EXHIBIT 4.17
AGREEMENT
MADE AND EXECUTED IN TEL AVIV, THIS 2ND DAY OF JANUARY, 2008
BETWEEN: 1. XXXXX XXXXXXXX, I.D. 007765191
of 0 Xxxxx Xxxxxx Xx., Xxx Xxxx
0. AMIRAM GUY, I.D. 00303530-0
of 00 Xxxxxxx Xxxxx Xx., Xxx Xxxx
(hereinafter jointly: "THE SHAREHOLDERS")
OF THE FIRST PART
AND: SHAMIR SALADS 2006 LTD., CORPORATE NO. 513789818
of 0 Xxxxxx Xx., Xxxxxx Xxxxxxxxxx Xxxx
(hereinafter: "THE COMPANY")
OF THE SECOND PART
AND: G. WILIFOOD INTERNATIONAL LTD. PUBLIC CORPORATE NO. 520043209
of 0 Xxxxx Xxxxx Xx., Xxxxx
(hereinafter: "THE PURCHASER")
OF THE THIRD PART
WHEREAS The Company is a private company carrying on the business of
salad production and marketing and has expertise and a reputation
in the field of salad production and marketing to consumers; and
WHEREAS The Company is wholly-owned by the Shareholders; and
WHEREAS The Purchaser is a publicly-traded company on the Nasdaq and is
engaged, inter alia in the marketing and sale of various food
products; and
WHEREAS The Purchaser is desirous of contracting with the Company and the
Shareholders, and the Company and the Shareholders are desirous
of contracting with the Purchaser by this Agreement whereby the
Purchaser will purchase and hold 51% of the issued and paid up
share capital of the Company in a manner whereby the Purchaser
will be the effective controlling party of the Company, all in
the manner and according to the terms and conditions hereinafter
set forth;
IT IS THEREFORE DECLARED, STIPULATED AND AGREED BETWEEN THE PARTIES AS
FOLLOWS:
1. GENERAL
1.1 The preamble and the Appendices hereto constitute an integral part
hereof. Appendices that have not been appended to the Agreement on the
date of the execution thereof will be appended thereafter, by not
later than the Closing Date (as hereinafter defined).
1.2 The headings to the clauses have been set out for ease of reference
only and will not be binding nor be applied in the interpretation of
this Agreement.
1.3 In this Agreement, each of the following terms will bear the meanings
set out opposite them:
"THE SHARES 44 ordinary NIS 1.00 par value shares each of the Company;
SOLD"
"THE ALLOTTED 98 ordinary NIS 1.00 par value shares each of the Company;
SHARES"
"THIRD-PARTY any pledge, charge, mortgage, attachment, levy, lien,
RIGHT" preferential right, right of refusal, option, the right to
tag along on a sale, negative pledge and any other or
additional third party right of any kind whatsoever that may
restrict or limit or infringe the property and/or use of any
asset.
"CLOSING DATE" 7 days after the date on which the last of the conditions
set out in clause 5.1 hereof will have been complied with,
or on such later date as will be agreed upon between the
parties in writing.
"THE INTERIM the period commencing on the date of the execution of this
PERIOD" Agreement and expiring on the Closing Date.
"DISCLOSURE the Disclosure Appendix attached as APPENDIX 2 hereto.
APPENDIX"
"MATERIAL any agreement and/or transaction and/or engagement to which
AGREEMENT", the Company is a party, whether verbal or in writing, and
"MATERIAL being valid as of the date of the execution of this
CONTRACT" OR Agreement, and which is material to the Company's businesses
"MATERIAL currently conducted and/or that the Company intends to
TRANSACTION" conduct in the future, including, but without derogating
from the foregoing, agreements that relate to a financial
liability exceeding NIS 100,000 in any one year.
"LEGAL civil, criminal or administrative legal proceedings in
PROCEEDINGS" Israel or abroad, including proceedings by way of
arbitration, mediation or compromise before also any
competent instance other than a court, as well as any notice
in respect of which a real possibility of such proceedings
being instituted arises.
"INDIRECTLY" includes, but not merely, by means of any other person,
company, partnership or body or other legal entity,
including as representative, agent, employee, beneficiary,
service-provider, shareholder or otherwise or body corporate
that holds or is held by any of them, or in any other
manner.
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"HOLDING" within the meaning of the Securities Law, 5728-1968.
"CONTROL"
"INTERESTED PARTY"
"SOX" In English the Xxxxxxxx-Xxxxx Act of 2002 (Pub.L. No.
107-204, 116 STAT. 745).
"ACCOUNTING EITF 16-96.
STANDARDS"
"THE COMPANIES the Companies Law, 5759-1999.
LAW"
2. REPRESENTATIONS AND DECLARATIONS OF THE SHAREHOLDERS AND THE COMPANY
The Shareholders and the Company jointly and severally, declare,
acknowledge and undertake towards the Purchaser that as of the date of this
Agreement and as of the Closing Date, as follows:
2.1 STATUTORY DOCUMENTS AND MANAGEMENT OF THE COMPANY
2.1.1 The Company was duly incorporated on January 31, 2006, as a
private company according to the Companies Law, 5759-1999.
2.1.2 The Company is registered with the Registrar of Companies as an
active company; no act has been made by the Company and/or its
Shareholders and/or by any other party, in the past or the
present, for the winding up and/or receivership thereof and/or to
strike it from the records of the Registrar of Companies, nor is
any intention to do any of the foregoing known.
2.1.3 The statutory documents comprising the up-to-date, certificate
of incorporation and articles of association of the Company, are
attached hereto as APPENDIX 2.1.3.
2.1.4 The minute book of the Company which was delivered to the
Purchaser's legal advisors contains full and true copies of all
the resolutions that have been passed by any of the Company's
organs since its incorporation. The Company's books have been
kept in accordance with the law, including the Companies Law.
2.1.5 The Company, its directors and the Shareholders will by, and as
of the Closing Date, execute all the acts required and adopt all
the resolutions and approvals necessary for the Company and the
Shareholders to enter into this Agreement and for performing and
completing the Agreement, the operations and transactions
described therein and their undertakings thereunder, including
the transfer of shares from the Shareholders to the Purchaser and
duly allotting shares to the Purchaser in accordance with this
Agreement, and according to the Company's documents of
incorporation, including the registration thereof in the register
of members and the issue of share certificates. The Company and
the Shareholders are fully empowered and authorized as required
to sign this Agreement and effect and complete their undertakings
under the Agreement and the Appendices thereto, and this
Agreement constitutes a lawful obligation of, and is binding
upon, the Company and the Shareholders in accordance with its
terms. The execution and performance of this Agreement as stated
do not require registration or the receipt of any approval from
any sovereign or other body that has not been received, and do
not contradict or deviate from the statutory documents of the
Company, or any contract, undertaking or restriction to which, or
subject to which the Company and/or the Shareholders are a party.
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2.1.6 The managing directors of the Company are Xx. Xxxxxx Xxx and Xx.
Xxxxx Xxxxxxxx.
2.1.7 The general signature rights of the Company are as set out in
APPENDIX 2.1.7.
2A.1 PURCHASE OF THE ASSETS AND ACTIVITY OF SHAMIR SALADS INDUSTRIES LTD.
The Company acquired, in January 2006, the activity and assets of
Shamir Food Industries Ltd., public company No. 520040403
(hereinafter: "SHAMIR FOOD INDUSTRIES LTD.") within the framework of
winding up proceedings of Shamir Food Industries Ltd., as set out
below in this clause:
2A.1.1 Fixed equipment of Shamir Food Industries Ltd., as set out in
the appraisal attached hereto as APPENDIX 2A.1.1, it being
clarified that part of the equipment has been sold/replaced in
the ordinary course of business;
2A.1.2 Goodwill, including all the goodwill relating to the fields of
business of Shamir Food Industries Ltd.;
2A.1.3 All intellectual property of Shamir Food Industries Ltd.,
including all the trade marks; the right to use the name 'Shamir
Salads', the trade names; merchandise marks; brand names;
customer list; backlog of customer orders;
2A.1.4 All rights of Shamir Food Industries Ltd., according to written
or oral agreements;
2A.1.5 The rights and obligations of Shamir Food Industries Ltd., by
virtue of the lease agreements between it and the owners of the
properties in which the Company's factory is situated in the
Xxxxxx Industrial Zone having an area of some 4,200 sq. meters;
and also by virtue of a lease agreement of the distribution
center of Shamir Food Industries Ltd., that is located in Haifa.
2A.1.6 The stock of products and raw materials of Shamir Food
Industries Ltd.;
The above rights and assets will be hereinafter called:- "THE
SHAMIR ACQUIRED ACTIVITY".
The Shamir Acquired Activity was transferred to the Company's
full and exclusive ownership the same being, in all its
components, free and clear of all and any Third-party Rights and
remains vested in the full and exclusive ownership of the
Company.
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The purchase of all the activity and assets of Shamir Food
Industries Ltd., by the Company as set out in this clause above
will be hereinafter called:- "THE AGREEMENT TO PURCHASE THE
ASSETS OF SHAMIR FOOD INDUSTRIES LTD.".
The Shareholders and the Company declare that the Agreement to
Purchase the Assets of Shamir Food Industries Ltd., received on
January 29, 2006, the absolute and final approval of the Tel Aviv
District Court and that such decision has not been varied in any
manner or form whatsoever.
2.2 LICENSES AND PERMITS
2.2.1 Subject as provided in clause 2.2.2 hereof, the Company holds
all the concessions, permits, licenses and any like authorization
that is required to conduct and operate its activity, including,
without derogating from the foregoing, those required for the
purpose of the manufacture, storage and marketing by the Company
and there is nothing to prevent the renewal thereof. All licenses
are in full force and effect and the Company has not infringed
any of them nor has it received notice of such infringement of
any of the licenses or other like authorization that are Material
to its business and/or its rights and/or assets and/or which
could adversely and materially affect any of the foregoing and/or
damage or impinge on the manufacturing and marketing activities
of the Company and the execution and performance of this
Agreement do not infringe and/or derogate from and/or prejudice
any of the licenses and/or lead to the revocation or termination
thereof.
2.2.2 The Company does not currently hold a business license and
manufacturer's license in relation to its manufacturing plant in
Xxxxxx. The Company and the Shareholders estimate that such
licenses will be obtained within a short time and are currently
in the course of discussion with the authorities on the subject.
CLAUSE 2.2.2 OF THE DISCLOSURE APPENDIX attached hereto contains
details of the circumstances describing the reasons for the
absence of such business license and manufacturer's license as
well as the activity that has been done until now and which is
required to obtain them.
2.2.3 Without derogating from that stated in clause 2.2.2 above, the
Company complies with all the operating conditions required by
the Ministry of Health and the local authority for carrying on
the Company's business as well as all the conditions that are
required by the various kashrut authorities (including the
Rabbinate and BADATZ of the HAREDI community and they
declare that the Company will continue to meet such conditions
also after the Closing Date.
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2.3 REGISTERED AND ISSUED SHARE CAPITAL
2.3.1 The registered share capital of the Company is 10,000 Shekels
divided into 10,000 ordinary shares of NIS 1.00 par value each.
The issued share capital of the Company is 270 ordinary shares
divided into 180 ordinary of NIS 1.00 shares par value each that
are held by the two Shareholders in equal shares (hereinafter:
"THE ISSUED SHARES") and 90 ordinary NIS 1.00 par value shares
each that are in the ownership of the Company and which are
dormant shares within the meaning of section 308 (a) of the
Companies Law, 5759-1999 (hereinafter: "THE DORMANT SHARES"). As
of the Closing Date the Dormant Shares are owned by the Company
and have not been transferred and/or disposed of by the Company
and do not confer any right whatsoever, either on any of the
Shareholders or on any third party. The purchase of the Dormant
Shares was effected in accordance with the law, and pursuant to
the provisions of the Companies Law. The Company will take action
to cancel the Dormant Shares to the extent this is possible with
the prior concurrence of the Purchaser.
2.3.2 The Issued Shares and the Dormant Shares jointly constitute 100%
of the issued and paid up share capital of the Company and save
for those shares, no third party, including, without derogating
from the generality of the foregoing, any of the Shareholders,
has any share of the Company and/or any right to any kind
whatsoever to receive shares of the Company, with the exception
of the Purchaser's rights according to this Agreement.
2.3.3 The Shareholders are the sole owners of the Issued Shares and
all the rights therein and the Issued Shares are free and clear
of all Third-Party-Rights. Without derogating from the generality
of the foregoing, the Shareholders declare and undertake that the
charge over the Issued Shares that is registered in favour of Tao
Yield Ltd., is not valid and that they will take action to remove
the same at the Registrar of Pledges immediately after the
execution of this Agreement and not later than the Closing Date.
2.3.4 IMMEDIATELY AFTER THE CLOSING DATE AND SUBJECT AS PROVIDED IN
THIS AGREEMENT, THE ISSUED AND PAID UP SHARE CAPITAL OF THE
COMPANY WILL BE 368 ORDINARY SHARES OF NIS 1.00 PAR VALUE EACH
DIVIDED AS FOLLOWS:
142 ORDINARY SHARES OF NIS 1.00 PAR VALUE EACH THAT ARE HELD BY
THE PURCHASER AND WHICH CONSTITUTE 51% OF THE AGGREGATE ISSUED
SHARE CAPITAL OF THE COMPANY (WITH THE EXCEPTION OF THE DORMANT
SHARES).
136 ORDINARY SHARES OF NIS 1.00 PAR VALUE EACH THAT ARE HELD BY
THE SHAREHOLDERS IN EQUAL SHARES AND WHICH CONSTITUTE 49% OF THE
AGGREGATE ISSUED SHARE CAPITAL OF THE COMPANY (WITH THE EXCEPTION
OF THE DORMANT SHARES).
And in addition, 90 Dormant Shares, as described above.
2.3.5 The issued share capital of the Company is fully paid up and the
Company has not issued any other shares, options or other
securities that confer or which may confer on any person voting,
management or other rights of the Company.
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2.3.6 The Company and the Shareholders have not undertaken orally
and/or in writing to allot and/or transfer and/or sell to any
person rights in the Company including shares or options to
purchase shares, securities, convertible securities and
debentures of the Company (except for the Company's undertaking
to allot the Allotted Shares and/or transfer the Shares Sold
under this Agreement), and no undertaking whatsoever, whether
oral or in writing of the Company and/or the Shareholders to
allot other shares or other securities of the Company to any
third party exists, including the Company's employees, and no
option or other right to acquire shares or securities of the
Company has been granted to any third party.
2.3.7 The Shares Sold and the Allotted Shares will, at the time of
their issue and transfer on the Closing Date into the Purchaser's
name and possession as set out in this Agreement be lawfully
transferred, fully paid up and free of all and any debts,
actions, charges, pledges, attachments, trusts or any other
Third-party or other right and will be duly registered in the
name of the Purchaser in the register of shareholders of the
Company and with the Registrar of Companies. To the extent any
consent is required from the Shareholders to issue and allot the
Allotted Shares to the Purchaser under this Agreement, the
Shareholders by signing this Agreement, hereby grant such
consent. For the avoidance of any doubt, the Shareholders hereby
waive any preferential right whatsoever in relation to the
Allotted Shares and the Shares Sold.
2.3.8 As from the Closing Date, the Shares Sold and the Allotted
Shares will confer upon the Purchaser all the rights that are
conferred on a shareholder in the Company who holds fully-paid-up
ordinary shares of the Company, as set out in the Company's
articles.
2.4 DIVIDEND
From the date of its incorporation, the Company has not distributed
dividend of any kind whatsoever to its Shareholders. The parties to
this Agreement agree that the Company will endeavour to maintain a
dividend distribution policy whereby the Company will distribute some
33% of its profits that are available for distribution as dividend,
each year.
2.5 BOARD OF DIRECTORS
2.5.1 The sole directors of the Company currently serving as of the
date of the execution of this Agreement are Xx. Xxxxx Xxxxxxxx
and Xx. Xxxxxx Xxx (hereinafter: "THE DIRECTORS"). The Directors
were lawfully appointed pursuant to the statutory documents of
the Company.
2.5.2 The Company has no agreements, undertakings or understandings in
writing or verbal in connection with any remuneration or payment
that will be paid to the Directors of the Company by virtue of
their position as such. In addition, save as set out in this
Agreement and in the articles of the Company attached hereto as
APPENDIX 2.1.3, the Company has no written or verbal agreements,
undertakings or understandings relating to the appointment of
other directors of the Company.
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2.6 FINANCIAL REPORTS
2.6.1 The audited financial reports of the Company as of December 31,
2006 (including a balance sheet and profit and loss statement)
are attached hereto as APPENDIX 2.6.1A (hereinafter: "THE ANNUAL
FINANCIAL REPORTS"), and the quarterly reviewed financial reports
of the Company as of September 30, 2007, are attached hereto as
APPENDIX 2.6.1B(hereinafter: "THE REVIEWED REPORTS") (the Annual
Financial Reports and the Reviewed Reports being hereinafter
called: "THE FINANCIAL REPORTS"). The Financial Reports have been
drawn pursuant to accepted accounting principles in Israel for
private companies of the Company's type and consistently for the
previous years and that such Reports fully and properly and
accurately reflect, in accordance with accepted accounting
principles the position of the assets, rights and liabilities,
debts, capital and business results of the Company as of the
dates mentioned above, as appropriate.
2.6.2 The Company has no debt or undertaking whether crystallised or
not, directly or indirectly, which the Company ought to have
included in the Financial Reports pursuant to accepted accounting
rules in Israel and which have not been included therein.
2.6.3 Save as set out in CLAUSE 2.6.3 OF THE DISCLOSURE APPENDIX
attached hereto, during the period commencing from September 30,
2007, (hereinafter: "THE DATE OF THE FINANCIAL REPORTS"): (1) no
material change has occurred in the financial position or assets
of the Company; (2) no change has occurred that adversely and
materially affects or which might affect the businesses of the
Company, its assets, undertakings, capital or business results as
they are reflected in the Financial Reports; (3) no transactions
other than in the ordinary course of business of the Company have
been made; (4) no key employee has left the Company or given
notice of his intention to leave since that date; (5) no
significant change has occurred in the salary or working
conditions of any of the Company's employees nor have any new
employees been recruited whose terms of employment are at
variance with that customary in relation to the Company's
remaining employees; (6) the Company has not waived any right or
debt whatsoever to the Company's benefit; (7) no change or
amendment has been made to any agreement or arrangement to which
the Company is party; and (8) no Third-party Rights have been
granted over the Company's assets. Since the Date of the
Financial Reports the Company has not become party to any
irregular transaction nor has any business been carried on
between the Company and interested parties in the Company and no
monies whatsoever from the Company have been drawn by its
Shareholders (and/or any interested parties therein) and/or by
interested parties therein (directly or indirectly, nor has any
resolution been passed whereby interested parties in the Company
are entitled to draw any monies from the Company and all of its
businesses have been conducted in the ordinary course of
business. Irregular transaction' for the purposes of this clause
bears the meaning ascribed thereto in the Companies Law.
2.6.4 The debts to the Company are as set out in the Financial
Reports. As of the date of this Agreement, no cause has arisen
for the non-payment, setoff or reduction of any of the above
debts nor is the Company aware of any refusal on the part of the
debtors to pay their respective debts to the Company or of any
defense that is available to any of them against the making of
the payment or performance thereof on due date.
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2.7 AGREEMENTS; SUPPLIERS AND RETAILERS
2.7.1 Save for the agreements and/or transactions set out in the
schedule attached in CLAUSE 2.7.1 OF THE DISCLOSURE APPENDIX
attached hereto, the Company and/or the Shareholders (in
connection with the Company), are not a party, whether in writing
or verbally, to any Material Agreement, Material Engagement or
Material Transaction or any proposal for a Material Transaction
and as of the date of the execution of this Contract, the Company
is not in the course of negotiating in relation to the entering
into of any other Material Agreement.
2.7.2 The Material Agreements and/or Engagements and/or Transactions
have not been breached by the Company and, to the best of the
Company's and Shareholders' knowledge, no claim on the part of
the other parties to the Material Agreements exists against the
Company; and the signature of this Agreement and/or the allotment
of the Allotted Shares and/or the transfer of the Shares Sold to
the Purchaser does not amount to a breach of the Material
Agreements and/or any ground for the rescission and/or
termination thereof.
2.7.3 CLAUSE 2.7.3 OF THE DISCLOSURE APPENDIX attached hereto contains
a list of all the suppliers, customers and retailers of the
Company, the working conditions with them and extent of the work
with them.
2.8 ASSETS
2.8.1 The tangible assets and material equipment set out in CLAUSE
2.8.1 OF THE DISCLOSURE APPENDIX attached hereto (hereinafter:
"THE ASSETS AND EQUIPMENT") constitute a full description of the
Assets and Equipment that are OWNED by the Company and that the
Assets and the Equipment are fully owned by the Company and free
and clear of all and any Third-party Right except for the charges
set out in clause 2.10 hereof.
2.8.2 CLAUSE 2.8.2 OF THE DISCLOSURE APPENDIX attached hereto
constitutes a full and true list of all the Assets, including,
without limitation, real estate assets (hereinafter: "THE LEASED
PROPERTIES"), that are used by or which the Company has a right
to use and which ARE NOT OWNED by the Company. CLAUSE 2.8.2 OF
THE DISCLOSURE APPENDIX ATTACHED CONTAINS DETAILS REGARDING THE
NAMES OF THE LESSORS, LANDLORDS OR OWNERS OF THE ABOVE
PROPERTIES. THE ASSETS DESCRIBED IN CLAUSE 2.8.2 OF THE
DISCLOSURE APPENDIX ARE FREE AND CLEAR OF ALL THIRD-PARTY RIGHTS
EXCEPT FOR THE CHARGES DETAILED IN CLAUSE 2.10 HEREOF.
2.8.3 All the Assets mentioned in Clauses 2.8.1-2.8.2 above
(hereinafter: "THE EXISTING COMPANY ASSETS") are free and clear
of all and any debts, demands, charges, pledges, mortgages and
Third-party Rights (subject to the charges mentioned in clause
2.10.2 of the Disclosure Appendix) (save as set out above), and
no cause of action whatsoever exists that would prevent or limit
by agreement or law the use of all of those Assets, after the
Closing Date. The Existing Company Assets mentioned constitute
all the assets that are required for the purpose of carrying on
the Company's business as they exist and as it intends carrying
them on in the near future.
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2.8.4 INTELLECTUAL PROPERTY
2.8.4.1 CLAUSE 2.8.4 OF THE DISCLOSURE APPENDIX attached hereto
constitutes a full and true list of all the Intellectual
Property, including trade marks, trade secrets, patents, to
the extent they exist, whether registered or unregistered,
and which are owned by the Company (hereinafter: "THE
INTELLECTUAL PROPERTY"). CLAUSE 2.8.4 OF THE DISCLOSURE
APPENDIX attached hereto sets out the date of the
registration, to the extent the Intellectual Property has
been registered, the date of lapse as well as every
important particular regarding restrictions or permits to
use the Intellectual Property.
2.8.4.2 The Shareholders declare that the Company is the
exclusive owner of the Intellectual Property, including, and
without limitation, the trade marks 'Shamir Salads';
'Shamir'; 'Shamir Salads Family of Salads'; and 'Shamir AL
HAKEFAK', in all of their forms of use in the field of
salads, spreads and HOUMUS cooked and processed products
(hereinafter: "THE TRADE MARKS").
Without derogating from the foregoing, the Shareholders and
the Company hereby declare that notwithstanding the fact
that registration of the title to the Trade Marks has yet to
be transferred at the Registrar of Trade Marks in the
Company's name, and the party who is registered as
proprietor of the Trade Marks, if it is registered, is
Shamir Food Industries Ltd., (and from whose liquidator the
Company acquired all of its assets, including its Trade
Marks), the Trade Marks belong to and are in the full
ownership of the Company. The Company and the Shareholders
will use their best endeavours to register the Trade Marks
that belong to the Company, in its name, and will further
use their best efforts to transfer and register in the
Company's name all the Trade Marks that belonged to Shamir
Food Industries Ltd., to the extent there are such, by the
Closing Date.
2.8.4.3 The Company has received no notice from any third party
claiming the infringement or expected infringement of any
patent, Trade Xxxx, service xxxx, trade name, copyright or
professional secret or other proprietary rights of any
person or other body. The Company has not infringed and is
not infringing the trade marks and names and/or copyright
and/or other intellectual property rights of any other
parties.
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2.9 XXXXXX
2.9.1 All the real estate properties held by the Company are held on a
lawful lease and according to the leases set out in the schedule
attached in CLAUSE 2.9.1 OF THE DISCLOSURE APPENDIX attached
hereto (hereinafter:- "THE LEASES").
2.9.2 No fundamental breach of the Leases has been committed by the
Company and, to the best of the Shareholders' knowledge, no claim
exists on the part of the counterparties to the Leases against
the Company and the signature of this Agreement and the sale and
allotment of the Allotted Shares and/or the sale and transfer of
the Shares Sold to the Purchaser shall not constitute a breach of
the Leases and/or lead to the termination thereof and/or to any
of the conditions of the Leases being varied.
2.10 CHARGES/GUARANTEES/LOANS
2.10.1 The Company has not guaranteed on behalf of the Shareholders or
any other parties whatsoever nor has it granted on the
Shareholders' and/or other parties' behalf any charges or
securities to secure debts and liabilities other than that of its
own. Save as set out in CLAUSE 2.10.1 OF THE DISCLOSURE APPENDIX
attached hereto, no guarantees and/or securities and/or indemnity
letters exist that have been given by the third parties on the
Company's behalf. The Company has no liabilities for indemnity or
compensation, save as set out in this Agreement and the
Appendices thereto.
2.10.2 As of the Closing Date, no Third-Party rights exist over the
Company's assets nor will any liability exist to grant such
Third-Party Rights, save for the charges in favour of the banks
set out in CLAUSE 2.10.2 OF THE DISCLOSURE APPENDIX attached
hereto. The signature of this Agreement, performance thereof and
the allotment of the Shares Allotted and/or the transfer of the
Shares Sold to the Purchaser will not give rise to any ground for
exercising or accelerating any Third-Party Rights.
2.10.3 The Shareholders declare that they have provided personal
guarantees to suppliers and banks for the performance of the
Company's undertakings. Details of the guarantees and extent
thereof are set out in CLAUSE 2.10.3 OF THE DISCLOSURE APPENDIX
attached hereto.
2.10.4 The Shareholders declare that they have made every effort to
disclose to the Purchaser all and any information and/or document
regarding all of the personal guarantees that they have signed as
stated above. Notwithstanding this, it is agreed that if,
following a mistake made in good faith isolated guarantees have
been overlooked which are not material, and on condition that
they were signed in good faith prior to the date of the execution
of this Agreement, clause 3.3 below, whereby the Purchaser will
indemnify the Shareholders in respect of those guarantees to the
extent of its share in the Company, as provided in this Agreement
will similarly apply to such general guarantees.
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2.10.5 The Shareholders declare that they advanced for the benefit of
the Company a loan in the sum of NIS 3.5 million (hereinafter:
"THE OWNERS', LOAN"), as set out in the Financial Reports, such
sum bearing no linkage and/or increments whatsoever. The parties
agree that the maturity date of the Owners' Loan will fall
immediately after the transfer of the Advance (as hereinafter
defined) to the Company (hereinafter: "THE OWNERS' LOAN REPAYMENT
DATE"). For the avoidance of any doubt it is clarified that the
Company will, on the Owners Loan Repayment Date, repay the
Owners' Loan in full (that is: NIS 3.5 million).
2.11 TAX ASSESSMENTS
2.11.1 The Company has completed and filed on due date all the returns
required according to the tax legislation in Israel. No
litigation and/or dispute or negotiations between the Company or
the tax authorities exist that pertain to any tax assessments of
the Company for any terminated fiscal year, and neither the
Company or the Shareholders are aware of facts that could cause
any litigation or dispute between the Company and the tax
authorities with respect to the self-tax assessments that they
filed with the tax authorities. The Company has fulfilled all the
requirements to which it was subject as prescribed in the tax
laws in Israel, including income tax, VAT, Land Appreciation Tax,
to the extent it applies. The Company has paid all and any taxes,
levies or fees that it was required to pay by law.
2.11.2 Adequate provision has been made in the Financial Reports for
all the as-yet-unpaid tax liabilities by the Company as of the
date of the Reports.
2.11.3 The Company has given all the notices that it is required or
bound to give by law to every sovereign body. The Company has
paid all the necessary payments required by law to every
sovereign authority.
2.11.4 The Company is not behind in filing any material statement or
payment with the tax authorities by law.
2.12 EMPLOYEES AND CONSULTANTS
2.12.1 IN CLAUSE 2.12.1 OF THE DISCLOSURE APPENDIX attached hereto are
set out all the employees and consultants employed by the Company
("THE COMPANY'S EMPLOYEES") with the statement of their names,
description of functions and details of the date of the
commencement of each employee's employment, the amount of his/her
gross salary, outstanding vacation leave due, the details of
severance pay reserves on behalf of the particular employee and
details regarding any other benefit that he/she receives,
including pension fund, in-house training funds and the like. The
Company fulfils all statutory requirements in connection with the
working conditions of all of the Company's employees. Some of the
Company's employees described in clause 2.12.1 of the Disclosure
Appendix are signed up on employment agreements that contain
non-disclosure and non-competition undertakings.
12
2.12.2 The Company has made, as of the date of the Financial Reports,
all the payments and provisions required in the Financial Reports
in respect of all of the Company's employees, including in
respect of the appointment of the Shareholders and/or any of the
members of their families, fully and punctually in accordance
with any agreement and law, including all the payments that are
required and the provisions necessary in respect of severance
pay, vacation, providence pay, national insurance, provident
funds, manager's insurance, pension funds and in-house training
funds, acclimatisation period, bonuses and prior notices; and the
Company has no liabilities as of the date of the above Financial
Reports in respect of payments to any of the Company's employees
including the Shareholders and any of the members of their family
mentioned above that has not been expressed in the Financial
Reports. Such provisions in the Financial Reports cover the full
amount of the Company's liabilities in respect of the termination
of employer-employee relationships.
2.12.3 As from the date of the Annual Financial Reports, the Company
has deposited and/or made the required accounting provision to
cover the above liabilities for the period mentioned and no
change in such liabilities of the Company has been made. In
addition, the Company has fully paid (or made appropriate
provision in the Financial Reports) for all the payments on
behalf of all the Company's employees, including national
insurance contributions, income tax deductions at source and the
like.
2.12.4 The Company was not and is not party to any labour disputes
and/or any collective wage agreement. The Company's employees
have no right in relation to the Company's assets or any of them,
including its Intellectual Property assets.
2.12.5 Without derogating from the foregoing, the Company and the
Shareholders declare that the Company has no debts and/or
liabilities to pay any sum whatsoever to any of its employees,
including all the required payments and necessary provisions in
respect of severance pay, vacation, provident payments, national
insurance, pension funds, managers insurance, pension funds and
in-house training funds, acclimatisation period, bonuses and
prior notice, in respect of the employment of any of its
employees by Shamir Salads Food Industries Ltd., during the
period preceding the purchase of the assets of Shamir Salads Food
Industries Ltd., by the Company.
2.13 LEGAL PROCEEDINGS
2.13.1 No legal proceedings are pending against the Company and the
Company is not an accused, defendant or respondent as of the
present in any legal proceeding except for the legal proceedings
set out in CLAUSE 2.13.1 OF THE DISCLOSURE APPENDIX annexed
hereto (in this Agreement - "THE EXISTING LEGAL PROCEEDINGS").
2.13.2 There are no judgments or decisions that exist and are binding
the Company that have not been performed or remain to be
executed, and no attachments over its assets have been imposed
nor is it aware of an intention to file or institute any legal
proceeding against the Company, and no notice has been received
in connection therewith, and to the best of its knowledge, there
is no cause for any such proceeding.
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2.13.3 Save as set out in clause 2.13.3 of the DISCLOSURE APPENDIX, no
ground exists for any action against the Company and no demands
of any kind whatsoever have been received, and to the best of the
Company's knowledge, no investigation by any authority (or
intention to launch the same) is pending, and no such proceedings
are anticipated.
2.13.4 Save for the Third-party Rights by virtue of the Material
Contracts and Engagements set out in this Agreement and mentioned
in the Disclosure Appendix, and except for the creditors
described in the Financial Reports, no third parties whatsoever
have any rights against the Company nor are they aware of any
action or demand of any third party in connection with such
rights or ground for such action or demand, including any claim
or demand of any sovereign authorities (except for the legal
proceedings mentioned above), with the exception of demands in
the ordinary course of business of the Company that do not
materially affect the Company's business.
2.13.5 They are not aware of any attachment that has been imposed over
the property of the Company.
2.13.6 Save as set out in CLAUSE 2.13.6 OF THE DISCLOSURE APPENDIX
ATTACHED HERETO, the Company is not a plaintiff or applicant in
any legal proceeding in the courts in Israel or abroad.
2.14 SHAREHOLDERS' CLAIMS
2.14.1 CLAUSE 2.14.1 OF THE DISCLOSURE APPENDIX annexed hereto
contains a list of all the verbal or written agreements between
the Company and the Shareholders or interested parties therein
and between the interested parties themselves, to the extent the
same relates to the Company.
2.14.2 The Shareholders have no claims, demands or requirements
against the Company that have not been expressly expressed in
this Agreement and the Company does not owe the Shareholders any
sums on any ground whatsoever, including as employees of the
Company. The Shareholders confirm that they have received
everything that is due to them until the date of the execution of
this Agreement and that save for the Loan (as stated above in
clause 2.10.5) annexed hereto the Company does not owe them any
monies whatsoever.
2.14.3 The assets of the Company do not include debts of, or rights
against, the Shareholders.
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2.15 Bank accounts
2.15.1 The Company has bank accounts in which various credit/debit
balances exist as of December 31, 2007 as set out in CLAUSE
2.15.1 OF THE DISCLOSURE APPENDIX annexed hereto.
2.15.2 The signature rights in the bank accounts are as set out in
CLAUSE 2.15.2 OF THE DISCLOSURE APPENDIX annexed hereto.
2.15.3 Approval is required to the transaction to which this Agreement
relates from the banks to whom the Company's assets are charged
as set out in clause 2.10.2 of the Disclosure Appendix, as part
of the conditions precedent to this Agreement set out in clause
5.1 hereof.
2.16 INSURANCE POLICIES
2.16.1 The Company's property, income and liability towards third
parties is covered by insurance policies.
2.16.2 CLAUSE 2.16.2 OF THE DISCLOSURE APPENDIX annexed hereto
constitutes a full list of the insurance policies to which the
Company is a party and includes details regarding the amount of
the cover and amount of the premiums of those insurance policies,
as well as the identity of the beneficiaries. These policies
provide the suitable insurance cover customary in relation to
companies of its type and in the field of the Company's business,
and they are in force and no claim has been filed by or against
the Company in respect of such policies. The conditions of the
policies have not been infringed by the Company and, to the best
of the Company's knowledge, the Shareholders have no claim of
such breach. Save as set out in CLAUSE 2.16.2 OF THE DISCLOSURE
APPENDIX, the Company is the sole and exclusive beneficiary under
those policies, except for the charges mentioned in clause 2.10.2
of the Disclosure Appendix.
2.17 SUBSIDIARIES/INVESTEE/AFFILIATED COMPANIES
2.17.1 The Company is not a (direct or indirect) shareholder nor does
it have any share in the ownership or control of any other
corporation or business and/or partnership, whether it is
registered or unregistered, and has no rights and/or obligations
in such corporation and/or business.
2.18 REPORTS
The Company and the Shareholders declare that they are aware of the
fact and agree that the Purchaser is a public company whose shares are
currently traded on the Nasdaq and that the parent company of the
investor is a public company whose shares are currently traded on the
Tel Aviv Stock Exchange Ltd., and it is possible that the investor's
shares and/or shares of the parent company of the investor will be
traded on other exchanges in the future and that in accordance
therewith, the Company will be subject and be required to act pursuant
to the various rules that apply or will apply to companies of the
Purchaser's type, including, and without limitation, the SOX Rules and
accepted accounting rules, including the IFRS.
15
2.19 NO RECEIVERSHIP AND/OR WINDING-UP PROCEEDINGS
No receivership and/or winding-up proceedings have been taken and/or
warning exists with respect to the taking of such proceedings against
the Company and to the best of their knowledge, no ground exists for
taking such proceedings.
2.20 BROKERAGE FEES
The Company and the Shareholders have not undertaken towards any third
party to pay brokerage fees or commission or any like payment in
respect of or in connection with this Agreement.
2.21 PERFORMANCE OF STATUTORY DUTIES, ABSENCE OF INFRINGEMENT
2.21.1 The Company has fulfilled all of its duties, obligations and
liabilities by law and has not committed any fundamental breaches
of the contracts to which it is a party, unless otherwise
expressly stated in this Agreement.
2.21.2 The Company has not committed any breach that has not been
specified to the Purchaser under this Agreement or in the
Appendices thereto, of (1) the articles of association of the
Company; or (2) any promissory note, trust contract, mortgage,
tenancy contract, agreement, summons or document or other
material contract to which it is a party or under which it or any
of its assets is liable or affected thereby; or (3) any material
statutory provision or judgment of any court that applies to the
Company.
2.21.3 The signature of this Agreement by the Company and performance
of all the terms and conditions thereunder is subject to
receiving all the consents and/or approvals set out in clause 5
hereof, with the exception of that set out in this Agreement
and/or the Appendices thereto, and the same will not deviate from
or infringe any condition, stipulation or term of (1) the
articles of association of the Company; or (2) any judgment,
order, injunction or mandatory order of any court or
governmental, local or foreign authority to which the Company is
subject; or (3) any material contract, agreement, tenancy
agreement, license or undertaking to which the Company is party
or subject to, which breach could affect the Company's ability to
sign or perform this Agreement; the signature and performance of
the Agreement in accordance with such conditions: (1) will not
confer upon others any financial or other right, including rights
to brokerage fees, termination, cancellation or preferential
rights under any material contract or undertaking or in
connection with any material property of the Company; (2) will
not require the receipt of the consent or approval of any person
that has not yet been received on the date of the Agreement.
2.22 IMPEDIMENT
Subject to the fulfilment of the conditions precedent set out below in
clause 5, there is no legal, contractual or other impediment to the
Company and the Shareholders entering into this Agreement and
performing their obligations thereunder.
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2.23 DUE DISCLOSURE
2.23.1 The Shareholders and the Company have made full and proper
disclosure to the Purchaser in writing of all the facts,
documents and details which could be important to a reasonable
investor considering the purchase of securities of a company, and
neither the Company nor the Shareholders are aware of any
material fact that has not been included in this clause 2, the
non-disclosure of which is misleading in the circumstances or
which could cause a reasonable investor and/or the Purchaser to
decline to enter into this Agreement.
2.23.2 Neither the company nor the Shareholders have any material
information that is not contained in this clause 2 which could
have a material impact on the Purchaser's evaluation of the
Company's property and assets, business activity, goodwill,
rights and obligations and the like.
2.23.3 All the information that has been given by the Company and/or
the Shareholders and/or by any person on their behalf to the
Purchaser or to any person on its behalf during the negotiations
leading up to the execution of this Agreement, whether same was
requested by the Purchaser or not, is, to the knowledge of the
Company and/or the Shareholders, true as of the date on which it
was granted, the date of the execution of this Agreement and the
Closing Date.
2.23.4 If, during the Interim Period, any information will come to the
knowledge of the Company and/or the Shareholders regarding any
material change that could make the representations given above
untrue or incomplete, they undertake to bring the details of such
change to the knowledge of the Purchaser.
2.24 The Company and the Shareholders are aware that the Purchaser is
entering into this Agreement with them inter alia based on the
statements, representations and undertakings set out in this Agreement
and in the Appendices thereto.
2.25 That subject to the truthfulness of the representations described in
this clause 2 above, and subject to the fulfilment of the Purchaser's
undertakings under this Agreement, the Company and/or the Shareholders
neither have nor will have any claim against the Purchaser in
connection with the sale of the Shares Sold and allotment of the
Allotted Shares to the Purchaser under this Agreement.
2.26 They are aware that the Purchaser is entering into this Agreement with
them inter alia based on the statement by the Shareholders and the
Company that in addition also after the allotment of the Allotted
Shares and transfer of the Shares Sold the Company and its employees
(including the managing directors of the Company) will continue to act
in the same manner and with the same professionalism in the field of
salads as existed prior to the implementation of the transaction to
which this Agreement relates.
17
2A. UNDERTAKINGS OF THE SHAREHOLDERS AND THE COMPANY
Without derogating from any other provision herein contained, the
Shareholders jointly and severally undertake towards the Purchaser as
follows:-
2A.1 LICENSES AND APPROVALS
2A.1.1 The Shareholders hereby declare that they are aware that the
Purchaser has agreed to enter into this Agreement with them
solely on the basis of and subject to the undertaking and
personal guarantee of the Shareholders to the effect that the
Company will hold all the Licenses (as hereinafter defined) and
these will be obtained at the latest by the end of 2008. It is
clarified that to the extent for any reason whatsoever, the
Licenses will not be obtained by the end of 2008, the
Shareholders will continue to guarantee and be committed to
obtain the same until they are effectively obtained.
2A.1.2 The Shareholders hereby undertake and declare that they are
personally responsible and guarantee the fact that the Company
will comply with all the conditions required by the Ministry of
Health, the local authority and/or any other authority for the
purpose of carrying on the Company's business and that the
Company will hold all the concessions, permits and licenses
and/or any other like authority to the extent they exist, and
which are material to the continuation of the management of the
Company's business, activity and operation in a proper and
regular manner including also a business license and
manufacturer's license relating to the Company's plant in Xxxxxx
(hereinafter: "THE LICENSES") and make every effort in order for
these to be obtained by the end of 2008.
2A.2 EFFLUENT FACILITY
To bear full responsibility for setting up a facility to handle
industrial waste and all aspects incidental thereto, in the area of
the Company's plant located in the Xxxxxx Industrial Zone according to
all the requirements and instructions of the competent authorities on
the matter from the Company in a manner whereby it will comply with
every standard and/or direction and/or law that the Company is
required to meet in order to continue its activity on a regular and
continuing basis (hereinafter: "THE EFFLUENT FACILITY"), and also that
they bear full and exclusive responsibility for every installation
that is ancillary to and required in order to set up the Effluent
Facility. The parties agree that the Company will bear the setup costs
of the Effluent Facility up to an aggregate amount of NIS 500,000 and
that any sum or expense beyond this amount in connection with the
setting up of the Effluent Facility will be immediately paid by the
Shareholders, jointly and severally.
2A.3 REGISTERED AND ISSUED SHARE CAPITAL
To the extent it transpires that any liability whatsoever to allot
shares or options or other securities that are convertible,
exchangeable or realisable for shares of the Company exists (except
for the Company's undertaking to allot the Allotment Shares to the
Purchaser) contrary to the Company's and Shareholders' declaration
contained in clause 2.3 above, shares or options or securities will be
allotted on account of the Company's shares that are held by the
Shareholders, and in no case will the Purchaser's holdings in the
Company be diluted.
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2A.4 INTELLECTUAL PROPERTY
To act at the Company's expense to transfer the registration of the
title to the trade marks from the name of Shamir Food Industries Ltd.,
to the name of the Company immediately and additionally to act at the
Company's expense and induce Shamir Food Industries Ltd., to change
its name so that the words "Shamir" and "Food" will not appear in its
name, to the best of their ability, within three (3) months at the
most of the date of the execution of this Agreement. To the extent
such company will not change its name as requested above, the
Purchaser will be entitled to demand that the Company will change its
name to that which will be directed by the Purchaser.
2A.5 DELIBERATELY LEFT BLANK
2A.6 EMPLOYEES AND CONSULTANTS
To solely bear all and any payments that the Company and the Purchaser
will be required to bear in respect of the employment of any of its
employees by Shamir Salads Food Industries Ltd., prior to the purchase
of the assets of Shamir Salads Food Industries Ltd., by the Company.
2A.7 LEGAL PROCEEDINGS
Without derogating from the generality of that stated in clause 2A.6
above, to solely bear all and any costs, payments and expenses that
will be borne or demanded of the Company and/or the Purchaser, either
for payment by a judgment and/or any other legal proceeding in respect
of the employment of any of the Company's employees by Shamir Food
Industries Ltd., prior to the purchase of the assets of Shamir Food
Industries Ltd., by the Company.
3. DECLARATIONS AND REPRESENTATIONS OF THE PURCHASER
The Purchaser declares and undertakes as follows:
3.1 The Purchaser acknowledges to the Company and the Shareholders that it
has been afforded an opportunity to ask questions and obtain material
with respect to the Company, but it is hereby clarified and agreed
that this will not impinge on the Company's and Shareholders'
responsibility towards the Purchaser by virtue of this Agreement,
including with respect to the truthfulness of the representations as
set out in clause 2 above.
3.2 That subject to the fulfilment of the conditions precedent contained
in clause 5 hereof, the Purchaser has the power and authority to enter
this Agreement and perform all the undertakings resulting therefrom
and there is nothing by agreement or law to prevent the Purchaser from
entering into this Agreement and performing any of the terms thereof.
19
3.3 That it will bear responsibility towards and indemnify the
Shareholders them in respect of the personal guarantees that the
Shareholders provided as described in clause 2.10.3 of the Disclosure
Appendix, according to the attached list, respectively according to
the Purchaser's relative share of the issued and paid up share capital
of the Company in relation to the Company's activity as from and after
the Closing Date, subject to the correctness of the representations
contained in clause 2 above. Notwithstanding this it is agreed that
if, following a mistake made in good faith isolated guarantees have
been omitted, and on condition that they were signed prior to the
Closing Date and are not material, this clause will similarly apply to
those personal guarantees whereby the Purchaser will indemnify the
Shareholders in respect of those guarantees in accordance with its
proportionate share of the Company in relation to the period following
the Closing Date.
3.4 It is clarified that new guarantees that will be required, if at all,
will be signed by the Shareholders, including the Purchaser, each
according to its respective share of the Company (it being clarified
that the Purchaser will limit in advance its guarantee to the rate of
its holding in the Company, multiplied by the amount of the debt).
4. THE TRANSACTION AND CONSIDERATION
4.1 The Company will, on the Closing Date, allot to the Purchaser and the
Purchaser will accept by allotment from the Company, the Allotted
Shares and the Shareholders will transfer to the Purchaser and the
Purchaser will accept from the Shareholders, the Shares Sold. The
total to be received by the Purchaser on the Closing Date is 142
ordinary NIS 1.00 par value shares each of the Company that will,
immediately after the delivery thereof to the Purchaser, constitute
51% of the issued and paid up share capital of the Company, on the
basis of a full dilution (based on the Company's and Shareholders'
declaration to the effect that no rights or securities convertible
into shares have been allotted in the Company and eliminating the
Dormant Shares) (the Shares Sold and the Allotted Shares being
hereinafter called: "THE SHARES PURCHASED"). The Shares Purchased
will, on the Closing Date be free and clear of all and any third party
rights as from the Closing Date, irrespective of the consideration
being payable in instalments, the Shares Purchased being fully paid-up
and there being attached thereto all the rights that are attached to
the ordinary fully paid-up shares as stated in this Agreement and in
the Company's articles of association attached hereto as APPENDIX 4.1
(hereinafter: "THE NEW ARTICLES") that will enter into effect on the
Closing Date.
4.2 In consideration of receiving the Shares Purchased and against all the
Shareholders' and Company's undertakings under this Agreement, the
Purchaser will pay to the Shareholders and the Company as set out
below, an amount in Shekels equal to the sum of five (5) times the net
annual profit after tax, eliminating the Company's capital gains for
2008, as reflected in its audited statements for 2008, multiplied by
the Purchaser's percentage holding of the Company's shares
(hereinafter: "THE CONSIDERATION"). The Company's statements for 2008
will be audited by the Company's outside accountant who will be
appointed by the Purchaser as stated below. For example: to the extent
the net profit after tax as stated will be NIS 5,000,000, the
Consideration payable will be NIS 12.75 million (51% x 5 x 5).
4.3 On the Closing Date the Purchaser undertakes as follows:
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4.3.1 To pay an advance (hereinafter: "THE ADVANCE") on account of the
Consideration in an amount being the lower of: (a) the sum of 5
(five) million new shekels or (hereinafter: "THE ADVANCE") or (b)
an amount equal to two and a half (2.5 multiplied by the weighted
annual profit of the Company after tax based on the net profit
after tax, eliminating capital gains, in the months of: August,
September, October and November 2007, jointly according to
reviewed statements that will be prepared by the accountants
Xxxxxxxxxx-Xxx-Xxxxx, and certified by the Purchaser.
The Advance will be deposited on the Closing Date in escrow, and
a daily interest deposit purchased with it by the trust company
of the Law Office of Tulchinsky, Stern, Xxxxxxxx, Xxx Zur, Xxxxx
& Co., the Purchaser's lawyers (hereinafter: "THE TRUSTEE")
and the Advance will, subject to the transfer of the Shares
Purchased to the Purchaser, be remitted to the Company and to the
Shareholders by not later than 14 days after the Closing Date, in
the manner set out below:
4.3.1.1 NIS 3,500,000 (three and a half million new shekels) will
be remitted to the bank account in the Company's name
(details of which will be transferred in writing to the
Purchaser and the Trustee) or by bank draft to its order.
This amount will be used, immediately upon the transfer
thereof to the Company's account, to fully repay the Owners
Loan in an identical amount that the Shareholders advanced
to the Company as stated in clause 2.10.4 above. As from the
date of the transfer of such sum and the actual receipt of
the monies by the Shareholders, the Company will no longer
have any debt towards the Shareholders or any person on
their behalf.
4.3.1.2 The balance of the Advance will be transferred to the
bank accounts in the name of the Shareholders (details of
which will be transferred in writing to the Purchaser and
the Trustee) or by bank draft to their order, in equal
shares between them.
4.3.2 In addition, the Purchaser will advance to the Shareholders a
loan in the sum of 1,500,000 (one and a half million new shekels)
(hereinafter: "THE LOAN"). The Loan will bear annual interest at
the prime rate (as quoted by Bank Leumi from time to time) plus
3.5% per annum (accruing on a weekly basis) from the date of the
Advance until the repayment date thereof as set out below. The
Shareholders will provide the Purchaser with their and their
spouses' personal guarantee and promissory note to secure the
repayment of the Loan (principal and interest), and further
charge by first degree registered charge in favour of the
Purchaser, all their shares in the Company to secure repayment of
the Loan amount all pursuant to the form and conditions of the
personal guarantee, the promissory note, the pledge and
certificate of pledge attached hereto as APPENDIX 4.3.2.
4.4 The balance of the Consideration that is, the amount of the
Consideration mentioned in clause 4.2 above less the amount of the
Advance set out in clause 4.3 above and less also the principal amount
of the Loan mentioned in clause 4.3.2 above, will be paid by the
Purchaser to the Shareholders by not later than 14 days after the date
of the publication of the annual audited financial statements of the
Company for 2008. It is to be clarified and emphasized that in no case
will the Consideration amount be less than the Advance.
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4.5 Insofar as the Consideration amount less the Advance will be lower
than the principal of the Loan, then the Shareholders will repay to
the Purchaser the difference within 14 days of the date of the
publication of the annual audited financial statements of the Company
for 2008, the interest on the Loan mentioned in clause 4.3.2 above
being computed on the principal portion of the Loan that exceeds the
amount of the Consideration, less the Advance.
4.6 It is to be clarified that all the payments enumerated in this section
will be paid to the Shareholders and the Company against a lawful
receipt and subject to the duty to deduct tax at source from the
amounts specified above, to the extent it applies.
5. CONDITIONS PRECEDENT
5.1 Completion of the transaction by the Purchaser on the Closing Date is
conditional on the fulfilment of all of the following conditions
precedent ("THE CONDITIONS PRECEDENT"):
5.1.1 ANTITRUST COMMISSIONER
Receipt of the unconditional approval of the Antitrust
Commissioner to this Agreement (hereinafter: "THE COMMISSIONER'S
APPROVAL").
5.1.2 APPROVAL OF THE PURCHASER'S BOARD OF DIRECTORS
Receipt of approval of the Purchaser's Board of Directors to the
Purchaser entering into this Agreement.
5.1.3 DUE DILIGENCE
On the completion of a legal, financial and commercial due
diligence investigation of the Company to the full satisfaction
of the Purchaser.
5.1.4 The truthfulness of all the Company's representations and
undertakings and those of the Shareholders contained in this
Agreement on the Closing Date and the non-occurrence of any event
which could materially affect the value of the Company or the
Company's business activity up to the Closing Date.
5.1.5 Written approval from the banks to whose benefit the Company's
property has been charged as mentioned in clause 7.2.9 below.
5.1.6 The completion of all the required Appendices by virtue of and
relating to this Agreement and all the documents ancillary
thereto to the full satisfaction of the Purchaser, at its sole
determination.
5.2 The parties will turn by way of application to the Antitrust
Commissioner to obtain the Commissioner's Approval mentioned. The
parties will co-operate for the purpose of obtaining the
Commissioner's Approval as speedily as possible, including furnishing
documentation and information respecting the Company, the Shareholders
and/or the Purchaser that will be required for the purpose of
receiving the same, provided the demand to receive the documentation
and information will be reasonable.
22
5.3 If the Commissioner's approval granted is subject to conditions ("THE
STIPULATIONS"), the grant of such Approval will be deemed to be
fulfilment of the Condition Precedent only if the Purchaser has agreed
in writing within 14 days of the date of receipt of such Approval that
all the Stipulations are agreed to by it, without exception. It is
hereby clarified that the Purchaser will be entitled not to agree to
the Stipulations for whatsoever reason, at its sole determination.
5.4 If by April 1, 2008, one or more of the Conditions Precedent
enumerated in Clauses 5.1.1-5.1.6 above will not have been fulfilled,
after the parties will have used their best endeavours to induce the
fulfilment of the Conditions Precedent pertaining to them, the
Purchaser will be entitled to declare that this Agreement is null and
void and each of the Parties will have no claims or demands against
the other parties and each party will bear its costs in connection
with this Agreement, provided that in such a case the Shareholders and
the Company will compensate the Purchaser for the amount of its costs
in respect of the transaction it being clarified that save when the
Commissioner's Approval will not have been received, the Purchaser
will be entitled - but not obliged - to waive the fulfilment of any of
the Conditions Precedent and demand the enforcement and performance of
this Agreement and performance of the Closing.
5.5 If by April 1, 2008, all of the Conditions Precedent appearing in sub
clauses 5.1.1, 5.1.4 and 5.1.5 have been fulfilled, and the Company
has delivered to the Purchaser all of the documents that are required
to complete the due diligence investigation and complete of the
condition contained in sub-clause 5.1.6, then the Company and/or the
Shareholders will be entitled to demand that the Closing Date take
place within 7 days (subject to receiving the Commissioner's Approval)
and if the Purchaser fails to effect the Closing within such period of
time, the Shareholders and the Company will be entitled to rescind
this Agreement but will not be entitled to any compensation from the
Purchaser.
6. CONDUCT DURING THE INTERIM PERIOD
6.1 The Company undertakes and the Shareholders, within the scope of their
power and rights as individual shareholders of the Company also
undertake that from the date of the execution of this Agreement until
the Closing Date neither the Company or the Shareholders or any person
on their behalf will effect any act and/or cease to effect any act
that will derogate from their undertakings under this Agreement and/or
frustrate or that could frustrate the performance thereof and will
similarly not effect any act the consequence of which will be that the
representations and declarations set out in clause 2 above will be
untrue also on the Closing Date, save for acts in the ordinary course
of business that have been brought to the knowledge of the Purchaser
in advance and in writing. The Company and the Shareholders will
notify the Purchaser and co-ordinate with the Purchaser in advance any
material act or event of the Company that could adversely and
materially affect the business position of the Company.
Without derogating from the foregoing it is agreed that as from the
date of the execution of this Agreement and thereafter until the
Closing Date:
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6.1.1 The Shareholders will cause the Company not to enter into any
material agreement withany third party except with the prior
written approval and agreement of the Purchaser thereto.
6.1.2 The Company and/or the Shareholders will not effect any change
in the registered or issued share capital of the Company nor
allot and/or undertake to allot securities of any class
whatsoever.
6.1.3 The Company and/or the Shareholders will not enter into any
agreement with any third party that pertains to the securities of
the Company.
6.1.4 No transaction will be effected with interested parties of the
Company without receiving the prior written consent of the
Purchaser.
7. THE CLOSING
7.1 Completion of the allotment of the Allotted Shares and the transfer of
the Shares Sold to the Purchaser and the registration thereof in the
register of members of the Company (hereinafter: "THE CLOSING") will
take place at the offices of Tulchinsky, Stern, Xxxxxxxx, Xxx Zur,
Xxxxx & Co., Advocates of 0 Xxxxxxxxx Xxxxxx, Xxx Xxxx at 10:00
a.m. on the Closing Date and/or at such other place as will be agreed
upon between the parties for the purpose of completing the
transaction.
7.2 On the Closing Date and as a condition for performing the Closing by
the Purchaser the Company will furnish and/or the Shareholders will
furnish to the Purchaser the following documents:
7.2.1 A copy of the resolution of the Board of Directors of the
Company in the form of the resolution attached hereto as APPENDIX
7.2.1, certified by the Company's lawyer as having been duly
passed pursuant to the statutory documents of the Company,
certifying, inter alia, the entering into of this Agreement and
full performance of the acts thereunder, including the change of
control in the Company, allotment of the Allotted Shares and that
the Allotted Shares will, upon their allotment, be fully paid.
7.2.2 A copy of a resolution of the Shareholders of the Company in the
form attached as APPENDIX 7.2.2, signed by all of the
Shareholders of the Company, certified by the Company's lawyer as
having been duly passed pursuant to the statutory documents of
the Company certifying, inter alia, the contents of the
Agreement, the entering into by the Company of the Agreement and
the full performance of the acts thereunder, including the change
of control in the Company, appointment of the two directors on
behalf of the Purchaser, allotment of the Allotted Shares and the
replacement of the Company's articles by the New Articles.
7.2.3 A return of the allotment of shares to the Registrar of
Companies, duly signed and ready for filing with the Registrar of
Companies in respect of the allotment of the Allotted Shares to
the Purchaser and the furnishing to the Purchaser of a share
certificate in respect of the Allotted Shares drawn and duly
signed in the name of the Purchaser.
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7.2.4 Instruments of share transfer duly signed by the Shareholders
relating to the transfer of the Shares Sold to the Purchaser.
7.2.5 A return of the transfer of shares to the Registrar of Companies
duly signed and ready for filing with the Registrar of Companies
in respect of the transfer of the Shares Sold to the Purchaser
and furnished to the Purchaser a share certificate in respect of
the Shares Sold drawn and duly signed in the name of the
Purchaser.
7.2.6 A return form to the Registrar of Companies of the replacement
of the Company's articles by the New Articles, and the
appointment of the directors signed by the Board of Directors of
the Company and ready for filing with the Registrar of Companies.
7.2.7 The opinion of Advocate Ram Efrati, the Company's lawyer in the
form attached hereto as APPENDIX 7.2.5 (that will, inter alia,
include an opinion with respect to the composition of the Board
of Directors of the Company, the Company's issued share capital
and the absence of any claims and breaches and the validity of
the purchase of the Shares Sold and the issue of the Allotted
Shares).
7.2.8 Directors insurance policies as customary for all of the
Company's directors as well as a letter of exemption and
indemnity relating to the Purchaser's directors in relation to
the lack of the Licenses (as hereinbefore defined) and the
establishment of the Effluent Facility, and everything involved
therein.
7.2.9 Signed confirmations of the chargees mentioned in clause 2.10.1
above of their consent to the performance of this Agreement and
all of the acts involved therein, including the allotment of the
Allotted Shares, transfer of the Shares Sold to the Purchaser,
change of control in the Company and repayment of the Owners Loan
mentioned in clause 2.10.4 above.
7.2.10 Confirmation of the owners of the real estate held by the
Company on the lease detailed in clause 2.9 above, to the
satisfaction of the Purchaser.
7.2.10 The employment agreement with Xx. Xxxxx Xxxxxxxx and Xx. Xxxxxx
Xxx as general managers of the Company mentioned in clause 8.5
hereof, to the satisfaction of the Purchaser.
7.2.11 On the Closing Date and as a condition for performing the
Closing by the Purchaser, the Shareholders will furnish a
certificate by virtue of their being directors of the Company and
being the sole shareholders of the Company, that the
representations that were given by the Company and the
Shareholders as of the date of the execution of this Agreement
are valid and true as of the Closing Date and that no event has
occurred that adversely and materially affects the businesses
and/or activity and/or worth of the Company in the form attached
hereto as APPENDIX 7.2.12.
7.2.12 On the Closing Date the Shareholders will furnish to the
Purchaser a personal guarantee in writing and promissory notes
and notices of pledge to secure repayment of the Loan (principal
and interest), pursuant as set out above in clause 4.3.2.
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7.2.13 On the Closing Date the Company and/or the Shareholders will
sign and/or furnish any document and/or certificate and/or
further agreement that will be required in connection with the
transaction to which this Agreement relates, at the reasonable
determination of the Purchaser, to the extent such certificate
will be reasonably required.
7.3 Without derogating from any of the foregoing, the Purchaser will, on
the Closing Date and as a condition for performing the Closing, sign
at its sole and absolute discretion, the working programs that the
Shareholders and the Company have submitted for the approval of the
Purchaser pursuant to clause 8.4 hereof.
7.4 All the acts will be carried out contemporaneously and none of the
acts will be of any effect as a separate transaction and none of the
documents will be deemed to have been lawfully delivered until all of
the acts provided for in this Agreement will have been completed and
until the parties will have delivered to one another complete and
finalised documents.
7.5 If by April 1, 2008, the Company and/or the Shareholders will not have
furnished all of the documents enumerated in clause 7.2 above (to the
extent additional documents will be required by the Purchaser) and/or
a material deterioration in the Company's business has occurred and/or
any of the Conditions Precedent mentioned in clause 5 above will not
have been fulfilled and the Purchaser will not have agreed in writing
(at its sole determination) to waive receipt of such a document or
such condition, then the Purchaser alone will have the right to
rescind this Agreement.
8. FURTHER AGREEMENTS
8.1 APPOINTMENT OF FINANCIAL MANAGER
It is agreed that the Purchaser will appoint a financial manager for
the Company who will be employed by the Company immediately after the
Closing Date and as part of his position will report to the Board of
Directors of the Company and to the Purchaser of the financial,
commercial and general condition of the Company.
8.2 OUTSIDE AUDITOR AND INTERNAL AUDITOR
8.2.1 The auditor serving as the Purchaser's accountant will serve as
the outside auditor for the Company who will replace the existing
auditor of the Company (hereinafter: "THE OUTSIDE AUDITOR"). The
Outside Auditor will take up his position in the Company as from
the Closing Date and will be the party to generate the financial
statements that will be used for calculating the Consideration
stated above.
8.2.2 It is agreed that the Purchaser may, at its sole discretion
decide to appoint the internal auditor who serves as internal
auditor of the Purchaser to act also as internal auditor of the
Company (hereinafter: "THE INTERNAL AUDITOR"). The Internal
Auditor will take up his position in the Company as from the
Closing Date and within the scope of his office will be entitled
to receive from the Company and its directors any document and/or
information that he will require of them, such information to be
forwarded by him in accordance with the law, to the Board of
Directors of the Company and to the Purchaser.
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8.3 PASSING RESOLUTIONS BY THE COMPANY
8.3.1 It is agreed that immediately after the Closing Date, subject to
the terms of this Agreement, the Company's Board will include
four (4) members and the composition thereof will be as follows:
Two directors will be appointed by the Purchaser, one of whom
will be the chairman of the Board.
On behalf of the Shareholders will serve as directors in the
Company Xx. Xxxxx Xxxxxxxx and Xx. Xxxxxx Xxx save that as from
the date being the later of three (3) years after the Closing
Date or the date of the termination of the service of any of the
Shareholders as director of the Company, the Shareholders may
appoint two other directors on their behalf, and in their stead.
It is clarified that within the scope of the New Articles an
appointment mechanism of directors will be provided that will
regulate situations in which any party dilutes its holdings.
8.3.2 Resolutions of the Board of Directors will be passed by a
majority vote, save that the chairman of the Company's Board who
will be appointed by the Purchaser, will have a casting vote in
the event of it not being possible to pass a resolution of the
Board of the Company by a majority vote. A casting vote means an
additional and casting vote on the Board of the Company.
8.3.3 The chairman of the Board who will be appointed by the Purchaser
will not be entitled to receive any remuneration and/or any
consideration whatsoever from the Company in respect of his
service as chairman of the Board.
8.3.4 As long as the Purchaser (and/or any permitted transferee
thereof) holds a majority of the issued share capital of the
Company, the Purchaser's directors may resolve to appoint the
managing director of the Company, as well as also on the
termination of his office.
8.3.5 Resolutions on the following matters, either by the Shareholders
of the Company or by the Company's Board and/or any committee of
the Board will require unanimous decision:
8.3.5.1 The allotment and/or issue of shares and/or securities.
8.3.5.2 Material change in the Company's business, including
entering into a material business activity that is not
numbered amongst the class of the businesses for which the
Company is intended.
8.3.5.3 The winding-up, merger or re-organization of the Company.
27
8.3.5.4 The employment of family relations of the Shareholders of
the Company, as well as any resolution to enter into an
agreement with an interested party or related party within
the meaning of those terms as contained in the Securities
Law.
8.3.5.5 Any resolution to perform acts that exceed the fields of
the Company's activity.
8.3.5.6 Any resolution concerning an irregular transaction within
the meaning of this term contained in the Companies Law.
8.3.5.7 The amendment or replacement of the Company's statutory
documents.
8.3.5.8 The sale or assignment or transfer of all or a majority
of the Company's assets.
8.3.5.9 A change in the Company's capital structure.
8.3.5.10 The authorised signatories of the Company will be a
representative on behalf of the Purchaser and a
representative on behalf of the Shareholders whose
co-signatures, together with the stamp of the Company, will
be binding upon the Company in all respects.
8.3.5.11 Any transaction and/or process involving an investment
of more than NIS 500,000.
8.4 WORKING PLAN
The Shareholders and the Company undertake to prepare a detailed
working plan and budget for the Company for 2008, including detailed
plans showing how the Company will meet the targets of such working
plan (hereinafter: "THE WORKING PLANS"). The Working Plans will be
submitted to the Purchaser for approval at least 3 days before the
Closing Date.
8.5 EMPLOYMENT AGREEMENT - XX. XXXXXX XXX AND XX. XXXXX XXXXXXXX
The parties agree that Xx. Xxxxxx Xxx and Xx. Xxxxx Xxxxxxxx will
serve as joint managing directors of the Company. The terms of their
employment by the Company are as set out in the employment agreement
in the form annexed as APPENDIX 8.5 that includes, inter alia, the
following: the undertaking of Xx. Xxxxxx Xxx and Xx. Xxxxx Xxxxxxxx to
serve as managing directors for three (3) years from the Closing Date,
subject to the Company's right to dismiss them by 60 days' prior
notice. Should the Company dismiss Xx. Xxxxxx Xxx and/or Xx. Xxxxx
Xxxxxxxx prior to such three-year period having elapsed, the Company
will bear the full amount of their monthly salary, including the
social benefits, until the end of such three-year period. This
provision will not apply in the case of dismissals involving, Heaven
Forbid, breach of faith and/or breach of fiduciary duty and/or theft
and/or any ground that does not carry entitlement to severance pay by
law, in which case no compensation will be paid. Their gross monthly
salary will be NIS 30,000 per month each, with the addition of social
benefits; Xx. Xxxxxx Xxx and Xx. Xxxxx Xxxxxxxx will be responsible
for all matters of purchasing, production, marketing, sales,
operations and logistics in the Company; Xx. Xxxxxx Xxx and Xx. Xxxxx
Xxxxxxxx will devote all of their energies and time to promoting the
affairs of the Company; Xx. Xxxxxx Xxx'x and Xx. Xxxxx Xxxxxxxx'x
undertaking not to compete with the Company's visit nor engage in the
fields of its activity within the scope of any other entity, as long
as they are employed by the Company and/or Shareholders of the Company
and for a period of twelve months thereafter.
28
8.6 FURTHER INVESTMENTS
The parties agree that to the extent the Company will need financing
from its Shareholders and, only to the extent that outside financing
cannot be obtained after the Closing Date, (either before the full
payment of the aggregate Consideration or thereafter),further
investments (including the grant of guarantees to various financing
entities), such investments will be made by the Shareholders and the
Purchaser according to the proportion of their holdings in the Company
(hereinafter- "THE FURTHER INVESTMENTS"), everything stated in this
clause being subject to the need to obtain unanimous consent to the
extent the investment in question is more than NIS 500,000, as stated
in clause 8.3.5.14 above. If any party does not wish to finance out of
its/his own pocket then the other party may dilute his/its share in
accordance with the value of the Company for the time being.
8.7 REPORTING
8.7.1 The Company will prepare quarterly reviewed financial statements
and audited annual financial statements in the form of a public
company whose securities are traded on the Tel Aviv Stock
Exchange Ltd., and the Nasdaq (USA) save that the quarterly
financial statements will be prepared within 30 days of the end
of the first quarter, the second and third quarter, as
appropriate, of each year, and the audited annual financial
statements will be published within 45 days of the end of the
year.
8.7.2 It is agreed that the Company will furnish to the Board of
Directors of the Company and its investors monthly or at such
other intervals that will be determined by the Purchaser, a
detailed operating and profit and loss statement as well as
financial, operating and/or other data that will be required by
the Purchaser, drawn to the Purchaser's satisfaction.
8.7.3 The parties agree by reason of the fact that the Purchaser is
traded on the Nasdaq (USA) and given the fact that the parent
company of the Purchaser is traded on the Tel Aviv Stock Exchange
Ltd., the Company will do all the required acts, including
adjusting the reporting and auditing setup including the
accounting audits setup of the Company to comply with all the
auditing regulations and rules that apply to a company that is
traded on the Nasdaq and the Tel Aviv Stock Exchange, including
the SOX Rules, accounting standards and IFRS, as quickly as
possible.
8.8 PUT OPTION
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8.8.1 It is agreed that the Purchaser is hereby granted for a period
of twelve months commencing from the Closing Date, a put option
to sell to the Shareholders and the Shareholders undertake to
buy, the shares purchased (hereinafter- "THE PUT OPTION"), in
consideration of an amount equal to: (a) 1.1 multiplied by - (b)
(1) the amount of the Consideration and/or the Advance, as
appropriate, plus the amount of the Loan (principal and interest)
plus (2) the amount of all the Purchaser's costs relating to this
Agreement plus (3) all the investments that the Purchaser has
made in the Company during the period commencing from the Closing
Date and expiring on the Put Option Exercise Date (as hereinafter
defined) (hereinafter- "THE PUT OPTION PAYMENT"). It is agreed
and clarified that the exercise of the Put Option will only be
enabled if and subject to prior to the exercise of the Put
Option, the Purchaser has discovered that a representation has
been infringed or an undertaking of the Company and/or of the
Shareholders that is material, has been breached.
8.8.2 Exercise of the Put Option will be effected by written notice of
the Purchaser to the Shareholders (hereinafter- "THE PUT OPTION
EXERCISE DATE").
8.8.3 The Put Option Payment will be made by the Shareholders in three
equal monthly instalments commencing from the Put Option Exercise
Date.
8.8.4 It is clarified that the sale of the shares purchased from the
Purchaser to the Shareholders in connection with the exercise of
the Put Option stated above will only be deemed to have been
completed after the full payment has been transferred from the
Shareholders to the Purchaser and only on that date will the
Purchaser transfer to the Shareholders the purchased shares.
8.9 RIGHT OF FIRST REFUSAL, TAG ALONG RIGHT
The Shareholders undertake not to sell part or all of the Company's
shares that are or will be held by them for a period of three (3)
years commencing from the Closing Date, such prohibition against sale
not to apply with respect to wholly-controlled companies, first-degree
family members or amongst the Shareholders of the Company between
themselves on condition that the transferee will be made subject in
advance and in writing to the undertakings by virtue of this Agreement
in addition to the undertaking of the Shareholders. Upon the
expiration of such three-year period mentioned in this clause the
Purchaser will have the first right of refusal regarding any sale of
the Company's shares by any of the Shareholders. It is further agreed
that the Shareholders and the Purchaser will have a tag along right on
a sale of shares by the other. The conditions of the first right of
refusal and the tag along right will be set out in the New Articles.
9. BREACHES AND RELIEF
9.1 The Company and the Shareholders declare that they are aware that the
declarations, undertakings and representations set out in this
Agreement (hereinafter: "THE REPRESENTATIONS AND THE UNDERTAKINGS")
have been given with the intention that the Purchaser will enter into
this Agreement in consequence of reliance thereon, and that the
Purchaser has entered into this Agreement in consequence of the
Representations and the Undertakings.
30
9.2 If it transpires that any material declaration, undertaking and/or
representation of the Company and/or the Shareholders is incorrect,
the Purchaser may but will not be obliged to rescind this Agreement
within three (3) years of the Closing Date.
9.3 The Purchaser will be entitled to receive, upon the Purchaser having
rescinded the Agreement as stated above, from the Company and/or the
Shareholders any amount that will be paid by it under this Agreement,
without derogating from the Purchaser's right to xxx the Company
and/or the Shareholders for all and remedies that are conferred upon
it by law and/or this Agreement.
9.4 The Shareholders hereby jointly and severally undertake to indemnify
and compensate the Purchaser promptly against and for any loss and
damage, whether direct or indirect, that will be incurred by it
following any of the Representations being untrue and/or incomplete
and/or imprecise, including, but without limitation, as a result of
the fact that the provisions set out in the financial statements will
be discovered to be insufficient or deficient. The Shareholders
further jointly and severally undertake in addition to that stated, to
indemnify and compensate the Purchaser promptly for all and any damage
and loss, whether direct or indirect, that will be incurred by it
and/or by the Company following and/or in respect of any demand and/or
claim and/or complaint on any matter relating to the Company and which
originated and/or the cause of which arose during the period preceding
the Closing Date (by way of clarification: on the assumption also that
the above Representations were correct).
9.5 clause 9.4 above is subject to all the following conditions:
9.5.1 The compensation or indemnity will be for the benefit of the
Company, the damage being caused to the Company and towards the
Purchaser, the damage having been caused to the Purchaser.
9.5.2 The compensation or indemnity will be valid and only apply to
demands for compensation and/or indemnity that will be submitted
by the end of 2010. There will be no compensation or indemnity
except in the case of the damages and/or loss exceeding the
cumulative net amount of NIS 100,000.
9.6 The Purchaser's Rights under this clause do not derogate from any
other right conferred upon the Purchaser by law and/or this Agreement.
10. LIABILITY AND INDEMNITY OF THE SHAREHOLDERS
10.1 Without derogating from their undertakings under this Agreement, the
Shareholders hereby jointly and severally declare and undertake as
follows:
10.1.1 To compensate and indemnify the Company and/or the Purchaser
(as appropriate), immediately upon the first demand of any of
them for any sum and/or expense of any kind whatsoever
(including, but without derogating from the generality of that
stated, legal costs, legal fees (and the like) that will be
demanded from any of them to pay following a demand and/or claim
and/or complaint that will be made against any of them by any
third party and directly or indirectly pertains to and/or results
from any activity originating in or which was caused during the
period preceding the Closing Date except in relation to claims
that have been expressly mentioned in clause 2.13.1 of the
Disclosure Appendix (and except for the claim in connection with
the absence of the Licenses and/or the Effluent Facility
mentioned in the Disclosure Appendix).
31
10.1.2 To compensate and indemnify the Purchaser and/or the Company
immediately upon the Purchaser's first demand with full
compensation for all and any harm, loss, loss of profit, damage,
cause and/or expense that they will have (if any) directly or
indirectly in connection with the purchase of the activity and
assets of Shamir Food Industries Ltd., and/or in connection with
the agreement to purchase the assets of Shamir Food Industries
Ltd.
10.1.3 Without derogating from the Shareholders' undertaking under
clause 2A.1 above, to indemnify and compensate the Purchaser
and/or the Company immediately upon the Purchaser's first demand
for any damage, loss of profits, and/or expense mentioned that
will be caused directly or indirectly to any of them in respect
of the absence of the Licenses and/or the erection of the
Effluent Facility and/or the claim in connection with the
Effluent Facility mentioned in the Disclosure Appendix.
10.1.4 Without derogating from the Shareholders' undertaking in clause
2A.2 above, to compensate and indemnify the Purchaser and/or the
Company upon the Purchaser's first demand for any damage, loss of
profit, cause and/or expense that will be incurred directly or
indirectly to any of them in respect of the erection of the
Effluent Facility and any facility ancillary thereto, directly or
indirectly.
10.1.5 Without derogating from the Shareholders' undertaking in clause
2A.4 above, to compensate and indemnify the Purchaser and/or the
Company immediately upon the Purchaser's first demand for any
damage, loss, loss of profit, cause and/or expense that any of
them will have, if at all, directly or indirectly in respect of
the non-registration of the trade marks in the name of the
Company.
10.1.6 Without derogating from the Shareholders' undertaking contained
in Clauses 2A.6 and 2A.7 above, to compensate and indemnify the
Purchaser and the Company immediately upon the Purchaser's first
demand, for all and any damage, loss, loss of profits, harm, cost
or expense that has been incurred by any of them directly or
indirectly in respect of the employment of any of the Company's
employees by Shamir Salads Food Industries Ltd., prior to the
purchase of the assets of Shamir Salads Food Industries Ltd., by
the Company, including, but without derogating from the
generality of the foregoing, any cost, payment and expense that
will be borne by and/or demanded from the Company and/or the
Purchaser, whether demanded to be paid by judgment and/or any
other legal proceeding in respect of the employment of any of the
Company's employees by Shamir Salads Food Industries Ltd., in the
manner stated above.
32
10.1.7 Without derogating from the generality of clause 10.1.1 above,
that in the event of a claim or demand of the income tax
authorities or other tax authorities to pay any payment by the
Company in connection with the Company's activity the cause of
which arose up until the Closing Date, the Shareholders will
indemnify the Company, including in respect of all the expenses
of conducting any legal dispute to the extent this arises with
the tax authorities, within 30 days of the date of the demand.
10.1.8 Without derogating from the Shareholders' undertaking contained
in clause 9 above, to compensate and indemnify the Purchaser
immediately upon the Purchaser's first demand for all and any
damage, loss of profits, and/or expense stated that will be
incurred by any of them directly or indirectly in consequence of
a breach of the undertakings to indemnify set out in clause 9
above.
10.2 To secure the payment of the indemnity mentioned in clause 10.1 above,
the parties will, on the date of payment of the Advance mentioned in
clause 4.3.1 above, deposit with the Trustee a non-negotiable
promissory note in blank that will be held in escrow for the benefit
of the Purchaser for a period of three (3) years from the Closing Date
(hereinafter: "THE TRUST PERIOD"). The Trustee may release such
promissory note and deliver the same to the Purchaser for realisation
in the event of the conditions for exercising the indemnity set out in
clause 10.1 above arising. Upon the expiration of the Trust Period,
the Trustee will redeliver the promissory note to the Shareholders.
The spouses of the Shareholders will guarantee such promissory note.
The release mechanism of the promissory note by the Trustee will be
regulated by deed of trust to be attached as Appendix 10.2 to this
Agreement. In addition, and without derogating from the generality of
the foregoing, all the Company's shares that will be held from time to
time by the Shareholders will be charged for the benefit of the
Purchaser by fixed and registered first degree charge until the
expiration of three (3) years from the Closing Date to the extent any
claim by virtue of this Agreement will be made against the
Shareholders within such period until the conclusion of the disposal
of such claim.
11. CONFIDENTIALITY AND NON-COMPETITION
11.1 In this clause, the following terms shall bear the meanings set out
opposite them:
11.1.1 "CONFIDENTIAL INFORMATION" means any commercial and economic
information relating to the Company's businesses including its
business plans, the relationship between the Company's employees
and themselves, including the Company's products, the method of
their production, import portfolios, production or import costs,
customer lists of the Company, the Company's suppliers, the
Company's marketing targets, market surveys, researches, other
information and advertising reports, assets, working methods,
prices, calculations, agreements, memoranda, records, reports,
summations, plans, computer systems, working agreements, letters
and documents of the Company, whose exposure and disclosure to
any person could harm and damage the Company, whether the same
are kept on paper, diskette, computer memory, tape or on any
other magnetic or other means on which information may be stored,
with the exception of any information that has come into the
public domain without the Shareholders having caused the
publication thereof.
33
11.2 The Shareholders acknowledge and declare that the Confidential
Information is the Company's exclusive property. All the files,
records, and documents constituting part of the Confidential
Information will remain the Company's exclusive property and not be
removed from its offices. The Shareholders will make no use of the
Confidential Information except as required within the scope of their
position as directors of the Company.
11.3 The Shareholders undertake that throughout the period that they will
be shareholders of the Company and for one year thereafter, not to
compete directly or indirectly with the Company personally or by means
of any third party related thereto.
11.5 The Purchaser declares and undertakes that as long as it will be the
holder of more than 25% of the Company's shares it will refrain from
acting and/or performing any activity in the field of cold salads that
are sold by the Company otherwise than by means of the Company. The
foregoing will not impose any restriction on the Purchaser's activity
as of the date of the execution of this Agreement.
12. EXPENSES AND TAXES
12.1 Each party will bear any tax that applies to it, if at all, in respect
of the transaction that it performs.
12.2 Lawful VAT will be added to any sum payable under this Agreement and
which is liable for VAT (against a VAT receipt) and will be paid to
the party liable for the transfer thereof to the VAT authority shortly
before the date on which it is to be transferred. Tax at source as
required by law will be deducted from any sum that the Purchaser is
bound to pay unless a certificate of an exemption from deduction of
tax at source is presented.
12.3 Each party will bear the legal and other costs that it will incur in
connection with the preparation of this Agreement.
13. APPLICABLE LAW AND DISPUTE SETTLEMENT
13.1 The law applicable to this Agreement is the law of the State of
Israel.
13.2 All disputes that will arise between the parties regarding the
interpretation, meaning, performance, existence or breach of this
Agreement or the rights and obligations in whole or in part of the
parties to this Agreement or of any of them in connection with any
matter involved in or resulting from this Agreement will be disposed
of solely by the competent court in Tel Aviv.
14. MISCELLANEOUS
14.1 The provisions of this Agreement override the terms and appendices in
the event of any deviation whatsoever.
14.2 This Agreement contains, encompasses, merges and expresses all the
conditions agreed upon between the parties. All assurances,
guarantees, written agreements, including the document of principle
between the parties dated 2 November 2007, or made verbally,
undertaking or representations regarding the subject matter of this
Agreement that were given or made by the parties prior to the making
of this Agreement and which have not been expressly stated herein do
not add to any of the obligations and rights prescribed in this
Agreement or resulting therefrom, or derogate from or deviate
therefrom and the parties will not be bound by them as from the date
of this Agreement.
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14.3 No conduct on the part of any of the parties will be construed as a
waiver of any of its rights hereunder or at law, or waiver or
agreement on its part to any breach or non-performance of any
condition, unless such waiver, agreement, extension, modification,
cancellation or addition has been expressly made in writing.
14.4 No modification, amendment or addition to this Agreement will be of
any effect unless made in writing and signed by all the parties
jointly.
14.5 This Agreement is not intended to be a third party agreement and
nothing contained herein will confer any rights whatsoever upon any
party that is not a party thereto.
14.6 The addresses of the parties hereto are as set out at the head of the
Agreement or at such other address of the parties as will be notified
in writing to the other party. Every notice sent by registered mail
according to the address of any of the parties will be deemed to have
reached the addressee within three (3) business days of dispatch, and
if sent by fax, on the first business day following the date of the
dispatch, and if served personally - at the time of service.
IN WITNESS WHEREOF THE PARTIES HAVE SET THEIR HANDS:
(SIGNED) (SIGNED)
___________________ ___________________
SHAMIR SALADS LTD. G. WILIFOOD INTERNATIONAL LTD.
THROUGH XXXXX XXXXXXXX AND XXXXXX XXX
(SIGNED) (SIGNED)
___________________ ___________________
XXXXX XXXXXXXX AMIRAM GUY
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