fact, it is intended to mean that
our knowledge is based upon the records, documents, instruments and certificates
described above and the current actual knowledge of the attorneys in this Firm
who have devoted substantive attention to the transactions contemplated by the
Transaction Documents or who are presently involved in substantive legal
representation of the Buyer (but not including any constructive or imputed
notice of any information) and that we have not otherwise undertaken any
independent investigations for the purpose of rendering this opinion.
Specifically, but without limitation, we have not searched the dockets of any
courts and we have made no inquiries of securities holders or employees of the
Company, other than such officers.
This opinion letter relates solely to the laws of the State of New
York, the General Corporation Law of the State of Delaware, and applicable
federal laws of the United States, and we express no opinion with respect to the
effect or applicability of the laws of other jurisdictions.
For purposes of the matters addressed in paragraph (1) below
relating to the valid existence and good standing of the Company under the laws
of Delaware, we have relied solely upon the Delaware Certificate. For purposes
of the matters addressed in paragraph (1) below relating to the good standing,
due qualification or similar status of the Company in California and New York,
we have relied solely upon our review of the Out-of-State Certificates.
14
<PAGE>
Based upon and subject to the foregoing, and subject to the further
assumptions, limitations, qualifications and exceptions set forth herein, we are
of the opinion that:
1. The Buyer is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, and the Buyer has
the requisite corporate power and authority to own its properties and to conduct
its business as, to our knowledge, it is presently conducted. The Buyer is
qualified to do business as a foreign corporation in the States of California
and New York.
2. The Buyer has the requisite corporate power and authority to
execute, deliver and perform the Purchase Agreement and the other Transaction
Documents. Each of the Purchase Agreement and the other Transaction Documents
has been duly and validly authorized by the Buyer, has been duly executed and
delivered by an authorized officer of the Buyer and constitutes a legal, valid
and binding obligation of the Buyer, enforceable by the Seller against the Buyer
in accordance with its terms.
3. Neither the execution or delivery by the Buyer of the Transaction
Documents nor the consummation by the Buyer at the Closing of the transactions
contemplated thereby will (i) violate any provision of the Certificate of
Incorporation or Bylaws of the Buyer, (ii) violate or be in conflict with any
federal, Delaware General Corporation Law or New York State law which to our
knowledge is applicable to the Buyer, (iii) to our knowledge, violate or
contravene any judgment, decree, injunction or order of any federal, Delaware
corporate or New York State court, or any arbitrator or governmental agency or
authority, having jurisdiction over the Buyer or its properties or by which the
Buyer may be bound, or (iv) constitute a material breach of, or result in a
material default under, any term or provision of any indenture, agreement or
other instrument to which Buyer is a party or by which Buyer or any of its
properties are bound and which has been filed by Buyer with the United States
Securities and Exchange Commission.
4. No consents, approvals or authorizations of or filings with any
governmental authority operating under the laws of the United States, the
Delaware General Corporation Law or New York State are required or necessary on
the part of the Buyer in connection with the execution, delivery and performance
at the Closing by the Buyer of the Transaction Documents, except for such
consents, approvals, authorizations or filings which have been obtained, waived
or made prior to the date hereof, and we are not aware of any proceedings, or
any threat of any proceedings, that question the validity of the Transaction
Documents.
5. The shares of Purchaser Common Stock to be delivered in exchange
for shares of Company Shares, when issued as contemplated by the Stock Purchase
Agreement, (i) will be validly issued, fully paid and non-assessable, and (ii)
will not be issued in violation of any statutory preemptive rights or, to our
knowledge, similar contractual rights granted by Buyer.
The foregoing opinions are subject to the following additional
limitations, qualifications, assumptions and exceptions:
A. The enforceability of the Buyer's obligations under the
Transaction Documents may be subject to or limited by (i) bankruptcy,
insolvency, reorganization, arrangement, moratorium, fraudulent transfer and
other similar laws affecting the rights of
<PAGE>
creditors generally; and (ii) general equitable principles (whether relief is
sought in a proceeding at law or in equity), including, without limitation,
concepts of materiality, reasonableness, good faith, and fair dealing.
B. We express no opinion as to provisions of the Transaction
Documents purporting to establish an evidentiary standard or to authorize
conclusive determinations by the Seller or any other person or allowing the
Seller or any other person to make determinations in its sole discretion.
C. We also express no opinion as to:
(i) provisions of the Transaction Documents pursuant to which
the Buyer agrees to make payments without set-off, defense or counterclaim;
(ii) provisions relating to indemnification, contribution or
exculpation, to the extent any such provision is contrary to public policy or
prohibited by law (including, without limitation, federal and state securities
laws);
(iii) any provision providing for the exclusive jurisdiction
of a particular court or purporting to waive rights to trial by jury, service of
process or objections to the laying of venue or to forum on the basis of forum
NON CONVENIENS, in connection with any litigation arising out of or pertaining
to the Transaction Documents;
(iv) provisions purporting to waive either illegality as a
defense to the performance of contract obligations or any other defense to such
performance which cannot, as a matter of law, be effectively waived; (v) any
provision permitting modification of the Transaction Documents only by means of
an agreement in writing signed by the parties thereto; and
(vi) any provision requiring payment of attorneys' fees,
except to the extent a court determines such fees to be reasonable.
D. Our opinions in clause (ii) of paragraph 3 above and in
paragraph 4 above are limited to laws and regulations normally applicable to
transactions of the type contemplated in the Transaction Documents and do not
extend to licenses, permits and approvals necessary for the conduct of the
Buyer's business. In addition and without limiting the previous sentence, we
express no opinion herein with respect to the effect of any land use,
environmental or similar law, any state or federal antitrust law, any state or
federal securities law or any local law. Further, we express no opinion as to
the effect of or compliance with any state or federal laws or regulations
applicable to the transactions contemplated by the Transaction Documents because
of the nature of the business of any party thereto other than the Buyer.
E. We also express no opinion as to Section 10.06 of the Purchase
Agreement and similar provisions of the other Transaction Documents to the
extent that they purport to exclude conflict of law principles under New York
law.
<PAGE>
This opinion is rendered as of the date first written above solely
for your benefit in connection with the Purchase Agreement and may not be
delivered to, quoted or relied upon by any person other than you, or for any
other purpose, without our prior written consent. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Buyer. We
assume no obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinions expressed herein.
Very truly yours,
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT H
HUMANCLICK LTD.
ESOP
Options Granted:
EMPLOYEE POSITION NUMBER OF OPTIONS GRANTED EXCERSISE PRICE
Shalom Waiss Consultant 1,300 $0.00
Zvi Rosenman Senior Developer/Consultant 7,800 $0.00
Audrey WebMarketing 5,300 $0.77
Eyal Halahmi VP R&D 26,700 $0.77
Chaim Salomon Customer support 3,124 $2.24
Zev Rubenstein VP Business Dev. 15,600 $2.24
Ben Brenner Developer 3,512 $0.77
Philippe Lang WebMaster, WebMarketing 20,092 $2.24
Trevor Weick IS /QA 1,756 $2.24
Yael Kopelman Office Administrator 1,756 $2.24
Michal Zuchman Developer / QA 3,512 $2.24
Amir Zucker Developer 3,512 $3.12
Uriah Av-Ron Marketing Communications 5,268 $3.12
Joseph Mermelstein Senior developer 8,780 $3.12
Hamutal Fridman Developer 4,390 $3.12
Amir Kalishov DBA 5,268 $3.12
-----------------------------------------------------------------------------------------------------------------------------
TOTAL 117,670
-----------------------------------------------------------------------------------------------------------------------------
EMPLOYEE DATE OF GRANT VESTING
Shalom Waiss 1-Aug-99 1/6 Every month since grant date
Zvi Rosenman 1-Aug-99 1/6 Every month since grant date
Audrey 1-Sep-99 Std.
Eyal Halahmi 1-Nov-99 Std.
Chaim Salomon 1-Dec-99 Std.
Zev Rubenstein 1-Dec-99 1/8 Every Quarter since grant date
Ben Brenner 1-Jan-00 Std.
Philippe Lang 1-Feb-00 Std. (3 year)
Trevor Weick 1-Mar-00 Std.
Yael Kopelman 1-Mar-00 Std.
Michal Zuchman 1-Mar-00 Std.
Amir Zucker 1-Jul-00 Std.
Uriah Av-Ron 1-Jul-00 Std.
Joseph Mermelstein 1-Aug-00 1/4 Every 6 month since grant date
Hamutal Fridman 1-Sep-00 Std.
Amir Kalishov 1-Oct-00 Std.
---------------------------------------------------------------------------------------------------
TOTAL
---------------------------------------------------------------------------------------------------
<PAGE>
EXHIBIT I
EMPLOYEE
PROPRIETARY INFORMATION
AND INTELLECTUAL PROPERTY AGREEMENT
--------------------------------------------------
(name of employee)
--------------------------------------------------
(address)
--------------------------------------------------
The following confirms an agreement between me and HumanClick LTD.
(the "Company"), which is a material part of the consideration for my employment
by the Company:
1. I understand that the Company possesses and will possess
Proprietary Information which is important to its or its clients' business. For
purposes of this Agreement, "Proprietary Information" is all information,
whether or not made verbally or in writing or other tangible form, that was or
will be developed, created, or discovered by or on behalf of the Company or its
clients, or which became or will become known by, or was or is conveyed to the
Company or its clients, which has commercial value in the Company's or its
clients' business. "Proprietary Information" includes, but is not limited to,
trade secrets, ideas, methodologies, skills, knowledge, computer programs,
computer codes, databases, database criteria, user profiles, algorithms,
modules, scripts, features and modes of operation, designs, technology, ideas,
know-how, processes, data, techniques, internal documentation, improvements,
inventions (whether patentable or not), works of authorship, technical,
business, financial, client, marketing, and product development plans,
forecasts, the salaries and terms of compensation of other employees, client and
supplier lists, contacts at or knowledge of clients or prospective clients of
the Company, and other information concerning the Company's or its clients'
actual or anticipated products or services, business, research or development,
or any information which is received in confidence by or for the Company from
any other person. I understand that my employment creates a relationship of
confidence and trust between me and the Company with respect to Proprietary
Information.
2. I understand that the Company possesses or will possess
"Company Materials" which are important to its or its clients' business. For
purposes of this Agreement, "Company Materials" are documents or other media or
tangible items that contain or embody Proprietary Information or any other
information concerning the business, operations or plans of the Company or its
clients, whether such documents have been prepared by me or by others. "Company
Materials" include, but are not limited to, computers, computer software,
computer disks, tapes, printouts, source, HTML and other code, flowcharts,
schematics, designs, graphics, drawings, photographs, charts, graphs, notebooks,
customer lists, sound recordings, other tangible or intangible manifestation of
content, and all other documents whether printed, typewritten, handwritten,
electronic, or stored on computer disks, tapes, hard drives, or any other
tangible medium, as well as samples, prototypes, models, products and the like.
3. In consideration of my employment by the Company and the
compensation received by me from the Company from time to time, I hereby agree
as follows:
<PAGE>
a. All Proprietary Information and all title, patents, patent
rights, copyrights, trade secret rights, and other intellectual property and
rights anywhere in the world (collectively "Rights") in connection therewith
shall be the sole property of the Company. I hereby assign to the Company any
Rights I may have or acquire in such Proprietary Information. At all times, both
during my employment by the Company and after its termination, I will keep in
confidence and trust and will not use or disclose any Proprietary Information or
anything relating to it without the prior written consent of an officer of the
Company. During the term of this Agreement and thereafter, I shall not disclose
to any third party the terms and conditions of my employment by the Company,
except to close family members, legal, tax, and accounting professionals who
require the information to provide services to me, or as required by law.
b. All Company Materials shall be the sole property of the
Company. I agree that during my employment by the Company, I will not deliver
any Company Materials to any person or entity outside the Company, except as I
am required to do in connection with performing the duties of my employment. I
further agree that, immediately upon the termination of my employment by me or
by the Company for any reason, or during my employment if so requested by the
Company, I will return all Company Materials, apparatus, equipment and any other
physical property of the Company, or any reproduction of such property,
excepting only (i) my personal copies of records relating to my compensation;
and (ii) my copy of this Agreement. I shall also provide any information, such
as passwords or codes, necessary to allow the Company to fully utilize its
property.
c. I will promptly disclose in writing to my immediate
supervisor, with a copy to the President or Chief Executive Officer of the
Company, or to any persons designated by the Company, all "Developments" (which
term includes, without limitation, any work of authorship, discovery,
improvement, invention, design, graphic, source, HTML and other code, trade
secret, technology, algorithms, computer program, audio, video or other files or
content, idea, design, process, technique, know-how and data, whether or not
patentable or copyrightable), made, conceived, reduced to practice, developed or
discovered by me, either alone or jointly with others, during the term of my
employment and occurring in the course of or arising from the performance of my
work under this Agreement. I will also disclose to the President or the Chief
Executive Officer of the Company Developments conceived, reduced to practice, or
developed by me within six (6) months after the termination of my employment
with the Company; such disclosures shall be received by the Company in
confidence (to the extent they are not assigned in Section 3(d) below) and do
not extend the assignment made in Section 3(d) below. I will not disclose
Developments covered by Section 3.d. to any person outside the Company unless I
am requested to do so by management personnel of the Company.
d. I agree that all Developments which I make, conceive,
reduce to practice discover or develop (in whole or in part, either alone or
jointly with others) during my employment and occurring in the course of or
arising from the performance of my work under this Agreement shall be the sole
property of the Company. Unless the Company decides otherwise, the Company shall
be the sole owner of all Rights in connection therewith. All copyright-protected
Developments are and at all times shall remain "work made for hire". I hereby
assign to the Company any and all of my Rights to any Developments, absolutely
and forever, throughout the world and for the full term of each and every such
Right, including renewal or extension of any such term.
e. I agree to perform, during and after my employment, all
acts deemed necessary or desirable by the Company to permit and assist it, at
the Company's expense, in evidencing, perfecting, obtaining, maintaining,
defending and enforcing Rights and/or my assignment with respect to such
Developments in any and all countries. Such acts may include, but are not
limited to, execution of documents and assistance or cooperation in legal
proceedings. I hereby irrevocably designate and appoint the Company and its duly
authorized officers and agents, as my agents and attorneys-in-fact to act for
and
2
<PAGE>
in my behalf and instead of me, to execute and file any documents and to do all
other lawfully permitted acts to further the above purposes with the same legal
force and effect as if executed by me.
f. Any assignment of copyright hereunder includes all rights
of paternity, integrity, disclosure and withdrawal and any other rights that may
be known as or referred to as "moral rights" (collectively "Moral Rights"). To
the extent such Moral Rights cannot be assigned under applicable law and to the
extent the following is allowed by the laws in the various countries where Moral
Rights exist, I hereby waive such Moral Rights and consent to any action of the
Company that would violate such Moral Rights in the absence of such consent. I
will confirm any such waivers and consents from time to time as requested by the
Company.
g. I have attached hereto a complete list of all existing
Developments to which I claim ownership as of the date of this Agreement and
that I desire to specifically clarify are not subject to this Agreement, and I
acknowledge and agree that such list is complete. If no such list is attached to
this Agreement, I represent that I have no such Developments at the time of
signing this Agreement.
h. During the term of my employment and for one (1) year
thereafter, I will not encourage or solicit any employee or consultant of the
Company to leave the Company for any reason. However, this obligation shall not
affect any responsibility I may have as an employee of the Company with respect
to the bona fide hiring and firing of Company personnel.
i. I agree that during my employment with the Company and for
a period of one (1) year thereafter (the "Non-Competition Period"), I will not,
as an employee, officer, director, shareholder (other than an owner of 1% or
less of the outstanding shares of any publicly-traded company), consultant,
partner or in any other capacity, engage in any employment, business, or
activity that is in any way competitive with the Business of the Company, and I
will not assist any other person or organization in competing with the Company
or in preparing to engage in competition with the Business of the Company.
Similarly, during the Non-Competition Period, I will not solicit any clients of
the Company, on my own behalf or on behalf of any third party, in connection
with any goods or services that are competitive with the Business of the
Company. "Business of the Company" shall be defined to mean any goods or
services offered by the Company to clients, or planned by the Company to be
offered to clients. The provisions of this paragraph shall apply both during
normal working hours and at all other times including, but not limited to,
nights, weekends and vacation time, while I am employed by the Company, as well
as to the entire Non-Competition Period.
j. I represent that my performance of all the terms of this
Agreement will not breach any agreement to keep in confidence proprietary
information acquired by me in confidence or in trust prior to my employment by
the Company. I have not entered into, and I agree I will not enter into, any
agreement either written or oral in conflict herewith or in conflict with my
employment with the Company. I also understand that I am prohibited from using
or disclosing, in the course of my employment with the Company, any proprietary
information, trade secrets, or tangible property of any other person or company,
including prior employers, without the express authority to do so.
k. I represent that any and all Developments that I may
create under this Agreement will be original and shall not defame Company, its
other employees, officers, directors, consultants or agents or any third party
or constitute a violation of the rights of privacy of Company's other employees
or any third party.
4. I agree that this Agreement is not an employment contract and
that I have the right to resign and the Company has the right to terminate my
employment at any time, for any reason,
3
<PAGE>
with or without cause, subject to the provisions of any written employment
agreement between the Company and me.
5. I agree that this Agreement does not purport to set forth all
of the terms and conditions of my employment, and that as an employee of the
Company I have obligations to the Company which are not set forth in this
Agreement.
6. I agree that my obligations under paragraphs 3(a) through 3(f)
and paragraph 3(h) of this Agreement shall continue in effect after termination
of my employment, regardless of the reason or reasons for termination, and
whether such termination is voluntary or involuntary on my part, and that the
Company is entitled to communicate my obligations under this Agreement to any
future employer or potential employer of mine.
7. I agree that any dispute in the meaning, effect or validity of
this Agreement shall be resolved in accordance with the laws of the State of
Israel without regard to the conflict of laws provisions thereof. I further
agree that if one or more provisions of this Agreement are held to be illegal or
unenforceable under applicable Israeli law, such illegal or unenforceable
portion(s) shall be limited or excluded from this Agreement to the minimum
extent required so that this Agreement shall otherwise remain in full force and
effect and enforceable in accordance with its terms.
8. This Agreement shall be effective as of the date I execute
this Agreement and shall be binding upon me, my heirs, executors, assigns, and
administrators and shall inure to the benefit of the Company, its subsidiaries,
successors and assigns.
9. This Agreement can only be modified by a subsequent written
agreement executed by the President or Chief Executive Officer of the Company.
I HAVE READ THIS AGREEMENT CAREFULLY AND I UNDERSTAND AND
ACCEPT THE OBLIGATIONS WHICH IT IMPOSES UPON ME WITHOUT RESERVATION. NO
PROMISES OR REPRESENTATIONS HAVE BEEN MADE TO ME TO INDUCE ME TO SIGN THIS
AGREEMENT. I SIGN THIS AGREEMENT VOLUNTARILY AND FREELY, IN DUPLICATE,
WITH THE UNDERSTANDING THAT ONE COUNTERPART WILL BE RETAINED BY THE
COMPANY AND THE OTHER COUNTERPART WILL BE RETAINED BY ME.
Dated: ___________, 20__ ______________________________________
Signature
Name of
Employee:_____________________________
(please print name)
Accepted and Agreed to:
HUMANCLICK LTD.
4
<PAGE>
Signature:__________________________
Name:_______________________________
Title:______________________________
5
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ATTACHMENT A
HumanClick Ltd.
[address]
Ladies and Gentlemen:
1. The following is a complete list of Developments relevant to
the subject matter of my employment by HUMANCLICK LTD. (the "Company") that have
been made or conceived or first reduced to practice by me alone or jointly with
others prior to my employment by the Company that I desire to clarify are not
subject to the Company's Employee Proprietary Information and Intellectual
Property Agreement.
_____ No Developments
_____ See below:
_____ Additional sheets attached
2. I propose to bring to my employment the following materials
and documents of a former employer:
_____ No materials or documents
_____ See below:
Signature:__________________________________
Name of
Employee:___________________________________
(please print name)
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EXHIBIT J
SERVICES AGREEMENT
____________________________________________
(name of independent contractor)
____________________________________________
(address)
____________________________________________
The following confirms the agreement between (the "Contractor") and
HumanClick Ltd. (the "Company"), with respect to consulting services to the
Company:
1. Contractor understands that the Company possesses and will
possess Proprietary Information which is important to its business. For purposes
of this Agreement, "Proprietary Information" is all information, whether or not
made verbally or in writing or any other tangible form, that was or will be
developed, created, or discovered by or on behalf of the Company, or which
became or will become known by, or was or is conveyed to the Company (including,
without limitation, "Results" as defined below), which has commercial value in
the Company's or clients' business. "Proprietary Information" of Company or its
clients includes, but is not limited to, Company's software, data and solutions,
trade secrets, ideas, methodologies, skills, knowledge, computer programs,
computer codes, databases, algorithms, modules, scripts, features and modes of
operation, designs, technology, ideas, know-how, processes, data, techniques,
internal documentation, improvements, inventions (whether or not patentable),
works of authorship, technical, business, financial, customer, marketing, and
product development plans and forecasts, the salaries and terms of compensation
of other employees, client lists and contacts at or knowledge of clients or
prospective clients of the Company, existing or potential strategic
partnerships, and other information concerning the Company's actual or
anticipated technology, business, research or development, or any information
which is received in confidence by or for the Company from any other person.
Contractor understands that there will be a relationship of confidence between
Contractor and Company with respect to Proprietary Information.
2. Contractor understands that the Company possesses or will
possess "Company Materials" which are important to its business. For purposes of
this Agreement, "Company Materials" are documents or other media or tangible
items that contain or embody Proprietary Information or any other information
concerning the business, operations or plans of the Company or Clients, whether
such documents have been prepared by Contractor or by others. "Company
Materials" include, but are not limited to, computer software, source code, HTML
and other code, databases, flowcharts, schematics, designs, graphics, drawings,
banners, photographs, charts, graphs, notebooks, client lists, and all other
documents whether printed,
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typewritten, handwritten, electronic or stored on computer disks, tapes, hard
drives, or any other tangible medium, as well as prototypes, models, and the
like.
3. In consideration of the mutual covenants and agreements
hereafter set forth, the parties agree as follows:
a. The term of this Agreement shall commence on the date
hereof and shall continue for three (3) years thereafter, unless earlier
terminated pursuant to Section 4 of this Agreement.
b. Contractor agrees to render the requested services and
duties as the Company may from time to time prescribe (collectively "Services").
Contractor also agrees to submit to the Company, in written form or other
tangible form, any deliverables or results of Contractor's work under this
Agreement ("Results," including, without limitation, all Developments referred
to in paragraph 3.f. below) and all documentation of work performed under this
Agreement in a timely manner. Contractor shall report directly to the __________
of the Company and shall provide his/her services in accordance with the
instructions of the ____________, and with such reasonable instructions given to
him/her by any other officer of the Company.
c. In consideration for the Services, Contractor shall
receive ______________________.
d. All Proprietary Information and all title, patents,
patent rights, copyrights, trade secret rights, SUI GENENIS database rights and
other intellectual and industrial property rights of any sort anywhere in the
world (collectively "Rights") in connection therewith shall be the sole property
of the Company. Contractor hereby assigns to the Company any Rights Contractor
may have or acquire in such Proprietary Information. At all times, both during
the term of this Agreement and after its termination, Contractor will keep in
confidence and trust and will not use or disclose any Proprietary Information or
anything related to it without the prior written consent of an officer of the
Company. Contractor acknowledges that any disclosure or unauthorized use of
Proprietary Information will constitute a material breach of this Agreement and
cause substantial harm to the Company for which damages would not be a fully
adequate remedy and, therefore, in the event of any such breach, in addition to
other available remedies, the Company shall have the right to obtain injunctive
relief.
e. All Company Materials shall be the sole property of the
Company. Contractor agrees that during the term of this Agreement, Contractor
will not remove any Company Materials from the business premises of the Company
or deliver any Company Materials to any person or entity outside the Company,
except as required to do in connection with performance of the Services under
this Agreement. Contractor further agrees that, immediately upon the Company's
request and in any event upon completion of the Services, Contractor shall
deliver to the Company all Company Materials, any document or media which
contains Results, apparatus, equipment and other physical property or any
reproduction of such property, excepting only Contractor's copy of this
Agreement. At all times before or after completion of the Services, the Company
shall have the right to examine the Results and any
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<PAGE>
materials relating thereto to ensure Contractor's compliance with the provisions
of this Agreement.
f. Contractor will promptly disclose in writing to the
President of the Company, or to any persons designated by the Company, all
"Developments" (which term includes, without limitation, works of authorship,
discoveries, improvements, inventions, designs, graphics, source code, HTML and
other code, trade secrets, technology, algorithms, computer programs, ideas,
processes, techniques, know-how, methods of doing business and data, whether or
not patentable), made, conceived, reduced to practice, developed or discovered
by Contractor, either alone or jointly with others, during the term of this
Agreement and occurring in the course of or arising from the performance of the
work of Contractor under this Agreement. Contractor shall also disclose to the
Chief Executive Officer of the Company all Developments conceived, reduced to
practice or developed by Contractor within six (6) months of the termination of
this Agreement that relate to any Proprietary Information of Company. Such
disclosures shall be received by Company in confidence (to the extent that they
are not assigned in (g) below) and do not extend the assignment made in (g)
below.
g. Contractor agrees that all Developments which Contractor
makes, conceives, reduces to practice, develops or discovers (in whole or in
part, either alone or jointly with others) during the term of this Agreement and
occurring in the course of or arising from the performance of the work of
Contractor under this Agreement in connection with the Services or which relate
to any Proprietary Information shall be the sole property of the Company. All
Developments that are copyright works will be "works made for hire" to the
extent allowed by law, and to the extent that such copyright works cannot
qualify as "works made for hire" as a matter of law, such copyright works shall
be covered by the assignment in the next sentence. Contractor agrees to assign
and hereby assigns to the Company any and all Rights to all Developments and the
Company shall be the sole owner of all Rights in connection with all
Developments.
h. Contractor agrees to perform, during and after the term
of this Agreement, all acts deemed necessary or desirable by the Company to
permit and assist it in evidencing, perfecting, obtaining, maintaining,
defending and enforcing Rights and/or Contractor's assignment with respect to
such Developments in any and all countries. Such acts may include, but are not
limited to, execution of documents and assistance or cooperation in legal
proceedings. Contractor hereby irrevocably designates and appoints the Company
and its duly authorized officers and agents, as Contractor's agents and
attorneys-in-fact to act for and on behalf and instead of Contractor, to execute
and file any documents and to do all other lawfully permitted acts to further
the above purposes with the same legal force and effect as if executed by
Contractor.
i. Any assignment of copyright hereunder includes all rights
of paternity, integrity, disclosure and withdrawal and any other rights that may
be known as or referred to as "moral rights" (collectively "Moral Rights"). To
the extent such Moral Rights cannot be assigned under applicable law and to the
extent the following is allowed by the laws in the various countries where Moral
Rights exist, Contractor hereby waives such Moral Rights and consents to any
action of the Company that would violate such Moral Rights in the absence of
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<PAGE>
such consent. Contractor will confirm any such waivers and consents from time to
time as requested by the Company.
j. Consultant will not, during the term of this Agreement,
or for one (1) year thereafter, induce or attempt to induce any person who, at
the time of such inducement, is or was, during the prior six (6) month period,
an employee of the Company or the Company's subsidiaries, to perform work or
services for any other person or entity other than the Company or its
subsidiaries.
k. Consultant will not, during the term of this Agreement
and for a period of one (1) year thereafter, induce or attempt to induce any
client of the Company to cease doing business with the Company, or solicit any
such client of the Company on behalf of any individual or entity other than the
Company for services of the same or similar type as those provided by the
Company to the client. "Client" shall be defined as any individual or entity for
whom the Company has performed services during the six (6) month period prior to
the termination of this Agreement.
l. Contractor agrees that during the term of this
Agreement, Contractor will not engage in any employment, business, or activity
that is in any way competitive with the business or proposed business of the
Company, and Contractor will not assist any other person or organization in
competing with the Company or in preparing to engage in competition with the
business or proposed business of the Company.
m. Contractor represents that performance of all the
terms of this Agreement will not breach any agreement to keep in confidence
proprietary information acquired by Contractor in confidence or in trust prior
to the execution of this Agreement. Contractor has not entered into, and
Contractor agrees not to enter into, any agreement either written or oral that
conflicts or might conflict with Contractor's performance of the Services under
this Agreement.
n. Contractor represents that any and all Developments
that it will create under this Agreement will be original and shall not defame
Company, its employees, officers, directors, Contractors or agents or any third
party or constitute a violation of the rights of privacy of Company's employees
or any third party.
o. If any Rights or Developments assigned hereunder or
any Results are based on, or incorporate, or are improvements or derivatives of,
or cannot be reasonably made, used, reproduced and distributed without using or
violating technology or Rights owned or licensed by Contractor and not assigned
hereunder, Contractor hereby grants the Company a perpetual, worldwide
royalty-free, non-exclusive sublicensable right and license to exploit and
exercise all such technology and Rights in support of the Company's exercise or
exploitation of any Results or assigned Rights or Developments (including any
modifications, improvements and derivatives thereof).
p. Contractor represents that, other than the Developments,
if any, disclosed to the Company in writing that Contractor claims to have
developed independent of this Agreement, Contractor does not own any
Developments that relate in any way to the Services.
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4. Contractor agrees that this Agreement may be terminated by
either the Company or the Contractor at any time, for any reason, with or
without cause, by giving written notice to the other party; termination to be
effective upon the other party's receipt of notice.
5. Nothing herein contained shall be deemed to create an agency,
joint venture, partnership or franchise relationship between parties hereto.
Consultant acknowledges that he/she is an independent contractor, is not an
agent or employee of the Company, is not entitled to any Company employment
rights or benefits and is not authorized to act on behalf of the Company.
Consultant shall be solely responsible for any and all tax obligations of
Consultant, including but not limited to, all city, state and federal income
taxes, social security withholding tax and other self employment tax incurred by
Consultant. The Company shall not dictate the work hours of Consultant during
the term of this Agreement. Subject to paragraph 3(l) of this Agreement,
Consultant shall perform the Services on a non-exclusive basis and shall be free
to accept other engagements during the term of this Agreement. The parties
hereby acknowledge and agree that the Company shall have no right to control the
manner, means, or method by which Consultant performs the Services. Rather, the
Company shall be entitled only to direct Consultant with respect to the elements
of the Services and the results to be derived by the Company, to inform
Consultant as to where and by when the Services shall be performed, and to
review and assess the performance of the Services by Consultant for the limited
purposes of assuring that the Services have been performed and confirming that
such results were satisfactory. The Company shall be entitled to exercise broad
general power of supervision and control over the results of work performed by
Consultant's personnel to ensure satisfactory performance, including the right
to inspect, the right to stop work, the right to make suggestions or
recommendations as to the details of the work, and the right to propose
modifications to the work.
6. Contractor has no authority to act on behalf of or to enter
into any contract, incur any liability or make any representation on behalf of
the Company.
7. Contractor's performance under this Agreement shall be
conducted with due diligence and in full compliance with the highest
professional standards of practice in the industry. Contractor shall comply with
all applicable laws and Company safety rules in the course of performing the
Services. If Contractor's work requires a license, Contractor has obtained that
license and the license is in full force and effect.
8. Contractor will indemnify and hold Company harmless, and will
defend Company against any and all loss, liability, damage, claims, demands or
suits and related costs and expenses to persons or property that arise, directly
or indirectly, from (i) infringement of any patents, copyrights or other Rights
of third parties by any of the Results of Contractor, (ii) acts or omissions of
Contractor, (iii) an alleged failure by Contractor to satisfy its tax or
withholding obligations, or (iv) breach of any term or condition of this
Agreement by Contractor.
9. Contractor agrees that all obligations under paragraphs 3.d.
through 3.k., paragraph 3.o., and Sections 5 and 8 of this Agreement shall
continue in effect after termination of this Agreement, and that the Company is
entitled to communicate Contractor's obligations under this Agreement to any
future client or potential client of Contractor.
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10. Contractor agrees that any dispute in the meaning, effect or
validity of this Agreement shall be resolved in accordance with the laws of the
State of Israel without regard to the conflict of laws provisions thereof.
Contractor further agrees that if one or more provisions of this Agreement are
held to be illegal or unenforceable under applicable Israel law, such illegal or
unenforceable portion(s) shall be limited or excluded from this Agreement to the
minimum extent required and the balance of the Agreement shall be interpreted as
if such portion(s) were so limited or excluded and shall be enforceable in
accordance with its terms.
11. This Agreement shall be binding upon Contractor, and inure to
the benefit of the parties hereto and their respective heirs, successors,
assigns, and personal representatives; PROVIDED, HOWEVER, that it shall not be
assignable by Contractor.
12. This Agreement contains the entire understanding of the
parties regarding its subject matter and can only be modified by a subsequent
written agreement executed by the President of the Company.
13. All notices required or given herewith shall be addressed to
the Company or Contractor at the designated addresses shown below by registered
mail, special delivery, or by certified courier service:
a. To Company:
HumanClick Ltd.
33 Bnei Zion
Israel 60910
Attention: Chief Executive Officer
b. To Contractor:
The address first appearing above.
14. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements, in addition to
any other relief to which the party may be entitled.
<PAGE>
CONTRACTOR HAS READ THIS AGREEMENT CAREFULLY AND UNDERSTANDS AND
ACCEPTS THE OBLIGATIONS WHICH IT IMPOSES UPON CONTRACTOR WITHOUT RESERVATION. NO
PROMISES OR REPRESENTATIONS HAVE BEEN MADE TO CONTRACTOR TO INDUCE CONTRACTOR TO
SIGN THIS AGREEMENT. CONTRACTOR SIGNS THIS AGREEMENT VOLUNTARILY AND FREELY.
Dated: _________, 20__
HUMANCLICK LTD. CONTRACTOR
Signature:__________________________ _______________________________________
Signature
Name of
Name:_______________________________ Contractor:____________________________
(please print name)
Name and Title
Title:______________________________ (If a Corporation):____________________