Exhibit B
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TRANSLATION OF THE ELISRA DEED
[TRANSLATED FROM THE HEBREW ORIGINAL]
SHARE TRANSFER DEED
Made this 6th day of July 2005
Koor Industries Ltd.
BETWEEN:
Public Company No. 00-000000-0
of 00 Xxxxxxxxx Xxxxxx, Xxxx Xxxxxxxxxx Xxxx, Xxxx Xx'xxxx 00000
("Koor")
of the one part
Elbit Systems Ltd.
AND:
Public Company No. 00-000000-0
of the Advanced Technology Center, Haifa 31053
(the "Purchaser")
of the second part
Koor is the holder of 81,697,000 ordinary shares of 1 NIS par value each
WHEREAS of the issued and paid-up share capital of Elisra Electronic Systems
Ltd., whose number with the Registrar of Companies is private company no.
00-000000-0 (the "Company");
Koor wishes to sell and transfer to the Purchaser, and the Purchaser
WHEREAS wishes to purchase and receive by transfer from Koor, 81,697,000
ordinary shares of the Company, each having a nominal value of NIS 1 per share,
that constitute on the date of signing this Deed, and will constitute at the
Transaction Completion Date, 70% of the Company's issued and paid-up share
capital, all subject to and in accordance with the provisions of this Deed; the
parties wish to regulate their relationship in respect of the sale
WHEREAS and purchase of the Sold Shares (as defined below) in the context of
this Deed.
NOW, THEREFORE, IT IS WARRANTED, PROVIDED AND AGREED BETWEEN THE PARTIES AS
FOLLOWS -
1. Preamble and Interpretation
1.1 The preamble and appendices hereto constitute an integral part hereof.
1.2 The clause headings in this Deed are solely for the sake of convenience
and shall not be applied in the interpretation hereof.
1.3 In this Deed, the following expressions shall have the meanings
appearing opposite them, unless expressly stated otherwise:
"Elta" Elta Systems Ltd., private company no.
00-000000-0;
"General Meeting" as defined in the Companies Law, and any adjourned
meeting;
"Subsidiaries" Tadiran Systems, Tadiran Spectralink, Elisra Inc.
and Microwave Network Solution Inc. (MNSI);
"Dollar" or "US$" United States dollars;
"Dekolink" Dekolink Wireless Ltd.;
"Financial Statements" as defined in Section 2.18 below;
"Sold Shares" 81,697,000 (eighty-one million, six hundred and
ninety-seven thousand) Ordinary Shares;
"Shareholders' Agreement" as defined in Section 2.9 below;
"Tadiran Communications a Share Transfer Deed that was executed between
Deed" Koor and the Purchaser on 27 December 2004,
pursuant and subject to which Koor shall sell and
transfer to the Purchaser 3,944,276 ordinary
shares of Tadiran Communications Ltd., each having
a nominal value of NIS 1 per share, including the
amendments thereto;
"Consideration" an amount of US$70,000,000 (seventy million
Dollars), together with Interest which shall be
added only if the actual payment date shall be
later than 6 January 2006 (in this Deed, the
"Determining Date"), and only for the period
beginning on the Determining Date until the date
of actual payment, and subject to the adjustment
stated in Section 6.3 below. For the avoidance of
doubt, no Interest shall be added for the period
until the Determining Date, whether the actual
payment date occurs before or after the
Determining Date;
"Additional Conditional as defined in Section 10.6 below;
Consideration"
"Conditions Precedent" as defined in Section 5.1 below;
"Zehava" Zehava Bnei Brak Company Ltd.
"Business Day" a day on which the two major banks in Israel are
open for business, other than Fridays and holiday
eves, which shall not be treated as a Business
Day;
"Ordinary Course of the ongoing activities of the Company and the
Business" Subsidiaries, of a type that the Company and/or
the Subsidiaries performed or are performing
before the signing of this Deed, including
activities in the area of Defense Activity or
entering into transactions in the Defense Activity
field;
"Final Date for the as defined in Section 5.2 below;
Transaction's Completion"
"Transaction Completion as defined in Section 7.1 below;
Date"
"Confidential Information" all information relating to the parties hereto
other than (a) information that was in the public
domain or came into the public domain otherwise
than due to a breach of this Deed and (b)
information the disclosure of which is required in
accordance with the provisions of law;
"Koor Letters" as defined in Section 2.7 below;
"Ordinary Shares" ordinary shares of 1 NIS par value each of the
Company's issued share capital;
"Free and Clear" free and clear of any charge, pledge, attachment,
levy, debt, lien, claim or other third party right
whatsoever;
"Defense Activity" activity in the manufacture or maintenance of
defense equipment, or in the field of research and
development of defense know-how, and all that is
connected to or derived therefrom, and all of the
type of activity that the Company and/or the
Subsidiaries carried out or carry out before the
signing of this Deed;
"Stage C of the Tadiran is defined in the Tadiran Communications Deed;
Communications as the term
"Stage C of the
Transaction"
"Interest" three-month LIBOR at Bank Leumi Le-Israel Ltd., at
the rate it will be on the Determining Date, plus
annual interest at the rate of 0.9%, compounded
every three months;
"Insurance Claim" as defined in Section 10.1 below;
"Tadiran Systems" Tadiran Electronic Systems Ltd.;
"Tadiran Spectralink" Tadiran Spectralink Ltd.;
"Qualification Conditions" all the requirements in accordance with applicable
law and pursuant to the Company's incorporation
documents for a person to serve as a director of
the Company, including security clearance as
required in Israel for the purpose of such
service.
1.4 Terms that are not defined in this Deed shall have the same definitions
as in Section 1 of the [Israel] Securities Law, 5728-1968, and if they
are not defined as aforesaid, then as in Section 1 of the [Israel]
Companies Law, 5759-1999, and all as applies to the matter's context.
2. Koor's Declarations
Koor hereby declares to the Purchaser that as of the date of the
signing of this Deed:
2.1 Koor is a public company that was legally incorporated in Israel, its
registration number with the Companies Registrar is as appears at the
outset of this Deed, and no steps or procedures have been taken or
threatened against it for dissolution, liquidation, winding-up, placing
in receivership or like acts.
2.2 The Company is a private company that was legally incorporated in
Israel, its registration number with the Companies Registrar is as
appears in the preamble to this Deed, and no steps or procedures have
been taken or, to the best of Koor's knowledge, threatened against it
for dissolution, liquidation, winding-up, placing in receivership or
like acts.
2.3 To the best of Koor's knowledge, including after checking with the
Company's management (hereinafter in this Deed, "to the Best of Koor's
Knowledge") no steps or procedures have been taken against any of the
Subsidiaries for dissolution, liquidation, winding-up, placing in
receivership or like acts.
2.4 Copies of the incorporation documents of the Company and of all of the
Subsidiaries, as they are in effect at the date of signing this Deed,
are attached to this Deed as Appendices "2.4A"--"2.4E."
2.5 The Company's registered share capital is NIS 116,710,000, and it is
divided into 116,710,000 ordinary shares.
2.6 The Company's issued and paid-up share capital is in a total of NIS
116,710,000, and it is divided into 81,697,000 ordinary shares that are
held by Koor, and 35,013,000 ordinary shares that are held by Elta.
2.7 The Sold Shares are fully paid-up, and are Free and Clear, and on the
Transaction Completion Date they will be Free and Clear, and all with
due regard to the Shareholders' Agreement (Appendix "2.9A" to this
Deed) and to the Company's Articles of Association (Appendix "2.4A") as
aforesaid.
A copy of Koor's letters to Elta in accordance with Section 6 of the
Shareholders' Agreement (Appendix "2.9A" to this Deed), dated 1 August
2004 and 17 February 2005, are attached as Appendices "2.7A"--"2.7B" to
this Deed (collectively, the "Koor Letters"). A copy of Elta's response
letter dated 2 March 2005 to Koor's letter dated 17 February 2005 is
attached to this Deed as Appendix "2.7C."
2.8 Other than as detailed in Appendix "2.8", the Company has not given or
undertaken to give to any of its shareholders and/or to any person or
entity whatsoever an option or right to purchase shares or rights in
the Company's share capital or in the Company's other securities that
are convertible into or exercisable for shares in the Company.
2.9 Other than the Shareholders' Agreement among Xxxx, Xxxx and the
Company, which regulates the relations between Koor and Elta as
shareholders in the Company, including any amendments thereto, if any,
a copy of which is attached to this Deed as Appendix "2.9A" (the
"Shareholders' Agreement"), and the agreement regarding management and
consulting services that was executed on 27 November 2002 among Xxxx,
Xxxx and the Company, including any amendments thereto, if any, a copy
of which is attached to this Deed as Appendix "2.9B", there are no
other shareholders' agreements and/or management agreements regarding
holdings in the Company's shares.
2.10 The holdings of the Company and of each of the Subsidiaries in shares
and/or rights in corporate entities, including partnerships (if any),
and other than financial investments of the Company and/or any of the
Subsidiaries in the framework of a securities investment portfolio, a
total amount that will not exceed US$10,000,000 (ten million Dollars),
as of the date of signing this Deed, and in which the Company and/or
any of the Subsidiaries are not interested parties, are as detailed in
Appendix "2.10" of this Deed.
2.11 Appendix "2.11" to this Deed lists all of the options and/or rights to
purchase shares and/or rights in the share capital that were granted by
any of the Subsidiaries to any person or entity.
2.12 Appendix "2.12" to this Deed lists all of the agreements among
shareholders and/or voting agreements to which the Company and/or any
of the Subsidiaries are parties, and the agreement among shareholders
to which Zehava is a party.
2.13 Koor's Board of Directors has approved Koor's entering into this Deed,
with all its Appendices, and its performance by Koor pursuant to its
terms and conditions, and except for the foregoing approval, Koor has
no need to obtain any additional approvals whatsoever from any of its
organs in order to enter into this Deed and perform its obligations
hereunder, including based upon its incorporation documents or by law.
A certificate of Koor's General Counsel indicating that Koor's Board of
Directors approved its entering into this Deed with all of its
Appendices, and its performance based upon its terms and conditions, is
attached as Appendix "2.13" to this Deed.
2.14 Appendix "2.14" to this Deed lists all of the approvals, consents and
permits that are required in order for Koor to enter into this Deed and
to perform all of its obligations hereunder, including approvals,
consents and permits from any authorities, governmental entities, or
any other entity, and, to the Best of Koor's Knowledge, approvals under
material agreements or undertakings to which the Company or any of the
Subsidiaries are parties, that are required in connection with Koor's
entering into this Deed and performing its undertakings hereunder, the
absence of which will cause a material adverse effect on the rights of
the Company or any of the Subsidiaries.
It is clarified that subject to Koor acting pursuant to Section 5.3 of
this Deed, there is nothing in what is stated in this Section 2.14 or
anywhere else in this Deed that would place liability on Koor and /or
anyone acting on its behalf for obtaining the approvals, consents and
permits listed in Appendix "2.14" to this Deed, and the receipt or
non-receipt of any such approval, consent or permit shall not
constitute a breach of this Deed by Koor, provided that Koor acts
pursuant to Section 5.3 of this Deed.
2.15 The persons signing this Deed and the documents that accompany it on
Koor's behalf are authorized to execute this Deed and the accompanying
and/or required documents for its performance on Koor's behalf, and to
obligate Koor with their signatures, and this Deed and all of its
conditions obligate Koor in all things and matters.
2.16 Subject to the Conditions Precedent being fulfilled, there is no legal
or other impediment to Koor entering into this Deed and carrying out
its provisions, and this Deed and the performance of its obligations
hereunder do not oppose or contradict any judgment, order or
instruction of any court, any contract, consent or agreement whatsoever
to which Koor is a party, its incorporation documents, or any other
undertaking by Koor, or, to the Best of Koor's Knowledge, of the
Company, whether by agreement (oral, by action or written) or by law.
2.17 Appendix "2.17" to this Deed lists the names of all of the members of
the Company's Board of Directors.
2.18 The Company's audited consolidated financial statements as of 31
December 2004, including the notes thereto, and the Company's unaudited
consolidated financial statements as of 31 March 2005, including the
notes thereto (the "Unaudited Financial Statements") that are attached
to this Deed as Appendices "2.18A"--"2.18B" (collectively the
"Financial Statements") fairly reflect, under generally accepted
accounting principles in Israel, in all material ways, the financial
state, the results of operations, the changes in net worth and the cash
flow of the Company, all on a consolidated basis, for the year ended 31
December 2004 and the quarter ended 31 March 2005, respectively. To the
Best of Koor's Knowledge, from 31 March 2005 to the date of signing
this Deed, none of the Company and/or any of the Subsidiaries has
undertaken any obligation outside the Ordinary Course of Business in an
amount that exceeds one million Dollars for each such undertaking, nor
in a total amount that exceeds 2.5 million Dollars.
2.19 The Company's accountants are KPMG--Somekh Xxxxxxx.
2.20 From 31 March 2005 to the date of signing this Deed, the Company and
the Subsidiaries are conducting their business in the Ordinary Course
of Business, and there has been no material adverse change in the state
of the Company's business on a consolidated basis.
2.21 To the Best of Koor's Knowledge, as of 31 March 2005, the Company's and
the Subsidiaries' order backlog (the "Backlog"), and the rules for
registering backlogged orders by which the Order Backlog was prepared
are attached to this Deed as Appendix "2.21."
To the Best of Koor's Knowledge, neither the Company nor any of the
Subsidiaries has received a written Termination Notice or a Cure Notice
(as defined below) that relates to the cancellation of a material order
that is listed in the Order Backlog.
In this Section 2.21, a "Termination Notice" means a written notice
that was delivered in the manner described in the relevant agreement,
pursuant to which that agreement is cancelled in the manner described
in the agreement due to a breach by the Company or any of the
Subsidiaries that grants the customer the right to finally and
completely terminate the agreement.
And a "Cure Notice" means a written notice that was delivered in the
manner described in the relevant agreement, pursuant to which the
Company breached a condition in that agreement that grants the customer
the right to deliver such a notice, and if the Company does not cure
the breach within the time period that is fixed therefor in the
agreement, the agreement will be finally and completely terminated.
2.22 To the Best of Koor's Knowledge, other than the guarantees listed in
Appendix "2.22" to this Deed, and other than undertakings to provide
guarantees that are given in the Ordinary Course of Business, neither
the Company nor any of the Subsidiaries has delivered or undertaken to
deliver any guarantee of any obligations and/or undertakings, and other
than the liens that are included in Appendix "2.24" below and in their
framework, they did not create or undertake to create any lien to
secure any undertakings.
2.23 To the Best of Koor's Knowledge, other than the guarantees listed in
Appendix "2.23" to this Deed, no person or entity, including banks,
delivered any guarantees to secure the debts and/or obligations of the
Company and/or of any of the Subsidiaries, and neither the Company nor
any of the Subsidiaries has any material obligation that is not listed
in this Section 2, that derives from the purchase or sale of rights in
corporate entities by the Company or by any of the Subsidiaries during
the three years that preceded the signing of this Deed.
2.24 To the Best of Koor's Knowledge, except as detailed in Appendix "2.24"
to this Deed, there are no liens and/or charges on the assets of the
Company and/or any of the Subsidiaries.
2.25 To the Best of Koor's Knowledge, there are no claims or legal
proceedings pending against the Company and/or any of the Subsidiaries,
and/or officeholders in the Company and/or in any of the Subsidiaries
in connection with performing their functions in the Company or the
Subsidiaries, respectively, that may have a material adverse effect on
the Company's business, whether in court, in an arbitration proceeding,
or in any other legal proceeding, and there are no judicial decisions
against the Company and/or against the Subsidiaries that may have a
material adverse effect on the Company's business, that obligate the
Company and/or any of the Subsidiaries, that have not yet been carried
out.
2.26 To the Best of Koor's Knowledge, the Company's General Manager, the
Company's Chief Financial Officer and the Company's General Counsel
have not received and there has not been forwarded to them any threat,
in writing, from any person who is competent to do so, to file any
claim against the Company and/or any of the Subsidiaries, and/or
officeholders in the Company and/or in any of the Subsidiaries in
connection with performing their functions in the Company or the
Subsidiaries, respectively, in an amount that exceeds one million
Dollars with regard to each such threat.
To the Best of Koor's Knowledge, as of the date of signing this Deed,
there is not pending, and the Company's management has not received any
written notice from a competent authority about the intention to
conduct an investigation that is not a routine examination or audit of
any government entity or authority whatsoever, against the Company
and/or any of the Subsidiaries, and/or officeholders in the Company
and/or in the Subsidiaries in connection with the performance of their
duties with the Company or the Subsidiaries, as the case may be, that
may have a material adverse effect on the Company and/or any of the
Subsidiaries.
2.27 Except as detailed in Appendix "2.26A" to this Deed, neither the
Company nor any of the Subsidiaries is a party to any agreement with
Koor and/or the controlling persons in Koor and/or officeholders in
Koor. To the Best of Koor's Knowledge, except as set forth in Appendix
"2.26B" to this Deed, neither the Company nor any of the Subsidiaries
is a party to an agreement that is outside the Ordinary Course of
Business with Elta and/or the controlling persons in Elta and/or
officeholders in Elta. Koor hereby represents that Dekolink does not
have any obligation whatsoever to make payments to Koor.
To the Best of Koor's Knowledge, the Company and the Subsidiaries
timely and fully set aside the reserves in the Financial Statements
(that are attached as Appendices "2.18A"--"2.18B" to this Deed) for
their employees pursuant to any written agreement and judgment that
were given, if given, against the Company or against any of the
Subsidiaries, including all of the payments and reserves for vacations,
severance compensation, royalties, national insurance, retirement
funds, managers' insurance, pension funds and education funds. To the
Best of Koor's Knowledge, the reserves in the foregoing Financial
Statements that the Company and the Subsidiaries have made are based
upon 80% of the total salary or on a greater percentage of the salary,
pursuant to the foregoing agreements that obligate them. To the Best of
Koor's Knowledge, the Company and/or any of the Subsidiaries did not
set aside any reserves in their Financial Statements for benefits that
they will be obligated to pay for employees who are organized under a
collective bargaining agreement or by custom in the event of the
implementation of a new program to reduce the workforce. For the
avoidance of doubt, to the Best of Koor's Knowledge, full reserves were
set aside for each employee who completed his work or the termination
of whose work was determined in the Company or in any of the
Subsidiaries on or before 31 March 2005.
To the Best of Koor's Knowledge, a list of all of the collective
bargaining agreements that obligate the Company and/or any of the
Subsidiaries is attached as Appendix "2.27" to this Deed, and aside
from those there is no collective bargaining agreement that obligates
the Company, Tadiran Systems or Tadiran Spectralink.
To the Best of Koor's Knowledge, the Purchaser was able to review the
personal employment contracts of the officeholders in the Company,
Tadiran Systems and Tadiran Spectralink (twenty-six officeholders in
total), and there are no more than twenty employees among the Company
and the Subsidiaries together who have personal employment contracts
whose discharge conditions are more favorable than the customary
conditions in the personal employment contracts of such officeholders.
2.28 On 17 March 2001, there was a fire in Tadiran Systems' and Tadiran
Spectralink's plant, all as described in the Unaudited Financial
Statements and in Note 4 to the Unaudited Financial Statements that are
attached as Appendix "2.18B" to this Deed. It is hereby clarified that
the foregoing does not constitute a representation and/or warranty of
Koor regarding the total amount that will be paid to the said companies
by the Insurance Company, whether within or outside the Insurance
Claim's framework.
2.29 To the Best of Koor's Knowledge, the Company, the Subsidiaries and
Zehava have ownership, leasing and/or rental rights to the real estate
listed in the list attached to this Deed as Appendix "2.29".
2.30 To the Best of Koor's Knowledge, the Company and the Subsidiaries that
are incorporated in Israel filed in a timely manner with the Israeli
tax authorities, and Elisra Inc. filed in a timely manner with the
United States tax authorities, all of the reports that they are
required to file by law, and made all of the payments that are required
by said reports. To the Best of Koor's Knowledge, the aforesaid
payments and the balance of reserves for taxes that is included in the
Unaudited Financial Statements accounts for all of the tax liabilities
of the Company, the Israeli-incorporated Subsidiaries and Elisra Inc.
for the period ending 31 March 2005 (Koor's representation in this
Section hereinafter, the "Tax Representation").
2.31 To the Best of Koor's Knowledge, the insurance policies of the Company
and the Subsidiaries are listed in
Appendix "2.31" this Deed, all of the premiums relating to such
policies were paid pursuant to their terms, they are in effect, and
Koor has no actual knowledge of a lack of sufficient insurance coverage
for the Company's material assets based upon the consolidated
Statements.
2.32 To the Best of Koor's Knowledge and estimation, no material damage is
expected to be caused to the activities of the Company and/or any of
the Subsidiaries due to the lack of licenses, permits or approvals that
are required by law in order to manage the Company's and the
Subsidiaries' business activities.
To the Best of Koor's Knowledge, Appendix "2.33" to this Deed lists all
of the Company's and the Subsidiaries' agreements with the Chief
Scientist of the [Israel] Ministry of Industry and Trade. To the Best
of Koor's Knowledge, the Company and/or the Subsidiaries, as the case
may be, believe that they have fulfilled and are fulfilling all of
their obligations under these agreements.
2.33 To the Best of Koor's Knowledge, Appendix "2.34" to this Deed lists all
of the approvals that the Company and the Subsidiaries received from
the Investment Center of the [Israel] Ministry of Industry and Trade,
and every agreement with the Investment Center. To the Best of Koor's
Knowledge, the Company and/or the Subsidiaries, as the case may be,
believe that they have fulfilled and are fulfilling all of their
obligations under these approvals and agreements.
2.34 To the Best of Koor's Knowledge, the Company and the Subsidiaries have
all of the intellectual property rights, including licenses and
authorizations to intellectual property rights from third parties, that
are required for the sales that took place in the last three years
preceding the date of signing this Deed. In Koor's estimation, with
respect to the fulfilment of orders that have not yet been fulfilled
that are included in the Order Backlog, the Company and the
Subsidiaries will have all of the intellectual property rights,
including licenses and authorizations to intellectual property rights
from third parties, that will be required for such sales, and to the
Best of Koor's Knowledge, there is nothing in this activity of theirs
that breaches the intellectual property rights of any person or entity.
2.35 To the Best of Koor's Knowledge, other than in four matters, the
Company and/or the Subsidiaries did not give any material price
proposals to their customers for orders which have not yet been listed
in the Order Backlog (" Open Price Proposals "), whose profitability is
expected (with regard to the research and development investments in
connection therewith) to be unusually lower than what is customary at
the Company and/or the Subsidiaries--as the case may be, and to the
Best of Koor's Knowledge, other than in those four matters, the Company
and/or the Subsidiaries do not expect investments in fixed assets in
connection with the Open Price Proposals that are unusually higher than
what is customary in the Company's and/or the Subsidiaries'
projects--as the case may be, and all taking into account the character
and scope of the price proposals.
2.36 To the Best of Koor's Knowledge, the Company is not aware of any
inspections or surveys regarding environmental quality that were
carried out within the two years that preceded the date of signing this
Deed, whose results will have a material adverse effect on the
Company's and Subsidiaries' business in the Company's estimation.
2.37 Every disclosure that appears in any of the Appendices to this Section
2 above shall be deemed as if it also appears in the other Appendices
to Section 2, if it is understood that the said disclosure is also
relevant to what is stated in any of the other Appendices.
2.38 Koor is aware that its representations and warranties in Section 2 of
this Deed constitute a basis for the Purchaser's entering into this
Deed, and it represents that they were given without the intent to
mislead, and to the Best of Koor's Knowledge, the representations and
warranties in this Section 2 and its Appendices do not include any
incorrect details.
3. Purchaser's Representations
The Purchaser hereby represents to Koor that as of the date of signing
this Deed:
3.1 The Purchaser is a public company that was legally incorporated in
Israel, its registration number with the Companies Registrar is as
appears at the outset of this Deed, and no steps or procedures have
been taken or threatened against it for dissolution, liquidation,
winding-up, placing in receivership or like acts.
3.2 The Purchaser has the ability and means to fully and timely fulfil its
obligations under this Deed, and it has funding sources that enable it
to timely pay the full Consideration as detailed in this Deed.
3.3 The Purchaser's Audit Committee and Board of Directors approved its
entering into this Deed with all its Appendices, and its performance by
the Purchaser based upon its conditions and provisions, after receiving
a fairness opinion from an outside independent appraiser regarding the
adequacy of the Consideration, and other than the approval of the
Purchaser's General Meeting, the Purchaser has no need, including based
upon its incorporation documents and by law, to obtain any other
approvals whatsoever from any of its organs in order to enter into this
Deed and to carry out its obligations thereunder. The certificate of
the Purchaser's General Counsel certifying that the Purchaser's Audit
Committee and Board of Directors approved the Purchaser entering into
this Deed and all of its Appendices as aforesaid, and the Purchasers
performing this Deed based upon its conditions and provisions, is
attached hereto as Appendix "3.3" to this Deed.
3.4 Appendix "3.4" to this Deed lists all of the approvals, agreements and
permits that are required for the Purchaser to enter into this Deed and
perform its obligations thereunder, including approvals, agreements and
permits from any authorities whatsoever, from government entities or
from any other entity. It is clarified that subject to the Purchaser
having acted in accordance with Section 5.3 of this Deed, there is
nothing in this Section 3.4 or in any other place in this Deed that
would place responsibility for obtaining the approvals, agreements and
permits listed in Appendix "3.4" to this Deed on the Purchaser and/or
persons acting on its behalf, and the receipt or non-receipt of any
approval, agreement or permit as aforesaid shall not constitute a
breach of this Deed by the Purchaser, provided that the Purchaser acted
in accordance with Section 5.3 of this Deed.
3.5 The persons signing this Deed and the documents that accompany it on
the Purchaser's behalf are the persons authorized to execute this Deed
and the accompanying and/or required documents for its performance on
the Purchaser's behalf, and to obligate the Purchaser with their
signatures, and this Deed and all of its conditions obligate the
Purchaser in all things and matters, subject to the approval of the
Purchaser's General Meeting.
3.6 Subject to the Conditions Precedent being fulfilled, there is no legal
or other impediment to the Purchaser entering into this Deed and
carrying out its provisions, and this Deed and the performance of its
obligations hereunder do not oppose or contradict any judgment, order
or instruction of any court, or any contract, consent or agreement
whatsoever to which the Purchaser is a party, its incorporation
documents, or any other undertaking by the Purchaser, whether by
agreement (oral, by action or written) or by law.
3.7 The Purchaser has the experience, knowledge and capability to evaluate
its entering into this Deed and its implications, and considering,
among other things, what is stated above, it has performed a due
diligence investigation of the Company and the Subsidiaries to its
satisfaction, with the full cooperation of the Company and the
Subsidiaries. Based upon, among other things, said due diligence
investigation, neither the Purchaser, nor anyone acting on its behalf,
is aware of the incorrectness of any representation that was given by
Koor in this Deed, and it will not have any claim against Koor and/or
anyone acting on its behalf regarding the incorrectness of any
representation if Koor proves that before the signing of this Deed any
of the following officeholders of the Purchaser, as of the signing date
of this Deed, knew that the representation is not correct: Chief
Financial Officer, Vice President for Mergers and Acquisitions, Vice
President for Financial Control, Controller or the Manager of Public
Institutions in the Finance Department.
3.8 Without derogating from the generality of the foregoing in Section 3.7
above, the Purchaser is aware that the Company and Tadiran Spectralink
are currently in negotiations to extend the terms of the agreements
that are listed in Appendix "3.8" to this Deed, and it will have no
claim, demand, complaint or other remedy against Koor if and to the
extent that the terms of the said agreements are extended provided that
they are extended with conditions that are not materially and adversely
different from the conditions of the said agreements as of the date of
signing this Deed, from the standpoint of the Company or the
Subsidiaries, as the case may be.
3.9 In connection with any of the representations and/or declarations of
Koor as detailed in Section 2 above, the Purchaser and/or anyone acting
on its behalf does not and will not have any claim, demand, complaint
or other remedy against Koor, including in connection with any
discrepancy, mistake, deletion in good faith or similar item in
connection with any thing and matter, except in connection with the
incorrectness of any representation that is included in Section 2 of
this Deed.
3.10 Other than the representations or undertakings that were explicitly
given in Section 2 of this Deed, Koor (or anyone acting on its behalf)
shall not be seen as having given the Purchaser (including anyone
acting on its behalf) any information, representation or undertaking,
and Koor (or anyone acting on its behalf) is not and will not be liable
for any information that was given to the Purchaser (including to
anyone acting on its behalf) in connection with the Sold Shares, the
Company or the Subsidiaries, including with respect to their value,
businesses, activities, assets, obligations or the financial results of
their activities.
4. The Transaction
On the Transaction Completion Date, against the Purchaser's payment of
the Consideration to Koor, and the Purchaser's undertaking to pay to
Koor the Additional Conditional Consideration as stated in Section 10.6
below, Koor shall sell and transfer to the Purchaser, and the Purchaser
shall purchase and receive from Koor, 81,697,000 Ordinary Shares, that,
as of the date of signing this Deed constitute, and as of the
Transaction Completion Date will constitute, 70% of the registered and
issued share capital of the Company (the Sold Shares), which shall be
fully paid-up and Free and Clear, all in the manner and conditions
detailed below.
5. The Conditions Precedent
5.1 The completion of the transaction that is this Deed's subject is
conditioned on the fulfilment of all of the conditions and the receipt
of all of the Approvals listed below (the "Conditions Precedent") no
later than the Final Date for the Transaction's Completion.
(a) Receipt of the Approval of the Purchaser's General
Meeting as required by law for the Purchaser entering
into this Deed.
(b) Receipt of the Approval of the [Israel] Commissioner
of Restrictive Trade Practices for the parties'
entering into this Deed and for executing the
transaction that is this Deed's subject.
(c) To the extent required, the receipt of the Approval
of the United States and/or European antitrust
authorities for the parties' entering into this Deed
and for executing the transaction that is this Deed's
subject.
(d) Receipt of the [Israel] Ministry of Defense's
Approval for the parties' entering into this Deed and
for executing the transaction that is this Deed's
subject.
(e) Receipt of the Company's Approval, by means of its
authorized organs, as required by law, to transfer
the Sold Shares from Koor to the Purchaser.
(f) Receipt of all the Approvals listed in Appendix
"2.14" and in Appendix "3.4" to this Deed.
(g) The fulfilment of all of the conditions precedent
that are required for the completion of Stage C of
the Tadiran Communications Transaction, excluding the
condition precedent for the completion of Stage C of
the Tadiran Communications Transaction that relates
to the receipt of all of the consents and Approvals
that are required and the fulfilment of all of the
conditions precedent to the Elisra Transaction (whose
fulfilment is required pursuant to this Deed) (in
this Section, the "Elisra Condition"), and that no
legal impediment has been created to the completion
of Stage C of the Tadiran Communications Transaction.
Notwithstanding the foregoing, if any of the
conditions precedent to the completion of Stage C of
the Tadiran CommunicationsTransaction do not occur
other than the Elisra Condition, or if an impediment
is created to the completion of Stage C of the
TadiranCommunications Transaction, the Purchaser
shall be entitled, in its discretion, to determine to
complete the transaction described in this Deed even
before the completion of Stage C of the Tadiran
Communications Transaction. Nothing in the foregoing
derogates from the parties' undertakings as detailed
in Section 5.3 of this Deed, or from the parties'
rights under the Tadiran Communications Deed.
However, notwithstanding all of the foregoing, if at
the Transaction Completion Date there exists any
impediment to the completion of Stage C of the
Tadiran Communications Transaction as a result of a
breach of the Tadiran Communications Deed by the
Purchaser, the transaction that is this Deed's
subject shall be completed despite the fact that
Stage C of the Tadiran CommunicationsTransaction
cannot be completed as of the Transaction Completion
Date. In this Section 5.1, "Approval" is meant to
include any approval, permit or consent that is
subject to conditions, but excluding any approval
that is subject to conditions that would materially
alter the Purchaser's business activities as they
exist on the date of signing this Deed, or that
materially damages the Company, or an approval that
imposes unreasonable conditions from a business
perspective with respect to the holdings in the
Company.
5.2 In this Deed, the "Final Date for the Transaction's Completion" means:
5.2.1 6 September 2005; however
5.2.2 If by 6 September 2005, all of the Conditions Precedent have
taken place other than the approval of the antitrust
authorities as detailed in Sections 5.1(b) and (c) above, the
Final Date for the Transaction's Completion shall
automatically be delayed to 6 October 2005; however
5.2.3 If the approval of the [Israel] Commissioner of Restrictive
Trade Practices as detailed in Section 5.1(b) above is not
received by 6 October 2005, each of the parties to this Deed
shall be entitled to notify the other party by written notice
to be received by the other party by the foregoing date, that
the Final Date for the Transaction's Completion shall be
postponed to 6 January 2006, or to such later date as is
determined by the parties as stated in Section 14.5 below.
5.3 The parties will work together with proper diligence in order to
promptly and completely fulfil all of the Conditions Precedent before
the Final Date for the Transaction's Completion, and will coordinate in
advance the text of any report, application, notice or other written
publication that will be distributed by any of them to any of the
entities listed in Section 5.1 above, all subject to applicable law.
Each party shall bear the expenses that it has for purposes of carrying
out the Conditions Precedent or any of them. Without derogating from
the generality of the foregoing in this Section 5.3, the Purchaser
undertakes to act to the best of its ability so that within 21 days of
signing this Deed, a notice will be published regarding the convening
of a General Meeting of the Company (Proxy Statement), for a date that
shall be no later than 21 days from the date that the notice will be
published, for purposes of approving the Purchaser's entering into this
Deed.
5.4 If and to the extent that the Conditions Precedent are not fulfilled
before the Final Date for the Transaction's Completion, or before such
other date as is agreed by the parties, by means of a written notice
signed by two officeholders of each of Koor and the Purchaser, this
Deed (other than the provision of Section 11 thereof) shall be
cancelled, and this without either of the parties having any complaint
and/or claim and/or demand from the other party, other than a claim
against a party that did not act in accordance with Section 5.3 above.
Nothing in this Section 5.4 above shall be deemed to derogate from any
other right or remedy based upon this Deed or by law that is at the
parties' disposal for breach of any of this Deed's provisions (if and
to the extent that it is breached).
5.5 Notwithstanding anything to the contrary in this Deed, each party shall
be entitled to (but not obligated to) waive the existence of any of the
Conditions Precedent that was intended for its benefit through a
written notice, signed by two of its officeholders that is to be
delivered to the other party to this Deed.
6. Company's Management from the Date of Signing this Deed until the Final
Date for the Transaction's Completion
6.1 From the date of signing this Deed until the earlier of the Final Date
for the Transaction's Completion and the Transaction Completion Date,
Koor shall act to the best of its ability and subject to applicable law
to fulfil what is stated in Section 6.1 below, unless it is agreed
otherwise between it and the Purchaser, by means of a written notice
signed by two officeholders of each of Koor and the Purchaser:
(a) Subject to what is stated in Section 12 below, the
Company and/or any of the Subsidiaries shall not
enter into any new transaction with Koor, the
controlling persons in Koor, and/or interested
parties in Koor, whose financial scope exceeds
US$1,000,000 (one million Dollars). For the avoidance
of doubt, it is clarified that the Company shall
continue to pay management fees to Koor and Elta in
the manner that was customary before entering into
this Deed.
(b) To the extent that it is dependent upon Koor, the
Company and/or the Subsidiaries shall not take any
actions that are not in the Ordinary Course of
Business, other than the exchange of existing
indemnification letters for new indemnification
letters (as is customary in companies like the
Company), and giving an exemption from liability for
directors and officeholders. Subject to applicable
law, Koor shall act to the best of its ability to
cause said exchange of the existing indemnification
letters.
(c) The Company shall not distribute any non-cash
dividend to its shareholders, and it shall not make
any other non-cash distribution except for a
distribution in kind of Dekolink's shares to the
extent that they are distributed, as stated in
Section 12.1.2 below.
(d) If the transaction that is this Deed's subject is not
completed within 90 days of signing this Deed, to the
extent that the matter is dependent upon Koor, the
Company shall organize itself to meet the
requirements of Section 404 of the [U.S.]
Xxxxxxxx-Xxxxx Act.
6.2 Without derogating from what is stated above in this Section 6, it is
clarified that during the course of the period from signing this Deed
until the Transaction Completion Date, if and to the extent that it is
completed, and if it is not completed, then until the Final Date for
the Transaction's Completion, the Company and/or the Subsidiaries shall
be entitled to enter into transactions in the Ordinary Course of
Business with Israel Aircraft Industries Ltd., directly or indirectly,
or with Elta, all in the discretion of management of the Company and/or
the Subsidiaries, and as the Company and/or the Subsidiaries were
accustomed to doing before signing this Deed.
6.3 To the extent that during the period from signing this Deed until the
Transaction Completion Date, the Company decides to make a cash
distribution to its shareholders, or to distribute Dekolink's shares in
kind as stated in Section 12.1.2, there shall be deducted from the
Consideration any amount (translated into Dollars at the representative
rate at the earlier of the date of actual execution of the distribution
and the Transaction Completion Date) that Koor is entitled to receive
by virtue of the Sold Shares (gross) (that is, for which the record
date for its distribution is before the Transaction Completion Date),
and all together with interest from the later of the date of the
dividend's payment or from the record date. This Section 6.3 shall not
apply to amounts that Koor receives from the Company and/or from any of
the Subsidiaries from the date of signing this Deed to the Transaction
Completion Date up to an amount of 70% (seventy percent) of the
receipts that the Company and/or any of the Subsidiaries receives for
the Insurance Claim during the aforesaid period.
7. Transaction Completion
7.1 Subject to what is stated in Section 7.5 below, and to the Conditions
Precedent being fulfilled before the Final Date for the Transaction's
Completion, the transaction's completion shall occur within three
Business Days from the date on which the final Condition Precedent
occurs or at any other time that is agreed between the parties, by
means of a written notice signed by two officeholders of each of Koor
and the Purchaser ("Transaction Completion Date").
7.2 On the Transaction Completion Date, the parties' representatives shall
meet at a place to be determined by the parties. At the transaction's
completion, each of the following actions, whose full and exact
execution by the party that is liable therefor is a precondition to the
performance of the actions by the other party, shall take place
concurrently:
(a) The Purchaser shall pay the full Consideration to
Koor by means of a final and irrevocable bank
transfer to Koor's bank account, whose details shall
be given to the Purchaser no less than two Business
Days before the Transaction Completion Date. At the
same time, the Purchaser shall deliver to Koor a
written certification of the execution of said
payment, with the signature of the authorized
signatories of the Purchaser's bank branch through
which the Consideration was paid, in the form
accepted at the banks, to which a SWIFT confirmation
shall be attached from the Purchaser's bank
confirming the execution of the transfer as
aforesaid.
(b) Koor shall deliver the share certificates
representing the Sold Shares to the Company.
(c) Koor and the Purchaser shall deliver this Deed to the
Company.
(d) An approval of the authorized organs of the Company
approving the transfer of the Sold Shares from Koor
to the Purchaser shall be shown, together with a
certification from Koor's General Counsel that said
resolutions were legally adopted; the Company shall
note in its books the transfer of the Sold Shares to
the Purchaser, and shall deliver to the Purchaser a
share certificate that proves the Purchaser's
ownership of the Sold Shares, and an original
executed copy of the notice to the Companies
Registrar regarding the transfer of the Sold Shares
from Koor to the Purchaser.
(e) Koor shall deliver a document to the Purchaser that
details the material adverse changes that occurred,
to the Best of Koor's Knowledge, in the
representations that are detailed in Section 2 of
this Deed, from the date of signing this Deed to the
Transaction Completion Date, if any, and shall
confirm, subject to material changes that occurred as
aforesaid, the correctness of the representations
that appear in Sections 2.1 through 2.9 and 2.11
through 2.16 of this Deed as of the Transaction
Completion Date.
(f) The Purchaser shall deliver to Koor a copy of the
Purchaser's General Meeting's approval that approves
its entering into the transaction that is this Deed's
subject, and the performance of its undertakings
pursuant thereto, together with the written
certification of the Purchaser's General Counsel that
said resolution was legally adopted.
(g) Koor shall deliver to the Company, with a copy to the
Purchaser, executed resignation letters of all of the
directors that were appointed to the Company's Board
of Directors based upon Koor's recommendation, which
shall take effect immediately upon the transaction's
completion.
(h) Koor shall deliver to the Purchaser a copy of the
Company's General Meeting's resolution, pursuant to
which, subject to the completion of the transaction
that is this Deed's subject, and immediately after
the Transaction Completion Date, a number of
candidates detailed below who meet the Qualification
Conditions and who are nominated by the Purchaser
shall be appointed to the Company's Board of
Directors. The number of candidates shall be equal to
or greater than 70% of the number of directors in the
Company (including the directors who are added based
upon the Purchaser's said nomination). The Purchaser
shall notify Koor and the Company, in advance and in
writing, of the names of said candidates who meet the
Qualification Conditions, and all no later than 30
days before the Transaction Completion Date.
7.3 All of the actions listed in Section 7.2 above shall be deemed to occur
simultaneously, no individual action shall be considered completed and
no individual document shall be considered delivered until all of the
actions at the same meeting shall be completed and all of the documents
shall be delivered.
7.4 Simultaneously with the completion of the transaction that is this
Deed's subject, Stage C of the Tadiran Communications Transaction shall
be completed, that is all of the actions that are to be executed at the
Third Closing (as defined in the Tadiran Communications Deed) as stated
in Section 13 of the Tadiran Communications Deed, will be executed.
However, if at the Transaction Completion Date that is this Deed's
subject, there is any impediment whatsoever to the completion of Stage
C of the Tadiran Communications Transaction as a result of a breach of
the Tadiran Communications Deed by the Purchaser, the transaction that
is this Deed's subject shall be completed even though it will not be
possible at the Transaction Completion Date to complete Stage C of the
Tadiran Communications Transaction. In addition, if any of the
conditions precedent for the completion of Stage C of the Tadiran
Communications Transaction do not take place, other than the Elisra
Condition, or if there is an impediment to completing the aforesaid
Stage C, the Purchaser shall be entitled, in its discretion, to
complete the transaction in this Deed even before the completion of
Stage C of the Tadiran Communications Transaction. Nothing in the
foregoing is intended to derogate from the parties' obligations under
Section 5.3 of this Deed or from the parties' rights under the Tadiran
Communications Deed.
7.5 Neither of the parties shall have any complaint, demand or claim
against the other in connection with the completion or non-completion
of the transaction that is this Deed's subject, if at the time of the
occurrence of all of the Conditions Precedent listed in Section 5.1 of
this Deed (in this Section, the " Conditions' Occurrence Date "), there
is an impediment based upon any decision, order or judgment (including
temporary or interim) of a competent court, that prohibits the
completion of the transaction that is this Deed's subject or that
prevents its completion. In the event that the aforesaid impediment is
not removed within 4 (four) months from the Conditions' Occurrence
Date, after the parties have exercised reasonable means for its
removal, this Deed shall be cancelled and neither of the parties shall
have any complaint, demand or claim against the other in connection
with the Deed's cancellation, including the completion or
non-completion of the transaction that is this Deed's subject.
8. Rights and Obligations Under the Shareholders' Agreement
If under the Shareholders' Agreement and/or under the management
agreement (Appendix 2.9B), Koor is obliged to cause the Purchaser to
assume any of Koor's undertakings that are listed in the Shareholders'
Agreement and/or in the management agreement (in this Section, the
"Transferred Undertakings"), then the Purchaser shall assume, and shall
be deemed to have assumed the Transferred Undertakings and Koor's
rights that pertain thereto, to the extent that they are transferable
as aforesaid, from the Transaction Completion Date, and this only and
to the extent and scope that are required in order that Koor fulfil its
obligations, if any, to cause the Purchaser to assume the Transferred
Undertakings. It is clarified that this undertaking is given solely for
Koor's benefit. From the Transaction Completion Date, Koor transfers to
the Purchaser all of the rights that are granted to Koor under the
Shareholders' Agreement and the management agreement, to the extent
that they are transferable as aforesaid. Rights that are not
transferable, if any, shall be exercised by Koor pursuant to the
Purchaser's instructions and for it only, to the extent that does not
constitute a breach of the provisions of the Shareholders' Agreement
and the management agreement, respectively, and during a reasonable
period of time under the circumstances.
9. Indemnification
9.1 Koor undertakes to indemnify the Purchaser as follows:
9.1.1 For all of the Damages that will be caused to the Purchaser by
any incorrectness and/or breach of any of Koor's
representations and/or declarations as detailed in Section 2
of this Deed, other than the Tax Representation (in this
Section, a "General Representation Breach ") above a total
amount of US$3,500,000 (three million five hundred thousand
Dollars) (" General Indemnification Floor "), and all pursuant
to the provisions of this Section 9.
9.1.2 For all of the Damages that will be caused to the Purchaser as
a result of any incorrectness and/or breach of the Tax
Representation above a total amount of US$2,000,000 (two
million Dollars) (" Tax Indemnification Floor "), and all
pursuant to the provisions of this Section 9.
9.1.3 Notwithstanding what is stated in Section 9.1.2 above, if it
becomes clear that all of the Damages that are caused due to a
General Representation Breach (in this Section, the " General
Representation Breach Damages ") are less than the General
Indemnification Floor, then the Tax Indemnification Floor
shall be the lower of (1) an amount of US$2,000,000 (two
million Dollars) plus the difference between the General
Indemnification Floor and the General Representation Damages,
and (2) US$3,500,000 (three million five hundred thousand
Dollars).
9.1.4 The limitation regarding the indemnification amount stated in
this Section 9.1 above shall not apply to the representations
and declarations detailed in Sections 2.6, 2.7 and 2.8 above.
9.1.5 In this Section 9, "Damage" means--
(a) 70% (seventy percent) of any amount that is actually
paid by the Company and/or the Subsidiaries to a
third party in connection with any claim and/or
demand that was filed against the Company and/or the
Subsidiaries for a situation, act or occurrence of
the Company and/or the Subsidiaries that constitutes
a breach of a representation.
(b) If it becomes clear that, based upon generally
accepted accounting principles in Israel, as of the
date of the Financial Statements, the Company was
required to set aside higher reserves than those that
it actually set aside regarding one or more of the
subjects with respect to which representations were
given in Section 2 of this Deed, the Damage that was
caused to the Purchaser shall be 70% (seventy
percent) of the difference between the reserves that
the Company should have set aside, based upon
generally accepted accounting principles in Israel,
as of the date of the Financial Statements, and the
reserves that the Company actually set aside in the
Financial Statements regarding that matter.
(c) 70% (seventy percent) of the value of any asset of
the Company and/or any of the Subsidiaries that was
actually removed from the set of the Company's and/or
the Subsidiaries' assets without consideration, and
as a result of a situation, act or occurrence of the
Company and/or any of the Subsidiaries that
constitutes a breach of a representation, or 70%
(seventy percent) of the value of any depreciation
made regarding any asset of the Company and/or any
Subsidiary that constitutes a breach of
representation, and all with respect to the state of
the Company's and/or any of the Subsidiaries' assets
as in the Financial Statements.
(d) The amount of any payments that were actually paid by
the Purchaser to any third party whatsoever in
connection with any claim and/or demand for a breach
of representation that was filed against it.
(e) In the event that the Company and/or the Subsidiaries
set aside full or partial reserves in the Financial
Statements in connection with Damages for which they
may be indemnified pursuant to what is written in
clauses (a), (b) and (c) above, the Damage that is
stated in clauses (a), (b) and (c) above shall only
be any amount in excess of said reserve amounts.
(f) Any payment that the Purchaser actually receives
and/or 70% (seventy percent) of any payment that the
Company and/or the Subsidiaries actually receives
from a third party for any of the occurrences that
are the subject of a demand for indemnification shall
be deducted from the amounts stated in Sections
9.2(a) through (d) above. In the event that the
Purchaser and/or the Company and/or any of the
Subsidiaries receives an actual payment from a third
party for any Damage listed in Sections 9.2(a)
through (d) above as a result of any of those
occurrences that are subject to indemnification,
after it has received indemnification from Koor for
the same Damage, the Purchaser shall immediately
return to Koor an amount equal to the lower of: (1)
the payment that the Purchaser actually received from
a third party for said Damage, or (2) the payment
that it received from Koor for said Damage; and 70%
of the lesser of (1) the payment that the Company
and/or the Subsidiaries actually received from a
third party for said Damage, or (2) the payment that
the Company and/or the Subsidiaries received from
Koor for said Damage.
(g) The indemnification in this Section 9 shall be given
for direct damages only and not for consequential or
indirect damages.
9.2 (a) Koor's undertaking to indemnify for the Damages that are
listed in Section 9.2(d) above is subject to and conditioned upon the
Purchaser notifying Koor of the claim's filing or the demand's receipt
immediately after the Purchaser's receipt of the claim and/or demand,
and its allowing Koor to take upon itself at its expense, the
management of the defense of said claim and/or demand in the
Purchaser's name in cooperation and while giving the full required
information to Koor. Koor's undertaking to indemnify for Damages listed
in Section 9.2(a) above is subject to and conditioned upon the
Purchaser acting to the best of its ability so that Koor will have the
ability to take upon itself at its expense, the management of the
defense of said claim and/or demand in the Company's and/or the
Subsidiaries' name in cooperation and while giving the full required
information to Koor.
(b) Koor's undertaking to indemnify for the Damages
listed in Sections 9.2(a) and 9.2(d) above, for which
a settlement agreement was signed between the Company
and/or the Subsidiaries and/or the Purchaser and any
third party whatsoever, is subject to and conditioned
upon the settlement agreement being signed in good
faith and upon the Purchaser having notified Koor in
writing that it intends to sign a settlement
agreement and Koor having given its prior written
consent to the settlement agreement, if the
settlement agreement is between the Purchaser and any
third party, and in the event that the settlement
agreement is between the Company and/or the
Subsidiaries and any third party, the Purchaser will
use its best efforts to cause the settlement
agreement to be conditioned upon Koor's prior written
consent.
9.3 The Purchaser shall not be entitled to indemnification or compensation
from Koor for breach of a representation pursuant to the foregoing and
following provisions of this Section 9 unless it provides Koor with a
demand no later than 30 days from the date on which the Company's Board
of Directors approves the Company's audited financial statements for
the year ending 31 December 2006, provided that they are approved no
later than the later of 31 March 2007, or 365 days from the Transaction
Completion Date (the " Indemnification Period "). In a demand as
aforesaid, the claim upon which the indemnification demand is based
shall be detailed and illustrated.
9.4 Notwithstanding the provisions of Section 9.4 above, the limitation
regarding the Indemnification Period shall not apply to a written
demand for indemnification pursuant to the provisions of this Section 9
for the incorrectness of the representation contained in Section 2.30
of this Deed, provided that the Purchaser serves Koor with such a
demand no later than 30 days from the date upon which the Company filed
with the tax authorities an annual reconciliation report for the
Company's income tax for the year in which the transaction was
completed, for the following year and for the next following year,
provided that the aforesaid reports are filed no later than 31 December
2008, and if the transaction is completed after 1 January 2006--the
reports were filed by no later than 31 December 2009 (the "Tax
Indemnification Period"). In such a demand, the Purchaser shall detail
the claim upon which the indemnification demand is based.
9.5 To the extent that the Damage for which the indemnification demand was
filed is as stated in Section 9.2(b) above or is Damage that was caused
but which has not fully materialized within the Indemnification Period
or the Tax Indemnification Period, as the case may be, the Purchaser
shall be deemed to have filed an indemnification demand at the times
that are noted above if it files a written demand with Koor during the
Indemnification Period or the Tax Indemnification Period, as the case
may be, in which the specific representation or declaration as a result
of whose incorrectness the Damage was caused as stated in this Section
9 is detailed, and the Damages that have materialized or are expected
to materialize are detailed. An indemnification demand as aforesaid
shall be signed by a senior officeholder of the Purchaser, and shall
include his/her assessment or estimate regarding the amount of damage
that has not yet fully materialized. It is clarified that an
indemnification demand that was filed pursuant to this Section 9.6
shall not be necessarily limited to the amount of Damage that was
estimated in the assessment or estimate that was attached to the
aforesaid indemnification demand.
9.6 Koor's indemnification undertaking as stated in this Section 9 shall
apply only if at the time of the indemnification demand's filing the
Company's and the Subsidiaries' respective current outside auditors
shall continue to serve (alone or together with others) as the
Company's and the Subsidiaries' respective outside auditors and such
outside auditors sign the audit report in connection with the financial
statements that are attached to the indemnification demand, and if what
is under discussion is a breach of the Tax Representation, the
Company's and the Subsidiaries' respective current outside auditors
shall continue to serve (alone or together with others) as the
Company's and/or the Subsidiaries' respective representatives before
the tax authorities and so long as the indemnification demand is being
investigated, they shall advise the Company and/or the Subsidiaries in
the matter that is the subject of the indemnification demand. Nothing
in the foregoing shall be deemed to derogate from the Purchaser's right
to appoint an outside auditor for the Company and/or for any of the
Subsidiaries, respectively, provided that the Company's and/or the
Subsidiaries' existing outside auditors shall continue to serve.
9.7 It is agreed between the parties that other than the indemnification
under this Section 9, and subject to its conditions, and without
derogating from the Purchaser's rights under Section 13 below, the
Purchaser shall not be entitled to any other remedy against Koor and/or
anyone acting on its behalf, including a remedy of cancelling this
Deed, and the Purchaser hereby confirms that except as stated in
Sections 9.1 through 9.6 above, neither it nor anyone acting on its
behalf shall have any demand and/or complaint and/or claim for any
remedy of any kind, including the remedy of cancellation, against Koor
and anyone coming in its stead and on its behalf, in connection with
the breach of any representation or whose basis is a breach of
representation other than an intentional breach of representation.
9.8 Subject to what is stated in Sections 9.4, 9.5 and 9.6 above, the
Purchaser undertakes to file a demand for indemnification with Koor
within 30 days of the date that it discovers the basis for the
indemnification, together with all of the documents that are required
to prove the indemnification's claim, as the case may be.
9.9 It is hereby clarified that what is stated in Sections 9.1 through 9.9
above shall not apply to representations and declarations that are
listed in Sections 2.2, 2.5, 2.6 (only regarding the percentage of
Koor's holdings in the Company's share capital), 2.7, 2.8 and 2.9
above, with respect to which Koor undertakes to indemnify the Purchaser
without any limitation for all of the expenses and losses that are
caused to the Purchaser as a result of any incorrectness and/or breach
of said representations and declarations.
9.10 Notwithstanding what is stated in Sections 9.1 through 9.10 above, in
any event the indemnification amount shall not exceed the
Consideration.
10. The Insurance Claim
10.1 As stated in Section 2.28 above, the Company, Tadiran Systems and
Tadiran Spectralink filed a complaint in the Tel-Aviv District Court
against the insurance company for a fire that occurred in Tadiran
Systems' and Tadiran Spectralink's plant (the "Insurance Claim").
10.2 The Purchaser hereby undertakes that so long as the Insurance Claim or
any proceeding with respect thereto or in connection therewith is
pending in any court, it shall continue to manage the Insurance Claim
in the same manner and in the same way in which the Company, Tadiran
Systems and Tadiran Spectralink are managing it today, that it will not
replace the attorneys, advisors and appraisers that are dealing with
the claim, and that it shall not add other or additional attorneys,
advisors or appraisers to deal with the Insurance Claim, unless it
receives Koor's consent to such a change, which shall not be
unreasonably withheld, and that it shall not discharge any of the
employees of the Company, Tadiran Systems or Tadiran Spectralink who,
in the opinion of the attorneys who are handling the claim, are vital
to the claim's management, except after consulting with Koor.
10.3 The Purchaser undertakes to cause Koor to receive ongoing updates
directly from the attorneys, advisors and appraisers who are handling
the Insurance Claim, and also, with advance coordination with the
Purchaser, from the employees of Elisra, Tadiran Systems and Tadiran
Spectralink who are connected to the matter.
10.4 The Purchaser undertakes to notify Koor, promptly after it becomes
aware of any decision or judgment that is adopted in the Insurance
Claim, and to send Koor a copy of any decision or judgment that is
received as aforesaid. 10.5Without derogating from what is stated in
Sections 10.2, 10.3 and 10.4 above, the Purchaser undertakes to notify
Koor of the intentions of the Company, Tadiran Systems and/or Tadiran
Spectralink to sign a settlement agreement with the insurance company
in connection with the Insurance Claim, and to act to the best of its
ability to cause the settlement agreement to be conditioned upon the
receipt of Koor's prior written consent to the settlement agreement.
10.5 To the extent that after signing this Deed there is directly or
indirectly paid to the Company, Tadiran Systems, Tadiran Spectralink
and/or anyone acting on their behalf and/or for any of them, any amount
in connection with the Insurance Claim, the Purchaser shall pay
additional consideration to Koor for the Sold Shares in amounts, under
the conditions and at the times detailed in Appendix "10.6" to this
Deed (the " Additional Conditional Consideration ").
10.6 If the Company, Tadiran Systems or Tadiran Spectralink is obligated by
a judgment in the Insurance Claim, whose execution is not stayed, to
return to the insurance company all or any part of the amount of
US$9,950,000 (nine million nine hundred fifty thousand Dollars) that
the insurance company paid to the Company, Tadiran Systems and Tadiran
Spectralink in 2001, or if the amount that was adjudicated in the
Company's favor for the Insurance Claim shall be less than the direct
expenses that the Company expended for the Insurance Claim from the
Transaction Completion Date (in this Section, the " Expenses "), the
Purchaser shall give written notice to Koor of the amount that the
Company, Tadiran Systems or Tadiran Spectralink returned to the
insurance company based on such judgment and/or the amount of the
difference between the Expenses and the amount that was adjudicated in
its favor, to the extent that the Expenses exceed the amount that was
adjudicated as aforesaid, and Koor shall pay to the Purchaser within 30
days from the date that it received such a notice 70% of any such
amount, and subject to the return of the said amount, the Purchaser
shall have no claim, demand or complaint against Koor and/or anyone
acting on its behalf in connection with said amount.
11. Confidentiality
The parties shall use Confidential Information that has reached them or may
reach them in connection with this Deed, the Company and the
Subsidiaries, including in the framework of the due diligence
examination's performance, only to fulfil their obligations under this
Deed, and shall refrain from disclosing, transferring or making use of
Confidential Information in any manner except to the extent required to
fulfil the Conditions Precedent, and all with advance coordination with
the other party. Without derogating from the foregoing, if the
transaction that is this Deed's subject is not consummated, each party
shall return to the other party to this Deed any Confidential
Information that came into its possession in connection with this Deed,
the Company and the Subsidiaries, if and to the extent that any such
information came into its possession. This undertaking is not limited
by time, and shall continue to remain in effect even after the end of
this Deed's term or if this Deed is cancelled for any reason.
12. Dekolink
12.1 Notwithstanding what is stated in Section 6.1 above, until the
Transaction Completion Date, Koor shall be entitled:
12.1.1 To enter into a transaction with the Company pursuant to which
the Company shall transfer and sell to Koor and/or to anyone
designated by Koor, unless the Purchaser objects to the
identity of the other party for reasonable cause that is
explained (the "Other Party"), the entire holdings of the
Company in Dekolink, and shall pay Dekolink's remaining
outstanding debt to the Company, and all in consideration of
and pursuant to the material principles that are detailed in
the draft Dekolink share transfer deed that is attached as
Appendix "12.1" to this Deed (the "Dekolink Transaction") or
12.1.2 To distribute Dekolink's shares as a dividend in kind to the
Company's existing shareholders at the time of signing this
Deed.
12.2 If by the Transaction Completion Date, the Dekolink Transaction has not
been completed for any reason, the Purchaser undertakes during a 90-day
period from the Transaction Completion Date to support the Dekolink
Transaction, including in the Company's Board of Directors and General
Meeting, and to act to the best of its ability in order to cause the
Company to enter into an agreement with Koor regarding the Dekolink
Transaction upon Koor's request and to consummate it no later than 90
days from the Transaction Completion Date. If the Dekolink Transaction
has not been completed within 90 days from the Transaction Completion
Date, Koor shall have no claim or complaint against the Purchaser
and/or the Company, including with regard to the Consideration (as
defined in this Deed), in connection with the failure to consummate the
Dekolink Transaction.
12.3 In the event that expenses are incurred by the Company as a result of
the consummation of the Dekolink Transaction and/or the distribution of
Dekolink's shares as a dividend in kind, the Consideration for the Sold
Shares shall be reduced by 70% (seventy percent) of these expenses (in
this Section, the " Refund Amount "). In the event that the expenses
become known after the Purchaser has paid the Consideration for the
Sold Shares to Koor, Koor shall refund the Refund Amount to the
Purchaser within 30 days of the date on which the Purchaser notified
Koor of the incurrence of said expenses.
13. Purchaser's Right to Cancel the Deed
13.1 Upon the occurrence of one or more of the events described in Section
13.2 below, from the date of signing this Deed until the Transaction
Completion Date, unless it occurred with the Purchaser's consent, the
Purchaser shall have the right to cancel this Deed. Such cancellation
shall be done by written notice from the Purchaser, which shall be
received by Koor within 10 Business Days from the date upon which the
Purchaser became aware of the occurrence of any of the events described
in Section 13.2 below. If the Purchaser gives notice of this Deed's
cancellation as aforesaid, all of the parties' undertakings and rights
under this Deed and its Appendices other than the provisions of Section
11 above shall be cancelled, and this without either of the parties
having any claim and/or complaint and/or demand against the other
party.
13.2 The events are as follows:
13.2.1 If a temporary or permanent receiver and/or a temporary
liquidator and/or a liquidator and/or a trustee is appointed
for the Company, for Tadiran Systems and/or for Tadiran
Spectralink (in this Section 13.2, the "Group") and/or if a
liquidation order and/or a receivership order and/or an order
staying procedures is granted and/or if a lien is imposed upon
a material asset among the Group's assets (on a consolidated
basis) other than if it occurred in connection with the
transaction that is this Deed's subject, and such an
appointment or order or lien is not cancelled within 30 days.
13.2.2 If any of the companies in the Group shall begin merger
proceedings as stated in the Eighth Chapter of the [Israel]
Companies Law, 5759-1999, or in compromise or arrangement
proceedings pursuant to Section 350 of the Companies Law,
5759-1999, or in restructuring and/or merger proceedings
pursuant to Section 351 of the Companies Law, 5759-1999.
13.2.3 If a change takes place in the incorporation documents of any
of the companies in the Group.
13.2.4 If any of the companies in the Group shall enter into new
material transactions (on a consolidated basis for the Group),
that are materially and adversely worse than the accepted
commercial conditions in the relevant company.
13.2.5 If any of the companies in the Group carries out a change in
an agreement that is not in the Ordinary Course of Business
for that company, that will cause material damage to the
Group's business (on a consolidated basis), but excluding
activities of the Company and/or Tadiran Spectralink pursuant
to the provisions of Section 3.8 above.
13.2.6 If any of the companies in the Group enters into a new area of
business in which the Group is not engaged as of the date of
signing this Deed, or in which it had not intended to engage
pursuant to decisions that it adopted before entering into
this Deed and of which it had notified the Purchaser, and that
is not included in the Group's Ordinary Course of Business, or
if it leaves a material business area in which the Group is
engaged at the signing of this Deed, other than as stated in
Section 12 above.
13.2.7 If any of the companies in the Group shall enter into
transactions whose essence is mergers or acquisitions of
corporate entities or businesses (M&A) whose total financial
scope is in excess of $1,000,000 (one million Dollars).
13.2.8 If any of the companies in the Group allots or undertakes to
allot its shares or other securities.
13.2.9 If one of the events listed in Section 6.1(a) and (c) above
occurs.
13.3 Koor shall deliver written notice to the Purchaser immediately upon the
occurrence of any of the events listed in Section 13.2 above, all
subject to applicable law.
14. Miscellaneous
14.1 Each party shall bear its legal expenses in connection with entering
into this Deed and the required payments and taxes that apply to it, if
any, under law, in connection with its entering into this Deed.
14.2 This Deed includes, merges and expresses all of the conditions that
have been agreed between the parties in the matters that are this
Deed's subject. Any promises, guarantees, written or oral agreements,
undertakings or representations, evaluations and assessments regarding
this Deed's subject that were given or done by the parties before
signing this Deed and that were not explicitly included in it shall not
add to the undertakings and rights that are determined in this Deed,
nor derogate from them nor change them, and the parties shall not be
bound by them from this Deed's date. Without derogating from the
generality of the foregoing, the exchange of documents between the
parties before this Deed was signed, including the drafts that were
exchanged between them, shall have no meaning in interpreting this
Deed.
14.3 No behavior by any of the parties shall be deemed a waiver of any of
its rights under this Deed or by law, or as a waiver or consent on its
part to any breach or failure to fulfil any condition unless the
agreement, waiver, delay, cancellation or addition was made explicitly
and in writing.
14.4 Any amendment, change or addition to this Deed shall be effective only
if done in writing and signed by the parties to this Deed, and shall
apply only to the instance described in said document, and shall not
derogate from the rights of any other party under this Deed.
14.5 The parties to this Deed shall be entitled to extend or shorten any
time that is fixed in this Deed, and to waive the execution of any of
this Deed's provisions, and all once or multiple times, and by means of
a written notice signed by two officeholders of each of Koor and the
Purchaser, without the need for any additional approval, provided that
the final time for receiving legal approval of the Purchaser's General
Meeting for the Purchaser entering into this Deed shall not be extended
without the time for receiving an approval of the Purchaser's General
Meeting for the Purchaser entering into the amendment of the Koor-Elbit
Deed dated 6 July 2005 that was signed between the parties to this Deed
being extended accordingly.
14.6 The laws of the State of Israel shall apply to this Deed and to all
that is connected therewith. The competent court in the judicial
district of Tel Aviv--Jaffa District Court shall have exclusive
jurisdiction in any matter that arises in connection with this Deed and
its performance, and no other court shall have jurisdiction.
14.7 Neither party to this Deed is authorized to transfer or assign any of
its rights and/or obligations that derive from this Deed to a third
party without the prior written consent of the other party to this
Deed.
14.8 Neither party to this Deed shall have any right of setoff, lien, charge
or holdback against the other party to this Deed and/or anyone acting
on its behalf, including in connection with the indemnification or the
Additional Conditional Consideration, and to the extent that any party
to this Deed has any such right or rights by law or agreement (oral, by
action or written) by its signature on this Deed it hereby waives such
rights absolutely and irrevocably.
14.9 If any of the parties did not enforce or delayed enforcement of any of
the rights that it is granted under this Deed, in a specific instance
or in a series of instances, it shall not be deemed a waiver of said
right, or on any other rights whatsoever.
14.10 Notices under this Deed or in connection therewith shall be delivered
in writing and with the signature of the notice's deliverer or of
someone who is authorized to sign on its behalf. A written notice that
is sent by either party to this Deed to the other party (to the address
given in this Deed's preamble or to another address of which that party
gives notice to the other parties to this Deed pursuant to this
Section's provisions), shall be deemed as if received by the party to
which it was sent within 4 (four) Business Days of its delivery for
mailing by registered mail (against a delivery receipt); at the time
that it was actually delivered or acceptance was refused if delivery
was made by hand; and at the time it was sent by facsimile (if it was
sent during the course of a Business Day and if it was not sent during
the course of a Business Day, on the first Business Day after it was
sent) provided that the sending party displays a facsimile confirmation
regarding the notice's dispatch.
14.11 Without derogating from Section 11 above, and subject to applicable
law, the parties shall not be entitled to publicize and/or disclose
this Deed's contents and shall coordinate in advance any report or
notice that they are required to give by law.
IN WITNESS WHEREOF, THE PARTIES HAVE DULY EXECUTED THIS DEED:
(signed) -----------------------------------------------
(signed) -----------------------------------------------
Koor Industries Ltd. Elbit Systems Ltd.
By: Xxxxxxxx Xxxxxx ------------------------
By: Xxxxxx Xxxxxxxx -----------------------
By: Xxxxx Xxxxx -----------------------
By: Xxxxxx Xxxxxx ------------------------
Attorney's Certification
I, Xxxxxx Xxxxxx, Adv. hereby certify that Messrs. Xxxxxxxx Xxxxxx and Xxxxx
Xxxxx, together are authorized to execute this Deed and the documents related
thereto or that are required for its performance, in the name of Koor Industries
Ltd.
(signed) ----------------------------
Xxxxxx Xxxxxx, Adv.
Attorney's Certification
I, Xxxxx Xxxxx Xxxxx, Adv. hereby certify that Messrs. Xxxxxx Xxxxxxxx and
Xxxxxx Xxxxxx, together are authorized to execute this Deed and the documents
related thereto or that are required for its performance, in the name of Elbit
Systems Ltd.
(signed) ----------------------------
Xxxxx Xxxxx Temin, Adv.
APPENDIX 10.6
The Additional Conditional Consideration shall be in the following amounts:
(1) For any amount that is directly or indirectly paid to the Company, to
Tadiran Systems, to Tadiran Spectralink and/or to anyone on behalf of
any of them and/or in favor of any of them in connection with an
Insurance Claim (such an amount, hereinafter, the "Insurance Payment")
up to an amount of US$30,000,000 (thirty million Dollars), the
Purchaser shall pay an amount equal to 40% of the Insurance Payment to
Koor.
(2) For every Insurance Payment in excess of US$30,000,000 (thirty million
Dollars) and up to an amount of US$50,000,000 (fifty million Dollars),
the Purchaser shall pay an amount equal to 27.5% of the Insurance
Payment to Koor.
(3) For every Insurance Payment in excess of US$50,000,000 (fifty million
Dollars), the Purchaser shall pay an amount equal to 25% of the
Insurance Payment to Koor. And it shall be paid at the following times:
(1) If the Insurance Payment is made to the Company, to Tadiran
Systems, to Tadiran Spectralink and/or to anyone on behalf of
any of them between the date of signing this Deed and the
Transaction Completion Date, the Purchaser shall pay the
Additional Conditional Consideration in the amounts stated
above to Koor on the Transaction Completion Date.
(2) If the Insurance Payment is made to the Company, to Tadiran
Systems, to Tadiran Spectralink and/or to anyone on behalf of
any of them after the Transaction Completion Date, the
Purchaser shall pay the Additional Conditional Consideration
in the amounts stated above to Koor within thirty days after
the date that the aforesaid Insurance Payment is made.
It is clarified that in the event that the court sets fee amounts that
exceed the fees given in the agreements existing on this Deed's signing
date, (unless they are amended with the consent of the Company, Tadiran
Systems, Tadiran Spectralink and/or anyone acting on behalf of any of
them, after the Transaction Completion Date), the aforesaid excess
amount set by the court shall not be included in the Insurance Payment.
Thus for example, and only as an illustration:
If an amount of US$50,000,000 was transferred in connection with the
Insurance Claim in the following manner:
(1) A total amount of US$35,000,000 was transferred to the
Company;
(2) An amount of US$5,000,000 was transferred to the attorneys who
are handling the Insurance Claim on the Company's behalf for
their handling of the Insurance Claim and pursuant to the
existing agreements with said attorneys on the date of signing
this Deed; and
(3) An amount of US$10,000,000 was deposited in trust,
Then the amounts stated in clauses (1) and (2), in a total amount of
US$40,000,000, shall be deemed amounts that were paid to the Company
and the amount stated in clause (3) shall only be deemed an amount paid
to the Company if and to the extent that it is released from the trust
in favor of the Company, at the time that it is released. In such an
instance, for the amounts stated in clauses (1) and (2) above totalling
US$40,000,000, the Purchaser shall pay to Koor:
(1) An amount of US$12,000,000 (40% of US$30,000,000); and
(2) An amount of US$2,750,000 (27.5% of US$10,000,000); And in
total an amount of US$14,750,000.
