DEED OF PLEDGE
--------------
This Deed of Pledge is made this 29 day of November, 2001
between:
(1) TREFOIL ISRAEL FSL, L.P. a limited partnership duly established and
existing under the laws of the State of Delaware U.S.A. (hereunder
called - "TREFOIL"); and
(2) BANK HAPOALIM B.M., a banking corporation limited by shares through
its Head Office situated at 00 Xxxxxxxxxx Xxxxxxxxx, Xxx-Xxxx 00000,
(hereinafter called - " BANK Hpoalim"); and
(3) POALIM TRUST SERVICES LTD., a company duly incorporated and existing
under the laws of the State of Israel, having its registered office at
00 Xxxxxxx Xx, Xxx-Xxxx (hereinafter called - "the TRUST COMPANY").
WHEREAS Trefoil has received or will receive as of the date hereof and at
all times hereafter from the Bank, loans (hereinafter "BANKING SERVICES")
on terms agreed or to be agreed upon from time to time with respect to any
of such Banking Services; and
WHEREAS it has been agreed upon that the following shares namely 1,000,000
(One Million) Ordinary shares of Formula Systems (1985) Ltd. a Company duly
established and existing under the laws of the State of Israel (hereinafter
called "THE COMPANY") having a nominal value of NIS 1 each (hereinafter
called "the SHARES or the "PLEDGED SHARES") held by Trefoil shall serve as
collateral for repayment of various sums of money which Trefoil may owe the
Bank in connection with Banking Services; and
WHEREAS it has also been agreed upon that the Pledged Shares be transferred
into the name of the Trust Company for the purpose of creating in favour of
the Bank (the "Trust Account") and its successors a first ranking specific
pledge and charge on the Shares and the income and profits derived from the
Shares for the purpose of securing the full and timely payment of any and
all amounts which may become due to the Bank from Trefoil from time to time
in connection with Banking Services to be extended by the Bank to Trefoil
in whole or in part irrespective whether due definitely or conditionally,
directly or indirectly, whether due and payable prior to realisation of the
collateral granted hereunder or thereafter, unlimited in amount, together
with interest, charges, commissions, linkage differentials expenses of any
kind including the costs of realisation, advocates fees, insurance
premiums, stamp duties and any and all monies which the Bank may be
entitled to claim and/or receive from Trefoil (hereinafter jointly and
severally referred to as "the SECURED AMOUNTS").
NOW, THEREFORE, It is Hereby Agreed and Declared between the Parties as
Follows:
1 The recitals to this Pledge Agreement form an integral part hereof.
2. Except as permitted under the documents signed between Trefoil and the
Bank in connection with the Banking Services Trefoil hereby declares,
confirms, warrants and undertakes (as the case may be) as follows:
(a) The Shares are fully paid up, free and clear of any charge,
pledge, attachment, claim or any other third party rights and
will remain so for the duration of the pledge of the Pledged
Rights (as defined in Clause 3 below), except for the purpose of
realising the Shares as collateral pursuant to the provisions of
this Deed of Pledge and except for restrictions as specified in
the Trefoil's letter to the Bank of this date.
(b) There is no limitation or provision of law or of any agreement
applicable to the Shares restricting the chargeability of the
Shares and except for restrictions as specified in the Trefoil's
letter to the Bank of this date.,
(c) No assignment or other disposition has been made affecting the
Shares or their value as collateral as envisaged by this Deed of
Pledge.
(d) The Shares in the Company are capable of being freely sold,
transferred and/or disposed of without the consent or approval of
any third person or authority except for restrictions under
agreements or commitments or under any applicable law, entered or
assumed as specified in Trefoil's letter to the Bank of this
date.
(e) There are no outstanding powers of attorney or proxies or
assignments or delegations thereof authorising an action to be
taken on behalf of Trefoil in connection with the Shares except
only under this Deed of Pledge or any other documents signed
between the Bank and Trefoil.
3. As security for the full and timely payment of all amounts which may
become due, from Trefoil in connection with any and all of the Secured
Amounts, all of the Shares transferred to the Trust Company are hereby
pledged and charged by way of a first ranking specific pledge and
charge in favour of the Trust Company acting as trustee for the Bank
together with all other shares, if any, which by virtue of the Shares
are issued to, the holder thereof, whether in substitution therefor,
by way of bonus shares, rights or otherwise, together with all
existing and future rights and benefits attaching to the Shares and
all additions and substitutions thereto and therefor, including but
without prejudice to the generality of the foregoing, all dividends,
interest returns of capital and other sums paid or to be paid in
respect of the Shares and all additions and substitutions thereto and
therefor, all of which are hereinafter called - "the PLEDGED RIGHTS".
4. In order to carry out the provisions of Clause 3 herein above:
(a) Trefoil undertakes to file the pledge of the Shares hereunder
with the Registrar of Pledges forthwith upon the signature of
this Deed of Pledge and deliver to the Bank certificate of the
Registrar of Pledges evidencing such filing within 14 days of the
signature of this Deed of Pledge.
5. (a) Subject to Section 14 below until such time as the Bank has
confirmed to the Trust Company by written notice that all amounts
which may become due and payable on account of the Secured
Amounts have been paid in full, the Trust Company shall hold the
Pledged Rights in its own name and shall act only in accordance
with instructions signed by the Bank. Nothing herein shall be
interpreted to convey upon the Bank the right to refuse giving
Trefoil a Proxy in respect of the Shares or to cancel any Proxy
given to Trefoil except in accordance with the provisions of this
Deed of Pledge.
(b) The Trust Company shall refer to the Bank for instructions with
respect to any matter and/or act to be performed and/or executed
in connection with the Pledged Rights and without derogating from
anything herein contained, especially in connection with any
matter with respect to voting in any general meeting of the
Company or any other exercise of rights under the Shares and/or
in connection therewith.
(c) Notwithstanding the provisions of sub-clauses (a) and (b) above
Trefoil's nominee or nominees (as the case may be) shall be
granted a proxy (hereinafter the "Proxy") to vote for resolutions
at meetings of shareholders of the Company or to be appointed or
elected as director or directors of the Company to the extent
that the Pledged Rights allow.
6. All dividends and/or other distributions of cash by the Company on or
in respect of the Shares and all other Pledged Rights and or any
amounts received from the sale of the Pledged Rights or any part of
the (hereinafter collectively called "Dividends") shall, be credited
to the Trust Account and be maintained in the Trust Account (under
such deposit and bearing such interest and other terms as may at that
time and from time to time be available with the Bank considering the
amount, currency and duration of the type of deposit chosen by Trefoil
(hereinafter: "Interest on Dividends"), and each and all Dividends
together with Interest on Dividends from time to time maintained in
and/or credited to the Trust Account shall constitute part of the
Pledged Rights and shall be transferred by the Trust Company to the
Bank upon the Trefoil's instructions furnished to the Trust Company as
agreed between Trefoil and the Bank. If Trefoil fails to make any
payment due and payable under the Banking Services or this Deed of
Pledge when due, then upon receipt by the Trust Company of the Bank's
demand, the Dividends and the Interest on Dividends shall be
transferred by the Trust Company to the Bank and applied by the Bank
to make such payment. Subject to the above, Trefoil hereby irrevocably
instructs and authorises the Trust Company to issue such instructions
with respect to the Trust Account and to do such acts in connection
therewith as it may from time to time be instructed by the Bank.
7. If at any time after any and all such appointments, elections or
actions there occurs and continues to subsist any one of the following
events of default, namely:
(a) Trefoil is in breach or fails to perform or fulfil any of its
obligations and\ or warranties pursuant to this Deed of Pledge;
or
(b) There occurs and continues to subsist an event which gives the
Bank the right to demand payment before the original due date of
payment, under any document signed between the Bank and Trefoil
secured by this Deed of Pledge in connection with the Pledged
Rights, provided that any period ( if any) given to Trefoil to
effect such early payment under such document shall have elapsed
and as long as such early payment is not actually effected (an
"Event of Default")
then the Bank, may notify the Trust Company, and Trefoil of its
intention to instruct the Trust Company to take whatever action
may be necessary to cancel the Proxy and/or replace all or any of
the incumbent nominees with a nominee or nominees acceptable to
the Bank.
The Bank shall give Trefoil seven (7) days prior notice of its
intention to cancel the Proxy unless the Bank in its sole
discretion considers that such early notice or such lapse of time
can cause the Bank damage or diminish the value of the Pledged
Rights in a way which the Bank considers to be material. Without
derogating from the forgoing, the Trust Company may then cancel
all or any of the existing proxy or proxies given by it and
Trefoil, shall cause the existing nominee or nominees being
replaced to surrender any proxy or proxies held by them and to
resign from the positions or offices held by them.
8. As long as any amount hereafter to become due from Trefoil to the Bank
on account of the Secured Amounts is outstanding, except as provided
in this Deed of Pledge or permitted under any document signed between
the Bank and Trefoil, Trefoil hereby undertakes not to pledge, charge,
assign or otherwise dispose of any of the Pledged Rights without the
prior written consent of the Trust Company and the Bank.
9. (a) Seven (7) days from receipt by Trefoil and the Trust Company
of the Bank's notification in writing, stating that an Event of
Default has occurred provided that any period ,if any, given to
Trefoil to cure such default under the documents signed between
the Bank and Trefoil shall have expired and as long as early
repayment of the Secured Amounts is not actually effected - the
Trust Company shall, if so requested by the Bank, immediately
surrender the Shares to the Bank and/or to whom the Bank shall so
instruct and \or shall further act in accordance with
instructions given by the Bank
Nothing herein contained shall derogate from any other right or
remedy the Bank may then have, pursuant to any applicable law,
against Trefoil and/or the Shares, which may be exercised by the
Bank simultaneously therewith on in any other manner deemed
appropriate by the Bank.
(b) Upon the elapse of the above mentioned 7 days period and provided
that the Secured Amounts were not paid in full, the Trust Company
and/or the Bank and/or any person or corporation acting on behalf
of the Trust Company and/or the Bank (hereinafter referred to as
- "the Attorneys-in-Fact") shall be entitled to realise all or
any of the Pledged Rights at a price approved by the Bank and \or
by the Attorney in Fact as they shall dim fit using best efforts
to obtain the best price and terms of payment available at that
time at the Bank's and \or Attorney's in Fact reasonable
discretion or according to a court's approval , without any
further authority being required from Trefoil.
10. (a) This Agreement shall be governed by the laws of the State of
Israel, and in particular the provisions of the Pledges Law,
5727-1967, as may be amended or substituted, with the exception
of Section 13(b) which shall not apply.
(b) Subject to the provisions of Section 9 above in order to realise
all or any of the Pledged Rights, the Trust Company and/or the
Bank and/or the Attorneys-in-Fact may adopt any means it or they
deem fit in order to collect any amount payable on account of the
Secured Amounts and/or to realise the Pledged Rights and/or the
respective rights of the Bank hereunder, including the sale of
any of the Pledged Rights in any manner allowed by applicable
law, as the Bank and/or the Trust Trefoil with the approval of
the Bank and/or the Attorney in Fact shall deem fit after giving
Trefoil seven (7) days prior notice ( unless the Bank in its sole
and reasonable discretion considers that such early notice can
cause the Bank damage or diminish the value of its collaterals in
a way which the Bank considers to be material and without being
answerable for any loss occasioned by such sale or realisation
resulting from postponement thereof as set forth in Section 12
and at any such sale the Bank may become the purchaser and shall
have the right to set-off the purchase price offered by it
against the amount due to it on account of the Secured Amounts.
(c) Upon the occurrence of any of the events specified in Section 6
above the Trust Company with the approval of the Bank may manage
and administer or may instruct the Attorneys-in-Fact to manage
and administer the Pledged Rights in such manner and for such
period as the Trust Company, with the approval of the Bank, in
its absolute discretion may deem expedient, and for the purposes
aforesaid the Trust Company with the approval of the Bank may do
or may instruct the Attorneys-in-Fact to do all acts or things
incidental or conducive thereto in all respects as if the Trust
Company or the Attorney's-in Fact were the owners thereof without
being responsible for any loss thereby incurred as set forth in
Section 13.
(d) Without derogating from the provisions of sub-clauses (a), (b)
and (c) of this Clause 9, the Bank and/or the Trust Company with
the approval of the Bank, may institute legal proceedings in
order to enforce payment by Trefoil of any amount payable on
account of the Secured Amounts pursuant to the documents signed
between the Bank and Trefoil and in accordance therewith.
(e) All costs, claims, expenses and disbursements incurred by the
Bank and/or the Trust Company and Attorneys-in-Fact in or about
or incidental to the exercise of any powers aforesaid shall be
payable by Trefoil on demand and shall be secured by this Deed of
Pledge.
11. Upon any sale by Bank and/or the Trust Company and/or by the
Attorneys-in Fact of any of the Pledged Rights, the purchasers shall
not be bound to see or enquire whether the Bank's and/or Trust
Company's and/or the Attorneys-in-Fact's power of sale has arisen in
the manner herein provided and the sale shall be deemed to be within
their power and receipt for the funds paid by the purchaser shall
effectively discharge the purchaser who shall not be concerned with
the manner of application of the proceeds of sale or be in any way
answerable therefore.
12. In the event that any of the Pledged Rights are sold as aforesaid or
in accordance with a court order or an order of a competent authority
and such order does not specify the order in which the amounts
realised are to be appropriated, all amounts so obtained shall be
appropriated according to the documents signed between Trefoil and the
Bank.
13. Trefoil hereby confirms that neither the Trust Company or the Bank nor
the Attorneys-in-Fact shall be held liable for any loss and/or damage
to/or incurred by Trefoil with respect to the Bank or the Trust
Company's or such Attorney-in-Fact's actions or omissions in good
faith in connection with and/or in accordance with this Deed of Pledge
unless such loss and/or damage is the result of gross negligence,
wilful misconduct, bad faith or breach of the provisions of a document
signed between Trefoil and the Bank in relation to this Deed of Pledge
or this Deed of Pledge by the Bank..
14. Without derogating from the provisions of Clause 5(b) herein above the
Bank shall be obliged to give to the Trust Company immediate written
notice of the repayment in full of all amounts due to the Bank in
connection with the Secured Amounts. Upon receipt by the Trust Company
of written notice from the Bank of the repayment in full of all
amounts due to the Bank in connection with the Secured Amounts then,
the Trust Company shall transfer the Pledged Rights or the unrealised
remainder thereof (as the case may be), to Trefoil and this Deed of
Pledge shall forthwith be terminated. Any expense incurred thereby
shall be borne by Trefoil. Notwithstanding the above, the Trust
Company shall release the Shares (or any part thereof) pursuant to
Trefoil's instructions as consented by the Bank provided such
instructions do not contravene with the Trust Company's obligations
under this Deed of Pledge.
15. In case the Shares are registered in the Tel Aviv Stock Exchange
("TASE") and the Shares are restricted shares according to TASE
regulations then the Trust Company shall hold such shares in
conformity with such regulations so long as they are applicable.
16. Trefoil hereby declares that the ownership of the Shares cause it to
be an "Interested Party" as such term is defined in the Securities Law
5728 - 1968, (the "LAW") and hereby undertakes to furnish from time to
time, when so required pursuant to the terms of the Law, all necessary
reports as required to be made by such Interested Party and to furnish
the Trust Company with true and correct copies thereof within 48
(forty eight) hours from the date such report is due to be furnished
under the Law.
Should Trefoil fail to comply with the above undertaking, the Trust
Company shall be entitled, without thereby derogating from Trefoil's
obligations so to do, to furnish the required reports, detailing the
names of the beneficiaries defined as Interested Party.
17. [Intentionally omitted]
18. Trefoil hereby irrevocably authorises and instructs the Trust Company
to sign on its behalf as its attorney-in-fact on any documents,
declarations, affidavits or returns which, in the opinion of the Trust
Company may be required to perfect the security interest of the Bank
with respect to the Pledged Rights, to facilitate the realisation of
any of the Pledged Rights as collateral for the full repayment of the
Secured Amounts or to transfer any of the Pledged Rights to the
respective party as provided in Clause 14 above following the
repayment in full of the Secured Amounts.
19. (a) For the purpose of this Agreement, the expression "written" or
"in writing" shall mean "by letter, cable or telex or fax".
(b) Any demand or any notice in writing required or permitted to be
made hereunder shall, if made by letter, be deemed to be
sufficiently made if addressed to Trefoil at its address set
below if addressed to the Bank or to the Trust Company, at their
respective addresses set forth above and posted to them or served
on them personally there or left for them there and in proving
such service in case of posting, it shall be sufficient to show
that the letter containing such demand or notice was properly
addressed, stamped and posted by registered mail for service to
be deemed to have been effected within seven (7) days after the
date of posting.
(c) Any demand or any notice in writing required or permitted to be
made hereunder shall, if made by cable or telex be deemed to be
sufficiently made if addressed as follows:
(i) In the case of a demand or notice to Trefoil:
Fax No.
Cable Address:
Telex Number
(ii) in the case of a demand or notice to Bank Hapoalim:
Cable Address: BANK HAPOALIM TEL AVIV
Telex Numbers: 32121, 342242 answerback PHEAD IL
Fax Number
(v) In the case of a demand or notice to the Trust Company
Cable Address: Bank Hapoalim Tel Aviv
Attn: Poalim Trust Services
Telex Numbers: 32121, 342242
Attn: Trust Company of Bank Hapoalim
answerbank PHEAD IL
and any such cable or telex properly addressed and sent
shall be deemed to have been received within 36
(thirty-six) hours after the time of sending.
(d) Each of the parties hereto shall be entitled at any time and from
time to time to give the other parties notice in writing of any
change of the addresses relating to the party giving such notice,
and paragraphs (b) and (c) of this clause shall be deemed
modified by and in accordance with every such notice of change.
20. In consideration of the Trust Company agreeing to act in terms of this
Pledge Agreement, Trefoil, shall pay to the Trust Company a fee for
each 12 months period (or, pro-rata, for any portion thereof) of or
equivalent to US$.1,500 payable every 3 months in advance and shall
bear any costs and expenses incurred by the Trust Company in
connection with the implementation of this Deed of Pledge (including
the cost of stamping and registering same and including the cost of
stamping of the deed of transfer of the Shares and further including
any banking fees incurred by the Trust Company in connection with the
depositing of the shares in a bank account). Such banking fees, costs
and expenses shall be payable on demand. Trefoil authorises the Bank
to reimburse the Trust Company in respect of any amount payable to the
Trust Company and any amount so paid to the Trust Company shall be
reimbursed by Trefoil, to the Bank immediately on demand. Any amount
not paid within 7 (seven) days shall bear interest at the highest rate
charged from time to time by the Bank on unauthorised overdrafts in
revolving debitory accounts of prime corporate customers and shall be
secured by this Deed of Pledge.
21. (a) For the purpose of this Deed Pledge the parties hereby
irrevocably submit to the exclusive jurisdiction of the competent
court in Tel-Aviv, Jaffa, but nothing herein contained shall
derogate from the rights of the Bank and/or Trust Company to
institute proceedings against any other party or parties in any
other competent court.
(b) Trefoil agrees that any summons, notice or judgement or other
legal process or document in connection with any proceedings
referred to in sub-clause (a) hereof may be served upon by
delivering same to the Trefoil at its address set forth above.
This Deed of Pledge shall enter into force as of the day and year
first above written after having been signed by all parties.
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to
be duly executed at the respective places and on the respective dates
below written.
-----------------------------------------
TREFOIL ISRAEL FSL L.P.
By: Trefoil FSL Inc
Its General Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President and Secretary
/s/ Xxxxx Xxxxxx /s/ Yoram Oron
--------------------------------------
BANK HAPOALIM B.M.
/s/ Xxxxxx Xxxxx /s/ Xxxxxxxx Xxxxxx
--------------------------------------
POALIM TRUST SERVICES LTD
