EXHIBIT 1
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made the 2nd day of October 1998.
BETWEEN:
CVALIM -The Electric Wire and Cable Company of Israel Ltd. ("Cvalim"), an
Israeli company having its headquarters at Xxxxxxxx Xxxxxxxx, Xxxxxx Xxxxxx,
00000, and Dash Cable Industries (Israel) Ltd. ("Dash"), an Israeli company with
its principal place of business at Industrial Xxxx X, Xxxxxxx-Xxxxx, 00000
(together, Cvalim with Dash, hereinafter jointly and severally referred to as
"Seller").
AND
Cables of Zion United Works Ltd., an Israeli company having its headquarters in
Rishon Lezion.
WHEREAS Seller is engaged in the business of designing,
production, marketing, distribution and sale of optical
fiber cable, copper and aluminum wire cable and
conductors of various types at factories located in
Haifa, Bet-Shean, Maalot, Upper Nazareth and Carmiel, and
at other properties located in Tel-Aviv (finished goods
warehouse) and, Kiryat Bialik (management offices) (the
"Cable Business"); and
WHEREAS Seller is willing to sell and the Purchaser is willing to
acquire the Assets, as defined in sub-Clause 1.1 below, on the
terms and conditions contained in this Agreement so that the
Purchaser may, upon closing of the transactions contemplated
by this Agreement, continue to operate the Cable Business as a
going concern;
Now, Therefore, the Parties Hereby Declare, Agree and Covenant as
Follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless the contrary intention appears:
1.1.1 "Assets" means all of Seller's right, title, and
interest in, under and to the assets of Seller,
whether tangible or intangible, used or held for
use in the conduct of the Cable Business wherever
such assets are located and whether or not any
such assets have any value for accounting
purposes, save however the Excluded Assets, and
including without limitation, the following:
1.1.1.1 all machinery and equipment, spare parts
and supplies, motor vehicles,
accessories, tooling, tools dies,
furniture, including such
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items paid for but not yet delivered to
Seller, including, without limitation,
the items on SCHEDULE 1.1.1.1 (save land
and buildings) ("Form 11" "[Alef][Yod]
[Samekh][Pe][Vav][Tet]" for accounting
purposes) attached hereto and updated as
of June 30th, 1998 (the "Equipment");
1.1.1.2 all of Seller's inventories, including
finished products, samples, work-in
process, raw materials (including raw
materials in transport or transit),
packaging materials, auxiliary
materials, spare parts, maintenance
materials, supplies, drums and engineer
stores (the "Inventory"). A preliminary
Schedule 1.1.1.2 which shall list the
Inventory used by Seller to determine
the Estimated Inventory Adjustment
pursuant to Clause 4.2 shall be
delivered by Seller to Purchaser with
the delivery of the Estimated Inventory
Adjustment. The final Schedule 1.1.1.2
which shall list the Inventory as of the
Closing Date shall be delivered to the
Purchaser by Seller fifteen (15)
Business Days after the Closing Date.
1.1.1.3 subject to Clauses 9.9 and 11.1, all of
Seller's rights in and to contracts,
arrangements, agreements, rights under
existing leases for real properties in
Tel-Aviv, Kiryat Bialik, Haifa (Ashbar
and Paz leases) and Carmiel (amended
according to SCHEDULE 1.1.1.3 hereto),
leases for personal properties,
transferable licenses and purchase
orders for the sale or purchase of goods
or services with suppliers and
customers;
1.1.1.4 all of Seller's correspondence,
engineering, maintenance, operating and
production records, advertising
materials, customer lists, cost and
pricing information, supplier lists,
catalogues, quality control records and
manuals, copies of personnel records and
customer credit records, and copies of
Seller's records and correspondence in
connection with the Cable Business (the
"Records"). For the sake of clarity, if
Seller requires original of any of the
Records, Seller shall only be obliged to
supply copies of such Records, however
at Purchaser's request, Seller shall
make available to Purchaser copies
certified by counsel or originals of
Records reasonably required by Purchaser
for legal or other processes where same
is necessary;
1.1.1.5 all of Seller's trademarks, trade names,
service marks and service names, and
registrations and any applications for
registration thereof and foreign
counterparts thereof and licenses with
respect thereto, including, without
limitation, those listed in SCHEDULE
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1.1.1.5 (the "Trademarks"). Schedule
1.1.1.5 shall be prepared as of the date
hereof and shall be updated by Seller,
only for changes occurring in the
ordinary course of business, for the
Closing Date and incorporated as part of
this Agreement;
1.1.1.6 all of the Seller's inventions,
discoveries, trade secrets,
improvements, formulae, practices,
processes, methods, technology and know-
how, whether or not patented or
patentable, including any of the
foregoing in the process of development,
and any similar proprietary rights and
licenses with respect thereto owned by
Seller, together with all product
specifications, drawings, blueprints,
research and development files, records
and laboratory books, (the "Know-How");
Trademarks and Know-How are hereinafter
collectively referred to as the
"Intellectual Property Rights";
1.1.1.7 subject to Clause 6, all of Seller's
prepaid items and expenses, rights
deriving from the Approved Enterprise
status of Seller's factories (save (i)
grants received by Seller and recorded
in its books and (ii) all rights to
receive money in respect of grants
relating to Approved Enterprises and to
the extent such amounts are or were due
to Seller on or before the Closing Date
relating to performance of its
obligations to the Investment Center
prior to the Closing Date and recorded
in the books of Seller in respect
thereof), customer deposits (other than
customer deposits that in effect
represent payments for products shipped
by Seller prior to Closing), rights of
offset and credits relating to the
Inventory, Equipment or Intellectual
Property Rights (other than (i) rights
of offset or credits that are
respectively deducted from the valuation
of Inventory and the calculation of the
Inventory Adjustment and (ii) rights of
offset or credits relating to Inventory
that are compensatory in nature and the
amounts related thereto are not
reflective of a reduction in the value
of the Inventory to which they relate);
1.1.1.8 all of Seller's computer and automatic
machinery, software, firmware, programs
and source disks, program documentation,
tapes, manuals, forms, guides and other
materials with respect thereto and any
licenses and other agreements with
respect thereto;
1.1.1.9 all of Seller's goodwill and rights in
and to the names (A) "Cvalim", (B)
"Cvalim -The Wire and Cable Company of
Israel
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LTD", (C) "D.A.S.H. Cable Industries
(Israel) Ltd" and (D) "D.A.S.H." and any
derivatives of such names;
1.1.1.10 casualty insurance proceeds payable as a
result of the loss or destruction of any
Equipment.
Subject to Clauses 9.9 and 12.1 the term "Assets"
with respect to any date prior to the Closing Date
shall be deemed to refer to the assets of Seller
that would constitute the Assets hereunder if
Closing were to take place on that date.
1.1.2 "Agreement" shall mean this agreement and any
Schedule or Appendix attached hereto.
1.1.3 "Appendix" means an appendix of Schedule 8.1.1
hereto.
1.1.4 "Assumed Liabilities" shall have the meaning set
forth in Clause 7.1 hereof.
1.1.5 "Assumed Transferred Hedging Transactions" shall
mean the hedging, futures and option arrangements
or transactions that are to be assumed by Purchaser
as set forth on SCHEDULE 1.1.5 hereto.
1.1.6 "Assumed Redundancy Payments" shall have the
meaning set forth in Clause 11.5 hereof.
1.1.7 "Assumed Warranty Obligations" shall have the
meaning set forth in Clause 7.4.
1.1.8 "Business Day" shall mean a day on which most of
the banks in Israel and in the U.S. are opened for
business.
1.1.9 "Competitive Activity" means any activity involving
the carrying on a business in Israel directly or
indirectly competitive with the Cable Business.
1.1.10 "Closing Date" means the date of Closing determined
in accordance with Clause 3.1.
1.1.11 "Contracts" shall have the meaning set forth in
Clause 8 of Schedule 8.l.1.
1.1.12 "Customers' and Suppliers' Backlog shall mean
Seller's backlog of suppliers and customers set
forth on SCHEDULE 1.1.12 to be attached hereto
prior to the Closing in accordance with Clause
9.14.3.
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1.1.13 "Damages" shall have the meaning set forth in
Clause 8.3 hereof.
1.1.14 "Employees" shall have the meaning set forth in
Clause 9.4 hereof.
1.1.15 "Encumbrances" means debentures, mortgages, charges
(fixed or floating), pledges, liens, security
interests and other encumbrances.
1.1.16 "Environmental Liability" means Damages (whether or
not arising out of third-party claims and including
amounts paid in investigation, defense or
settlement of the foregoing) which may be sustained
or suffered by Purchaser arising out or based
upon (a) environmental conditions occurring,
existing or arising prior to Closing, including
without limitation, the presence of, Environmental
Release of, threat of Environmental Release of or
exposure to Hazardous Materials at any property
owned, operated or leased by the Seller or in
connection with the Cable Business (whether into
air, soil, ground or surface waters on or off-site)
(" Environmental Conditions"); (b) arising from the
off-site transportation, storage, treatment,
recycling or disposal of Hazardous Materials
generated by the Seller prior to Closing or during
the Seller's tenure at any property owned, operated
or leased by the Seller or in connection with the
Cable Business or (c) any violation by Seller prior
to Closing of any Health Safety and Environmental
Laws applicable in Israel and in effect on or prior
to the Closing Date, provided, however, that Seller
shall not be responsible for Damages arising out of
or based upon the clean-up or remedy of any
pollution or damage to any property under
subsections (a) or (b) of this section unless such
clean-up or remedy (i) arises out of or is based
upon a third-proxy claim or action, or (ii) is
required pursuant to Health Safety and
Environmental Laws in effect on or prior to the
Closing Date.
1.1.17 "Environmental Release" shall mean any action or
omission whereby any substance is released,
spilled, leaked, discharged, disposed of, pumped,
poured, emitted, emptied, injected, leached, dumped
or allowed to escape into the air, ground or water.
1.1.18 "Estimated inventory Adjustment" shall have the
meaning set forth in sub-Clause 4.2 hereof.
1.1.19 "Exchange Rate" for any relevant date means the
representative rate of NIS to the US$ as published
by the Bank of Israel on the relevant date or if
such relevant date is not a business day, the last
business day prior to such relevant date.
1.1.20 "Excluded Assets" shall have the meaning set forth
in SCHEDULE 1.1.20 hereto.
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1.1.21 "Exempted Amount" shall mean an aggregate amount of
US$500,000 which Seller is exempted from satisfying
with regard to the indemnities provided both under
Clause 7.4 (product warranty claims) and Clause
8.6.1 (Seller's indemnities).
1.1.22 "Financial Statements" means the
consolidated balance sheet, statement of
income, changes in shareholders equity and
changes of cash flows of the Seller,
including the notes related thereto, for the
year ended 31 December 1997 (annual audited)
and for the period ended 30 June 1998
(interim reviewed), all prepared in
accordance with applicable law and Israeli
GAAP.
1.1.23 "Hazardous Materials" shall mean any
hazardous, toxic or polluting materials,
substances, wastes, pollutants or
contaminants (including, without limitation,
petroleum, petroleum products,
polychlorinated biphenyls, radioactive
materials, asbestos, or asbestos-containing
materials, lead) or any material regulated
by any Health Safety and Environmental Laws
in Israel.
1.1.24 "Inventory Adjustment" shall have the meaning set
forth in Clause 4 hereof.
1.1.25 "Insurance Coverage" shall have the meaning set
forth in Clause 18 of Schedule 8.1.1.
1.1.26 "Israeli GAAP" means the generally accepted
accounting principles as promulgated by the
Institute of Certified Public Accountants in Israel
as consistently applied by Seller.
1.1.27 "LG Agreement" shall mean the agreements between
Seller and LG Cable and Machinery Ltd. both dated
September 17th 1997 relating to the supply of Super
High Voltage Products to IEC and certain
Supplementary Technical Assistance committed by LG
Cable and Machinery Ltd.
1.1.28 "Long Term Financing" shall have the meaning set
forth in SCHEDULE 1.1.28 hereto.
1.1.29 "NMAC" shall mean the following non-majority
associated companies of Seller: (i) H.T.
Cable Ltd., (ii)Trans Security and
Technological Systems Ltd, and (iii) Xxxxx
Marketing Company Ltd.
1.1.30 "Net Estimated Adjustment" shall have the meaning
set forth in Clause 4 hereof.
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1.1.31 "Net Final Adjustment" shall have the meaning set
forth in Clause 4.3 hereof.
1.1.32 "Performance Guarantees" shall mean guarantees,
letters of credit, performance or bid bonds,
progress payment guarantees, down payment
guarantees, advance payment guarantees and other
similar items listed in SCHEDULE 1.1.32 hereto.
1.1.33 "Permits" shall mean all licenses and permits,
required under law for the operation of the Cable
Business and Assets; the absence of which may
materially and adversely affect the Cable Business
and/or
the Assets.
1.1.34 "Properties" shall mean the land and buildings in
which the various structures and facilities of the
Cable Business are located as set out in SCHEDULE
1.1.34.
1.1.35 "Purchase Price" shall mean the aggregate price to
be paid by the Purchaser for the purchase of the
Assets being US$ 50,000,000 payable in US$ PLUS the
Net Final Adjustment.
The Purchase Price shall be allocated as follows
(subject to the Inventory Adjustment):
Inventory - Cvalim and Dash US$21,600,000
Fixed Assets - Cvalim US$27,300,000
Fixed Assets - Dash US$1,100,000
Total US$50,000,000 __________
1.1.36 "Redundancy Payments" shall have the meaning set
forth in Clause 9.5 hereof.
1.1.37 "Retained Liabilities" shall have the meaning set
forth in Clause 7.2 hereof.
1.1.38 "Schedule" means a schedule to this
Agreement.
1.1.39 "Super High Voltage Products" shall mean copper
conductor, lead-seathed, cross-linked polyethylene
insulated power cables, 161 KV 1200 square
millimeter conductor size compatible with the
technical requirements referred to in the LG
Agreement, all as ordered under same agreement.
1.1.40 "US$" shall mean United States Dollars.
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1.1.41 "Warranties" means the warranties and
representations of Seller and/or the
Purchaser, as the contest shall so admit;
1.2 INTERPRETATION
In this Agreement, unless the contrary intention appears:
1.2.1 words denoting the singular include the plural and
vice-versa;
1.2.2 words denoting individuals include corporations
and vice versa;
1.2.3 headings are included for convenience only and
shall not affect the interpretation of this
Agreement; and
1.2.4 reference to time and dates shall be construed in
accordance with the Gregorian Calendar.
2. SALE AND PURCHASE OF ASSETS
Seller hereby agrees to sell, assign, transfer and convey to the
Purchaser and Purchaser agrees to purchase, receive the assignment,
transfer and conveyance from Seller for the Purchase Price, the Assets
free from all Encumbrances other than the Encumbrances set forth on
SCHEDULE 2 (Investment Center Charge/s), all in accordance with the
terms and subject to the conditions of this Agreement, and Seller
agrees to transfer title and to deliver possession of the Assets to the
purchaser at Closing.
3. CLOSING DATE, PURCHASE PRICE AND RELATED MATTERS
3.1 Subject to the conditions set out in Clause 10 below being
fulfilled and subject to Clause 3.2 below, the Closing shall
take place at the offices of Zellermayer Pelossof Adv., at
10:00AM on November 30th, 1998 (the
"Closing Date").
3.2 Should the conditions set forth in Clause 10.1.11 (Controller)
and 10.1.11 (Contract) not be met before the Closing Date, the
Closing Date shall be postponed, to the fifth Business Day
following the date all the conditions set forth in Clause 10
are met but not later than December 31st, 1998.
3.3 This Agreement may be terminated (i) by mutual written consent
of Seller and Purchaser, (ii) by Seller or Purchaser, if less
than the minimum percentage of stockholders required by law
have failed to approve this Agreement at least twenty (20)
days before the Closing Date or, if their board of directors
will not have approved this Agreement within 20 days, (iii) by
Purchaser if the conditions set out in Clause 10 have not been
satisfied or waived by Purchaser on or before the Closing Date
as may be postponed pursuant to Clause 3.2 above or (iv) by
Purchaser or Seller
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if Closing shall not have occurred prior to December 31st,
1998. Notwithstanding clause (ii) and (iii) of the preceding
sentence, Purchaser or Seller, as the case may be, shall not
have the right to terminate of this Agreement if the
non-fulfillment of a condition is due to the failure of such
party to perform its obligations hereunder. If this Agreement
is terminated pursuant to the foregoing sentences, the
transaction contemplated by this Agreement shall be deemed
null and void, and neither party shall have any claim against
the other party or its respective officers or directors
arising from this Agreement, except damages arising from a
breach of this Agreement prior to such date.
3.4 At the Closing the following shall take place
simultaneously:
3.4.1 Purchaser shall make the payments referred to in
Clause 4 below.
3.4.2 Purchaser shall either (i) provide Seller with a
copy of an exemption from the Value Added Taxes
("VAT Taxes"), if any, resulting from the sale,
assignment or transfer of the Assets or (ii)
provide Seller with a cheque dated ten (10) days
after the end of the month in which the Closing
takes place payable to the Seller for the amount
of the VAT Taxes, if any, resulting from the sale,
assignment or transfer of the Assets.
3.4.3 Seller shall deposit with Purchaser for payment to
the Employees the amount of the special transfer
bonus provided for in the Special Collective
Agreement between Cvalim and the New General
Hisdatrut in Bet Xxxxx and the Bet Xxxxx Labor
Association dated May 15, 1998, and as applicable
to all the Employees, all as provided in SCHEDULE
3.4.3 (which will state the terms of Clause 6(a) of
said Special Collective Agreement). Upon such
deposit of said amount, the payment of said
transfer bonus shall become the sole responsibility
of Purchaser relating to said liabilities.
3.4.4 Each party hereto shall deliver to the other party
certified copies of appropriate resolution of the
shareholder and/or board of directors of each party
required to implement the transactions contemplated
by this Agreement, and each party shall provide a
legal opinion.
3.4.5 Seller shall execute, where required, and/or
deliver, inter alia, the following:
3.4.5.1 Validly issued VAT Invoice with respect
to the Assets and the amounts paid
therefor.
3.4.5.2 the approvals, consents and discharges
referred to in Clause 10.1 below, and
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3.4.5.3 A certificate from Seller in the form
attached hereto as SCHEDULE 3.4.5.3
(compliance certificate).
3.4.5.4 Seller shall transfer title (ownership
or leasehold) free and clear of all
Encumbrances (excluding Investment
Center Charges) and deliver possession
of the Assets to the Purchaser and
execute and deliver any document or
instrument reasonably required by
Purchaser to give full effect to such
transactions at the Closing.
3.4.5.5 Seller shall deliver to Purchaser a
valid certificate exempting the Seller
from withholding tax, failing which
Purchaser will withhold from the
Purchase Price the applicable
withholding tax.
3.4.5.6 Seller shall deliver to Purchaser a
valid certificate from an "authorized
officer" under Section 2 of Law of
Transactions of Public Bodies
(Enforcement of Bookkeeping and Payment
of Tax Debts) -- 1976.
3.4.6 Each Party shall execute and/or deliver to the
other any other document or instrument required to
be provided hereunder on or prior to the Closing.
4. CLOSING DATE PAYMENTS ADJUSTMENTS
On the Closing Date, if the Net Estimated Adjustment is greater than
zero, the Purchaser shall (i) pay to Seller the Purchase Price by wire
transfer of immediately available funds to the account or accounts
designated by Seller in writing at least five business days prior to
Closing and (ii) deposit an amount equal to the Net Estimated
Adjustment into an escrow account as provided in Clause 5 (the "Escrow
Account"). If the Net Estimated Adjustment is less than zero, the
Purchaser shall pay, on the Closing Date, to Seller the Purchase Price
LESS the amount of the Net Estimated Adjustment.
If the Purchase Price, as finally determined pursuant to this Clause 4,
exceeds the total of the amount paid to Seller at Closing plus any
amounts previously distributed to Seller by the Escrow Agent (save
amounts distributed to Seller by the Escrow Agent which represent
interest) (such excess being the "Purchase Price Excess"), then
Purchaser and Seller will direct the Escrow Agent to distribute the
amount of the Purchase Price Excess to the Seller together with
interest as contemplated by Clause 5 and will direct the Escrow Agent
to distribute any remaining amount in the Escrow Account to the
Purchaser. If the Purchase Price Excess exceeds the amount remaining in
the Escrow Account, then Purchaser will pay to Seller within five days
after the date the Purchase Price is finally so determined the amount
of such excess, plus interest at the rate of six percent (6%) per annum
on such amount accruing since the Closing Date.
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If the amount paid to the Seller at Closing plus any amount distributed
to Seller by the Escrow Agent exceeds the Purchase Price (such excess
being the "Purchase Price Overpayment") then Purchaser and Seller will
direct the Escrow Agent to distribute any remaining amount in the
Escrow Account to the Purchaser. If the Purchase Price Overpayment
exceeds the amount remaining in the Escrow Account, then Seller will
pay to Purchaser within five days after the date the Purchase Price is
finally so determined the amount of such excess, plus interest at the
rate of six percent (6%) per annum on such amount accruing since the
Closing Date.
As used herein:
"Inventory Adjustment" shall mean the amount equal to the difference
(positive or negative) between (x) the GAAP Value of the Inventory (in
NIS) on the Closing Date determined in accordance with Israeli GAAP
plus the Israeli GAAP value of down payments made by Seller on account
of Inventory items ordered but not delivered before Closing; and (y)
NIS 81,650,000, linked to the Consumer Price Index (with the base index
for June 1998 published on July 15, 1998 and the new index being the
one to be first published after the Closing Date). The Inventory
Adjustment shall be determined in NIS as aforesaid and shall be
converted to US$ according to the Exchange Rate on the Closing Date.
"GAAP Value" shall mean the book value of such item prepared in
accordance with Israeli GAAP and calculated using a consistent
methodology as noted in the Financial Statements and including the
effects, if any, of adjustments for the changes in the general
purchasing power of the New Israeli Shekel ("NIS") as measured by the
Israeli consumer price index.
"Net Estimated Adjustment" shall mean the Estimated Inventory
Adjustment (as defined in Clause 4.2).
4.1 On the Closing Date, Seller and Purchaser shall conduct a
detailed physical count of the Inventory (the "Physical
Count"). The Physical Count shall be conducted with full
cooperation through the parties' representatives and shall be
certified by the parties' CPA's in a joint protocol as having
been conducted in accordance with Israeli GAAP.
4.2 On or before two days prior to the Closing Date, Seller will
provide Purchaser with preliminary Schedule 1.1.1.2 setting
forth an estimate of the positive or negative Inventory
Adjustment (the "Estimated Inventory Adjustment"). Such
written estimate shall set forth the amounts necessary to
calculate the Inventory in accordance with Israeli GAAP.
4.3 Within thirty (30) days after the Closing Date, Purchaser
shall prepare and deliver to Seller a statement (the "Final
Adjustment Statement") setting forth and detailing the
Inventory Adjustment (the sum, positive or negative, of the
Inventory Adjustment set forth on the Final Adjustment
Statement being the "Net Final Adjustment". The
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Final Adjustment Statement shall be based on amounts prepared
in accordance with Israeli GAAP.
4.4 The Final Adjustment Statement shall be final, binding and
conclusive on the parties hereto unless Seller notifies
Purchaser in writing fifteen (15) days after the receipt on
the Final Adjustment Statement of a disagreement therewith
(which notice shall state with reasonable specificity the
reasons for any disagreement and the amount in dispute),
PROVIDED, that Seller may dispute the amounts on the Final
Adjustment Statement only on the basis that the Final
Adjustment Statement was not prepared in accordance with this
Clause 4 or that the amounts used to prepare the Final
Adjustment Statement were not determined in accordance with
Israeli GAAP.
4.5 In the event of such a dispute, Seller and the Purchaser shall
attempt in good faith to reconcile their differences and any
resolution by them as to any disputed amounts shall be final,
binding and conclusive ono the parties. If Seller and the
Purchaser are unable to resolve their disputes within twenty
(20) days of Sellers' written notice of dispute to the
Purchaser, the parties shall submit the items remaining in
dispute for resolution to Xxxxxx Xxxxx, CPA or another
mutually acceptable and recognized independent international
accounting with offices in Israel (the "Independent
Accountant") and with no affiliation with any of the parties,
and withing thirty (30) days after such submission, the
Independent Accountant shall determine and report to the
parties upon such remaining disputed items, and such report
shall be final, binding and conclusive on the parties hereto.
The Independent Accountant shall act as an expert and not as
an arbitrator. Such determination by the Independent
Accountants shall be limited to determining whether the Final
Adjustment Statement was prepared in accordance with this
Clause 4 or that the amounts used to prepare the Final
Adjustment Statement were not determined in accordance with
Israeli GAAP. If the Independent Accountant determines that
the Final Adjustment Statement was not prepared in accordance
with this Clause 4 or that the amounts used to prepare the
Final Adjustment Statement were not determined in accordance
with Israeli GAAP, the Independent Accountant shall provide to
the parties the corrected amounts that should have appeared on
the Final Adjustment Statement. The fees and expenses of the
Independent Accountant shall be borne by the party whose
position is not supported by the decision of the Independent
Accountant, unless otherwise determined by the Independent
Accountant.
5. THE ESCROW ACCOUNT
5.1 On the Closing Date, the amount required to be deposited into
an escrow account pursuant to Clause 4 shall be delivered to
The Trust Company of the Israel General Bank Ltd. (the "Escrow
Agent") which will hold and disburse the Escrow Amount in
accordance with this Clause 5. The Escrow Agent shall be
instructed to deposit the Escrow Amount in an interest bearing
account with the Israel General Bank Ltd.
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or institutions mutually agreed by Purchaser and Seller.
Interest on the entire balance of the Escrow Amount shall be
deemed to be part of the Escrow Amount.
5.2 The amount of the Net Final Adjustment not disputed by Seller
pursuant to Clauses 4.4 and 4.5 and any interest on such
amount shall be distributed to Seller or Purchaser, as the
case may be, upon written notification to the Escrow Agent
executed by the Purchaser and the Seller indicating the
allocation (between Purchaser and Seller) of the Net Final
Adjustment not in dispute. Any amount of the Net Final
Adjustment not distributed pursuant to the foregoing sentence
and any interest on such amount shall be distributed to Seller
or Purchaser, as the case may be, upon (i) written
notification to the Escrow Agent executed by the Purchaser and
the Seller indicating the allocation (between Purchaser and
Seller) of the remaining Net Final Adjustment or (ii) a
written determination by the Independent Accountant if
Purchaser and Seller are unable to agree as to the allocation
of the remaining Net Final Adjustment.
5.3 The fees and expenses of the Escrow Agent shall be equally
borne by the parties.
6. ALLOCATION OF EXPENSES AND CHARGES
Save as expressly stated otherwise in this Agreement, all Cable
Business operating expenses, including, but not limited to, (a) salary,
real and personal property taxes relating to the Assets (b) utility
charges, (c) rentals and service charges, (d) financial charges and
expenses relating to Performance Guarantees (e) down payments made by
Seller to suppliers recorded on the books and records of Seller, (f)
other amounts with respect to the Assets that (i) were prepaid by
Seller and for which Purchaser shall receive the direct benefit of
after Closing or (ii) are to be paid by Purchaser after Closing, shall
be prorated in accordance with Israeli GAAP. At Closing, as between
Seller and Purchaser, such charges relating to the period and/or
performance prior to and including the Closing Date shall be allocated
to and be the obligations of Seller and such charges relating to the
period and/or performance subsequent to the Closing Date shall be
allocated to and be the obligations of the Purchaser. On the Closing
Date, such prorations shall be based on actual amounts calculated in
accordance with Israeli GAAP (the "Actual Prorated Amounts"), and, to
the extent actual amounts are not available, amounts estimated by
Seller based on actual amounts for the most recent comparable billing
period and calculated in accordance with Israeli GAAP (the "Estimated
Prorated Amounts"). Purchaser and Seller shall settle and pay amounts
owing to each other based on Actual Prorated Amounts on the Closing
Date. At the Closing Date the Estimated Prorated Amounts shall be
transferred by Seller or by Purchaser, as the case may be, to the
Escrow Agent who shall deposit same in an escrow account (the "Second
Escrow Account") as provided below.
The Escrow Agent will hold the Estimated Prorated Amounts in an
interest bearing account with the Israel General Bank or institutions
mutually agreed by Purchaser and Seller.
13
Interest on the entire balance of the Second Escrow Amount shall be
deemed to be part of the Estimated Prorated Amounts.
When actual amounts become known, the Estimated Prorated Amounts shall
be recalculated by Purchaser and Seller, and Purchaser and Seller shall
make additional payment, if necessary and as the case may be, to the
Escrow Agent so that the corrected prorated amount shall have been paid
by each of Purchaser and Seller, as the case may be, promptly after
Closing, but in no event later than thirty (30) Business Days after
Closing. The amount of the Estimated Prorated Amounts not disputed by
Seller or Purchaser and any interest on such amount shall be
distributed to Seller or Purchaser, as the case may be, upon written
notification to the Escrow Agent executed by the Purchaser and the
Seller indicating the allocation (between Purchaser and Seller) of the
amount not in dispute.
In the event of a dispute, Seller and the Purchaser shall attempt in
good faith to reconcile their differences and any resolution by them as
to any disputed amounts shall be final, binding and conclusive on the
parties. If Seller and the Purchaser are unable to resolve their
disputes within twenty (20) days of a written notice of dispute by one
party to the other, the parties shall submit the items remaining in
dispute for resolution to the Independent Accountant and within thirty
(30) days after such submission, the Independent Accountant shall
determine and report to the parties upon such remaining disputed items,
and such report shall be final, binding and conclusive on the parties
hereto. The Independent Accountant shall act as an expert and not as an
arbitrator. Such determination by the Independent Accountant shall be
limited to determining the adjustment of the Estimated Prorated Amounts
based on the actual amounts available in accordance with Israeli GAAP.
The Independent Accountant shall provide to the parties and the Escrow
Agent the corrected amounts. The fees and expenses of the Independent
Accountant shall be borne equally by Seller and Purchaser.
Any amount of the Estimated Prorated Amounts not distributed pursuant
to the foregoing sentence and any interest on such amount shall be
distributed to Seller or Purchaser, as the case may be, upon (i)
written notification to the Escrow Agent executed by the Purchaser and
the Seller indicating the allocation (between Purchaser and Seller) of
same or (ii) a written determination by the Independent Accountant if
Purchaser and Seller are unable to agree as to the allocation of the
remaining Estimated Prorated Amounts.
Amounts payable pursuant to this Clause 6 shall be payable in U.S.
Dollars based on the Exchange Rate on (i) the date of each such
payment, if such Exchange Rate is known at the time of Closing, or (ii)
the Closing Date, if such Exchange Rate is not known at the time of
Closing and such amounts shall bear interest at the rate of six percent
(6%) on such amount accruing since the Closing Date.
14
7. ASSUMPTION OF LIABILITIES
7.1 At Closing, Purchaser shall assume and agree to be responsible
for (i) the liabilities and obligations arising under the
terms of the Contracts (as defined in Section 8 of Schedule
8.1.1) and the Long Term Financing pursuant to the terms of
Schedule 1.1.28 attached hereto (the "Assumed Contracts") and
disclosed on the schedules hereto to the extent such liability
or obligation relates to any period after the Closing Date but
excluding liabilities and obligations resulting from a breach
or default by the Seller prior to the Closing Date; (ii) the
liabilities and obligations resulting from a breach or default
by Purchaser under the Assumed Contracts, which breach first
occurs after the Closings Date, (iii) subject to Clause 7.4,
the Assumed Warranty Obligations, (iv) liabilities and
obligations deriving from the Approved Enterprise status of
Seller's factories, other than liabilities and obligations
resulting from Seller's failure to comply with the
requirements imposed by the Investment Center on Seller that
were required to be complied with on or before the Closing
Date, (v) liabilities and obligations under Performance
Guarantees maintained by Seller on behalf of Purchaser to the
extent such obligations and liabilities arise from or relate
to breaches first occurring after the Closing Date, (vi) to
the extent disclosed to Purchaser pursuant to Clause __of
Schedule 8.1.1, payment obligations under letters of credit
issued by Seller relating to raw materials received by
Purchaser in the ordinary course of business after the Closing
Date and not included in the calculation of the Inventory
Adjustment, (vii) the Assumed Transferred Hedging
Transactions, (viii) purchase orders for the sale of products
to customers or for the purchase of raw materials from
suppliers and agreements for other products and services used
in the operation of the Cable Business that are (A)
outstanding on the Closing Date, (B) which were entered into
the ordinary course of business consistent with the past
practice of the Cable Business and (C) subject to Clause 9.15,
which are not required to be disclosed on the Schedules to
this Agreement and (ix) the Assumed Redundancy Payments
(collectively, (i), (ii), (iii), (iv), (v), (vi), (vii),
(viii) and (ix), the "Assumed Liabilities"). The Assumed
Liabilities shall exclude any liabilities and obligations
arising under contracts the assignment of which pursuant to
this Agreement is not consented to by the other parties to
same contracts, in which case such liabilities shall be deemed
part of the Retained Liabilities, only to the extent that
Purchaser was unable to act in accordance with Clause 11.1 (a)
due to limitation contained in the terms of such contracts.
7.2 Other than the Assumed Liabilities, Purchaser shall not assume
or be obligated to pay, perform or otherwise assume or
discharge any obligations, liabilities or claims, including,
without limitation, tax liabilities, product liability claims,
warranty claims, Environmental Liabilities (subject to Clause
7.5 below), Redundancy Payments which are not transferred
pursuant to Clause 9.5 herein, employee claims and any claims
on SCHEDULE 7.2, whether due or become due, whether accrued,
whether or not related to the Cable Business and whether
direct or indirect, known or unknown, or absolute, contingent
or otherwise existing on the Closing Date or arising out of
15
any transactions entered into or state of facts existing, or
the use, ownership, possession or operation of the Assets or
conduct of the Cable Business, prior to the Closing Date (all
such liabilities and obligations being "Retained
Liabilities").
7.3 Purchaser shall be responsible for the liability and
obligations first arising after the Closing Date out of the
use, ownership, possession or operation of the Assets or the
conduct of the Cable Business by Purchaser after the Closing
Date, but excluding the Retained Liabilities. Without limiting
the generality of the foregoing, if Inventory, or any partial
order for Inventory, is received after the Closing Date and
the cost of such Inventory (including, freight, customs and
insurance) is included in the calculation of the Inventory
Adjustment, then Seller shall remain obligated to discharge
any payment obligations (including freight, customs, and
insurance) relating to such Inventory.
7.4 If, following the Closing Date, any customer of Seller makes a
valid product warranty claim with respect to defective product
shipped by Seller prior to the Closing Date, Purchaser shall
have the right and obligation (the "Assumed Warranty
Obligation") to satisfy Seller's warranty obligation for such
defective product. Seller shall promptly reimburse Purchaser's
cost incurred in satisfaction of such warranty claims, subject
to the Exempted Amount.
7.5 The Seller shall be liable for, perform, pay and
discharge, when due, the Retained Liabilities.
Notwithstanding the aforesaid, Environmental Liabilities
which although arising out of or based upon Environmental
Conditions first occurring, existing or arising prior to the
Closing Date, but are then exacerbated or aggravated by
activities of the Purchaser after the Closing Date, shall be
pro rated between the parties according to general principles
of tort law.
8. WARRANTIES
8.1 (a) Seller hereby represents and warrants to the
Purchaser that, save as expressly excepted in this
Agreement and the relevant Schedules hereto, each
of the statements made in SCHEDULE 8.1.1 hereto is
correct and complete.
(b) Purchaser hereby represents and warrants to the
Seller that save as expressly excepted in this
Agreement, each of the statements made in
subclauses (i) through (vi) herein are correct and
complete:
(i) The Purchaser has the corporate power
and full corporate authorization to
enter into this Agreement and to fulfill
its obligations with respect thereto.
16
(ii) Except as disclosed on SCHEDULE 8.1.2.2
no consent, approval, authorization of,
or designation, declaration, notice to
or filing with any governmental
authority or other persons or entities
is required in connection with the
execution, delivery or consummation of
the transactions contained in this
Agreement.
(iii) At and after Closing, Purchaser believes
that it will have the financial
resources to fulfill its obligations
under this Agreement and the
transactions contemplated hereby.
(iv) purchaser recognizes that the Cable
Business is conducted in Israel and that
it has two primary customers and that
the Purchaser is fully aware of the
business and economic environment in
Israel.
(v) Purchaser has not employed, nor is
subject to any claim of, any broker,
finder, consultant or other intermediary
in connection with the transactions
contemplated by this Agreement who might
be entitled to a fee or commission upon
the consummation of the transactions
contemplated hereby.
8.2 All Warranties given by the Seller and the Purchaser:
8.2.1 Shall remain in full force and effect as of
execution hereof and after the Closing Date,
subject to updates pursuant to Clause 9.15 below;
and
8.2.2 are given as at the date of this Agreement and as
at the time of Closing, except Warranties which
address matters only as of a particular date which
are given as of such date.
8.3 Seller shall indemnify the Purchaser against and hold it
harmless from any and all losses, damages and liabilities (or
claims or actions in respect thereof) ("Damages") incurred by
Purchaser and arising out of or resulting from any
misrepresentation, inaccurate Warranty and/or breach of a
Warranty, under this Agreement, including all appendices and
schedules attached hereto, any claim asserted with respect to
the Retained Liabilities or Seller's failure to perform, pay
or discharge the Retained Liabilities when due or any
Environmental Liability. If Seller is obligated to indemnify
Purchaser hereunder, Seller shall pay the amount to which the
Purchaser shall be entitled. If Seller fails to pay all or any
part of any indemnification obligation when due, the Seller
shall also be obligated to pay interest on the unpaid amount
for such day during which the obligation remains unpaid at the
rate of 6% per annum together with linkage to the consumer
price index for the respective period.
17
8.4 Purchaser shall indemnify the Seller against and hold it
harmless from any and all Damages incurred by Seller and
arising out of or resulting from any misrepresentations,
inaccurate Warranty and/or breach of a Warranty, under this
Agreement, including all appendices and schedules, any claim
asserted with respect to the Assumed Liabilities or
Purchaser's failure to perform, pay or discharge the Assumed
Liabilities when due. If Purchaser is obligated to indemnify
Seller hereunder, Purchaser shall pay the amount to which the
Seller shall be entitled. If Purchaser fails to pay all or any
part of any indemnification obligation when due, the Purchaser
shall also be obligated to pay interest on the unpaid amount
for each day during which the obligations remains unpaid at
the rate of 6% per annum together with linkage to the consumer
price index for the respective period.
8.5 No claim for indemnification may be brought pursuant to Clause
8.3-8.4 if such claim has been expressly waived in writing by
the party seeking indemnification.
8.6 The following shall be the governing principles for
indemnification claims pursuant to Clause 8.3-8.4 of this
Agreement:
8.6.1 Subject to sub-clauses 8.6.2 and 8.6.3, claims for
indemnification pursuant to Clause 8.3 or 8.4 for
the inaccuracy or breach of Purchaser's or
Seller's Warranties, must be made within a period
of twenty four (24) months (the "Time Limit") from
the Closing Date. Such claims shall also be
subject to the Exempted Amount. Notwithstanding
the foregoing, the Time Limit and the Exempted
Amount shall not apply to Seller's Warranties in
Sections 1, 2, 4, 12 and 19 of Schedule 8.1.1.
8.6.2 Except for time limits imposed by law, the Time
Limit and the Exempted Amount shall not apply for
submitting any claim which is the result of a
Warranty which when made by Seller was fraudulent
or known to be incorrect.
8.6.3 The party (the "Indemnified Party") submitting a
claim hereunder shall, within thirty (30) days
after the Indemnified Party has knowledge of such
claim, notify the other party (the "Indemnifying
Party") in writing of the claim for
indemnification, and/or of all matters known to
the Indemnified Party which are likely to give
rise to the right to indemnification hereunder,
specifying in detail the basis of such claim, the
facts pertaining thereto and, if known, the
amount, or an estimate of the amount, of the
liability arising therefrom. Failure to provide
such notice shall not relieve the Indemnifying
Party of any liability hereunder (except to the
extent that the Indemnifying Party has suffered
actual prejudice thereby). The Indemnified Party
shall provide the Indemnifying Party as promptly
as practicable thereafter all information and
documentation necessary to support and verify the
claim asserted.
18
8.6.4 The Indemnifying Party shall have the right,
exercisable upon written notice to the Indemnified
Party within thirty (30) days of the receipt from
the Indemnified Party of notice of a third party
claim in which indemnity may be sought hereunder,
to defend and, subject to sub-Clause 8.6.6 below,
control the settlement of any third such party
claim through counsel of its own choosing at its
own expense, PROVIDED (I) the Indemnifying Party
agrees in writing to be solely obligated to satisfy
and discharge such claim, (ii) except for claims
which involve (and continue to involve) solely
monetary damage, the defense or settlement of such
claim will not, in the reasonable judgment of the
Indemnified Party, have any continuing adverse
effect on the business of the Indemnified Party,
and (iii) the Indemnifying party provides the
Indemnified Party with reasonable evidence of the
ability of the Indemnifying Party to satisfy the
full amount of any adverse monetary judgment that
may result. In the event that the conditions
described in the foregoing proviso cease to be
satisfied, the Indemnifying Party's right to defend
any such thirty party claim shall terminate until
such conditions are satisfied.
8.6.5 The Indemnifying Party or the Indemnified Party, as
the case may be, shall have the right to
participate in (but not control), at its own
expense the defense of any third party claim which
the other is defending as provided in this
Agreement.
8.6.6 The Indemnifying Party, if it shall have assumed
the defense of any third party claim as provided
hereunder, shall not consent to a settlement of or
the entry of any judgment arising form any such
third party claim without the prior written
consent of the Indemnified Party if such
compromise or settlement (I) commits the
Indemnified Party to take, or to forbear to take
any action, (ii) does not provide for a complete
release by such third party of the Indemnified
Party or (iii) includes any statement as to or an
admission of fault, wrongdoing, guilt, culpability
or failure to act by or on behalf of the
Indemnified Party.
8.6.7 If the Indemnifying Party does not assume the
control of the defense of a third party claim
pursuant to sub-Clause 8.6.4, the Indemnified Party
shall have the right to defend such third party
claim with counsel of its own choosing and
reasonably acceptable to the Indemnifying Party (or
if such third party claim will be covered by the
Indemnifying Party's insurance and the carrier of
such insurance policy expressly requires counsel
acceptable to it, counsel reasonably acceptable to
such insurance carrier) and to settle any third
party claim with the written consent of the
Indemnifying Party, which consent shall not be
unreasonably withheld or delayed.
19
8.6.8 Whether or not the Indemnifying Party chooses to
participate in the defense or prosecution of a
third party claim, all of the parties hereto shall
cooperate in the defense or prosecution thereof
and shall furnish all records, information, and
testimony, and attend at such conferences,
proceedings, hearings, trials and appeals, as may
be reasonably requested in connection therewith.
9. OBLIGATIONS PRIOR TO CLOSING
From and after the date hereof, and pending Closing, the parties agree
that:
9.1 The Purchaser and Seller shall promptly, with the fullest
cooperation between them, and in addition to any other
specific matters referred to herein, jointly prepare
applications which are required for the transaction
contemplated herein to include, without limitation, the
applications to the Controller of Restrictive Trade
Practices (the "Controller"), the Ministry of the
Environment and to the Ministry of Health for the re-
issue of permits and licenses, and the Investment Center
as referred to in Clause 10.1 below, or which is
necessary for the purchase of Assets and conduct of the
Cable Business by the Purchaser and will use their best
endeavors to obtain such consents, permits, licenses and
benefits, or to the extent any such consents have been
obtained prior to the date hereof, they will use their
best endeavors to maintain until Closing such consents,
permits and licenses, including without limitation
providing any additional materials or information which
may be required in that connection. Seller undertakes to
fully cooperate with Purchaser in obtaining an exemption
from the VAT Taxes. Seller and Purchaser shall equally
share the cost of engaging Xxxx. Xxxxx to prepare the
economic study required to obtain said approval of the
Controller and pursue same, estimated at a total of US$
40,000.
9.2 Seller undertakes to use its best endeavors to continue
operating the Cable Business in the ordinary course consistent
with past practice, comply with all existing orders from
Seller's customers, promote and market its products and to
compete for tenders consistent with past practice. Seller
shall promptly notify Purchaser in writing if Seller needs to
deviate from said mode of operation. This Clause shall not
derogate in any way from Clause 10.2 below and Schedule 8.1.1.
9.3 Subject to Clause 12.6, Seller shall, at Closing provide duly
authorized resolutions authorizing the changes of its and its
associated companies names so that the names (A) "Cvalim", (B)
"Cvalim -The Wire and Cable Company of Israel LTD", (C)
"D.A.S.H Cable Industries (Israel) Ltd" and (D) "D.A.S.H." and
any derivatives of such names do not appear in its name or any
of its associated company's names (including Barak Cables
Holding Ltd.). Seller shall procure that a power of attorney
for purposes of name changes, in the form and substance
reasonably acceptable to Purchaser, is handed over to the
Purchaser at Closing. In addition to its obligations under the
preceding sentences above, Seller shall take all actions
necessary to
20
immediately after Closing, change its name used in the
listings of companies at Tel Aviv Stock Exchange ("TASE") so
that the term "Cvalim" does not appear in the name of Seller
used in the listings of companies at TASE.
9.4 At Closing, all of Seller's existing employees shall be made
available by the Seller to the Purchaser on their existing
terms and Purchaser shall continue to employ such employees
subject to the same terms and conditions currently applicable
thereto respecting all accrued rights of employees and the
Collective Agreements applicable to Seller will apply to the
Purchaser both towards the employees, and Worker
Organizations.
9.5 Seller is solely liable for all of the employment and all
other benefits and payments of any kind (other than sick leave
payments) due to all Seller's Employees for the period through
the Closing under such Employees' terms and conditions of
employment and retirement whether under any collective
bargaining or personal agreements and arrangements or under
any applicable laws, practices and procedures ("Applicable
Law"), including, without limitation, recreation and holiday
payments (including accrued but unused holiday and vacation
leave), payments into Seller's severance payment fund,
manager's insurance policies, payments towards Employees'
unemployment, disability and health insurance, education fund
and pensions or provident funds, payments toward national
insurance, professional literature payments, any severance
payments to which senior personnel are entitled, any taxes
payable in respect of salaries and benefits paid/to be paid by
Seller to the Employees (to the extent not withheld or
transferred to the Tax Authorities) ("the Redundancy
Payments"). Purchaser shall request that each key Employee
that enters into an employment agreement with Purchaser prior
to the date hereof include a provision in such employment
agreement acknowledging the termination of Seller's obligation
for the Redundancy Payments to such key Employees upon
Closing, provided, that Purchaser shall not be obligated to
negotiate or make any concessions to such Employee as an
incentive for such Employee to include such an acknowledgment.
On or prior to Closing Date, Seller agrees to procure the
transfer to the Purchaser of the money equivalent to the
Redundancy Payments. For the sake of clarity, it is hereby
provided that Seller shall not be required to fund Redundancy
Payments that are first imposed after the Closing and
constitute a change in the Applicable Law existing before the
Closing.
Seller shall transfer to Purchaser the Redundancy Payments set
forth on SCHEDULE 9.5 hereto as adjusted for the Closing by
the parties' CPAs using the same methodology used in
preparation of Schedule 9.5 in accordance with Israeli GAAP.
In the event the two accounting firms mentioned above cannot
agree on the update of Schedule 9.5, two accounting firms
shall be finally determined by the Independent Accountant
referred to in Clause 4.5 regarding the settlement of the
dispute shall apply, mutatis mutandis. It is hereby stated
that, in addition to the transfer of Purchaser's name of the
Mivtachim, Taoz, Tadiran, Simon and Xxxxx, the Fenix Central
funds and any
21
other fund, the amount required to be funded under Schedule
9.5 shall in any event not fall below the total of the
respective amount recorded in Seller's books in accordance
with Israeli GAAP plus NIS3.6m. It is further agreed that
notwithstanding anything to the contrary herein, with respect
to those specific Redundancy payments listed in Schedule 9.5,
Seller shall not have any further liability than as shall be
specified in said schedule. For the avoidance of doubt Seller
shall have no obligation with respect to "prior notice" or
"adjustment grants" to managers. Purchaser shall apply in good
faith any excess Redundancy Payments transferred pursuant to
Schedule 9.5 as credit for additional Redundancy Payments
Seller may be obligated to pay Purchaser pursuant to this
Agreement.
The attachment of Schedule 9.5 shall be deemed to be
acknowledgment of Seller that the methodology applied in
calculating the amounts included therein should be employed by
Seller.
9.6 Seller will use all best efforts to preserve the business
organization of Seller intact, to keep available to Purchaser
the present officers and Employees of Seller, and to preserve
for Purchaser the good will of the suppliers, customers and
others having business relations with Seller.
9.7 Subject to the following, Seller undertakes that at the
Closing the Warranties of Seller contained in this
Agreement shall be true and correct as though such warranties
were made on, as of, and with reference to the Closing, it
being understood that Seller is entitled to update certain
Schedules and Appendices pursuant only to Clause 9.15 below.
Without derogating from the aforesaid, Seller will promptly
notify Purchaser in writing of any event or fact which
represents or is likely to cause breach of any of its
warranties, covenants or agreements and shall promptly advise
Purchaser in writing of the occurrence of any condition or
development (exclusive of general economic factors affecting
business in general) of a nature that is or may be material to
the Cable Business or Assets of Seller.
9.8 Seller shall maintain in full force and effect the Insurance
Coverage, subject only to variations required by the ordinary
operations of its business, or else will obtain, prior to the
lapse of any such policy, substantially similar coverage with
insurers of recognized standing. Seller shall promptly advise
Purchaser in writing of any change of insurer or type of
coverage in respect of its policies.
9.9 It is understood and agreed that the transfer of rights or
obligations in or to the contracts specified in SCHEDULE 9.9,
may be subject to consents of third parties and to conditions
which might be attached thereto. Purchaser and Seller (i)
agree to cooperate and satisfy reasonable third party's
requirements, in order to obtain any third party consent
required to transfer and assign same to Purchaser, and
Purchaser (ii) agrees to use its reasonable endeavors to
provide the customers on SCHEDULE 9.9(ii) with comfort
regarding its financial standing and continued commitment to
22
the Cable Business after Closing, and (iii) agrees to provide
the suppliers on SCHEDULE 9.9(iii) with a reasonable financial
guarantee. Seller agrees not to disclose the terms of this
Clause to the third parties mentioned in this section.
Notwithstanding the foregoing, Purchaser shall not be required
to provide any Performance Guarantee for any contract for
which Seller has received all of the benefits of such
contract. Purchaser shall only be required to provide a pro
rata portion of any Performance Guarantee required under any
contract (each a "Partially Performed Contract") for which
Seller has received a portion of the benefits of such
contract. Seller agrees to maintain a pro rata portion of any
existing performance guarantee required under any Partially
Performed Contract until Seller's portion of such contract has
been satisfied. Should the respective third party insist on
having one Performance Guarantee, the
aforesaid prorating shall be made as between Seller and
Purchaser.
On or as soon as practicable after the Closing Date (not to
exceed thirty (30) days), Purchaser shall replace any
Performance Guarantee for any Assumed Contract for which
Purchaser will receive all the benefits of such Assumed
Contract after Closing.
9.10 Seller shall not, and shall not authorize or permit any of its
directors, officers, employees, agents or representatives,
directly or indirectly, to (i) solicit, initiate, encourage or
facilitate or furnish or disclose information in furtherance
of any inquiries or the making of any proposal with respect to
the acquisition of all or a major part of the Assets or the
Cable Business or all or substantially all of the capital
stock of Cvalim or Dash in a single transaction or series of
related transactions (each, an "Acquisition Proposal"), (ii)
engage in negotiations or discussions concerning an
Acquisition Proposal, (iii) agree to recommend any Acquisition
Proposal or (iv) enter into any agreement or understanding
regarding an Acquisition Proposal.
9.11 Seller shall take all actions necessary to convene at least 10
days before Closing a meeting of the stockholders of Seller to
consider and vote upon approval of this Agreement and the
transactions contemplated hereby.
9.12 Seller attaches hereto as SCHEDULE 9.12 the written
undertaking of Barak Cables Holding Ltd, being the beneficial
owner of the majority of the issued and outstanding voting
capital stock of the Seller, to exercise the voting rights
attached to its shares in the Seller and to instruct its duly
appointed attorneys-in-fact to exercise the voting rights
attached to its shares of the Seller, at any meeting of the
shareholders of the Seller and any postponement thereto at
which the matters coming before such meeting to vote (i) in
favor of this Agreement and the transactions contemplated
hereby, (ii) against any action or agreement the purpose or
effect of which would be to impede, interfere or discourage
Closing, and (iii) against any action the taking of which
would constitute a breach by Seller of any of its
representations, warranties, covenants or agreements contained
in this Agreement.
23
9.13 - deleted.
9.14 Seller will provide Purchaser on a current basis and at least
two weeks prior to Closing a written description of
any items that Seller wishes to add to the following
Schedules and Appendices as an update for the Closing:
9.14.1 Schedule 1.1.32 indicating any additional
Performance Guarantees entered into by Seller after
the date hereof;
9.14.2 Schedules 1.1.1.1, 1.1.1.2, 3.4.3, 10.1.3 and
Appendices 6.1, 8.1, 8.2, l2.1, 12.2, 12.3, 12.5,
12.6, 17, 18.1 indicating changes in the subject
matter thereof.
If the aforesaid updates reflect changes in the
ordinary course of business which are consistent
with past practice and may not individually or in
the aggregate have a material adverse effect on the
Cable Business, they shall be deemed incorporated
in the respective Schedules and Appendices.
9.14.3 Seller will use its best efforts to provide
Purchaser with a list of its Customers' and
Suppliers' Backlog updated, to the best of
its knowledge, for the Closing which shall
be attached hereto as Schedule 1.1.12, it
being understood that such schedule is
provided for information and does not
constitute a Warranty.
Seller shall advise Purchaser promptly after it
enters into any option, future or hedging
arrangement as of execution hereof and until the
Closing and at least on a biweekly basis and, at
Purchaser's written request, Schedule 1.1.5 (list
of Assumed Transferred Hedging Transactions) shall
be updated to include any such transaction.
9.15 Within 6 Business Days following the Closing the parties shall
attach hereto all Schedules and Appendices which were not
attached upon execution hereof.
10. CONDITIONS PRECEDENT TO CLOSING
10.1 Closing of the transaction contemplated by this Agreement
shall not take place unless and until each of the following
has occurred or been waived by Purchaser at its sole
discretion:
10.1.1 an unconditional approval or an approval with
conditions satisfactory to Purchaser given by the
Controller pursuant to the Restrictive Business
Practice Law - 1988, and that approval is in full
force and effect;
24
10.1.2 an approval with conditions expressly set
forth in SCHEDULE 10.1.2 and reasonably
satisfactory to Purchaser, of the transfer
to Purchaser of Approved Enterprise status
from the Investment Center and referred to
in the investment programs with the dates
and reference numbers as set forth on
Schedule 10.1.2 and approval of any relevant
person to allow a first charge on the Assets
in favor of the lenders of Purchaser;
10.1.3 except for a charge registered in favor of
the Investment Center pursuant to Clause
10.1.2 above, all Encumbrances over the
Assets shall have been discharged and Seller
has provided Purchaser with evidence of such
discharge or Seller has provided Purchaser
with a letter from the beneficiaries of such
Encumbrances agreeing that the Encumbrances
will be released effective upon Closing, all
reasonably satisfactory to Purchaser.
10.1.4 the making available to Purchaser of the Employees
and that a sufficient number of them will have
become employees of the Purchaser at Closing as
contemplated under Clause 9.4 above so as to enable
Purchaser to continue to operate the Cable Business
in the ordinary course.
10.1.5 the transfer to Purchaser of Redundancy Payments
pursuant to Clause 9.5 above.
10.1.6 the consent of the Israel Lands
Administration to all of the leases of the
Properties at Haifa, Maalot and Nazareth,
the details of which are set out in Schedule
1.1.1.3 and the sub-lease or assignment of
the leases of the other Properties utilized
in the Cable Business at Bet-Xxxxx, Haifa,
Tel Aviv, Kiryat Bialik, Carmiel and
Nazareth, the details of which are set out
in [paragraph A, points 1-5] of Schedule
1.1.1.3, shall be obtained to Purchaser's
reasonable satisfaction.
10.1.7 Seller shall have complied with its covenants,
obligations and agreements set forth herein that
are required to be complied with prior to Closing.
10.1.8 Seller, Purchaser and Escrow Agent shall have
entered into a mutually satisfactory Escrow
Agreement regarding the Escrow Account and the
Second Escrow Account;
10.1.9 Seller and Purchaser shall have entered into
the leases or sub-leases required by Clause
12 hereof;
10.1.10 Seller shall have valid Permits and Purchaser shall
be in a position for the Permits to be reissued in
the name of the Purchaser upon Closing or
immediately thereafter.
25
10.1.11 The other parties to the Contracts specified in
Appendix 8.1 shall have agreed in writing to their
assignment to Purchaser where such agreement is
required thereunder and subject to Section 9.9
above, the terms of same Contracts shall not be
adversely affected by the transactions contemplated
herein.
10.1.12 The Board of Directors of both parties and the
General Meeting of the Shareholders of Seller shall
have adopted a resolution authorizing the execution
and delivery of this Agreement and the consummation
of the transactions contemplated herein.
10.2 The obligation of the Purchaser to close the acquisition of
the Assets shall be subject to the additional condition, which
is agreed to be material, that, each of Seller's Warranties
shall be true and correct as at the Closing Date with the same
force and effect as if made on the Closing Date in accordance
with Clause 9.7 above.
The obligation of the Purchaser to close the acquisition of
the Assets pursuant to this Agreement shall not be terminated
or postponed due to any strike, lock out, work-slowdown, labor
dispute or any other adverse action taken by the Employees,
whether collectively or individually, through workers
committees, labor unions or otherwise as a result of this
Agreement or negotiations that had taken place prior thereto.
10.3 Any of the above conditions may be waived by the Purchaser at
its discretion expressly in writing but such waiver shall not
be deemed a waiver of any rights or remedies that the
Purchaser may have against Seller by reason of any breach of
Clause 8.1 above.
11. POST-CLOSING OBLIGATIONS
11.1 Nothing in this Agreement shall be construed as an attempt to
assign any contract, agreement, permit, franchise, or claim
included in the Assets which is by its terms or by law
nonassignable without the consent of the other party or
parties thereto, unless such consent shall have been given, or
as to which all the remedies for the enforcement thereof
enjoyed by the Seller would as a matter of law, pass to the
Purchaser as an incident of the assignment provided for by
this Agreement. In the event that a third party refuses to
consent to an assignment or a novation of a contract,
arrangement or license, (a) the Purchaser shall be entitled,
insofar as this is not considered to be breach by the relevant
third party or by the Seller, to continue the contract,
arrangement or license on behalf of and in the name of Seller
in fact on the Purchaser's own account; PROVIDED, Purchaser
shall indemnify and hold harmless Seller for damages to Seller
associated with maintaining and performing any such contract,
arrangement or license and/or (b) Seller should use and
continue to use its best endeavors to transfer to the
Purchaser all rights in and to the contracts,
26
arrangements, agreements, leases, licenses, purchase orders
for the sale or purchase of goods or services with suppliers
and customers, as the Purchaser shall determine in its sole
discretion, prior to Closing, that it seeks to be a party to.
11.2 In addition to Seller's other obligations under this
Agreement, Seller shall fully cooperate in regard to making
applications and/or declarations for any outstanding
certificates, permits and licenses required for the continued
operation of the Cable Business of the Seller under the
ownership of the Purchaser.
11.3 In the event that Seller does not settle any Retained
Liability when due, and such omission may adversely affect the
continuing Cable Business of the Purchaser and the related
goodwill and/or customer/supplier relations ("Adverse Effect")
and Seller does not make the necessary arrangements with such
creditor(s) to prevent the Adverse Effect, in Purchaser's
reasonable discretion, the Purchaser shall be entitled to
settle such outstanding liability upon giving Seller 30
Business Days notice of its intention to do so and Seller
shall forthwith reimburse the Purchaser for its costs in
connection therewith.
11.4 For a period of seven (7) years after Closing, Seller shall
maintain all existing liability insurance policies for past
and existing directors and officers of the Seller relating to
acts or omissions by such directors and officers prior to
Closing, and Seller agrees to pay on behalf of such directors
and officers any deductible
payable under such insurance policies. The cost of such
insurance shall not be subject to Clause 6 hereof.
11.5 After the transfer of the Redundancy Payments pursuant to
Section 9.5, Purchaser shall take any reasonable and customary
actions required to ensure that the Redundancy Payments will
be available for payment to the employees of Purchaser when
due. To the extent Redundancy Payments are transferred to
Purchaser pursuant to Section 9.5 (such Redundancy Payments so
transferred being the "Assumed Redundancy Payments"),
Purchaser agrees and undertakes to pay and discharge such
Assumed Redundancy Payments, when due, to the employees of
Purchaser entitled to receive such Assumed Redundancy
Payments. Redundancy Payments which are not transferred to
Purchaser pursuant to Clause 9.5 shall be deemed Retained
Liabilities.
If agreed to by Purchaser expressly in writing and in advance,
any additional payment to Employees which results from the
implementation of this Agreement, shall be the responsibility
of Purchaser.
11.6 Purchaser undertakes to pay the Employees, within 20 Business
Days as of the Closing Date, the amounts of the special
transfer bonus deposited by the Seller with Purchaser pursuant
to Clause 3.4.3 above. Purchaser further undertakes to provide
Seller with a CPA certificate confirming such payment.
27
11.7 Purchaser hereby grants (i) Shanghai Cvalim Telecommunication
Optical Fiber Cable Ltd. a non-exclusive, perpetual, royalty
free license to use the name "Cvalim" in its name in China and
(ii) Xxxxx -- Trade and Marketing Company of Cable and
Electronic Equipment Ltd. a non-exclusive, perpetual, royalty
free license to use the name "Cvalim" in its name in Israel,
provided said companies shall not present themselves as
associated in any way with the Cable Business to be
transferred hereunder.
11.8 For the periods set forth below, and in so far as relating to
the Cable Business, Purchaser will provide the following
services to Seller free of charge:
11.8.1 During the twelve month period after the Closing
Date, Purchaser shall: (i) perform the
administrative functions concerned with collection
of trade accounts receivable owing from third
parties to Seller after the Closing Date (such
administrative functions will be substantially the
same as the those performed by Purchaser for its
own account); (ii) perform the administrative
functions associated with pursuing any insurance or
other claims relating to the Cable Business and
(iii) perform the administrative functions
associated with collecting loans extended by Seller
to Employees and down payments made by Seller to
Employees on account of salary payable immediately
after Closing. Purchaser undertakes to deduct said
loans and down payments from the Employees'
emoluments, subject to any applicable laws and
agreements. If a dispute with Seller's debtor
arises the parties shall collaborate and use their
efforts to resolve the dispute with the minimal
possible interference with the relations Purchaser
has with same party. Failing that within 21 days,
Seller may take legal action to recover the debt in
question. For purposes of clarification it is
hereby stated that administrative functions include
correspondence, telephone communication and follow
up.
11.8.2 For the period beginning on the Closing Date and
ending on June 30, 1999, Purchaser shall (i)
perform the administrative functions associated
with paying bills and expenses of Seller to third
persons and, subject to Purchaser continuing to use
the software currently used by Seller for producing
financial records (ii) assist with the transfer of
electronic financial records to Seller's new
computer system and (iii) provide duplicate
electronic financial records of Seller for the
years ending December 31, 1998 and for the period
ending [June 30, 1999]. If a dispute with a third
party arises concerning bills and expenses of
Seller, the parties shall act in accordance with
Clause 11.3 above.
11.8.3 For the period beginning after the Closing Date and
ending on the date of publication of Seller's
financial statements for the period ended [June 30,
28
1999], Purchaser shall provide bookkeeping services
for maintaining the books and records of Seller and
the operations of Seller.
11.8.4 For the period beginning after the Closing Date and
ending seven years after the Closing Date,
Purchaser shall provide Seller with reasonable
access to any documents that Seller reasonably
requires for pursuing any insurance or other claims
relating to the Cable Business.
Purchaser shall provide the aforesaid services in
good faith and shall not be liable for any damages
or any loss to Seller associated therewith except
in case of willful misconduct. Seller shall
indemnify Purchaser and hold it harmless against
any claim or other legal proceedings and any out of
pocket cost concerned with same services.
11.9 Deleted
11.10 The Parties agree to cooperate in applying to the Investment
Center to amend the approved Investment Center plans (the
"Approved Plans") granted in respect of the plants at Carmiel
& Maalot, as follows:
11.10.1 Carmiel
The Parties will jointly endeavor to amend
Approved Plan in respect of the Carmiel plant,
within twelve (12) months from the Closing Date in
order to obtain; (i) an extension of two (2) years
for the commencement of the export obligation
included in the said Approved Plan, (ii) if so
desired by Purchaser, a reduction of the investment
commitment in the said Approved Plan to the amounts
invested by Seller prior to the Closing Date or
such higher amount the Purchaser shall wish, (iii)
the transfer of the said Approved Plan, as amended
under (i) and (ii) above to the "Shaar Hanegev"
plant of Purchaser; and (iv) reduction of the level
of the export obligation included in the said
Approved Plan.
If the amendments stipulated in subsections (i)
through (iii) above, are not cumulatively agreed
to by the Investment Center within twelve (12)
months from the Closing Date, Seller shall satisfy
any liability or obligation imposed by the
Investment Center with respect to the said Approved
Plan notwithstanding anything to the contrary in
this Agreement.
11.10.2 If the conditions stipulated in Section 11.10.1 (i)
through (iii) above are consented to by the
Investment Center within twelve (12) months from
the Closing Date, Seller shall be relieved of any
liability or obligation with respect to the said
Approved Plans, notwithstanding anything to the
contrary in this Agreement.
29
11.10.3 Ma'a lot
11.10.3.1 The Parties will jointly endeavor to
amend Approved Plan in respect of the
Maalot Plant, within twelve (12) months
from the Closing Date in order to obtain
(i) an extension of one (1) year for
completion of the performance of the
said Approved Plan, and (ii) a reduction
of the investment commitment in the said
Approved Plan.
If the above two amendments are not
cumulatively agreed to by the Investment
Center within twelve (12) months from
the Closing Date, Seller shall satisfy
any liability or obligation imposed by
the Investment Center with respect to
the said Approved Plan in connection
with the subject matter of any of said
amendments notwithstanding anything to
the contrary in this Agreement.
11.10.3.2 If the two (2) amendments stipulated in
Section 11.10.3.1 above are consented to
by the Investment Center within twelve
(12) months from the Closing Date,
Seller shall be relieved of any
liability or obligation with respect to
the said Approved Plan, notwithstanding
anything to the contrary in this
Agreement.
11.10.4 In performing their undertakings as set out
in this Section hereinabove, the parties
shall provide the Investment Center promptly
with all documents, data and other materials
requested thereby for the purposes of
processing, evaluating and approving the
applications to amend the Approved Plans as
stated in this Section hereinabove.
11.11 Without derogating from any provision of Clause 11.10 above,
it is clarified that Seller shall not be liable for any
liability towards the Investment Center arising as a result of
Purchaser's closing factories or transferring facilities to
other locations.
12. LEASE
On the Closing Date, Seller agrees to enter into a mutually
satisfactory lease or sub-lease substantially on the terms attached
hereto as SCHEDULE 1.1.1.3 for all of the Properties. [Seller/Purchaser
agrees to pay all transfer or consent fees, including fees payable to
the Israel Lands Authority, necessary to lease the Properties or
sub-lease the real property utilized in the Cable Business to Purchaser
-- pending check].
30
13. RESTRICTION ON SELLER
13.1 Seller hereby covenants with the Purchaser that neither Seller
nor any of its associated companies (other than the NMAC)
will, whether on its own account or in conjunction with or on
behalf of or through any other person or entity, carry on or
be engaged in a Competitive Activity for a period of 7 years.
13.2 Seller hereby covenants with the Purchaser that from the date
hereof until the third anniversary of the Closing Date, Seller
shall not directly or indirectly, solicit for employment any
senior manager, general manager, sales or technical employee
of Seller who is or was recently engaged in the conduct of the
Cable Business or any employee transferred to Purchaser
performing any of the foregoing functions; PROVIDED, HOWEVER,
that general solicitations of employment published in journal,
newspaper or other publication of general circulation and not
specifically directed towards such employees shall not be
deemed to constitute solicitation for purposes of this Clause.
13.3 Seller acknowledges that given the nature of Seller's business
the covenants contained in this Clause contain reasonable
limitations as to time, geographical area and scope of
activity to be restrained, and do not impose a greater
restraint than is necessary to protect and preserve for the
benefit of Purchaser the goodwill of the Cable Business and to
protect the legitimate business interests of Purchaser. If,
however, this Clause is determined by any court of competent
jurisdiction to be unenforceable by reason of its extending
for too long a period of time or over too large a geographic
area or by reason of its being too extensive in any other
respect or for any other reason it will be interpreted to
extend only over the longest period of time for which it may
be enforceable and/or over the largest geographical area as to
which it may be enforceable and/or to the maximum extent in
all other aspects as to which it may be enforceable, all as
determined by such court and in such action.
13.4 From and after the Closing, Seller shall keep confidential and
not disclose to any other person or use for its own benefit or
the benefit of any other person (i) any information in its
possession or control regarding the Cable Business and the
Assets and (ii) any information of or concerning this
Agreement or the transactions contemplated hereby. The
obligation of Seller under this Clause shall not apply to
information which: (i) is or becomes generally available to
the public without breach of the commitment provided for in
this Clause; or (ii) is required to be disclosed by law, order
or regulation of a court or tribunal or governmental
authority; PROVIDED, HOWEVER, that, in such case, Seller shall
notify the Purchaser as early as reasonably practicable prior
to disclosure to allow the Purchaser to take appropriate
measures to preserve the confidentiality of such information.
31
14. OPTION TO ACQUIRE SELLER'S INTEREST IN NMAC
14.1 Purchaser shall have the right and option during a period of
12 months from the Closing Date to acquire all of Seller's
interest in any of the NMAC, PROVIDED, that such option shall
be subject to (i) any right of first refusal existing on the
date hereof and disclosed to Purchaser on SCHEDULE 14.1
hereto, (ii) any existing right of first refusal transferred
to a transferee of such NMAC interest pursuant to Schedule
14.1 or (iii) any right of first refusal hereafter granted to
bona fide new investor (i.e., an investor after the date
hereof) in such NMAC that is not on terms any more favorable
to such new investor than any existing right of first refusal.
14.2 The purchase price for Seller's interest in any of such
company will be an amount equal to the amount Seller paid to
acquire such interest plus an amount reflecting the
adjustments for the changes in the general purchasing power of
the New Israeli Shekel as measured by the Israeli price index
plus interest (compounded annually at a rate equal to six
percent (6%)) for the period after Seller acquired such
interest until the date Purchaser acquires such interest.
14.3 Notwithstanding the above the purchase price for Seller's
interest in HT Cable Ltd. shall be an amount equal to the
amount of capital loans from Seller to HT Cable Ltd. plus any
interest accrued thereon pursuant to their terms [plus an
amount reflecting the adjustments for changes in the general
purchasing power of the New Israeli Shekel plus interest
(compounded annually at a rate equal to 6%) for the period
beginning from the date or dates Seller made the capital loans
until the date Purchaser acquires Seller's interest in HT
Cable Ltd.
14.4 Purchaser's right to purchase such interest shall be exercised
by providing Seller with a written notice setting forth the
time and location of the closing for the purchase of such
interest. At such closing Seller shall deliver duly executed
instruments of transfer and any other documents necessary to
transfer the interest to Purchaser free from Encumbrances and
Purchaser shall pay the purchase price to Seller.
14.5 Seller shall give Purchaser prompt written notice whenever it
is offered to purchase any NMAC interest so that Purchaser
shall be able to timely exercise its option hereunder and
accept such offer.
14.6 At Purchaser's request, Seller shall forthwith forward for
Purchaser's review any information available to Seller
concerning the NMAC during the option period mentioned in
Clause 14.1 above.
15. LIQUIDATION OF DASH
Purchaser hereby agrees that after the execution of this Agreement; (i)
Dash shall sell and transfer to Seller the real property owned thereby
in Nazareth as detailed in SCHEDULE 15 and
32
(ii) Dash shall adopt a resolution for its voluntary liquidation,
without creditors. Seller is and shall remain directly liable and
responsible for all obligations and liabilities of Dash arising under
this Agreement.
For the sake of clarity, nothing stated above shall in way prejudice or
derogate from the rights of the Purchaser pursuant to this Agreement.
16. ANNOUNCEMENTS
The parties hereto shall consult together as to the terms, time and
manner of any announcement to employees, customers, supplier or to the
press or otherwise of this Agreement, the completion of the acquisition
hereby agreed or of any supplemental or related transaction - prior to
Closing. No such announcement shall be made prior to Closing except in
agreed terms save (in the absence of agreement) for any statement or
disclosure which may be required by law or called for by or conforming
with the requirements of the Tel Aviv or New York Stock Exchange or
other regulatory body, and any such statement or disclosure shall be no
more extensive than is necessary to meet the minimum requirements upon
the party making such statement or disclosure. The obligation of the
parties under this Clause shall not apply to announcements required to
be made by law, order or regulation of a court or tribunal or
governmental authority; PROVIDED, HOWEVER, that, in any such case the
announcing party shall notify the other party's early as reasonably
practicable prior to such
announcement to permit the other party to take appropriate measures
regarding such announcement.
17. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
pertaining to the subject hereof and supersedes all prior agreements,
understanding, negotiations and discussions, whether oral or written,
of the parties in connection with the subject matter hereof except as
specifically set forth herein.
18. AMENDMENT
No amendment, supplement or modification of this Agreement shall be
binding unless executed in writing by all the parties to this
Agreement.
19. ASSIGNMENT
This Agreement shall bind and inure to the benefit of the successors of
the parties but shall not be assignable without the prior written
consent of all the other parties.
33
20. WAIVER
No waiver by any party of any default in the strict and literal
performance or compliance with any provision, condition or requirement
in this Agreement shall be deemed to be a waiver of strict and literal
performance or compliance with any other provision, condition or
requirement in this Agreement nor to be a waiver of or in any manner
release any party from strict compliance with any provision, condition
or requirement in the future nor shall delay or omission of any party
to exercise any right under this Agreement in any manner impair the
exercise of any such right accruing to it thereafter.
21. SEVERABILITY
If any provision or identifiable part of the Agreement is held to be
invalid or unenforceable by any court of competent jurisdiction, then
such invalidity or unenforceability shall not affect the remaining
provisions or identifiable parts of the Agreement.
If any provision of this Agreement should be or become invalid or cease
to be binding in whole or in part, the parties shall negotiate in good
faith in order to replace such provision by a new provision approaching
as closely as possible the commercial intent of the replaced provision.
22. COSTS AND EXPENSES
Each party shall bear the costs and expenses incurred by it in
connection with the preparation, negotiation and execution of this
Agreement and consummation of the transaction contained herein.
If a stamp duty is required to be paid, the cost of such stamp duty
will be borne equally by the parties hereto.
23. GOVERNING LAW AND JURISDICTION
This Agreement is governed by and shall be construed in accordance with
the laws of the State of Israel and subject to Clause 23 below, the
competent courts in Tel-Aviv (the "Court") shall have exclusive
jurisdiction over any dispute relating to the subject matter of this
Agreement.
24. ARBITRATION
24.1 Notwithstanding anything contained in this Agreement to the
contrary, this Clause 24 shall survive termination or Closing
of this Agreement.
24.2 The parties shall endeavor in good faith to resolve amicably
any dispute relating to the subject matter of this Agreement.
In the event that any such dispute is not amicably
34
resolved, it shall be resolved by binding arbitration before a
single arbitrator (who is a former Supreme Court Justice), if
the parties are able to agree on the selection of such
arbitrator, or, if the parties are unable to agree, a panel of
three arbitrators. The arbitration shall be conducted pursuant
the to rules of the [Israeli Institute of Commercial
Arbitration] (the "Institute") in Tel-Aviv, Israel. If
arbitration is before a panel of three arbitrators, one
arbitrator shall be selected by the Seller, one arbitrator
shall be selected by the Purchaser and the third arbitrator
shall be selected by the two arbitrators from a panel provided
by the Institute. In any event, the arbitrator or arbitrators,
as the case may be, shall be bound by substantive applicable
law and shall state in writing the reasons for his or their
award/decision. In connection with any arbitration hereunder,
the attorneys (or attorneys in any law firms with which those
attorney's are associated) who have represented the
negotiation and/or drafting of this Agreement:
24.2.1 shall be precluded from serving as an
arbitrator; and
24.2.2 shall not be precluded from:
24.2.2.1 submitting expert or other testimony; or
24.2.2.2 representing any of those same parties
in the arbitration or any related
proceedings.
24.3 Any arbitration hereunder shall be conducted in English, and
the arbitrator shall sit in Tel-Aviv, Israel unless otherwise
agreed by the parties. Nothing in the preceding sentence shall
preclude the taking of evidence in a place other than Tel
Aviv, Israel (or such other place as is agreed) if the
arbitrator deems that appropriate.
24.4 In the event that any party to this Agreement is not a formal
participant in an arbitration proceeding hereunder, such party
shall cooperate with any reasonable request, from the
arbitration panel or from any participant in such arbitration
proceeding, for the producing of evidence. The arbitration
panel will be entitled to request the submission of expert
testimony.
24.5 Nothing in the Clause 24 shall preclude any party from making
an appropriate application to the Court for injunctive or
other equitable relief ancillary to the arbitration
proceeding.
24.6 Unless the participants in an arbitration proceeding hereunder
and the party producing evidence otherwise agree in writing,
the arbitration panel and the participants in an arbitration
proceeding hereunder shall take all reasonable steps to ensure
the confidentiality of all evidence produced in connection
with any such arbitration proceeding. As used in this clause,
"evidence" includes document and
35
testimony (whether written or oral), and "producing evidence"
included giving, providing or otherwise furnishing evidence.
24.7 The arbitrator(s) shall award the recovery of all costs and
fees (including reasonable attorney's fees, administrative
fees and arbitration fees) to the prevailing party or if the
arbitrator(s) determines that there is no clear prevailing
party as the arbitrator(s) shall deem just and equitable.
25. NOTICES
25.1 Unless expressly stated otherwise, any demand, consent, notice
or other communication authorized or required to be made under
this Agreement shall be in writing and shall be given or made
by facsimile, registered mail (registered airmail if
international post) or personal delivery addressed to the
respective parties as follows (or to such changed address as
to which they may give notice):
To Purchaser:
Copy to:
To Seller:
Cvalim - The Electric Wire and Cable Company of
Israel Ltd.
(or the new name thereof)
X/X Xxxx Xxxxxxxx
0 Xxxxx Xxx Xx.
Xxxxxxxx Pituach 46851
Attention: Yuli Xxxx
Xxxx Rafiah
Fax: (00)-0000000
Copy to: Xxx Xxxxxx
0 Xxxxx Xxx Xx.
Xxxxxxxx Pituach
Fax: 00-0000000
25.2 A notice given by registered mail (registered airmail if
international post) shall be deemed delivered of the 7th
Business Day following the date it is posted. Personal
delivery shall be deemed to be given and received on the date
of delivery to the address of the addressee provided that if
such a day is not a Business Day, then the notice shall be
deemed to have been given and received on the next following
36
Business Day. A notice given by facsimile shall be deemed
given and received on the date of transmission to the fax
number of the recipient provided the recipient expressly
confirms in writing receipt thereof.
/S/ /S/
-------------------------------- ---------------------------------
Seller Purchaser
37
