Form 8-K
8-K — Ondas Inc.
Accession: 0001213900-26-058161
Filed: 2026-05-18
Period: 2026-05-16
CIK: 0001646188
SIC: 3663 (RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT)
Item: Entry into a Material Definitive Agreement
Item: Unregistered Sales of Equity Securities
Item: Regulation FD Disclosure
Item: Other Events
Item: Financial Statements and Exhibits
Documents
8-K — ea0291248-8k_ondas.htm (Primary)
EX-2.1 — SHARE PURCHASE AGREEMENT, DATED MAY 16, 2026, BY AND AMONG THE COMPANY, OMNISYS LTD., (ea029124801ex2-1.htm)
EX-99.1 — FACT SHEET, DATED MAY 18, 2026 (ea029124801ex99-1.htm)
EX-99.2 — PRESS RELEASE, DATED MAY 18, 2026 (ea029124801ex99-2.htm)
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GRAPHIC (ea029124801_ex99-1img2.jpg)
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8-K — CURRENT REPORT
8-K (Primary)
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported) May 16, 2026
Ondas
Inc.
(Exact
name of registrant as specified in its charter)
Nevada
001-39761
47-2615102
(State or other jurisdiction
of incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
222
Lakeview Avenue, Suite 800, West Palm Beach, Florida 33401
(Address
of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code (888) 350-9994
N/A
(Former
name or former address, if changed since last report.)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
☐
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class
Trading
Symbol
Name
of each exchange on which registered
Common Stock par value $0.0001
ONDS
The Nasdaq Stock Market
LLC
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☐
If
an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item
1.01. Entry into a Material Definitive Agreement.
On
May 16, 2026, Ondas Inc. (the “Company”) entered into a Share Purchase Agreement (the “Agreement”), by and among
the Company, Omnisys Ltd., a company organized under the laws of the State of Israel (“Omnisys”), Omnisys’ shareholders
listed on Exhibit A thereto (the “Company Shareholders”), and Mr. Ofer Yarden, solely in such person’s capacity as
the representative, agent and attorney-in-fact of the Indemnifying Parties (as defined in the Agreement) and not in any personal capacity.
The
Agreement provides that, upon the terms and subject to the conditions set forth in the Agreement, the Company will acquire 100% of the
issued and outstanding share capital (“Omnisys Shares”) of Omnisys (the “Acquisition”). At
the closing of the Acquisition, upon the terms and subject to the conditions set forth in the Agreement, the Company shall pay an aggregate
amount of $199,000,000 of shares of the Company's common stock, par value $0.0001 per share (“Common Stock”), subject to
certain adjustments set forth in the Agreement (the “Purchase Price”), of which
(i) $29,000,000 of Common Stock shall be paid on the closing of the Acquisition, (ii) $142,500,000 of Common Stock shall be paid in five
equal installments within twenty days following the closing of the Acquisition, and (iii) the balance of the Purchase Price shall be
paid in Common Stock on the twenty-forth Trading Day (as defined in the Agreement) following the closing of the Acquisition.
Additionally,
pursuant to the terms of the Agreement, for three years after the closing of the Acquisition, the Company Shareholders have an opportunity
to earn an additional aggregate amount of up to $60,000,000 in contingent earn-out payments, subject to certain milestones as set forth
in the Agreement, payable in Common Stock (the “Earn-Out Payments”).
The
shares of Common Stock issued pursuant to the Acquisition, including the Earn-Out Payments, are to be registered for resale pursuant
to a registration rights agreement to be entered into at closing of the Acquisition.
Each
of the Company, Omnisys, and the Company Shareholders has provided customary representations, warranties and covenants in the Agreement.
The completion of the Acquisition is subject to various closing conditions, including (a) the requisite shareholder consent of Omnisys
being obtained, (b) the requisite governmental approvals, consents and/or waivers, if any, being obtained, (c) the absence of any applicable
order issued preventing the consummation of the Acquisition shall be in effect, and no action shall have been taken by any Governmental
Entity (as defined in the Agreement) seeking any of the foregoing, and no applicable law or order shall have been enacted, entered, enforced
or deemed applicable that makes the consummation of the Acquisition illegal, (d) the absence of any threatened, instituted or pending
lawsuit, litigation, claims, investigations or other proceedings by any third party which purports to prevent or limit the consummation
of the Acquisition, (e) the absence of any Material Adverse Effect (as defined in the Agreement) with respect to Omnisys or its subsidiaries,
and (f) all Key Employees (as defined in the Agreement) and no fewer than 90% of the employees and Contingent Workers (as defined in
the Agreement) of Omnisys and its subsidiaries shall have continued to be engaged by Omnisys or the applicable subsidiary as of immediately
following closing of the Acquisition.
The
Agreement contains customary termination rights for both the Company and Omnisys, including, but not limited to, (i) the mutual written
consent duly authorized by the Company and Omnisys, (ii) the written notice by the Company or Omnisys if the closing of the Acquisition
has not occurred on or before June 16, 2026 (the “Termination Date”), provided that, this right to terminate shall not be
available to any party whose material breach of any covenant, agreement or obligation under the Agreement shall have been the principal
cause of, or shall have directly resulted in, the failure of the closing of the Acquisition to occur on or before the Termination Date,
or (iii) the written notice by the Company or Omnisys if any order of a Governmental Entity of competent authority preventing the Acquisition
shall have become final and non-appealable.
The
Acquisition is expected to close in the second quarter of 2026.
The
foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by the full text of the Agreement,
a copy of which is attached hereto as Exhibit 2.1, and is incorporated herein by reference.
1
Item
3.02 Unregistered Sales of Equity Securities.
The
disclosure included in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference. The issuances of shares of the
Common Stock in Item 1.01 above will be exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities
Act”), in accordance with Regulation S thereunder, for sales to non-U.S. investors outside of the United States.
Item
7.01. Regulation FD Disclosure.
On
May 18, 2026, the Company issued an investor fact sheet regarding the Acquisition. A copy of the fact sheet is furnished as Exhibit 99.1
to this Current Report on Form 8-K.
The
information furnished pursuant to this Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section
18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under
that section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange
Act, except as shall be expressly set forth by specific reference in such filing.
Item
8.01. Other Events
On
May 18, 2026, the Company issued a press release announcing it has entered into the Agreement. A copy of the press release is attached
as Exhibit 99.2 and incorporated herein by reference.
Item
9.01. Financial Statements and Exhibits.
(d)
Exhibits.
Exhibit
No.
Description
2.1*
Share Purchase Agreement, dated May 16, 2026, by and among the Company, Omnisys Ltd., shareholders listed on Exhibit A thereto, and Mr. Ofer Yarden, solely in such person’s capacity as the representative, agent and attorney-in-fact of the Indemnifying Parties.
99.1
Fact Sheet, dated May 18, 2026.
99.2
Press Release, dated May 18, 2026.
104
Cover Page Interactive Data File (embedded within the
Inline XBRL document)
* Schedules
and Exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally to the Securities
and Exchange Commission a copy of any omitted schedule upon request.
2
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: May 18, 2026
ONDAS INC.
By:
/s/
Eric A. Brock
Eric A. Brock
Chief Executive Officer
3
EX-2.1 — SHARE PURCHASE AGREEMENT, DATED MAY 16, 2026, BY AND AMONG THE COMPANY, OMNISYS LTD.,
EX-2.1
Filename: ea029124801ex2-1.htm · Sequence: 2
Exhibit 2.1
SHARE PURCHASE AGREEMENT
by and among
Ondas
Inc.
a Nevada corporation,
Omnisys
Ltd.,
a company organized under the laws of the State
of Israel,
the Company
Shareholders
and
Ofer
Yarden,
as the Shareholders’ Agent
Dated as of May 16, 2026
Share
Purchase Agreement
This
Share Purchase Agreement (this “Agreement”) is made and entered into as of May 16, 2026 (the “Agreement
Date”), by and among Ondas Inc., a Nevada corporation (“Acquirer”), Omnisys Ltd., a company organized
under the laws of the State of Israel (the “Company”) and the Company’s shareholders listed on Exhibit
A, (the “Company Shareholders”), and Mr. Ofer Yarden, solely in such person’s capacity as the representative,
agent and attorney-in-fact of the Indemnifying Parties and not in any personal capacity (the “Shareholders’ Agent”).
Certain other capitalized terms used herein are defined in Schedule I.
Recitals
A. The Company Shareholders are the holders and the legal and beneficial owners of 100% of the Company Shares
and Equity Securities of the Company.
B. Acquirer desires to, subject to the terms and conditions set forth in this Agreement, purchase from the
Company Shareholders, and each Company Shareholder will sell to Acquirer, all of the Company Shares owned by such Company Shareholder
free from any Encumbrances and subject to the terms and conditions set forth in this Agreement (the “Share Purchase”).
C. The Company, the Company Shareholders, and Acquirer desire to make certain representations, warranties,
covenants and other agreements in connection with the Share Purchase as set forth herein.
D. The board of directors of the Company (the “Board”) has carefully considered
the terms of this Agreement and has unanimously determined that this Agreement and the transactions contemplated by this Agreement and
the documents referenced herein (collectively, the “Transactions”), are in the best interests of, and are advisable
to, the Company and the Company Shareholders and recommended that all of the Company Shareholders enter into this Agreement.
E. Concurrently with the execution and delivery of this Agreement, (a) the Company Shareholders representing
holders of 100% of the issued and outstanding share capital of the Company as of the date hereof have delivered a duly executed counterpart
to a unanimous written consent in the form to be agreed between the Company and Acquirer prior to Closing (the “Shareholder
Consent”), pursuant to which all of the Company Shareholders irrevocably (i) approved this Agreement, the other Transaction
Documents, the Share Purchase and the Transactions, and (ii) waived all of their respective Acquisition Rights (if any), and (b) the Company
Shareholders have delivered investor questionnaires substantially in the form to be agreed between the Company and Acquirer prior to Closing,
pursuant to which each such Company Shareholder is either an Accredited Investor and/or is a non-US Person (the “Investor
Questionnaires”).
Now, Therefore,
in consideration of the representations, warranties, covenants, agreements and obligations contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Article
I
The Share Purchase
1.1 The
Share Purchase.
(a) Company
Shares. On the terms and subject to the conditions of this Agreement, at the Closing, each Company Shareholder shall sell, transfer
and deliver to Acquirer, and Acquirer shall purchase from each Company Shareholder, all of the Company Shares owned by such Company Shareholder
as of immediately prior to the Closing (as set forth on the Spreadsheet) free and clear of all Encumbrances, in exchange for the right
to receive (in each case, without interest and subject to withholding in accordance with the provisions of Section 1.1(b))
at the Closing:
(i) for
each Company Share owned by such Company Shareholder (provided that Company 102 Shares held by the 102 Trustee shall be treated as set
forth in Section 1.1(b)):
(1) subject
to the execution and delivery of the Registration Rights Agreement, the number of shares of the Base Stock Consideration Payment due on
the Closing Date per each Company Share (rounded down to the nearest whole share after aggregating all fractional Base Stock Consideration
payable to such Company Shareholder on such date and as calculated in the Spreadsheet), minus such Company Shareholder’s
Pro Rata Share of (x) the Closing Escrow Amount and (y) the Adjustment Escrow Amount (if there shall be an Adjustment Escrow Fund); and
(2) the
right to receive, subject to the terms and provisions hereof, on each of the Second Payment Date, the Third Payment Date, the Fourth Payment
Date, the Fifth Payment Date, the Sixth Payment Date and the Seventh Payment Date, subject to the execution and delivery of the Registration
Rights Agreement, the number of shares of the Base Stock Consideration Payment due on the applicable Payment Date per each Company Share
(rounded down to the nearest whole share after aggregating all fractional Base Stock Consideration payable to such Company Shareholder
and as calculated in the Spreadsheet), minus such Company Shareholder’s Pro Rata Share of the respective Deferred Escrow
Amount; and
(3) subject
to the Earn-Out Payment being payable on the Earn-Out Payment Date, the right to receive, subject to the terms and provisions hereof,
on the Earn-Out Payment Date, per each Company Share and at Acquirer’s sole discretion, either (i) subject to the execution and
delivery of the Registration Rights Agreement, the number of shares of the Earn-Out Payment due on the Earn-Out Payment Date per each
such Company Share (rounded down to the nearest whole share after aggregating all fractional shares of Earn-Out Payment payable to such
Company Shareholder and as calculated in the Spreadsheet), or, in lieu thereof, (ii) an amount in cash equal to the Substitute Cash Consideration
due on the Earn-Out Payment Date per each such Company Share (as calculated in the Spreadsheet); and
(4) the
right to receive, subject to the terms and provisions hereof, upon release, such Company Shareholder’s portion of the Escrow Fund
and the Adjustment Escrow Fund.
(ii) Any
portion of the Aggregate Consideration payable or otherwise deliverable pursuant to this Agreement to the Company Shareholders or any
of them shall be deposited with the Paying Agent, which will hold and release such consideration to the Company Shareholders or any of
them in accordance with the provisions hereof and the provisions of the Paying Agent Agreement. Upon such deposit with the Paying Agent,
Acquirer shall have fulfilled its obligations to the Company Shareholders with respect to such payments.
2
(iii) Notwithstanding
anything to the contrary herein, if on any Base Stock Consideration Payment Date the Acquirer is unable to deliver Tradeable shares of
the Acquirer Common Stock pursuant to a Prosupp filed on such date, in accordance with the terms of the Registration Rights Agreement,
the Acquirer shall pay, in lieu of the issuance of shares of Acquirer Common Stock, an amount equal to the Substitute Cash Consideration
in immediately available funds.
(b) Company
102 Shares Treatment. Any portion of the Aggregate Consideration payable or otherwise deliverable pursuant to this Agreement to the
holders of Company 102 Shares shall be deposited with the Paying Agent, and the Paying Agent shall deliver the portion of the Aggregate
Consideration that is payable to the holders thereof at the Closing in consideration of Company 102 Shares, to the 102 Trustee to be held
and released in accordance with the provisions of this Agreement, the trust agreement with the 102 Trustee, applicable Law (including
the provisions of Section 102 of the Israel Tax Ordinance and the regulations and rules promulgated thereunder). The 102 Trustee shall
withhold or cause to be withheld any amounts required in accordance with applicable Law (including the provisions of Section 102 of the
Israel Tax Ordinance and the regulations and rules promulgated thereunder).
(c) Withholding;
Certain Tax Matters.
(i) Each
of Acquirer, the Paying Agent, the 102 Trustee and the Company (each, a “Payor”) shall be entitled to deduct
and withhold (without duplication) from any consideration in cash or in Acquirer Common Stock payable or otherwise deliverable to any
Person pursuant to this Agreement (each, a “Payee”) such amounts as Payor determines are required to be deducted
or withheld therefrom in connection therewith under the Code or any provision of state, local or foreign Tax law or under any other Applicable
Law, including Israeli Income Tax Ordinance (New Version) 1961 and any regulations promulgated thereunder (as amended) (the “Israeli
Income Tax Ordinance”), provided, however, that other than with respect to any such payments, the applicable
Payor shall provide the Payee from whom such amounts will be withheld with (a) written notice at least five (5) Business Days prior to
withholding any amounts pursuant to this Section (d), and (b) the opportunity to produce any forms, certificates and
other documentation that may eliminate or reduce such deduction and withholding. To the extent such amounts were so deducted or withheld,
such amounts shall be timely remitted to the applicable Tax Authority by the relevant Payor, and such amounts shall be treated for all
purposes under this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid. To the extent such
amounts are deducted and withheld, the Payor shall within no later than thirty (30) days of the date of such withholding, furnish the
payee with written confirmation evidencing such Tax withholding.
3
(ii) Notwithstanding
the provisions of Section 1.1(d)(i) above, the Paying Agent shall provide Acquirer, prior to the Closing Date, with an undertaking
as required under Section 6.2.4.3 of the Income Tax Circular 19/2018 (Transaction for Sale of Rights in a Corporation that includes
Consideration that will be transferred to the Seller at Future Dates), with respect to Israeli Tax, any payments payable or otherwise
deliverable in cash or by issuance of shares of Acquirer Common Stock to any Payee pursuant to this Agreement shall be retained by the
Paying Agent for the benefit of each such Payee for a period of up to 180 days from the Closing (or, with respect to any amounts payable
or otherwise deliverable by issuance of shares of Acquirer Common Stock after the Closing, 180 days from the date of such payment)
or an earlier date required in writing by such Payee or as otherwise requested by the ITA (the “Withholding
Drop Date”) (during which time, unless otherwise required by the ITA, no amount shall be paid by the Paying Agent
to such Payee and no amounts for Israeli Taxes shall be withheld from amounts paid to the Paying Agent), and during which time each Payee
may obtain a valid certification or ruling (which, for avoidance of doubt, includes Acquirer’s opportunity to review, comment on
and approve any application to the ITA before submission, such approval not to be unreasonably conditioned, withheld or delayed) issued
by the ITA and applicable to the payments to be made to the Payee pursuant to this Agreement, in form and substance reasonably acceptable
to Paying Agent and Acquirer (x) exempting the Payor from the duty to withhold Israeli Taxes with respect to payment to such Payee,
(y) determining the applicable rate of Israeli Tax to be withheld from the payment to such Payee, or (z) providing any other
written instructions with respect to withholding of Israeli Taxes (the “Valid
Tax Certificate”). In the event that no later than five (5) Business Days before the Withholding Drop Date, a Payee
submits a Valid Tax Certificate to the Paying Agent, the Paying Agent shall act in accordance with the provisions of such Valid Tax Certificate
subject to any deduction and withholding as may be required to be deducted and withheld under the Code, or any provision of state, local
or foreign Tax Law (other than Israeli Law), and the balance of the payment that is not withheld shall be promptly paid to such Payee.
If any Payee (A) does not provide the Paying Agent with a Valid Tax Certificate, no later than five (5) Business Days before the Withholding
Drop Date, or (B) submits a written request with the Paying Agent to release its portion of the applicable payment payable in cash or
in shares of Acquirer Common Stock prior to the Withholding Drop Date and fails to submit a Valid Tax Certificate at or before such time,
then Israeli Taxes will be withheld from such Payee’s portion of the applicable payment under this Agreement as determined by the
Paying Agent, in consultation with Acquirer and/or its advisors at its reasonable discretion, according to the applicable withholding
rate in accordance with the Israeli Income Tax Ordinance (calculated in NIS based on the published US$:NIS exchange rate of the Bank of
Israel on the actual payment date to such Payee), which amount shall be delivered, or caused to be delivered, to the ITA by the Paying
Agent, and the Paying Agent shall deliver to such Payee the balance of the applicable payment due to such Payee that is not so withheld.
Any amount required to be withheld under this Agreement shall be funded first through a reduction from any portion of cash consideration
then payable to such Payee, and to the extent there is insufficient cash to permit such withholding, through the forfeiture or sale of
the portion of the Acquirer Common Stock otherwise deliverable to such Payee that is required to enable the Payor to comply with applicable
deduction or withholding requirements. Any currency conversion or sale of Acquirer Common Stock commissions will be borne by the applicable
Payee and deducted from payments to be made to such Payee. Each Payee hereby waives, releases and absolutely and forever discharges Acquirer
and any other Payor from and against any and all claims for any losses in connection with the forfeiture or sale of any portion of the
Acquirer Common Stock otherwise deliverable to such Payee in connection with the compliance with the withholding requirements set forth
in this Section. For the avoidance of doubt, any Valid Tax Certificate delivered to the Paying Agent by any Payee with respect to any
amount payable or otherwise deliverable pursuant to this Agreement at a certain date shall apply only to the amount payable or otherwise
deliverable at such certain date and will not apply to any amounts payable or otherwise deliverable to the Acquirer at any later dates
thereafter, unless, with respect to each later date, such Valid Tax Certificate is in force during such later date and covers the full
amount payable or otherwise deliverable to the Acquirer on such later date. For the avoidance of doubt, any amounts required to be deducted
or withheld pursuant to this Section 1.1(d) in connection with the shares of Acquirer Common Stock payable to a Payee pursuant
to this Agreement, shall be calculated based on the value of such shares of Acquirer Common Stock at Closing or on the date of their actual
payment, whichever results in a higher amount to be withheld, unless the ITA instructs otherwise.
4
(iii) In
the event that the Payor receives a demand from the ITA to withhold any amount and transfer it to the ITA, the Payor (i) shall notify
the applicable Payee of such matter reasonably promptly after receipt of such demand, and provide such Payee with reasonable time to attempt
to delay such requirement or extend the period for complying with such requirement as evidenced by a written certificate, ruling or confirmation
from the ITA and (ii) to the extent that any such certificate, ruling or confirmation is not timely provided by such Payee to the Payor,
transfer to the ITA any amount so demanded, including any interest, indexation and fines required by the ITA in respect thereof, and such
amounts shall be treated for all purposes of this Agreement as having been delivered and paid to the applicable Payee.
(d) Unaccredited
Investors and Non-US Person. Notwithstanding anything to the contrary in this Agreement, in no event shall Acquirer issue or be required
to issue any shares of Acquirer Common Stock to any Person that is neither an Accredited Investor nor a non-US Person, as determined by
Acquirer in its sole discretion.
(e) Closing.
Upon the terms and subject to the conditions set forth herein, the closing of the Transactions, including the consummation of the Share
Purchase (the “Closing”), shall take place remotely via the exchange of documents and electronic signatures,
on the fifth (5th) Business Day following the satisfaction or waiver, as applicable, of all conditions precedent set forth set forth in
Article VIII, or at such other location, date and time to be agreed by Acquirer and the Company in writing (the “Closing
Date”).
1.2 Closing
Deliveries.
(a) Acquirer
Deliveries. Acquirer shall take the following actions and deliver the following documents to the Company at or prior to the Closing,
except as otherwise indicated:
(i) a
certificate, dated as of the Closing Date, executed on behalf of Acquirer by a duly authorized officer of Acquirer to the effect that
each of the conditions set forth in Section 8.2 has been satisfied (the “Acquirer’s Officer Certificate”);
(ii) the
Escrow Agreement in the to be agreed between the Company and Acquirer prior to Closing (the “Escrow Agreement”),
duly executed by Acquirer;
(iii) the
Paying Agent Agreement, duly executed by the Acquirer;
(iv) the
Registration Rights Agreement, duly executed by the Acquirer; and
(v) an
undertaking towards the IIA, in the form attached hereto as Schedule 1.2(a)(v) duly executed by the Acquirer.
(b) Company
Deliveries. The Company or the Company Shareholders, as applicable, shall deliver, or cause the Company to deliver, to Acquirer, at
or prior to the Closing:
(i) duly
executed share transfer deeds signed by all Company Shareholders with respect to all of the Company Shares held by each such Company Shareholder
as of the Closing Date;
(ii) a
certificate dated as of the Closing Date and executed on behalf of the Company by its Chief Executive Officer, to the effect that each
of the conditions set forth in clauses (a), (c), (d), (f) and (h) of Section 8.3 has been satisfied
(the “Company Closing Certificate”);
(iii) a
certificate, dated as of the Closing Date and executed on behalf of the Company by its Chief Executive Officer, certifying (A) the Company’s
Amended and Restated Articles of Association as in effect immediately prior to the Closing (the “Charter Documents”)
and (B) the Board Consent and the Shareholder Consent (including a certification that, as of the Closing Date, such resolutions remain
in full force and effect and have not been amended, rescinded or modified), and (C) the incumbency and signatures of the officers of the
Company executing this Agreement or any other Transaction Document (the “Company Officer’s Certificate”
and together with the Acquirer Officer’s Certificate, the “Officer’s Certificates”);
5
(iv) an
invoice from each advisor or other service provider to any of the Acquired Companies (other than any Employee, director or officer of
any of the Acquired Companies), in each case dated no more than three (3) Business Days prior to the Closing Date, with respect to all
their respective Transaction Expenses set forth in the Spreadsheet, and written acknowledgments pursuant to which each such advisor or
other service provider states the total amount of Transaction Expenses owed to such Person (each, an “Invoice”);
(v) a
resignation letter in the form attached hereto as Schedule 1.2(b)(v)(A) (the “D&O Resignation Letter”),
executed by Alfred Tzimet, effective no later than immediately prior to the Closing;
(vi) a
certificate from the Israeli Registrar of Companies certifying that each of the Company and its Subsidiaries is registered under Israeli
Law since its date of incorporation and is not a “breaching company”;
(vii) the
Spreadsheet, completed to include all of the information specified in Section 7.5 in a form (A) similar to the Signing
Spreadsheet and (B) satisfactory to Acquirer, and a certificate executed by the Chief Executive Officer of the Company, dated as of the
Closing Date, certifying on behalf of the Company that the Spreadsheet is true, correct and complete;
(viii) a
USB, CD or DVD-ROM, or URL link containing a complete copy of the contents of the virtual data room entitled “Project Omega –
Data Room” as of immediately prior to the Closing;
(ix)
evidence that the Company has purchased the D&O Tail Policy;
(x) the
Paying Agent Agreement, duly executed by the Shareholders’ Agent and the Company Shareholders;
(xi) the
Escrow Agreement, duly executed by the Shareholders’ Agent and the Escrow Agent;
(xii)
a Retention and Employment Agreement, in the form to be agreed between the Company and Acquirer prior to Closing (a “Retention
and Employment Agreement”), duly executed by each Company Shareholder;
(xiii) each
Company Shareholder shall have duly executed an Investor Questionnaire and a Registration Rights Agreement dated on or before the Closing
Date, and all Company Shareholders shall have been confirmed by Acquirer, based on their duly executed Investor Questionnaires, as either
Accredited Investors or non-US Persons;
(xiv) evidence
that the consents listed or described on Schedule 1.2(xiv) hereof have been obtained;
6
(xv) evidence
that the notices and procedures listed or described on Schedule 1.2(b)(xv) hereof have been delivered and/or complied
with, as applicable; and
(xvi) the
shareholders registry of the Company, duly executed by an authorized officer or director of the Company, evidencing the transfer and ownership
of all of the Company Shares to Acquirer.
Receipt by Acquirer of any of the agreements, instruments,
certificates or documents delivered pursuant to this Section 1.2(b) shall not be deemed to be an agreement by Acquirer
that the information or statements contained therein are true, correct or complete, and shall not diminish Acquirer’s remedies hereunder
if any of the foregoing agreements, instruments, certificates or documents are not true, correct or complete.
(c) Rights
Not Transferable. The rights of the Company Shareholders under this Agreement as of immediately prior to the Closing are personal
to each such Company Shareholder and shall not be transferable for any reason, other than by operation of law, will or the laws of descent.
Any attempted transfer of such right by any holder thereof (other than as permitted by the immediately preceding sentence) shall be null
and void.
1.3 Surrender
of Certificates.
(a) Certificate
Exchange Procedures.
(i) At
the Closing, subject to Section 1.1(a)(ii), Acquirer shall cause to be deposited with IBI Trust Management Ltd. (the “Paying
Agent”) a number of shares of Acquirer Common Stock equal to the Base Stock Consideration Payment due at the Closing Date,
or the applicable Substitute Cash Consideration.
(ii) At
the Closing and upon the effectiveness of the Share Purchase, Acquirer and the Shareholders’ Agent shall enter with the Paying Agent
into a Paying Agent Agreement in the form to be agreed between the Company and Acquirer prior to Closing (the “Paying Agent
Agreement”), which shall provide for the payment specified under clause (i) above to the Company Shareholders subject to
the withholding provisions of Section 1.1(b), all as set forth in the Spreadsheet and in accordance with Section 1.1.
Notwithstanding anything to the contrary herein, any portion of the Aggregate Consideration payable or otherwise deliverable pursuant
to this Agreement in respect of any Company 102 Shares, shall be delivered by the Paying Agent to the 102 Trustee, which will hold and
release such payment in accordance with the provisions of Section 102 of the Israeli Income Tax Ordinance.
(iii) If
any certificates representing Company Shares shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the Person claiming such certificate to be lost, stolen, or destroyed and, if required by Acquirer or the Paying Agent, the execution
of an indemnity agreement in such reasonable form as Acquirer or Paying Agent requires as indemnity against any claim that may be made
against Acquirer, any of its Affiliates or the Paying Agent with respect to such document, and upon delivery of all other required documentation,
the Paying Agent will issue in respect of such Person’s Company Shares represented by such lost, stolen or destroyed certificate
the applicable portion of the Base Stock Consideration due at Closing pursuant to Section 1.1.
(iv) No
Liability. Notwithstanding anything to the contrary in this Section 1.3, no party hereto shall be liable to any Person
for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar Applicable Law.
7
1.4 Escrow Fund. Notwithstanding anything else to the contrary in this Agreement, at the Closing, Acquirer shall deduct and withhold from the portion
of the aggregate number of shares of Acquirer Common Stock otherwise deliverable to each Company Shareholder pursuant to Section 1.1(a),
on the Closing Date, such number of shares of Acquirer Common Stock as is equal to the quotient of (i) such Company Shareholder’s
Pro Rata Share of the Closing Escrow Amount divided by (ii) the Acquirer Stock PPS, rounded up to the nearest whole share, and
at each Payment Date thereafter, (a) such Company Shareholder’s Pro Rata Share of the applicable Deferred Escrow Amount, divided
by (ii) the Acquirer Stock PPS, rounded up to the nearest whole share (the aggregate cash amount resulting from any sale by the Paying
Agent on behalf of the Company Shareholders of such shares of Acquirer Common Stock, together with any interest that may be earned thereon,
collectively, the “Escrow Fund”), and shall deposit (or cause to be deposited) the Escrow Fund with the Paying
Agent, for further distribution to the Escrow Agent. The Escrow Fund shall be held and released by the Escrow Agent subject to the provisions
of this Agreement, the Escrow Agreement and the Paying Agent Agreement for the purpose of securing the indemnification obligations of
the Indemnifying Parties under this Agreement.
1.5 Company
Net Working Capital Adjustment.
(a) Concurrently
with the execution of this Agreement by the Company, the Company shall deliver to the Acquirer a schedule certified by the Chief Executive
Officer of the Company on behalf of the Company setting forth such items required to be included in the Spreadsheet, as of such date (the
“Signing Spreadsheet”). Pursuant to Section 7.5, the Company shall deliver the Spreadsheet
to Acquirer not later than five (5) Business Days prior to the Closing Date, certified by the Chief Executive Officer of the Company on
behalf of the Company, dated as of the Closing Date.
(b) Not
less than two (2) Business Days prior to the anticipated Closing Date, Acquirer shall notify the Company in the event that it disputes
in good faith any aspect of the Spreadsheet, it being understood and agreed that any failure to do so with respect to any particular aspect
shall not prejudice in any way Acquirer’s rights following Closing. Prior to the Closing Date, the Company and Acquirer shall negotiate
in good faith to resolve any such dispute with respect to Acquirer’s comments on the Spreadsheet. If Acquirer and the Company reach
agreement on all such disputes, then Acquirer and the Company shall proceed to the Closing, and the Spreadsheet that reflects such agreements
shall serve as the Spreadsheet pursuant to Section 7.5. If Acquirer and the Company do
not reach agreement on all such disputes, then the Company shall have the right to cause the parties to proceed to the Closing, with the
amount in disagreement (the “Adjustment Escrow Amount”) deposited in escrow, such that Acquirer shall deduct
and withhold the aggregate number of shares of Acquirer Common Stock otherwise deliverable to each Company Shareholder pursuant to Section
1.1(a), on the Closing Date, as is equal to the quotient of (i) such Company Shareholder’s Pro Rata Share of the Adjustment
Escrow Amount divided by (ii) the Acquirer Stock PPS, rounded up to the nearest whole share (the aggregate cash amount resulting
from any sale by the Paying Agent on behalf of the Company Shareholders of such shares of Acquirer Common Stock, together with any interest
that may be earned thereon, collectively, the “Adjustment Escrow Fund”), and shall deposit (or cause to be deposited)
the Adjustment Escrow Fund with the Paying Agent, for further distribution to the Escrow Agent, and the Spreadsheet shall serve as the
Spreadsheet pursuant to Section 7.5. If, after delivery of the Spreadsheet, but
prior to the Closing, there shall be a change in any component thereof, the Company shall update the Adjustment Calculations (as defined
below) and the Spreadsheet, accordingly.
8
(c) Within
90 days after the Closing, Acquirer shall deliver to the Shareholders’ Agent a notice (the “Acquirer Adjustments Notice”)
setting forth Acquirer’s calculation (collectively, the “Adjustment Calculations”) of Company Cash, Company
Debt, Transaction Expenses and the Closing Net Working Capital Adjustment and the amount by which Company Cash, Company Debt, Transaction
Expenses or Company Net Working Capital as calculated by Acquirer is more or less than Estimated Company Cash, Estimated Company Debt,
Estimated Transaction Expenses or the Estimated Closing Net Working Capital Adjustment, in each case together with supporting documentation,
information and calculations.
(d) The
Shareholders’ Agent, after receiving any relevant information which it may reasonably request, may object to any item of the Adjustment
Calculations set forth in the Acquirer Adjustments Notice by providing written notice of such objection to Acquirer within 30 days after
Acquirer’s delivery of the Acquirer Adjustments Notice (the “Notice of Objection”), together with supporting
documentation, information and calculations. Any matters not expressly set forth in the Notice of Objection shall be deemed to have been
accepted by the Shareholders’ Agent on behalf of the Indemnifying Parties, and if the Shareholders’ Agent fails to deliver
a Notice of Objection within such 30 day period, then the Shareholders’ Agent shall be deemed to have accepted the Acquirer Adjustments
Notice, and the Adjustment Calculations set forth in the Acquirer Adjustments Notice shall be deemed to have been accepted by the Shareholders’
Agent on behalf of the Indemnifying Parties and final, binding and conclusive for purposes of this Agreement.
(e) If
the Shareholders’ Agent timely provides the Notice of Objection, then Acquirer and the Shareholders’ Agent shall confer in
good faith for a period of up to 15 Business Days following delivery of the Notice of Objection in an attempt to resolve any disputed
matter set forth in the Notice of Objection, and any resolution by them shall be in writing and shall be final and binding on the parties
hereto and the Indemnifying Parties.
(f) If,
after the 15 Business Day period set forth in Section 1.5(e), Acquirer and the Shareholders’ Agent cannot resolve any
matter set forth in the Notice of Objection, then Acquirer and the Shareholders’ Agent shall engage EY Israel or, if such firm is
not able or willing to so act, another internationally recognized auditing firm acceptable to both Acquirer and the Shareholders’
Agent and independent of both the Company and Acquirer, and in the absence of agreement, either party may request that the Israeli Arbitration
Association shall nominate such independent accounting firm, provided that under no circumstances shall such accounting firm be the Company’s
or Purchaser’s accounting firm immediately prior to such time (the “Reviewing Accountant”) to review only
the matters in the Notice of Objection that are still disputed by Acquirer and the Shareholders’ Agent (the “Disputed
Items”). The Reviewing Accountant shall base its review solely on the presentations (including by way of a frontal meeting)
and supporting material provided by the parties and not on an independent review. Neither Acquirer nor the Shareholders’ Agent shall
have any ex parte communication or meetings related hereto with the Reviewing Accountant without receiving the prior written consent of
the other party. After its review, the Reviewing Accountant shall promptly (and in any event within 60 days following its engagement)
determine the resolution of the Disputed Items, which determination shall be final and binding on the parties hereto and the Indemnifying
Parties, and the Reviewing Accountant shall provide Acquirer and the Shareholders’ Agent with a calculation of the Disputed Items
and a reasonable basis for each of its determinations, which determinations shall be within the range of the amounts for each of the Disputed
Items as included in the Acquirer Adjustments Notice and the Objection Notice, such that in making such calculation of the Disputed Items,
the Reviewing Accountant shall not assign a value greater than the greatest value claimed by Acquirer or the Shareholders’ Agent
or a value lower than the lowest value claimed thereby.
9
(g) For
purposes of calculating the purchase price adjustments, the following terms shall apply: (i) the “Final Closing Net Working
Capital Adjustment” shall mean the Closing Net Working Capital Adjustment as finally determined pursuant to Section 1.5(d),
Section 1.5(e) and/or Section 1.5(f), as the case may be, (ii) the “Final Company Cash”
shall mean the Company Cash as finally determined pursuant to Section 1.5(d), Section 1.5(e) and/or Section 1.5(f),
as the case may be, (iii) the “Final Company Debt” shall mean the Company Debt as finally determined pursuant
to Section 1.5(d), Section 1.5(e) and/or Section 1.5(f), as the case may be, (iv) the “Final
Transaction Expenses” shall mean the Transaction Expenses as finally determined pursuant to Section 1.5(d),
Section 1.5(e) and/or Section 1.5(f), as the case may be, (v) the “Estimated Closing Net Working
Capital Adjustment” shall mean the Closing Net Working Capital Adjustment as set forth in the Spreadsheet, (vi) the “Estimated
Company Cash” shall mean the Company Cash as set forth in the Spreadsheet, (vii) the “Estimated Company Debt”
shall mean the Company Debt as set forth in the Spreadsheet and (viii) the “Estimated Transaction Expenses”
shall mean the Transaction Expenses as set forth in the Spreadsheet.
(h) If
the Final Base Stock Consideration is less than the Base Stock Consideration (such difference, the “Deficit Amount”),
then within two (2) Business Days of final determination of the Final Base Stock Consideration and without any dispute by the parties
hereto, (x) if there shall be an Adjustment Escrow Fund, the Escrow Agent shall, upon Acquirer’s direction, immediately deliver
from the Adjustment Escrow Fund to Acquirer the amount of the lower of the Deficit Amount or the Adjustment Escrow Fund; provided that
if the Adjustment Escrow Fund exceeds the Deficit Amount, then the balance shall be released to the Paying Agent for further distribution
to the Company Shareholders; or (y) if there shall not be an Adjustment Escrow Fund or if the funds in the Adjustment Escrow Fund are
insufficient to pay the full Deficit Amount to Acquirer, the Escrow Agent shall, upon Acquirer’s direction, immediately deliver
from the Escrow Fund to Acquirer the difference between the Deficit Amount and the Adjustment Escrow Amount or the Deficit Amount, as
applicable; provided that if the funds in the Escrow Fund are insufficient to pay the full Deficit Amount to Acquirer, Acquirer shall
be indemnified for the full amount of such shortfall by the Indemnifying Parties in accordance with each such Indemnifying Party’s
Pro Rata Share, in any such case by wire transfer of immediately available funds and without any dispute by the Shareholders’ Agent
or Indemnifying Parties. In any event, Acquirer shall not be entitled to offset any Deficit Amount from the Base Stock Consideration Payments.
(i) If
the Final Base Stock Consideration is greater than the Base Stock Consideration (such difference, the “Excess Amount”),
then within two (2) Business Days of final determination of the Final Base Stock Consideration and without any dispute by the parties
hereto, (x) if there shall be an Adjustment Escrow Fund, the Escrow Agent shall immediately deliver the full Adjustment Escrow Fund to
the Paying Agent for further distribution to the Company Shareholders, and in addition the Excess Amount shall be paid, by way of issuance
of Acquirer Common Stock valued at the closing price of Acquirer Common Stock on Nasdaq on the Trading Day immediately prior to the date
of actual payment, to the Paying Agent for further distribution to the Company Shareholders; or (y) if there shall not be an Adjustment
Escrow Fund, then the Excess Amount shall be paid, by way of issuance of Acquirer Common Stock valued at the closing price of Acquirer
Common Stock on Nasdaq on the Trading Day immediately prior to the date of actual payment, to the Paying Agent for further distribution
to the Company Shareholders.
(j) If
the Final Base Stock Consideration is equal to the Base Stock Consideration, then there will be no additional adjustments.
10
(k) The
fees, costs and expenses, if any, of the Reviewing Accountant shall be paid pro rata by Acquirer on the one hand and by the Shareholders’
Agent on the other hand on behalf of the Company Shareholders based on the inverse of the percentage that the Reviewing Accountant’s
determination (before such allocation) bears to the total amount of the total items in dispute as originally submitted to the Reviewing
Accountant.
(l) Any
adjustment hereunder shall be treated as an adjustment to the portion of the Aggregate Consideration payable at Closing for Tax purposes,
unless otherwise required by Applicable Law.
1.6 Transfer
Taxes. All transfer, documentary, sales, use, stamp, registration and other Taxes and fees (including any penalties and
interest) that apply to the Company Shareholders and become payable in connection with the transactions contemplated by this
Agreement (“Transfer Taxes”) shall be borne by the Company Shareholders. The party required by Applicable
Law to file any Tax Return with respect to Transfer Taxes shall do so in the time and manner prescribed by Applicable Law.
1.7 Taking of
Necessary Action; Further Action. Prior to the Closing, Acquirer, the Company and each Company Shareholder, as applicable, shall
sign and deliver any documents and instruments and take any further action that is necessary or desirable to effect the Closing and
to carry out the purposes of this Agreement and to vest Acquirer, with full right, title and interest in and to the Company Shares.
If, at any time after the Closing, any further action is necessary or desirable to carry out the purposes of this Agreement and to
vest the Company or Acquirer, with full right, title and interest in, to and under, and/or possession of, all assets, property,
rights, privileges, powers and franchises of the Company and its Subsidiaries, the officers and directors of the Company and
Acquirer are fully authorized, in the name and on behalf of the Company and its Subsidiaries or otherwise, to take all lawful action
reasonably necessary or desirable to accomplish such purpose or acts, so long as such action is not inconsistent with this
Agreement.
1.8 Waiver
and Release of Claims.
(a) Effective
for all purposes as of and subject to the Closing, each Company Shareholder, severally and not jointly with any other Company Shareholder,
acknowledges and agrees on behalf of itself and each of its agents, trustees, beneficiaries, directors, officers, Affiliates, estate,
successors and assigns (each, a “Releasing Party”) that each hereby releases and forever discharges the Company,
each Company Shareholder and Acquirer (each a “Beneficiary”) and each of such Beneficiary’s respective
subsidiaries, affiliates, directors, officers, employees, representatives, agents, members, stockholders, successors, predecessors and
assigns (each, a “Released Party” and collectively, the “Released Parties”) from any
and all Shareholder Claims such Releasing Party may have or assert against any of the Released Parties, from the beginning of time through
the time of the Closing and following the Closing, in each case whether known or unknown, or whether or not the facts that could give
rise to or support a Shareholder Claim are known or should have been known; except with regard to its rights pursuant to this Agreement,
the other Transaction Documents and the Transactions. In this Agreement a “Shareholder Claim” shall mean any
claims, suits, demands, causes of action, cross-claims, counter claims, compensatory damages, liquidated damages, punitive or exemplary
damages, other damages, contracts, covenants, obligations, debts, costs, expenses, attorneys’ fees and liabilities claim or other
rights, of whatever kind or nature, in law or in equity, by statute or otherwise, related to the Company or the Transactions, (A) including:
(i) with regard to any Company Securities other than the Company Securities set forth in the Spreadsheet with respect to such Person,
(ii) to receive any portion of the Aggregate Consideration or any other form, amount or value of consideration payable to any Company
Shareholder pursuant to the terms of this Agreement, other than as specifically set forth in the Spreadsheet (subject to any adjustments
contemplated in this Agreement), (iii) with respect to the authority or enforceability to enter into this Agreement, the Share Purchase
or any of the Transactions, or (iv) any bonuses payable with respect to any period prior to the Closing, but (B) specifically excluding
(i) Acquirer’s failure to pay the Aggregate Consideration in accordance with and subject to the provisions of this Agreement (subject
to any adjustments contemplated in this Agreement) or other breach by Acquirer and/or any Released Party (other than the Company or its
Subsidiaries or their respective directors) of this Agreement or any of the other Transaction Documents, (ii) rights relating to any employment
payment, including salary, accrued vacation, any other employee compensation and/or benefits, any amounts set forth in this Agreement
to be paid to such Releasing Party and unreimbursed expenses (provided all such salary and other payments shall be only in the ordinary
course of business or otherwise specified in the Company Disclosure Schedule), and (iii) the exercise of rights under the Company’s
D&O insurance policy.
11
(b) Each
Company Shareholder hereby confirms, acknowledges, represents and warrants that he, she or it: (A) (i) is, or will be immediately prior
to the Closing, the holder of the number of Company Securities set forth in the Spreadsheet; (ii) other than the number and class of Company
Securities set forth in the Spreadsheet, is not entitled to any additional Company Shares or any other form of Equity Interests, including,
shares, options, warrants or any other convertible security, or right to acquire shares, options or warrants of or any other convertible
security into Company Shares; (iii) waives any right to receive any additional Company Securities (as a result of any anti-dilution rights,
preemptive rights, conversion rights (of any of the Company Shares which are outstanding as of the Agreement Date or any Company Shares
he, she or it may have been entitled to receive as a result of the conversion of any option, right, convertible loan agreement or any
other convertible instrument that was issued by the Company), rights of first offer, co-sale and no-sale rights, any other participation,
first refusal or similar rights, any adjustment of the conversion price of any preferred share whatsoever or otherwise); and (iv) fully,
finally, irrevocably and forever waives any right to convert any of its Company Securities into any other class or series of Company Shares
presently and through the Closing; (B) (i) examined the Spreadsheet and is entitled only to the distribution set forth in the Spreadsheet
(subject to any changes and adjustments contemplated in this Agreement); and (ii) waives any right to receive consideration other than
as set forth in the Spreadsheet (subject to any adjustments contemplated in this Agreement) (including for any interest payments, the
method of determination or calculation of any of the values or allocations pursuant to this Agreement, any preferential or other amount
resulting from its investment in the Company or the purchase of Company Securities (e.g. in the form of indemnification), the conversion
of Company Shares, any other rights of any nature under the Charter Documents, or any Shareholders Agreement, which the Company Shareholder
and/or its successors and assignees ever had, now have or hereafter can, shall or may have, at any time, due to actions or events that
occurred prior to Closing which do not conform or are not consistent with the terms of this Agreement and the consideration attributed
to such Company Shareholder in the Spreadsheet); (C) hereby terminates and waives any rights, powers and privileges such Company Shareholder
has or may have pursuant to any investors rights agreement, registration rights agreement or shareholders agreement entered into by such
Company Shareholder with respect to the Company (each, a “Shareholders Agreement”) or any right to make a claim
or demand for any discrepancy between any Shareholders Agreement, share purchase agreement or convertible loan agreement such Company
Shareholder and the provisions of this Agreement and his, her or its entitlement pursuant to such agreements; (D) for as long as this
Agreement is in force agrees not to sell, transfer, assign or convert any of its Company Securities (except as contemplated by Section
1.2(d)), or subject such Company Securities to any Encumbrances, except pursuant to a transfer request of Company Securities provided
to the Company and Acquirer prior to the Agreement Date; and (E) has not heretofore assigned or transferred, or purported to have
assigned or transferred, to any corporation (or any other legal entity) or person whatsoever, any claim, debt, liability, demand, obligation,
cost, expense, action or cause of action, cross-claims, counter claims, compensatory damages, liquidated damages, punitive or exemplary
damages, or other damages herein released.
12
(c) Notwithstanding
anything to the contrary, (i) the foregoing releases are conditioned upon the consummation of the Closing and shall become null and void,
and shall have no effect whatsoever, without any action on the part of any Person, upon termination of this Agreement in accordance with
its terms; and (ii) should any portion or provision of this release (including, without limitation, any portion or provision of any section
of this release) be found, held, declared, determined, or deemed by any court of competent jurisdiction to be void, illegal, invalid or
unenforceable under any Applicable Law, (a) the legality, validity, and enforceability of the remaining portions and provisions will not
be affected and (b) the parties hereto shall use all reasonable efforts to replace such void, illegal, invalid or unenforceable portion
or provision with a valid and enforceable portion or provision that shall achieve, to the greatest extent possible, the economic, business
and other purposes of such void, illegal, invalid or unenforceable portion or provision (and if not possible, the illegal, invalid, or
unenforceable portion or provision will be deemed not to be a part of this release).
1.9 Acquirer Common
Stock.
(a) Without
derogating in any manner from the obligations of Acquirer in connection with the issuance of Acquirer Common Stock, where applicable,
any Acquirer Common Stock issued hereunder, if any, shall be issued in book-entry form and shall bear the following legend:
THE SHARES OF COMMON
STOCK REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL (I)
SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”)
OR (II) THE ISSUER OF THE SHARES HAS RECEIVED AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH
OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH THE ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF.IN
ADDITION, THE RIGHT TO SELL THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO A REGISTRATION RIGHTS AGREEMENT,
A COPY OF WHICH IS ON FILE AT THE ISSUER’S PRINCIPAL PLACE OF BUSINESS
(b) Exchange
Procedures. Notwithstanding any other provision in this Agreement, (i) the aggregate Acquirer Common Stock to be issued in connection
with the transactions contemplated hereunder shall not exceed 19.99% of the outstanding Common Stock on the execution date of this Agreement
and any portion of the Aggregate Consideration exceeding 19.99% shall instead be paid in Substitute Cash Consideration; (ii) in no event
shall Acquirer be required to issue any shares of Acquirer Common Stock, if recipient does not qualify as either an Accredited Investor
or a non-US person to the Acquirer’s satisfaction in its sole determination; and (iii) no fraction of a share of Acquirer Common
Stock shall be issued in connection with the transactions contemplated hereunder, and there shall not be any cash payments made under
this Agreement in lieu of fractional shares; the aggregate number of shares of Acquirer Common Stock issuable hereunder shall be rounded
down to the nearest whole share after aggregating all fractional Base Stock Consideration payable to each Company Shareholder on the Closing
Date or the respective Payment Date.
(c) Legend
Removal. Upon the requests of the Company Shareholders, Acquirer shall cause the transfer agent to remove the legend set forth above
from the Acquirer Common Stock in connection with resales made pursuant to the Registration Rights Agreement and in any event upon the
twelve month anniversary of the Closing Date. As set forth in the Registration Rights Agreement, Acquirer agrees to make further direction
to its legal counsel and transfer agent as necessary for such issuance of an opinion regarding the removal of the legend in order to facilitate
the foregoing.
13
Article
II
Earn-Out
2.1 Earn-Out
Definitions. The following terms used herein have the following definitions:
(a) “Actual
New Orders Amount” means the aggregate amount, without duplication, of New Orders received by the Company and its Subsidiaries
during the Earn-Out Period. The Actual New Orders Amount shall be calculated in U.S. dollars, regardless of the currency in which the
New Orders are denominated, based on the applicable exchange rate used in Acquirer’s books. For the avoidance of doubt, the calculation
of the Actual New Orders Amount shall give effect to any actual and quantified reductions attributable to product returns, de-booking,
warranty claims refunds, or customer credits.
(b) “Earn-Out
Report” means a report indicating the Actual New Orders Amount for the Earn-Out Period, and shall include: (i) notice to
the Shareholders’ Agent of whether the Company Shareholders are entitled to an Earn-Out Payment, and if they are so entitled, the
amount of Earn-Out Payment; (ii) such data and documentation as may be reasonably required to support Acquirer’s calculation of
the Actual New Orders Amount and any Earn-Out Payment; and (iii) a list of any Customer Orders received during the Earn-Out Period that
Acquirer determined do not qualify as New Orders and a reasonably detailed explanation of the basis for such determination.
(c) “New
Order” means a bona fide, arm’s-length customer order, contract, statement of work, purchase order, or other binding
commitment for the Company’s and its Subsidiaries products or services that: (w) specifies delivery, performance, installation or
acceptance dates for receipt by the customer of the applicable products or services, or with respect to services, completion date(s) or
service periods, (x) has been fully executed or duly issued by the customer and duly accepted by the Company in accordance with ordinary
course contracting procedures; (y) identifies the customer, the specific products or services to be provided, and all material commercial
terms, including pricing and payment terms; and (z) creates a present, legally enforceable obligation on the part of the customer to pay
the applicable fees. For the avoidance of doubt, a New Order that had met the foregoing conditions but that shall have subsequently, during
the Earn-Out Period, in respect of all or any portion of such New Order, ceased to meet these conditions (e.g., due to a termination of
the New Order or any portion thereof occurring during the Earn-Out Period) shall not constitute a New Order hereunder. Conversely, an
order that did not meet the foregoing conditions but subsequently, the Company or its Subsidiaries have made the sale, the actual amount
collected shall be considered a New Order hereunder and taken into account in the calculation of “Actual New Orders Amount”.
A New Order shall be counted
only at the net contract value of such binding commitment that is reasonably expected to be collected or that has been collected, and
shall exclude any amounts attributable to taxes, shipping, pass-through expenses optional amounts or variable usage amounts, in each case
not contractually committed, and any other amounts that are not fixed as of the date of booking, provided however that to the extent such
excluded amounts become contractually committed following the date of booking, such amounts shall be added to the Actual New Order Amount.
14
No non-binding proposal, quote,
pipeline opportunity, forecasted sale, memorandum of understanding, letter of intent, or any transaction entered into primarily to accelerate,
pull forward, or inflate achievement of the Earn-Out shall constitute a New Order.
2.2 Subject
to the terms and conditions herein and in Schedule 2.2(a) attached hereto (the “Earn-Out Schedule”),
Acquirer shall pay up to an amount of US $60,000,000 to the Paying Agent, for further disbursement to the Company Shareholders, at such
time and in accordance with the procedures set forth in this Article II, an amount, if
any, calculated in accordance with the terms of the Earn-Out Schedule (the “Earn-Out”), and, subject to the
terms of the Earn-Out Schedule, shall allocate to the Retention Participants equity-based awards having an aggregate value of US $5,000,000.
Capitalized terms used in this Agreement but defined in the Earn-Out Schedule shall have the respective meanings given to them in the
Earn-Out Schedule.
2.3 Delivery
of Earn-Out Report; Determination of Earn-Out Payment. The procedures for the determination, calculation and payment of the Earn-Out
Payment shall be as follows:
(a) Within
30 days from the end of the Earn-Out Period, Acquirer shall deliver the Earn-Out Report to the Shareholders’ Agent, along with documents
reasonably necessary for determination thereof, provided that Acquirer shall not be required to disclose any information with respect
to which disclosure is prohibited in accordance with the provisions of any applicable Law or Order, and Acquirer shall be permitted to
redact or otherwise refrain from disclosing any such information. The Company’s CEO shall provide a report to the Shareholders’
Agent and Acquirer at the end of each one-year anniversary of the Closing Date specifying the Actual New Orders Amount as estimated by
the CEO as of each such date, which shall not be determinative of the Earn-Out (“Interim Report”), and if Ofer Yarden is no
longer serving as the Company’s CEO, then as of the date on which he ceases to be in
such capacity and until the lapse of the Earn-Out Period, the Acquirer shall provide the Shareholders’ Agent with an Interim
Report on a quarterly basis together with documents reasonably necessary for determination of the Actual New Orders Amount, provided
that Acquirer shall not be required to disclose any information with respect to which disclosure is prohibited in accordance with the
provisions of any applicable Contract, Law or Order, and Acquirer shall be permitted to redact or otherwise refrain from disclosing any
such information.
(b) The
Shareholders’ Agent may object, in good faith, to the determination in the Earn-Out Report by providing written notice to that effect
to Acquirer within 30 days after the delivery of the Earn-Out Report, which notice will set forth in reasonable detail the basis for such
objection and the amount in dispute (the “Earn-Out Report Objection Notice”).
(c) If
the Earn-Out Report Objection Notice is not delivered within the said 30-day period, then the calculation of the Earn-Out Payment as set
forth in the Earn-Out Report shall be deemed finally determined and shall be final and binding on the parties for all purposes.
(d) If
the Shareholders’ Agent timely delivers the Earn-Out Report Objection Notice, then Acquirer and the Shareholders’ Agent shall
use reasonable efforts and attempt in good faith to resolve the objection as to the computation of the Earn-Out Payment during a further
20-day period (the “Resolution Period”), and if it is so resolved, the Earn-Out Payment shall be modified as
necessary to reflect such resolution. The resolution so agreed shall be final and binding on the parties for all purposes.
(e) If
Acquirer and the Shareholders’ Agent are unable to resolve the objection until the end of the Resolution Period or such longer period
as Acquirer and the Shareholders’ Agent shall agree to, then the provisions of Section 1.5(f)
shall apply, mutatis mutandis, and the determination of the Reviewing Accountant shall be final and binding on the parties for
all purposes.
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2.4 Subject
to the provisions of this Agreement, the Earn-Out Payment, if any, shall be paid, without interest, to the Paying Agent, for further disbursement
to the Company Shareholders, on the first business day of the first calendar month on which at least 30 days shall have elapsed from the
final determination of the Earn-Out Payment pursuant to Section 2.3 hereof (the “Earn-Out Payment Date”).
2.5 Earn-Out
Period Covenants. During the Earn-Out Period:
(a) Acquirer
shall enable the Company to be operated in good faith and in all material respects consistent with past practice and shall not take (or
omit to take) actions primarily intended to prevent, reduce or defer achievement or payment of the Earn-Out.
(b) Acquirer
shall enable the Company to operate pursuant to the Company’s budget and business plan, as
may be amended, and based on the principles specified in Schedule 2.5.
(c)
If, during the Earn-Out Period, there is a sale of the Company (including by way of an asset sale of the Company’s assets), the
new controlling shareholder following such sale shall be bound to honor the Earn-Out provisions set forth in this Article II and
the related undertakings contained herein, and Acquirer shall guarantee the payment obligations of such new controlling shareholder in
respect thereof. In the event that Acquirer executes a binding definitive agreement for the sale of the Company during the Earn-Out
Period, Acquirer shall provide the Shareholders’ Agent written notice prior to Acquirer’s execution of such agreement.
Article
III
Representations and Warranties of the Company
Subject to the disclosures
set forth in the disclosure letter of the Company delivered to Acquirer concurrently with the execution of this Agreement (the “Company
Disclosure Letter”) (each of which disclosures, in order to be effective, shall clearly indicate the Section and, if
applicable, the Subsection of this Article III to which it relates (unless and only to the extent the relevance to other
representations and warranties is readily apparent from the actual text of the disclosures without any reference to extrinsic documentation
or any independent knowledge on the part of the reader regarding the matter disclosed), and each of which disclosures shall also be deemed
to be representations and warranties made by the Company to Acquirer under this Article III), the Company represents and warrants
to Acquirer as follows (and any reference to the Company’s Subsidiary shall be deemed reference to each of the Company’s Subsidiaries,
as applicable):
3.1 Organization,
Standing, Power and Subsidiary.
(a) The
Company and its Subsidiary are corporations duly organized, validly existing and in good standing under the laws of their jurisdiction
of organization, and the Company is not registered by the Israeli Registrar of Companies as a “violating company” as such
term is defined under Section 362a of the Israeli Companies Law, and it has not received any notice or warning concerning any intention
of the Israeli Registrar of Companies to declare that the Company is a “violating company”. Each of the Company and its Subsidiary
has the corporate power to own, operate, use, distribute and lease its properties and to conduct the Business and is duly licensed or
qualified to do business and is in good standing in each jurisdiction where the failure to be so qualified or in good standing, individually
or in the aggregate with any such other failures, would reasonably be expected to have a Material Adverse Effect with respect to the Company
and its Subsidiary taken as a whole. Except as set forth in Schedule 3.1(a) of the Company Disclosure Letter, the Company
and its Subsidiary, since their applicable inception, have had no Equity Interest, whether direct or indirect, in, or any loans to, any
corporation, partnership, limited liability company, joint venture or other business entity (other than with respect to the Company’s
holding of Equity Interests in the Subsidiary). There are no outstanding and currently effective powers of attorneys executed by or on
behalf of the Company or its Subsidiary (except, in the case of the Subsidiary, in favor of the Company). The Company has made available
to Acquirer accurate and complete copies of the Charter Documents of the Company and the organizational documents of its Subsidiary, as
amended to date and currently in effect, which documents are in full force and effect, and neither the Company nor its Subsidiary is,
in any material respect, in default under or in violation of any provisions thereof. There are no entities that have been merged into
or otherwise are predecessors of the Company or its Subsidiary. The Acquired Companies are not qualified to do business in any jurisdiction
other than Israel.
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(b) Schedule
3.1(b) of the Company Disclosure Letter sets forth a true, correct and complete list of: (i) the names of the members of the
Board and the board of directors (or similar body) of the Subsidiary, (ii) the names of the members of each committee of the Board and
the board of directors (or similar body) of the Subsidiary, and (iii) the names and titles of the officers of each of the Company and
its Subsidiary.
(c) Except
as set forth in Schedule 3.1(c) of the Company Disclosure Letter, neither the Company nor the Subsidiary has conducted
any business under or otherwise used, for any purpose or in any jurisdiction, any fictitious name, assumed name, business name or other
name, other than (i) its corporate name as set forth in this Agreement, or (ii) any of its trademarks listed on Schedule 3.10(d)
of the Company Disclosure Letter. For the avoidance of doubt, a change of the corporate name of the Company or its Subsidiary duly registered
with the Israeli Registrar of Companies shall not constitute the use of a fictitious name, assumed name or other name for purposes of
this Section 3.1(c).
(d) Neither
the Company nor any Subsidiary is, or has ever been, bankrupt or insolvent, and has not proposed a voluntary arrangement or made or proposed
any arrangement or composition with such Company’s or Subsidiary’s creditors or any class of such creditors, and no petition
in respect of any such arrangement or composition has been presented. The consummation of the Share Purchase and the other Transactions
shall not constitute a fraudulent transfer by the Company or the Subsidiary under applicable bankruptcy and other similar laws relating
to bankruptcy and insolvency. Neither the Company nor any of its shareholders has ever approved or commenced any proceeding or made any
election contemplating the dissolution or liquidation of the Company or the Subsidiary or the winding up or cessation of the business
or affairs of the Company or the Subsidiary.
3.2 Capital
Structure.
(a) The
authorized share capital of the Company consists solely of 38,000 Company Shares, and 13,592 Company Shares, are issued and outstanding
as of the Agreement Date (4,068 of which are dormant shares, as defined in the Israeli Companies Law, held by the Company). Except as
set forth in Schedule 3.2(a) of the Company Disclosure Letter, there are no (i) other issued and outstanding shares of
Company Shares and no commitments or Contracts to issue any shares of Company Shares, or (ii) any outstanding securities constituting
any Equity Interest of the Company or any commitments or Contracts to issue any such Equity Interest. There are no outstanding Company
Options. Except as set forth in Schedule 3.2(a) of the Company Disclosure Letter, neither the Company nor its Subsidiary
holds any treasury shares. Schedule 3.2(a) of the Company Disclosure Letter sets forth, as of the Agreement Date, a true,
correct and complete list of the Company Shareholders that are the registered owners of any Company Shares and the number and type of
such shares so owned by such Company Shareholder and any beneficial holders thereof, if applicable. All issued and outstanding shares
of Company Shares are duly authorized, validly issued, fully paid and non-assessable and are free of any Encumbrances, outstanding subscriptions,
preemptive rights or “put” or “call” rights created by statute, the Charter Documents or any Contract to which
the Company or its Subsidiary is a party or by which the Company or its Subsidiary or any of their respective assets are bound.
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(b) Except
as set forth in Schedule 3.2(b) of the Company Disclosure Letter, neither the Company nor any Subsidiary has ever declared
or paid any dividends on any shares of Company Shares. There is no Liability for dividends accrued and unpaid by the Company or its Subsidiary.
All issued and outstanding shares of Company Shares were issued in compliance with all Applicable Law and all requirements set forth in
the Charter Documents, the Company Option Plan and any applicable Contracts to which the Company or its Subsidiary is a party or by which
the Company or its Subsidiary or any of their respective assets are bound.
(c) Except
for the Company Option Plan, neither the Company nor any Subsidiary has ever adopted, sponsored or maintained any share option plan or
any other plan or Contract providing for equity-related compensation to any Person (whether payable in shares, cash or otherwise). The
Company Option Plan has been duly authorized, approved and adopted by the Board and the Company Shareholders and is in full force and
effect. There are no promises or commitments of any options or other equity or equity-based awards with respect to Company Shares or other
equity securities of the Company or its Subsidiary, whether or not such promises are contingent on performance or other factors, which
options or other awards have not been granted as of the date of this Agreement.
(d) Schedule
3.2(d) of the Company Disclosure Letter accurately sets forth, as of the date of this Agreement, and the Spreadsheet will accurately
set forth, as of immediately prior to the Closing, with respect to each Company Option: (i) the name of the holder of such Company Option,
(ii) the exercise price per share thereof, (iii) the number of Company Shares covered thereby, (iv) the date of grant and vesting schedule
(including any applicable performance-based vesting conditions) thereof, (v) the extent for which it is vested as of the date hereof,
(vi) whether the exercisability thereof is to be accelerated in any manner as a result of the transactions contemplated by this Agreement
or any other events, (vii) the expiration date thereof, and (viii) whether such Company Option is an incentive stock option (as defined
in Section 422 of the Code) or a nonqualified stock option, or otherwise eligible for beneficial tax. In addition, no Company Options
were granted under the Company Option Plan to any holder who is not an employee of any Acquired Company. Each grant of a Company Option
was duly authorized no later than the date on which the grant of such Company Option was by its terms to be effective by all necessary
corporate action, including, as applicable, approval by the Board (or a duly constituted and authorized committee thereof) and any required
shareholders approval, in each case, by the necessary number of votes or written consents, and the award agreement governing any such
grant that remains outstanding was duly executed and delivered by each party thereto and is in full force and effect. Each grant of a
Company Option was made in accordance with the terms of the applicable Company Option Plan and all other applicable Law. The issuance
and vesting of each Company Option complied with the terms of the applicable Company Option Plan, all Contracts applicable to such Company
Option and all applicable legal requirements. As of the Closing, other than the right to receive consideration under this Agreement, no
former holder of a Company Option will have any rights with respect to such Company Option. True and complete copies of all agreements,
Contracts and instruments relating to or issued under the Company Option Plan have been made available to Acquirer and such agreements,
Contracts and instruments have not been amended, modified or supplemented, and there are no agreements to amend, modify or supplement
such agreements or instruments from the forms thereof made available to Acquirer. The terms of the Company Option Plan and the Contracts
evidencing the Company Options permit the treatment of Company Options as provided in this Agreement, without notice to, or without the
consent or approval of, the holders of such securities, the Company Shareholders or otherwise.
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(e) Except
as set forth in Schedule 3.2(e) of the Company Disclosure Letter, the Company has never repurchased, redeemed or otherwise
reacquired any of its Company Shares or Company Options, or other Equity Interests.
(f) As
of the Closing, (i) the number of Company Securities set forth in the Spreadsheet as being owned by a Person will constitute the entire
interest of such Person in the issued and outstanding Company Shares or any other Equity Interests of the Company, (ii) no Person not
disclosed in the Spreadsheet owns or will have a right to acquire from the Company or its Subsidiary any Company Shares, Company Options,
or any other Equity Interests of the Company or its Subsidiary and (iii) the Company Shares disclosed in the Spreadsheet will be free
and clear of any Encumbrances.
(g) Neither
the Company nor its Subsidiary owns, beneficially or otherwise, any units or other securities of, or any direct or indirect equity, voting,
beneficial ownership interest in, any other Person and neither the Company nor its Subsidiary has agreed or is obligated to make any future
investment in or capital contribution to any Person (other than with respect to the Company’s holding of Equity Interests in the
Subsidiary and any dormant shares held by the Company, in each case in accordance with applicable law).
3.3 Authority;
Non-Contravention.
(a) The
Company has all requisite corporate power and authority to enter into this Agreement and the other Transaction Documents to which it is
a party and to consummate the Transactions. The execution and delivery of this Agreement and the other Transaction Documents to which
the Company is a party and the consummation of the Transactions have been duly authorized by all necessary corporate action on the part
of the Company and its Subsidiary. Each Transaction Document to which the Company is a party has been duly executed and delivered by the
Company and, assuming the due execution and delivery of such Transaction Document by the other parties hereto, constitutes the valid and
binding obligation of the Company enforceable against the Company in accordance with its terms subject only to the effect, if any, of
(i) applicable bankruptcy and other similar Applicable Law affecting the rights of creditors generally and (ii) rules of law governing
specific performance, injunctive relief and other equitable remedies. The Board, by resolutions duly adopted (and not thereafter modified
or rescinded) by the unanimous vote of the members of the Board, has (x) approved this Agreement and approved the Share Purchase and the
other Transactions and determined that this Agreement and the Transactions, including the Share Purchase, upon the terms and subject to
the conditions set forth herein, are advisable, and in the best interests of the Company and the Company Shareholders, (y) approved this
Agreement in accordance with the provisions of Israeli Law and the Charter Documents and (z) recommended that all of the Company Shareholders
approve and execute this Agreement (the “Board Consent”). The Board Consent was made available to Acquirer prior
to the date hereof. The Shareholder Consent constitutes the only vote or approval of, or waiver by, any holder of any class or series
of Company Shares necessary to adopt and approve this Agreement, the other Transaction Documents, and the Transactions under Applicable
Laws, the Charter Documents, any Contracts by which the Company is bound and/or a party, or otherwise. The Company and its Subsidiary
and the Transactions are not, and by the passage of time or notice or both will not be, subject to, and no Person has Acquisition Rights
or, to the knowledge of the Company, other rights that could affect or threaten the Company or any Company Shareholder’s compliance
with any of the obligations under this Agreement, or any of the other Transaction Documents.
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(b) The
execution and delivery of this Agreement and the other Transaction Documents to which the Company is a party by the Company does not,
and the consummation of the Transactions will not, (i) result in the creation of any Encumbrance, on any of the material assets of the
Company or its Subsidiary or any of the shares of Company Shares, (ii) conflict with, or result in any violation of or default under (with
or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or
loss of any benefit under, or require any consent, approval or waiver from any Person pursuant to, (A) any provision of the Charter
Documents of the Company or its Subsidiary, in each case as amended to date, or any resolution adopted by the Company Shareholders or
Board, (B) any Contract of the Company or its Subsidiary or any Contract applicable to any of the material properties or assets of the
Company or its Subsidiary, or (C) any Applicable Law, or (iii) contravene, conflict with or result in a violation of, or give any
Governmental Entity or other Person the right to challenge any of the transactions contemplated by this Agreement or to exercise any remedy
or obtain any relief under, Israeli Law or any Order to which the Company or its Subsidiary is subject.
(c) Except
as set forth in Schedule 3.3(c) of the Company Disclosure Letter, no consent, approval, Order or authorization
of, or registration, declaration or filing with, or notice to, any Governmental Entity or any other Person is required by or with respect
to the Company or the Subsidiary in connection with the execution and delivery of this Agreement or any other Transaction Document to
which the Company is a party or the consummation of the Transactions, except for such consents, approvals, Orders, authorizations, registrations,
declarations, filings and notices that, if not obtained or made, would not adversely affect, and would not reasonably be expected to adversely
affect, the Company’s or the Subsidiary’s ability to perform or comply with the covenants, agreements or obligations of the
Company herein or in any other Transaction Document to which the Company is a party or to consummate the Transactions in accordance with
this Agreement or any other such Transaction Document and Applicable Law.
(d) Assuming
the consents set forth in Schedule 3.3(c) of the Company Disclosure Letter are obtained, the execution and delivery of
this Agreement by the Company does not, and the consummation of the Transactions will not contravene, conflict with or result in a violation
of any of the terms or requirements of, or give any Governmental Entity the right to revoke, withdraw, suspend, cancel, terminate or modify,
any authorization from a Governmental Entity that is held by the Company or its Subsidiary that otherwise relates to the Company’s
or the Subsidiary’s Business or to any of the assets owned or used by the Company.
3.4 Financial
Statements; No Undisclosed Liabilities.
(a) The
Company has delivered to Acquirer its audited, financial statements of the Company and its Subsidiaries for the fiscal years ended December
31, 2023 and December 31, 2024, and its reviewed financial statements for the fiscal year ended December 31, 2025 (including, in each
case, balance sheets, statements of operations and statements of cash flows and notes) (collectively, the “Financial Statements”),
which are included as Schedule 3.4(a) of the Company Disclosure Letter. Except as set forth in Schedule 3.4(a)
of the Company Disclosure Letter, the Financial Statements (i) are derived from and in accordance with the books and records of
the Company and its Subsidiary, (ii) complied as to form with applicable accounting requirements with respect thereto as of their respective
dates, (iii) fairly and accurately present in all materials respects the financial condition of the Company and its Subsidiary at the
dates therein indicated and the results of operations and cash flows of the Company and its Subsidiary for the periods therein specified
(subject, in the case of unaudited interim period financial statements, to normal recurring year-end audit adjustments, none of which
individually or in the aggregate will be material in amount), (iv) were prepared in accordance with Israeli GAAP, except for the absence
of footnotes in the unaudited Financial Statements (which would not be material individually or in the aggregate if disclosed or recorded
and which are expected to be consistent with past practice), applied on a consistent basis throughout the periods involved, and (v) have
been kept accurately in the ordinary course of business consistent in all material respects with Israeli Law. To the knowledge of the
Company, no basis exists that would require, and no circumstance exists that would reasonably be expected to require, the Company to restate
any of the Financial Statements.
20
(b) The
Company and each Subsidiary have in place, maintain, adhere to and enforce systems and processes (including the maintenance of proper
books and records) that (i) provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial
statements (including the Financial Statements), in accordance with Israeli GAAP, and (ii) in a timely manner accumulate and communicate
to the Company’s principal executive officer and principal financial officer the type of information that would be required to be
disclosed in the Financial Statements (such systems and processes are herein referred to as the “Controls”).
Neither the Company nor the Subsidiary, nor, to the knowledge of the Company, their respective current or former employees, consultants,
officers or directors, nor the Company’s independent auditors, has identified or been made aware of any complaint, allegation, deficiency,
weakness, assertion or claim, whether written or oral, regarding the Controls or the Financial Statements. To the Knowledge of the Company,
there have been no instances of fraud, whether or not material, that occurred during any period covered by the Financial Statements. Each
of the Company and its Subsidiary has in place a revenue recognition method consistent with Israeli GAAP. The current internal operating
systems and networks (hardware and software) of the Company and its Subsidiary are adequate to conduct the business of the Company and
its Subsidiary as presently conducted without additional capital expenditures.
(c) Except
as set forth in Schedule 3.4(c) of the Company Disclosure Letter, neither the Company nor any Subsidiary has any
Liabilities of any nature other than (i) those set forth or adequately provided for in the balance sheet included in the Financial Statements
as of December 31, 2025 (such date, the “Company Balance Sheet Date” and such balance sheet, the “Company
Balance Sheet”), (ii) those incurred in the conduct of the Company’s and its Subsidiary’s business since the
Company Balance Sheet Date in the ordinary course consistent with past practice, that are of the type that ordinarily recur and, individually
or in the aggregate, are not material in nature or amount and do not result from any breach of Contract, warranty, infringement, tort
or violation of Applicable Law, and (iii) those incurred by the Company and its Subsidiary in connection with the execution of this Agreement
or the Transactions, including, for the avoidance of doubt, the Transaction Expenses. Except for Liabilities reflected in the Financial
Statements and the foregoing exceptions, neither the Company nor the Subsidiary has any off-balance sheet Liability of any nature to,
or any financial interest in, any third parties or entities, the purpose or effect of which is to defer, postpone, reduce or otherwise
avoid or adjust the recording of expenses incurred by the Company and its Subsidiary. All reserves that are set forth in or reflected
in the Company Balance Sheet have been established in accordance with Israeli GAAP consistently applied and are adequate. Without limiting
the generality of the foregoing, except as set forth in Schedule 3.2(d) of the Company Disclosure Letter, neither the
Company nor the Subsidiary has ever guaranteed any debt or other obligation of any other Person.
(d) All
accounts receivable reflected in the Company Balance Sheet, or which have arisen from the conduct of the Acquired Companies’ business
since the Company Balance Sheet Date, are valid and have arisen only from bona fide, arms-length transactions entered into in the ordinary
course of business, and the accounts receivable reflected in the Company Balance Sheet are consistent with the Company’s past accounting
practices. To the knowledge of the Company, all receivables reflected in the Company Balance Sheet, or which have arisen from the conduct
of the Group Companies’ business since the Company Balance Sheet Date, are as of the date of this Agreement, not subject to defense,
offset or any counterclaim in excess of the reserves reflected in the Company Balance Sheet are and collectible in accordance with the
Company’s collection practices in the ordinary course of business consistent with past practice (except as set forth in the Company
Balance Sheet). Other than intercompany balances between the Company and the Subsidiaries and any Transaction Expenses, all accounts payable
of the Company have or will have arisen from bona fide arm’s length transactions in the ordinary course of business. The Company
and each Subsidiary pays its accounts payable in the ordinary course of its business.
21
(e) Schedule
3.4(e) of the Company Disclosure Letter sets forth a true, correct and complete list of all Company Debt, including, for each
such Liability, the agreement governing such Liability and the interest rate, maturity date, and any assets securing such Liability.
(f) Schedule
3.4(f) of the Company Disclosure Letter sets forth the names and locations of all banks and other financial institutions at which
the Company and its Subsidiary maintain an account (whether checking, savings or otherwise), lock box or safe deposit box, and the account
numbers thereof and the names of all Persons authorized to make withdrawals therefrom.
(g) Schedule
3.4(g) of the Company Disclosure Letter sets forth, to the Company’s knowledge, all personal guarantees or similar undertakings,
howsoever named, covering any undertaking, liability or obligation of any Acquired Company (each, a “Personal Guarantee”).
To the Company’s knowledge, other than as set forth on Schedule 3.4(g), there are no Personal Guarantees with respect
to any Acquired Company.
3.5 Absence of
Changes. Since the Company Balance Sheet Date, (i) Expect as set forth in Schedule 3.5(i) of the Company Disclosure
Letter, the Company and each Subsidiary have conducted the Business only in the ordinary course of business consistent with past
practice, (ii) there has not occurred any Material Adverse Effect with respect to the Company and each Subsidiary and (iii) neither
the Company nor any Subsidiary has done, caused or permitted any action that would constitute a breach of Section 6.2 if
such action were taken by the Company or any Subsidiary, as applicable, without the written consent of Acquirer, between the
Agreement Date and the earlier of the termination of this Agreement and the Closing.
3.6 Litigation.
Except as set forth in Schedule 3.6 of the Company Disclosure Letter, there is no, and there has not been since the last
seven years, any Legal Proceeding to which the Company or its Subsidiary is a party pending before any Governmental Entity, or to
the knowledge of the Company, threatened against the Company or its Subsidiary or, in each case, any of its assets or any of its
directors, officers or employees (in their capacities as such or relating to their employment, services or relationship with the
Company or its Subsidiary), and to the knowledge of the Company, there is no reasonable basis for any such Legal Proceeding. There
is no Order against the Company, or its Subsidiary, or any of their respective assets, or any of the Company’s or its
Subsidiary’s directors, officers or, to the knowledge of the Company, their employees (in their capacities as such or relating
to their employment, services or relationship with the Company or its Subsidiary). To the knowledge of the Company, there is no
reasonable basis for any Person to assert a claim against the Company or its Subsidiary or any of their respective assets or any of
the Company’s or its Subsidiary’s directors, officers or employees (in their capacities as such or relating to their
employment, services or relationship with the Company or its Subsidiary) based upon: (i) the Company or its Subsidiary entering into
this Agreement, any of the Transactions or the agreements contemplated by this Agreement, including a claim that such director,
officer or employee breached a fiduciary duty in connection therewith, (ii) any confidentiality or similar agreement entered into by
the Company or its Subsidiary regarding its assets or (iii) any claim that the Company or its Subsidiary has agreed to sell or
dispose of any of its assets to any party other than Acquirer, whether by way of merger, consolidation, sale of assets or otherwise.
Except as set forth in Schedule 3.6 of the Company Disclosure Letter, neither the Company nor its Subsidiary has any Legal
Proceeding pending against any other Person.
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3.7 Restrictions
on Business Activities. Except as set forth in Schedule 3.7 of the Company Disclosure Letter, there is no Contract
or Order binding upon the Company or its Subsidiary that restricts or prohibits, purports to restrict or prohibit or would
reasonably be expected to restrict or prohibit the conduct or operation of the Business or, excluding restrictions on the use of
Third-Party Intellectual Property contained in the applicable written license agreement therefor, limiting the freedom of the
Company or its Subsidiary to (i) engage or participate, or compete with any other Person, in any line of business, market or
geographic area with respect to the Company Products or the Company Intellectual Property, or to make use of any Company
Intellectual Property, including any grants by the Company of exclusive rights or licenses thereto, or any Contract granting most
favored nation pricing, exclusive sales, distribution, marketing or other exclusive rights, rights of refusal, rights of first
negotiation or similar rights and/or terms to any Person, or (ii) sell, distribute or manufacture any products or services or
to purchase or otherwise obtain any software, components, parts or services.
3.8 Compliance
with Laws; Governmental Permits.
(a) The
Company and each Subsidiary have complied in all material respects with, are not in violation in any material respect of, and have not
received any notices of violation with respect to, Applicable Law.
(b) The
Company and each Subsidiary have obtained each material federal, state, county, local or foreign governmental consent, license, permit,
grant or other authorization of a Governmental Entity (i) pursuant to which the Company or its Subsidiary currently operates or holds
any interest in any of its assets or properties or (ii) that is required for the conduct of the Business or the holding of any such interest
(all of the foregoing consents, licenses, permits, grants and other authorizations, collectively, the “Company Authorizations”),
and all of the Company Authorizations are in full force and effect. Schedule 3.8(b) of the Company Disclosure Letter
identifies each Company Authorization, to include any licenses, registrations or filings with the U.S. Directorate of Defense Trade Controls
(DDTC), the Committee on Foreign Investment in the U.S. (CFIUS), the Israeli Defense Export Control Agency (DECA), the Israeli Ministry
of Defense (IMOD), or any other similar entities. Neither the Company nor its Subsidiary has received any notice or other communication
from any Governmental Entity regarding (x) any actual or possible violation of any Company Authorization or (y) any actual or
possible revocation, withdrawal, suspension, cancellation, termination or modification of any Company Authorization, and to the knowledge
of the Company, no such notice or other communication is forthcoming. Except as set forth in Schedule 3.8(b) of the Company
Disclosure Letter, the Company and its Subsidiary have materially complied with all of the terms of the Company Authorizations and none
of the Company Authorizations will be terminated or impaired, or will become terminable, in whole or in part, as a result of the consummation
of the Transactions.
(c) The
Company and its Subsidiary do not meet the criteria set forth in Section 17(a) of the Israeli Economic Competition Law, 1988 and Section
9 of the Israeli Restrictive Trade Practices Regulations (Registration, Publication and Reporting of Transactions), 2004, promulgated
thereunder, in terms of market shares (less than 50% in each market in which they operate) and annual turnover in Israel (less than NIS
22.51 million in the last completed fiscal year).
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3.9 Title
to, Condition and Sufficiency of Assets; Real Property.
(a) Each
of the Company and its Subsidiary has good title to, or valid leasehold interest in all of its properties, and interests in properties
and assets, real and personal, reflected on the Company Balance Sheet or acquired after the Company Balance Sheet Date (except properties
and assets, or interests in properties and assets, sold or otherwise disposed of since the Company Balance Sheet Date in the ordinary
course of business consistent with past practice) (the “Company Assets”), or, with respect to leased properties
and assets, valid leasehold interests in such properties and assets that afford the Company and its Subsidiary valid leasehold possession
of the properties and assets that are the subject of such leases, in each case, free and clear of all Encumbrances, except for those set
forth in Schedule 3.9(a) of the Company Disclosure Letter.
(b) The
Company Assets owned or leased by each of the Company and each Subsidiary (i) constitute all of the real and personal assets and properties
that are necessary for the Company and its Subsidiary to conduct, operate and continue the conduct of the Business and to sell and otherwise
enjoy full rights to exploitation of its assets, properties and all products and services that are provided in connection with its assets
and properties and (ii) constitute all of the assets and properties that are used in the conduct of the Business, without (A) the need
for Acquirer to acquire or license any other asset, property or Intellectual Property in order to conduct, operate and continue the Business,
or (B) the breach or violation of any Contract to which the Company or its Subsidiary is a party or, in each case, by which its assets
are bound.
(c) Schedule
3.9(c) of the Company Disclosure Letter identifies each parcel of real property leased by the Company or its Subsidiary. The
Company has provided to Acquirer true, correct and complete copies of all leases, subleases and other agreements under which the Company
or its Subsidiary uses or occupies or has the right to use or occupy, now or in the future, any real property or facility, including all
modifications, amendments and supplements thereto. Neither the Company nor its Subsidiary currently owns any real property.
3.10 Intellectual
Property.
(a) As
used herein, the following terms have the meanings indicated below:
(i)
“AI” means artificial intelligence systems or models.
(ii) “Company
Data” means all data collected, generated, received or otherwise Processed by the Company or its Subsidiary or on their
behalf, including in connection with the marketing, delivery, or use of any Company Product, including Company-Licensed Data, Company-Owned
Data and Personal Data.
(iii) “Company
Data Agreement” means any Contract involving Company Data to which the Company or the Subsidiary is a party or is bound
by, except for the standard terms of service entered into by users of the Company Products (copies of which have been made available to
Acquirer).
(iv) “Company
Intellectual Property” means any and all Company-Owned Intellectual Property and any and all Third-Party Intellectual Property
that is licensed to, or otherwise used or held for use by, the Company or the Subsidiary.
(v) “Company
Intellectual Property Agreements” means any Contract governing any Company Intellectual Property to which the Company or
its Subsidiary is a party or bound by, except for Contracts for Off-the-Shelf Software.
24
(vi) “Company-Licensed
Data” means all Company Data owned, or purported to be owned, by third parties that is Processed by the Company or the Subsidiary.
(vii) “Company-Owned
Data” means Company Data the Company or the Subsidiary owns or purports to own.
(viii) “Company-Owned
Intellectual Property” means any and all Intellectual Property that is owned or purported to be owned by the Company including
Company-Owned Data.
(ix) “Company
Privacy Policies” means, collectively, any and all (A) of the Company’s and Subsidiary’s data privacy and security
policies, whether applicable internally, or published on Company Websites or otherwise made available by the Company or the Subsidiary
to any Person, and (B) public representations (including representations on Company Websites), industry self-regulatory obligations and
commitments and Contracts with third parties relating to the Processing of Company Data applicable to the Business of the Company.
(x) “Company
Products” means all products or services produced, marketed, licensed, sold, distributed or performed by or on behalf of
the Company or its Subsidiary or currently in active development and scheduled to be commercially released within one (1) year of the
Closing Date.
(xi) “Company
Registered Intellectual Property” means the United States, Israeli, international and foreign: (A) patents and patent applications
(including provisional applications), (B) registered trademarks, applications to register trademarks, intent-to-use applications,
or other registrations or applications related to trademarks, (C) registered Internet domain names and (D) registered copyrights
and applications for copyright registration, in each case registered or filed in the name of, or owned or purported to be owned by, the
Company.
(xii) “Company
Source Code” means, collectively, any software source code or database specifications or designs, or any material proprietary
information or algorithm contained in or relating to any software source code or database specifications or designs, of any Company-Owned
Intellectual Property or Company Products, all other than Open Source Materials and Integrated Off-the-Shelf Software.
(xiii) “Company
Websites” means all web sites owned, operated or hosted by or on behalf of the Company or its Subsidiary or through which
the Company or its Subsidiary conducts the Business (including those web sites operated using the domain names listed in Schedule 3.10(c)
of the Company Disclosure Letter), and the underlying platforms for such web sites.
(xiv) “ICT
Infrastructure” means the information and communications technology infrastructure and systems (including software, hardware,
firmware, networks and the Company Websites) that are or have been used in the Business.
(xv) “Integrated
Off-the-Shelf Software” means generally, commercially available, off-the-shelf software or SaaS owned by a third party and
licensed to, or otherwise used or held for use by, the Company or its Subsidiary, which (A) has not been modified or customized for the
Company or its Subsidiary (except for standard integrations) and (B) is licensed for an annual fee under $30,000.
(xvi) “Intellectual
Property” means (A) Intellectual Property Rights and (B) Proprietary Information and Technology.
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(xvii) “Intellectual
Property Rights” means any and all intellectual property rights and/or proprietary rights, including any and all of the
following and all rights in, arising out of, or associated therewith, throughout the world: patents, utility models, and applications
therefor and all reissues, divisions, re-examinations, renewals, extensions, provisionals, continuations and continuations-in-part thereof
and equivalent or similar rights in inventions and discoveries anywhere in the world, including invention disclosures, common law and
statutory rights associated with trade secrets, confidential and proprietary information and know-how, industrial designs and any registrations
and applications therefor, trade names, logos, trade dress, trademarks and service marks, trademark and service mark registrations, trademark
and service mark applications and any and all goodwill associated with and symbolized by the foregoing items, Internet domain name applications
and registrations, social media accounts, Internet and World Wide Web URLs or addresses, copyrights, copyright registrations and applications
therefor and all other rights corresponding thereto, database rights, mask works, mask work registrations and applications therefor and
any equivalent or similar rights in semiconductor masks, layouts, architectures or topology, moral and economic rights of authors and
inventors, however denominated and any similar or equivalent rights to any of the foregoing, and all benefits, privileges, causes of action
and remedies relating to any of the foregoing.
(xviii) “Off-the-Shelf
Software” means generally, commercially available, off-the-shelf software or SaaS owned by a third party and licensed to,
or otherwise used or held for use by, the Company or its Subsidiary, which (A) has not been modified or customized for the Company or
its Subsidiary, (B) has not been incorporated into, or integrated or bundled with, any Company Product and (C) is licensed for an
annual fee under $25,000.
(xix) “Open
Source Materials” means (A) software or other material that is distributed as “free software,” “open source
software”, “source available” software or under similar licensing or distribution terms (including the GNU General Public
License (GPL), GNU Affero General Public License (AGPL), GNU Lesser General Public License (LGPL), Server Side Public License (SSPL),
Business Source License (BUSL), Mozilla Public License (MPL), BSD licenses, the Artistic License, the Netscape Public License, the Sun
Community Source License (SCSL) the Sun Industry Standards License (SISL) and the Apache License) or (B) any other license or other agreement
that requires, as a condition of the use, modification or distribution of software subject to such license or agreement, that such software
or other software linked with, called by, combined or distributed with such software be (1) disclosed, distributed, made available, offered,
licensed or delivered in source code form, (2) licensed for the purpose of making derivative works, (3) licensed under terms that allow
reverse engineering, reverse assembly, or disassembly of any kind, or (4) redistributable at no charge, including any license defined
as an open source license by the Open Source Initiative as set forth on www.opensource.org.
(xx) “Proprietary
Information and Technology” means any and all of the following: works of authorship, computer programs, source code and
executable code, whether embodied in software, firmware or otherwise, assemblers, applets, compilers, user interfaces, application programming
interfaces, protocols, architectures, documentation, annotations, comments, designs, files, records, schematics, test methodologies, test
vectors, emulation and simulation tools and reports, hardware development tools, models, tooling, prototypes, breadboards and other devices,
trade secrets, know-how, data, data structures, databases, data compilations and collections, inventions (whether or not patentable),
invention disclosures, discoveries, improvements, technology, proprietary and confidential ideas and information, tools, concepts, techniques,
methods, processes, formulae, patterns, algorithms and specifications, customer lists and supplier lists and any and all instantiations
or embodiments of the foregoing or any Intellectual Property Rights in any form and embodied in any media.
(xxi) “Third-Party
Intellectual Property” means any and all Intellectual Property owned by a third party.
26
(b) Status.
The Company and its Subsidiary have full title and exclusive ownership, free and clear of any Encumbrances, of, or the Company and its
Subsidiary are duly licensed under or otherwise authorized to use, all Intellectual Property necessary for the conduct of the Business.
The Company Intellectual Property collectively constitutes all of the Intellectual Property necessary for Acquirer’s conduct of
the Business without (i) the need for Acquirer to acquire or license any other intangible asset, intangible property or Intellectual Property
Right or (ii) the breach or violation of any Contracts (disregarding any obligations imposed upon the Acquirer to which the Company is
not a party). Neither the Company nor its Subsidiary has transferred ownership of, or granted any exclusive rights in, any Company Intellectual
Property to any third party. No third party has any ownership right, title, interest, or lien on any of the Company-Owned Intellectual
Property. The Company exclusively owns all Company-Owned Intellectual Property.
(c) Company
Registered Intellectual Property. Schedule 3.10(c) of the Company Disclosure Letter lists all Company Registered Intellectual
Property, the jurisdictions in which it has been issued or registered or in which any application for such issuance and registration has
been filed or the jurisdictions in which any other filing or recordation has been made, and all actions that are required to be taken
by the Company within 60 days following the Agreement Date in order to avoid abandonment of such Company Registered Intellectual Property
Rights (including all office actions, provisional conversions, annuity or maintenance fees or re-issuances). Each item of Company Registered
Intellectual Property is valid (or in the case of applications, applied for), enforceable and subsisting, and all registration, maintenance
and renewal fees currently due in connection with such Company Registered Intellectual Property have been paid and all documents, recordations
and certificates in connection with such Company Registered Intellectual Property currently required to be filed have been filed with
the relevant patent, copyright, trademark or other authorities in the United States, Israel or foreign jurisdictions, as the case may
be, for the purposes of prosecuting, maintaining and perfecting such Company Registered Intellectual Property and recording the Company’s
ownership interests therein. Notwithstanding the foregoing, Company did not conduct a freedom to operate study.
(d) Company
Unregistered Intellectual Property. Schedule 3.10(d) of the Company Disclosure Letter lists all material Company-Owned
Intellectual Property that is not Company Registered Intellectual Property, including all material trade secrets, know-how, unregistered
copyrights, and unregistered trademarks owned by the Company. For each such item, the Schedule shall describe its nature, the measures
taken to protect its confidentiality and ownership, and its significance to the Business.
(e) Governmental
Grants.
(i) Schedule
3.10(e)(i) of the Company Disclosure Letter identifies each pending and outstanding Governmental Grant (including with respect
to “approved enterprise” status) that has been received or applied for by the Company. Except as set forth on Schedule
3.10(e)(i) of the Company Disclosure Letter, the Company has never received or applied for any Governmental Grant. The Company
has provided Acquirer accurate and complete copies of: (i) all applications for Governmental Grants and related documents submitted by
the Company to any Governmental Entity and (ii) all certificates of approval and letters of approval (and supplements thereto) granted
to the Company by any Governmental Entity. In each such application submitted by or on behalf of the Company, all information required
by such application has been disclosed accurately and completely, and the Company has not made any misstatements of fact or any disclosures
that are not accurate or complete. Except for undertakings set forth in letters of approvals which were provided to the Acquirer, there
are no undertakings of the Company given in connection with any Governmental Grant. The Company is and has been at all times in compliance
with the terms, conditions, requirements and criteria of all Governmental Grants and Applicable Law pertaining thereto, including all
reporting requirements as per Applicable Law including, where applicable, the provisions of the Innovation Law. No claim or challenge
has been made by any Governmental Entity with respect to the entitlement of any Company to any Government Grant or the compliance with
the terms, conditions, obligations or laws relating to Government Grants.
27
(ii) Except
as set forth in Schedule 3.10(e)(ii) of the Company Disclosure Letter, each item of Company Owned Intellectual
Property is and will be freely and fully transferable, licensable, conveyable and/or assignable by the Company or the Acquirer to any
individual or entity located in any jurisdiction in the world without any restriction, constraint, control, supervision, limitation, obligation
or payment of any kind and without approval of any third Person, including any Governmental Entity.
(iii) Schedule
3.10(e)(iii)(a) of the Company Disclosure Letter sets forth, with respect to each Governmental Grant referred to in Schedule
3.10(e)(iii) of the Company Disclosure Letter: (A) a complete and accurate report of the total amount of the benefits received
by the Company under each Governmental Grant, the total outstanding amounts to be paid by the Governmental Entity to the Company under
the Government Grants, if any, and the aggregate outstanding obligations under each such Government Grant with respect to royalties applicable
thereto and any outstanding amounts otherwise payable under each such Government Grant to the applicable Governmental Entity; (B) the
time period in which the Company received, or will be entitled to receive, benefits under such Governmental Grant; and (C) any Governmental
Grant consisting of a Tax incentive (other than incentives generally available by operation of law without application or action by any
Governmental Entity). No event has occurred, and, to the knowledge of the Company, no circumstance or condition exists, that would reasonably
be expected to give rise to: (1) the annulment, revocation, withdrawal, suspension, cancellation, recapture or modification of any Governmental
Grant; (2) the imposition of any limitation on any Governmental Grant or any benefit available in connection with any Governmental Grant;
(3) a requirement that the Company return or refund any benefits provided under any Governmental Grant; or (4) an acceleration or increase
of royalty payments obligation (including total royalty amount and royalty rate), or obligation to pay additional payments to any Governmental
Entity, in each case, other than ongoing royalty payments. The Company has obtained all authorizations and approvals necessary for the
consummation of the Share Purchase pursuant to the terms of this Agreement and the consummation of the other transactions contemplated
by this Agreement in order to ensure that, the Share Purchase: (x) will not adversely affect the ability of the Company to obtain the
benefit of any Governmental Grant for the remaining duration thereof or require any recapture of any previously claimed incentive; and
(y) will not result in the failure of the Company to comply with any of the terms, conditions, requirements and criteria of any Governmental
Grant, applicable laws, regulations, ordinances or guidelines or any claim by any Governmental Entity or other Person that the Company
is required to return or refund, or that any Governmental Entity is entitled to recapture, any benefit provided under any Governmental
Grant. Except as set forth in Schedule 3.10(e)(iii)(b) of the Company Disclosure Letter, no consent of any Governmental Entity
or other Person is required to be obtained prior to the consummation of the Share Purchase pursuant to the terms of this Agreement in
order to comply with any Israeli Applicable Law or to avoid any increase in royalty rates incurred by the Company under any such Governmental
Grant received by the Company or other change in the terms and conditions applicable to the Company under any such Governmental Grant
received by the Company. The Company has no knowledge of an intention to change the terms of any Governmental Grant, except as may result
from generally applicable changes to the relevant laws and regulations thereunder.
28
(iv) No
Company-Owned Intellectual Property was developed, created, or reduced to practice, in whole or in part, using funding, personnel, facilities
or resources provided by any Governmental Entity, agency or private source (except for equity funding not specifically allocated to the
development of any specific Company-Owned Intellectual Property), or any university, college, other educational institution, military,
multi-national, bi-national or international organization or research center (collectively, “Institutions”).
(f) Company
Products. Schedule 3.10(f) of the Company Disclosure Letter lists all Company Products that have been made available for
use or purchase by the Company or its Subsidiary in the last 12 months, including any product or service currently under development and
scheduled for commercial release within 90 days following the date of this Agreement, for each such Company Product (and each version
thereof) identifying its release date.
(g) No
Parallel Engagement. To the Company’s knowledge, at no time during the development, creation, conception of or reduction to
practice of any Intellectual Property for the Company or its Subsidiary was any Author (as defined below) subject to any employment or
services agreement or invention assignment or nondisclosure agreement or other obligation with any third party that could adversely affect
the Company’s rights in such Intellectual Property, such that results in a detrimental effect on Company’s ownership of Company-Owned
Intellectual Property or that imposes restrictions thereon or grants such third party any rights thereto. No third party, including any
Institution has any claim of right to, ownership of or other encumbrance on any Company-Owned Intellectual Property.
(h) Invention
Assignment and Confidentiality Agreement. Except as set forth in Schedule 3.10(h) of the Company Disclosure
Letter, the Company and its Subsidiary have secured from all (i) current and former founders, consultants, advisors, employees, service
providers, and independent contractors and any other individuals or entities (including the Company’s officers and directors) who
independently or jointly contributed to or participated in the conception, reduction to practice, creation or development of any Intellectual
Property for the Company or its Subsidiary and (ii) named inventors of patents and patent applications owned or purported to be owned
by the Company or its Subsidiary (any Person described in clause (i) or (ii), an “Author”), a valid, binding
and enforceable written Contract providing for an effective present and future assignment to the Company all rights in the Intellectual
Property developed conceived, invented, discovered, programmed, designed, or reduced to practice (either alone or jointly with others)
by them during and as a result of their employment or engagement by the Company or Subsidiary (and in the case of patents and patent applications,
such assignments have been recorded with the relevant authorities in the applicable jurisdiction), and an explicit and irrevocable waiver
of all rights related thereof (collectively, “PIIA Agreements”). The Company has provided to Acquirer copies
of all forms of such PIIA Agreements currently and historically used by the Company and its Subsidiary and, in the case of patents and
patent applications, the Company has provided to Acquirer copies of all such assignments. All amounts payable and due, whether under contract
or applicable law, by the Company and its Subsidiary to all Authors have been paid in full. It is not and will not become necessary to
utilize any Intellectual Property of the Authors, made prior to their engagement with the Company and its Subsidiary other than those
that have been rightfully assigned to the Company and its Subsidiary pursuant to a PIIA Agreement. Neither the Company nor its Subsidiary
has received any claim from any Person for consideration, compensation or royalty payments pursuant to Section 134 of the Israeli Patent
Law, 1967 and to the knowledge of the Company, no reasonable basis exists that could give rise to such a claim.
29
(i) No
Violation. To the Company’s knowledge, no current or former employee, consultant, advisor or independent contractor of the Company
or its Subsidiary: (i) is in violation of any term or covenant of any Contract relating to invention disclosure, invention assignment,
non-disclosure or non-competition or any other Contract with any other party by virtue of such employee’s, consultant’s, advisor’s
or independent contractor’s being employed by, or performing services for, the Company or its Subsidiary in respect of use of trade
secrets or proprietary information of others without permission or (ii) has developed any technology, Intellectual Property, software
or other copyrightable, patentable or otherwise proprietary work for the Company or its Subsidiary that is subject to any agreement under
which such employee, consultant, advisor or independent contractor has assigned or otherwise granted to any third party any rights (including
Intellectual Property Rights) in or to such technology, software or other copyrightable, patentable or otherwise proprietary work. To
the Company’s knowledge, neither the execution nor delivery of this Agreement will conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any Contract of the type described in clause (i).
(j) Confidential
Information. The Company and its Subsidiary have taken all commercially reasonable steps to protect and preserve the confidentiality
of all confidential or non-public information of the Company and its Subsidiary (including trade secrets) or provided by any third party
to the Company or its Subsidiary (“Confidential Information”). All current and former employees and contractors
of the Company and its Subsidiary and any third party having access to Confidential Information have executed and delivered to the Company
and its Subsidiary a written agreement regarding the protection of such Confidential Information. To the knowledge of the Company, there
has been no breach of confidentiality obligations on the part of the Company or its Subsidiary or, to the knowledge of the Company, with
respect to Confidential Information by any third-party.
(k) Non-Infringement.
To the knowledge of the Company, there is no unauthorized use, unauthorized disclosure, infringement or misappropriation of any Company-Owned
Intellectual Property by any third party. Neither the Company nor its Subsidiary has brought any Legal Proceeding for infringement or
misappropriation of any Company-Owned Intellectual Property. Neither the Company nor its Subsidiary has any Liability for infringement
or misappropriation of any Third-Party Intellectual Property. The operation of the Business, including (i) the design, development, manufacturing,
reproduction, marketing, licensing, sale, offer for sale, importation, distribution, provision and/or use of any Company Product and/or
Company-Owned Intellectual Property and (ii) the Company’s or its Subsidiary’s use of any product, device, process or service
used in the Business as previously conducted, currently conducted, and as currently proposed to be conducted by the Company or its Subsidiary,
has not, does not, and to the knowledge of the Company will not (directly or indirectly, including via contribution or inducement), misappropriate,
infringe or violate any Third-Party Intellectual Property, breach any terms of service, click-through agreement or any other agreement
or rules, policies or guidelines applicable to use of such Third-Party Intellectual Property, nor constitute unfair competition or unfair
trade practices under the Applicable Law of any jurisdiction in which the Company or its Subsidiary conducts the Business or in which
Company Products are manufactured, marketed, distributed, licensed or sold and there to the Company’s knowledge, is no basis for
any such claims. Neither the Company nor its Subsidiary has been sued in any Legal Proceeding or received any written communications (including
any third-party reports by users) alleging that the Company or its Subsidiary has infringed, misappropriated, or violated or, by conducting
the Business, would infringe, misappropriate, or violate any Intellectual Property of any other Person, or that any Company Intellectual
Property is invalid or unenforceable. No Company-Owned Intellectual Property or Company Product owned by the Company, and to the knowledge
of the Company, Company Products licensed from a third party, is subject to any Legal Proceeding, Order or settlement agreement that restricts
in any manner the use, transfer or licensing thereof by the Company or its Subsidiary, or that may affect the validity, use or enforceability
of any Company-Owned Intellectual Property.
30
(l) Licenses;
Agreements.
(i) neither
the Company nor any Subsidiary has granted any options, licenses or agreements of any kind relating to any Company Intellectual Property
outside of nonexclusive licenses (copies of which have been provided to Acquirer), and the Company is not bound by or a party to any option,
license or agreement of any kind with respect to any of the Company-Owned Intellectual Property, outside of nonexclusive licenses.
(ii) Except
as set forth in Schedule 3.10(l)(ii) of the Company Disclosure Letter, neither the Company nor any Subsidiary
is obligated to pay any royalties or other payments to third parties with respect to the marketing, sale, distribution, manufacture, license
or use of any Company Products (other than in respect of Integrated Off-The-Shelf Software or IIA royalty obligations, which are also
detailed in Schedule 3.10(e) of the Company Disclosure Letter) or Company-Owned Intellectual Property.
(iii) the
Company and its Subsidiary has obtained and possesses valid licenses to use all of the software programs present on the computers and
other software-enabled electronic devices that the Company and its Subsidiary owns or leases or that the Company or its Subsidiary has
otherwise provided to its employees and contractors for their use.
(m) Other
Intellectual Property Agreements. With respect to the Company Intellectual Property Agreements:
(i) each
such agreement is valid and subsisting;
(ii) neither
the Company nor its Subsidiary is (and will not be as a result of the execution and delivery or effectiveness of this Agreement or the
performance of the Company’s or its Subsidiary’s obligations under this Agreement), in breach of any Company Intellectual
Property Agreement and to the knowledge of the Company, the consummation of the Transactions will not result in the modification, cancellation,
termination, suspension of, or acceleration of any payments, rights, obligations or remedies with respect to any Company Intellectual
Property Agreements, or give any non-Company party to any Company Intellectual Property Agreement the right to do any of the foregoing;
(iii) to
the knowledge of the Company, no counterparty to any Company Intellectual Property Agreement is in breach thereof;
(iv) at
and immediately after the Closing, the Company (as a wholly owned subsidiary of Acquirer) will be permitted to exercise all of the Company’s
and its Subsidiary’s rights under the Company Intellectual Property Agreements to the same extent the Company and its Subsidiary
would have been able to had the Transactions not occurred and without the payment of any additional amounts or consideration other than
ongoing fees, royalties or payments that the Company or its Subsidiary would otherwise be required to pay;
(v) to
the knowledge of the Company, there are no disputes or Legal Proceedings (pending or threatened in writing, or to the knowledge of the
Company otherwise threatened) regarding the scope of any Company Intellectual Property Agreements, or performance under any Company Intellectual
Property Agreements including with respect to any payments to be made or received by the Company or its Subsidiary thereunder;
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(vi) Except
as set forth in Schedule 3.10(m)(vi), no Company Intellectual Property Agreement requires the Company or its Subsidiary
to include any Third-Party Intellectual Property in any Company Product or obtain any Person’s approval of any Company Product at
any stage of development, licensing, distribution or sale of that Company Product;
(vii) Except
as set forth in Schedule 3.10(m)(vii) of the Company Disclosure Letter, none of the Company Intellectual Property
Agreements grants any third-party exclusive rights to or under any Company Intellectual Property;
(viii) Except
as set forth in Schedule 3.10(m)(viii) of the Company Disclosure Letter, none of the Company Intellectual Property
Agreements grants any third party the right to sublicense any Company Intellectual Property, other than reseller and MSSP agreements;
(ix) Except
as set forth in Schedule 3.10(m)(ix), the Company and its Subsidiary have obtained valid, written licenses (sufficient
for the conduct of the Business) to all Third-Party Intellectual Property that is incorporated into, integrated or bundled by the Company
or its Subsidiary with any of the Company Products; and
(x) Except
as set forth in Schedule 3.10(m)(x) of the Company Disclosure Letter, no third party that has licensed Intellectual
Property Rights to the Company or its Subsidiary has ownership or license rights to improvements or derivative works made by the Company
or its Subsidiary in the Third-Party Intellectual Property that has been licensed to the Company or its Subsidiary.
(n) Non-Contravention.
Neither the execution and performance of this Agreement will result in: (i) Acquirer or any of its Affiliates granting to any third
party any right to or with respect to any Intellectual Property Rights owned by, or licensed to, Acquirer or any of its Affiliates, (ii) Acquirer
or any of its Affiliates, being bound by or subject to, any exclusivity obligations, non-compete or other restriction on the operation
or scope of their respective businesses, (iii) Acquirer or the Company being obligated to pay any royalties or other material amounts
to any third party in excess of those payable by any of them, respectively, in the absence of this Agreement or the Transactions or (iv)
any termination of, or other material impact to, any Company Intellectual Property; all of the foregoing in (i)-(iv), unless arising from
any agreement, covenant, obligation or other legal requirement of Acquirer.
(o) Company
Source Code. Except as set forth in Schedule 3.10(o) of the Company Disclosure Letter, neither the Company nor
its Subsidiary has disclosed, delivered or licensed to any Person or agreed or obligated itself to disclose, deliver or license to any
Person, or permitted the disclosure or delivery to any escrow agent or other Person of, nor has there been any unauthorized or inadvertent
disclosure of, any Company Source Code, other than (x) disclosures to employees, contractors and consultants (i) involved in the
development of Company Products and (ii) subject to a written confidentiality agreement. No event has occurred, and to the knowledge
of the Company, no circumstance or condition exists, that (with or without notice or lapse of time, or both) will, or would reasonably
be expected to, result in the disclosure, delivery or license by the Company or its Subsidiary of any Company Source Code, other than
disclosures to employees and consultants involved in the development of Company Products who have executed written confidentiality agreements.
Without limiting the foregoing, neither the execution nor performance of this Agreement nor the consummation of any of the Transactions
will result in a release from escrow or other delivery to a third party of any Company Source Code.
32
(p) Open
Source Software.
(i) Schedule
3.10(p)(i) of the Company Disclosure Letter identifies all Open Source Materials contained or incorporated in, or linked to or
called by, or distributed with, any Company Products, describes whether and, if so, how the Open Source Materials were modified and/or
distributed by the Company or its Subsidiary and identifies the licenses under which such Open Source Materials were used. The Company
and its Subsidiary are in compliance with the terms and conditions of all licenses for the Open Source Materials.
(ii) Except
as set forth in Schedule 3.10(p)(ii) of the Company Disclosure Letter, the Company and its Subsidiary have not (i) incorporated
Open Source Materials into, or combined Open Source Materials with, the Company-Owned Intellectual Property or Company Products, (ii)
distributed Open Source Materials in conjunction with any Company-Owned Intellectual Property or Company Products or (iii) used Open Source
Materials (including linking or calling), in such a way that, with respect to clauses (i) through (iii), creates, or purports to create,
obligations for the Company or its Subsidiary with respect to any Company-Owned Intellectual Property or grant, or purport to grant, to
any third party any rights or immunities under any Company-Owned Intellectual Property (including using any Open Source Materials that
require, as a condition of use, modification and/or distribution of such Open Source Materials that other software incorporated into,
derived from or distributed with such Open Source Materials be (A) disclosed or distributed in source code form, (B) be licensed for the
purpose of making derivative works or (C) be redistributable at no charge).
(q) Information
Technology.
(i) Plans.
The Company and its Subsidiary have implemented and maintain reasonable security, disaster recovery and business continuity plans consistent
with industry practices of companies offering similar services, and act in compliance therewith and have tested such plans on a periodic
basis, and such plans have proven effective upon testing.
(ii) Company
Databases. Schedule 3.10(q)(ii) of the Company Disclosure Letter identifies and describes each distinct electronic or
other repository or database containing (in whole or in part) Company Data maintained by or for the Company or the Subsidiary at any time
(collectively, the “Company Databases”), the types of Company Data in each such database (including by Company-Licensed
Data and Company-Owned Data), the means by which the Company Data was collected or received and the security policies that have been adopted
and maintained with respect to each such Company Database.
(iii) Processing.
The Company and its Subsidiary have valid and subsisting contractual rights to Process or to have Processed all Company-Licensed Data
howsoever obtained or collected by or for the Company or its Subsidiary in the manner that it is Processed by or for the Company or its
Subsidiary. The Company and its Subsidiaries have all rights, permissions, licenses or authorizations required under Applicable Law and
relevant Contracts (including Company Data Agreements), to retain, produce copies, prepare derivative works, disclose, combine with other
data, and grant third parties rights, as applicable, to each of the Company Data as necessary for the operation of the Business as currently
conducted. The Company and its Subsidiary have been and are in compliance with all Contracts in all material respects pursuant to which
the Company Processes or has Processed Company-Licensed Data, and the consummation of the Transactions will not conflict with, or result
in any violation or breach of, or default under, any such Contract. Schedule 3.10(q)(iii) of the Company Disclosure Letter
identifies each Contract governing any Company-Licensed Data to which the Company is a party or is bound by, except the standard terms
of use entered into by users of the Company Products and Company’s agreements with customers, resellers and MSSPs (copies of which
have been provided to Acquirer).
33
(iv) Other
than as set forth on Schedule 3.10(q)(iv) of the Company Disclosure Letter, the Company and its Subsidiary are not bound by
and have not entered into any Contract governing any Company-Owned Data, except the standard terms of use entered into by users (including
MSSPs) and resellers of the Company Products (copies of which have been provided to Acquirer).
(v) Generative
AI. The tools developed by the Company for use as part of Company’s product offerings, testing and development are set forth
on Schedule 3.10(q)(v)(i) (the “Company Developed AI”). The Company owns all rights, title, and
interest in the Company Developed AI, free and clear of all Encumbrances except for Open Source Materials disclosed in Schedule 2.10(o)(i).
The Company Developed AI (1) does not infringe the Intellectual Property Rights of any third-party and (2) comply with all applicable
laws and regulations, including data protection and privacy laws. The Company has implemented reasonable measures to protect the confidentiality
and security of the Company Developed AI and the Company Developed AI constitutes part of the Company-Owned Intellectual Property. To
the Company’s knowledge, there have been no unauthorized uses, disclosures, or breaches of the Company Developed AI or related systems.
The Company Developed AI has been developed and maintained in accordance with industry best practices, including but not limited to: (1)
measures to prevent and mitigate algorithmic bias, (2) ethical AI principles, (3) transparency in AI decision-making processes where appropriate,
and (4) regular testing and validation for accuracy and reliability. The Company maintains accurate and up-to-date documentation of its
AI development and deployment practices, including any assessments of potential biases or ethical considerations. Schedule 3.10(q)(v)(ii)
sets forth a correct, current, and complete list of all third-party AI technologies (“AI Technologies”) used
or held for use by the Company in the Business (collectively, “Third-Party AI”). Schedule 3.10(q)(v)(iii)
sets forth a correct, current, and complete list of all Third-Party AI capable of generating various types of content (including text,
images, video, audio, or computer code) based on user-supplied prompts (“Generative AI Tools”) used by the Company
or the Subsidiary and, for any such Generative AI Tool owned or controlled by any other Person, the license or other Contract governing
the Company’s or any Subsidiary’s use thereof. The Company and the Subsidiary have not: (1) used any Generative AI Tools (whether
owned or controlled by the Company or the Subsidiary or any other Person) in a manner that does, will, or could reasonably be expected
to adversely affect the ownership, validity, enforceability, registrability, or patentability of any Company-Owned Intellectual Property
that the Company or any Subsidiary intended to maintain as proprietary; (2) except as set forth in Schedule 3.10(q)(v)(iv),
included any source code owned by the Company in any prompts or inputs into any Generative AI Tool owned or controlled by any other Person;
or (3) used any Generative AI Tool in a manner that does not comply with the applicable license or other Contract terms governing its
use by the Company or the Subsidiary.
(r) No
Defects. The Company has taken reasonable steps designed to maintain the Company Products free from material defects and bugs and
to operate in accordance with the documentation and specifications provided by the Company. The Company uses means and methods consistent
with those in a similar industry as the Company to ensure the software included in the Company Products does not contain (a) any clock,
timer, counter, or other limiting or disabling code, design, routine, or any viruses, Trojan horses, or other disabling or disruptive
codes or commands that would cause such software to be erased, made inoperable, or otherwise rendered incapable of performing in accordance
with its performance specifications and descriptions or otherwise limit or restrict the Company’s or its Subsidiary’s or any
Person’s ability to use such software or the Company Product, including after a specific or random number of years or copies, or
(b) any back doors or other undocumented access mechanism allowing unauthorized access to, and viewing, manipulation, modification, or
other changes to, such software or Company Product.
(s) Standards
Bodies. (i) the Company and its Subsidiary have not and have never been a member of, a contributor to, or affiliated with, any industry
standards organization, body, working group, or similar organization, and (ii) neither the Company nor its Subsidiary, nor any Company-Owned
Intellectual Property is subject to any licensing, assignment, contribution, disclosure, or other requirements or restrictions of any
industry standards organization, body, working group, or similar organization.
34
(t) Warranties;
Company Products. No Company Product is subject to any guaranty, warranty, right of return, right of credit, or other indemnity other
than the applicable standard terms and conditions or any other agreements entered into with customers, MSSPs or resellers for the sale,
license, or lease of the Company Products, which are set forth in Schedule 3.10(t) of the Company Disclosure Letter. The Company
has not received any written product liability claims relating to the Company or its Subsidiary, or any Company Products, or services
provided by the Company related thereto that resulted in a Material Adverse Effect to the Company’s Business.
(u) Company
Websites. To the knowledge of the Company, no domain names have been registered by any Person that are similar to any trademarks,
service marks, domain names or business or trading names used, created or owned by the Company or its Subsidiary. The contents of any
Company Website and all transactions conducted over the Internet by the Company, if applicable, comply with Applicable Law in any applicable
jurisdiction in all material respects.
3.11 Data Privacy
and Security.
(a) Except
as set forth in Schedule 3.11(a) of the Company Disclosure Letter, the Company and its Subsidiary comply and have at all times
complied with all: (i) Privacy Laws, (ii) Company Privacy Policies, (iii) all privacy, data protection and cybersecurity requirements
of Company Data Agreements, and (iv) all applicable industry standards by which Company is bound ((i)-(iv), collectively, “Company
Privacy Commitments”) in each case with respect to its Processing of Personal Data, in all material respects. Neither the
execution, delivery, nor performance of this Agreement will cause, constitute, or result in a breach or violation of any Company Privacy
Commitments. Copies of all current and prior Company Privacy Policies have been made available to Acquirer and such copies are true, correct
and complete.
(b) The
Company and its Subsidiary have established and maintain appropriate technical, physical and organizational measures and security systems
and technologies, in compliance with all Company Privacy Commitments that protect Personal Data against accidental or unlawful Processing
and against accidental loss, destruction, alteration, disclosure, access or damage to Personal Data (“Data Breach”)
in a manner appropriate to the risks represented by the Processing of such data by the Company or Subsidiary and their data processors.
The Company and its Subsidiary have taken reasonable steps to ensure the reliability of their employees and contractors who have access
to Company Data, to train such employees on all applicable aspects of Company Privacy Commitments and to ensure that all employees with
the authority and/or ability to access such data are under written obligations of confidentiality with respect to such data.
(c) The
Company and its Subsidiary have not received or experienced and, to the knowledge of the Company, there is no circumstance (including
any circumstance arising as the result of an audit or inspection carried out by any Governmental Entity) that would reasonably be expected
to give rise to, any Legal Proceeding, Order, notice, communication, warrant, regulatory opinion, auditor allegation from a Governmental
Entity or any other Person (including an end user): (i) alleging or confirming Company’s or Subsidiary’s non-compliance with
Company Privacy Commitments, (ii) requiring or requesting the Company or its Subsidiary to amend, rectify, cease Processing, de-combine,
permanently anonymize, block or delete any Personal Data, or (iii) claiming compensation from the Company or its Subsidiary in respect
of Processing of Personal Data. The Company and its Subsidiary have at all times complied with any requests or communications received
from any Person exercising any rights under Privacy Laws.
35
(d) Schedule
3.11(d) of the Company Disclosure Letter contains a complete list of notifications and registrations made by the Company and
the Subsidiary under Privacy Laws with relevant Governmental Entities in connection with their Processing of Personal Data (including
with respect to Company Databases). All such notifications and registrations are valid, accurate, complete and fully paid up and the relevant
Personal Data has been used by the Company and its Subsidiary solely as permitted pursuant to such registrations and notifications and,
the consummation of the Transactions will not invalidate such notification or registration or require such notification or registration
to be amended. Other than the notifications and registrations set forth on Schedule 3.11(d) of the Company Disclosure Letter,
no other registrations or notifications are required in connection with the Processing of Personal Data by the Company or the Subsidiary.
(e) The
Company and its Subsidiary have not shared Personal Data with any Person except in accordance with the Company Privacy Commitments. Where
the Company or its Subsidiary uses a data processor to Process Personal Data, the processor has provided guarantees, warranties or covenants
in relation to Processing of Personal Data, confidentiality, security measures and agreed to compliance with those obligations that are
sufficient for the Company’s compliance with Company Privacy Commitments, and there is in existence a written Contract between the
Company and each such data processor that complies with the requirements of all Company Privacy Commitments. The Company and its Subsidiary
have made available to Acquirer true, correct and complete copies of all such Contracts. To the knowledge of the Company, such data processors
have not breached any such Contracts pertaining to Personal Data Processed by such Persons on behalf of the Company or its Subsidiary.
(f) The
Company and its Subsidiaries, and, to the knowledge of the Company, any third parties Processing Personal Data on behalf of the Company
or its Subsidiary, have not experienced any security incident, violation of any data security policy, unauthorized access or Data Breach
in relation to Personal Data, Company Databases, or Confidential Information (including Personal Data in the Company’s or its Subsidiary’s
possession, custody or control), or any unauthorized or illegal Processing of any of the foregoing. With respect to the ICT Infrastructure,
no security incident or Data Breach, has occurred, including but not limited to ransomware, compromise of credentials, denial-of-service
attack, or unauthorized intrusion of any kind has occurred or is threatened. No circumstance has arisen in which Applicable Law (including
Privacy Laws) would require the Company to notify a Governmental Entity or Person of a data security breach or security incident.
3.12 Taxes.
(a) Except
as set forth in Schedule 3.12(a) of the Company Disclosure Letter, each of the Company and its Subsidiary has properly
completed and timely filed all Tax Returns required to be filed by it prior to the Closing Date and such Tax Returns are true, correct
and complete in all material respects and have been completed in accordance with Applicable Law. Each of the Company and its Subsidiary
has timely paid all Taxes required to be paid by it (whether or not shown on any Tax Return) and has no Liability for Taxes in excess
of the amounts so paid. There is no claim for Taxes that has resulted in an Encumbrance against any of the assets of the Company or its
Subsidiary.
36
(b) The
Company has delivered to Acquirer true, correct and complete copies of all material Tax Returns, examination reports and statements of
deficiencies, adjustments and proposed deficiencies and adjustments in respect of the Company and its Subsidiary in connection with any
taxable periods during the last seven years.
(c) The
Company Balance Sheet reflects all Liabilities for unpaid Taxes of the Company and its Subsidiary for periods (or portions of periods)
through the Company Balance Sheet Date, all to the extent such Liabilities are required to be reflected therein pursuant to Israeli GAAP.
Neither the Company nor its Subsidiary has any Liability for unpaid Taxes accruing after the Company Balance Sheet Date except for Taxes
arising in the ordinary course of business consistent with past practice following the Company Balance Sheet Date. Neither the Company
nor its Subsidiary has any Liability for Taxes (whether outstanding, accrued, contingent or otherwise) that are not included in the calculation
of Company Debt.
(d) Except
as set forth in Schedule 3.12(d) of the Company Disclosure Letter, there is (i) no past or pending audit of, or
Tax controversy associated with, any Tax Return of the Company or its Subsidiary that has been conducted in the last seven years, or to
the Company or the Subsidiary’s knowledge is being, conducted by a Tax Authority, nor has the Company or its Subsidiary been notified
in writing of any request for, or commencement of, such an audit, (ii) no such procedure, proceeding or contest of any refund or
deficiency in respect of Taxes of the Company or its Subsidiary pending, proposed or threatened in writing, or on appeal with any Governmental
Entity, (iii) no extension of any statute of limitations on the assessment of any Taxes granted by the Company or its Subsidiary currently
in effect and (iv) no agreement to any extension of time for filing any Tax Return of the Company or its Subsidiary that has not
been filed, other than customary extensions granted automatically by the ITA or such other applicable Governmental Entity. No adjustment
relating to any Tax Return filed by the Company or its Subsidiary in the last seven years has been proposed in writing by any Tax Authority
to the Company or its Subsidiary or any representative thereof that has not been fully and finally resolved. No written claim has ever
been made by any Governmental Entity in a jurisdiction where the Company or its Subsidiary does not file Tax Returns that the Company
or its Subsidiary is or may be subject to taxation by that jurisdiction.
(e) The
Company and its Subsidiary have complied in all material respects with their obligations under all Applicable Laws relating to the payment
and withholding of Taxes from payments made to any Person and remittance to the appropriate Tax Authority of all amounts required to be
so withheld and paid under all Applicable Laws. The Company and its Subsidiary are in material compliance with, and their records contain
all material information and documents necessary to comply with, their obligations under all applicable information reporting and withholding
requirements under all Applicable Laws.
(f) All
records which the Company or its Subsidiary are required under any Applicable Law to keep for Tax purposes (including all documents and
records likely to be needed to defend any challenge by any Tax Authority with respect to the transfer pricing of any transaction) have
been duly kept in accordance with all applicable requirements and are available, upon request and within a reasonable period of time,
for inspection at the premises of the Company or its Subsidiary, as applicable.
(g) The
Company and its Subsidiary are duly registered for the purposes of Israeli value added tax and have complied with all requirements concerning
value added Taxes (“VAT”). The Company and its Subsidiary (i) have not made any exempt transactions (as
defined in the Israel Value Added Tax Law of 1975) and there are no circumstances by reason of which there might not be an entitlement
to full credit of all VAT chargeable or paid on inputs, supplies, and other transactions and imports made by them, (ii) have collected
and timely remitted to the relevant Tax Authority all output VAT which they are required to collect and remit under any Applicable Law;
and (iii) have not received a refund for input VAT for which they are not entitled under any Applicable Law.
37
(h) The
prices and terms for the provision of any property or services by or to the Company or its Subsidiaries are at arm’s length for
purposes of the relevant transfer pricing Applicable Laws and all related documentation if required by such Applicable Laws has been timely
prepared or obtained and, if necessary, retained. Each of the Company and its Subsidiary complies, and has always been compliant with
the requirements of Section 85A of the Israeli Income Tax Ordinance and Section 482 of the Code and the regulations promulgated thereunder
in all material respects. Each of the Company and its Subsidiary (i) has never been party to any reorganization under Part E2 of the Israeli
Income Tax Ordinance; and (ii) is not subject to any restrictions or limitations pursuant to Part E2 of the Israeli Income Tax Ordinance
or pursuant to any Tax ruling made with reference to the provisions of Part E2.
(i) The
Company and its Subsidiary do not and have never participated or engaged in any transaction listed in Section 131(g) of the Israeli Income
Tax Ordinance and the Israeli Income Tax Regulations (Reportable Tax Planning), 5767-2006 promulgated thereunder, or are subject to reporting
obligations under Sections 131D and 131E of the Israeli Income Tax Ordinance or similar provisions under the Israel Value Added Tax Law
of 1975.
(j) The
Company and its Subsidiary are not and have never been a real property corporation (Igud Mekarke’in) within the meaning of this
term under Section 1 of the Israeli Land Taxation Law (Appreciation and Acquisition), 5723-1963.
(k) The
Company and its Subsidiary are residents of the State of Israel for Tax purposes and are not and have never been subject to Tax in any
country other than the State of Israel by virtue of (i) being treated as a resident of, (ii) being engaged in a trade or business through
a permanent establishment (within the meaning of an applicable Tax treaty) or otherwise having an office or a fixed place of business
in that country or (iii) having any other source of income in that jurisdiction, or other than by way of tax withholding in that jurisdiction.
(l) Except
as set forth in Schedule 3.12(l), the Company is not benefiting (and has never benefited) from any grants, Tax incentives,
tax holidays, reduced tax rates or accelerated depreciation under the Israeli Capital Investment Encouragement Law – 1959 (the “Capital
Investment Law”), including but not limited to Technological Preferred Enterprise, Preferred Enterprise, Benefitted Enterprise and
Approved Enterprise Status. As of the date hereof, to the extent the Company benefited from the Benefitted Enterprise or Approved Enterprise
Status, the Company has no retained earnings which would be subject to corporate Tax due to the distribution of a “dividend”
from such earnings, as the term “dividend” is specifically defined by the ITA in the framework of the Capital Investment Law
(or actions that are deemed as dividend for these purposes).
(m)
Neither the Company nor its Subsidiary is party to or bound by any Tax sharing, Tax indemnity, or Tax allocation agreement (other than
commercial Contracts entered into in the ordinary course of business the principal purpose of which is not related to Taxes (“Customary
Contracts”)), and neither the Company nor its Subsidiary has any Liability to another party under any such agreement.
(n) Neither
the Company nor its Subsidiary is a partner for Tax purposes with respect to any joint venture, partnership, or other arrangement or Contract
which is treated as a partnership for Tax purposes. No U.S. federal income tax entity classification election pursuant to Treasury Regulations
Section 301.7701-3 has been filed with respect to the Company or any of the Company Subsidiaries.
38
(o) Neither
the Company nor its Subsidiary has participated in, and is not currently participating in, a “Listed Transaction” within the
meaning of Section 6707A(c) of the Code or Treasury Regulation Section 1.6011-4(b), or any transaction requiring disclosure
under a corresponding or similar provision of state, local, or foreign law.
(p) Neither
the Company nor its Subsidiary will be required to include any item of income in, or exclude any item of deduction from, Taxable income
for any Taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a
taxable period ending prior to the Closing Date, (ii) use of an improper method of accounting for a taxable period ending prior to the
Closing Date, (iii) installment sale or open transaction disposition made prior to the Closing, (iv) prepaid amount received prior to
the Closing, (v) any gain recognition agreement to which the Company or any corporation acquired by the Company is a party under Section
367 of the Code (or any corresponding or similar provision of state, local or non-US Tax Law) entered into on or prior to the Closing
Date, (vi) use of a method of accounting other than the accrual or, (vii) any deferred amount pursuant to Sections 451(c), 455, 456, or
460 of the Code or any corresponding provision of Applicable Law.
(q) Neither
the Company nor its Subsidiary has received any “taxation decision” (hachlatat misui) from the ITA, or any other technical
advice memoranda or any private letter ruling from the IRS (or any comparable Tax ruling from any other Governmental Entity). There is
no private letter ruling, “taxation decision”, or any agreement with any Tax authority to which the Company is party.
(r) The
Company for itself and for its Subsidiary has provided to Acquirer all documentation relating to any applicable Tax holidays or incentives.
The Company and its Subsidiary are in compliance in all material respects with the requirements for any applicable Tax holidays or incentives
and none of the Tax holidays or incentives will be jeopardized by the Transactions.
(s) Each
of the Company and its Subsidiary has in its possession official foreign government receipts (or other receipts customarily accepted by
Tax Authorities) for any Taxes paid by it to any foreign Tax Authorities for which receipts have been provided or are customarily provided.
(t) Neither
the Company nor any Subsidiary is, and has never been, a “United States real property holding corporation” within the meaning
of Section 897 of the Code, and the Company has filed with the IRS all statements, if any, that are required under Section 1.897-2(h)
of the Treasury Regulations. No claim or challenge has been made in writing towards the Company or any Subsidiarity by any Governmental
Entity with respect to the entitlement of the Company or any Subsidiary to any Tax incentive.
(u) Neither
the Company nor any Subsidiary owns any interest in any controlled foreign corporation (as defined under Section 75B of the Israeli Income
Tax Ordinance).
(v) No
payment to any Company Shareholder of any portion of the Aggregate Consideration will result in compensation or other income to any Company
Shareholder with respect to which Acquirer or the Company or its Subsidiary would be required to deduct or withhold any Taxes pursuant
to U.S. Tax law.
(w) Except
as set forth in Schedule 3.12(w), to the Company’s and each Subsidiary’s knowledge, no independent contractor
was or will be considered as an employee of the Company or its Subsidiary by an applicable Tax Authority.
(x) There
is no agreement, plan, arrangement or other Contract covering any current or former employee or other service provider of the Company
or its Subsidiary that, considered individually or considered collectively with any other such agreements, plans, arrangements or other
Contracts, will, or would reasonably be expected to, as a result of the Transactions (whether alone or upon the occurrence of any additional
or subsequent events), give rise directly or indirectly to the payment of any amount that would reasonably be expected to be characterized
as a “parachute payment” within the meaning of Section 280G of the Code (or any corresponding or similar provision of
state, local or foreign Tax law). Neither the Company nor its Subsidiary has ever had any obligation to report, withhold or gross up any
excise Taxes under Section 280G or Section 4999 of the Code.
39
3.13 Employee Benefit
Plans and Employee Matters. (a) Employee
List. Schedule 3.13(a) of the Company Disclosure Letter contains a list of all Company Employees as of the Agreement Date,
and correctly reflects for each such Company Employee: (i) name; (ii) date of hire; (iii) position; (iv) full-time or part-time
status; (v) classification as either exempt or non-exempt for wage and hour purposes under any Applicable Law; (vi) monthly base salary
or hourly wage rate, as applicable; (vii) any visa or work permit status and the date of expiration, if applicable; (viii) employment
location (country); (ix) bonus eligibility; (x) commission eligibility; (xi) vacation entitlement and accrued but unused vacation balance;
and (xii) any other material compensation payable to them including, without limitation, housing allowances, compensation payable pursuant
to any bonus or incentive compensation plan, agreement or arrangement, deferred compensation or commission plans, agreements or arrangements,
overtime payment, travel pay or car maintenance or car entitlement, sick leave entitlement and accrual, recuperation pay entitlement and
accrual, entitlement to pension arrangement and/or any other provident fund (including manager’s insurance and education fund),
their respective contribution rates and the salary basis for such contributions, whether such employee, is subject to Section 14 Arrangement
under the Israeli Severance Pay Law – 5723-1963 (“Section 14 Arrangement”) (and, to the extent such employee
is subject to the Section 14 Arrangement, an indication of whether such arrangement has been applied to such person from the commencement
date of their employment and on the basis of their entire salary), and whether the employee is on leave (and if so, the category of leave,
the date on which such leave commenced and the date of expected return to work. as known to the Company, if any) and notice period entitlement;
and (xiv) any promises or commitments made to any of the Company Employees, whether in writing or not, with respect to any future
changes or additions to their compensation or benefits listed in Schedule 3.13(a) of the Company Disclosure Letter.
(b) Except
as set forth on Schedule 3.13(b)(i), the Company and its Subsidiary are and have been in compliance in all material respects
with all Applicable Law respecting employment, discrimination in employment, harassment, terms and conditions of employment, employee
benefits, pay equity, pay transparency, restrictive covenants, worker classification (including the proper classification of workers as
independent contractors and consultants, and the proper classification of employees as exempt or non-exempt), engagement with independent
contractors (including catering, security and cleaning services), wages, pay slips, working hours, overtime and overtime payments, wages
and hours including payment of minimum wage, meal and rest breaks, rest days, workplace safety and health, employee leave, social benefits
contributions, termination and severance payment, engaging employees through service providers (including manpower employees and outsourcing
employees), and occupational safety and health and employment practices, work authorization and immigration. Other than as listed in Schedule
3.13(b)(ii) of the Company Disclosure Letter, (i) all Company Employees have signed an employment agreement substantially in
the form(s) delivered or made available to Acquirer with no deviations in any material respect; (ii) Company Employees are not entitled
to any payment or benefit that may be reclassified as part of their determining salary for all intent and purposes, including for the
social contributions (other than their salary and overtime payments); (iii) no Person has accepted an offer of employment made by the
Company or its Subsidiary but has not yet commenced employment; (iv) there are no outstanding offers of employment made by the Company
or its Subsidiary to any Persons; and (v) no officer, director or other key employee of the Company or its Subsidiary was terminated or
dismissed in the twelve (12) months preceding to the Agreement Date nor, to the knowledge of the Company, has any officer, director or
other key employee, or group of employees, expressed any plans to terminate his, her or its employment with the Company. Except as set
forth on Schedule 3.13(a), neither the Company nor its Subsidiary has made any promise, commitment or undertaking (whether written or
oral) to any current or former Employee or Contingent Worker regarding any future increase or change in compensation, benefits, equity
awards or other terms of employment or engagement.
40
(c) Schedule
3.13(c)(i) of the Company Disclosure Letter contains a list of all the Company’s current consultants, freelancers, independent
contractors, or other agents who provide services to the Company and are classified by the Company as other than employees, or compensated
other than through wages paid by the Company through the Company’s payroll (for the avoidance of any doubt, not including legal,
financial or tax advisors who provide such advisory services through a corporate entity) (“Contingent Workers”)
and, for each, location (country), average hours performed per month (as known by the Company), the rate(s) of compensation, the initial
date of engagement, and the amount of notice required prior to termination of such engagement. Except as set forth on Schedule 3.13(c)(ii),
all such current Contingent Workers are properly classified as such and would not reasonably be expected to be reclassified by any Governmental
Entity as employees of the Company or its Subsidiary, for any purpose whatsoever, and all such Contingent Workers’ agreements contain
provisions which state that no employer-employee relations exist between them and the Company. To the extent material, all current and
former Contingent Workers have received all rights and benefits, if any, to which they are and were entitled to according to any Applicable
Law or Contract with the Company. The Company does not engage any personnel through manpower agencies. The Company does not have temporary
employees or leased employees. Other than as listed in Schedule 3.13(c)(iii), the Company’s engagements with Contingent
Workers to which the Israeli Law for Strengthening the Enforcement of Labor Laws 5771- 2011 applies, are in full compliance with the law.
(d) Schedule
3.13(d) of the Company Disclosure Letter contains a list, with respect to the Company and its Subsidiary, (i) each loan
to an employee that is currently outstanding, (ii) all share option, share purchase, phantom share, share appreciation right, restricted
share unit, supplemental retirement, severance, sabbatical, medical, dental, vision care, disability, employee relocation, life insurance
or accident insurance plans, programs or arrangements, (iii) all bonus, pension, profit sharing, savings, severance, retirement,
deferred compensation or incentive plans (including commission and cash incentive plans), programs or arrangements other than any statutory
plans, (iv) all other fringe or employee benefit plans, programs or arrangements and (v) all employment, individual consulting,
retention, change of control or compensation, relocation, repatriation, expatriation or severance agreements, written or otherwise (all
of the foregoing described in clauses (i) through (vi), collectively, the “Company Employee Plans”).
(e) Each
Employee Benefit Plan has been established, maintained, administered, operated and funded in accordance with its terms and in compliance
with all applicable requirements of all Applicable Law. Each of the Company or its Subsidiary is and has been in compliance in all material
respects with all Laws with respect to employee benefits. Except as could not reasonably result, individually or in the aggregate, in
any material liability to the Company or its Subsidiary (i) all contributions, premiums and other payments due from the Company or its
Subsidiary (or with respect to) each Employee Benefit Plan for periods ending prior to the Agreement Date have been timely paid in accordance
with the terms of such Employee Benefit Plan and all Applicable Laws, or, if not yet due, have been accrued as a liability on the Company
Balance Sheet in accordance with, and to the extent required by, Israeli GAAP; and (ii) all returns, reports, notices, statements and
other disclosures relating to such Employee Benefit Plan required to be filed with any Governmental Entity or distributed to any participant
therein have been properly prepared and duly filed or distributed in a timely manner and were complete and accurate in all material respects
when filed or distributed.
41
(f) No
claim (other than routine claims for benefits) or action is pending or, to the Company’s Knowledge, threatened with respect to (or
against the assets of) any Employee Benefit Plan. No Employee Benefit Plan is (since the inception of the Company has been) the subject
of any audit, investigation, examination or other action by any Governmental Entity or a participant in any amnesty, voluntary compliance,
self-correction or similar program sponsored by any Governmental Entity, and, to the Company’s knowledge, no such audit, investigation,
examination or other action is contemplated or under consideration by any Governmental Entity.
(g) Except
as set forth on Schedule 3.13(g) of the Company Disclosure Letter, neither the Company nor its Subsidiary has received
written notice of complaints, charges or claims against the Company or its Subsidiary and, to the knowledge of the Company, no such complaints,
charges or claims are threatened in writing, arising out of, in connection with or otherwise relating to the employment or termination
of employment or failure to employ by the Company or its Subsidiary, of any individual.
(h) Except
as set forth on Schedule 3.13(h) of the Company Disclosure Letter, neither the Company nor its Subsidiary has any unsatisfied or
outstanding obligations of any nature to any former Employee or former Contingent Worker, and the termination of employment or engagement
of each such former Employee or former Contingent Worker was effected in compliance in all material respects with Applicable Law and the
applicable Contractual arrangements.
(i) No
Company Employee Plan provides for any tax “gross-up” or similar “make-whole” payments.
(j) Neither
the Company nor its Subsidiary is, nor ever has been, engaged in any unfair labor practice. Other than as listed in Schedule 3.13(j)(i)
of the Company Disclosure Letter, neither the Company nor its Subsidiary is liable for any arrears of wages, compensation, contribution
to social and pension benefits, Taxes, penalties or other sums for failure to comply with the foregoing (other than routine payments to
be made in the normal course of business and consistent with past practice). Other than as listed in Schedule 3.13(j)(i) of
the Company Disclosure Letter, neither the Company nor its Subsidiary are delinquent in any payments to any employees or Contingent Workers
for any wages, salaries, commissions, bonuses, fees, benefits and other compensation due to or on behalf of such employees or Contingent
Workers or amounts required to be reimbursed to such employees or Contingent Workers. Other than as listed in Schedule 3.13(j)(ii)
of the Company Disclosure Letter, neither the Company nor its Subsidiary is liable for any payment to any trust or other fund or to any
Governmental Entity, with respect to social benefits or other benefits or obligations for employees (other than routine payments to be
made in the normal course of business and consistent with past practice). There are no pending claims against the Company or its Subsidiary
under any Company Employee Plan or for long term disability. There are no controversies pending or, to the knowledge of the Company, threatened,
between the Company or its Subsidiary and any of their respective employees or Contingent Workers, which controversies have or would reasonably
be expected to result in a Legal Proceeding before any Governmental Entity. Other than as listed in Schedule 3.13(j)(iii) of
the Company Disclosure Letter, currently and since their incorporation, the Company and its Subsidiary are not, and have not been involved
in, any form of litigation, governmental audit, governmental investigation, administrative agency proceeding, private dispute resolution
procedure, or internal or external investigation of alleged employee misconduct, in each case with respect to employment or labor matters
(including but not limited to allegations of employment discrimination, retaliation, noncompliance with wage and hour laws, the misclassification
of independent contractors, violation of restrictive covenants, sexual harassment, other unlawful harassment or unfair labor practices).
No employee or Contingent Worker is eligible to earn commission, incentive compensation, or other post-employment or post-engagement compensation
payments after the end of their employment or engagement with the Company or its Subsidiary. Except as set forth on Schedule 3.13(j)(iv)
of the Company Disclosure Letter, each Employee and each Contingent Worker has executed a written agreement with the Company or its Subsidiary,
as applicable, containing customary confidentiality and intellectual property assignment provisions.
42
(k) The
Company for itself and for its Subsidiary has provided to Acquirer true, correct and complete copies of each of the following (to the
extent exist): (i) all current forms of employment agreements and severance agreements, (ii) all current forms of services agreements
with Contingent Workers and/or advisory board members, (iii) all current forms of confidentiality, non-competition or inventions agreements
between employees or Contingent Workers and, on the other hand, the Company or its Subsidiary, (iv) the most current management organization
chart, (v) all current forms of bonus plans and any form award agreement thereunder and (vi) a schedule of bonus commitments made to Company
Employees.
(l) Neither
the Company nor its Subsidiary is and has not at any time been a party to or bound by any collective bargaining agreement, works council
arrangement or other labor union Contract. No collective bargaining agreement, works council arrangement or other labor union Contract
is being negotiated by the Company or its Subsidiary and neither the Company nor its Subsidiary has any duty to bargain with any labor
organization or other person purporting to act as exclusive bargaining representative of any employees or Contingent Workers. Other than
as listed in Schedule 3.13(l)(i) of the Company Disclosure Letter, to the knowledge of the Company, the Company is not and
no Company Employee benefits from any extension order (tzavei harchava) except for extension orders which generally apply to all
employees in Israel, and there are no labor organizations representing, and to the knowledge of the Company there are no labor organizations
purporting to represent or seeking to represent any Company Employees. To the knowledge of the Company, there are no, and have not been,
activities or proceedings of any labor union or to organize their respective employees. There is no, and there has not been any, labor
dispute, strike, lockout, work stoppage, or any concerted interference with normal operations against the Company or its Subsidiary pending
or, to the knowledge of the Company, threatened against, affecting, or that may interfere with the conduct of the Business. Other than
as listed in Schedule 3.13(l)(ii) of the Company Disclosure Letter, the Company and its Subsidiary are not and have never
been a member of any employers’ association or organization. Other than as listed in Schedule 3.13(l)(iii) of the Company
Disclosure Letter, the Company and its Subsidiary have never paid, been required to pay nor been requested to pay any payment (including
professional organizational handling charges) to any employers’ association or organization. To the knowledge of the Company there
is no charge or complaint against the Company or its Subsidiary by any Governmental Entity pending or, to the knowledge of the Company,
threatened.
(m) To
the knowledge of the Company, no Company Employee is in violation of any term of any employment agreement, confidentiality agreement,
non-competition agreement, any restrictive covenant or any other agreement or obligation to a former employer or other third party relating
to the right of any such employee to be employed by the Company or its Subsidiary because of the nature of the Business or to the use
of trade secrets or proprietary information of others. To the knowledge of the Company, no Contingent Worker of the Company or its Subsidiary
is in violation of any term of any confidentiality agreement, non-competition agreement, any restrictive covenant or any other agreement
or obligation to a former employer or other third party relating to the right of any such Contingent Worker to be providing services to
the Company or its Subsidiary because of the nature of the Business or to the use of trade secrets or proprietary information of others.
Except as set forth on Schedule 3.13(m)(i) of the Company Disclosure Letter, the employment of each of the employees of the
Company can be terminated by the Company in accordance with applicable law. Except as set forth on Schedule 3.13(m)(ii) of
the Company Disclosure Letter, neither the Company nor its Subsidiary has any obligation to provide a period of notice prior to terminating
the employment or engagement of their respective employees or Contingent Workers, as applicable, which is longer than thirty (30) days.
Except as set forth on Schedule 3.13(m)(iii) of the Company Disclosure Letter, as of the Agreement Date, neither the Company
nor its Subsidiary has, (1) entered into any Contract that obligates or purports to obligate Acquirer to make an offer of employment to,
or to continue to employ or engage without the ability to terminate, any present or former employee or Contingent Worker of the Company
or any Subsidiary and/or (2) promised or otherwise provided any assurances (contingent or otherwise) to any present or former employee
or Contingent Worker of the Company or its Subsidiary of any terms or conditions of employment with Acquirer following the Closing.
43
(n) To
the knowledge of the Company, no Company Employee has received or accepted an offer to join a business or has active plans to engage in
business activities that may be deemed to be competitive with the Business.
(o) Except
as set forth on Schedule 3.13(o) of the Company Disclosure Letter, to the knowledge of the Company, the Company and its
Subsidiary do not currently engage and have never engaged any employee or Contingent Worker, whose employment or engagement requires special
licenses or permits.
(p) There
are no formal performance improvement plans or disciplinary actions contemplated or pending against any of the Company’s or its
Subsidiary’s employees. No claims or allegations have been made, either internally or externally, against the Company or its Subsidiary,
or, to the knowledge of the Company, any Employee or Contingent Worker thereof, for discrimination, sexual or other harassment, or retaliation,
nor are any such claims threatened in writing, pending, or, to the knowledge of the Company, threatened verbally. To the knowledge of
the Company, there are no facts that could reasonably be expected to give rise to a claim of sexual harassment or other discriminatory
harassment against or involving the Company, its Subsidiary, or any employee, director or Contingent Worker of the Company or its Subsidiary.
The Company and its Subsidiary have maintained policies prohibiting sexual harassment and all other forms of discriminatory harassment,
and providing complaint and investigation procedures with respect to applicable law. Any and all such policies have conformed with applicable
legal requirements, including, as applicable, with respect to Contingent Workers. The Company and its Subsidiary have complied with any
material and customary applicable legal requirements with respect to training concerning prevention of sexual harassment.
(q) Except
as set forth on Schedule 3.13(q) of the Company Disclosure Letter, none of the execution, delivery and performance of this
Agreement, the consummation of the Transactions, any termination of employment or service and any other event in connection therewith
or subsequent thereto could, individually or together or with the occurrence of some other event (whether contingent or otherwise), (i)
result in any payment or benefit including severance (other than the payment of statutory severance pay or termination related benefits
when it is required under Israeli Law), unemployment compensation, golden parachute, bonus or otherwise becoming due or payable, or required
to be provided, to any current Employee, director, or Contingent Worker, (ii) increase the amount or value of any benefit or compensation
otherwise payable or required to be provided to any current Employee, director, or Contingent Worker, (iii) result in the acceleration
of the time of payment, vesting or funding or delivery of any such benefit or compensation, (iv) increase the amount of compensation due
to any employee or Contingent Worker by the Company or (v) result in the forgiveness in whole or in part of any outstanding loans made
by the Company or its Subsidiary to any employee or Contingent Worker.
44
(r) Without
derogating from any of the above representations, the Company’s liability towards its employees regarding severance pay, accrued
vacation and contributions to all Company Employee Plans with respect to the employees are fully funded or if not required by any source
to be funded are accrued on the Company’s financial statements as of the date of such financial statements. Except as set forth
on Schedule 3.13(r)(i) of the Company Disclosure Letter, Section 14 Arrangement was properly applied in accordance with the
terms of the general permit issued by the Israeli Labor Minister regarding all current employees of the Company or its Subsidiary who
reside in Israel based on their full salaries and from their commencement date of employment. Except as set forth on Schedule 3.13(r)(ii)
of the Company Disclosure Letter, upon the termination of employment of Israeli Company Employees, the Company will not have to make any
payment under the Severance Pay Law 5723-1963, except for release of the funds accumulated in accordance with the Section 14 Arrangement.
All amounts that the Company is legally or contractually required to either (i) deduct from its employees’ salaries and any other
compensation or benefit or to transfer to such employees’ Company Employee Plan or (ii) withhold from employees’ salaries
and any other compensation or benefit and to pay to any Governmental Entity as required by any Applicable Law have in either case, been
duly deducted, transferred, withheld and paid, and the Company does not have any outstanding obligation to make any such deduction, transfer,
withholding or payment (other than routine payments, deductions or withholdings to be timely made in the ordinary course of business and
consistent with past practice).
3.14 Interested-Party
Transactions. Except as set forth on Schedule 3.14,
none of the officers and directors of the Company or its Subsidiary and none of the Company Shareholders, and, to the knowledge of the
Company, none of the immediate family members of any of the foregoing, (i) has any direct or indirect ownership, participation, royalty
or other interest in, or is an officer, director, employee of or consultant or contractor for any firm, partnership, entity or corporation
that directly competes with, or does business with, or has any contractual arrangement with, the Company or its Subsidiary (except with
respect to any interest in less than 1% of the stock of any corporation whose stock is publicly traded), (ii) is a party to, or to the
knowledge of the Company, otherwise directly or indirectly has a personal interest in, any Contract to which the Company or its Subsidiary
is a party or by which the Company or its Subsidiary or any of their respective assets are bound, except for bona fide compensation for
services as an officer, director or employee thereof or related D&O insurance, indemnification and exemption agreements or (iii) to
the knowledge of the Company, has any interest in any property, real or personal, tangible or intangible (including any Intellectual Property)
that is used in, or that relates to, the Business, except for the rights of Company Shareholders under Applicable Law.
3.15 Insurance. The Company and its Subsidiary maintain the policies
of insurance and bonds set forth in Schedule 3.15 of the Company Disclosure Letter, including all legally required workers’
compensation insurance and errors and omissions, casualty, fire, cybersecurity and general liability insurance. Schedule 3.15
of the Company Disclosure Letter sets forth the name of the insurer under each such policy and bond, the type of policy or bond, the coverage
amount and any applicable deductible and all material claims made under such policies and bonds since inception. The Company has provided
to Acquirer true, correct and complete copies of all material details of such policies of insurance and bonds issued at the request or
for the benefit of the Company and its Subsidiary. There is no claim pending under any of such policies or bonds as to which coverage
has been questioned, denied or disputed by the underwriters of such policies or bonds. All premiums due and payable under all such policies
and bonds have been timely paid and the Company and its Subsidiary are otherwise in compliance with the terms of such policies and bonds.
All such policies and bonds remain in full force and effect, and the Company has no knowledge of any threatened termination of, any of
such policies or bonds.
45
3.16 Books
and Records. The Company has provided to Acquirer true, correct
and complete copies of each document that has been requested by Acquirer in connection with their legal and accounting review of the Company
and its Subsidiary (other than any such document that does not exist or is not in the Company’s or its Subsidiary’s possession
or subject to its control). There has not been any material violation of any of the provisions of the Charter Documents, including all
amendments thereto, and the Company has not taken any action that is inconsistent in any material respect with any resolution adopted
by the Company Shareholders or the Board. The books, records and accounts of the Company and its Subsidiary (A) are true, correct and
complete in all material respects, (B) have been maintained in accordance with reasonable business practices on a basis consistent
with prior years, (C) are stated in reasonable detail and accurately and fairly reflect all of the transactions and dispositions of the
assets and properties of the Company and its Subsidiary and (D) accurately and fairly reflect the basis for the Financial Statements.
3.17 Material Contracts.
(a) Schedules 3.17(a)(i)
through (xxv) of the Company Disclosure Letter set forth a list of each of the following Contracts to which the Company or
its Subsidiary is a party that are in effect on the Agreement Date (collectively, the “Material Contracts”):
(i) any
Contract with a (A) Significant Customer/Distributor or (B) Significant Supplier;
(ii) any
Contract providing for payments by or to the Company or its Subsidiary (or under which the Company or its Subsidiary has made or received
such payments) in an aggregate annual amount of $50,000 or more;
(iii) any
dealer, distributor, referral or similar agreement, or any Contract providing for the grant of rights to reproduce, license, market, refer
or sell its products or services to any other Person or relating to the advertising or promotion of the Business or pursuant to which
any third-parties advertise on any websites operated by the Company, and with respect thereto, the aggregate amounts due or to become
due to such dealers, distributors, referral agents or third parties holding a similar position on account of such services prior to such
date for existing backlog. Other than as set forth in Schedule 3.17(a)(iii), there are (x) no referral fees, royalty payments
or commissions which are due under any such Contract and (y) no third parties that are entitled to compensation of any nature for introduction
or referral of business;
(iv) (A)
any joint venture Contract, (B) any Contract that involves a sharing of revenues, profits, cash flows, expenses or losses with other Persons
and (C) any Contract that involves the payment by the Company or its Subsidiary of royalties to any other Person;
46
(v) any
(i) separation agreement, (ii) severance agreement or (iii) other Contract, in each case of (i), (ii) and (iii), providing for the payment
of compensation or benefits upon or in connection with this Agreement (other than the Employment Agreements, or payments made under this
Agreement) with any current or former Employees or Contingent Workers under which the Company or its Subsidiary has any actual or potential
Liability;
(vi) any
Contract for or relating to the employment or service of any director, officer, or Company Shareholder of more than 5% of the total shares
of Company Shares or any other type of Contract with any of the Company’s or the Company’s Subsidiary’s officers, or
Company Shareholder of more than 5% of the total shares of Company Shares, as the case may be;
(vii) any
Contract (A) pursuant to which any other party is granted exclusive rights or “most favored party” rights of any type or scope
with respect to any of the Company Products, Company Intellectual Property or Company Data; (B) that limits or would limit the freedom
of the Company or its Subsidiary or any of their respective successors or assigns or their respective Affiliates to (I) engage or participate
with any other Person, in any line of business, market or geographic area with respect to the Company Products or the Company Intellectual
Property, or to grant by the Company or its Subsidiary of exclusive rights or licenses, (II) sell, distribute or manufacture any products
or services or to purchase or otherwise obtain any software, components, parts or services or (III) solicit the employment or engagement
of, or hire or engage, any potential employees or contractors; or (C) containing any “take or pay,” minimum commitments or
similar provisions;
(viii) any
standstill or similar agreement containing provisions prohibiting a third party from purchasing Equity Interests of the Company or its
Subsidiary or, in each case, the assets of the Company or its Subsidiary or otherwise seeking to influence or exercise control over the
Company or its Subsidiary;
(ix) other
than Contracts for Off-the-Shelf Software, all licenses, sublicenses and other Contracts to which the Company or its Subsidiary is a party
and pursuant to which the Company or its Subsidiary acquired or is authorized to use any Third-Party Intellectual Property;
(x) any
license, sublicense or other Contract to which the Company or its Subsidiary is a party and pursuant to which any Person is authorized
to use any Company-Owned Intellectual Property, other than any Contract entered into in substantial conformance with the Company’s
or its Subsidiary’s standard form of agreement, a copy of which has been provided to Acquirer;
(xi) any
license, sublicense or other Contract pursuant to which the Company or its Subsidiary has agreed to any restriction on the right of the
Company or its Subsidiary to use or enforce any Company-Owned Intellectual Property rights or pursuant to which the Company or its Subsidiary
agrees to encumber, transfer or sell rights in or with respect to any Company-Owned Intellectual Property rights;
(xii) any
Contracts relating to the membership of, or participation by, the Company or its Subsidiary in, or the affiliation of the Company or its
Subsidiary with, any industry standards group or association;
47
(xiii) any
Contract providing for the development of any software, technology or Intellectual Property Rights, independently or jointly, either by
or for the Company or its Subsidiary (other than employee invention assignment agreements and consulting agreements with Authors on the
Company’s or its Subsidiary’s standard form of agreement, copies of which have been provided to Acquirer);
(xiv) any
confidentiality, secrecy or non-disclosure Contract other than any such Contract entered into by the Company or its Subsidiary in the
ordinary course of business consistent with past practice;
(xv) any
Contract to license or authorize any third party to manufacture, reproduce or license any of the Company Products or Company Intellectual
Property;
(xvi) any
settlement agreement with respect to any Legal Proceeding entered into in the last 5 years, including any threatened Legal Proceeding
threatened;
(xvii) any
Contract pursuant to which rights of any third party are triggered or become exercisable, in connection with or as a result of the execution
of this Agreement or the consummation of the Share Purchase or the other Transactions, either alone or in combination with any other event;
(xviii) any
Contract or plan (including any share option, merger and/or share bonus plan) relating to the sale, issuance, grant, exercise, award,
purchase, repurchase or redemption of any shares of Company Shares or any other securities of the Company or its Subsidiary or, in each
case, any options, warrants, convertible notes or other rights to purchase or otherwise acquire any such shares of Company Shares, other
securities or options, warrants or other rights therefor, except for the repurchase rights disclosed on Schedule 3.2(a) or
Schedule 3.2(c) of the Company Disclosure Letter, other than the Company Option Plan and Contracts providing for Equity Interests
thereunder;
(xix) any
Contract with any labor union or other labor organization or any collective bargaining agreement or similar Contract with its Employees
or other person purporting to act as exclusive bargaining representative of any employees or Contingent Workers;
(xx) 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 Israeli GAAP;
(xxi) any
Contract of guarantee, surety, support, indemnification (other than pursuant to its standard end user agreements), assumption or endorsement
of, or any similar commitment with respect to, the Liabilities or indebtedness of any other Person;
(xxii) any
Contract for capital expenditures in excess of $50,000 in the aggregate on an annual basis;
48
(xxiii) any
Contract pursuant to which the Company or its Subsidiary is a lessor or lessee of any real property or any machinery, equipment, motor
vehicles, office furniture, fixtures or other material property;
(xxiv) any
Contract pursuant to which the Company or its Subsidiary has acquired a business or entity, or assets of a business or entity, whether
by way of merger, consolidation, purchase of stock, purchase of assets, license or otherwise, or any Contract pursuant to which it has
any material ownership interest in any other Person;
(xxv) any
Contract with any Governmental Entity, any Company Authorization, or any Contract with a government prime contractor or higher-tier government
subcontractor (in their capacity as such), including any indefinite delivery/indefinite quantity contract, firm-fixed-price contract,
schedule contract, blanket purchase agreement, or task or delivery order (each a “Government Contract”);
(xxvi) any
Contract that is between the Company and its Subsidiary;
(xxvii) any
Contract pursuant to which an Encumbrance is currently placed on any assets (including tangible and intangible assets) or properties of
the Company or its Subsidiary; and
(xxviii) any
Contract relating to the voting and any other rights or obligations of the Company Shareholders.
(b) All
Material Contracts are in written form. Each of the Company and each Subsidiary has performed all of the material obligations required
to be performed by it and is entitled to all benefits under, and is not alleged to be in material default in respect of, any Material
Contract. Each of the Material Contracts is in full force and effect in accordance with its terms, subject only to the effect, if any,
of applicable bankruptcy and other similar Applicable Law affecting the rights of creditors generally and rules of law governing specific
performance, injunctive relief and other equitable remedies. Except as set forth in Schedule 3.17(b), there exists no
material default or event of default or event, occurrence, condition or act, with respect to either the Company or its Subsidiary or to
the knowledge of the Company, with respect to any other contracting party, that, with the giving of notice, the lapse of time or the happening
of any other event or condition, would reasonably be expected to (i) become a material default or event of default under any Material
Contract or (ii) give any third party (A) the right to declare a material default or exercise any remedy under any Material
Contract, (B) the right to a rebate, chargeback, refund, credit, penalty or change in delivery schedule under any Material Contract, (C) the
right to accelerate the maturity or performance of any obligation of the Company or its Subsidiary under any Material Contract or (D) the
right to cancel, terminate or modify any Material Contract. Neither the Company nor its Subsidiary has received any notice or other communication
regarding any actual or possible violation or breach of, default under, or intention to cancel or modify any Material Contract. Neither
the Company nor its Subsidiary has any Liability for renegotiation of Government Contracts. True, correct and complete copies of all Material
Contracts have been provided to Acquirer at least three (3) Business Days prior to the Agreement Date.
3.18 Real Estate.
(a) Schedule
3.18(a) of the Company Disclosure Letter sets forth a complete and accurate list of all Leases and any guaranties with respect
thereto to which the Company is bound, setting forth for each such Lease, the name of the landlord, the expiration date, the amount of
the bank guarantee or security deposit paid by the Company for such Lease.
49
(b) The
Company has provided to Acquirer a true and correct copy of each Lease and any guaranties with respect thereto, in each case, required
to be listed in Schedule 3.18(a) of the Company Disclosure Letter. Each such Lease is in full force and effect and is valid,
binding and enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting or relating to creditors’ rights generally, and general principles of equity, regardless of whether
asserted in a proceeding in equity or at law. Except as set forth on Schedule 3.18(b) of the Company Disclosure Letter,
neither the Company, nor, to the Company’s knowledge, the applicable landlord, sublandlord or licensor is in default under any Lease.
No Lease has been cancelled, mutually terminated or to the Company’s knowledge, challenged in writing wholly or in part, and to
the Company’s knowledge, such cancellation, termination or challenge has not been directly and overtly threatened neither for now
nor the future and no side agreements have been made by the Company with respect to the properties subject to any Lease. The possession
and quiet enjoyment by the Company of the premises which are the subject of each Lease has not been disturbed. The Company has not transferred
or assigned any Lease or sublet or sub-sublet any portion of the property covered by any Leases. The Company has paid all rents, operating
expenses and other additional charges in full to the extent such rents, operating expenses and charges are due and payable under each
Lease.
(c) The
Company does not own, and has never owned, any real property.
3.19 Accounts
Receivable/Payable. Subject to any reserves set forth therein, the accounts receivable and
accounts payable shown on the Company Balance Sheet are valid and genuine, have arisen, or arose, solely out of bona fide sales and
deliveries of goods, performance of services, and other business transactions in the ordinary course of business consistent with
past practice in each case with persons other than Affiliates, are not subject to any prior assignment, Encumbrance or security
interest. Such accounts receivable are collectible in accordance with their terms at their recorded amounts. Prior to the Closing,
the Company and the Subsidiary have been paying their accounts payable in the ordinary course, consistent with past
practice.
3.20 Broker Fee. Except as set forth in Schedule 3.20
of the Company Disclosure Letter, no broker, finder, financial advisor, investment banker or similar Person is entitled to any brokerage,
finder’s or other fee or commission in connection with the origin, negotiation or execution of this Agreement or in connection with
the Transactions.
3.21 Anti-Corruption
Law.
(d) Neither
the Company nor its Subsidiary nor, in each case, any of its Representatives (acting in their capacities as such) has, directly or indirectly
through its representatives or any Person authorized to act on its behalf (including any distributor, agent, sales intermediary or other
third party), (i) violated any Anti-Corruption Law or (ii) offered, given, promised to give or authorized the giving of money or
anything of value, to any Government Official or to any other Person: (A) for the purpose of (1) corruptly or improperly influencing
any act or decision of any Government Official in their official capacity, (2) inducing any Government Official to do or omit to do any
act in violation of their lawful duties, (3) securing any improper advantage or (4) inducing any Government Official to use his or her
respective influence with a Governmental Entity to affect any act or decision of such Governmental Entity or (B) in a manner that would
constitute or have the purpose or effect of public or commercial bribery, acceptance of, or acquiescence in, extortion, kickbacks or other
unlawful or improper means of obtaining business or any improper advantage.
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(e) The
Company has maintained, and has caused its Subsidiary to maintain, systems of internal controls (including, but not limited to, accounting
systems, purchasing systems and billing systems) and written policies to ensure compliance with Anti-Corruption Laws, and to ensure that
all books and records of the Company and its Subsidiary accurately and fairly reflect, in reasonable detail, all transactions and dispositions
of funds and assets, payments to any agents, consultants, representatives, third parties and Government Officials, in accordance with
Israeli GAAP, and has made available all of such documentation to Acquirer. Neither the Company nor the Subsidiary has made any false
or fictitious entries in the books and records of the Company and its Subsidiary relating to any unlawful offer, payment, promise to pay
or authorization of the payment of any money, or unlawful offer, gift, promise to give, or authorization of the giving of anything of
value, including any bribe, kickback or other illegal or improper payment, or has established or maintained a secret or unrecorded fund
or account.
(f) Neither
the Company nor its Subsidiary nor, in each case, any of its Representatives (acting in their capacities as such) has been convicted of
violating any Anti-Corruption Law or subjected to any investigation or proceeding by a Governmental Entity for potential corruption, fraud
or violation of any Anti-Corruption Law.
3.22 Environmental,
Health and Safety Matters.
(a) Each
of the Company and its Subsidiary is in compliance in all material respects, and to an extent applicable to the conduct of its business
as presently conducted, with all material Environmental, Health and Safety Requirements in connection with the ownership, use, maintenance
or operation of its business or tangible assets or properties. There are no pending, or to the knowledge of the Company or its Subsidiary,
any threatened allegations by any Person that the properties or tangible assets of the Company or its Subsidiary are not, or in each case
that its or their business has not been conducted, in compliance with all Environmental, Health and Safety Requirements. Neither the Company
nor its Subsidiary has retained or assumed any Liability of any other Person under any Environmental, Health and Safety Requirements.
To the knowledge of the Company, there are no past or present facts, circumstances or conditions that would reasonably be expected to
give rise to any Liability of the Company or its Subsidiary with respect to Environmental, Health and Safety Requirements.
(b) Each
of the Company and its Subsidiary has all material licenses, permits, certificates, approvals, registrations, franchises, variances, exemptions,
orders and other governmental authorizations, consents, approvals and clearances of, and has submitted all required notices to, any Governmental
Entity that are required under applicable Environmental, Health and Safety Requirements, solely to the extent applicable for the Company
to own, lease and operate its properties or other assets and to carry on its business as presently conducted, with respect to the development,
manufacture, distribution, use, generation, treatment, storage, transport, handling or recycling directly by the Company (the “Environmental
Permits”), and all such Environmental Permits are valid, and in full force and effect. Each of the Company and its Subsidiary
has fulfilled and performed in all material respects their respective obligations under each Environmental Permit, and no event has occurred
that constitutes or, after written notice or lapse of time or both, would constitute a material breach or default under any Environmental
Permit or that permits or, after written notice or lapse of time or both, would result in revocation or termination of any Environmental
Permit, or that might adversely affect in any material respect the rights of the Company under any Environmental Permit.
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3.23 Export
Control Laws. The Company and its Subsidiary, and, to the knowledge of the Company, their respective directors, officers,
employees, agents, distributors, Affiliates, and other Persons associated with or acting on their behalf, have at all times been in
compliance with and conducted their export transactions in accordance with, all applicable Israeli import/export control laws and
Israeli Laws which restrict or prohibit the carrying on of business with individuals, corporations or countries, and other Israeli
Laws regulating the development, commercialization, transfer, provision, import or export of technology or services, including
without limitation, the Israeli Defense Export Control Law, 2007, the Israeli Order of Import and Export (Supervision of Export of
Dual Use Goods, Services and Technologies), 2006, the Israeli Trading with the Enemy Ordinance, 1939, as amended, and any
regulations and orders promulgated under or related to any of the foregoing, as well as with applicable U.S. export, reexport,
transfer (in-country), import, anti-boycott, economic and trade sanctions laws, regulations, statutes, and orders, including the
Export Control Reform Act and Export Administration Regulations (EAR), the Arms Export Control Act and International Traffic in Arms
Regulations (ITAR), and the economic and trade sanctions regulations administered by the Office of Foreign Assets Control of the
U.S. Department of the Treasury and all other Applicable Laws, regulations, statutes, and orders in other countries in which the
Company or its Subsidiary conducts business (collectively, “Trade Laws”). Without limiting the foregoing:
(i) each of the Company and its Subsidiary has obtained, or is otherwise qualified to rely upon, and has at all times been in
compliance with, all export and import licenses, license exceptions and other consents, notices, waivers, approvals, orders,
authorizations, registrations, declarations and filings with any Governmental Entity required for (A) the export, import and
re-export of products, services, software and technologies and (B) releases of technologies and software to foreign nationals,
wherever located (collectively, “Trade Approvals”), (ii) neither the Company nor its Subsidiary nor any of
their respective directors, officers, Employees, agents, distributors, Affiliates, or other Persons associated with or acting on
their behalf is a Person with whom dealings are prohibited or restricted under any Trade Laws and Regulations, including as a result
of: (1) being named on any list of Persons subject to prohibitions or restrictions under any Trade Laws and Regulations, (2) being
located, organized, or resident in any jurisdiction subject to comprehensive sanctions programs administered by the U.S. Department
of the Treasury’s Office of Foreign Assets Control (currently, the so-called Donetsk People’s Republic (DNR) and Luhansk People’s
Republic (LNR) regions of Ukraine, the Crimea region of Ukraine, Cuba, Iran, Lebanon, North Korea and Syria) (each, a
“Sanctioned Jurisdiction”), or (3) a relationship of ownership or control with a Person named in (1) or
(2) above (any such Person, a “Sanctioned Person”) (as ownership or control is established or defined
under relevant sanctions laws), (iii) neither Company nor the Company Subsidiary nor any of their respective directors, officers,
Employees, agents, distributors, Affiliates, or other Person associated with or acting on their behalf has engaged or is currently
engaged in any dealings or transactions directly or indirectly involving any Sanctioned Person or Sanctioned Jurisdiction, and (iv)
there are no pending or, to the knowledge of the Company, threatened inquiries, investigations, enforcement actions, voluntary
disclosures or other claims against the Company or its Subsidiary, nor any actions, conditions, facts, or circumstances that would
reasonably be expected to give rise to any future claims, with respect to Trade Laws or Trade Approvals. Schedule 3.23
of the Company Disclosure Letter identifies each Trade Approval received by the Company to include any licenses, registrations or
filings with the U.S. Directorate of Defense Trade Controls (DDTC), the Committee on Foreign Investment in the U.S. (CFIUS), the
Israeli Defense Export Control Agency (DECA), the Israeli Ministry of Defense (IMOD), or any other similar entities. The Company
does not use or develop, or engage in, encryption technology, technology with military applications, or other technology in a
manner that is restricted under Israeli Law, and except as set forth in Schedule 3.23, no Company business and/or operation
requires the Company to obtain a license from the Israeli Ministry of Defense (IMOD) or Israeli Ministry of Economy or an authorized
body thereof, including without limitation pursuant to the Control of Products and Services Order (Export of Warfare Equipment and
Defense Information), 1991, as amended, the Law of Regulation of Security Exports, 5767-2007, or under any other legislation
regulating the development, commercialization or export of technology and/or encryption under any Applicable Law. The Company has
not developed any of its own encryption means and the Company’s or the Subsidiary’s products, services or technology do
not contain any encryption means developed by the Company. The Company and its Subsidiary maintain written internal policies,
procedures and controls designed to ensure ongoing compliance with Trade Laws, including in respect of license management and
restricted party screening.
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3.24 Customers
and Distributors. The Company and its Subsidiary do not have any outstanding material disputes concerning any Company Products
with any customer or distributor who, during the last seven years, was one of ten (10) largest sources of revenues for the Company,
based on amounts paid or payable with respect to such periods (each, a “Significant
Customer/Distributor”), and, to the knowledge of the Company, there is no material dissatisfaction on the part of any
Significant Customer/Distributor with respect to any Company Products. Each Significant Customer/Distributor is listed on Schedule
3.24 of the Company Disclosure Letter. Neither the Company nor its Subsidiary has received any notification from any
Significant Customer/Distributor that such Significant Customer/Distributor shall not continue as a customer of the Company and/or
its Subsidiary, as applicable (or Acquirer) after the Closing or that such Significant Customer/Distributor intends to terminate or
materially modify existing Contracts with the Company and/or its Subsidiary, as applicable (or Acquirer). Neither the Company nor
its Subsidiary has had any Company Products returned by a purchaser thereof except for normal warranty returns consistent with past
history that would not result in a reversal of any revenue by the Company and/or its Subsidiary, as applicable.
3.25 Suppliers.
The Company and its Subsidiary do not have any outstanding material disputes concerning products and/or services provided by any
supplier who (i) during the last seven years, was one of the ten (10) largest suppliers of products and/or services to the Company
and its Subsidiary, based on the aggregate amounts paid or payable with respect to such periods or (ii) is material to the operation
of the Business (each, a “Significant Supplier”). There is no material dissatisfaction on the part of the
Company or its Subsidiary with respect to any Significant Supplier and, to the knowledge of the Company, there is no material
dissatisfaction on the part of any Significant Supplier with respect to the Company or its Subsidiary. Each Significant Supplier, if
any, is listed on Schedule 3.25 of the Company Disclosure Letter. Neither the Company nor its Subsidiary has received
any notification from any Significant Supplier that such supplier shall not continue as a supplier to the Company and/or its
Subsidiary, as applicable (or Acquirer) after the Closing or that such Significant Supplier intends to terminate or materially
modify existing Contracts with the Company and/or its Subsidiary, as applicable (or Acquirer). The Company and its Subsidiary have
access, on commercially reasonable terms, to all products and services reasonably necessary to carry on the Business and, to the
knowledge of the Company, there is no reason why the Company or its Subsidiary, as applicable, will not continue to have such access
on commercially reasonable terms.
3.26 Benefit
Plans. The Company has not adopted, or maintained, any equity plan other than the Company Option Plan. The Company does not have
any liability to the ITA or to any relevant fund or Governmental Authority with respect to any Israeli Benefit Plan. The Company has
made, in time and in full, adequate provisions with respect to the payment of any payment under any Israeli Benefit Plan, including
severance pay provided under the Law, agreement or otherwise. The Company has provided to Acquirer current, true, correct and
complete copies of all material communications to or from the ITA or any other Governmental Authority relating to each Israeli
Benefit Plan (including any filings made with the ITA with respect to each Israeli Benefit Plan and any notices from the ITA), if
any.
3.27 Accuracy
of Information; Disclosure. Neither this Agreement nor any schedule, statement, or certificate furnished by or on behalf of the Company
or any Company Shareholder to Acquirer in connection with this Agreement or any of the transactions contemplated hereby, contains any
untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they are made, not misleading.
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Article
IV
Representations and Warranties of the Company Shareholders
Each Company Shareholder,
severally and not jointly with the other Company Shareholder, represents and warrants to Acquirer in respect of itself, as follows:
4.1 Organization,
Power and Capacity. Such Company Shareholder possesses all requisite
capacity necessary to carry out the Transactions that are required to be carried out by such Company Shareholder.
4.2 Enforceability;
Non-Contravention.
(a) This
Agreement has been duly executed and delivered by such Company Shareholder and, assuming the due execution and delivery of this Agreement
by the other parties hereto, constitutes the valid and legally binding obligation of such Company Shareholder enforceable against such
Company Shareholder in accordance with its terms, except as may be limited by and subject only to the effect, if any, of (i) applicable
bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors’
rights generally and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies.
(b) The
execution, delivery and performance by such Company Shareholder of this Agreement, or its otherwise being bound by it, does not, and the
consummation of the Transactions will not, conflict with, or result in any violation of or default under (with or without notice or lapse
of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any benefit under,
or require any consent, approval or waiver from any Person pursuant to, or result in the creation of any Encumbrance upon the Company
Shares or Company Options pursuant to (i) any Contract or Order to which the Company Shareholder is subject or (ii) any Applicable
Law, except where such conflict, violation, default, termination, cancellation or acceleration, individually or in the aggregate, would
not be material to such Company Shareholder’s ability to consummate the Share Purchase or to perform its obligations under this
Agreement. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity or any
other Person is required by such Company Shareholder in connection with the execution and delivery of this Agreement or the consummation
of the Transactions.
4.3 Title to
Securities. Such Company Shareholder owns of record and beneficially the Company Shares and/or Company Options as set forth
opposite his name on Schedule 3.2(a) of the Company Disclosure Letter, and has good and valid title to such Company
Shares and/or Company Options, free and clear of all Encumbrances (except for those set forth in the Charter Documents) and, at
Closing, shall deliver to Acquirer good and valid title to such Company Shares and/or Company Options, free and clear of all
Encumbrances and Taxes. Such Company Shareholder does not own, and does not have the right to acquire, directly or indirectly, any
other Company Shares and/or Company Options, except as set forth in Schedule 3.2(a) of the Company Disclosure Letter.
Such Company Shareholder is not a party to any option, warrant, purchase right, or other Contract or commitment that could require
such Company Shareholder to sell, transfer, or otherwise dispose of any Company Shares and/or Company Options (other than this
Agreement). Such Company Shareholder is not a party to any voting trust, proxy, or other agreement or understanding with respect to
the voting of any share capital of the Company.
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4.4 Litigation.
There are no actions, suits, arbitrations, mediations, proceedings or claims pending or, to the knowledge of such Company
Shareholder, threatened against such Company Shareholder that seek to restrain or enjoin the consummation of the Transactions.
4.5 Solvency.
Such Company Shareholder is not bankrupt or insolvent and has not proposed a voluntary arrangement or made or proposed any
arrangement or composition with such Company Shareholder’s creditors or any class of such creditors, and no petition in
respect of any such arrangement or composition has been presented. The consummation of the Share Purchase and the other Transactions
shall not constitute a fraudulent transfer by such Company Shareholder under applicable bankruptcy and other similar laws relating
to bankruptcy and insolvency of such Company Shareholder.
4.6 Broker
Fee. No broker, finder, financial advisor, investment banker or similar Person is entitled to any brokerage, finder’s or
other fee or commission from such Company Shareholder in connection with the origin, negotiation or execution of this Agreement or
in connection with the Transactions.
4.7 Tax
Matters. Such Company Shareholder has had an opportunity to review with his, her or its own tax advisors the tax consequences of
the Transaction Documents, the Transactions and the other transactions contemplated hereby and thereby. Such Company Shareholder
understands that he, she or it must rely solely on his, her or its advisors and not on any statements or representations made by
Acquirer, the Company or any of their agents or representatives. Such Company Shareholder understands that such Company Shareholder
(and not Acquirer, the Company or any of their respective Affiliates) shall be responsible for any tax liability for such Company
Shareholder that may arise as a result of the Transaction Documents, the Transactions and the other transactions contemplated hereby
and thereby.
4.8 Withholding
Information. All information provided, or to be provided, to Acquirer, the Paying Agent or to the ITA, by or on behalf of any
Company Shareholder for purposes of enabling Acquirer, the Paying Agent or the ITA to determine the amount of Tax to be deducted and
withheld, if any, from the consideration payable to such Company Shareholder pursuant to this Agreement and for the ITA to issue a
Valid Tax Certificate is and will be true, correct and complete when provided and provides full disclosure of all the relevant facts
relating to such Company Shareholder.
4.9 Investor
Questionnaires. The Investor Questionnaire provided to Acquirer by such Company Shareholder and all information contained therein
is fully true, correct and complete including without limitation the following:
(a) Such
Person is receiving Acquirer Common Stock for investment solely for such Person’s own account and not with a view to or for sale
in connection with any distribution thereof in violation of any Applicable Law, including without limitation, any federal securities laws,
state securities laws or this Agreement.
(b) At
the time such Person was offered the Acquirer Common Stock, such Person had, and as of the date hereof, has, such knowledge and experience
in financial and business matters that he is capable of evaluating the merits and risks of the acquisition of Acquirer Common Stock, and
in each case has consulted with counsel and other advisors prior to entering into this Agreement.
55
(c) Such
Person has had an opportunity to ask questions and receive answers concerning the capitalization of Acquirer, the terms of this Agreement
and the financial condition and operations of Acquirer and its subsidiaries.
(d) Such
Person shall confirm whether such Person is either an Accredited Investor or is not a U.S. Person (as defined in Regulation S. under the
Securities Act).
(e) Such
Person understands that that the issuance of Acquirer Common Stock has not been registered under the Securities Act and as a result must
be held indefinitely unless the resale thereof is registered under the Securities Act or an exemption from such registration is available
but that the Acquirer Common Stock shall be registered for resale in accordance with the Registration Rights Agreement.
4.10 Experience;
No Reliance. Such Company Shareholder has received and reviewed a copy of this Agreement and any of the Transaction Documents to which
it is a party or by which it is bound. Such Company Shareholder has such experience in business and financial matters to enable such Company
Shareholder to understand and evaluate this Agreement and form an investment decision with respect to the Acquirer Common Stock. Such
Company Shareholder has independently and without reliance upon the Company, any Subsidiary, or Acquirer, made its own analysis and decision
to enter into the Transaction Documents. Such Company Shareholder acknowledges that Acquirer is entering into this Agreement in reliance
on such Company Shareholder’s execution and delivery of the Transaction Documents and such Company Shareholder’s agreement
to be bound thereby, including with respect to such Company Shareholder’s indemnification obligations hereunder.
4.11 Accuracy
of Information; Disclosure. Neither this Agreement nor any schedule, statement, or certificate furnished by or on behalf of such Company
Shareholder to Acquirer in connection with this Agreement or any of the transactions contemplated hereby, contains any untrue statement
of a material fact or omits to state a material fact necessary to make the statements contained herein or therein, in light of the circumstances
in which they are made, not misleading.
Article
V
Representations and Warranties of Acquirer
Acquirer represents and warrants to the Company
as follows:
5.1 Organization
and Standing. Acquirer is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction
of incorporation. Acquirer is not in violation of any of the provisions of its articles or certificate of incorporation, as
applicable, or bylaws or equivalent organizational or governing documents.
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5.2 Authority;
Non-Contravention. Acquirer has all requisite corporate power and authority to enter into this Agreement and any other
Transaction Document to which it is a party and to consummate the Transactions. The execution and delivery of this Agreement and the
other Transaction Documents by Acquirer and the consummation of the Transactions have been duly authorized by all necessary
corporate action on the part of Acquirer, and no other corporate proceedings on the part of Acquirer are necessary for it to
authorize this Agreement or to consummate the Transactions and the other transactions contemplated hereby. This Agreement and the
other Transaction Documents have been duly executed and delivered by Acquirer and, assuming the due execution and delivery of this
Agreement by the other parties hereto, constitutes the valid and binding obligation of Acquirer, enforceable against Acquirer in
accordance with its terms, subject only to the effect, if any, of (i) applicable bankruptcy and other similar Applicable Law
affecting the rights of creditors generally and (ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.
5.3 Consents
and Approvals; No Violations. Except as set forth on Schedule 5.3, the execution and delivery by Acquirer of this Agreement
and each other instrument to be executed and delivered by it hereunder, the performance by Acquirer of its obligations hereunder and thereunder
and the consummation by Acquirer of the transactions contemplated hereby and thereby, do not and will not, with or without the giving
of notice or the lapse of time or both (a) violate, conflict with or result in a breach of or default by Acquirer under any provision
of its organizational documents or of any Contract to which Acquirer is a party or by which it or any of its assets or properties, are
bound, (b) require Acquirer to obtain any consent, approval or action of, make any filing with, or give any notice to, any Person, including
any consent, license, permit, grant or other authorization of any Governmental Entity, other than (i) the filings required pursuant to
this Agreement; (ii) the filing with the SEC of a Current Report on Form 8-K, (iii) the application(s) to NASDAQ for the listing of the
Base Stock Consideration Payment and the Earn-Out Consideration for trading thereon in the time and manner required thereby, and (iv)
the filing with the SEC of a Prosupp in accordance with the Registration Rights Agreement, (c) contravene any law or judgment applicable
to Acquirer or any of Acquirer’s assets or properties, or (d) violate, conflict with, result in a breach of or default by Acquirer
under any provision of any Contract to which Acquirer is a party or by which it or any of Acquirer’s assets or properties, are bound;
provided, however, that the foregoing subsection (iv) shall not derogate in any manner from Acquirer’s obligation to make payments
by way of Substitute Cash Consideration hereunder if and to the extent applicable in the event that any payment by way of Base Stock Consideration
Payment is unavailable.
5.4 Issuance
of the Base Stock Consideration and Earn-Out Consideration; Registration. Each portion of the Base Stock Consideration issued at each
of the Closing Date, the Second Payment Date, the Third Payment Date, the Fourth Payment Date, the Fifth Payment Date, the Sixth Payment
Date, the Seventh Payment Date, the Earn-Out Consideration, and the issuance of the Excess Amount in accordance with Section 1.5(i)
(if applicable), if and when issued, will be duly authorized, validly issued, fully paid and nonassessable, and a Prosupp shall be
filed concurrently with such issuances in accordance with the Registration Rights Agreement. Such Acquirer Common Stock, if and when issued,
in reliance upon a Prosupp filed concurrently with such issuance, will be free from any pre-emptive rights or other restrictions on transfer
other than those imposed under this Agreement, the Registration Rights Agreement, applicable federal and state securities laws, the Acquirer’s
insider trading policy, if applicable to the Company Shareholders on and after the Closing Date, and any liens or encumbrances imposed
on a shareholder of Acquirer. Assuming the accuracy of the representations of the Company Shareholders in Article
IV of this Agreement, the Acquirer Common Stock will be issued in compliance with all applicable federal and state securities laws.
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5.5 Listing
and Maintenance Requirements. Acquirer is in compliance with the provisions of the rules and regulations promulgated by NASDAQ and/or
any other Trading Market and has no reason to believe that it will not in the foreseeable future continue to be in compliance with all
such listing and maintenance requirements. There are no proceedings pending or threatened against Acquirer relating to the continued listing
of the Acquirer Common Stock on NASDAQ, and Acquirer has not received any notice of, nor is there any reasonable basis for, the delisting
of the Acquirer Common Stock from NASDAQ.
5.6 Litigation.
There is no (a) private or governmental proceeding, suit or litigation pending or, to the Acquirer’s knowledge, threatened against
the Acquirer or its Affiliates arising out of or in connection with the transactions contemplated hereby, and (b) to the Acquirer’s
knowledge, governmental inquiry or investigation pending or threatened against the Acquirer or its Affiliates, in each case, with respect
to the execution, delivery or performance of this Agreement or the transactions contemplated hereby or any other agreement entered into
by Acquirer in connection with the transactions contemplated hereby.
5.7 Broker
Fee.
No broker, finder, financial advisor, investment banker or similar Person is entitled to any brokerage, finder’s or other fee or
commission from Acquirer in connection with the origin, negotiation or execution of this Agreement or in connection with the Transactions.
5.9 Available
Funds. Acquirer shall have prior to the applicable payment date, sufficient cash on-hand to pay the amounts required to be paid by
it in cash, if any, pursuant to the provisions set forth herein.
5.10 SEC
Filings. Acquirer has timely filed or furnished with the SEC all reports, schedules, forms, statements, and other documents (including exhibits
and other information incorporated therein) required to be filed or furnished by it since December 31, 2024 under the Exchange Act.
5.12 Disclaimer
of Other Representations and Warranties.
(a) Acquirer
acknowledges that it and its representatives have had an opportunity to ask questions and receive answers and materials, and to discuss
the Business with, and meet with, certain key officers of the Company and have been permitted access to the virtual data room provided
by the Company.
(b) Acquirer
has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks
of the prospective purchase of the Company Shares, and has so evaluated the merits and risks of such purchase. Acquirer is able to bear
the economic risk of the purchase of the Company Shares contemplated under this Agreement.
(c) Acquirer
acknowledges and agrees that, except for the representations and warranties expressly set forth in this Agreement, the Transaction Documents
or any certificates delivered by the Company or any Company Shareholder pursuant to this Agreement and any other Transaction Document
to which the Company or any Company Shareholder is party, neither the Company nor any of the Company Shareholders has made any representations
or warranties whatsoever relating to the Company Shareholders, the Company or the Company’s Subsidiaries in connection with the
transactions contemplated hereby. Nothing in this Section shall derogate from the representations and warranties of the Company and the
Company Shareholders contained in Articles III and IV hereof, the Transaction Documents or any certificates delivered pursuant to this
Agreement or the other Transaction Documents (or the obligation to indemnify the Acquirer Indemnified Person for breach of such representations
and warranties pursuant to Article X or any other Transaction Documents) or the ability of Acquirer to rely on such warranties and representations
or to recover Indemnifiable Damages in respect of such representations and warranties pursuant to Article X.
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Article
VI
Conduct Prior to the Closing
6.1 Conduct of
the Business of the Company. During the period from the Agreement Date and continuing until the earlier of the termination of
this Agreement and the Closing, the Company shall and shall cause its Subsidiary to, except as Acquirer shall otherwise consent in
writing, with email being sufficient:
(a) conduct
the Business solely in the ordinary course consistent with past practice (except to the extent expressly provided otherwise herein or
as consented to in writing by Acquirer, with email being sufficient) and in compliance with Applicable Law;
(b) promptly
upon becoming aware, notify Acquirer of any material event or occurrence that constitutes a Material Adverse Effect;
(c) use
its commercially reasonable efforts, consistent with past practice and policies, to preserve intact its present business organizations,
keep available the services of its present officers and key employees, and preserve its relationships with customers, suppliers, distributors,
licensors, licensees, and others having business dealings with it, to the end that its goodwill and ongoing businesses shall be unimpaired
at the Closing; and
(d)
assure that each of its Contracts (other than with Acquirer) entered into after the Agreement Date will not require the procurement of
any consent, waiver or novation or provide for any change in the obligations of any party thereto in connection with, or terminate as
a result of the consummation of, the Transactions, and shall use commercially reasonable efforts to give reasonable advance notice to
Acquirer prior to allowing any Material Contract or right thereunder to lapse or terminate by its terms.
6.2 Restrictions
on Conduct of the Business of the Company. Without limiting the generality or effect of Section 6.1, except as
expressly set forth on Schedule 6.2 of the Company Disclosure Letter, during the period from the Agreement Date and
continuing until the earlier of the termination of this Agreement and the Closing, the Company shall not, and shall cause each of
its Subsidiaries not to, cause or permit any of the following (except to the extent expressly provided otherwise herein or as
consented to in writing by Acquirer, with email being sufficient):
(a) Charter
Documents. Cause, propose or permit any amendments to the Charter Documents or equivalent organizational or governing documents of
the Company’s Subsidiary other than as contemplated in the Shareholder Consent;
(b) Merger,
Reorganization. Merge or consolidate itself with any other Person or adopt a plan of complete or partial liquidation, dissolution,
consolidation, restructuring, recapitalization or other reorganization;
(c) Dividends;
Distributions. Declare or pay any dividends on or make any other distributions (whether in cash, stock or other property) in respect
of any of its Equity Interests, or split, combine or reclassify any of its Equity Interests, or repurchase or otherwise acquire, directly
or indirectly, any of its Equity Interests;
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(d) Material
Contracts. (i) Enter into, amend or modify any (A) Contract that would (if entered into, amended or modified prior to the Agreement
Date) constitute a Material Contract, provided, however, that for purposes of this clause (A), a Contract shall not be deemed a “Material
Contract” solely due to the fact that it constitutes a “Government Contract”, unless such Contract also meets the condition(s)
set forth in clauses (A) and (B) of Section 3.17(a)(vii), Sections 3.17(a) (xvi)-(xx), Section 3.17(a)(xxiv),
or Section 3.17(a)(xxvii), or (B) other Contract requiring a novation or consent in connection with the Share Purchase or the other
Transactions, (ii) terminate, amend or modify (including by entering into a new Contract with such party or otherwise) or waive or materially
violate any of the terms of any of its Material Contracts or (iii) enter into, amend, modify or terminate any Contract or waive, release
or assign any rights or claims thereunder, which if so entered into, modified, amended, terminated, waived, released or assigned would
be reasonably likely to (A) adversely affect the Company or its Subsidiary (or any of their respective Affiliates) in any material respect,
(B) materially impair the ability of the Company or its Subsidiary or the Shareholders’ Agent to perform their respective obligations
under this Agreement or (C) prevent or materially delay or impair the consummation of the Share Purchase and the other Transactions;
(e) Issuance
of Equity Interests. Issue, deliver, grant or sell or authorize or propose the issuance, delivery, grant or sale of, or purchase or
propose the purchase of, any Equity Interests, or enter into or authorize or propose to enter into any Contracts of any character obligating
it to issue any Equity Interests;
(f) Employees;
Consultants; Independent Contractors. (i) Hire, or offer to hire, any additional officers or other employees, or any Contingent Workers,
(ii) terminate the employment, change the title, office or position, or materially reduce the responsibilities of any employee of the
Company or its Subsidiary, (iii) enter into, amend or extend the term of any employment or consulting agreement with, or issue any Equity
Interest to be held by, any officer, employee, or Contingent Worker, (iv) enter into or negotiate any Contract or collective bargaining
agreement with a labor union or other labor organization, works council, economic committee, union or similar body that would have the
effect of making any changes in the terms and conditions of employment or pension benefits of any employees or Contingent Workers;
(g) Loans
and Investments. Make any loans or advances (other than routine expense advances to employees of the Company or its Subsidiary consistent
with past practice) to, or any investments in or capital contributions to, any Person, or forgive or discharge in whole or in part any
outstanding loans or advances, or prepay any Company Debt;
(h) Intellectual
Property. Transfer or license from any Person any rights to any Intellectual Property or transfer or license to any Person any rights
to any Company Intellectual Property or transfer or provide a copy of any Company Source Code to any Person (including any current or
former employee or consultant of the Company or its Subsidiary or any consultant or commercial partner of the Company or its Subsidiary)
(other than providing access to Company Source Code to current employees and consultants of the Company involved in the development of
the Company Products on a need to know basis in the ordinary course of business consistent with past practice);
(i) Patents.
Take any action regarding a patent, patent application or other Company Owned Intellectual Property right, other than filing continuations
for existing patent applications or completing or renewing registrations of existing patents, domain names, trademarks or service marks
in the ordinary course of business consistent with past practice;
(j) Dispositions.
Sell, lease, license or otherwise dispose of or permit to lapse any of its tangible or intangible assets, other than sales and nonexclusive
licenses of the Company Products in the ordinary course of business consistent with past practice;
(k) Indebtedness.
Incur any Company Debt or guarantee any such indebtedness (provided that withdrawals under existing credit facilities are permitted);
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(l) Payment
of Obligations. Pay, discharge or satisfy (i) any Liability to any Person who is an officer, director or Company Shareholder of the
Company or its Subsidiary (other than compensation due for services as an officer or director) or (ii) any claim or Liability arising
other than in the ordinary course of business consistent with past practice, or give any discount, accommodation or other concession other
than in the ordinary course of business consistent with past practice, in order to accelerate or induce the collection of any receivable;
(m) Capital
Expenditures. Make any capital expenditures, capital additions or capital improvements;
(n) Insurance.
Materially change the amount of, or terminate, any insurance coverage;
(o) Termination
or Waiver. Cancel, release or waive any claims or rights held by the Company or its Subsidiary;
(p) Employee
Benefit Plans; Pay Increases. (i) Adopt, terminate or amend any Company Employee Plan or other employee or compensation benefit plan,
or (ii) increase the salaries, wage rates, fees, or other compensation of its employees or Contingent Workers;
(q) Lawsuits;
Settlements. Commence a lawsuit or settle or agree to settle any pending or threatened lawsuit or other dispute;
(r) Acquisitions.
Acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire
or agree to acquire any assets that are material, individually or in the aggregate, to the Company and its Subsidiaries (taken as a whole)
or the Business, or enter into any Contract with respect to a joint venture, strategic alliance or partnership;
(s) Taxes.
Make or change any election in respect of Taxes, adopt or change any accounting method in respect of Taxes file any amendment to a federal,
state, or foreign income Tax Return or any other material Tax Return unless required under Applicable Law, enter into any Tax sharing
or similar agreement or closing agreement, assume any Liability for the Taxes of any other Person whether by Contract or otherwise, settle
any claim or assessment in respect of Taxes, consent to any extension or waiver of the limitation period applicable to any claim or assessment
in respect of Taxes;
(t) Accounting.
Change accounting methods or practices (including any change in depreciation or amortization policies) or revalue any of its assets (including
writing down the value of inventory or writing off notes or accounts receivable otherwise than in the ordinary course of business), except
in each case as required by changes in Israeli GAAP as concurred with its independent accountants and after notice to Acquirer;
(u) Real
Property. Enter into any agreement for the purchase, sale or lease, or for the extension of a current lease, of any real property;
(v) Encumbrances.
Place or allow the creation of any Encumbrance on any of its properties;
(w) Warranties,
Discounts. Materially change the manner in which it provides warranties, discounts or credits to customers;
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(x) Interested
Party Transactions. Enter into any Contract that, if entered prior to the Agreement Date, would be required to be listed on Schedule
3.14 of the Company Disclosure Letter; and
(y) Other.
Take or agree in writing or otherwise to take any of the actions described in clauses (a) through
(x) in this Section 6.2.
6.3 Restrictions
on Conduct of the Company Shareholders. Except as expressly set forth on Schedule 6.3
of the Company Disclosure Letter or as Acquirer shall otherwise consent in writing, with email being sufficient, during the period
from the Agreement Date and continuing until the earlier of the termination of this Agreement and the Closing (such period, the
“Pre-Closing Period”), each Company Shareholder, on a several and not joint basis, hereby agrees, not to:
(a) Directly
or indirectly, transfer, sell, exchange, pledge or otherwise dispose of or encumber any Equity Interest in the Company or enter into any
agreement relating thereto; or
(b) Knowingly
take any action that would (i) make any warranty made by such Company Shareholder or the Company herein untrue or incorrect or (ii) reasonably
be expected to have the effect of impairing the ability of such Company Shareholder or the Company to perform its, his or her obligations
under this Agreement or preventing or materially delaying the consummation of any of the transactions contemplated by this Agreement or
any other agreement contemplated by this Agreement.
6.4 Notices of
Certain Events. Without limiting the generality of Sections 6.1, 6.2 and 6.3, during the
Pre-Closing Period, the Company or each Company Shareholder shall promptly notify Acquirer of:
(a) any
notice or other communication received thereby from any Person alleging that the consent of such Person is or may be required in connection
with the Share Purchase or this Agreement;
(b) any
notice or other communication received thereby from any Governmental Entity (i) delivered in connection with the Share Purchase or this
Agreement, or (ii) indicating that a Company Authorization is revoked or about to be revoked or that a Company Authorization is required
in any jurisdiction in which such Company Authorization has not been obtained, which revocation or failure to obtain would reasonably
be expected to be material to the Company or to Acquirer, as the case may be; and
(c) any
actions, suits, claims, investigations or proceedings commenced or, to his respective knowledge, threatened against, relating to or involving
or otherwise affecting the Company that has come to the knowledge of such Person and that, if pending on the Agreement Date, would have
been required to have been disclosed pursuant to the Agreement, and any ongoing material developments in any such actions, suits, claims,
investigations or proceedings;
(d) any
inaccuracy in or breach of any of his respective representations, warranties or covenants contained in this Agreement; and
(e) any
event, condition, fact or circumstance not covered by clauses (a)-(d)
above that would reasonably be expected to make the timely satisfaction of any of the conditions set forth in Article
VIII impossible or unlikely.
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Article
VII
Additional Agreements
7.1 No Transactional
Solicitation.
(a) During
the period from the Agreement Date and continuing until the earlier of the termination of this Agreement and the Closing, none of the
Company, its Subsidiaries and each of the Company Shareholders, will, and none of the Company, its Subsidiaries and each such Company
Shareholder will authorize or permit any of their respective Representatives to, directly or indirectly, (i) solicit, seek, initiate,
encourage, entertain, respond to, facilitate, support or induce the making, submission or announcement of any inquiry, expression of interest,
proposal or offer that constitutes, or is reasonably likely to lead to, an Acquisition Proposal, (ii) disclose to any person any
non-public information relating to the Company in connection with, or enter into, participate in, maintain or continue any discussions
or negotiations regarding, any inquiry, expression of interest, proposal or offer that constitutes, or is reasonably likely to lead to,
an Acquisition Proposal, (iii) agree to, accept, recommend or endorse (or publicly propose or announce any intention or desire to
agree to, accept, recommend or endorse) any Acquisition Proposal, (iv) enter into any letter of intent or any other Contract contemplating
or otherwise relating to any Acquisition Proposal, or (v) submit any Acquisition Proposal to the vote of any Company Shareholders.
Each of the Company, its Subsidiaries and Company Shareholders will, and will cause their Representatives to, (A) immediately cease and
cause to be terminated any and all existing activities, discussions or negotiations with any Persons conducted prior to or on the Agreement
Date with respect to any Acquisition Proposal and (B) immediately revoke or withdraw access of any Person (other than the Company, the
Acquirer and their respective Representatives) to any data room (virtual or actual) containing any non-public information with respect
to the Company or its Subsidiary in connection with an Acquisition Proposal and request from each Person (other than Acquirer and its
Representatives) the prompt return or destruction of all non-public information with respect to the Company or its Subsidiary previously
provided to such Person in connection with an Acquisition Proposal.
(b) The
Company and each Company Shareholder shall immediately (but in any event, within 24 hours) notify Acquirer orally and in writing after
receipt by it (or by any of its Representatives), of (i) any Acquisition Proposal, (ii) any inquiry, expression of interest, proposal
or offer that constitutes, or is reasonably likely to lead to, an Acquisition Proposal, or (iii) any other written notice that any Person
is considering making an Acquisition Proposal. Such notice shall describe the material terms and conditions of such Acquisition Proposal,
inquiry, expression of interest, proposal, offer, notice or request. The sender of such notice shall keep Acquirer reasonably informed
of the status and details of, and any modification to, any such inquiry, expression of interest, proposal or offer and any correspondence
or communications related thereto. The Company shall provide Acquirer with 48 hours prior notice (or such lesser prior notice as is provided
to the members of the Board) of any meeting of the Board at which the Board is reasonably expected to discuss any Acquisition Proposal.
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7.2 No Public
Disclosure. Each party hereto will not disclose to any Person the existence of this Agreement and the consummation of the
transactions contemplated hereunder, and any and all press releases and other widely-disseminated public disclosure by a party
hereto concerning the existence or terms of this Agreement or the transactions contemplated hereby from and after the date hereof
(and, solely with respect to Acquirer, until the Closing Date) will be subject to prior coordination with, review by and approval of
the other parties; except for (i) permitted disclosure to any of the parties’ Representatives on a need to know basis (such as
accountants and legal counsels), (ii) to the extent a party is required to make an announcement pursuant to any Applicable Law or
stock exchange rule or court order, or (iii) to competent court, in order to enforce the provisions of this Agreement and/or any of
the related and ancillary documents hereto; provided that in connection with (ii) and (iii), the disclosing party provides the other
party a copy of such proposed disclosure and provides the other party a reasonable period of time to review and provide comments to
such disclosure.
7.3 Reasonable Best
Efforts.Each of the parties hereto agrees to use its reasonable best efforts, and to cooperate with each other party hereto, to take,
or cause to be taken, all actions, and to do, or cause to be done, all things necessary, appropriate or desirable to consummate and make
effective, in the most expeditious manner practicable, the Share Purchase and the other Transactions, including the satisfaction of the
respective conditions set forth in Article VIII, and including to execute and
deliver such other instruments and do and perform such other acts and things as may be necessary or reasonably desirable for effecting
completely the consummation of the Share Purchase and the other Transactions.
7.4 Access to
Information. During the Pre-Closing Period, (i) upon prior coordination, the Company shall afford Acquirer and its
Representatives reasonable access during business hours to (A) the Company’s and its Subsidiaries’ properties,
personnel, books, Contracts and records and (B) all other information concerning the business, properties and personnel of the
Company and its Subsidiaries as Acquirer may reasonably request and (ii) the Company and its Subsidiaries shall provide to
Acquirer and its Representatives true, correct and complete copies of the Company’s and each such Subsidiary’s (A)
internal financial statements, (B) Tax Returns, Tax elections and all other records and workpapers relating to Taxes, (C) a schedule
of any deferred intercompany gain or loss with respect to transactions to which the Company or its Subsidiaries has been a party and
(D) receipts for any Taxes paid to foreign Tax Authorities. Subject to compliance with Applicable Law, from the Agreement Date and
during the Pre-Closing Period, the Company shall confer from time to time as requested by Acquirer with one or more Representatives
of Acquirer to discuss any material changes or developments in the operational matters of the Company and its Subsidiaries and the
general status of the ongoing operations of the Company and its Subsidiaries. No information or knowledge obtained by Acquirer or
any of its Representatives during the pendency of the Transactions in any investigation pursuant to this Section 7.4
shall affect or be deemed to modify any representation, warranty, covenant, agreement, obligation or condition set forth herein.
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7.5 Spreadsheet.
The Company shall prepare and deliver to Acquirer, in accordance with this Section 7.5, a spreadsheet (certified by the
Company’s Chief Executive Officer) (the “Spreadsheet”) in form and substance similar to Schedule
7.5 and reasonably satisfactory to Acquirer not later than five (5) Business Days prior to the Closing Date, which
spreadsheet shall be dated as of the Closing Date and shall set forth all of the following information (in addition to the other
required data and information specified therein and in this Agreement), as of immediately prior to the Closing:
(c) the
names of all Company Shareholders and their respective e-mail addresses and country and state of residence;
(d) the
number, class and series of Company Shares held by such Persons and, in the case of outstanding shares, the respective certificate numbers;
(e) the
number and date of grant of all Company 102 Shares;
(f) the
calculation of each portion of the Aggregate Consideration (excluding the Earn-Out Consideration) and the allocation thereof between all
Company Shareholders, and the Pro Rata Share of each Company Shareholder;
(g) the
calculation of (i) the Company Net Working Capital (including: (A) the Company’s balance sheet as of the Closing prepared on a consistent
basis with the Company Balance Sheet, (B) an itemized list of each element of the Company’s consolidated current assets and (C)
an itemized list of each element of the Company’s consolidated total current liabilities), (ii) Company Cash, (iii) any Transaction
Expenses and the Person to whom such Transaction Expense is owed, (iv) an itemized list of each item of Company Debt and the Person to
whom such Company Debt is owed, and (v) the Closing Net Working Capital Adjustment;
(h) a
funds flow memorandum setting forth applicable wire transfer instructions and other information reasonably requested by Acquirer.
Neither Acquirer nor any Affiliate thereof (including
the Company post-Closing) shall have any liability whatsoever for verifying the information, calculations, or determinations, whether
in the Spreadsheet, or otherwise with respect to the distribution of any consideration among the Company Shareholders.
7.6 Tax Matters.
(a) Tax
Returns.
(i) The
Company shall timely file or cause to be timely filed when due (taking into account all extensions properly obtained) all Tax Returns
that are required to be filed by or with respect to the Company and its Subsidiaries (taking into account all extensions properly obtained)
on or prior to the Closing Date (“Company Prepared Returns”) and timely pay all Taxes shown as due on such Tax
Returns. Each Company Prepared Return shall be prepared and filed in a manner consistent with past practice, unless otherwise required
by law. Each Company Prepared Return shall be submitted to Acquirer for Acquirer’s review and comment, in the case of an income
Tax Return, at least ten (10) days prior to the due date thereof (taking into account all extensions properly obtained) and in the case
of a non-income Tax Return, as soon as is reasonably practicable prior to the due date thereof (taking into account all extensions properly
obtained). The Company shall consider in good faith any reasonable comments made by Acquirer in such Company Prepared Return prior to
filing.
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(ii) Acquirer
shall timely file or cause to be timely filed when due (taking into account all extensions properly obtained) all Tax Returns that are
required to be filed by or with respect to the Company and its Subsidiaries (taking into account all extensions properly obtained) after
the Closing Date for any Pre-Closing Tax Period or Straddle Period (“Acquirer Prepared Return”). Each Acquirer
Prepared Return shall be submitted to the Shareholders’ Agent for the Shareholders’ Agent’s review and comment, in the
case of an income Tax Return, at least ten (10) days prior to the due date thereof (taking into account all extensions properly obtained)
and in the case of a non-income Tax Return, as soon as is reasonably practicable prior to the due date thereof (taking into account all
extensions properly obtained). Acquirer shall consider in good faith any reasonable comments made by the Shareholders’ Agent in
such Acquirer Prepared Return prior to filing. Without duplication, and to the extent that sufficient accrual for such Pre-Closing Tax
amounts were not set aside by the Company or the Subsidiaries and not taken into account in calculating the Company Debt, the Company
Shareholders shall pay to the Company, or cause to be paid, all Pre-Closing Tax amounts due with respect to such Tax Returns in accordance
with the provisions of Article X.
(iii) Tax
Contests. Each party shall notify each other after acquiring knowledge of any inquiry, claim, audit, assessment, proceeding or similar
event with respect to any Taxes of the Company or its Subsidiaries for a Pre-Closing Tax Period (any such inquiry, claim, audit, assessment,
proceeding or similar event, a “Tax Contest”). Any failure to so notify the Shareholders’ Agent or the
Company Shareholders of any Tax Contest shall not relieve the Company Shareholders of any liability with respect to such Tax Contest except
to the extent that such failure shall have materially prejudiced the defense of such Tax Contest. Acquirer shall control any Tax Contest
and defend such Tax Contest in good faith as if it were the only party in interest; provided, however, that, with respect
to any Tax Contest that would reasonably be expected to result in Pre-Closing Taxes for which the Company Shareholders are liable, (i)
Acquirer shall keep the Shareholders’ Agent reasonably informed of the progress of such Tax Contest, (ii) Acquirer shall provide
the Shareholders’ Agent the opportunity to participate and be involved in the defense of such Tax Contest and to employ counsel
of his choice at the Company Shareholders’ expense; and (iii) Acquirer shall not settle or compromise such Tax Contest without the
Shareholders’ Agent prior written consent, which consent shall not be unreasonably withheld, conditioned, or delayed. In the event
of any conflict between this Section 7.6(a)(iii) and Section 10.8, this Section 7.6(a)(iii) shall
control.
(i) Tax
Cooperation. Each of Acquirer, the Shareholders’ Agent and the Company Shareholders, and the Company shall cooperate fully,
as and to the extent reasonably requested by any of the others, in connection with the filing of Tax Returns and any Legal Proceeding
with respect to Taxes during the Straddle Period and all taxable periods ending on or before the Closing Date. Such cooperation shall
include the retention and (upon request therefor) the provision of records and information reasonably relevant to any such Legal Proceeding
and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided
hereunder. Acquirer, the Company and its Subsidiaries, the Shareholders’ Agent and the Company Shareholders agree to retain all
material books and records with respect to Tax matters pertinent to the Company and its Subsidiaries relating to any taxable period beginning
before the Closing Date until expiration of the statute of limitations of the respective taxable periods, and to abide by all record retention
agreements entered into with any Tax Authority.
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(j) Intended
Tax Treatment. The parties intend that the Share Purchase be a Taxable transaction for U.S. federal income Tax purposes, including
with respect to the Aggregate Consideration, the Adjustment Escrow Amount and the Escrow Amount and will so treat the Share Purchase unless
otherwise required by a determination within the meaning of Section 1313 of the Code. Notwithstanding the foregoing, each party hereto
is relying solely on the advice of his, her or its own Tax advisors with respect to the Tax consequences of the Transactions.
(k) Straddle
Period Apportionment. In the case of any Taxes of the Company or its Subsidiaries that are imposed on a periodic basis and that are
payable for a Taxable period that includes (but does not end on) the Closing Date, such Taxes shall (i) in the case of property, ad
valorem or other Taxes that accrue based upon the passage of time, be deemed to be Pre-Closing Taxes in an amount equal to the amount
of such Taxes for the entire Taxable period multiplied by a fraction, the numerator of which is the number of days in the Taxable period
through and including the Closing Date and the denominator of which is the number of days in the entire Taxable period, and (ii) in the
case of any other Taxes, be deemed to be Pre-Closing Taxes in an amount equal to the amount of Taxes that would be payable if the relevant
Taxable period ended on the Closing Date (and for such purpose, the taxable period of any partnership, other pass through entity or any
non-U.S. entity owned by the Company shall be deemed to terminate at such time). Any credits or deductions relating to a Taxable period
that includes (but does not end on) the Closing Date shall be taken into account on a basis consistent with the assumption in clauses
(i) and (ii) above.
(l) Post-Closing
Actions. Acquirer and its Affiliates (including on or after the Closing Date, the Company and its Subsidiaries) shall not, without
prior consultation with the Shareholders’ Agent, (i) make, revoke, or change any Tax election or Tax accounting method or practice,
(ii) file, re-file, amend or otherwise modify any Tax Return or (iii) enter into any closing agreement, initiate any voluntary disclosure
process or similar process with any Governmental Entity, surrender any right to claim a refund of Taxes, or extend or waive the limitation
period applicable to any Tax proceeding, in each case with respect to, or that has (or could reasonably be expected to have) a retroactive
effect with respect to the Company and/or its Subsidiaries that relates to a Pre-Closing Tax Period (or portion of a Straddle Period ending
on the Closing Date as determined in accordance with Section 6.6(e)).
7.7 Director
Resignation. Prior to the Closing, the Company shall cause Alfred Tzimet to execute and deliver a D&O Resignation Letter or
Subsidiary D&O Resignation Letter, effectuating his resignation from such position as a member of the board of directors
(although not as an employee) effective as of the Closing.
7.8 Removal
of Personal Guarantees.
(a) Acquirer
hereby undertakes to take all reasonable actions, subject to the full cooperation of the applicable Company Shareholder, to remove, extinguish
and terminate, without any further Liability to such Company Shareholder, the Personal Guarantees and any other personal guarantees provided
by such Company Shareholder with respect to the operation of the Company or any Subsidiary, which has not been so removed, extinguished
and terminated prior to Closing, whether or not Acquirer has been made aware of such other personal guarantees at any time before the
Closing. Each Company Shareholder shall assist the Company and Acquirer with the removal of any Personal Guarantee and any such other
personal guarantees, upon request by the Company and/or Acquirer, and shall notify the Company and Acquirer promptly upon becoming aware
of the existence of any such other personal guarantees, provided that lack of such notice shall not affect Acquirer’s obligations
under this Section 7.9, except to the extent materially prejudiced by such lack of notice.
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(b) Reimbursement.
Following the Closing Date, subject to the full cooperation of the applicable Company Shareholder with the removal, extinguishment and
termination process, Acquirer shall fully reimburse any Company Shareholder, promptly on demand, for any amounts such Company Shareholder
is required to expend after the Closing pursuant to any Personal Guarantee, provided that such Company Shareholder has provided Acquirer
with written notice at least 14 days prior to any such payment and has fully cooperated with Acquirer with any attempt to prevent such
payment.
7.9 Restrictive
Covenants. Without derogating from, and in addition to, any undertaking under the Retention and Employment Agreement or any other
existing Contract, each of the Company Shareholders undertakes and agrees towards the Company and the Acquirer, effective commencing as
of the Closing, as follows:
(a) Confidentiality.
To keep secret and to treat with confidentiality the Confidential Information and not to disclose any Confidential Information to any
person or entity whatsoever or to use any Confidential Information for any purpose whatsoever, except for the benefit of the Company and
only in performance of their duties on behalf of the Company (if applicable), provided however, that in the event that any of the
Company Shareholders shall be legally required (by formal questioning by any Governmental Entity, or, in the written opinion of his/her/its
legal counsel, by Applicable Law) to disclose any Confidential Information, such Company Shareholder shall immediately notify Acquirer
and the Company (to the extent legally allowed to do so) of such request or requirement prior to
disclosure so that Acquirer or the Company may seek an appropriate protective order with the reasonable assistance of such Company Shareholder.
If such order is not timely obtained, only such portion of the Confidential Information as specifically required shall be disclosed.
(b) Non-Compete.
Each of the Company Shareholders undertakes that during the period commencing on the Closing Date and ending upon the 4th anniversary
of the Closing Date (the “Restricted Period”), such Company Shareholder will not, and will cause its Affiliates
not to, compete in the Business anywhere in the world. For the purposes of this Agreement, the term “compete” shall mean engaging
or having any interest, directly or indirectly through any Affiliate, partnership, joint venture or agent (other than Acquirer or the
Company), for its own account or as an owner, shareholder, operator, manager, employee, officer, director, partner, venture partner, investor,
advisor, consultant or similar capacity of or to any Person; provided, however, that holding of not more than 2% of the shares of a public
company without having any active role in such company, shall not constitute a breach of the non-compete obligations herein.
(c) Non-Solicitation.
During the period commencing on the date hereof and ending upon expiration of the Restricted Period, each of the Company Shareholders
covenants and agrees not to (and cause its Affiliates not to): (i) solicit, seek to employ or seek to retain the services of any Person
who is at that time or was within the previous twelve (12) months as of the Closing Date, providing services to the Company, as an employee,
consultant or contractor, or employee of such a consultant or contractor (any such Person, a “Subject Person”),
(ii) persuade, induce or attempt to persuade or induce any Subject Person to leave his/her employment or to refrain from providing services
to such party or (iii) cause or authorize any Person to do any of the foregoing; provided that this Section shall not preclude each Company
Shareholders or its Affiliates from soliciting through a public medium or general or mass mailing by or on behalf of such Company Shareholder
or any of its respective Affiliates that is not targeted at employees, consultants or contractors of the Company.
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(d) Non-Disparagement
& Non-Interference. Each of the Company Shareholders will not, and will cause such Company Shareholders’ respective Affiliates
not to, directly or indirectly, make or publish any statement or communication which is false or disparaging with respect to Acquirer,
the Company, their respective Affiliates or any direct or indirect shareholders, officers, directors, members, managers, employees or
agents. Such Company Shareholder further agree that during the Restricted Period not to, and cause such Company Shareholder’s Affiliates
not to, directly or indirectly, induce, or attempt to induce, any consultant, contractor, sub-contractor, customer, client, distributor,
supplier, vendor, manufacturer, representative, agent, venturer, co-venturer or other Person transacting business with the Company to
reduce or cease doing business with the Company, or in any way to interfere with the relationship between any such Person, on the one
hand, and the Company, on the other hand.
(e) Enforcement.
The parties hereto intend that the provisions of this Section 7.10 be enforced to the
fullest extent permissible under Applicable Law in each jurisdiction where enforcement may be sought, and that the unenforceability of
any provision shall not impair the remainder of this Section 7.9. If any court determines
that the restrictions are unreasonable, the parties hereto agree that such court may substitute the maximum reasonable period, scope or
geographic area and revise the restrictions to cover the maximum extent permitted by law. Each of the Company Shareholders acknowledges
that these restrictive covenants, including their duration, are necessary to protect the proprietary interests and legitimate business
interests of the other parties, and that the Aggregate Consideration payable to such Company Shareholder hereunder constitutes also consideration
for the Company Shareholder’s obligations under this Section 7.9. The covenants
and obligations of the Company Shareholders set forth in this Section 7.9 shall be construed
as independent of any other provision herein and of any other agreement or arrangement among the parties hereto and the existence of any
claim or cause of action by any party hereto against any other party or any of their Affiliates, whether based on another provision of
this Agreement or a separate agreement, shall not constitute a defense to the enforcement of such covenants or obligations against such
party.
7.10 Prosupp
Information. The Company and the Company Shareholders shall furnish all information as may be reasonably requested by the Acquirer
in connection with the preparation, filing and distribution of each Prosupp. Such information supplied or to be supplied by the Company
or any Company Shareholder for inclusion in a Prosupp: (i) will comply as to form in all material respects with the provisions of Form
S-3 and Rule 424(b)(7) under the Securities Act and (ii) not contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading as of the
date of the Prosupp and/or the date of any additional supplement thereto.
7.11 Post-Closing
Committee. Immediately following the Closing, the Company shall establish a special committee having such rights and authorities as
detailed in Schedule 7.11 attached hereto.
7.12 Retention
Plan; Bonus. The Acquirer shall establish a retention plan for certain employees of the Company and shall pay special bonus to certain
employees of the Company, as detailed in Schedule 7.12 attached hereto (the “Retention Schedule”). Capitalized
terms used in this Agreement but defined in the Retention Schedule shall have the respective meanings given to them in the Retention Schedule.
7.13 Pension
Contributions Completion. Following the Closing, the Company shall file an application with the Ministry of Labor for approval of
the retroactive application of the Section 14 Arrangement with respect to the full salaries paid to Ofer Yarden and Alfred Zimet from
their commencement of employment with the Company until the Closing. Concurrently with the filing of such application, the amount that
shall be required to be deposited so that Section 14 Arrangement shall fully apply, will be deposited by the Company in Ofer Yarden’s
and Alfred Zimet’s individual pension arrangements.
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Article
VIII
Conditions to the Share Purchase
8.1 Conditions to Obligations
of Each Party to Effect the Share Purchase. The respective obligations of each party hereto to consummate the Transactions shall
be subject to the satisfaction or waiver in writing (by each of Acquirer and the Company, as applicable) at or prior to the Closing of
each of the following conditions:
(a) Illegality.
No Order issued by any court of competent jurisdiction or other legal or regulatory restraint or prohibition preventing the consummation
of the Share Purchase shall be in effect, and no action shall have been taken by any Governmental Entity seeking any of the foregoing,
and no Applicable Law or Order shall have been enacted, entered, enforced or deemed applicable to the Share Purchase (and not rescinded
or repealed) that makes the consummation of the Share Purchase illegal.
(b) Governmental
Approvals. Acquirer and the Company shall have timely obtained from each Governmental Entity (excluding any such Governmental Entity
in its capacity as a customer of the Company) all approvals, waivers and consents, if any, necessary for consummation of, or in connection
with, the Share Purchase and the other Transactions.
(c) Exhibits;
Transaction Documents. Each ancillary document, exhibit, schedule and other Transaction Document referenced in this Agreement shall
be in line with market practice and in form and substance reasonably satisfactory to the Company and Acquirer.
8.2 Additional Conditions
to Obligations of the Company. The obligations of the Company to consummate the Transactions shall be subject to the satisfaction
or waiver at or prior to the Closing of each of the following conditions (it being understood and agreed that each such condition is
solely for the benefit of the Company and may be waived by the Company in writing in its sole discretion without notice or Liability
to any Person):
(a) Representations,
Warranties and Covenants. The representations and warranties made by Acquirer herein shall be true and correct in all material respects
(except for such representations and warranties that are qualified by their terms by a reference to materiality or Material Adverse Effect,
which representations and warranties as so qualified shall be true and correct in all respects) on and as of the Agreement Date and on
and as of the Closing Date as though such representations and warranties were made on and as of such dates (except for representations
and warranties that address matters only as to a specified date or dates, which representations and warranties shall be true and correct
with respect to such specified date or dates). Acquirer shall have performed and complied with all covenants, agreements and obligations
herein required to be performed and complied with by them at or prior to the Closing.
(b) Receipt
of Closing Deliveries. The Company shall have received each of the agreements, instruments, certificates and other documents set forth
in Section 1.2(a).
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8.3 Additional
Conditions to the Obligations of Acquirer. The obligations of Acquirer to consummate the Transactions shall be subject to the
satisfaction or waiver at or prior to the Closing of each of the following conditions (it being understood and agreed that each such
condition is solely for the benefit of Acquirer and may be waived by Acquirer in writing in its sole discretion without notice or
Liability to any Person):
(a) Representations,
Warranties and Covenants. The representations and warranties made by the Company and the Company Shareholders herein, as applicable,
(i) which are Special Representations, or qualified by materiality or Material Adverse Effect, shall be true, correct and complete in
all respects as of the Agreement Date and as of the Closing Date as if made on and as of the Closing Date (or, if given as of a specific
date, at and as of such date), (ii) set forth in Article III (other than the Special
Representations and other than any representations and warranties qualified by materiality or Material Adverse Effect) shall be true,
correct and complete as of the Agreement Date and in all material respects as of the Closing Date as if made on and as of the Closing
Date (or, if given as of a specific date, at and as of such date). The Company and each of the Company Shareholder shall have performed
and complied with all covenants, agreements and obligations herein required to be performed and complied with by the Company and the Company
Shareholder at or prior to the Closing.
(b) Receipt
of Closing Deliveries. Acquirer shall have received each of the agreements, instruments, certificates and other documents set forth
in Section 1.2(b), which shall be in full force and effect.
(c) Company
Shareholder Consent. The Shareholder Consent shall remain in full force and effect and shall not have been revoked.
(d) Injunctions
or Restraints on Conduct of Business. No Order issued by any court of competent jurisdiction or other legal or regulatory restraint
or prohibition limiting or restricting Acquirer’s ownership, conduct or operation of the Business following the Closing shall be
in effect, and no Legal Proceeding seeking any of the foregoing shall be pending or threatened.
(e) No
Legal Proceedings. No Governmental Entity or other Person shall have commenced or threatened to commence any Legal Proceeding challenging
or seeking the recovery of a material amount of damages in connection with Share Purchase or seeking to prohibit or limit the exercise
by Acquirer of any material right pertaining to ownership of Equity Interests of the Company.
(f) No
Material Adverse Effect. There shall not have occurred a Material Adverse Effect with respect to the Company and its Subsidiaries
(taken as a whole).
(g) Shareholders’
Register. The Company shall have delivered (i) a copy of the Company’s updated shareholders’ register evidencing the holdings
in the Company immediately following the Closing certified by an authorized director of the Company and attached hereto as Exhibit
G and (ii) a share certificate registered in the name of Acquirer, representing ownership of one hundred percent (100%) of the
Company Shares.
(h) Employees.
All of the Key Employees and no fewer than 90% of the employees and Contingent Workers of the Company and its Subsidiaries shall have
continued to be engaged by the Company or the applicable Subsidiary as of immediately following the Closing.
(i) D&O
Insurance Policy. The Company shall, on or prior to the Closing Date, purchase tail insurance coverage for the D&O Indemnitees
(“D&O Tail Policy”), the cost of which shall constitute a Transaction Expense, to become effective at the
Closing, which shall provide the D&O Indemnitees with coverage for seven (7) years following the Closing Date for acts and omissions
occurring prior to the Closing, including in connection with the Transactions, on terms not materially less favorable (including the amount
of coverage) as in effect for the Company as of immediately prior to the Closing Date and reasonably satisfactory to Acquirer.
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Article
IX
Termination
9.1 Termination. At
any time prior to the Closing, this Agreement may be terminated and the Share Purchase abandoned by authorized action taken by the terminating
party:
(a) by
mutual written consent duly authorized by Acquirer and the Company;
(b) by
Acquirer, on the one hand, or the Company, on the other hand, by written notice to the other, if the Closing shall not have occurred on
or before June 16, 2026, or such other date that Acquirer and the Company may agree upon in writing (the “Termination Date”);
provided that the right to terminate this Agreement under this Section 1.1(b)
shall not be available to any party whose material breach of any covenant, agreement or obligation hereunder shall have been the principal
cause of, or shall have directly resulted in, the failure of the Closing to occur on or before the Termination Date;
(c) by
Acquirer, on the one hand, or the Company, on the other hand, by written notice to the other if any Order of a Governmental Entity of
competent authority preventing the consummation of the Share Purchase shall have become final and non-appealable;
(d) by
Acquirer, by written notice to the Company, if (i) there shall have been an inaccuracy or breach of any representation or warranty made
by, or a breach of any covenant, agreement or obligation of, the Company or any of the Company Shareholders herein, and such inaccuracy
or breach shall not have been cured within ten (10) Business Days after receipt by the Company of written notice of such inaccuracy or
breach and, if not cured within such period and at or prior to the Closing, such would result in the failure of any of the conditions
set forth in Section 8.1 or Section 8.3
to be satisfied (provided, that no such cure period shall be available or applicable to any such inaccuracy or breach that by its
nature cannot be cured), (ii) there shall have been a Material Adverse Effect with respect to the Company and the Subsidiaries, taken
as a whole or (iii) the Company shall have materially breached Sections 6.1 or 6.2;
or
(e) by
the Company, by written notice to Acquirer, if there shall have been an inaccuracy in or breach of any representation or warranty made
by, or a breach of any covenant, agreement or obligation of, Acquirer herein, and such inaccuracy or breach shall not have been cured
within ten (10) Business Days after receipt by Acquirer of written notice of such inaccuracy or breach and, if not cured within such period
and at or prior to the Closing, such breach would result in the failure of any of the conditions set forth in Section 8.1
or Section 8.2 to be satisfied (provided that no such cure period
shall be available or applicable to any such inaccuracy or breach that by its nature cannot be cured);
9.2 Effect of Termination.
In the event of termination of this Agreement as provided in Section 9.1, this Agreement shall forthwith become void
and there shall be no Liability on the part of Acquirer, the Company, the Shareholders’ Agent or their respective officers, directors,
shareholders or Affiliates; provided, that (i) Section 7.2 (No Public Disclosure), this Section 9.2
(Effect of Termination), Article XI (General Provisions) and any related definition provisions in or referenced in Schedule
I and the Confidentiality Agreement by and between the Company and Acquirer dated 2026 shall remain in full force and effect and
survive any termination of this Agreement and (ii) nothing herein shall relieve any party hereto from Liability in connection with any
material breach, intentional misrepresentation made by, or a willful breach of any covenant, agreement or obligation of, such party herein.
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Article
X
Indemnification
10.1 Indemnification.
(a) Subject
to the limitations set forth in this Article X, from and after the Closing and subject to the terms herein, the Indemnifying
Parties shall severally but not jointly, in proportion to each such Indemnifying Party’s Pro Rata Share (except that (1) any claims
from the Escrow Fund may be made on a several and joint basis; and (2) with respect to any breach of any representations, warranties or
covenants of, or Fraud (as defined below) by, any individual Indemnifying Party, such Indemnifying Party shall severally be liable for
the entire indemnification amount), indemnify and hold harmless Acquirer, the Company and their respective officers, directors, agents
and employees, and each Person, if any, who controls Acquirer within the meaning of the Securities Act (each of the foregoing being referred
to individually as an “Indemnified Person” and collectively as “Indemnified Persons”)
from and against, and shall compensate and reimburse each Indemnified Person for, any and all losses, liabilities, damages, claims, fees,
Taxes, interest, reasonable out-of-pocket costs and expenses, including costs of investigation and defense and reasonable fees and expenses
of counsel, experts and other professionals, directly (provided, however, that any indirect or punitive damages actually awarded in any
Third-Party Claim shall be indemnifiable in accordance with the provisions herein and, for the purposes hereof, shall be deemed direct
damages), whether or not due to a Third-Party Claim (collectively, “Indemnifiable Damages”), arising out of,
resulting from or in connection with:
(i) any
failure of any representation or warranty made by the Company or by such Indemnifying Party in this Agreement or in the Company Disclosure
Letter (including any exhibit to or schedule thereof) or in any certificate required to be delivered by the Company to Acquirer at
the Closing pursuant to any provision of this Agreement, to be true and correct (A) as of the Agreement Date (except in the case of representations
and warranties that by their terms speak only as of a specified date or dates, which representations and warranties shall be true and
correct as of such date or dates) or (B) as of the Closing Date (if such date is later than the Agreement Date) as though such representation
or warranty were made as of the Closing Date (except in the case of representations and warranties that by their terms speak only as of
a specific date or dates, which representations and warranties shall be true and correct as of such date or dates);
(ii) any
breach of, or default in connection with, any of the covenants, agreements or obligations made by the Company or such Indemnifying Party
herein or in any other agreements contemplated by the Transaction Documents;
(iii) any
inaccuracies in the Spreadsheet;
(iv)
any claims or threatened claims by (A) any current or former holder or alleged current or former holder of any Equity Interests of the
Company or its Subsidiaries (in each case, including any predecessors thereof), arising out of, resulting from or in connection with (x)
the Transactions or this Agreement, including the allocation of the Aggregate Consideration or any portion thereof, or (y) such Person’s
status or alleged status as a holder of Equity Interests of the Company or its Subsidiaries (in each case, including any predecessors
thereof) at any time at or prior to the Closing, whether for breach of fiduciary duty or otherwise, (B) any Person to the effect that
such Person is entitled to any Equity Interest of Acquirer or the Company or any payment in connection with the Transactions other than
as specifically set forth on the Spreadsheet or (C) any Person with respect to any Company Option Plan or any other plan, policy or Contract
providing for compensation to any Person in the form of Equity Interests with respect to participation in such plan;
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(v) any
matter that is or would be an exception to the representations and warranties made in Section 3.6 (Litigation) as of the Agreement
Date or the Closing;
(vi) disregarding
any disclosures in the Company Disclosure Letter (other than for establishing Fraud), any Pre-Closing Taxes to the extent not taken into
account in calculating the Adjustments Calculation, including for the avoidance of doubt and without duplication any additional Tax imposed
on the Company and arising from the period prior to Closing due to denial of benefits claimed by the Company in accordance with the Capital
Investment Law and any Tax withholding and VAT imposed in connection with (i) any Company Securities, including any Company Securities
that were converted into Company Shares on or prior to the Closing, (ii) any loans made between the Company, its Shareholders and/or any
of its Subsidiaries on or prior to the Closing, and (iii) any capital contribution made by the Company to any of its Subsidiaries on or
prior to the Closing;
(vii) any
withholding Taxes imposed on any Indemnified Persons arising as a result of the failure to deduct or withhold the correct amount of Taxes
with respect to any amounts payable or otherwise issuable to the Company Shareholders under this Agreement;
(viii) any
Company Debt or Transaction Expenses, to the extent any such item was not taken into account in the calculation of the Final Base Stock
Consideration;
(ix) any
fraud or intentional misrepresentation (“Fraud”) by or on behalf of the Company or such Indemnifying Party;
(x) any
Liability pursuant to indemnification undertakings granted by the Company and/or its Subsidiaries to directors or officers of the Company
and its Subsidiaries in respect of the period prior to the Closing Date;
(xi) claims
by or purportedly on behalf of a Company Shareholder or any other Person related to or in connection with the invalidity of the execution
of this Agreement;
(xii) any
claim or threatened claim by any Company Shareholder relating to any alleged action or failure to act on its behalf by the Shareholders’
Agent;
(xiii) any
claim or right asserted by any Person that is not an Indemnified Person relating to any breach or alleged breach or any other matter referred
to in any of clauses of Section 10.1 above;
(xiv) any
claim commenced or right asserted by any Indemnified Person for the purpose of enforcing any of its rights under this Article
X, to the extent successful;
(xv) any
misrepresentation or breach by the Company or the Company Shareholders of Section 7.12(c); and
(xvi) any
claim with respect to any non compliance with any obligations of the Company in connection with the Company’s Governmental Grants
in respect of the period until the Closing, including, without limitation, any royalties, interest, penalty and any other amount imposed
for non-compliance with any statutory obligations, including reporting obligations.
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(b) Knowledge
qualifications, qualifications or requirements that a matter be or not be “reasonably expected” or “reasonably likely”
to occur, materiality standards and qualifications by reference to the defined term “Material Adverse Effect” in any representation,
warranty, covenant, agreement or obligation shall be deemed to be made without such qualification or limitation for purposes of determining
the amount of any Indemnifiable Damages, but not for the purpose of determining the existence of Indemnifiable Damages.
10.2 Indemnifiable Damage
Threshold; Other Limitations.
(a) Recovery
from the Escrow Fund shall constitute the sole and exclusive remedy for the indemnity obligations of each Indemnifying Party under this
Agreement for Indemnifiable Damages arising out of, resulting from or in connection with the matters listed in clause (i) of Section 10.1(a)
except:
(i) in
the case of Fraud by or on behalf of the Company or such Indemnifying Party, or
(ii) any
failure of any of the representations and warranties made by:
(1) the
Company in Section 3.1 (Organization, Standing, Power and Subsidiary), Section 3.2 (Capital Structure),
Section 3.3 (Authority; Non-Contravention), Section 3.10 (Intellectual Property) (which representation shall
be referred to as the “IP Rep”), Section 3.12 (Taxes), or Section 3.20 (Broker
Fees) (collectively, the “Company Special Representations”) to be true and correct; or
(2) the
Company Shareholder representations contained in Article IV (the “Shareholders Special Representations”
and (1) and (2) collectively, the “Special Representations”) to be true and correct.
(b) In
the case of any claims for Indemnifiable Damages arising out of, resulting from or in connection with (x) the failure of any of the Special
Representations to be true and correct as aforesaid, and (y) the matters listed in Section 10.1(a) other than clause 10.1(a)(i)
((x) and (y) collectively “Special Claims”), Acquirer shall seek recovery (i) first, from the Escrow Fund, and
(ii) to the extent the Escrow Fund or the Pro Rata Share of the applicable Indemnifying Party in the Escrow Fund, as applicable, has been
exhausted or the Escrow Release Date has passed, from each Indemnifying Party (including by way of set off; provided, that the right to
set off shall not apply with respect to the Base Stock Consideration Payments) for the amount of any Indemnifiable Damages resulting therefrom,
subject to the limitations set forth under 10.2(c) below.
(c) The
total aggregate Liability that can be recovered from an Indemnifying Party hereunder shall not exceed the Aggregate Consideration actually
paid (or, with respect to set off, payable) to such Indemnifying Party, except in the case of Fraud by or on behalf of (i) the Company,
of which such an Indemnifying Party had actual knowledge, or (ii) such Indemnifying Party.
(d) The
total Liability recovered from the Indemnifying Parties in respect of the indemnification obligations in respect of any failure of the
IP Rep to be true and correct shall not exceed 25% of the Aggregate Consideration actually paid (or, with respect to set off, payable)
to the Indemnifying Parties, except in the case of Fraud.
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(e) The
Indemnified Persons shall first seek recovery of Indemnifiable Damages from the Escrow Fund; provided that, to the extent that
an Indemnified Person recovers amounts from the Escrow Fund in satisfaction of a Special Claim, or pursuant to Section 1.5
such recovered amounts shall not reduce the amount that the Indemnified Persons may recover with respect to claims for which recovery
is limited to the Escrow Fund. By way of illustration and not limitation, assuming there are no other claims for indemnification pursuant
to this Article X, in the event that a Special Claim is first satisfied from the Escrow Fund and such recovery fully depletes the
Escrow Fund, the maximum limitation of liability for a subsequent claim based on a failure of a representation and warranty contained
in Section 3.22 (Environmental, Health and Safety Matters) to be true and correct shall continue to be each Indemnifying
Party’s Pro Rata Share of the dollar value of the Escrow Fund without taking into account the fact that the Escrow Fund was used
to satisfy such Special Claim, with the effect that the amount recoverable for such two claims would be the same regardless of whether
the chronological order of the making of such claims were reversed.
(f) Notwithstanding
anything to the contrary contained herein, (i) no Indemnifying Party shall have any right of indemnification, compensation, reimbursement,
contribution or right of advancement from Acquirer, the Company or any other Indemnified Person (based upon such Indemnifying Party’s
position as an officer, director, employee or agent of the Company or otherwise) with respect to any Indemnifiable Damages claimed by
any Indemnified Person or any right of subrogation against the Company with respect to any indemnification, compensation or reimbursement
of an Indemnified Person by reason of any of the matters set forth in Section 10.1(a), (ii) the rights and remedies of the
Indemnified Persons after the Closing shall not be limited by (x) any investigation by or on behalf of, or disclosure to (other than in
the Company Disclosure Letter with respect to clauses (i) and (ii) of Section 10.1(a), subject to any
limitations expressly set forth therein), any Indemnified Person at or prior to the Closing regarding any failure, breach or other event
or circumstance or (y) any waiver of any condition to the Closing related thereto. If an Indemnified Person’s claim under this Article
X may be properly characterized in multiple ways in accordance with this Article X such that such claim may
or may not be subject to different limitations depending on such characterization, then such Indemnified Person shall have the right to
characterize such claim in a manner that maximizes the recovery and time to assert such claim permitted in accordance with this Article
X; provided that in no event shall any party be indemnified under different provisions of this Agreement more than once for
the same dollar of Indemnifiable Damages.
(g) Except
for Special Claims, claims that involve Fraud and without derogating from any Indemnified Person’s entitlement to seek any equitable
remedy, including a preliminary or permanent injunction or specific performance, the Indemnifying Parties shall not be liable for any
Indemnifiable Damages pursuant to clause (i) of Section 10.1(a) for breaches of Company representations and warranties,
until the aggregate amount of such Indemnifiable Damages paid, incurred, sustained or accrued exceeds US$ 350,000 (the “Basket”);
provided, however, that if such aggregate amount exceeds the applicable Basket, then the Indemnified Persons shall be entitled
to indemnification for the entire amount of all such Indemnifiable Damages (including the Basket amount).
(h) Each
Indemnified Person agrees to bring a claim against an insurance company to the extent the applicable Indemnifiable Damages are insured,
provided that such Indemnified Person shall not be obligated to litigate against the insurance company any such claim. All Indemnifiable
Damages shall be calculated net of the amount of any recoveries actually received by an Indemnified Person under any existing insurance
policies and contractual indemnification or contribution provisions (in each case, calculated net of any actual collection costs and reserves,
expenses, deductibles or premium adjustments or retrospectively rated premiums (as determined in good faith by such Indemnified Person)
incurred or paid to procure such recoveries) in respect of any Indemnifiable Damages suffered, paid, sustained or incurred by any Indemnified
Person; provided that no Indemnified Person shall have any obligation to seek to obtain or continue to pursue any such recoveries.
In the event that, after receiving indemnification hereunder, an Indemnified Person receives any insurance proceeds or third-party indemnification
or reimbursement in respect of the same Indemnifiable Damages, such Indemnified Person shall promptly pay to the applicable Indemnifying
Parties the amount of such recovery, net of any actual costs and expenses incurred to obtain it, to the extent necessary to avoid duplicate
recovery.
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(i) Notwithstanding
any provision in the Transaction Documents to the contrary: no Indemnifying Party shall be liable nor shall it be required to indemnify
any Indemnified Person for any breaches, defaults or misrepresentations of any personal representations, warranties, covenants, undertakings,
obligations, agreements or liabilities, including the performance of any of the foregoing, of any other Indemnifying Party. Additionally,
no Indemnifying Party shall be held liable nor shall be required to indemnify any Indemnified Person for (a) any Fraud on the part of
any other Indemnifying Party (except to the extent the same also constitutes Fraud of the Company), or (b) for any Tax liability of any
other Indemnifying Party. For the avoidance of doubt, the maximum and aggregate liability of each Indemnifying Party in the event of any
Fraud of the Company of which such Indemnifying Party was not aware, shall be limited to such Indemnifying Party’s Aggregate Consideration
actually paid (or, with respect to set off, actually payable) to such Indemnifying Party.
10.3 Period for Claims.
Except as otherwise set forth in this Section 10.3, the period (the “Claims Period”) during
which claims may be made (i) for Indemnifiable Damages arising out of, resulting from or in connection with the matters listed in clauses
(i) of Section 10.1(a) (other than with respect to Special Claims)
shall commence at the Closing and terminate on the first anniversary of the Closing Date (the “Escrow Release Date”),
(ii) Indemnifiable Damages arising out of, resulting from or in connection with the IP Rep shall commence at the Closing and terminate
on the 30-month anniversary of the Closing Date; and (iii) for Indemnifiable Damages arising out of, resulting from or in connection
with all other matters, including Special Claims (other than the IP Rep), shall commence at the Closing and terminate at 11:59 p.m. Eastern
Standard Time on the date that is 60 days following expiration of the applicable statute of limitations period (the “Maximum
Liability Period”). Notwithstanding anything to the contrary contained herein, such portion of the Escrow Fund as is set
forth in a Claim Certificate delivered to the Shareholders’ Agent on or prior to the Escrow Release Date shall remain in the Escrow
Fund until such claims for Indemnifiable Damages have been resolved or satisfied. Notwithstanding anything to the contrary contained
herein, the Claims Period for claims for Indemnifiable Damages arising out of, resulting from or in connection with Fraud shall not be
limited. In addition, no right to indemnification pursuant to Article X in respect of any claim that is set forth in a Claim
Certificate delivered by Acquirer to the Shareholders’ Agent on or prior to the applicable survival period for such claim shall
be affected by the expiration of such representations and warranties; provided, further, that such expiration shall not
affect the rights of any Indemnified Person under Article X or otherwise to seek recovery of Indemnifiable Damages arising
out of, resulting from or in connection with any Fraud by or on behalf of the Company or the Company Shareholders. The representations
and warranties made by the Acquirer contained herein and in the other certificates contemplated by this Agreement shall survive the Closing
and remain in full force and effect until the first anniversary of the Closing Date (or the first anniversary of the Earn-Out Payment
Date in relation to the Acquirer Common Stock comprising the Earn-Out). All covenants, agreements and obligations of the parties hereto
shall expire and be of no further force or effect as of the Closing, except to the extent such covenants, agreements and obligations
provide that they are to be performed after the Closing in which case they shall survive until the expiry of the Maximum Liability Period;
provided, that no right to indemnification pursuant to Article X in respect of any claim based upon any breach of
a covenant, agreement or obligation shall be affected by the expiration of such covenant, agreement or obligation.
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10.4 Set
Off Rights. Without derogating from the sole and exclusive remedy provisions of Section 10.2(a), Acquirer may, but shall
not be obligated to, set off any amounts to which the Indemnified Parties are entitled to pursuant to this Article X after
the Closing, against any Earn-Out Consideration, applying such amounts in satisfaction, to the extent of such amount, of such owed amounts,
and without limiting any other rights or remedies of Acquirer hereunder and under applicable Law; provided, however, that
the right to set off shall not apply with respect to the Base Stock Consideration Payments. Any set off rights exercised against Acquirer
Common Stock shall be calculated based on the Acquirer Stock PPS on the Earn-Out Payment Date.
10.5 Claims.
(a) On
or before the Escrow Release Date and from time to time during the Claims Period, Acquirer may deliver to the Shareholders’ Agent,
one or more certificates signed by any officer of Acquirer (each, a “Claim Certificate”):
(i) stating
that an Indemnified Person has incurred, paid, reserved or accrued, or in good faith believes it may incur, pay, reserve or accrue, Indemnifiable
Damages (or that with respect to any Tax matters, that any Tax Authority may raise such matter in audit of Acquirer or its subsidiaries
that could give rise to Indemnifiable Damages);
(ii) stating
the amount of such Indemnifiable Damages, if known, or an estimate thereof (which, in the case of Indemnifiable Damages not yet incurred,
paid, reserved or accrued, may be the maximum amount believed by Acquirer in good faith to be incurred, paid, reserved, accrued or demanded
by a third party); and
(iii) specifying
in reasonable detail (based upon the information then possessed by Acquirer) the individual items of such Indemnifiable Damages included
in the amount so stated and the nature of the claim to which such Indemnifiable Damages are related and the basis for indemnity (by reference
to the specific misrepresentation, breach of warranty, covenant or claim to which such item is related).
(b) Such
Claim Certificate (i) need only specify such information to the knowledge of such officer of Acquirer as of the date thereof, (ii) shall
not limit any of the rights or remedies of any Indemnified Person with respect to the underlying facts and circumstances specifically
set forth in such Claim Certificate and (iii) may be updated and amended from time to time by Acquirer by delivering any updated or amended
Claim Certificate, so long as the delivery of the original Claim Certificate is made within the applicable Claims Period and such update
or amendment relates to the underlying facts and circumstances specifically set forth in such original Claim Certificate. All claims for
Indemnifiable Damages properly set forth in a Claim Certificate or any update or amendment thereto shall remain outstanding until such
claims have been resolved or satisfied, notwithstanding the expiration of the applicable Claims Period. No delay in providing such Claim
Certificate within the applicable Claims Period shall affect an Indemnified Person’s rights hereunder, unless (and then only to
the extent that) the Shareholders’ Agent or the Indemnifying Parties are materially prejudiced thereby.
(c) The
Indemnified Persons shall afford the Shareholders’ Agent and its designated representatives and advisors, upon the Shareholders’
Agent’s written request, such additional information, documents and material as are reasonably necessary in order to allow the Shareholders’
Agent to properly consider, evaluate and respond to the Claim Certificate; provided that Acquirer shall not be required to provide
any such materials that are subject to attorney-client privilege, attorney work product protection or that are subject to confidentiality
obligations or constitute confidential communications.
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(d) At
the time of delivery of any Claims Certificate to the Escrow Agent, a duplicate copy of such Claims Certificate shall be delivered to
the Shareholders’ Agent by or on behalf of Acquirer (on behalf of itself or any other Indemnified Person) and for a period of 30
days after such delivery to the Shareholders’ Agent of such Claims Certificate, the Escrow Agent shall make no payment pursuant
to this Section 10.5 unless the Escrow Agent shall have received written authorization from the Shareholders’ Agent
to make such payment. After the expiration of such 30-day period, the Escrow Agent shall make delivery of cash from the Escrow Fund to
Acquirer in accordance with this Section 10.5; provided that no such delivery may be made if and to the extent
the Shareholders’ Agent has objected in a written statement to any claim or claims made in the Claims Certificate, and such written
statement shall have been delivered to the Escrow Agent prior to the expiration of such 30-day period.
10.6 Resolution of Objections
to Claims.
(a) If
the Shareholders’ Agent does not contest by written notice to Acquirer, any claim or claims by Acquirer made in any Claim Certificate
within the 30-day period following receipt of the Claim Certificate, the claim or claims shall be deemed to be accepted by the Indemnifying
Parties and Shareholders’ Agent (an “Uncontested Acceptance”), and (i) if recovery was sought from the
Escrow Fund, the Escrow Agent shall, upon Acquirer’s direction, immediately deliver to Acquirer an amount from the Escrow Fund having
a total value equal to the amount of any Indemnifiable Damages corresponding to such claim or claims as set forth in such Claim Certificate
(subject to the limitations set forth herein) and/or Acquirer may, at its sole discretion, either (ii) exercise its set off rights having
a total value equal to the amount of any Indemnifiable Damages corresponding to such claim or claims as set forth in such Claim Certificate
(subject to the limitations set forth herein) and/or (iii) the Indemnifying Parties shall promptly pay to Acquirer their applicable amount
of any Indemnifiable Damages corresponding to such claim or claims as set forth in such Claim Certificate.
(b) If
the Shareholders’ Agent objects in writing to any claim or claims by Acquirer made in any Claim Certificate within the 30-day period
set forth in Section 10.6(a), Acquirer and the Shareholders’ Agent shall attempt in good faith for 30 days after
Acquirer’s receipt of such written objection (the “Resolutions Period”) to resolve such objection. If
Acquirer and the Shareholders’ Agent shall so agree, a memorandum setting forth such agreement shall be prepared and signed by both
Acquirer and the Shareholders’ Agent and the provisions of Section 10.6(a) above shall apply. The Escrow Agent shall
be entitled to conclusively rely on any such memorandum and, if recovery was sought from the Escrow Fund, the Escrow Agent shall, upon
Acquirer’s direction, immediately deliver to Acquirer an amount of cash from the Escrow Fund having a total value equal to the amount
set forth in such memorandum and/or the Indemnifying Parties shall promptly pay to Acquirer their respective Pro Rata Shares of the amount
set forth in such memorandum (less any amounts paid from the Escrow Fund with respect to such claim or claims) in accordance with the
provisions of this Section 10.6(b).
(c) If
no such agreement can be reached during the Resolutions Period, either Acquirer or the Shareholders’ Agent may bring a claim in
connection with such disagreement in accordance with the terms of Section 10.10 to resolve the matter.
(d) The
amount of any claim made by an Indemnified Person against the Escrow Fund and/or the Indemnifying Party(ies) pursuant to the provisions
of this Article X shall be paid (if paid by the Indemnifying Parties and not subject to set-off) within fourteen (14) Business
Days after the earliest occurrence of one of the following events: (i) an Uncontested Acceptance, (ii) a mutual agreement between the
Shareholders’ Agent and Acquirer on the amount of the Indemnifiable Damages, or (iii) if the validity and amount of such claim is
disputed by the Shareholders’ Agent and Acquirer, a judicial determination.
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10.7 Shareholders’
Agent. By executing this Agreement, each Indemnifying Party hereby appoints Mr. Ofer Yarden as the Shareholders’ Agent as of
the Agreement Date for all purposes in connection with this Agreement and the agreements ancillary hereto. The Shareholders’ Agent
shall be the representative, agent and attorney-in-fact for and on behalf of the Indemnifying Parties as of the Agreement Date with the
power and authority to: (i) execute, as the Shareholders’ Agent, this Agreement and any agreement or instrument entered into or
delivered in connection with the Transactions, (ii) give and receive notices, instructions and communications permitted or required under
this Agreement, or any other agreement, document or instrument entered into or executed in connection herewith, for and on behalf of
any Indemnifying Party, to or from Acquirer (on behalf of itself or any other Indemnified Person) relating to this Agreement or any of
the Transactions and any other matters contemplated by this Agreement or by such other agreement, document or instrument ancillary hereto,
(iii) review, negotiate and agree with Acquirer regarding satisfaction of claims asserted by Acquirer (on behalf of itself or any other
Indemnified Person, including by not objecting to such claims) pursuant to this Article X, including authorize Acquirer to
reclaim funds from the Escrow Fund in satisfaction of such claims, (iv) object to (or refrain from contesting) such claims pursuant
to Section 10.6, (v) consent or agree to, negotiate, enter into, or, if applicable, contest, prosecute or defend, lawsuits,
settlements and compromises of, and demand arbitration and comply with Orders of courts and awards of arbitrators with respect to, such
claims, resolve any such claims, take any actions in connection with the resolution of any dispute relating hereto or to the Transactions
by litigation, arbitration, settlement or otherwise, and take or forego any or all actions permitted or required of any Indemnifying
Party or necessary in the judgment of the Shareholders’ Agent for the accomplishment of the foregoing and all of the other terms,
conditions and limitations of this Agreement, (vi) consult with legal counsel, accountants and other experts selected by it, solely
at the cost and expense of the Indemnifying Parties, (vii) consent or agree to any amendment to this Agreement or to waive any terms
and conditions of this Agreement providing rights or benefits to the Indemnifying Parties in accordance with the terms hereof and in
the manner provided herein, (viii) pursuant to Section 1.5, review, negotiate, object to, accept or agree to Acquirer’s
calculation of Company Net Working Capital, and any other element of the Adjustment Calculation, including authorize Acquirer to reclaim
funds from the Adjustment Escrow Fund with respect thereto, (ix) sell any and all of the Acquirer Common Stock issued to the Paying Agent
or the Escrow Agent, Base Stock Consideration Payments and the Earn-Out Consideration hereunder, for and on behalf of all the Indemnifying
Parties, in accordance with the Trading Limitations, so as to convert such Acquirer Common Stock into cash to be distributed to the Indemnifying
Parties in lieu of such Acquirer Common Stock so issued, (x) pay any broker fees associated with the disposition of any Acquirer Common
Stock issued to any of the Securityholders hereunder, and (xi) take all actions necessary or appropriate in the judgment of the
Shareholders’ Agent for the accomplishment of the foregoing and for the consummation of the Transactions, in each case without
having to seek or obtain the consent of any Person under any circumstance. Acquirer and its Affiliates (including after the Closing,
the Company) shall be entitled to rely on the appointment of the Shareholders’ Agent as the duly appointed attorney-in-fact of
each Indemnifying Party and as having the duties, power and authority provided for in this Section 10.7. The
Indemnifying Parties shall be bound by all actions taken and documents executed by the Shareholders’ Agent on their behalf, and
Acquirer and other Indemnified Persons shall be entitled to rely exclusively on any action or decision of the Shareholders’ Agent.
Any Person serving as the Shareholders’ Agent may be removed or replaced from time to time, or if such Person resigns from its
position as the Shareholders’ Agent (which it may do at any time upon 30 days’ prior written notice to the Indemnifying Parties
and the other Persons serving as the Shareholders’ Agent), then a successor may be appointed, by all the Indemnifying Parties upon
not less than ten (10) days’ prior written notice to Acquirer. If any Person serving as the Shareholders’ Agent is removed
or resigns and is not replaced, then the remaining Person(s) serving as the Shareholders’ Agent shall be authorized to serve as
the Shareholders’ Agent in all respects. Notwithstanding the foregoing, the Shareholders’ Agent shall have no obligation
to act on behalf of the Indemnifying Parties, except as expressly provided herein and in the Escrow Agreement, and for purposes of clarity,
there are no obligations of the Shareholders’ Agent in any ancillary agreement, schedule, exhibit or the Company Disclosure Letter.
The immunities and rights to indemnification set forth herein shall survive the resignation or removal of the Shareholders’ Agent
and the Closing and/or any termination of this Agreement. No bond shall be required of the Shareholders’ Agent and the Escrow Agreement.
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(b) The
Shareholders’ Agent (including its members, managers, directors, officers, contractors, agents, employees, affiliates and other
representatives) shall not be liable to any Indemnifying Party for any act done or omitted hereunder as the Shareholders’ Agent
while acting in good faith (and any act done or omitted pursuant to the advice of counsel shall be conclusive evidence of such good faith)
and without willful misconduct. The Shareholders’ Agent shall serve as the Shareholders’ Agent without compensation; provided,
that the Indemnifying Parties shall severally but not jointly indemnify the Shareholders’ Agent (including its members, managers,
directors, officers, contractors, agents, employees, affiliates and other representatives) and hold them harmless against any loss, Liability
or expense incurred without willful misconduct or bad faith on the part of the Shareholders’ Agent and arising out of, resulting
from or in connection with the acceptance or administration of its duties hereunder, including all reasonable out-of-pocket costs and
expenses and legal fees and other legal costs reasonably incurred by the Shareholders’ Agent. If not paid directly to the Shareholders’
Agent by the Indemnifying Parties, such losses, Liabilities or expenses may be recovered by the Shareholders’ Agent from the Indemnifying
Parties according to their respective Pro Rata Shares of such losses, Liabilities or expenses. In no event will the Shareholders’
Agent be required to advance its own funds on behalf of the Indemnifying Parties or otherwise. The powers, immunities and rights to indemnification
granted to the Shareholders’ Agent herein (i) are coupled with an interest and shall be irrevocable and survive the death, incompetence,
bankruptcy or liquidation of any Indemnifying Party and shall be binding on any successor thereto, and (ii) shall survive the delivery
of an assignment by any Indemnifying Party.
(c) Any
notice or communication given or received by, and any decision, action, failure to act within a designated period of time, agreement,
consent, settlement, resolution or instruction of, the Shareholders’ Agent that is within the scope of the Shareholders’ Agent’s
authority hereunder shall constitute a notice or communication to or by, or a decision, action, failure to act within a designated period
of time, agreement, consent, settlement, resolution or instruction of all the Indemnifying Parties and shall be final, binding and conclusive
upon each such Indemnifying Party and its successors as if expressly confirmed and ratified in writing by such Indemnifying Party, and
all defenses which may be available to any Indemnifying Party to contest, negate or disaffirm the action of the Shareholders’ Agent
taken in good faith under this Agreement, or any related agreements (including the Paying Agent Agreement and Escrow Agreement) are hereby
waived; and each Indemnified Person shall be entitled to rely exclusively upon any such notice, communication, decision, action, failure
to act within a designated period of time, agreement, consent, settlement, resolution or instruction as being a notice or communication
to or by, or a decision, action, failure to act within a designated period of time, agreement, consent, settlement, resolution or instruction
of, each and every such Indemnifying Party. The Company, Acquirer and the Indemnified Persons are hereby relieved from any Liability to
any Person for any acts done by them in accordance with such notice, communication, decision, action, failure to act within a designated
period of time, agreement, consent, settlement, resolution or instruction of the Shareholders’ Agent. The Shareholders’ Agent
shall be entitled to (i) rely upon the Spreadsheet, (ii) rely upon any signature believed by it to be genuine, and (iii) reasonably assume
that a signatory has proper authorization to sign on behalf of the applicable Indemnifying Party or other party.
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10.8 Third-Party Claims.
In the event Acquirer becomes aware of a claim by a third party (a “Third-Party Claim”)
that Acquirer believes in good faith may result in a claim for Indemnifiable Damages by or on behalf of an Indemnified Person, it shall
promptly notify the Shareholders’ Agent of such Third-Party Claim and the basis for such belief, provided, however, that the failure
to so notify the Indemnifying Parties shall not relieve the Indemnifying Parties of any liability except to the extent that such Indemnifying
Parties demonstrate that the defense of such action is materially prejudiced thereby. Acquirer shall have the right in its sole discretion
to conduct the defense of and to settle or resolve any Third-Party Claim (and the out-of-pocket costs and expenses incurred by Acquirer
in connection with such defense, settlement or resolution (including reasonable attorneys’ fees, other professionals’ and
experts’ fees and court costs) shall be included in the Indemnifiable Damages for which Acquirer may seek indemnification pursuant
to a claim made hereunder, and such costs and expenses shall constitute Indemnifiable Damages subject to indemnification under Section
10.1(a)), provided that any settlement
of a Third-Party Claim by Acquirer without the written consent of the Shareholders’ Agent (which consent shall not be unreasonably
withheld, conditioned or delayed) shall not be determinative of the amount of Indemnifiable Damages incurred by the Indemnified Party
in connection with such Third Party Claim. The Shareholders’ Agent shall have the right to receive copies of all pleadings, notices
and communications with respect to such Third-Party Claim to the extent that receipt of such documents does not affect any privilege
relating to any Indemnified Person, subject to execution by the Shareholders’ Agent of Acquirer’s (and, if required, such
third party’s) non-disclosure agreement to the extent that such materials contain confidential or propriety information. The Shareholders’
Agent may participate in (but not control) any Third-Party Claim or any action related to such Third-Party Claim. In the event that the
Shareholders’ Agent has consented to the amount of any settlement or resolution by Acquirer of any such claim (which consent shall
not be unreasonably withheld, conditioned or delayed and which consent shall be deemed to have been given, unless the Shareholders’
Agent shall have objected within 10 Business Days after a written request therefor by Acquirer), or if the Shareholders’ Agent
shall have been determined by a court to have unreasonably withheld, conditioned or delayed its consent, neither the Shareholders’
Agent nor any Indemnifying Party shall have any power or authority to object to any claim by or on behalf of any Indemnified Person against
the Escrow Fund or the Indemnifying Party for indemnity with respect to such settlement or resolution. In the event the Acquirer elects
not to assume the defense of such Third-Party Claim, then the Shareholders’ Agent shall be entitled to control the defense of such
Third-Party Claim and to employ separate counsel of its choice for such purpose, in which event the Shareholders’ Agent shall be
deemed to agree to indemnify the Indemnified Parties in connection with such Third-Party Claim in accordance with the provisions hereof.
In such event, the Shareholders’ Agent shall keep Acquirer informed of all proceedings and matters related to handling such Third
Party Claim, and shall not settle such Third Party Claim without the consent of Acquirer (which consent shall not be unreasonably withheld,
conditioned or delayed). For the avoidance of doubt, nothing in the foregoing shall be deemed as an agreement to waive or amend any limitation
on indemnification contained in this Agreement, and any indemnification with respect thereto shall be subject to the limitations contained
in this Agreement. If the Shareholders’ Agent assumed the conduct of the defense then, subject to the Acquirer’s prior written
consent (which shall not be unreasonably withheld, delayed or conditioned) Shareholders’ Agent shall be entitled to settle or resolve
any such Third Party Claim, and shall inform the Acquirer promptly of any such settlement or resolution. In such case, the Shareholders’
Agent shall be deemed to agree on behalf of the Indemnifying Parties to indemnify the Indemnified Parties in connection with such Third-Party
Claim in accordance with the provisions hereof. The ability to assume and conduct the defense and settle in such Third Party Claim shall
apply only if: (x) such settlement, compromise, default or judgment includes a release by the plaintiff or claimant of the Indemnified
Persons from all Liability with respect to all matters relating to such Third Party Claim, and (y) such settlement, compromise, default
or judgment does not include any admission of fault or wrongdoing on the part of the Indemnified Persons. Notwithstanding the foregoing,
the Shareholders’ Agent shall not be entitled to assume the defense of such claim: (I) if a claim involves or could reasonably
be expected to involve monetary damages in excess of the limit of an Indemnifying Party’s liability hereunder or a claim for non-monetary
relief; or (II) if (1) an actual conflict of interest, or actual differing defenses between the Indemnifying Parties and the Indemnified
Persons exists (in the reasonable opinion of the Indemnified Persons’ counsel) in respect of any such claim, or if such claim involves
Tax issues or Intellectual Property issues; or (2) a claim relates to or arises in connection with any criminal proceeding, action, indictment
or allegation or investigation. The Indemnified Persons may, at their sole discretion, participate in such defense through separate counsel
at their sole cost and expense.
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10.9 Exclusive Remedy.
Acquirer and the Indemnified Persons agree that Indemnified Persons’ sole and exclusive remedy after the Closing with respect to
any and all Indemnifiable Damages relating to this Agreement, and any and all Indemnifiable Damages with respect to any representations,
warranties, covenants and agreements in this Agreement, shall be pursuant to the indemnification provisions set forth in this Article
X; provided, however, that the foregoing clause of this sentence shall not be deemed a waiver by any party of any right to specific
performance or injunctive relief.
10.10 Treatment of Indemnification
Payments. The Indemnifying Parties, the Shareholders’ Agent and Acquirer agree to treat (and cause their respective Affiliates
to treat) any payment received by the Indemnified Persons pursuant to this Article X as adjustments to the Aggregate Consideration
for all Tax purposes, to the maximum extent permitted by Applicable Law.
Article
XI
General Provisions
11.1 Notices. All
notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed given
if delivered personally or by commercial delivery service, or mailed by registered or certified mail (return receipt requested) or sent
via electronic mail to the parties hereto at the following address (or at such other address for a party as shall be specified by like
notice):
(a) if
to Acquirer, to:
Ondas Inc.
222 Lakeview Avenue, Suite 800, West Palm Beach, Florida
33401
Attention: Eric Brock, Gilad Yacubovich
Email: [***]
with copies (which shall not constitute notice) to:
Meitar | Law Offices
16 Abba Hillel Road, Ramat-Gan, 5250608, Israel
Attention: Assaf Oz, Adv.
Email: [***]
(b) If
to the Company, to:
Omnisys Ltd.
13 Amal St. Rosh Ha’ayin, 4809249, Israel
Attention: Ofer Yarden, CEO
Email: [***]
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If to the Shareholders’ Agents, to:
Ofer Yarden
308 Nof Sadot St. Olesh, Israel
Email: [***]
with a copy (which shall not constitute notice) to:
Shibolet Law Firm
4 Yitzhak Sadeh St. Tel Aviv 6777504, Israel
Attention: Ofer Manor, Adv.
Email: [***]
Any notice given as specified in this Section 11.1
(i) if delivered personally or sent by electronic mail transmission shall conclusively deemed to have been given or served at the time
of dispatch if sent or delivered on a Business Day or, if not sent or delivered on a Business Day, on the next following Business Day
and (ii) if sent by commercial delivery service or mailed by registered or certified mail (return receipt requested) shall conclusively
be deemed to have been received on the fifth Business Day after the post of the same.
11.2 Interpretation.
When a reference is made herein to Articles, Sections, subsections, Schedules or Exhibits, such reference shall be to an Article, Section
or subsection of, or a Schedule or an Exhibit to this Agreement unless otherwise indicated. The headings contained herein are for reference
purposes only and shall not affect in any way the meaning or interpretation of this Agreement. The words “include,” “includes”
and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.”
Where a reference is made to a Contract, instrument or Applicable Law, such reference is to such Contract, instrument or Applicable Law
as amended, modified or supplemented, including (in the case of Contracts or instruments) by waiver or consent and (in the case of Applicable
Law) by succession of comparable successor Applicable Law and references to all attachments thereto and instruments incorporated therein.
Unless the context of this Agreement otherwise requires: (i) words of any gender include each other gender and neutral forms of such
words, (ii) words using the singular or plural number also include the plural or singular number, respectively, (iii) the terms “hereof,”
“herein,” “hereto,” “hereunder” and derivative or similar words refer to this entire Agreement, (iv)
references to clauses without a cross-reference to a Section or subsection are references to clauses within the same Section or, if more
specific, subsection, (v) references to any person include the successors and permitted assigns of that person, (vi) references from
or through any date shall mean, unless otherwise specified, from and including or through and including, respectively, (vii) subject
to clause (viii) below, the phrases “provide to,” “made available” and “deliver to” and phrases of
similar import mean that a true, correct and complete paper or electronic copy of the information or material referred to has been delivered
to the party to whom such information or material is to be provided and (viii) the phrases “provided to Acquirer” or “made
available to Acquirer” and phrases of similar import means, with respect to any information, document or other material of the
Company or its Affiliates, that such information, document or material was made available for review and properly indexed by the Company
and its Representatives in the virtual data room established by Acquirer in connection with this Agreement at least 48 hours prior to
the execution of this Agreement or actually delivered (whether by physical or electronic delivery) to Acquirer or its Representatives
at least 48 hours prior to the execution of this Agreement. The symbol “$” refers to United States Dollars. The word “extent”
in the phrase “to the extent” means the degree to which a subject or other thing extends and such phrase shall not mean simply
“if.” All references to “days” shall be to calendar days unless otherwise indicated as a “Business Day.”
Any action otherwise required to be taken on a day that is not a Business Day shall instead be required to be taken on the next succeeding
Business Day, and if the last day of a time period is a non-Business Day, such period shall be deemed to end on the next succeeding Business
Day. The terms “U.S.” and “United States” shall refer to the United States of America. References to the Company
shall mean the Company and its Subsidiary, except as otherwise indicated herein.
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11.3 Amendment. Subject
to Applicable Law, the parties hereto may amend this Agreement by authorized action at any time prior to the Closing pursuant to an instrument
in writing signed on behalf of each of the Company, the Shareholders’ Agent and Acquirer. Acquirer and the Shareholders’
Agent may cause this Agreement to be amended at any time after the Closing by execution of an instrument in writing signed on behalf
of Acquirer and the Shareholders’ Agent.
11.4 Extension; Waiver.
At any time at or prior to the Closing, the Company, the Shareholders’ Agent (on behalf of the Company Shareholders) and Acquirer
may, to the extent legally allowed, (i) extend the time for the performance of any of the obligations or other acts of the other parties
hereto owed to such party, (ii) waive any inaccuracies in the representations and warranties made to such party contained herein or in
any document delivered pursuant hereto and (iii) waive any breaches of any of the covenants, agreements, obligations or conditions for
the benefit of such party contained herein. At any time after the Closing, Acquirer and the Shareholders’ Agent (on behalf of the
Company Shareholders) may, to the extent legally allowed, (A) extend the time for the performance of any of the obligations of the other
owed to such party, (B) waive any inaccuracies in the representations and warranties made to such party contained herein or in any document
delivered pursuant hereto or (C) waive compliance with any of the covenants, agreements, obligations or conditions for the benefit of
such party contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing that is (I) prior
to the Closing with respect to the Company and/or the Company Shareholders, signed by the Company and the Shareholders’ Agent,
(II) after the Closing with respect to the Indemnifying Parties and/or the Shareholders’ Agent, signed by the Shareholders’
Agent and (III) with respect to the Company and the Acquirer, signed by Acquirer. Without limiting the generality or effect of the preceding
sentence, no failure to exercise or delay in exercising any right under this Agreement shall constitute a waiver of such right, and no
waiver of any breach or default shall be deemed a waiver of any other breach or default of the same or any other provision herein.
11.5 Counterparts.
This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same instrument and shall become
effective when one or more counterparts have been signed by each of the parties hereto and delivered to the other parties hereto; it
being understood and agreed that all parties hereto need not sign the same counterpart. The delivery by facsimile or by electronic delivery
in PDF format of this Agreement with all executed signature pages (in counterparts or otherwise) shall be sufficient to bind the parties
hereto to the terms and conditions set forth herein. All of the counterparts will together constitute one and the same instrument and
each counterpart will constitute an original of this Agreement.
11.6 Entire Agreement;
Parties in Interest. This Agreement and the documents and instruments and other agreements specifically referred to herein or delivered
pursuant hereto, including all the exhibits attached hereto, the Schedules, including the Company Disclosure Letter, (a) constitute the
entire agreement among the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties hereto with respect to the subject matter hereof, except for the Mutual Non-Disclosure Agreement
dated 2026, which shall continue in full force and effect, and shall survive any termination of this Agreement, in accordance with its
terms and (b) are not intended to confer, and shall not be construed as conferring, upon any Person other than the parties hereto any
rights or remedies hereunder (except that Article X is intended to benefit the Indemnified Persons).
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11.7 Assignment. Neither
this Agreement nor any of the rights and obligations under this Agreement may be assigned or delegated, in whole or in part, by operation
of law or otherwise by any of the parties hereto without the prior written consent of the other parties hereto, and any such assignment
without such prior written consent shall be null and void, except that Acquirer may assign its rights and delegate its obligations under
this Agreement to any direct or indirect or wholly owned Subsidiary of Acquirer or of Ondas, Inc., without the prior consent of any other
party hereto. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the parties hereto and their respective successors and assigns.
11.8 Severability.
In the event that any provision of this Agreement, or the application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, invalid, void or unenforceable, the remainder of this Agreement shall continue in full force and effect and shall be interpreted
so as reasonably necessary to effect the intent of the parties hereto. The parties hereto shall use all reasonable efforts to replace
such illegal, invalid, void or unenforceable provision of this Agreement with a legal, valid and enforceable provision that shall achieve,
to the greatest extent possible, the economic, business and other purposes of such illegal, invalid, void or unenforceable provision.
11.9 Remedies Cumulative;
Specific Performance. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party hereto shall
be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise
by a party hereto of any one remedy shall not preclude the exercise of any other remedy and nothing herein shall be deemed a waiver by
Acquirer of any right to specific performance or injunctive relief. It is accordingly agreed that Acquirer shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition
to any other remedy to which it is entitled at law or in equity, and the parties hereto hereby waive the requirement of any posting of
a bond in connection with the remedies described herein.
11.10 Submission to Jurisdiction;
Consent to Service of Process. The parties hereto hereby irrevocably submit to the exclusive jurisdiction of the courts of Tel Aviv,
Jaffa in the State of Israel, in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents
referred to herein, and in respect of the Transactions, and hereby waive, and agree not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof or thereof, that it is not subject thereto or that such action, suit or proceeding
may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement or any
such document may not be enforced in or by such courts, and the parties hereto irrevocably agree that all claims with respect to such
action or proceeding shall be heard and determined in the Tel-Aviv court. The parties hereto hereby consent to and grant any such court
jurisdiction over the person of such parties and over the subject matter of such dispute and agree that mailing of process or other papers
in connection with any such action or proceeding in the manner provided in this Section 11.10
or in such other manner as may be permitted by Applicable Law, shall be valid and sufficient service thereof. With respect to any particular
action, suit or proceeding, venue shall lie solely in Tel Aviv, Israel. A party hereto may apply to a court of competent jurisdiction,
if one has been appointed, for prejudgment remedies and emergency relief pending final determination of a claim pursuant to this Section
11.10.
11.11 Governing Law.
This Agreement shall be governed by and construed in accordance with the laws of the State of Israel without reference to such state’s
principles of conflicts of law that would refer a matter to a different jurisdiction.
11.12 Rules of Construction.
The parties hereto have been represented by counsel during the negotiation, preparation and execution of this Agreement and, therefore,
hereby waive, with respect to this Agreement, each Schedule and each Exhibit attached hereto, the application of any Applicable
Law or rule of construction providing that ambiguities in an agreement or other document shall be construed against the party drafting
such agreement or document.
[Signature
Page Follows]
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IN WITNESS WHEREOF, Acquirer,
the Company, the Company Shareholders and the Shareholders’ Agent have caused this Share Purchase Agreement to be executed and delivered
by their respective officers thereunto duly authorized (or with respect to those Company Shareholders who are individuals, personally
in their capacity as such), all as of the date first written above.
ACQUIRER:
By:
/s/ Eric Brock
Name:
Eric Brock
Title:
Chairman and CEO
IN WITNESS WHEREOF, Acquirer, the Company, the Company Shareholders
and the Shareholders’ Agent have caused this Share Purchase Agreement to be executed and delivered by their respective officers
thereunto duly authorized (or with respect to those Company Shareholders who are individuals, personally in their capacity as such),
all as of the date first written above.
Company:
By:
/s/ Ofer Yarden
Name:
Ofer Yarden
Title:
CEO
IN WITNESS WHEREOF, Acquirer, the Company, the
Company Shareholders and the Shareholders’ Agent have caused this Share Purchase Agreement to be executed and delivered by their
respective officers thereunto duly authorized (or with respect to those Company Shareholders who are individuals, personally in their
capacity as such), all as of the date first written above.
COMPANY SHAREHOLDERS:
/s/ Ofer Yarden
Ofer Yarden (as personal capacity and as Shareholders Agent)
/s/ Alfred Zimet
Alfred Zimet
/s/ Ofer Yarden
Altshare Trusts Ltd (in trust for Alfred Tzimet)
By: Ofer Yarden as proxy
LIST OF EXHIBITS
Exhibit A – Company Shareholders
Exhibit B – Registration Rights Agreement
Schedule I
DEFINITIONS
As used in this Agreement, the following terms
shall have the meanings indicated below.
“102 Trustee”
shall mean the trustee appointed by the Company in accordance with the provisions of the Israel Tax Ordinance, and approved by the ITA,
with respect to Company 102 Shares.
“Accredited Investor”
means as defined in Rule 501(a) under the Securities Act.
“Acquirer Common
Stock” means the Common Stock, $0.0001 par value per share, of Acquirer.
“Acquired Companies”
means the Company, Omnisys Ltd. Consulting Services Ltd. and Omnisys Investments Ltd.
“Acquirer Stock
PPS” means, (i) with respect to Acquirer Common Stock issued to the Company Shareholders at the Closing, the Volume Weighted
Average Price of such Acquirer Common Stock on the Trading Market on the Trading Day immediately prior to the Closing Date or prior to
each subsequent Base Stock Consideration Payment Date, and (ii) with respect to Acquirer Common Stock issued to the Company Shareholders
on the Earn Out Payment Date, the Volume Weighted Average Price of such Acquirer Common Stock on the Trading Market on the Trading Day
immediately prior to the issuance thereof.
“Acquisition Proposal”
means, with respect to the Company and its Subsidiaries, an agreement, offer or proposal for, or any indication of interest in, any direct
or indirect acquisition of the Company and/or of any of its Subsidiaries or of all or a substantial portion of the assets of the Company
and/or any of its Subsidiaries, whether by way of a merger, consolidation, asset sale, stock purchase, recapitalization, other combination
or otherwise, or any material, non-ordinary course development, license, joint venture transaction, or equity or debt financing, other
than any offer, proposal or indication of interest made by or on behalf of Acquirer.
“Acquisition Rights”
means any transfer restrictions, rights to purchase, rights of first refusal, negotiation or notice, or other similar rights or restrictions
which relate to any Equity Interests or assets of the Company or its Subsidiaries, whether arising under the Charter Documents of the
Company and its Subsidiary, any Contracts, Applicable Laws or otherwise.
“Adjusted Consideration”
means (i) $199,000,000 minus (ii) (a) NIS 7,000,000 divided by (b) the US$:NIS exchange rate as of the business day immediately
preceding the Closing Date.
“Affiliate”
means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, or is controlled
by, or is under common control with, such Person, including any general partner, managing member, officer or director of such Person or
any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares
the same management company with, such Person, in each case as of the date on which, or at any time during the period for which, the determination
of affiliation is being made, but excluding, in the case of any Person that is a public company (or a Subsidiary of a public company),
any Person that controls such public company; or, in the case of an individual, the spouse, child, adopted child, stepchild or other lineal
descendants of such Person or any trust or other entity principally for the benefit of such Person. For purposes of this definition,
the term “control” (including the correlative meanings of the terms “controlled by” and “under common control
with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction
of the management policies of such Person, whether through the ownership of more than 50% of the voting securities or by Contract or otherwise.
Sch 1-1
“Aggregate Consideration”
means the sum of the Base Stock Consideration and, to the extent due and payable in accordance with the provisions hereof, the Earn-Out
Consideration.
“Anti-Corruption
Law” means any Applicable Law relating to anti-bribery or anti-corruption (governmental or commercial), including the Foreign
Corrupt Practices Act of 1977, as amended, Section 291(a) of the Israeli Penal Code of 1977, the UK Bribery Act 2010, and any other Applicable
Law that prohibits the corrupt payment, offer, promise or authorization of the payment or transfer of anything of value (including gifts
or entertainment), directly or indirectly, to any Person, including any Government Official.
“Applicable Law”
means, with respect to any Person, any national, federal, state, foreign, local, municipal or other law, statute, constitution, legislation,
principle of common law, resolution, ordinance, code, edict, decree, rule, directive, guidance, license, permit, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental
Entity and any Orders applicable to such Person or such Person’s Affiliates or to any of their respective assets, properties or
businesses.
“Base Stock Consideration”
means Acquirer Common Stock valued, without duplications, at the lower of: (a) the Adjusted Consideration or (b) (i) the Adjusted Consideration,
plus (ii) the Estimated Closing Net Working Capital Adjustment, plus (iii) the Estimated Company Cash, less
(iv) the Estimated Company Debt, less (v) the Estimated Transaction Expenses, as such sums are set forth in the Spreadsheet, based
on the Acquirer Stock PPS.
“Base Stock Consideration
Payment Date(s)” or the “Payment Date(s)”, as applicable, means each of the Closing Date, the
Second Payment Date, the Third Payment Date, the Fourth Payment Date, the Fifth Payment Date, the Sixth Payment Date and the Seventh Payment
Date.
“Base Stock Consideration
Payments” means Acquirer Common Stock constituting the Base Stock Consideration, issued on each of the following dates,
in each case, valued in accordance with their respective Acquirer Stock PPS: (i) US $29,000,000 on the Closing Date, (ii) US $28,500,000
on the 4th Trading Day after the Closing Date (the “Second Payment Date”), (iii) US $28,500,000on
the 8th Trading Day after the Closing Date (the “Third Payment Date”),(iv) US $28,500,000on the 12thTrading
Day after the Closing Date (the “Fourth Payment Date”); (v) US $28,500,000 on the 16th Trading Day
after the Closing Date (the “Fifth Payment Date”); (vi) US $28,500,000 on the 20th Trading Day after the
Closing Date (the “Sixth Payment Date”); and (vii) the balance on the 24th Trading Day after the Closing
Date (the “Seventh Payment Date”).
“Business”
means the business of the Acquired Companies as currently conducted and as currently proposed to be conducted by the Acquired Companies,
provided, however, that solely for purposes of Section 7.10(d), the maintenance of nostro accounts and the conduct of investment,
trading and related treasury activities shall not be deemed “Business”.
“Business Day”
means a day (i) other than Friday, Saturday or Sunday and (ii) on which commercial banks are open for business in the United States or
in the State of Israel.
“Cause”
means (i) Ofer Yarden’s conviction of a crime of moral turpitude, or any crime which includes an element of fraud; (ii) Ofer Yarden’s
engagement in theft, embezzlement, or self-dealing, in each case, towards the Company or Acquirer; (iii) a material breach of Ofer Yarden’s
non-compete, confidentiality and non-disclosure obligations towards the Company which, to the extent such breach is curable, has not been
cured by Ofer Yarden within 14 days after Ofer Yarden’s receipt of a written notice thereof; (iv) a breach of Ofer Yarden’s
fiduciary duty to the Company; or (v) any other act or omission which is determined to be grounds for dismissal or termination without
severance payments under applicable Israeli law.
Sch 1-2
“Closing Net Working
Capital Adjustment” means the amount (which may be a positive or negative number) equal to (i) the Company Net Working Capital,
minus (ii) the Closing Net Working Capital Target.
“Closing Net Working
Capital Target” means US $16,660,535.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Company 102 Shares”
shall mean Company Ordinary Share which is subject to tax under Section 102(b)(2) of the Israeli Income Tax Ordinance.
“Company Cash”
means, without duplication, the aggregate unrestricted cash and cash equivalents of the Company, determined in accordance with Israeli
GAAP, as of immediately prior to the Closing, excluding for the avoidance of doubt, any Trapped Cash.
“Company Debt”
means, as of immediately prior to the Closing, without duplication, in accordance with Israeli GAAP: (i) all obligations (including the
principal amount thereof or, if applicable, the accreted amount thereof and the amount of accrued and unpaid interest thereon) of the
Company and its Subsidiaries, whether or not represented by bonds, debentures, notes or other securities (whether or not convertible into
any other security), for the repayment of money borrowed, whether owing to banks, financial institutions, on equipment leases or otherwise,
(ii) all deferred indebtedness of the Company and its Subsidiaries for the payment of the purchase price of property or assets purchased,
including any earn-outs (at the maximum amount) or deferred consideration for the acquisition of any business (other than accounts payable
incurred in the ordinary course of business), (iii) all outstanding reimbursement obligations of the Company and its Subsidiaries with
respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of the Company, (iv) all obligations
of the Company and its Subsidiaries under any interest rate swap agreement, forward rate agreement, interest rate cap or collar agreement
or other financial agreement or arrangement entered into for the purpose of limiting or managing interest rate risks, (v) all obligations
secured by any Encumbrance existing on property owned by the Company and its Subsidiaries, whether or not indebtedness secured thereby
will have been assumed, (vi) all premiums, penalties, fees, expenses, breakage costs and change of control payments required to be paid
in respect of any of the foregoing on prepayment as a result of the consummation of the Transactions or in connection with any lender
consent in connection therewith, (vii) all unpaid Pre-Closing Taxes, which, notwithstanding anything to the contrary, shall be calculated
as of the end of the Closing Date, (viii) all defined benefit or defined contribution pension, multiemployer pension, post-retirement
health and welfare benefit, accrued annual or other bonus obligations, any unpaid severance liabilities currently being paid or payable
in respect of employees and service providers of the Company or its Subsidiaries who terminated employment or whose services to the Company
or its Subsidiaries have ceased (as applicable) prior to the Closing and deferred compensation liabilities of the Company or its Subsidiaries,
together, in each case, with any associated employer payroll taxes, (ix) obligations as lessee under leases that have been or should
be, in accordance with Israeli GAAP, recorded as capital or financing leases; (x) obligations, contingent or otherwise, as an account
party or applicant in respect of letters of credit; (xi) obligations, contingent or otherwise, in respect of bankers’ acceptances;
(xii) bank overdrafts and similar items; and (xiii) all guaranties, endorsements, assumptions and other contingent obligations of the
Company and its Subsidiaries in respect of, or to purchase or to otherwise acquire, any of the obligations and other matters of the kind
described in any of the clauses (i) through (xiii) appertaining to third parties. Notwithstanding anything herein to the contrary, Company
Debt shall not include Liabilities between the Company and the Subsidiaries and shall exclude items to the extent covered also under Transaction
Expenses.
Sch 1-3
“Company Net Working
Capital” means, without duplication, as of immediately prior to the Closing, the current assets (other than cash) of the
Acquired Companies minus the current liabilities of the Acquired Companies (in each case, calculated in accordance with Israeli
GAAP), and specifically including all Liabilities for deferred revenue (current and long-term), payroll obligations accrued or accruable
by or for the Acquired Companies’ employees as of the Closing, and specifically excluding Liabilities between the Company and the
Subsidiaries and the Disregarded Expense. Current liabilities included in Company Net Working Capital shall exclude items to the extent
covered also under Transaction Expenses and Company Debt.
“Company Option
Plan” means, collectively, with respect to any Person who is a corporation, each share option plan, program or arrangement,
and any appendixes thereto.
“Company Options”
means options to purchase Company Shares pursuant to the Company Option Plan.
“Company Securities”
means Company Shares, any equity securities convertible into Company Shares and Company Options.
“Company Shares”
means the Ordinary Shares of the Company, of par value NIS 1, and including, for the avoidance of doubt, Company 102 Shares.
“Contract”
means any written or oral legally binding contract, agreement, instrument, commitment or undertaking of any nature (including leases,
subleases, licenses, mortgages, notes, guarantees, sublicenses, subcontracts, letters of intent and purchase orders), including all amendments,
supplements, exhibits and schedules thereto.
“Current
Resale Shelf Registration Statement” means Acquirer’s automatic shelf registration statement on Form S-3 filed by
Acquirer with the SEC on September 9, 2025 (File No. 333-290121), including the prospectus, amendments and supplements (including each
Prosupp) to such registration statement or prospectus (including post-effective amendments, all exhibits thereto and all material incorporated
by reference or deemed to be incorporated by reference, if any, in such registration statement), or any replacement thereof (including,
for the elimination of doubt, any replacement registration statement filed in accordance with Section 1(b) of the Registration Rights
Agreement).
“Disability”
shall mean physical or mental injury, illness or disability which results in Ofer Yarden’s inability to perform the material duties
and responsibilities under his Retention and Employment Agreement for a period of more than 45 consecutive days, or for a period of 90
days in the aggregate in a 12-month period irrespective of whether such days are consecutive (or such longer period as may be required
by law), as the result of his incapacity due to physical or mental injury, illness or disability, confirmed in writing by a physician
(or immediately if a physician determines that such individual is unable on a non-temporary basis to exercise managerial judgment).
Sch 1-4
“D&O Indemnitees”
means, collectively, current or former directors, managers and officers and any Person who becomes a director, manager or officer of the
Company or the Subsidiary prior to the Closing.
“Earn-Out Consideration”
means Acquirer Common Stock in such amount calculated in accordance with Article II, based on their respective Acquirer Stock
PPS, to be issued, if applicable in accordance with the provisions hereof, on the Earn-Out Payment Date.
“Employee”
shall mean any current or past employee and Contingent Workers of any Acquired Company.
“Encumbrance”
means, with respect to any asset, any mortgage, equitable interest, deed of trust, lien (statutory or other), pledge, charge, security
interest, title retention device, conditional sale or other security arrangement, collateral assignment, claim, community property interest,
adverse claim of title, ownership or right to use, right of first refusal, restriction or other encumbrance of any kind in respect of
such asset (including any restriction on (i) the voting of any security or the transfer of any security or other asset, (ii) the
receipt of any income derived from any asset, (iii) the use of any asset and (iv) the possession, exercise or transfer of any
other attribute of ownership of any asset).
“Environmental,
Health and Safety Requirements” means all Applicable Law concerning or relating to worker/occupational health and safety,
or pollution or protection of the environment, including those relating to the presence, use, manufacturing, refining, production, generation,
handling, transportation, treatment, recycling, transfer, storage, disposal, distribution, importing, labeling, testing, processing, discharge,
release, threatened release, control or other action or failure to act involving cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and as now in effect.
“Equity Interests”
means, with respect to any Person, any share capital of, or other ownership, membership, partnership, joint venture or equity interest
in, such Person or any indebtedness, securities, options, warrants, call, subscription or other rights or entitlements of, or granted
by, such Person or any of its Affiliates that are convertible into, or are exercisable or exchangeable for, or giving any Person any right
or entitlement to acquire any such capital stock or other ownership, partnership, joint venture or equity interest, in all cases, whether
vested or unvested.
“Escrow Agent”
means IBI Trust Management Ltd.
“Escrow Amount”
means (i) an amount equal to 12% of the Base Stock Consideration, which shall be comprised of cash only, with 12% being withheld from
each installment on each Payment Date (the first escrow amount shall be referred to as the “Closing Escrow Amount”
and any subsequent escrow amount shall be referred to as a “Deferred Escrow Amount”).
“Exchange Act”
means the Securities Exchange Act of 1934, as amended.
“Final Base Stock
Consideration” means, without duplications, at the lower of: (a) the Adjusted Consideration or (b) (i) the Adjusted Consideration,
plus (ii) the Final Closing Net Working Capital Adjustment, plus (iii) the Final Company Cash, less
(iv) the Final Company Debt, less (v) the Final Transaction Expenses.
Sch 1-5
“Fully-Diluted
Shares” means the sum of the aggregate number of Company Shares that are issued and outstanding and the Company Options
that are outstanding as of immediately prior to the Closing.
“Good Reason”
shall mean any of the following which is consummated without Ofer Yarden’s written consent: (i) a material reduction (other than
a reduction that is similarly applied to all management employees of the Company or Acquirer) in Ofer Yarden’s salary or other
material benefits; or (ii) a material change in Ofer Yarden’s title, authorities, duties or responsibilities under Ofer Yarden’s
engagement agreement with the Company, provided, in each case above, that Ofer Yarden provides the Company a written notice of any act
Ofer Yarden deems to be Good Reason hereunder within 30 days after the Company takes such action, and the Company has not cured such act
in 14 days, and as a result of which Ofer Yarden notified the Company of termination of his engagement with the Company within seven days
from the expiration of such seven day period.
“Government Official”
means (i) any official, employee, agent or representative of, or any other Person acting in an official capacity for or on behalf of,
any Governmental Entity, (ii) any political party, political party official, (iii) any official, employee, agent or representative of,
or any other Person acting in an official capacity for or on behalf of, a company, business, enterprise or other entity controlled by
any Governmental Entity, or in which any Governmental Entity holds a direct or indirect ownership interest, including any state-owned
defense company or defense-related enterprise, or (iv) any official, employee, agent or representative of, or any other Person acting
in an official capacity for or on behalf of, a public international organization.
“Governmental
Entity” means (i) any supranational, national, state, municipal, local or foreign government, (ii) any court, tribunal,
arbitrator, administrative agency, commission or other Government Official, authority or instrumentality, including a Tax Authority, in
each case whether domestic or foreign, and (iii) any stock exchange or similar self-regulatory organization or any quasi-governmental
or private body exercising any executive, legislative, judicial, regulatory or other functions of, or pertaining to, government authority
(including any governmental or political division, department, agency, commission, instrumentality, official, organization, unit, body
or entity, the IIA and any court or other tribunal).
“Governmental
Grant” means any grant, incentive, subsidy, award, loan, participation, cost sharing arrangement, reimbursement arrangement
or other benefit, relief or privilege provided or made available by or on behalf of or under the authority of the IIA or affiliated authorities
or programs (including the Incubator Administration, Tnufa, Nofar, Magnet and Magneton), Authority for Investments and the Development
of the Industry and Economy (formerly known as the Investment Center), the ITA (solely with respect to “preferred” or “approved”
enterprise status or similar programs), the State of Israel, and any other bi- or multi-national grant program, framework or foundation
(including the BIRD foundation) for research and development, the European Union, the Fund for Encouragement of Marketing Activities of
the Israeli Government or any other Governmental Entity.
“IIA”
means the Israel Innovation Authority.
“Indemnifying
Parties” means the Company Shareholders.
“Innovation Law”
means the Israeli Encouragement of Research, Development and Technological Innovation in the Industry Law 5744-1984, as amended from time
to time, including regulations, directives, procedures, and rules that have been or will be promulgated thereunder and/or by virtue thereof,
including any directives, guidelines and rules as issued from time to time by the IIA.
“IRS”
means the United States Internal Revenue Service.
Sch 1-6
“Israeli Companies
Law” means the Israeli Companies Law 5759-1999.
“Israeli GAAP”
means generally accepted accounting principles in Israel, that are applicable to the circumstances of the date of determination, consistently
applied
“Israeli Law”
means Israeli Applicable Law.
“ITA”
means the Israeli Tax Authority.
“Key Employee”
means the individuals listed in Schedule II attached hereto.
“knowledge”,
with respect to any fact, circumstance, event or other matter in question, the knowledge of such fact, circumstance, event or other matter
after reasonable inquiry of (i) an individual, if used in reference to an individual or (ii) with respect to any Person that is not
an individual (other than the Company), the executive officers of such Person, and solely with respect to the Company, the individuals
listed on Schedule III attached hereto (the “Company Knowledge Persons”); provided that any executive
officer or Company Knowledge Person, as applicable, will be deemed to have knowledge of a particular fact, circumstance, event or other
matter if (A) such fact, circumstance, event or other matter is reflected in one or more documents (whether written or electronic, including
electronic mails sent to or by such individual) in, or that have been in, the possession of such executive officer or Company Knowledge
Person, including his or her personal files, or (B) such knowledge could be obtained from reasonable inquiry of such executive officer’s
or Company Knowledge Person’s direct subordinates or reports, to the extent such persons would reasonably be expected to have actual
knowledge of such fact, circumstance, event or other matter.
“Lease”
means any lease, sublease, license or other occupancy agreement for the use of real property, including workspace use agreements.
“Legal Proceeding”
means any private or governmental action, inquiry, claim, counterclaim, proceeding, suit, hearing, litigation, audit or investigation,
in each case whether civil, criminal, administrative, judicial or investigative, or any appeal therefrom.
“Liabilities”
(and, with correlative meaning, “Liability”) means all debts, liabilities, commitments and obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured, determined or determinable, liquidated or unliquidated, asserted or unasserted,
known or unknown, whenever or however arising, including those arising under Applicable Law or any Legal Proceeding or Order of a Governmental
Entity and those arising under any Contract, regardless of whether such debt, liability, commitment or obligation would be required to
be reflected on a balance sheet prepared in accordance with GAAP, or disclosed in the notes thereto.
“Material Adverse
Effect” with respect to any Person means any change, event, violation, inaccuracy, circumstance or effect (each, an “Effect”)
that, individually or taken together with all other Effects, and regardless of whether such Effect constitutes an inaccuracy in the representations
or warranties made by, or a breach of the covenants, agreements or obligations of, such Person herein, (i) is, or would reasonably be
likely to be or become, materially adverse in relation to the condition (financial or otherwise), assets (including intangible assets),
Liabilities, business, capitalization, employees, operations or results of operations of such Person and its subsidiaries, taken as a
whole, except to the extent that any such Effect directly results from: (A) changes in general business, financial, political, capital
market or economic conditions, (B) changes affecting the industry generally in which such Person operates, (C) changes in Applicable Law,
(D) natural disasters, war, hostilities, and/or acts of terrorism and/or any pandemics, epidemics, disease outbreaks or other public health
conditions or any escalation or worsening of any of the foregoing, or (E) changes in GAAP; provided that the exceptions in clauses
(A) through (E) shall not apply if such changes or acts disproportionately affect such entity and its subsidiaries, taken as a whole,
as compared to other participants in such entity’s industry, and/or (ii) materially adversely affects, or would reasonably be likely
to adversely affect, such Person’s ability to perform or comply with the covenants, agreements or obligations of such Person herein
or to consummate the Transactions in accordance with this Agreement and Applicable Law.
Sch 1-7
“NASDAQ”
means the Nasdaq Stock Market.
“non-US Person”
means a Person which is not a U.S. Person (as defined in Regulation S. under the U.S. Securities Act of 1933).
“Order”
means any judgment, writ, decree, stipulation, determination, decision, award, rule, preliminary or permanent injunction, temporary restraining
order or other order of any Governmental Entity.
“Person”
means any natural person, company, corporation, limited liability company, general partnership, limited partnership, limited liability
partnership, trust, estate, proprietorship, joint venture, business organization or Governmental Entity.
“Personal Data”
means any information relating to an identified or identifiable natural person including, but not limited to, a name, an identification
number, location data, an online identifier or to one or more factors specific to the physical, physiological, genetic, mental, economic,
cultural or social identity of that natural person or any other piece of information that allows the identification of a natural person
or is otherwise considered personally identifiable information, personal data or personal information under Applicable Law, including
Tracking Data; all to the extent is Processed by or on behalf of the Company or the Subsidiary.
“Pre-Closing Tax
Period” means any taxable period ending on or before the Closing Date and the portion of any Straddle Period through the
end of the Closing Date.
“Pre-Closing Taxes”
means any (i) Taxes of the Company or its Subsidiaries with respect to any Pre-Closing Tax Period (determined, with respect to any Straddle
Period, in accordance with Section 1.1(k)), including for this purpose any Taxes with respect to deferred revenues arising
in the Pre-Closing Tax Period, regardless of when recognized for income tax purposes,(ii) Taxes of any member of an affiliated, consolidated,
combined or unitary group of which the Company or its Subsidiaries (or any predecessor thereof) was a member on or prior to the Closing
Date, including pursuant to Treasury Regulations Section 1.1502-6 or any analogous or similar state, local or non-U.S. Law, (iii) Taxes
of any Person (other than the Company) imposed on the Company or its Subsidiary as a transferee or successor, by Contract, pursuant to
any Applicable Law or otherwise, which Taxes relate to an event or transaction occurring before the Closing, in each case, except if provided
in the ordinary course of business under an obligation, agreement or arrangement the main subject matter of which is not Taxes and such
Taxes are not in a material amount, and (iv) any payroll or other withholding Taxes arising in connection with any payment by the Company
or its Subsidiaries required pursuant to, or arising as a result of, this Agreement or the Transactions.
Sch 1-8
“Privacy Laws”
means each Applicable Law applicable to Personal Data, and any such legal requirement governing privacy, data security, data or security
breach notification, any penalties and compliance with any order, including but not limited to the General Data Protection Regulation
(EU) 2016/679 (the “EU GDPR”), the EU GDPR as it forms part of the law of England and Wales, Scotland and Northern
Ireland by virtue of section 3 of the European Union (Withdrawal) Act 2018 (together with the EU GDPR, the “GDPR”),
Section 5 of the Federal Trade Commission Act, the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”),
the Gramm-Leach-Bliley Act (“GLBA”), the Electronic Communications Privacy Act of 1986, the Stored Communications
Act, California Online Privacy Protection Act, the California Consumer Privacy Act (“CCPA”), and other United
States state laws concerning privacy, data protection, and / or data security, the CAN-SPAM Act, the Telephone Consumer Protection Act
(“TCPA”), the Israeli Protection of Privacy Law, 5741–1981, and the regulations promulgated thereunder
(including the Protection of Privacy Regulations (Data Security), 2017), and any and all guidelines published by the Israeli Privacy Protection
Authority, the Payment Card Industry Data Security Standards, the Video Privacy Protection Act, the EU Privacy and Electronic Communications
Directive 2002/58/EC on Privacy and Electronic Communications, the UK Privacy and Electronic Communications (EC Directive) Regulations
2003 and any other analogous data protection, direct marketing or privacy laws, regulations, or regulatory requirements, guidance and
codes of practice applicable to the processing of Personal Data (as amended and/or replaced from time to time) in any jurisdiction in
which the Company carries on its business and/or from which the Company collects Personal Data.
“Pro Rata Share”
means, with respect to a particular Company Shareholder at any given time, a fraction, the numerator of which is the Aggregate Consideration
payable to such Company Shareholder in accordance with the Spreadsheet, and the denominator of which is the Aggregate Consideration payable
to all Company Shareholder. For the avoidance of doubt, the total of all Pro Rata Shares at all times shall equal one hundred percent.
“Process”
or “Processing” means, with respect to data, any operation or set of operations such as collection, recording,
organization, structuring, storage, adaptation, enhancement, enrichment or alteration, retrieval, consultation, analysis, use, disclosure
by transmission, dissemination or otherwise making available, alignment or combination, restriction, erasure or destruction.
“Prosupp”
means a prospectus supplement pursuant to Rule 424(b)(7) under the Securities Act to the Current Resale Shelf Registration Statement providing
for the resale registration of the Acquirer Common Stock.
“Registration
Rights Agreement” means the form attached hereto as Exhibit B, executed between Acquirer and the Company Shareholders
in connection with such Person being issued Acquirer Common Stock pursuant to the provisions of this Agreement.
“Representatives”
means, with respect to a Person, such Person’s officers, directors, Affiliates, shareholders or employees, or any investment banker,
attorney, accountant, auditor or other advisor or representative retained by any of them.
“SEC”
means the Securities and Exchange Commission.
“Securities Act”
means the Securities Act of 1933, as amended.
“Straddle Period”
means any taxable period that includes (but does not end on) the Closing Date.
Sch 1-9
“Subsidiary”
means, with respect to the Company, any Person controlled by the Company.
“Substitute Cash
Consideration” means, (i) with respect to any Base Stock Consideration Payment payable to any Company Shareholder hereunder,
a cash payment of equivalent value paid in accordance with the provisions hereof in lieu thereof; and (ii) with respect to any portion
of the Earn-Out Consideration, if applicable, payable to any Company Shareholder hereunder, a cash payment of equivalent value paid in
accordance with the provisions hereof in lieu thereof.
“Tax”
(and, with correlative meaning, “Taxes” and “Taxable”) means (i) any net income,
alternative or add-on minimum tax, gross income, estimated, gross receipts, sales, use, ad valorem, value added, transfer, franchise,
fringe benefit, share capital, profits, license, registration, withholding, payroll, social security (or equivalent), national insurance,
health, employment, unemployment, disability, excise, severance, stamp, occupation, premium, property (real, tangible or intangible),
land betterment, purchase, corporate, capital gains, environmental or windfall profit tax, custom duty or other tax, governmental fee
or other like assessment or charge of any kind whatsoever, together with any interest or any penalty, addition to tax or additional amount
(whether disputed or not) imposed by any Governmental Entity responsible for the imposition of any such tax (domestic or foreign) (each,
a “Tax Authority”), (ii) any Liability for the payment of any amounts of the type described in clause (i)
of this sentence as a result of being a member of an affiliated, consolidated, combined, unitary or aggregate group for any Taxable period
and (iii) any Liability for the payment of any amounts of the type described in clause (i) or (ii) of this sentence as a result of
being a transferee of or successor to any Person or as a result of any express or implied obligation to assume such Taxes or to indemnify
any other Person, except if provided in the ordinary course of business under an obligation, agreement or arrangement the main subject
matter of which is not Taxes.
“Tax Forms”
shall mean a properly completed IRS Form W-9, or the appropriate version of IRS Form W-8, as applicable.
“Tax Representations”
means the representations and warranties of the Company set forth in Section 3.12
(Taxes).
“Tax Return”
means any return, statement, report or form (including estimated Tax returns and reports, withholding Tax returns and reports, any schedule
or attachment, and information returns and reports) filed or required to be filed with respect to Taxes.
“Tracking Data”
means (a) any information or data collected in relation to on-line, mobile or other electronic activities or communications that can reasonably
be associated with a particular Person, user, computer, mobile or other device, or instance of any application or mobile application,
(b) any information or data collected in relation to off-line activities or communications that can reasonably be associated with or that
derives from a particular Person, user, computer, mobile or other device or instance of any application or mobile application or (c) any
device or network identifier (including IP address or MAC address), device activity data or data collected from a networked physical object.
“Tradeable”
means the Aggregate Consideration to be registered for resale pursuant to the Securities Act as set forth in the Registration
Rights Agreement, with no lock-up restrictions imposed by the issuer thereof, other than the Trading Limitations as set forth in the Registration
Rights Agreement.
“Trading Day”
means a day on which the principal Trading Market is open for trading.
“Trading Limitations”
shall have the meaning ascribed to such term in the Registration Rights Agreement.
Sch 1-10
“Trading Market”
means the NASDAQ and/or any other trading market or exchange upon which the Acquirer Common Stock are traded or listed or quoted for trading
on the date in question (or any successors to any of the foregoing).
“Transaction Document”
means, collectively, this Agreement, the Company Disclosure Letter, the Paying Agent Agreement, the Escrow Agreement, the Retention and
Employment Agreements, the Company Closing Certificate, the Officer’s Certificates, the Spreadsheet, the Signing Spreadsheet and
each other agreement or document to be executed in connection with any of the Transactions.
“Transaction Expenses”
means, without double counting and to the extent not paid prior to Closing, all third-party fees, costs, expenses, payments and expenditures
incurred by or on behalf of the Company or its Subsidiaries in connection with the Transaction Documents and the Transactions, whether
or not incurred, billed or accrued, including (i) any fees, costs expenses, payments and expenditures of legal counsel and accountants,
(ii) the maximum amount of fees, costs, expenses, payments and expenditures payable to brokers, finders, financial advisors, investment
bankers or similar Persons notwithstanding any earn-outs, escrows or other contingencies, (iii) all sale, change-of-control, “stay
around,” retention, termination, severance or similar bonus or payment obligations or compensatory amounts owed or incurred by the
Company or its Subsidiaries to the Company’s or its Subsidiaries’ directors, employees and/or consultants in connection with
the Transactions (together with the occurrence of any other event) and any Taxes payable by the Company or its Subsidiaries in connection
therewith (including the employer portion of any payroll, social security, Medicare, Federal Unemployment Tax Act unemployment or any
similar Tax associated with such amounts, and including any VAT payable with respect thereto, unless recoverable in full as determined
by Acquirer in its sole discretion) whether paid or payable at or following the Closing, including, for the avoidance of doubt, any statutorily
or contractually required notice period expenses relating to such termination, (iv) any such fees, costs, expenses, payments and expenditures
incurred by Company Shareholders, paid for or to be paid for by the Company or its Subsidiaries, (v) the costs of the D&O Tail Policy,
(vi) 50% of the costs of the Paying Agent, (vii) 50% of the costs of the Escrow Agent, and (viii) all payment obligations in respect to
pension premiums and severance payment that is required to be deposited in Ofer Yarden and Alfred Zimet individual pension arrangements,
in addition to the amounts already contributed to their pension arrangements during and in connection with their employment by the Company,
to ensure full compliance with the Section 14 Arrangement until the Closing. It is emphasized that said amount excludes any required payment
in connection with global overtime compensation paid to Alfred Zimet; all to the extent not paid prior to Closing, but excluding the Disregarded
Expense.
“Trapped Cash”
means cash or cash equivalents (a) of the Company which are not freely useable or available because it is subject to restrictions or limitations
on use under Contract or Applicable Laws by the Company, including collateral for customer agreements, lease agreements, collateral for
debt, and hedge guarantees. or (b) in the form of deposits in transit and outstanding checks and drafts issued by the Company.
“Treasury Regulations”
means the United States Treasury Department’s tax regulations issued under the Code.
“Volume Weighted
Average Price” means the average of the daily volume weighted average price of the Acquirer Common Stock for the applicable
Trading Day on the Trading Market on which the Common Stock are then listed or quoted (based on a Trading Day from 9:30 a.m. (New York
City time) to 4:00 p.m. (New York City time)).
Sch 1-11
EX-99.1 — FACT SHEET, DATED MAY 18, 2026
EX-99.1
Filename: ea029124801ex99-1.htm · Sequence: 3
Exhibit
99.1
NASDAQ: ONDS www.ondas.com | www.omnisys.co.il ABOUT OMNISYS Omnisys is a leading global provider of combat - proven optimization software for multi - mission and multi - domain defense planning and real - time decision - making. The company has maintained a long - standing track record of profitable operations without reliance on external capital. At the core of Omnisys' offering is the Battle Resource Optimization (BRO) platform — a modular, scalable, and vendor - agnostic software suite that integrates data from multiple sensors, platforms, and C2 systems, applying advanced AI and operations research to generate optimized courses of action in real time. BRO supports the full operational cycle: pre - mission planning, in - mission dynamic adaptation, and post - mission debriefing. TRANSACTION INSIGHTS Expands Ondas into AI - enabled battlefield software based on one of the most combat proven technology Adds a proven, revenue generating AI software platform to the Ondas technologies Establishes BRO as a central mission optimization layer across all Ondas systems Transitions Ondas to a full systems of systems orchestrator, and will integrate to US defense system Omnisys has maintained a long history of profitable operations without reliance on external capital ONDAS TO ACQUIRE OMNISYS Adding AI - Powered Mission and Battlefield Management & Optimization Capabilities Ondas Inc. (NASDAQ: ONDS) has entered into a definitive agreement to acquire 100% of Omnisys Ltd., an Israeli developer of AI - powered Battle Resource Optimization (BRO) software for multi - mission and multi - domain defense planning and real - time operational decision - making. Omnisys brings combat - proven performance and a global customer base spanning NATO and allied defense organizations. The acquisition will establish BRO as a mission optimization and orchestration layer spanning Ondas’ multi - domain platforms and the broader defense ecosystem, integrating sensors, autonomous systems, and command infrastructure into a unified operational framework. BRO is complementary to SkyWeaver, Ondas’ mission autonomy software platform, by enabling AI - driven battlefield coordination and real - time resource optimization across complex operations
NASDAQ: ONDS INTEGRATION WITHIN ONDAS AUTONOMOUS SYSTEMS Omnisys BRO is expected to operate as the intelligent command layer across Ondas's systems of systems architecture, enabling closed - loop sense - decide - act operations spanning ISR, strike, electronic warfare, and air defense missions. Forward - Looking Statements Statements made in this fact sheet that are not statements of historical or current facts are "forward - looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Our actual results, performance, or achievements could differ materially from those expressed or implied by the forward - looking statements as a result of a number of factors, including the risks discussed in our most recent Annual Report on Form 10 - K and in our other filings with the SEC. We undertake no obligation to publicly update or revise any forward - looking statements, whether as a result of new information, future events or otherwise that occur after that date, except as required by law. www.ondas.com | www.omnisys.co.il BRO CORE TECHNOLOGY PLATFORM The Battle Resource Optimization (BRO) platform is Omnisys' proprietary AI - driven software suite for multi - domain, multi - mission defense planning and execution. BRO operates as an intelligent orchestration layer above existing C2 systems, integrating data from sensors, platforms, and command systems into a unified operational picture — then applying AI and operations research to generate optimized courses of action in real time. Pre - Mission: Optimal force build - up, asset positioning, and CONOPS planning In - Mission: Real - time recommendations and dynamic resource reallocation Post - Mission: Automated debriefing, analysis, and lessons - learned reporting Vendor - Agnostic: Integrates with any US defense systems Multi - Domain: Space · Air · Sea · Land · Spectrum — all within a single platform BRO MISSION APPLICATIONS Optimizes multi - layer Ground - Based Air Defense (GBAD) and Counter - UAS operations. Supports multi domain sensors, GBAD Multi Tier defense effectors and fighter aircraft in coordinated real - time engagements. Deployed operationally at dense battle field operations. Scales from single - battery tactical deployment to national - level multi - layer defense. BRO - AD Air Defense & C - UAS Provides real - time spectrum management (NAVWAR), ELINT mission planning, and intelligence - gathering optimization. Enables multi - sensor fusion for full situational awareness across complex electromagnetic environments. Supports planning, execution, and debriefing of EW and intelligence missions at tactical and operational levels. BRO - EW / BRO - IG Electronic Warfare & ISR Optimizes radar and sensor placement for air surveillance and border protection missions. AI - driven threat detection, resource allocation, and loitering munition coordination across national borders and critical infrastructure. Deployable on ruggedized field hardware for tactical operations. BRO - AS / BRO - Border Air Surveillance & Border Security
EX-99.2 — PRESS RELEASE, DATED MAY 18, 2026
EX-99.2
Filename: ea029124801ex99-2.htm · Sequence: 4
Exhibit 99.2
Ondas to Acquire Omnisys, Adding Battle-Proven
Battlefield Orchestration Software Across Autonomous Defense Systems
With 25 Years of Operational Deployment, Omnisys
Supports Complex Multi-Domain Defense Missions Across Multiple Operational Architectures
Combat-Proven Battlefield Optimization Software
Capabilities Will Accelerate Ondas’ Transition to a Software-Defined Autonomous Defense Orchestrator
Adds High-Margin Mission Software and Expands
Global Defense Opportunities
WEST PALM BEACH, FL / May 18, 2026 / Ondas
Inc. (Nasdaq: ONDS) (“Ondas” or the “Company”), a leading provider of advanced autonomous systems and next-generation
defense and security technologies, today announced it has entered into a definitive agreement to acquire 100% of Omnisys Ltd., an Israeli
developer of AI-powered Battle Resource Optimization (BRO) software for multi-domain defense planning and real-time decision-making. The
acquisition marks a major strategic milestone in Ondas’ evolution into a software-defined defense technology company. Omnisys’
BRO platform is expected to serve as a core orchestration layer across Ondas’ growing autonomous systems portfolio, enabling mission
planning, operational coordination, and real-time battlefield resource optimization across sensors, autonomous systems, and defense assets
operating within complex mission environments.
Modern warfare is increasingly defined by high-volume,
multi-domain threats occurring at machine speed across air, ground, electronic warfare, and cyber environments. Human operators alone
can no longer effectively coordinate the growing number of sensors, effectors, and autonomous systems operating simultaneously across
contested battlespaces. For more than 25 years, Omnisys’ BRO platform has addressed this challenge within some of the world’s
most advanced operational defense architectures, continuously optimizing battlefield resources and supporting real-time decision-making
across layered, multi-mission operational environments. BRO enables dynamic resource allocation, mission prioritization, and coordinated
system responses designed to maximize operational effectiveness, asset utilization, and mission success under high-intensity combat conditions.
“Omnisys and its BRO platform will represent
a major advancement of Ondas’ customer-focused systems-of-systems roadmap for autonomous defense and security solutions,”
said Eric Brock, Chairman and CEO of Ondas. “BRO is a proven, battle-tested software platform that delivers meaningful operational
value by improving planning, battlefield resource optimization, and real-time mission execution across complex multi-domain environments.
Its vendor-agnostic architecture and interoperability across broader defense ecosystems will strengthen our ability to integrate into
existing customer infrastructures and support the delivery of scalable, mission-ready solutions for global defense markets.”
Omnisys’ BRO platform serves as a modular,
vendor-agnostic AI software suite that integrates data from sensors, command-and-control systems, autonomous platforms, and operational
assets into a unified operational picture. Using advanced AI algorithms and operations research methodologies, BRO generates optimized
courses of action in real time across the full mission lifecycle — from pre-mission planning to in-mission adaptation and post-mission
analysis. The platform has been combat-proven at scale, including deployment in complex multi-layer air defense operations, where it improved
the effectiveness of layered defense systems while maximizing utilization of constrained battlefield resources through real-time optimization
across multiple systems simultaneously.
“At Ondas Autonomous Systems, our mission
is to deliver integrated, combat-proven technologies that operate as a unified force in the field,” said Oshri Lugassy, Co-CEO of
Ondas Autonomous Systems. “With the addition of Omnisys and its BRO platform, we believe we are adding one of the most advanced
and operationally validated AI decision and battlefield orchestration engines into our architecture. This enables true closed-loop operations,
connecting sensors, platforms, and effectors into a single intelligent operational framework capable of detecting, deciding, orchestrating,
and acting in real time across complex and dynamic battle environments.”
“I am incredibly proud of what Omnisys has
built over the years — a mission-driven company with exceptional people, a strong culture, and a deep commitment to contributing
to the security of the State of Israel,” said Ofer Yarden, CEO of Omnisys. “That mission led to the development of BRO, a
unique, battle-proven capability that helps defense organizations optimize resources, accelerate operational decision-making, and execute
complex missions in real time. We are excited to join Ondas and leverage its global reach and resources to expand the adoption of BRO
across international defense markets.”
The acquisition directly supports Ondas’
broader growth strategy and builds on recent momentum across its autonomous systems portfolio, including expanding deployments of ISR
platforms, counter-UAS systems, and integrated defense solutions worldwide. By adding a high-margin, software-driven business with a 25-year
track record of operational deployment and profitability, Ondas will strengthen both its financial profile and its ability to deliver
larger, higher-value software-enabled defense programs.
The
integration of BRO technology into Ondas’ architecture will establish a unified “sense-decide-orchestrate-act” operational
framework spanning ISR, strike, electronic warfare, counter-UAS, and air defense missions. BRO operates as a complementary battlefield
orchestration and optimization layer alongside Ondas’ AI and mission autonomy platform, SkyWeaver, enhancing mission planning, coordination,
and real-time resource optimization across complex operational environments. The platform’s vendor-agnostic design enables scalable
orchestration of autonomous aerial and ground systems across tactical, operational, and national defense environments while accelerating
deployment timelines for advanced multi-domain defense solutions.
2
Strategically, the acquisition will expand Ondas’
position within the global defense ecosystem and strengthen its relationships with leading defense integrators and customers. Omnisys
has established a strong market position through long-term deployment within some of the world’s most advanced customers and operational
environments, and broad integration across existing defense infrastructures. Through Ondas’ growing international footprint, Ondas
believes it is well positioned to expand into additional U.S. and allied defense markets while accelerating its transition toward fully
integrated, intelligent, software-defined defense systems-of-systems.
For additional information regarding the terms
of the definitive agreement, please see the Current Report on Form 8-K to be filed with the Securities and Exchange Commission later today.
About Ondas Inc.
Ondas Inc.
(Nasdaq: ONDS) is a leading provider of autonomous systems, robotics, and mission-critical technologies for defense, homeland security,
public safety, critical infrastructure, and industrial markets. The Company develops and deploys integrated unmanned and autonomous platforms
across air, ground, and stratospheric environments, including autonomous drone systems, counter-UAS technologies, robotic ground systems,
advanced unmanned aircraft and propulsion solutions, demining and engineering systems, and integrated sensing and communications technologies
designed to support intelligence, surveillance, reconnaissance, security, and operational missions in complex environments. Ondas’
solutions are deployed globally by government, defense, and commercial customers to protect infrastructure, borders, transportation networks,
personnel, and strategic assets.
Forward-Looking Statements
Statements made in this release that are not statements
of historical or current facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. We caution readers that forward-looking statements are predictions based on our current expectations about future events.
These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that
are difficult to predict. Our actual results, performance, or achievements could differ materially from those expressed or implied by
the forward-looking statements as a result of a number of factors, including the risks discussed under the heading "Risk Factors"
discussed under the caption "Item 1A. Risk Factors" in Part I of our most recent Annual Report on Form 10-K or any updates discussed
under the caption "Item 1A. Risk Factors" in Part II of our Quarterly Reports on Form 10-Q and in our other filings with the
SEC. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise that occur after that date, except as required by law.
Contacts
IR Contact for Ondas Inc.
888-657-2377
ir@ondas.com
Media Contact for Ondas Inc.
Escalate PR
ondas@escalatepr.com
Preston Grimes
Marketing Manager, Ondas Inc.
preston.grimes@ondas.com
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