Exhibit C
CONTRACT
Made and entered into at Tel Aviv on this 28th day of December 1999
Between: Arwol Achzakot Ltd.
Private Company Registration No. 00-000000-0
Care of Ravilan, Volovelsky, Dinstein and Co., Law Offices
00 Xxxxxxxxxx Xxxxxxxxx, Xxx Xxxx
(hereinafter: "the Seller")
Of the One Part;
And: Mr. Avi Ruimi, holder of Identity Document No. 54341631
and/or a Corporation under his control
of 00 Xxxxxxxxxx Xxxxxxxxx, Xxx Xxxx
(hereinafter: "the Purchaser")
Of the Other Part;
Whereas The Seller declares that it is the owner of 12,183,671 shares
having a par value of NIS 1.- each in the company Macfall
Industries Ltd. Public Company Registration No. 00-000000-0
(hereinafter: "Macfall" or "the Company"), which constitutes
78.3% of the issued and paid up share capital of the Company;
And Whereas The Seller is desirous of selling to the Purchaser 3,987,700
shares having a par value of NIS 1.- each in the Company
(hereinafter: "the Shares Sold");
And Whereas The Shares Sold as well as the rights of the Seller in and to
the Shares Sold are clean, free and unencumbered by any
pledge, mortgage, attachment, debt, obligation, right of
refusal or any other right of any third party (hereinafter:
"clean, free and unencumbered"), save for a mortgage in favor
of Bank Hapoalim Ltd. (hereinafter: "the Bank"), with respect
to which, on the date of the signature of this Contract, it
has given its consent to the release of the Shares Sold from
the mortgage in its favor;
And Whereas The Purchaser is desirous of purchasing the Shares Sold clean,
free and unencumbered, all of which as set forth hereunder in
this Contract;
And Whereas Simultaneously with the signature of this Contract and as a
condition thereof, the Seller and the Purchaser are entering
into contractual arrangements under a shareholders agreement
(hereinafter: "the Shareholders Agreement");
And Whereas The parties desire to regulate the legal relationships between
them as set out in this Contract and in the Shareholders
Agreement;
Now therefore it is declared, stipulated and agreed between the parties
as follows:
1. Preamble and Interpretation
1.1 The preamble to this Contract and the Annexes hereto
constitute an integral part hereof. In the event of any
contradiction between the provisions of the Contract and the
provisions of any of the Annexes, the provisions laid down in
this Contract shall prevail.
1.2 Paragraph headings in this Contract are for the purposes of
convenience only and shall not serve in the interpretation of
the Contract and/or of any of the stipulations thereof
whatsoever.
1.3 In this Contract the following terms shall have the meaning
set out alongside them as follows:
"The Stock Exchange" The Tel Aviv Stock Exchange Ltd.
"The First Payment Date" 29th December 1999
"The Second Payment Date" 31st January 2000
"The Third Payment Date" 15th February 2000
"Dollar" An amount in new Israeli shekels
in accordance with the last
known representative rate of
exchange of the United States
dollar as at the date of any
payment or calculation.
2. Declarations and Undertakings by the Seller
The Seller hereby undertakes and declares vis a vis the Purchaser as
follows:
2.1 That it is the sole owner of the Shares Sold and that save for
the mortgage in favor of Bank Hapoalim Ltd. (which as at the
date of signature of this Contract has given its consent to
the release of the mortgage from the Shares Sold), that all
its rights in and to the Shares Sold are clean, free and
unencumbered, that the Shares Sold are fully paid up, and
correct as at the date of signature of this Contract, no
undertakings have been given to any third party whatsoever to
transfer the Shares Sold, or any part of them, or to refrain
from the transfer thereof, and that no option or any other
right for the acquisition of the Shares Sold have been granted
nor given to any third party whatsoever, and that they shall
also so remain on the First Payment Date, as well as on the
Second Payment Date and on the Third Payment Date, as the case
may be.
2.2 All the Shares Sold are registered in the register of
shareholders of the Company and with the Registrar of
Companies in the name of the Seller in the condition thereof
as set forth in paragraph 2.1 above.
2.3 That there is nothing to prohibit, prevent or otherwise
restrict the sale of the Shares Sold to the Purchaser, the
transfer thereof into its ownership and the registration
thereof in its name in the register of shareholders of the
Company.
2.4 That all the Shares Sold are negotiable, are not "blocked"
under instructions or directives of the Stock Exchange and/or
the Securities Authority and there is no restriction with
respect to the transfer thereof to the Purchaser.
2.5 That the registered share capital of Macfall, correct as at
the date of signature of this Contract, is NIS 50,000,000
divided into 50,000,000 ordinary shares having a par value of
NIS 1.- each.
2.6 That to the best of its knowledge, the issued and fully paid
up share capital of Macfall as at the date of signature of
this Contract is NIS 15,560,588 divided into 15,560,588
ordinary shares having a par value of NIS 1.- each and held by
shareholders as set forth in Annex A to this Contract.
2.7 That to the best of its knowledge, the composition of the
additional securities which Macfall has issued is as set forth
in Annex B to this Contract, and that Macfall does not have
further securities save for those as set forth in Annex B. The
Seller does not hold any of the securities detailed in Annex
B.
2.8 That the unaudited Financial Reports of Macfall as at 30th
September 1999 properly reflect, in accordance with accepted
principles of accounting, the state of its assets, its
liabilities, its capital, its business and the results of its
operations up to that date; and that since the publication of
the foregoing Financial Reports no material changes have taken
place to the detriment of the state of the assets,
liabilities, capital, business and the results of the
operations of Macfall.
2.9 That the Opinion of the valuator which was undertaken by First
Boston Credit Suisse in November 1999 in connection with the
value of the company "Alba Waldenstan" (hereinafter: "Alba"),
pointed to the value of Alba as at the effective date as being
higher than the price which was paid by Tafron for the
purchase there. The board of directors of Tafron relied upon
that Opinion in its decision to acquire Alba.
2.10 The founding documents of the Company (the Memorandum and
Articles of Association) which are attached as Annexes C and D
to this Contract, are valid and the founding documents are
revised to the date of signature of this Contract, and no
resolution for the alteration or amendment thereof has been
adopted.
2.11 That save for the matters set out in Annex B to this Contract,
correct as at the date of signature of this Contract, no
person (including, but not only, the Seller) has any right to
the allotment of any share capital in Macfall and/or any right
of first refusal in connection with any aforesaid allotment,
and that there is also no obligation of any kind and nature
whatsoever to increase the share capital of Macfall and/or to
allot any securities therefrom and/or to issue capital notes
to any person (included, but not only, to the Seller) and/or
any obligation to refrain from any of the foregoing acts.
For this purpose "share capital" - means securities and rights
of any kind whatsoever, including but not only, ordinary
shares (and all the various classes thereof), management
shares, bonus shares, options, convertible debentures and any
right whatsoever to the receipt thereof and/or to the
acquisition thereof and/or to the allocation of any one of
them.
2.12 That insofar as it is aware, no resolution with respect to the
distribution of a dividend has been adopted by Macfall after
30th September 1999, and insofar as it is aware there is no
intention to distribute any dividend in which the Purchaser
would not be included.
2.13 That to the best of its knowledge the signature of this
Contract and the implementation of the provisions thereof are
not contrary to or inconsistent with any contract, obligation
or restriction to which it is a party, and there is nothing
whatsoever legally, business-wise or otherwise to prevent the
implementation thereof.
2.14 That it is aware that its declarations as set out in this
Contract constitute the basis for the Purchaser's entering
into contractual arrangements under this Contract, and it is
not aware of any material detail in relation to Macfall and/or
to the companies affiliated to it which is not capable of
disclosure to the public.
In this context, the Purchaser declares that it has been
brought to its knowledge that negotiations are being conducted
for the merger of the company New Horizon (a subsidiary of
Macfall) with another company and also that the continued
operations of New Horizon are dependant upon the success of
these negotiations. The Purchaser declares that it shall not
raise any claim against the Seller in this connection
irrespective of howsoever the board of directors of the
Company shall resolve in the matter.
3. The First Stage of the Sale Transaction
3.1 The Seller undertakes to sell and to transfer to the Purchaser
under the first stage half of the Shares Sold, that is to say,
1,993,260 shares in the Company, and the Purchaser hereby
undertakes to purchase and to accept possession from the
Seller of such shares (hereinafter: "the First Half of the
Shares Sold").
3.2 In consideration for the First Half of the Shares Sold the
Purchaser undertakes to pay to the Seller the sum of $
6,983,260, which constitutes an amount of $ 3.5024 for each
ordinary share in Macfall, multiplied by 1,993,850 shares.
3.3 The consideration set out in paragraph 3.2 above shall be paid
in 2 installments:
3.3.1 On the First Payment Date the sum of $ 1,750,000.
3.3.2 On the Second Payment Date the sum of $ 5,233,260.
3.4 Upon effecting the first payment the Purchaser shall be
entitled to call upon the Seller to recommend to the board of
directors of the Company that an additional director, whose
identity shall be determined by the Purchaser, be attached to
the board of directors. Such additional director shall resign
from his office if the second payment is not made in
accordance with the provisions of this Contract; a letter of
resignation shall be deposited, as a condition of appointment,
with the Seller's attorney, Advocate Xxxxxx Xxxxxxxxxx.
3.5 The parties shall appoint Advocate Xxxxxx Xxxxxxxxxx
(hereinafter: "the Trustee") as Trustee for the
implementation of both the stages of the sale transaction in
accordance with this Contract. On the First Payment Date the
Seller shall deposit with the Trustee a deed of transfer of
the shares with respect to 454,227 shares, signed by the
Seller together with the appropriate share certificate, which
shall be transferred to the Purchaser upon the First Payment
being effected, to the order of the Seller's account no. 51661
at Branch no. 000 (xxx Xxxx Xxxx branch) of Bank Hapoalim Ltd.
(hereinafter: "the Bank"). On the Second Payment Date the
Seller shall deposit with the Trustee a deed of transfer of
the shares with respect to 1,539,623 shares, signed by the
Seller, which shall be transferred to the Purchaser against
the Second Payment being effected into the aforesaid account,
together with the appropriate share certificate which shall be
obtained from the Bank against such Second Payment being
effected.
3.6 For the sake of clarity it is recorded that the first stage of
the sale transaction, as set out in paragraph 3 above, is
final and absolute.
4. The Second Stage of the Sale Transaction
4.1 Under the second stage, the Purchaser shall purchase from the
Seller, on the Third Payment Date, the other half of the
Shares Sold, that is to say, 1,993,850 shares in the Company
(hereinafter: "the Balance of the Shares Sold"), at a price
of $ 3.5024 per share and in the aggregate $ 6,983,260
(hereinafter: "the Balance of the Consideration for the
Shares Sold"), this being subject to the carrying out and
completion of an appropriate examination of the Company, as
set forth in paragraph 4.4 hereunder, to the satisfaction of
the Purchaser.
4.2 Subject to the completion of the appropriate examination as
aforesaid, the transfer of the Balance of the Shares Sold and
payment of the Balance of the Shares Sold shall be effected on
the Third Payment Date, in accordance with the procedure set
forth in paragraph 3.5 above, mutatis mutandis.
4.3 It is hereby agreed that for the purpose of securing the
implementation of the second stage of the sale transaction and
the completion thereof, the Seller shall, on the First Payment
Date, deposit with the Trustee a deed of transfer of the
shares signed by it with respect to the Balance of the Shares
being Transferred. The Trustee shall act in accordance with
the following provisions:
4.3.1 The Trustee shall hand over the deed of transfer of
the shares and the share certificates with respect
thereto (the certificates shall be obtained from the
Bank against the third payment being effected) to the
Purchaser against the deposit of the Balance of the
Consideration for the Shares Sold into the Seller's
account at the Bank.
4.3.2 In the event of the Balance of the Shares Sold not
being handed over to the Purchaser on the Third
Payment Date, the Trustee shall return the deed of
transfer of the Shares to the Seller or to his order,
unless the Trustee shall have received written notice
from the Purchaser that it desires to continue with
the appropriate examination in the circumstances set
out in paragraph 4.5 hereunder, and in such an event,
the Trustee shall hold the deed of transfer of the
shares which are in trust for a further 15 days.
4.3.3 The Trustee shall be entitled to refer to any
competent judicial authority on any question, if any,
which may arise within the context of the trust in
pursuance of this Contract.
4.3.4 The parties hereby release and relieve the Trustee
from any liability for any damage of any kind
whatsoever, if any, which may be caused to it as a
result of and/or in consequence of any act and/or
omission of the Trustee provided that he had acted in
good faith in accordance with the provisions of this
Contract.
4.3.5 The signature by the parties of this Contract
constitutes an irrevocable instruction to the Trustee
to act in accordance with the provisions of this
paragraph 4.3 above.
4.4 It is hereby agreed that the Seller shall do whatsoever shall
be required in order to enable the Purchaser to carry out such
an appropriate comprehensive and detailed examination of
Macfall as is the accepted practice in similar instances on
the basis of the declarations of the Seller contained in
paragraph 2 of the Contract (hereinafter: "the Appropriate
Examination"). The Appropriate Examination shall be carried
out by the Purchaser itself and/or though its employees and/or
its representatives and/or its professional consultants, over
a period which shall be between the First Payment Date and 6th
February 2000.
4.4.1 The Appropriate Examination shall be carried out
subject to the signature by all the appropriate
entities of a letter of confidentiality in the form
attached hereto as Annex E to this Contract.
4.4.2 Should, at the conclusion of the Appropriate
Examination, it become evident to the Purchaser that
the declarations of the Seller as set forth in
paragraph 2 above are incorrect and incomplete (save
in relation to details which are not of an essential
nature), the Purchaser shall be entitled not to
complete the second stage of the sale transaction, and
not to purchase the Balance of the Shares Sold on the
Third Payment Date.
4.4.3 A "detail of an essential nature" for such purpose
means:
(a) In relation to the declarations of the Seller
with respect to the quantity of shares of the
Company and the nature of its rights therein
(the declarations which are set out in sub
paragraphs 2.1 to 2.7 above as well as in sub
paragraphs 2.10 and 2.11 above) any detail
whatsoever.
(b) In relation to the declarations of the Seller
with respect to the business results and
operations of the Company (the declarations
which are set out in sub paragraphs 2.8 to
2.11 above) - details which would cause,
cumulatively, a divergence of in excess of $
1 M in the equity of the Company as at 30th
September 1999 or a reduction in the worth of
Alba to below the price of the acquisition
thereof by Tafron.
4.4.4 It is hereby agreed that in the event of the Seller
failing to furnish any details, explanations, data or
documents which are reasonably required for the
purpose of the Appropriate Examination (hereinafter:
"the Deficiencies") notwithstanding that the Purchaser
(or the persons scrutinizing on its behalf) shall have
requested this for the purpose of an Appropriate
Examination during the course of the first 15 days
which had been prescribed for the carrying out
thereof, the Third Payment Date shall be postponed for
15 days and the acquisition of the Shares Sold shall
be effected only should the Seller make good the
Deficiencies to the satisfaction of the Purchaser
during those further 15 days.
5. Shareholders Agreement
At the time of signature of this Contract the parties shall enter into
a Shareholders Agreement in the form attached hereto as Annex F to this
Contract.
6. Taxes and Costs
6.1 Each of the parties to this Contract shall bear such taxes as
are imposed on it according to law with respect to the
transaction which is the subject matter of this Contract.
6.2 Stamp duty with respect to this Contract and/or in connection
with the transfer of the Shares Sold, if applicable, shall be
due by the Seller and Purchaser in equal shares (50% shall be
paid by the Seller and 50% shall be paid by the Purchaser).
6.3 Each party shall bear the fees of its attorney.
7. Miscellaneous
7.1 The transaction which is the subject matter of this Contract
is subject to and conditional upon the approval of the
Director of Business Restrictions. The parties shall jointly
apply to the Director of Business Restrictions in order to
obtain his approval as aforesaid and shall furnish him with
particulars and documents to the extent required for such
purpose.
7.2 The parties acknowledge and declare that the amounts specified
in paragraphs 3 and 4 above on the one hand and the Shares
Sold on the other, constitute a final, fair, fitting, and
definitive consideration for the fulfillment of all the
obligations which they have assumed by virtue of the
provisions of this Contract, and no claim on the part of one
of them to the effect that the other party is obliged to
increase and to pay or to give to it, either directly or
indirectly, any additional consideration in connection with
this Contract and/or in connection with the fulfillment of any
of its obligations in pursuance thereof, shall be admissible.
7.3 The parties undertake that subject to the provisions of any
law, they shall keep confidential the matter of the
transaction between them and the details thereof. Accordingly
and inter alia, any publication concerning the transaction and
the details thereof, whether by operation of law or
voluntarily by the parties, shall be undertaken in concert and
with consensus between the parties as to the timing thereof,
the content thereof and the place of publication thereof.
7.4 This Contract and the Annexes thereto consolidate and express
the set of relationships, the rights and the obligations
between the parties in an exclusive and absolute manner. Upon
signature of this Contract any agreement, contract,
declaration, assurances and undertakings which had been made
between the parties and/or between some person acting on their
behalf (whether prepared in writing or made verbally) shall be
null and void.
7.5 No variation and/or amendment and/or addition and/or waiver
and/or departure from the provisions of this Contract shall be
valid unless effected in writing and signed by the parties to
this Contract.
7.6 Any agreement on behalf of one of the parties to this Contract
to depart from the conditions of this Contract and/or to waive
in one particular instance shall not constitute a precedent
and no inference with respect to any other instance is to be
drawn therefrom. The non use by either party of any right
conferred upon it in pursuance of this Contract in any one
particular instance is not to be deemed to be a waiver of that
right in any identical, similar or dissimilar instance, and no
inference may be drawn therefrom as to any waiver whatsoever
of any right whatsoever by that party.
7.7 The parties undertake to cooperate with each other and inter
alia in this context, to do whatever shall be required for the
purpose of the speedy and efficient execution of this
Contract, including the signature of any document which may be
required for such purpose.
7.8 Nothing contained in any of the provisions of this Contract
shall be construed as constituting a contract for the benefit
of any third party whatsoever.
7.9 The addresses of the parties for the purposes of this Contract
are as specified in the heading of this Contract and any
notice to be sent by either party to the other by registered
post in accordance with the above addresses, in the absence of
written notice from either party to the other as to a change
in its address, shall be deemed to have reached its
destination to have come to the knowledge of the addressee
party within 72 hours from the time of its handing for
dispatch by post.
7.10 Notices delivered personally shall be deemed to have been
delivered and to have been brought to the knowledge of the
addressee party at the time of actual delivery. Notices may
also be delivered by means of a telegram in accordance with
the addresses of the parties set out above and the date of
delivery thereof shall be deemed in such an event to be on the
first business day after the date upon which they were so
dispatched.
In witness whereof the parties have affixed their signatures:
"signature" - Arwol Achzakot Ltd. "signature"
---------------------------------- ----------------------------------
The Seller The Purchaser
Annexes:
Annex A - Paragraph 2.6 Details of Shareholders in the Company
Annex B - Paragraph 2.7 Details of Additional Securities issued by the
Company and which are held by the Seller
Annex C - Paragraph 2.10 Memorandum of Association of the Company
Annex D - Paragraph 2.10 Articles of Association of the Company
Annex E - Paragraph 4.4.1 Letter of Confidentiality
Annex F - Paragraph 5 Shareholders Agreement
ANNEX A
TABLE OF SHAREHOLDERS AND RATES OF THEIR HOLDING
--------------------------------------------------------------------------------
Name of Shareholder No. of Shares Ordinary Shares of a par
value of NIS 1.-
--------------------------------------------------------------------------------
Silberdik Gadi 1
--------------------------------------------------------------------------------
Peleg Ran 1
--------------------------------------------------------------------------------
Xxxxx Xxxxxx 1
--------------------------------------------------------------------------------
Cantalevi Arieh 1
--------------------------------------------------------------------------------
Xxxxxx Xxxxx 1
--------------------------------------------------------------------------------
Bar Xxx Xxxxxx 7
--------------------------------------------------------------------------------
Bank Mizrachi Registrations Company Ltd. 3,375,905
--------------------------------------------------------------------------------
Arwol Achzakot Ltd. 12,183,671
--------------------------------------------------------------------------------
Total 15,560,588
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ANNEX B
LIST OF SECURITIES
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Securities Par Value Basis of Rate of Payment at time of Earliest Last date of
in Turnover Linkage Interest conversion in Payment Date Payment /
nominal new Israeli Lapse
shekels
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Ordinary 15,560,588
shares of
NIS 1.-
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Debentures 6,559,113 Index 2.00 15 5th November 5th November
Series A 2000 2000
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Debentures 3,557,011 Dollar 3.00 15 5th May 2000 5th May 2000
Series B
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Debentures 64,679,148 Index 1.45 18 20th August 20th August
Series C 2001 2001
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Options 5,350,000 14
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