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EXHIBIT 1.
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This exhibit is a fair and accurate English translation of a foreign language
document.
/s/ AVI RUIMI
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Avi Ruimi
CONTRACT
MADE AND ENTERED INTO AT TEL AVIV ON THIS 28TH DAY OF DECEMBER 1999
BETWEEN : ARWOL ACHZAKOT LTD.
Private Company Registration No. 00-000000-0
Care of Ravilan, Volovelsky, Dinstein and Co., Law Offices
00 Xxxxxxxxxx Xxxxxxxxx, Xxx Xxxx
(hereinafter : "THE SELLER")
OF THE ONE PART;
AND : MR. AVI RUIMI, HOLDER OF IDENTITY DOCUMENT NO. 54341631
AND/OR A CORPORATION UNDER HIS CONTROL
of 00 Xxxxxxxxxx Xxxxxxxxx, Xxx Xxxx
(hereinafter : "THE PURCHASER")
OF THE OTHER PART;
Whereas The Seller declares that it is the owner of 12,183,671 shares
having a par value of NIS 1.- each in the company Macpell
Industries Ltd. Public Company Registration No. 00-000000-0
(hereinafter : "MACFALL" or "THE COMPANY"), which constitutes
78.3% of the issued and paid up share capital of the Company;
And Whereas The Seller is desirous of selling to the Purchaser 3,987,700
shares having a par value of NIS 1.- each in the Company
(hereinafter : "THE SHARES SOLD");
And Whereas The Shares Sold as well as the rights of the Seller in and to the
Shares Sold are clean, free and unencumbered by any pledge,
mortgage, attachment, debt, obligation, right of refusal or any
other right of any third party (hereinafter : "CLEAN, FREE AND
UNENCUMBERED"), save for a mortgage in favor of Bank Hapoalim
Ltd. (hereinafter : "THE BANK"), with respect to which, on the
date of the signature of this Contract, it has given its consent
to the release of the Shares Sold from the mortgage in its favor;
And Whereas The Purchaser is desirous of purchasing the Shares Sold clean,
free and unencumbered, all of which as set forth hereunder in
this Contract;
And Whereas Simultaneously with the signature of this Contract and as a
condition thereof, the Seller and the Purchaser are entering into
contractual arrangements under a shareholders agreement
(hereinafter : "THE SHAREHOLDERS AGREEMENT");
And Whereas The parties desire to regulate the legal relationships between
them as set out in this Contract and in the Shareholders
Agreement;
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NOW THEREFORE IT IS DECLARED, STIPULATED AND AGREED BETWEEN THE PARTIES AS
FOLLOWS :
1. PREAMBLE AND INTERPRETATION
1.1 The preamble to this Contract and the Annexes hereto constitute
an integral part hereof. In the event of any contradiction
between the provisions of the Contract and the provisions of any
of the Annexes, the provisions laid down in this Contract shall
prevail.
1.2 Paragraph headings in this Contract are for the purposes of
convenience only and shall not serve in the interpretation of the
Contract and/or of any of the stipulations thereof whatsoever.
1.3 In this Contract the following terms shall have the meaning set
out alongside them as follows :
"THE STOCK EXCHANGE" The Tel Aviv Stock Exchange Ltd.
"THE FIRST PAYMENT DATE" 29th December 1999
"THE SECOND PAYMENT DATE" 31st January 2000
"THE THIRD PAYMENT DATE" 15th February 2000
"DOLLAR" An amount in new Israeli shekels
in accordance with the last
known representative rate of
exchange of the United States
dollar as at the date of any
payment or calculation.
2. DECLARATIONS AND UNDERTAKINGS BY THE SELLER
The Seller hereby undertakes and declares vis a vis the Purchaser as
follows :
2.1 That it is the sole owner of the Shares Sold and that save for
the mortgage in favor of Bank Hapoalim Ltd. (which as at the
date of signature of this Contract has given its consent to the
release of the mortgage from the Shares Sold), that all its
rights in and to the Shares Sold are clean, free and
unencumbered, that the Shares Sold are fully paid up, and
correct as at the date of signature of this Contract, no
undertakings have been given to any third party whatsoever to
transfer the Shares Sold, or any part of them, or to refrain
from the transfer thereof, and that no option or any other right
for the acquisition of the Shares Sold have been granted nor
given to any third party whatsoever, and that they shall also so
remain on the First Payment Date, as well as on the Second
Payment Date and on the Third Payment Date, as the case may be.
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2.2 All the Shares Sold are registered in the register of
shareholders of the Company and with the Registrar of Companies
in the name of the Seller in the condition thereof as set forth
in paragraph 2.1 above.
2.3 That there is nothing to prohibit, prevent or otherwise restrict
the sale of the Shares Sold to the Purchaser, the transfer
thereof into its ownership and the registration thereof in its
name in the register of shareholders of the Company.
2.4 That all the Shares Sold are negotiable, are not "blocked" under
instructions or directives of the Stock Exchange and/or the
Securities Authority and there is no restriction with respect to
the transfer thereof to the Purchaser.
2.5 That the registered share capital of Macfall, correct as at the
date of signature of this Contract, is NIS 50,000,000 divided
into 50,000,000 ordinary shares having a par value of NIS 1.-
each.
2.6 That to the best of its knowledge, the issued and fully paid up
share capital of Macfall as at the date of signature of this
Contract is NIS 15,560,588 divided into 15,560,588 ordinary
shares having a par value of NIS 1.- each and held by
shareholders as set forth in ANNEX A to this Contract.
2.7 That to the best of its knowledge, the composition of the
additional securities which Macfall has issued is as set forth
in ANNEX B to this Contract, and that Macfall does not have
further securities save for those as set forth in Annex B. The
Seller does not hold any of the securities detailed in Annex B.
2.8 That the unaudited Financial Reports of Macfall as at 30th
September 1999 properly reflect, in accordance with accepted
principles of accounting, the state of its assets, its
liabilities, its capital, its business and the results of its
operations up to that date; and that since the publication of
the foregoing Financial Reports no material changes have taken
place to the detriment of the state of the assets, liabilities,
capital, business and the results of the operations of Macfall.
2.9 That the Opinion of the valuator which was undertaken by First
Boston Credit Suisse in November 1999 in connection with the
value of the company "Alba Waldenstan" (hereinafter : "ALBA"),
pointed to the value of Alba as at the effective date as being
higher than the price which was paid by Tafron for the purchase
there. The board of directors of Tafron relied upon that Opinion
in its decision to acquire Alba.
2.10 The founding documents of the Company (the Memorandum and
Articles of Association) which are attached as ANNEXES C AND D
to this Contract, are valid and the founding documents are
revised to the date of signature of this Contract, and no
resolution for the alteration or amendment thereof has been
adopted.
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2.11 That save for the matters set out in Annex B to this Contract,
correct as at the date of signature of this Contract, no person
(including, but not only, the Seller) has any right to the
allotment of any share capital in Macfall and/or any right of
first refusal in connection with any aforesaid allotment, and
that there is also no obligation of any kind and nature
whatsoever to increase the share capital of Macfall and/or to
allot any securities therefrom and/or to issue capital notes to
any person (included, but not only, to the Seller) and/or any
obligation to refrain from any of the foregoing acts.
For this purpose "SHARE CAPITAL" - means securities and rights
of any kind whatsoever, including but not only, ordinary shares
(and all the various classes thereof), management shares, bonus
shares, options, convertible debentures and any right whatsoever
to the receipt thereof and/or to the acquisition thereof and/or
to the allocation of any one of them.
2.12 That insofar as it is aware, no resolution with respect to the
distribution of a dividend has been adopted by Macfall after
30th September 1999, and insofar as it is aware there is no
intention to distribute any dividend in which the Purchaser
would not be included.
2.13 That to the best of its knowledge the signature of this Contract
and the implementation of the provisions thereof are not
contrary to or inconsistent with any contract, obligation or
restriction to which it is a party, and there is nothing
whatsoever legally, business-wise or otherwise to prevent the
implementation thereof.
2.14 That it is aware that its declarations as set out in this
Contract constitute the basis for the Purchaser's entering into
contractual arrangements under this Contract, and it is not
aware of any material detail in relation to Macfall and/or to
the companies affiliated to it which is not capable of
disclosure to the public.
In this context, the Purchaser declares that it has been brought
to its knowledge that negotiations are being conducted for the
merger of the company New Horizon (a subsidiary of Macfall) with
another company and also that the continued operations of New
Horizon are dependant upon the success of these negotiations.
The Purchaser declares that it shall not raise any claim against
the Seller in this connection irrespective of howsoever the
board of directors of the Company shall resolve in the matter.
3. THE FIRST STAGE OF THE SALE TRANSACTION
3.1 The Seller undertakes to sell and to transfer to the Purchaser
under the first stage half of the Shares Sold, that is to say,
1,993,260 shares in the Company, and the Purchaser hereby
undertakes to purchase and to accept possession from the Seller
of such shares (hereinafter : "THE FIRST HALF OF THE SHARES
SOLD").
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3.2 In consideration for the First Half of the Shares Sold the
Purchaser undertakes to pay to the Seller the sum of $
6,983,260, which constitutes an amount of $ 3.5024 for each
ordinary share in Macfall, multiplied by 1,993,850 shares.
3.3 The consideration set out in paragraph 3.2 above shall be paid
in 2 installments :
3.3.1 On the First Payment Date the sum of $ 1,750,000.
3.3.2 On the Second Payment Date the sum of $ 5,233,260.
3.4 Upon effecting the first payment the Purchaser shall be entitled
to call upon the Seller to recommend to the board of directors
of the Company that an additional director, whose identity shall
be determined by the Purchaser, be attached to the board of
directors. Such additional director shall resign from his office
if the second payment is not made in accordance with the
provisions of this Contract; a letter of resignation shall be
deposited, as a condition of appointment, with the Seller's
attorney, Advocate Xxxxxx Xxxxxxxxxx.
3.5 The parties shall appoint Advocate Xxxxxx Xxxxxxxxxx
(hereinafter : "THE TRUSTEE") as Trustee for the implementation
of both the stages of the sale transaction in accordance with
this Contract. On the First Payment Date the Seller shall
deposit with the Trustee a deed of transfer of the shares with
respect to 454,227 shares, signed by the Seller together with
the appropriate share certificate, which shall be transferred to
the Purchaser upon the First Payment being effected, to the
order of the Seller's account no. 51661 at Branch no. 000 (xxx
Xxxx Xxxx branch) of Bank Hapoalim Ltd. (hereinafter : "THE
BANK"). On the Second Payment Date the Seller shall deposit with
the Trustee a deed of transfer of the shares with respect to
1,539,623 shares, signed by the Seller, which shall be
transferred to the Purchaser against the Second Payment being
effected into the aforesaid account, together with the
appropriate share certificate which shall be obtained from the
Bank against such Second Payment being effected.
3.6 For the sake of clarity it is recorded that the first stage of
the sale transaction, as set out in paragraph 3 above, is final
and absolute.
4. THE SECOND STAGE OF THE SALE TRANSACTION
4.1 Under the second stage, the Purchaser shall purchase from the
Seller, on the Third Payment Date, the other half of the Shares
Sold, that is to say, 1,993,850 shares in the Company
(hereinafter : "THE BALANCE OF THE SHARES SOLD"), at a price of
$ 3.5024 per share and in the aggregate $ 6,983,260 (hereinafter
: "THE BALANCE OF THE CONSIDERATION FOR THE SHARES SOLD"), this
being subject to the carrying out and completion of an
appropriate examination of the Company, as set forth in
paragraph 4.4 hereunder, to the satisfaction of the Purchaser.
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4.2 Subject to the completion of the appropriate examination as
aforesaid, the transfer of the Balance of the Shares Sold and
payment of the Balance of the Shares Sold shall be effected on
the Third Payment Date, in accordance with the procedure set
forth in paragraph 3.5 above, mutatis mutandis.
4.3 It is hereby agreed that for the purpose of securing the
implementation of the second stage of the sale transaction and
the completion thereof, the Seller shall, on the First Payment
Date, deposit with the Trustee a deed of transfer of the shares
signed by it with respect to the Balance of the Shares being
Transferred. The Trustee shall act in accordance with the
following provisions :
4.3.1 The Trustee shall hand over the deed of transfer of the
shares and the share certificates with respect thereto
(the certificates shall be obtained from the Bank
against the third payment being effected) to the
Purchaser against the deposit of the Balance of the
Consideration for the Shares Sold into the Seller's
account at the Bank.
4.3.2 In the event of the Balance of the Shares Sold not being
handed over to the Purchaser on the Third Payment Date,
the Trustee shall return the deed of transfer of the
Shares to the Seller or to his order, unless the Trustee
shall have received written notice from the Purchaser
that it desires to continue with the appropriate
examination in the circumstances set out in paragraph
4.5 hereunder, and in such an event, the Trustee shall
hold the deed of transfer of the shares which are in
trust for a further 15 days.
4.3.3 The Trustee shall be entitled to refer to any competent
judicial authority on any question, if any, which may
arise within the context of the trust in pursuance of
this Contract.
4.3.4 The parties hereby release and relieve the Trustee from
any liability for any damage of any kind whatsoever, if
any, which may be caused to it as a result of and/or in
consequence of any act and/or omission of the Trustee
provided that he had acted in good faith in accordance
with the provisions of this Contract.
4.3.5 The signature by the parties of this Contract
constitutes an irrevocable instruction to the Trustee to
act in accordance with the provisions of this paragraph
4.3 above.
4.4 It is hereby agreed that the Seller shall do whatsoever shall be
required in order to enable the Purchaser to carry out such an
appropriate comprehensive and detailed examination of Macfall as
is the accepted practice in similar instances on the basis of
the declarations of the Seller contained in paragraph 2 of the
Contract (hereinafter : "THE APPROPRIATE EXAMINATION"). The
Appropriate Examination shall be carried out by the Purchaser
itself and/or though its employees and/or its representatives
and/or its professional consultants, over a period which shall
be between the First Payment Date and 6th February 2000.
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4.4.1 The Appropriate Examination shall be carried out subject
to the signature by all the appropriate entities of a
letter of confidentiality in the form attached hereto as
ANNEX E to this Contract.
4.4.2 Should, at the conclusion of the Appropriate
Examination, it become evident to the Purchaser that the
declarations of the Seller as set forth in paragraph 2
above are incorrect and incomplete (save in relation to
details which are not of an essential nature), the
Purchaser shall be entitled not to complete the second
stage of the sale transaction, and not to purchase the
Balance of the Shares Sold on the Third Payment Date.
4.4.3 A "detail of an essential nature" for such purpose
means:
(a) In relation to the declarations of the Seller
with respect to the quantity of shares of the
Company and the nature of its rights therein
(the declarations which are set out in sub
paragraphs 2.1 to 2.7 above as well as in sub
paragraphs 2.10 and 2.11 above) - any detail
whatsoever.
(b) In relation to the declarations of the Seller
with respect to the business results and
operations of the Company (the declarations
which are set out in sub paragraphs 2.8 to 2.11
above) - details which would cause,
cumulatively, a divergence of in excess of $ 1 M
in the equity of the Company as at 30th
September 1999 or a reduction in the worth of
Alba to below the price of the acquisition
thereof by Tafron.
4.4.4 It is hereby agreed that in the event of the Seller
failing to furnish any details, explanations, data or
documents which are reasonably required for the purpose
of the Appropriate Examination (hereinafter : "THE
DEFICIENCIES") notwithstanding that the Purchaser (or
the persons scrutinizing on its behalf) shall have
requested this for the purpose of an Appropriate
Examination during the course of the first 15 days which
had been prescribed for the carrying out thereof, the
Third Payment Date shall be postponed for 15 days and
the acquisition of the Shares Sold shall be effected
only should the Seller make good the Deficiencies to the
satisfaction of the Purchaser during those further 15
days.
5. SHAREHOLDERS AGREEMENT
At the time of signature of this Contract the parties shall enter into a
Shareholders Agreement in the form attached hereto as ANNEX F to this
Contract.
6. TAXES AND COSTS
6.1 Each of the parties to this Contract shall bear such taxes as
are imposed on it according to law with respect to the
transaction which is the subject matter of this Contract.
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6.2 Stamp duty with respect to this Contract and/or in connection
with the transfer of the Shares Sold, if applicable, shall be
due by the Seller and Purchaser in equal shares (50% shall be
paid by the Seller and 50% shall be paid by the Purchaser).
6.3 Each party shall bear the fees of its attorney.
7. MISCELLANEOUS
7.1 The transaction which is the subject matter of this Contract is
subject to and conditional upon the approval of the Director of
Business Restrictions. The parties shall jointly apply to the
Director of Business Restrictions in order to obtain his
approval as aforesaid and shall furnish him with particulars and
documents to the extent required for such purpose.
7.2 The parties acknowledge and declare that the amounts specified
in paragraphs 3 and 4 above on the one hand and the Shares Sold
on the other, constitute a final, fair, fitting, and definitive
consideration for the fulfillment of all the obligations which
they have assumed by virtue of the provisions of this Contract,
and no claim on the part of one of them to the effect that the
other party is obliged to increase and to pay or to give to it,
either directly or indirectly, any additional consideration in
connection with this Contract and/or in connection with the
fulfillment of any of its obligations in pursuance thereof,
shall be admissible.
7.3 The parties undertake that subject to the provisions of any law,
they shall keep confidential the matter of the transaction
between them and the details thereof. Accordingly and inter
alia, any publication concerning the transaction and the details
thereof, whether by operation of law or voluntarily by the
parties, shall be undertaken in concert and with consensus
between the parties as to the timing thereof, the content
thereof and the place of publication thereof.
7.4 This Contract and the Annexes thereto consolidate and express
the set of relationships, the rights and the obligations between
the parties in an exclusive and absolute manner. Upon signature
of this Contract any agreement, contract, declaration,
assurances and undertakings which had been made between the
parties and/or between some person acting on their behalf
(whether prepared in writing or made verbally) shall be null and
void.
7.5 No variation and/or amendment and/or addition and/or waiver
and/or departure from the provisions of this Contract shall be
valid unless effected in writing and signed by the parties to
this Contract.
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7.6 Any agreement on behalf of one of the parties to this Contract
to depart from the conditions of this Contract and/or to waive
in one particular instance shall not constitute a precedent and
no inference with respect to any other instance is to be drawn
therefrom. The non use by either party of any right conferred
upon it in pursuance of this Contract in any one particular
instance is not to be deemed to be a waiver of that right in any
identical, similar or dissimilar instance, and no inference may
be drawn therefrom as to any waiver whatsoever of any right
whatsoever by that party.
7.7 The parties undertake to cooperate with each other and inter
alia in this context, to do whatever shall be required for the
purpose of the speedy and efficient execution of this Contract,
including the signature of any document which may be required
for such purpose.
7.8 Nothing contained in any of the provisions of this Contract
shall be construed as constituting a contract for the benefit of
any third party whatsoever.
7.9 The addresses of the parties for the purposes of this Contract
are as specified in the heading of this Contract and any notice
to be sent by either party to the other by registered post in
accordance with the above addresses, in the absence of written
notice from either party to the other as to a change in its
address, shall be deemed to have reached its destination to have
come to the knowledge of the addressee party within 72 hours
from the time of its handing for dispatch by post.
7.10 Notices delivered personally shall be deemed to have been
delivered and to have been brought to the knowledge of the
addressee party at the time of actual delivery. Notices may also
be delivered by means of a telegram in accordance with the
addresses of the parties set out above and the date of delivery
thereof shall be deemed in such an event to be on the first
business day after the date upon which they were so dispatched.
IN WITNESS WHEREOF THE PARTIES HAVE AFFIXED THEIR SIGNATURES :
"SIGNATURE" - ARWOL ACHZAKOT LTD. "SIGNATURE"
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THE SELLER THE PURCHASER
